[Title 32 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 1999 Edition]
[From the U.S. Government Printing Office]


          32



          National Defense



[[Page i]]

          PARTS 191 TO 399

                         Revised as of July 1, 1999

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF JULY 1, 1999
          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



[[Page ii]]






                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1999



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 32:

    Subtitle A--Department of Defense (Continued):

            Chapter I--Office of the Secretary of Defense 
          (Continued).........................................       5

  Finding Aids:

      Table of CFR Titles and Chapters........................    1097

      Alphabetical List of Agencies Appearing in the CFR......    1115

      List of CFR Sections Affected...........................    1125



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  32 CFR 191.1 refers 
                       to title 32, part 191, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 1999), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

SALES

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, The United States 
Government Manual, the Federal Register, Public Laws, Weekly Compilation 
of Presidential Documents and the Privacy Act Compilation are available 
in electronic format at www.access.gpo.gov/nara (``GPO Access''). For 
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    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public

[[Page vii]]

law numbers, Federal Register finding aids, and related information. 
Connect to NARA's web site at www.nara.gov/fedreg. The NARA site also 
contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

July 1, 1999.



[[Page ix]]



                               THIS TITLE

    Title 32--National Defense is composed of six volumes. The parts in 
these volumes are arranged in the following order: parts 1-190, parts 
191-399, parts 400-629, parts 630-699, parts 700-799, and part 800 to 
end. The contents of these volumes represent all current regulations 
codified under this title of the CFR as of July 1, 1999.

    The current regulations issued by the Department of Defense appear 
in the volumes containing parts 1-190 and parts 191-399; those issued by 
the Department of the Army appear in the volumes containing parts 400-
629 and parts 630-699; those issued by the Department of the Navy appear 
in the volume containing parts 700-799, and those issued by the 
Department of the Air Force, Defense Logistics Agency, Selective Service 
System, Central Intelligence Agency, Information Security Oversight 
Office, National Security Council, Office of Science and Technology 
Policy, Office for Micronesian Status Negotiations, Office of the Vice 
President of the United States, and Presidential Commission on the 
Assignment of Women in the Armed Forces appear in the volume containing 
part 800 to end.

    For this volume, Shelley C. Featherson was Chief Editor. The Code of 
Federal Regulations is published under the direction of Frances D. 
McDonald, assisted by Alomha S. Morris.

[[Page x]]





[[Page 1]]



                       TITLE 32--NATIONAL DEFENSE




                 (This volume contains parts 191 to 399)

  --------------------------------------------------------------------
                                                                    Part

             SUBTITLE A--Department of Defense (Continued):

Chapter I--Office of the Secretary of Defense (Continued).....       191

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                        Subtitle A--Department of

                           Defense (Continued)

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       CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE (CONTINUED)       



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                       SUBCHAPTER M--MISCELLANEOUS
Part                                                                Page
191             The DOD Civilian Equal Employment 
                    Opportunity (EEO) Program...............          11
192             Equal opportunity in off-base housing.......          18
193             Highways for national defense...............          26
194             International co-production projects and 
                    agreements between the United States and 
                    other countries or international 
                    organizations...........................          28
195             Nondiscrimination in Federally assisted 
                    programs of the Department of Defense--
                    Effectuation of Title VI of the Civil 
                    Rights Act of 1964......................          30
196             [Reserved]
199             Civilian Health and Medical Program of the 
                    Uniformed Services (CHAMPUS)............          41
203             Technical Assistance for Public 
                    Participation (TAPP) in defense 
                    environmental restoration activities....         315
204             User charges................................         325
205             End use certificates (EUCs).................         332
206             National Security Education Program (NSEP) 
                    grants to institutions of higher 
                    education...............................         334
207-209         [Reserved]
210             Enforcement of State traffic laws on DoD 
                    installations...........................         340
211             DoD Foreign Tax Relief Program..............         341
212             Private organizations on DoD installations..         344
215             Employment of military resources in the 
                    event of civil disturbances.............         347
216             Military Recruiting and Reserve Officer 
                    Training Corps Program access to 
                    institutions of higher education........         354

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218             Guidance for the determination and reporting 
                    of nuclear radiation dose for DoD 
                    participants in the atmospheric nuclear 
                    test program (1945-1962)................         359
219             Protection of human subjects................         364
220             Collection from third party payers of 
                    reasonable costs of healthcare services.         375
221             Department of Defense participation in the 
                    National Practitioner Data Bank (NPDB)..         385
223             Department of Defense Unclassified 
                    Controlled Nuclear Information (DoD 
                    UCNI)...................................         387
224             DoD Committee Management Program............         394
226             Shelter for the homeless....................         396
228             Security Protective Force...................         398
229             Protection of archaeological resources: 
                    uniform regulations.....................         400
230             Procedures governing banking offices on DoD 
                    installations...........................         414
231             Financial institutions on DoD installations.         425
231a            Procedures governing credit unions on DoD 
                    installations...........................         431
234             Conduct on the Pentagon Reservation.........         440
235             Sale or rental of sexually explicit material 
                    on DoD property.........................         445
237a            Public affairs liaison with industry........         447
238             Armed Forces community relations............         449
239             Homeowners Assistance Program--application 
                    processing..............................         473
240             Criteria and procedures for providing 
                    assistance to local educational agencies         481
242             Admission policies and procedures for the 
                    School of Medicine, Uniformed Services 
                    University of the Health Sciences.......         484
242a            Public meeting procedures of the Board of 
                    Regents, Uniformed Services University 
                    of the Health Sciences..................         489
242b            General procedures and delegations of the 
                    Board of Regents of the Uniformed 
                    Services University of the Health 
                    Sciences................................         494
243             Intergovernmental coordination of DoD 
                    Federal development programs and 
                    activities..............................         498
245             Plan for the security control of air traffic 
                    and air navigation aids (short title: 
                    SCATANA)................................         500
246             Stars and Stripes (S&S) newspaper and 
                    business operations.....................         511
247             Department of Defense newspapers, magazines 
                    and Civilian Enterprise publications....         524
248             Department of Defense periodicals...........         543

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249             Presentation of DoD-related scientific and 
                    technical papers at meetings............         545
250             Withholding of unclassified technical data 
                    from public disclosure..................         550
252             Department of Defense offshore military 
                    activities program......................         558
253             Assignment of American National Red Cross 
                    and United Service Organizations, Inc., 
                    employees to duty with the Military 
                    Services................................         560
254             Teacher and Teacher's Aide Placement 
                    Assistance Program......................         561
256             Air installations compatible use zones......         566
257             Acceptance of service of process............         574
258             Cooperation with allies in research and 
                    development of defense equipment........         575
259             Uniform relocation assistance and real 
                    property acquisition for Federal and 
                    federally-assisted programs.............         577
260             Vending facility program for the blind on 
                    Federal property........................         577
261             Armed Services military club and package 
                    stores..................................         583
263             Traffic and vehicle control on certain 
                    Defense Mapping Agency sites............         585
264             International interchange of patent rights 
                    and technical information...............         586
266             Audits of State and local governments, 
                    institutions of higher education, and 
                    other nonprofit institutions............         589
268             Collecting and reporting of foreign 
                    indebtedness within the Department of 
                    Defense.................................         592
269             Civil monetary penalty inflation adjustment.         595
270             Compensation of certain former operatives 
                    incarcerated by the Democratic Republic 
                    of Vietnam..............................         596
271             Obtaining information from financial 
                    institutions............................         609
272             Administration and support of basic research 
                    by the DoD..............................         611
274             Regulations governing competitive bidding on 
                    U.S. Government guaranteed military 
                    export loan agreements..................         612
275             Obtaining information from financial 
                    institutions: Rights to Financial 
                    Privacy Act of 1978.....................         614
277             Implementation of the Program Fraud Civil 
                    Remedies Act............................         622

            SUBCHAPTER N--FREEDOM OF INFORMATION ACT PROGRAM

285             DOD Freedom of Information Act (FOIA) 
                    Program.................................         637

[[Page 8]]

286             DoD Freedom of Information Act Program 
                    Regulation..............................         638
286h            Release of Acquisition-Related Information..         692
287             Defense Information Systems Agency (DISA) 
                    Freedom of Information Act Program......         695
290             Defense Contract Audit Agency (DCAA) Freedom 
                    of Information Act Program..............         697
291             Defense Nuclear Agency (DNA) Freedom of 
                    Information Act Program.................         711
292             Defense Intelligence Agency (DIA) Freedom of 
                    Information Act.........................         726
293             Defense Mapping Agency (DMA) Freedom of 
                    Information Act Program.................         731
295             Office of the Inspector General, Freedom of 
                    Information Act Program.................         737
296             National Reconnaissance Office Freedom of 
                    Information Act Program regulation......         757
298             Defense Investigative Service (DIS) Freedom 
                    of Information Act Program..............         759
299             National Security Agency (NSA) Freedom of 
                    Information Act Program.................         761

                      SUBCHAPTER O--PRIVACY PROGRAM

310             DoD Privacy Program.........................         763
311             OSD Privacy Program.........................         815
312             Office of the Inspector General (OIG) 
                    Privacy Program.........................         822
313             The Chairman of the Joint Chiefs of Staff 
                    and the Joint Staff Privacy Program.....         828
314             Defense Advanced Research Projects Agency, 
                    Privacy Act of 1974.....................         828
315             Uniformed Services University of Health 
                    Sciences, Privacy Act of 1974...........         829
316             Defense Information Systems Agency Privacy 
                    Program.................................         829
317             Defense Contract Audit Agency Privacy Act 
                    Program.................................         833
318             Defense Threat Reduction Agency (DTRA)......         880
319             Defense Intelligence Agency Privacy Program.         885
320             National Imagery and Mapping Agency (NIMA) 
                    Privacy Program.........................         889
321             Defense Investigative Service, Privacy Act 
                    of 1974.................................         895
322             Privacy Act systems of records--disclosures 
                    and amendment procedures--specific 
                    exemptions, National Security Agency....         907
323             Defense Logistics Agency Privacy Program....         915

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324             DFAS Privacy Act Program....................         940

                 SUBCHAPTER P--OBTAINING DOD INFORMATION

336             Publications of proposed and adopted 
                    regulations affecting the public........         949
337             Availability of DoD directives, DoD 
                    instructions, DoD publications, and 
                    changes.................................         952
338             Availability to the public of Defense 
                    Nuclear Agency (DNA) instructions and 
                    changes thereto.........................         952

                        SUBCHAPTER Q  [RESERVED]

                  SUBCHAPTER R--ORGANIZATIONAL CHARTERS

342             Department of Defense Civilian Personnel 
                    Management Service......................         954
343             Under Secretary of Defense for Personnel and 
                    Readiness (USD(P&R))....................         956
344             Assistant Secretary of Defense for Reserve 
                    Affairs (ASD(RA)).......................         959
345             Department of Defense section 6 schools.....         961
346             Department of Defense education activity....         964
347             Department of Defense Dependents Schools 
                    (DoDDS).................................         966
348             Defense Medical Programs Activity (DMPA)....         970
350             Assistant Secretary of Defense for Command, 
                    Control, Communications, and 
                    Intelligence (ASD(C31)).................         972
352a            Defense Finance and Accounting Service 
                    (DFAS)..................................         975
353             Assistant Secretary of Defense (Legislative 
                    Affairs)................................         978
362             Defense Information Systems Agency (DISA)...         979
363             Defense Security Assistance Agency..........         987
364             Washington Headquarters Services............         989
365             Office of Economic Adjustment...............         993
366             Assistant Secretary of Defense (Program 
                    Analysis and Evaluation)................         995
367             Assistant Secretary of Defense for Health 
                    Affairs.................................         997
367a            Uniformed Services University of the Health 
                    Sciences (USUHS)........................         999
368             Functions of the Department of Defense and 
                    its major components....................        1003
369             Principal Deputy Under Secretary of Defense 
                    for Acquisition and Technology 
                    (PDUSD(A&T))............................        1016
370             DoD Health Council..........................        1016
371             Defense Prisoner of War/Missing in Action 
                    Office (DPMO)...........................        1019
373             Inspector General of the Department of 
                    Defense.................................        1020

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376             Department of Defense Support Activities 
                    (DSAs)..................................        1025
377             Defense Investigative Service (DIS).........        1028
378             Assistant to the Secretary of Defense for 
                    Intelligence Oversight (ATSD(IO)).......        1032
380             Director of Operational Test and Evaluation.        1034
381             Defense Nuclear Agency......................        1037
382             Under Secretary of Defense (Acquisition)....        1042
383a            Defense Commissary Agency (DeCA)............        1049
384             Under Secretary of Defense for Acquisition 
                    and Technology..........................        1053
385             Defense Intelligence Agency.................        1058
386             Central Imagery Office......................        1063
387             Defense Contract Audit Agency...............        1066
388             Ballistic Missile Defense Organization 
                    (BMDO)..................................        1069
390             Armed Forces Radiobiology Research Institute        1074
391             Director of Administration and Management...        1077
392             Director of Small and Disadvantaged Business 
                    Utilization.............................        1078
394             General Counsel of the Department of Defense        1080
395             Defense Legal Services Agency...............        1081
396             DoD coordinator for drug enforcement policy 
                    and support.............................        1083
398             Defense Logistics Agency (DLA)..............        1084
399             Defense Mapping Agency (DMA)................        1089

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                       SUBCHAPTER M--MISCELLANEOUS





PART 191--THE DOD CIVILIAN EQUAL EMPLOYMENT OPPORTUNITY (EEO) PROGRAM--Table of Contents




Sec.
191.1  Purpose.
191.2  Applicability and scope.
191.3  Definitions.
191.4  Policy.
191.5  Responsibilities.
191.6  Procedures.
191.7  Civilian EEO program staff.
191.8  Defense equal opportunity council and EEO boards.
191.9  Information requirements.
191.10  Effective date.

    Authority: 5 U.S.C. 301, 10 U.S.C. 113.

    Source: 53 FR 30990, Aug. 17, 1988, unless otherwise noted.



Sec. 191.1  Purpose.

    This part:
    (a) Implements the DoD Humans Goals Charter; 29 U.S.C. 791, 792, 
793, and 795; guidance from the Equal Employment Opportunity Commission 
(EEOC); guidance from the Office of Personnel Management (OPM); 
Executive Order 11830; General Services Administration Order ADM 
5420.71A; Executive Orders 11141; 11246 Part II, 11375, and 12086; 
Office of Management and Budget (OMB) Circular No. A-11; 42 U.S.C. 
2000E-16; Executive Order 11478; 38 U.S.C. 2014; 29 U.S.C. 631(b) and 
633a; 5 U.S.C. chapters 43 and 72; Secretary of Defense Policy on Sexual 
Harassment, July 17, 1981; Assistant Secretary of Defense (Manpower, 
Reserve Affairs and Logistics) Multiple Addressee Memorandum, August 16, 
1981; and 29 U.S.C. 206(d) by establishing the Civilian Equal Employment 
Opportunity (EEO) Program, to include affirmative action programs, 
consistent with guidance from the Equal Employment Opportunity 
Commission (EEOC), Office of Personnel Management (OPM), and the DoD 
Human Goals Charter.
    (b) Consolidates in a single document provisions of Secretary of 
Defense Multiple Addressee Memorandum, June 23, 1981; DoD Directive 
1100.11, DoD Directive 1450.1, DoD Directive 5120.46, and DoD Directive 
1100.15, therefore cancelling each document.
    (c) Authorizes, as an integral part of the Civilian EEO Program, the 
establishment of Special Emphasis Programs (SEPs) entitled the Federal 
Women's Program (FWP), the Hispanic Employment Program (HEP), and the 
Program for People with Disabilities (PPD), the Asian/Pacific Islander 
Employment Program (AEP), the American Indian/Alaskan Native Employment 
Program (AIEP), and the Black Employment Program (BEP).
    (d) Establishes the Defense Equal Opportunity Council (DEOC), the 
Civilian EEO Review Board, the SEP Boards.
    (e) Authorizes the issuance of DoD Instructions and Manuals to 
implement this part and guidance from standard-setting agencies such as 
EEOC and OPM, consistent with DoD 5025.1-M.

[53 FR 30990, Aug. 17, 1988, as amended at 56 FR 10170, Mar. 11, 1991; 
57 FR 35755, Aug. 11, 1992]



Sec. 191.2  Applicability and scope.

    This part:
    (a) Applies to the Office of the Secretary of Defense (OSD) and 
activities supported administratively by OSD, the Military Departments, 
the Organization of the Joint Chiefs of Staff (as an element of the OSD 
for the purposes of this program), the Unified and Specified Commands, 
the Defense Agencies, the Army and Air Force Exchange Service, the 
National Guard Bureau, the Uniformed Services University of the Health 
Sciences, the Office of Civilian Health and Medical Programs of the 
Uniformed Services, and the DoD Dependents Schools (hereafter referred 
to collectively as ``DoD Components'').
    (b) Applies worldwide to all civilian employees and applicants for 
civilian employment within the Department of Defense in appropriated and 
non-appropriated fund positions.
    (c) Does not apply to military personnel, for whom equal opportunity 
is covered by DoD Directive 1350.2 \1\.
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    \1\ Copies may be obtained from the National Technical Information 
Service, 5285 Port Royal Road, Springfield, VA 22161.

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    (d) Covers Federal employment issues under section 504 of the 
Rehabilitation Act of 1973, as amended, even though DoD Directive 1020.1 
\2\ implements section 504 with respect to programs conducted and 
assisted by the Department of Defense. The standards established under 
section 501 of the Rehabilitation Act of 1973, as amended, (29 U.S.C. 
791, 792, 793, and 795), are to be applied under section 504 of the Act 
with respect to civilian employees and applicants for civilian 
employment in Federal Agencies.
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    \2\ See footnote 1 to Sec. 191.2(c).

[53 FR 30990, Aug. 17, 1988, as amended at 56 FR 10170, Mar. 11, 1991]



Sec. 191.3  Definitions.

    Affirmative action. A tool to achieve equal employment opportunity. 
A program of self-analysis, problem identification, data collection, 
policy statements, reporting systems, and elimination of discriminatory 
policies and practices, past and present.
    Age. A prohibited basis discrimination. For purposes of this 
Directive, persons protected under age discrimination provisions are 
those 40 years of age or older, except when a maximum age requirement 
has been established by statute or the OPM. Aliens employed outside the 
limits of the United States are not covered by this definition.
    Discrimination. Illegal treatment of a person or group based on 
race, color, national origin, religion, sex, age, or disability.
    Equal Employment Opportunity (EEO). The right of all persons to work 
and advance on the basis of merit, ability, and potential, free from 
social, personal, or institutional barriers of prejudice and 
discrimination.
    Minorities. All persons classified as black (not of Hispanic 
origin), Hispanic, Asian or Pacific Islander, and American Indian or 
Alaskan Native.
    National origin. A prohibited basis for discrimination. An 
individual's place of origin or his or her ancestor's place of origin or 
the possession of physical, cultural, or linguistic characteristics of a 
national origin group.
    People with disabilities. People who have physical or mental 
impairments that substantially limits one or more major life activities, 
has a record of such impairment, or is regarded as having such an 
impairment. For purposes of this part, such term does not include any 
individual who is an alcoholic or drug abuser and whose current use of 
alcohol or drugs prevents such individual from performing the duties of 
the job in question, or whose employment, by reason of such current 
alcohol or drug abuse, would constitute a direct threat to property or 
to the safety of others. As used in this paragraph:
    (a) Physical or mental impairment. Any physiological disorder or 
condition, cosmetic disfigurement, or anatomical loss affecting one or 
more of the following body systems: neurological; musculoskeletal and 
special sense organs; respiratory, including speech organs; 
cardiovascular; reproductive; digestive; genitourinary; hemic and 
lymphatic; skin; and endocrine; or any mental or psychological disorder, 
such as mental retardation, organic brain syndrome, emotional or mental 
illness, and specific learning disabilities.
    (b) Major life activities. Functions such as caring for one's self, 
performing manual tasks, walking, seeing, hearing, speaking, breathing, 
learning, and working.
    (c) Has a record of such impairment. Has a history of, or has been 
misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (d) Is regarded as having an impairment. Has:
    (1) A physical or mental impairment that does not substantially 
limit major life activities but is treated by an employer as 
constituting such a limitation;
    (2) A physical or mental impairment that substantially limits major 
life activities only as a result of the attitude of others toward such 
impairment; or
    (3) None of the impairments defined above but is treated by an 
employer as having an impairment.
    Race. A prohibited basis for discrimination. For purposes of this 
part, all persons are classified as black (not of Hispanic origin), 
Hispanic, Asian or Pacific Islander, American Indian or Alaskan Native, 
and White, as follows:

[[Page 13]]

    (a) Black (not of Hispanic origin). A person having origins in any 
of the black racial groups of Africa.
    (b) Hispanic origin. A person of Mexican, Puerto Rican, Cuban, 
Central or South American or other Spanish culture or origin regardless 
of race.
    (c) Asian or Pacific Islander. A person having origin in any of the 
original peoples of the Far East, Southeast Asia, the Indian 
subcontinent, or the Pacific Islands. This area includes, for example, 
China, India, Japan, Korea, the Philippine Islands, and Samoa.
    (d) American Indian or Alaskan Native. A person having origins in 
any of the original peoples of North America, and who maintains cultural 
identification through tribal affiliation or community recognition.
    (e) White. A person having origins in any of the original peoples of 
Europe, North Africa, or the Middle East.
    Religion. Traditional systems of religious belief and moral or 
ethical beliefs as to what is right and wrong that are sincerely held 
with the strength of traditional religious views. The phrase ``religious 
practice'' as used in this part includes both religious observances and 
practices. DoD Components are expected to accommodate an employee's 
religious practices unless doing so causes undue hardship on the conduct 
of the Component's business.
    Sexual Harassment. A form of sex discrimination that involves 
unwelcomed sexual advances, requests for sexual favors, and other verbal 
or physical conduct of a sexual nature when:
    (a) Submission to or rejection of such conduct is made either 
explicitly or implicitly a term or condition of a person's job, pay, or 
career; or
    (b) Submission to or rejection of such conduct by a person is used 
as a basis for career or employment decisions affecting that person, or
    (c) Such conduct interferes with an individual's performance or 
creates an intimidating, hostile, or offensive environment.

Any person in a supervisory or command position who uses or condones 
implicit or explicit sexual behavior to control, influence, or affect 
the career, pay, or job of a military member of civilian employee is 
engaging in sexual harassment. Similarly, any military member of 
civilian employee who makes deliberate or repeated unwelcomed verbal 
comments, gestures, or physical contact of a sexual nature is also 
engaging in sexual harassment.
    Special Emphasis Program (SEPs). Programs established as integral 
parts of the overall EEO program to enhance the employment, training, 
and advancement of a particular minority group, women, or people with 
disabilities.
    Standard-setting agencies. Non-DoD Federal Agencies authorized to 
establish Federal Government-wide EEO policy or program requirements. 
The term includes the EEOC; OPM: DoL, Office of Federal Contract 
Compliance Programs (OFCCP); and OMB.

[53 FR 30990, Aug. 17, 1988, as amended at 54 FR 15752, Apr. 19, 1989; 
57 FR 35755, Aug. 11, 1992]



Sec. 191.4  Policy.

    It is DoD Policy to:
    (a) Recognize equal opportunity programs, including affirmative 
action programs, as essential elements of readiness that are vital to 
the accomplishment of the DoD national security mission. Equal 
employment opportunity is the objective of affirmative action programs.
    (b) Develop and implement affirmative action programs to achieve the 
objective of a civilian work force in which the representation of 
minorities, women, and people with disabilities at all grade levels, in 
every occupational series, and in every major organization element is 
commensurate with the representation specified in EEOC and OPM guidance. 
Such programs, which shall be designed to identify, recruit, and select 
qualified personnel, shall be coordinated with the cognizant legal 
offices.
    (c) Ensure that Civilian EEO Program activities for minorities, 
women, and people with disabilities are integrated fully into the 
civilian personnel management system.
    (d) Assess progress in DoD Component programs in accordance with the 
affirmative action goals of the Department of Defense.

[[Page 14]]

    (e) Prohibit discrimination based on race, color, religion, sex, 
national origin, mental or physical disability, or age.
    (f) Eliminate barriers and practices that impede equal employment 
opportunity for all employees and applicants for employment, including 
sexual harassment in the work force and at work sites and architectural, 
transportation, and other barriers affecting people with disabilities.

[53 FR 30990, Aug. 17, 1988, as amended at 54 FR 15752, Apr. 19, 1989; 
57 FR 35756, Aug. 11, 1992]



Sec. 191.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Force Management and 
Personnel (ASD(FM&P)), or designee, shall:
    (1) Represent the Secretary of Defense in all matters related to the 
DoD Civilian EEO Program, consistent with DoD Directive 5124.2 \3\
---------------------------------------------------------------------------

    \3\ See footnote 1 to Sec. 191.2(c).
---------------------------------------------------------------------------

    (2) Establish and chair the DEOC.
    (3) Establish a Civilian EEO Review Board.
    (4) Develop policy and provide program oversight for the Civilian 
EEO Program.
    (5) Ensure full implementation of this part, monitor progress of 
affirmative action program elements, and advise the Secretary of Defense 
on matters relating to the Civilian EEO Program.
    (6) Ensure that realistic goals that provide for significant 
continuing increases in the percentages of minorities, women, and people 
with disabilities in entry, middle, and higher grade positions in all 
organizations and occupations are set and accomplished until the overall 
DoD objective is met and sustained.
    (7) Prepare a new DoD Human Goals Charter each time a new Secretary 
of Defense is appointed.
    (8) Ensure fair, impartial, and timely investigation and resolution 
of complaints of discrimination in employment, including complaints of 
sexual harassment.
    (9) Establish DoD SEPs for the FWP, HEP, HIP, AEP, AIEP, and BEP.
    (10) Establish DoD Special Emphasis Program Boards to assist with 
implementation of SEPs under this part.
    (11) Establish DoD Civilian EEO Award Programs to provide for the 
annual issuance of Secretary of Defense Certificates of Merit to DoD 
Components and individuals for outstanding achievement in the major 
areas covered by this part, and to review all awards and management 
training programs within the Department of Defense to ensure that 
minorities, women, and people with disabilities receive full and fair 
consideration consistent with their qualifications and the applicable 
program criteria.
    (12) Issue implementing instructions and other documents, as 
required, to achieve the goals of the DoD Civilian EEO Program and to 
provide policy direction and overall guidance to the DoD Components.
    (13) Represent the Department of Defense on programmatic EEO matters 
with EEOC, OPM, the Department of Justice, other Federal Agencies, and 
Congress.
    (14) Represent the Department of Defense on the Interagency 
Committee on Handicapped Employees under E.O. 11830, as amended, and the 
Council on Accessible Technology under General Services Administration 
Order ADM 5420.71A.
    (15) Represent the Department of Defense at meetings and conferences 
of non-Federal organizations concerned with EEO programs, and coordinate 
DoD support of such organizations' activities with the Assistant 
Secretary of Defense (Public Affairs) and with DoD General Counsel in 
accordance with DoD Directive 5410.18 \4\, DoD Instruction 5410.19 \5\, 
DoD Directive 5500.2 \6\, and DoD Directive 5500.7 \7\.
---------------------------------------------------------------------------

    \4\ See footnote 1 to Sec. 191.2(c).
    \5\ See footnote 1 to Sec. 191.2(c).
    \6\ See footnote 1 to Sec. 191.2(c).
    \7\ See footnote 1 to Sec. 191.2(c).
---------------------------------------------------------------------------

    (16) Serve as the DoD liaison with the Office of Federal Contract 
Compliance Programs (OFCCP), Department of Labor (DoL), for the purpose 
of providing contract information, forwarding complaints of 
discrimination filed against DoD contractors, and implementing 
administrative sanctions imposed against DoD contractors for

[[Page 15]]

violations of E.O. 11141; E.O. 11246; as amended by E.O. 11375, E.O. 
12088; and DoL implementing regulations.
    (17) Ensure that the DoD FAR Supplement contains appropriate 
contract provisions for EEO for Government contractors and 
subcontractors under Executive Orders 11141, 11246 Part II, 11375, and 
12086; Section 402 of the Vietnam Era Veterans' Readjustment Assistance 
Act of 1974, as amended; Section 503 of the Rehabilitation Act of 1973, 
as amended; and DoL implementing regulations.
    (b) The Heads of DoD Components, or their designees, shall:
    (1) Ensure that all EEO policies are disseminated widely and that 
they are understood and implemented at all levels within their 
Components.
    (2) Ensure that their Components comply with EEOC and OPM guidance 
and this part and that minorities, women, and people with disabilities 
receive full and fair consideration for civilian employment in all grade 
levels, occupations, and major organizations, with special emphasis on 
mid-level and higher grades and executive-level jobs, including the 
Senior Executive Service (SES) and SES candidate pools.
    (3) Treat equal opportunity and affirmative action programs as 
essential elements of readiness that are vital to accomplishment of the 
national security mission.
    (4) Designate a Director of Civilian Equal Opportunity and allocate 
sufficient staff and other resources to ensure a viable EEO program 
under this Directive. This includes assignment of staff to be 
responsible for EEO and affirmative action programs generally and SEP 
Managers for the SEPs established under this part at the Component 
level.
    (5) Establish DoD SEPs, for the FWP, HEP, PPD, AEP, AIEP, and BEP at 
Headquarters level and at all field activities levels unless exemptions 
are granted to field activities. Authority to grant exceptions to field 
activities of DoD Components is delegated to the Component Heads who, in 
turn, may redelegate this authority.
    (6) Require that EEO be included in critical elements in the 
performance appraisals of all supervisors, managers, and other Component 
personnel, military and civilian, with EEO responsibilities.
    (7) Ensure fair, impartial, and timely investigation and resolution 
of complaints of discrimination in employment, including complaints of 
sexual harassment.
    (8) Set realistic Component goals and motivate subordinate managers 
and supervisors to set and meet their own goals until overall DoD and 
Component goals are met and sustained.
    (9) Evaluate employment policies, practices, and patterns within 
their respective Components and identify and correct and institutional 
barriers that restrict opportunities for recruitment, employment, 
advancement, awards, or training for minorities, women, and people with 
disabilities and ensure that EEO officers and civilian personnel 
officers provide leadership in eliminating these barriers.
    (10) Ensure that installations and activities establish focused 
external recruitment programs to produce employment applications from 
minorities, women, and people with disabilities who are qualified to 
compete effectively with internal DoD candidates for employment at all 
levels and in all occupations.
    (11) Establish a continuing EEO educational program (including 
training in the prevention of sexual harassment) for civilian and 
military personnel who supervise civilian employees.
    (12) Establish EEO Awards Programs to recognize individuals and 
organizational units for outstanding achievement in one or all of the 
major EEO areas covered by this part.
    (13) Review all award and management training programs to ensure 
that minorities, women, and people with disabilities are considered, 
consistent with their qualifications and program criteria.
    (14) At military installations having a civilian work force and 
military units, ensure that the Civilian EEO Program is managed by and 
conducted for civilian personnel only and that the Military Equal 
Opportunity Program is managed by and conducted for military personnel 
only. Any exceptions to this

[[Page 16]]

policy must be authorized by the Component head.

[53 FR 30990, Aug. 17, 1988, as amended at 56 FR 10170, Mar. 11, 1991; 
57 FR 35756, Aug. 11, 1992]



Sec. 191.6  Procedures.

    (a) Officials designated in this Directive shall allocate resources 
necessary to develop methods and procedures to ensure that all elements 
of this part are fully implemented and are in compliance with the spirit 
and intent of the DoD Human Goals Charter, laws, executive orders, 
regulatory requirements, and other Directive and Instructions governing 
the Civilian EEO Program within the Department of Defense.
    (b) Heads of DoD Components, in accordance with EEOC and OPM 
guidance and subject to oversight by and supplemental guidance from the 
ASD(FM&P), or designee shall:
    (1) Develop procedures for and implement an affirmative action 
program for minorities and women, consistent with section 717 of the 
Civil Rights Act of 1964, as amended; E.O. 11478; guidance from EEOC; 
and guidance from OPM.
    (2) Develop procedures for and implement an affirmative action 
program for people with disabilities consistent with section 501 of 
Rehabilitation Act of 1973, as amended, and guidance from EEOC.
    (3) Develop procedures for and implement an affirmative action 
program for disabled veterans, consistent with DoD Directive 
1341.6.8 This program shall be consistent with the program 
established in paragraph (b)(2) of this section and coordinated with the 
Component's PPD manager.
---------------------------------------------------------------------------

    \8\ See footnote 1 to Sec. 191.2(c).
---------------------------------------------------------------------------

    (4) Develop procedures for and implement systems for investigation 
and resolution of complaints of employment discrimination under section 
717 of the Civil Rights Act of 1964, as amended; sections 501, 503, and 
504 of the Rehabilitation Act of 1973, as amended and DoD Directive 
1020.1; section 402 of the Vietnam Era Veterans' Readjustment Assistance 
Act of 1974, as amended; the Age Discrimination in Employment Act of 
1967, as amended; guidance from EEOC; and applicable case law.
    (5) Develop procedures for and implement a Federal Equal Opportunity 
Recruitment Program for minorities and women and a comparable special 
recruitment program for people with disabilities in accordance with the 
Civil Service Reform Act of 1978; EEOC instruction concerning 
affirmative action programs for people with disabilities; guidance from 
OPM; external recruitment programs to obtain employment applications 
from minorities, women, and people with disabilities who are competitive 
with internal DoD candidates for employment at all levels.
    (6) Develop procedures for and implement all SEPs established under 
this part at the Component level. These SEPs shall be integral parts of 
the Civilian EEO Program and shall be conducted in accordance with the 
provisions of this part and applicable EEOC and OPM guidance.
    (7) Develop procedures for and implement a program to eliminate 
sexual harassment in Component work places, consistent with DoD Policy 
on Sexual Harassment memorandums, and to ensure compliance with the 
Equal Pay Act.
    (8) Develop procedures for and implement a program of employment 
preference for spouses of military personnel, in accordance with DoD 
Instruction 1404.12.\9\
---------------------------------------------------------------------------

    \9\ See footnote 1 to Sec. 191.2(c).
---------------------------------------------------------------------------

    (9) Develop procedures for and implement a selective placement 
program for people with disabilities in accordance with guidance from 
OPM. This program shall be consistent with the program established in 
paragraph (b)(2) of this section, and coordinated with the Component's 
PPD manager.
    (10) Develop procedures for and implement staffing initiatives, 
training and development programs, and upward mobility programs designed 
to increase the representation of qualified minorities, women, and 
people with disabilities on certificates of eligibility and accompanying 
lists of individuals eligible for special appointments that are provided 
to selecting officials at all levels within the Component. These

[[Page 17]]

programs should include SES candidate programs and shall be targeted in 
career field in which there is underrepresentation and a likelihood of 
vacancies (e.g., science and engineering positions).
    (11) Develop procedures for and implement a program to evaluate all 
supervisors and managers with EEO responsibilities on their 
contributions to and support of the Component's EEO program. 
Specifically, Component SES and General Manager personnel, when 
appropriate, shall have their EEO responsibilities defined as a critical 
element in their performance appraisals in accordance with the Civil 
Service Reform Act of 1978.
    (12) Develop procedures for an implement a program to participate in 
and conduct ceremonies, where appropriate, at all levels of the 
Component to observe nationally proclaimed or other specially-designated 
community activities that particularly affect minorities, women, and 
people with disabilities and that support the Civilian EEO Program. 
Military and civilian personnel should both participate whenever 
possible. Example of special observances include Dr. Martin Luther King 
Jr.'s Birthday, Black History Month, National Women's History Week, 
Women's Equality Day, Hispanic Heritage Week, National Disability 
Employment Awareness Month, and the Decade of Disabled Persons.
    (13) Develop procedures for and implement a program to revise 
documents and change practices and policies that discriminate against 
civilian personnel on the basis or race, color, sex, religion, national 
origin, mental or physical disability, or age.
    (14) Develop procedures for and implement and affirmative action 
program for the continued Federal employment of minorities, women, and 
people with disabilities who have lost their jobs in DoD Components 
because of contracting decisions made under OMB Circular No. A-76. 
(Under OMB Circular Federal employees have, in general, the right of 
first refusal of employment under these contracts.)
    (15) Develop precedures for and implement a program for computer 
support of employees with disabilities consistent with DoD participation 
in activities of the Council on Accessible Technology in accordance with 
General Services Administration Order ADM 5420.71A.

[53 FR 30990, Aug. 17, 1988, as amended at 54 FR 15752, Apr. 19, 1989; 
57 FR 35756, Aug. 11, 1992]



Sec. 191.7  Civilian EEO program staff.

    (a) EEO Managers, including SEP Managers and other staff who are 
responsible for EEO and affirmative action programs, shall function at a 
level that is sufficiently responsible with the assigned organization to 
enable them to communicate effectively the goals and objectives of the 
program and to enable them to obtain the understanding, support, and 
commitment of managers and other officials at all levels within the 
organization.
    (b) It shall be the responsibility of EEO Managers, SEP Managers, 
and other program staff to develop, coordinate, implement, and recommend 
to managers, other officials, and covered groups the policy, guidance, 
information, and activities necessary to attain the goals of the SEPs 
and the overall DoD Civilian EEO Program.



Sec. 191.8  Defense equal opportunity council and EEO boards.

    (a) The DEOC shall be chaired by the ASD (FM&P) and shall coordinate 
policy for and review civilian and military equal opportunity programs, 
monitor progress of program elements, and advise the secretary of 
Defense on pertinent matters. One of the mandates of the DEOC shall be 
to pursue an aggressive course of action to increase the numbers of 
minorities, women, and people with disabilities in management and 
executive positions at grades 13 and above, including the SES and, at 
the request of the Secretary of Defense, Schedule C, and other noncareer 
executive positions in the SES and on the Executive Schedule. Members of 
the DEOC shall include the assistant Secretary of Defense (Reserve 
Affairs), Director of Administration and Management, and the Assistant 
Secretaries with responsibility for personnel policy and reserve affairs 
in the Military Departments.
    (b) The Civilian EEO Review Board shall be chaired by the ASD(FM&P), 
or

[[Page 18]]

designee. The Board shall support the DEOC and shall be made up of 
designated EEO and personnel representatives from the DoD Components and 
such other individuals as may be necessary to carry out the work of the 
DEOC and implement this part. The Board shall work with career 
management officials, other key management officials, and union 
representatives in developing policies, programs, and objectives.
    (c) The DoD SEP Boards shall be chaired by the DoD SEP Managers. 
These Boards shall be comprised of designated SEP Managers from the DoD 
Components and such other individuals as may be necessary to advise and 
assist in EEO activities and policy development in the Department of 
Defense. The Boards shall work with career management officials, other 
key management officials, and union representatives in developing 
policies, programs, and objectives.
    (d) The DEOC, Civilian EEO Review Board, and each SEP Board 
established at the DoD level shall have a Charter that describes its 
organization, management, functions, and operating procedures, 
consistent with DoD Directive 5105.18.\1\\0\
---------------------------------------------------------------------------

    \1\\0\ See footnote 1 to Sec. 191.2(c).
---------------------------------------------------------------------------

    (e) Civilian EEO Review Boards and SEP Boards may be established at 
Component, command, and installation levels as well as the DoD level to 
assist in program activities.
    (f) Members of covered groups should be represented on Civilian EEO 
Review Boards, SEP Boards, and subcommittees at all levels; and 
consideration should be given to participation by military personnel and 
by Federal employees who are union representatives.

[53 FR 30990, Aug. 17, 1988, as amended at 54 FR 15752, Apr. 19, 1989; 
57 FR 35756, Aug. 11, 1992]



Sec. 191.9  Information requirements.

    (a) The ASD(FM&P) shall:
    (1) Submit an annual report to the Secretary of Defense on the 
status of the DoD EEO program. This report shall be developed from 
existing documents, such as affirmative action plan accomplishment 
reports, civil rights budget reports, semiannual discrimination 
complaint reports, and Federal Equal Opportunity Recruitment Program 
reports, plus statistical data obtained from the Defense Manpower Data 
Center and reports of visits to DoD installations.
    (2) Submit consolidated DoD annual reports on discrimination 
complaints to the EEOC in accordance with EEOC guidance. This reporting 
requirement is assigned Interagency Report Control Number 0288-EEO-NA.
    (b) Heads of DoD Components shall:
    (1) Submit annual reports on discrimination complaints to the 
ASD(FM&P), or designee, in accordance with guidance from the EEOC. This 
reporting requirement is assigned Interagency Report Control Number 
0288-EEO-NA.
    (2) Submit copies of affirmative action program plan, affirmative 
action program plan updates, and affirmative action plan accomplishment 
reports for minorities, women, and people with disabilities to the 
ASD(FM&P), or designee, in addition to copies of annual reports for the 
Federal Equal Opportunity Recruitment Program.
    (3) Ensure that designated officials submit information for an 
annual report on computer support of employees with disabilities and for 
reports on individual computer accommodations for employees with 
disabilites. These reporting requirements are assigned RCS DD-FM&P (A) 
1731 and RCS DD-FM&P (AR) 1732.

[53 FR 30990, Aug. 17, 1988, as amended at 54 FR 15752, Apr. 19, 1989; 
57 FR 35756, Aug. 11, 1992]



Sec. 191.10  Effective date.

    This part is effective May 21, 1987.



PART 192--EQUAL OPPORTUNITY IN OFF-BASE HOUSING--Table of Contents




Sec.
192.1  Purpose.
192.2  Applicability.
192.3  Definitions.
192.4  Policy.
192.5  Responsibilities.
192.6  Procedures.

Appendix A to Part 192--Checklist for Commanders
Appendix B to Part 192--Procedures and Reports


[[Page 19]]


    Authority: 42 U.S.C. 3601 et seq.

    Source: 55 FR 6248, Feb. 22, 1990, unless otherwise noted. 
Redesignated at 56 FR 32964, July 18, 1991.



Sec. 192.1  Purpose.

    This part:
    (a) Revises 32 CFR part 192.
    (b) Revises the references, policies, and procedures covering off-
base housing and fair housing enforcement.
    (c) Outlines discrimination complaint inquiries or investigative 
procedures and hearing requirements.
    (d) Deletes the requirement for each Military Department to submit a 
semi-annual housing discrimination report to the Assistant Secretary of 
Defense (Force Management and Personnel) (ASD(FM&P)).
    (e) Requires each Military Service to report to the ASD(FM&P) any 
housing discrimination cases and their results in their Annual Military 
Equal Opportunity Assessment Report to the ASD(FM&P).
    (f) Requires each Military Department to maintain all completed or 
resolved housing discrimination cases.
    (g) Emphasizes liaison with other Government (local, State, or 
Federal) agencies.

[55 FR 6248, Feb. 22, 1990. Redesignated and amended at 56 FR 32964, 
July 18, 1991]



Sec. 192.2  Applicability.

    This part applies to the Office of the Secretary of Defense (OSD), 
the Military Departments, the Joint Chiefs of Staff (JCS), the Joint 
Staff, the Unified and Specified Commands, the Inspector General of the 
Department of Defense (IG, DoD), the Uniformed Services University of 
the Health Sciences (USUHS), the Defense Agencies, and DoD Field 
Activities (hereafter referred to collectively as ``DoD Components''). 
The term ``Military Services,'' as used herein, refers to the Army, 
Navy, Air Force, and Marine Corps. DoD civilian employees (as defined in 
Sec. 192.3) will be offered the same services that members of the Armed 
Forces receive.

[55 FR 6248, Feb. 22, 1990. Redesignated and amended at 56 FR 32964, 
July 18, 1991]



Sec. 192.3  Definitions.

    Agent. Real estate agency, manager, landlord, or owner of a housing 
facility doing business with DoD personnel or a housing referral service 
(HRS).
    Area Outside the United States. Foreign countries where DoD 
personnel reside.
    Commander. The military or civilian head of any installation, 
organization, or agency of the Department of Defense who is assigned 
responsibility for the off-base housing program.
    Commuting Area. That area which is within a 1 hour commute by a 
privately-owned vehicle during rush hour and no farther than 30 miles 
from the installation, or within other limits to satisfy mission 
requirements.
    Complainant. A member of the Armed Forces (or authorized dependent 
designated by the member) or a civilian employee of the Department of 
Defense (or authorized dependent designated by the civilian employee) 
who submits a complaint of discrimination under this part.
    Discrimination. An act, policy, or procedure that arbitrarily denies 
equal treatment in housing because of race, color, religion, sex, 
national origin, age, handicap, or familial status to an individual or 
group of individuals.
    DoD Personnel. (1) Members of the Armed Forces (and their 
dependents) authorized to live off-base.
    (2) DoD civilian employees (and their dependents) who are 
transferred from one place of residence to another because of job 
requirements or recruited for job opportunities away from their current 
place of residence in the United States, and all DoD U.S. citizen 
appropriated fund and nonappropriated fund civilian employees and their 
dependents outside the United States.
    Familial Status. One or more individuals (who have not attained the 
age of 18 years) being domiciled with a parent or another person having 
legal custody of such an individual or individuals; or the designee of 
such parent or other person having such custody, with the written 
permission of such parent or other person.
    Listed Facility. A suitable housing facility (not on restrictive 
sanction) listed with the HRS as available for occupancy by DoD 
personnel.

[[Page 20]]

    Minorities. All persons classified as black (not of Hispanic 
origin), Hispanic, Asian or Pacific Islander, or American Indian or 
Alaskan native.
    Relief for the Complainant. Action taken by a commander for the 
benefit of a complainant.
    Restrictive Sanctions. Actions taken by a commander to prevent 
military personnel from moving to, or entering into a rental, lease, or 
purchase arrangement with, a housing facility, when its agent has been 
found to have discriminated against DoD personnel. Restrictive sanctions 
are effective against the agent and the facility.
    Survey. The procedure by which the HRS identifies housing resources 
to ascertain the availability of housing facilities for occupancy by DoD 
personnel.
    Verifiers. Volunteers used by the commander during the course of a 
housing discrimination investigation to determine if, in fact, housing 
discrimination is being practiced by an agent, as alleged. Verifiers are 
not required to be prospective tenants.



Sec. 192.4  Policy.

    It is DoD policy that under DoD Directive 1350.2 \1\ the Department 
of Defense is fully committed to the goal of obtaining equal treatment 
for all DoD personnel. Specific guidance on off-base housing and fair 
housing enforcement is as follows:
---------------------------------------------------------------------------

    \1\ Copies of all DoD issuances listed in this part may be obtained, 
at cost, from the National Technical Information Service, 5285 Port 
Royal Road, Springfield, VA 22161.
---------------------------------------------------------------------------

    (a) National Housing Policy. Federal law prohibits discrimination in 
housing in the United States against any person because of race, color, 
religion, sex, age, national origin, handicap, or familial status.
    (1) Title VIII of P.L. 90-284 contains the following:
    (i) The fair housing provisions.
    (ii) Outlines the responsibilities of the Secretary of Housing and 
Urban Development (HUD) with regard to Public Law 90-284.
    (iii) Requires all Executive Departments and Agencies to administer 
housing and urban development programs and activities under their 
jurisdiction in a manner that shall reflect ``affirmatively'' the 
furthering of title VIII.
    (2) Title IX of Public Law 90-284 makes it a crime to intimidate 
willfully or interfere with any person by force or threat because of 
that person's activities in support of fair housing.
    (3) Title 42 U.S.C. 1982 prohibits discrimination in housing in the 
United States. This statute protects DoD personnel.
    (4) Public Law 100-430 amends title VIII of Public Law 90-284 by 
revising the procedures for the enforcement of fair housing requirements 
and adding protected classes of individuals.
    (5) Title VIII of Public Law 90-284, as amended by Public Law 100-
430, does not limit the applicability of any reasonable local, State, or 
Federal restrictions regarding the maximum number of occupants permitted 
to occupy a dwelling. Additionally, provisions of such title VIII 
regarding familial status do not apply with respect to housing intended 
for, and solely occupied by, persons 62 years of age or older or 
intended and operated for occupancy, but at least one person 55 years of 
age or older. For guidance regarding housing occupied by those 55 years 
of age or older, use the statutory provision at section 805 b(2)(c), 102 
Stat. 1623, of Public Law 100-430.
    (b) DoD Fair Housing Policy. The Department of Defense intends that 
Federal fair housing law shall be supported and that DoD personnel shall 
have equal opportunity for available housing regardless of race, color, 
religion, sex, age, national origin, handicap, or familial status.
    (1) That policy includes the objective of eliminating discrimination 
against DoD personnel in off-base housing. That objective is not 
achieved simply by finding a place to live in a particular part of town 
or in a particular facility for a specific person.
    (2) The intent is achieved when a person meeting the ordinary 
standards of character and financial responsibility is able to obtain 
off-base housing equally as any other person anywhere in the area 
surrounding a military installation, without suffering discrimination 
based on race, color, religion,

[[Page 21]]

sex, age, national origin, handicap or familial status.
    (i) The accomplishment of this objective shall not be hampered by 
requiring the submission of a formal complaint of discrimination. A 
suspected discriminatory act, with or without the filing of a formal 
complaint, is a valid basis for investigation and, if discrimination is 
substantiated, imposition of restrictive sanctions.
    (ii) On substantiation that an agent practiced discrimination, 
restrictive sanctions shall be imposed for a minimum of 180 days.
    (iii) The fact that Public Law 90-284, 42 U.S.C. 1982, and Public 
Law 100-430 may or may not provide a remedy in a given case of 
discrimination affecting DoD personnel does not relieve a commander of 
the responsibility to ensure equal treatment and equal opportunity for 
such personnel or to impose restrictive sanctions against the agent and/
or facility, when appropriate.
    (iv) Military installations shall develop information programs to 
apprise Service members of the DoD policy and program for equal 
opportunity in off-base housing. Commanders should use local community 
resources, such as civil rights organizations, religious and service 
groups, and local information media, in support of their programs.

[55 FR 6248, Feb. 22, 1990. Redesignated and amended at 56 FR 32964, 
July 18, 1991]



Sec. 192.5  Responsibilities.

    The Secretaries of the Military Departments shall:
    (a) Ensure nondiscrimination in referring DoD personnel to off-base 
housing facilities.
    (b) Continue efforts (as described in DoD 4165.63-M \2\ to identify 
and solicit nondiscriminatory assurances for housing facilities within 
the commuting area, which are considered to be suitable for occupancy by 
Service members.
---------------------------------------------------------------------------

    \2\ See footnote 1 to Sec. 192.4.
---------------------------------------------------------------------------

    (c) Ensure that an office and staff required by DoD 4165.63-M are 
available in conjunction with the cognizant staff judge advocate or 
other legal authority to advise Service members on the following:
    (1) The procedures in this part.
    (2) The application of Public Law 90-284, 42 U.S.C. 1982, and Public 
Law 100-430 in specific situations.
    (3) The rights of individuals to pursue remedies through civilian 
channels, without recourse and in addition to the procedures prescribed 
in this part, including the right to:
    (i) Make a complaint directly to the Department of HUD and/or to the 
Department of Justice (DoJ) in the United States.
    (ii) Bring a private civil action in any court of competent 
jurisdiction.
    (d) Periodically review off-base housing procedures and policies to 
ensure effectiveness and compliance with this part. (Appendix A to this 
part is a checklist to help commanders with this review.)
    (e) Cooperate with other Government Agencies investigating housing 
discrimination complaints filed by Service members.
    (f) Ensure that each Military Service reports any housing 
discrimination cases and their results in the Annual Military Equal 
Opportunity Assessment Report required by DoD Instruction 1350.3.

[55 FR 6248, Feb. 22, 1990. Redesignated and amended at 56 FR 32964, 
July 18, 1991]



Sec. 192.6  Procedures.

    (a) Appendix B to this part contains the detailed procedures for 
assisting Service members, investigating housing complaints, and 
reporting requirements for housing discrimination complaints.
    (b) The complaint and investigative report required in section B., 
appendix B to this part is exempt from formal approval and licensing 
under DoD 7750.5-M.\3\
---------------------------------------------------------------------------

    \3\ See footnote 1 to Sec. 192.4.

[55 FR 6248, Feb. 22, 1990. Redesignated and amended at 56 FR 32965, 
July 18, 1991]

            Appendix A to Part 192--Checklist for Commanders

    A. Are all assigned personnel informed of the Equal Opportunity in 
Off-Base Housing Program requirements before obtaining housing off base?
    B. Is there an effective information program ensuring equal 
opportunity in off-base housing information program?

[[Page 22]]

    C. Are community resources being used to support the equal 
opportunity in off-base housing information program?
    D. Are housing discrimination complaints being processed within the 
required time?
    E. Are complainants being informed in writing of the results of 
housing discrimination inquiry and/or investigating actions?
    F. Are housing surveys being conducted periodically to obtain new 
listings?
    G. Are restrictive sanctions being imposed immediately for a minimum 
of 180 days on agents found to be practicing discrimination?
    H. Are the services of command representatives provided to assist 
applicants in their search for housing?
    I. Are HHS personnel and equal opportunity personnel aware of and 
sensitive to housing problems encountered by DoD personnel?
    J. Are equal opportunity in off-base housing reports being submitted 
accurately and on time?

             Appendix B to Part 192--Procedures and Reports

                     A. Off-Base Housing Procedures

    DoD personnel seeking off-base housing shall be processed as 
follows:
    1. Seen by an HRS when available (optional for DoD civilian 
personnel).
    2. Provided assistance in seeking temporary and permanent off-base 
housing, as follows:

    a. Counseling on the equal opportunity in off-base housing program 
with particular emphasis placed on reporting any indication of 
discrimination against DoD personnel in their search for housing.
    b. Counseling and personal assistance shall include the following 
services:
    (1) Offering to check by telephone the availability of selected 
listings. A record shall be made and retained for future reference of 
the date, time, and nature of any conversation confirming the 
availability of a facility. The race, color, religion, sex, national 
origin, handicap, or familial status of the applicant shall not be 
divulged. Caution must be exercised to ensure that a pattern of 
``confirmation only for minorities'' does not develop.
    (2) Offering the services of a command representative (such as a 
unit sponsor or other designated person, when available) to accompany 
and assist the applicant in the search for housing.
    (3) Explaining various discriminatory methods that may be employed 
by agents. For instance, an agent may arbitrarily refuse to accept or 
consider the applicant as a tenant, falsely indicate the unit sought has 
been rented to another applicant, or refuse to make the unit available 
under the same terms and conditions as are ordinarily applied to 
applicants for the facilities. In such instances the following shall 
apply:
    (a) The agent shall be queried on the reasons why the unit is not 
available. After all reasonable steps have been taken to ascertain 
whether any valid nondiscriminatory reason can be shown for the agent's 
rejection of the applicant, and if there appears to be no such reason, a 
reasonable effort shall be made to persuade the agent to make the unit 
available to the applicant.
    (b) The incident shall be reported immediately by the command 
representative and the applicant to the HRS for appropriate command 
action.

                 B. Complaint Procedures--United States

    Commanders shall ensure that all DoD personnel are informed of the 
scope and provisions of the DoD Equal Opportunity in Off-Base Housing 
Program and advised to report immediately to the HRS (when available) 
any form of discrimination encountered when seeking housing within a 
Civilian Community. Incidents should be reported to base agencies or 
command representatives when an HRS is not available (i.e., equal 
opportunity officer, unit commander, supervisor). A verbal or written 
statement of discriminatory policy by an agent is considered to be an 
act or incident of discrimination, and the investigative procedures 
outlined in this appendix shall be followed.
    1. Inquiry into Complaint. Complaints of off-base housing 
discrimination must receive prompt attention. An inquiry into the 
complaint shall begin within 3 working days after receipt of the 
complaint. The inquiry may be informal, but must be detailed 
sufficiently to determine if discrimination occurred. Upon receipt of a 
discrimination complaint, the HRS (if there is no HRS, a command 
designated representative) shall take the following action:
    a. Immediately notify the commander.
    b. Promptly interview the complainant to determine the details and 
circumstances of the alleged discriminatory act.
    c. Immediately telephone or visit the facility and/or agent 
concerned, if the complaint is received shortly after the time of the 
alleged act and it concerns the change in availability of a vacancy 
(i.e., ``just rented,'' etc.). Attempt to determine if a vacancy exists 
without making reference to the complaint received. Request the 
commander to authorize the use of verifiers, as necessary. (See this 
appendix, subsection B.2.)
    d. Advise the complainant of the provisions and procedures in this 
Instruction and of the right to pursue further actions through HUD, DoJ, 
and local or State agencies. Coordinate efforts with the Office of Judge 
Advocate or other cognizant legal counsel to determine

[[Page 23]]

to what extent legal assistance can be provided to the complainant. 
Assist the complainant in completing seven signed, dated, and notarized 
copies of HUD Form 903, ``Housing Discrimination Complaint.'' The fact 
that a complainant might report an act of alleged discriminatory 
treatment, but declines completing a HUD Form 903, does not relieve the 
command of responsibility for making further inquiry and taking such 
subsequent actions, as may be appropriate.
    e. Document the complainant's action for future reference and inform 
the commander of the results of the HRS preliminary inquiry and actions 
taken. The commander shall take action to assist the complainant in 
obtaining suitable housing. If, due to previous discriminatory practices 
in the community, suitable housing cannot be obtained by the complainant 
in a reasonable amount of time, the complainant and the commander may 
use this fact to justify a request for priority in obtaining military 
housing or for humanitarian reassignment. Reassignment action is a last 
resort and must be justified fully through command personnel channels.
    2. Use of Verifiers. Verifiers are authorized to determine if a 
vacancy exists and whether or not rental or such practices are 
discriminatory. Verifiers shall not be used only for determining 
sincerity or normal practices of an agent about whom the HRS has not 
received a housing discrimination complaint.
    a. When selecting and using verifiers, the following applies:
    (1) Verification of the vacancy shall be made expediently after 
alleged act of discrimination.
    (2) Verifiers may be volunteers. (The equal opportunity office is a 
possible source for identifying individuals to be used as verifiers.)
    (3) The purpose of verification is to isolate the attribute of race, 
color, religion, sex, national origin, age, handicap, or familial status 
that is the suspected basis for the alleged discrimination against the 
complainant. Except for those attributes that are considered to be the 
source of the discrimination complaint, the verifier should possess 
attributes that are similar to the complainant. If two verifiers are 
used, one may possess similar attributes to the complainant. Ideally, 
two verifiers should be used.
    b. Instructions provided to the verifiers by HRS personnel should 
include the following:
    (1) Explanation of the equal opportunity in off-base housing and 
off-base housing referral programs.
    (2) Verifiers are to obtain information only on agent and/or 
facility operating policies, practices, and procedures for subsequent 
determination of complaint validity.
    (3) Verifiers are not to make a verbal or written contract for the 
housing unit, pay any money, or say they want the housing unit.
    (4) Verifiers shall be knowledgeable concerning family composition, 
pets, and housing requirements of the complainant; they shall ask for 
identical housing requirements.
    (5) The following information shall be obtained by the verifier, if 
possible:
    (a) Concerning the Facility. What is available? Does it meet the 
requirements of the complainant? Amount of rent or cost of facility? 
Deposit required? Is an application required? What is the time between 
filing an application and permission to move in? Are there minority 
families and/or singles in the facility? Make a note of the presence or 
absence of a vacancy sign, and any other information deemed appropriate.
    (b) Concerning the Prospective Tenants/Purchasers. If possible, 
ascertain criteria and qualifications that must be met (credit rating, 
salary, marital status, deposit, written application, etc.) and obtain a 
complete description of all procedures for becoming a tenant/purchaser 
including all steps from initial inquiry to moving in. Does the agent's 
subjective impression of the applicant appear to play any part in the 
decision to rent the unit?
    (6) The verifier's statement shall be completed immediately after 
the verification visit, if possible. It shall be accurate, objective, 
and factual. Include the following in the statement:
    (a) Date, time of visit, persons contacted, positions of persons 
contacted. Include any other pertinent information obtained during 
visit; i.e., length of time employed at facility, in addition to the 
information in this appendix, subparagraph B.2.b.(5), above.
    (b) When reconstructing a conversation, write in the first person 
and try to use direct quotes. Do not use pronouns such as ``he,'' 
``she,'' or ``they.'' Clearly identify who said what to whom.
    (c) Sign and date statement. Give full name, address, telephone 
number (duty or home), race, color, religion, sex, national origin, age, 
handicap or familial status, as relevant to the complaint.
    3. Complaint Process. If the basic facts of the HRS preliminary 
inquiry appear to substantiate the complaint, the commander shall ensure 
that the following actions begin within 3 working days of receipt of the 
inquiry report:
    a. Informal Hearing. Give written notice to the agent explaining the 
nature of the complaint and the agent's right to request an informal 
hearing with the commander. The notification shall state specifically 
the nature of the discrimination complaint and the right of the agent to 
appear personally at the hearing, to be represented by an attorney, to 
present evidence, and to call witnesses. The notification also shall 
state that the agent has 5 days after receipt of the written notice to 
request a hearing. If no request

[[Page 24]]

is received within 5 days, the lack of response shall be considered as a 
waiver of the right to such hearing. The written notification either 
shall be delivered to the agent personally by a representative of the 
commander, or shall be sent to the agent by certified mail with return 
receipt requested.
    (1) Composition of an Informal Hearing. The informal hearing shall 
be conducted by the commander or designee at a convenient location. The 
agent, agent's attorney, the complainant, the complainant's attorney, 
the equal opportunity officer, the HRS, the Staff Judge Advocate or 
other cognizant legal counsel, or other designated persons may attend.
    (2) Record of Hearing. A summary of the hearing shall be made a part 
of the complaint file.
    b. Legal Review. A legal review shall be accomplished following the 
inquiry and informal hearing (if applicable) and before the commander's 
final decision that the inquiry supports or fails to support the 
complaint. The summary and other pertinent documents shall be reviewed 
for content and completeness. A statement that such a review was 
conducted and signed by the Staff Judge Advocate or other cognizant 
legal counsel performing the review shall be made a part of the case 
file. That statement shall include:
    (1) Any necessary explanatory remarks, including comments on the 
facts and evidence presented.
    (2) Information known about pending complaints brought by other 
parties on the same facility and/or agent.
    (3) Comments on the civil rights laws relevant to the particular 
case.
    4. Commander's Decision. The responsibility for imposition of 
restrictive sanctions rests with the commander and cannot be delegated. 
The commander's decision shall be based on a full and impartial review 
of all facts and the policies and requirements as stated in this part. 
The commander's options include the following:
    a. If the commander determines that more information is required, or 
for any reason further inquiry is deemed necessary, an officer shall be 
appointed from sources other than the HRS to conduct a formal inquiry or 
investigation, as the situation warrants. The officer, if not an 
attorney, shall be afforded the advice and assistance of a Staff Judge 
Advocate or other cognizant legal counsel.
    b. If, in the commander's judgment, the inquiry or investigation 
fails to support the complaint the case shall be considered closed and 
the commander shall:
    (1) Inform the complainant in writing of all actions taken and 
advise the complainant of rights to pursue further actions to include 
the following:
    (a) The right to submit a complaint to the HUD and the DoJ.
    (b) The right to bring a private civil action in a State or Federal 
court of competent jurisdiction.
    (c) The availability of legal assistance from their local Staff 
Judge Advocate or other cognizant legal counsel in pursuing civil 
redress.
    (2) Summarize in the report file the practices giving rise to the 
complaint, the actions and results of the inquiry or investigation, and 
if discriminatory practices were found, written assurances from the 
agent on future facility and/or agent practices. The following 
statement, completed by the complainant, shall be included, as part of 
the case file: ``I am (am not) satisfied with the efforts taken by the 
commander on my behalf to achieve satisfactory resolution of my off-base 
housing discrimination complaint.'' If the complainant indicates a lack 
of satisfaction, the reasons must be included in the case file.
    (3) Inform the agent of the results of the inquiry by command 
correspondence if an informal hearing was held. Such correspondence 
should reiterate DoD policy and requirements for equal opportunity in 
off-base housing.
    (4) Forward unsubstantiated complaint reports and HUD Form 903 to 
the HUD and the DoJ if requested by the complainant.
    (5) Retain a copy of the report file for 2 years for future 
reference.
    c. If the inquiry or investigation supports the complainant's charge 
of discrimination and the discriminatory act is determined by the 
commander to conflict with DoD policy, the commander shall:
    (1) Impose restrictive sanctions against the agent and/or facility 
for a minimum of 180 days. Sanctions shall remain in effect until the 
requirements in this appendix, subparagraphs B.6.a.(1) or B.6.a.(2), 
below, are met. Restrictive sanctions shall be imposed when a suspected 
discriminatory act, despite the absence of a formal complaint, is 
investigated and found valid. The fact that a validated discrimination 
complaint and/or incident has been or is scheduled to be forwarded to 
another Agency (the HUD, the DoJ, etc.) is not cause for withholding 
sanction action pending the outcome of that Agency's further review or 
investigation. When imposing a restrictive sanction, the commander 
shall:
    (a) Remove the facility listing(s) from HRO files.
    (b) Impose restrictive sanctions against all facilities owned or 
operated by the agent concerned.
    (c) Place the facility on the restrictive sanction list maintained 
by the HRS. The restrictive sanction list shall be prepared on official 
letterhead stationery, signed by the commander, and include the 
authority for and conditions of the restrictive sanctions.
    (d) Inform the agent concerned by command correspondence that:

[[Page 25]]

    (1) Restrictive sanctions have been imposed.
    (2) The reasons, nature, and minimum duration of the restrictions.
    (3) The action required for the removal of sanctions at the 
conclusion of the minimum period.

The notification of restrictive sanctions shall be sent by certified 
mail, return receipt requested or delivered to the agent personally by a 
command representative.
    (e) Provide all DoD personnel reporting to the HRS with a copy of 
the restrictive sanction list, and advise members of the Armed Forces 
that they may not rent, lease, purchase, or reside in any of the listed 
facilities. Obtain a signed acknowledgment of receipt of the restrictive 
sanction list from the HRS using a DD Form 1746, ``Application for 
Assignment to Housing.''
    (f) Advise other military installations of the restrictive sanction 
action taken when the sanctioned facility is located within the 
commuting area of their military installations.
    (2) Inform the complainant in writing of all actions taken and 
advise the complainant that his or her case will receive continuing 
action to include, if the complainant requests, forwarding the case file 
to the HUD and/or the DoJ for action.
    (3) Before forwarding the report to the respective Military 
Department, prepare a memorandum outlining the following:
    (a) The base efforts made to obtain housing relief for the 
complainant.
    (b) The impact of restrictive sanctions on the off-base housing 
program and DoD personnel and their dependents.
    (c) Any other considerations deemed relevant.
    (4) Include a statement completed by the complainant for the case 
file. (See this appendix, subparagraph B.4.b.(3), above.)
    (5) If the act of discrimination falls within existing regulations, 
forward a copy of the complaint and investigation report directly to the 
HUD within 180 days after the occurrence of the alleged discriminating 
act, using HUD Form 903. The original report shall be sent to the 
appropriate HUD Regional Office or the U.S. Department of Housing and 
Urban Development Office of Fair Housing and Equal Opportunity, 451 7th 
Street SW., Washington, DC 20410. A copy of the complaint and 
investigation report shall be forwarded to the Civil Rights Division, 
Department of Justice, Washington, DC 20530.
    (6) When more than one complaint alleging discrimination in the same 
facility or by the same agent has been received, consolidate the 
complaints for the inquiry, legal review, and commander's memorandum.
    d. When a commander receives a complaint alleging further 
discrimination in a facility or by an agent after a completed case file 
has been closed, the commander shall forward the summary of the facts on 
the subsequent complaint, outlined in this enclosure, subparagraph 
B.4.c.(6), above. Include brief comments indicating the extent to which 
the new complaint affects the previous action.
    5. Followup Actions. After forwarding the report and all required 
attachments to the HUD and the DoJ, the commander shall take the 
following actions:
    a. Cooperate with the HUD, the DoJ, and the local and State agency 
representatives during their investigation and processing of the case, 
should those entities seek assistance.
    b. Periodically determine the status of the case by maintaining 
liaison with the HUD office concerned. Contact shall be maintained until 
such time as the case is resolved by the HUD.
    c. Ensure that the complainant is kept informed directly by the HUD 
and/or the DoJ.
    d. Ensure that DoD personnel comply with the restrictive sanctions 
imposed on the facility and/or the agent. Housing personnel will comply 
with the following:
    (1) Military personnel moving into or changing their place of 
residence in the commuting area of a military installation or activity 
may not enter into a rental, purchase, or lease arrangement with an 
agent or a facility that is under restrictive sanction.
    (2) Implement procedures for ensuring that DoD personnel seeking 
housing are made aware of, and are counselled on, current restrictive 
sanctions.
    (3) Sanctions are not applicable to the DoD personnel who may be 
residing in a facility when the sanction is imposed or to the extension 
or renewal of a rental or lease agreement originally entered into before 
the imposition of the sanction. Relocation of a military tenant within a 
restricted facility is prohibited without the written approval of the 
commander.
    (4) If it is determined that a member of the Armed Forces has 
intentionally taken residency in a restricted facility contrary to 
instructions received by Housing Referal personnel, the commander shall 
take appropriate disciplinary action against that number.
    (5) Periodically publish a current listing of restricted facilities 
in the base bulletin (or other appropriate means of internal 
distribution). Minimally, such publication shall occur when there has 
been an addition or deletion to the list.
    6. Removal of Restrictive Sanction
    a. A facility and/or agent may be removed from restrictive sanction 
only if one of the following actions is taken:

[[Page 26]]

    (1) The restrictive sanction may be removed before completion of the 
180 day restrictive period if an approved waiver request is obtained 
from the senior installation commander concerned, or designee. 
Consideration shall be given to lifting an imposed sanction only in 
exceptional circumstances and in conjunction with a written assurance of 
nondiscrimination from the agent concerned.
    (2) After completion of 180 days on restrictive sanction, if the 
agent provides written assurance of future nondiscrimination to the HRS.
    b. The commander shall inform the HRS, the equal opportunity office, 
and the agent in writing of the removal from restrictive sanction.
    7. ``Privacy Act'' and ``Freedom of Information Act'' Inquiries. 
Requests for information from reports of housing discrimination shall be 
processed in accordance with 32 CFR parts 285 and 286a.

           C. Compliant Procedures--Outside the United States

    Commanders of installations or activities outside the United States 
shall ensure that all DoD personnel, on reporting to the HRS, are 
clearly informed of the scope and provisions of the DoD Equal 
Opportunity in Off-Base Housing Program and advised to report 
immediately to the HRS any form of discrimination encountered as a 
tenant, prospective tenant, or purchaser. Incidents reported to base 
agencies or representatives other than the HRS (i.e., equal opportunity 
officer, unit commander, supervisor) shall be brought to the immediate 
attention of the HRS for appropriate action. On receiving a complaint of 
discrimination, the commander and HRS shall:
    1. Consult with the Staff Judge Advocate or other cognizant legal 
counsel to determine if the laws of the country concerned (or any 
subdivision thereof) prohibit any of the actions outlined in this 
appendix, section B., above.
    2. Take actions outlined in this appendix, section B, above, except 
that a HUD Form 903 shall not be completed because reports of cases 
arising outside the United States are not forwarded to the HUD or the 
DoJ. Complainants should understand that the fair housing provisions of 
the P.L. 90-284, ``Civil Rights Act,'' Title 42, United States, 1982, 
and Public Law 100-430, ``Fair Housing Amendments Act of 1988,'' 
September 13, 1988, are not applicable in areas outside the United 
States.
    3. Determine, with legal advice, whether redress for the 
discriminatory act should be sought from authorities in the host 
country. Redress shall be based on the laws of the country (or 
subdivision thereof) concerned.

                        D. Reporting Requirements

    1. A copy of each complaint and investigative report that 
substantiates a housing discrimination shall be submitted to the 
appropriate Military Department (manpower and reserve affairs and/or the 
equal opportunity office) not later than 45 days from the date the case 
is completed. Under normal circumstances, the commander of the 
installation concerned shall complete the required investigation and 
processing complaints within 45 days from the date that a housing 
complaint is filed by a complainant.
    2. A copy of complaint and investigative reports that do not 
substantiate allegations of housing discrimination shall be kept on file 
at the installation level for a 24-month period beginning from the date 
the case was completed.



PART 193--HIGHWAYS FOR NATIONAL DEFENSE--Table of Contents




Sec.
193.1  Purpose and scope.
193.2  Applicability.
193.3  Policy.
193.4  Authorities and responsibilities.

    Authority: 5 U.S.C. 301.

    Source: 33 FR 13016, Sept. 14, 1968, unless otherwise noted.



Sec. 193.1  Purpose and scope.

    This part sets forth policy, responsibilities, and authority in 
matters pertaining to Department of Defense highway needs and, when 
appropriate, to the highway needs of other Federal agencies, during 
peacetime and emergencies in the United States and its territories and 
possessions.



Sec. 193.2  Applicability.

    The provisions of this part apply to all components of the Deparment 
of Defense.



Sec. 193.3  Policy.

    In order to insure that the national defense is served by adequate, 
safe and efficient highway transportation, it shall be the policy of the 
DoD to (a) integrate the highway needs of the national defense into the 
civil highway programs of the various State and Federal agencies, and 
(b) cooperate with those agencies in matters pertaining to the use of 
public highways and in planning their development and construction.

[[Page 27]]



Sec. 193.4  Authorities and responsibilities.

    (a) The Secretary of the Army, as the Single Manager for Military 
Traffic, Land Transportation, and Common-User Ocean Terminals (see DoD 
Directive 5160.53, Single Manager Assignment for Military Traffic, Land 
Transportation, and Common-User Ocean Terminals, March 24, 1967 (32 FR 
5295)), is hereby designated as the Executive Agent for the Department 
of Defense (hereinafter referred to as the Executive Agent), in matters 
pertaining to public highways to serve the national defense in meeting 
both peacetime and mobilization highway transportation needs in the 
United States, its territories and possessions; and highway needs of 
other Federal agencies, when appropriate. The Executive Agent, or his 
designee, under the policy guidance of the Assistant Secretary of 
Defense (Installations and Logistics), will:
    (1) Coordinate the defense transportation interest in public 
highways, including the implementation of subsection (h), section 210 of 
Title 23 U.S. Code, and integrate foreseen DoD highway needs and 
operational requirements into the highway programs of the United States, 
its territories and possessions.
    (2) Review and analyze DoD access road needs, and, when appropriate, 
those of other Federal agencies from the standpoint of approved 
transportation engineering practices, statutory provisions, and policies 
and procedures of the Bureau of Public Roads, Department of 
Transportation.
    (3) Represent the DoD in matters pertaining to highways to serve the 
national defense in liaison with the Bureau of Public Roads, the 
American Association of State Highway Officials, and other appropriate 
Government and non-Government agencies.
    (4) Certify on behalf of the Secretary of Defense to the appropriate 
Government agency, the public highway needs of the DoD and, when 
appropriate, the needs of other Federal agencies, as being important to 
the national defense. (See section 210, Title 23, U.S. Code.)
    (5) Advise and assist the Assistant Secretary of Defense 
(Comptroller) in matters pertaining to the (i) preparation and 
justification of budget requirements for defense access road needs, and 
(ii) transfer of funds appropriated for this purpose to the Bureau of 
Public Roads.
    (6) Develop and maintain an efficient relationship between the 
design of military vehicles and State and Federal standards for the 
design of public highways to ensure the effective and efficient 
utilization of such highways by military vehicles.
    (7) Provide highway traffic engineering services to DoD components, 
when requested.
    (8) Insure effective cooperation between the Department of Defense 
and state highway authorities in matters pertaining to special defense 
utilization of public highways.
    (b) The other DoD Components will:
    (1) Maintain official liaison with the Executive Agent in matters 
pertaining to the provision of public highways to serve the national 
defense and the access road needs of new or expanded DoD installations 
and activities.
    (2) Furnish the Executive Agent with information and data on current 
and potential access-road and highway-system needs on request.
    (c) The Secretaries of the Military Departments, or their designees, 
are authorized to act for the Secretary of Defense under the provisions 
of subsection (h) of section 210, Title 23, U.S. Code, in determining, 
in connection with the funding of contracts for the construction of 
classified military installations and facilities for ballistic missiles, 
that construction estimates and the bids of contractors did not include 
allowances for repairing road damages.
    (d) The Secretaries of the Military Departments and the Directors of 
DoD Agencies will program, budget, and finance for the responsibilities 
assigned by this part and their access road requirements (see Pub. L. 
90-180, Military Construction Appropriation Act, fiscal year 1968, and 
successor statutes) in accordance with applicable program and financial 
guidelines and procedures.

[[Page 28]]



PART 194--INTERNATIONAL CO-PRODUCTION PROJECTS AND AGREEMENTS BETWEEN THE UNITED STATES AND OTHER COUNTRIES OR INTERNATIONAL ORGANIZATIONS--Table of Contents




Sec.
194.1  Purpose.
194.2  Applicability and scope.
194.3  Concept.
194.4  Objectives and policies.
194.5  Responsibilities and procedures.
194.6  Security.
194.7  Reports required.
194.8  Effective date and implementation.

    Authority: 5 U.S.C. 301.

    Source: 33 FR 13016, Sept. 14, 1968, unless otherwise noted.



Sec. 194.1  Purpose.

    This part supplements the international logistics policies 
established in DoD Directive 5100.27, Delineation of International 
Logistic Responsibilities, December 29, 1964; 1 DoD Directive 
5132.3 (28 FR 7611); DoD Instruction 2000.8, Cooperative Logistic 
Support Arrangements, February 14, 1964; 1 part 258 of this 
subchapter; DoD Instruction 2015.4, Mutual Weapons Development Data 
Exchange Program and Defense Development Exchange Program, November 5, 
1963; 1DoD Directive 2100.3, ``U.S. Policy Relative to 
Commitments to Foreign Governments Under Foreign Assistance Programs, 
July 11, 1963. 1 Its purpose is to prescribe general policies 
and principles governing international co-production projects negotiated 
under agreements between the U.S. Government and eligible foreign 
governments, international organizations, foreign producers, or other 
approved agencies. Policy guidance pertaining to the general areas of 
the Military Assistance Program (MAP), Foreign Military Sales (FMS), and 
international Cooperative Logistics Support Arrangements (CLSA) is not 
affected by this part.
---------------------------------------------------------------------------

    1 Copies available from Naval Supply Depot, 5801 Tabor 
Avenue, Philadelphia, Pa. 19120, Attention: Code 300.
---------------------------------------------------------------------------



Sec. 194.2  Applicability and scope.

    The provisions of this part are applicable to those offices 
responsible for negotiation, implementation, monitorship and financial 
and management control of the co-production projects within OSD, DSA, 
and the Departments of the Army, Navy, and Air Force.



Sec. 194.3  Concept.

    (a) The term co-production as used herein encompasses any program 
wherein the U.S. Government, under the aegis of an international 
diplomatic level or Ministry of Defense-to-Department of Defense 
agreement, either directly through the FMS program, or indirectly 
through specific licensing arrangements by designated commercial firms, 
enables an eligible foreign government, international organization or 
designated commercial producer to acquire the ``know-how'' to 
manufacture or assemble, repair, maintain and operate, in whole or in 
part, a specific weapon, communication or support system, or an 
individual military item. The ``know-how'' furnished may include 
research, development production data and/or manufacturing machinery or 
tools, raw or finished materiel, components or major subassemblies, 
managerial skills, procurement assistance or quality-control procedures. 
Third country sales limitations and licensing agreements are also 
included as required.
    (b) Co-production may be limited to the assembly of a few end-items 
with a small input of local country parts, or it may extend to a major 
manufacturing effort requiring the build-up of capital industries.



Sec. 194.4  Objectives and policies.

    (a) The major objectives to be attained through co-production 
projects are to:
    (1) Enable eligible countries to improve military readiness through 
expansion of their technical and military support capability.
    (2) Promote United States-Allied standardization of military 
materiel and equipment, which, in turn, would generate the establishment 
of uniform logistics support, procedures and expanded multinational 
operational capabilities.
    (b) Co-production programs directly benefit the United States 
through:

[[Page 29]]

    (1) Creating in-country compatability with the U.S. standardized 
equipment, thereby creating Allied capability of supporting deployment 
of U.S. forces.
    (2) Promoting the standardization of materiel or equipment to 
integrate and strengthen international military operations in times of 
emergency or hostilities.
    (3) Encouraging multinational acceptance of strategic and tactical 
concepts and doctrine through the utilization of common military 
materiel.
    (4) Encouraging the creation of complementary forces in Allied 
countries.
    (5) Establishing or broadening the base for common and 
interchangeable logistics among free or Allied nations.
    (6) Serving to improve procurement, production, contract 
administration and mutual support capability of friendly Allied nations.
    (c) Co-production is considered to be an important component of the 
U.S. military foreign sales program and, as such, represents an 
essential element of U.S. foreign policy. Accordingly, it is DoD policy 
that initiation of co-production project agreements will be encouraged 
and supported by all elements of DoD under the following circumstances. 
When they:
    (1) Advance the objectives outlined in paragraphs (a) and (b) of 
this section.
    (2) Supplement and reinforce the U.S. FMS program.
    (3) Are in the best interest of the United States.



Sec. 194.5  Responsibilities and procedures.

    (a) Co-production projects may be initiated by ASD(ISA) or, subject 
to prior ASD(ISA) approval, by the Military Departments; the Military 
Assistance Advisory Groups; and by authorized representatives of foreign 
governments and international organizations.
    (1) The cognizant DoD component will ensure appropriate coordination 
with ASD(ISA) and furnish technical and negotiating assistance as 
required.
    (2) After the agreement is signed, the appropriate DoD component 
will perform necessary managerial and reporting functions.
    (b) In conformance with responsibilities assigned in DoD Directive 
5100.27.
    (1) The Assistant Secretary of Defense (International Security 
Affairs) will:
    (i) Develop and coordinate DoD positions for the negotiation of co-
production agreements with foreign governments and international 
organizations; and
    (ii) Either conduct negotiations for specific agreements, or 
delegate this responsibility to an appropriate DoD component.
    (2) The Assistant Secretary of Defense (Installations and Logistics) 
will:
    (i) Assure during coordination of formal agreements, that the 
materiel to be committed under the co-production project will not 
adversely affect the U.S. defense supply or production base, or further 
limit critical materiel; that consideration had been given to the future 
logistical support of the equipment to be produced; and
    (ii) Monitor and act as OSD coordinator for implementation of co-
production projects under formal agreements, in coordination with other 
elements of the Office of the Secretary of Defense, as required.
    (3) The Office of the General Counsel of the Department of Defense 
will assure necessary legal clearance, as required, prior to 
formalization of co-production project agreements.
    (4) The Assistant Secretary of Defense (Comptroller) will assist the 
ASD(ISA) and the ASD(I&L) during coordination, as required, of formal 
coproduction agreements by providing necessary DoD representation and 
financial guidance with respect to pricing policies for U.S. military 
services and equipment, cost sharing, and reporting requirements under 
co-production agreements as they relate to international balance of 
payments.
    (5) Other OSD organizational elements will assist ASD(I&L), as 
required, in assuring that the terms and conditions of co-production 
project agreements are met.



Sec. 194.6  Security.

    (a) Classified information and materials will be treated as 
exchanges between those governments involved and will be safeguarded by 
each government in accordance with existing agreements.

[[Page 30]]

    (b) In addition to adherence to existing security agreements, a 
security annex or clause will be developed as a part of the co-
production agreement which will cover all security factors involved.



Sec. 194.7  Reports required.

    (a) A short narrative type report will be submitted to ASD(I&L) by 
the cognizant DoD component on a quarterly basis covering all formalized 
co-production projects and agreements including pending agreements with 
a high potential of being finalized within the next three (3) quarters. 
The report will briefly state project, project officer, background 
highlights, current production and status including anticipated and 
approximate monetary return to the United States, current problem areas 
(if any) and future major events or milestones. This reporting 
requirement has been assigned Report Control Symbol DD-I&L (Q)834.
    (b) This report will be submitted in triplicate to OASD(I&L) by the 
close of the last working day of the month following the close of the 
quarter. The first report under this part will cover the quarter ending 
March 31, 1968, and be due April 30, 1968. In addition, copies will be 
forwarded to the appropriate Unified Commands and MAAG's of the 
countries involved. Further distribution may be prescribed by the 
Military Department concerned.



Sec. 194.8  Effective date and implementation.

    This part is effective immediately and encompasses all co-production 
agreements in effect or pending on the date of this part, and such 
agreements consummated subsequently.



PART 195--NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF DEFENSE--EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964--Table of Contents




Sec.
195.1  Purpose.
195.2  Definitions.
195.3  Application.
195.4  Policy.
195.5  Responsibilities.
195.6  Assurances required.
195.7  Compliance information.
195.8  Conduct of investigations.
195.9  Procedure for effecting compliance.
195.10  Hearings.
195.11  Decisions and notices.
195.12  Judicial review.
195.13  Effect on other issuances.
195.14  Implementation.

Appendix A to Part 195--Programs to Which This Part Applies

    Authority: Sec. 602, 78 Stat. 252; 42 U.S.C. 2000d-1; and the laws 
referred to in appendix A.

    Source: 29 FR 19291, Dec. 31, 1964, unless otherwise noted. 
Redesignated at 56 FR 32965, July 18, 1991.



Sec. 195.1  Purpose.

    The purpose of this part is to effectuate the provisions of Title VI 
of the Civil Rights Act of 1964 (referred to in this part as the 
``Act'') to the end that no person in the United States shall, on the 
ground of race, color, or national origin, be excluded from 
participation in, be denied the benefits of, or be otherwise subjected 
to discrimination under any program or activity receiving Federal 
financial assistance from any component of the Department of Defense.



Sec. 195.2  Definitions.

    (a) Component means the Office of the Secretary of Defense, a 
military department or a Defense agency.
    (b) Responsible Department official means the Secretary of Defense 
or other official of the Department of Defense or component thereof who 
by law or by delegation has the principal responsibility within the 
Department or component for the administration of the law extending such 
assistance.
    (c) The term United States means the States of the United States, 
the District of Columbia, Puerto Rico, the Virgin Islands, American 
Samoa, Guam, Wake Island, the Canal Zone, and the territories and 
possessions of the United States, and the term ``State'' means any one 
of the foregoing.
    (d) The term Federal financial assistance includes:
    (1) Grants and loans of Federal funds,
    (2) The grant or donation of Federal property and interests in 
property,
    (3) The detail of Federal personnel,

[[Page 31]]

    (4) The sale and lease of, and the permission to use (on other than 
a casual or transient basis), Federal property or any interest in such 
property without consideration or at a nominal consideration, or at a 
consideration which is reduced for the purpose of assisting the 
recipient, or in recognition of the public interest to be served by such 
sale or lease to the recipient, and
    (5) Any Federal agreement, arrangement, or other contract which has 
as one of its purposes the provision of assistance.
    (e) The term program includes any program, project, or activity for 
the provision of services, financial aid, or other benefits to 
individuals, or for the provision of facilities for furnishing services, 
financial aid or other benefits to individuals. The services, financial 
aid, or other benefits provided under a program receiving Federal 
financial assistance shall be deemed to include any services, financial 
aid, or other benefits provided with the aid of Federal financial 
assistance or with the aid of any non-Federal funds, property, or other 
resources required to be expended or made available for the program to 
meet matching requirements or other conditions which must be met in 
order to receive the Federal financial assistance, and to include any 
services, financial aid, or other benefits provided in or through a 
facility provided with the aid of Federal financial assistance or such 
non-Federal resources.
    (f) The term facility includes all or any portion of structures, 
equipment, or other real or personal property or interests therein, and 
the provision of facilities includes the construction, expansion, 
renovation, remodeling, alteration or acquisition of facilities.
    (g) The term recipient means any State, political subdivision of any 
State, or instrumentality of any State or political subdivision, any 
public or private agency, institution, or organization, or other entity, 
or any individual, in any State, to whom Federal financial assistance is 
extended, directly or through another recipient, for any program, 
including any successor, assign, or transferee thereof, but such term 
does not include any ultimate beneficiary under any such program.
    (h) The term primary recipient means any recipient which is 
authorized or required to extend Federal financial assistance to another 
recipient for the purpose of carrying out a program.
    (i) The term applicant means one who submits an application, 
request, or plan required to be approved by a responsible Department 
official, or by a primary recipient, as a condition to eligibility for 
Federal financial assistance, and the term ``application'' means such an 
application, request or plan.



Sec. 195.3  Application.

    This part applies to any program for which Federal financial 
assistance is authorized under a law administered by any component of 
the Department of Defense, including the federally assisted programs and 
activities listed in appendix A of this part. This directive applies to 
money paid, property transferred, or other Federal financial assistance 
extended under any such program after January 7, 1965 pursuant to an 
application approved prior to such date. This directive does not apply 
to: (a) Any Federal financial assistance by way of insurance guaranty 
contracts, (b) money paid, property transferred, or other assistance 
extended under any such program before January 7, 1965, (c) any 
assistance to any individual who is the ultimate beneficiary under any 
such program, or (d) any employment practice, under any such program, of 
any employer, employment agency, or labor organization, except as noted 
in Sec. 195.4(b)(5) of this part. The fact that a program or activity is 
not listed in appendix A shall not mean, if title VI of the Act is 
otherwise applicable, that such program is not covered. Other programs 
under statutes now in force or hereinafter enacted may be added to this 
list by notice published in the Federal Register.

[29 FR 19291, Dec. 31, 1964, as amended at 38 FR 17959, July 5, 1973. 
Redesignated and amended at 56 FR 32965, July 18, 1991]



Sec. 195.4  Policy.

    (a) General. No person in the United States shall, on the ground of 
race, color, or national origin be excluded from participation in, be 
denied the benefits of, or be otherwise subjected

[[Page 32]]

to discrimination under any program to which this (part) applies.
    (b) Specific discriminatory actions prohibited. (1) A recipient 
under any program to which this part applies may not, directly or 
through contractual or other arrangements, on the ground of race, color, 
or national origin:
    (i) Deny an individual any service, financial aid, or other benefit 
provided under the program;
    (ii) Provide any service, financial aid, or other benefit to an 
individual which is different, or is provided in a different manner, 
from that provided to others under the program;
    (iii) In determining the site or location of facilities, a recipient 
may not make selections with the purpose of excluding individuals from, 
denying them the benefits of, or subjecting them to discrimination under 
any program to which this part applies, on the ground of race, color, or 
national origin; or with the purpose or effect of defeating or 
substantially impairing the accomplishment of the objectives of the Act 
or this part.
    (iv) Subject an individual to segregation or separate treatment in 
any matter related to his receipt of any service, financial aid, or 
other benefit under the program;
    (v) Restrict an individual in any way in the enjoyment of any 
advantage or privilege enjoyed by others receiving any service, 
financial aid, or other benefit under the program;
    (vi) Treat an individual differently from others in determining 
whether he satisfies any admission, enrollment, quota, eligibility, 
membership or other requirement or condition which individuals must meet 
in order to be provided any service, financial aid, or other benefit 
provided under the program;
    (vii) Deny an individual an opportunity to participate in the 
program through the provision of services or otherwise or afford him an 
opportunity to do so which is different from that afforded others under 
the program;
    (viii) Deny a person the opportunity to participate as a member of a 
planning or advisory body which is an integral part of the program.
    (2) A recipient, in determining the types of services, financial 
aid, or other benefits, or facilities which will be provided under any 
such program, or the class of individuals to whom, or the situations in 
which, such services, financial aid, other benefits, or facilities will 
be provided under any such program, or the class of individuals to be 
afforded an opportunity to participate in any such program, may not, 
directly or through contractual or other arrangements, utilize criteria 
or methods of administration which have the effect of subjecting 
individuals to discrimination because of their race, color, or national 
origin, or have the effect of defeating or substantially impairing 
accomplishment of the objectives of the program as respect individuals 
of a particular race, color, or national origin.
    (3) As used in this section the services, financial aid, or other 
benefits provided under a program receiving Federal financial assistance 
shall be deemed to include any service, financial aid, or other benefit 
provided in or through a facility provided with the aid of Federal 
financial assistance.
    (4)(i) In administering a program regarding which the recipient has 
previously discriminated against persons on the ground of race, color, 
or national origin, the recipient must take affirmative action to 
overcome the effects of prior discrimination.
    (ii) Even in the absence of such prior discrimination, a recipient 
in administering a program may take affirmative action to overcome the 
effects of conditions which resulted in limiting participation by 
persons of a particular race, color, or national origin.
    (5) Where a primary objective of the Federal financial assistance is 
not to provide employment, but nevertheless discrimination on the 
grounds of race, color or national origin in the employment practices of 
the recipient or other persons subject to this Directive tends, on the 
grounds of race, color, or national origin of the intended 
beneficiaries, to exclude intended beneficiaries from participation in, 
to deny them benefits of, or to subject them to discrimination under any 
program to which this Directive applies, the recipient or other persons 
subject to this Directive are prohibited from (directly or

[[Page 33]]

through contractual or other arrangements) subjecting an individual to 
discrimination on the grounds of race, color, or national origin in its 
employment practices under such program (including recruitment or 
recruitment advertising; employment, layoff or termination; upgrading, 
demotion or transfer; rates of pay and/or other forms of compensation; 
and use of facilities), to the extent necessary to assure equality of 
opportunity to, and nondiscriminatory treatment of the beneficiaries. 
Any action taken by a component pursuant to this provision with respect 
to a state or local agency subject to Standards for a Merit System of 
Personnel Administration, 45 CFR part 70, shall be consistent with those 
standards and shall be coordinated with the U.S. Civil Service 
Commission.
    (6) The enumeration of specific forms of prohibited discrimination 
in this section does not limit the generality of the prohibition in 
paragraph (a) of this section.

[29 FR 19291, Dec. 31, 1964, as amended at 38 FR 17959, July 5, 1973]



Sec. 195.5  Responsibilities.

    (a) The Assistant Secretary of Defense (Manpower) shall be 
responsible for insuring that the policies of this part are effectuated 
throughout the Department of Defense. He may review from time to time as 
he deems necessary the implementation of these policies by the 
components of the Department of Defense.
    (b) The Secretary of each Military Department is responsible for 
implementing this part with respect to programs and activities receiving 
financial assistance from his Military Department; and the Assistant 
Secretary of Defense (Manpower) is responsible for similarly 
implementing this part with respect to all other components of the 
Department of Defense. Each may designate official(s) to fulfill this 
responsibility in accordance with Sec. 195.2(b).
    (c) The Assistant Secretary of Defense (Manpower) or, after 
consultation with the Assistant Secretary of Defense (Manpower), the 
Secretary of each Military Department or other responsible Department 
official designated by the Assistant Secretary of Defense (Manpower) may 
assign to officials of other departments or agencies of the Government, 
with the consent of such departments or agencies, responsibilities in 
connection with the effectuation of the purposes of Title VI of the Act 
and this part (other than responsibility for final decision as provided 
in Sec. 195.11), including the achievement of effective coordination and 
maximum uniformity within the Department and within the Executive Branch 
of the Government in the application of Title VI and this part to 
similar programs and in similar situations.

[29 FR 19291, Dec. 31, 1964. Redesignated and amended at 56 FR 32965, 
July 18, 1991]



Sec. 195.6  Assurances required.

    (a) General. (1)(i) Every application for Federal financial 
assistance to carry out a program to which this part applies, except a 
program to which paragraph (b) of this section applies, and every 
application for Federal financial assistance to provide a facility 
shall, as a condition to its approval and the extension of any Federal 
financial assistance pursuant to the application, contain or be 
accompanied by an assurance that the program will be conducted or the 
facility operated in compliance with all requirements imposed by or 
pursuant to this part.
    (ii) In the case where the Federal financial assistance is to 
provide or is in the form of personal property, or real property or 
interest therein or structures thereon, the assurance shall obligate the 
recipient, or, in the case of a subsequent transfer, the transferee, for 
the period during which the property or structures are used for a 
purpose for which the Federal financial assistance is extended or for 
another purpose involving the provision of similar services and 
benefits, or for as long as the recipient retains ownership or 
possession of the property, whichever is longer. In all other cases the 
assurance shall obligate the recipient for the period during which 
Federal financial assistance is extended pursuant to the application. In 
any case in which Federal financial assistance is extended without an 
application having been made, such extension shall be subject to the 
same assurances as if an application had been made. The responsible

[[Page 34]]

Department official shall specify the form of the foregoing assurances 
for each program, and the extent to which like assurances will be 
required of subguarantees, contractors and subcontractors, transferees, 
successors in interest, and other participants in the program. Any such 
assurance shall include provisions which give the United States a right 
to seek its judicial enforcement.
    (2) In the case of real property, structures or improvements 
thereon, or interest therein, which was acquired through a program of 
Federal financial assistance, or in the case where Federal financial 
assistance is provided in the form of a transfer of real property or 
interest therein from the Federal Government, the instrument effecting 
or recording the transfer, shall contain a covenant running with the 
land assuring nondiscrimination for the period during which the real 
property is used for a purpose for which the Federal financial 
assistance is extended or for another purpose involving the provision of 
similar services or benefits, or for as long as the recipient retains 
ownership or possession of the property, whichever is longer. Where no 
transfer of property is involved, but property is improved under a 
program of Federal financial assistance, the recipient shall agree to 
include such a covenant in any subsequent transfer of such property. 
Where the property is obtained from the Federal Government, such 
covenant may also include a condition coupled with a right to be 
reserved by the Department to revert title to the property in the event 
of a breach of the covenant where, in the discretion of the responsible 
Department official, such a condition and right of reverter is 
appropriate to the program under which the real property is obtained and 
to the nature of the grant and the grantee. In the event a transferee of 
real property proposes to mortgage or otherwise encumber the real 
property as security for financing construction of new, or improvement 
of existing facilities on such property for the purposes for which the 
property was transferred, the responsible Department official may agree, 
upon request of the transferee and if necessary to accomplish such 
financing, and upon such conditions as he deems appropriate, to forbear 
the exercise of such right to revert title for so long as the lien of 
such mortgage or other encumbrance remains effective. In programs 
receiving Federal financial assistance in the form, or for the 
acquisition of real property or an interest in real property, to the 
extent that rights to space on, over, or under any such property are 
included as part of the program receiving such assistance, the 
nondiscrimination requirements of this part shall extend to any facility 
located wholly or in part in such space.
    (3) The assurance required in the case of a transfer of surplus 
personal property shall be inserted in a written agreement by and 
between the Department of Defense component concerned and the recipient.
    (b) Continuing State programs. Every application by a State agency 
to carry out a program involving continuing Federal financial assistance 
to which this part applies shall as a condition to its approval and the 
extension of any Federal financial assistance pursuant to the 
application (1) contain or be accompanied by a statement that the 
program is (or, in the case of a new program, will be) conducted in 
compliance with all requirements imposed by or pursuant to this part, 
and (2) provide or be accompanied by provision for such methods of 
administration for the program as are found by the responsible 
Department official to give reasonable assurance that the applicant and 
all recipients of Federal financial assistance under such program will 
comply with all requirements imposed by or pursuant to this part. In 
cases of continuing State programs in which applications are not made, 
the extension of Federal financial assistance shall be subject to the 
same conditions under this subsection as if applications had been made.
    (c) Assurances from institutions. (1) In the case of Federal 
financial assistance to an institution of higher education, the 
assurance required by this section shall extend to admission practices 
and to all other practices relating to the treatment of students.

[[Page 35]]

    (2) The assurance required with respect to an institution of higher 
education, or any other institution, insofar as the assurance relates to 
the institution's practices with respect to admission or other treatment 
of individuals as students of the institution or to the opportunity to 
participate in the provision of services or other benefits to such 
individuals, shall be applicable to the entire institution unless the 
applicant establishes, to the satisfaction of the responsible Department 
official, that the institution's practices in designated parts or 
programs of the institution will in no way affect its practices in the 
program of the institution for which Federal financial assistance is 
sought, or the beneficiaries of or participants in such program. If in 
any such case the assistance sought is for the construction of a 
facility or part of a facility, the assurance shall in any event extend 
to the entire facility and to facilities operated in connection 
therewith.
    (d) Elementary and secondary schools. The requirement of paragraph 
(a), (b), or (c) of this section, with respect to any elementary or 
secondary school or school system shall be deemed to be satisfied if 
such school or school system (1) is subject to a final order of a court 
of the United States for the desegregation of such school or school 
system, and provides an assurance that it will comply with such order, 
including any future modification of such order, or (2) submits a plan 
for the desegregation of such school or school system which the 
responsible official of the Department of Health, Education, and Welfare 
determines is adequate to accomplish the purposes of the Act and this 
part, and provides reasonable assurance that it will carry out such 
plan; in any case of continuing Federal financial assistance the said 
Department officer may reserve the right to redetermine, after such 
period as may be specified by him, the adequacy of the plan to 
accomplish the purpose of the Act or this part within the earliest 
practicable time. In any case in which a final order of a court of the 
United States for the desegregation of such school or school system is 
entered after submission of such a plan, such plan shall be revised to 
conform to such final order, including any future modification of said 
order.

[29 FR 19291, Dec. 31, 1964, as amended at 38 FR 17960, July 5, 1973]



Sec. 195.7  Compliance information.

    (a) Cooperation and assistance. Each responsible Department official 
shall to the fullest extent practicable seek the cooperation of 
recipients in obtaining compliance with this part and shall provide 
assistance and guidance to recipients to help them comply voluntarily 
with this part.
    (b) Compliance reports. Each recipient shall keep such records and 
submit to the responsible Department official timely, complete and 
accurate compliance reports at such times, and in such form and 
containing such information, as the responsible Department official may 
determine to be necessary to enable him to ascertain whether the 
recipient has complied or is complying with this part. In general, 
recipients should have available for the Department racial and ethnic 
data showing the extent to which members of minority groups are 
beneficiaries of federally assisted programs. In the case of any program 
under which a primary recipient extends Federal financial assistance to 
any other recipient, such other recipient shall also submit such 
compliance reports to the primary recipient as may be necessary to 
enable the primary recipient to carry out its obligations imposed 
pursuant to this part.
    (c) Access to sources of information. Each recipient shall permit 
access by the responsible Department official during normal business 
hours to such of its books, records, accounts, and other sources of 
information, and its facilities as may be pertinent to ascertain 
compliance with this part. Where any information required of a recipient 
is in the exclusive possession of any other institution or person and 
this institution or person shall fail or refuse to furnish this 
information, the recipient shall so certify in its report and shall set 
forth what efforts it has made to obtain the information.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of

[[Page 36]]

this part and its applicability to the program under which the recipient 
receives Federal financial assistance, and make such information 
available to them in such manner, as the responsible Department official 
finds necessary to apprise such persons of the protections against 
discrimination assured them by the Act and this part.

[29 FR 19291, Dec. 31, 1964, as amended at 38 FR 17960, July 5, 1973]



Sec. 195.8  Conduct of investigations.

    (a) Periodic compliance reviews. The responsible Department official 
or his designee(s) shall from time to time review the practices of 
recipients to determine whether they are complying with this part.
    (b) Complaints. Any person who believes himself or any specific 
class of individuals to be subjected to discrimination prohibited by 
this part may by himself or by a representative file with the 
responsible Department official a written complaint. A complaint must be 
filed not later than 180 days from the date of the alleged 
discrimination, unless the time for filing is extended by the 
responsible Department official.
    (c) Investigations. The responsible Department official will make a 
prompt investigation whenever a compliance review, report, complaint, or 
any other information indicates a possible failure to comply with this 
part. The investigation should include, where appropriate, a review of 
the pertinent practices and policies of the recipient, the circumstances 
under which the possible noncompliance with this part occurred, and 
other factors relevant to a determination of whether the recipient has 
failed to comply with this part.
    (d) Resolution of matters. (1) If an investigation pursuant to 
paragraph (c) of this section indicates a failure to comply with this 
part, the responsible Department official will so inform the recipient 
and the matter will be resolved by informal means whenever possible. If 
it has been determined that the matter cannot be resolved by informal 
means, action will be taken as provided in Sec. 195.9.
    (2) If an investigation does not warrant action pursuant to 
paragraph (d)(1) of this section, the responsible Department official 
will so inform the recipient and the complainant, if any, in writing.
    (e) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any individual for the purpose of interfering with any right or 
privilege secured by section 601 of the Act or this part, or because he 
has made a complaint, testified, assisted, or participated in any manner 
in an investigation, proceeding, or hearing under this part. The 
identity of complainants shall not be disclosed except when necessary to 
carry out the purposes of this part including the conduct of any 
investigation, hearing, or judicial proceeding arising thereunder.

[29 FR 19291, Dec. 31, 1964, as amended at 38 FR 17960, July 5, 1974. 
Redesignated and amended at 56 FR 32965, July 18, 1991]



Sec. 195.9  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this part, and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part may be effected by the suspension or termination of or refusal 
to grant or to continue Federal financial assistance or by any other 
means authorized by law as determined by the responsible Department 
official. Such other means may include, but are not limited to (1) a 
reference to the Department of Justice with a recommendation that 
appropriate proceedings be brought to enforce any rights of the United 
States under any law of the United States (including other titles of the 
Act), or any assurance or other contractual undertaking, and (2) any 
applicable proceedings under State or local law.
    (b) Noncompliance with Sec. 195.6. If an applicant fails or refuses 
to furnish an assurance required under Sec. 195.6 or otherwise fails or 
refuses to comply with a requirement imposed by or pursuant to that 
section Federal financial assistance may be refused in accordance with 
the procedures of paragraph (c) of this section. The component of the 
Department of Defense concerned shall not be required to provide 
assistance in such a

[[Page 37]]

case during the pendency of the administrative proceedings under such 
paragraph except that the component shall continue assistance during the 
pendency of such proceedings where such assistance is due and payable 
pursuant to an application therefor approved prior to the effective date 
of this part.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. Except as provided in paragraph (b) of this 
section no order suspending, terminating or refusing to grant or 
continue Federal financial assistance shall become effective until (1) 
the responsible Department official has advised the applicant or 
recipient of his failure to comply and has determined that compliance 
cannot be secured by voluntary means, (2) there has been an express 
finding, after opportunity for a hearing (as provided in Sec. 195.10), 
of a failure by the applicant or recipient to comply with a requirement 
imposed by or pursuant to this part, (3) the action has been approved by 
the Secretary of Defense pursuant to Sec. 195.11, and (4) the expiration 
of 30 days after the Secretary of Defense has filed with the committee 
of the House and the committee of the Senate having legislative 
jurisdiction over the program involved, a full written report of the 
circumstances and the grounds for such action. Any action to suspend or 
terminate or to refuse to grant or to continue Federal financial 
assistance shall be limited to the particular political entity, or part 
thereof, or other applicant or recipient as to whom such a finding has 
been made and shall be limited in its effect to the particular program, 
or part thereof, in which such noncompliance has been so found.
    (d) Other means authorized by law. No action to affect compliance by 
any other means authorized by law shall be taken until (1) the 
responsible Department official has determined that compliance cannot be 
secured by voluntary means, (2) the action has been approved by the 
Assistant Secretary of Defense (Manpower), (3) the recipient or other 
person has been notified of its failure to comply and of the action to 
be taken to effect compliance, and (4) the expiration of at least 10 
days from the mailing of such notice to the recipient or other person. 
During this period of at least 10 days additional efforts shall be made 
to persuade the recipient or other person to comply with this part and 
to take such corrective action as may be appropriate.

[29 FR 19291, Dec. 31, 1964. Redesignated and amended at 56 FR 32965, 
July 18, 1991]



Sec. 195.10  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 195.9, reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action, and either 
(1) fix a date not less than 20 days after the date of such notice 
within which the applicant or recipient may request of the responsible 
Department official that the matter be scheduled for hearing or (2) 
advise the applicant or recipient that the matter in question has been 
set down for hearing at a stated place and time. The time and place so 
fixed shall be reasonable and shall be subject to change for cause. The 
complainant, if any, shall be advised of the time and place of hearing. 
An applicant or recipient may waive a hearing and submit written 
information and argument. The failure of an applicant or recipient to 
request a hearing under this paragraph or to appear at a hearing for 
which a date has been set shall be deemed to be a waiver of the right to 
a hearing under section 602 of the Act and Sec. 195.11(c) and consent to 
the making of a decision on the basis of such information as is 
available.
    (b) Time and place of hearing. Hearings shall be held at the offices 
of the responsible component of the Department of Defense in Washington, 
D.C., at a time fixed by the responsible Department official unless he 
determines that the convenience of the applicant or recipient or of the 
component requires that another place be selected. Hearings shall be 
held before the responsible Department official or, at his discretion, 
before a hearing examiner designated by him.

[[Page 38]]

    (c) Hearing examiner. The examiner shall be a field grade officer or 
civilian employee above the grade of GS-12 (or the equivalent) who shall 
be a person admitted to practice law before a Federal court or the 
highest court of a State.
    (d) Right to counsel. In all proceedings under this section, the 
applicant or recipient and the responsible component of the Department 
shall have the right to be represented by counsel.
    (e) Procedures. (1) The recipient shall receive an open hearing at 
which he or his counsel may examine any witnesses present. Both the 
responsible Department official and the applicant or recipient shall be 
entitled to introduce all relevant evidence on the issues as stated in 
the notice for hearing or as determined by the officer conducting the 
hearing at the outset of or during the hearing.
    (2) Technical rules of evidence shall not apply to hearings 
conducted pursuant to this part, but rules or principles designed to 
assure production of the most credible evidence available and to subject 
testimony to test by cross-examination shall be applied where reasonably 
necessary by the officer conducting the hearing. The hearing officer may 
exclude irrelevant, immaterial, or unduly repetitious evidence. All 
documents and other evidence offered or taken for record shall be open 
to examination by the parties and opportunity shall be given to refute 
facts and arguments advanced on either side of the issues. A transcript 
shall be made of the oral evidence except to the extent the substance 
thereof is stipulated for the record. All decisions shall be based upon 
the hearing record and written findings shall be made.
    (f) Consolidated or joint hearings. In cases in which the same or 
related facts are asserted to constitute noncompliance with this part 
with respect to two or more programs to which this part applies, or 
noncompliance with this part and the regulations of one or more other 
Federal departments or agencies issued under Title VI of the Act, the 
Assistant Secretary of Defense (Manpower), the Secretary of a Military 
Department, or other responsible Department official designated by the 
Assistant Secretary of Defense (Manpower) after consultation with the 
Assistant Secretary of Defense (Manpower) may, by agreement with such 
other departments or agencies where applicable, provide for the conduct 
of consolidated or joint hearings, and for the application to such 
hearings of appropriate procedures not inconsistent with this part. 
Final decisions in such cases, insofar as this part is concerned, shall 
be made in accordance with Sec. 195.11.

[29 FR 19291, Dec. 31, 1964, as amended at 30 FR 133, Jan. 7, 1965. 
Redesignated and amended at 56 FR 32965, July 18, 1991]



Sec. 195.11  Decisions and notices.

    (a) Decision by person other than the responsible department 
official. If the hearing is held by a hearing examiner such hearing 
examiner shall either make an initial decision, if so authorized, or 
certify the entire record including his recommended findings and 
proposed decision to the responsible Department official for a final 
decision, and a copy of such initial decision or certification shall be 
mailed to the applicant or recipient. Where the initial decision is made 
by the hearing examiner the applicant or recipient may within 30 days of 
the mailing of such notice of initial decision file with the responsible 
Department official his exceptions to the initial decision, with his 
reasons therefor. In the absence of exceptions, the responsible 
Department official may on his own motion within 45 days after the 
initial decision serve on the applicant or recipient a notice that he 
will review the decision. Upon the filing of such exceptions or of such 
notice of review the responsible Department official shall review the 
initial decision and issue his own decision thereon including the 
reasons therefor. In the absence of either exceptions or a notice of 
review the initial decision shall constitute the final decision of the 
responsible Department official.
    (b) Decisions on record or review by the responsible department 
official. Whenever a record is certified to the responsible Department 
official for decision or he reviews the decision of a hearing examiner 
pursuant to paragraph (a) of this section or whenever the responsible 
Department official conducts the hearing, the applicant or recipient 
shall be

[[Page 39]]

given reasonable opportunity to file with him briefs or other written 
statements of its contentions, and a copy of the final decision of the 
responsible Department official shall be given in writing to the 
applicant or recipient and to the complainant, if any.
    (c) Decisions on record where a hearing is waived. Whenever a 
hearing is waived pursuant to Sec. 195.10(a), a decision shall be made 
by the responsible Department official on the record and a copy of such 
decision shall be given in writing to the applicant or recipient, and to 
the complainant, if any.
    (d) Rulings required. Each decision of a hearing officer or 
responsible Department official shall set forth his ruling on each 
finding, conclusion, or exception presented, and shall identify the 
requirement or requirements imposed by or pursuant to this part with 
which it is found that the applicant or recipient has failed to comply.
    (e) Approval by the Secretary of Defense. Any final decision of a 
responsible Department official which provides for the suspension or 
termination of, or the refusal to grant or continue Federal financial 
assistance, or the imposition of any other sanction available under this 
part or the Act, shall promptly be transmitted to the Secretary of 
Defense, who may approve such decision, may vacate it, or remit or 
mitigate any sanction imposed.
    (f) Contents of orders. The final decision may provide for 
suspension or termination of, or refusal to grant or continue Federal 
financial assistance, in whole or in part, under the program involved, 
and may contain such terms, conditions, and other provisions as are 
consistent with and will effectuate the purposes of the Act and this 
part, including provisions designed to assure that no Federal financial 
assistance will thereafter be extended under such program to the 
applicant or recipient determined by such decision to be in default in 
its performance of an assurance given by it pursuant to this part, or to 
have otherwise failed to comply with this part, unless and until it 
corrects its noncompliance and satisfies the responsible Department 
official that it will fully comply with this part.
    (g) Post-termination proceedings. (1) An applicant or recipient 
adversely affected by an order issued under paragraph (f) of this 
section shall be restored to full eligibility to receive Federal 
financial assistance if it satisfies the terms and conditions of that 
order for such eligibility or if it brings itself into compliance with 
this part and provides reasonable assurance that it will fully comply 
with this part.
    (2) Any applicant or recipient adversely affected by an order 
entered pursuant to paragraph (f) of this section may at any time 
request the responsible Department official to restore fully its 
eligibility to receive Federal financial assistance. Any such request 
shall be supported by information showing that the applicant or 
recipient has met the requirements of paragraph (g)(1) of this section. 
If the responsible Department official determines that those 
requirements have been satisfied, he shall restore such eligibility.
    (3) If the responsible Department official denies any such request, 
the applicant or recipient may submit a request for a hearing in 
writing, specifying why it believes such official to have been in error. 
It shall thereupon be given an expeditious hearing, with a decision on 
the record, in accordance with rules of procedure issued by the 
responsible Department official. The applicant or recipient will be 
restored to such eligibility if it proves at such a hearing that it 
satisfied the requirements of paragraph (g)(1) of this section. While 
proceedings under this subsection are pending, the sanctions imposed by 
the order issued under paragraph (f) of this section shall remain in 
effect.

[29 FR 19291, Dec. 31, 1964, as amended at 38 FR 17960, July 5, 1973. 
Redesignated and amended at 56 FR 32965, July 18, 1991]



Sec. 195.12  Judicial review.

    Action taken pursuant to section 602 of the Act is subject to 
judicial review as provided in section 603 of the Act.



Sec. 195.13  Effect on other issuances.

    All issuances heretofore issued by any officer of the Department of 
Defense or its components which impose requirements designed to prohibit 
any discrimination against individuals on the ground of race, color, or 
national

[[Page 40]]

origin under any program to which this part applies, and which authorize 
the suspension or termination of or refusal to grant or to continue 
Federal financial assistance to any applicant for or recipient of such 
assistance under such program for failure to comply with such 
requirements, are hereby superseded to the extent that such 
discrimination is prohibited by this part, except that nothing in this 
part shall be deemed to relieve any person of any obligation assumed or 
imposed under any such superseded regulation, order, instruction, or 
like direction prior to the effective date of this part. Nothing in this 
part, however, shall be deemed to supersede any of the following 
(including future amendments thereof):
    (a) Executive Orders 10925 and 11114 and issuances thereunder,
    (b) The ``Standards for a Merit System of Personnel 
Administration,'' issued jointly by the Secretaries of Defense, of 
Health, Education, and Welfare, and of Labor, 28 FR 734, or
    (c) Executive Order 11063 and issuances thereunder, or any other 
issuances, insofar as such Order or issuances prohibit discrimination on 
the ground of race, color, or national origin in any program or 
situation to which this part is inapplicable, or prohibit discrimination 
on any other ground.



Sec. 195.14  Implementation.

    The Secretary of each Military Department shall submit regulations 
implementing this part to the Assistant Secretary of Defense (Manpower).

       Appendix A to Part 195--Programs to Which This Part Applies

    1. The Army and Air National Guard (Title 32, United States Code).
    2. Various programs involving loan or other disposition of surplus 
property (various general and specialized statutory provisions 
including: 40 United States Code 483, 484, 512; 49 United States Code 
1101-1119; 10 United States Code 2541, 2542, 2543, 2572, 2662, 7308, 
7541, 7542, 7545, 7546, 7547).
    3. National Program for Promotion of Rifle Practice (10 United 
States Code 4307 and annual Department of Defense Appropriation Act).
    4. National Defense Cadet Corps Program (10 United States Code 
3540(b), 4651).
    5. Office of Civil Defense assistance to programs of adult education 
in civil defense subjects (50 United States Code App. 2281 (e), (f)).
    6. Office of Civil Defense radiological instruments grants (50 
United States Code App. 2281(h)).
    7. Office of Civil Defense program (with Public Health Service) for 
development of instructional materials on medical self-help (50 United 
States Code App. 2281 (e), (f)).
    8. Office of Civil Defense university extension programs for civil 
defense instructor training (50 United States Code App. 2281 (e)).
    9. Office of Civil Defense programs for survival supplies and 
equipment, survival training, emergency operating center construction, 
and personnel and administrative expenses (50 United States Code App. 
2281(i), 2285).
    10. Office of Civil Defense Shelter Provisioning Program (50 United 
States Code App. 2281(h)).
    11. Office of Civil Defense assistance to students attending Office 
of Civil Defense schools (50 United States Code App. 2281(e)).
    12. Office of Civil Defense loans of equipment or materials from OCD 
stockpiles for civil defense, including local disaster purposes (50 
United States Code App. 2281).
    13. Navy Science Cruiser Program (SecNav Instruction 5720.19A).
    14. Civil Air Patrol (10 United States Code 9441).
    15. Research grants made under the authority of Pub. L. 85-934 (42 
United States Code 1892).
    16. Contracts with nonprofit institutions of higher education or 
with nonprofit organizations whose primary purpose is the conduct of 
scientific research, wherein title to equipment purchased with funds 
under such contracts may be vested in such institutions or organizations 
under the authority of Pub. L. 85-934 (42 United States Code 1891).
    17. Army Corps of Engineers participation in cooperative 
investigations and studies concerning erosion of shores of coastal and 
lake waters (33 United States Code 426).
    18. Army Corps of Engineers assistance in the construction of works 
for the restoration and protection of shores and beaches (33 United 
States Code 426e-h).
    19. Public park and recreational facilities at water resource 
development projects under the administrative jurisdiction of the 
Department of the Army (16 United States Code 460d and Federal Water 
Project Recreation Act, Pub. L. 89-72, 79 Stat. 218, July 9, 1965).
    20. Payment to States of proceeds of lands acquired by the United 
States for flood control, navigation, and allied purposes (33 United 
States Code 701-c-3).

[[Page 41]]

    21. Grants of easements without consideration, or at a nominal or 
reduced consideration, on lands under the control of the Department of 
the Army at water resource development projects (33 United States Code 
558c and 702d-1; 10 United States Code 2668 and 2669); 43 United States 
Code 961; 40 United States Code 319).
    22. Army Corps of Engineers assistance in the construction of small 
boat harbor projects (33 United States Code 540 and 577, and 47 Stat. 
42, Feb. 10, 1932).
    23. Emergency bank protection works constructed by the Army Corps of 
Engineers for protection of highways, bridge approaches, and public 
works (33 United States Code 701r).
    24. Assistance to States and local interests in the development of 
water supplies for municipal and industrial purposes in connection with 
Army Corps of Engineers reservoir projects (Water Supply Act of 1958, 43 
United States Code 390b).
    25. Army Corps of Engineers contracts for remedial works under 
authority of section 111 of Act of July 3, 1958 (33 United States Code 
633).

[29 FR 19291, Dec. 31, 1964, as amended at 31 FR 6831, May 7, 1966]

                           PART 196 [RESERVED]



PART 199--CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED SERVICES (CHAMPUS)--Table of Contents




Sec.
199.1  General provisions.
199.2  Definitions.
199.3  Eligibility.
199.4  Basic program benefits.
199.5  Program for Persons with Disabilities (PFPWD).
199.6  Authorized providers.
199.7  Claims submission, review, and payment.
199.8  Double coverage.
199.9  Administrative remedies for fraud, abuse, and conflict of 
          interest.
199.10  Appeal and hearing procedures.
199.11  Overpayments recovery.
199.12  Third party recoveries.
199.13  Active duty dependents dental plan.
199.14  Provider reimbursement methods.
199.15  Quality and utilization review peer review organization program.
199.16  Supplemental Health Care Program for active duty members.
199.17  TRICARE program.
199.18  Uniform HMO Benefit.
199.20  Continued Health Care Benefit Program (CHCBP).
199.21  TRICARE Selected Reserve Dental Program (TSRDP).
199.22  TRICARE Retiree Dental Program (TRDP).

Appendix A to Part 199--Acronyms

    Authority: 5 U.S.C. 301; 10 U.S.C. chapter 55.

    Source: 51 FR 24008, July 1, 1986, unless otherwise noted.



Sec. 199.1  General provisions.

    (a) Purpose. This part prescribes guidelines and policies for the 
administration of the Civilian Health and Medical Program of the 
Uniformed Services (CHAMPUS) for the Army, the Navy, the Air Force, the 
Marine Corps, the Coast Guard, the Commissioned Corps of the U.S. Public 
Health Service (USPHS) and the Commissioned Corps of the National 
Oceanic and Atmospheric Administration (NOAA).
    (b) Applicability--(1) Geographic. This part is applicable 
geographically within the 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, and the United States 
possessions and territories, and in all foreign countries, unless 
specific exemptions are granted in writing by the Director, OCHAMPUS, or 
a designee.
    (2) Agency. The provisions of this part apply throughout the 
Department of Defense (DoD), the Coast Guard, the Commissioned Corps of 
the USPHS, and the Commissioned Corps of the NOAA.
    (c) Authority and responsibility--(1) Legislative authority--(i) 
Joint regulations. 10 U.S.C. chapter 55 authorizes the Secretary of 
Defense, the Secretary of Health and Human Services, and the Secretary 
of Transportation jointly to prescribe regulations for the 
administration of CHAMPUS.
    (ii) Administration. 10 U.S.C. chapter 55 also authorizes the 
Secretary of Defense to administer CHAMPUS for the Army, Navy, Air 
Force, and Marine Corps under DoD jurisdiction, the Secretary of 
Transportation to administer CHAMPUS for the Coast Guard, when the Coast 
Guard is not operating as a service in the Navy, and the Secretary of 
Health and Human Services to administer CHAMPUS for the Commissioned 
Corps of the NOAA and the USPHS.

[[Page 42]]

    (2) Organizational delegations and assignments--(i) Assistant 
Secretary of Defense (Health Affairs) (ASD(HA)). The Secretary of 
Defense, by 32 CFR part 367, delegated authority to the ASD(HA) to 
provide policy guidance, management control and coordination as required 
for CHAMPUS, and to develop, issue, and maintain regulations with the 
coordination of the Military Departments and consistent with DoD 5025.1-
M.\1\ Additional implementing authority is contained in DoD Directive 
5105.46.\2\
---------------------------------------------------------------------------

    \1\ Copies may be obtained, if needed, from the National Technical 
Information Service (NTIS), U.S. Department of Commerce, 5285 Port Royal 
Road, Springfield, VA 22161.
    \2\ Copies may be obtained; if needed from the Naval Publications 
and Forms Center, 5801 Tabor Avenue, Code 301, Philadelphia, PA 19120.
---------------------------------------------------------------------------

    (ii) Department of Health and Human Services. The Secretary of 
Health and Human Services has delegated authority to the Assistant 
Secretary for Health, DHHS, to consult with the Secretary of Defense or 
a designee and to approve and issue joint regulations implementing 10 
U.S.C. chapter 55. This delegation was effective April 19, 1976 (41 FR 
18698, May 6, 1976).
    (iii) Department of Transportation. The Secretary of Transportation 
has delegated authority to the Commandant, United States Coast Guard, to 
consult with the Secretary of Defense or a designee and to approve an 
issue joint regulations implementing 10 U.S.C., chapter 55.
    (iv) Office of CHAMPUS (OCHAMPUS). By DoD Directive 5105.46, 
OCHAMPUS was established as an OSD field activity under the policy 
guidance and direction of the ASD(HA). The Director, OCHAMPUS, is 
directed to execute the following responsibilities and functions:
    (A) Supervise and administer the programs and missions to:
    (1) Provide technical direction and guidance on organizational, 
administrative, and operational matters.
    (2) Conduct studies and research activities in the health care area 
to assist in formulating policy required to guide OCHAMPUS in carrying 
out its programs.
    (3) Enter into agreements through the Department of Defense with 
respect to the Military Departments or other U.S. Government entities, 
as required, for the effective performance of CHAMPUS.
    (4) Supervise and administer OCHAMPUS financial management 
activities to include:
    (i) Formulating budget estimates and justifications to be submitted 
to the Deputy Assistant Secretary of Defense (Administration) (DASD(A)) 
for inclusion in the overall budget for the Office of the Secretary of 
Defense.
    (ii) Ensuring the establishment and maintenance of necessary 
accounting records and submission of required financial reports to the 
DASD(A).
    (iii) Ensuring the effective execution of approved budgets.
    (5) Contract for claims processing services, studies and research, 
supplies, equipment, an other services necessary to carry out the 
CHAMPUS programs.
    (6) Monitor claims adjudication and processing contracts to ensure 
that CHAMPUS fiscal intermediaries are fulfilling their obligations.
    (7) Convey appropriate CHAMPUS information to providers of care, 
practitioners, professional societies, health industry organizations, 
fiscal agents, hospital contractors, and others who have need of such 
information.
    (8) Collect, maintain, and analyze program cost and utilization data 
appropriate for preparation of budgets, fiscal planning, and as 
otherwise needed to carry out CHAMPUS programs and missions.
    (9) Arrange for the facilities logistical and administrative support 
to be provided by the Military Departments.
    (10) Execute such other functions as appropriate to administer the 
programs and missions assigned.
    (B) Direct and control of the office, activities, and functions of 
OCHAMPUS Europe (OCHAMPUSEUR).
    Note: The Director, OCHAMPUS, may also establish similar offices for 
OCHAMPUS Southern Hemisphere (OCHAMPUSSO) and OCHAMPUS Pacific 
(OCHAMPUSPAC).
    (C) Develop for issuance, subject to approval by the ASD(HA), such 
policies

[[Page 43]]

or regulations as required to administer and manage CHAMPUS effectively.
    (v) Evidence of eligibility. The Department of Defense, through the 
Defense Enrollment Eligibility Reporting System (DEERS), is responsible 
for establishing and maintaining a listing of persons eligible to 
receive benefits under CHAMPUS. Identification cards or devices bearing 
information necessary for preliminary evidence of eligibility, subject 
to verification through the DEERS, shall be issued to eligible persons 
by the appropriate Uniformed Services (DoD 1341.1-M, ``Defense 
Enrollment Eligibility Reporting System (DEERS) Program Manual'').
    (d) Medical benefits program. The CHAMPUS is a program of medical 
benefits provided by the U.S. Government under public law to specified 
categories of individuals who are qualified for these benefits by virtue 
of their relationship to one of the seven Uniformed Services. Although 
similar in structure in many of its aspects, CHAMPUS is not an insurance 
program in that it does not involve a contract guaranteeing the 
indemnification of an insured party against a specified loss in return 
for a premium paid. Further, CHAMPUS is not subject to those state 
regulatory bodies or agencies that control the insurance business 
generally.
    (e) Program funds. The funds used by CHAMPUS are appropriated funds 
furnished by the Congress through the annual appropriation acts for the 
Department of Defense and the DHHS. These funds are further disbursed by 
agents of the government under contracts negotiated by the Director, 
OCHAMPUS, or a designee, under the provisions of the Federal Aquisition 
Regulation (FAR). These agents (referred to in this part as CHAMPUS 
fiscal intermediaries) receive claims against CHAMPUS and adjudicate the 
claims under this part and in accordance with administrative procedures 
and instructions prescribed in their contracts. The funds expended for 
CHAMPUS benefits are federal funds provided CHAMPUS fiscal 
intermediaries solely to pay CHAMPUS claims, and are not a part of or 
obtained from the CHAMPUS fiscal intermediary's funds related to other 
programs or insurance coverage. CHAMPUS fiscal intermediaries are 
reimbursed for the adjudication and payment of CHAMPUS claims at a rate 
(generally fixed-price) prescribed in their contracts.
    (f) Claims adjudication and processing. The Director, OCHAMPUS, is 
responsible for making such arrangements as are necessary to adjudicate 
and process CHAMPUS claims worldwide.
    (1) The United States--(i) Contracting out. The primary method of 
processing CHAMPUS claims in the United States is through competitively 
procured, fixed-price contracts. The Director, OCHAMPUS, or a designee, 
is responsible for negotiating, under the provisions of the FAR, 
contracts for the purpose of adjudicating and processing CHAMPUS claims 
(and related supporting activities).
    (ii) In-house. The Director, OCHAMPUS, or a designee, is authorized 
to adjudicate and process certain CHAMPUS claims in-house at OCHAMPUS, 
when it is determined to be in the best interests of CHAMPUS subject to 
applicable considerations set forth in OMB Circular A-76. Such in-house 
claims processing may involve special or unique claims, or all claims 
for a specific geographic area.
    (2) Outside the United States--(i) Special subsidiary office or 
contracting out. For adjudicating and processing CHAMPUS claims for 
services or supplies provided outside the United States, the Director, 
OCHAMPUS, or a designee, has the option of either setting up a special 
subsidiary claims paying operation (such as OCHAMPUSEUR) or contracting 
out as described in paragraph (f)(1)(i) of this section. Such claims 
paying operations are reviewed periodically to determine whether current 
arrangements continue to be appropriate and the most effective.
    (ii) Support agreements. In those situations outside the United 
States that demand special arrangements, the Director, OCHAMPUS, may 
enter into support agreements through the Department of Defense with any 
of the Military Departments or other government agency to process 
CHAMPUS claims in specific geographic locations. Such agreements may be 
negotiated for such period of time as the Director,

[[Page 44]]

OCHAMPUS, or designee, may determine to be necessary to meet identified 
special demands.
    (g) Recommendations for change to part. The Director, OCHAMPUS, or a 
designee, shall establish procedures for receiving and processing 
recommendations for changes to this part from interested parties.
    (h) CHAMPUS, claims forms. The Director, OCHAMPUS, or a designee, is 
responsible for the development and updating of all CHAMPUS claim forms 
and any other forms necessary in the administration of CHAMPUS.
    (i) The CHAMPUS handbook. The Director, OCHAMPUS, or a designee, 
shall develop the CHAMPUS, Handbook. The CHAMPUS Handbook is a general 
program guide for the use of CHAMPUS beneficiaries and providers and 
shall be updated, as required.
    (j) Program integrity. The Director, OCHAMPUS, or a designee, shall 
oversee all CHAMPUS personnel, fiscal intermediaries, providers, and 
beneficiaries to ensure compliance with this part. The Director, 
OCHAMPUS, or a designee, shall accomplish this by means of proper 
delegation of authority, separation of responsibilities, establishment 
of reports, performance evaluations, internal and external management 
and fiscal audits, personal or delegated reviews of CHAMPUS 
responsibilities, taking affidavits, exchange of information among state 
and Federal governmental agencies, insurers, providers and associations 
of providers, and such other means as may be appropriate. Compliance 
with law and this part shall include compliance with specific contracts 
and agreements, regardless of form, and general instructions, such as 
CHAMPUS policies, instructions, procedures, and criteria relating to 
CHAMPUS operation.
    (k) Role of CHAMPUS Health Benefits Advisor (HBA). The CHAMPUS HBA 
is appointed (generally by the commander of a Uniformed Services medical 
treatment facility) to serve as an advisor to patients and staff in 
matters involving CHAMPUS. The CHAMPUS HBA may assist beneficiaries or 
sponsors in applying for CHAMPUS benefits, in the preparation of claims, 
and in their relations with OCHAMPUS and CHAMPUS fiscal intermediaries. 
However, the CHAMPUS HBA is not responsible for CHAMPUS policies and 
procedures and has no authority to make benefit determinations or 
obligate Government funds. Advice given to beneficiaries as to 
determination of benefits or level of payment is not binding on OCHAMPUS 
or CHAMPUS fiscal intermediaries.
    (l) Cooperation and exchange of information with other Federal 
programs. The Director, OCHAMPUS, or a designee, shall disclose to 
appropriate officers or employees of the DHHS:
    (1) Investigation for fraud. The name and address of any physician 
or other individual actively being investigated for possible fraud in 
connection with CHAMPUS, and the nature of such suspected fraud. An 
active investigation exists when there is significant evidence 
supporting an initial complaint but there is need for further 
investigation.
    (2) Unnecessary services. The name and address of any provider of 
medical services, organization, or other person found, after 
consultation with an appropriate professional association or appropriate 
peer review body, to have provided unnecessary services. Such 
information will be released only for the purpose of conducting an 
investigation or prosecution, or for the administration of titles XVIII 
and XIX of the Social Security Act, provided that the information will 
be released only to the agency's enforcement branch and that the agency 
will preserve the confidentiality of the information received and will 
not disclose such information for other than program purposes.
    (m) Disclosure of information to the public. Records and information 
acquired in the administration of CHAMPUS are records of the Department 
of Defense and may be disclosed in accordance with DoD Directive 
5400.7\3\, DoD 5400.7-R\4\, and DoD 5400.11-R\5\ (codified in 32 CFR 
parts 286 and 286a), constituting the applicable DoD Directives and DoD 
Regulations implementing the Freedom of Information and the Privacy 
Acts.
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    \3\ See footnote 2 to Sec. 199.1(c)(2)(i)
    \4\ See footnote 1 to Sec. 199.1(c)(2)(i)
    \5\ See footnote 1 to Sec. 199.1(c)(2)(i)

---------------------------------------------------------------------------

[[Page 45]]

    (n) Discretionary authority. When it is determined to be in the best 
interest of CHAMPUS, the Director, OCHAMPUS, or a designee, is granted 
discretionary authority to waive any requirements of this part, except 
that any requirement specifically set forth in 10 U.S.C. chapter 55, or 
otherwise imposed by law, may not be waived. It is the intent that such 
discretionay authority be used only under very unusual and limited 
circumstances and not to deny any individual any right, benefit, or 
privilege provided to him or her by statute or this part. Any such 
exception granted by the Director, OCHAMPUS, or a designee, shall apply 
only to the individual circumstance or case involved and will in no way 
be construed to be precedent-setting.
    (o) Demonstration projects. (1) Authority. The Director, OCHAMPUS 
may waive or alter any requirements of this regulation in connection 
with the conduct of a demonstration project required or authorized by 
law except for any requirement that may not be waived or altered 
pursuant to 10 U.S.C. chapter 55, or other applicable law.
    (2) Procedures. At least 30 days prior to taking effect, OCHAMPUS 
shall publish a notice describing the demonstration project, the 
requirements of this regulation being waived or altered under paragraph 
(o)(1) of this section and the duration of the waiver or alteration. 
Consistent with the purpose and nature of demonstration projects, these 
notices are not covered by public comment practices under DoD Directive 
5400.9 (32 CFR part 296) or DoD Instruction 6010.8.
    (3) Definition. For purposes of this section, a ``demonstration 
project'' is a project of limited duration designed to test a different 
method for the finance, delivery or administration of health care 
activities for the uniformed services. Demonstration projects may be 
required or authorized by 10 U.S.C. 1092, any other statutory provision 
requiring or authorizing a demonstration project or any other provision 
of law that authorizes the activity involved in the demonstration 
project.''.
    (p) Military-Civilian Health Services Partnership Program. The 
Secretary of Defense, or designee, may enter into an agreement (external 
or internal) providing for the sharing of resources between facilities 
of the uniformed services and facilities of a civilian health care 
provider or providers if the Secretary determines that such an agreement 
would result in the delivery of health care in a more effective, 
efficient or economical manner. This partnership allows CHAMPUS 
beneficiaries to receive inpatient and outpatient services through 
CHAMPUS from civilian personnel providing health care services in 
military treatment facilities and from uniformed service professional 
providers in civilian facilities. The policies and procedures by which 
partnership agreements may be executed are set forth in Department of 
Defense Instruction (DoDI) 6010.12, ``Military-Civilian Health Services 
Partnership Program.'' The Director, OCHAMPUS, or a designee, shall 
issue policies, instructions, procedures, guidelines, standards, or 
criteria as may be necessary to provide support for implementation of 
DoDI 6010.12, to promulgate and manage benefit and financial policy 
issues, and to develop a program evaluation process to ensure the 
Partnership Program accomplishes the purpose for which it was developed.
    (1) Partnership agreements. Military treatment facility commanders, 
based upon the authority provided by their representative Surgeons 
General of the military departments, are responsible for entering into 
individual partnership agreements only when they have determined 
specifically that use of the Partnership Program is more economical 
overall to the Government than referring the need for health care 
services to the civilian community under the normal operation of the 
CHAMPUS Program. All such agreements are subject to the review and 
approval of the Director, OCHAMPUS, or designee, and the appropriate 
Surgeon General.
    (i) External Partnership Agreements. The external partnership 
agreement is an agreement between a military treatment facility 
Commander and a CHAMPUS-authorized institutional provider, enabling 
Uniformed Services health care personnel to provide otherwise covered 
medical care to CHAMPUS beneficiaries in a civilian facility. Authorized 
costs associated

[[Page 46]]

with the use of the facility will be financed through CHAMPUS under 
normal cost-sharing and reimbursement procedures currently applicable 
under the basic CHAMPUS. Savings will be realized under this type of 
agreement by using available military health care personnel to avoid the 
civilian professional provider charges which would otherwise be billed 
to CHAMPUS.
    (ii) Internal Partnership Agreements. The internal partnership 
agreement is an agreement between a military treatment facility 
commander and a CHAMPUS-authorized civilian health care provider which 
enables the use of civilian health care personnel or other resources to 
provide medical care to CHAMPUS beneficiaries on the premises of a 
military treatment facility. These internal agreements may be 
established when a military treatment facility is unable to provide 
sufficient health care services for CHAMPUS beneficiaries due to 
shortages of personnel and other required resources. In addition to 
allowing the military treatment facility to achieve maximum use of 
available facility space, the internal agreement will result in savings 
to the Government by using civilian medical specialists to provide 
inpatient care in Government-owned facilities, thereby avoiding the 
civilian facility charges which would have otherwise been billed to 
CHAMPUS.
    (2) Beneficiary Cost-Sharing. Beneficiary cost-sharing under the 
Partnership Program is outlined in Sec. 199.4(f)(5) of this part.
    (3) Reimbusement. Reimbursement under the Partnership Program is 
outlined in Sec. 199.14(f) of this part.
    (4) Beneficiary Eligibility and Authorized Providers. Existing 
requirements of this Regulation remain in effect as concerns beneficiary 
eligibility and authorized providers.
    (5) Range of Benefits. Health care services provided CHAMPUS 
beneficiaries under the terms of the Partnership Program must be 
consistent with the CHAMPUS range of benefits outlined in this 
Regulation. The services rendered must be otherwise covered. Charges 
allowed for professional services provided under the Partnership Program 
may include costs of support personnel, equipment, and supplies when 
specifically outlined in the partnership agreement, However, all CHAMPUS 
coverage and provider requirements must be met.
    (q) Equality of benefits. All claims submitted for benefits under 
CHAMPUS shall be adjudicated in a consistent, fair, and equitable 
manner, without regard to the rank of the sponsor.
    (r) TRICARE program. Many rules and procedures established in 
sections of this part are subject to revision in areas where the TRICARE 
program is implemented. The TRICARE program is the means by which 
managed care activities designed to improve the delivery and financing 
of health care services in the Military Health Services System(MHSS) are 
carried out. Rules and procedures for the TRICARE program are set forth 
in Sec. 199.17.

[51 FR 24008, July 1, 1986, as amended at 52 FR 38754, Oct. 19, 1987; 53 
FR 27961, July 26, 1988; 55 FR 43338, Oct. 29, 1990; 60 FR 52094, Oct. 
5, 1995]



Sec. 199.2  Definitions.

    (a) General. In an effort to be as specific as possible as to the 
word and intent of CHAMPUS, the following definitions have been 
developed. While many of the definitions are general and some assign 
meaning to relatively common terms within the health insurance 
environment, others are applicable only to CHAMPUS; however, they all 
appear in this part solely for the purpose of the Program. Except when 
otherwise specified, the definitions in this section apply generally 
throughout this part.
    (b) Specific definitions.
    Abortion. Abortion means the intentional termination of a pregnancy 
by artificial means done for a purpose other than that of producing a 
live birth. A spontaneous, missed or threatened abortion or termination 
of an ectopic (tubal) pregnancy are not included within the term 
``abortion'' as used herein.
    Absent treatment. Services performed by Christian Science 
practitioners for a person when the person is physically present.
    Note: Technically, ``Absent Treatment'' is an obsolete term. The 
current Christian Science terminology is ``treatment through

[[Page 47]]

prayer and spiritual means,'' which is employed by an authorized 
Christian Science practitioner either with the beneficiary being present 
or absent. However, to be considered for coverage under CHAMPUS, the 
beneficiary must be present physically when a Christian Science service 
is rendered, regardless of the terminology used.
    Abuse. For the purposes of this part, abuse is defined as any 
practice that is inconsistent with accepted sound fiscal, business, or 
professional practice which results in a CHAMPUS claim, unnecessary 
cost, or CHAMPUS payment for services or supplies that are: (1) Not 
within the concepts of medically necessary and appropriate care, as 
defined in this part, or (2) that fail to meet professionally recognized 
standards for health care providers. The term ``abuse'' includes 
deception or misrepresentation by a provider, or any person or entity 
acting on behalf of a provider in relation to a CHAMPUS claim.
    Note: Unless a specific action is deemed gross and flagrant, a 
pattern of inappropriate practice will normally be required to find that 
abuse has occurred. Also, any practice or action that constitutes fraud, 
as defined by this part, would also be abuse.
    Accidental injury. Physical bodily injury resulting from an external 
force, blow or fall, or the ingestion of a foreign body or harmful 
substance, requiring immediate medical treatment. Accidental injury also 
includes animal and insect bites and sunstrokes. For the purpose of 
CHAMPUS, the breaking of a tooth or teeth does not constitute a physical 
bodily injury.
    Active duty. Full-time duty in the Uniformed Services of the United 
States. It includes duty on the active list, full-time training duty, 
annual training duty, and attendance while in the active Military 
Service, at a school designated as a Service school by law or by the 
Secretary of the Military Department concerned.
    Active duty member. A person on active duty in a Uniformed Service 
under a call or order that does not specify a period of 30 days or less.
    Acupuncture. The practice of inserting needles into various body 
parts to pierce specific peripheral nerves for the production of 
counter-irritation to relieve the discomfort of pain, induce surgical 
anesthesia, or for other treatment purposes.
    Note: Acupuncture is not covered by CHAMPUS.
    Adequate Medical Documentation, Medical Treatment Records. Adequate 
medical documentation contains sufficient information to justify the 
diagnosis, the treatment plan, and the services and supplies furnished. 
Under CHAMPUS, it is required that adequate and sufficient clinical 
records be kept by the health care provider(s) to substantiate that 
specific care was actually and appropriately furnished, was medically 
necessary and appropriate (as defined by this part), and to identify the 
individual(s) who provided the care. All procedures billed must be 
documented in the records. In determining whether medical records are 
adequate, the records will be reviewed under the generally acceptable 
standards such as the applicable Joint Commission on Accreditation of 
Healthcare Organizations (JCAHO) standards, the Peer Review Organization 
(PRO) standards (and the provider's state or local licensing 
requirements) and other requirements specified by this part. In general, 
the documentation requirements for a professional provider are not less 
in the outpatient setting than the inpatient setting.
    Adequate Medical Documentation, Mental Health Records. Adequate 
medical documentation provides the means for measuring the type, 
frequency, and duration of active treatment mechanisms employed and 
progress under the treatment plan. Under CHAMPUS, it is required that 
adequate and sufficient clinical records be kept by the provider to 
substantiate that specific care was actually and appropriately 
furnished, was medically or psychologically necessary (as defined by 
this part), and to identify the individual(s) who provided the care. 
Each service provided or billed must be documented in the records. In 
determining whether medical records are adequate, the records will be 
reviewed under the generally acceptable standards (e.g., the applicable 
JCAHO standards and the provider's state or local licensing 
requirements) and other requirements specified by this part. It must be 
noted that the psychiatric and psychological evaluations, physician 
orders, the treatment plan, integrated progress notes

[[Page 48]]

(and physician progress notes if separate from the integrated progress 
notes), and the discharge summary are the more critical elements of the 
mental health record. However, nursing and staff notes, no matter how 
complete, are not a substitute for the documentation of services by the 
individual professional provider who furnished treatment to the 
beneficiary. In general, the documentation requirements of a 
professional provider are not less in the outpatient setting than the 
inpatient setting. Furthermore, even though a hospital that provides 
psychiatric care may be accredited under the JCAHO manual for hospitals 
rather than the consolidated standards manual, the critical elements of 
the mental health record listed above are required for CHAMPUS claims.
    Adjunctive dental care. Dental care which is medically necessary in 
the treatment of an otherwise covered medical (not dental) condition, is 
an integral part of the treatment of such medical condition and is 
essential to the control of the primary medical condition; or, is 
required in preparation for or as the result of dental trauma which may 
be or is caused by medically necessary treatment of an injury or disease 
(iatrogenic).
    Admission. The formal acceptance by a CHAMPUS authorized 
institutional provider of a CHAMPUS beneficiary for the purpose of 
diagnosis and treatment of illness, injury, pregnancy, or mental 
disorder.
    Adopted Child. A child taken into one's own family by legal process 
and treated as one's own child. In case of adoption, CHAMPUS eligibility 
begins as of 12:01 a.m. of the day of the final adoption decree.
    Note: There is no CHAMPUS benefit entitlement during any interim 
waiting period.
    All-Inclusive Per Diem Rate. The OCHAMPUS determined rate that 
encompasses the daily charge for inpatient care and, unless specifically 
excepted, all other treatment determined necessary and rendered as part 
of the treatment plan established for a patient, and accepted by 
OCHAMPUS.
    Allowable charge. The CHAMPUS-determined level of payment to 
physicians, other individual professional providers and other providers, 
based on one of the approved reimbursement methods set forth in 
Sec. 199.14 of this part. Allowable charge also may be referred to as 
the CHAMPUS-determined reasonable charge.
    Allowable cost. The CHAMPUS-determined level of payment to hospitals 
or other insitutions, based on one of the approved reimbursement methods 
set fourth in Sec. 199.14 of this part. Allowable cost may also be 
referred to as the CHAMPUS-determined reasonable cost.
    Ambulance. A specially designed vehicle for transporting the sick or 
injured that contains a stretcher, linens, first aid supplies, oxygen 
equipment, and such lifesaving equipment required by state and local 
law, and that is staffed by personnel trained to provide first aid 
treatment.
    Amount in dispute. The amount of money, determined under this part, 
that CHAMPUS would pay for medical services and supplies involved in an 
adverse determination being appealed if the appeal were resolved in 
favor of the appealing party. See Sec. 199.10 for additional information 
concerning the determination of ``amount in dispute'' under this part.
    Anesthesia services. The administration of an anesthetic agent by 
injection or inhalation, the purpose and effect of which is to produce 
surgical anesthesia characterized by muscular relaxation, loss of 
sensation, or loss of consciousness when administered by or under the 
direction of a physician or dentist in connection with otherwise covered 
surgery or obstetrical care, or shock therapy. Anesthesia services do 
not include hypnosis or acupuncture.
    Appealable issue. Disputed questions of fact which, if resolved in 
favor of the appealing party, would result in the authorization of 
CHAMPUS benefits, or approval as an authorized provider in accordance 
with this part. An appealable issue does not exist if no facts are in 
dispute, if no CHAMPUS benefits would be payable, or if there is no 
authorized provider, regardless of the resolution of any disputed facts. 
See Sec. 199.10 for additional information concerning the determination 
of ``appealable issue'' under this part.
    Appealing party. Any party to the initial determination who files an 
appeal

[[Page 49]]

of an adverse determination or requests a hearing under the provisions 
of this part.
    Appropriate medical care. (i) Services performed in connection with 
the diagnosis or treatment of disease or injury, pregnancy, mental 
disorder, or well-baby care which are in keeping with the generally 
accepted norms for medical practice in the United States;
    (ii) The authorized individual professional provider rendering the 
medical care is qualified to perform such medical services by reason of 
his or her training and education and is licensed or certified by the 
state where the service is rendered or appropriate national organization 
or otherwise meets CHAMPUS standards; and
    (iii) The services are furnished economically. For purposes of this 
part, ``economically'' means that the services are furnished in the 
least expensive level of care or medical environment adequate to provide 
the required medical care regardless of whether or not that level of 
care is covered by CHAMPUS.
    Approved teaching programs. For purposes of CHAMPUS, an approved 
teaching program is a program of graduate medical education which has 
been duly approved in its respective specialty or subspecialty by the 
Accreditation Council for Graduate Medical Education of the American 
Medical Association, by the Committee on Hospitals of the Bureau of 
Professional Education of the American Osteopathic Association, by the 
Council on Dental Education of the American Dental Association, or by 
the Council on Podiatry Education of the American Podiatry Association.
    Assistant Secretary of Defense (Health Affairs). An authority of the 
Assistant Secretary of Defense (Health Affairs) includes any person 
designated by the Assistant Secretary to exercise the authority 
involved.
    Attending physician. The physician who has the primary 
responsibility for the medical diagnosis and treatment of the patient. A 
consultant or an assistant surgeon, for example, would not be an 
attending physician. Under very extraordinary circumstances, because of 
the presence of complex, serious, and multiple, but unrelated, medical 
conditions, a patient may have more than one attending physician 
concurrently rendering medical treatment during a single period of time. 
An attending physician also may be a teaching physician.
    Authorized provider. A hospital or institutional provider, 
physician, or other individual professional provider, or other provider 
of services or supplies specifically authorized to provide benefits 
under CHAMPUS in Sec. 199.6 of this part.
    Backup hospital. A hospital which is otherwise eligible as a CHAMPUS 
institutional provider and which is fully capable of providing emergency 
care to a patient who develops complications beyond the scope of 
services of a given category of CHAMPUS-authorized freestanding 
institutional provider and which is accessible from the site of the 
CHAMPUS-authorized freestanding institutional provider within an average 
transport time acceptable for the types of medical emergencies usually 
associated with the type of care provided by the freestanding facility.
    Balance billing. A provider seeking any payment, other than any 
payment relating to applicable deductible and cost sharing amounts, from 
a beneficiary for CHAMPUS covered services for any amount in excess of 
the applicable CHAMPUS allowable cost or charge.
    Basic program. The primary medical benefits authorized under chapter 
55 of title 10 U.S. Code, and set forth in Sec. 199.4 of this part.
    Beneficiary. An individual who has been determined to be eligible 
for CHAMPUS benefits, as set forth in Sec. 199.3 of this part.
    Beneficiary liability. The legal obligation of a beneficiary, his or 
her estate, or responsible family member to pay for the costs of medical 
care or treatment received. Specifically, for the purposes of services 
and supplies covered by CHAMPUS, beneficiary liability includes any 
annual deductible amount, cost-sharing amounts, or, when a provider does 
not submit a claim on a participating basis on behalf of the 
beneficiary, amounts above the CHAMPUS-determined allowable cost or 
charge. Beneficiary liability also includes any expenses for medical

[[Page 50]]

or related services and supplies not covered by CHAMPUS.
    Birthing center. A health care provider which meets the applicable 
requirements established by Sec. 199.6(b) of this part.
    Birthing room. A room and environment designed and equipped to 
provide care, to accommodate support persons, and within which a woman 
with a low-risk, normal, full-term pregnancy can labor, deliver and 
recover with her infant.
    Brace. An orthopedic appliance or apparatus (an orthosis) used to 
support, align, or hold parts of the body in correct position. For the 
purposes of CHAMPUS, it does not include orthodontic or other dental 
appliances.
    Capped Rate. The maximum per diem or all-inclusive rate that CHAMPUS 
will allow for care.
    Case management. Case management is a collaborative process which 
assesses, plans, implements, coordinates, monitors, and evaluates the 
options and services required to meet an individual's health needs, 
using communication and available resources to promote quality, cost 
effective outcomes.
    Case managers. A licensed registered nurse, licensed clinical social 
worker, licensed psychologist or licensed physician who has a minimum of 
two (2) years case management experience.
    Certified nurse-midwife. An individual who meets the applicable 
requirements established by Sec. 199.6(c) of this part.
    Certified psychiatric nurse specialist. A licensed, registered nurse 
who meets the criteria in Sec. 199.6(c)(3)(iii)(G).
    CHAMPUS DRG-Based Payment System. A reimbursement system for 
hospitals which assigns prospectively-determined payment levels to each 
DRG based on the average cost of treating all CHAMPUS patients in a 
given DRG.
    CHAMPUS fiscal intermediary. An organization with which the 
Director, OCHAMPUS, has entered into a contract for the adjudication and 
processing of CHAMPUS claims and the performance of related support 
activities.
    CHAMPUS Health Benefits Advisors (HBAs). Those individuals located 
at Uniformed Services medical facilities (on occasion at other 
locations) and assigned the responsibility for providing CHAMPUS 
information, information concerning availability of care from the 
Uniformed Services direct medical care system, and generally assisting 
beneficiaries (or sponsors). The term also includes ``Health Benefits 
Counselor'' and ``CHAMPUS Advisor.''
    Chemotherapy. The administration of approved antineoplastic drugs 
for the treatment of malignancies (cancer) via perfusion, infusion, or 
parenteral methods of administration.
    Child. An unmarried legitimate child, adopted child, stepchild, or 
illegitimate child, who otherwise meets the requirements (including age 
requirements) set forth in Sec. 199.3(b)(2)(iv) of this part.
    Chiropractor. A practitioner of chiropractic (also called 
chiropraxis); essentially a system of therapeutics based upon the claim 
that disease is caused by abnormal function of the nerve system. It 
attempts to restore normal function of the nerve system by manipulation 
and treatment of the structures of the human body, especially those of 
the spinal column.
    Note: Services of chiropractors are not covered by CHAMPUS.
    Christian science nurse. An individual who has been accredited as a 
Christian Science Nurse by the Department of Care of the First Church of 
Christ, Scientist, Boston, Massachusetts, and listed (or eligible to be 
listed) in the Christian Science Journal at the time the service is 
provided. The duties of Christian Science nurses are spiritual and are 
nonmedical and nontechnical nursing care performed under the direction 
of an accredited Christian Science practitioner. There exist two levels 
of Christian Science nurse accreditation:
    (i) Graduate Christian Science nurse. This accreditation is granted 
by the Department of Care of the First Church of Christ, Scientist, 
Boston, Massachusetts, after completion of a 3-year course of 
instruction and study.
    (ii) Practical Christian Science nurse. This accreditation is 
granted by the Department of Care of the First Church of Christ, 
Scientist, Boston, Massachusetts, after completion of a 1-year course of 
instruction and study.
    Christian Science practitioner. An individual who has been 
accredited as a Christian Science Practitioner for the

[[Page 51]]

First Church, Scientist, Boston, Massachusetts, and listed (or eligible 
to be listed) in the Christian Science Journal at the time the service 
is provided. An individual who attains this accreditation has 
demonstrated results of his or her healing through faith and prayer 
rather than by medical treatment. Instruction is executed by an 
accredited Christian Science teacher and is continuous.
    Christian Science sanatorium. A sanatorium either operated by the 
First Church of Christ, Scientist, or listed and certified by the First 
Church of Christ, Scientist, Boston, Massachusetts.
    Chronic medical condition. A medical condition that is not curable, 
but which is under control through active medical treatment. Such 
chronic conditions may have periodic acute episodes and may require 
intermittent inpatient hospital care. However, a chronic medical 
condition can be controlled sufficiently to permit generally 
continuation of some activities of persons who are not ill (such as work 
and school).
    Chronic renal disease (CRD). The end stage of renal disease which 
requires a continuing course of dialysis or a kidney transplantation to 
ameliorate uremic symptoms and maintain life.
    Clinical psychologist. A psychologist, certified or licensed at the 
independent practice level in his or her state, who meets the criteria 
in Sec. 199.6(c)(3)(iii)(A).
    Clinical social worker. An individual who is licensed or certified 
as a clinical social worker and meets the criteria listed in Sec. 199.6.
    Clinically Meaningful Endpoints. As used the definition of reliable 
evidence in this paragraph (b) and Sec. 199.4(g)(15), the term 
clinically meaningful endpoints means objectively measurable outcomes of 
clinical interventions or other medical procedures, expressed in terms 
of survival, severity of illness or condition, extent of adverse side 
effects, diagnostic capability, or other effect on bodily functions 
directly associated with such results.
    Collateral visits. Sessions with the patient's family or significant 
others for purposes of information gathering or implementing treatment 
goals.
    Combined daily charge. A billing procedure by an inpatient facility 
that uses an inclusive flat rate covering all professional and ancillary 
charges without any itemization.
    Complications of pregnancy. One of the following, when commencing or 
exacerbating during the term of the pregnancy:
    (i) Caesarean delivery; hysterotomy.
    (ii) Pregnancy terminating before expiration of 26 weeks, except a 
voluntary abortion.
    (iii) False labor or threatened miscarriage.
    (iv) Nephritis or pyelitis of pregnancy.
    (v) Hyperemesis gravidarum.
    (vi) Toxemia.
    (vii) Aggravation of a heart condition or diabetes.
    (viii) Premature rupture of membrane.
    (ix) Ectopic pregnancy.
    (x) Hemorrhage.
    (xi) Other conditions as may be determined by the Director, 
OCHAMPUS, or a designee.
    Confinement. That period of time from the day of admission to a 
hospital or other institutional provider, to the day of discharge, 
transfer, or separation from the facility, or death. Successive 
admissions also may qualify as one confinement provided not more than 60 
days have elapsed between the successive admissions, except that 
successive admissions related to a single maternity episode shall be 
considered one confinement, regardless of the number of days between 
admissions.
    Conflict of Interest. Includes any situation where an active duty 
member (including a reserve member while on active duty) or civilian 
employee of the United States Government, through an official federal 
position, has the apparent or actual opportunity to exert, directly or 
indirectly, any influence on the referral of CHAMPUS beneficiaries to 
himself or herself or others with some potential for personal gain or 
appearance of impropriety. For purposes of this part, individuals under 
contract to a Uniformed Service may be involved in a conflict of 
interest situation through the contract position.

[[Page 52]]

    Congenital anomaly. A condition existing at or from birth that is a 
significant deviation from the common form or norm and is other than a 
common racial or ethnic feature. For purposes of CHAMPUS, congenital 
anomalies do not include anomalies relating to teeth (including 
malocclusion or missing tooth buds) or structures supporting the teeth, 
or to any form of hermaphroditism or sex gender confusion. Examples of 
congenital anomalies are harelip, birthmarks, webbed fingers or toes, or 
such other conditions that the Director, OCHAMPUS, or a designee, may 
determine to be congenital anomalies.
    Note: Also refer to Sec. 199.4(e)(7) of this part.
    Consultation. A deliberation with a specialist physician or dentist 
requested by the attending physician primarily responsible for the 
medical care of the patient, with respect to the diagnosis or treatment 
in any particular case. A consulting physician or dentist may perform a 
limited examination of a given system or one requiring a complete 
diagnostic history and examination. To qualify as a consultation, a 
written report to the attending physician of the findings of the 
consultant is required.
    Note: Staff consultations required by rules and regulations of the 
medical staff of a hospital or other institutional provider do not 
qualify as consultation.
    Consulting physician or dentist. A physician or dentist, other than 
the attending physician, who performs a consultation.
    Conviction. For purposes of this part, ``conviction'' or 
``convicted'' means that (1) a judgment of conviction has been entered, 
or (2) there has been a finding of guilt by the trier of fact, or (3) a 
plea of guilty or a plea of nolo contendere has been accepted by a court 
of competent jurisdiction, regardless of whether an appeal is pending.
    Coordination of benefits. The coordination, on a primary or 
secondary payer basis, of the payment of benefits between two or more 
health care coverages to avoid duplication of benefit payments.
    Corporate services provider. A health care provider that meets the 
applicable requirements established by Sec. 199.6(f).
    Cosmetic, reconstructive, or plastic surgery. Surgery that can be 
expected primarily to improve the physical appearance of a beneficiary, 
or that is performed primarily for psychological purposes, or that 
restores form, but does not correct or improve materially a bodily 
function.
    Cost-share. The amount of money for which the beneficiary (or 
sponsor) is responsible in connection with otherwise covered inpatient 
and outpatient services (other than the annual fiscal year deductible or 
disallowed amounts) as set forth in Secs. 199.4(f) and 199.5(b) of this 
part. Cost-sharing may also be referred to as ``co-payment.''
    Custodial care. Care rendered to a patient:
    (i) who is disabled mentally or physically and such disability is 
expected to continue and be prolonged, and
    (ii) who requires a protected, monitored, or controlled environment 
whether in an institution or in the home, and
    (iii) who requires assistance to support the essentials of daily 
living, and
    (iv) who is not under active and specific medical, surgical, or 
psychiatric treatment that will reduce the disability to the extent 
necessary to enable the patient to function outside the protected, 
monitored, or controlled environment.
    A custodial care determination is not precluded by the fact that a 
patient is under the care of a supervising or attending physician and 
that services are being ordered and prescribed to support and generally 
maintain the patient's condition, or provide for the patient's comfort, 
or ensure the manageability of the patient. Further, a custodial care 
determination is not precluded because the ordered and prescribed 
services and supplies are being provided by an R.N., L.P.N., or L.V.N.
    Note: The determination of custodial care in no way implies that the 
care being rendered is not required by the patient; it only means that 
it is the kind of care that is not covered under CHAMPUS. A program of 
physical and mental rehabilitation which is designed to reduce a 
disability is not custodial care as long as the objective of the program 
is a reduced level of care.
    Days. Calendar days.
    Deceased service member. A person who, at the time of his or her 
death, was an active duty member of a Uniformed Service under a call or 
order

[[Page 53]]

that did not specify a period of 30 days or less; or a retiree of a 
Uniformed Service.
    Deductible. Payment by a beneficiary of the first $50 of the 
CHAMPUS-determined allowable costs or charges for otherwise covered 
outpatient services or supplies provided in any one fiscal year; or for 
a family, the aggregate payment by two or more beneficiaries who submit 
claims of the first $100.
    Deductible certificate. A statement issued to the beneficiary (or 
sponsor) by a CHAMPUS fiscal intermediary certifying to deductible 
amounts satisfied by a CHAMPUS beneficiary for any applicable fiscal 
year.
    Defense Enrollment Eligibility Reporting System (DEERS). The 
automated system that is composed of two phases:
    (i) Enrolling all active duty and retired service members, their 
dependents, and the dependents of deceased service members, and
    (ii) Verifying their eligibility for health care benefits in the 
direct care facilities and through CHAMPUS.
    Dental care. Services relating to the teeth and their supporting 
structures.
    Dentist. Doctor of Dental Medicine (D.M.D.) or Doctor of Dental 
Surgery (D.D.S.) who is licensed to practice dentistry by an appropriate 
authority.
    Dependent. A person who bears any of the following relationships to 
an active duty member (under a call or order that does not specify a 
period of 30 days or less), retiree, or deceased active duty member or 
retiree, of a Uniformed Service, that is, lawful spouse, former spouse 
(in certain circumstances), unremarried widow or widower, or child; or a 
spouse and child of an active duty member of the armed forces of foreign 
North Atlantic Treaty Organization (NATO) nations (refer to 
Sec. 199.3(b) of this part).
    Deserter or desertion status. A service member is a deserter, or in 
a desertion status, when the Uniformed Service concerned has made an 
administrative determination to that effect, or the member's period of 
unauthorized absence has resulted in a court-martial conviction of 
desertion. Administrative declarations of desertion normally are made 
when a member has been an unauthorized absentee for over 30 days, but 
particular circumstances may result in an earlier declaration. 
Entitlement to CHAMPUS benefits ceases as of 12:01 a.m. on the day 
following the day the desertion status is declared. Benefits are not to 
be authorized for treatment received during a period of unauthorized 
absence that results in a court-martial conviction for desertion. 
Dependent eligibility for benefits is reestablished when a deserter is 
returned to military control and continues, even though the member may 
be in confinement, until any discharge is executed. When a deserter 
status is later found to have been determined erroneously, the status of 
deserter is considered never to have existed, and the member's 
dependents will have been eligible continuously for benefits under 
CHAMPUS.
    Diagnosis-Related Groups (DRGs). Diagnosis-related groups (DRGs) are 
a method of dividing hospital patients into clinically coherent groups 
based on the consumption of resources. Patients are assigned to the 
groups based on their principal diagnosis (the reason for admission, 
determined after study), secondary diagnoses, procedures performed, and 
the patient's age, sex, and discharge status.
    Diagnostic admission. An admission to a hospital or other authorized 
institutional provider, or an extension of a stay in such a facility, 
primarily for the purpose of performing diagnostic tests, examinations, 
and procedures.
    Director, OCHAMPUS. An authority of the Director, OCHAMPUS includes 
any person designated by the Director, OCHAMPUS to exercise the 
authority involved.
    Doctor of Dental Medicine (D.M.D.). A person who has received a 
degree in dentistry, that is, that department of the healing arts which 
is concerned with the teeth, oral cavity, and associated structures.
    Doctor of Medicine (M.D.). A person who has graduated from a college 
of allopathic medicine and who is entitled legally to use the 
designation M.D.
    Doctor of Osteopathy (D.O.). A practitioner of osteopathy, that is, 
a system of therapy based on the theory that the body is capable of 
making its own remedies against disease and other toxic

[[Page 54]]

conditions when it is in normal structural relationship and has 
favorable environmental conditions and adequate nutrition. It utilizes 
generally accepted physical, medicinal, and surgical methods of 
diagnosis and therapy, while placing chief emphasis on the importance of 
normal body mechanics and manipulative methods of detecting and 
correcting faulty structure.
    Domiciliary care. Inpatient institutional care provided the 
beneficiary not because it is medically necessary, but because the care 
in the home setting is not available, is unsuitable, or members of the 
patient's family are unwilling to provide the care. Institutionalization 
because of abandonment constitutes domiciliary care.
    Note: The terms ``domiciliary'' and ``custodial care'' represent 
separate concepts and are not interchangeable. Domiciliary care is not 
covered under either the CHAMPUS Basic Program or the Program for 
Persons with Disabilities (PFPWD).
    Donor. An individual who supplies living tissue or material to be 
used in another body, such as a person who furnishes a kidney for renal 
transplant.
    Double coverage. When a CHAMPUS beneficiary also is enrolled in 
another insurance, medical service, or health plan that duplicates all 
or part of a beneficiary's CHAMPUS benefits.
    Double coverage plan. The specific insurance, medical service, or 
health plan under which a CHAMPUS beneficiary has entitlement to medical 
beneifts that duplicate CHAMPUS benefits in whole or in part. Double 
coverage plans do not include:
    (i) Medicaid.
    (ii) Coverage specifically designed to supplement CHAMPUS benefits.
    (iii) Entitlement to receive care from the Uniformed Services 
medical facilities; or
    (iv) Entitlement to receive care from Veterans Administration 
medical care facilities.
    Dual Compensation. Federal Law (5 U.S.C. 5536) prohibits active duty 
members or civilian employees of the United States Government from 
receiving additional compensation from the government above their normal 
pay and allowances. This prohibition applies to CHAMPUS cost-sharing of 
medical care provided by active duty members or civilian government 
employees to CHAMPUS beneficiaries.
    Durable equipment. A device or apparatus which does not qualify as 
Durable Medical Equipment (as defined in this section), and which is 
essential to the efficient arrest or reduction of functional loss 
resulting from a qualifying condition as provided by Sec. 199.5.
    Durable medical equipment. Equipment for which the allowable charge 
is over $100 and which:
    (1) Is medically necessary for the treatment of a covered illness or 
injury;
    (2) Improves the function of a malformed, diseased, or injured body 
part, or retards further deterioration of a patient's physical 
condition;
    (3) Is primarily and customarily designed and intended to serve a 
medical purpose rather than primarily for transportation, comfort, or 
convenience;
    (4) Can withstand repeated use;
    (5) Provides the medically appropriate level of performance and 
quality for the medical condition present (that is, nonluxury and 
nondeluxe);
    (6) Is other than spectacles, eyeglasses, contact lenses, or other 
optical devices; hearing aids; or other communication devices; and
    (7) Is other than exercise equipment, spas, whirlpools, hot tubs, 
swimming pools or other such items.
    Economic interest. (1) Any right, title, or share in the income, 
remuneration, payment, or profit of a CHAMPUS-authorized provider, or of 
an individual or entity eligible to be a CHAMPUS-authorized provider, 
resulting, directly or indirectly, from a referral relationship; or any 
direct or indirect ownership, right, title, or share, including a 
mortgage, deed of trust, note, or other obligation secured (in whole or 
in part) by one entity for another entity in a referral or accreditation 
relationship, which is equal to or exceeds 5 percent of the total 
property and assets of the other entity.
    (2) A referral relationship exists when a CHAMPUS beneficiary is 
sent, directed, assigned or influenced to use a specific CHAMPUS-
authorized provider, or a specific individual or entity eligible to be a 
CHAMPUS-authorized provider.

[[Page 55]]

    (3) An accreditation relationship exists when a CHAMPUS-authorized 
accreditation organization evaluates for accreditation an entity that is 
an applicant for, or recipient of CHAMPUS-authorized provider status.
    Emergency inpatient admission. An unscheduled, unexpected, medically 
necessary admission to a hospital or other authorized institutional 
provider for treatment of a medical condition meeting the definition of 
medical emergency and which is determined to require immediate inpatient 
treatment by the attending physician.
    Entity. For purposes of Sec. 199.9(f)(1), ``entity'' includes a 
corporation, trust, partnership, sole proprietorship or other kind of 
business enterprise that is or may be eligible to receive reimbursement 
either directly or indirectly from CHAMPUS.
    Essentials of daily living. Care that consists of providing food 
(including special diets), clothing, and shelter; personal hygiene 
services; observation and general monitoring; bowel training or 
management; safety precautions; general preventive procedures (such as 
turning to prevent bedsores); passive exercise; companionship; 
recreation; transportation; and such other elements of personal care 
that reasonably can be performed by an untrained adult with minimal 
instruction or supervision.
    External Partnership Agreement. The External Partnership Agreement 
is an agreement between a military treatment facility commander and a 
CHAMPUS authorized institutional provider, enabling Uniformed Services 
health care personnel to provide otherwise covered medical care to 
CHAMPUS beneficiaries in a civilian facility under the Military-Civilian 
Health Services Partnership Program. Authorized costs associated with 
the use of the facility will be financed through CHAMPUS under normal 
cost-sharing and reimbursement procedures currently applicable under the 
basic CHAMPUS.
    External Resource Sharing Agreement. A type External Partnership 
Agreement, established in the context of the TRICARE program by 
agreement of a military medical treatment facility commander and an 
authorized TRICARE contractor. External Resource Sharing Agreements may 
incorporate TRICARE features in lieu of standard CHAMPUS features that 
would apply to standard External Partnership Agreements.
    Extramedical individual providers of care. Individuals who do 
counseling or nonmedical therapy and whose training and therapeutic 
concepts are outside the medical field, as specified in Sec. 199.6 of 
this part.
    Extraordinary condition. A complex clinical condition, which 
resulted, or is expected to result, in extraordinary TRICARE/CHAMPUS 
costs or utilization, based on thresholds established by the Director, 
OCHAMPUS, or designee.
    Former spouse. A former husband or wife of a Uniformed Service 
member or former mmeber who meets the criteria as set forth in 
Sec. 199.3(b)(2)(ii) of this part.
    Fraud. For purposes of this part, fraud is defined as (1) a 
deception or misrepresentation by a provider, beneficiary, sponsor, or 
any person acting on behalf of a provider, sponsor, or beneficiary with 
the knowledge (or who had reason to know or should have known) that the 
deception or misrepresentation could result in some unauthorized CHAMPUS 
benefit to self or some other person, or some unauthorized CHAMPUS 
payment, or (2) a claim that is false or fictitious, or includes or is 
supported by any written statement which asserts a material fact which 
is false or fictitious, or includes or is supported by any written 
statement that (a) omits a material fact and (b) is false or fictitious 
as a result of such omission and (c) is a statement in which the person 
making, presenting, or submitting such statement has a duty to include 
such material fact. It is presumed that, if a deception or 
misrepresentation is established and a CHAMPUS claim is filed, the 
person responsible for the claim had the requisite knowledge. This 
presumption is rebuttable only by substantial evidence. It is further 
presumed that the provider of the services is responsible for the 
actions of all individuals who file a claim on behalf of the provider

[[Page 56]]

(for example, billing clerks); this presumption may only be rebutted by 
clear and convincing evidence.
    Freestanding. Not ``institution-affiliated'' or ``institution-
based.''
    Full-time course of higher education. A complete, progressive series 
of studies to develop attributes such as knowledge, skill, mind, and 
character, by formal schooling at a college or university, and which 
meets the criteria set out in Sec. 199.3 of this part. To qualify as 
full-time, the student must be carrying a course load of a minimum of 12 
credit hours or equivalent each semester.
    General staff nursing service. All nursing care (other than that 
provided by private duty nurses) including, but not limited to, general 
duty nursing, emergency room nursing, recovery room nursing, intensive 
nursing care, and group nursing arrangements performed by nursing 
personnel on the payroll of the hospital or other authorized 
institution.
    Good faith payments. Those payments made to civilian sources of 
medical care who provided medical care to persons purporting to be 
eligible beneficiaries but who are determined later to be ineligible for 
CHAMPUS benefits. (The ineligible person usually possesses an erroneous 
or illegal identification card.) To be considered for good faith 
payments, the civilian source of care must have exercised reasonable 
precautions in identifying a person claiming to be an eligible 
beneficiary.
    Habilitation. The provision of functional capacity, absent from 
birth due to congenital anomaly or developmental disorder, which 
facilitates performance of an activity in the manner, or within the 
range considered normal, for a human being.
    Handicap. For the purposes of this part, the term ``handicap'' is 
synonymous with the term ``disability.''
    High-risk pregnancy. A pregnancy is high-risk when the presence of a 
currently active or previously treated medical, anatomical, 
physiological illness or condition may create or increase the likelihood 
of a detrimental effect on the mother, fetus, or newborn and presents a 
reasonable possibility of the development of complications during labor 
or delivery.
    Hospice care. Hospice care is a program which provides an integrated 
set of services and supplies designed to care for the terminally ill. 
This type of care emphasizes palliative care and supportive services, 
such as pain control and home care, rather than cure-oriented services 
provided in institutions that are otherwise the primary focus under 
CHAMPUS. The benefit provides coverage for a humane and sensible 
approach to care during the last days of life for some terminally ill 
patients.
    Hospital, acute care (general and special). An institution that 
meets the criteria as set forth in Sec. 199.6(b)(4)(i) of this part.
    Hospital, long-term (tuberculosis, chronic care, or rehabilitation). 
An institution that meets the criteria as set forth in 
Sec. 199.6(b)(4)(iii) of this part.
    Hospital, phychiatric. An institution that meets the criteria as set 
forth in Sec. 199.6(b)(4)(ii) of this part.
    Illegitimate child. A child not recognized as a lawful offspring; 
that is, a child born of parents not married to each other.
    Immediate family. The spouse, natural parent, child and sibling, a 
dopted child and adoptive parent, stepparent, stepchild, grandparent, 
grandchild, stepbrother and stepsister, father-in-law, mother-in-law of 
the beneficiary, or provider, as appropriate. For purposes of this 
definition only, to determine who may render services to a beneficiary, 
the step-relationship continues to exist even if the marriage upon which 
the relationship is based terminates through divorce or death of one of 
the parents.
    Independent laboratory. A freestanding laboratory approved for 
participation under Medicare and certified by the Health Care Financing 
Administration.
    Infirmaries. Facilities operated by student health departments of 
colleges and universities to provide inpatient or outpatient care to 
enrolled students. When specifically approved by the Director, OCHAMPUS, 
or a designee, a boarding school infirmary also is included.

[[Page 57]]

    Initial determination. A formal written decision on a CHAMPUS claim, 
a request for benefit authorization, a request by a provider for 
approval as an authorized CHAMPUS provider, or a decision disqualifying 
or excluding a provider as an authorized provider under CHAMPUS. 
Rejection of a claim or a request for benefit or provider authorization 
for failure to comply with administrative requirements, including 
failure to submit reasonably requested information, is not an initial 
determination. Responses to general or specific inquiries regarding 
CHAMPUS benefits are not initial determinations.
    In-out surgery. Surgery performed in the outpatient department of a 
hospital or other institutional provider, in a physician's office or the 
office of another individual professional provider, in a clinic, or in a 
``freestanding'' ambulatory surgical center which does not involve a 
formal inpatient admission for a period of 24 hours or more.
    Inpatient. A patient who has been admitted to a hospital or other 
authorized institution for bed occupancy for purposes of receiving 
necessary medical care, with the reasonable expectation that the patient 
will remain in the institution at least 24 hours, and with the 
registration and assignment of an inpatient number or designation. 
Institutional care in connection with in and out (ambulatory) surgery is 
not included within the meaning of inpatient whether or not an inpatient 
number or designation is made by the hospital or other institution. If 
the patient has been received at the hospital, but death occurs before 
the actual admission occurs, an inpatient admission exists as if the 
patient had lived and had been formally admitted.
    Institution-affiliated. Related to a CHAMPUS-authorized 
institutional provider through a shared governing body but operating 
under a separate and distinct license or accreditation.
    Institution-based. Related to a CHAMPUS-authorized institutional 
provider through a shared governing body and operating under a common 
license and shared accreditation.
    Institutional provider. A health care provider which meets the 
applicable requirements established by Sec. 199.6(b) of this part.
    Intensive care unit (ICU). A special segregated unit of a hospital 
in which patients are concentrated by reason of serious illness, usually 
without regard to diagnosis. Special lifesaving techniques and equipment 
regularly and immediately are available within the unit, and patients 
are under continuous observation by a nursing staff specially trained 
and selected for the care of this type patient. The unit is maintained 
on a continuing rather than an intermittent or temporary basis. It is 
not a postoperative recovery room nor a postanesthesia room. In some 
large or highly specialized hospitals, the ICUs may be further refined 
for special purposes, such as for respiratory conditions, cardiac 
surgery, coronary care, burn care, or neurosurgery. For the purposes of 
CHAMPUS, these specialized units would be considered ICUs if they 
otherwise conformed to the definition of an ICU.
    Intern. A graduate of a medical or dental school serving in a 
hospital in preparation to being licensed to practice medicine or 
dentistry.
    Internal Partnership Agreement. The Internal Partnership Agreement 
is an agreement between a military treatment facility commander and a 
CHAMPUS-authorized civilian health care provider which enables the use 
of civilian health care personnel or other resources to provide medical 
care to CHAMPUS beneficiaries on the premises of a military treatment 
facility under the Military-Civilian Health Services Partnership 
Program. These internal agreements may be established when a military 
treatment facility is unable to provide sufficient health care services 
for CHAMPUS beneficiaries due to shortages of personnel and other 
required resources.
    Internal Resource Sharing Agreement. A type of Internal Partnership 
Agreement, established in the context of the TRICARE program by 
agreement of a military medical treatment facility commander and 
authorized TRICARE contractor. Internal Resource Sharing Agreements may 
incorporate TRICARE features in lieu of standard CHAMPUS features that 
would apply to standard Internal Partnership Agreements.

[[Page 58]]

    Item, Service, or Supply. Includes (1) any item, device, medical 
supply, or service claimed to have been provided to a beneficiary 
(patient) and listed in an itemized claim for CHAMPUS payment or a 
request for payment, or (2) in the case of a claim based on costs, any 
entry or omission in a cost report, books of account, or other documents 
supporting the claim.
    Laboratory and pathological services. Laboratory and pathological 
examinations (including machine diagnostic tests that produce hard-copy 
results) when necessary to, and rendered in connection with medical, 
obstetrical, or surgical diagnosis or treatment of an illness or injury, 
or in connection with well-baby care.
    Legitimized child. A formerly illegitimate child who is considered 
legitimate by reason of qualifying actions recognized in law.
    Licensed practical nurse (L.P.N.). A person who is prepared 
specially in the scientific basis of nursing; who is a graduate of a 
school of practical nursing; whose qualifications have been examined by 
a state board of nursing; and who has been authorized legally to 
practice as an L.P.N. under the supervision of a physician.
    Licensed vocational nurse (L.V.N.) A person who specifically is 
prepared in the scientific basis or nursing; who is a graduate of a 
school of vocational nursing; whose qualifications have been examined by 
a state board of nursing; and who has been authorized legally to 
practice as a L.V.N. under the supervision of a physician.
    Long-term hospital care. Any inpatient hospital stay that exceeds 30 
days.
    Low-risk pregnancy. A pregnancy is low-risk when the basis for the 
ongoing clinical expectation of a normal uncomplicated birth, as defined 
by reasonable and generally accepted criteria of maternal and fetal 
health, is documented throughout a generally accepted course of prenatal 
care.
    Major life activity. Breathing, cognition, hearing, seeing, and age 
appropriate ability essential to bathing, dressing, eating, grooming, 
speaking, stair use, toilet use, transferring, and walking.
    Marriage and family therapist, certified. An extramedical individual 
provider who meets the requirements outlined in Sec. 199.6.
    Maternity care. Care and treatment related to conception, delivery, 
and abortion, including prenatal and postnatal care (generally through 
the 6th post-delivery week), and also including treatment of the 
complications of pregnancy.
    Medicaid. Those medical benefits authorized under Title XIX of the 
Social Security Act provided to welfare recipients and the medically 
indigent through programs administered by the various states.
    Medical. The generally used term which pertains to the diagnosis and 
treatment of illness, injury, pregnancy, and mental disorders by trained 
and licensed or certified health professionals. For purposes of CHAMPUS, 
the term ``medical'' should be understood to include ``medical, 
psychological, surgical, and obstetrical,'' unless it is specifically 
stated that a more restrictive meaning is intended.
    Medical emergency. The sudden and unexpected onset of a medical 
condition or the acute exacerbation of a chronic condition that is 
threatening to life, limb, or sight, and requires immediate medical 
treatment or which manifests painful symptomatology requiring immediate 
palliative efforts to alleviate suffering. Medical emergencies include 
heart attacks, cardiovascular accidents, poisoning, convulsions, kidney 
stones, and such other acute medical conditions as may be determined to 
be medical emergencies by the Director, OCHAMPUS, or a designee. In the 
case of a pregnancy, a medical emergency must involve a sudden and 
unexpected medical complication that puts the mother, the baby, or both, 
at risk. Pain would not, however, qualify a maternity case as an 
emergency, nor would incipient birth after the 34th week of gestation, 
unless an otherwise qualifying medical condition is present. Examples of 
medical emergencies related to pregnancy or delivery are hemorrhage, 
ruptured membrane with prolapsed cord, placenta previa, abruptio 
placenta, presence of shock or unconsciousness, suspected heart attack 
or stroke, or trauma (such as injuries received in an automobile 
accident).

[[Page 59]]

    Medical supplies and dressings (consumables). Necessary medical or 
surgical supplies (exclusive of durable medical equipment) that do not 
withstand prolonged, repeated use and that are needed for the proper 
medical management of a condition for which benefits are otherwise 
authorized under CHAMPUS, on either an inpatient or outpatient basis. 
Examples include disposable syringes for a diabetic, colostomy sets, 
irrigation sets, and ace bandages.
    Medically or psychologically necessary. The frequency, extent, and 
types of medical services or supplies which represent appropriate 
medical care and that are generally accepted by qualified professionals 
to be reasonable and adequate for the diagnosis and treatment of 
illness, injury, pregnancy, and mental disorders or that are reasonable 
and adequate for well-baby care.
    Medicare. These medical benefits authorized under Title XVIII of the 
Social Security Act provided to persons 65 or older, certain disabled 
persons, or persons with chronic renal disease, through a national 
program administered by the DHHS, Health Care Financing Administration, 
Medicare Bureau.
    Mental disorder. For purposes of the payment of CHAMPUS benefits, a 
mental disorder is a nervous or mental condition that involves a 
clinically significant behavioral or psychological syndrome or pattern 
that is associated with a painful symptom, such as distress, and that 
impairs a patient's ability to function in one or more major life 
activities. Additionally, the mental disorder must be one of those 
conditions listed in the DSM-III.
    Mental health counselor. An extramedical individual provider who 
meets the requirements outlined in Sec. 199.6.
    Mental health therapeutic absence. A therapeutically planned absence 
from the inpatient setting. The patient is not discharged from the 
facility and may be away for periods of several hours to several days. 
The purpose of the therapeutic absence is to give the patient an 
opportunity to test his or her ability to function outside the inpatient 
setting before the actual discharge.
    Missing in action (MIA). A battle casualty whose whereabouts and 
status are unknown, provided the absence appears to be involuntary and 
the service member is not known to be in a status of unauthorized 
absence.
    Note: Claims for eligible CHAMPUS beneficiaries whose sponsor is 
classified as MIA are processed as dependents of an active duty service 
member.
    Morbid obesity. The body weight is 100 pounds over ideal weight for 
height and bone structure, according to the most current Metropolitan 
Life Table, and such weight is in association with severe medical 
conditions known to have higher mortality rates in association with 
morbid obesity; or, the body weight is 200 percent or more of the ideal 
weight for height and bone structure according to the most current 
Metropolitan Life Table. The associated medical conditions are diabetes 
mellitus, hypertension, cholecystitis, narcolepsy, pickwickian syndrome 
(and other severe respiratory diseases), hypothalmic disorders, and 
severe arthritis of the weight-bearing joints.
    Most-favored rate. The lowest usual charge to any individual or 
third-party payer in effect on the date of the admission of a CHAMPUS 
beneficiary.
    Natural childbirth. Childbirth without the use of chemical induction 
or augmentation of labor or surgical procedures other than episiotomy or 
perineal repair.
    Naturopath. A person who practices naturopathy, that is, a drugless 
system of therapy making use of physical forces such as air, light, 
water, heat, and massage.
    Note: Services of a naturopath are not covered by CHAMPUS.
    NAVCARE clinics. Contractor owned, staffed, and operated primary 
clinics exclusively serving uniformed services beneficiaries pursuant to 
contracts awarded by a Military Department.
    Nonavailability statement. A certification by a commander (or a 
designee) of a Uniformed Services medical treatment facility, recorded 
on DEERS, generally for the reason that the needed medical care being 
requested by a non-TRICARE Prime enrolled beneficiary cannot be provided 
at the facility concerned because the necessary resources are not 
available in the time frame needed.

[[Page 60]]

    Nonparticipating provider. A hospital or other authorized 
institutional provider, a physician or other authorized individual 
professional provider, or other authorized provider that furnished 
medical services or supplies to a CHAMPUS beneficiary, but who did not 
agree on the CHAMPUS claim form to participate or to accept the CHAMPUS-
determined allowable cost or charge as the total charge for the 
services. A nonparticipating provider looks to the beneficiary or 
sponsor for payment of his or her charge, not CHAMPUS. In such cases, 
CHAMPUS pays the beneficiary or sponsor, not the provider.
    North Atlantic Treaty Organization (NATO) member. A military member 
of an armed force of a foreign NATO nation who is on active duty and 
who, in connection with official duties, is stationed in or passing 
through the United States. The foreign NATO nations are Belgium, Canada, 
Denmark, France, Federal Republic of Germany, Greece, Iceland, Italy, 
Luxembourg, the Netherlands, Norway, Portugal, Spain, Turkey, and the 
United Kingdom.
    Not-for-profit entity. An organization or institution owned and 
operated by one or more nonprofit corporations or associations formed 
pursuant to applicable state laws, no part of the net earnings of which 
inures, or may lawfully inure, to the benefit of any private shareholder 
or individual.
    Occupational therapist. A person who is trained specially in the 
skills and techniques of occupational therapy (that is, the use of 
purposeful activity with individuals who are limited by physical injury 
of illness, psychosocial dysfunction, developmental or learning 
disabilities, poverty and cultural differences, or the aging process in 
order to maximize independence, prevent disability, and maintain health) 
and who is licensed to administer occupational therapy treatments 
prescribed by a physician.
    Official formularies. A book of official standards for certain 
pharmaceuticals and preparations that are not included in the U.S. 
Pharmacopeia.
    Optometrist (Doctor of Optometry). A person trained and licensed to 
examine and test the eyes and to treat visual defects by prescribing and 
adapting corrective lenses and other optical aids, and by establishing 
programs of exercises.
    Oral surgeon (D.D.S. or D.M.D.). A person who has received a degree 
in dentistry and who limits his or her practice to oral surgery, that 
is, that branch of the healing arts that deals with the diagnosis and 
the surgical correction and adjunctive treatment of diseases, injuries, 
and defects of the mouth, the jaws, and associated structures.
    Orthopedic shoes. Shoes prescribed by an orthopedic surgeon to 
effect changes in foot or feet position and alignment and which are not 
an integral part of a brace.
    Other allied health professionals. Individual professional providers 
other than physicians, dentists, or extramedical individual providers, 
as specified in Sec. 199.6 of this part.
    Other special institutional providers. Certain specialized medical 
treatment facilities, either inpatient or outpatient, other than those 
specifically defined, that provide courses of treatment prescribed by a 
doctor of medicine or osteopathy; when the patient is under the 
supervision of a doctor of medicine or osteopathy during the entire 
course of the inpatient admission or the outpatient treatment; when the 
type and level of care and services rendered by the institution are 
otherwise authorized in this Regulation; when the facility meets all 
licensing or other certification requirements that are extant in the 
jurisdiction in which the facility is located geographically; which is 
accredited by the Joint Commission on Accreditation if an appropriate 
accreditation program for the given type of facility is available; and 
which is not a nursing home, intermediate facility, halfway house, home 
for the aged, or other institution of similar purpose.
    Outpatient. A patient who has not been admitted to a hospital or 
other authorized institution as an inpatient.
    Ownership or control interest. For purposes of Sec. 199.9(f)(1), a 
``person with an ownership or control interest'' is anyone who
    (1) Has directly or indirectly a 5 percent or more ownership 
interest in the entity; or

[[Page 61]]

    (2) Is the owner of a whole or part interest in any mortgage, deed 
of trust, note, or other obligation secured (in whole or in part) by the 
entity or any of the property or assets thereof, which whole or part 
interest is equal to or exceeds 5 percent of the total property and 
assets of the entity; or
    (3) Is an officer or director of the entity if the entity is 
organized as a corporation; or
    (4) Is a partner in the entity if the entity is organized as a 
partnership.
    Partial hospitalization. A treatment setting capable of providing an 
interdisciplinary program of medical therapeutic services at least 3 
hours per day, 5 days per week, which may embrace day, evening, night 
and weekend treatment programs which employ an integrated, comprehensive 
and complementary schedule of recognized treatment approaches. Partial 
hospitalization is a time-limited, ambulatory, active treatment program 
that offers therapeutically intensive, coordinated, and structured 
clinical services within a stable therapeutic environment. Partial 
hospitalization is an appropriate setting for crisis stabilization, 
treatment of partially stabilized mental health disorders, and a 
transition from an inpatient program when medically necessary. Such 
programs must enter into a participation agreement with CHAMPUS, and be 
accredited and in substantial compliance with the standards of the 
Mental Health Manual of the Joint Commission on Accreditation of 
Healthcare Organizations (JCAHO) (formerly known as the Consolidated 
Standards).
    Participating provider. A CHAMPUS-authorized provider that is 
required, or has agreed by entering into a CHAMPUS participation 
agreement or by act of indicating ``accept assignment'' on the claim 
form, to accept the CHAMPUS-allowable amount as the maximum total charge 
for a service or item rendered to a CHAMPUS beneficiary, whether the 
amount is paid for fully by CHAMPUS or requires cost-sharing by the 
CHAMPUS beneficiary.
    Party to a hearing. An appealing party or parties and CHAMPUS.
    Party to the initial determination. Includes CHAMPUS and also refers 
to a CHAMPUS beneficiary and a participating provider of services whose 
interests have been adjudicated by the initial determination. In 
addition, a provider who has been denied approval as an authorized 
CHAMPUS provider is a party to that initial determination, as is a 
provider who is disqualified or excluded as an authorized provider under 
CHAMPUS, unless the provider is excluded based on a determination of 
abuse or fraudulent practices or procedures under another federal or 
federally funded program. See Sec. 199.10 for additional information 
concerning parties not entitled to administrative review under the 
CHAMPUS appeals and hearing procedures.
    Pastoral counselor. An extramedical individual provider who meets 
the requirements outlined in Sec. 199.6.
    Pharmacist. A person who is trained specially in the scientific 
basis of pharmacology and who is licensed to prepare and sell or 
dispense drugs and compounds and to make up prescriptions ordered by a 
physician.
    Physical medicine services or physiatry services. The treatment of 
disease or injury by physical means such as massage, hydrotherapy, or 
heat.
    Physical therapist. A person who is trained specially in the skills 
and techniques of physical therapy (that is, the treatment of disease by 
physical agents and methods such as heat, massage, manipulation, 
therapeutic exercise, hydrotherapy, and various forms of energy such as 
electrotherapy and ultrasound), who has been authorized legally (that 
is, registered) to administer treatments prescribed by a physician and 
who is entitled legally to use the designation ``Registered Physical 
Therapist.'' A physical therapist also may be called a physiotherapist.
    Physician. A person with a degree of Doctor of Medicine (M.D.) or 
Doctor of Osteopathy (D.O.) who is licensed to practice medicine by an 
appropriate authority.
    Physician in training. Interns, residents, and fellows participating 
in approved postgraduate training programs and physicians who are not in 
approved programs but who are authorized to

[[Page 62]]

practice only in a hospital or other institutional provider setting, 
e.g., individuals with temporary or restricted licenses, or unlicensed 
graduates of foreign medical schools.
    Podiatrist (Doctor of Podiatry or Surgical Chiropody). A person who 
has received a degree in podiatry (formerly called chiropody), that is, 
that specialized field of the healing arts that deals with the study and 
care of the foot, including its anatomy, pathology, and medical and 
surgical treatment.
    Preauthorization. A decision issued in writing by the Director, 
OCHAMPUS, or a designee, that CHAMPUS benefits are payable for certain 
services that a beneficiary has not yet received.
    Prescription drugs and medicines. Drugs and medicines which at the 
time of use were approved for commercial marketing by the U.S. Food and 
Drug Administration, and which, by law of the United States, require a 
physician's or dentist's prescription, except that it includes insulin 
for known diabetics whether or not a prescription is required. Drugs 
grandfathered by the Federal Food, Drug and Cosmetic Act of 1938 may be 
covered under CHAMPUS as if FDA approved.
    Note: The fact that the U.S. Food and Drug Administration has 
approved a drug for testing on humans would not qualify it within this 
definition.
    Preventive care. Diagnostic and other medical procedures not related 
directly to a specific illness, injury, or definitive set of symptoms, 
or obstetrical care, but rather performed as periodic health screening, 
health assessment, or health maintenance.
    Primary caregiver. An individual who renders to a beneficiary 
services to support the essentials of daily living (as defined in 
Sec. 199.2) and specific services essential to the safe management of 
the beneficiary's condition.
    Primary payer. The plan or program whose medical benefits are 
payable first in a double coverage situation.
    PRIMUS clinics. Contractor owned, staffed, and operated primary care 
clinics exclusively serving uniformed services beneficiaries pursuant to 
contracts awarded by a Military Department.
    Private duty (special) nursing services. Skilled nursing services 
rendered to an individual patient requiring intensive medical care. Such 
private duty (special) nursing must be by an actively practicing 
registered nurse (R.N.) or licensed practical or vocational nurse 
(L.P.N. or L.V.N.) only when the medical condition of the patient 
requires intensive skilled nursing services (rather than primarily 
providing the essentials of daily living) and when such skilled nursing 
care is ordered by the attending physician.
    Private room. A room with one bed that is designated as a private 
room by the hospital or other authorized institutional provider.
    Program for Persons with Disabilities PFPWD). The CHAMPUS benefits 
described in Sec. 199.5.
    Progress notes. Progress notes are an essential component of the 
medical record wherein health care personnel provide written evidence of 
ordered and supervised diagnostic tests, treatments, medical procedures, 
therapeutic behavior and outcomes. In the case of mental health care, 
progress notes must include: the date of the therapy session; length of 
the therapy session; a notation of the patient's signs and symptoms; the 
issues, pathology and specific behaviors addressed in the therapy 
session; a statement summarizing the therapeutic interventions attempted 
during the therapy session; descriptions of the response to treatment, 
the outcome of the treatment, and the response to significant others; 
and a statement summarizing the patient's degree of progress toward the 
treatment goals. Progress notes do not need to repeat all that was said 
during a therapy session but must document a patient contact and be 
sufficiently detailed to allow for both peer review and audits to 
substantiate the quality and quantity of care rendered.
    Prosthetic device (prosthesis). An artificial substitute for a 
missing body part.
    Provider. A hospital or other institutional provider, a physician, 
or other individual professional provider, or other provider of services 
or supplies as specified in Sec. 199.6 of this part.
    Provider exclusion and suspension. The terms ``exclusion'' and 
``suspension'', when referring to a provider under CHAMPUS, both mean 
the denial of status as an authorized provider, resulting in items, 
services, or supplies

[[Page 63]]

furnished by the provider not being reimbursed, directly or indirectly, 
under CHAMPUS. The terms may be used interchangeably to refer to a 
provider who has been denied status as an authorized CHAMPUS provider 
based on (1) a criminal conviction or civil judgment involving fraud, 
(2) an administrative finding of fraud or abuse under CHAMPUS, (3) an 
administrative finding that the provider has been excluded or suspended 
by another agency of the Federal Government, a state, or a local 
licensing authority, (4) an administrative finding that the provider has 
knowingly participated in a conflict of interest situation, or (5) an 
administrative finding that it is in the best interests of the CHAMPUS 
or CHAMPUS beneficiaries to exclude or suspend the provider.
    Provider termination. When a provider's status as an authorized 
CHAMPUS provider is ended, other than through exclusion or suspension, 
based on a finding that the provider does not meet the qualifications, 
as set forth in Sec. 199.6 of this part, to be an authorized CHAMPUS 
provider.
    Psychiatric emergency. A psychiatric inpatient admission is an 
emergency when, based on a psychiatric evaluation performed by a 
physician (or other qualified mental health care professional with 
hospital admission authority), the patient is at immediate risk of 
serious harm to self or others as a result of a mental disorder and 
requires immediate continuous skilled observation at the acute level of 
care.
    Public facility. A public authority or entity legally constituted 
within a State (as defined in this section) to administer, control or 
perform a service function for public health, education or human 
services programs in a city, county, or township, special district, or 
other political subdivision, or such combination of political 
subdivisions or special districts or counties as are recognized as an 
administrative agency for a State's public health, education or human 
services programs, or any other public institution or agency having 
administrative control and direction of a publicly funded health, 
education or human services program.
    Public facility adequacy. An available public facility shall be 
considered adequate when the Director, OCHAMPUS, or designee, determines 
that the quality, quantity, and frequency of an available service or 
item otherwise allowable as a CHAMPUS benefit is sufficient to meet the 
beneficiary's specific disability related need in a timely manner.
    Public facility availability. A public facility shall be considered 
available when the public facility usually and customarily provides the 
requested service or item to individuals with the same or similar 
disability related need as the otherwise equally qualified CHAMPUS 
beneficiary.
    Qualified accreditation organization. A not-for-profit corporation 
or a foundation that:
    (1) Develops process standards and outcome standards for health care 
delivery programs, or knowledge standards and skill standards for health 
care professional certification testing, using experts both from within 
and outside of the health care program area or individual specialty to 
which the standards are to be applied;
    (2) Creates measurable criteria that demonstrate compliance with 
each standard;
    (3) Publishes the organization's standards, criteria and evaluation 
processes so that they are available to the general public;
    (4) Performs on-site evaluations of health care delivery programs, 
or provides testing of individuals, to measure the extent of compliance 
with each standard;
    (5) Provides on-site evaluation or individual testing on a national 
or international basis;
    (6) Provides to evaluated programs and tested individuals time-
limited written certification of compliance with the organization's 
standards;
    (7) Excludes certification of any program operated by an 
organization which has an economic interest, as defined in this section, 
in the accreditation organization or in which the accreditation 
organization has an economic interest;
    (8) Publishes promptly the certification outcomes of each program 
evaluation or individual test so that it is available to the general 
public; and

[[Page 64]]

    (9) Has been found by the Director, OCHAMPUS, or designee, to apply 
standards, criteria, and certification processes which reinforce CHAMPUS 
provider authorization requirements and promote efficient delivery of 
CHAMPUS benefits.
    Radiation therapy services. The treatment of diseases by x-ray, 
radium, or radioactive isotopes when ordered by the attending physician.
    Rare Diseases. CHAMPUS defines a rare disease as one which affects 
fewer than one in 200,000 Americans.
    Referral. The act or an instance of referring a CHAMPUS beneficiary 
to another authorized provider to obtain necessary medical treatment. 
Under CHAMPUS, only a physician may make referrals.
    Registered nurse. A person who is prepared specially in the 
scientific basis of nursing, who is a graduate of a school of nursing, 
and who is registered for practice after examination by a state board of 
nurse examiners or similar regulatory authority, who holds a current, 
valid license, and who is entitled legally to use the designation R.N.
    Rehabilitation. The reduction of an acquired loss of ability to 
perform an activity in the manner, or within the range considered 
normal, for a human being.
    Reliable evidence. (1) As used in Sec. 199.4(g)(15), the term 
reliable evidence means only:
    (i) Well controlled studies of clinically meaningful endpoints, 
published in refereed medical literature.
    (ii) Published formal technology assessments.
    (iii) The published reports of national professional medical 
associations.
    (iv) Published national medical policy organization positions; and
    (v) The published reports of national expert opinion organizations.
    (2) The hierarchy of reliable evidence of proven medical 
effectiveness, established by (1) through (5) of this paragraph, is the 
order of the relative weight to be given to any particular source. With 
respect to clinical studies, only those reports and articles containing 
scientifically valid data and published in the refereed medical and 
scientific literature shall be considered as meeting the requirements of 
reliable evidence. Specifically not included in the meaning of reliable 
evidence are reports, articles, or statements by providers or groups of 
providers containing only abstracts, anecdotal evidence or personal 
professional opinions. Also not included in the meaning of reliable 
evidence is the fact that a provider or a number of providers have 
elected to adopt a drug, device, or medical treatment or procedure as 
their personal treatment or procedure of choice or standard of practice.
    Representative. Any person who has been appointed by a party to the 
initial determination as counsel or advisor and who is otherwise 
eligible to serve as the counsel or advisor of the party to the initial 
determination, particularly in connection with a hearing.
    Resident (medical). A graduate physician or dentist who has an M.D. 
or D.O. degree, or D.D.S. or D.M.D. degree, respectively, is licensed to 
practice, and who choose to remain on the house staff of a hospital to 
get further training that will qualify him or her for a medical or 
dental specialty.
    Residential treatment center (RTC). A facility (or distinct part of 
a facility) which meets the criteria in Sec. 199.6(b)(4)(v).
    Respite care. Respite care is short-term care for a patient in order 
to provide rest and change for those who have been caring for the 
patient at home, usually the patient's family.
    Retiree. A member or former member of a Uniformed Service who is 
entitled to retired, retainer, or equivalent pay based on duty in a 
Uniformed Service.
    Routine eye examinations. The services rendered in order to 
determine the refractive state of the eyes.
    Sanction. For purpose of Sec. 199.9, ``sanction'' means a provider 
exclusion, suspension, or termination.
    Secondary payer. The plan or program whose medical benefits are 
payable in double coverage situations only after the primary payer has 
adjudicated the claim.
    Semiprivate room. A room containing at least two beds. If a room is 
designated publicly as a semiprivate accommodation by the hospital or 
other authorized institutional provider and contains multiple beds, it 
qualifies as a

[[Page 65]]

semiprivate room for the purposes of CHAMPUS.
    Serious physical disability. Any physiological disorder or condition 
or anatomical loss affecting one or more body systems which has lasted, 
or with reasonable certainty is expected to last, for a minimum period 
of 12 contiguous months, and which precludes the person with the 
disorder, condition or anatomical loss from unaided performance of at 
least one Major Life Activity as defined in this section.
    Skilled nursing facility. An institution (or a distinct part of an 
institution) that meets the criteria as set forth in 
Sec. 199.6(b)(4)(iv) of this part.
    Skilled nursing service. A service that can only be furnished by an 
R.N., or L.P.N. or L.V.N., and is required to be performed under the 
supervision of a physician to ensure the safety of the patient and 
achieve the medically desired result. Examples of skilled nursing 
services are intravenous for intramuscular injections, levin tube or 
gastrostomy feedings, or tracheotomy aspiration and insertion. Skilled 
nursing services are other than those services that provide primarily 
support for the essentials of daily living or that could be performed by 
an untrained adult with minimum instruction or supervision.
    Specialized Treatment Service Facility. A military or civilian 
medical treatment facility specifically designated pursuant to 
Sec. 199.4(a)(10) to be a referral facility for certain highly 
specialized care. For this purpose, a civilian medical treatment 
facility may be another federal facility (such as a Department of 
Veterans Affairs hospital).
    Spectacles, eyeglasses, and lenses. Lenses, including contact 
lenses, that help to correct faulty vision.
    Sponsor. An active duty member, retiree, or deceased active duty 
member or retiree, of a Uniformed Service upon whose status his or her 
dependents' eligibility for CHAMPUS is based.
    Spouse. A lawful wife or husband regardless of whether or not 
dependent upon the active duty member or retiree.
    State. For purposes of this part, any of the several States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of the Northern Mariana Islands, and each territory and possession of 
the United States.
    State victims of crime compensation programs. Benefits available to 
victims of crime under the Violent Crime Control and Law Enforcement 
Act.
    Student status. A dependent of a member or former member of a 
Uniformed Service who has not passed his or her 23rd birthday, and is 
enrolled in a full-time course of study in an institution of higher 
learning.
    Supplemental insurance plan. A health insurance policy or other 
health benefit plan offered by a private entity to a CHAMPUS 
beneficiary, that primarily is designed, advertised, marketed, or 
otherwise held out as providing payment for expenses incurred for 
services and items that are not reimbursed under CHAMPUS due to program 
limitations, or beneficiary liabilities imposed by law. CHAMPUS 
recognizes two types of supplemental plans, general indemnity plans, and 
those offered through a direct service health maintenance organization 
(HMO).
    (1) An indemnity supplemental insurance plan must meet all of the 
following criteria:
    (i) It provides insurance coverage, regulated by state insurance 
agencies, which is available only to beneficiaries of CHAMPUS.
    (ii) It is premium based and all premiums relate only to the CHAMPUS 
supplemental coverage.
    (iii) Its benefits for all covered CHAMPUS beneficiaries are 
predominantly limited to non-covered services, to the deductible and 
cost-shared portions of the pre-determined allowable charges, and/or to 
amounts exceeding the allowable charges for covered services.
    (iv) It provides insurance reimbursement by making payment directly 
to the CHAMPUS beneficiary or to the participating provider.
    (v) It does not operate in a manner which results in lower 
deductibles or cost-shares than those imposed by law, or that waives the 
legally imposed deductibles or cost-shares.
    (2) A supplemental insurance plan offered by a Health Maintenance 
Organization (HMO) must meet all of the following criteria:

[[Page 66]]

    (i) The HMO must be authorized and must operate under relevant 
provisions of state law.
    (ii) The HMO supplemental plan must be premium based and all 
premiums must relate only to CHAMPUS supplemental coverage.
    (iii) The HMO's benefits, above those which are directly reimbursed 
by CHAMPUS, must be limited predominantly to services not covered by 
CHAMPUS and CHAMPUS deductible and cost-share amounts.
    (iv) The HMO must provide services directly to CHAMPUS beneficiaries 
through its affiliated providers who, in turn, are reimbursed by 
CHAMPUS.
    (v) The HMO's premium structure must be designed so that no overall 
reduction in the amount of the beneficiary deductibles or cost-shares 
will result.
    Suppliers of portable X-ray services. A supplier that meets the 
conditions of coverage of the Medicare program, set forth in the 
Medicare regulations (42 CFR 405.1411 through 405.1416 (as amended)) or 
the Medicaid program in the state in which the covered service is 
provided.
    Surgery. Medically appropriate operative procedures, including 
related preoperative and postoperative care; reduction of fractures and 
dislocations; injections and needling procedures of the joints; laser 
surgery of the eye; and those certain procedures listed in 
Sec. 199.4(c)(2)(i) of this part.
    Surgical assistant. A physician (or dentist or podiatrist) who 
assists the operating surgeon in the performance of a covered surgical 
service when such assistance is certified as necessary by the attending 
surgeon, when the type of surgical procedure being performed is of such 
complexity and seriousness as to require a surgical assistant, and when 
interns, residents, or other house staff are not available to provide 
the surgical assistance services in the specialty area required.
    Suspension of claims processing. The temporary suspension of 
processing (to protect the government's interests) of claims for care 
furnished by a specific provider (whether the claims are submitted by 
the provider or beneficiary) or claims submitted by or on behalf of a 
specific CHAMPUS beneficiary pending action by the Director, OCHAMPUS, 
or a designee, in a case of suspected fraud or abuse. The action may 
include the administrative remedies provided for in Sec. 199.9 or any 
other Department of Defense issuance (e.g. DoD issuances implementing 
the Program Fraud Civil Remedies Act), case development or investigation 
by OCHAMPUS, or referral to the Department of Defense-Inspector General 
or the Department of Justice for action within their cognizant 
jurisdictions.
    Teaching physician. A teaching physician is any physician whose 
duties include providing medical training to physicians in training 
within a hospital or other institutional provider setting.
    Timely filing. The filing of CHAMPUS claims within the prescribed 
time limits as set forth in Sec. 199.7 of this part.
    Treatment plan. A detailed description of the medical care being 
rendered or expected to be rendered a CHAMPUS beneficiary seeking 
approval for inpatient benefits for which preauthorization is required 
as set forth in Sec. 199.4(b) of this part. A treatment plan must 
include, at a minimum, a diagnosis (either ICD-9-CM or DSM-III); 
detailed reports of prior treatment, medical history, family history, 
social history, and physical examination; diagnostic test results; 
consultant's reports (if any); proposed treatment by type (such as 
surgical, medical, and psychiatric); a description of who is or will be 
providing treatment (by discipline or specialty); anticipated frequency, 
medications, and specific goals of treatment; type of inpatient facility 
required and why (including length of time the related inpatient stay 
will be required); and prognosis. If the treatment plan involves the 
transfer of a CHAMPUS patient from a hospital or another inpatient 
facility, medical records related to that inpatient stay also are 
required as a part of the treatment plan documentation.
    TRICARE extra plan. The health care option, provided as part of the 
TRICARE program under Sec. 199.17, under which beneficiaries may choose 
to receive care in facilities of the uniformed

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services, or from special civilian network providers (with reduced cost 
sharing), or from any other CHAMPUS-authorized provider (with standard 
cost sharing).
    TRICARE prime plan. The health care option, provided as part of the 
TRICARE program under Sec. 199.17, under which beneficiaries enroll to 
receive all health care from facilities of the uniformed services and 
civilian network providers (with civilian care subject to substantially 
reduced cost sharing.
    TRICARE program. The program establish under Sec. 199.17.
    TRICARE standard plan. The health care option, provided as part of 
the TRICARE program under Sec. 199.17, under which beneficiaries are 
eligible for care in facilities of the uniformed services and CHAMPUS 
under standard rules and procedures.
    Uniform HMO benefit. The health care benefit established by 
Sec. 199.18.
    Uniformed Services. The Army, Navy, Air Force, Marine Corps, Coast 
Guard, Commissioned Corps of the USPHS, and the Commissioned Corps of 
the NOAA.
    Unlabeled or Off-Label Drugs. Food and Drug Administration (FDA) 
approved drugs that are used for indications or treatments not included 
in the approved labeling. The drug must be medically necessary for the 
treatment of the condition for which it is administered, according to 
accepted standards of medical practice.
    Veteran. A person who served in the active military, naval, or air 
service, and who was discharged or released therefrom under conditions 
other than dishonorable.
    Note: Unless the veteran is eligible for ``retired pay,'' 
``retirement pay,'' or ``retainer pay,'' which refers to payments of a 
continuing nature and are payable at fixed intervals from the government 
for military service neither the veteran nor his or her dependents are 
eligible for benefits under CHAMPUS.
    Waiver of benefit limits. Extension of current benefit limitations 
under the Case Management Program, of medical care, services, and/or 
equipment, not otherwise a benefit under the TRICARE/CHAMPUS program.
    Well-child care. A specific program of periodic health screening, 
developmental assessment, and routine immunization for dependents under 
six years of age.
    Widow or widower. A person who was a spouse at the time of death of 
the active duty member or retiree and who has not remarried.
    Worker's compensation benefits. Medical benefits available under any 
worker's compensation law (including the Federal Employees Compensation 
Act), occupational disease law, employers liability law, or any other 
legislation of similar purpose, or under the maritime doctrine of 
maintenance, wages, and cure.
    X-ray services. An x-ray examination from which an x-ray film or 
other image is produced, ordered by the attending physician when 
necessary and rendered in connection with a medical or surgical 
diagnosis or treatment of an illness or injury, or in connection with 
maternity or well-baby care.

[51 FR 24008, July 1, 1986]

    Editorial Note: For Federal Register citations affecting Sec. 199.2, 
see the List of CFR Sections Affected in the Finding Aids section of 
this volume.



Sec. 199.3  Eligibility.

    (a) General. This section sets forth those persons who, by the 
provisions of 10 U.S.C., chapter 55, and the NATO Status of Forces 
Agreement, are eligible for CHAMPUS benefits. For additional statements 
concerning the special requirements of the Program for Persons with 
Disabilities (PFPWD), refer to Sec. 199.5. A determination that a person 
is eligible does not entitle such a person automatically to CHAMPUS 
payments. Other sections of this part set forth additional requirements 
that must be met before any CHAMPUS benefits may be extended. 
Additionally, the use of CHAMPUS may be denied if a Uniformed Services 
medical facility capable of providing the needed care is available.
    (b) Persons eligible--(1) Retiree. A member or former member of a 
Uniformed Service who is entitled to retired, retainer, or equivalent 
pay based on duty in a Uniformed Service.
    (2) Dependent. A person who bears one of the following relationships 
to an active duty member (under a call or order that does not specify a 
period of 30 days or less), to a retiree, to a NATO

[[Page 68]]

member who is stationed in or passing through the United States on 
official business, or to a deceased person who, at the time of death, 
was an active duty member or a retiree.
    Note: According to section 767 of the Department of Defense 
Appropriation Act, 1981, (Pub. L. 96-527), from December 15, 1980, 
through September 30, 1981, spouses and children of NATO members are 
eligible only for outpatient CHAMPUS benefits while officially 
accompanying the NATO member who is stationed in or passing through the 
United States on official business. Availability of benefits after 
September 30, 1981, will depend on the language of future appropriation 
acts.
    (i) Spouse. A lawful husband or wife, regardless of whether or not 
dependent upon the active duty member or retiree.
    (ii) Former spouse. There are two groups of former spouses; (i.e., 
spouses who were married to a military member or former member but whose 
marriage has been terminated by a final decree of divorce, dissolution, 
or annulment). To be eligible for CHAMPUS benefits a former spouse must 
meet the criteria of paragraphs (b)(2)(ii)(A) through (b)(2)(ii)(E) of 
this section and must qualify under either the group defined in 
paragraph (b)(2)(ii)(F)(1) or (b)(2)(ii)(F)(2) of this section.
    (A) Must be unremarried;
    (B) Must not be covered by an employer-sponsored health plan;
    (C) Must have been married to a member or former member who 
performed at least 20 years of service which can be credited in 
determining the member's or former member's eligibility for retired or 
retainer pay;
    (D) Must not be eligible for part A of title XVIII of the Social 
Security Act (Medicare);
    (E) Must not be the dependent of a NATO member;
    (F) Must meet the requirements of either paragraph (b)(2)(ii)(F)(1), 
or (b)(2)(ii)(F)(2) of this section.
    (1) The former spouse must have been married to the same member or 
former member for at least 20 years, at least 20 of which were 
creditable in determining the member's or former member's eligibility 
for retired or retainer pay. Eligibility continues indefinitely unless 
affected by any of the conditions in paragraphs (b)(2)(ii)(A) through 
(b)(2)(ii)(E) of this section.
    (i) If the date of the final decree of divorce, dissolution, or 
annulment is before February 1, 1983, the former spouse is eligible for 
CHAMPUS coverage of health care received on or before January 1, 1985.
    (ii) If the date of the final decree of divorce, dissolution of 
marriage, or annulment was on or after February 1, 1983, the former 
spouse is eligible for CHAMPUS coverage of health care which is received 
on or after the date of the divorce, dissolution, or annulment.
    (2) The former spouse must have been married to the same military 
member or former member for at least 20 years, and at least 15, but less 
than 20 of those married years were creditable in determining the 
member's or former member's eligibility for retired or retainer pay.
    (i) If the date of the final decree of divorce, dissolution of 
marriage, or annulment, is before April 1, 1985, the former spouse is 
eligible only for health care received on or before January 1, 1985, or 
the date of the divorce, dissolution, or annulment, whichever is later.
    (ii) If the date of the decree was on or after April 1, 1985, but 
before September 29, 1988, the former spouse is eligible only for care 
received from the date of the divorce, dissolution, or annulment until 
December 31, 1988, or for two years from the date of the divorce, 
dissolution, or annulment, whichever is later.
    (iii) If the date of the final decree of divorce, dissolution, or 
annulment is on or after September 29, 1988, the former spouse is 
eligible only for care received within the 365 days (366 days in the 
case of a leap year) immediately following the date of the divorce, 
dissolution, or annulment.
    (iv) Former spouses listed under paragraphs (b)(2)(ii)(F)(2)(ii) or 
(b)(2)(ii)(F)(2)(iii) of this section, who purchase a DoD designated 
health insurance policy upon termination of their eligibility, or within 
90 days of termination of their eligibility, under paragraphs 
(b)(2)(ii)(F)(2)(ii) or (b)(2)(ii)(F)(2)(iii) of this section, are 
eligible for an additional year of coverage at military treatment 
facilities and under CHAMPUS for preexisting

[[Page 69]]

conditions. Preexisting conditions are those for which coverage is 
denied by the conversion health plan, solely because the conditions 
existed in the twelve month period prior to the purchase of the 
conversion insurance policy.
    (iii) Widow or widower. A person who was a spouse at the time of 
death of the active duty member or retiree and who has not remarried.
    Note: For purposes of this part, an unremarried widow or widower is 
not an eligible dependent of a NATO member.
    (iv) Child. To be eligible, the child must be unmarried and a member 
of one of the classes set forth in paragraph (b)(2)(iv) (A) or (B) of 
this section, and who also meets the requirements of paragraph 
(b)(2)(iv)(C) of this section.
    (A) Child of active duty member.
    (1) A legitimate child.
    (2) An adopted child whose adoption has been legally completed. For 
eligibility under this provision, adoption must take place on or before 
the child's twenty-first birthday.
    (3) A legitimate stepchild.
    (4) An illegitimate child of a male member whose paternity has been 
determined judicially, or an illegitimate child of record of a female 
member who has been directed judicially to support the child.
    (5) An illegitimate child of a male active duty member whose 
paternity has not been determined judicially, or an illegitimate child 
of record of a female active duty member who:
    (i) Resides with or in a home provided by the member; and
    (ii) Is and continues to be dependent upon the member for over 50 
percent of his or her support.
    (6) An illegitimate child of the spouse of an active duty member 
(that is, the active duty member's stepchild) who:
    (i) Resides with or in a home provided by the active duty member or 
the parent who is the spouse of the member; and
    (ii) Is and continues to be dependent upon the member for over 50 
percent of his or her support.
    (B) Child of retiree, or deceased member or retiree.
    (1) A legitimate child.
    (2) An adopted child whose adoption has been legally completed. For 
eligibility under this provision, adoption must take place on or before 
the child's twenty-first birthday.
    (3) A legitimate stepchild.
    (4) An illegitimate child of a male retiree whose paternity has been 
determined judicially, or an illegitimate child of record of a female 
retiree who has been directed judicially to support the child.
    (5) An illegitimate child of a male retiree, or deceased male member 
or retiree whose paternity has not been determined judicially or an 
illegitimate child of record of a female retiree, or deceased female 
member or retiree who--
    (i ) Resides with or in a home provided by the retiree, or which was 
being provided by the deceased member or retiree at the time of death; 
and
    (ii ) Is and continues to be dependent upon the retiree for over 50 
percent of his or her support, or who was so dependent on the deceased 
member or retiree at the time of death.
    (6 ) An illegitimate child of the spouse of a retiree or deceased 
member or retiree (that is, the retiree's stepchild or stepchild of a 
deceased member or retiree at the time of death) who--
    (i ) Resides with or in a home provided by the retiree or the parent 
who is the spouse of the retiree or was the spouse of the deceased 
member or retiree at the time of death; and
    (ii ) Is and continues to be dependent upon the retiree for 50 
percent of his or her support, or who was so dependent on the deceased 
member or retiree at the time of death.
    (C) Additional requirements for a child who is a member of one of 
the classes in paragraphs (b)(2)(iv) (A) and (B) of this section. The 
child must not be married. Additionally, he or she must be in one of the 
following three age groups:
    (1 ) Not passed his or her 21st birthday.
    (2 ) Passed his or her 21st birthday but incapable of self-support 
because of a mental or physical incapacity that existed before his or 
her 21st birthday and dependent on the member or retiree for over 50 
percent of his or her

[[Page 70]]

support, or dependent upon the member or retiree for over 50 percent of 
his or her support on the date of the member's or retiree's death. Such 
incapacity must be continuous. If the incapacity significantly improves 
or ceases at any time after age 21, even if such incapacity recurs 
subsequently, CHAMPUS eligibility cannot be reinstated on the basis of 
the incapacity. If the child was not handicapped mentally or physically 
at his or her 21st birthday, but becomes so incapacitated after that 
time, no CHAMPUS eligibility exists on the basis of the incapacity.
    (3 ) Passed his or her 21st birthday but not his or her 23rd 
birthday, dependent upon the member or retiree for over 50 percent of 
his or her support, or dependent upon the member or retiree for over 50 
percent of his or her support on the date of the member's or retiree's 
death, and pursuing a full-time course of education in an institution of 
higher learning approved by the Secretary of Defense or the Department 
of Education (as appropriate) or by a state agency under 38 U.S.C. 
chapters 34 and 35.
    Note: Courses of education offered by institutions listed in the 
``Education Directory, Part 3, Higher Education'' or ``Accredited Higher 
Institutions'' issued periodically by the Department of Education meet 
the criteria approved by the Secretary of Defense or the Department of 
Education (refer to paragraph (b)(2)(iv)(C)(3) of this section. For 
determination of approval of courses offered by a foreign institution, 
by an institution not listed in either of the above directories, or by 
an institution not approved by a state agency pursuant to chapters 34 
and 35 of 38 U.S.C., a statement may be obtained from the Department of 
Education, Washington, DC 20202.
    (c) Beginning dates of eligibility--(1) General. The beginning date 
of eligibility is dependent upon the class to which the person belongs 
and the date the person became a member of the class. Those who join 
after the class became eligible attain individual eligibility on the 
date they join.
    (2) Beginning dates of class eligibility--(i) Spouse, legitimate 
child, adopted child, or (legitimate) stepchild of an active duty 
member.
    (A) For the medical benefits authorized by the Dependents' Medical 
Care Act of 1956, December 7, 1956.
    (B) For outpatient medical benefits under the Basic Program, October 
1, 1966.
    (C) For inpatient medical benefits under the Basic Program, January 
1, 1967.
    (D) For benefits under the PFPWD, January 1, 1967.
    (ii) Retiree. For medical benefits under the Basic Program, January 
1, 1967.
    Note: Retirees and their dependents are not eligible for benefits of 
the PFPWD.
    (iii) Spouse, legitimate child, adopted child, or (legitimate) 
stepchild of a retiree or of a deceased member or retiree; widow or 
widower of deceased member or retiree. For medical benefits under the 
Basic Program, January 1, 1967.
    Note: These classes do not have eligibility for benefits of the 
PFPWD.
    (iv) Illegitimate child of a male active duty member or retiree (or 
deceased member or retiree) whose paternity has been determined 
judicially or an illegitimate child of record of a female active duty 
member or retiree (or deceased member or retiree) who has been directed 
judicially to support the child. For all benefits for which otherwise 
eligible, August 31, 1972.
    (v) Illegitimate child of male active duty member or retiree (or 
deceased male member or retiree) whose paternity has not been determined 
judicially, or an illegitimate child of record of a female active duty 
member or retiree (or deceased female member or retiree) who resides 
with or in a home provided by the active duty member or retiree (or 
which was being provided by the deceased member or retiree at the time 
of death) and who is dependent on the member for over 50 percent of his 
or her support (or was so dependent on the deceased member or retiree at 
the time of death). For all benefits for which otherwise eligible, 
January 1, 1969.
    (vi) Illegitimate child of the spouse of an active duty member or 
retiree (that is, the member or retiree's stepchild or stepchild of a 
deceased member or retiree at the time of death) who resides with or in 
a home provided by the active duty member or retiree, or the parent who 
is the spouse of the active duty member or retiree (or was the

[[Page 71]]

spouse of the deceased member or retiree at the time of death), and who 
is dependent upon the active duty member or retiree for over 50 percent 
of his or her support (or was so dependent on the deceased member or 
retiree at the time of death). For medical benefits under the Basic 
Program, January 1, 1969. For benefits under the PFPWD, dependents of an 
active duty member only, January 1, 1969.
    Note. Retirees or their dependents do not have eligibility for 
benefits of the PFPWD.
    (d) Dual coverage. When an active duty member is also the dependent 
of another active duty member, a retiree, or a deceased active duty 
member or retiree, dual coverage, that is, entitlement to direct care 
from the Uniformed Services medical care system and CHAMPUS is the 
result. Since the active duty status is primary, and it is the intent 
that all medical care be provided an active duty member through the 
Uniformed Services medical care system, CHAMPUS eligibility of dual 
coverage is therefore terminated as of 12:01 a.m. on the day following 
the day dual coverage begins. (However, any dependent children in a 
marriage of two active duty persons or an active duty member and a 
retiree, are CHAMPUS eligible in the same manner as dependent children 
of a marriage involving only one CHAMPUS sponsor.) Should a spouse or 
dependent who has dual coverage leave active duty status, that person's 
CHAMPUS eligibility is reinstated as of 12:01 a.m. of the day active 
duty ends, if he or she otherwise is eligible as a dependent of a 
CHAMPUS sponsor.
    (e) Changes in and termination of eligibility. (1) Changes in status 
of active duty member. When an active duty member's period of active 
duty ends (for any reason other than retirement or death), his or her 
dependents lose their eligibility as of 12:01 a.m. of the day following 
the day the active duty ends. Entitlement to CHAMPUS benefits also 
ceases as of 12:01 a.m. of the day following the day a member is placed 
in desertion status. The member's dependent regains eligibility when the 
member is returned to military control. A member serving a sentence of 
confinement in conjunction with a sentence of a punitive discharge is 
still considered on active duty until such time as the discharge is 
executed.
    (2) Changes in status of retiree. Should a retiree cease to be 
entitled to retired, retainer, or equivalent pay for any reason, that 
person and his or her dependents lose their eligibility as of 12:01 a.m. 
of the day following the day the retiree ceases to be entitled to such 
pay unless such persons are otherwise eligible. A retiree who waives his 
or her retired, retainer, or equivalent pay is still considered a 
retiree for the purposes of CHAMPUS eligibility.
    (3) Changes in status of dependent--(i) Divorce. Except as provided 
in paragraph (b)(2)(ii) of this section, a spouse separated from an 
active duty member or retiree by a final divorce decree loses all 
eligibility based on his or her former marital relationship as of 12:01 
a.m. of the day following the day the divorce becomes final. The 
eligibility of the member's or retiree's own children (including adopted 
and eligible illegitimate children) is unaffected by the divorce. An 
unadopted stepchild, however, loses eligibility with the termination of 
the marriage, also as of 12:01 a.m. the day following the day the 
divorce becomes final.
    (ii) Annulment. Except as provided in paragraph (b)(2)(ii) of this 
section, a spouse whose marriage to an active duty member or retiree is 
dissolved by annulment loses eligibility as of 12:01 a.m. of the day 
following the date the court grants the annulment order. The fact that 
the annulment legally declares the entire marriage void from its 
inception does not affect the termination date of CHAMPUS eligibility. 
When there are children, the eligibility of the member's or retiree's 
own children (including adopted and eligible illegitimate children) is 
unaffected by the annulment. An unadopted stepchild, however, loses 
eligibility with the annulment of the marriage, also as of 12:01 a.m. of 
the day following the day the court grants the annulment order.
    (iii) Adoption. A child of an active duty member or retiree who is 
adopted by a person, other than a person whose dependents are eligible 
for CHAMPUS benefits while the active duty member or retiree is living, 
thereby severing the legal relationship between the

[[Page 72]]

child and the sponsor, loses eligibility as of 12:01 a.m. of the day 
following the day the adoption becomes final. However, an adoption 
occurring after the death of an active duty member or retiree would not 
result in loss of the child's eligibility, since there would be no 
termination of the legal relationship between the child and the deceased 
sponsor.
    (iv) Marriage of child. A child of an active duty member or retiree, 
who marries a person whose dependents are not eligible for CHAMPUS, 
loses eligibility as of 12:01 a.m. of the day following the day of the 
marriage. However, should the marriage be terminated by death, divorce, 
or annulment before the child is 21 years old, the child again becomes a 
CHAMPUS eligible dependent as of 12:01 a.m. of the day following the day 
of the occurrence that terminates the marriage and continues up to age 
21 if the child does not marry before that time. If the marriage 
terminates after the child's 21st birthday, there is no reinstatement of 
CHAMPUS eligibility.
    (v) Marriage of widow or widower. The remarriage of a widow or 
widower of an active duty member or retiree to a person whose dependents 
are not eligible for CHAMPUS terminates his or her CHAMPUS eligibility 
as of 12:01 a.m. of the day following the day of marriage. Even if such 
remarriage should terminate for any reason, CHAMPUS benefits cannot be 
reinstated. However, the child of the widow or widower who was the 
stepchild of the deceased active duty member or retiree at the time of 
death continues to have the same CHAMPUS eligibility as other classes of 
dependent children.
    (vi) Attainment of entitlement to hospital insurance benefits (Part 
A) under Medicare. Retirees, and all other CHAMPUS eligible persons 
except dependents of active duty members lose their eligibility for 
CHAMPUS if they become eligible for hospital insurance benefits (Part A) 
of Medicare. This is true even though the persons attaining such status 
live outside the United States where Medicare benefits are not 
available.
    (A) Loss of CHAMPUS eligibility: Age. All CHAMPUS beneficiaries, 
except dependents of active duty members, and beneficiaries not eligible 
for Part A of Medicare, lose CHAMPUS eligibility at midnight on the last 
day of the month preceding the month of attainment of age 65. (For 
Medicare purposes, an individual attains age 65 the day before his or 
her 65th birthday.) If the person is not eligible for Part A of 
Medicare, he or she must file a Social Security Administration ``Notice 
of Disallowance'' certifying to that fact with the Uniformed Service 
responsible for the issuance of his or her identification card so a new 
card showing CHAMPUS eligibility can be issued.
    (B) Loss of CHAMPUS eligibility: End stage renal disease and 
disability--(1) End stage renal disease. Medicare coverage begins with 
the third month after the month a course of maintenance dialysis begins, 
or with the first month of dialysis if the individual participates in a 
self-dialysis training program during the 3-month waiting period, or 
with the month in which a patient enters the hospital to prepare to 
receive a transplant (providing the transplant is performed within the 
following 2 months). If a transplant is delayed more than 2 months after 
the preparatory hospitalization, Medicare coverage will begin with the 
second month prior to the month of transplant. All beneficiaries, except 
dependents of active duty members, lose their CHAMPUS eligibility when 
Medicare coverage becomes available to a person because of chronic renal 
disease.
    (2) Disability. Each case relating to Medicare eligibility resulting 
from being disabled requires individual investigation. All beneficiaries 
except dependents of active duty members lose their CHAMPUS eligibility 
when Medicare coverage becomes available to a disabled person.
    (C) Reinstatement of CHAMPUS eligibility--(1) Age limitation. 
Beneficiaries who lose their CHAMPUS eligibility because they reached 
the age limitation and were eligible for Part A, cannot be reinstated 
under CHAMPUS.
    (2) End stage renal disease. Medicare coverage ceases for end stage 
renal disease patients with the 36th month after the month in which a 
successful kidney transplant takes place or with the 12th month after 
the month in which the course of maintenance dialysis ends. At

[[Page 73]]

this point CHAMPUS eligibility resumes if the person is otherwise still 
eligible. He or she is required to take action to be reinstated as a 
CHAMPUS beneficiary and to obtain a new identification card.
    (3) Disability. Some disabilities are permanent, other temporary. 
Each case must be reviewed individually. When disability ends and 
Medicare eligibility ceases, CHAMPUS eligibility resumes if the person 
is otherwise still eligible. Agan, he or she is required to take action 
to obtain a new CHAMPUS identification card.
    (D) Other Medicare entitlement. Entitlement only to supplementary 
medical insurance (Part B) of Medicare, but not Part A, or to Part A 
through the Premium-HI provision (provided for under the 1972 Amendments 
to the Social Security Act), does not affect CHAMPUS eligibility for any 
class of beneficiary. The only impact relates to double coverage (refer 
to Sec. 199.8 of this part).
    (vii) Disabling illness or injury of child age 21 or 22 who has 
eligibility based on his or her student status. A child 21 or 22 years 
old who is pursuing a full-time course of higher education and who, 
either during the school year or between semester, suffers a disabling 
illness or injury with resultant inability to resume attendance at the 
institution remains eligible for CHAMPUS medical benefits for 6 months 
after the disability is removed or until the student passes his or her 
23rd birthday, whichever occurs first. However, if recovery occurs 
before the 23rd birthday and there is resumption of a full-time course 
of higher education, CHAMPUS benefits can be continued until the 23rd 
birthday. The normal vacation periods during an established school year 
do not change the eligibility status of a dependent child 21 or 22 years 
old in full-time student status. Unless an incapacitating condition 
existed before, and at the time of, a dependent child's 21st birthday, a 
dependent child 21 or 22 years old in student status does not have 
eligibility related to mental or physical incapacity as described in 
paragraph (b)(2)(iv)(C)(2) of this section.
    (f) Determination of eligibility status--(1) Eligibility 
determinations responsibility of Uniformed Services. Determination of a 
person's eligibility as a CHAMPUS beneficiary is the responsibility of 
the Uniformed Service in which the active duty member, retiree, deceased 
member, or deceased retiree is, or was, a member, or in the case of 
dependents of a NATO military member, the Service that sponsors the NATO 
member. For the purpose of program integrity, the appropriate Uniformed 
Service shall, upon request of the Director, OCHAMPUS, review the 
eligibility of a specific person when there is reason to question the 
eligibility status. In such cases, a report on the result of the review 
and any action taken will be submitted to the Director, OCHAMPUS, or a 
designee.
    (2) Procedures for determination of eligibility. Procedures for the 
determination of eligibility and issuance of identification cards 
evidencing eligibility are prescribed by the following regulatory 
documents:
    (i) Department of Defense. DoD Instruction 1000.13.\6\
---------------------------------------------------------------------------

    \6\ See footnote 2 to Sec. 199.1(c)(2)(i).
---------------------------------------------------------------------------

    (ii) Army. AR 640-3, ``Identification Cards, Tags, and Badges.''
    (iii) Navy. (A) NAVPERS 15560, articles 4620150 (active duty 
members) and 4620250 (retired members).
    (B) NAVMILPERSCOMINST 1750.1 series, Uniformed Services 
Identification and Privilege Card (DD Form 1173); regulations governing.
    (iv) Marine Corps. (A) MCO in P1900 series, Separation and 
Retirement Manual (DD Form 2MC-RETIRED).
    (B) MCO in P1750 series, Uniformed Services Identification and 
Privilege Card (DD Form 1173).
    (v) Air Force. AFR 30-20, ``Issue and Control of Identification 
Cards.''
    (vi) U.S. Public Health Service. CC29.2, Personnel Instruction 1 and 
2.
    (vii) Coast Guard. Personnel Manual (CG 207, Chapter 13, Section E, 
and Chapter 18, Section C).
    (viii) NOAA. No published regulations. Identification cards are 
issued by Headquarters, NOAA, or the applications are verified by 
Headquarters, NOAA, and presented to any Uniformed Service facility for 
issuance of a card.
    (g) Evidence of eligibility required. Eligibility for CHAMPUS 
benefits will be

[[Page 74]]

verified through the DEERS (DoD 1341.1-M \7\).
---------------------------------------------------------------------------

    \7\ See footnote 1 to Sec. 199.1(c)(2)(i).
---------------------------------------------------------------------------

    (1) Acceptable evidence of eligibility--(i) DEERS. Eligibility 
information established and maintained in the DEERS files is acceptable 
evidence of eligibility.
    (ii) Identification cards or devices. When the DEERS file is not 
accessible immediately, acceptable preliminary evidence of eligibility 
includes valid identification cards or devices officially prescribed and 
issued by the appropriate Uniformed Service. Dependents identification 
cards must confirm CHAMPUS eligibility.
    (2) Responsibility for obtaining evidence of eligibility. It is the 
responsibility of the CHAMPUS beneficiary, or parent, or legal 
representative, when appropriate, to provide the necessary evidence 
required for entry into the DEERS file to establish CHAMPUS eligibility, 
and to ensure that all changes in status that may affect eligibility be 
reported immediately to the appropriate Uniformed Service for action. 
Ineligibility for CHAMPUS benefits may be presumed in the absence of 
prescribed eligibility evidence in the DEERS file or in the absence of a 
valid identification card or device.

[51 FR 24008, July 1, 1986, as amended at 52 FR 27991, July 27, 1987; 53 
FR 17191, May 16, 1988; 55 FR 27634, July 5, 1990; 62 FR 35092, June 30, 
1997]



Sec. 199.4  Basic program benefits.

    (a) General. The CHAMPUS Basic Program is essentially a supplemental 
program to the Uniformed Services direct medical care system. The Basic 
Program is similar to private insurance programs, and is designed to 
provide financial assistance to CHAMPUS beneficiaries for certain 
prescribed medical care obtained from civilian sources.
    (1)(i) Scope of benefits. Subject to all applicable definitions, 
conditions, limitations, or exclusions specified in this part, the 
CHAMPUS Basic Program will pay for medically necessary services and 
supplies required in the diagnosis and treatment of illness or injury, 
including maternity care and well-baby care. Benefits include specified 
medical services and supplies provided to eligible beneficiaries from 
authorized civilian sources such as hospitals, other authorized 
institutional providers, physicians, other authorized individual 
professional providers, and professional ambulance service, prescription 
drugs, authorized medical supplies, and rental or purchase of durable 
medical equipment.
    (ii) Impact of TRICARE program. The basic program benefits set forth 
in this section are applicable to the basic CHAMPUS program. In areas in 
which the TRICARE program is implemented, certain provisions of 
Sec. 199.17 will apply instead of the provisions of this section. In 
those areas, the provisions of Sec. 199.17 will take precedence over any 
provisions of this section with which they conflict.
    (2) Persons eligible for Basic Program benefits. Persons eligible to 
receive the Basic Program benefits are set forth in Sec. 199.3 of this 
part. Any person determined to be an eligible CHAMPUS beneficiary is 
eligible for Basic Program benefits.
    (3) Authority to act for CHAMPUS. The authority to make benefit 
determinations and authorize the disbursement of funds under CHAMPUS is 
restricted to the Director, OCHAMPUS; designated OCHAMPUS staff; 
Director, OCHAMPUSEUR; or CHAMPUS fiscal intermediaries. No other 
persons or agents (such as physicians, staff members of hospitals, or 
CHAMPUS health benefits advisors) have such authority.
    (4) Status of patient controlling for purposes of cost-sharing. 
Benefits for covered services and supplies described in this section 
will be extended either on an inpatient or outpatient cost-sharing basis 
in accordance with the status of the patient at the time the covered 
services and supplies were provided, unless otherwise specifically 
designated (such as for ambulance service or maternity care). For cost-
sharing provisions, refer to paragraph (f) of this section.
    (5) Right to information. As a condition precedent to the provision 
of benefits hereunder, OCHAMPUS or its CHAMPUS fiscal intermediaries 
shall be entitled to receive information from a physician or hospital or 
other person, institution, or organization (including

[[Page 75]]

a local, state, or U.S. Government agency) providing services or 
supplies to the beneficiary for which claims or requests for approval 
for benefits are submitted. Such information and records may relate to 
the attendance, testing, monitoring, or examination or diagnosis of, or 
treatment rendered, or services and supplies furnished to a beneficiary, 
and shall be necessary for the accurate and efficient administration of 
CHAMPUS benefits. Before a determination will be made on a request for 
preauthorization or claim of benefits, a beneficiary or sponsor must 
provide particular additional information relevant to the requested 
determination, when necessary. The recipient of such information shall 
in every case hold such records confidential except when:
    (i) Disclosure of such information is authorized specifically by the 
beneficiary;
    (ii) Disclosure is necessary to permit authorized governmental 
officials to investigate and prosecute criminal actions, or
    (iii) Disclosure is authorized or required specifically under the 
terms of the Privacy Act or Freedom of Information Act (refer to 
Sec. 199.1(m) of this part).

For the purposes of determining the applicability of and implementing 
the provisions of Secs. 199.8, 199.11, and 199.12, or any provision of 
similar purpose of any other medical benefits coverage or entitlement, 
OCHAMPUS or CHAMPUS fiscal intermediaries may release, without consent 
or notice to any beneficiary or sponsor, to any person, organization, 
government agency, provider, or other entity any information with 
respect to any beneficiary when such release constitutes a routine use 
published in the Federal Register in accordance with DoD 5400.11-R 
(Privacy Act (5 U.S.C. 552a)). Before a person's claim of benefits will 
be adjudicated, the person must furnish to CHAMPUS information that 
reasonably may be expected to be in his or her possession and that is 
necessary to make the benefit determination. Failure to provide the 
requested information may result in denial of the claim.
    (6) Physical examinations. The Director, OCHAMPUS, or a designee, 
may require a beneficiary to submit to one or more medical (including 
psychiatric) examinations to determine the beneficiary's entitlement to 
benefits for which application has been made or for otherwise authorized 
medically necessary services and supplies required in the diagnosis or 
treatment of an illness or injury (including maternity and well-baby 
care). When a medical examination has been requested, CHAMPUS will 
withhold payment of any pending claims or preauthorization requests on 
that particular beneficiary. If the beneficiary refuses to agree to the 
requested medical examination, or unless prevented by a medical reason 
acceptable to OCHAMPUS, the examination is not performed within 90 days 
of initial request, all pending claims for services and supplies will be 
denied. A denial of payments for services or supplies provided before 
(and related to) the request for a physical examination is not subject 
to reconsideration. The medical examination and required beneficiary 
travel related to performing the requested medical examination will be 
at the expense of CHAMPUS. The medical examination may be performed by a 
physician in a Uniformed Services medical facility or by an appropriate 
civilian physician, as determined and selected by the Director, 
OCHAMPUS, or a designee who is responsible for making such arrangements 
as are necessary, including necessary travel arrangements.
    (7) Claims filing deadline. For all services provided on or after 
January 1, 1993, to be considered for benefits, all claims submitted for 
benefits must, except as provided in Sec. 199.7, be filed with the 
appropriate CHAMPUS contractor no later than one year after the services 
are provided. Unless the requirement is waived, failure to file a claim 
within this deadline waives all rights to benefits for such services or 
supplies.
    (8) Double coverage and third party recoveries. CHAMPUS claims 
involving double coverage or the possiblity that the United States can 
recover all or a part of its expenses from a third party, are 
specifically subject to the provisions of Sec. 199.8 or Sec. 199.12 of 
this part as appropriate.

[[Page 76]]

    (9) Nonavailability statements within a 40-mile catchment area. In 
some geographic locations, it is necessary for CHAMPUS beneficiaries not 
enrolled in TRICARE Prime to determine whether the required inpatient 
medical care can be provided through a Uniformed Services facility. If 
the required care cannot be provided, the hospital commander, or 
designee, will issue a Nonavailability Statement (DD form 1251). Except 
for emergencies, a Nonavailability Statement should be issued before 
medical care is obtained from a civilian source. Failure to secure such 
a statement may waive the beneficiary's rights to benefits under 
CHAMPUS.
    (i) Rules applicable to issuance of Nonavailability Statement (NAS) 
(DD Form 1251).
    (A) The ASD(HA) is responsible for issuing rules and regulations 
regarding Nonavailability Statements.
    (B) For CHAMPUS beneficiaries who are not enrolled in TRICARE Prime, 
an NAS is required for services in connection with nonemergency 
inpatient hospital care if such services are available at a facility of 
the Uniformed Services located within a 40 mile radius of the residence 
of the beneficiary, except that an NAS is not required for services 
otherwise available at a facility of the Uniformed Services located 
within a 40-mile radius of the beneficiary's residence when another 
insurance plan or program provides the beneficiary primary coverage for 
the services. This requirement for an NAS does not apply to 
beneficiaries enrolled in TRICARE Prime, even when those beneficiaries 
use the point-of-service option under Sec. 199.17(n)(3).
    (C) In addition to NAS requirements set forth in paragraph (a)(9) of 
this section, additional NAS requirements are established pursuant to 
paragraph (a)(10) of this section in connection with highly specialized 
care in national or 200-mile catchment areas of military or civilian STS 
facilities.
    (ii) Beneficiary responsibility. A CHAMPUS beneficiary who is not 
enrolled in TRICARE Prime is responsible for securing information 
whether or not he or she resides in a geographic area that requires 
obtaining a Nonavailability Statement. Information concerning current 
rules and regulations may be obtained from the Offices of the Army, 
Navy, and Air Force Surgeons General; or a representative of the TRICARE 
managed care support contractor's staff, or the Director, OCHAMPUS.
    (iii) Rules in effect at time civilian medical care is provided 
apply. The applicable rules and regulations regarding Nonavailability 
Statements in effect at the time the civilian care is rendered apply in 
determining whether a Nonavailability Statement is required.
    (iv) Nonavailability Statement (DD Form 1251) must be filed with 
applicable claim. When a claim is submitted for CHAMPUS benefits that 
includes services for which a Nonavailability Statement was issued, a 
valid Nonavailability Statement authorization must be on DEERS.
    (v) Nonavailability Statement (NAS) and Claims Adjudication. A NAS 
is valid for the adjudication of CHAMPUS claims for all related care 
otherwise authorized by this part which is received from a civilian 
source while the beneficiary resided within the Uniformed Service 
facility catchment area which issued the NAS.
    (vi) In the case of any service subject to an NAS requirement under 
paragraph (a)(9) of this section and also subject to a preadmission (or 
other pre-service) authorization requirement under Sec. 199.4 or 
Sec. 199.15, the administrative processes for the NAS and pre-service 
authorization may be combined.
    (10) Nonavailability Statements in national or 200-mile catchment 
areas for highly specialized care available in selected military or 
civilian Specialized Treatment Service Facilities--(i) Specialized 
Treatment Service Facilities. STS Facilities may be designated for 
certain high cost, high technology procedures. The purpose of such 
designations is to concentrate patient referrals for certain highly 
specialized procedures which are of relatively low incidence and/or 
relatively high per-case cost and which require patient concentration to 
permit resource investment and enhance the effectiveness of quality 
assurance efforts.
    (ii) Designation. Selected military treatment facilities and 
civilian facilities will be designated by the Assistant

[[Page 77]]

Secretary of Defense for Health Affairs as STS Facilities for certain 
procedures. These designations will be based on the highly specialized 
capabilities of those selected facilities. For each STS designation for 
which NASs in national or 200-mile catchment areas will be required, 
there shall be a determination that total government costs associated 
with providing the service under the Specialized Treatment Services 
program will in the aggregate be less than the total government cost of 
that service under the normal operation of CHAMPUS. There shall also be 
a determination that the Specialized Treatment Services Facility meets a 
standard of excellence in quality comparable to that prevailing in other 
highly specialized medical centers in the nation or region that provide 
the services involved.
    (iii) Organ transplants and similar procedures. For organ 
transplants and procedures of similar extraordinary specialization, 
military or civilian STS Facilities may be designated for a nationwide 
catchment area, covering all 50 states, the District of Columbia and 
Puerto Rico (or, alternatively, for any portion of such a nationwide 
area).
    (iv) Other highly specialized procedures. For other highly 
specialized procedures, military or civilian STS Facilities will be 
designated for catchment areas of up to approximately 200 miles radius. 
The exact geographical area covered for each STS Facility will be 
identified by reference to State and local governmental jurisdictions, 
zip code groups or other method to describe an area within an 
approximate radius of 200 miles from the facility. In paragraph (a)(10) 
of this section, this catchment area is referred to as a ``200-mile 
catchment area''.
    (v) NAS requirement. For procedures subject to a nationwide 
catchment area NAS requirement under paragraph (a)(10)(iii) of this 
section or a 200-mile catchment area NAS requirement under paragraph 
(a)(10)(iv) of this section, CHAMPUS cost sharing is not allowed unless 
the services are obtained from a designated civilian Specialized 
Treatment Services program (as authorized) or an NAS has been issued. 
This rule is subject to the exceptions set forth in paragraph 
(a)(10)(vi) of this section. This NAS requirement is a general 
requirement of the CHAMPUS program.
    (vi) Exceptions. Nationwide catchment areas NASs and 200-mile 
catchment area NASs are not required in any of the following 
circumstances:
    (A) An emergency.
    (B) When another insurance plan or program provides the beneficiary 
primary coverage for the services.
    (C) A case-by-case waiver is granted based on a medical judgment 
made by the commander of the STS Facility (or other person designated 
for this purpose) that, although the care is available at the facility, 
it would be medically inappropriate because of a delay in the treatment 
or other special reason to require that the STS Facility be used; or
    (D) A case-by-case waiver is granted by the commander of the STS 
Facility (or other person designated for this purpose) that, although 
the care is available at the facility, use of the facility would impose 
exceptional hardship on the beneficiary or the beneficiary's family.
    (E) The beneficiary is enrolled in TRICARE Prime.
    (vii) Waiver process. A process shall be established for 
beneficiaries to request a case-by-case waiver under paragraphs 
(a)(10)(vi) (C) and (D) of this section. This process shall include:
    (A) An opportunity for the beneficiary (and/or the beneficiary's 
physician) to submit information the beneficiary believes justifies a 
waiver.
    (B) A written decision from a person designated for the purpose on 
the request for a waiver, including a statement of the reasons for the 
decision.
    (C) An opportunity for the beneficiary to appeal an unfavorable 
decision to a designated appeal authority not involved in the initial 
decision; and
    (D) A written decision on the appeal, including a statement of the 
reasons for the decision.
    (viii) Notice. The Assistant Secretary of Defense for Health Affairs 
will annually publish in the Federal Register a notice of all military 
and civilian STS Facilities, including a listing of the several 
procedures subject to nationwide catchment area NASs and the

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highly specialized procedures subject to 200-mile catchment area NASs.
    (ix) Specialized procedures. Highly specialized procedures that may 
be established as subject to 200-mile catchment area NASs are limited 
to:
    (A) Medical and surgical diagnoses requiring inpatient hospital 
treatment of an unusually intensive nature, documented by a DRG-based 
payment system weight (pursuant to Sec. 199.14(a)(1)) for a single DRG 
or an aggregated DRG weight for a category of DRGs of at least 2.0 
(i.e., treatment is at least two times as intensive as the average 
CHAMPUS inpatient case).
    (B) Diagnostic or therapeutic services, including outpatient 
services, related to such inpatient categories of treatment.
    (C) Other procedures which require highly specialized equipment the 
cost of which exceeds $1,000,000 (e.g., lithotriptor, positron emission 
tomography equipment) and such equipment is underutilized in the area; 
and
    (D) Other comparable highly specialized procedures as determined by 
the Assistant Secretary of Defense for Health Affairs.
    (x) Quality standards. Any facility designated as a military or 
civilian STS Facility under paragraph (a)(10) of this section shall be 
required to meet quality standards established by the Assistant 
Secretary of Defense for Health Affairs. In the development of such 
standards, the Assistant Secretary shall consult with relevant medical 
specialty societies and other appropriate parties. To the extent 
feasible, quality standards shall be based on nationally recognized 
standards.
    (xi) NAS procedures. The provisions of paragraphs (a)(9)(ii) through 
(a)(9)(v) of this section regarding procedures applicable to NASs shall 
apply to expanded catchment area NASs required by paragraph (a)(10) of 
this section.
    (xii) Travel and lodging expenses. In accordance with guidelines 
issued by the Assistant Secretary of Defense for Health Affairs, certain 
travel and lodging expenses associated with services under the 
Specialized Treatment Services program may be fully or partially 
reimbursed.
    (xiii) Preference for military facility use. In any case in which 
services subject to an NAS requirement under paragraph (a)(10) of this 
section are available in both a military STS Facility and from a 
civilian STS Facility, the military Facility must be used unless use of 
the civilian Facility is specifically authorized.
    (11) Quality and Utilization Review Peer Review Organization 
program. All benefits under the CHAMPUS program are subject to review 
under the CHAMPUS Quality and Utilization Review Peer Review 
Organization program pursuant to Sec. 199.15. (Utilization and quality 
review of mental health services are also part of the Peer Review 
Organization program, and are addressed in paragraph (a)(12) of this 
section.)
    (12) Utilization review, quality assurance and reauthorization for 
inpatient mental health services and partial hospitalization. (i) In 
general. The Director, OCHAMPUS shall provide, either directly or 
through contract, a program of utilization and quality review for all 
mental health care services. Among other things, this program shall 
include mandatory preadmission authorization before nonemergency 
inpatient mental health services may be provided and mandatory approval 
of continuation of inpatient services within 72 hours of emergency 
admissions. This program shall also include requirements for other 
pretreatment authorization procedures, concurrent review of continuing 
inpatient and partial hospitalization, retrospective review, and other 
such procedures as determined appropriate by the Director, OCHAMPUS. The 
provisions of paragraph (h) of this section and Sec. 199.15(f) shall 
apply to this program. The Director, OCHAMPUS, shall establish, pursuant 
to that Sec. 199.15(f), procedures substantially comparable to 
requirements of paragraph (h) of this section and Sec. 199.15. If the 
utilization and quality review program for mental health care services 
is provided by contract, the contractor(s) need not be the same 
contractor(s) as are engaged under Sec. 199.15 in connection with the 
review of other services.
    (ii) Preadmission authorization. (A) This section generally requires 
preadmission authorization for all nonemergency inpatient mental health

[[Page 79]]

services and prompt continued stay authorization after emergency 
admissions. It also requires preadmission authorization for all 
admissions to a partial hospitalization program, without exception, as 
the concept of an emergency admission does not pertain to a partial 
hospitalization level of care. This section generally requires 
preadmission authorization for all nonemergency inpatient mental health 
services and prompt continued stay authorization after emergency 
admissions. Institutional services for which payment would otherwise be 
authorized, but which were provided without compliance with preadmission 
authorization requirements, do not qualify for the same payment that 
would be provided if the preadmission requirements had been met.
    (B) In cases of noncompliance with preauthorization requirements, a 
payment reduction shall be made in accordance with 
Sec. 199.15(b)(4)(iii).
    (C) For purposes of paragraph (a)(12)(ii)(B) of this section, a day 
of services without the appropriate preauthorization is any day of 
services provided prior to:
    (1) The receipt of an authorization; or
    (2) The effective date of an authorization subsequently received.
    (D) Services for which payment is disallowed under paragraph 
(a)(12)(ii)(B) of this section may not be billed to the patient (or the 
patient's family).
    (13) Implementing instructions. The Director, OCHAMPUS shall issue 
policies, procedures, instructions, guidelines, standards and/or 
criteria to implement this section.
    (b) Institutional benefits. (1) General. Services and supplies 
provided by an institutional provider authorized as set forth in 
Sec. 199.6 may be cost-shared only when such services or supplies: are 
otherwise authorized by this part; are medically necessary; are ordered, 
directed, prescribed, or delivered by an OCHAMPUS-authorized individual 
professional provider as set forth in Sec. 199.6 or by an employee of 
the authorized institutional provider who is otherwise eligible to be a 
CHAMPUS authorized individual professional provider; are delivered in 
accordance with generally accepted norms for clinical practice in the 
United States; meet established quality standards; and comply with 
applicable definitions, conditions, limitations, exceptions, or 
exclusions as otherwise set forth in this part.
    (i) Billing practices. To be considered for benefits under 
Sec. 199.4(b), covered services and supplies must be provided and billed 
for by a hospital or other authorized institutional provider. Such 
billings must be fully itemized and sufficiently descriptive to permit 
CHAMPUS to determine whether benefits are authorized by this part. 
Depending on the individual circumstances, teaching physician services 
may be considered an institutional benefit in accordance with 
Sec. 199.4(b) or a professional benefit under Sec. 199.4(c). See 
paragraph (c)(3)(xiii) of this section for the CHAMPUS requirements 
regarding teaching physicians. In the case of continuous care, claims 
shall be submitted to the appropriate CHAMPUS fiscal intermediary at 
least every 30 days either by the beneficiary or sponsor or, on a 
participating basis, directly by the facility on behalf of the 
beneficiary (refer to Sec. 199.7).
    (ii) Successive inpatient admissions. Successive inpatient 
admissions shall be deemed one inpatient confinement for the purpose of 
computing the active duty dependent's share of the inpatient 
institutional charges, provided not more than 60 days have elapsed 
between the successive admissions, except that successive inpatient 
admissions related to a single maternity episode shall be considered one 
confinement, regardless of the number of days between admissions. For 
the purpose of applying benefits, successive admissions will be 
determined separately for maternity admissions and admissions related to 
an accidental injury (refer to Sec. 199.4(f)).
    (iii) Related services and supplies. Covered services and supplies 
must be rendered in connection with and related directly to a covered 
diagnosis or definitive set of symptoms requiring otherwise authorized 
medically necessary treatment.
    (iv) Inpatient, appropriate level required. For purposes of 
inpatient care, the level of institutional care for which Basic Program 
benefits may be extended must be at the appropriate level

[[Page 80]]

required to provide the medically necessary treatment except for 
patients requiring skilled nursing facility care. For patients for whom 
skilled nursing facility care is adequate, but is not available in the 
general locality, benefits may be continued in the higher level care 
facility. General locality means an area that includes all the skilled 
nursing facilities within 50 miles of the higher level facility, unless 
the higher level facility can demonstrate that the skilled nursing 
facilities are inaccessible to its patients. The decision as to whether 
a skilled nursing facility is within the higher level facility's general 
locality, or the skilled nursing facility is inaccessible to the higher 
level facility's patients shall be a CHAMPUS contractor initial 
determination for the purposes of appeal under Sec. 199.10 of this part. 
CHAMPUS institutional benefit payments shall be limited to the allowable 
cost that would have been incurred in the skilled nursing facility, as 
determined by the Director, OCHAMPUS, or a designee. If it is determined 
that the institutional care can be provided reasonably in the home 
setting, no CHAMPUS institutional benefits are payable.
    (v) General or special education not covered. Services and supplies 
related to the provision of either regular or special education 
generally are not covered. Such exclusion applies whether a separate 
charge is made for education or whether it is included as a part of an 
overall combined daily charge of an institution. In the latter instance, 
that portion of the overall combined daily charge related to education 
must be determined, based on the allowable costs of the educational 
component, and deleted from the institution's charges before CHAMPUS 
benefits can be extended. The only exception is when appropriate 
education is not available from or not payable by the cognizant public 
entity. Each case must be referred to the Director, OCHAMPUS, or a 
designee, for review and a determination of the applicability of CHAMPUS 
benefits.
    (2) Covered hospital services and supplies--(i) Room and board. 
Includes special diets, laundry services, and other general housekeeping 
support services (inpatient only).
    (ii) General staff nursing services.
    (iii) ICU. Includes specialized units, such as for respiratory 
conditions, cardiac surgery, coronary care, burn care, or neurosurgery 
(inpatient only).
    (iv) Operating room, recovery room. Operating room and recovery 
room, including other special treatment rooms and equipment, and 
hyperbaric chamber.
    (v) Drugs and medicines. Includes sera, biologicals, and 
pharmaceutical preparations (including insulin) that are listed in the 
official formularies of the institution or facility at the time of use. 
(To be considered as an inpatient supply, drugs and medicines must be 
consumed during the specific period the beneficiary is a registered 
inpatient. Drugs and medicines prescribed for use outside the hospital, 
even though prescribed and obtained while still a registered inpatient, 
will be considered outpatient supplies and the provisions of paragraph 
(d) of this section will apply.)
    (vi) Durable medical equipment, medical supplies, and dressings. 
Includes durable medical equipment, medical supplies essential to a 
surgical procedure (such as artificial heart valve and artificial ball 
and socket joint), sterile trays, casts, and orthopedic hardware. Use of 
durable medical equipment is restricted to an inpatient basis.
    Note: If durable medical equipment is to be used on an outpatient 
basis or continued in outpatient status after use as an inpatient, 
benefits will be provided as set forth in paragraph (d) of this section 
and cost-sharing will be on an outpatient basis (refer to paragraph 
(a)(4) of this section).
    (vii) Diagnostic services. Includes clinical laboratory 
examinations, x-ray examinations, pathological examinations, and machine 
tests that produce hard-copy results. Also includes CT scanning under 
certain limited conditions.
    (viii) Anesthesia. Includes both the anesthetic agent and its 
administration.
    (ix) Blood. Includes blood, plasma and its derivatives, including 
equipment and supplies, and its administration.
    (x) Radiation therapy. Includes radioisotopes.
    (xi) Physical therapy.

[[Page 81]]

    (xii) Oxygen. Includes equipment for its administration.
    (xiii) Intravenous injections. Includes solution.
    (xiv) Shock therapy.
    (xv) Chemotherapy.
    (xvi) Renal and peritoneal dialysis.
    (xvii) Psychological evaluation tests. When required by the 
diagnosis.
    (xviii) Other medical services. Includes such other medical services 
as may be authorized by the Director, OCHAMPUS, or a designee, provided 
they are related directly to the diagnosis or definitive set of symptoms 
and rendered by a member of the institution's medical or professional 
staff (either salaried or contractual) and billed for by the hospital.
    (3) Covered services and supplies provided by special medical 
treatment institutions or facilities, other than hospitals or RTCs--(i) 
Room and board. Includes special diets, laundry services, and other 
general housekeeping support services (inpatient only).
    (ii) General staff nursing services.
    (iii) Drugs and medicines. Includes sera, biologicals, and 
pharmaceutical preparations (including insulin) that are listed in the 
official formularies of the institution or facility at the time of use. 
(To be considered as an inpatient supply, drugs and medicines must be 
consumed during the specific period the beneficiary is a registered 
inpatient. Drugs and medicines prescribed for use outside the authorized 
institutional provider, even though prescribed and obtained while still 
a registered inpatient, will be considered outpatient supplies and the 
provisions of paragraph (d) of this section will apply.).
    (iv) Durable medical equipment, medical supplies, and dressings. 
Includes durable medical equipment, sterile trays, casts, orthopedic 
hardware and dressings. Use of durable medical equipment is restricted 
to an inpatent basis.
    Note: If the durable medical equipment is to be used on an 
outpatient basis or continued in outpatient status after use as an 
inpatient, benefits will be provided as set forth in paragraph (d) of 
this section, and cost-sharing will be on an outpatient basis (refer to 
paragraph (a)(4) of this section).
    (v) Diagnostic services. Includes clinical laboratory examinations, 
x-ray examinations, pathological examination, and machine tests that 
produce hard-copy results.
    (vi) Blood. Includes blood, plasma and its derivatives, including 
equipment and supplies, and its administration.
    (vii) Physical therapy.
    (viii) Oxygen. Includes equipment for its administration.
    (ix) Intravenous injections. Includes solution.
    (x) Shock therapy.
    (xi) Chemotherapy.
    (xii) Psychological evaluation tests. When required by the 
diagnosis.
    (xiii) Renal and peritoneal dialysis.
    (xiv) Other medical services. Other medical services may be 
authorized by the Director, OCHAMPUS, or a designee, provided they are 
related directly to the diagnosis or definitive set of symptoms and 
rendered by a member of the institution's medical or professional staff 
(either salaried or contractual) and billed for by the authorized 
institutional provider of care.
    (4) Services and supplies provided by RTCs--(i) Room and board. 
Includes use of residential facilities such as food service (including 
special diets), laundry services, supervised reasonable recreational and 
social activity services, and other general services as considered 
appropriate by the Director, OCHAMPUS, or a designee.
    (ii) Patient assessment. Includes the assessment of each child or 
adolescent accepted by the RTC, including clinical consideration of each 
of his or her fundamental needs, that is, physical, psychological, 
chronological age, developmental level, family, educational, social, 
environmental, and recreational.
    (iii) Diagnostic services. Includes clinical laboratory 
examinations, x-ray examinations, pathological examinations, and machine 
tests that produce hard-copy results.
    (iv) Psychological evaluation tests.
    (v) Treatment of mental disorders. Services and supplies that are 
medically or psychologically necessary to diagnose and treat the mental 
disorder for which the patient was admitted to the RTC. Covered services 
and requirements for qualifications of providers are as listed in 
paragraph (c)(3)(ix) of this section.
    (vi) Other necessary medical care. Emergency medical services or 
other

[[Page 82]]

authorized medical care may be rendered by the RTC provided it is 
professionally capable of rendering such services and meets standards 
required by the Director, OCHAMPUS. It is intended, however, that 
CHAMPUS payments to an RTC should primarily cover those services and 
supplies directly related to the treatment of mental disorders that 
require residential care.
    (vii) Criteria for determining medical or psychological necessity. 
In determining the medical or psychological necessity of services and 
supplies provided by RTCs, the evaluation conducted by the Director, 
OCHAMPUS (or designee) shall consider the appropriate level of care for 
the patient, the intensity of services required by the patient, and the 
availability of that care. In addition to the criteria set forth in this 
paragraph (b)(4) of this section, additional evaluation standards, 
consistent with such criteria, may be adopted by the Director, OCHAMPUS 
(or designee). RTC services and supplies shall not be considered 
medically or psychologically necessary unless, at a minimum, all the 
following criteria are clinically determined in the evaluation to be 
fully met:
    (A) Patient has a diagnosable psychiatric disorder.
    (B) Patient exhibits patterns of disruptive behavior with evidence 
of disturbances in family functioning or social relationships and 
persistent psychological and/or emotional disturbances.
    (C) RTC services involve active clinical treatment under an 
individualized treatment plan that provides for:
    (1) Specific level of care, and measurable goals/objectives relevant 
to each of the problems identified;
    (2) Skilled interventions by qualified mental health professionals 
to assist the patient and/or family;
    (3) Time frames for achieving proposed outcomes; and
    (4) Evaluation of treatment progress to include timely reviews and 
updates as appropriate of the patient's treatment plan that reflects 
alterations in the treatment regimen, the measurable goals/objectives, 
and the level of care required for each of the patient's problems, and 
explanations of any failure to achieve the treatment goals/objectives.
    (D) Unless therapeutically contraindicated, the family and/or 
guardian must actively participate in the continuing care of the patient 
either through direct involvement at the facility or geographically 
distant family therapy. (In the latter case, the treatment center must 
document that there has been collaboration with the family and/or 
guardian in all reviews.)
    (viii) Preauthorization requirement. (A) All admissions to RTC care 
are elective and must be certified as medically/psychologically 
necessary prior to admission. The criteria for preauthorization shall be 
those set forth in paragraph (b)(4)(vii) of this section. In applying 
those criteria in the context of preadmission authorization review, 
special emphasis is placed on the development of a specific diagnosis/
treatment plan, consistent with those criteria and reasonably expected 
to be effective, for that individual patient.
    (B) The timetable for development of the individualized treatment 
plan shall be as follows:
    (1) The plan must be under development at the time of the admission.
    (2) A preliminary treatment plan must be established within 24 hours 
of the admission.
    (3) A master treatment plan must be established within ten calendar 
days of the admission.
    (C) The elements of the individualized treatment plan must include:
    (1) The diagnostic evaluation that establishes the necessity for the 
admission;
    (2) An assessment regarding the inappropriateness of services at a 
less intensive level of care;
    (3) A comprehensive, biopsychosocial assessment and diagnostic 
formulation;
    (4) A specific individualized treatment plan that integrates 
measurable goals/objectives and their required level of care for each of 
the patient's problems that are a focus of treatment;
    (5) A specific plan for involvement of family members, unless 
therapeutically contraindicated; and

[[Page 83]]

    (6) A discharge plan, including an objective of referring the 
patient to further services, if needed, at less intensive levels of care 
within the benefit limited period.
    (D) Preauthorization requests should be made not fewer than two 
business days prior to the planned admission. In general, the decision 
regarding preauthorization shall be made within one business day of 
receipt of a request for preauthorization, and shall be followed with 
written confirmation. Preauthorizations are valid for the period of 
time, appropriate to the type of care involved, stated when the 
preauthorization is issued. In general, preauthorizations are valid for 
30 days.
    (ix) Concurrent review. Concurrent review of the necessity for 
continued stay will be conducted no less frequently than every 30 days. 
The criteria for concurrent review shall be those set forth in paragraph 
(b)(4)(vii) of this section. In applying those criteria in the context 
of concurrent review, special emphasis is placed on evaluating the 
progress being made in the active individualized clinical treatment 
being provided and on developing appropriate discharge plans.
    (5) Extent of institutional benefits--(i) Inpatient room 
accommodations--(A) Semiprivate. The allowable costs for room and board 
furnished an individual patient are payable for semiprivate 
accommodations in a hospital or other authorized institution, subject to 
appropriate cost-sharing provisions (refer to paragraph (f) of this 
section). A semiprivate accommodation is a room containing at least two 
beds. Therefore, if a room publicly is designated by the institution as 
a semiprivate accommodation and contains multiple beds, it qualifies as 
semiprivate for the purpose of CHAMPUS.
    (B) Private. A room with one bed that is designated as a private 
room by the hospital or other authorized institutional provider. The 
allowable cost of a private room accommodation is covered only under the 
following conditions:
    (1) When its use is required medically and when the attending 
physician certifies that a private room is necessary medically for the 
proper care and treatment of a patient; or
    (2) When a patient's medical condition requires isolation; or
    (3) When a patient (in need of immediate inpatient care but not 
requiring a private room) is admitted to a hospital or other authorized 
institution that has semiprivate accommodations, but at the time of 
admission, such accommodations are occupied; or
    (4) When a patient is admitted to an acute care hospital (general or 
special) without semiprivate rooms.
    (C) Duration of private room stay. The allowable cost of private 
accommodations is covered under the circumstances described in paragraph 
(b)(5)(i)(B) of this section until the patient's condition no longer 
requires the private room for medical reasons or medical isolation; or, 
in the case of the patient not requiring a private room, when a 
semiprivate accommodation becomes available; or, in the case of an acute 
care hospital (general or special) which does not have semiprivate 
rooms, for the duration of an otherwise covered inpatient stay.
    (D) Hospital (except an acute care hospital, general or special) or 
other authorized institutional provider without semiprivate 
accommodations. When a beneficiary is admitted to a hospital (except an 
acute care hospital, general or special) or other institution that has 
no semiprivate accommodations, for any inpatient day when the patient 
qualifies for use of a private room (as set forth in paragraphs 
(b)(5)(i)(B) (1) and (2) of this section) the allowable cost of private 
accommodations is covered. For any inpatient day in such a hospital or 
other authorized institution when the patient does not require medically 
the private room, the allowable cost of semiprivate accommodations is 
covered, such allowable costs to be determined by the Director, 
OCHAMPUS, or a designee.
    (ii) General staff nursing services. General staff nursing services 
cover all nursing care (other than that provided by private duty nurses) 
including, but not limited to, general duty nursing, emergency room 
nursing, recovery room nursing, intensive nursing care, and group 
nursing arrangements. Only nursing services provided by nursing 
personnel on the payroll of the hospital

[[Page 84]]

or other authorized institution are eligible under paragraph (b) of this 
section. If a nurse who is not on the payroll of the hospital or other 
authorized institution is called in specifically to care for a single 
patient (individual nursing) or more than one patient (group nursing), 
whether the patient is billed for the nursing services directly or 
through the hospital or other institution, such services constitute 
private duty (special) nursing services and are not eligible for 
benefits under this paragraph (the provisions of paragraph (c)(2)(xv) of 
this section would apply).
    (iii) ICU. An ICU is a special segregated unit of a hospital in 
which patients are concentrated, by reason of serious illness, usually 
without regard to diagnosis. Special lifesaving techniques and equipment 
are available regularly and immediately within the unit, and patients 
are under continuous observation by a nursing staff specially trained 
and selected for the care of this type of patient. The unit is 
maintained on a continuing, rather than an intermittent or temporary, 
basis. It is not a postoperative recovery room or a postanesthesia room. 
In some large or highly specialized hospitals, the ICUs may be refined 
further for special purposes, such as for respiratory conditions, 
cardiac surgery, coronary care, burn care, or neurosurgery. For purposes 
of CHAMPUS, these specialized units would be considered ICUs if they 
otherwise conformed to the definition of an ICU.
    (iv) Treatment rooms. Standard treatment rooms include emergency 
rooms, operating rooms, recovery rooms, special treatment rooms, and 
hyperbaric chambers and all related necessary medical staff and 
equipment. To be recognized for purposes of CHAMPUS, treatment rooms 
must be so designated and maintained by the hospital or other authorized 
institutions on a continuing basis. A treatment room set up on an 
intermittent or temporary basis would not be so recognized.
    (v) Drugs and medicines. Drugs and medicines are included as a 
supply of a hospital or other authorized institution only under the 
following conditions:
    (A) They represent a cost to the facility rendering treatment;
    (B) They are furnished to a patient receiving treatment, and are 
related directly to that treatment; and
    (C) They are ordinarily furnished by the facility for the care and 
treatment of inpatients.
    (vi) Durable medical equipment, medical supplies, and dressings. 
Durable medical equipment, medical supplies, and dressings are included 
as a supply of a hospital or other authorized institution only under the 
following conditions:
    (A) If ordinarily furnished by the facility for the care and 
treatment of patients; and
    (B) If specifically related to, and in connection with, the 
condition for which the patient is being treated; and
    (C) If ordinarily furnished to a patient for use in the hospital or 
other authorized institution (except in the case of a temporary or 
disposable item); and
    (D) Use of durable medical equipment is limited to those items 
provided while the patient is an inpatient. If such equipment is 
provided for use on an outpatient basis, the provisions of paragraph (d) 
of this section apply.
    (vii) Transitional use items. Under certain circumstances, a 
temporary or disposable item may be provided for use beyond an inpatient 
stay, when such item is necessary medically to permit or facilitate the 
patient's departure from the hospital or other authorized institution, 
or which may be required until such time as the patient can obtain a 
continuing supply; or it would be unreasonable or impossible from a 
medical standpoint to discontinue the patient's use of the item at the 
time of termination of his or her stay as an inpatient.
    (viii) Anesthetics and oxygen. Anesthetics and oxygen and their 
administration are considered a service or supply if furnished by the 
hospital or other authorized institution, or by others under 
arrangements made by the facility under which the billing for such 
services is made through the facility.
    (6) Inpatient mental health services. Inpatient mental health 
services are those services furnished by institutional and professional 
providers for

[[Page 85]]

treatment of a nervous or mental disorder (as defined in Sec. 199.2) to 
a patient admitted to a CHAMPUS-authorized acute care general hospital; 
a psychiatric hospital; or, unless otherwise exempted, a special 
institutional provider.
    (i) Criteria for determining medical or psychological necessity. In 
determining the medical or psychological necessity of acute inpatient 
mental health services, the evaluation conducted by the Director, 
OCHAMPUS (or designee) shall consider the appropriate level of care for 
the patient, the intensity of services required by the patient, and the 
availability of that care. The purpose of such acute inpatient care is 
to stabilize a life-threatening or severely disabling condition within 
the context of a brief, intensive model of inpatient care in order to 
permit management of the patient's condition at a less intensive level 
of care. Such care is appropriate only if the patient requires services 
of an intensity and nature that are generally recognized as being 
effectively and safely provided only in an acute inpatient hospital 
setting. In addition to the criteria set forth in this paragraph (b)(6) 
of this section, additional evaluation standards, consistent with such 
criteria, may be adopted by the Director, OCHAMPUS (or designee). Acute 
inpatient care shall not be considered necessary unless the patient 
needs to be observed and assessed on a 24-hour basis by skilled nursing 
staff, and/or requires continued intervention by a multidisciplinary 
treatment team; and in addition, at least one of the following criteria 
is determined to be met:
    (A) Patient poses a serious risk of harm to self and/or others.
    (B) Patient is in need of high dosage, intensive medication or 
somatic and/or psychological treatment, with potentially serious side 
effects.
    (C) Patient has acute disturbances of mood, behavior, or thinking.
    (ii) Emergency admissions. Admission to an acute inpatient hospital 
setting may be on an emergency or on a non-emergency basis. In order for 
an admission to qualify as an emergency, the following criteria, in 
addition to those in paragraph (b)(6)(i) of this section, must be met:
    (A) The patient must be at immediate risk of serious harm to self 
and or others based on a psychiatric evaluation performed by a physician 
(or other qualified mental health professional with hospital admission 
authority); and
    (B) The patient requires immediate continuous skilled observation 
and treatment at the acute psychiatric level of care.
    (iii) Preauthorization requirements. (A) All non-emergency 
admissions to an acute inpatient hospital level of care must be 
authorized prior to the admission. The criteria for preauthorization 
shall be those set forth in paragraph (b)(6)(i) of this section. In 
applying those criteria in the context of preauthorization review, 
special emphasis is placed on the development of a specific 
individualized treatment plan, consistent with those criteria and 
reasonably expected to be effective, for that individual patient.
    (B) The timetable for development of the individualized treatment 
plan shall be as follows:
    (1) The development of the plan must begin immediately upon 
admission.
    (2) A preliminary treatment plan must be established within 24 hours 
of the admission.
    (3) A master treatment plan must be established within five calendar 
days of the admission.
    (C) The elements of the individualized treatment plan must include:
    (1) The diagnostic evaluation that establishes the necessity for the 
admission;
    (2) An assessment regarding the inappropriateness of services at a 
less intensive level of care;
    (3) A comprehensive biopsychosocial assessment and diagnostic 
formulation;
    (4) A specific individualized treatment plan that integrates 
measurable goals/objectives and their required level of care for each of 
the patient's problems that are a focus of treatment;
    (5) A specific plan for involvement of family members, unless 
therapeutically contraindicated; and
    (6) A discharge plan, including an objective of referring the 
patient to further services, if needed, at less intensive levels of care 
within the benefit limit period.

[[Page 86]]

    (D) The request for preauthorization must be received by the 
reviewer designated by the Director, OCHAMPUS prior to the planned 
admission. In general, the decision regarding preauthorization shall be 
made within one business day of receipt of a request for 
preauthorization, and shall be followed with written confirmation. In 
the case of an authorization issued after an admission resulting from 
approval of a request made prior to the admission, the effective date of 
the certification shall be the date of the receipt of the request. 
However, if the request on which the approved authorization is based was 
made after the admission (and the case was not an emergency admission), 
the effective date of the authorization shall be the date of approval.
    (E) Authorization prior to admission is not required in the case of 
a psychiatric emergency requiring an inpatient acute level of care, but 
authorization for a continuation of services must be obtained promptly. 
Admissions resulting from a bona fide psychiatric emergency should be 
reported within 24 hours of the admission or the next business day after 
the admission, but must be reported to the Director, OCHAMPUS or a 
designee, within 72 hours of the admission. In the case of an emergency 
admission authorization resulting from approval of a request made within 
72 hours of the admission, the effective date of the authorization shall 
be the date of the admission. However, if it is determined that the case 
was not a bona fide psychiatric emergency admission (but the admission 
can be authorized as medically or psychologically necessary), the 
effective date of the authorization shall be the date of the receipt of 
the request.
    (iv) Concurrent review. Concurrent review of the necessity for 
continued stay will be conducted. The criteria for concurrent review 
shall be those set forth in paragraph (b)(6)(i) of this section. In 
applying those criteria in the context of concurrent review, special 
emphasis is placed on evaluating the progress being made in the active 
clinical treatment being provided and on developing/refining appropriate 
discharge plans. In general, the decision regarding concurrent review 
shall be made within one business day of the review, and shall be 
followed with written confirmation.
    (7) Emergency inpatient hospital services. In the case of a medical 
emergency, benefits can be extended for medically necessary inpatient 
services and supplies provided to a beneficiary by a hospital, including 
hospitals that do not meet CHAMPUS standards or comply with the 
provisions of title VI of the Civil Rights Act, or satisfy other 
conditions herein set forth. In a medical emergency, medically necessary 
inpatient services and supplies are those that are necessary to prevent 
the death or serious impairment of the health of the patient, and that, 
because of the threat to the life or health of the patient, necessitate, 
the use of the most accessible hospital available and equipped to 
furnish such services. The availability of benefits depends upon the 
following three separate findings and continues only as long as the 
emergency exists, as determined by medical review. If the case qualified 
as an emergency at the time of admission to an unauthorized 
institutional provider and the emergency subsequently is determined no 
longer to exist, benefits will be extended up through the date of notice 
to the beneficiary and provider that CHAMPUS benefits no longer are 
payable in that hospital.
    (i) Existence of medical emergency. A determination that a medical 
emergency existed with regard to the patient's condition;
    (ii) Immediate admission required. A determination that the 
condition causing the medical emergency required immediate admission to 
a hospital to provide the emergency care; and
    (iii) Closest hospital utilized. A determination that diagnosis or 
treatment was received at the most accessible (closest) hospital 
available and equipped to furnish the medically necessary care.
    (8) RTC day limit. (i) With respect to mental health services 
provided on or after October 1, 1991, benefits for residential treatment 
are generally limited to 150 days in a fiscal year or 150 days in an 
admission (not including days of care prior to October 1, 1991). The RTC 
benefit limit is separate from

[[Page 87]]

the benefit limit for acute inpatient mental health care.
    (ii) Waiver of the RTC day limit. (A) There is a statutory 
presumption against the appropriateness of residential treatment 
services in excess of the 150 day limit. However, the Director, 
OCHAMPUS, (or designee) may in special cases, after considering the 
opinion of the peer review designated by the Director (involving a 
health professional who is not a federal employee) confirming that 
applicable criteria have been met, waive the RTC benefit limit in 
paragraph (b)(8)(i) of this section and authorize payment for care 
beyond that limit.
    (B) The criteria for waiver shall be those set forth in paragraph 
(b)(4)(vii) of this section. In applying those criteria to the context 
of waiver request reviews, special emphasis is placed on assuring that 
the record documents that:
    (1) Active treatment has taken place for the past 150 days and 
substantial progress has been made according to the plan of treatment.
    (2) The progress made is insufficient, due to the complexity of the 
illness, for the patient to be discharged to a less intensive level of 
care.
    (3) Specific evidence is presented to explain the factors which 
interfered with treatment progress during the 150 days of RTC care.
    (4) The waiver request includes specific timeframes and a specific 
plan of treatment which will lead to discharge.
    (C) Where family or social issues complicate transfer to a lower 
level of intensity, the RTC is responsible for determining and arranging 
the supportive and adjunctive resources required to permit appropriate 
transfer. If the RTC fails adequately to meet this responsibility, the 
existence of such family or social issues shall be an inadequate basis 
for a waiver of the benefit limit.
    (D) It is the responsibility of the patient's primary care provider 
to establish, through actual documentation from the medical record and 
other sources, that the conditions for waiver exist.
    (iii) RTC day limits do not apply to services provided under the 
Program for Persons with Disabilities (Sec. 199.5) or services provided 
as partial hospitalization care.
    (9) Acute care day limits. (i) With respect to mental health care 
services provided on or after October 1, 1991, payment for inpatient 
acute hospital care is, in general, statutorily limited as follows:
    (A) Adults, aged 19 and over--30 days in a fiscal year or 30 days in 
an admission (excluding days provided prior to October 1, 1991).
    (B) Children and adolescents, aged 18 and under--45 days in a fiscal 
year or 45 days in an admission (excluding days provided prior to 
October 1, 1991).
    (ii) It is the patient's age at the time of admission that 
determines the number of days available.
    (iii) Waiver of the acute care day limits. (A) There is a statutory 
presumption against the appropriateness of inpatient acute services in 
excess of the day limits set forth in paragraph (b)(9)(i) of this 
section. However, the Director, OCHAMPUS (or designee) may in special 
cases, after considering the opinion of the peer review designated by 
the Director (involving a health professional who is not a federal 
employee) confirming that applicable criteria have been met, waive the 
acute inpatient limits described in paragraph (b)(9)(i) of this section 
and authorize payment for care beyond those limits.
    (B) The criteria for waiver of the acute inpatient limit shall be 
those set forth in paragraph (b)(6)(i) of this section. In applying 
those criteria in the context of waiver request review, special emphasis 
is placed on determining whether additional days of acute inpatient 
mental health care are medically/psychologically necessary to complete 
necessary elements of the treatment plan prior to implementing 
appropriate discharge planning. A waiver may also be granted in cases in 
which a patient exhibits well-documented new symptoms, maladaptive 
behavior, or medical complications which have appeared in the inpatient 
setting requiring a significant revision to the treatment plan.
    (C) The clinician responsible for the patient's care is responsible 
for documenting that a waiver criterion has been met and must establish 
an estimated length of stay beyond the date

[[Page 88]]

of the inpatient limit. There must be evidence of a coherent and 
specific plan for assessment, intervention and reassessment that 
reasonably can be accomplished within the time frame of the additional 
days of coverage requested under the waiver provision.
    (D) For patients in care at the time the inpatient limit is reached, 
a waiver must be requested prior to the limit. For patients being 
readmitted after having received 30 or 45 days in the fiscal year, the 
waiver review will be conducted at the time of the preadmission 
authorization.
    (iv) Acute care day limits do not apply to services provided under 
the Program for Persons with Disabilities (Sec. 199.5) or services 
provided as partial hospitalization care.
    (10) Psychiatric partial hospitalization services.
    (i) In general. Partial hospitalization services are those services 
furnished by a CHAMPUS-authorized partial hospitalization program and 
authorized mental health providers for the active treatment of a mental 
disorder. All services must follow a medical model and vest patient care 
under the general direction of a licensed psychiatrist employed by the 
partial hospitalization center to ensure medication and physical needs 
of all the patients are considered. The primary or attending provider 
must be a CHAMPUS authorized mental health provider, operating within 
the scope of his/her license. These categories include physicians, 
clinical psychologists, certified psychiatric nurse specialists, 
clinical social workers, marriage and family counselors, pastoral 
counselors and mental health counselors. Partial hospitalization 
services are covered as a basic program benefit only if they are 
provided in accordance with paragraph (b)(10) of this section.
    (ii) Criteria for determining medical or psychological necessity of 
psychiatric partial hospitalization services. Psychiatric partial 
hospitalization services will be considered necessary only if all of the 
following conditions are present:
    (A) The patient is suffering significant impairment from a mental 
disorder (as defined in Sec. 199.2) which interferes with age 
appropriate functioning.
    (B) The patient is unable to maintain himself or herself in the 
community, with appropriate support, at a sufficient level of 
functioning to permit an adequate course of therapy exclusively on an 
outpatient basis (but is able, with appropriate support, to maintain a 
basic level of functioning to permit partial hospitalization services 
and presents no substantial imminent risk of harm to self or others).
    (C) The patient is in need of crisis stabilization, treatment of 
partially stabilized mental health disorders, or services as a 
transition from an inpatient program.
    (D) The admission into the partial hospitalization program is based 
on the development of an individualized diagnosis and treatment plan 
expected to be effective for that patient and permit treatment at a less 
intensive level.
    (iii) Preauthorization and concurrent review requirements. All 
preadmission authorization and concurrent review requirements and 
procedures applicable to acute mental health inpatient hospital care in 
paragraphs (a)(12) and (b) of this section are applicable to the partial 
hospitalization program, except that the criteria for considering 
medical or psychological necessity shall be those set forth in paragraph 
(b)(10)(ii) of this section, and no emergency admissions will be 
recognized.
    (iv) Institutional benefits limited to 60 days. Benefits for 
institutional services for partial hospitalization are limited to 60 
treatment days (whether a full day or partial day program) in a fiscal 
year or in an admission. This limit may be extended by waiver.
    (v) Waiver of the 60-day partial hospitalization program limit. The 
Director, OCHAMPUS (or designee) may, in special cases, waive the 60-day 
partial hospitalization benefit and authorize payment for care beyond 
the 60-day limit.
    (A) the criteria for waiver are set forth in paragraph (b)(10)(ii) 
of this section. In applying these criteria in the context of waiver 
request review, special emphasis is placed on determining whether 
additional days of partial hospitalization are medically/psychologically 
necessary to complete essential elements of the treatment plan prior to 
discharge. Consideration is also given in cases in which a patient

[[Page 89]]

exhibits well-documented new symptoms or maladaptive behaviors which 
have appeared in the partial hospitalization setting requiring 
significant revisions to the treatment plan.
    (B) The clinician responsible for the patient's care is responsible 
for documenting the need for additional days and must establish an 
estimated length of stay beyond the date of the 60-day limit. There must 
be evidence of a coherent and specific plan for assessment, intervention 
and reassessment that reasonably can be accomplished within the time 
frame of the additional days of coverage requested under the waiver 
provisions.
    (C) For patients in care at the time the partial hospitalization 
program limit is reached, a waiver must be requested prior to the limit. 
For patients being preadmitted after having received 60 days in the 
fiscal year, the waiver review will be conducted at the time of the 
preadmission authorization.
    (vi) Services and supplies. The following services and supplies are 
included in the per diem rate approved for an authorized partial 
hospitalization program:
    (A) Board. Includes use of the partial hospital facilities such as 
food service, supervised therapeutically constructed recreational and 
social activities, and other general services as considered appropriate 
by the Director, OCHAMPUS, or a designee.
    (B) Patient assessment. Includes the assessment of each individual 
accepted by the facility, and must, at a minimum, consist of a physical 
examination; psychiatric examination; psychological assessment; 
assessment of physiological, biological and cognitive processes; 
developmental assessment; family history and assessment; social history 
and assessment; educational or vocational history and assessment; 
environmental assessment; and recreational/activities assessment. 
Assessments conducted within 30 days prior to admission to a partial 
program may be used if approved and deemed adequate to permit treatment 
planning by the partial hospital program.
    (C) Psychological testing.
    (D) Treatment services. All services, supplies, equipment and space 
necessary to fulfill the requirements of each patient's individualized 
diagnosis and treatment plan (with the exception of the five 
psychotherapy sessions per week which may be allowed separately for 
individual or family psychotherapy based upon the provisions of 
paragraph (b)(10)(vii) of this section). All mental health services must 
be provided by a CHAMPUS authorized individual professional provider of 
mental health services. [Exception: PHPs that employ individuals with 
master's or doctoral level degrees in a mental health discipline who do 
not meet the licensure, certification and experience requirements for a 
qualified mental health provider but are actively working toward 
licensure or certification, may provide services within the all-
inclusive per diem rate but the individual must work under the clinical 
supervision of a fully qualified mental health provider employed by the 
PHP.]
    (vii) Social services required. The facility must provide an active 
social services component which assures the patient appropriate living 
arrangements after treatment hours, transportation to and from the 
facility, arrangement of community based support services, referral of 
suspected child abuse to the appropriate state agencies, and effective 
after care arrangements, at a minimum.
    (viii) Educational services required. Programs treating children and 
adolescents must ensure the provision of a state certified educational 
component which assures that patients do not fall behind in educational 
placement while receiving partial hospital treatment. CHAMPUS will not 
fund the cost of educational services separately from the per diem rate. 
The hours devoted to education do not count toward the therapeutic half 
or full day program.
    (ix) Family therapy required. The facility must ensure the provision 
of an active family therapy treatment component which assures that each 
patient and family participate at least weekly in family therapy 
provided by the institution and rendered by a CHAMPUS authorized 
individual professional provider of mental health services. There is no 
acceptable substitute for family therapy. An exception to this 
requirement may be granted on a case-by-case

[[Page 90]]

basis by the Director, OCHAMPUS, or designee, only if family therapy is 
clinically contraindicated.
    (x) Professional mental health benefits limited. Professional mental 
health benefits are limited to a maximum of one session (60 minutes 
individual, 90 minutes family) per authorized treatment day not to 
exceed five sessions in any calendar week. These may be billed 
separately from the partial hospitalization per diem rate only when 
rendered by an attending, CHAMPUS-authorized mental health professional 
who is not an employee of, or under contract with, the partial 
hospitalization program for purposes of providing clinical patient care.
    (xi) Non-mental health related medical services. Separate billing 
will be allowed for otherwise covered, non-mental health related medical 
services.
    (c) Professional services benefit--(1) General. Benefits may be 
extended for those covered services described in paragraph (c) of this 
section that are provided in accordance with good medical practice and 
established standards of quality by physicians or other authorized 
individual professional providers, as set forth in Sec. 199.6 of this 
part. Such benefits are subject to all applicable definitions, 
conditions, exceptions, limitations, or exclusions as maybe otherwise 
set forth in this or other Sections of this part. Except as otherwise 
specifically authorized, to be considered for benefits under paragraph 
(c) of this section, the described services must be rendered by a 
physician, or prescribed, ordered, and referred medically by a physician 
to other authorized individual professional providers. Further, except 
under specifically defined circumstances, there should be an attending 
physician in any episode of care. (For example, certain services of a 
clinical psychologist are exempt from this requirement. For these 
exceptions, refer to Sec. 199.6.)
    (i) Billing practices. To be considered for benefits under paragraph 
(c) of this section, covered professional services must be performed 
personally by the physician or other authorized individual professional 
provider, who is other than a salaried or contractual staff member of a 
hospital or other authorized institution, and who ordinarily and 
customarily bills on a fee-for-service basis for professional services 
rendered. Such billings must be itemized fully and be sufficiently 
descriptive to permit CHAMPUS to determine whether benefits are 
authorized by this part. See paragraph (c)(3)(xiii) of this section for 
the requirements regarding the special circumstances for teaching 
physicians. For continuing professional care, claims should be submitted 
to the appropriate CHAMPUS fiscal intermediary at least every 30 days 
either by the beneficiary or sponsor, or directly by the physician or 
other authorized individual professional provider on behalf of a 
beneficiary (refer to Sec. 199.7).
    (ii) Services must be related. Covered professional services must be 
rendered in connection with and directly related to a covered diagnosis 
or definitive set of symptoms requiring medically necessary treatment.
    (2) Covered services of physicians and other authorized profession 
providers.
    (i) Surgery. Surgery means operative procedures, including related 
preoperative and postoperative care; reduction of fractures and 
dislocations; injection and needling procedures of the joints; laser 
surgery of the eye; and the following procedures:

Bronchoscopy
Laryngoscopy
Thoracoscopy
Catheterization of the heart
Arteriograph thoracic lumbar
Esophagoscopy
Gastroscopy
Proctoscopy
Sigmoidoscopy
Peritoneoscopy
Cystoscopy
Colonscopy
Upper G.I. panendoscopy
Encephalograph
Myelography
Discography
Visualization of intracranial aneurysm by intracarotid injection of dye, 
with exposure of carotid artery, unilateral
Ventriculography
Insufflation of uterus and fallopian tubes for determination of tubal 
patency (Rubin's test of injection of radiopaque medium or for dilation)
Introduction of opaque media into the cranial arterial system, 
preliminary to cerebral arteriography, or into vertebral and subclavian 
systems

[[Page 91]]

Intraspinal introduction of air preliminary to pneumoencephalography
Intraspinal introduction of opaque media preliminary to myelography
Intraventricular introduction of air preliminary to ventriculography
    Note: The Director, OCHAMPUS, or a designee, shall determine such 
additional procedures that may fall within the intent of this definition 
of ``surgery.''
    (ii) Surgical assistance.
    (iii) Inpatient medical services.
    (iv) Outpatient medical services.
    (v) Psychiatric services.
    (vi) Consultation services.
    (vii) Anesthesia services.
    (viii) Radiation therapy services.
    (ix) X-ray services.
    (x) Laboratory and pathological services.
    (xi) Physical medicine services or physiatry services.
    (xii) Maternity care.
    (xiii) Well-child care.
    (xiv) Other medical care. Other medical care includes, but is not 
limited to, hemodialysis, inhalation therapy, shock therapy, and 
chemotherapy. The Director, OCHAMPUS, or a designee, shall determine 
those additional medical services for which benefits may be extended 
under this paragraph.

    Note: A separate professional charge for the oral administration of 
approved antineoplastic drugs is not covered.
    (xv) Private duty (special) nursing services.
    (xvi) Routine eye examinations. Coverage for routine eye 
examinations is limited to dependents of active duty members, to one 
examination per calendar year per person, and to services rendered on or 
after October 1, 1984, except as provided under paragraph (c)(3)(xi) of 
this section.
    (3) Extent of professional benefits--
    (i) Multiple Surgery. In cases of multiple surgical procedures 
performed during the same operative session, benefits shall be extended 
as follows:
    (A) One hundred (100) percent of the CHAMPUS-determined allowable 
charge for the major surgical procedure (the procedure for which the 
greatest amount is payable under the applicable reimbursement method); 
and
    (B) Fifty (50) percent of the CHAMPUS-determined allowable charge 
for each of the other surgical procedures;
    (C) Except that:
    (1) If the multiple surgical procedures involve the fingers or toes, 
benefits for the first surgical procedure shall be at one hundred (100) 
percent of the CHAMPUS-determined allowable charge; the second procedure 
at fifty (50) percent; and the third and subsequent procedures at 
twenty-five (25) percent.
    (2) If the multiple surgical procedures include an incidental 
procedure, no benefits shall be allowed for the incidental procedure.
    (3) If the multiple surgical procedures involve specific procedures 
identified by the Director, OCHAMPUS, benefits shall be limited as set 
forth in CHAMPUS instructions.
    (ii) Different types of inpatient care, concurrent. If a beneficiary 
receives inpatient medical care during the same admission in which he or 
she also receives surgical care or maternity care, the beneficiary shall 
be entitled to the greater of the CHAMPUS-determined allowable charge 
for either the inpatient medical care or surgical or maternity care 
received, as the case may be, but not both; except that the provisions 
of this paragraph (c)(3)(ii) shall not apply if such inpatient medical 
care is for a diagnosed condition requiring inpatient medical care not 
related to the condition for which surgical care or maternity care is 
received, and is received from a physician other than the one rendering 
the surgical care or maternity care.
    Note: This provision is not meant to imply that when extra time and 
special effort are required due to postsurgical or postdelivery 
complications, the attending physician may not request special 
consideration for a higher than usual charge.
    (iii) Need for surgical assistance. Surgical assistance is payable 
only when the complexity of the procedure warrants a surgical assistant 
(other than the surgical nurse or other such operating room personnel), 
subject to utilization review. In order for benefits to be extended for 
surgical assistance service, the primary surgeon may be required to 
certify in writing to the nonavailability of a qualified intern, 
resident, or other house physician. When a claim is received for a 
surgical assistant involving the following circumstances, special review 
is required

[[Page 92]]

to ascertain whether the surgical assistance service meets the medical 
necessity and other requirements of paragraph (c) of this section.
    (A) If the surgical assistance occurred in a hospital that has a 
residency program in a specialty appropriate to the surgery;
    (B) If the surgery was performed by a team of surgeons;
    (C) If there were multiple surgical assistants; or
    (D) If the surgical assistant was a partner of or from the same 
group of practicing physicians as the attending surgeon.
    (iv) Aftercare following surgery. Except for those diagnostic 
procedures classified as surgery in paragraph (c) of this section, and 
injection and needling procedures involving the joints, the benefit 
payments made for surgery (regardless of the setting in which it is 
rendered) include normal aftercare, whether the aftercare is billed for 
by the physician or other authorized individual professional provider on 
a global, all-inclusive basis, or billed for separately.
    (v) Cast and sutures, removal. The benefit payments made for the 
application of a cast or of sutures normally covers the postoperative 
care including the removal of the cast or sutures. When the application 
is made in one geographical location and the removal of the cast or 
sutures must be done in another geographical location, a separate 
benefit payment may be provided for the removal. The intent of this 
provision is to provide a separate benefit only when it is impracticable 
for the beneficiary to use the services of the provider that applied the 
cast originally. Benefits are not available for the services of a second 
provider if those services reasonably could have been rendered by the 
individual professional provider who applied the cast or sutures 
initially.
    (vi) Inpatient care, concurrent. Concurrent inpatient care by more 
than one individual professional provider is covered if required because 
of the severity and complexity of the beneficiary's condition or because 
the beneficiary has multiple conditions that require treatment by 
providers of different specialities. Any claim for concurrent care must 
be reviewed before extending benefits in order to ascertain the 
condition of the beneficiary at the time the concurrent care was 
rendered. In the absence of such determination, benefits are payable 
only for inpatient care rendered by one attending physician or other 
authorized individual professional provider.
    (vii) Consultants who become the attending surgeon. A consultation 
performed within 3 days of surgery by the attending physician is 
considered a preoperative examination. Preoperative examinations are an 
integral part of the surgery and a separate benefit is not payable for 
the consultation. If more than 3 days elapse between the consultation 
and surgery (performed by the same physician), benefits may be extended 
for the consultation, subject to review.
    (viii) Anesthesia administered by the attending physician. A 
separate benefit is not payable for anesthesia administered by the 
attending physician (surgeon or obstetrician) or dentist, or by the 
surgical, obstetrical, or dental assistant.
    (ix) Treatment of mental disorders. CHAMPUS benefits for the 
treatment of mental disorders are payable for beneficiaries who are 
outpatients or inpatients of CHAMPUS-authorized general or psychiatric 
hospitals, RTCs, or specialized treatment facilities, as authorized by 
the Director, OCHAMPUS, or a designee. All such services are subject to 
review for medical or psychological necessity and for quality of care. 
The Director, OCHAMPUS, reserves the right to require preauthorization 
of mental health services. Preauthorization may be conducted by the 
Director, OCHAMPUS, or a designee. In order to qualify for CHAMPUS 
mental health benefits, the patient must be diagnosed by a CHAMPUS-
authorized licensed, qualified mental health professional to be 
suffering from a mental disorder, according to the criteria listed in 
the most current edition of the Diagnostic and Statistical Manual of 
Mental Disorders which may be purchased from the American Psychiatric 
Press, Inc., 1400 K Street, NW., suite 1101, Washington, DC 20005. 
Benefits are limited for certain mental disorders, such as

[[Page 93]]

specific developmental disorders. No benefits are payable for 
``Conditions Not Attributable to a Mental Disorder,'' or V codes. In 
order for treatment of a mental disorder to be medically or 
psychologically necessary, the patient must, as a result of a diagnosed 
mental disorder, be experiencing both physical or psychological distress 
and an impairment in his or her ability to function in appropriate 
occupational, educational or social roles. It is generally the degree to 
which the patient's ability to function is impaired that determines the 
level of care (if any) required to treat the patient's condition.
    (A) Covered diagnostic and therapeutic services. Subject to the 
requirements and limitations stated, CHAMPUS benefits are payable for 
the following services when rendered in the diagnosis or treatment of a 
covered mental disorder by a CHAMPUS-authorized, qualified mental health 
provider practicing within the scope of his or her license. Qualified 
mental health providers are: psychiatrists or other physicians; clinical 
psychologists, certified psychiatric nurse specialists, clinical social 
workers, and certified marriage and family therapists; and pastoral and 
mental health counselors under a physician's supervision. No payment 
will be made for any service listed in paragraph (c)(3)(ix)(A) of this 
section rendered by an individual who does not meet the criteria of 
Sec. 199.6 for his or her respective profession, regardless of whether 
the provider is an independent professional provider or an employee of 
an authorized professional or institutional provider.
    (1) Individual psychotherapy, adult or child. A covered individual 
psychotherapy session is no more than 60 minutes in length. An 
individual psychotherapy session of up to 120 minutes in length is 
payable for crisis intervention.
    (2) Group psychotherapy. A covered group psychotherapy session is no 
more than 90 minutes in length.
    (3) Family or conjoint psychotherapy. A covered family or conjoint 
psychotherapy session is no more than 90 minutes in length. A family or 
conjoint psychotherapy session of up to 180 minutes in length is payable 
for crisis intervention.
    (4) Psychoanalysis. Psychoanalysis is covered when provided by a 
graduate or candidate of a psychoanalytic training institution 
recognized by the American Psychoanalytic Association and when 
preauthorized by the Director, OCHAMPUS, or a designee.
    (5) Psychological testing and assessment. Psychological testing and 
assessment is generally limited to six hours of testing in a fiscal year 
when medically or psychologically necessary and in conjunction with 
otherwise covered psychotherapy. Testing or assessment in excess of 
these limits requires review for medical necessity. Benefits will not be 
provided for the Reitan-Indiana battery when administered to a patient 
under age five, for self-administered tests administered to patients 
under age 13, or for psychological testing and assessment as part of an 
assessment for academic placement.
    (6) Administration of psychotropic drugs. When prescribed by an 
authorized provider qualified by licensure to prescribe drugs.
    (7) Electroconvulsive treatment. When provided in accordance with 
guidelines issued by the Director, OCHAMPUS.
    (8) Collateral visits. Covered collateral visits are those that are 
medically or psychologically necessary for the treatment of the patient 
and, as such, are considered as a psychotherapy session for purposes of 
paragraph (c)(3)(ix)(B) of this section.
    (B) Limitations and review requirements--(1) Outpatient 
psychotherapy. Outpatient psychotherapy generally is limited to a 
maximum of two psychotherapy sessions per week, in any combination of 
individual, family, conjoint, collateral, or group sessions. Before 
benefits can be extended for more than two outpatient psychotherapy 
sessions per week, professional review of the medical or psychological 
necessity for and appropriateness of the more intensive therapy is 
required.
    (2) Inpatient psychotherapy. Coverage of inpatient psychotherapy is 
based on medical or psychological necessity for the services identified 
in the patient's treatment plan. As a general rule, up to five 
psychotherapy sessions per week are considered appropriate when 
specified in the treatment as necessary to meet certain measurable/
observable

[[Page 94]]

goals and objectives. Additional sessions per week or more than one type 
of psychotherapy sessions performed on the same day (for example, an 
individual psychotherapy session and a family psychotherapy session on 
the same day) could be considered for coverage, depending on the medical 
or psychological necessity for the services. Benefits for inpatient 
psychotherapy will end automatically when authorization has been granted 
for the maximum number of inpatient mental health days in accordance 
with the limits as described in this section, unless additional coverage 
is granted by the Director, OCHAMPUS or a designee.
    (C) Covered ancillary therapies. Includes art, music, dance, 
occupational, and other ancillary therapies, when included by the 
attending provider in an approved inpatient, residential treatment plan 
and under the clinical supervision of a licensed doctoral level mental 
health professional. These ancillary therapies are not separately 
reimbursed professional services but are included within the 
institutional reimbursement.
    (D) Review of claims for treatment of mental disorder. The Director, 
OCHAMPUS, shall establish and maintain procedures for review, including 
professional review, of the services provided for the treatment of 
mental disorders.
    (x) Physical and occupational therapy. Assessment and treatment 
services of a CHAMPUS-authorized physical or occupational therapist may 
be cost-shared when:
    (A) The services are prescribed and monitored by a physician;
    (B) The purpose of the prescription is to reduce the disabling 
effects of an illness, injury, or neuromuscular disorder; and
    (C) The prescribed treatment increases, stabilizes, or slows the 
deterioration of the beneficiary's ability to perform specified 
purposeful activity in the manner, or within the range considered 
normal, for a human being.
    (xi) Well-child care. Benefits routinely are covered for well-child 
care from birth to under six years of age. These periodic health 
examinations are designed for prevention, early detection and treatment 
of disease and consist of screening procedures, immunizations and risk 
counseling.
    (A) The following services are covered when required as a part of 
the specific well-child care program and when rendered by the attending 
pediatrician, family physician, certified nurse practitioner, or 
certified physician assistant.
    (1) Newborn examination, heredity and metabolic screening, and 
newborn circumcision.
    (2) Periodic health supervision visits, in accordance with American 
Academy of Pediatrics (AAP) guidelines, intended to promote the optimal 
health for infants and children to include the following services:
    (i) History and physical examination and mental health assessment.
    (ii) Vision, hearing, and dental screening.
    (iii) Developmental appraisal to include body measurement.
    (iv) Immunizations as recommenced by the Centers for Disease Control 
(CDC).
    (v) Pediatric risk assessment for lead exposure and blood lead level 
test.
    (vi) Tuberculosis screening.
    (vii) Blood pressure screening.
    (viii) Measurement of hemoglobin and hematocrit for anemia.
    (ix) Urinalysis.
    (x) Health guidance and counseling, including breastfeeding and 
nutrition counseling.
    (B) Additional services or visits required because of specific 
findings or because the particular circumstances of the individual case 
are covered if medically necessary and otherwise authorized for benefits 
under CHAMPUS.
    (C) The Deputy Assistant Secretary of Defense, Health Services 
Financing, will determine when such services are separately reimbursable 
apart from the health supervision visit.
    (xii) Private duty (special) nursing. Benefits are available for the 
skilled nursing services rendered by a private duty (special) nurse to a 
beneficiary requiring intensive skilled nursing care that can only be 
provided with the technical proficiency and scientific skills of an R.N. 
The specific skilled nursing services being rendered are controlling, 
not the condition of the patient or the professional status of

[[Page 95]]

the private duty (special) nurse rendering the services.
    (A) Inpatient private duty (special) nursing services are limited to 
those rendered to an inpatient in a hospital that does not have an ICU. 
In addition, under specified circumstances, private duty (special) 
nursing in the home setting also is covered.
    (B) The private duty (special) nursing care must be ordered and 
certified to be medically necessary by the attending physician.
    (C) The skilled nursing care must be rendered by a private duty 
(special) nurse who is neither a member of the immediate family nor is a 
member of the beneficiary's household.
    (D) Private duty (special) nursing care does not, except 
incidentally, include providing services that provide or support 
primarily the essentials of daily living or acting as a companion or 
sitter.
    (E) If the private duty (special) nursing care services being 
performed are primarily those that could be rendered by the average 
adult with minimal instruction or supervision, the services would not 
qualify as covered private duty (special) nursing services, regardless 
of whether performed by an R.N., regardless of whether or not ordered 
and certified to by the attending physician, and regardless of the 
condition of the patient.
    (F) In order for such services to be considered for benefits, a 
private duty (special) nurse is required to maintain detailed daily 
nursing notes, whether the case involves inpatient nursing service or 
nursing services rendered in the home setting.
    (G) Claims for continuing private duty (special) nursing care shall 
be submitted at least every 30 days. Each claim will be reviewed and the 
nursing care evaluated whether it continues to be appropriate and 
eligible for benefits.
    (H) In most situations involving private duty (special) nursing care 
rendered in the home setting, benefits will be available only for a 
portion of the care, that is, providing benefits only for that time 
actually required to perform medically necessary skilled nursing 
services. If full-time private duty (special) nursing services are 
engaged, usually for convenience or to provide personal services to the 
patient, CHAMPUS benefits are payable only for that portion of the day 
during which skilled nursing services are rendered, but in no event is 
less than 1 hour of nursing care payable in any 24-hour period during 
which skilled nursing services are determined to have been rendered. 
Such situations often are better accommodated through the use of 
visiting nurses. This allows the personal services that are not 
coverable by CHAMPUS to be obtained at lesser cost from other than an 
R.N. Skilled nursing services provided by visiting nurses are covered 
under CHAMPUS.

    Note: When the services of an R.N. are not available, benefits may 
be extended for the otherwise covered services of a L.P.N. or L.V.N.

    (xiii) Physicians in a teaching setting.
    (A) Teaching physicians.
    (1) General. The services of teaching physicians may be reimbursed 
on an allowable charge basis only when the teaching physician has 
established an attending physician relationship between the teaching 
physician and the patient or when the teaching physician provides 
distinct, identifiable, personal services (e.g., services rendered as a 
consultant, assistant surgeon, etc.). Attending physician services may 
include both direct patient care services or direct supervision of care 
provided by a physician in training. In order to be considered an 
attending physician, the teaching physician must:
    (i) Review the patient's history and the record of examinations and 
tests in the institution, and make frequent reviews of the patient's 
progress; and
    (ii) Personally examine the patient; and
    (iiii) Confirm or revise the diagnosis and determine the course of 
treatment to be followed; and
    (iv) Either perform the physician's services required by the patient 
or supervise the treatment so as to assure that appropriate services are 
provided by physicians in training and that the care meets a proper 
quality level; and
    (v) Be present and ready to perform any service performed by an 
attending physician in a nonteaching setting when a major surgical 
procedure or a

[[Page 96]]

complex or dangerous medical procedure is performed; and
    (vi) Be personally responsible for the patient's care, at least 
throughout the period of hospitalization.
    (2) Direct supervision by an attending physician of care provided by 
physicians in training. Payment on the basis of allowable charges may be 
made for the professional services rendered to a beneficiary by his/her 
attending physician when the attending physician provides personal and 
identifiable direction to physicians in training who are participating 
in the care of the patient. It is not necessary that the attending 
physician be personally present for all services, but the attending 
physician must be on the provider's premises and available to provide 
immediate personal assistance and direction if needed.
    (3) Individual, personal services. A teaching physician may be 
reimbursed on an allowable charge basis for any individual, identifiable 
service rendered to a CHAMPUS beneficiary, so long as the service is a 
covered service and is normally reimbursed separately, and so long as 
the patient records substantiate the service.
    (4) Who may bill. The services of a teaching physician must be 
billed by the institutional provider when the physician is employed by 
the provider or a related entity or under a contract which provides for 
payment to the physician by the provider or a related entity. Where the 
teaching physician has no relationship with the provider (except for 
standard physician privileges to admit patients) and generally treats 
patients on a fee-for-service basis in the private sector, the teaching 
physician may submit claims under his/her own provider number.
    (B) Physicians in training. Physicians in training in an approved 
teaching program are considered to be ``students'' and may not be 
reimbursed directly by CHAMPUS for services rendered to a beneficiary 
when their services are provided as part of their employment (either 
salaried or contractual) by a hospital or other institutional provider. 
Services of physicians in training may be reimbursed on an allowable 
charge basis only if:
    (1) The physician in training is fully licensed to practice medicine 
by the state in which the services are performed, and
    (2) The services are rendered outside the scope and requirements of 
the approved training program to which the physician in training is 
assigned.
    (d) Other benefits--(1) General. Benefits may be extended for the 
allowable charge of those other covered services and supplies described 
in paragraph (d) of this section, which are provided in accordance with 
good medical practice and established standards of quality by those 
other authorized providers described in Sec. 199.6 of this Regulation. 
Such benefits are subject to all applicable definitions, conditions, 
limitations, or exclusions as otherwise may be set forth in this or 
other chapters of this Regulation. To be considered for benefits under 
paragraph (d) of this section, the described services or supplies must 
be prescribed and ordered by a physician. Other authorized individual 
professional providers acting within their scope of licensure may also 
prescribe and order these services and supplies unless otherwise 
specified in paragraph (d) of this section. For example, durable medical 
equipment and cardiorespiratory monitors can only be ordered by a 
physician.
    (2) Billing practices. To be considered for benefits under paragraph 
(d) of this section, covered services and supplies must be provided and 
billed for by an authorized provider as set forth in Sec. 199.6 of this 
part. Such billing must be itemized fully and described sufficiently, 
even when CHAMPUS payment is determined under the CHAMPUS DRG-based 
payment system, so that CHAMPUS can determine whether benefits are 
authorized by this part. Except for claims subject to the CHAMPUS DRG-
based payment system, whenever continuing charges are involved, claims 
should be submitted to the appropriate CHAMPUS fiscal intermediary at 
least every 30 days (monthly) either by the beneficiary or sponsor or 
directly by the provider. For claims subject to the CHAMPUS DRG-based 
payment system, claims may be submitted only after the beneficiary has 
been discharged or transferred from the hospital.

[[Page 97]]

    (3) Other covered services and supplies--(i) Blood. If whole blood 
or plasma (or its derivatives) are provided and billed for by an 
authorized institution in connection with covered treatment, benefits 
are extended as set forth in paragraph (b) of this section. If blood is 
billed for directly to a beneficiary, benefits may be extended under 
paragraph (d) in the same manner as a medical supply.
    (ii) Durable medical equipment--(A) Scope of benefit. Subject to the 
exceptions in paragraphs (B) and (C) below, only durable medical 
equipment (DME) which is ordered by a physician for the specific use of 
the beneficiary, and which complies with the definition of ``Durable 
Medical Equipment'' in Sec. 199.2 of this part, and which is not 
otherwise excluded by this Regulation qualifies as a Basic Program 
benefit.
    (B) Cardiorespiratory monitor exception. (1) When prescribed by a 
physician who is otherwise eligible as a CHAMPUS individual professional 
provider, or who is on active duty with a United States Uniformed 
Service, an electronic cardiorespiratory monitor, including technical 
support necessary for the proper use of the monitor, may be cost-shared 
as durable medical equipment when supervised by the prescribing 
physician for in-home use by:
    (i) An infant beneficiary who has had an apparent life-threatening 
event, as defined in guidelines issued by the Director, OCHAMPUS, or a 
designee, or
    (ii) An infant beneficiary who is a subsequent or multiple birth 
biological sibling of a victim of sudden infant death syndrome (SIDS), 
or
    (iii) An infant beneficiary whose birth weight was 1,500 grams or 
less, or
    (iv) An infant beneficiary who is a pre-term infant with pathologic 
apnea, as defined in guidelines issued by the Director, OCHAMPUS, or a 
designee, or
    (v) Any beneficiary who has a condition or suspected condition 
designated in guidelines issued by the Director, OCHAMPUS, or a 
designee, for which the in-home use of the cardiorespiratory monitor 
otherwise meets Basic Program requirements.
    (2) The following types of services and items may be cost-shared 
when provided in conjunction with an otherwise authorized 
cardiorespiratory monitor:
    (i) Trend-event recorder, including technical support necessary for 
the proper use of the recorder.
    (ii) Analysis of recorded physiological data associated with monitor 
alarms.
    (iii) Professional visits for services otherwise authorized by this 
part, and for family training on how to respond to an apparent life 
threatening event.
    (iv) Diagnostic testing otherwise authorized by this part.
    (C) Basic mobility equipment exception. A wheelchair, or a CHAMPUS-
approved alternative, which is medically necessary to provide basic 
mobility, including reasonable additional cost for medically necessary 
modifications to accommodate a particular disability, may be cost-shared 
as durable medical equipment.
    (D) Exclusions. DME which is otherwise qualified as a benefit is 
excluded as a benefit under the following circumstances:
    (1) DME for a beneficiary who is a patient in a type of facility 
that ordinarily provides the same type of DME item to its patients at no 
additional charge in the usual course of providing its services.
    (2) DME which is available to the beneficiary from a Uniformed 
Services Medical Treatment Facility.
    (3) DME with deluxe, luxury, or immaterial features which increase 
the cost of the item to the government relative to a similar item 
without those features.
    (E) Basis for reimbursement. The cost of DME may be shared by the 
CHAMPUS based upon the price which is most advantageous to the 
government taking into consideration the anticipated duration of the 
medically necessary need for the equipment and current price information 
for the type of item. The cost analysis must include comparison of the 
total price of the item as a monthly rental charge, a lease-purchase 
price, and a lump-sum purchase price and a provision for the time value 
of money at the rate determined by the U.S. Department of the Treasury.
    (iii) Medical supplies and dressings (consumables). Medical supplies 
and dressings (consumables) are those that

[[Page 98]]

do not withstand prolonged, repeated use. Such items must be related 
directly to an appropriate and verified covered medical condition of the 
specific beneficiary for whom the item was purchased and obtained from a 
medical supply company, a pharmacy, or authorized institutional 
provider. Examples of covered medical supplies and dressings are 
disposable syringes for a known diabetic, colostomy sets, irrigation 
sets, and elastic bandages. An external surgical garment specifically 
designed for use following a mastectomy is considered a medical supply 
item.
    Note: Generally, the allowable charge of a medical supply item will 
be under $100. Any item over this amount must be reviewed to determine 
whether it would not qualify as a DME item. If it is, in fact, a medical 
supply item and does not represent an excessive charge, it can be 
considered for benefits under paragraph (d)(3)(iii) of this section.
    (iv) Oxygen. Oxygen and equipment for its administration are 
covered. Benefits are limited to providing a tank unit at one location 
with oxygen limited to a 30-day supply at any one time. Repair and 
adjustment of CHAMPUS-purchased oxygen equipment also is covered.
    (v) Ambulance. Civilian ambulance service is covered when medically 
necessary in connection with otherwise covered services and supplies and 
a covered medical condition. Ambulance service is also covered for 
transfers to a Uniformed Service Medical Treatment Facility (USMTF). For 
the purpose of CHAMPUS payment, ambulance service is an outpatient 
service (including in connection with maternity care) with the exception 
of otherwise covered transfers between hospitals which are cost-shared 
on an inpatient basis. Ambulance transfers from a hospital based 
emergency room to another hospital more capable of providing the 
required care will also be cost-shared on an inpatient basis.
    Note: The inpatient cost-sharing provisions for ambulance transfers 
only apply to otherwise covered transfers between hospitals, i.e., acute 
care, general, and special hospitals; psychiatric hospitals; and long-
term hospitals.
    (A) Ambulance service is covered for emergency transfers from a 
beneficiary's place of residence, accident scene, or other location to a 
USMTF, and for transfer to a USMTF after treatment at, or admission to, 
a civilian hospital, if ordered by other than a representative of the 
USMTF.
    (B) Ambulance service cannot be used instead of taxi service and is 
not payable when the patient's condition would have permitted use of 
regular private transportation; nor is it payable when transport or 
transfer of a patient is primarily for the purpose of having the patient 
nearer to home, family, friends, or personal physician. Except as 
described in paragraph (d)(3)(v)(A) of this section, transport must be 
to closest appropriate facility by the least costly means.
    (C) Vehicles such as medicabs or ambicabs function primarily as 
public passenger conveyances transporting patients to and from their 
medical appointments. No actual medical care is provided to the patients 
in transit. These types of vehicles do not qualify for benefits for the 
purpose of CHAMPUS payment.
    (D) Ambulance services by other than land vehicles (such as a boat 
or airplane) may be considered only when the pickup point is 
inaccessible by a land vehicle, or when great distance or other 
obstacles are involved in transporting the patient to the nearest 
hospital with appropriate facilities and the patient's medical condition 
warrants speedy admission or is such that transfer by other means is 
contraindicated.
    (vi) Prescription drugs and medicines. Prescription drugs and 
medicines that by United States law require a physician's or other 
authorized individual professional provider's prescription (acting 
within the scope of their license) and that are ordered or prescribed by 
a physician or other authorized individual professional provider (except 
that insulin is covered for a known diabetic, even though a prescription 
may not be required for its purchase) in connection with an otherwise 
covered condition or treatment, including Rh immune globulin.
    (A) Drugs administered by a physician or other authorized individual 
professional provider as an integral part of a procedure covered under 
paragraph (b) or (c) of this section (such as chemotherapy) are not 
covered under this

[[Page 99]]

subparagraph inasmuch as the benefit for the institutional services or 
the professional services in connection with the procedure itself also 
includes the drug used.
    (B) CHAMPUS benefits may not be extended for drugs not approved by 
the U.S. Food and Drug Administration for commercial marketing. Drugs 
grandfathered by the Federal Food, Drug and Cosmetic Act of 1938 may be 
covered under CHAMPUS as if FDA approved.
    (vii) Prosthetic devices. The purchase of prosthetic devices is 
limited to artificial limbs and eyes, except those items that are 
inserted surgically into the body as an essential and integral part of 
an otherwise covered surgical procedure are not excluded.
    Note: In order for CHAMPUS benefits to be extended, any surgical 
implant must be approved for use in humans by the U.S. Food and Drug 
Administration. Devices that are approved only for investigational use 
in humans are not payable.
    (viii) Orthopedic braces and appliances. The purchase of leg braces 
(including attached shoes), arm braces, back braces, and neck braces is 
covered, orthopedic shoes, arch supports, shoe inserts, and other 
supportive devices for the feet, including special-ordered, custom-made 
built-up shoes or regular shoes subsequently built up, are not covered.
    (e) Special benefit information--(1) General. There are certain 
circumstances, conditions, or limitations that impact the extension of 
benefits and that require special emphasis and explanation. This 
paragraph (e) sets forth those benefits and limitations recognized to be 
in this category. The benefits and limitations herein described also are 
subject to all applicable definitions, conditions, limitations, 
exceptions, and exclusions as set forth in this or other sections of 
this part, except as otherwise may be provided specifically in this 
paragraph (e).
    (2) Abortion. The statute under which CHAMPUS operates prohibits 
payment for abortions with one single exception--where the life of the 
mother would be endangered if the fetus were carried to term. Covered 
abortion services are limited to medical services and supplies only. 
Physician certification is required attesting that the abortion was 
performed because the mother's life would be endangered if the fetus 
were carried to term. Abortions performed for suspected or confirmed 
fetal abnormality (e.g., anencephalic) or for mental health reasons 
(e.g., threatened suicide) do not fall within the exceptions permitted 
within the language of the statute and are not authorized for payment 
under CHAMPUS.
    Note: Covered abortion services are limited to medical services or 
supplies only for the single circumstance outlined above and do not 
include abortion counseling or referral fees. Payment is not allowed for 
any services involving preparation for, or normal followup to, a 
noncovered abortion. The Director, OCHAMPUS, or a designee, shall issue 
guidelines describing the policy on abortion.
    (3) Family planning. The scope of the CHAMPUS family planning 
benefit is as follows:
    (i) Birth control (such as contraception)--(A) Benefits provided. 
Benefits are available for services and supplies related to preventing 
conception, including the following:
    (1) Surgical inserting, removal, or replacement of intrauterine 
devices.
    (2) Measurement for, and purchase of, contraceptive diaphragms (and 
later remeasurement and replacement).
    (3) Prescription contraceptives.
    (4) Surgical sterilization (either male or female).
    (B) Exclusions. The family planning benefit does not include the 
following:
    (1) Prophylactics (condoms).
    (2) Spermicidal foams, jellies, and sprays not requiring a 
prescription.
    (3) Services and supplies related to noncoital reproductive 
technologies, including but not limited to artificial insemination 
(including any costs related to donors or semen banks), in-vitro 
fertilization and gamete intrafallopian transfer.
    (4) Reversal of a surgical sterilization procedure (male or female).
    (ii) Genetic testing. Genetic testing essentially is preventive 
rather than related to active medical treatment of an illness or injury. 
However, under the family planning benefit, genetic testing is covered 
when performed in certain high risk situations. For the purpose of 
CHAMPUS, genetic testing includes to detect developmental abnormalities 
as well as purely genetic defects.

[[Page 100]]

    (A) Benefits provided. Benefits may be extended for genetic testing 
performed on a pregnant beneficiary under the following prescribed 
circumstances. The tests must be appropriate to the specific risk 
situation and must meet one of the following criteria:
    (1) The mother-to-be is 35 years old or older; or
    (2) The mother- or father-to-be has had a previous child born with a 
congenital abnormality; or
    (3) Either the mother- or father-to-be has a family history of 
congenital abnormalities; or
    (4) The mother-to-be contracted rubella during the first trimester 
of the pregnancy; or
    (5) Such other specific situations as may be determined by the 
Director, OCHAMPUS, or a designee, to fall within the intent of 
paragraph (e)(3)(ii) of this section.
    (B) Exclusions. It is emphasized that routine or demand genetic 
testing is not covered. Further, genetic testing does not include the 
following:
    (1) Tests performed to establish paternity of a child.
    (2) Tests to determine the sex of an unborn child.
    (4) Treatment of substance use disorders. Emergency and inpatient 
hospital care for complications of alcohol and drug abuse or dependency 
and detoxification are covered as for any other medical condition. 
Specific coverage for the treatment of substance use disorders includes 
detoxification, rehabilitation, and outpatient care provided in 
authorized substance use disorder rehabilitation facilities.
    (i) Emergency and inpatient hospital services. Emergency and 
inpatient hospital services are covered when medically necessary for the 
active medical treatment of the acute phases of substance abuse 
withdrawal (detoxification), for stabilization, and for treatment of 
medical complications of substance use disorders. Emergency and 
inpatient hospital services are considered medically necessary only when 
the patient's condition is such that the personnel and facilities of a 
hospital are required. Stays provided for substance use disorder 
rehabilitation in a hospital-based rehabilitation facility are covered, 
subject to the provisions of paragraph (e)(4)(ii) of this section. 
Inpatient hospital services also are subject to the provisions regarding 
the limit on inpatient mental health services.
    (ii) Authorized substance use disorder treatment. Only those 
services provided by CHAMPUS-authorized institutional providers are 
covered. Such a provider must be either an authorized hospital, or an 
organized substance use disorder treatment program in an authorized 
free-standing or hospital-based substance use disorder rehabilitation 
facility. Covered services consist of any or all of the services listed 
below. A qualified mental health provider (physicians, clinical 
psychologists, clinical social workers, psychiatric nurse specialists) 
(see paragraph (c)(3)(ix) of this section) shall prescribe the 
particular level of treatment. Each CHAMPUS beneficiary is entitled to 
three substance use disorder treatment benefit periods in his or her 
lifetime, unless this limit is waived pursuant to paragraph (e)(4)(v) of 
this section. (A benefit period begins with the first date of covered 
treatment and ends 365 days later, regardless of the total services 
actually used within the benefit period. Unused benefits cannot be 
carried over to subsequent benefit periods. Emergency and inpatient 
hospital services (as described in paragraph (e)(4)(i) of this section) 
do not constitute substance abuse treatment for purposes of establishing 
the beginning of a benefit period.)
    (A) Rehabilitative care. Rehabilitative care in a authorized 
hospital or substance use disorder rehabilitative facility, whether 
free-standing or hospital-based, is covered on either a residential or 
partial care (day or night program) basis. Coverage during a single 
benefit period is limited to no more than inpatient stay (exclusive of 
stays classified in DRG 433) in hospitals subject to CHAMPUS DRG-based 
payment system or 21 days in a DRG-exempt facility for rehabilitation 
care, unless the limit is waived pursuant to paragraph (e)(4)(v) of this 
section. If the patient is medically in need of chemical detoxification, 
but does not require the personnel or facilities of a general hospital 
setting, detoxification services are covered in addition to the 
rehabilitative

[[Page 101]]

care, but in a DRG-exempt facility detoxification services are limited 
to 7 days unless the limit is waived pursuant to paragraph (e)(4)(v) of 
this section. The medical necessity for the detoxification must be 
documented. Any detoxification services provided by the substance use 
disorder rehabilitation facility must be under general medical 
supervision.
    (B) Outpatient care. Outpatient treatment provided by an approved 
substance use disorder rehabilitation facility, whether free-standing or 
hospital-based, is covered for up to 60 visits in a benefit period, 
unless the limit is waived pursuant to paragraph (e)(4)(v) of this 
section.
    (C) Family therapy. Family therapy provided by an approved substance 
use disorder rehabilitation facility, whether free-standing or hospital-
based, is covered for up to 15 visits in a benefit period, unless the 
limit is waived pursuant to paragraph (e)(4)(v) of this section.
    (iii) Exclusions--(A) Aversion therapy. The programmed use of 
physical measures, such as electric shock, alcohol, or other drugs as 
negative reinforcement (aversion therapy) is not covered, even if 
recommended by a physician.
    (B) Domiciliary settings. Domiciliary facilities, generally referred 
to as halfway or quarterway houses, are not authorized providers and 
charges for services provided by these facilities are not covered.
    (iv) Confidentialty. Release of any patient identifying information, 
including that required to adjudicate a claim, must comply with the 
provisions of section 544 of the Public Health Service Act, as amended, 
(42 U.S.C. 290dd-3), which governs the release of medical and other 
information from the records of patients undergoing treatment of 
substance abuse. If the patient refuses to authorize the release of 
medical records which are, in the opinion of the Director, OCHAMPUS, or 
a designee, necessary to determine benefits on a claim for treatment of 
substance abuse the claim will be denied.
    (v) Waiver of benefit limits. The specific benefit limits set forth 
in paragraphs (e)(4)(ii) of this section may be waived by the Director, 
OCHAMPUS in special cases based on a determination that all of the 
following criteria are met:
    (A) Active treatment has taken place during the period of the 
benefit limit and substantial progress has been made according to the 
plan of treatment.
    (B) Further progress has been delayed due to the complexity of the 
illness.
    (C) Specific evidence has been presented to explain the factors that 
interfered with further treatment progress during the period of the 
benefit limit.
    (D) The waiver request includes specific time frames and a specific 
plan of treatment which will complete the course of treatment.
    (5) Organ transplants. Basic Program benefits are available for 
otherwise covered services or supplies in connection with an organ 
transplant procedure, provided such transplant procedure generally is in 
accordance with accepted professional medical standards and is not 
considered to be experimental or investigational.
    (i) Recipient costs. CHAMPUS benefits are payable for recipient 
costs when the recipient of the transplant is a beneficiary, whether or 
not the donor is a beneficiary.
    (ii) Donor costs. (A) Donor costs are payable when both the donor 
and recipient are CHAMPUS beneficiaries.
    (B) Donor costs are payable when the donor is a CHAMPUS beneficiary 
but the recipient is not.
    (C) Donor costs are payable when the donor is the sponsor and the 
recipient is a beneficiary. (In such an event, donor costs are paid as a 
part of the beneficiary and recipient costs.)
    (D) Donor costs also are payable when the donor is neither a CHAMPUS 
beneficiary nor a sponsor, if the recipient is a CHAMPUS beneficiary. 
(Again, in such an event, donor costs are paid as a part of the 
beneficiary and recipient costs.)
    (iii) General limitations. (A) If the donor is not a beneficiary, 
CHAMPUS benefits for donor costs are limited to those directly related 
to the transplant procedure itself and do not include any medical care 
costs related to other treatment of the donor, including complications.

[[Page 102]]

    (B) With respect to kidney transplants, in most cases, Medicare (not 
CHAMPUS) benefits will be applicable. (Refer to 199.9 (e)(3)(vi), 
``Eligibility.'')
    (C) Donor transportation costs are excluded whether or not the donor 
is a beneficiary.
    (D) When the organ transplant is performed under a study, grant, or 
research program, no CHAMPUS benefits are payable for either recipient 
or donor cost.
    (iv) Kidney acquisition. With specific reference to acquisition 
costs for kidneys, each hospital that performs kidney transplants is 
required for Medicare purposes to develop for each year separate 
standard acquisition costs for kidneys obtained from live donors and 
kidneys obtained from cadavers. The standard acquisition cost for 
cadaver kidneys is compiled by dividing the total cost of cadaver 
kidneys acquired by the number of transplants using cadaver kidneys. The 
standard acquisition cost for kidneys from live donors is compiled 
similarly using the total acquisition cost of kidneys from live donors 
and the number of transplants using kidneys from live donors. All 
recipients of cadaver kidneys are charged the same standard cadaver 
kidney acquisition cost and all recipients of kidneys from live donors 
are charged the same standard live donor acquisition cost. The 
appropriate hospital standard kidney acquisition costs (live donor or 
cadaver) required for Medicare in every instance must be used as the 
acquisition cost for purposes of providing CHAMPUS benefits.
    (v) Liver transplants. Effective July 1, 1983, CHAMPUS benefits are 
payable for services and supplies related to liver transplantation under 
the following circumstances only:
    (A) Medical indications for liver transplantation. CHAMPUS shall 
provide benefits for services and supplies related to liver 
transplantation performed for beneficiaries suffering from irreversible 
liver injury who have exhausted alternative medical and surgical 
treatments, who are approaching the terminal phase of their illness, and 
who are considered appropriate for liver transplantation according to 
guidelines adopted by the Director, OCHAMPUS.
    (B) Contraindications. CHAMPUS shall not provide coverage if any of 
the following contraindications exist:
    (1) Active alcohol or other substance abuse;
    (2) Malignancies metastasized to or extending beyond the margins of 
the liver; or
    (3) Viral-induced liver disease when viremia is still present.
    (C) Specific covered services. CHAMPUS shall provide coverage for 
the following services related to liver transplantation:
    (1) Medically necessary services to evaluate a potential candidate's 
suitability for liver transplantation, whether or not the patient is 
ultimately accepted as a candidate for transplantation;
    (2) Medically necessary pre- and post-transplant inpatient hospital 
and outpatient services;
    (3) Surgical services and related pre- and post-operative services 
of the transplant team;
    (4) Services provided by a donor organ acquisition team, including 
the costs of transportation to the location of the donor organ and 
transportation of the team and the donated organ to the location of the 
transportation center;
    (5) Medically necessary services required to maintain the viability 
of the donor organ following a formal declaration of brain death and 
after all existing legal requirements for excision of the donor organ 
have been met;
    (6) Blood and blood products;
    (7) Services and drugs required for immunosuppression, provided the 
drugs are approved by the United States Food and Drug Administration;
    (8) Services and supplies, including inpatient care, which are 
medically necessary to treat complications of the transplant procedure, 
including management of infection and rejection episodes; and
    (9) Services and supplies which are medically necessary for the 
periodic evaluation and assessment of the successfully transplanted 
patient.
    (D) Specific noncovered services. CHAMPUS benefits will not be paid 
for the following:
    (1) Services and supplies for which the beneficiary has no legal 
obligation

[[Page 103]]

to pay. For example, CHAMPUS shall not reimburse expenses that are 
waived by the transplant center, or for which research funds are 
available; and
    (2) Out-of-hospital living expenses and any other non-medical 
expenses, including transportation, of the liver transplant candidate or 
family members, whether pre- or post-transplant.
    (E) Implementation guidelines. The Director, OCHAMPUS, shall issue 
such guidelines as are necessary to implement the provision of this 
paragraph.
    (vi) Heart transplantations. CHAMPUS benefits are payable for 
services and supplies related to heart transplantation under the 
following circumstances:
    (A) Medical indications for heart transplantation. CHAMPUS shall 
provide benefits for services and supplies related to heart 
transplantation performed for beneficiaries with end-stage cardiac 
disease who have exhausted alternative medical and surgical treatments, 
who have a very poor prognosis as a result of poor cardiac functional 
status, for whom plans for long-term adherence to a disciplined medical 
regimen are feasible, and who are considered appropriate for heart 
transplantation according to guidelines adopted by the Director, 
OCHAMPUS. However, benefits for heart transplantation are available only 
if the procedure is performed in a CHAMPUS-approved heart 
transplantation center or meets other certification or accreditation 
standards recognized by the Director, OCHAMPUS. See 
Sec. 199.6(b)(4)(iii).
    (B) Specific covered services. CHAMPUS shall provide coverage for 
the following services related to heart transplantation:
    (1) Medically necessary services to evaluate a potential candidate's 
suitability for heart transplantation, whether or not the patient is 
ultimately accepted as a candidate for transplantation;
    (2) Medically necessary pre- and post-transplant inpatient hospital 
and outpatient services;
    (3) Surgical services and related pre- and post-operative services 
of the transplant team;
    (4) Services provided by the donor acquisition team, including the 
costs of transportation to the location of the donor organ and 
transportation of the team and the donated organ to the location of the 
transplantation center;
    (5) Medically necessary services required to maintain the viability 
of the donor organ following a formal declaration of brain death and 
after all existing legal requirements for excision of the donor organ 
have been met;
    (6) Blood and blood products;
    (7) Services and drugs required for immunosuppression, provided the 
drugs are approved by the United States Food and Drug Administration;
    (8) Services and supplies, including inpatient care, which are 
medically necessary to treat complications of the transplant procedure, 
including management of infection and rejection episodes; and
    (9) Services and supplies which are medically necessary for the 
periodic evaluation and assessment of the successfully transplanted 
patient.
    (C) Noncovered services. CHAMPUS benefits will not be paid for the 
following:
    (1) Services and supplies for which the beneficiary has no legal 
obligation to pay; and
    (2) Out-of-hospital living expenses and any other nonmedical 
expenses, including transportation of the heart transplant candidate or 
family members, whether pre- or post-transplant.
    (D) Implementation guidelines. The Director, OCHAMPUS, shall issue 
such guidelines as are necessary to implement the provisions of this 
paragraph.
    (6) Eyeglasses, spectacles, contact lenses, or other optical 
devices. Eyeglasses, spectacles, contact lenses, or other optical 
devices are excluded under the Basic Program except under very limited 
and specific circumstances.
    (i) Exception to general exclusion. Benefits for glasses and lenses 
may be extended only in connection with the following specified eye 
conditions and circumstances:
    (A) Eyeglasses or lenses that perform the function of the human 
lens, lost as a result of intraocular surgery or ocular injury or 
congenital absence.
    Note: Notwithstanding the general requirement for U.S. Food and Drug 
Administration approval of any surgical implant set forth in paragraph 
(d)(3)(vii) of this section, intraocular lenses are authorized under

[[Page 104]]

CHAMPUS if they are either approved for marketing by FDA or are subject 
to an investigational device exemption.
    (B) ``Pinhole'' glasses prescribed for use after surgery for 
detached retina.
    (C) Lenses prescribed as ``treatment'' instead of surgery for the 
following conditions:
    (1) Contract lenses used for treatment of infantile glaucoma.
    (2) Corneal or scleral lenses prescribed in connection with 
treatment of keratoconus.
    (3) Scleral lenses prescribed to retain moisture when normal tearing 
is not present or is inadequate.
    (4) Corneal or scleral lenses prescribed to reduce a corneal 
irregularity other than astigmatism.
    (ii) Limitations. The specified benefits are limited further to one 
set of lenses related to one of the qualifying eye conditions set forth 
in paragraph (e)(6)(i) of this section. If there is a prescription 
change requiring a new set of lenses (but still related to the 
qualifying eye condition), benefits may be extended for a second set of 
lenses, subject to specific medical review.
    (7) Transsexualism or such other conditions as gender dysphoria. All 
services and supplies directly or indirectly related to transsexualism 
or such other conditions as gender dysphoria are excluded under CHAMPUS. 
This exclusion includes, but is not limited to, psychotherapy, 
prescription drugs, and intersex surgery that may be provided in 
connection with transsexualism or such other conditions as gender 
dysphoria. There is only one very limited exception to this general 
exclusion, that is, notwithstanding the definition of congenital 
anomaly, CHAMPUS benefits may be extended for surgery and related 
medically necessary services performed to correct sex gender confusion 
(that is, ambiguous genitalia) which has been documented to be present 
at birth.
    (8) Cosmetic, reconstructive, or plastic surgery. For the purposes 
of CHAMPUS, cosmetic, reconstructive, or plastic surgery is surgery that 
can be expected primarily to improve physical appearance or that is 
performed primarily for psychological purposes or that restores form, 
but does not correct or improve materially a bodily function.
    Note: If a surgical procedure primarily restores function, whether 
or not there is also a concomitant improvement in physical appearance, 
the surgical procedure does not fall within the provisions set forth in 
this paragraph (e)(8).
    (i) Limited benefits under CHAMPUS. Benefits under the Basic Program 
generally are not available for cosmetic, reconstructive, or plastic 
surgery. However, under certain limited circumstances, benefits for 
otherwise covered services and supplies may be provided in connection 
with cosmetic, reconstructive, or plastic surgery as follows:
    (A) Correction of a congenital anomaly; or
    (B) Restoration of body form following an accidental injury; or
    (C) Revision of disfiguring and extensive scars resulting from 
neoplastic surgery.
    (D) Reconstructive breast surgery following a medically necessary 
mastectomy performed for the treatment of carcinoma, severe fibrocystic 
disease, other nonmalignant tumors or traumatic injuries.
    (E) Penile implants and testicular prostheses for conditions 
resulting from organic origins (i.e., trauma, radical surgery, disease 
process, for correction of congenital anomaly, etc.). Also, penile 
implants for organic impotency.
    Note: Organic impotence is defined as that which can be reasonably 
expected to occur following certain diseases, surgical procedures, 
trauma, injury, or congenital malformation. Impotence does not become 
organic because of psychological or psychiatric reasons.
    (F) Generally, benefits are limited to those cosmetic, 
reconstructive, or plastic surgery procedures performed no later than 
December 31 of the year following the year in which the related 
accidental injury or surgical trauma occurred, except for authorized 
postmastectomy breast reconstruction for which there is no time 
limitation between mastectomy and reconstruction. Also, special 
consideration for exception will be given to cases involving children 
who may require a growth period.
    (ii) General exclusions. (A) For the purposes of CHAMPUS, dental 
congenital anomalies such as absent tooth buds or malocclusion 
specifically are

[[Page 105]]

excluded. Also excluded are any procedures related to transsexualism or 
such other conditions as gender dysphoria, except as provided in 
paragraph (e)(7) of this section.
    (B) Cosmetic, reconstructive, or plastic surgery procedures 
performed primarily for psychological reasons or as a result of the 
aging process also are excluded.
    (C) Procedures performed for elective correction of minor 
dermatological blemishes and marks or minor anatomical anomalies also 
are excluded.
    (D) In addition, whether or not it would otherwise qualify for 
benefits under paragraph (e)(8)(i) of this section, the breast 
augmentation mammoplasty is specifically excluded.
    (iii) Noncovered surgery, all related services and supplies 
excluded. When it is determined that a cosmetic, reconstructive, or 
plastic surgery procedure does not qualify for CHAMPUS benefits, all 
related services and supplies are excluded, including any institutional 
costs.
    (iv) Example of noncovered cosmetic, reconstructive, or plastic 
surgery procedures. The following is a partial list of cosmetic, 
reconstructive, or plastic surgery procedures that do not qualify for 
benefits under CHAMPUS. This list is for example purposes only and is 
not to be construed as being all-inclusive.
    (A) Any procedure performed for personal reasons to improve the 
appearance of an obvious feature or part of the body that would be 
considered by an average observer to be normal and acceptable for the 
patient's age or ethnic or racial background.
    (B) Cosmetic, reconstructive, or plastic surgical procedures that 
are justified primarily on the basis of a psychological or psychiatric 
need.
    (C) Augmentation mammoplasties, except for those performed as a part 
of postmastectomy breast reconstruction as specifically authorized in 
paragraph (e)(8)(i)(D) of this section.
    (D) Face lifts and other procedures related to the aging process.
    (E) Reduction mammoplasties (unless there is medical documentation 
of intractable pain, not amenable to other forms of treatment, resulting 
from large, pendulous breasts).
    (F) Panniculectomy; body sculpture procedures.
    (G) Repair of sagging eyelids (without demonstrated and medically 
documented significant impairment of vision).
    (H) Rhinoplasties (without evidence of accidental injury occurring 
within the previous 6 months that resulted in significant obstruction of 
breathing).
    (I) Chemical peeling for facial wrinkles.
    (J) Dermabrasion of the face.
    (K) Elective correction of minor dermatological blemishes and marks 
or minor anatomical anomalies.
    (L) Revision of scars resulting from surgery or a disease process, 
except disfiguring and extensive scars resulting from neoplastic 
surgery.
    (M) Removal of tattoos.
    (N) Hair transplants.
    (O) Electrolysis.
    (P) Any procedures related to transsexualism or such other 
conditions as gender dysphoria except as provided in paragraph (e)(7) of 
this section.
    (Q) Penile implant procedure for psychological impotency, 
transsexualism, or such other conditions as gender dysphoria.
    (R) Insertion of prosthetic testicles for transsexualism, or such 
other conditions as gender dysphoria.
    (9) Complications (unfortunate sequelae) resulting from noncovered 
initial surgery or treatment. Benefits are available for otherwise 
covered services and supplies required in the treatment of complications 
resulting from a noncovered incident of treatment (such as nonadjunctive 
dental care, transsexual surgery, and cosmetic surgery) but only if the 
later complication represents a separate medical condition such as a 
systemic infection, cardiac arrest, and acute drug reaction. Benefits 
may not be extended for any later care or procedures related to the 
complication that essentially is similar to the initial noncovered care. 
Examples of complications similar to the initial episode of care (and 
thus not covered) would be repair of facial scarring resulting from 
dermabrasion for acne or repair of a prolapsed vagina in a biological 
male who had undergone transsexual surgery.

[[Page 106]]

    (10) Dental. CHAMPUS does not include a dental benefit. Under very 
limited circumstances, benefits are available for dental services and 
supplies when the dental services are adjunctive to otherwise covered 
medical treatment.
    (i) Adjunctive dental care: Limited. Adjunctive dental care is 
limited to those services and supplies provided under the following 
conditions:
    (A) Dental care which is medically necessary in the treatment of an 
otherwise covered medical (not dental) condition, is an integral part of 
the treatment of such medical condition and is essential to the control 
of the primary medical condition. The following is a list of conditions 
for which CHAMPUS benefits are payable under this provision:
    (1) Intraoral abscesses which extend beyond the dental alveolus.
    (2) Extraoral abscesses.
    (3) Cellulitis and osteitis which is clearly exacerbating and 
directly affecting a medical condition currently under treatment.
    (4) Removal of teeth and tooth fragments in order to treat and 
repair facial trauma resulting from an accidental injury.
    (5) Myofacial Pain Dysfunction Syndrome.
    (6) Total or complete ankyloglossia.
    (7) Adjunctive dental and orthodontic support for cleft palate.
    (8) The prosthetic replacement of either the maxilla or the mandible 
due to the reduction of body tissues associated with traumatic injury 
(e.g., impact, gun shot wound), in addition to services related to 
treating neoplasms or iatrogenic dental trauma.
    Note: The test of whether dental trauma is covered is whether the 
trauma is solely dental trauma. Dental trauma, in order to be covered, 
must be related to, and an integral part of medical trauma; or a result 
of medically necessary treatment of an injury or disease.
    (B) Dental care required in preparation for medical treatment of a 
disease or disorder or required as the result of dental trauma caused by 
the medically necessary treatment of an injury or disease (iatrogenic).
    (1) Necessary dental care including prophylaxis and extractions when 
performed in preparation for or as a result of in-line radiation therapy 
for oral or facial cancer.
    (2) Treatment of gingival hyperplasia, with or without periodontal 
disease, as a direct result of prolonged therapy with Dilantin 
(diphenylhydantoin) or related compounds.
    (C) Dental care is limited to the above and similar conditions 
specifically prescribed by the Director, OCHAMPUS, as meeting the 
requirements for coverage under the provisions of this section.
    (ii) General exclusions. (A) Dental care which is routine, 
preventative, restorative, prosthodontic, periodontic or emergency does 
not qualify as adjunctive dental care for the purposes of CHAMPUS except 
when performed in preparation for or as a result of dental trauma caused 
by medically necessary treatment of an injury or disease.
    (B) The adding or modifying of bridgework and dentures.
    (C) Orthodontia, except when directly related to and an integral 
part of the medical or surgical correction of a cleft palate or when 
required in preparation for, or as a result of, trauma to the teeth and 
supporting structures caused by medically necessary treatment of an 
injury or disease.
    (iii) Preauthorization required. In order to be covered, adjunctive 
dental care requires preauthorization from the Director, OCHAMPUS, or a 
designee, in accordance with paragraph (a)(11) of this section. When 
adjunctive dental care involves a medical (not dental) emergency (such 
as facial injuries resulting from an accident), the requirement for 
preauthorization is waived. Such waiver, however, is limited to the 
essential adjunctive dental care related to the medical condition 
requiring the immediate emergency treatment. A complete explanation, 
with supporting medical documentation, must be submitted with claims for 
emergency adjunctive dental care.
    (iv) Covered oral surgery. Notwithstanding the above limitations on 
dental care, there are certain oral surgical procedures that are 
performed by both physicians and dentists, and that are essentially 
medical rather than dental care. For the purposes of CHAMPUS,

[[Page 107]]

the following procedures, whether performed by a physician or dentist, 
are considered to be in this category and benefits may be extended for 
otherwise covered services and supplies without preauthorization:
    (A) Excision of tumors and cysts of the jaws, cheeks, lips, tongue, 
and roof and floor of the mouth, when such conditions require a 
pathological (histological) examination.
    (B) Surgical procedures required to correct accidental injuries of 
the jaws, cheeks, lips, tongue, and roof and floor of the mouth.
    (C) Treatment of oral or facial cancer.
    (D) Treatment of fractures of facial bones.
    (E) External (extra-oral) incision and drainage of cellulitis.
    (F) Surgery of accessory sinuses, salivary glands, or ducts.
    (G) Reduction of dislocations and the excision of the 
temporomandibular joints, when surgery is a necessary part of the 
reduction.
    (H) Any oral surgical procedure that falls within the cosmetic, 
reconstructive, or plastic surgery definition is subject to the 
limitations and requirements set forth in paragraph (e)(8) of this 
section.
    Note: Extraction of unerupted or partially erupted, malposed or 
impacted teeth, with or without the attached follicular or development 
tissues, is not a covered oral surgery procedure except when the care is 
indicated in preparation for medical treatment of a disease or disorder 
or required as a result of dental trauma caused by the necessary medical 
treatment of an injury or illness. Surgical preparation of the mouth for 
dentures is not covered by CHAMPUS.
    (v) Inpatient hospital stay in connection with non-adjunctive, 
noncovered dental care. Institutional benefits specified in paragraph 
(b) of this section may be extended for inpatient hospital stays related 
to noncovered, nonadjunctive dental care when such inpatient stay is 
medically necessary to safeguard the life of the patient from the 
effects of dentistry because of the existence of a specific and serious 
nondental organic impairment currenty under active treatment. 
(Hemophilia is an example of a condition that could be considered a 
serious nondental impairment.) Preauthorization by the Director, 
OCHAMPUS, or a designee, is required for such inpatient stays to be 
covered in the same manner as required for adjunctive dental care 
described in paragraph (e)(10)(iii) of this section. Regardless of 
whether or not the preauthorization request for the hospital admission 
is approved and thus qualifies for institutional benefits, the 
professional service related to the nonadjunctive dental care is not 
covered.
    (11) Drug abuse. Under the Basic Program, benefits may be extended 
for medically necessary prescripion drugs required in the treatment of 
an illness or injury or in connection with maternity care (refer to 
paragraph (d) of this section). However, CHAMPUS benefits cannot be 
authorized to support of maintain an existing or potential drug abuse 
situation, whether or not the drugs (under other circumstances) are 
eligible for benefit consideration and whether or not obtained by legal 
means.
    (i) Limitations on who can prescribe drugs. CHAMPUS benefits are not 
available for any drugs prescribed by a member of the beneficiary's 
family or by a nonfamily member residing in the same household with the 
beneficiary or sponsor.
    (ii) Drug maintenance programs excluded. Drug maintenance programs 
when one addictive drug is substituted for another on a maintenance 
basis (such as methadone substituted for heroin) are not covered. This 
exclusion applies even in areas outside the United States where 
addictive drugs are dispensed legally by physicians on a maintenance 
dosage level.
    (iii) Kinds of prescription drugs that are monitored carefully by 
CHAMPUS for possible abuse situations--(A) Narcotics. Examples are 
Morphine and Demerol.
    (B) Nonnarcotic analgesics. Examples are Talwin and Darvon.
    (C) Tranquilizers. Examples are Valium, Librium, and Meprobamate.
    (D) Barbiturates. Examples are Seconal and Nembuttal.
    (E) Nonbarbituate hypnotics. Examples are Doriden and Chloral 
Hydrate.
    (F) Stimulants. Examples are amphetamines.

[[Page 108]]

    (iv) CHAMPUS fiscal intermediary responsibilities. CHAMPUS fiscal 
intermediaries are responsible for implementing utilization control and 
quality assurance procedures designed to identify possible drug abuse 
situations. The CHAMPUS fiscal intermediary is directed to screen all 
drug claims for potential overutilization and irrational prescribing of 
drugs, and to subject any such cases to extensive review to establish 
the necessity for the drugs and their appropriateness on the basis of 
diagnosis or definitive symptoms.
    (A) When a possible drug abuse situation is identified, all claims 
for drugs for that specific beneficiary or provider will be suspended 
pending the results of a review.
    (B) If the review determines that a drug abuse situation does in 
fact exist, all drug claims held in suspense will be denied.
    (C) If the record indicates previously paid drug benefits, the prior 
claims for that beneficiary or provider will be reopened and the 
circumstances involved reviewed to determine whether or not drug abuse 
also existed at the time the earlier claims were adjudicated. If drug 
abuse is later ascertained, benefit payments made previously will be 
considered to have been extended in error and the amounts so paid 
recouped.
    (D) Inpatient stays primarily for the purpose of obtaining drugs and 
any other services and supplies related to drug abuse also are excluded.
    (v) Unethical or illegal provider practices related to drugs. Any 
such investigation into a possible drug abuse that uncovers unethical or 
illegal drug dispensing practices on the part of an institution, a 
pharmacy, or physician will be referred to the professional or 
investigative agency having jurisdiction. CHAMPUS fiscal intermediaries 
are directed to withhold payment of all CHAMPUS claims for services and 
supplies rendered by a provider under active investigation for possible 
unethical or illegal drug dispensing activities.
    (vi) Detoxification. The above monitoring and control of drug abuse 
situations shall in no way be construed to deny otherwise covered 
medical services and supplies related to drug detoxification (including 
newborn, addicted infants) when medical supervision is required.
    (12) Custodial care. The statute under which CHAMPUS operates 
specifically excludes custodial care. Many beneficiaries and sponsors 
misunderstand what is meant by custodial care, assuming that because 
custodial care is not covered, it implies the custodial care is not 
necessary. This is not the case; it only means the care being provided 
is not a type of care for which CHAMPUS benefits can be extended.
    (i) Kinds of conditions that can result in custodial care. There is 
no absolute rule that can be applied. With most conditions, there is a 
period of active treatment before custodial care, some much more 
prolonged than others. Examples of potential custodial care cases may be 
a spinal cord injury resulting in extensive paralysis, a severe cerebral 
vascular accident, multiple sclerosis in its latter stages, or presenile 
and senile dementia. These conditions do not result necessarily in 
custodial care but are indicative of the types of conditions that 
sometimes do. It is not the condition itself that is controlling, but 
whether the care being rendered falls within the definition of custodial 
care (refer to Sec. 199.2 of this part for the definition of ``custodial 
care'').
    (ii) Benefits available in connection with a custodial care case. 
CHAMPUS benefits are not available for services related to a custodial 
care case, with the following specific exceptions:
    (A) Prescription drugs and medicines, medical supplies and durable 
medical equipment. Benefits are payable for otherwise covered 
prescription drugs and medicines, medical supplies and durable medical 
equipment.
    (B) Nursing services, limited. Recognizing that even though the care 
being received is determined primarily to be custodial, an occasional 
specific skilled nursing service may be required. When it is determined 
such skilled nursing services are needed, benefits may be extended for 
one hour of nursing care per day.
    (C) Physician services, limited. Recognizing that even though the 
care being received is determined primarily to be custodial, occasional 
physician monitoring may be required to maintain the

[[Page 109]]

patient's condition. When it is determined that a patient is receiving 
custodial care, benefits may be extended for up to twelve physician 
visits per calendar year for the custodial condition (not to exceed one 
per month).
    Note: CHAMPUS benefits may be extended for additional physician 
visits related to the treatment of a condition other than the condition 
for which the patient is receiving custodial care (an example is a 
broken leg as a result of a fall).
    (D) Payment for prescription drugs, medical supplies, durable 
medical equipment and limited skilled nursing and physician services 
does not affect custodial care determination. The fact that CHAMPUS 
extends benefits for prescription drugs, medical supplies, durable 
medical equipment, and limited skilled nursing and physician services in 
no way affects the custodial care determination if the case otherwise 
falls within the definition of custodial care.
    (iii) Exception to custodial care exclusion, admission to a 
hospital. CHAMPUS benefits may be extended for otherwise covered 
services or supplies directly related to a medically necessary admission 
to an acute care general or special hospital (as defined in paragraph 
(b)(4)(i), section 199.6 of this part), if the care is at the 
appropriate level and meets other requirements of this Regulation.
    (iv) Reasonable care for which benefits were authorized or 
reimbursed before June 1, 1977. It is recognized that care for which 
benefits were authorized or reimbursed before the implementation date of 
DoD 6010.8-R may be excluded under the custodial care limitations set 
forth in the Regulation. Therefore, an exception to the custodial care 
limitations set forth in this part exists whereby reasonable care for 
which benefits authorized or reimbursed under the Basic Program before 
June 1, 1977, shall continue to be authorized even though the care would 
be excluded as a benefit under the custodial care limitations of the DoD 
6010.8-R. Continuation of CHAMPUS benefits in such cases is limited as 
follows:
    (A) Initial authorization or reimbursement before June 1, 1977. The 
initial CHAMPUS authorization or reimbursement for the care occurred 
before June 1, 1977; and,
    (B) Continued care. The care has been continuous since the initial 
CHAMPUS authorization or reimbursement; and,
    (C) Reasonable care. The care is reasonable. CHAMPUS benefits shall 
be continued for reasonable care up to the same level of benefits and 
for the same period of eligibility authorized or reimbursed before June 
1, 1977. Care that is excessive or otherwise unreasonable will be 
reduced or eliminated from the continued care authorized under this 
exception.
    (13) Domiciliary care. The statute under which CHAMPUS operates also 
specifically excludes domiciliary care (refer to Sec. 199.2 of this part 
for the definition of ``Domiciliary Care'').
    (i) Examples of domiciliary care situations. The following are 
examples of domiciliary care for which CHAMPUS benefits are not payable.
    (A) Home care is not available. Institutionalization primarily 
because parents work, or extension of a hospital stay beyond what is 
medically necessary because the patient lives alone, are examples of 
domiciliary care provided because there is no other family member or 
other person available in the home.
    (B) Home care is not suitable. Institutionalization of a child 
because a parent (or parents) is an alcoholic who is not responsible 
enough to care for the child, or because someone in the home has a 
contagious disease, are examples of domiciliary care being provided 
because the home setting is unsuitable.
    (C) Family unwilling to care for a person in the home. A child who 
is difficult to manage may be placed in an institution, not because 
institutional care is medically necessary, but because the family does 
not want to handle him or her in the home. Such institutionalization 
would represent domiciliary care, that is, the family being unwilling to 
assume responsibility for the child.
    (ii) Benefits available in connection with a domiciliary care case. 
Should the beneficiary receive otherwise covered medical services or 
supplies while also being in a domiciliary care situation, CHAMPUS 
benefits are payable for those medical services or supplies, or both, in 
the same manner as though the beneficiary resided in his or her own 
home. Such benefits would be cost-

[[Page 110]]

shared as though rendered to an outpatient.
    (iii) General exclusion. Domiciliary care is institutionalization 
essentially to provide a substitute home--not because it is medically 
necessary for the beneficiary to be in the institution (although there 
may be conditions present that have contributed to the fact that 
domiciliary care is being rendered). CHAMPUS benefits are not payable 
for any costs or charges related to the provision of domiciliary care. 
While a substitute home or assistance may be necessary for the 
beneficiary, domiciliary care does not represent the kind of care for 
which CHAMPUS benefits can be provided.
    (14) CT scanning--(i) Approved CT scan services. Benefits may be 
extended for medically necessary CT scans of the head or other 
anatomical regions of the body when all of the following conditions are 
met:
    (A) The patient is referred for the diagnostic procedure by a 
physician.
    (B) The CT scan procedure is consistent with the preliminary 
diagnosis or symptoms.
    (C) Other noninvasive and less costly means of diagnosis have been 
attempted or are not appropriate.
    (D) The CT scan equipment is licensed or registered by the 
appropriate state agency responsible for licensing or registering 
medical equipment that emits ionizing radiation.
    (E) The CT scan equipment is operated under the general supervision 
and direction of a physician.
    (F) The results of the CT scan diagnostic procedure are interpreted 
by a physician.
    (ii) Review guidelines and criteria. The Director, OCHAMPUS, or a 
designee, will issue specific guidelines and criteria for CHAMPUS 
coverage of medically necessary head and body part CT scans.
    (15) Morbid obesity. The CHAMPUS morbid obesity benefit is limited 
to the gastric bypass, gastric stapling, or gastroplasty method.
    (i) Conditions for coverage. Payment may be extended for the gastric 
bypass, gastric stapling, or gastroplasty method only when one of the 
following conditions is met:
    (A) The patient is 100 pounds over the ideal weight for height and 
bone structure and has an associated severe medical condition. These 
associated medical conditions are diabetes mellitus, hypertension, 
cholecystitis, narcolepsy, pickwickian syndrome (and other severe 
respiratory disease), hypothalmic disorders, and severe arthritis of the 
weight-bearing joints.
    (B) The patient is 200 percent or more of the ideal weight for 
height and bone structure. An associated medical condition is not 
required for this category.
    (C) The patient has had an intestinal bypass or other surgery for 
obesity and, because of complications, requires a second surgery (a 
takedown). The surgeon in many cases, will do a gastric bypass, gastric 
stapling, or gastroplasty to help the patient avoid regaining the weight 
that was lost. In this situation, payment is authorized even though the 
patient's condition technically may not meet the definition of morbid 
obesity because of the weight that was already lost following the 
initial surgery.
    (ii) Exclusions. (A) CHAMPUS payment may not be made for nonsurgical 
treatment of obesity or morbid obesity, for dietary control, or weight 
reduction.
    (B) CHAMPUS payment may not be made for surgical procedures other 
than the gastric bypass, gastric stapling, or gastroplasty, even if 
morbid obesity is present.
    (16) Maternity care. (i) Benefit. The CHAMPUS Basic Program may 
share the cost of medically necessary services and supplies associated 
with maternity care which are not otherwise excluded by this part. 
However, failure by a beneficiary to secure a required Nonavailability 
Statement (NAS) (DD Form 1251) as set forth in paragraph (a)(9) of this 
section will waive that beneficiary's right to CHAMPUS cost-share of 
certain maternity care services and supplies.
    (ii) Cost-share. Subject to applicable Nonavailability Statement 
(NAS) requirements, maternity care cost-share shall be determined as 
follows:
    (A) Inpatient cost-share formula applies to maternity care ending in 
childbirth in, or on the way to, a hospital

[[Page 111]]

inpatient childbirth unit, and for maternity care ending in a non-birth 
outcome not otherwise excluded by this part.
    (B) Ambulatory surgery cost-share formula applies to maternity care 
ending in childbirth in, or on the way to, a birthing center to which 
the beneficiary is admitted and from which the beneficiary has received 
prenatal care, or a hospital-based outpatient birthing room.
    (C) Outpatient cost-share formula applies to maternity care which 
terminates in a planned childbirth at home.
    (D) Otherwise covered medical services and supplies directly related 
to ``Complications of pregnancy,'' as defined in Sec. 199.2 of this 
part, will be cost-shared on the same basis as the related maternity 
care for a period not to exceed 42 days following termination of the 
pregnancy and thereafter cost-shared on the basis of the inpatient or 
outpatient status of the beneficiary when medically necessary services 
and supplies are received.
    (17) Biofeedback Therapy. Biofeedback therapy is a technique by 
which a person is taught to exercise control over a physiologic process 
occurring within the body. By using modern biomedical instruments the 
patient learns how a specific physiologic system within his body 
operates and how to modify the performance of this particular system.
    (i) Benefits Provided. CHAMPUS benefits are payable for services and 
supplies in connection with electrothermal, electromyograph and 
electrodermal biofeedback therapy when there is documentation that the 
patient has undergone an appropriate medical evaluation, that their 
present condition is not responding to or no longer responds to other 
forms of conventional treatment, and only when provided as treatment for 
the following conditions:
    (A) Adjunctive treatment for Raynaud's Syndrome.
    (B) Adjunctive treatment for muscle re-education of specific muscle 
groups or for treating pathological muscle abnormalities of spasticity, 
or incapacitating muscle spasm or weakness.
    (ii) Limitations. Payable benefits include initial intake 
evaluation. Treatment following the initial intake evaluation is limited 
to a maximum of 20 inpatient and outpatient biofeedback treatments per 
calendar year.
    (iii) Exclusions. Benefits are excluded for biofeedback therapy for 
the treatment of ordinary muscle tension states or for psychosomatic 
conditions. Benefits are also excluded for the rental or purchase of 
biofeedback equipment.
    (iv) Provider Requirements. A provider of biofeedback therapy must 
be a CHAMPUS-authorized provider. (Refer to Sec. 199.6, ``Authorized 
Providers). If biofeedback treatment is provided by other than a 
physician, the patient must be referred by a physician.
    (v) Implementation Guidelines. The Director of OCHAMPUS shall issue 
guidelines as are necessary to implement the provision of this 
paragraph.
    (18) Cardiac rehabilitation. Cardiac rehabilitation is the process 
by which individuals are restored to their optimal physical, medical, 
and psychological status, after a cardiac event. Cardiac rehabilitation 
is often divided into three phases. Phase I begins during inpatient 
hospitalization and is managed by the patient's personal physician. 
Phase II is a medically supervised outpatient program which begins 
following discharge. Phase III is a lifetime maintenance program 
emphasizing continuation of physical fitness with periodic followup. 
Each phase includes an exercise component, patient education, and risk 
factor modification. There may be considerable variation in program 
components, intensity, and duration.
    (i) Benefits Provided. CHAMPUS benefits are available on an 
inpatient or outpatient basis for services and supplies provided in 
connection with a cardiac rehabilitation program when ordered by a 
physician and provided as treatment for patients who have experienced 
the following cardiac events within the preceding twelve (12) months:
    (A) Myocardial Infarction.
    (B) Coronary Artery Bypass Graft.
    (C) Coronary Angioplasty.
    (D) Percutaneous Transluminal Coronary Angioplasty
    (E) Chronic Stable Angina (see limitations below).
    (ii) Limitations. Payable benefits include separate allowance for 
the initial

[[Page 112]]

evaluation and testing. Outpatient treatment following the initial 
intake evaluation and testing is limited to a maximum of thirty-six (36) 
sessions per cardiac event, usually provided 3 sessions per week for 
twelve (12) weeks. Patients diagnosed with chronic stable angina are 
limited to one treatment episode (36 sessions) in a calendar year.
    (iii) Exclusions. Phase III cardiac rehabilitation lifetime 
maintenance programs performed at home or in medically unsupervised 
settings are not covered.
    (iv) Providers. A provider of cardiac rehabilitation services must 
be a CHAMPUS authorized hospital. (Refer to Section 199.6, ``Authorized 
Providers.'') All cardiac rehabilitation services must be ordered by a 
physician.
    (v) Payment. Payment for outpatient treatment will be based on an 
all inclusive allowable charge per session. Inpatient treatment will be 
paid based upon the reimbursement system in place for the hospital where 
the services are rendered.
    (vi) Implementation Guidelines. The Director of OCHAMPUS shall issue 
guidelines as are necessary to implement the provisions of this 
paragraph.
    (19) Hospice care. Hospice care is a program which provides an 
integrated set of services and supplies designed to care for the 
terminally ill. This type of care emphasizes palliative care and 
supportive services, such as pain control and home care, rather than 
cure-oriented services provided in institutions that are otherwise the 
primary focus under CHAMPUS. The benefit provides coverage for a humane 
and sensible approach to care during the last days of life for some 
terminally ill patients.
    (i) Benefit coverage. CHAMPUS beneficiaries who are terminally ill 
(that is, a life expectancy of six months or less if the disease runs 
its normal course) will be eligible for the following services and 
supplies in lieu of most other CHAMPUS benefits:
    (A) Physician services.
    (B) Nursing care provided by or under the supervision of a 
registered professional nurse.
    (C) Medical social services provided by a social worker who has at 
least a bachelor's degree from a school accredited or approved by the 
Council on Social Work Education, and who is working under the direction 
of a physician. Medical social services include, but are not limited to 
the following:
    (1) Assessment of social and emotional factors related to the 
beneficiary's illness, need for care, response to treatment, and 
adjustment to care.
    (2) Assessment of the relationship of the beneficiary's medical and 
nursing requirements to the individual's home situation, financial 
resources, and availability of community resources.
    (3) Appropriate action to obtain available community resources to 
assist in resolving the beneficiary's problem.
    (4) Counseling services that are required by the beneficiary.
    (D) Counseling services provided to the terminally ill individual 
and the family member or other persons caring for the individual at 
home. Counseling, including dietary counseling, may be provided both for 
the purpose of training the individual's family or other care-giver to 
provide care, and for the purpose of helping the individual and those 
caring for him or her to adjust to the individual's approaching death. 
Bereavement counseling, which consists of counseling services provided 
to the individual's family after the individual's death, is a required 
hospice service but it is not reimbursable.
    (E) Home health aide services furnished by qualified aides and 
homemaker services. Home health aides may provide personal care 
services. Aides also may perform household services to maintain a safe 
and sanitary environment in areas of the home used by the patient. 
Examples of such services are changing the bed or light cleaning and 
laundering essential to the comfort and cleanliness of the patient. Aide 
services must be provided under the general supervision of a registered 
nurse. Homemaker services may include assistance in personal care, 
maintenance of a safe and healthy environment, and services to enable 
the individual to carry out the plan of care. Qualifications for home 
health aides can be found in 42 CFR 484.36.

[[Page 113]]

    (F) Medical appliances and supplies, including drugs and 
biologicals. Only drugs that are used primarily for the relief of pain 
and symptom control related to the individual's terminal illness are 
covered. Appliances may include covered durable medical equipment, as 
well as other self-help and personal comfort items related to the 
palliation or management of the patient's condition while he or she is 
under hospice care. Equipment is provided by the hospice for use in the 
beneficiary's home while he or she is under hospice care. Medical 
supplies include those that are part of the written plan of care. 
Medical appliances and supplies are included within the hospice all-
inclusive rates.
    (G) Physical therapy, occupational therapy and speech-language 
pathology services provided for purposes of symptom control or to enable 
the individual to maintain activities of daily living and basic 
functional skills.
    (H) Short-term inpatient care provided in a Medicare participating 
hospice inpatient unit, or a Medicare participating hospital, skilled 
nursing facility (SNF) or, in the case of respite care, a Medicaid-
certified nursing facility that additionally meets the special hospice 
standards regarding staffing and patient areas. Services provided in an 
inpatient setting must conform to the written plan of care. Inpatient 
care may be required for procedures necessary for pain control or acute 
or chronic symptom management. Inpatient care may also be furnished to 
provide respite for the individual's family or other persons caring for 
the individual at home. Respite care is the only type of inpatient care 
that may be provided in a Medicaid-certified nursing facility. The 
limitations on custodial care and personal comfort items applicable to 
other CHAMPUS services are not applicable to hospice care.
    (ii) Core services. The hospice must ensure that substantially all 
core services are routinely provided directly by hospice employees; 
i.e., physician services, nursing care, medical social services, and 
counseling for individuals and care givers. Refer to paragraphs 
(e)(19)(i)(A), (e)(19)(i)(B), (e)(19)(i)(C), and (e)(19)(i)(D) of this 
section.
    (iii) Non-core services. While non-core services (i.e., home health 
aide services, medical appliances and supplies, drugs and biologicals, 
physical therapy, occupational therapy, speech-language pathology and 
short-term inpatient care) may be provided under arrangements with other 
agencies or organizations, the hospice must maintain professional 
management of the patient at all times and in all settings. Refer to 
paragraphs (e)(19)(i)(E), (e)(19)(i)(F), (e)(19)(i)(G), and 
(e)(19)(i)(H) of this section.
    (iv) Availability of services. The hospice must make nursing 
services, physician services, and drugs and biologicals routinely 
available on a 24-hour basis. All other covered services must be made 
available on a 24-hour basis to the extent necessary to meet the needs 
of individuals for care that is reasonable and necessary for the 
palliation and management of the terminal illness and related condition. 
These services must be provided in a manner consistent with accepted 
standards of practice.
    (v) Periods of care. Hospice care is divided into distinct periods/
episodes of care. The terminally ill beneficiary may elect to receive 
hospice benefits for an initial period of 90 days, a subsequent period 
of 90 days, a second subsequent period of 30 days, and a final period of 
unlimited duration.
    (vi) Conditions for coverage. The CHAMPUS beneficiary must meet the 
following conditions/criteria in order to be eligible for the hospice 
benefits and services referenced in paragraph (e)(19)(i) of this 
section.
    (A) There must be written certification in the medical record that 
the CHAMPUS beneficiary is terminally ill with a life expectancy of six 
months or less if the terminal illness runs its normal course.
    (1) Timing of certification. The hospice must obtain written 
certification of terminal illness for each of the election periods 
described in paragraph (e)(19(vi)(B) of this section, even if a single 
election continues in effect for two, three or four periods.
    (i) Basic requirement. Except as provided in paragraph 
(e)(19(vi)(A)(1)(ii) of this section the hospice must obtain the written 
certification no later than

[[Page 114]]

two calendar days after the period begins.
    (ii) Exception. For the initial 90-day period, if the hospice cannot 
obtain the written certifications within two calendar days, it must 
obtain oral certifications within two calendar days, and written 
certifications no later than eight calendar days after the period 
begins.
    (2) Sources of certification. Physician certification is required 
for both initial and subsequent election periods.
    (i) For the initial 90-day period, the hospice must obtain written 
certification statements (and oral certification statements if required 
under paragraph (e)(19(vi)(A)(i)(ii) of this section) from:
    (A) The individual's attending physician if the individual has an 
attending physician; and
    (B) The medical director of the hospice or the physician member of 
the hospice interdisciplinary group.
    (ii) For subsequent periods, the only requirement is certification 
by one of the physicians listed in paragraph (e)(19)(vi)(A)(2)(i)(B) of 
this section.
    (B) The terminally ill beneficiary must elect to receive hospice 
care for each specified period of time; i.e., the two 90-day periods, a 
subsequent 30-day period, and a final period of unlimited duration. If 
the individual is found to be mentally incompetent, his or her 
representative may file the election statement. Representative means an 
individual who has been authorized under State law to terminate medical 
care or to elect or revoke the election of hospice care on behalf of a 
terminally ill individual who is found to be mentally incompetent.
    (1) The episodes of care must be used consecutively; i.e., the two 
90-day periods first, then the 30-day period, followed by the final 
period. The periods of care may be elected separately at different 
times.
    (2) The initial election will continue through subsequent election 
periods without a break in care as long as the individual remains in the 
care of the hospice and does not revoke the election.
    (3) The effective date of the election may begin on the first day of 
hospice care or any subsequent day of care, but the effective date 
cannot be made prior to the date that the election was made.
    (4) The beneficiary or representative may revoke a hospice election 
at any time, but in doing so, the remaining days of that particular 
election period are forfeited and standard CHAMPUS coverage resumes. To 
revoke the hospice benefit, the beneficiary or representative must file 
a signed statement of revocation with the hospice. The statement must 
provide the date that the revocation is to be effective. An individual 
or representative may not designate an effective date earlier than the 
date that the revocation is made.
    (5) If an election of hospice benefits has been revoked, the 
individual, or his or her representative may at any time file a hospice 
election for any period of time still available to the individual, in 
accordance with Sec. 199.4(e)(19)(vi)(B).
    (6) A CHAMPUS beneficiary may change, once in each election period, 
the designation of the particular hospice from which he or she elects to 
receive hospice care. To change the designation of hospice programs the 
individual or representative must file, with the hospice from which care 
has been received and with the newly designated hospice, a statement 
that includes the following information:
    (i) The name of the hospice from which the individual has received 
care and the name of the hospice from which he or she plans to receive 
care.
    (ii) The date the change is to be effective.
    (7) Each hospice will design and print its own election statement to 
include the following information:
    (i) Identification of the particular hospice that will provide care 
to the individual.
    (ii) The individual's or representative's acknowledgment that he or 
she has been given a full understanding of the palliative rather than 
curative nature of hospice care, as it relates to the individual's 
terminal illness.
    (iii) The individual's or representative's acknowledgment that he or 
she understands that certain other CHAMPUS services are waived by the 
election.
    (iv) The effective date of the election.

[[Page 115]]

    (v) The signature of the individual or representative, and the date 
signed.
    (8) The hospice must notify the CHAMPUS contractor of the 
initiation, change or revocation of any election.
    (C) The beneficiary must waive all rights to other CHAMPUS payments 
for the duration of the election period for:
    (1) Care provided by any hospice program other than the elected 
hospice unless provided under arrangements made by the elected hospice; 
and
    (2) Other CHAMPUS basic program services/benefits related to the 
treatment of the terminal illness for which hospice care was elected, or 
to a related condition, or that are equivalent to hospice care, except 
for services provided by:
    (i) The designated hospice;
    (ii) Another hospice under arrangement made by the designated 
hospice; or
    (iii) An attending physician who is not employed by or under 
contract with the hospice program.
    (3) Basic CHAMPUS coverage will be reinstated upon revocation of the 
hospice election.
    (D) A written plan of care must be established by a member of the 
basic interdisciplinary group assessing the patient's needs. This group 
must have at least one physician, one registered professional nurse, one 
social worker, and one pastoral or other counselor.
    (1) In establishing the initial plan of care the member of the basic 
interdisciplinary group who assesses the patient's needs must meet or 
call at least one other group member before writing the initial plan of 
care.
    (2) At least one of the persons involved in developing the initial 
plan must be a nurse or physician.
    (3) The plan must be established on the same day as the assessment 
if the day of assessment is to be a covered day of hospice care.
    (4) The other two members of the basic interdisciplinary group--the 
attending physician and the medical director or physician designee--must 
review the initial plan of care and provide their input to the process 
of establishing the plan of care within two calendar days following the 
day of assessment. A meeting of group members is not required within 
this 2-day period. Input may be provided by telephone.
    (5) Hospice services must be consistent with the plan of care for 
coverage to be extended.
    (6) The plan must be reviewed and updated, at intervals specified in 
the plan, by the attending physician, medical director or physician 
designee and interdisciplinary group. These reviews must be documented 
in the medical records.
    (7) The hospice must designate a registered nurse to coordinate the 
implementation of the plan of care for each patient.
    (8) The plan must include an assessment of the individual's needs 
and identification of the services, including the management of 
discomfort and symptom relief. It must state in detail the scope and 
frequency of services needed to meet the patient's and family's needs.
    (E) Complete medical records and all supporting documentation must 
be submitted to the CHAMPUS contractor within 30 days of the date of its 
request. If records are not received within the designated time frame, 
authorization of the hospice benefit will be denied and any prior 
payments made will be recouped. A denial issued for this reason is not 
an initial determination under Sec. 199.10, and is not appealable.
    (vii) Appeal rights under hospice benefit. A beneficiary or provider 
is entitled to appeal rights for cases involving a denial of benefits in 
accordance with the provisions of this part and Sec. 199.10.
    (20) Case management services. As part of case management for 
beneficiaries with complex medical or psychological conditions, payment 
for services or supplies not otherwise covered by the basic CHAMPUS/
TRICARE program may be authorized when they are provided in accordance 
with Sec. 199.4(i). Waiver of benefit limits/exclusions to the basic 
CHAMPUS/TRICARE program may be cost shared where it is demonstrated that 
the absence of such services would result in the exacerbation of an 
existing extraordinary condition, as defined in Sec. 199.2, to the 
extent that frequent or extensive services are required; and such 
services are

[[Page 116]]

a cost effective alternative to the Basic CHAMPUS program.
    (f) Beneficiary or sponsor liability--(1) General. As stated in the 
introductory paragraph to this section, the Basic Program is essentially 
a supplemental program to the Uniformed Services direct medical care 
system. To encourage use of the Uniformed Services direct medical care 
system wherever its facilities are available and appropriate, the Basic 
Program benefits are designed so that it is to the financial advantage 
of a CHAMPUS beneficiary or sponsor to use the direct medical care 
system. When medical care is received from civilian sources, a CHAMPUS 
beneficiary is responsible for payment of certain deductible and cost-
sharing amounts in connection with otherwise covered services and 
supplies. By statute, this joint financial responsibility between the 
beneficiary or sponsor and CHAMPUS is more favorable for dependents of 
active duty members than for other classes of beneficiaries.
    (2) Dependents of active duty members of the Uniformed Services. 
CHAMPUS beneficiary or sponsor liability set forth for dependents of 
active duty members is as follows:
    (i) Annual fiscal year deductible for outpatient services and 
supplies.
    (A) For care rendered all eligible beneficiaries prior to April 1, 
1991, or when the active duty sponsor's pay grade is E-4 or below, 
regardless of the date of care:
    (1) Individual Deductible: Each beneficiary is liable for the first 
fifty dollars ($50.00) of the CHAMPUS-determined allowable amount on 
claims for care provided in the same fiscal year.
    (2) Family Deductible: The total deductible amount for all members 
of a family with the same sponsor during one fiscal year shall not 
exceed one hundred dollars ($100.00).
    (B) For care rendered on or after April 1, 1991, for all CHAMPUS 
beneficiaries except dependents of active duty sponsors in pay grades E-
4 or below.
    (1) Individual Deductible: Each beneficiary is liable for the first 
one hundred and fifty dollars ($150.00) of the CHAMPUS-determined 
allowable amount on claims for care provided in the same fiscal year.
    (2) Family Deductible: The total deductible amount for all members 
of a family with the same sponsor during one fiscal year shall not 
exceed three hundred dollars ($300.00).
    (C) CHAMPUS-approved Ambulatory Surgical Centers or Birthing 
Centers. No deductible shall be applied to allowable amounts for 
services or items rendered to active duty for authorized NATO 
dependents.
    (D) Allowable Amount does not exceed Deductible Amount. If fiscal 
year allowable amounts for two or more beneficiary members of a family 
total less than $100.00 ($300.00 if paragraph (f) (2)(i)(B)(2) of this 
section applies), but more of the beneficiary members submit a claim for 
over $50.00 ($150.00 if paragraph (f)(2)(i)(B)(1) of this section 
applies), neither the family nor the individual deductible will have 
been met and no CHAMPUS benefits are payable.
    (E) For any family the outpatient deductible amounts will be applied 
sequentially as the CHAMPUS claims are processed.
    (F) If the fiscal year outpatient deductible under either paragraphs 
(f)(2)(i)(A) or (f)(2)(i)(B) of this section has been met by a 
beneficiary or a family through the submission of a claim or claims to a 
CHAMPUS fiscal intermediary in another geographic location from the 
location where a current claim is being submitted, the beneficiary or 
sponsor must obtain a deductible certificate from the CHAMPUS fiscal 
intermediary where the applicable beneficiary or famiy fiscal year 
deductible was met. Such deductible certificate must be attached to the 
current claim being submitted for benefits. Failure to obtain a 
deductible certificate under such circumstances will result in a second 
beneficiary or family fiscal year deductible being applied. However, 
this second deductible may be reimbursed once appropriate documentation, 
as described in paragraph (f)(2)(i)(F) of this section, is supplied to 
the CHAMPUS fiscal intermediary applying the second deductible.
    (G) Notwithstanding the dates specified in paragraphs (f)(2)(i)(A) 
and (f)(B)(2)(i) of this section in the case of dependents of active 
duty members of rank E-5 or above with Persian Gulf

[[Page 117]]

Conflict service, dependents of service members who were killed in the 
Gulf, or who died subsequent to Gulf service, and of members who retired 
prior to October 1, 1991, after having served in the Gulf War, the 
deductible shall be the amount specified in paragraph (f)(2)(i)(A) of 
this section for care rendered prior to October 1, 1991, and the amount 
specified in paragraph (f)(2)(i)(B) of this section for care rendered on 
or after October 1, 1991.
    (ii) Inpatient cost-sharing. Except in the case of mental health 
services (see paragraph (f)(2)(ii)(D) of this section), dependents of 
active duty members of the Uniformed Services or their sponsors are 
responsible for the payment of the first $25 of the allowable 
institutional costs incurred with each covered inpatient admission to a 
hospital or other authorized institutional provider (refer to 
Sec. 199.6), or the amount the beneficiary or sponsor would have been 
charged had the inpatient care been provided in a Uniformed Service 
hospital, whichever is greater.
    Note: The Secretary of Defense (after consulting with the Secretary 
of Health and Human Services and the Secretary of Transportation) 
prescribes the fair charges for inpatient hospital care provided through 
Uniformed Services medical facilities. This determination is made each 
fiscal year.
    (A) Inpatient cost-sharing payable with each separate inpatient 
admission. A separate cost-sharing amount (as described in paragraph 
(f)(2) of this section) is payable for each inpatient admission to a 
hospital or other authorized institution, regardless of the purpose of 
the admission (such as medical or surgical), regardless of the number of 
times the beneficiary is admitted, and regardless of whether or not the 
inpatient admissions are for the same or related conditions; except that 
successive inpatient admissions shall be deemed one inpatient 
confinement for the purpose of computing the inpatient cost-share 
payable, provided not more than 60 days have elapsed between the 
successive admissions. However, notwithstanding this provision, all 
admissions related to a single maternity episode shall be considered one 
confinement, regardless of the number of days between admissions (refer 
to paragraph (b) of this section).
    (B) Multiple family inpatient admissions. A separate cost-sharing 
amount is payable for each inpatient admission, regardless of whether or 
not two or more beneficiary members of a family are admitted at the same 
time or from the same cause (such as an accident). A separate 
beneficiary inpatient cost-sharing amount must be applied for each 
separate admission on each beneficiary member of the family.
    (C) Newborn patient in his or her own right. When a newborn infant 
remains as an inpatient in his or her own right (usually after the 
mother is discharged), the newborn child becomes the beneficiary and 
patient and the extended inpatient stay becomes a separate inpatient 
admission. In such a situation, a new, separate inpatient cost-sharing 
amount is applied. If a multiple birth is involved (such as twins or 
triplets) and two or more newborn infants become patients in their own 
right, a separate inpatient cost-sharing amount must be applied to the 
inpatient stay for each newborn child who has remained as an inpatient 
in his or her own right.
    (D) Inpatient cost-sharing for mental health services. For care 
provided on or after October 1, 1995, the inpatient cost-sharing for 
mental health services is $20 per day for each day of the inpatient 
admission. This $20 per day cost sharing amount applies to admissions to 
any hospital for mental health services, any residential treatment 
facility, any substance abuse rehabilitation facility, and any partial 
hospitalization program providing mental health or substance use 
disorder rehabilitation services.
    (iii) Outpatient cost-sharing. Dependents of active duty members of 
the Uniformed Services or their sponsors are responsible for payment of 
20 percent of the CHAMPUS-determined allowable cost or charge beyond the 
annual fiscal year deductible amount (as described in paragraph 
(f)(2)(i) of this section) for otherwise covered services or supplies 
provided on an outpatient basis by authorized providers.
    (iv) Ambulatory surgery. Notwithstanding the above provisions 
pertaining to outpatient cost-sharing, dependents of active duty members 
of the Uniformed Services or their sponsors

[[Page 118]]

are responsible for payment of $25 for surgical care that is authorized 
and received while in an outpatient status and that has been designated 
in guidelines issued by the Director, OCHAMPUS, or a designee.
    (v) Psychiatric partial hospitalization services. Institutional and 
professional services provided under the psychiatric partial 
hospitalization program authorized by paragraph (b)(10) of this section 
shall be cost shared as inpatient services.
    (3) Retirees, dependents of retirees, dependents of deceased active 
duty members, and dependents of deceased retirees. CHAMPUS beneficiary 
liability set forth for retirees, dependents of retirees, dependents of 
deceased active duty members, and dependents of deceased retirees is as 
follows:
    (i) Annual fiscal year deductible for outpatient services or 
supplies. The annual fiscal year deductible for otherwise covered 
outpatient services or supplies provided retirees, dependents of 
retirees, dependents of deceased active duty members, and dependents of 
deceased retirees is the same as the annual fiscal year outpatient 
deductible applicable to dependents of active duty members of rank E-5 
or above as specified in paragraph (f)(2)(i)(A) or (B) of this section.
    (ii) Inpatient cost-sharing. Cost-sharing amounts for inpatient 
services shall be as follows:
    (A) Services subject to the CHAMPUS DRG-based payment system. The 
cost-share shall be the lesser of: an amount calculated by multiplying a 
per diem amount by the total number of days in the hospital stay except 
the day of discharge; or 25 percent of the hospital's billed charges. 
The per diem amount shall be calculated so that, in the aggregate, the 
total cost-sharing amounts for these beneficiaries is equivalent to 25 
percent of the CHAMPUS-determined allowable costs for covered services 
or supplies provided on an inpatient basis by authorized providers. The 
per diem amount shall be published annually by OCHAMPUS.
    (B) Services subject to the CHAMPUS mental health per diem payment 
system. The cost-share is dependent upon whether the hospital is paid a 
hospital-specific per diem or a regional per diem under the provisions 
of Sec. 199.14(a)(2). With respect to care paid for on the basis of a 
hospital specific per diem, the cost-share shall be 25% of the hospital-
specific per diem amount. For care paid for on the basis of a regional 
per diem, the cost share shall be the lower of a fixed daily amount or 
25% of the hospital's billed charges. The fixed daily amount shall be 25 
percent of the per diem adjusted so that total beneficiary cost shares 
will equal 25 percent of total payments under the mental health per diem 
payment system. These fixed daily amount shall be updated annually and 
published in the Federal Register along with the per diems published 
pursuant to Sec. 199.14(a)(2)(iv)(B).
    (C) Other services. For services exempt from the CHAMPUS DRG-based 
payment system and the CHAMPUS mental health per diem payment system and 
services provided by institutions other than hospitals, the cost-share 
shall be 25% of the CHAMPUS-determined allowable charges.
    (iii) Outpatient cost-sharing. (A) For services other than 
ambulatory surgery services. Retirees, dependents of retirees, 
dependents of deceased active duty members, and dependents of deceased 
retirees are responsible for payment of 25 percent of the CHAMPUS-
determined allowable costs or charges beyond the annual fiscal year 
deductible amount (as described in paragraph (f)(2)(i) of this section 
for otherwise covered services or supplies provided on an outpatient 
basis by authorized providers.
    (B) For services subject to the ambulatory surgery payment method. 
For services subject to the ambulatory surgery payment method set forth 
in Sec. 199.14(d), the cost share shall be the lesser of: 25 percent of 
the payment amount provided pursuant to Sec. 199.14(d); or 25 percent of 
the center's billed charges.
    (iv) Psychiatric partial hospitalization services. Institutional and 
professional services provided under the psychiatric partial 
hospitalization program authorized by paragraph (b)(10) of this section 
shall be cost shared as inpatient services.
    (4) Former spouses. CHAMPUS beneficiary liability set forth for 
former

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spouses eligible under the provisions of paragraph (b)(2)(ii) of 
Sec. 199.3 is as follows:
    (i) Annual fiscal year deductible for outpatient services or 
supplies. An eligible former spouse is responsible for the payment of 
the first $150.00 of the CHAMPUS-determined reasonable costs or charges 
for otherwise covered outpatient services or supplies provided in any 
one fiscal year. (Except for services received prior to April 1, 1991, 
the deductible amount is $50.00). The former spouse cannot contribute 
to, nor benefit from, any family deductible of the member or former 
member to whom the former spouse was married or of any CHAMPUS-eligible 
children.
    (ii) Inpatient cost-sharing. Eligible former spouses are responsible 
for the payment of cost-sharing amounts the same as those required for 
retirees, dependents of retirees, dependents of deceased active duty 
members, and dependents of deceased retirees.
    (iii) Outpatient cost-sharing. Eligible former spouses are 
responsible for payment of 25 percent of the CHAMPUS-determined 
reasonable costs or charges beyond the annual fiscal year deductible 
amount for otherwise covered services or supplies provided on an 
outpatient basis by authorized providers.
    (5) Cost-Sharing under the Military-Civilian Health Services 
Partnership Program. Cost-sharing is dependent upon the type of 
partnership program entered into, whether external or internal. (See 
paragraph (p) of Sec. 199.1, for general requirements of the Military-
Civilian Health Services Partnership Program.)
    (i) External Partnership Agreement. Authorized costs associated with 
the use of the civilian facility will be financed through CHAMPUS under 
the normal cost-sharing and reimbursement procedures applicable under 
CHAMPUS.
    (ii) Internal Partnership Agreement. Beneficiary cost-sharing under 
internal agreements will be the same as charges prescribed for care in 
military treatment facilities.
    (6)-(7) [Reserved]
    (8) Cost-sharing for services provided under special discount 
arrangements--(i) General rule. With respect to services determined by 
the Director, OCHAMPUS (or designee) to be covered by Sec. 199.14(i), 
the Director, OCHAMPUS (or designee) has authority to establish, as an 
exception to the cost-sharing amount normally required pursuant to this 
section, a different cost-share amount that appropriately reflects the 
application of the statutory cost-share to the discount arrangement.
    (ii) Specific applications. The following are examples of 
applications of the general rule; they are not all inclusive.
    (A) In the case of services provided by individual health care 
professionals and other noninstitutional providers, the cost-share shall 
be the usual percentage of the CHAMPUS allowable charge determined under 
Sec. 199.14(i).
    (B) In the case of services provided by institutional providers 
normally paid on the basis of a pre-set amount (such as DRG-based amount 
under Sec. 199.14(a)(1) or per-diem amount under Sec. 199.14(a)(2)), if 
the discount rate is lower than the pre-set rate, the cost-share amount 
that would apply for a beneficiary other than an active duty dependent 
pursuant to the normal pre-set rate would be reduced by the same 
percentage by which the pre-set rate was reduced in setting the discount 
rate.
    (9) Waiver of deductible amounts or cost-sharing not allowed--(i) 
General rule. Because deductible amounts and cost sharing are 
statutorily mandated, except when specifically authorized by law (as 
determined by the Director, OCHAMPUS), a provider may not waive or 
forgive beneficiary liability for annual deductible amounts or inpatient 
or outpatient cost sharing, as set forth in this section.
    (ii) Exception for bad debts. This general rule is not violated in 
cases in which a provider has made all reasonable attempts to effect 
collection, without success, and determines in accordance with generally 
accepted fiscal management standards that the beneficiary liability in a 
particular case is an uncollectible bad debt.
    (iii) Remedies for noncompliance. Potential remedies for 
noncompliance with this requirement include:
    (A) A claim for services regarding which the provider has waived the

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beneficiary's liability may be disallowed in full, or, alternatively, 
the amount payable for such a claim may be reduced by the amount of the 
beneficiary liability waived.
    (B) Repeated noncompliance with this requirement is a basis for 
exclusion of a provider.
    (10) Catastrophic loss protection for basic program benefits. Fiscal 
year limits, or catastrophic caps, on the amounts beneficiaries are 
required to pay are established as follows:
    (i) Dependents of active duty members. The maximum family liability 
is $1,000 for deductibles and cost-shares based on allowable charges for 
Basic Program services and supplies received in a fiscal year.
    (ii) All other beneficiaries. For all other categories of 
beneficiary families (including those eligible under CHAMPVA) the fiscal 
year cap is $10,000.
    (iii) Payment after cap is met. After a family has paid the maximum 
cost-share and deductible amounts (dependents of active duty members 
$1,000 and all others $10,000), for a fiscal year, CHAMPUS will pay 
allowable amounts for remaining covered services through the end of that 
fiscal year.
    Note to paragraph (f)(10):
    Under the Defense Authorization Act for Fiscal Year 1993, the cap 
for beneficiaries other than dependents of active duty members was 
reduced from $10,000 to $7,500 on October 1, 1992. The cap remains at 
$1,000 for dependents of active duty members.
    (g) Exclusions and limitations. In addition to any definitions, 
requirements, conditions, or limitations enumerated and described in 
other sections of this part, the following specifically are excluded 
from the Basic Program:
    (1) Not medically or psychologically necessary. Services and 
supplies that are not medically or psychologically necessary for the 
diagnosis or treatment of a covered illness (including mental disorder) 
or injury, for the diagnosis and treatment of pregnancy or well-baby 
care except as provided in the following paragraph.
    (2) Unnecessary diagnostic tests. X-ray, laboratory, and 
pathological services and machine diagnostic tests not related to a 
specific illness or injury or a definitive set of symptoms except for 
cancer screening mammography and cancer screening papanicolaou (PAP) 
tests provided under the terms and conditions contained in the 
guidelines adopted by the Director, OCHAMPUS.
    (3) Institutional level of care. Services and supplies related to 
inpatient stays in hospitals or other authorized institutions above the 
appropriate level required to provide necessary medical care.
    (4) Diagnostic admission. Services and supplies related to an 
inpatient admission primarily to perform diagnostic tests, examinations, 
and procedures that could have been and are performed routinely on an 
outpatient basis.
    Note: If it is determined that the diagnostic x-ray, laboratory, and 
pathological services and machine tests performed during such admission 
were medically necessary and would have been covered if performed on an 
outpatient basis, CHAMPUS benefits may be extended for such diagnostic 
procedures only, but cost-sharing will be computed as if performed on an 
outpatient basis.
    (5) Unnecessary postpartum inpatient stay, mother or newborn. 
Postpartum inpatient stay of a mother for purposes of staying with the 
newborn infant (usually primarily for the purpose of breast feeding the 
infant) when the infant (but not the mother) requires the extended stay; 
or continued inpatient stay of a newborn infant primarily for purposes 
of remaining with the mother when the mother (but not the newborn 
infant) requires extended postpartum inpatient stay.
    (6) Therapeutic absences. Therapeutic absences from an inpatient 
facility, except when such absences are specifically included in a 
treatment plan approved by the Director, OCHAMPUS, or a designee. For 
cost-sharing provisions refer to Sec. 199.14, paragraph (f)(3).
    (7) Custodial care. Custodial care except as otherwise specifically 
provided in paragraphs (e)(12) (ii), (iii), and (iv) of this section.
    (8) Domiciliary care. Inpatient stays primarily for domiciliary care 
purposes.
    (9) Rest or rest cures. Inpatient stays primarily for rest or rest 
cures.
    (10) Amounts above allowable costs or charges. Costs of services and 
supplies to the extent amounts billed are over the CHAMPUS determined 
allowable cost or charge, as provided for in Sec. 199.14.

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    (11) No legal obligation to pay, no charge would be made. Services 
or supplies for which the beneficiary or sponsor has no legal obligation 
to pay; or for which no charge would be made if the beneficiary or 
sponsor was not eligible under CHAMPUS; or whenever CHAMPUS is a 
secondary payer for claims subject to the CHAMPUS DRG-based payment 
system, amounts, when combined with the primary payment, which would be 
in excess of charges (or the amount the provider is obligated to accept 
as payment in full, if it is less than the charges).
    (12) Furnished without charge. Services or supplies furnished 
without charge.
    (13) Furnished by local, state, or Federal Government. Services and 
supplies paid for, or eligible for payment, directly or indirectly by a 
local, state, or Federal Government, except as provided under CHAMPUS, 
or by government hospitals serving the general public, or medical care 
provided by a Uniformed Service medical care facility, or benefits 
provided under title XIX of the Social Security Act (Medicaid) (refer to 
Sec. 199.8 of this part).
    (14) Study, grant, or research programs. Services and supplies 
provided as a part of or under a scientific or medical study, grant, or 
research program.
    (15) Unproven drugs, devices, and medical treatments or procedures. 
By law, CHAMPUS can only cost-share medically necessary supplies and 
services. Any drug, device or medical treatment or procedure, the safety 
and efficacy of which have not been established, as described in this 
paragraph (g)(15), is unproven and cannot be cost-shared by CHAMPUS.
    (i) A drug, device, or medical treatment or procedure is unproven:
    (A) If the drug or device cannot be lawfully marketed without the 
approval or clearance of the United States Food and Drug Administration 
(FDA) and approval or clearance for marketing has not been given at the 
time the drug or device is furnished to the patient.
    Note: Although the use of drugs and medicines not approved by the 
FDA for commercial marketing, that is for use by humans, (even though 
permitted for testing on humans) is excluded from coverage as unproven, 
drugs grandfathered by the Federal Food, Drug and Cosmetic Act of 1938 
may be covered by CHAMPUS as if FDA approved.
    Certain cancer drugs, designated as Group C drugs (approved and 
distributed by the National Cancer Institute) and Treatment 
Investigational New Drugs (INDs), are not covered under CHAMPUS because 
they are not approved for commercial marketing by the FDA. However, 
medical care related to the use of Group C drugs and Treatment INDs can 
be cost-shared under CHAMPUS when the patient's medical condition 
warrants their administration and the care is provided in accordance 
with generally accepted standards of medical practice.
    CHAMPUS can also consider coverage of unlabeled or off-label uses of 
drugs that are Food and Drug Administration (FDA) approved drugs that 
are used for indications or treatments not included in the approved 
labeling. Approval for reimbursement of unlabeled or off-label uses 
requires review for medical necessity, and also requires demonstrations 
from medical literature, national organizations, or technology 
assessment bodies that the unlabeled or off-label use of the drug is 
safe, effective and in accordance with nationally accepted standards of 
practice in the medical community.
    (B) If a medical device (as defined by 21 U.S.C. 321(h)) with an 
Investigational Device Exemption (IDE) approved by the Food and Drug 
Administration is categorized by the FDA as experimental/investigational 
(FDA Category A).
    Note: CHAMPUS will consider for coverage a device with an FDA-
approved IDE categorized by the FDA as non-experimental/investigational 
(FDA Category B) for CHAMPUS beneficiaries participating in FDA approved 
clinical trials. Coverage of any such Category B device is dependent on 
its meeting all other requirements of the laws and rules governing 
CHAMPUS and upon the beneficiary involved meeting the FDA-approved IDE 
study protocols.
    (C) Unless reliable evidence shows that any medical treatment or 
procedure has been the subject of well-controlled studies of clinically 
meaningful endpoints, which have determined its maximum tolerated dose, 
its toxicity, its safety, and its efficacy as compared with standard 
means of treatment or diagnosis. (See the definition of reliable 
evidence in Sec. 199.2 of this part for the procedures used in 
determining if a medical treatment or procedure is unproven.)
    (D) If the consensus among experts regarding the medical treatment 
or procedure is that further studies or

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clinical trials are necessary to determine its maximum tolerated doses, 
its toxicity, its safety, or its effectiveness as compared with the 
standard means of treatment or diagnosis. (See the definition of 
reliable evidence in Sec. 199.2 of this part for the procedures used in 
determining if a medical treatment or procedure is unproven.)
    (ii) CHAMPUS benefits for rare diseases are reviewed on a case-by-
case basis by the Director, Office of CHAMPUS, or a designee. In 
reviewing the case, the Director, or a designee, may consult with any or 
all of the following sources to determine if the proposed therapy is 
considered safe and effective:
    (A) Trials published in refereed medical literature.
    (B) Formal technology assessments.
    (C) National medical policy organization positions.
    (D) National professional associations.
    (E) National expert opinion organizations.
    (iii) Care excluded. This exclusion from benefits includes all 
services directly related to the unproven drug, device, or medical 
treatment or procedure. However, CHAMPUS may cover services or supplies 
when there is no logical or causal relationship between the unproven 
drug, device or medical treatment or procedure and the treatment at 
issue or where such a logical or causal relationship cannot be 
established with a sufficient degree of certainty. This CHAMPUS coverage 
is authorized in the following circumstances:
    (A) Treatment that is not related to the unproven drug, device or 
medical treatment or procedure; e.g., medically necessary in the absence 
of the unproven treatment.
    (B) Treatment which is necessary follow-up to the unproven drug, 
device or medical treatment or procedure but which might have been 
necessary in the absence of the unproven treatment.
    (iv) Examples of unproven drugs, devices or medical treatments or 
procedures. This paragraph (g)(15)(iv) consists of a partial list of 
unproven drugs, devices or medical treatment or procedures. These are 
excluded from CHAMPUS program benefits. This list is not all inclusive. 
Other unproven drugs, devices or medical treatments or procedures, are 
similarly excluded, although they do not appear on this partial list. 
This partial list will be reviewed and updated periodically as new 
information becomes available. With respect to any procedure included on 
this partial list, if and when the Director, OCHAMPUS determines that 
based on reliable evidence (as defined in section 199.2) such procedure 
has proven medical effectiveness, the Director will initiate action to 
remove the procedure from this partial list of unproven drugs, devices 
or medical treatment or procedures. From the date established by the 
Director as the date the procedure has established proven medical 
effectiveness until the date the regulatory change is made to remove the 
procedures from the partial list of unproven drugs, devices or medical 
treatment or procedures the Director, OCHAMPUS will suspend treatment of 
the procedure as unproven drugs, devices, or medical treatments or 
procedures. Following is the non-inclusive, partial list of unproven 
drugs, devices or medical treatment or procedures, all of which are 
excluded from CHAMPUS benefits:
    (A) Radial keratotomy (refractive keratoplasty).
    (B) Cellular therapy.
    (C) Histamine therapy.
    (D) Stem cell assay, a laboratory procedure which allows a 
determination to be made of the type and dose of cancer chemotherapy 
drugs to be used, based on in vitro analysis of their effects on cancer 
cells taken from an individual.
    (E) Topical application of oxygen.
    (F) Immunotherapy for malignant disease, except when using drugs 
approved by the FDA for this purpose.
    (G) Prolotherapy, joint sclerotherapy, and ligamentous injections 
with sclerosing agents.
    (H) Transcervical block silicone plug.
    (I) Whole body hyperthermia in the treatment of cancer.
    (J) Portable nocturnal hypoglycemia detectors.
    (K) Testosterone pellet implants in the treatment of females.
    (L) Estradiol pellet implants.
    (M) Epikeratophakia for treatment of aphakia and myopia.
    (N) Bladder stimulators.

[[Page 123]]

    (O) Ligament replacement with absorbable copolymer carbon fiber 
scaffold.
    (P) Intraoperative radiation therapy.
    (Q) Gastric bubble or balloon.
    (R) Dorsal root entry zone (DREZ) thermocoagulation or 
micorcoagulation neurosurgical procedure.
    (S) Brain electrical activity mapping (BEAM).
    (T) Topographic brain mapping (TBM) procedure.
    (U) Ambulatory blood pressure monitoring.
    (V) Bilateral carotoid body resection to relieve pulmonary system.
    (W) Intracavitary administration of cisplatin for malignant disease.
    (X) Cervicography.
    (Y) In-home uterine activity monitoring for the purpose of 
preventing preterm labor and/or delivery.
    (Z) Sperm evaluation, hamster penetration test.
    (AA) Transfer factor (TF).
    (BB) Continuous ambulatory esophageal pH monitoring (CAEpHM) is 
considered unproven for patients under age 12 for all indications, and 
for patients over age 12 for sleep apnea.
    (CC) Adrenal-to-brain transplantation for Parkinson's disease.
    (DD) Videofluoroscopy evaluation in speech pathology.
    (EE) Applied kinesiology.
    (FF) Hair analysis to identify mineral deficiencies from the 
chemical composition of the hair. Hair analysis testing may be 
reimbursed when necessary to determine lead poisoning.
    (GG) Iridology (links flaws in eye coloration with disease elsewhere 
in the body).
    (HH) Small intestinal bypass (jejunoileal bypass) for treatment of 
morbid obesity.
    (II) Biliopancreatic bypass.
    (JJ) Gastric wrapping/gastric banding.
    (KK) Calcium EAP/calcium orotate and selenium (also known as Nieper 
therapy)--Involves inpatient care and use of calcium compounds and other 
non-FDA approved drugs and special diets. Used for cancer, heart 
disease, diabetes, and multiple sclerosis.
    (LL) Percutaneous balloon valvuloplasty for mitral and tricuspid 
valve stenosis.
    (MM) Amniocentesis performed for ISO immunization to the ABO blood 
antigens.
    (NN) Balloon dilatation of the prostate.
    (OO) Helium in radiosurgery.
    (PP) Electrostimulation of salivary production in the treatment of 
xerostomia secondary to Sjogren's syndrome.
    (QQ) Intraoperative monitoring of sensory evoked potentials (SEP). 
To include visually evoked potentials, brainstem auditory evoked 
response, somatosensory evoked potentials during spinal and orthopedic 
surgery, and sensory evoked potentials monitoring of the sciatic nerve 
during total hip replacement. Recording SEPs in unconscious head injured 
patients to assess the status of the somatosensory system. The use of 
SEPs to define conceptional or gestational age in preterm infants.
    (RR) Autolymphocyte therapy (ALT) (immunotherapy used for treating 
metastatic kidney cancer patients).
    (SS) Radioimmunoguided surgery in the detection of cancer.
    (TT) Gait analysis (also known as a walk study or electrodynogram)
    (UU) Use of cerebellar stimulators/pacemakers for the treatment of 
neurologic disorders.
    (VV) Signal-averaged ECG.
    (WW) Peri-urethal Teflon injections to manage urinary incontinence.
    (XX) Extraoperative electrocorticography for stimulation and 
recording
    (YY) Quantitative computed tomography (QCT) for the detection and 
monitoring of osteoporosis.
    (ZZ) [Reserved]
    (AAA) Percutaneous transluminal angioplasty in the treatment of 
obstructive lesions of the carotoid, vertebral and cerebral arteries.
    (BBB) Endoscopic third ventriculostomy.
    (CCC) Holding therapy--Involves holding the patient in an attempt to 
achieve interpersonal contact, and to improve the patient's ability to 
concentrate on learning tasks.
    (DDD) In utero fetal surgery.

[[Page 124]]

    (EEE) Light therapy for seasonal depression (also known as seasonal 
affective disorder (SAD)).
    (FFF) Dorsal column and deep brain electrical stimulation of 
treatment of motor function disorder.
    (GGG) Chelation therapy, except with products and for indications 
approved by the FDA.
    (HHH) All organ transplants except heart, heart-lung, lung, kidney, 
some bone marrow, liver, liver-kidney, corneal, heart-valve, and kidney-
pancreas transplants for Type I diabetics with chronic renal failure who 
require kidney transplants.
    (III) Implantable infusion pumps, except for treatment of 
spasticity, chronic intractable pain, and hepatic artery perfusion 
chemotherapy for the treatment of primary liver cancer or metastic 
colorectal liver cancer.
    (JJJ) Services related to the candidiasis hypersensitivity syndrome, 
yeast syndrome, or gastrointestinal candidiasis (i.e., allergenic 
extracts of Candida albicans for immunotherapy and/or provocation/
neutralization).
    (KKK) Treatment of chronic fatigue syndrome.
    (LLL) Extracorporeal immunoadsorption using protein A columns for 
conditions other than acute idopathic thrombocytopenia purpura.
    (MMM) Dynamic posturography (both static and computerized).
    (NNN) Laparoscopic myomectomy.
    (OOO) Growth factor, including platelet-derived growth factors, for 
treating non-healing wounds. This includes Procurene, a 
platelet-derived wound-healing formula.
    (PPP) High dose chemotherapy with stem cell rescue (HDC/SCR) for any 
of the following malignancies:
    (1) Breast cancer, except for metastic breast cancer that has 
relapsed after responding to a first line treatment.
    (2) Ovarian cancer.
    (3) Testicular cancer.
    (16) Immediate family, household. Services or supplies provided or 
prescribed by a member of the beneficiary's immediate family, or a 
person living in the beneficiary's or sponsor's household.
    (17) Double coverage. Services and supplies that are (or are 
eligible to be) payable under another medical insurance or program, 
either private or governmental, such as coverage through employment or 
Medicare (refer to Sec. 199.8 of this part).
    (18) Nonavailability Statement required. Services and supplies 
provided under circumstances or in geographic locations requiring a 
Nonavailability Statement (DD Form 1251), when such a statement was not 
obtained.
    (19) Preauthorization required. Services or supplies which require 
preauthorization if preauthorization was not obtained. Services and 
supplies which were not provided according to the terms of the 
preauthorization. The Director, OCHAMPUS, or a designee, may grant an 
exception to the requirement for preauthorization if the services 
otherwise would be payable except for the failure to obtain 
preauthorization.
    (20) Psychoanalysis or psychotherapy, part of education. 
Psychoanalysis or psychotherapy provided to a beneficiary or any member 
of the immediate family that is credited towards earning a degree or 
furtherance of the education or training of a beneficiary or sponsor, 
regardless of diagnosis or symptoms that may be present.
    (21) Runaways. Inpatient stays primarily to control or detain a 
runaway child, whether or not admission is to an authorized institution.
    (22) Services or supplies ordered by a court or other government 
agency. Services or supplies, including inpatient stays, directed or 
agreed to by a court or other governmental agency. However, those 
services and supplies (including inpatient stays) that otherwise are 
medically or psychologically necessary for the diagnosis or treatment of 
a covered condition and that otherwise meet all CHAMPUS requirements for 
coverage are not excluded.
    (23) Work-related (occupational) disease or injury. Services and 
supplies required as a result of occupational disease or injury for 
which any benefits are payable under a worker's compensation or similar 
law, whether or not such benefits have been applied for or paid; except 
if benefits provided under such laws are exhausted.
    (24) Cosmetic, reconstructive, or plastic surgery. Services and 
supplies in connection with cosmetic, reconstructive,

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or plastic surgery except as specifically provided in paragraph (e)(8) 
of this section.
    (25) Surgery, psychological reasons. Surgery performed primarily for 
psychological reasons (such as psychogenic).
    (26) Electrolysis.
    (27) Dental care. Dental care or oral surgery, except as 
specifically provided in paragraph (e)(10) of this section.
    (28) Obesity, weight reduction. Services and supplies related to 
obesity or weight reduction whether surgical or nonsurgical; wiring of 
the jaw or any procedure of similar purpose, regardless of the 
circumstances under which performed; except that benefits may be 
provided for the gastric bypass, gastric stapling, or gastroplasty 
procedures in connection with morbid obesity as provided in paragraph 
(e)(15) of this section.
    (29) Transsexualism or such other conditions as gender dysphoria. 
Services and supplies related to transsexualism or such other conditions 
as gender dysphoria (including, but not limited, to intersex surgery, 
psychotherapy, and prescription drugs), except as specifically provided 
in paragraph (e)(7) of this section.
    (30) Therapy or counseling for sexual dysfunctions or sexual 
inadequacies. Sex therapy, sexual advice, sexual counseling, sex 
behavior modification, psychotherapy for mental disorders involving 
sexual deviations (i.e., transvestic fetishm), or other similar 
services, and any supplies provided in connection with therapy for 
sexual dysfunctions or inadequacies.
    (31) Corns, calluses, and toenails. Removal of corns or calluses or 
trimming of toenails and other routine podiatry services, except those 
required as a result of a diagnosed systemic medical disease affecting 
the lower limbs, such as severe diabetes.
    (32) Dyslexia.
    (33) Surgical sterilization, reversal. Surgery to reverse surgical 
sterilization procedures.
    (34) Noncoital reproductive procedures including artifical 
insemination, in-vitro fertilization, gamete intrafallopian transfer and 
all other such reproductive technologies. Services and supplies related 
to artificial insemination (including semen donors and semen banks), in-
vitro fertilization, gamete intrafallopian transfer and all other 
noncoital reproductive technologies.
    (35) Nonprescription contraceptives.
    (36) Tests to determine paternity or sex of a child. Diagnostic 
tests to establish paternity of a child; or tests to determine sex of an 
unborn child.
    (37) Preventive care. Preventive care, such as routine, annual, or 
employment-requested physical examinations; routine screening 
procedures; except that the following are not excluded:
    (i) Well-child care.
    (ii) Immunizations for individuals age six and older, as recommended 
by the CDC.
    (iii) Rabies shots.
    (iv) Tetanus shot following an accidental injury.
    (v) Rh immune globulin.
    (vi) Genetic tests as specified in paragraph (e)(3)(ii) of this 
section.
    (vii) Immunizations and physical examinations provided when required 
in the case of dependents of active duty military personnel who are 
traveling outside the United States as a result of an active duty 
member's assignment and such travel is being performed under orders 
issued by a Uniformed Service.
    (viii) Screening mammography for asymptomatic women 40 years of age 
and older, and for high risk women 35 years of age and older, when 
provided under the terms and conditions contained in the guidelines 
adopted by the Deputy Assistant Secretary of Defense, Health Services 
Financing.
    (ix) Cancer screening Papanicolaou (PAP) test for women who are at 
risk for sexually transmissible diseases, women who have or have had 
multiple sexual partners (or if their partner has or has had multiple 
sexual partners), women who smoke cigarettes, and women 18 years of age 
and older when provided under the terms and conditions contained in the 
guidelines adopted by the Deputy Assistant Secretary of Defense, Health 
Services Financing.
    (x) Other cancer screenings authorized by 10 U.S.C. 1079.
    (xi) Health promotion and disease prevention visits (which may 
include all of the services provided pursuant to

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Sec. 199.18(b)(2)) may be provided in connection with immunizations and 
cancer screening examinations authorized by paragraphs (g)(37)(ii) of 
this section or (g)(37)(viii) through (x) of this section.
    (38) Chiropractors and naturopaths. Services of chiropractors and 
naturopaths whether or not such services would be eligible for benefits 
if rendered by an authorized provider.
    (39) Counseling. Counseling services that are not medically 
necessary in the treatment of a diagnosed medical condition: For 
example, educational counseling, vocational counseling, nutritional 
counseling, and counseling for socioeconomic purposes, diabetic self-
education programs, stress management, lifestyle modification, etc. 
Services provided by a certified marriage and family therapist, pastoral 
or mental health counselor in the treatment of a mental disorder are 
covered only as specifically provided in Sec. 199.6. Services provided 
by alcoholism rehabilitation counselors are covered only when rendered 
in a CHAMPUS-authorized treatment setting and only when the cost of 
those services is included in the facility's CHAMPUS-determined 
allowable cost rate.
    (40) Acupuncture. Acupuncture, whether used as a therapeutic agent 
or as an anesthetic.
    (41) Hair transplants, wigs, or hairpieces.
    Note: In accordance with section 744 of the DoD Appropriation Act 
for 1981 (Pub. L. 96-527), CHAMPUS coverage for wigs or hairpieces is 
permitted effective December 15, 1980, under the conditions listed 
below. Continued availability of benefits will depend on the language of 
the annual DoD Appropriation Acts.
    (i) Benefits provided. Benefits may be extended, in accordance with 
the CHAMPUS-determined allowable charge, for one wig or hairpiece per 
beneficiary (lifetime maximum) when the attending physician certifies 
that alopecia has resulted from treatment of a malignant disease and the 
beneficiary certifies that a wig or hairpiece has not been obtained 
previously through the U.S. Government (including the Veterans 
Administration).
    (ii) Exclusions. The wig or hairpiece benefit does not include 
coverage for the following:
    (A) Alopecia resulting from conditions other than treatment of 
malignant disease.
    (B) Maintenance, wig or hairpiece supplies, or replacement of the 
wig or hairpiece.
    (C) Hair transplants or any other surgical procedure involving the 
attachment of hair or a wig or hairpiece to the scalp.
    (D) Any diagnostic or therapeutic method or supply intended to 
encourage hair regrowth.
    (42) Education or training. Self-help, academic education or 
vocational training services and supplies, unless the provisions of 
Sec. 199.4, paragraph (b)(1)(v) relating to general or special 
education, apply.
    (43) Exercise/relaxation/comfort devices. Exercise equipment, spas, 
whirlpools, hot tubs, swimming pools, health club membership or other 
such charges or items.
    (44) Exercise. General exercise programs, even if recommended by a 
physician and regardless of whether or not rendered by an authorized 
provider. In addition, passive exercises and range of motion exercises 
also are excluded, except when prescribed by a physician and rendered by 
a physical therapist concurrent to, and as an integral part of, a 
comprehensive program of physical therapy.
    (45) Audiologist, speech therapist. Services of an audiologist or 
speech therapist, except when prescribed by a physician and rendered as 
a part of treatment addressed to the physical defect itself and not to 
any educational or occupational deficit.
    (46) Vision care. Eye exercises or visual training (orthoptics).
    (47) Eye and hearing examinations. Eye and hearing examinations 
except as specifically provided in paragraphs (c)(2)(xvi) and (c)(3)(xi) 
of this section, or except when rendered in connection with medical or 
surgical treatment of a covered illness or injury.
    (48) Prosthetic devices. Prostheses, except artificial limbs, voice 
prostheses, eyes, or if an item is inserted surgically in the body as an 
integral part of a surgical procedure. All dental prostheses are 
excluded, except for those specially required in connection with 
otherwise covered orthodontia directly

[[Page 127]]

related to the surgical correction of a cleft palate anomaly.
    (49) Orthopedic shoes. Orthopedic shoes, arch supports, shoe 
inserts, and other supportive devices for the feet, including special-
ordered, custom-made built-up shoes, or regular shoes later built up.
    (50) Eyeglasses. Eyeglasses, spectacles, contact lenses, or other 
optical devices, except as specifically provided under paragraph (e)(6) 
of this section.
    (51) Hearing aids. Hearing aids or other auditory sensory enhancing 
devices.
    (52) Telephone services. Services or advice rendered by telephone 
are excluded, except that a diagnostic or monitoring procedure which 
incorporates electronic transmission of data or remote detection and 
measurement of a condition, activity, or function (biotelemetry) is not 
excluded when:
    (i) The procedure without electronic transmission of data or 
biotelemetry is otherwise an explicit or derived benefit of this 
section; and
    (ii) The addition of electronic transmission of data or biotelemetry 
to the procedure is found by the Director, CHAMPUS, or designee, to be 
medically necessary and appropriate medical care which usually improves 
the efficiency of the management of a clinical condition in defined 
circumstances; and
    (iii) That each data transmission or biotelemetry device 
incorporated into a procedure that is otherwise an explicit or derived 
benefit of this section, has been classified by the U.S. Food and Drug 
Administration, either separately or as a part of a system, for use 
consistent with the defined circumstances in paragraph (g)(52)(ii) of 
this section.
    (53) Air conditioners, humidifiers, dehumidifiers, and purifiers.
    (54) Elevators or chair lifts.
    (55) Alterations. Alterations to living spaces or permanent features 
attached thereto, even when necessary to accommodate installation of 
covered durable medical equipment or to facilitate entrance or exit.
    (56) Clothing. Items of clothing or shoes, even if required by 
virtue of an allergy (such as cotton fabric as against synthetic fabric 
and vegetable-dyed shoes).
    (57) Food, food substitutes. Food, food substitutes, vitamins, or 
other nutritional supplements, including those related to prenatal care.
    (58) Enuresis. Enuretic devices; enuretic conditioning programs.
    (59) [Reserved]
    (60) Autopsy and postmortem.
    (61) Camping. All camping even though organized for a specific 
therapeutic purpose (such as diabetic camp or a camp for emotionally 
disturbed children), and even though offered as a part of an otherwise 
covered treatment plan or offered through a CHAMPUS-approved facility.
    (62) Housekeeper, companion. Housekeeping, homemaker, or attendant 
services; sitter or companion.
    (63) Noncovered condition, unauthorized provider. All services and 
supplies (including inpatient institutional costs) related to a 
noncovered condition or treatment, or provided by an unauthorized 
provider.
    (64) Comfort or convenience. Personal, comfort, or convenience items 
such as beauty and barber services, radio, television, and telephone.
    (65) ``Stop smoking'' programs. Services and supplies related to 
``stop smoking'' regimens.
    (66) Megavitamin psychiatric therapy, orthomolecular psychiatric 
therapy.
    (67) Transportation. All transportation except by ambulance, as 
specifically provided under paragraph (d), and except as authorized in 
paragraph (e)(5) of this section.
    (68) Travel. All travel even though prescribed by a physician and 
even if its purpose is to obtain medical care, except as specified in 
paragraph (a)(6) of this section in connection with a CHAMPUS-required 
physical examination.
    (69) Institutions. Services and supplies provided by other than a 
hospital, unless the institution has been approved specifically by 
OCHAMPUS. Nursing homes, intermediate care facilities, halfway houses, 
homes for the aged, or institutions of similar purpose are excluded from 
consideration as approved facilities under the Basic Program.
    Note: In order to be approved under CHAMPUS, an institution must, in 
addition to meeting CHAMPUS standards, provide a

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level of care for which CHAMPUS benefits are payable.
    (70)-(71) [Reserved]
    (72) Inpatient mental health services. Effective for care received 
on or after October 1, 1991, services in excess of 30 days in any fiscal 
year (or in an admission), in the case of a patient nineteen years of 
age or older, 45 days in any fiscal year (or in an admission) in the 
case of a patient under 19 years of age, or 150 days in any fiscal year 
(or in an admission) in the case of inpatient mental health services 
provided as residential treatment care, unless coverage for such 
services is granted by a waiver by the Director, OCHAMPUS, or a 
designee. In cases involving the day limitations, waivers shall be 
handled in accordance with paragraphs (b)(8) or (b)(9) of this section. 
For services prior to October 1, 1991, services in excess of 60 days in 
any calendar year unless additional coverage is granted by the Director, 
OCHAMPUS, or a designee.
    (73) Economic interest in connection with mental health admissions. 
Inpatient mental health services (including both acute care and RTC 
services) are excluded for care received when a patient is referred to a 
provider of such services by a physician (or other health care 
professional with authority to admit) who has an economic interest in 
the facility to which the patient is referred, unless a waiver is 
granted. Requests for waiver shall be considered under the same 
procedure and based on the same criteria as used for obtaining 
preadmission authorization (or continued stay authorization for 
emergency admissions), with the only additional requirement being that 
the economic interest be disclosed as part of the request. The same 
reconsideration and appeals procedures that apply to day limit waivers 
shall also apply to decisions regarding requested waivers of the 
economic interest exclusion. However, a provider may appeal a 
reconsidered determination that an economic relationship constitutes an 
economic interest within the scope of the exclusion to the same extent 
that a provider may appeal determinations under Sec. 199.15(i)(3). This 
exclusion does not apply to services under the Program for Persons with 
Disabilities (Sec. 199.5) or provided as partial hospital care. If a 
situation arises where a decision is made to exclude CHAMPUS payment 
solely on the basis of the provider's economic interest, the normal 
CHAMPUS appeals process will be available.
    (74) Not specifically listed. Services and supplies not specifically 
listed as a benefit in this part. This exclusion is not intended to 
preclude extending benefits for those services or supplies specifically 
determined to be covered within the intent of this part by the Director, 
OCHAMPUS, or a designee, even though not otherwise listed.
    Note: The fact that a physician may prescribe, order, recommend, or 
approve a service or supply does not, of itself, make it medically 
necessary or make the charge an allowable expense, even though it is not 
listed specifically as an exclusion.
    (h) Payment and liability for certain potentially excludable 
services under the Peer Review Organization program--(1) Applicability. 
This subsection provides special rules that apply only to services 
retrospectively determined under the Peer Review organization (PRO) 
program (operated pursuant to Sec. 199.15) to be potentially excludable 
(in whole or in part) from the basic program under paragraph (g) of this 
section. Services may be excluded by reason of being not medically 
necessary (paragraph (g)(1) of this section), at an inappropriate level 
(paragraph (g)(3) of this section), custodial care (paragraph (g)(7) of 
this section) or other reason relative to reasonableness, necessity or 
appropriateness (which services shall throughout the remainder of this 
subsection, be referred to as ``not medically necessary''). (Also 
throughout the remainder of the subsection, ``services'' includes items 
and ``provider'' includes supplier). This paragraph does not apply to 
coverage determinations made by OCHAMPUS or the fiscal intermediaries 
which are not based on medical necessity determinations made under the 
PRO program.
    (2) Payment for certain potentially excludable expenses. Services 
determined under the PRO program to be potentially excludable by reason 
of the exclusions in paragraph (g) of this section for not medically 
necessary services will not be determined to be excludable if neither 
the beneficiary to whom the services were provided nor the provider

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(institutional or individual) who furnished the services knew, or could 
reasonably have been expected to know, that the services were subject to 
those exclusions. Payment may be made for such services as if the 
exclusions did not apply.
    (3) Liability for certain excludable services. In any case in which 
items or services are determined excludable by the PRO program by reason 
of being not medically necessary and payment may not be made under 
paragraph (h)(2) of this section because the requirements of paragraph 
(h)(2) of this section are not met, the beneficiary may not be held 
liable (and shall be entitled to a full refund from the provider of the 
amount excluded and any cost share amount already paid) if:
    (i) The beneficiary did not know and could not reasonably have been 
expected to know that the services were excludable by reason of being 
not medically necessary; and
    (ii) The provider knew or could reasonably have been expected to 
know that the items or services were excludable by reason of being not 
medically necessary.
    (4) Criteria for determining that beneficiary knew or could 
reasonably have been expected to have known that services were 
excludable. A beneficiary who receives services excludable by reason of 
being not medically necessary will be found to have known that the 
services were excludable if the beneficiary has been given written 
notice that the services were excludable or that similar or comparable 
services provided on a previous occasion were excludable and that notice 
was given by the OCHAMPUS, CHAMPUS PRO or fiscal intermediary, a group 
or committee responsible for utilization review for the provider, or the 
provider who provided the services.
    (5) Criteria for determining that provider knew or could reasonably 
have been expected to have known that services were excludable. An 
institutional or individual provider will be found to have known or been 
reasonably expected to have known that services were excludable under 
this subsection under any one of the following circumstances:
    (i) The PRO or fiscal intermediary had informed the provider that 
the services provided were excludable or that similar or reasonably 
comparable services were excludable.
    (ii) The utilization review group or committee for an institutional 
provider or the beneficiary's attending physician had informed the 
provider that the services provided were excludable.
    (iii) The provider had informed the beneficiary that the services 
were excludable.
    (iv) The provider had received written materials, including notices, 
manual issuances, bulletins, guides, directives or other materials, 
providing notification of PRO screening criteria specific to the 
condition of the beneficiary. Attending physicians who are members of 
the medical staff of an institutional provider will be found to have 
also received written materials provided to the institutional provider.
    (v) The services that are at issue are the subject of what are 
generally considered acceptable standards of practice by the local 
medical community.
    (vi) Preadmission authorization was available but not requested, or 
concurrent review requirements were not followed.
    (i) Case management program. (1) In general. Case management, as it 
applies to this program, provides a collaborative process among the case 
manager, beneficiary, primary caregiver, professional health care 
providers and funding sources to meet the medical needs of an individual 
with an extraordinary condition. It is designed to promote quality and 
cost-effective outcomes through assessment, planning, implementing, 
monitoring and evaluating the options and services required. Payment for 
services or supplies limited or not otherwise covered by the basic 
TRICARE/CHAMPUS program may be authorized when they are provided in 
accordance with paragraph (i) of this section. Waiver of benefit limits/
exclusions may be cost-shared where it is demonstrated that the absence 
of such services would result in the exacerbation of an existing 
extraordinary condition, as defined in Sec. 199.2, to the extent that 
such services are a cost-effective alternative to the basic TRICARE/
CHAMPUS program.

[[Page 130]]

    (2) Applicability of case management program. A CHAMPUS eligible 
beneficiary may participate in the case management program if he/she has 
an extraordinary condition, which is disabling and requires extensive 
utilization of TRICARE resources. The medical or psychological condition 
must also:
    (i) Be contained in the latest revision of the International 
Classification of Diseases Clinical Modification, or the Diagnostic and 
Statistical Manual of Mental Disorders;
    (ii) Meet at least one of the following:
    (A) Demonstrate a prior history of high CHAMPUS costs in the year 
immediately preceding eligibility for the case management program; or
    (B) Require clinically appropriate services or supplies from 
multiple providers to address an extraordinary condition; and
    (iii) Can be treated more appropriately and cost effectively at a 
less intensive level of care.
    (3) Prior authorization required. Services or supplies allowable as 
a benefit exception under this Section shall be cost-shared only when a 
beneficiary's entire treatment has received prior authorization through 
an individual case management program.
    (4) Cost effective requirement. Treatment must be determined to be 
cost effective by comparison to alternative treatment that would 
otherwise be required or when compared to existing reimbursement 
methodology. Treatment must meet the requirements of appropriate medical 
care as defined in Sec. 199.2.
    (5) Limited waiver of exclusions and limitations. Limited waivers of 
exclusions and limitations normally applicable to the basic program may 
be granted for specific services or supplies only when a beneficiary's 
entire treatment has received prior authorization through the individual 
case management program described in paragraph (i) of this section. The 
Director, OCHAMPUS may grant a patient-specific waiver of benefit limits 
for services or supplies in the following categories, subject to the 
waiver requirements of this section.
    (i) Durable equipment. The cost of a device or apparatus which does 
not qualify as Durable Medical Equipment (as defined in Sec. 199.2) or 
back-up durable medical equipment may be shared when determined by the 
Director, OCHAMPUS to be cost-effective and clinically appropriate.
    (ii) Custodial care. The cost of services or supplies rendered to a 
beneficiary that would otherwise be excluded as custodial care (as 
defined in Sec. 199.2) may be cost-shared for a maximum lifetime period 
of 365 days when determined by the Director, OCHAMPUS, to be cost 
effective and clinically appropriate. To qualify for a waiver of benefit 
limits of custodial care, the patient must meet all eligibility 
requirements of paragraph (i) of this section, including that the 
absence of the waived services would result in the exacerbation of an 
existing extraordinary condition. In addition:
    (A) The proposed treatment must be cost effective and clinically 
appropriate as determined by the individual case manager. For example, 
the treatment would be determined to be cost effective by comparison to 
alternative care that would otherwise be required or when compared to 
existing reimbursement methodology.
    (B) For patients receiving care at home, there must be a primary 
caregiver or the patient is capable of self-support.
    (iii) Domiciliary care. The cost of services or supplies rendered to 
be a beneficiary what would otherwise be excluded as domiciliary care 
(as defined in Sec. 199.2) may be shared when determined by the 
Director, OCHAMPUS to be cost effective and clinically appropriate. 
Waivers for domiciliary care are subject to the same requirements as 
paragraphs (i)(5)(ii) of this section.
    (iv) In home services. The cost of the following in-home services 
may be shared when determined by the Director, OCHAMPUS to be cost 
effective and clinically appropriate: nursing care, physical, 
occupational, speech therapy, medical social services, intermittent or 
part-time services of a

[[Page 131]]

home health aide, beneficiary transportation required for treatment plan 
implementation, and training for the beneficiary and primary caregiver 
sufficient to allow them to assume all feasible responsibility for the 
care of the beneficiary that will facilitate movement of the beneficiary 
to the least resource-intensive, clinically appropriate setting. 
(Qualifications for home health aides shall be based on the standards at 
42 CFR 848.36.)
    (6) Case management acknowledgment. The beneficiary, or 
representative, and the primary caregiver shall sign a case management 
acknowledgment as a prerequisite to prior authorization of case 
management services. The acknowledgment shall include, in part, all of 
the following provisions:
    (i) The right to participate fully in the development and ongoing 
assessment of the treatment;
    (ii) That all health care services for which TRICARE/CHAMPUS cost 
sharing is sought shall be authorized by the case manager prior to their 
delivery;
    (iii) That there are limitations in scope and duration of the 
planned case management treatment, including provisions to transition to 
other arrangements; and
    (iv) The conditions under which case management services are 
provided, including the requirement that the services must be cost 
effective and clinically appropriate;
    (v) That a beneficiary's participation in the case management 
program shall be discontinued for any of the following reasons:
    (A) The loss of TRICARE/CHAMPUS eligibility;
    (B) A determination that the services or supplies provided are not 
cost effective or clinically appropriate;
    (C) The beneficiary, or representative, and/or primary caregiver, 
terminates participation in writing;
    (D) The beneficiary and/or primary caregiver's failure to comply 
with requirements in this paragraph (i); or
    (E) A determination that the beneficiary's condition no longer meets 
the requirements of participation as described in paragraph (i) of this 
section.
    (7) Other administrative requirements. (i) Qualified providers of 
services or items not covered under the basic program, or who are not 
otherwise eligible for TRICARE/CHAMPUS authorized status, may be 
authorized for a time-limited period when such authorization is 
essential to implement the planned treatment under case management. Such 
providers must not be excluded or suspended as a CHAMPUS provider, must 
hold Medicare or state certification or licensure appropriate to the 
service, and must agree to participate on all claims related to the case 
management treatment.
    (ii) Retrospective requests for authorization of waiver of benefit 
limits/exclusions will not be considered. Authorization of waiver of 
benefit limits/exclusions is allowed only after all other options for 
services or supplies have been considered and either appropriately 
utilized or determined to be clinically inappropriate and/or not cost-
effective.
    (iii) Experimental or investigational treatment or procedures shall 
not be cost-shared as an exception to standard benefits under this part.
    (iv) TRICARE/CHAMPUS case management services may be provided by 
contractors designated by the Director, OCHAMPUS.

[51 FR 24008, July 1, 1986]

    Editorial Notes: For Federal Register citations affecting 
Sec. 199.4, see the List of CFR Sections Affected in the Finding Aids 
section of this volume.



Sec. 199.5  Program for Persons with Disabilities (PFPWD).

    (a) General. This PFPWD provides financial assistance for certain 
CHAMPUS beneficiaries who are moderately or severely mentally retarded, 
or seriously physically disabled. The PFPWD is not intended to be a 
stand alone benefit.
    (1) Purpose. The primary purpose of the PFPWD is to assist in 
reducing the disabling effects of a PFPWD qualifying condition.
    (2) Benefit source election. A PFPWD beneficiary (or sponsor or 
guardian acting on behalf of the beneficiary) may elect to use the 
provisions of either this section, or the provisions of Sec. 199.4, for 
a specific service or item which is allowable by both sections.
    (i) Election limitation. No amount for authorized, or otherwise 
allowed,

[[Page 132]]

PFPWD services or items remaining after the maximum PFPWD benefit dollar 
amount has been reached in a given month may be cost-shared through the 
provisions of Sec. 199.4.
    (ii) Election change. A beneficiary (or sponsor or guardian acting 
on behalf of the beneficiary) shall have the right to request the 
Director, OCHAMPUS, or designee, to allow PFPWD cost-shared services or 
items otherwise allowable as a benefit of Sec. 199.4, and which were 
rendered after the catastrophic loss protection provision applicable to 
Sec. 199.4 was in effect for a given PFPWD beneficiary's sponsor, to be 
readjudicated according to the provisions of Sec. 199.4. The Director, 
OCHAMPUS, or designee, shall allow readjudication when the sponsor's 
family's CHAMPUS benefit year cost-share liability would be reduced by 
such readjudication. Such requests are subject to the claims filing 
deadline provisions of Sec. 199.7. The determination regarding 
readjudication is conclusive and may not be appealed.
    (3) Application required. A beneficiary shall establish PFPWD 
eligibility as a prerequisite to authorization or payment of any PFPWD 
benefits. Subsequent review of the PFPWD qualifying condition to confirm 
continued eligibility shall be made in accordance with the prognosis for 
a change in severity such that the condition would not likely continue 
to be a PFPWD qualifying condition.
    (4) Benefit authorization. To establish whether a requested service 
or item is a PFPWD benefit, the beneficiary (or sponsor or guardian 
acting on the behalf of the beneficiary) shall provide such information 
about how the requested benefit will contribute to confirming, 
arresting, or reducing the disabling effects of the qualifying condition 
as the Director, OCHAMPUS, or designee, determines necessary for benefit 
adjudication.
    (i) Written authorization. The Director, OCHAMPUS, or designee, may 
require written authorization for any PFPWD category or type of service 
or item as a prerequisite for adjudication of related claims.
    (ii) Format. An authorization issued by the Director, OCHAMPUS, or 
designee, shall specify, such description, dates, amounts, requirements, 
limitations or information as necessary for exact identification of 
approved benefits and efficient adjudication of resulting claims.
    (iii) Valid period. An authorization for a particular PFPWD service 
or item shall not exceed six consecutive months.
    (iv) Authorization waiver. The Director, OCHAMPUS, or designee, 
shall waive the requirement for a written CHAMPUS authorization for 
rendered PFPWD services or items that, except for the absence of the 
written CHAMPUS authorization, would be allowable as a PFPWD benefit.
    (v) Public facility use. A PFPWD beneficiary residing within a 
State, as defined in Sec. 199.2, must demonstrate that a public 
facility, as defined in Sec. 199.2, funds, except funds administered 
under a State plan for medical assistance under Title XIX of the Social 
Security Act (Medicaid) is not available or adequate, as defined in 
Sec. 199.2, to meet the qualifying condition related need.
    (A) Equipment repair or maintenance for beneficiary owned equipment 
shall be considered not available when the equipment is a type allowable 
as a benefit.
    (B) A beneficiary shall not be required to change the provider of 
public facility funded therapy when public facility funding is depleted 
during that beneficiary's course of therapy and when such a change is 
determined by the Director, OCHAMPUS, or designee, to be clinically 
contraindicated. When contraindicated, other public facilities for the 
therapy shall not be considered adequate for the beneficiary.
    (5) Public facility use certification. Written certification, in 
accord with information requirements, formats, and procedures 
established by the Director, OCHAMPUS, or designee that requested PFPWD 
services or items cannot be obtained from public facilities because the 
services or items are not available, or if available, are not adequate, 
is a prerequisite for PFPWD benefit payment.
    (i) A Military Treatment Facility (MTF) Commander, or designee, may 
make such certification for a beneficiary residing within a defined 
geographic area.

[[Page 133]]

    (ii) An administrator of a public facility, or designee, may make 
such certification for a beneficiary residing within the service area of 
that public facility.
    (iii) The domicile of the beneficiary shall be the basis for the 
determination of public facility availability when the sponsor and 
beneficiary are separately domiciled due to the sponsor's move to a new 
permanent duty station or due to legal custody requirements.
    (iv) The Director, OCHAMPUS, or designee, may determine, on a case-
by-case basis, that apparent public facility availability for a 
requested type of service or item can not be substantiated for a 
specific beneficiary's request for PFPWD benefits and is not available.
    (A) A case-specific determination shall be shall be based upon a 
written statement by the beneficiary (or sponsor or guardian acting on 
behalf of the beneficiary) which details the circumstances wherein a 
specific individual representing a specific public facility refused to 
provide a public facility use certification, and such other information 
as the Director, OCHAMPUS, or designee determines to be material to the 
determination.
    (B) A case-specific determination of public facility availability by 
the Director, OCHAMPUS, or designee, is conclusive, and is not 
appealable.
    (6) Equipment. (i) An item of equipment shall not be authorized when 
such authorization would allow concurrent PFPWD cost-sharing of more 
than one item of the same type of equipment for the same beneficiary.
    (ii) Reasonable repairs and maintenance shall be allowable for any 
beneficiary owned equipment otherwise allowable by this section.
    (7) Implementing instructions. The Director, OCHAMPUS, or designee 
shall issue policies, instructions, procedures, guidelines, standards, 
and criteria necessary to assure the quality and efficiency of services 
and items furnished as a PFPWD benefit and to otherwise accomplish the 
purpose of the PFPWD.
    (i) Other requirements. All provisions of this part, except the 
provisions of Sec. 199.4, apply to the PFPWD unless otherwise provided 
by this section.
    (ii) Continuity of eligibility. A CHAMPUS beneficiary who has an 
outstanding Program for the Handicapped (PFTH) benefit authorization 
during the 30 calendar day period immediately prior to the effective 
date of the Program for Persons with Disabilities (PFPWD) shall be 
deemed to have a PFPWD qualifying condition for the duration of the 
period during which the beneficiary is otherwise eligible for PFPWD and 
the beneficiary continues to meet the applicable PFTH qualifying 
condition criteria.
    (b) Eligibility--(1) Spouse or child. PFPWD benefits are limited to 
a CHAMPUS eligible child or spouse, but not a former spouse, except as 
provided in paragraph (b)(1)(ii) of this section, of:
    (i) Active duty sponsor. An active duty member of one of the 
Uniformed Services as determined in accordance with the provisions of 
Sec. 199.3; or
    (ii) Former member sponsor. After November 13, 1986, a former member 
of a Uniformed Service, when the qualifying condition is the result of, 
or has been exacerbated by, an injury or illness resulting from physical 
or emotional abuse; or
    (iii) Deceased sponsor. A CHAMPUS beneficiary remains eligible for 
benefits under the PFPWD:
    (A) For a period of one calendar year from the date an active duty 
sponsor dies; or
    (B) Through midnight of the beneficiary's twenty-first birthday when 
the beneficiary is receiving PFPWD benefits at the time the active duty 
sponsor dies and the sponsor was eligible, at the time of death, for 
receipt of hostile-fire pay or died as a result of a disease or injury 
incurred while eligible for such pay.
    (2) Loss of PFPWD eligibility. Eligibility for PFPWD benefits ceases 
as of 12.:01 a.m. of the day following the day that:
    (i) The sponsor ceases to be an active duty member for any reason 
other than death; or
    (ii) Eligibility based upon the abused dependent provisions of 
paragraph (b)(1) of this section expires; or
    (iii) Eligibility based upon the deceased sponsor provisions of 
paragraph (b)(1) of this section expires; or

[[Page 134]]

    (iv) The Director, OCHAMPUS, or designee, determines that the 
beneficiary no longer has a qualifying condition.
    (3) Qualifying condition--(i) Mental retardation. A diagnosis of 
moderate or severe mental retardation made in accordance with the 
criteria of the current edition of the ``Diagnostic and Statistical 
Manual of Mental Disorders'' published by the American Psychiatric 
Association is a PFPWD qualifying condition.
    (ii)Serious physical disability. A serious physical disability as 
defined in Sec. 199.2, is a PFPWD qualifying condition.
    (iii) Infant/toddler. For CHAMPUS beneficiaries under the age of 
three years with a diagnosed neuromuscular developmental condition or 
Down syndrome, or other condition that can to a reasonable medical 
probability be expected to precede a diagnosis of moderate or severe 
mental retardation or be characterized as a serious physical disability 
before the age of seven, the Director, OCHAMPUS, or designee, shall 
establish criteria for PFPWD eligibility in lieu of the requirements of 
paragraph (b)(3)(i) or paragraph (b)(3)(ii) of this section.
    (iv) Multiple disabilities. The cumulative disabling effect shall be 
used in the adjudication of a qualifying condition determination when an 
applicant has two or more disabilities involving separate body systems.
    (c) Benefit. Items or services which the Director, OCHAMPUS, or 
designee, has determined to be intrinsic to the following benefit 
categories and has determined to be capable of confirming, arresting, or 
reducing the severity of the disabling effects of a qualifying 
condition, generally or in a specific case, and which are not otherwise 
excluded by this PFPWD, may be allowed.
    (1) Diagnostic procedures to establish a qualifying condition 
diagnosis or to measure the extent of functional loss.
    (2) Treatment through the use of such medical, habilitative, or 
rehabilitative methods, techniques, therapies and equipment which 
otherwise meet the requirements of this PFPWD. Treatment includes, but 
is not limited to, prosthetic devices, orthopedic braces, and orthopedic 
appliances. Otherwise allowable treatment may be rendered in-home, or as 
inpatient or outpatient care as appropriate.
    (3) Training when required to allow the use of an assistive 
technology device or to acquire skills which are expected to assist the 
beneficiary to reduce the disabling effects of a qualifying condition 
and for parents (or guardian) and siblings of a PFPWD beneficiary when 
required as an integral part of the management of the qualifying 
condition.
    (4) Special education instruction, other than training specifically 
designed to accommodate the disabling effects of a qualifying condition.
    (5) Institutional care within a State, as defined in Sec. 199.2, 
when the severity of the qualifying condition requires protective 
custody or training in a residential environment.
    (6) Transportation when required to convey the PFPWD beneficiary to 
or from a facility or institution to receive otherwise allowable 
services or items. Transportation for a medical attendant may be 
approved when medically necessary for the safe transport of the PFPWD 
eligible beneficiary.
    (7) Adjunct services--(i) Assistive services. Services of a 
qualified interpreter or translator for PFPWD beneficiaries who are 
deaf, readers for PFPWD beneficiaries who are blind, and personal 
assistants for PFPWD beneficiaries with other types of qualifying 
conditions, when such services are not directly related to the rendering 
or delivery of service or item otherwise an allowable PFPWD benefit.
    (ii) Equipment adaptation. The allowable equipment purchase shall 
encompass such services and structural modification to the equipment as 
necessary to make the equipment serviceable for a particular disability.
    (iii) Equipment maintenance. Reasonable repairs and maintenance for 
that portion of the useful life of beneficiary owned equipment that is 
concurrent with the beneficiary's PFPWD eligibility.
    (d) Exclusions--(1) Inpatient acute care for medical or surgical 
treatment of an acute illness, or of an acute exacerbation of the 
qualifying condition, is excluded.

[[Page 135]]

    (2) Structural alterations to living space and permanent fixtures 
attached thereto, including alterations necessary to accommodate 
installation of equipment, or to facilitate entrance or exit, are 
excluded.
    (3) Homemaker, sitter, or companion services, except as 
institutional care of adjunct services, which predominantly provide 
assistance with daily living activities or accomplish household chores 
or provide companionship or provide supervision or observation, or any 
combination of these functions, are excluded.
    (4) Dental care or orthodontic treatment is excluded.
    (5) Nondomestic travel which originates or terminates outside of a 
State, as defined in Sec. 199.2, is excluded.
    (6) Deluxe travel accommodation price differential between the price 
for a type of accommodation which provides services or features which 
exceed the requirements of the beneficiary's condition for safe 
transport and the price for a type of accommodation without those deluxe 
features, is excluded.
    (7) Equipment. Exclusions for durable medical equipment at 
Sec. 199.4(d)(3)(ii)(D) apply to all PFPWD allowable equipment.
    (8) Medical devices. Prosthetic devices and medical equipment which 
do not meet the benefit requirements of Sec. 199.4 are excluded.
    (9) No obligation to pay. Services or items for which the 
beneficiary or sponsor has no legal obligation to pay, or for which no 
charge would be made if the beneficiary was not eligible for the 
CHAMPUS, are excluded.
    (10) Public facility or Federal government. Services or items paid 
for, or eligible for payment, directly or indirectly by a Public 
Facility, as defined in Sec. 199.2, or by the Federal government, other 
than the Department of Defense, are excluded, except when such services 
or items are eligible for payment under a State plan for medical 
assistance under Title XIX of the Social Security Act (Medicaid).
    (11) Study, grant, or research programs. Services and items provided 
as a part of a scientific clinical study, grant, or research program are 
excluded.
    (12) Unproven drugs, devices, and medical treatments or procedures. 
Services and items whose safety and efficacy have not been established 
as described in Sec. 199.4 are unproven and cannot be cost-shared by 
CHAMPUS.
    (13) Immediate family or household. Services or items provided or 
prescribed by a member of the beneficiary's immediate family, or a 
person living in the beneficiary's or sponsor's household, are excluded.
    (14) Court or agency ordered care. Services or items ordered by a 
court or other government agency that are not otherwise a legitimate 
PFPWD benefit are excluded.
    (15) Excursions. Additional or special charges for excursions, other 
than otherwise allowable transportation, are excluded even though part 
of a program offered by an approved provider.
    (16) Drugs and medicines. Drugs and medicines which do not meet the 
benefit requirements of Sec. 199.4 are excluded.
    (17) Therapeutic absences. Therapeutic absences from an inpatient 
facility are excluded.
    (e) Cost-share liability--(1) No deductible. PFPWD benefits are not 
subject to a deductible amount.
    (2)(i) Sponsor cost-share liability. Regardless of the number of 
PFPWD eligible family members, the sponsor's cost share for allowed 
PFPWD benefits in a given month is according to the following table:

------------------------------------------------------------------------
                                                                 Monthly
                      Member's pay grade                          share
------------------------------------------------------------------------
E-1 through E-5...............................................       $25
E-6...........................................................        30
E-7 and O-1...................................................        35
E-8 and O-2...................................................        40
E-9, W-1, W-2, and O-3........................................        45
W-3, W-4, and O-4.............................................        50
W-5 and O-5...................................................        65
O-6...........................................................        75
O-7...........................................................       100
O-8...........................................................       150
O-9...........................................................       200
O-10..........................................................       250
------------------------------------------------------------------------

    (ii) The sponsor's cost-share will be applied, up to the amount 
given in the table in paragraph (e)(2)(i), to the first allowed charges 
in any given month. The government's share will be paid, up to the 
maximum amount(s) specified in paragraphs (e)(3) and (e)(4) of this 
section for allowed charges after the sponsor's cost-share has been 
applied.

[[Page 136]]

    (3) Government cost-share liability: member who sponsors one PFPWD 
beneficiary. The total government share of the cost of all PFPWD 
benefits provided in a given month to a beneficiary who is the sponsor's 
only PFPWD eligible family member may not exceed $1,000 after 
application of the allowable payment methodology. Any amount remaining 
after the Government's maximum share has been reached is the 
responsibility of the active duty sponsor.
    (4) Government cost-share liability: member who sponsors more than 
one PFPWD beneficiary. The total government share of the cost of all 
PFPWD allowable benefits provided in a given month to a beneficiary who 
is one of two or more PFPWD eligible family members of the same sponsor 
shall be determined as follows:
    (i) Maximum benefit limit determination for the first PFPWD eligible 
beneficiary. The $1,000 maximum monthly government PFPWD benefit amount 
shall apply only to the beneficiary incurring the least amount of 
allowable PFPWD expense in a given month, after application of the 
allowable payment methodology. If two or more PFPWD eligible 
beneficiaries have the same amount of allowable PFPWD expenses in a 
given month, the $1,000 maximum benefit in that month shall apply to 
only one PFPWD eligible beneficiary.
    (ii) Maximum benefit limit determination for the remaining PFPWD 
eligible beneficiaries. After application of the Government's cost-share 
specified in paragraph (e)(4)(i) of this section, the government shall 
cost-share the entire remaining amount for all allowable services and 
items received in that month by the remaining PFPWD eligible 
beneficiaries.
    (f) Benefit payment--(1) Equipment. The allowable amount for 
equipment shall be calculated in the same manner as durable medical 
equipment allowable through Sec. 199.4.
    (2) Transportation. The allowable amount for transportation is 
limited to the actual cost of the standard published fare plus any 
standard surcharge made to accommodate any person with a similar 
disability or to the actual cost of specialized medical transportation 
when nonspecialized transport cannot accommodate the beneficiary's 
disability related needs, or when specialized transport is more 
economical than nonspecialized transport. When transport is by private 
vehicle, the allowable amount is limited to the Federal government 
employee mileage reimbursement rate in effect on the trip date.
    (3) Proration of equipment expense. The PFPWD beneficiary (or 
sponsor or guardian acting on the beneficiary's behalf) may, only at the 
time of the request for authorization of equipment, specify that the 
allowable cost of the equipment be prorated. Equipment expense proration 
permits the allowable cost of an item of PFPWD authorized equipment to 
be apportioned so that no portion of the allowable cost exceeds the 
monthly benefit limit and allows each apportioned amount to be 
separately authorized as a benefit during subsequent contiguous months.
    (i) Maximum period. The maximum number of contiguous months during 
which a prorated amount may be authorized for cost-share shall be the 
lesser of:
    (A) The number of months calculated by dividing the initial 
allowable cost for the item of equipment by $1,000 and doubling the 
resulting quotient; or
    (B) The number of months of useful equipment life for the requesting 
beneficiary, as determined by the Director, OCHAMPUS, or designee.
    (ii) Cost-share. A cost-share is applicable in any month in which a 
prorated amount is authorized, subject to the cost-share provisions for 
a sponsor with two or more PFPWD eligible beneficiaries.
    (iii) Termination. Prorated payments shall be terminated as of the 
first day of the month following the death of a beneficiary or as of the 
effective date of a beneficiary's loss of PFPWD eligibility for any 
other reason.
    (4) For-profit institutional care provider. Institutional care 
provided by a for-profit entity may be allowed only when the care for a 
specific PFPWD beneficiary:
    (i) Is contracted for by a public facility, as defined in 
Sec. 199.2, as a part of a publicly funded long-term inpatient care 
program; and
    (ii) Is provided based upon the PFPWD beneficiary's being eligible 
for

[[Page 137]]

the publicly funded program which has contracted for the care; and
    (iii) Is authorized by the public facility as a part of a publicly 
funded program; and
    (iv) Would cause a cost-share liability in the absence of CHAMPUS 
eligibility; and
    (v) Produces a PFPWD beneficiary cost-share liability that does not 
exceed the maximum charge by the provider to the public facility for the 
contracted level of care.
    (g) Implementing instructions. The Director, OCHAMPUS, or a 
designee, shall issue CHAMPUS policies, instructions, procedures, 
guidelines, standards, and criteria as may be necessary to implement the 
intent of this section.

[62 FR 35093, June 30, 1997, as amended at 62 FR 42904, Aug. 11, 1997]



Sec. 199.6  Authorized providers.

    (a) General. This section sets forth general policies and procedures 
that are the basis for the CHAMPUS cost-sharing of medical services and 
supplies provided by institutions, individuals, or other types of 
providers. Providers seeking payment from the Federal Government through 
programs such as CHAMPUS have a duty to familiarize themselves with, and 
comply with, the program requirements.
    (1) Listing of provider does not guarantee payment of benefits. The 
fact that a type of provider is listed in this section is not to be 
construed to mean that CHAMPUS will automatically pay a claim for 
services or supplies provided by such a provider. The provider who 
actually furnishes the service(s) must, in fact, meet all licensing and 
other requirements established by this part to be an authorized 
provider; the provider must not be the subject of sanction under 
Sec. 199.9; and, cost-sharing of the services must not otherwise be 
prohibited by this part. In addition, the patient must in fact be an 
eligible beneficiary and the services or supplies billed must be 
authorized and medically necessary, regardless of the standing of the 
provider.
    (2) Outside the United States or emergency situations within the 
United States. Outside the United States or within the United States and 
Puerto Rico in emergency situations, the Director, OCHAMPUS, or a 
designee, after review of the facts, may provide payment to or on behalf 
of a beneficiary who receives otherwise covered services or supplies 
from a provider of service that does not meet the standards described in 
this part.
    Note: Only the Secretary of Defense, the Secretary of Health and 
Human Services, or the Secretary of Transportation, or their designees, 
may authorize (in emergency situations) payment to civilian facilities 
in the United States that are not in compliance with title VI of the 
Civil Rights Act of 1964. For the purpose of the Civil Rights Act only, 
the United States includes the 50 states, the District of Columbia, 
Puerto Rico, Virgin Islands, American Samoa, Guam, Wake Island, Canal 
Zone, and the territories and possessions of the United States.
    (3) Dual Compensation/Conflict of Interest. Title 5, United States 
Code, section 5536 prohibits medical personnel who are active duty 
Uniformed Service members or civilian employees of the Government from 
receiving additional Government compensation above their normal pay and 
allowances for medical care furnished. In addition, Uniformed Service 
members and civilian employees of the Government are generally 
prohibited by law and agency regulations and policies from participating 
in apparent or actual conflict of interest situations in which a 
potential for personal gain exists or in which there is an appearance of 
impropriety or incompatibility with the performance of their official 
duties or responsibilities. The Departments of Defense, Health and Human 
Services, and Transportation have a responsibility, when disbursing 
appropriated funds in the payment of CHAMPUS benefits, to ensure that 
the laws and regulations are not violated. Therefore, active duty 
Uniformed Service members (including a reserve member while on active 
duty and civilian employees of the United States Government shall not be 
authorized to be CHAMPUS providers. While individual employees of the 
Government may be able to demonstrate that the furnishing of care to 
CHAMPUS beneficiaries may not be incompatible with their official duties 
and responsibilities, the processing of millions of CHAMPUS claims each 
year does not enable Program administrators to efficiently review the 
status

[[Page 138]]

of the provider on each claim to ensure that no conflict of interest or 
dual compensation situation exists. The problem is further complicated 
given the numerous interagency agreements (for example, resource sharing 
arrangements between the Department of Defense and the Veterans 
Administration in the provision of health care) and other unique 
arrangements which exist at individual treatment facilities around the 
country. While an individual provider may be prevented from being an 
authorized CHAMPUS provider even though no conflict of interest or dual 
compensation situation exists, it is essential for CHAMPUS to have an 
easily administered, uniform rule which will ensure compliance with the 
existing laws and regulations. Therefore, a provider who is an active 
duty Uniformed Service member or civilian employee of the Government 
shall not be an authorized CHAMPUS provider. In addition, a provider 
shall certify on each CHAMPUS claim that he/she is not an active duty 
Uniformed Service member or civilian employee of the Government.
    (4) [Reserved]
    (5) Utilization review and quality assurance. Providers approved as 
authorized CHAMPUS providers have certain obligations to provide 
services and supplies under CHAMPUS which are (i) furnished at the 
appropriate level and only when and to the extent medically necessary 
under the criteria of this part; (ii) of a quality that meets 
professionally recognized standards of health care; and, (iii) supported 
by adequate medical documentation as may be reasonably required under 
this part by the Director, OCHAMPUS, or designee, to evidence the 
medical necessity and quality of services furnished, as well as the 
appropriateness of the level of care. Therefore, the authorization of 
CHAMPUS benefits is contingent upon the services and supplies furnished 
by any provider being subject to pre-payment or post-payment utilization 
and quality assurance review under professionally recognized standards, 
norms, and criteria, as well as any standards or criteria issued by the 
Director, OCHAMPUS, or a designee, pursuant to this part. (Refer to 
Secs. 199.4, 199.5, and 199.7 of this part.)
    (6) Exclusion of beneficiary liability. In connection with certain 
utilization review, quality assurance and preauthorization requirements 
of section 199.4 of this part, providers may not hold patients liable 
for payment for certain services for which CHAMPUS payment is 
disallowed. With respect to such services, providers may not seek 
payment from the patient or the patient's family. Any such effort to 
seek payment is a basis for termination of the provider's authorized 
status.
    (7) Provider required. In order to be considered for benefits, all 
services and supplies shall be rendered by, prescribed by, or furnished 
at the direction of, or on the order of a CHAMPUS-authorized provider 
practicing within the scope of his or her license.
    (8) Participating providers. A CHAMPUS-authorized provider is a 
participating provider, as defined in Sec. 199.2 under the following 
circumstances:
    (i) Mandatory participation. (A) All Medicare-participating 
hospitals must be CHAMPUS participating providers for all inpatient 
CHAMPUS claims.
    (B) Hospitals that are not Medicare-participating but are subject to 
the CHAMPUS-DRG-based payment methodology or the CHAMPUS mental health 
payment methodology as established by Sec. 199.14(a), must enter into a 
participation agreement with CHAMPUS for all inpatient claims in order 
to be a CHAMPUS-authorized provider.
    (C) Corporate services providers authorized as CHAMPUS providers 
under the provisions of paragraph (f) of this section must enter into a 
participation agreement as provided by the Director, OCHAMPUS, or 
designee.
    (ii) Voluntary participation--(A) Total claims participation: The 
participating provider program. A CHAMPUS-authorized provider that is 
not required to participate by this part may become a participating 
provider by entering into an agreement or memorandum of understanding 
(MOU) with the Director, OCHAMPUS, or designee, which includes, but is 
not limited to, the provisions of paragraph (a)(13) of this section. The 
Director, OCHAMPUS, or

[[Page 139]]

designee, may include in a participating provider agreement/MOU 
provisions that establish between CHAMPUS and a class, category, type, 
or specific provider, uniform procedures and conditions which encourage 
provider participation while improving beneficiary access to benefits 
and contributing to CHAMPUS efficiency. Such provisions shall be 
otherwise allowed by this part or by DoD Directive or DoD Instruction 
specifically pertaining to CHAMPUS claims participation. Participating 
provider program provisions may be incorporated into an agreement/MOU to 
establish a specific CHAMPUS-provider relationship, such as a preferred 
provider arrangement.
    (B) Claim-specific participation. A CHAMPUS-authorized provider that 
is not required to participate and that has not entered into a 
participation agreement pursuant to paragraph (a)(8)(ii)(A) of this 
section may elect to be a participating provider on a claim-by-claim 
basis by indicating ``accept assignment'' on each claim form for which 
participation is elected.
    (9) Limitation to authorized institutional provider designation. 
Authorized institutional provider status granted to a specific 
institutional provider applicant does not extend to any institution-
affiliated provider, as defined in Sec. 199.2, of that specific 
applicant.
    (10) Authorized provider. A hospital or institutional provider, 
physician, or other individual professional provider, or other provider 
of services or supplies specifically authorized in this chapter to 
provide benefits under CHAMPUS. In addition, to be an authorized CHAMPUS 
provider, any hospital which is a CHAMPUS participating provider under 
paragraph (a)(7) of this section, shall be a participating provider for 
all care, services, or supplies furnished to an active duty member of 
the uniformed services for which the active duty member is entitled 
under 10 U.S.C. 1074(c). As a participating provider for active duty 
members, the CHAMPUS authorized hospital shall provide such care, 
services, and supplies in accordance with the payment rules of 
Sec. 199.16 of this part. The failure of any CHAMPUS participating 
hospital to be a participating provider for any active duty member 
subjects the hospital to termination of the hospital's status as a 
CHAMPUS authorized provider for failure to meet the qualifications 
established by this part.
    (11) Balance billing limits.
    (i) In general. Individual providers who are not Participating 
Providers may not balance bill a beneficiary an amount which exceeds the 
applicable balance billing limit. The balance billing limit shall be the 
same percentage as the Medicare limiting charge percentage for 
nonparticipating physicians.
    (ii) Waiver. The balance billing limit may be waived by the 
Director, OCHAMPUS on a case-by-case basis if requested by a CHAMPUS 
beneficiary. A decision by the Director, OCHAMPUS to waive or not waive 
the limit in any particular case is not subject to the appeal and 
hearing procedures of Sec. 199.10.
    (iii) Compliance. Failure to comply with the balance billing limit 
shall be considered abuse and/or fraud and grounds of exclusion or 
suspension of the provider under Sec. 199.9.
    (12) Medical records. CHAMPUS-authorized provider organizations and 
individuals providing clinical services shall maintain adequate clinical 
records to substantiate that specific care was actually furnished, was 
medically necessary, and appropriate, and identify(ies) the 
individual(s) who provided the care. This applies whether the care is 
inpatient or outpatient. The minimum requirements for medical record 
documentation are set forth by all of the following:
    (i) The cognizant state licensing authority;
    (ii) The Joint Commission on Accreditation of Healthcare 
Organizations, or the appropriate Qualified Accreditation Organization 
as defined in Sec. 199.2;
    (iii) Standards of practice established by national medical 
organizations; and
    (iv) This part.
    (13) Participation agreements. A participation agreement otherwise 
required by this part shall include, in part, all of the following 
provisions requiring that the provider shall:
    (i) Not charge a beneficiary for the following:
    (A) Services for which the provider is entitled to payment from 
CHAMPUS;

[[Page 140]]

    (B) Services for which the beneficiary would be entitled to have 
CHAMPUS payment made had the provider complied with certain procedural 
requirements.
    (C) Services not medically necessary and appropriate for the 
clinical management of the presenting illness, injury, disorder or 
maternity;
    (D) Services for which a beneficiary would be entitled to payment 
but for a reduction or denial in payment as a result of quality review; 
and
    (E) Services rendered during a period in which the provider was not 
in compliance with one or more conditions of authorization;
    (ii) Comply with the applicable provisions of this part and related 
CHAMPUS administrative policy;
    (iii) Accept the CHAMPUS determined allowable payment combined with 
the cost-share, deductible, and other health insurance amounts payable 
by, or on behalf of, the beneficiary, as full payment for CHAMPUS 
allowed services;
    (iv) Collect from the CHAMPUS beneficiary those amounts that the 
beneficiary has a liability to pay for the CHAMPUS deductible and cost-
share;
    (v) Permit access by the Director, OCHAMPUS, or designee, to the 
clinical record of any CHAMPUS beneficiary, to the financial and 
organizational records of the provider, and to reports of evaluations 
and inspections conducted by state, private agencies or organizations;
    (vi) Provide the Director, OCHAMPUS, or designee, prompt written 
notification of the provider's employment of an individual who, at any 
time during the twelve months preceding such employment, was employed in 
a managerial, accounting, auditing, or similar capacity by an agency or 
organization which is responsible, directly or indirectly for decisions 
regarding Department of Defense payments to the provider;
    (vii) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the Department 
of Defense for the geographic area in which the provider renders 
services;
    (viii) Obtain written authorization before rendering designated 
services or items for which CHAMPUS cost-share may be expected;
    (ix) Maintain clinical and other records related to individuals for 
whom CHAMPUS payment was made for services rendered by the provider, or 
otherwise under arrangement, for a period of 60 months from the date of 
service;
    (x) Maintain contemporaneous clinical records that substantiate the 
clinical rationale for each course of treatment, periodic evaluation of 
the efficacy of treatment, and the outcome at completion or 
discontinuation of treatment;
    (xi) Refer CHAMPUS beneficiaries only to providers with which the 
referring provider does not have an economic interest, as defined in 
Sec. 199.2; and
    (xii) Limit services furnished under arrangement to those for which 
receipt of payment by the CHAMPUS authorized provider discharges the 
payment liability of the beneficiary.
    (14) Implementing instructions. The Director, OCHAMPUS, or a 
designee, shall issue CHAMPUS policies, instructions, procedures, and 
guidelines, as may be necesssary to implement the intent of this 
section.
    (15) Exclusion. Regardless of any provision in this section, a 
provider who is suspended, excluded, or terminated under Sec. 199.9 of 
this part is specifically excluded as an authorized CHAMPUS provider.
    (b) Institutional providers--(1) General. Institutional providers 
are those providers who bill for services in the name of an 
organizational entity (such as hospital and skilled nursing facility), 
rather than in the name of a person. The term ``institutional provider'' 
does not include professional corporations or associations qualifying as 
a domestic corporation under Sec. 301.7701-5 of the Internal Revenue 
Service Regulations nor does it include other corporations that provide 
principally professional services. Institutional providers may provide 
medical services and supplies on either an inpatient or outpatient 
basis.
    (i) Preauthorization. Preauthorization may be required by the 
Director, OCHAMPUS for any health care service for which payment is 
sought under CHAMPUS. (See Secs. 199.4 and 199.15 for

[[Page 141]]

further information on preauthorization requirements.)
    (ii) Billing practices.
    (A) Each institutional billing, including those institutions subject 
to the CHAMPUS DRG-based reimbursement method or a CHAMPUS-determined 
all-inclusive rate reimbursement method, must be itemized fully and 
sufficiently descriptive for the CHAMPUS to make a determination of 
benefits.
    (B) Institutional claims subject to the CHAMPUS DRG-based 
reimbursement method or a CHAMPUS-determined all-inclusive rate 
reimbursement method, may be submitted only after the beneficiary has 
been discharged or transferred from the institutional provider's 
facility or program.
    (C) Institutional claims for Residential Treatment Centers and all 
other institutional providers, except those listed in (B) above, should 
be submitted to the appropriate CHAMPUS fiscal intermediary at least 
every 30 days.
    (2) Nondiscrimination policy. Except as provided below, payment may 
not be made for inpatient or outpatient care provided and billed by an 
institutional provider found by the Federal Government to practice 
discrimination in the admission of patients to its services on the basis 
of race, color, or national origin. Reimbursement may not be made to a 
beneficiary who pays for care provided by such a facility and submits a 
claim for reimbursement. In the following circumstances, the Secretary 
of Defense, or a designee, may authorize payment for care obtained in an 
ineligible facility:
    (i) Emergency care. Emergency inpatient or outpatient care.
    (ii) Care rendered before finding of a violation. Care initiated 
before a finding of a violation and which continues after such violation 
when it is determined that a change in the treatment facility would be 
detrimental to the health of the patient, and the attending physician so 
certifies.
    (iii) Other facility not available. Care provided in an ineligible 
facility because an eligible facility is not available within a 
reasonable distance.
    (3) Procedures for qualifying as a CHAMPUS-approved institutional 
provider. General and special hospitals otherwise meeting the 
qualifications outlined in paragraphs (b)(4) (i), (ii), and (iii), of 
this section are not required to request CHAMPUS approval formally.
    (i) JCAH accreditation status. Each CHAMPUS fiscal intermediary 
shall keep informed as to the current JCAH accreditation status of all 
hospitals and skilled nursing facilities in its area; and the provider's 
status under Medicare, particularly with regard to compliance with title 
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d(1)). The Director, 
OCHAMPUS, or a designee, shall specifically approve all other authorized 
institutional providers providing services to CHAMPUS beneficiaries. At 
the discretion of the Director, OCHAMPUS, any facility that is certified 
and participating as a provider of services under title XVIII of the 
Social Security Act (Medicare), may be deemed to meet CHAMPUS 
requirements. The facility must be providing a type and level of service 
that is authorized by this part.
    (ii) Required to comply with criteria. Facilities seeking CHAMPUS 
approval will be expected to comply with appropriate criteria set forth 
in paragraph (b)(4) of this section. They also are required to complete 
and submit CHAMPUS Form 200, ``Required Information, Facility 
Determination Instructions,'' and provide such additional information as 
may be requested by OCHAMPUS. An onsite evaluation, either scheduled or 
unscheduled, may be conducted at the discretion of the Director, 
OCHAMPUS, or a designee. The final determination regarding approval, 
reapproval, or disapproval of a facility will be provided in writing to 
the facility and the appropriate CHAMPUS fiscal intermediary.
    (iii) Notice of peer review rights. All health care facilities 
subject to the DRG-based payment system shall provide CHAMPUS 
beneficiaries, upon admission, with information about peer review 
including their appeal rights. The notices shall be in a form specified 
by the Director, OCHAMPUS.
    (iv) Surveying of facilities. The surveying of newly established 
institutional providers and the periodic resurveying of all authorized 
institutional providers is a continuing process conducted by OCHAMPUS.

[[Page 142]]

    (v) Institutions not in compliance with CHAMPUS standards. If a 
determination is made that an institution is not in compliance with one 
or more of the standards applicable to its specific category of 
institution, CHAMPUS shall take immediate steps to bring about 
compliance or terminate the approval as an authorized institution in 
accordance with Sec. 199.9(f)(2).
    (vi) Participation agreements required for some hospitals which are 
not Medicare-participating. Notwithstanding the provisions of this 
paragraph (B)(3), a hospital which is subject to the CHAMPUS DRG-based 
payment system but which is not a Medicare-particpating hospital must 
request and sign an agreement with OCHAMPUS. By signing the agreement, 
the hospital agrees to participate on all CHAMPUS inpatient claims and 
accept the requirements for a participating provider as contained in 
paragraph (a)(8) of Sec. 199.6. Failure to sign such an agreement shall 
disqualify such hospital as a CHAMPUS-approved institutional provider.
    (4) Categories of institutional providers. The following categories 
of institutional providers may be reimbursed by CHAMPUS for services 
provided CHAMPUS beneficiaries subject to any and all definitions, 
conditions, limitation, and exclusions specified or enumerated in this 
part.
    (i) Hospitals, acute care, general and special. An institution that 
provides inpatient services, that also may provide outpatient services 
(including clinical and ambulatory surgical services), and that:
    (A) Is engaged primarily in providing to inpatients, by or under the 
supervision of physicians, diagnostic and therapeutic services for the 
medical or surgical diagnosis and treatment of illness, injury, or 
bodily malfunction (including maternity).
    (B) Maintains clinical records on all inpatients (and outpatients if 
the facility operates an outpatient department or emergency room).
    (C) Has bylaws in effect with respect to its operations and medical 
staff.
    (D) Has a requirement that every patient be under the care of a 
physician.
    (E) Provides 24-hour nursing service rendered or supervised by a 
registered professional nurse, and has a licensed practical nurse or 
registered professional nurse on duty at all times.
    (F) Has in effect a hospital utilization review plan that is 
operational and functioning.
    (G) In the case of an institution in a state in which state or 
applicable local law provides for the licensing of hospitals, the 
hospital:
    (1) Is licensed pursuant to such law, or
    (2) Is approved by the agency of such state or locality responsible 
for licensing hospitals as meeting the standards established for such 
licensing.
    (H) Has in effect an operating plan and budget.
    (I) Is accredited by the JCAH or meets such other requirements as 
the Secretary of Health and Human Services, the Secretary of 
Transportation, or the Secretary of Defense finds necessary in the 
interest of the health and safety of patients who are admitted to and 
furnished services in the institution.
    (ii) Liver transplantation centers. (A) CHAMPUS shall provide 
coverage for liver transplantation procedures performed only by 
experienced transplant surgeons at centers complying with the provisions 
outlined in paragraph (b)(4)(i) of this section and meeting the 
following criteria:
    (1) The center is a tertiary care facility affiliated with an 
academic health center. The center must have accredited programs in 
graduate medical education related to the function of liver 
transplantation such as internal medicine, pediatrics, surgery, and 
anesthesiology;
    (2) The center has an active solid organ transplantation program 
(involving liver transplants as well as other organs);
    (3) The transplantation center must have at least a 50 percent one-
year survival rate for ten cases. At the time CHAMPUS approval is 
requested, the transplant center must provide evidence that at least ten 
liver transplants have been performed at the center and that at least 50 
percent of those transplanted patients have survived one year following 
surgery. A 50 percent one-year survival rate for all subsequent liver 
transplantations must be

[[Page 143]]

maintained for continued CHAMPUS approval;
    (4) The center has allocated sufficient operating room, recovery 
room, laboratory, and blood bank support and a sufficient number of 
intensive care and general surgical beds and specialized staff for these 
areas;
    (5) The center participates in a donor procurement program and 
network;
    (6) The center systematically collects and shares data on its 
transplant program;
    (7) The center has an interdisciplinary body to determine the 
suitability of candidates for transplantation on an equitable basis;
    (8) The transplantation surgeon is specifically trained for liver 
grafting and must assemble and train a team to function whenever a donor 
liver is available;
    (9) The transplantation center must have on staff board eligible or 
board certified physicians and other experts in the field of hepatology, 
pediatrics, infectious disease, nephrology with dialysis capability, 
pulmonary medicine with respiratory therapy support, pathology, 
immunology, and anesthesiology to complement a qualified transplantation 
team;
    (10) The transplantation center has the assistance of appropriate 
microbiology, clinical chemistry, and radiology support;
    (11) The transplantation center has blood bank support to 
accommodate normal demands and the transplant procedure; and
    (12) The transplantation center includes the availability of 
psychiatric and social services support for patients and family.
    (B) In order to receive approval as a CHAMPUS authorized liver 
transplant center, a center must submit a request to the Director, 
CHAMPUS, or a designee. The CHAMPUS authorized liver transplant center 
shall agree to the following:
    (1) Bill for all services and supplies related to the liver 
transplantation performed by its staff and bill also for services 
rendered by the donor hospital following declaration of brain death and 
after all existing legal requirements for excision of the donor organ 
have been met; and
    (2) The center shall agree to submit all charges on the basis of 
fully itemized bills. This means that each service and supply and the 
charge for each is individually identified.
    (iii) Heart transplantation centers. (A) CHAMPUS shall provide 
coverage for heart transplantation procedures performed only by 
experienced transplant surgeons at centers complying with provisions 
outlined in paragraph (b)(4)(i) of this section and meeting the 
following criteria:
    (1) The center has experts in the fields of cardiology, 
cardiovascular surgery, anesthesiology, immunology, infectious disease, 
nursing, social services and organ procurement to complement the 
transplant team;
    (2) The center has an active cardiovascular medical and surgical 
program as evidenced by a minimum of 500 cardiac catheterizations and 
coronary arteriograms and 250 open heart procedures per year;
    (3) The center has an anesthesia team that is available at all 
times;
    (4) The center has infectious disease services with both the 
professional skills and the laboratory resources that are needed to 
discover, identify, and manage a whole range of organisms;
    (5) The center has a nursing service team trained in the hemodynamic 
support of the patient and in managing immunosuppressed patients;
    (6) The center has pathology resources that are available for 
studying and reporting the pathological responses of transplantation;
    (7) The center has legal counsel familiar with transplantation laws 
and regulations;
    (8) The commitment of the transplant center must be at all levels 
and broadly evident throughout the facility;
    (9) Responsible team members must be board certified or board 
eligible in their respective disciplines;
    (10) Component teams must be integrated into a comprehensive 
transplant team with clearly defined leadership and responsibility;
    (11) The center has adequate social service resources;

[[Page 144]]

    (12) The transplant center must comply with applicable State 
transplant laws and regulations;
    (13) The transplant center must safeguard the rights and privacy of 
patients;
    (14) The transplant center must have adequate patient management 
plans and protocols;
    (15) The center participates in a donor procurement program and 
network;
    (16) The center systematically collects and shares data on its 
transplant program;
    (17) The center has an interdisciplinary body to determine the 
suitability of candidates for transplantation on an equitable basis;
    (18) The center has extensive blood bank support;
    (19) The center must have an established heart transplantation 
program with documented evidence of 12 or more heart transplants in each 
of the two consecutive preceding 12-month periods prior to application 
and 12 heart transplants prior to that; and
    (20) The center must demonstrate actuarial survival rates of 73 
percent for one year and 65 percent for two years for patients who have 
had heart transplants since January 1, 1982, at that facility.
    (B) CHAMPUS approval will lapse if either the number of heart 
transplants falls below 8 in 12 months or if the one-year survival rate 
falls below 60 percent for a consecutive 24-month period.
    (C) CHAMPUS-approval may also be extended for a heart transplant 
center that meets other certification or accreditation standards 
provided the standards are equivalent to or exceed the criteria listed 
above and have been approved by the Director, OCHAMPUS.
    (D) In order to receive approval as a CHAMPUS heart transplant 
center, a facility must submit a request to the Director, OCHAMPUS, or a 
designee. The CHAMPUS-authorized heart transplant center shall agree to 
the following:
    (1) Bill for all services and supplies related to the heart 
transplantation performed by its staff and bill also for services 
rendered by the donor hospital following declaration of brain death;
    (2) Submit all charges on the basis of fully itemized bills. Each 
service and supply must be individually identified and the first claim 
submitted for the heart transplantation must include a copy of the 
admission history and physical examination; and
    (3) Report any significant decrease in the experience level or 
survival rates and loss of key members of the transplant team to the 
Director, OCHAMPUS.
    (iv) Hospitals, psychiatric. A psychiatric hospital is an 
institution   which is engaged primarily in providing services to 
inpatients for the diagnosis and treatment of mental disorders.
    (A) There are two major categories of psychiatric hospitals:
    (1) The private psychiatric hospital category includes both 
proprietary and the not-for-profit nongovernmental institutions.
    (2) The second category is those psychiatric hospitals that are 
controlled, financed, and operated by departments or agencies of the 
local, state, or Federal Government and always are operated on a not-
for-profit basis.
    (B) In order for the services of a psychiatric hospital to be 
covered, the hospital shall comply with the provisions outlined in 
paragraph (b)(4)(i) of this section. All psychiatric hospitals shall be 
accredited under the JCAHO Accreditation Manual for Hospitals (AMH) 
standards in order for their services to be cost-shared under CHAMPUS. 
In the case of those psychiatric hospitals that are not JCAHO-accredited 
because they have not been in operation a sufficient period of time to 
be eligible to request an accreditation survey by the JCAHO, the 
Director, OCHAMPUS, or a designee, may grant temporary approval if the 
hospital is certified and participating under Title XVIII of the Social 
Security Act (Medicare, Part A). This temporary approval expires 12 
months from the date on which the psychiatric hospital first becomes 
eligible to request an accreditation survey by the JCAHO.
    (C) Factors to be considered in determining whether CHAMPUS will 
cost-share care provided in a psychiatric hospital include, but are not 
limited to, the following considerations:

[[Page 145]]

    (1) Is the prognosis of the patient such that care provided will 
lead to resolution or remission of the mental illness to the degree that 
the patient is of no danger to others, can perform routine daily 
activities, and can be expected to function reasonably outside the 
inpatient setting?
    (2) Can the services being provided be provided more economically in 
another facility or on an outpatient basis?
    (3) Are the charges reasonable?
    (4) Is the care primarily custodial or domiciliary? (Custodial or 
domiciliary care of the permanently mentally ill or retarded is not a 
benefit under the Basic Program.)
    (D) Although psychiatric hospitals are accredited under the JCAHO 
AMH standards, their medical records must be maintained in accordance 
with the JCAHO Consolidated Standard Manual for Child, Adolescent, and 
Adult Psychiatric, Alcoholism, and Drug Abuse Facilities and Facilities 
Serving the Mentally Retarded, along with the requirements set forth in 
Sec. 199.7(b)(3). The hospital is responsible for assuring that patient 
services and all treatment are accurately documented and completed in a 
timely manner.
    (v) Hospitals, long-term (tuberculosis, chronic care, or 
rehabilitation). To be considered a long-term hospital, an institution 
for patients that have tuberculosis or chronic diseases must be an 
institution (or distinct part of an institution) primarily engaged in 
providing by or under the supervision of a physician appropriate medical 
or surgical services for the diagnosis and active treatment of the 
illness or condition in which the institution specializes.
    (A) In order for the service of long-term hospitals to be covered, 
the hospital must comply with the provisions outlined in paragraph 
(b)(4)(i) of this section. In addition, in order for services provided 
by such hospitals to be covered by CHAMPUS, they must be primarily for 
the treatment of the presenting illness.
    (B) Custodial or domiciliary care is not coverable under CHAMPUS, 
even if rendered in an otherwise authorized long-term hospital.
    (C) The controlling factor in determining whether a beneficiary's 
stay in a long-term hospital is coverable by CHAMPUS is the level of 
professional care, supervision, and skilled nursing care that the 
beneficiary requires, in addition to the diagnosis, type of condition, 
or degree of functional limitations. The type and level of medical 
services required or rendered is controlling for purposes of extending 
CHAMPUS benefits; not the type of provider or condition of the 
beneficiary.
    (vi) Skilled nursing facility. A skilled nursing facility is an 
institution (or a distinct part of an institution) that is engaged 
primarily in providing to inpatients medically necessary skilled nursing 
care, which is other than a nursing home or intermediate facility, and 
which:
    (A) Has policies that are developed with the advice of (and with 
provisions for review on a periodic basis by) a group of professionals, 
including one or more physicians and one or more registered nurses, to 
govern the skilled nursing care and related medical services it 
provides.
    (B) Has a physician, a registered nurse, or a medical staff 
responsible for the execution of such policies.
    (C) Has a requirement that the medical care of each patient must be 
under the supervision of a physician, and provides for having a 
physician available to furnish necessary medical care in case of an 
emergency.
    (D) Maintains clinical records on all patients.
    (E) Provides 24-hour skilled nursing service that is sufficient to 
meet nursing needs in accordance with the policies developed as provided 
in paragraph (b)(4)(iv)(A) of this section, and has at least one 
registered professional nurse employed full-time.
    (F) Provides appropriate methods and procedures for the dispensing 
and administering of drugs and biologicals.
    (G) Has in effect a utilization review plan that is operational and 
functioning.
    (H) In the case of an institution in a state in which state or 
applicable local law provides for the licensing of this type facility, 
the institution:
    (1) Is licensed pursuant to such law, or

[[Page 146]]

    (2) Is approved by the agency of such state or locality responsible 
for licensing such institutions as meeting the standards established for 
such licensing.
    (I) Has in effect an operating plan and budget.
    (J) Meets such provisions of the most current edition of the Life 
Safety Code \8\ as are applicable to nursing facilities; except that if 
the Secretary of Health and Human Services has waived, for such periods, 
as deemed appropriate, specific provisions of such code which, if 
rigidly applied, would result in unreasonable hardship upon a nursing 
facility.
---------------------------------------------------------------------------

    \8\ Compiled and published by the National Fire Protection 
Association, Batterymarch Park, Quincy, Massachusetts 02269.
---------------------------------------------------------------------------

    (vii) Residential treatment centers. This paragraph (b)(4)(vii) 
establishes standards and requirements for residential treatment centers 
(RTCs).
    (A) Organization and administration.
    (1) Definition. A Residential Treatment Center (RTC) is a facility 
or a distinct part of a facility that provides to beneficiaries under 21 
years of age a medically supervised, interdisciplinary program of mental 
health treatment. An RTC is appropriate for patients whose predominant 
symptom presentation is essentially stabilized, although not resolved, 
and who have persistent dysfunction in major life areas. The extent and 
pervasiveness of the patient's problems require a protected and highly 
structured therapeutic environment. Residential treatment is 
differentiated from:
    (i) Acute psychiatric care, which requires medical treatment and 24-
hour availability of a full range of diagnostic and therapeutic services 
to establish and implement an effective plan of care which will reverse 
life-threatening and/or severely incapacitating symptoms;
    (ii) Partial hospitalization, which provides a less than 24-hour-
per-day, seven-day-per-week treatment program for patients who continue 
to exhibit psychiatric problems but can function with support in some of 
the major life areas;
    (iii) A group home, which is a professionally directed living 
arrangement with the availability of psychiatric consultation and 
treatment for patients with significant family dysfunction and/or 
chronic but stable psychiatric disturbances;
    (iv) Therapeutic school, which is an educational program 
supplemented by psychological and psychiatric services;
    (v) Facilities that treat patients with a primary diagnosis of 
chemical abuse or dependence; and
    (vi) Facilities providing care for patients with a primary diagnosis 
of mental retardation or developmental disability.
    (2) Eligibility.
    (i) Every RTC must be certified pursuant to CHAMPUS certification 
standards. Such standards shall incorporate the basic standards set 
forth in paragraphs (b)(4)(vii) (A) through (D) of this section, and 
shall include such additional elaborative criteria and standards as the 
Director, OCHAMPUS determines are necessary to implement the basic 
standards.
    (ii) To be eligible for CHAMPUS certification, the facility is 
required to be licensed and fully operational for six months (with a 
minimum average daily census of 30 percent of total bed capacity) and 
operate in substantial compliance with state and federal regulations.
    (iii) The facility is currently accredited by the Joint Commission 
on Accreditation of Healthcare Organizations (JCAHO) under the current 
edition of the Manual for Mental Health, Chemical Dependency, and Mental 
Retardation/Developmental Disabilities Services which is available from 
JCAHO, P.O. Box 75751, Chicago, IL 60675.
    (iv) The facility has a written participation agreement with 
OCHAMPUS. The RTC is not a CHAMPUS-authorized provider and CHAMPUS 
benefits are not paid for services provided until the date upon which a 
participation agreement is signed by the Director, OCHAMPUS.
    (3) Governing body.
    (i) The RTC shall have a governing body which is responsible for the 
policies, bylaws, and activities of the facility. If the RTC is owned by 
a partnership or single owner, the partners or

[[Page 147]]

single owner are regarded as the governing body. The facility will 
provide an up-to-date list of names, addresses, telephone numbers and 
titles of the members of the governing body.
    (ii) The governing body ensures appropriate and adequate services 
for all patients and oversees continuing development and improvement of 
care. Where business relationships exist between the governing body and 
facility, appropriate conflict-of-interest policies are in place.
    (iii) Board members are fully informed about facility services and 
the governing body conducts annual review of its performance in meeting 
purposes, responsibilities, goals and objectives.
    (4) Chief executive officer. The chief executive officer, appointed 
by and subject to the direction of the governing body, shall assume 
overall administrative responsibility for the operation of the facility 
according to governing body policies. The chief executive officer shall 
have five years' administrative experience in the field of mental 
health. On October 1, 1997, the CEO shall possess a degree in business 
administration, public health, hospital administration, nursing, social 
work, or psychology, or meeting similar educational requirements as 
prescribed by the Director, OCHAMPUS.
    (5) Clinical Director. The clinical director, appointed by the 
governing body, shall be a psychiatrist or doctoral level psychologist 
who meets applicable CHAMPUS requirements for individual professional 
providers and is licensed to practice in the state where the residential 
treatment center is located. The clinical director shall possess 
requisite education and experience, credentials applicable under state 
practice and licensing laws appropriate to the professional discipline, 
and a minimum of five years' clinical experience in the treatment of 
children and adolescents. The clinical director shall be responsible for 
planning, development, implementation, and monitoring of all clinical 
activities.
    (6) Medical director. The medical director, appointed by the 
governing body, shall be licensed to practice medicine in the state 
where the residential treatment center is located and shall possess 
requisite education and experience, including graduation from an 
accredited school of medicine or osteopathy, an approved residency in 
psychiatry and a minimum of five years clinical experience in the 
treatment of children and adolescents. The Medical Director shall be 
responsible for the planning, development, implementation, and 
monitoring of all activities relating to medical treatment of patients. 
If qualified, the Medical Director may also serve as Clinical Director.
    (7) Medical or professional staff organization. The governing body 
shall establish a medical or professional staff organization to assure 
effective implementation of clinical privileging, professional conduct 
rules, and other activities directly affecting patient care.
    (8) Personnel policies and records. The RTC shall maintain written 
personnel policies, updated job descriptions and personnel records to 
assure the selection of qualified personnel and successful job 
performance of those personnel.
    (9) Staff development. The facility shall provide appropriate 
training and development programs for administrative, professional 
support, and direct care staff.
    (10) Fiscal accountability. The RTC shall assure fiscal 
accountability to applicable government authorities and patients.
    (11) Designated teaching facilities. Students, residents, interns or 
fellows providing direct clinical care are under the supervision of a 
qualified staff member approved by an accredited university. The 
teaching program is approved by the Director, OCHAMPUS.
    (12) Emergency reports and records. The facility notifies OCHAMPUS 
of any serious occurrence involving CHAMPUS beneficiaries.
    (B) Treatment services.
    (1) Staff composition.
    (i) The RTC shall follow written plans which assure that medical and 
clinical patient needs will be appropriately addressed 24 hours a day, 
seven days a week by a sufficient number of fully qualified (including 
license, registration or certification requirements, educational 
attainment, and professional experience) health care professionals and 
support staff in the

[[Page 148]]

respective disciplines. Clinicians providing individual, group, and 
family therapy meet CHAMPUS requirements as qualified mental health 
providers and operate within the scope of their licenses. The ultimate 
authority for planning, development, implementation, and monitoring of 
all clinical activities is vested in a psychiatrist or doctoral level 
psychologist. The management of medical care is vested in a physician.
    (ii) The RTC shall ensure adequate coverage by fully qualified staff 
during all hours of operation, including physician availability, other 
professional staff coverage, and support staff in the respective 
disciplines.
    (2) Staff qualifications. The RTC will have a sufficient number of 
qualified mental health providers, administrative, and support staff to 
address patients' clinical needs and to coordinate the services 
provided. RTCs which employ individuals with master's or doctoral level 
degrees in a mental health discipline who do not meet the licensure, 
certification and experience requirements for a qualified mental health 
provider but are actively working toward licensure or certification, may 
provide services within the all-inclusive per diem rate, provided the 
individual works under the clinical supervision of a fully qualified 
mental health provider employed by the RTC. All other program services 
shall be provided by trained, licensed staff.
    (3) Patient rights.
    (i) The RTC shall provide adequate protection for all patient 
rights, including rights provided by law, privacy, personnel rights, 
safety, confidentiality, informed consent, grievances, and personal 
dignity.
    (ii) The facility has a written policy regarding patient abuse and 
neglect.
    (iii) Facility marketing and advertising meets professional 
standards.
    (4) Behavioral management. The RTC shall adhere to a comprehensive, 
written plan of behavioral management, developed by the clinical 
director and the medical or professional staff and approved by the 
governing body, including strictly limited procedures to assure that the 
restraint or seclusion are used only in extraordinary circumstances, are 
carefully monitored, and are fully documented. Only trained and 
clinically privileged RNs or qualified mental health professionals may 
be responsible for the implementation of seclusion and restraint 
procedures in an emergency situation.
    (5) Admission process. The RTC shall maintain written policies and 
procedures to ensure that, prior to an admission, a determination is 
made, and approved pursuant to CHAMPUS preauthorization requirements, 
that the admission is medically and/or psychologically necessary and the 
program is appropriate to meet the patient's needs. Medical and/or 
psychological necessity determinations shall be rendered by qualified 
mental health professionals who meet CHAMPUS requirements for individual 
professional providers and who are permitted by law and by the facility 
to refer patients for admission.
    (6) Assessments. The professional staff of the RTC shall complete a 
current multidisciplinary assessment which includes, but is not limited 
to physical, psychological, developmental, family, educational, social, 
spiritual and skills assessment of each patient admitted. Unless 
otherwise specified, all required clinical assessments are completed 
prior to development of the multidisciplinary treatment plan.
    (7) Clinical formulation. A qualified mental health professional of 
the RTC will complete a clinical formulation on all patients. The 
clinical formulation will be reviewed and approved by the responsible 
individual professional provider and will incorporate significant 
findings from each of the multidisciplinary assessments. It will provide 
the basis for development of an interdisciplinary treatment plan.
    (8) Treatment planning. A qualified mental health professional shall 
be responsible for the development, supervision, implementation, and 
assessment of a written, individualized, interdisciplinary plan of 
treatment, which shall be completed within 10 days of admission and 
shall include individual, measurable, and observable goals for 
incremental progress and discharge. A preliminary treatment plan is 
completed within 24 hours of admission and includes at least an 
admission

[[Page 149]]

note and orders written by the admitting mental health professional. The 
master treatment plan is reviewed and revised at least every 30 days, or 
when major changes occur in treatment.
    (9) Discharge and transition planning. The RTC shall maintain a 
transition planning process to address adequately the anticipated needs 
of the patient prior to the time of discharge. The planning involves 
determining necessary modifications in the treatment plan, facilitating 
the termination of treatment, and identifying resources to maintain 
therapeutic stability following discharge.
    (10) Clinical documentation. Clinical records shall be maintained on 
each patient to plan care and treatment and provide ongoing evaluation 
of the patient's progress. All care is documented and each clinical 
record contains at least the following: demographic data, consent forms, 
pertinent legal documents, all treatment plans and patient assessments, 
consultation and laboratory reports, physician orders, progress notes, 
and a discharge summary. All documentation will adhere to applicable 
provisions of the JCAHO and requirements set forth in Sec. 199.7(b)(3). 
An appropriately qualified records administrator or technician will 
supervise and maintain the quality of the records. These requirements 
are in addition to other records requirements of this part, and 
documentation requirements of the Joint Commission on Accreditation of 
Healthcare Organizations.
    (11) Progress notes. RTC's shall document the course of treatment 
for patients and families using progress notes which provide information 
to review, analyze, and modify the treatment plans. Progress notes are 
legible, contemporaneous, sequential, signed and dated and adhere to 
applicable provisions of the Manual of Mental Health, Chemical 
Dependency, and Mental Retardation/Development Disabilities Services and 
requirements set forth in Sec. 199.7(b)(3).
    (12) Therapeutic services.
    (i) Individual, group, and family psychotherapy are provided to all 
patients, consistent with each patient's treatment plan, by qualified 
mental health providers.
    (ii) A range of therapeutic activities, directed and staffed by 
qualified personnel, are offered to help patients meet the goals of the 
treatment plan.
    (iii) Therapeutic educational services are provided or arranged that 
are appropriate to the patients educational and therapeutic needs.
    (13) Ancillary services. A full range of ancillary services is 
provided. Emergency services include policies and procedures for 
handling emergencies with qualified personnel and written agreements 
with each facility providing the service. Other ancillary services 
include physical health, pharmacy and dietary services.
    (C) Standards for physical plant and environment.
    (1) Physical environment. The buildings and grounds of the RTC shall 
be maintained so as to avoid health and safety hazards, be supportive of 
the services provided to patients, and promote patient comfort, dignity, 
privacy, personal hygiene, and personal safety.
    (2) Physical plant safety. The RTC shall be of permanent 
construction and maintained in a manner that protects the lives and 
ensures the physical safety of patients, staff, and visitors, including 
conformity with all applicable building, fire, health, and safety codes.
    (3) Disaster planning. The RTC shall maintain and rehearse written 
plan for taking care of casualities and handling other consequences 
arising from internal and external disasters.
    (D) Standards for evaluation system.
    (1) Quality assessment and improvement. The RTC shall develop and 
implement a comprehensive quality assurance and quality improvement 
program that monitors the quality, efficiency, appropriateness, and 
effectiveness of the care, treatments, and services it provides for 
patients and their families, primarily utilizing explicit clinical 
indicators to evaluate all functions of the RTC and contribute to an 
ongoing process of program improvement. The clinical director is 
responsible for developing and implementing quality assessment and 
improvement activities throughout the facility.
    (2) Utilization review. The RTC shall implement a utilization review 
process, pursuant to a written plan approved by

[[Page 150]]

the professional staff, the administration, and the governing body, that 
assesses the appropriateness of admission, continued stay, and 
timeliness of discharge as part of an effort to provide quality patient 
care in a cost-effective manner. Findings of the utilization review 
process are used as a basis for revising the plan of operation, 
including a review of staff qualifications and staff composition.
    (3) Patient records review. The RTC shall implement a process, 
including monthly reviews of a representative sample of patient records, 
to determine the completeness and accuracy of the patient records and 
the timeliness and pertinence of record entries, particularly with 
regard to regular recording of progress/non-progress in treatment.
    (4) Drug utilization review. The RTC shall implement a comprehensive 
process for the monitoring and evaluating of the prophylactic, 
therapeutic, and empiric use of drugs to assure that medications are 
provided appropriately, safely, and effectively.
    (5) Risk management. The RTC shall implement a comprehensive risk 
management program, fully coordinated with other aspects of the quality 
assurance and quality improvement program, to prevent and control risks 
to patients and staff and costs associated with clinical aspects of 
patient care and safety.
    (6) Infection control. The RTC shall implement a comprehensive 
system for the surveillance, prevention, control, and reporting of 
infections acquired or brought into the facility.
    (7) Safety. The RTC shall implement an effective program to assure a 
safe environment for patients, staff, and visitors, including an 
incident report system, a continuous safety surveillance system, and an 
active multidisciplinary safety committee.
    (8) Facility evaluation. The RTC annually evaluates accomplishment 
of the goals and objectives of each clinical program and service of the 
RTC and reports findings and recommendations to the governing body.
    (E) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(vii), of this section in 
order for the services of an RTC to be authorized, the RTC shall have 
entered into a Participation Agreement with OCHAMPUS. The period of a 
participation agreement shall be specified in the agreement, and will 
generally be for not more than five years. Participation agreements 
entered into prior April 6, 1995 must be renewed not later than October 
1, 1995. In addition to review of a facility's application and 
supporting documentation, an on-site inspection by OCHAMPUS authorized 
personnel may be required prior to signing a Participation Agreement. 
Retroactive approval is not given. In addition, the Participation 
Agreement shall include provisions that the RTC shall, at a minimum:
    (1) Render residential treatment center impatient services to 
eligible CHAMPUS beneficiaries in need of such services, in accordance 
with the participation agreement and CHAMPUS regulation;
    (2) Accept payment for its services based upon the methodology 
provided in Sec. 199.14(f) or such other method as determined by the 
Director, OCHAMPUS;
    (3) Accept the CHAMPUS all-inclusive per diem rate as payment in 
full and collect from the CHAMPUS beneficiary or the family of the 
CHAMPUS beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec. 199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director, 
OCHAMPUS, to collect those amounts, which represents the beneficiary's 
liability, as defined in Sec. 199.4;
    (5) Comply with the provisions of Sec. 199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Submit claims for services provided to CHAMPUS beneficiaries at 
least 30 days (except to the extent a delay is necessitated by efforts 
to first collect from other health insurance). If claims are not 
submitted at least every 30 days, the RTC agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
CHAMPUS;
    (7) Certify that:

[[Page 151]]

    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(vii) of this section establishing standards for 
Residential Treatment Centers;
    (ii) It has conducted a self assessment of the facility's compliance 
with the CHAMPUS Standards for Residential Treatment Centers Serving 
Children and Adolescents with Mental Disorders, as issued by the 
Director, OCHAMPUS and notified the Director, OCHAMPUS of any matter 
regarding which the facility is not in compliance with such standards; 
and
    (iii) It will maintain compliance with the CHAMPUS Standards for 
Residential Treatment Centers Serving Children and Adolescents with 
Mental Disorders, as issued by the Director, OCHAMPUS, except for any 
such standards regarding which the facility notifies the Director, 
OCHAMPUS that it is not in compliance.
    (8) Designate an individual who will act as liaison for CHAMPUS 
inquiries. The RTC shall inform OCHAMPUS in writing of the designated 
individual;
    (9) Furnish OCHAMPUS, as requested by OCHAMPUS, with cost data 
certified by an independent accounting firm or other agency as 
authorized by the Director, OCHAMPUS;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning preauthorization, 
concurrent care review, claims processing, beneficiary liability, double 
coverage, utilization and quality review and other matters;
    (11) Grant the Director, OCHAMPUS, or designee, the right to conduct 
quality assurance audits or accounting audits with full access to 
patients and records (including records relating to patients who are not 
CHAMPUS beneficiaries) to determine the quality and cost-effectiveness 
of care rendered. The audits may be conducted on a scheduled or 
unscheduled (unannounced) basis. This right to audit/review includes, 
but is not limited to:
    (i) Examination of fiscal and all other records of the RTC which 
would confirm compliance with the participation agreement and 
designation as an authorized CHAMPUS RTC provider;
    (ii) Conducting such audits of RTC records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspections conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the RTC and 
interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required;
    (v) Audits conducted by the United States General Accounting Office.
    (F) Other requirements applicable to RTCs.
    (1) Even though an RTC may qualify as a CHAMPUS-authorized provider 
and may have entered into a participation agreement with CHAMPUS, 
payment by CHAMPUS for particular services provided is contingent upon 
the RTC also meeting all conditions set forth in Sec. 199.4 especially 
all requirements of paragraph (b)(4) of that section.
    (2) The RTC shall provide inpatient services to CHAMPUS 
beneficiaries in the same manner it provides inpatient services to all 
other patients. The RTC may not discriminate against CHAMPUS 
beneficiaries in any manner, including admission practices, placement in 
special or separate wings or rooms, or provisions of special or limited 
treatment.
    (3) The RTC shall assure that all certifications and information 
provided to the Director, OCHAMPUS incident to the process of obtaining 
and retaining authorized provider status is accurate and that it has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized status will be denied or terminated, and the RTC 
will be ineligible for consideration for authorized provider status for 
a two year period.
    (viii) Christian Science sanatoriums. The services obtained in 
Christian Science sanatoriums are covered by CHAMPUS as inpatient care. 
To qualify for coverage, the sanatorium either must be operated by, or 
be listed and

[[Page 152]]

certified by the First Church of Christ, Scientist.
    (ix) Infirmaries. Infirmaries are facilities operated by student 
health departments of colleges and universities to provide inpatient or 
outpatient care to enrolled students. Charges for care provided by such 
facilities will not be cost-shared by CHAMPUS if the student would not 
be charged in the absence of CHAMPUS, or if student is covered by a 
mandatory student health insurance plan, in which enrollment is required 
as a part of the student's school registration and the charges by the 
college or university include a premium for the student health insurance 
coverage. CHAMPUS will cost-share only if enrollment in the student 
health program or health insurance plan is voluntary.
    Note: An infirmary in a boarding school also may qualify under this 
provision, subject to review and approval by the Director, OCHAMPUS or a 
designee.
    (x) Other special institution providers. (A) General. (1) Care 
provided by certain special institutional providers (on either an 
inpatient or outpatient basis), may be cost-shared by CHAMPUS under 
specified circumstances and only if the provider is specifically 
identified in paragraph (b)(4)(x) of this section.
    (i) The course of treatment is prescribed by a doctor of medicine or 
osteopathy.
    (ii) The patient is under the supervision of a physician during the 
entire course of the inpatient admission or the outpatient treatment.
    (iii) The type and level of care and service rendered by the 
institution are otherwise authorized by this part.
    (iv) The facility meets all licensing or other certification 
requirements that are extant in the jurisdiction in which the facility 
is located geographically.
    (v) Is other than a nursing home, intermediate care facility, home 
for the aged, halfway house, or other similar institution.
    (vi) Is accredited by the JCAH or other CHAMPUS-approved 
accreditation organization, if an appropriate accreditation program for 
the given type of facility is available. As future accreditation 
programs are developed to cover emerging specialized treatment programs, 
such accreditation will be a prerequisite to coverage by CHAMPUS for 
services provided by such facilities.
    (2) To ensure that CHAMPUS beneficiaries are provided quality care 
at a reasonable cost when treated by a special institutional provider, 
the Director, OCHAMPUS may:
    (i) Require prior approval of all admissions to special 
institutional providers.
    (ii) Set appropriate standards for special institutional providers 
in addition to or in the absence of JCAHO accreditation.
    (iii) Monitor facility operations and treatment programs on a 
continuing basis and conduct onsite inspections on a scheduled and 
unscheduled basis.
    (iv) Negotiate agreements of participation.
    (v) Terminate approval of a case when it is ascertained that a 
departure from the facts upon which the admission was based originally 
has occurred.
    (vi) Declare a special institutional provider not eligible for 
CHAMPUS payment if that facility has been found to have engaged in 
fraudulent or deceptive practices.
    (3) In general, the following disclaimers apply to treatment by 
special institutional providers:
    (i) Just because one period or episode of treatment by a facility 
has been covered by CHAMPUS may not be construed to mean that later 
episodes of care by the same or similar facility will be covered 
automatically.
    (ii) The fact that one case has been authorized for treatment by a 
specific facility or similar type of facility may not be construed to 
mean that similar cases or later periods of treatment will be extended 
CHAMPUS benefits automatically.
    (B) Types of providers. The following is a list of facilities that 
have been designated specifically as special institutional providers.
    (1) Free-standing ambulatory surgical centers. Care provided by 
freestanding ambulatory surgical centers may be cost-shared by CHAMPUS 
under the following circumstances:
    (i) The treatment is prescribed and supervised by a physician.

[[Page 153]]

    (ii) The type and level of care and services rendered by the center 
are otherwise authorized by this part.
    (iii) The center meets all licensing or other certification 
requirements of the jurisdiction in which the facility is located.
    (iv) The center is accredited by the JCAH, the Accreditation 
Association for Ambulatory Health Care, Inc. (AAAHC), or such other 
standards as authorized by the Director, OCHAMPUS.
    (v) A childbirth procedure provided by a CHAMPUS-approved free-
standing ambulatory surgical center shall not be cost-shared by the 
CHAMPUS unless the surgical center is also a CHAMPUS-approved birthing 
center institutional provider as established by the birthing center 
provider certification requirement of this Regulation.
    (2)[Reserved]
    (xi) Birthing centers. A birthing center is a freestanding or 
institution-affiliated outpatient maternity care program which 
principally provides a planned course of outpatient prenatal care and 
outpatient childbirth service limited to low-risk pregnancies; excludes 
care for high-risk pregnancies; limits childbirth to the use of natural 
childbirth procedures; and provides immediate newborn care.
    (A) Certification requirements. A birthing center which meets the 
following criteria may be designated as an authorized CHAMPUS 
institutional provider:
    (1) The predominant type of service and level of care rendered by 
the center is otherwise authorized by this part.
    (2) The center is licensed to operate as a birthing center where 
such license is available, or is specifically licensed as a type of 
ambulatory health care facility where birthing center specific license 
is not available, and meets all applicable licensing or certification 
requirements that are extant in the state, county, municipality, or 
other political jurisdiction in which the center is located.
    (3) The center is accredited by a nationally recognized 
accreditation organization whose standards and procedures have been 
determined to be acceptable by the Director, OCHAMPUS, or a designee.
    (4) The center complies with the CHAMPUS birthing center standards 
set forth in this part.
    (5) The center has entered into a participation agreement with 
OCHAMPUS in which the center agrees, in part, to:
    (i) Participate in CHAMPUS and accept payment for maternity services 
based upon the reimbursement methodology for birthing centers;
    (ii) Collect from the CHAMPUS beneficiary only those amounts that 
represent the beneficiary's liability under the participation agreement 
and the reimbursement methodology for birthing centers, and the amounts 
for services and supplies that are not a benefit of the CHAMPUS;
    (iii) Permit access by the Director, OCHAMPUS, or a designee, to the 
clinical record of any CHAMPUS beneficiary, to the financial and 
organizational records of the center, and to reports of evaluations and 
inspections conducted by state or private agencies or organizations;
    (iv) Submit claims first to all health benefit and insurance plans 
primary to the CHAMPUS to which the beneficiary is entitled and to 
comply with the double coverage provisions of this part;
    (v) Notify CHAMPUS in writing within 7 days of the emergency 
transport of any CHAMPUS beneficiary from the center to an acute care 
hospital or of the death of any CHAMPUS beneficiary in the center.
    (6) A birthing center shall not be a CHAMPUS-authorized 
institutional provider and CHAMPUS benefits shall not be paid for any 
service provided by a birthing center before the date the participation 
agreement is signed by the Director, OCHAMPUS, or a designee.
    (B) CHAMPUS birthing center standards. (1) Environment: The center 
has a safe and sanitary environment, properly constructed, equipped, and 
maintained to protect health and safety and meets the applicable 
provisions of the ``Life Safety Code'' of the National Fire Protection 
Association.
    (2) Policies and procedures: The center has written administrative, 
fiscal, personnel and clinical policies and procedures which 
collectively promote the provision of high-quality maternity

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care and childbirth services in an orderly, effective, and safe physical 
and organizational environment.
    (3) Informed consent: Each CHAMPUS beneficiary admitted to the 
center will be informed in writing at the time of admission of the 
nature and scope of the center's program and of the possible risks 
associated with maternity care and childbirth in the center.
    (4) Beneficiary care: Each woman admitted will be cared for by or 
under the direct supervision of a specific physician or a specific 
certified nurse-midwife who is otherwise eligible as a CHAMPUS 
individual professional provider.
    (5) Medical direction: The center has written memoranda of 
understanding (MOU) for routine consultation and emergency care with an 
obstetrician-gynecologist who is certified or is eligible for 
certification by the American Board of Obstetrics and Gynecology or the 
American Osteopathic Board of Obstetrics and Gynecology and with a 
pediatrician who is certified or eligible for certification by the 
American Board of Pediatrics or by the American Osteopathic Board of 
Pediatrics, each of whom have admitting privileges to at least one 
backup hospital. In lieu of a required MOU, the center may employ a 
physician with the required qualifications. Each MOU must be renewed 
annually.
    (6) Admission and emergency care criteria and procedures. The center 
has written clinical criteria and administrative procedures, which are 
reviewed and approved annually by a physician related to the center as 
required by paragraph (b)(4)(xi)(B)(5) above, for the exclusion of a 
woman with a high-risk pregnancy from center care and for management of 
maternal and neonatal emergencies.
    (7) Emergency treatment. The center has a written memorandum of 
understanding (MOU) with at least one backup hospital which documents 
that the hospital will accept and treat any woman or newborn transferred 
from the center who is in need of emergency obstetrical or neonatal 
medical care. In lieu of this MOU with a hospital, a birthing center may 
have an MOU with a physician, who otherwise meets the requirements as a 
CHAMPUS individual professional provider, and who has admitting 
privileges to a backup hospital capable of providing care for critical 
maternal and neonatal patients as demonstrated by a letter from that 
hospital certifying the scope and expected duration of the admitting 
privileges granted by the hospital to the physician. The MOU must be 
reviewed annually.
    (8) Emergency medical transportation. The center has a written 
memorandum of understanding (MOU) with at least one ambulance service 
which documents that the ambulance service is routinely staffed by 
qualified personnel who are capable of the management of critical 
maternal and neonatal patients during transport and which specifies the 
estimated transport time to each backup hospital with which the center 
has arranged for emergency treatment as required in paragraph 
(b)(4)(xi)(B)(7) above. Each MOU must be renewed annually.
    (9) Professional staff. The center's professional staff is legally 
and professionally qualified for the performance of their professional 
responsibilities.
    (10) Medical records. The center maintains full and complete written 
documentation of the services rendered to each woman admitted and each 
newborn delivered. A copy of the informed consent document required by 
paragraph (b)(4)(xi)(B)(3), above, which contains the original signature 
of the CHAMPUS beneficiary, signed and dated at the time of admission, 
must be maintained in the medical record of each CHAMPUS beneficiary 
admitted.
    (11) Quality assurance. The center has an organized program for 
quality assurance which includes, but is not limited to, written 
procedures for regularly scheduled evaluation of each type of service 
provided, of each mother or newborn transferred to a hospital, and of 
each death within the facility.
    (12) Governance and administration. The center has a govening body 
legally responsible for overall operation and maintenance of the center 
and a full-time employee who has authority and responsibility for the 
day-to-day operation of the center.
    (xii) Psychiatric partial hospitalization programs. Paragraph 
(b)(4)(xii) of this

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section establishes standards and requirements for psychiatric partial 
hospitalization programs.
    (A) Organization and administration.
    (1) Definition. Partial hospitalization is defined as a time-
limited, ambulatory, active treatment program that offers 
therapeutically intensive, coordinated, and structured clinical services 
within a stable therapeutic milieu. Partial hospitalization programs 
serve patients who exhibit psychiatric symptoms, disturbances of 
conduct, and decompensating conditions affecting mental health.
    (2) Eligibility.
    (i) Every psychiatric partial hospitalization program must be 
certified pursuant to CHAMPUS certification standards. Such standards 
shall incorporate the basic standards set forth in paragraphs 
(b)(4)(xii) (A) through (D) of this section, and shall include such 
additional elaborative criteria and standards as the Director, OCHAMPUS 
determines are necessary to implement the basic standards. Each 
psychiatric partial hospitalization program must be either a distinct 
part of an otherwise authorized institutional provider or a freestanding 
program.
    (ii) To be eligible for CHAMPUS certification, the facility is 
required to be licensed and fully operational for a period of at least 
six months (with a minimum patient census of at least 30 percent of bed 
capacity) and operate in substantial compliance with state and federal 
regulations.
    (iii) The facility is currently accredited by the Joint Commission 
on Accreditation of Healthcare Organizations under the current edition 
of the Accreditation Manual for Mental Health, Chemical Dependency, and 
Mental Retardation/Developmental Disabilities Services.
    (iv) The facility has a written participation agreement with 
OCHAMPUS. On October 1, 1995, the PHP is not a CHAMPUS-authorized 
provider and CHAMPUS benefits are not paid for services provided until 
the date upon which a participation agreement is signed by the Director, 
OCHAMPUS. Partial hospitalization is capable of providing an 
interdisciplinary program of medical and therapeutic services a minimum 
of three hours per day, five days per week, and may include full- or 
half-day, evening, and weekend treatment programs.
    (3) Governing body.
    (i) The PHP shall have a governing body which is responsible for the 
policies, bylaws, and activities of the facilities. If the PHP is owned 
by a partnership or single owner, the partners or single owner are 
regarded as the governing body. The facility will provide an up-to-date 
list of names, addresses, telephone numbers, and titles of the members 
of the governing body.
    (ii) The governing body ensures appropriate and adequate services 
for all patients and oversees continuing development and improvement of 
care. Where business relationships exist between the governing body and 
facility, appropriate conflict-of-interest policies are in place.
    (iii) Board members are fully informed about facility services and 
the governing body conducts annual review of its performance in meeting 
purposes, responsibilities, goals and objectives.
    (4) Chief executive officer. The Chief Executive Officer, appointed 
by and subject to the direction of the governing body, shall assume 
overall administrative responsibility for the operation of the facility 
according to governing body policies. The chief executive officer shall 
have five years' administrative experience in the field of mental 
health. On October 1, 1997, the CEO shall possess a degree in business 
administration, public health, hospital administration, nursing, social 
work, or psychology, or meet similar educational requirements as 
prescribed by the Director, OCHAMPUS.
    (5) Clinical Director. The clinical director, appointed by the 
governing body, shall be a psychiatrist or doctoral level psychologist 
who meets applicable CHAMPUS requirements for individual professional 
providers and is licensed to practice in the state where the PHP is 
located. The clinical director shall possess requisite education and 
experience, credentials applicable under state practice and licensing 
laws appropriate to the professional discipline, and a minimum of five 
years' clinical experience in the treatment of mental disorders specific 
to the ages and disabilities of the patients served.

[[Page 156]]

The clinical director shall be responsible for planning, development, 
implementation, and monitoring of all clinical activities.
    (6) Medical director. The medical director, appointed by the 
governing body, shall be licensed to practice medicine in the state 
where the residential treatment center is located and shall possess 
requisite education and experience, including graduation from an 
accredited school of medicine or osteopathy, an approved residency in 
psychiatry and a minimum of five years clinical experience in the 
treatment of mental disorders specific to the ages and disabilities of 
the patients served. The Medical Director shall be responsible for the 
planning, development, implementation, and monitoring of all activities 
relating to medical treatment of patients. If qualified, the Medical 
Director may also serve as Clinical Director.
    (7) Medical or professional staff organization. The governing body 
shall establish a medical or professional staff organization to assure 
effective implementation of clinical privileging, professional conduct 
rules, and other activities directly affecting patient care.
    (8) Personnel policies and records. The PHP shall maintain written 
personnel policies, updated job descriptions, personnel records to 
assure the selection of qualified personnel and successful job 
performance of those personnel.
    (9) Staff development. The facility shall provide appropriate 
training and development programs for administrative, professional 
support, and direct care staff.
    (10) Fiscal accountability. The PHP shall assure fiscal 
accountability to applicable government authorities and patients.
    (11) Designated teaching facilities. Students, residents, interns, 
or fellows providing direct clinical care are under the supervision of a 
qualified staff member approved by an accredited university. The 
teaching program is approved by the Director, OCHAMPUS.
    (12) Emergency reports and records. The facility notifies OCHAMPUS 
of any serious occurrence involving CHAMPUS beneficiaries.
    (B) Treatment services.
    (1) Staff composition.
    (i) The PHP shall ensure that patient care needs will be 
appropriately addressed during all hours of operation by a sufficient 
number of fully qualified (including license, registration or 
certification requirements, educational attainment, and professional 
experience) health care professionals. Clinicians providing individual, 
group, and family therapy meet CHAMPUS requirements as qualified mental 
health providers, and operate within the scope of their licenses. The 
ultimate authority for managing care is vested in a psychiatrist or 
licensed doctor level psychologist. The management of medical care is 
vested in a physician.
    (ii) The PHP shall establish and follow written plans to assure 
adequate staff coverage during all hours of operation, including 
physician availability, other professional staff coverage, and support 
staff in the respective disciplines.
    (2) Staff qualifications. The PHP will have a sufficient number of 
qualified mental health providers, administrative, and support staff to 
address patients' clinical needs and to coordinate the services 
provided. PHPs which employ individuals with master's or doctoral level 
degrees in a mental health discipline who do not meet the licensure, 
certification and experience requirements for a qualified mental health 
provider but are actively working toward licensure or certification, may 
provide services within the all-inclusive per diem rate, provided the 
individual works under the clinical supervision of a fully qualified 
mental health provider employed by the PHP. All other program services 
shall be provided by trained, licensed staff.
    (3) Patient rights.
    (i) The PHP shall provide adequate protection for all patient 
rights, including rights provided by law, privacy, personal rights, 
safety, confidentiality, informed consent, grievances, and personal 
dignity.
    (ii) The facility has a written policy regarding patient abuse and 
neglect.
    (iii) Facility marketing and advertising meets professional 
standards.
    (4) Behavioral management. The PHP shall adhere to a comprehensive, 
written plan of behavior management, developed by the clinical director 
and the

[[Page 157]]

medical or professional staff and approved by the governing body, 
including strictly limited procedures to assure that restraint or 
seclusion are used only in extraordinary circumstances, are carefully 
monitored, and are fully documented. Only trained and clinically 
privileged RNs or qualified mental health professionals may be 
responsible for implementation of seclusion and restraint procedures in 
an emergency situation.
    (5) Admission process. The PHP shall maintain written policies and 
procedures to ensure that prior to an admission, a determination is 
made, and approved pursuant to CHAMPUS preauthorization requirements, 
that the admission is medically and/or psychologically necessary and the 
program is appropriate to meet the patient's needs. Medical and/or 
psychological necessity determinations shall be rendered by qualified 
mental health professionals who meet CHAMPUS requirements for individual 
professional providers and who are permitted by law and by the facility 
to refer patients for admission.
    (6) Assessments. The professional staff of the PHP shall complete a 
multidisciplinary assessment which includes, but is not limited to 
physical health, psychological health, physiological, developmental, 
family, educational, spiritual, and skills assessment of each patient 
admitted. Unless otherwise specified, all required clinical assessment 
are completed prior to development of the interdisciplinary treatment 
plan.
    (7) Clinical formulation. A qualified mental health provider of the 
PHP will complete a clinical formulation on all patients. The clinical 
formulation will be reviewed and approved by the responsible individual 
professional provider and will incorporate significant findings from 
each of the multidisciplinary assessments. It will provide the basis for 
development of an interdisciplinary treatment plan.
    (8) Treatment planning. A qualified mental health professional with 
admitting privileges shall be responsible for the development, 
supervision, implementation, and assessment of a written, 
individualized, interdisciplinary plan of treatment, which shall be 
completed by the fifth day following admission to a full-day PHP, or by 
the seventh day following admission to a half-day PHP, and shall include 
measurable and observable goals for incremental progress and discharge. 
The treatment plan shall undergo review at least every two weeks, or 
when major changes occur in treatment.
    (9) Discharge and transition planning. The PHP shall develop an 
individualized transition plan which addresses anticipated needs of the 
patient at discharge. The transition plan involves determining necessary 
modifications in the treatment plan, facilitating the termination of 
treatment, and identifying resources for maintaining therapeutic 
stability following discharge.
    (10) Clinical documentation. Clinical records shall be maintained on 
each patient to plan care and treatment and provide ongoing evaluation 
of the patient's progress. All care is documented and each clinical 
record contains at least the following: demographic data, consent forms, 
pertinent legal documents, all treatment plans and patient assessments, 
consultation and laboratory reports, physician orders, progress notes, 
and a discharge summary. All documentation will adhere to applicable 
provisions of the JCAHO and requirements set forth in Sec. 199.7(b)(3). 
An appropriately qualified records administrator or technician will 
supervise and maintain the quality of the records. These requirements 
are in addition to other records requirements of this part, and 
documentation requirements of the Joint Commission on Accreditation of 
Health Care Organization.
    (11) Progress notes. PHPs shall document the course of treatment for 
patients and families using progress notes which provide information to 
review, analyze, and modify the treatment plans. Progress notes are 
legible, contemporaneous, sequential, signed and dated and adhere to 
applicable provisions of the Manual for Mental Health, Chemical 
Dependency, and Mental Retardation/Developmental Disabilities Services 
and requirements set forth in section 199.7(b)(3).
    (12) Therapeutic services.
    (i) Individual, group, and family therapy are provided to all 
patients, consistent with each patient's treatment

[[Page 158]]

plan by qualified mental health providers.
    (ii) A range of therapeutic activities, directed and staffed by 
qualified personnel, are offered to help patients meet the goals of the 
treatment plan.
    (iii) Educational services are provided or arranged that are 
appropriate to the patient's needs.
    (13) Ancillary services. A full range of ancillary services are 
provided. Emergency services include policies and procedures for 
handling emergencies with qualified personnel and written agreements 
with each facility providing these services. Other ancillary services 
include physical health, pharmacy and dietary services.
    (C) Standards for physical plant and environment.
    (1) Physical environment. The buildings and grounds of the PHP shall 
be maintained so as to avoid health and safety hazards, be supportive of 
the services provided to patients, and promote patient comfort, dignity, 
privacy, personal hygiene, and personal safety.
    (2) Physical plant safety. The PHP shall be of permanent 
construction and maintained in a manner that protects the lives and 
ensures the physical safety of patients, staff, and visitors, including 
conformity with all applicable building, fire, health, and safety codes.
    (3) Disaster planning. The PHP shall maintain and rehearse written 
plans for taking care of casualities and handling other consequences 
arising from internal and external disasters.
    (D) Standards for evaluation system.
    (1) Quality assessment and improvement. The PHP shall develop and 
implement a comprehensive quality assurance and quality improvement 
program that monitors the quality, efficiency, appropriateness, and 
effectiveness of care, treatments, and services the PHP provides for 
patients and their families. Explicit clinical indicators shall be used 
to be used to evaluate all functions of the PHP and contribute to an 
ongoing process of program improvement. The clinical director is 
responsible for developing and implementing quality assessment and 
improvement activities throughout the facility.
    (2) Utilization review. The PHP shall implement a utilization review 
process, pursuant to a written plan approved by the professional staff, 
the administration and the governing body, that assesses distribution of 
services, clinical necessity of treatment, appropriateness of admission, 
continued stay, and timeliness of discharge, as part of an overall 
effort to provide quality patient care in a cost-effective manner. 
Findings of the utilization review process are used as a basis for 
revising the plan of operation, including a review of staff 
qualifications and staff composition.
    (3) Patient records. The PHP shall implement a process, including 
regular monthly reviews of a representative sample of patient records, 
to determine completeness, accuracy, timeliness of entries, appropriate 
signatures, and pertinence of clinical entries. Conclusions, 
recommendations, actions taken, and the results of actions are monitored 
and reported.
    (4) Drug utilization review. The PHP shall implement a comprehensive 
process for the monitoring and evaluating of the prophylactic, 
therapeutic, and empiric use of drugs to assure that medications are 
provided appropriately, safely, and effectively.
    (5) Risk management. The PHP shall implement a comprehensive risk 
management program, fully coordinated with other aspects of the quality 
assurance and quality improvement program, to prevent and control risks 
to patients and staff, and to minimize costs associated with clinical 
aspects of patient care and safety.
    (6) Infection control. The PHP shall implement a comprehensive 
system for the surveillance, prevention, control, and reporting of 
infections acquired or brought into the facility.
    (7) Safety. The PHP shall implement an effective program to assure a 
safe environment for patients, staff, and visitors, including an 
incident reporting system, disaster training and safety education, a 
continuous safety surveillance system, and an active multidisciplinary 
safety committee.
    (8) Facility evaluation. The PHP annually evaluates accomplishment 
of the goals and objectives of each clinical program component or 
facility service of the PHP and reports findings and recommendations to 
the governing body.

[[Page 159]]

    (E) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xii) of this section, in 
order for the services of a PHP to be authorized, the PHP shall have 
entered into a Participation Agreement with OCHAMPUS. The period of a 
Participation Agreement shall be specified in the agreement, and will 
generally be for not more than five years. On October 1, 1995, the PHP 
shall not be considered to be a CHAMPUS authorized provider and CHAMPUS 
payments shall not be made for services provided by the PHP until the 
date the participation agreement is signed by the Director, OCHAMPUS. In 
addition to review of a facility's application and supporting 
documentation, an on-site inspection by OCHAMPUS authorized personnel 
may be required prior to signing a participation agreement. The 
Participation Agreement shall include at least the following 
requirements:
    (1) Render partial hospitalization program services to eligible 
CHAMPUS beneficiaries in need of such services, in accordance with the 
participation agreement and CHAMPUS regulation.
    (2) Accept payment for its services based upon the methodology 
provided in Sec. 199.14, or such other method as determined by the 
Director, OCHAMPUS;
    (3) Accept the CHAMPUS all-inclusive per diem rate as payment in 
full and collect from the CHAMPUS beneficiary or the family of the 
CHAMPUS beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec. 199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director, 
OCHAMPUS, to collect those amounts, which represent the beneficiary's 
liability, as defined in Sec. 199.4;
    (5) Comply with the provisions of Sec. 199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Submit claims for services provided to CHAMPUS beneficiaries at 
least every 30 days (except to the extent a delay is necessitated by 
efforts to first collect from other health insurance). If claims are not 
submitted at least every 30 days, the PHP agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
CHAMPUS;
    (7) Certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(xii) of this section establishing standards for 
psychiatric partial hospitalization programs;
    (ii) It has conducted a self assessment of the facility's compliance 
with the CHAMPUS Standards for Psychiatric Partial Hospitalization 
Programs, as issued by the Director, OCHAMPUS, and notified the 
Director, OCHAMPUS of any matter regarding which the facility is not in 
compliance with such standards; and
    (iii) It will maintain compliance with the CHAMPUS Standards for 
Psychiatric Partial Hospitalization Programs, as issued by the Director, 
OCHAMPUS, except for any such standards regarding which the facility 
notifies the Director, OCHAMPUS that it is not in compliance.
    (8) Designate an individual who will act as liaison for CHAMPUS 
inquiries. The PHP shall inform OCHAMPUS in writing of the designated 
individual;
    (9) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, 
certified by an independent accounting firm or other agency as 
authorized by the Director, OCHAMPUS;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning preauthorization, 
concurrent care review, claims processing, beneficiary liability, double 
coverage, utilization and quality review and other matters;
    (11) Grant the Director, OCHAMPUS, or designee, the right to conduct 
quality assurance audits or accounting audits with full access to 
patients and records (including records relating to patients who are not 
CHAMPUS beneficiaries) to determine the quality and cost-effectiveness 
of care rendered. The audits may be conducted on a scheduled or 
unscheduled (unannounced) basis. This right to audit/review includes, 
but is not limited to:
    (i) Examination of fiscal and all other records of the PHP which 
would confirm compliance with the participation

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agreement and designation as an authorized CHAMPUS PHP provider;
    (ii) Conducting such audits of PHP records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspections conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the PHP and 
interreviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required;
    (v) Audits conducted by the United States General Account Office.
    (F) Other requirements applicable to PHPs.
    (1) Even though a PHP may qualify as a CHAMPUS-authorized provider 
and may have entered into a participation agreement with CHAMPUS, 
payment by CHAMPUS for particular services provided is contingent upon 
the PHP also meeting all conditions set forth in section 199.4 of this 
part.
    (2) The PHP shall provide patient services to CHAMPUS beneficiaries 
in the same manner it provides inpatient services to all other patients. 
The PHP may not discriminate against CHAMPUS beneficiaries in any 
manner, including admission practices, placement in special or separate 
wings or rooms, or provisions of special or limited treatment.
    (3) The PHP shall assure that all certifications and information 
provided to the Director, OCHAMPUS incident to the process of obtaining 
and retaining authorized provider status is accurate and that is has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized provider status will be denied or terminated, and 
the PHP will be ineligible for consideration for authorized provider 
status for a two year period.
    (xiii) Hospice programs. Hospice programs must be Medicare approved 
and meet all Medicare conditions of participation (42 CFR part 418) in 
relation to CHAMPUS patients in order to receive payment under the 
CHAMPUS program. A hospice program may be found to be out of compliance 
with a particular Medicare condition of participation and still 
participate in the CHAMPUS as long as the hospice is allowed continued 
participation in Medicare while the condition of noncompliance is being 
corrected. The hospice program can be either a public agency or private 
organization (or a subdivision thereof) which:
    (A) Is primarily engaged in providing the care and services 
described under Sec. 199.4(e)(19) and makes such services available on a 
24-hour basis.
    (B) Provides bereavement counseling for the immediate family or 
terminally ill individuals.
    (C) Provides for such care and services in individuals' homes, on an 
outpatient basis, and on a short-term inpatient basis, directly or under 
arrangements made by the hospice program, except that the agency or 
organization must:
    (1) Ensure that substantially all the core services are routinely 
provided directly by hospice employees.
    (2) Maintain professional management responsibility for all services 
which are not directly furnished to the patient, regardless of the 
location or facility in which the services are rendered.
    (3) Provide assurances that the aggregate number of days of 
inpatient care provided in any 12-month period does not exceed 20 
percent of the aggregate number of days of hospice care during the same 
period.
    (4) Have an interdisciplinary group composed of the following 
personnel who provide the care and services described under 
Sec. 199.4(e)(19) and who establish the policies governing the provision 
of such care/services:
    (i) A physician;
    (ii) A registered professional nurse;
    (iii) A social worker; and
    (iv) A pastoral or other counselor.
    (5) Maintain central clinical records on all patients.
    (6) Utilize volunteers.
    (7) The hospice and all hospice employees must be licensed in 
accordance with applicable Federal, State and local laws and 
regulations.

[[Page 161]]

    (8) The hospice must enter into an agreement with CHAMPUS in order 
to be qualified to participate and to be eligible for payment under the 
program. In this agreement the hospice and CHAMPUS agree that the 
hospice will:
    (i) Not charge the beneficiary or any other person for items or 
services for which the beneficiary is entitled to have payment made 
under the CHAMPUS hospice benefit.
    (ii) Be allowed to charge the beneficiary for items or services 
requested by the beneficiary in addition to those that are covered under 
the CHAMPUS hospice benefit.
    (9) Meet such other requirements as the Secretary of Defense may 
find necessary in the interest of the health and safety of the 
individuals who are provided care and services by such agency or 
organization.
    (xiv) Substance use disorder rehabilitation facilities. Paragraph 
(b)(4)(xiv) of this section establishes standards and requirements for 
substance use order rehabilitation facilities (SUDRF). This includes 
both inpatient rehabilitation centers for the treatment of substance use 
disorders and partial hospitalization centers for the treatment of 
substance use disorders.
    (A) Organization and administration.
    (1) Definition of inpatient rehabilitation center. An inpatient 
rehabilitation center is a facility, or distinct part of a facility, 
that provides medically monitored, interdisciplinary addiction-focused 
treatment to beneficiaries who have psychoactive substance use 
disorders. Qualified health care professionals provide 24-hour, seven-
day-per-week, medically monitored assessment, treatment, and evaluation. 
An inpatient rehabilitation center is appropriate for patients whose 
addiction-related symptoms, or concomitant physical and emotional/
behavioral problems reflect persistent dysfunction in several major life 
areas. Inpatient rehabilitation is differentiated from:
    (i) Acute psychoactive substance use treatment and from treatment of 
acute biomedical/emotional/behavioral problems; which problems are 
either life-threatening and/or severely incapacitating and often occur 
within the context of a discrete episode of addiction-related biomedical 
or psychiatric dysfunction;
    (ii) A partial hospitalization center, which serves patients who 
exhibit emotional/behavioral dysfunction but who can function in the 
community for defined periods of time with support in one or more of the 
major life areas;
    (iii) A group home, sober-living environment, halfway house, or 
three-quarter way house;
    (iv) Therapeutic schools, which are educational programs 
supplemented by addiction-focused services;
    (v) Facilities that treat patients with primary psychiatric 
diagnoses other than psychoactive substance use or dependence; and
    (vi) Facilities that care for patients with the primary diagnosis of 
mental retardation or developmental disability.
    (2) Definition of partial hospitalization center for the treatment 
of substance use disorders. A partial hospitalization center for the 
treatment of substance use disorders is an addiction-focused service 
that provides active treatment to adolescents between the ages of 13 and 
18 or adults aged 18 and over. Partial hospitalization is a generic term 
for day, evening, or weekend programs that treat patients with 
psychoactive substance use disorders according to a comprehensive, 
individualized, integrated schedule of care. A partial hospitalization 
center is organized, interdisciplinary, and medically monitored. Partial 
hospitalization is appropriate for those whose addiction-related 
symptoms or concomitant physical and emotional/behavioral problems can 
be managed outside the hospital environment for defined periods of time 
with support in one or more of the major life areas.
    (3) Eligibility.
    (i) Every inpatient rehabilitation center and partial 
hospitalization center for the treatment of substance use disorders must 
be certified pursuant to CHAMPUS certification standards. Such standards 
shall incorporate the basic standards set forth in paragraphs 
(b)(4)(xiv) (A) through (D) of this section, and shall include such 
additional elaborative criteria and standards as the Director, OCHAMPUS 
determines

[[Page 162]]

are necessary to implement the basic standards.
    (ii) To be eligible for CHAMPUS certification, the SUDRF is required 
to be licensed and fully operational (with a minimum patient census of 
the lesser of: six patients or 30 percent of bed capacity) for a period 
of at least six months and operate in substantial compliance with state 
and federal regulations.
    (iii) The SUDRF is currently accredited by the Joint Commission on 
Accreditation of Healthcare Organizations under the Accreditation Manual 
for Mental Health, Chemical Dependency, and Mental Retardation/
Developmental Disabilities Services, or by the Commission on 
Accreditation of Rehabilitation Facilities as an alcoholism and other 
drug dependency rehabilitation program under the Standards Manual for 
Organizations Serving People with Disabilities, or other designated 
standards approved by the Director, OCHAMPUS.
    (iv) The SUDRF has a written participation agreement with OCHAMPUS. 
On October 1, 1995, the SUDRF is not considered a CHAMPUS-authorized 
provider, and CHAMPUS benefits are not paid for services provided until 
the date upon which a participation agreement is signed by the Director, 
OCHAMPUS.
    (4) Governing body.
    (i) The SUDRF shall have a governing body which is responsible for 
the policies, bylaws, and activities of the facility. If the SUDRF is 
owned by a partnership or single owner, the partners or single owner are 
regarded as the governing body. The facility will provide an up-to-date 
list of names, addresses, telephone numbers and titles of the members of 
the governing body.
    (ii) The governing body ensures appropriate and adequate services 
for all patients and oversees continuing development and improvement of 
care. Where business relationships exist between the governing body and 
facility, appropriate conflict-of-interest policies are in place.
    (iii) Board members are fully informed about facility services and 
the governing body conducts annual reviews of its performance in meeting 
purposes, responsibilities, goals and objectives.
    (5) Chief executive officer. The chief executive officer, appointed 
by and subject to the direction of the governing body, shall assume 
overall administrative responsibility for the operation of the facility 
according to governing body policies. The chief executive officer shall 
have five years' administrative experience in the field of mental health 
or addictions. On October 1, 1997 the CEO shall possess a degree in 
business administration, public health, hospital administration, 
nursing, social work, or psychology, or meet similar educational 
requirements as prescribed by the Director, OCHAMPUS.
    (6) Clinical Director. The clinical director, appointed by the 
governing body, shall be a qualified psychiatrist or doctoral level 
psychologist who meets applicable CHAMPUS requirements for individual 
professional providers and is licensed to practice in the state where 
the SUDRF is located. The clinical director shall possess requisite 
education and experience, including credentials applicable under state 
practice and licensing laws appropriate to the professional discipline. 
The clinical director shall satisfy at least one of the following 
requirements: certification by the American Society of Addiction 
Medicine; one year or 1,000 hours of experience in the treatment of 
psychoactive substance use disorders; or is a psychiatrist or doctoral 
level psychologist with experience in the treatment of substance use 
disorders. The clinical director shall be responsible for planning, 
development, implementation, and monitoring of all clinical activities.
    (7) Medical director. The medical director, appointed by the 
governing body, shall be licensed to practice medicine in the state 
where the center is located and shall possess requisite education 
including graduation from an accredited school of medicine or 
osteopathy. The medical director shall satisfy at least one of the 
following requirements: certification by the American Society of 
Addiction Medicine; one year or 1,000 hours of experience in

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the treatment of psychoactive substance use disorders; or is a 
psychiatrist with experience in the treatment of substance use 
disorders. The medical director shall be responsible for the planning, 
development, implementation, and monitoring of all activities relating 
to medical treatment of patients. If qualified, the Medical Director may 
also serve as Clinical Director.
    (8) Medical or professional staff organization. The governing body 
shall establish a medical or professional staff organization to assure 
effective implementation of clinical privileging, professional conduct 
rules, and other activities directly affecting patient care.
    (9) Personnel policies and records. The SUDRF shall maintain written 
personnel policies, updated job descriptions, personnel records to 
assure the selection of qualified personnel and successful job 
performance of those personnel.
    (10) Staff development. The SUDRF shall provide appropriate training 
and development programs for administrative, support, and direct care 
staff.
    (11) Fiscal accountability. The SUDRF shall assure fiscal 
accountability to applicable government authorities and patients.
    (12) Designated teaching facilities. Students, residents, interns, 
or fellows providing direct clinical care are under the supervision of a 
qualified staff member approved by an accredited university or approved 
training program. The teaching program is approved by the Director, 
OCHAMPUS.
    (13) Emergency reports and records. The facility notifies OCHAMPUS 
of any serious occurrence involving CHAMPUS beneficiaries.
    (B) Treatment services.
    (1) Staff composition.
    (i) The SUDRF shall follow written plans which assure that medical 
and clinical patient needs will be appropriately addressed during all 
hours of operation by a sufficient number of fully qualified (including 
license, registration or certification requirements, educational 
attainment, and professional experience) health care professionals and 
support staff in the respective disciplines. Clinicians providing 
individual, group and family therapy meet CHAMPUS requirements as 
qualified mental health providers and operate within the scope of their 
licenses. The ultimate authority for planning, development, 
implementation, and monitoring of all clinical activities is vested in a 
psychiatrist or doctoral level clinical psychologist. The management of 
medical care is vested in a physician.
    (ii) The SUDRF shall establish and follow written plans to assure 
adequate staff coverage during all hours of operation of the center, 
including physician availability and other professional staff coverage 
24 hours per day, seven days per week for an inpatient rehabilitation 
center and during all hours of operation for a partial hospitalization 
center.
    (2) Staff qualifications. Within the scope of its programs and 
services, the SUDRF has a sufficient number of professional, 
administrative, and support staff to address the medical and clinical 
needs of patients and to coordinate the services provided. SUDRFs that 
employ individuals with master's or doctoral level degrees in a mental 
health discipline who do not meet the licensure, certification and 
experience requirements for a qualified mental health provider but are 
actively working toward licensure or certification, may provide services 
within the DRG, provided the individual works under the clinical 
supervision of a fully qualified mental health provider employed by the 
SUDRF.
    (3) Patient rights.
    (i) The SUDRF shall provide adequate protection for all patient 
rights, safety, confidentiality, informed consent, grievances, and 
personal dignity.
    (ii) The SUDRF has a written policy regarding patient abuse and 
neglect.
    (iii) SUDRF marketing and advertising meets professional standards.
    (4) Behavioral management. When a SUDRF uses a behavioral management 
program, the center shall adhere to a comprehensive, written plan of 
behavioral management, developed by the clinical director and the 
medical or professional staff and approved by the governing body. It 
shall be based on positive reinforcement methods and, except for 
infrequent use of temporary physical holds or time outs, does not

[[Page 164]]

include the use of restraint or seclusion. Only trained and clinically 
privileged RNs or qualified mental health professionals may be 
responsible for the implementation of seclusion and restraint in an 
emergency situation.
    (5) Admission process. The SUDRF shall maintain written policies and 
procedures to ensure that, prior to an admission, a determination is 
made, and approved pursuant to CHAMPUS preauthorization requirements, 
that the admission is medically and/or psychologically necessary and the 
program is appropriate to meet the patient's needs. Medical and/or 
psychological necessity determinations shall be rendered by qualified 
mental health professionals who meet CHAMPUS requirements for individual 
professional providers and who are permitted by law and by the facility 
to refer patients for admission.
    (6) Assessment. The professional staff of the SUDRF shall provide a 
complete, multidisciplinary assessment of each patient which includes, 
but is not limited to, medical history, physical health, nursing needs, 
alcohol and drug history, emotional and behavioral factors, age-
appropriate social circumstances, psychological condition, education 
status, and skills. Unless otherwise specified, all required clinical 
assessments are completed prior to development of the multidisciplinary 
treatment plan.
    (7) Clinical formulation. A qualified mental health care 
professional of the SUDRF will complete a clinical formulation on all 
patients. The clinical formulation will be reviewed and approved by the 
responsible individual professional provider and will incorporate 
significant findings from each of the multidisciplinary assessments. It 
will provide the basis for development of an interdisciplinary treatment 
plan.
    (8) Treatment planning. A qualified health care professional with 
admitting privileges shall be responsible for the development, 
supervision, implementation, and assessment of a written, 
individualized, and interdisciplinary plan of treatment, which shall be 
completed within 10 days of admission to an inpatient rehabilitation 
center or by the fifth day following admission to full day partial 
hospitalization center, and by the seventh day of treatment for half day 
partial hospitalization. The treatment plan shall include individual, 
measurable, and observable goals for incremental progress towards the 
treatment plan objectives and goals and discharge. A preliminary 
treatment plan is completed within 24 hours of admission and includes at 
least a physician's admission note and orders. The master treatment plan 
is regularly reviewed for effectiveness and revised when major changes 
occur in treatment.
    (9) Discharge and transition planning. The SUDRF shall maintain a 
transition planning process to address adequately the anticipated needs 
of the patient prior to the time of discharge.
    (10) Clinical documentation. Clinical records shall be maintained on 
each patient to plan care and treatment and provide ongoing evaluation 
of the patient's progress. All care is documented and each clinical 
record contains at least the following: demographic data, consent forms, 
pertinent legal documents, all treatment plans and patient assessments, 
consultation and laboratory reports, physician orders, progress notes, 
and a discharge summary. All documentation will adhere to applicable 
provisions of the JCAHO and requirements set forth in Sec. 199.7(b)(3). 
An appropriately qualified records administrator or technician will 
supervise and maintain the quality of the records. These requirements 
are in addition to other records requirements of this part, and 
provisions of the JCAHO Manual for Mental Health, Chemical Dependency, 
and Mental Retardation/Developmental Disabilities Services.
    (11) Progress notes. Timely and complete progress notes shall be 
maintained to document the course of treatment for the patient and 
family.
    (12) Therapeutic services.
    (i) Individual, group, and family psychotherapy and addiction 
counseling services are provided to all patients, consistent with each 
patient's treatment plan by qualified mental health providers.
    (ii) A range of therapeutic activities, directed and staffed by 
qualified personnel, are offered to help patients meet the goals of the 
treatment plan.

[[Page 165]]

    (iii) Therapeutic educational services are provided or arranged that 
are appropriate to the patient's educational and therapeutic needs.
    (13) Ancillary services. A full range of ancillary services is 
provided. Emergency services include policies and procedures for 
handling emergencies with qualified personnel and written agreements 
with each facility providing the service. Other ancillary services 
include physical health, pharmacy and dietary services.
    (C) Standards for physical plant and environment.
    (1) Physical environment. The buildings and grounds of the SUDRF 
shall be maintained so as to avoid health and safety hazards, be 
supportive of the services provided to patients, and promote patient 
comfort, dignity, privacy, personal hygiene, and personal safety.
    (2) Physical plant safety. The SUDRF shall be maintained in a manner 
that protects the lives and ensures the physical safety of patients, 
staff, and visitors, including conformity with all applicable building, 
fire, health, and safety codes.
    (3) Disaster planning. The SUDRF shall maintain and rehearse written 
plans for taking care of casualties and handling other consequences 
arising from internal or external disasters.
    (D) Standards for evaluation system.
    (1) Quality assessment and improvement. The SUDRF develop and 
implement a comprehensive quality assurance and quality improvement 
program that monitors the quality, efficiency, appropriateness, and 
effectiveness of the care, treatments, and services it provides for 
patients and their families, utilizing clinical indicators of 
effectiveness to contribute to an ongoing process of program 
improvement. The clinical director is responsible for developing and 
implementing quality assessment and improvement activities throughout 
the facility.
    (2) Utilization review. The SUDRF shall implement a utilization 
review process, pursuant to a written plan approved by the professional 
staff, the administration, and the governing body, that assesses the 
appropriateness of admissions, continued stay, and timeliness of 
discharge as part of an effort to provide quality patient care in a 
cost-effective manner. Findings of the utilization review process are 
used as a basis for revising the plan of operation, including a review 
of staff qualifications and staff composition.
    (3) Patient records review. The center shall implement a process, 
including monthly reviews of a representative sample of patient records, 
to determine the completeness and accuracy of the patient records and 
the timeliness and pertinence of record entries, particularly with 
regard to regular recording of progress/non-progress in treatment plan.
    (4) Drug utilization review. An inpatient rehabilitation center and, 
when applicable, a partial hospitalization center, shall implement a 
comprehensive process for the monitoring and evaluating of the 
prophylactic, therapeutic, and empiric use of drugs to assure that 
medications are provided appropriately, safely, and effectively.
    (5) Risk management. The SUDRF shall implement a comprehensive risk 
management program, fully coordinated with other aspects of the quality 
assurance and quality improvement program, to prevent and control risks 
to patients and staff and costs associated with clinical aspects of 
patient care and safety.
    (6) Infection control. The SUDRF shall implement a comprehensive 
system for the surveillance, prevention, control, and reporting of 
infections acquired or brought into the facility.
    (7) Safety. The SUDRF shall implement an effective program to assure 
a safe environment for patients, staff, and visitors.
    (8) Facility evaluation. The SUDRF annually evaluates accomplishment 
of the goals and objectives of each clinical program and service of the 
SUDRF and reports findings and recommendations to the governing body.
    (E) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xiv) of this section, in 
order for the services of an inpatient rehabilitation center or partial 
hospitalization center for the treatment of substance abuse disorders to 
be authorized, the center shall have entered into a Participation 
Agreement with OCHAMPUS. The period of a

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Participation Agreement shall be specified in the agreement, and will 
generally be for not more than five years. On October 1, 1995, the SUDRF 
shall not be considered to be a CHAMPUS authorized provider and CHAMPUS 
payments shall not be made for services provided by the SUDRF until the 
date the participation agreement is signed by the Director, OCHAMPUS. In 
addition to review of the SUDRFS application and supporting 
documentation, an on-site visit by OCHAMPUS representatives may be part 
of the authorization process. In addition, such a Participation 
Agreement may not be signed until an SUDRF has been licensed and 
operational for at least six months. The Participation Agreement shall 
include at least the following requirements:
    (1) Render applicable services to eligible CHAMPUS beneficiaries in 
need of such services, in accordance with the participation agreement 
and CHAMPUS regulation;
    (2) Accept payment for its services based upon the methodology 
provided in Sec. 199.14, or such other method as determined by the 
Director, OCHAMPUS;
    (3) Accept the CHAMPUS-determined rate as payment in full and 
collect from the CHAMPUS beneficiary or the family of the CHAMPUS 
beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec. 199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director, 
OCHAMPUS, to collect those amounts which represent the beneficiary's 
liability, as defined in Sec. 199.4;
    (5) Comply with the provisions of Sec. 199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, 
certified to by an independent accounting firm or other agency as 
authorized by the Director, OCHAMPUS;
    (7) Certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(xiv) of the section establishing standards for 
substance use disorder rehabilitation facilities;
    (ii) It has conducted a self assessment of the SUDRF'S compliance 
with the CHAMPUS Standards for Substance Use Disorder Rehabilitation 
Facilities, as issued by the Director, OCHAMPUS, and notified the 
Director, OCHAMPUS of any matter regarding which the facility is not in 
compliance with such standards; and
    (iii) It will maintain compliance with the CHAMPUS Standards for 
Substance Use Disorder Rehabilitation Facilities, as issued by the 
Director, OCHAMPUS, except for any such standards regarding which the 
facility notifies the Director, OCHAMPUS that it is not in compliance.
    (8) Grant the Director, OCHAMPUS, or designee, the right to conduct 
quality assurance audits or accounting audits with full access to 
patients and records (including records relating to patients who are not 
CHAMPUS beneficiaries) to determine the quality and cost effectiveness 
of care rendered. The audits may be conducted on a scheduled or 
unscheduled (unannounced) basis. This right to audit/review included, 
but is not limited to:
    (i) Examination of fiscal and all other records of the center which 
would confirm compliance with the participation agreement and 
designation as an authorized CHAMPUS provider;
    (ii) Conducting such audits of center records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspection conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the SUDRF 
and interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required.
    (v) Audits conducted by the United States General Accounting Office.
    (F) Other requirements applicable to substance use disorder 
rehabilitation facilities.

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    (1) Even though a SUDRF may qualify as a CHAMPUS-authorized provider 
and may have entered into a participation agreement with CHAMPUS, 
payment by CHAMPUS for particular services provided is contingent upon 
the SUDRF also meeting all conditions set forth in Sec. 199.4.
    (2) The center shall provide inpatient services to CHAMPUS 
beneficiaries in the same manner it provides services to all other 
patients. The center may not discriminate against CHAMPUS beneficiaries 
in any manner, including admission practices, placement in special or 
separate wings or rooms, or provisions of special or limited treatment.
    (3) The substance use disorder facility shall assure that all 
certifications and information provided to the Director, OCHAMPUS 
incident to the process of obtaining and retaining authorized provider 
status is accurate and that it has no material errors or omissions. In 
the case of any misrepresentations, whether by inaccurate information 
being provided or material facts withheld, authorized provider status 
will be denied or terminated, and the facility will be ineligible for 
consideration for authorized provider status for a two year period.
    (c) Individual professional providers of care--(1) General--(i) 
Purpose. This individual professional provider class is established to 
accommodate individuals who are recognized by 10 U.S.C. 1079(a) as 
authorized to assess or diagnose illness, injury, or bodily malfunction 
as a prerequisite for CHAMPUS cost-share of otherwise allowable related 
preventive or treatment services or supplies, and to accommodate such 
other qualified individuals who the Director, OCHAMPUS, or designee, may 
authorize to render otherwise allowable services essential to the 
efficient implementation of a plan-of-care established and managed by a 
10 U.S.C. 1079(a) authorized professional.
    (ii) Professional corporation affiliation or association membership 
permitted. Paragraph (c) of this section applies to those individual 
health care professionals who have formed a professional corporation or 
association pursuant to applicable state laws. Such a professional 
corporation or association may file claims on behalf of a CHAMPUS-
authorized individual professional provider and be the payee for any 
payment resulting from such claims when the CHAMPUS-authorized 
individual certifies to the Director, OCHAMPUS, or designee, in writing 
that the professional corporation or association is acting on the 
authorized individual's behalf.
    (iii) Scope of practice limitation. For CHAMPUS cost-sharing to be 
authorized, otherwise allowable services provided by a CHAMPUS-
authorized individual professional provider shall be within the scope of 
the individual's license as regulated by the applicable state practice 
act of the state where the individual rendered the service to the 
CHAMPUS beneficiary or shall be within the scope of the test which was 
the basis for the individual's qualifying certification.
    (iv) Employee status exclusion. An individual employed directly, or 
indirectly by contract, by an individual or entity to render 
professional services otherwise allowable by this part is excluded from 
provider status as established by this paragraph (c) for the duration of 
each employment.
    (v) Training status exclusion. Individual health care professionals 
who are allowed to render health care services only under direct and 
ongoing supervision as training to be credited towards earning a 
clinical academic degree or other clinical credential required for the 
individual to practice independently are excluded from provider status 
as established by this paragraph (c) for the duration of such training.
    (2) Conditions of authorization--(i) Professional license 
requirement. The individual must be currently licensed to render 
professional health care services in each state in which the individual 
renders services to CHAMPUS beneficiaries. Such license is required when 
a specific state provides, but does not require, license for a specific 
category of individual professional provider. The license must be at 
full clinical practice level to meet this requirement. A temporary 
license at the full clinical practice level is acceptable.
    (ii) Professional certification requirement. When a state does not 
license a

[[Page 168]]

specific category of individual professional, certification by a 
Qualified Accreditation Organization, as defined in Sec. 199.2, is 
required. Certification must be at full clinical practice level. A 
temporary certification at the full clinical practice level is 
acceptable.
    (iii) Education, training and experience requirement. The Director, 
OCHAMPUS, or designee, may establish for each category or type of 
provider allowed by this paragraph (c) specific education, training, and 
experience requirements as necessary to promote the delivery of services 
by fully qualified individuals.
    (iv) Physician referral and supervision. When physician referral and 
supervision is a prerequisite for CHAMPUS cost-sharing of the services 
of a provider authorized under this paragraph (c), such referral and 
supervision means that the physicians must actually see the patient to 
evaluate and diagnose the condition to be treated prior to referring the 
beneficiary to another provider and that the referring physician 
provides ongoing oversight of the course of referral related treatment 
throughout the period during which the beneficiary is being treated in 
response to the referral. Written contemporaneous documentation of the 
referring physician's basis for referral and ongoing communication 
between the referring and treating provider regarding the oversight of 
the treatment rendered as a result of the referral must meet all 
requirements for medical records established by this part. Referring 
physician supervision does not require physical location on the premises 
of the treating provider or at the site of treatment.
    (3) Types of providers. Subject to the standards of participation 
provisions of this part, the following individual professional providers 
of medical care are authorized to provide services to CHAMPUS 
beneficiaries:
    (i) Physicians. (A) Doctors of Medicine (M.D.).
    (B) Doctors of Osteopathy (D.O.).
    (ii) Dentists. Except for covered oral surgery as specified in 
Sec. 199.4(e) of this part, all otherwise covered services rendered by 
dentists require preauthorization.
    (A) Doctors of Dental Medicine (D.M.D.).
    (B) Doctors of Dental Surgery (D.D.S.).
    (iii) Other allied health professionals. The services of the 
following individual professional providers of care are coverable on a 
fee-for-service basis provided such services are otherwise authorized in 
this or other sections of this part.
    (A) Clinical psychologist. For purposes of CHAMPUS, a clinical 
psychologist is an individual who is licensed or certified by the state 
for the independent practice of psychology and:
    (1) Possesses a doctoral degree in psychology from a regionally 
accredited university; and
    (2) Has has 2 years of supervised clinical experience in 
psychological health services of which at least 1 year is post-doctoral 
and 1 year (may be the post-doctoral year) is in an organized 
psychological health service training program; or
    (3) As an alternative to paragraphs (c)(3)(iii)(A)(1) and (2) of 
this section is listed in the National Register of Health Service 
Providers in Psychology.
    (B) Doctors of Optometry.
    (C) Doctors of Podiatry or Surgical Chiropody.
    (D) Certified nurse midwives.
    (1) A certified nurse midwife may provide covered care independent 
of physician referral and supervision, provided the nurse midwife is:
    (i) Licensed, when required, by the local licensing agency for the 
jurisdiction in which the care is provided; and
    (ii) Certified by the American College of Nurse Midwives. To receive 
certification, a candidate must be a registered nurse who has completed 
successfully an educational program approved by the American College of 
Nurse Midwives, and passed the American College of Nurse Midwives 
National Certification Examination.
    (2) The services of a registered nurse who is not a certified nurse 
midwife may be authorized only when the patient has been referred for 
care by a licensed physician and a licensed physican provides continuing 
supervision of the course of care. A lay midwife who is neither a 
certified nurse midwife nor a registered nurse is not a

[[Page 169]]

CHAMPUS-authorized provider, regardless of whether the services rendered 
may otherwise be covered.
    (E) Certified nurse practitioner. Within the scope of applicable 
licensure or certification requirements, a certified nurse practitioner 
may provide covered care independent of physician referral and 
supervision, provided the nurse practitioner is:
    (1) A licensed, registered nurse; and
    (2) Specifically licensed or certified as a nurse practitioner by 
the state in which the care was provided, if the state offers such 
specific licensure or certification; or
    (3) Certified as a nurse practitioner (certified nurse) by a 
professional organization offering certification in the speciality of 
practice, if the state does not offer specific licensure or 
certification for nurse practitioners.
    (F) Certified Clinical Social Worker. A clinical social worker may 
provide covered services independent of physician referral and 
supervision, provided the clinical social worker:
    (1) Is licensed or certified as a clinical social worker by the 
jurisdiction where practicing; or, if the jurisdiction does not provide 
for licensure or certification of clinical social workers, is certified 
by a national professional organization offering certification of 
clinical social workers; and
    (2) Has at least a master's degree in social work from a graduate 
school of social work accredited by the Council on Social Work 
Education; and
    (3) Has had a minimum of 2 years or 3,000 hours of post-master's 
degree supervised clinical social work practice under the supervision of 
a master's level social worker in an appropriate clinical setting, as 
determined by the Director, OCHAMPUS, or a designee.
    Note: Patients' organic medical problems must receive appropriate 
concurrent management by a physician.
    (G) Certified psychiatric nurse specialist. A certified psychiatric 
nurse specialist may provide covered care independent of physician 
referral and supervision. For purposes of CHAMPUS, a certified 
psychiatric nurse specialist is an individual who:
    (1) Is a licensed, registered nurse; and
    (2) Has at least a master's degree in nursing from a regionally 
accredited institution with a specialization in psychiatric and mental 
health nursing; and
    (3) Has had at least 2 years of post-master's degree practice in the 
field of psychiatric and mental health nursing, including an average of 
8 hours of direct patient contact per week; or
    (4) Is listed in a CHAMPUS-recognized, professionally sanctioned 
listing of clinical specialists in psychiatric and mental health 
nursing.
    (H) Certified physician assistant. A physician assistant may provide 
care under general supervision of a physician (see 
Sec. 199.14(g)(1)(iii) of this part for limitations on reimbursement). 
For purposes of CHAMPUS, a physician assistant must meet the applicable 
state requirements governing the qualifications of physician assistants 
and at least one of the following conditions:
    (1) Is currently certified by the National Commission on 
Certification of Physician Assistants to assist primary care physicians, 
or
    (2) Has satisfactorily completed a program for preparing physician 
assistants that:
    (i) Was at least 1 academic year in length;
    (ii) Consisted of supervised clinical practice and at least 4 months 
(in the aggregate) of classroom instruction directed toward preparing 
students to deliver health care; and
    (iii) Was accredited by the American Medical Association's Committee 
on Allied Health Education and Accreditation; or
    (3) Has satisfactorily completed a formal educational program for 
preparing program physician assistants that does not meet the 
requirement of paragraph (c)(3)(iii)(H)(2) of this section and had been 
assisting primary care physicians for a minimum of 12 months during the 
18-month period immediately preceding January 1, 1987.
    (I) Other individual paramedical providers. The services of the 
following individual professional providers of care to be considered for 
benefits on a fee-for-service basis may be provided only if the 
beneficiary is referred by a physician for the treatment of a medically-
diagnosed condition and a physician must also provide continuing and 
ongoing oversight and supervision of the

[[Page 170]]

program or episode of treatment provided by these individual para-
medical providers.
    (1) Licensed registered nurses.
    (2) Licensed registered physical therapists and occupational 
therapists.
    (3) Licensed registered physical therapists.
    (4) Audiologists.
    (5) Speech therapists (speech pathologists).
    (iv) Extramedical individual providers. Extramedical individual 
providers are those who do counseling or nonmedical therapy and whose 
training and therapeutic concepts are outside the medical field. The 
services of extramedical individual professionals are coverable 
following the CHAMPUS determined allowable charge methodology provided 
such services are otherwise authorized in this or other sections of the 
regulation.
    (A) Certified marriage and family therapists. For the purposes of 
CHAMPUS, a certified marriage and family therapist is an individual who 
meets the following requirements:
    (1) Recognized graduate professional education with the minimum of 
an earned master's degree from a regionally accredited educational 
institution in an appropriate behavioral science field, mental health 
discipline; and
    (2) The following experience:
    (i) Either 200 hours of approved supervision in the practice of 
marriage and family counseling, ordinarily to be completed in a 2- to 3-
year period, of which at least 100 hours must be in individual 
supervision. This supervision will occur preferably with more than one 
supervisor and should include a continuous process of supervision with 
at least three cases; and
    (ii) 1,000 hours of clinical experience in the practice of marriage 
and family counseling under approved supervision, involving at least 50 
different cases; or
    (iii) 150 hours of approved supervision in the practice of 
psychotherapy, ordinarily to be completed in a 2- to 3-year period, of 
which at least 50 hours must be individual supervision; plus at least 50 
hours of approved individual supervision in the practice of marriage and 
family counseling, ordinarily to be completed within a period of not 
less than 1 nor more than 2 years; and
    (iv) 750 hours of clinical experience in the practice of 
psychotherapy under approved supervision involving at least 30 cases; 
plus at least 250 hours of clinical practice in marriage and family 
counseling under approved supervision, involving at least 20 cases; and
    (3) Is licensed or certified to practice as a marriage and family 
therapist by the jurisdiction where practicing (see paragraph 
(c)(3)(iv)(D) of this section for more specific information regarding 
licensure); and
    (4) Agrees that a patients' organic medical problems must receive 
appropriate concurrent management by a physician.
    (5) Agrees to accept the CHAMPUS determined allowable charge as 
payment in full, except for applicable deductibles and cost-shares, and 
hold CHAMPUS beneficiaries harmless for noncovered care (i.e., may not 
bill a beneficiary for noncovered care, and may not balance bill a 
beneficiary for amounts above the allowable charge). The certified 
marriage and family therapist must enter into a participation agreement 
with the Office of CHAMPUS within which the certified marriage and 
family therapist agrees to all provisions specified above.
    (6) As of the effective date of termination, the certified marriage 
and family therapist will no longer be recognized as an authorized 
provider under CHAMPUS. Subsequent to termination, the certified 
marriage and family therapist may only be reinstated as an authorized 
CHAMPUS extramedical provider by entering into a new participation 
agreement as a certified marriage and family therapist.
    (B) Pastoral counselors. For the purposes of CHAMPUS, a pastoral 
counselor is an individual who meets the following requirements:
    (1) Recognized graduate professional education with the minimum of 
an earned master's degree from a regionally accredited educational 
institution in an appropriate behavioral science field, mental health 
discipline; and
    (2) The following experience:
    (i) Either 200 hours of approved supervision in the practice of 
pastoral counseling, ordinarily to be completed in a 2- to 3-year 
period, of which at least 100

[[Page 171]]

hours must be in individual supervision. This supervision will occur 
preferably with more than one supervisor and should include a continuous 
process of supervision with at least three cases; and
    (ii) 1,000 hours of clinical experience in the practice of pastoral 
counseling under approved supervision, involving at least 50 different 
cases; or
    (iii) 150 hours of approved supervision in the practice of 
psychotherapy, ordinarily to be completed in a 2- to 3-year period, of 
which at least 50 hours must be individual supervision; plus at least 50 
hours of approved individual supervision in the practice of pastoral 
counseling, ordinarily to be completed within a period of not less than 
1 nor more than 2 years; and
    (iv) 750 hours of clinical experience in the practice of 
psychotherapy under approved supervision involving at least 30 cases; 
plus at least 250 hours of clinical practice in pastoral counseling 
under approved supervision, involving at least 20 cases; and
    (3) Is licensed or certified to practice as a pastoral counselor by 
the jurisdiction where practicing (see paragraph (c)(3)(iv)(D) of this 
section for more specific information regarding licensure); and
    (4) The services of a pastoral counselor meeting the above 
requirements are coverable following the CHAMPUS determined allowable 
charge methdology, under the following specified conditions:
    (i) The CHAMPUS beneficiary must be referred for therapy by a 
physician; and
    (ii) A physician is providing ongoing oversight and supervision of 
the therapy being provided; and
    (iii) The pastoral counselor must certify on each claim for 
reimbursement that a written communication has been made or will be made 
to the referring physician of the results of the treatment. Such 
communication will be made at the end of the treatment, or more 
frequently, as required by the referring physician (refer to 
Sec. 199.7).
    (5) Because of the similarity of the requirements for licensure, 
certification, experience, and education, a pastoral counselor may elect 
to be authorized under CHAMPUS as a certified marriage and family 
therapist, and as such, be subject to all previously defined criteria 
for the certified marriage and family therapist category, to include 
acceptance of the CHAMPUS determined allowable charge as payment in 
full, except for applicable deductibles and cost-shares (i.e., balance 
billing of a beneficiary above the allowable charge is prohibited; may 
not bill beneficiary for noncovered care). The pastoral counselor must 
also agree to enter into the same participation agreement as a certified 
marriage and family therapist with the Office of CHAMPUS within which 
the pastoral counselor agrees to all provisions including licensure, 
national association membership and conditions upon termination, 
outlined above for certified marriage and family therapist.
    Note: No dual status will be recognized by the Office of CHAMPUS. 
Pastoral counselors must elect to become one of the categories of 
extramedical CHAMPUS provides specified above. Once authorized as either 
a pastoral counselor, or a certified marriage and family therapist, 
claims review and reimbursement will be in accordance with the criteria 
established for the elected provider category.
    (C) Mental health counselor. For the purposes of CHAMPUS, a mental 
health counselor is an individual who meets the following requirements:
    (1) Minimum of a master's degree in mental health counseling or 
allied mental health field from a regionally accredited institution; and
    (2) Two years of post-masters experience which includes 3000 hours 
of clinical work and 100 hours of face-to-face supervision; and
    (3) Is licensed or certified to practice as a mental health 
counselor by the jurisdiction where practicing (see paragraph 
(c)(3)(iv)(D) of this section for more specific information); and
    (4) May only be reimbursed when:
    (i) The CHAMPUS beneficiary is referred for therapy by a physician; 
and
    (ii) A physician is providing ongoing oversight and supervision of 
the therapy being provided; and
    (iii) The mental health counselor certifies on each claim for 
reimbursement that a written communication has been made or will be made 
to the referring physician of the results of the treatment. Such 
communication will be made at the end of the treatment, or

[[Page 172]]

more frequently, as required by the referring physician (refer to 
Sec. 199.7).
    (D) The following additional information applies to each of the 
above categories of extramedical individual providers:
    (1) These providers must also be licensed or certified to practice 
as a certified marriage and family therapist, pastoral counselor or 
mental health counselor by the jurisdiction where practicing. In 
jurisdictions that do not provide for licensure or certification, the 
provider must be certified by or eligible for full clinical membership 
in the appropriate national professional association that sets standards 
for the specific profession.
    (2) Grace period for therapists or counselors in states where 
licensure/certification is optional. CHAMPUS is providing a grace period 
for those therapists or counselors who did not obtain optional 
licensure/certification in their jurisdiction, not realizing it was a 
CHAMPUS requirement for authorization. The exemption by state law for 
pastoral counselors may have misled this group into thinking licensure 
was not required. The same situation may have occurred with the other 
therapist or counselor categories where licensure was either not 
mandated by the state or was provided under a more general category such 
as ``professional counselors.'' This grace period pertains only to the 
licensure/certification requirement, applies only to therapists or 
counselors who are already approved as of October 29, 1990, and only in 
those areas where the licensure/certification is optional. Any therapist 
or counselor who is not licensed/certified in the state in which he/she 
is practicing by August 1, 1991, will be terminated under the provisions 
of Sec. 199.9. This grace period does not change any of the other 
existing requirements which remain in effect. During this grace period, 
membership or proof of eligibility for full clinical membership in a 
recognized professional association is required for those therapists or 
counselors who are not licensed or certified by the state. The following 
organizations are recognized for therapists or counselors at the level 
indicated: Full clinical member of the American Association of Marriage 
and Family Therapy; membership at the fellow or diplomate level of the 
American Association of Pastoral Counselors; and membership in the 
National Academy of Certified Clinical Mental Health Counselors. 
Acceptable proof of eligibility for membership is a letter from the 
appropriate certifying organization. This opportunity for delayed 
certification/licensure is limited to the counselor or therapist 
category only as the language in all of the other provider categories 
has been consistent and unmodified from the time each of the other 
provider categories were added. The grace period does not apply in those 
states where licensure is mandatory.
    (E) Christian Science practitioners and Christian Science nurses. 
CHAMPUS cost-shares the services of Christian Science practitioners and 
nurses. In order to bill as such, practitioners or nurses must be listed 
or be eligible for listing in the Christian Science Journal \1\ at the 
time the service is provided.
---------------------------------------------------------------------------

    \1\ Copies of this journal can be obtained through the Christian 
Science Publishing Company, 1 Norway Street, Boston, MA 02115-3122 or 
the Christian Science Publishing Society, P.O. Box 11369, Des Moines, IA 
50340.
---------------------------------------------------------------------------

    (d) Other providers. Certain medical supplies and services of an 
ancillary or supplemental nature are coverable by CHAMPUS, subject to 
certain controls. This category of provider includes the following:
    (1) Independent laboratory. Laboratory services of independent 
laboratories may be cost-shared if the laboratory is approved for 
participation under Medicare and certified by the Medicare Bureau, 
Health Care Financing Administration.
    (2) Suppliers of portable x-ray services. Such suppliers must meet 
the conditions of coverage of the Medicare program, set forth in the 
Medicare regulations, or the Medicaid program in that state in which the 
covered service is provided.
    (3) Pharmacies. Pharmacies must meet the applicable requirements of 
state law in the state in which the pharmacy is located.
    (4) Ambulance companies. Such companies must meet the requirements 
of

[[Page 173]]

state and local laws in the jurisdiction in which the ambulance firm is 
licensed.
    (5) Medical equipment firms, medical supply firms. As determined by 
the Director, OCHAMPUS, or a designee.
    (6) Mammography suppliers. Mammography services may be cost-shared 
only if the supplier is certified by Medicare for participation as a 
mammography supplier, or is certified by the American College of 
Radiology as having met its mammography supplier standards.
    (e) Program for Persons with Disabilities Providers.--(1) General. 
(i) Services and items cost-shared through Sec. 199.5 must be rendered 
by a CHAMPUS-authorized provider.
    (ii) A Program for the Handicapped (PFTH) provider with CHAMPUS-
authorized status on the effective date for the Program for Persons with 
Disabilities (PFPWD) shall be deemed to be a CHAMPUS-authorized PFPWD 
provider until all outstanding PFTH benefit authorizations for services 
or items being rendered by the provider expire.
    (2) PFPWD provider categories.--(i) PFPWD inpatient care provider. A 
provider of residential institutional care which is otherwise a PFPWD 
benefit shall be:
    (A) A not-for-profit entity or a public facility, as defined in 
Sec. 199.2; and
    (B) Located within a State, as defined in Sec. 199.2; and
    (C) Be certified as eligible for Medicaid payment in accordance with 
a State plan for medical assistance under Title XIX of the Social 
Security Act (Medicaid) as a Medicaid Nursing Facility, or Intermediate 
Care Facility for the Mentally Retarded, or be a CHAMPUS-authorized 
Institutional Provider as defined in paragraph (b) of this section, or 
be approved by a State educational agency as a training institution.
    (ii) PFPWD outpatient care provider. A provider of PFPWD outpatient, 
ambulatory, or in-home services shall be:
    (A) A CHAMPUS-authorized provider of services as defined in this 
section; or
    (B) An individual, corporation, foundation, or public entity that 
predominantly renders services of a type uniquely allowable as a PFPWD 
benefit and not otherwise allowable as a benefit of Sec. 199.4, that 
meets all applicable licensing or other regulatory requirements that are 
extant in the state, county, municipality, or other political 
jurisdiction in which the PFPWD service is rendered.
    (iii) PFPWD vendor. A provider of an allowable PFPWD item, supply, 
equipment, orthotic, or device shall be deemed to be a CHAMPUS-
authorized vendor for the provision of the specific item, supply, 
equipment, orthotic, or device when the vendor supplies such information 
as the Director, OCHAMPUS, or designee, determines necessary to 
adjudicate a specific claim.
    (3) PFPWD provider exclusion or suspension. A provider of PFPWD 
services or items may be excluded or suspended for a pattern of 
discrimination on the basis of disability. Such exclusion or suspension 
shall be accomplished according to the provisions of Sec. 199.9.
    (f) Corporate services providers--(1) General. (i) This corporate 
services provider class is established to accommodate individuals who 
would meet the criteria for status as a CHAMPUS authorized individual 
professional provider as established by paragraph (c) of this section 
but for the fact that they are employed directly or contractually by a 
corporation or foundation that provides principally professional 
services which are within the scope of the CHAMPUS benefit.
    (ii) Payment for otherwise allowable services may be made to a 
CHAMPUS-authorized corporate services provider subject to the applicable 
requirements, exclusions and limitations of this part.
    (iii) The Director, OCHAMPUS, or designee, may create discrete types 
within any allowable category of provider established by this paragraph 
(f) to improve the efficiency of CHAMPUS management.
    (iv) The Director, OCHAMPUS, or designee, may require, as a 
condition of authorization, that a specific category or type of provider 
established by this paragraph (f):
    (A) Maintain certain accreditation in addition to or in lieu of the 
requirement of paragraph (f)(2)(v) of this section;

[[Page 174]]

    (B) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the Department 
of Defense for the geographic area in which the provider does business;
    (C) Render services for which direct or indirect payment is expected 
to be made by CHAMPUS only after obtaining CHAMPUS written 
authorization; and
    (D) Maintain Medicare approval for payment when the Director, 
OCHAMPUS, or designee, determines that a category, or type, of provider 
established by this paragraph (f) is substantially comparable to a 
provider or supplier for which Medicare has regulatory conditions of 
participation or conditions of coverage.
    (v) Otherwise allowable services may be rendered at the authorized 
corporate services provider's place of business, or in the beneficiary's 
home under such circumstances as the Director, OCHAMPUS, or designee, 
determines to be necessary for the efficient delivery of such in-home 
services.
    (vi) The Director, OCHAMPUS, or designee, may limit the term of a 
participation agreement for any category or type of provider established 
by this paragraph (f).
    (vii) Corporate services providers shall be assigned to only one of 
the following allowable categories based upon the predominate type of 
procedure rendered by the organization;
    (A) Medical treatment procedures;
    (B) Surgical treatment procedures;
    (C) Maternity management procedures;
    (D) Rehabilitation and/or habilitation procedures; or
    (E) Diagnostic technical procedures.
    (viii) The Director, OCHAMPUS, or designee, shall determine the 
appropriate procedural category of a qualified organization and may 
change the category based upon the provider's CHAMPUS claim 
characteristics. The category determination of the Director, OCHAMPUS, 
designee, is conclusive and may not be appealed.
    (2) Conditions of authorization. An applicant must meet the 
following conditions to be eligible for authorization as a CHAMPUS 
corporate services provider:
    (i) Be a corporation or a foundation, but not a professional 
corporation or professional association; and
    (ii) Be institution-affiliated or freestanding as defined in 
Sec. 199.2; and
    (iii) Provide:
    (A) Services and related supplies of a type rendered by CHAMPUS 
individual professional providers or diagnostic technical services and 
related supplies of a type which requires direct patient contact and a 
technologist who is licensed by the state in which the procedure is 
rendered or who is certified by a Qualified Accreditation Organization 
as defined in Sec. 199.2; and
    (B) A level of care which does not necessitate that the beneficiary 
be provided with on-site sleeping accommodations and food in conjunction 
with the delivery of services; and
    (iv) Complies with all applicable organizational and individual 
licensing or certification requirements that are extant in the state, 
county, municipality, or other political jurisdiction in which the 
provider renders services; and
    (v) Be approved for Medicare payment when determined to be 
substantially comparable under the provisions of paragraph (f)(1)(iv)(D) 
of this section or, when Medicare approved status is not required, be 
accredited by a qualified accreditation organization, as defined in 
Sec. 199.2; and
    (vi) Has entered into a participation agreement approved by the 
Director, OCHAMPUS, or designee, which at least complies with the 
minimum participation agreement requirements of this section.
    (3) Transfer of participation agreement. In order to provide 
continuity of care for beneficiaries when there is a change of provider 
ownership, the provider agreement is automatically assigned to the new 
owner, subject to all the terms and conditions under which the original 
agreement was made.
    (i) The merger of the provider corporation or foundation into 
another corporation or foundation, or the consolidation of two or more 
corporations or foundations resulting in the creation of a new 
corporation or foundation, constitutes a change of ownership.

[[Page 175]]

    (ii) Transfer of corporate stock or the merger of another 
corporation or foundation into the provider corporation or foundation 
does not constitute change of ownership.
    (iii) The surviving corporation or foundation shall notify the 
Director, OCHAMPUS, or designee, in writing of the change of ownership 
promptly after the effective date of the transfer or change in 
ownership.
    (4) Pricing and payment methodology: The pricing and payment of 
procedures rendered by a provider authorized under this paragraph (f) 
shall be limited to those methods for pricing and payment allowed by 
this part which the Director, OCHAMPUS, or designee, determines 
contribute to the efficient management of CHAMPUS.
    (5) Termination of participation agreement. A provider may terminate 
a participation agreement upon 45 days written notice to the Director, 
OCHAMPUS, or designee, and to the public.

[51 FR 24008, July 1, 1986]

    Editorial Note: For Federal Register citations affecting Sec. 199.6, 
see the List of Sections Affected in the Finding Aids section of this 
volume.



Sec. 199.7  Claims submission, review, and payment.

    (a) General. The Director, OCHAMPUS, or a designee, is responsible 
for ensuring that benefits under CHAMPUS are paid only to the extent 
described in this part. Before benefits can be paid, an appropriate 
claim must be submitted that includes sufficient information as to 
beneficiary identification, the medical services and supplies provided, 
and double coverage information, to permit proper, accurate, and timely 
adjudication of the claim by the CHAMPUS contractor or OCHAMPUS. 
Providers must be able to document that the care or service shown on the 
claim was rendered. This section sets forth minimum medical record 
requirements for verification of services. Subject to such definitions, 
conditions, limitations, exclusions, and requirements as may be set 
forth in this part, the following are the CHAMPUS claim filing 
requirements:
    (1) CHAMPUS identification card required. A patient shall present 
his or her applicable CHAMPUS identification card (that is, Uniformed 
Services identification card) to the authorized provider of care that 
identifies the patient as an eligible CHAMPUS beneficiary (refer to 
Sec. 199.3 of this part).
    (2) Claim required. No benefit may be extended under the Basic 
Program or Program for Persons with Disabilities (PFPWD) without the 
submission of a complete and properly executed appropriate claim form.
    (3) Responsibility for perfecting claim. It is the responsibility of 
the CHAMPUS beneficiary or sponsor or the authorized provider acting on 
behalf of the CHAMPUS beneficiary to perfect a claim for submission to 
the appropriate CHAMPUS fiscal intermediary. Neither a CHAMPUS fiscal 
intermediary nor OCHAMPUS is authorized to prepare a claim on behalf of 
a CHAMPUS beneficiary.
    (4) Obtaining appropriate claim form. CHAMPUS provides specific 
CHAMPUS forms appropriate for making a claim for benefits for various 
types of medical services and supplies (such as hospital, physician, or 
prescription drugs). Claim forms may be obtained from the appropriate 
CHAMPUS fiscal intermediary who processes claims for the beneficiary's 
state of residence, from the Director, OCHAMPUS, or a designee, or from 
CHAMPUS health benefits advisors (HBAs) located at all Uniformed 
Services medical facilities.
    (5) Prepayment not required. A CHAMPUS beneficiary or sponsor is not 
required to pay for the medical services or supplies before submitting a 
claim for benefits.
    (6) Deductible certificate. If the fiscal year outpatient 
deductible, as defined in Sec. 199.4(f)(2) has been met by a beneficiary 
or a family through the submission of a claim or claims to a CHAMPUS 
fiscal intermediary in a geographic location different from the location 
where a current claim is being submitted, the beneficiary or sponsor 
must obtain a deductible certificate from the CHAMPUS fiscal 
intermediary where the applicable individual or family fiscal year 
deductible was met. Such deductible certificate must be attached to the 
current claim being submitted for benefits. Failure to obtain a 
deductible certificate under

[[Page 176]]

such circumstances will result in a second individual or family fiscal 
year deductible being applied. However, this second deductible may be 
reimbursed once appropriate documentation, as described in this 
paragraph is supplied to the CHAMPUS fiscal intermediary applying the 
second deductible (refer to Sec. 199.4 (f)(2)(i)(F)).
    (7) Nonavailability Statement (DD Form 1251). In some geographic 
locations or under certain circumstances, it is necessary for a CHAMPUS 
beneficiary to determine whether the required medical care can be 
provided through a Uniformed Services facility. If the required medical 
care cannot be provided by the Uniformed Services facility, a 
Nonavailability Statement will be issued. When requried (except for 
emergencies), this Nonavailability Statement must be issued before 
medical care is obtained from civilian sources. Failure to secure such a 
statement will waive the beneficiary's rights to benefits under CHAMPUS, 
subject to appeal to the appropriate hospital commander (or higher 
medical authority).
    (i) Rules applicable to issuance of Nonavailability Statement. The 
ASD(HA) has issued DoD Instruction 6015.19 that contains rules for the 
issuance of Nonavailability Statements. Such rules may change depending 
on the current situations.
    (ii) Beneficiary responsibility. The beneficiary shall ascertain 
whether or not he or she resides in a geographic area that requires 
obtaining a Nonavailability Statement. Information concerning current 
rules may be obtained from the CHAMPUS fiscal intermediary concerned, a 
CHAMPUS HBA or the Director, OCHAMPUS, or a designee.
    (iii) Rules in effect at time civilian care is provided apply. The 
applicable rules regarding Nonavailability Statements in effect at the 
time the civilian care is rendered apply in determining whether a 
Nonavailability Statement is required.
    (iv) Nonavailability Statement must be filed with applicable claim. 
When a claim is submitted for CHAMPUS benefits that includes services 
for which a Nonavailability Statement is required, such statement must 
be submitted along with the claim form.
    (b) Information required to adjudicate a CHAMPUS claim. Claims 
received that are not completed fully and that do not provide the 
following minimum information may be returned. If enough space is not 
available on the appropriate claim form, the required information must 
be attached separately and include the patient's name and address, be 
dated, and signed.
    (1) Patient's identification information. The following patient 
identification information must be completed on every CHAMPUS claim form 
submitted for benefits before a claim will be adjudicated and processed:
    (i) Patient's full name.
    (ii) Patient's residence address.
    (iii) Patient's date of birth.
    (iv) Patient's relationship to sponsor.
    Note: If name of patient is different from sponsor, explain (for 
example, stepchild or illegitimate child).
    (v) Patient's identification number (from DD Form 1173).
    (vi) Patient's identification card effective date and expiration 
date (from DD Form 1173).
    (vii) Sponsor's full name.
    (viii) Sponsor's service or social security number.
    (ix) Sponsor's grade.
    (x) Sponsor's organization and duty station. Home port for ships; 
home address for retiree.
    (xi) Sponsor's branch of service or deceased or retiree's former 
branch of service.
    (xii) Sponsor's current status. Active duty, retired, or deceased.
    (2) Patient treatment information. The following patient treatment 
information routinely is required relative to the medical services and 
supplies for which a claim for benefits is being made before a claim 
will be adjudicated and processed:
    (i) Diagnosis. All applicable diagnoses are required; standard 
nomenclature is acceptable. In the absence of a diagnosis, a narrative 
description of the definitive set of symptoms for which the medical care 
was rendered must be provided.
    (ii) Source of care. Full name of source of care (such as hospital 
or physician) providing the specific medical services being claimed.

[[Page 177]]

    (iii) Full address of source of care. This address must be where the 
care actually was provided, not a billing address.
    (iv) Attending physician. Name of attending physician (or other 
authorized individual professional provider).
    (v) Referring physician. Name and address of ordering, prescribing, 
or referring physician.
    (vi) Status of patient. Status of patient at the time the medical 
services and supplies were rendered (that is, inpatient or outpatient).
    (vii) Dates of service. Specific and inclusive dates of service.
    (viii) Inpatient stay. Source and dates of related inpatient stay 
(if applicable).
    (ix) Physicians or other authorized individual professional 
providers. The claims must give the name of the individual actually 
rendering the care, along with the individual's professional status 
(e.g., M.D., Ph.D., R.N., etc.) and provider number, if the individual 
signing the claim is not the provider who actually rendered the service. 
The following information must also be included:
    (A) Date each service was rendered.
    (B) Procedure code or narrative description of each procedure or 
service for each date of service.
    (C) Individual charge for each item of service or each supply for 
each date.
    (D) Detailed description of any unusual complicating circumstances 
related to the medical care provided that the physician or other 
individual professional provider may choose to submit separately.
    (x) Hospitals or other authorized institutional providers. For care 
provided by hospitals (or other authorized institutional providers), the 
following information also must be provided before a claim will be 
adjudicated and processed:
    (A) An itemized billing showing each item of service or supply 
provided for each day covered by the claim.
    Note: The Director, OCHAMPUS, or a designee, may approve, in 
writing, an alternative billing procedure for RTCs or other special 
institutions, in which case the itemized billing requirement may be 
waived. The particular facility will be aware of such approved alternate 
billing procedure.
    (B) Any absences from a hospital or other authorized institution 
during a period for which inpatient benefits are being claimed must be 
identified specifically as to date or dates and provide details on the 
purpose of the absence. Failure to provide such information will result 
in denial of benefits and, in an ongoing case, termination of benefits 
for the inpatient stay at least back to the date of the absence.
    (C) For hospitals subject to the CHAMPUS DRG-based payment system 
(see paragraph (a)(1)(ii)(D) of Sec. 199.14), the following information 
is also required:
    (1) The principal diagnosis (the diagnosis established, after study, 
to be chiefly responsible for causing the patient's admission to the 
hospital).
    (2) All secondary diagnoses.
    (3) All significant procedures performed.
    (4) The discharge status of the beneficiary.
    (5) The hospital's Medicare provider number.
    (6) The source of the admission.
    (D) Claims submitted by hospitals (or other authorized institutional 
providers) must include the name of the individual actually rendering 
the care, along with the individual's professional status (e.g., M.D., 
Ph.D., R.N., etc.).
    (xi) Prescription drugs and medicines (and insulin). For 
prescription drugs and medicines (and insulin, whether or not a 
prescription is required) receipted bills must be attached and the 
following additional information provided:
    (A) Name of drug.
    Note: When the physician or pharmacist so requests, the name of the 
drugs may be submitted to the CHAMPUS fiscal intermediary directly by 
the physician or pharmacist.
    (B) Strength of drug.
    (C) Name and address of pharmacy where drug was purchased.
    (D) Prescription number of drug being claimed.
    (xii) Other authorized providers. For items from other authorized 
providers (such as medical supplies), an explanation as to the medical 
need must be attached to the appropriate claim form. For purchases of 
durable equipment under the PFPWD, it is necessary also to attach a copy 
of the preauthorization.
    (xiii) Nonparticipating providers. When the beneficiary or sponsor 
submits the

[[Page 178]]

claim to the CHAMPUS fiscal intermediary (that is, the provider elects 
not to participate), an itemized bill from the provider to the 
beneficiary or sponsor must be attached to the CHAMPUS claim form.
    (3) Medical records/medical documentation. Medical records are of 
vital importance in the care and treatment of the patient. Medical 
records serve as a basis for planning of patient care and for the 
ongoing evaluation of the patient's treatment and progress. Accurate and 
timely completion of orders, notes, etc., enable different members of a 
health care team and subsequent health care providers to have access to 
relevant data concerning the patient. Appropriate medical records must 
be maintained in order to accommodate utilization review and to 
substantiate that billed services were actually rendered.
    (i) All care rendered and billed must be appropriately documented in 
writing. Failure to document the care billed will result in the claim or 
specific services on the claim being denied CHAMPUS cost-sharing.
    (ii) A pattern of failure to adequately document medical care will 
result in episodes of care being denied CHAMPUS cost-sharing.
    (iii) Cursory notes of a generalized nature that do not identify the 
specific treatment and the patient's response to the treatment are not 
acceptable.
    (iv) The documentation of medical records must be legible and 
prepared as soon as possible after the care is rendered. Entries should 
be made when the treatment described is given or the observations to be 
documented are made. The following are documentation requirements and 
specific time frames for entry into the medical records:
    (A) General requirements for acute medical/surgical services:
    (1) Admission evaluation report within 24 hours of admission.
    (2) Completed history and physical examination report within 72 
hours of admission.
    (3) Registered nursing notes at the end of each shift.
    (4) Daily physician notes.
    (B) Requirements specific to mental health services:
    (1) Psychiatric admission evaluation report within 24 hours of 
admission.
    (2) History and physical examination within 24 hours of admission; 
complete report documented within 72 hours for acute and residential 
programs and within 3 working days for partial programs.
    (3) Individual and family therapy notes within 24 hours of procedure 
for acute, detoxification and Residential Treatment Center (RTC) 
programs and within 48 hours for partial programs.
    (4) Preliminary treatment plan within 24 hours of admission.
    (5) Master treatment plan within 5 calendar days of admission for 
acute care, 10 days for RTC care, 5 days for full-day partial programs 
and within 7 days for half-day partial programs.
    (6) Family assessment report within 72 hours of admission for acute 
care and 7 days for RTC and partial programs.
    (7) Nursing assessment report within 24 hours of admission.
    (8) Nursing notes at the end of each shift for acute and 
detoxification programs; every ten visits for partial hospitalization; 
and at least once a week for RTCs.
    (9) Daily physician notes for intensive treatment, detoxification, 
and rapid stabilization programs; twice per week for acute programs; and 
once per week for RTC and partial programs.
    (10) Group therapy notes once per week.
    (11) Ancillary service notes once per week.
    Note: A pattern of failure to meet the above criteria may result in 
provider sanctions prescribed under Sec. 199.9.
    (4) Double coverage information. When the CHAMPUS beneficiary is 
eligible for medical benefits coverage through another plan, insurance, 
or program, either private or Government, the following information must 
be provided:
    (i) Name of other coverage. Full name and address of double coverage 
plan, insurance, or program (such as Blue Cross, Medicare, commercial 
insurance, and state program).
    (ii) Source of double coverage. Source of double coverage (such as 
employment, including retirement, private purchase, membership in a 
group, and law).

[[Page 179]]

    (iii) Employer information. If source of double coverage is 
employment, give name and address of employer.
    (iv) Identification number. Identification number or group number of 
other coverage.
    (5) Right to additional information. (i) As a condition precedent to 
the cost-sharing of benefits under this part or pursuant to a review or 
audit, whether the review or audit is prospective, concurrent, or 
retroactive, OCHAMPUS or CHAMPUS contractors may request, and shall be 
entitled to receive, information from a physician or hospital or other 
person, institution, or organization (including a local, state, or 
Federal Government agency) providing services or supplies to the 
beneficiary for whom claims or requests for approval for benefits are 
submitted. Such information and records may relate to the attendance, 
testing, monitoring, examination, diagnosis, treatment, or services and 
supplies furnished to a beneficiary and, as such, shall be necessary for 
the accurate and efficient administration of CHAMPUS benefits. This may 
include requests for copies of all medical records or documentation 
related to the episode of care. In addition, before a determination on a 
request for preauthorization or claim of benefits is made, a 
beneficiary, or sponsor, shall provide additional information relevant 
to the requested determination, when necessary. The recipient of such 
information shall hold such records confidential except when:
    (A) Disclosure of such information is authorized specifically by the 
beneficiary;
    (B) Disclosure is necessary to permit authorized governmental 
officials to investigate and prosecute criminal actions; or
    (C) Disclosure is authorized or required specifically under the 
terms of DoD Directive 5400.7 and 5400.11, the Freedom of Information 
Act, and the Privacy Act (refer to paragraph (m) of Sec. 199.1 of this 
part).
    (ii) For the purposes of determining the applicability of and 
implementing the provisions of Secs. 199.8 and 199.9, or any provision 
of similar purpose of any other medical benefits coverage or 
entitlement, OCHAMPUS or CHAMPUS fiscal intermediaries, without consent 
or notice to any beneficiary or sponsor, may release to or obtain from 
any insurance company or other organization, governmental agency, 
provider, or person, any information with respect to any beneficiary 
when such release constitutes a routine use duly published in the 
Federal Register in accordance with the Privacy Act.
    (iii) Before a beneficiary's claim of benefits is adjudicated, the 
beneficiary or the provider(s) must furnish to CHAMPUS that information 
which is necessary to make the benefit determination. Failure to provide 
the requested information will result in denial of the claim. A 
beneficiary, by submitting a CHAMPUS claim(s) (either a participating or 
nonparticipating claim), is deemed to have given consent to the release 
of any and all medical records or documentation pertaining to the claims 
and the episode of care.
    (c) Signature on CHAMPUS Claim Form--(1) Beneficiary signature. 
CHAMPUS claim forms must be signed by the beneficiary except under the 
conditions identified in paragraph (c)(1)(v) of this section. The parent 
or guardian may sign for any beneficiary under 18 years.
    (i) Certification of identity. This signature certifies that the 
patient identification information provided is correct.
    (ii) Certification of medical care provided. This signature 
certifies that the specific medical care for which benefits are being 
claimed actually were rendered to the beneficiary on the dates 
indicated.
    (iii) Authorization to obtain or release information. Before 
requesting additional information necessary to process a claim or 
releasing medical information, the signature of the beneficiary who is 
18 years old or older must be recorded on or obtained on the CHAMPUS 
claim form or on a separate release form. The signature of the 
beneficiary, parent, or guardian will be requested when the beneficiary 
is under 18 years.
    Note: If the care was rendered to a minor and a custodial parent or 
legal guardian requests information prior to the minor turning 18 years 
of age, medical records may still be released pursuant to the signature 
of the parent or guardian, and claims information

[[Page 180]]

may still be released to the parent or guardian in response to the 
request, even though the beneficiary has turned 18 between the time of 
the request and the response. However, any follow-up request or 
subsequent request from the parent or guardian, after the beneficiary 
turns 18 years of age, will necessitate the authorization of the 
beneficiary (or the beneficiary's legal guardian as appointed by a 
cognizant court), before records and information can be released to the 
parent or guardian.
    (iv) Certification of accuracy and authorization to release double 
coverage information. This signature certifies to the accuracy of the 
double coverage information and authorizes the release of any 
information related to double coverage. (Refer to Sec. 199.8 of this 
part).
    (v) Exceptions to beneficiary signature requirement. (A) Except as 
required by paragraph (c)(1)(iii) of this section, the signature of a 
spouse, parent, or guardian will be accepted on a claim submitted for a 
beneficiary who is 18 years old or older.
    (B) When the institutional provider obtains the signature of the 
beneficiary (or the signature of the parent or guardian when the 
beneficiary is under 18 years) on a CHAMPUS claim form at admission, the 
following participating claims may be submitted without the 
beneficiary's signature.
    (1) Claims for laboratory and diagnostic tests and test 
interpretations from radiologists, pathologists, neurologists, and 
cardiologists.
    (2) Claims from anesthesiologists.
    (C) Claims filed by providers using CHAMPUS-approved signature-on-
file and claims submission procedures.
    (2) Provider's signature. A participating provider (see paragraph 
(a)(8) of Sec. 199.6) is required to sign the CHAMPUS claim form.
    (i) Certification. A participating provider's signature on a CHAMPUS 
claim form:
    (A) Certifies that the specific medical care listed on the claim 
form was, in fact, rendered to the specific beneficiary for which 
benefits are being claimed, on the specific date or dates indicated, at 
the level indicated and by the provider signing the claim unless the 
claim otherwise indicates another individual provided the care. For 
example, if the claim is signed by a psychiatrist and the care billed 
was rendered by a psychologist or licensed social worker, the claim must 
indicate both the name and profession of the individual who rendered the 
care.
    (B) Certifies that the provider has agreed to participate (providing 
this agreement has been indicated on the claim form) and that the 
CHAMPUS-determined allowable charge or cost will constitute the full 
charge or cost for the medical care listed on the specific claim form; 
and further agrees to accept the amount paid by CHAMPUS or the CHAMPUS 
payment combined with the cost-shared amount paid by, or on behalf of 
the beneficiary, as full payment for the covered medical services or 
supplies.
    (1) Thus, neither CHAMPUS nor the sponsor is responsible for any 
additional charges, whether or not the CHAMPUS-determined charge or cost 
is less than the billed amount.
    (2) Any provider who signs and submits a CHAMPUS claim form and then 
violates this agreement by billing the beneficiary or sponsor for any 
difference between the CHAMPUS-determined charge or cost and the amount 
billed is acting in bad faith and is subject to penalties including 
withdrawal of CHAMPUS approval as a CHAMPUS provider by administrative 
action of the Director, OCHAMPUS, or a designee, and possible legal 
action on the part of CHAMPUS, either directly or as a part of a 
beneficiary action, to recover monies improperly obtained from CHAMPUS 
beneficiaries or sponsors (refer to Sec. 199.6 of this part.)
    (ii) Physician or other authorized individual professional provider. 
A physician or other authorized individual professional provider is 
liable for any signature submitted on his or her behalf. Further, a 
facsimile signature is not acceptable unless such facsimile signature is 
on file with, and has been authorized specifically by, the CHAMPUS 
fiscal intermediary serving the state where the physician or other 
authorized individual professional provider practices.
    (iii) Hospital or other authorized institutional provider. The 
provider signature on a claim form for institutional services must be 
that of an authorized representative of the hospital or other authorized 
institutional provider,

[[Page 181]]

whose signature is on file with and approved by the appropriate CHAMPUS 
fiscal intermediary.
    (d) Claims filing deadline. For all services provided on or after 
January 1, 1993, to be considered for benefits, all claims submitted for 
benefits must, except as provided in paragraph (d)(2) of this section, 
be filed with the appropriate CHAMPUS contractor no later than one year 
after the services are provided. Unless the requirement is waived, 
failure to file a claim within this deadline waives all rights to 
benefits for such services or supplies.
    (1) Claims returned for additional information. When a claim is 
submitted initially within the claim filing time limit, but is returned 
in whole or in part for additional information to be considered for 
benefits, the returned claim, along with the requested information, must 
be resubmitted and received by the appropriate CHAMPUS contractor no 
later than the later of:
    (i) One year after the services are provided; or
    (ii) 90 days from the date the claim was returned to the provider or 
beneficiary.
    (2) Exception to claims filing deadline. The Director, OCHAMPUS, or 
a designee, may grant exceptions to the claims filing deadline 
requirements.
    (i) Types of exception. (A) Retroactive eligibility. Retroactive 
CHAMPUS eligibility determinations.
    (B) Administrative error. Administrative error (that is, 
misrepresentation, mistake, or other accountable action) of an officer 
or employee of OCHAMPUS (including OCHAMPUSEUR) or a CHAMPUS fiscal 
intermediary, performing functions under CHAMPUS and acting within the 
scope of that official's authority.
    (C) Mental incompetency. Mental incompetency of the beneficiary or 
guardian or sponsor, in the case of a minor child (which includes 
inability to communicate, even if it is the result of a physical 
disability).
    (D) Delays by other health insurance. When not attributable to the 
beneficiary, delays in adjudication by other health insurance companies 
when double coverage coordination is required before the CHAMPUS benefit 
determination.
    (E) Other waiver authority. The Director, OCHAMPUS may waive the 
claims filing deadline in other circumstances in which the Director 
determines that the waiver is necessary in order to ensure adequate 
access for CHAMPUS beneficiaries to health care services.
    (ii) Request for exception to claims filing deadline. Beneficiaries 
who wish to request an exception to the claims filing deadline may 
submit such a request to the CHAMPUS fiscal intermediary having 
jurisdiction over the location in which the service was rendered, or as 
otherwise designated by the Director, OCHAMPUS.
    (A) Such requests for an exception must include a complete 
explanation of the circumstances of the late filing, together with all 
available documentation supporting the request, and the specific claim 
denied for late filing.
    (B) Each request for an exception to the claims filing deadline is 
reviewed individually and considered on its own merits.
    (e) Other claims filing requirements. Notwithstanding the claims 
filing deadline described in paragraph (d) of this section, to lessen 
any potential adverse impact on a CHAMPUS beneficiary or sponsor that 
could result from a retroactive denial, the following additional claims 
filing procedures are recommended or required.
    (1) Continuing care. Except for claims subject to the CHAMPUS DRG-
based payment system, whenever medical services and supplies are being 
rendered on a continuing basis, an appropriate claim or claims should be 
submitted every 30 days (monthly) whether submitted directly by the 
beneficiary or sponsor or by the provider on behalf of the beneficiary. 
Such claims may be submitted more frequently if the beneficiary or 
provider so elects. The Director, OCHAMPUS, or a designee, also may 
require more frequent claims submission based on dollars. Examples of 
care that may be rendered on a continuing basis are outpatient physical 
therapy, private duty (special) nursing, or inpatient stays. For claims 
subject to the CHAMPUS DRG-based payment system, claims may be submitted 
only after the beneficiary has been discharged or transferred from the 
hospital.

[[Page 182]]

    (2) Inpatient mental health services. Under most circumstances, the 
60-day inpatient mental health limit applies to the first 60 days of 
care paid in a calendar year. The patient will be notified when the 
first 30 days of inpatient mental health benefits have been paid. The 
beneficiary is responsible for assuring that all claims for care are 
submitted sequentially and on a regular basis. Once payment has been 
made for care determined to be medically appropriate and a program 
benefit, the decision will not be reopened solely on the basis that 
previous inpatient mental health care had been rendered but not yet 
billed during the same calendar year by a different provider.
    (3) Claims involving the services of marriage and family counselors, 
pastoral counselors, and mental health counselors. CHAMPUS requires that 
marriage and family counselors, pastoral counselors, and mental health 
counselors make a written report to the referrring physician concerning 
the CHAMPUS beneficiary's progress. Therefore, each claim for 
reimbursement for services of marriage and family counselors, pastoral 
counselors, and mental health counselors must include certification to 
the effect that a written communication has been made or will be made to 
the referring physician at the end of treatment, or more frequently, as 
required by the referring physician.
    (f) Preauthorization. When specifically required in other sections 
of this part, preauthorization requires the following:
    (1) Preauthorization must be granted before benefits can be 
extended. In those situations requiring preauthorization, the request 
for such preauthorization shall be submitted and approved before 
benefits may be extended, except as provided in Sec. 199.4(a)(11). If a 
claim for services or supplies is submitted without the required 
preauthorization, no benefits shall be paid, unless the Director, 
OCHAMPUS, or a designee, has granted an exception to the requirement for 
preauthorization.
    (i) Specifically preauthorized services. An approved 
preauthorization specifies the exact services or supplies for which 
authorization is being given. In a preauthorization situation, benefits 
cannot be extended for services or supplies provided beyond the specific 
authorization.
    (ii) Time limit on preauthorization. Approved preauthorizations are 
valid for specific periods of time, appropriate for the circumstances 
presented and specified at the time of the preauthorization is approved. 
In general, preauthorization are valid for 30 days. If the preauthorized 
service or supplies are not obtained or commenced within the specified 
time limit, a new preauthorization is required before benefits may be 
extended.
    (2) Treatment plan. Each preauthorization request shall be 
accompanied by a proposed medical treatment plan (for inpatient stays 
under the Basic Program) which shall include generally a diagnosis; a 
detailed summary of complete history and physical; a detailed statement 
of the problem; the proposed treatment modality, including anticipated 
length of time the proposed modality will be required; any available 
test results; consultant's reports; and the prognosis. When the 
preauthorization request involves transfer from a hospital to another 
inpatient facility, medical records related to the inpatient stay also 
must be provided.
    (3) Claims for services and supplies that have been preauthorized. 
Whenever a claim is submitted for benefits under CHAMPUS involving 
preauthorized services and supplies, the date of the approved 
preauthorization must be indicated on the claim form and a copy of the 
written preauthorization must be attached to the appropriate CHAMPUS 
claim.
    (4) Advance payment prohibited. No CHAMPUS payment shall be made for 
otherwise authorized services or items not yet rendered or delivered to 
the beneficiary.
    (g) Claims review. It is the responsibility of the CHAMPUS fiscal 
intermediary (or OCHAMPUS, including OCHAMPUSEUR) to review each CHAMPUS 
claim submitted for benefit consideration to ensure compliance with all 
applicable definitions, conditions, limitations, or exclusions specified 
or enumerated in this part. It is also required that before any CHAMPUS 
benefits may be extended,

[[Page 183]]

claims for medical services and supplies will be subject to utilization 
review and quality assurance standards, norms, and criteria issued by 
the Director, OCHAMPUS, or a designee (see paragraph (a)(1)(v) of 
Sec. 199.14 for review standards for claims subject to the CHAMPUS DRG-
based payment system).
    (h) Benefit payments. CHAMPUS benefit payments are made either 
directly to the beneficiary or sponsor or to the provider, depending on 
the manner in which the CHAMPUS claim is submitted.
    (1) Benefit payments made to beneficiary or sponsor. When the 
CHAMPUS beneficiary or sponsor signs and submits a specific claim form 
directly to the appropriate CHAMPUS fiscal intermediary (or OCHAMPUS, 
including OCHAMPUSEUR), any CHAMPUS benefit payments due as a result of 
that specific claim submission will be made in the name of, and mailed 
to, the beneficiary or sponsor. In such circumstances, the beneficiary 
or sponsor is responsible to the provider for any amounts billed.
    (2) Benefit payments made to participating provider. When the 
authorized provider elects to participate by signing a CHAMPUS claim 
form, indicating participation in the appropriate space on the claim 
form, and submitting a specific claim on behalf of the beneficiary to 
the appropriate CHAMPUS fiscal intermediary, any CHAMPUS benefit 
payments due as a result of that claim submission will be made in the 
name of and mailed to the participating provider. Thus, by signing the 
claim form, the authorized provider agrees to abide by the CHAMPUS-
determined allowable charge or cost, whether or not lower than the 
amount billed. Therefore, the beneficiary or sponsor is responsible only 
for any required deductible amount and any cost-sharing portion of the 
CHAMPUS-determined allowable charge or cost as may be required under the 
terms and conditions set forth in Secs. 199.4 and 199.5 of this part.
    (3) CEOB. When a CHAMPUS claim is adjudicated, a CEOB is sent to the 
beneficiary or sponsor. A copy of the CEOB also is sent to the provider 
if the claim was submitted on a participating basis. The CEOB form 
provides, at a minimum, the following information:
    (i) Name and address of beneficiary.
    (ii) Name and address of provider.
    (iii) Services or supplies covered by claim for which CEOB applies.
    (iv) Dates services or supplies provided.
    (v) Amount billed; CHAMPUS-determined allowable charge or cost; and 
amount of CHAMPUS payment.
    (vi) To whom payment, if any, was made.
    (vii) Reasons for any denial.
    (viii) Recourse available to beneficiary for review of claim 
decision (refer to Sec. 199.10 of this part).
    Note: The Director, OCHAMPUS, or a designee, may authorize a CHAMPUS 
fiscal intermediary to waive a CEOB to protect the privacy of a CHAMPUS 
beneficiary.
    (4) Benefit under $1. If the CHAMPUS benefit is determined to be 
under $1, payment is waived.
    (i) Erroneous payments and recoupment--(1) Erroneous payments. 
Erroneous payments are expenditures of government funds that are not 
authorized by law or this part. Such payments are to be recouped under 
the provisions of Sec. 199.11 of this part.
    (2) Claims denials resulting from clarification or change in law or 
Regulation. In those instances where claims review results in a finding 
of denial of benefits previously allowed but currently denied due to a 
clarification or interpretation of law or this part, or due to a change 
in this part, no recoupment action need be taken to recover funds 
expended prior to the effective date of such clarification, 
interpretation, or change.
    (3) Fraudulent billing. Claims that are submitted to CHAMPUS that 
include a billing for services, supplies, or equipment not furnished, or 
used by, CHAMPUS beneficiaries will be denied in their entirety, 
regardless of the relative amount of the fraudulent billing compared to 
the total billings. Claims that have been CHAMPUS cost-shared that are 
retroactively audited or reviewed and are found to include fraudulent 
billings may be denied in part or in total based on the discretion of 
the Director, OCHAMPUS, or a designee.
    (j) General assignment of benefits not recognized. CHAMPUS does not 
recognize any general assignment of

[[Page 184]]

CHAMPUS benefits to another person. All CHAMPUS benefits are payable as 
described in this and other Sections of this part.

[51 FR 24008, July 1, 1986, as amended at 52 FR 33007, Sept. 1, 1987; 53 
FR 5373, Feb. 24, 1988; 54 FR 25246, June 14, 1989; 56 FR 28487, June 
21, 1991; 56 FR 59878, Nov. 26, 1991; 58 FR 35408, July 1, 1993; 58 FR 
51238, Oct. 1, 1993; 58 FR 58961, Nov. 5, 1993; 62 FR 35097, June 30, 
1997; 63 FR 48446, Sept. 10, 1998]



Sec. 199.8  Double coverage.

    (a) Introduction. In enacting CHAMPUS legislation, Congress clearly 
has intended that CHAMPUS be the secondary payer to all health benefit 
and insurance plans. 10 U.S.C. 1079(j)(1) specifically provides:

    ``A benefit may not be paid under a plan [CHAMPUS] covered by this 
section in the case of a person enrolled in any other insurance, medical 
service, or health plan to the extent that the benefit also is a benefit 
under other plans, except in the case of a plan [Medicaid] administered 
under title 19 of the Social Security Act (42 U.S.C. 1306 et seq.).''


The above provision is made applicable specifically to retired members, 
dependents, and survivors by 10 U.S.C. 1086(d). The underlying intent, 
in addition to preventing waste of Federal resources, is to ensure that 
CHAMPUS beneficiaries receive maximum benefits while ensuring that the 
combined payments of CHAMPUS and other health benefit and insurance 
plans do not exceed the total charges.
    (b) Double coverage plan. A double coverage plan is one of the 
following:
    (1) Insurance plan. An insurance plan is any plan or program that is 
designed to provide compensation or coverage for expenses incurred by a 
beneficiary for medical services and supplies. It includes plans or 
programs for which the beneficiary pays a premium to an issuing agent as 
well as those plans or programs to which the beneficiary is entitled as 
a result of employment or membership in, or association with, an 
organization or group.
    (2) Medical service or health plan. A medical service or health plan 
is any plan or program of an organized health care group, corporation, 
or other entity for the provision of health care to an individual from 
plan providers, both professional and institutional. It includes plans 
or programs for which the beneficiary pays a premium to an issuing agent 
as well as those plans or programs to which the beneficiary is entitled 
as a result of employment or membership in, or association with, an 
organization or group.
    (3) Exceptions. Double coverage plans do not include:
    (i) Plans administered under title XIX of the Social Security Act 
(Medicaid);
    (ii) Coverage specifically designed to supplement CHAMPUS benefits 
(a health insurance policy or other health benefit plan that meets the 
definition and criteria under supplemental insurance plan as set forth 
in Sec. 199.2(b));
    (iii) Entitlement to receive care from Uniformed Services medical 
care facilities;
    (iv) Certain Federal Government programs, as prescribed by the 
Director, OCHAMPUS, that are designed to provide benefits to a distinct 
beneficiary population and for which entitlement does not derive from 
either premium payment of monetary contribution (for example, the Indian 
Health Service); or
    (v) State Victims of Crime Compensation Programs.
    (c) Application of double coverage provisions. CHAMPUS claims 
submitted for otherwise covered services or supplies and which involve 
double coverage shall be adjudicated as follows:
    (1) CHAMPUS always last pay. For any claim that involves a double 
coverage plan as defined above, CHAMPUS shall be last pay. That is, 
CHAMPUS benefits may not be extended until all other double coverage 
plans have adjudicated the claim.
    (2) Waiver of benefits. A CHAMPUS beneficiary may not elect to waive 
benefits under a double coverage plan and use CHAMPUS. Whenever double 
coverage exists, the provisions of this Section shall be applied.
    (3) Last pay limitations. CHAMPUS may not pay more as a secondary 
payer than it would have in the absence of other coverages. Application 
of double coverage provisions does not extend or add to the CHAMPUS 
benefits as otherwise set forth in this and other Sections of this part.

[[Page 185]]

    (d) Special considerations. (1) CHAMPUS and Medicare. In any double 
coverage situation involving Medicare, Medicare is always the primary 
payer. When Part A, ``Hospital Insurance,'' of Medicare is involved, the 
Medicare ``lifetime reserve'' benefit must be used before CHAMPUS 
benefits may be extended.
    (2) CHAMPUS and Medicaid. Medicaid is not a double coverage plan. In 
any double coverage situation involving Medicaid, CHAMPUS is always the 
primary payer.
    (3) CHAMPUS and Worker's Compensation. CHAMPUS benefits are not 
payable for a work-related illness or injury that is covered under a 
worker's compensation program.
    (4) Program for persons with disabilities (PFPWD). A PFPWD eligible 
beneficiary (or sponsor or guardian acting on behalf of the beneficiary) 
does not have the option of waiving the full use of public facilities 
which are determined by the Director, OCHAMPUS, or designee, to be 
available and adequate to meet a disability related need for which a 
PFPWD benefit was requested. Benefits eligible for payment under a State 
plan for medical assistance under Title XIX of the Social Security Act 
(Medicaid) are never considered to be available in the adjudication of 
PFPWD benefits.
    (e) Implementing instructions. The Director, OCHAMPUS, or a 
designee, shall issue such instructions, procedures, or guidelines, as 
necessary, to implement the intent of this section.

[51 FR 24008, July 1, 1986, as amended at 62 FR 35097, June 30, 1997; 62 
FR 54384, Oct. 20, 1997; 63 FR 59232, Nov. 3, 1998]



Sec. 199.9  Administrative remedies for fraud, abuse, and conflict of interest.

    (a) General. (1) This section sets forth provisions for invoking 
administrative remedies under CHAMPUS in situations involving fraud, 
abuse, or conflict of interest. The remedies impact institutional 
providers, professional providers, and beneficiaries (including parents, 
guardians, or other representatives of beneficiaries), and cover 
situations involving criminal fraud, civil fraud, administrative 
determinations of conflicts of interest or dual compensation, and 
administrative determinations of fraud or abuse. The administrative 
actions, remedies, and procedures may differ based upon whether the 
initial findings were made by a court of law, another agency, or the 
Director, OCHAMPUS (or designee).
    (2) This section also sets forth provisions for invoking 
administrative remedies in situations requiring administrative action to 
enforce provisions of law, regulation, and policy in the administration 
of CHAMPUS and to ensure quality of care for CHAMPUS beneficiaries. 
Examples of such situations may include a case in which it is discovered 
that a provider fails to meet requirements under this part to be an 
authorized CHAMPUS provider; a case in which the provider ceases to be 
qualified as a CHAMPUS provider because of suspension or revocation of 
the provider's license by a local licensing authority; or a case in 
which a provider meets the minimum requirements under this part but, 
nonetheless, it is determined that it is in the best interest of the 
CHAMPUS or CHAMPUS beneficiaries that the provider should not be an 
authorized CHAMPUS provider.
    (3) The administrative remedies set forth in this section are in 
addition to, and not in lieu of, any other remedies or sanctions 
authorized by law or regulation. For example, administrative action 
under this section may be taken in a particular case even if the same 
case will be or has been processed under the administrative procedures 
established by the Department of Defense to implement the Program Fraud 
Civil Remedies Act.
    (4) Providers seeking payment from the Federal Government through 
programs such as CHAMPUS have a duty to familiarize themselves with, and 
comply with, the program requirements.
    (5) CHAMPUS contractors and peer review organizations have a 
responsibility to apply provisions of this regulation in the discharge 
of their duties, and to report all known situations involving fraud, 
abuse, or conflict of interest. Failure to report known situations 
involving fraud, abuse, or conflict

[[Page 186]]

of interest will result in the withholding of administrative payments or 
other contractual remedies as determined by the Director, OCHAMPUS, or a 
designee.
    (b) Abuse. The term ``abuse'' generally describes incidents and 
practices which may directly or indirectly cause financial loss to the 
Government under CHAMPUS or to CHAMPUS beneficiaries. For the definition 
of abuse, see Sec. 199.2 of this part. The type of abuse to which 
CHAMPUS is most vulnerable is the CHAMPUS claim involving the 
overutilization of medical and health care services. To avoid abuse 
situations, providers have certain obligations to provide services and 
supplies under CHAMPUS which are: Furnished at the appropriate level and 
only when and to the extent medically necessary as determined under the 
provisions of this part; of a quality that meets professionally 
recognized standards of health care; and, supported by adequate medical 
documentation as may reasonably be required under this part by the 
Director, OCHAMPUS, or a designee, to evidence the medical necessity and 
quality of services furnished, as well as the appropriateness of the 
level of care. A provider's failure to comply with these obligations can 
result in sanctions being imposed by the Director, OCHAMPUS, or a 
designee, under this section. Even when administrative remedies are not 
initiated under this section, abuse situations under CHAMPUS are a 
sufficient basis for denying all or any part of CHAMPUS cost-sharing of 
individual claims. The types of abuse or possible abuse situations under 
CHAMPUS include, but are not limited, to the following:
    (1) A pattern of waiver of beneficiary (patient) cost-share or 
deductible.
    Note: In a case of a legitimate bad debt write-off of patient cost-
share or deductible, the provider's record should include documentation 
as to what efforts were made to collect the debt, when the debt was 
written off, why the debt was written off, and the amount of the debt 
written off.
    (2) Improper billing practices. Examples include, charging CHAMPUS 
beneficiaries rates for services and supplies that are in excess of 
those charges routinely charged by the provider to the general public, 
commercial health insurance carriers, or other federal health benefit 
entitlement programs for the same or similar services. (This includes 
dual fee schedules--one for CHAMPUS beneficiaries and one for other 
patients or third-party payers. This also includes billing other third-
party payers the same as CHAMPUS is billed but accepting less than the 
billed amount as reimbursement. However, a formal discount arrangement 
such as through a preferred provider organization, may not necessarily 
constitute an improper billing practice.)
    (3) A pattern of claims for services which are not medically 
necessary or, if medically necessary, not to the extent rendered. For 
example, a battery of diagnostic tests are given when, based on the 
diagnosis, fewer tests were needed.
    (4) Care of inferior quality. For example, consistently furnishing 
medical or mental health services that do not meet accepted standards of 
care.
    (5) Failure to maintain adequate medical or financial records.
    (6) Refusal to furnish or allow the Government (for example, 
OCHAMPUS) or Government contractors access to records related to CHAMPUS 
claims.
    (7) Billing substantially in excess of customary or reasonable 
charges unless it is determined by OCHAMPUS that the excess charges are 
justified by unusual circumstances or medical complications requiring 
additional time, effort, or expense in localities when it is accepted 
medical practice to make an extra charge in such cases.
    (8) Unauthorized use of the term ``Civilian Health and Medical 
Program of the Uniformed Services (CHAMPUS)'' in private business. While 
the use of the term ``CHAMPUS'' is not prohibited by federal statute, 
misrepresentation or deception by use of the term ``CHAMPUS'' to imply 
an official connection with the Government or to defraud CHAMPUS 
beneficiaries may be a violation of federal statute. Regardless of 
whether the actual use of the term ``CHAMPUS'' may be actionable under 
federal statute, the unauthorized or deceptive use of the term 
``CHAMPUS'' in private business will be considered abuse for purposes of 
this Section.

[[Page 187]]

    (c) Fraud. For the definition of fraud, see Sec. 199.2 of this part. 
Examples of situations which, for the purpose of this part, are presumed 
to be fraud include, but are not limited to:
    (1) Submitting CHAMPUS claims (including billings by providers when 
the claim is submitted by the beneficiary) for services, supplies, or 
equipment not furnished to, or used by, CHAMPUS beneficiaries. For 
example, billing or claiming services when the provider was on call 
(other than an authorized standby charge) and did not provide any 
specific medical care to the beneficiary; providing services to an 
ineligible person and billing or submitting a claim for the services in 
the name of an eligible CHAMPUS beneficiary; billing or submitting a 
CHAMPUS claim for an office visit for a missed appointment; or billing 
or submitting a CHAMPUS claim for individual psychotherapy when a 
medical visit was the only service provided.
    (2) Billing or submitting a CHAMPUS claim for costs for noncovered 
or nonchargeable services, supplies, or equipment disguised as covered 
items. Some examples are: (i) Billings or CHAMPUS claims for services 
which would be covered except for the frequency or duration of the 
services, such as billing or submitting a claim for two one-hour 
psychotherapy sessions furnished on separate days when the actual 
service furnished was a two-hour therapy session on a single day, (ii) 
spreading the billing or claims for services over a time period that 
reduces the apparent frequency to a level that may be cost-shared by 
CHAMPUS, (iii) charging to CHAMPUS, directly or indirectly, costs not 
incurred or not reasonably allowable to the services billed or claimed 
under CHAMPUS, for example, costs attributable to nonprogram activities, 
other enterprises, or the personal expenses of principals, or (iv) 
billing or submitting claim on a fee-for-service basis when in fact a 
personal service to a specific patient was not performed and the service 
rendered is part of the overall management of, for example, the 
laboratory or x-ray department.
    (3) Breach of a provider participation agreement which results in 
the beneficiary (including parent, guardian, or other representative) 
being billed for amounts which exceed the CHAMPUS-determined allowable 
charge or cost.
    (4) Billings or CHAMPUS claims for supplies or equipment which are 
clearly unsuitable for the patient's needs or are so lacking in quality 
or sufficiency for the purpose as to be virtually worthless.
    (5) Billings or CHAMPUS claims which involve flagrant and persistent 
overutilization of services without proper regard for results, the 
patient's ailments, condition, medical needs, or the physician's orders.
    (6) Misrepresentations of dates, frequency, duration, or description 
of services rendered, or of the identity of the recipient of the 
services or the individual who rendered the services.
    (7) Submitting falsified or altered CHAMPUS claims or medical or 
mental health patient records which misrepresent the type, frequency, or 
duration of services or supplies or misrepresent the name(s) of the 
individual(s) who provided the services or supplies.
    (8) Duplicate billings or CHAMPUS claims. This includes billing or 
submitting CHAMPUS claims more than once for the same services, billing 
or submitting claims both to CHAMPUS and the beneficiary for the same 
services, or billing or submitting claims both to CHAMPUS and other 
third-parties (such as other health insurance or government agencies) 
for the same services, without making full disclosure of material facts 
or immediate, voluntary repayment or notification to CHAMPUS upon 
receipt of payments which combined exceed the CHAMPUS-determined 
allowable charge of the services involved.
    (9) Misrepresentation by a provider of his or her credentials or 
concealing information or business practices which bear on the 
provider's qualifications for authorized CHAMPUS provider status. For 
example, a provider representing that he or she has a qualifying 
doctorate in clinical psychology when the degree is not from a 
regionally accredited university.
    (10) Reciprocal billing. Billing or claiming services which were 
furnished by another provider or furnished by the billing provider in a 
capacity other than as billed or claimed. For example, practices such as 
the following: (i) One

[[Page 188]]

provider performing services for another provider and the latter bills 
as though he had actually performed the services (e.g., a weekend fill-
in); (ii) providing service as an institutional employee and billing as 
a professional provider for the services; (iii) billing for professional 
services when the services were provided by another individual who was 
an institutional employee; (iv) billing for professional services at a 
higher provider profile than would be paid for the person actually 
furnishing the services, (for example, bills reflecting that an M.D. or 
Ph.D. performed the services when services were actually furnished by a 
licensed social worker, psychiatric nurse, or marriage and family 
counselor); or (v) an authorized provider billing for services which 
were actually furnished by an unauthorized or sanctioned provider.
    (11) Submitting CHAMPUS claims at a rate higher than a rate 
established between CHAMPUS and the provider, if such a rate has been 
established. For example, billing or claiming a rate in excess of the 
provider's most favored rate limitation specified in a residential 
treatment center agreement.
    (12) Arrangements by providers with employees, independent 
contractors, suppliers, or others which appear to be designed primarily 
to overcharge the CHAMPUS through various means (such as commissions, 
fee-splitting, and kickbacks) used to divert or conceal improper or 
unnecessary costs or profits.
    (13) Agreements or arrangements between the supplier and recipient 
(recipient could be either a provider or beneficiary, including the 
parent, guardian, or other representative of the beneficiary) that 
result in billings or claims which include unnecessary costs or charges 
to CHAMPUS.
    (d) Conflict of Interest. (1) Conflict of interest includes any 
situation where an active duty member of the Uniformed Services 
(including a reserve member while on active duty, active duty for 
training, or inactive duty training) or civilian employee of the United 
States Government, through an official federal position has the apparent 
or actual opportunity to exert, directly or indirectly, any influence on 
the referral of CHAMPUS beneficiaries to himself/herself or others with 
some potential for personal gain or the appearance of impropriety. 
Although individuals under contract to the Uniformed Services are not 
considered ``employees,'' such individuals are subject to conflict of 
interest provisions by express terms of their contracts and, for 
purposes of this part, may be considered to be involved in conflict of 
interest situations as a result of their contract positions. In any 
situation involving potential conflict of interest of a Uniformed 
Service employee, the Director, OCHAMPUS, or a designee, may refer the 
case to the Uniformed Service concerned for appropriate review and 
action. If such a referral is made, a report of the results of findings 
and action taken shall be made to the Director, OCHAMPUS, by the 
Uniformed Service having jurisdiction within 90 days of receiving the 
referral.
    (2) CHAMPUS cost-sharing shall be denied on any claim where a 
conflict of interest situation is found to exist. This denial of cost-
sharing applies whether the claim is submitted by the individual who 
provided the care, the institutional provider in which the care was 
furnished, or the beneficiary.
    (e) Dual Compensation. (1) Federal law (5 U.S.C. 5536) prohibits 
active duty members of the Uniformed Services or employees (including 
part-time or intermittent) appointed in the civil service of the United 
States Government from receiving additional compensation from the 
Government above their normal pay and allowances. This prohibition 
applies to CHAMPUS payments for care furnished to CHAMPUS beneficiaries 
by active duty members of the Uniformed Services or civilian employees 
of the Government.
    (2) CHAMPUS cost-sharing of a claim shall be denied where the 
services or supplies were provided by an active duty member of the 
Uniformed Services or a civilian employee of the Government. This denial 
of CHAMPUS payment applies whether the claim for reimbursement is filed 
by the individual who provided the care, the institutional provider in 
which the care was furnished, or by the beneficiary.
    Note: Physicians of the National Health Service Corps (NHSC) may be 
assigned to

[[Page 189]]

areas where there is a shortage of medical providers. Although these 
physicians would be prohibited from accepting CHAMPUS payments as 
individuals if they are employees of the United States Government, the 
private organizations to which they may be assigned may be eligible for 
payment, as determined by the Director, OCHAMPUS, or a designee.
    (3) The prohibition against dual compensation does not apply to 
individuals under contract to the Uniformed Services or the Government.
    (f) Administrative Remedies. Administrative remedies available under 
CHAMPUS in this section are set forth below.
    (1) Provider exclusion or suspension. The Director, OCHAMPUS, or a 
designee, shall have the authority to exclude or suspend an otherwise 
authorized CHAMPUS provider from the program based on any criminal 
conviction or civil judgment involving fraud by the provider; fraud or 
abuse under CHAMPUS by the provider; exclusion or suspension of the 
provider by another agency of the Federal Government, a state, or local 
licensing authority; participation in a conflict of interest situation 
by the provider; or, when it is in the best interests of the program or 
CHAMPUS beneficiaries to exclude or suspend a provider under CHAMPUS. In 
all cases, the exclusion or suspension of a provider shall be effective 
15 calendar days from the date on the written initial determination 
issued under paragraph (h)(2) of this section.
    (i) Criminal conviction or civil judgment involving fraud by a 
provider--(A) Criminal conviction involving CHAMPUS fraud. A provider 
convicted by a Federal, state, foreign, or other court of competent 
jurisdiction of a crime involving CHAMPUS fraud, whether the crime is a 
felony or misdemeanor, shall be excluded or suspended from CHAMPUS for a 
period of time as determined by the Director, OCHAMPUS, or a designee. 
The CHAMPUS exclusion or suspension applies whether or not the provider, 
as a result of the conviction, receives probation or the sentence is 
suspended or deferred, and whether or not the conviction or sentence is 
under appeal.
    Note: Under the above paragraph (f)(1)(i)(A) of this section, an 
entity may be excluded or suspended from CHAMPUS whenever the entity is 
found to have a person, convicted of a crime involving CHAMPUS fraud, 
who has a direct or indirect ownership or control interest (see 
Sec. 199.2) of 5 percent or more in the entity, or is an officer, 
director, agent or managing employee of the entity. The entity will have 
an opportunity to provide evidence to show that the ownership or control 
relationship has ceased. While an entity will not be excluded or 
suspended from CHAMPUS for employing a provider who has been sanctioned 
under this Section, the entity will be denied CHAMPUS payment for any 
services furnished by the sanctioned employee. As an authorized CHAMPUS 
provider, the entity is responsible for ensuring that all CHAMPUS claims 
involve services furnished to CHAMPUS beneficiaries by employees who 
meet all requirements under CHAMPUS for provider status.
    (B) Criminal conviction involving fraud of other Federal programs. 
Any provider convicted by a Federal, state, or other court of competent 
jurisdiction of a crime involving another Federal health care or benefit 
program (such as plans administered under titles XVIII and XIX of the 
Social Security Act, Federal Workmen's Compensation, and the Federal 
Employees Program (FEP) for employee health insurance), whether the 
crime is a felony or misdemeanor, shall be excluded from CHAMPUS for a 
period of time as determined by the Director, OCHAMPUS, or a designee. 
The CHAMPUS exclusion or suspension applies whether or not the provider, 
as a result of the conviction, receives probation or the sentence is 
suspended or deferred, and whether or not the conviction or sentence is 
under appeal.
    (C) Criminal conviction involving fraud of non-Federal programs. Any 
provider convicted by a Federal, state, foreign, or other court of 
competent jurisdiction of a crime involving any non-Federal health 
benefit program or private insurance involving health benefits may be 
excluded or suspended from CHAMPUS for a period of time as determined by 
the Director, OCHAMPUS, or a designee.
    (D) Civil fraud involving CHAMPUS. If a judgment involving civil 
fraud has been entered (whether or not it is appealed) against a 
provider in a civil action involving CHAMPUS benefits (whether or not 
other Federal programs are involved), the provider shall be excluded or 
suspended from CHAMPUS for a period determined by

[[Page 190]]

the Director, OCHAMPUS, or a designee.
    (E) Civil fraud involving other programs. If a judgment involving 
civil fraud has been entered against a provider (whether or not it has 
been appealed) in a civil action involving other public or private 
health care programs or health insurance, the provider may be excluded 
or suspended for a period of time determined by the Director, OCHAMPUS, 
or a designee.
    (ii) Administrative determination of fraud or abuse under CHAMPUS. 
If the Director, OCHAMPUS, or a designee, determines that a provider has 
committed fraud or abuse as defined in this part, the provider shall be 
excluded or suspended from CHAMPUS for a period of time determined by 
the Director, OCHAMPUS, or designee.
    (iii) Administrative determination that the provider has been 
excluded or suspended by another agency of the Federal Government, a 
state, or local licensing authority. Any provider who is excluded or 
suspended by any other Federal health care program (for example, 
Medicare), shall be excluded or suspended under CHAMPUS. A provider who 
has his/her credentials revoked through a Veterans Administration or 
Military Department credentials review process and who is excluded, 
suspended, terminated, retired, or separated, shall also be excluded or 
suspended under CHAMPUS. The period of time of exclusion or suspension 
shall be determined by the Director, OCHAMPUS, or a designee, pursuant 
to paragraph (g) of this section.
    (iv) Administrative determination that the provider has participated 
in a conflict of interest situation. The Director, OCHAMPUS, or a 
designee, may exclude or suspend any provider who has knowingly been 
involved in a conflict of interest situation under CHAMPUS. The period 
of time of exclusion or suspension shall be determined by the Director, 
OCHAMPUS, or a designee, pursuant to paragraph (g) of this section. For 
purposes of this administrative determination, it will be presumed that 
a CHAMPUS provider knowingly participated in a conflict of interest 
situation if the provider employs, in the treatment of a CHAMPUS 
beneficiary (resulting in a CHAMPUS claim), any medical personnel who 
are active duty members of the Uniformed Services or civilian employees 
of the Government. The burden of proof to rebut this presumption rests 
with the CHAMPUS provider. Two exceptions will be recognized to the 
presumption that a conflict of interest exists. First, indirect CHAMPUS 
payments may be made to private organizations to which physicians of the 
National Health Service Corps (NHSC) are assigned. Second, any off-duty 
Government medical personnel employed in an emergency room of an acute 
care hospital will be presumed not to have had the opportunity to exert, 
directly or indirectly, any influence on the referral of CHAMPUS 
beneficiaries; therefore, CHAMPUS payments may be made to the employing 
hospital provided the medical care was not furnished directly by the 
off-duty Government medical personnel in violation of dual compensation 
provisions.
    (v) Administrative determination that it is in the best interests of 
the CHAMPUS or CHAMPUS beneficiaries to exclude or suspend a provider--
(A) Unethical or improper practices or unprofessional conduct. (1) In 
most instances, unethical or improper practices or unprofessional 
conduct by a provider will be program abuse and subject the provider to 
exclusion or suspension for abuse. However, in some cases such practices 
and conduct may provide an independent basis for exclusion or suspension 
of the provider by the Director, OCHAMPUS, or a designee.
    (2) Such exclusions or suspensions may be based on findings or 
recommendations of state licensure boards, boards of quality assurance, 
other regulatory agencies, state medical societies, peer review 
organizations, or other professional associations.
    (B) In any other case in which the Director, OCHAMPUS (or designee), 
determines that exclusion or suspension of a provider is in the best 
interests of CHAMPUS or CHAMPUS beneficiaries. The Director, OCHAMPUS, 
or a designee, may exclude or suspend any provider if it is determined 
that the authorization of that particular provider

[[Page 191]]

under CHAMPUS poses an unreasonable potential for fraud, abuse, or 
professional misconduct. Any documented misconduct by the provider 
reflecting on the business or professional competence or integrity of 
the provider may be considered. Situations in which the Director, 
OCHAMPUS, or a designee, may take administrative action under this 
Section to protect CHAMPUS or CHAMPUS beneficiaries include, but are not 
limited to, a case in which it is determined that a provider poses an 
unreasonable potential cost to the Government to monitor the provider 
for fraud or abuse and to avoid the issuance of erroneous payments; or 
that the provider poses an unreasonable potential harm to the financial 
or health status of CHAMPUS beneficiaries; or that the provider poses 
any other unreasonable threat to the interests of CHAMPUS or CHAMPUS 
beneficiaries. One example of such circumstances involves a provider 
who, for his/her entire practice or for most of his/her practice, 
provides or bills for tratment that is not a CHAMPUS benefit, resulting 
in CHAMPUS frequently and repeatedly denying claims as non-covered 
services. This may occur when a professional provider furnishes sex 
therapy (a therapy which may be recognized by the provider's licensing 
authority but which is excluded from CHAMPUS coverage) and repeatedly 
submits CHAMPUS claims for the services.
    (2) Provider termination. The Director, OCHAMPUS, or a designee, 
shall terminate the provider status of any provider determined not to 
meet the qualifications established by this part to be an authorized 
CHAMPUS provider.
    (i) Effective date of termination. Except as provided in paragraph 
(g)(2)(ii) of this section, the termination shall be retroactive to the 
date on which the provider did not meet the requirements of this part.
    (A) The retroactive effective date of termination shall not be 
limited due to the passage of time, erroneous payment of claims, or any 
other events which may be cited as a basis for CHAMPUS recognition of 
the provider notwithstanding the fact that the provider does not meet 
program qualifications. Unless specific provision is made in this part 
to ``grandfather'' or authorize a provider who does not otherwise meet 
the qualifications established by this part, all unqualified providers 
shall be terminated.
    (B) Any claims cost-shared or paid under CHAMPUS for services or 
supplies furnished by the provider on or after the effective date of 
termination, even when the effective date is retroactive, shall be 
deemed an erroneous payment unless specific exception is provided in 
this part. All erroneous payments are subject to collection under 
Sec. 199.11 of this part.
    (C) If an institution is terminated as an authorized CHAMPUS 
provider, the institution shall immediately give written notice of the 
termination to any CHAMPUS beneficiary (or their parent, guardian, or 
other representative) admitted to, or receiving care at, the institution 
on or after the effective date of the termination. In addition, when an 
institution is terminated with an effective date of termination after 
the date of the initial determination terminating the provider, any 
beneficiary admitted to the institution prior to the effective date of 
termination (or their parent, guardian, or other representative) shall 
be notified by the Director, OCHAMPUS, or a designee, by certified mail 
of the termination, and that CHAMPUS cost-sharing of the beneficiary's 
care in the institution will cease as of the effective date of the 
termination. However, any beneficiary admitted to the institution prior 
to any grace period extended to the institution under paragraph 
(f)(2)(ii)(A) of this section shall be advised that, if the 
beneficiary's care otherwise qualifies for CHAMPUS coverage, CHAMPUS 
cost-sharing of the care in the institution will continue in order to 
provide a reasonable period of transition of care; however the 
transitional period of CHAMPUS cost-sharing shall not exceed the last 
day of the month following the month in which the institution's status 
as a CHAMPUS provider is terminated. (This authorized CHAMPUS cost-
sharing of the inpatient care received during the transition period is 
an exception to the general rule that CHAMPUS payment for care furnished 
after the effective date of termination of the provider's status

[[Page 192]]

shall be deemed to be an erroneous payment.) If a major violation under 
paragraph (f)(2)(ii)(B) of this section is involved, in order to ensure 
immediate action is taken to transfer beneficiaries to an approved 
provider, CHAMPUS cost-sharing shall not be authorized after the 
effective date of termination of the provider's status.
    (ii) Institutions not in compliance with CHAMPUS standards. If it is 
determined that an institution is not in compliance with one or more of 
the standards applicable to its specific category of institution under 
this part, the Director, OCHAMPUS, or a designee, shall take immediate 
steps to bring about compliance or terminate the status of the provider 
as an authorized CHAMPUS provider.
    (A) Minor violations. An institution determined to be in violation 
of one or more of the standards shall be advised by certified mail of 
the nature of the discrepancy or discrepancies and will be given a grace 
period of 30 days to effect appropriate corrections. The grace period 
may be extended at the discretion of the Director, OCHAMPUS, or a 
designee, but in no event shall the extension exceed 90 days.
    (1) CHAMPUS will not cost-share a claim for any beneficiary admitted 
during the grace period.
    (2) Any beneficiary admitted to the institution prior to the grace 
period (or the beneficiary's parent, guardian, or other representative) 
will be notified by the Director, OCHAMPUS, or a designee, in writing, 
of the minor violations and the grace period granted the institution to 
correct the violations. The beneficiary will also be advised that, if 
the beneficiary's care otherwise meets all requirements for CHAMPUS 
coverage, CHAMPUS cost-sharing will continue during the grace period.
    (3) If the institution submits written notice before the end of the 
grace period that corrective action has been taken and if the Director, 
OCHAMPUS, or a designee, determines that the corrective action has 
eliminated the minor violations, the provider will be advised that the 
institution is restored to full status as an authorized CHAMPUS provider 
as of 12:01 a.m. on the day written notice of correction was received by 
the Director, OCHAMPUS, or a designee, or the day on which acceptable 
corrective action was completed in the judgment of the Director, 
OCHAMPUS, or a designee. Any beneficiary admitted to the institution 
prior to the grace period will be notified by the Director, OCHAMPUS, or 
a designee, of the corrective action and that the provider continues to 
be an authorized CHAMPUS provider. CHAMPUS cost-sharing for any 
beneficiary admitted to the institution during the grace period shall be 
allowed only for care received after 12:01 a.m. on the day written 
notice of correction was received by the Director, OCHAMPUS, or a 
designee, or the day on which acceptable corrective action was completed 
in the judgment of the Director, OCHAMPUS, or a designee.
    (4) If the institution has failed to give notification in writing 
before the end of the grace period that corrective action has been 
completed or, in the judgment of the Director, OCHAMPUS, or a designee, 
the institution has not completed acceptable corrective action during 
the grace period, the Director, OCHAMPUS, or a designee, may initiate 
action to terminate the provider as an authorized CHAMPUS provider.
    (B) Major violations. If the Director, OCHAMPUS, or a designee, 
determines that an institution is in violation of standards detrimental 
to life, safety, or health, or substantially in violation of approved 
treatment programs, immediate action shall be taken to terminate the 
institution as an authorized CHAMPUS provider. The institution shall be 
notified by telegram, certified mail, or express mail of the termination 
under this subparagraph, effective on receipt of the notice. The notice 
shall include a brief statement of the nature of violations resulting in 
the termination and advise the institution that an initial determination 
formalizing the administrative action of termination will be issued 
pursuant to paragraph (h)(3)(ii) of this section within 15 days.
    (3) Beneficiary sanctions. (i) With entitlement to CHAMPUS benefits 
based on public law, an eligible beneficiary will not be suspended or 
excluded from CHAMPUS. However, the Director, OCHAMPUS, or a designee, 
may take

[[Page 193]]

action deemed appropriate and reasonable to protect the Government from 
those beneficiaries (including sponsors, parents, guardians, or 
representatives of beneficiaries) who have submitted false claims.
    (ii) Pursuant to Sec. 199.11 of this part, the Director, OCHAMPUS, 
or a designee, may recover erroneous payments on claims involving fraud 
or false or misleading statements. Remedies for recovery of the 
erroneous payments include the use of offset against future CHAMPUS 
payments.
    (iii) Under policies adopted by the Director, OCHAMPUS, or a 
designee, individuals who, based on reliable information, have 
previously submitted fraudulent or false CHAMPUS claims, may be required 
to comply with any procedures (e.g., partial or total pre-payment audit 
or review, restriction to a designated primary care provider, etc.) 
which the Director, OCHAMPUS, or a designee, deems appropriate to ensure 
that their future medical care and CHAMPUS claims (including the medical 
care and CHAMPUS claims submitted by or for members of their family) are 
valid.
    (g) Period of exclusion, suspension, or termination--(1) Exclusions 
or suspensions. Except as otherwise required by paragraph (g)(1)(i) of 
this section, the Director, OCHAMPUS, or a designee, shall determine the 
period of exclusion or suspension for a provider using the factors set 
forth in paragraph (g)(1)(ii) of this section.
    (i) Exclusion or suspension of a provider based on the provider's 
exclusion or suspension by another agency of the Federal Government, a 
state, or a local licensing authority. If the administrative action 
under CHAMPUS is based solely on the provider's exclusion or suspension 
by another agency, state, or local licensing authority, the period of 
exclusion or suspension under CHAMPUS shall be for the same length of 
time of exclusion or suspension imposed by the other agency, state, or 
local licensing authority. The provider may request reinstatement as an 
authorized CHAMPUS provider if reinstatement is achieved under the other 
program prior to the end of the period of exclusion or suspension. If 
the administrative action under CHAMPUS is not based solely on the 
provider's exclusion or suspension by another agency, state, or local 
licensing authority, the minimum period of exclusion or suspension shall 
be for the same period of exclusion or suspension imposed by the other 
agency, state, or local licensing authority.
    (ii) Factors to be considered in determining the period of exclusion 
or suspension of providers under CHAMPUS. In determining the period of 
exclusion or suspension of a provider, the Director, OCHAMPUS, or a 
designee, may consider any or all of the following:
    (A) When the case concerns all or any part of the same issues which 
have been the subject of criminal conviction or civil judgment involving 
fraud by a provider:
    (1) The period(s) of sentence, probation, and other sanction imposed 
by court order against the provider may be presumed reasonable and 
adopted as the administrative period of exclusion or suspension under 
CHAMPUS, unless aggravating or mitigating factors exist.
    (2) If any aggravating factors exist, then cause exists for the 
Director, OCHAMPUS, or a designee, to consider the factors set forth in 
paragraph (g)(1)(ii)(B) of this section, in imposing a period of 
administrative exclusion or suspension in excess of the period(s) of 
sentence, probation, and/or other sanctions imposed by court order. 
Examples of aggravating factors include, but are not limited to:
    (i) An administrative determination by the Director, OCHAMPUS, or a 
designee, that the basis for administrative exclusion or suspension 
includes an act(s) of fraud or abuse under CHAMPUS in addition to, or 
unrelated to, an act(s) of fraud included in the court conviction or 
civil judgment.
    (ii) The fraudulent act(s) involved in the criminal conviction or 
civil judgment, or similar acts, were committed over a significant 
period of time; that is, one year or more.
    (iii) The act(s) of fraud or abuse had an adverse physical, mental, 
or financial impact on one or more CHAMPUS beneficiaries.
    (iv) The loss or potential loss to CHAMPUS is over $5,000. The 
entire amount of loss or potential loss to

[[Page 194]]

CHAMPUS due to acts of fraud and abuse will be considered, in addition 
to the amount of loss involved in the court conviction or civil 
judgment, regardless of whether full or partial restitution has been 
made to CHAMPUS.
    (v) The provider has a prior court record, criminal or civil, or 
administrative record or finding of fraud or abuse.
    (3) If any mitigating factors exist, then cause may exist for the 
Director, OCHAMPUS, or a designee, to reduce a period of administrative 
exclusion or suspension from any period(s) imposed by court conviction 
or civil judgment. Only the existence of either of the following two 
factors may be considered in mitigation:
    (i) The criminal conviction or civil judgment only involved three or 
fewer misdemeanor offenses, and the total of the estimated losses 
incurred (including any loss from act(s) not involved in the conviction 
or judgment) is less than $1,000, regardless of whether full or partial 
restitution has been made.
    (ii) The criminal or civil court proceedings establish that the 
provider had a mental, emotional or physical condition, prior to or 
contemporaneous with the commission of the act(s), that reduced the 
provider's criminal or civil culpability.
    (B) The Director, OCHAMPUS, or a designee, may consider the 
following factors in determining a reasonable period of exclusion or 
suspension of a provider under CHAMPUS:
    (1) The nature of the claims and the circumstances under which they 
were presented;
    (2) The degree of culpability;
    (3) History of prior offenses (including whether claims were 
submitted while the provider was either excluded or suspended pursuant 
to prior administrative action);
    (4) Number of claims involved;
    (5) Dollar amount of claims involved;
    (6) Whether, if a crime was involved, it was a felony or 
misdemeanor;
    (7) If patients were injured financially, mentally, or physically; 
the number of patients; and the seriousness of the injury(ies);
    (8) The previous record of the provider under CHAMPUS;
    (9) Whether restitution has been made or arrangements for repayment 
accepted by the Government;
    (10) Whether the provider has resolved the conflict of interest 
situations or implemented procedures acceptable to the Director, 
OCHAMPUS, or a designee, which will prevent conflict of interest in the 
future; and,
    (11) Such other factors as may be deemed appropriate.
    (2) Terminations. When a provider's status as an authorized CHAMPUS 
provider is ended, other than through exclusion or suspension, the 
termination is based on a finding that the provider does not meet the 
qualifications to be an authorized provider, as set forth in this part. 
Therefore, the period of termination in all cases will be indefinite and 
will end only after the provider has successfully met the established 
qualifications for authorized provider status under CHAMPUS and has been 
reinstated under CHAMPUS. Except as otherwise provided in this 
subparagraph, the following guidelines control the termination of 
authorized CHAMPUS provider status for a provider whose license to 
practice (or, in the case of an institutional provider, to operate) has 
been temporarily or permanently suspended or revoked by the jurisdiction 
issuing the license.
    (i) Termination of the provider under CHAMPUS shall continue even if 
the provider obtains a license to practice in a second jurisdiction 
during the period of suspension or revocation of the provider's license 
by the original licensing jurisdiction. A provider who has licenses to 
practice in two or more jurisdictions and has one or more license(s) 
suspended or revoked will also be terminated as a CHAMPUS provider.
    (A) Professional providers shall remain terminated from the CHAMPUS 
until the jurisdiction(s) suspending or revoking the provider's 
license(s) to practice restores it or removes the impediment to 
restoration.
    (B) Institutional providers shall remain terminated under CHAMPUS 
until their license is restored. In the event the facility is sold, 
transferred, or reorganized as a new legal entity, and a license issued 
under a new name or to a different legal entity, the new

[[Page 195]]

entity must submit an application to be an authorized CHAMPUS provider.
    (ii) If the CHAMPUS provider status is terminated due to the loss of 
the provider's license, the effective date shall be retroactive to the 
date the provider lost the license; however, in the case of a 
professional provider who has licenses in two or more jurisdictions and 
submitted claims from a jurisdiction from which he/she had a valid 
license, the effective date of the termination will be 15 calendar days 
from the date of the written initial determination of termination for 
purposes of claims from the jurisdiction in which the provider still has 
a valid license.
    (h) Procedures for initiating and implementing the administrative 
remedies--(1) Temporary suspension of claims processing. (i) In general, 
temporary suspension of claims processing may be invoked to protect the 
interests of the Government for a period reasonably necessary to 
complete investigation or appropriate criminal, civil, and 
administrative proceedings. The temporary suspension only delays the 
ultimate payment of otherwise appropriate claims. When claims processing 
involving a participating provider is temporarily suspended, the 
participation agreement remains in full force and the provider cannot 
repudiate the agreement because of the delay in the final disposition of 
the claim(s). Once it has been determined appropriate to end the 
temporary suspension of claims processing, CHAMPUS claims which were the 
subject of the suspension and which are otherwise determined to be in 
compliance with the requirements of law and regulation, will be 
processed to completion and payment unless such action is deemed 
inappropriate as a result of criminal, civil, or administrative remedies 
ultimately invoked in the case.
    (ii) When adequate evidence exists to determine that a provider or 
beneficiary is submitting fraudulent or false claims or claims involving 
practices that may be fraud or abuse as defined by this part, the 
Director, OCHAMPUS, or a designee, may suspend CHAMPUS claims processing 
(in whole or in part) for claims submitted by the beneficiary or any 
CHAMPUS claims involving care furnished by the provider. The temporary 
suspension of claims processing for care furnished by a provider may be 
invoked against all such claims, whether or not the claims are submitted 
by the beneficiary or by the provider as a participating CHAMPUS 
provider. In cases involving a provider, notice of the suspension of 
claims processing may also be given to the beneficiary community either 
directly or indirectly through notice to appropriate military 
facilities, health benefit advisors, and the information or news media.
    (A) Adequate evidence is any information sufficient to support the 
reasonable belief that a particular act or omission has occurred.
    (B) Indictment or any other initiation of criminal charges, filing 
of a complaint for civil fraud, issuance of an administrative complaint 
under the Program Fraud Civil Remedies Act, or issuance of an initial 
determination under this part for submitting fraudulent or false claims 
or claims involving practices that may be fraud or abuse as defined by 
this part, shall constitute adequate evidence for invoking temporary 
suspension of claims processing.
    (iii) The Director, OCHAMPUS, or a designee, may suspend CHAMPUS 
claims processing without first notifying the provider or beneficiary of 
the intent to suspend payments. Following a decision to invoke a 
temporary suspension, however, the Director, OCHAMPUS, or a designee, 
shall issue written notice advising the provider or beneficiary that:
    (A) A temporary suspension of claims processing has been ordered and 
a statement of the basis of the decision to suspend payment. Unless the 
suspension is based on any of the actions set forth in paragraph 
(h)(1)(ii)(B) of this section, the notice shall describe the suspected 
acts or omissions in terms sufficient to place the provider or 
beneficiary on notice without disclosing the Government's evidence.
    (B) Within 30 days (or, upon written request received by OCHAMPUS 
during the 30 days and for good cause shown, within 60 days) from the 
date of the notice, the provider or beneficiary may:
    (1) Submit to the Director, OCHAMPUS, or a designee, in writing,

[[Page 196]]

information (including documentary evidence) and argument in opposition 
to the suspension, provided the additional specific information raises a 
genuine dispute over the material facts, or
    (2) Submit a written request to present in person evidence or 
argument to the Director, OCHAMPUS, or a designee. All such 
presentations shall be made at the Office of Civilian Health and Medical 
Program of the Uniformed Services (OCHAMPUS) in Aurora, Colorado, at the 
provider's or beneficiary's own expense.
    (C) Additional proceedings to determine disputed material facts may 
be conducted unless:
    (1) The suspension is based on any of the actions set forth in 
paragraph (h)(1)(ii)(B) of this section, or,
    (2) A determination is made, on the basis of the advice of the 
responsible Government official (e.g., an official of the Department of 
Justice, the designated Reviewing Official under the Program Fraud Civil 
Remedies Act, etc.), that the substantial interests of the Government in 
pending or contemplated legal or administrative proceedings based on the 
same facts as the suspension would be prejudiced.
    (iv) If the beneficiary or provider submits, either in writing or in 
person, additional information or argument in opposition to the 
suspension, the Director, OCHAMPUS, or a designee, shall issue a 
suspending official's decision which modifies, terminates, or leaves in 
force the suspension of claims processing. However, a decision to 
terminate or modify the suspension shall be without prejudice to the 
subsequent imposition of suspension of claims processing, imposition of 
sanctions under this Sec. 199.9, the recovery of erroneous payments 
under Sec. 199.11 of this part, or any other administrative or legal 
action authorized by law or regulation. The suspending official's 
decision shall be in writing as follows:
    (A) A written decision based on all the information in the 
administrative record, including any submission by the beneficiary or 
provider, shall be final in a case:
    (1) Based on any of the actions set forth in paragraph (h)(1)(ii)(B) 
of this section,
    (2) In which the beneficiary's or provider's submission does not 
raise a genuine dispute over material facts, or
    (3) In which additional proceedings to determine disputed material 
facts have been denied on the basis of advice of a responsible 
Government official that the substantial interests of the Government in 
pending or contemplated legal or administrative proceedings would be 
prejudiced.
    (B) In a case in which additional proceedings are necessary as to 
disputed material facts, the suspending official's decision shall advise 
the beneficiary or provider that the case has been referred for handling 
as a hearing under Sec. 199.10 of this part.
    (v) A suspension of claims processing may be modified or terminated 
for reasons such as:
    (A) Newly discovered evidence;
    (B) Elimination of any of the causes for which the suspension was 
invoked; or
    (C) Other reasons the Director, OCHAMPUS, or a designee, deems 
appropriate.
    (vi) A suspension of claims processing shall be for a temporary 
period pending the completion of investigation and any ensuing legal or 
administrative proceedings, unless sooner terminated by the Director, 
OCHAMPUS, or a designee, or as provided in this subparagraph.
    (A) If legal or administrative proceedings are not initiated within 
12 months after the date of the suspension notice, the suspension shall 
be terminated unless the Government official responsible for initiation 
of the legal or administrative action requests its extension, in which 
case it may be extended for an additional 6 months. In no event may a 
suspension extend beyond 18 months, unless legal or administrative 
proceedings have been initiated during that period.
    (B) The Director, OCHAMPUS, or a designee, shall notify the 
Government official responsible for initiation of the legal or 
administrative action of the proposed termination of the suspension, at 
least 30 days before the 12-month period expires, to give the official 
an opportunity to request an extension.

[[Page 197]]

    (2) Notice of proposed administrative sanction. (i) A provider shall 
be notified in writing of the proposed action to exclude, suspend, or 
terminate the provider's status as an authorized CHAMPUS provider.
    (A) The notice shall state which sanction will be taken and the 
effective date of that sanction as determined in accordance with the 
provisions of this part.
    (B) The notice shall inform the provider of the situation(s), 
circumstance(s), or action(s) which form the basis for the proposed 
sanction and reference the paragraph of this part under which the 
administrative action is being taken.
    (C) The notice will be sent to the provider's last known business or 
office address (or home address if there is no known business address.)
    (D) The notice shall offer the provider an opportunity to respond 
within 30 days (or, upon written request received by OCHAMPUS during the 
30 days and for good cause shown, within 60 days) from the date on the 
notice with either:
    (1) Documentary evidence and written argument contesting the 
proposed action; or,
    (2) A written request to present in person evidence or argument to 
the Director, OCHAMPUS, or a designee. All such presentations shall be 
made at the Office of the Civilian Health and Medical Program of the 
Uniformed Services (OCHAMPUS) in Aurora, Colorado, at the provider's own 
expense.
    (3) Initial determination. (i) If, after the provider has exhausted, 
or failed to comply with, the procedures specified in paragraph (h)(2) 
of this section, the Director, OCHAMPUS, or a designee, decides to 
invoke an administrative remedy of exclusion, suspension, or termination 
of a provider under CHAMPUS, written notice of the decision will be sent 
to the provider by certified mail. Except in those cases where the 
sanction has a retroactive effective date, the written notice shall be 
dated no later than 15 days before the decision becomes effective. For 
terminations under paragraph (f)(2)(ii)(B) of this section, the initial 
determination may be issued without first implementing or exhausting the 
procedures specified in paragraph (h)(2) of this section.
    (ii) The initial determination shall include:
    (A) A statement of the sanction being invoked;
    (B) A statement of the effective date of the sanction;
    (C) A statement of the facts, circumstances, or actions which form 
the basis for the sanction and a discussion of any information submitted 
by the provider relevant to the sanction;
    (D) A statement of the factors considered in determining the period 
of sanction;
    (E) The earliest date on which a request for reinstatement under 
CHAMPUS will be accepted;
    (F) The requirements and procedures for reinstatement; and,
    (G) Notice of the available hearing upon request of the sanctioned 
provider.
    (4) Reinstatement procedures--(i) Restitution. (A) There is no 
entitlement under CHAMPUS for payment (cost-sharing) of any claim that 
involves either criminal or civil fraud as defined by law, or fraud or 
abuse or conflict of interest as defined by this part. In addition, 
except as specifically provided in this part, there is no entitlement 
under CHAMPUS for payment (cost-sharing) of any claim for services or 
supplies furnished by a provider who does not meet the requirements to 
be an authorized CHAMPUS provider. In any of the situations described 
above, CHAMPUS payment shall be denied whether the claim is submitted by 
the provider as a participating claim or by the beneficiary for 
reimbursement. If an erroneous payment has been issued in any such case, 
collection of the payment will be processed under Sec. 199.11 of this 
part.
    (B) If the Government has made erroneous payments to a provider 
because of claims involving fraud, abuse, or conflicts of interest, 
restitution of the erroneous payments shall be made before a request for 
reinstatement as a CHAMPUS authorized provider will be considered. 
Without restitution or resolution of the debt under Sec. 199.11 of this 
part, a provider shall not be reinstated as an authorized CHAMPUS 
provider.

[[Page 198]]

This is not an appealable issue under Sec. 199.10 of this part.
    (C) For purposes of authorization as a CHAMPUS provider, a provider 
who is excluded or suspended under this Sec. 199.9 and who submits 
participating claims for services furnished on or after the effective 
date of the exclusion or suspension is considered to have forfeited or 
waived any right or entitlement to bill the beneficiary for the care 
involved in the claims. Similarly, because a provider is expected to 
know the CHAMPUS requirements for qualification as an authorized 
provider, any participating provider who fails to meet the qualification 
requirements for CHAMPUS is considered to have forfeited or waived any 
right or entitlement to bill the beneficiary for the care involved in 
the CHAMPUS claims. If, in either situtation, the provider bills the 
beneficiary, restitution to the beneficiary may be required by the 
Director, OCHAMPUS, or a designee, as a condition for consideration of 
reinstatement as a CHAMPUS authorized provider.
    (ii) Terminated providers. A terminated provider who subsequently 
achieves the minimum qualifications to be an authorized CHAMPUS provider 
or who has had his/her license reinstated or the impediment to 
reinstatement removed by the appropriate licensing jurisdiction may 
submit a written request for reinstatement under CHAMPUS to the 
Director, OCHAMPUS, or a designee. If restitution or proper 
reinstatement of license is not at issue, the Director, OCHAMPUS, or a 
designee, will process the request for reinstatement under the 
procedures established for initial requests for authorized CHAMPUS 
provider status.
    (iii) Providers (other than entities) excluded or suspended under 
CHAMPUS. (A) A provider excluded or suspended from CHAMPUS (other than 
an entity excluded under Sec. 199.9(f)(1)(i)) may seek reinstatement by 
submitting a written request to the Director, OCHAMPUS, or a designee, 
any time after the date specified in the notice of exclusion or 
suspension or any earlier date specified in an appeal decision issued in 
the provider's appeal under Sec. 199.10 of this part. The request for 
reinstatement shall include:
    (1) Documentation sufficient to establish the provider's 
qualifications under this part to be a CHAMPUS authorized provider;
    (2) A statement from the provider setting forth the reasons why the 
provider should be reinstated, accompanied by written statements from 
professional associates, peer review bodies, and/or probation officers 
(if appropriate), attesting to their belief that the violations that led 
to exclusion or suspension will not be repeated.
    (B) A provider entity excluded from CHAMPUS under 
Sec. 199.9(f)(1)(i) may seek reinstatement by submitting a written 
request to the Director, OCHAMPUS, or a designee, with documentation 
sufficient to establish the provider's qualifications under this part to 
be a CHAMPUS authorized provider and either:
    (1) Documentation showing the CHAMPUS reinstatement of the excluded 
individual provider whose conviction led to the CHAMPUS exclusion or 
suspension of the provider entity; or
    (2) Documentation acceptable to the Director, OCHAMPUS, or a 
designee, that shows that the individual whose conviction led to the 
entity's exclusion:
    (i) Has reduced his or her ownership or control interest in the 
entity below 5 percent; or
    (ii) Is no longer an officer, director, agent or managing employee 
of the entity; or
    (iii) Continues to maintain a 5 percent or more ownership or control 
interest in such entity, and that the entity due to circumstances beyond 
its control, is unable to obtain a divestiture.

    Note: Under paragraph (h)(4)(iii)(B)(2) of this section, the request 
for reinstatement may be submitted any time prior to the date specified 
in the notice of exclusion or suspension or an earlier date specified in 
the appeal decision issued under Sec. 199.10 of this part.

    (iv) Action on request for reinstatement. In order to reinstate a 
provider as a CHAMPUS authorized provider, the Director, OCHAMPUS, or a 
designee, must determine that:

[[Page 199]]

    (A) The provider meets all requirements under this part to be an 
authorized CHAMPUS provider;
    (B) No additional criminal, civil, or administrative action has been 
taken or is being considered which could subject the provider to 
exclusion, suspension, or termination under this section;
    (C) In the case of a provider entity, verification has been made of 
the divestiture or termination of the owner, controlling party, officer, 
director, agent or managing employee whose conviction led to the 
entity's exclusion, or that the provider entity should be reinstated 
because the entity, due to circumstances beyond its control, cannot 
obtain a divestiture of the 5 percent or more ownership or controlling 
interest by the convicted party.
    (v) Notice of action on request for reinstatement--(A) Notice of 
approval of request. If the Director, OCHAMPUS, or a designee, approves 
the request for reinstatement, he or she will:
    (1) Give written notice to the sanctioned party specifying the date 
when the authorized provider status under CHAMPUS may resume; and
    (2) Give notice to those agencies and groups that were originally 
notified, in accordance with Sec. 199.9(k), of the imposition of the 
sanction. General notice may also be given to beneficiaries and other 
parties as deemed appropriate by the Director, OCHAMPUS, or a designee.
    (B) Notice of denial of request. If the Director, OCHAMPUS, or a 
designee, does not approve the request for reinstatement, written notice 
will be given to the provider. If established procedures for processing 
initial requests for authorized provider status are used to review the 
request for reinstatement, the established procedures may be used to 
provide the notice that the provider does not meet requirements of this 
part for such status. If the provider continues to be excluded, 
suspended, or terminated under the provisions of this section, the 
procedures set forth in this paragraph (h) may be followed in denying 
the provider's request for reinstatement.
    (5) Reversed or vacated convictions or civil judgments involving 
CHAMPUS fraud. (i) If a CHAMPUS provider is excluded or suspended solely 
on the basis of a criminal conviction or civil judgment involving a 
CHAMPUS fraud and the conviction or judgment is reversed or vacated on 
appeal, CHAMPUS will void the exclusion of a provider. Such action will 
not preclude the initiation of additional independent administrative 
action under this section or any other administrative remedy based on 
the same facts or events which were the subject of the criminal 
conviction or civil judgment.
    (ii) If an exclusion is voided under paragraph (h)(5)(i) of this 
section, CHAMPUS will make payment, either to the provider or the 
beneficiary (if the claim was not a participating claim) for otherwise 
authorized services under CHAMPUS that are furnished or performed during 
the period of exclusion.
    (iii) CHAMPUS will also void the exclusion of any entity that was 
excluded under Sec. 199.9(f)(1)(i) based solely on an individual's 
conviction that has been reversed or vacated on appeal.
    (iv) When CHAMPUS voids the exclusion of a provider or an entity, 
notice will be given to the agencies and others that were originally 
notified, in accordance with Sec. 199.9(k).
    (i) Evidence required for determinations to invoke administrative 
remedies--(1) General. Any relevant evidence may be used by the 
Director, OCHAMPUS, or a designee, if it is the type of evidence on 
which reasonable persons are accustomed to rely in the conduct of 
serious affairs, regardless of the existence of any common law or 
statutory rule that might make improper the admission of such evidence 
over objection in civil or criminal courts.
    (2) Types of evidence. The types of evidence which the Director, 
OCHAMPUS, or a designee, may rely on in reaching a determination to 
invoke administrative remedies under this section include but are not 
limited to the following:
    (i) Results of audits conducted by or on behalf of the Government. 
Such audits can include the results of 100 percent review of claims and 
related records or a statistically valid sample audit of the claims or 
records. A statistical sampling shall constitute prima facie evidence of 
the number and

[[Page 200]]

amount of claims and the instances of fraud, abuse, or conflict of 
interest.
    (ii) Reports, including sanction reports, from various sources 
including a peer review organization (PRO) for the area served by the 
provider; state or local licensing or certification authorities; peer or 
medical review consultants of the Government, including consultants for 
Government contractors; state or local professional societies; or other 
sources deemed appropriate by the Director, OCHAMPUS, or a designee.
    (iii) Orders or documents issued by Federal, state, foreign, or 
other courts of competent jurisdiction which issue findings and/or 
criminal convictions or civil judgments involving the provider, and 
administrative rulings, findings, or determinations by any agency of the 
Federal Government, a state, or local licensing or certification 
authority regarding the provider's status with that agency or authority.
    (j) Suspending Administrative Action. (1) All or any administrative 
action may be suspended by the Director, OCHAMPUS, or a designee, 
pending action in the case by the Department of Defense--Inspector 
General, Defense Criminal Investigative Service, or the Department of 
Justice (including the responsible United States Attorney). However, 
action by the Department of Defense--Inspector General or the Department 
of Justice, including investigation, criminal prosecution, or civil 
litigation, does not preclude administrative action by OCHAMPUS.
    (2) The normal OCHAMPUS procedure is to suspend action on the 
administrative process pending an investigation by the Department of 
Defense--Inspector General or final disposition by the Department of 
Justice.
    (3) Though OCHAMPUS administrative action is taken independently of 
any action by the Department of Defense-Inspector General or by the 
Department of Justice, once a case is forwarded to the Department of 
Defense-Inspector General or the Department of Justice for legal action 
(criminal or civil), administrative action may be held in abeyance.
    (4) In some instances there may be dual jurisdiction between 
agencies; as in, for example, the joint regulations issued by the 
Department of Justice and the Government Accounting Office regarding 
debt collection.
    (k) Notice to Other Agencies. (1) When CHAMPUS excludes, suspends, 
or terminates a provider, the Director, OCHAMPUS, or a designee, will 
notify other appropriate agencies (for example, the Department of Health 
and Human Services and the state licensing agency that issued the 
provider's license to practice) that the individual has been excluded, 
suspended, or terminated as an authorized provider under CHAMPUS. An 
exclusion, suspension, or termination action is considered a public 
record. Such notice can include the notices and determinations sent to 
the suspended provider and other public documents such as testimony 
given at a hearing or exhibits or depositions given in a lawsuit or 
hearing. Notice may also be given to Uniformed Services Military 
Treatment Facilities, Health Benefit Advisors, beneficiaries and 
sponsors, the news media, and institutional providers if inpatient care 
was involved.
    (2) If CHAMPUS has temporarily suspended claims processing, notice 
of such action normally will be given to the affected provider and 
Uniformed Services Medical Treatment Facilities, Health Benefits 
Advisors, beneficiaries, and sponsors. Notice may also be given to any 
information or news media and any other individual, professional 
provider, or institutional provider, as deemed appropriate. However, 
since a ``temporary suspension of claims processing'' is by definition 
not a final or formal agency action, the basis for the action generally 
will not be disclosed. It is noted that the basis for the action can be 
a result of questions arising from routine audits to investigation of 
possible criminal violations.
    (l) Compromise, Settlement, and Resolution Authority. (1) In lieu of 
invoking any remedy provided by this Section, the Director, OCHAMPUS, or 
a designee, may elect to enter into an agreement with the provider 
intended to correct the situation within an established time period and 
subject to any remedies deemed appropriate by the Director, OCHAMPUS, or 
a designee.
    (2) When it is in the best interest of CHAMPUS, the Director, 
OCHAMPUS,

[[Page 201]]

has the discretionary authority to waive an action or enter into 
compromise or settlement of administrative actions taken under this 
Sec. 199.9.
    (m) Government-wide effect of exclusion or suspension from CHAMPUS. 
As provided by section 2455 of the Federal Acquisition Streamlining Act 
of 1994, Pub. L. 103-355, October 13 1994, and Executive Order 12549, 
``Debarment and Suspension from Federal Financial and Nonfinancial 
Assistance Programs,'' February 18, 1986, any health care provider 
excluded or suspended from CHAMPUS under this section shall, as a 
general rule, also be debarred, suspended, or otherwise excluded from 
all other programs and activities involving Federal financial 
assistance. Among the other programs for which this debarment, 
suspension, or exclusion shall operate are the Medicare and Medicaid 
programs. This debarment, suspension, or termination requirement is 
subject to limited exceptions in the regulations governing the 
respective Federal programs affected. (Note: Other regulations related 
to this government-wide exclusion or suspension authority are 32 CFR 
Part 25 and 45 CFR Part 76.)

[54 FR 25246, June 14, 1989, as amended at 63 FR 48445, Sept. 10, 1998]



Sec. 199.10  Appeal and hearing procedures.

    (a) General. This Section sets forth the policies and procedures for 
appealing decisions made by OCHAMPUS, OCHAMPUSEUR, and CHAMPUS 
contractors adversely affecting the rights and liabilities of CHAMPUS 
beneficiaries, CHAMPUS participating providers, and providers denied the 
status of authorized provider under CHAMPUS. An appeal under CHAMPUS is 
an administrative review of program determinations made under the 
provisions of law and regulation. An appeal cannot challenge the 
propriety, equity, or legality of any provision of law or regulation.
    (1) Initial determination. (i) Notice of initial determination and 
right to appeal. (A) OCHAMPUS, OCHAMPUSEUR, and CHAMPUS contractors 
shall mail notices of initial determinations to the affected provider or 
CHAMPUS beneficiary (or representative) at the last known address. For 
beneficiaries who are under 18 years of age or who are incompetent, a 
notice issued to the parent, guardian, or other representative, under 
established CHAMPUS procedures, constitutes notice to the beneficiary.
    (B) CHAMPUS contractors and OCHAMPUSEUR shall notify a provider of 
an initial determination on a claim only if the provider participated in 
the claim. (See Sec. 199.7 of this part.)
    (C) CHAMPUS peer review organizations shall notify providers and 
fiscal intermediaries of a denial determination on a claim.
    (D) Notice of an initial determination on a claim processed by a 
CHAMPUS contractor or OCHAMPUSEUR normally will be made on a CHAMPUS 
Explanation of Benefits (CEOB) form.
    (E) Each notice of an initial determination on a request for benefit 
authorization, a request by a provider for approval as an authorized 
CHAMPUS provider, or a decsion to disqualify or exclude a provider as an 
authorized provider under CHAMPUS shall state the reason for the 
determination and the underlying facts supporting the determination.
    (F) In any case when the initial determination is adverse to the 
beneficiary or participating provider, or to the provider seeking 
approval as an authorized CHAMPUS provider, the notice shall include a 
statement of the beneficiary's or provider's right to appeal the 
determination. The procedure for filing the appeal also shall be 
explained.
    (ii) Effect of initial determination. The initial determination is 
final unless appealed in accordance with this chapter, or unless the 
initial determination is reopened by OCHAMPUS, the CHAMPUS contractor, 
or the CHAMPUS peer review organization.
    (2) Participation in an appeal. Participation in an appeal is 
limited to any party to the initial determination, including CHAMPUS, 
and authorized representatives of the parties. Any party to the initial 
determination, except CHAMPUS, may appeal an adverse determination. The 
appealing party is the party who actually files the appeal.

[[Page 202]]

    (i) Parties to the initial determination. For purposes of the 
CHAMPUS appeals and hearing procedures, the following are not parties to 
an initial determination and are not entitled to administrative review 
under this section.
    (A) A provider disqualified or excluded as an authorized provider 
under CHAMPUS based on a determination of abuse or fraudulent practices 
or procedures under another Federal or federally funded program is not a 
party to the CHAMPUS action and may not appeal under this section.
    (B) A beneficiary who has an interest in receiving care or has 
received care from a particular provider cannot be an appealing party 
regarding the exclusion, suspension, or termination of the provider 
under Sec. 199.9 of this part.
    (C) A sponsor or parent of a beneficiary under 18 years of age or 
guardian or an incompetent beneficiary is not a party to the initial 
determination and may not serve as the appealing party, although such 
persons may represent the appealing party in an appeal.
    (D) A third party, such as an insurance company, is not a party to 
the initial determination and is not entitled to appeal even though it 
may have an indirect interest in the initial determination.
    (E) A nonparticipating provider is not a party to the initial 
determination and may not appeal.
    (ii) Representative. Any party to the initial determination may 
appoint a representative to act on behalf of the party in connection 
with an appeal. Generally, the parent of a minor beneficiary and the 
legally appointed guardian of an incompetent beneficiary shall be 
presumed to have been appointed representative without specific 
designation by the beneficiary. The custodial parent or legal guardian 
(appointed by a cognizant court) of a minor beneficiary may initiate an 
appeal based on the above presumption. However, should a minor 
beneficiary turn 18 years of age during the course of an appeal, then 
any further requests to appeal on behalf of the beneficiary must be from 
the beneficiary or pursuant to the written authorization of the 
beneficiary appointing a representative. For example, if the beneficiary 
is 17 years of age and the sponsor (who is a custodial parent) requests 
a formal review, absent written objection by the minor beneficiary, the 
sponsor is presumed to be acting on behalf of the minor beneficiary. 
Following the issuance of the formal review, the sponsor requests a 
hearing; however if, at the time of the request for a hearing, the 
beneficiary is 18 years of age or older, the request must either be by 
the beneficiary or the beneficiary must appoint a representative. The 
sponsor, in this example, could not pursue the request for hearing 
without being appointed by the beneficiary as the beneficiary's 
representative.
    (A) The representative shall have the same authority as the party to 
the appeal and notice given to the representative shall constitute 
notice required to be given to the party under this part.
    (B) To avoid possible conflicts of interest, an officer or employee 
of the United States, such as an employee or member of a Uniformed 
Service, including an employee or staff member of a Uniformed Service 
legal office, or a CHAMPUS advisor, subject to the exceptions in 18 
U.S.C. 205, is not eligible to serve as a representative. An exception 
usually is made for an employee or member of a Uniformed Service who 
represents an immediate family member. In addition, the Director, 
OCHAMPUS, or designee, may appoint an officer or employee of the United 
States as the CHAMPUS representative at a hearing.
    (3) Burden of proof. The burden of proof is on the appealing party 
to establish affirmatively by substantial evidence the appealing party's 
entitlement under law and this part to the authorization of CHAMPUS 
benefits, approval of authorized CHAMPUS provider status, or removal of 
sanctions imposed under Sec. 199.9 of this part. If a presumption exists 
under the provisions of this part or information constitutes prima facie 
evidence under the provisions of this part, the appealing party must 
produce evidence reasonably sufficient to rebut the presumption or prima 
facie evidence as part of the appealing party's burden of proof. CHAMPUS 
shall not pay any part of the cost or fee, including attorney fees,

[[Page 203]]

associated with producing or submitting evidence in support of an 
appeal.
    (4) Evidence in appeal and hearing cases. Any relevant evidence may 
be used in the administrative appeal and hearing process if it is the 
type of evidence on which reasonable persons are accustomed to rely in 
the conduct of serious affairs, regardless of the existence of any 
common law or statutory rule that might make improper the admission of 
such evidence over objection in civil or criminal courts.
    (5) Late filing. If a request for reconsideration, formal review, or 
hearings is filed after the time permitted in this section, written 
notice shall be issued denying the request. Late filing may be permitted 
only if the appealing party reasonably can demonstrate to the 
satisfaction of the Director, OCHAMPUS, or a designee, that the timely 
filing of the request was not feasible due to extraordinary 
circumstances over which the appealing party had no practical control. 
Each request for an exception to the filing requirement will be 
considered on its own merits. The decision of the Director, OCHAMPUS, or 
a designee, on the request for an exception to the filing requirement 
shall be final.
    (6) Appealable issue. An appealable issue is required in order for 
an adverse determination to be appealed under the provisions of this 
section. Examples of issues that are not appealable under this section 
include:
    (i) A dispute regarding a requirement of the law or regulation.
    (ii) The amount of the CHAMPUS-determined allowable cost or charge, 
since the methodology for determining allowable costs or charges is 
established by this part.
    (iii) The establishment of diagnosis-related groups (DRGs), or the 
methodology for the classification of inpatient discharges within the 
DRGs, or the weighting factors that reflect the relative hospital 
resources used with respect to discharges within each DRG, since each of 
these is established by this part.
    (iv) Certain other issues on the basis that the authority for the 
initial determination is not vested in CHAMPUS. Such issues include but 
are not limited to the following examples:
    (A) Determination of a person's eligibility as a CHAMPUS beneficiary 
is the responsibility of the appropriate Uniformed Service. Although 
OCHAMPUS, OCHAMPUSEUR, and CHAMPUS contractors must make determinations 
concerning a beneficiary's eligibility in order to ensure proper 
disbursement of appropriated funds on each CHAMPUS claim processed, 
ultimate responsibility for resolving a beneficiary's eligibility rests 
with the Uniformed Services. Accordingly, disputed question of fact 
concerning a beneficiary's eligibility will not be considered an 
appealable issue under the provisions of this section, but shall be 
resolved in accordance with Sec. 199.3 of this part.
    (B) Similarly, decisions relating to the issuance of a 
Nonavailability Statement (DD Form 1251) in each case are made by the 
Uniformed Services. Disputes over the need for a Nonavailability 
Statement or a refusal to issue a Nonavailability Statement are not 
appealable under this section. The one exception is when a dispute 
arises over whether the facts of the case demonstrate a medical 
emergency for which a Nonavailability Statement is not required. Denial 
of payment in this one situation is an appealable issue.
    (C) Any sanction, including the period of the sanction, imposed 
under Sec. 199.9 of this part which is based solely on a provider's 
exclusion or suspension by another agency of the Federal Government, a 
state, or a local licensing authority is not appealable under this 
section. The provider must exhaust administrative appeal rights offered 
by the other agency that made the initial determination to exclude or 
suspend the provider. Similarly, any sanction imposed under Sec. 199.9 
which is based solely on a criminal conviction or civil judgment against 
the provider is not appealable under this section. If the sanction 
imposed under Sec. 199.9 is not based solely on the provider's criminal 
conviction or civil judgment or on the provider's exclusion or 
suspension by another agency of the Federal Government, a state, or a 
local licensing authority, that portion of the CHAMPUS administrative 
determination which is in addition to the criminal conviction/civil 
judgment or exclusion/suspension

[[Page 204]]

by the other agency may be appealed under this section.
    (v) A decision by the Director, OCHAMPUS, or a designee, as a 
suspending official when the decision is final under the provisions of 
Sec. 199.9(h)(1)(iv)(A).
    (7) Amount in dispute. An amount in dispute is required for an 
adverse determination to be appealed under the provisions of this 
section, except as set forth below.
    (i) The amount in dispute is calculated as the amount of money 
CHAMPUS would pay if the services and supplies involved in dispute were 
determined to be authorized CHAMPUS benefits. Examples of amounts of 
money that are excluded by the Regulation from CHAMPUS payments for 
authorized benefits include, but are not limited to:
    (A) Amounts in excess of the CHAMPUS-determined allowable charge or 
cost.
    (B) The beneficiary's CHAMPUS deductible and cost-share amounts.
    (C) Amounts that the CHAMPUS beneficiary, or parent, guardian, or 
other responsible person has no legal obligation to pay.
    (D) Amounts excluded under the provisions of Sec. 199.8 of this 
part.
    (ii) The amount of dispute for appeals involving a denial of a 
request for authorization in advance of obtaining care shall be the 
estimated allowable charge or cost for the services requested.
    (iii) There is no requirement for an amount in dispute when the 
appealable issue involves a denial of a provider's request for approval 
as an authorized CHAMPUS provider or the determination to exclude, 
suspend, or terminate a provider's authorized CHAMPUS provider status.
    (iv) Individual claims may be combined to meet the required amount 
in dispute if all of the following exist:
    (A) The claims involve the same beneficiary.
    (B) The claims involve the same issue.
    (C) At least one of the claims so combined has had a reconsideration 
decision issued by OCHAMPUSEUR, a CHAMPUS contractor, or a CHAMPUS peer 
review organization.
    Note: A request for administrative review under this appeal process 
which involves a dispute regarding a requirement of law or regulation 
(paragraph (a)(6)(i) of this section) or does not involve a sufficient 
amount in dispute (paragraph (a)(7) of this section) may not be rejected 
at the reconsideration level of appeal. However, an appeal shall involve 
an appealable issue and sufficient amount in dispute under these 
paragraphs to be granted a formal review or hearing.
    (8) Levels of appeal. The sequence and procedures of a CHAMPUS 
appeal vary, depending on whether the initial determination was made by 
OCHAMPUS, OCHAMPUSEUR, a CHAMPUS contractor, or a CHAMPUS peer review 
organization.
    (i) Appeal levels for initial determination made by OCHAMPUSEUR, 
CHAMPUS contractor, or CHAMPUS peer review organization. (A) 
Reconsideration by OCHAMPUSEUR, CHAMPUS contractor, or CHAMPUS peer 
review organization.
    (B) Formal review by OCHAMPUS (except for CHAMPUS peer review 
organization reconsiderations).
    (C) Hearing.
    (ii) Appeal levels for initial determination made by OCHAMPUS. (A) 
Reconsideration by OCHAMPUSEUR or CHAMPUS contractor.
    (A) Formal review by OCHAMPUS except (1) initial determinations 
involving the suspension of claims processing where the Director, 
OCHAMPUS, or a designee, determines that additional proceedings are 
necessary as to disputed material facts and the suspending official's 
decision is not final under the provisions of Sec. 199.9(h) (1)(iv)(A) 
or (2) initial determinations involving the sanctioning (exclusion, 
suspension, or termination) of CHAMPUS providers. Initial determinations 
involving these matters shall be appealed directly to the hearing level.
    (B) Hearing.
    (9) Appeal decision. An appeal decision at any level may address all 
pertinent issues which arise under the appeal or are otherwise presented 
by the information in the case record (for example, the entire episode 
of care in the appeal), and shall not be limited to addressing the 
specific issue appealed by a party. In the case of sanctions imposed 
under Sec. 199.9, the final decision

[[Page 205]]

may affirm, increase or reduce the sanction period imposed by CHAMPUS, 
or otherwise modify or reverse the imposition of the sanction.
    (b) Reconsideration. Any part to the initial determination made by 
OCHAMPUSEUR, the CHAMPUS contractor, or a CHAMPUS peer review 
organization may request a reconsideration.
    (1) Requesting a reconsideration--(i) Written request required. The 
request must be in writing, shall state the specific matter in dispute, 
and shall include a copy of the notice of initial determination (such as 
the CEOB form) made by OCHAMPUSEUR, the CHAMPUS contractor, or the 
CHAMPUS peer review organization.
    (ii) Where to file. The request shall be submitted to the office 
that made the initial determination (i.e., OCHAMPUSEUR, the CHAMPUS 
contractor, or the CHAMPUS peer review organization) or any other 
CHAMPUS contractor designated in the notice of initial determination.
    (iii) Allowed time to file. The request must be mailed within 90 
days after the date of the notice of initial determination.
    (iv) Official filing date. A request for a reconsideration shall be 
deemed filed on the date it is mailed and postmarked. If the request 
does not have a postmark, it shall be deemed filed on the date received 
by OCHAMPUSEUR, the CHAMPUS contractor or the CHAMPUS peer review 
organization.
    (2) The reconsideration process. The purpose of the reconsideration 
is to determine whether the initial determination was made in accordance 
with law, regulation, policies, and guidelines in effect at the time the 
care was provided or requested, or at the time of the initial 
determination and/or reconsideration decision involving a provider 
request for approval as an authorized provider under CHAMPUS. The 
reconsideration is performed by a member of the OCHAMPUSEUR, CHAMPUS 
contractor, or CHAMPUS peer review organization staff who was not 
involved in making the initial determination and is a thorough and 
independent reveiw of the case. The reconsideration is based on the 
information submitted that led to the initial determination, plus any 
additional information that the appealing party may submit or 
OCHAMPUSEUR, the CHAMPUS contractor, or CHAMPUS peer review organization 
may obtain.
    (3) Timeliness of reconsideration determination. OCHAMPUSEUR, the 
CHAMPUS contractor, or CHAMPUS peer review organization normally shall 
issue its reconsideration determination no later than 60 days from the 
date of receipt of the request for reconsideration by OCHAMPUSEUR, the 
CHAMPUS contractor, or the CHAMPUS peer review organization.
    (4) Notice of reconsideration determination. OCHAMPUSEUR, the 
CHAMPUS contractor, or the CHAMPUS peer review organization shall issue 
a written notice of the reconsideration determination to the appealing 
party at his or her last known address. The notice of the 
reconsideration must contain the following elements:
    (i) A statement of the issues or issue under appeal.
    (ii) The provisions of law, regulation, policies, and guidelines 
that apply to the issue or issues under appeal.
    (iii) A discussion of the original and additional information that 
is relevant to the issue or issues under appeal.
    (iv) Whether the reconsideration upholds the initial determination 
or reverses it, in whole or in part, and the rationale for the action.
    (v) A statement of the right to appeal further in any case when the 
reconsideration determination is less than fully favorable to the 
appealing party and the amount in dispute is $50 or more.
    (5) Effect of reconsideration determination. The reconsideration 
determination is final if either of the following exist:
    (i) The amount in dispute is less than $50.
    (ii) Appeal rights have been offered, but a request for formal 
review is not received by OCHAMPUS within 60 days of the date of the 
notice of the reconsideration determination.
    (c) Formal review. Except as explained in this paragraph, any party 
to an initial determination made by OCHAMPUS, or a reconsideration 
determination made by the CHAMPUS

[[Page 206]]

contractor may request a formal review by OCHAMPUS if the party is 
dissatisfied with the initial or reconsideration determination unless 
the initial or reconsideration determination
    (1) Is final under paragraph (b)(5) of this section;
    (2) Involves the sanctioning of a provider by the exclusion, 
suspension or termination of authorized provider status;
    (3) Involves a written decision issued pursuant to Sec. 199.9, 
paragraph (h)(l)(iv)(A) regarding the temporary suspension of claims 
processing; or
    (4) Involves a reconsideration determination by a CHAMPUS peer 
review organization. A hearing, but not a formal review level of appeal, 
may be available to a party to an initial determination involving the 
sanctioning of a provider or to a party to a written decision involving 
a temporary suspension of claims processing. A beneficiary (or an 
authorized representative of a beneficiary), but not a provider, may 
request a hearing, but not a formal review, of a reconsideration 
determination made by a CHAMPUS peer review organization.
    (d) Hearing. Any party to the initial determination may request a 
hearing if the party is dissatisfied with the formal review 
determination and the formal review determination is not final under the 
provisions of paragraph (c)(5), of this section, or the initial 
determination involves the sanctioning of a provider under Sec. 199.9 of 
this part and involves an appealable issue.
    (1) Requesting a hearing--(i) Written request required. The request 
shall be in writing, state the specific matter in dispute, include a 
copy of the appropriate initial determination or formal review 
determination being appealed, and include any additional information or 
documents not submitted previously.
    (ii) Where to file. The request shall be submitted to the Chief, 
Appeals and Hearings, OCHAMPUS, Aurora, Colorado 80045-6900.
    (iii) Allowed time to file. The request shall be mailed within 60 
days after the date of the notice of the initial determination or formal 
review determination being appealed.
    (iv) Official filing date. A request for hearing shall be deemed 
filed on the date it is mailed and postmarked. If a request for hearing 
does not have a postmark, it shall be deemed filed on the day received 
by OCHAMPUS.
    (2) Hearing process. A hearing is an administrative proceeding in 
which facts relevant to the appealable issue(s) in the case are 
presented and evaluated in relation to applicable law, regulation, 
policies, and guidelines in effect at the time the care in dispute was 
provided or requested; at the time of the initial determination, formal 
review determination, or hearing decision involving a provider request 
for approval under CHAMPUS as an authorized provider; or at the time of 
the act or event which is the basis for the imposition of sanctions 
under this part. A hearing, except for an appeal involving a provider 
sanction, generally shall be conducted as a nonadversary, administrative 
proceeding. However, an authorized party to any hearing, including 
CHAMPUS, may submit additional evidence or testimony relevant to the 
appealable issue(s) and may appoint a representative, including legal 
counsel, to participate in the hearing process.
    (3) Timeliness of hearing. (i) Except as otherwise provided in this 
section, within 60 days following receipt of a request for hearing, the 
Director, OCHAMPUS, or a designee, normally will appoint a hearing 
officer to hear the appeal. Copies of all records in the possession of 
OCHAMPUS that are pertinent to the matter to be heard or that formed the 
basis of the formal review determination shall be provided to the 
hearing officer and, upon request, to the appealing party.
    (ii) The hearing officer, except as otherwise provided in this 
Section, normally shall have 60 days from the date of written notice of 
assignment to review the file, schedule and hold the hearing, and issue 
a recommended decision to the Director, OCHAMPUS, or designee.
    (iii) The Director, OCHAMPUS, or designee, may delay the case 
assignment to the hearing officer if additional information is needed 
that cannot be obtained and included in the record within the time 
period specified

[[Page 207]]

above. The appealing party will be notified in writing of the delay 
resulting from the request for additional information. The Director, 
OCHAMPUS, or a designee, in such circumstances, will assign the case to 
a hearing officer within 30 days of receipt of all such additional 
information, or within 60 days of receipt of the request for hearing, 
whichever shall occur last.
    (iv) The hearing officer may delay submitting the recommended 
decision if, at the close of the hearing, any party to the hearing 
requests that the record remain open for submission of additional 
information. In such circumstances, the hearing officer will have 30 
days following receipt of all such additional information including 
comments from the other parties to the hearing concerning the additional 
information to submit the recommended decision to the Director, 
OCHAMPUS, or a designee.
    (4) Representation at a hearing. Any party to the hearing may 
appoint a representative to act on behalf of the party at the hearing, 
unless such person currently is disqualified or suspended from acting in 
another Federal administrative proceeding, or unless otherwise 
prohibited by law, this part, or any other DoD regulation (see paragraph 
(a)(2)(ii) of this section). A hearing officer may refuse to allow any 
person to represent a party at the hearing when such person engages in 
unethical, disruptive, or contemptuous conduct, or intentionally fails 
to comply with proper instructions or requests of the hearing officer, 
or the provisions of this part. The representative shall have the same 
authority as the appealing party and notice given to the representative 
shall constitute notice required to be given to the appealing party.
    (5) Consolidation of proceedings. The Director, OCHAMPUS, or a 
designee, may consolidate any number of proceedings for hearing when the 
facts and circumstances are similar and no substantial right of an 
appealing party will be prejudiced.
    (6) Authority of the hearing officer. The hearing officer in 
exercising the authority to conduct a hearing under this part will be 
bound by 10 U.S.C. chapter 55 and this part. The hearing officer in 
addressing substantive, appealable issues shall be bound by policy 
manuals, instructions, procedures, and other guidelines issued by the 
ASD(HA), or a designee, or by the Director, OCHAMPUS, or a designee, in 
effect for the period in which the matter in dispute arose. A hearing 
officer may not establish or amend policy, procedures, instructions, or 
guidelines. However, the hearing officer may recommend reconsideration 
of the policy, procedures, instructions or guidelines by the ASD(HA), or 
a designee, when the final decision is issued in the case.
    (7) Disqualification of hearing officer. A hearing officer 
voluntarily shall disqualify himself or herself and withdraw from any 
proceeding in which the hearing officer cannot give fair or impartial 
hearing, or in which there is a conflict of interest. A party to the 
hearing may request the disqualification of a hearing officer by filing 
a statement detailing the reasons the party believes that a fair and 
impartial hearing cannot be given or that a conflict of interest exists. 
Such request immediately shall be sent by the appealing party or the 
hearing officer to the Director, OCHAMPUS, or a designee, who shall 
investigate the allegations and advise the complaining party of the 
decision in writing. A copy of such decision also shall be mailed to all 
other parties to the hearing. If the Director, OCHAMPUS, or a designee, 
reassigns the case to another hearing officer, no investigation shall be 
required.
    (8) Notice and scheduling of hearing. The hearing officer shall 
issue by certified mail, when practicable, a written notice to the 
parties to the hearing of the time and place for the hearing. Such 
notice shall be mailed at least 15 days before the scheduled date of the 
hearing. The notice shall contain sufficient information about the 
hearing procedure, including the party's right to representation, to 
allow for effective preparation. The notice also shall advise the 
appealing party of the right to request a copy of the record before the 
hearing. Additionally, the notice shall advise the appealing party of 
his or her responsibility to furnish the hearing officer, no later than 
7 days before the scheduled date of the hearing, a list of all witnesses 
who will testify and a

[[Page 208]]

copy of all additional information to be presented at the hearing. The 
time and place of the hearing shall be determined by the hearing 
officer, who shall select a reasonable time and location mutually 
convenient to the appealing party and OCHAMPUS.
    (9) Dismissal of request for hearing. (i) By application of 
appealing party. A request for hearing may be dismissed by the Director, 
OCHAMPUS, or a designee, at any time before the mailing of the final 
decision, upon the application of the appealing party. A request for 
dismissal must be in writing and filed with the Chief, Appeals and 
Hearings, OCHAMPUS, or the hearing officer. When dismissal is requested, 
the formal review determination in the case shall be deemed final, 
unless the dismissal is vacated in accordance with paragraph (d)(9)(v) 
of this section.
    (ii) By stipulation of the parties to the hearing. A request for a 
hearing may be dismissed by the Director, OCHAMPUS, or a designee, at 
any time before to the mailing of notice of the final decision under a 
stipulation agreement between the appealing party and OCHAMPUS. When 
dismissal is entered under a stipulation, the formal review decision 
shall be deemed final, unless the dismissal is vacated in accordance 
with paragraph (d)(9)(v) of this section.
    (iii) By abandonment. The Director, OCHAMPUS, or a designee, may 
dismiss a request for hearing upon abandonment by the appealing party.
    (A) An appealing party shall be deemed to have abandoned a request 
for hearing, other than when personal appearance is waived in accordance 
with Sec. 199.10(d)(11)(xii), if neither the appealing party nor an 
appointed representative appears at the time and place fixed for the 
hearing and if, within 10 days after the mailing of a notice by 
certified mail to the appealing party by the hearing officer to show 
cause, such party does not show good and sufficient cause for such 
failure to appear and failure to notify the hearing officer before the 
time fixed for hearing that an appearance could not be made.
    (B) An appealing party shall be deemed to have abandoned a request 
for hearing if, before assignment of the case to the hearing officer, 
OCHAMPUS is unable to locate either the appealing party or an appointed 
representative.
    (C) An appealing party shall be deemed to have abandoned a request 
for hearing if the appealing party fails to prosecute the appeal. 
Failure to prosecute the appeal includes, but is not limited to, an 
appealing party's failure to provide information reasonably requested by 
OCHAMPUS or the hearing officer for consideration in the appeal.
    (D) If the Director, OCHAMPUS, or a designee, dismisses the request 
for hearing because of abandonment, the formal review determination in 
the case shall be deemed to be final, unless the dismissal is vacated in 
accordance with paragraph (d)(9)(v) of this section.
    (iv) For cause. The Director, OCHAMPUS, or a designee, may dismiss 
for cause a request for hearing either entirely or as to any stated 
issue. If the Director, OCHAMPUS, or a designee, dismisses a hearing 
request for cause, the formal review determination in the case shall be 
deemed to be final, unless the dismissal is vacated in accordance with 
paragraph (d)(9)(v) of this section. A dismissal for cause may be issued 
under any of the following circumstances:
    (A) When the appealing party requesting the hearing is not a proper 
party under paragraph (a)(2)(i) of this section, or does not otherwise 
have a right to participate in a hearing.
    (B) When the appealing party who filed the hearing request dies, and 
there is no information before the Director, OCHAMPUS, or a designee, 
showing that a party to the initial determination who is not an 
appealing party may be prejudiced by the formal review determination.
    (C) When the issue is not appealable (see Sec. 199.10(a)(6)).
    (D) When the amount in dispute is less than $300 (see 
Sec. 199.10(a)(7)).
    (E) When all appealable issues have been resolved in favor of the 
appealing party.
    (v) Vacation of dismissal. Dismissal of a request for hearing may be 
vacated by the Director, OCHAMPUS, or a designee, upon written request 
of the appealing party, if the request is received

[[Page 209]]

within 6 months of the date of the notice of dismissal mailed to the 
last known address of the party requesting the hearing.
    (10) Preparation for hearing. (i) Prehearing statement of 
contentions. The hearing officer may on reasonable notice require a 
party to the hearing to submit a written statement of contentions and 
reasons. The written statement shall be provided to all parties to the 
hearing before the hearing takes place.
    (ii) Discovery. Upon the written request of a party to the initial 
determination (including OCHAMPUS) and for good cause shown, the hearing 
officer will allow that party to inspect and copy all documents, unless 
privileged, relevant to issues in the proceeding that are in the 
possession or control of the other party participating in the appeal. 
The written request shall state clearly what information and documents 
are required for inspection and the relevance of the documents to the 
issues in the proceeding. Depositions, interrogatories, requests for 
admissions, and other forms of prehearing discovery are generally not 
authorized and the Department of Defense does not have subpoena 
authority for purposes of administrative hearings under this Section. If 
the hearing officer finds that good cause exists for taking a deposition 
or interrogatory, the expense shall be assessed to the requesting party, 
with copies furnished to the hearing officer and the other party or 
parties to the hearing.
    (iii) Witnesses and evidence. All parties to a hearing are 
responsible for producing, at each party's expense, meaning without 
reimbursement of payment by CHAMPUS, witnesses and other evidence in 
their own behalf, and for furnishing copies of any such documentary 
evidence to the hearing officer and other party or parties to the 
hearing. The Department of Defense is not authorized to subpoena 
witnesses or records. The hearing officer may issue invitations and 
requests to individuals to appear and testify without cost to the 
Government, so that the full facts in the case may be presented.
    (11) Conduct of hearing. (i) Right to open hearing. Because of the 
personal nature of the matters to be considered, hearings normally shall 
be closed to the public. However, the appealing party may request an 
open hearing. If this occurs, the hearing shall be open except when 
protection of other legitimate Government purposes dictates closing 
certain portions of the hearing.
    (ii) Right to examine parties to the hearing and their witnesses. 
Each party to the hearing shall have the right to produce and examine 
witnesses, to introduce exhibits, to question opposing witnesses on any 
matter relevant to the issue even though the matter was not covered in 
the direct examination, to impeach any witness regardless of which party 
to the hearing first called the witness to testify, and to rebut any 
evidence presented. Except for those witnesses employed by OCHAMPUS at 
the time of the hearing, or records in the possession of OCHAMPUS, a 
party to a hearing shall be responsible, that is to say no payment or 
reimbursement shall be made by CHAMPUS for the cost or fee associated 
with producing witnesses or other evidence in the party's own behalf, or 
for furnishing copies of documentary evidence to the hearing officer and 
other party or parties to the hearing.
    (iii) Taking of evidence. The hearing officer shall control the 
taking of evidence in a manner best suited ascertain the facts and 
safeguard the rights of the parties to the hearing. Before taking 
evidence, the hearing officer shall identify and state the issues in 
dispute on the record and the order in which evidence will be recieved.
    (iv) Questioning and admission of evidence. A hearing officer may 
question any witness and shall admit any relevant evidence. Evidence 
that is irrelevant or unduly repetitious shall be excluded.
    (v) Relevant evidence. Any relevant evidence shall be admitted, 
unless unduly repetitious, if it is the type of evidence on which 
responsible persons are accustomed to rely in the conduct of serious 
affairs, regardless of the existence of any common law or statutory rule 
that might make improper the admission of such evidence over objection 
in civil or criminal actions.
    (vi) CHAMPUS determination first. The basis of the CHAMPUS 
determinations

[[Page 210]]

shall be presented to the hearing officer first. The appealing party 
shall then be given the opportunity to establish affirmatively why this 
determination is held to be in error.
    (vii) Testimony. Testimony shall be taken only on oath, affirmation, 
or penalty of perjury.
    (viii) Oral argument and briefs. At the request of any party to the 
hearing made before the close of the hearing, the hearing officer shall 
grant oral argument. If written argument is requested, it shall be 
granted, and the parties to the hearing shall be advised as to the time 
and manner within which such argument is to be filed. The hearing 
officer may require any party to the hearing to submit written memoranda 
pertaining to any or all issues raised in the hearing.
    (ix) Continuance of hearing. A hearing officer may continue a 
hearing to another time or place on his or her own motion or, upon 
showing of good cause, at the request of any party. Written notice of 
the time and place of the continued hearing, except as otherwise 
provided here, shall be in accordance with this part. When a continuance 
is ordered during a hearing, oral notice of the time and place of the 
continued hearing may be given to each party to the hearing who is 
present at the hearing.
    (x) Continuance for additional evidence. If the hearing officer 
determines, after a hearing has begun, that additional evidence is 
necessary for the proper determination of the case, the following 
procedures may be invoked:
    (A) Continue hearing. The hearing may be continued to a later date 
in accordance with Sec. 199.10(d)(11)(ix), above.
    (B) Closed hearing. The hearing may be closed, but the record held 
open in order to permit the introduction of additional evidence. Any 
evidence submitted after the close of the hearing shall be made 
available to all parties to the hearing, and all parties to the hearing 
shall have the opportunity for comment. The hearing officer may reopen 
the hearing if any portion of the additional evidence makes further 
hearing desirable. Notice thereof shall be given in accordance with 
paragraph (d)(8) of this section.
    (xi) Transcript of hearing. A verbatim taped record of the hearing 
shall be made and shall become a permanent part of the record. Upon 
request, the appealing party shall be furnished a duplicate copy of the 
tape. A typed transcript of the testimony will be made only when 
determined to be necessary by OCHAMPUS. If a typed transcript is made, 
the appealing party shall be furnished a copy without charge. 
Corrections shall be allowed in the typed transcript by the hearing 
officer solely for the purpose of conforming the transcript to the 
actual testimony.
    (xii) Waiver of right to appear and present evidence. If all parties 
waive their right to appear before the hearing officer for presenting 
evidence and contentions personally or by representation, it will not be 
necessary for the hearing officer to give notice of, or to conduct a 
formal hearing. A waiver of the right to appear must be in writing and 
filed with the hearing officer or the Chief, Appeals and Hearings, 
OCHAMPUS. Such waiver may be withdrawn by the party by written notice 
received by the hearing officer or Chief, Appeals and Hearings, no later 
than 7 days before the scheduled hearing or the mailing of notice of the 
final decision, whichever occurs first. For purposes of this Section, 
failure of a party to appear personally or by representation after 
filing written notice of waiver, will not be cause for finding of 
abandonment and the hearing officer shall make the recommended decision 
on the basis of all evidence of record.
    (12) Recommended decision. At the conclusion of the hearing and 
after the record has been closed, the matter shall be taken under 
consideration by the hearing officer. Within the time frames previously 
set forth in this Section, the hearing officer shall submit to the 
Director, OCHAMPUS, or a designee, a written recommended decision 
containing a statement of findings and a statement of reasons based on 
the evidence adduced at the hearing and otherwise included in the 
hearing record.
    (i) Statement of findings. A statement of findings is a clear and 
concise statement of fact evidenced in the record or conclusions that 
readily can be deduced from the evidence of record.

[[Page 211]]

Each finding must be supported by substantial evidence that is defined 
as such evidence as a reasonable mind can accept as adequate to support 
a conclusion.
    (ii) Statement of reasons. A reason is a clear and concise statement 
of law, regulation, policies, or guidelines relating to the statement of 
findings that provides the basis for the recommended decision.
    (e) Final decision. (1) Director, OCHAMPUS. The recommended decision 
shall be reviewed by the Director, OCHAMPUS, or a designee, who shall 
adopt or reject the recommended decision or refer the recommended 
decision for review by the Assistant Secretary of Defense (Health 
Affairs). The Director, OCHAMPUS, or designee, normally will take action 
with regard to the recommended decision within 90 days of receipt of the 
recommended decision or receipt of the revised recommended decision 
following a remand order to the Hearing Officer.
    (i) Final action. If the Director, OCHAMPUS, or a designee, concurs 
in the recommended decision, no further agency action is required and 
the recommended decision, as adopted by the Director, OCHAMPUS, is the 
final agency decision in the appeal. In the case of rejection, the 
Director, OCHAMPUS, or a designee, shall state the reason for 
disagreement with the recommended decision and the underlying facts 
supporting such disagreement. In these circumstances, the Director, 
OCHAMPUS, or a designee, may have a final decision prepared based on the 
record, or may remand the matter to the Hearing Officer for appropriate 
action. In the latter instance, the Hearing Officer shall take 
appropriate action and submit a new recommended decision within 60 days 
of receipt of the remand order. The decision by the Director, OCHAMPUS, 
or a designee, concerning a case arising under the procedures of this 
section, shall be the final agency decision and the final decision shall 
be sent by certified mail to the appealing party or parties. A final 
agency decision under paragraph (e)(1) of this section will not be 
relied on, used, or cited as precedent by the Department of Defense in 
the administration of CHAMPUS.
    (ii) Referral for review by ASD(HA). The Director, OCHAMPUS, or a 
designee, may refer a hearing case to the Assistant Secretary of Defense 
(Health Affairs) when the hearing involves the resolution of CHAMPUS 
policy and issuance of a final decision which may be relied on, used, or 
cited as precedent in the administration of CHAMPUS. In such a 
circumstance, the Director, OCHAMPUS, or a designee, shall forward the 
recommended decision, together with the recommendation of the Director, 
OCHAMPUS, or a designee, regarding disposition of the hearing case.
    (2) ASD(HA). The ASD(HA), or a designee, after reviewing a case 
arising under the procedures of this section may issue a final decision 
based on the record in the hearing case or remand the case to the 
Director, OCHAMPUS, or a designee, for appropriate action. A decision 
issued by the ASD(HA), or a designee, shall be the final agency decision 
in the appeal and a copy of the final decision shall be sent by 
certified mail to the appealing party or parties. A final decision of 
the ASD(HA), or a designee, issued under this paragraph (e)(2) may be 
relied on, used, or cited as precedent in the administration of CHAMPUS.

[51 FR 24008, July 1, 1986, as amended at 52 FR 33007, Sept. 1, 1987; 54 
FR 25255, June 14, 1989; 55 FR 43341, Nov. 16, 1990; 56 FR 59880, Nov. 
26, 1991]



Sec. 199.11  Overpayments recovery.

    (a) General. Actions to recover overpayments arise when the 
government has a right to recover money or property from an individual, 
partnership, association, corporation, governmental body or other legal 
entity, foreign or domestic, except an instrumentality of the United 
States because of an erroneous payment of benefits under the Civilian 
Health and Medical Program of the Uniformed Services (CHAMPUS). A claim 
against several joint debtors arising from a single incident or 
transaction is considered to be one claim. It is the purpose of this 
Section to prescribe procedures for investigation, determination, 
assertion, collection, compromise, waiver and termination of claims in 
favor of the United States for

[[Page 212]]

erroneous benefits payments arising out of administration of CHAMPUS.
    (b) Authority. (1) Federal statutory authority. The Federal Claims 
Collection Act provides the basic authority under which claims may be 
asserted pursuant to this section. It is implemented by joint 
regulations issued by the Department of Justice and the General 
Accounting Office, 4 CFR parts 101-105. Thereunder, the heads of federal 
agencies or their designees are required to attempt collection of all 
claims of the United States for money or property arising out of the 
activities of their respective agencies. These officials may, with 
respect to claims that do not exceed $20,000, exclusive of interest, and 
in conformity with the standards promulgated in the joint regulations, 
compromise, suspend, or terminate collection action on such claims. 
Section 743 of the National Defense Authorization Act for Fiscal Year 
1996 (Public Law 104-106) authorizes the waiver (see paragraph (g)(3) of 
this section) of collection of overpayments otherwise due from a person 
after the termination of the person's CHAMPUS eligibility, because the 
person became eligible for Medicare Part A by reason of disability or 
end-stage renal disease.
    (2) Other authority. Occasionally, federal claims may arise which 
are grounded, at least in part, in authority other than the federal 
statute referenced above. These include, but are not limited to, claims 
arising under:
    (i) State worker's compensation laws.
    (ii) State hospital lien laws.
    (iii) State no-fault automobile statutes.
    (iv) Contract rights under terms of insurance policies.
    (c) Policy. The governmental policy of avoiding unnecessary 
litigation in the collection of claims by the United States for money or 
property necessitates aggressive agency collection action. The Director, 
OCHAMPUS, or a designee, will insure that CHAMPUS claims asserting 
personnel are adequately supported to take timely and effective action. 
Claims arising out of any incident which has or probably will generate a 
claim in favor of the government will not be compromised nor will 
collection action be terminated by any person not authorized to take 
final action on the government's claim. By the Act of July 18, 1966 (28 
U.S.C. 2415-2418), Congress established a statute of limitation 
applicable to the government in areas where previously neither 
limitations nor laches were available as a defense. Claims falling 
within the provisions of this statute will be processed expeditiously to 
the Department of Justice or the General Accounting Office, as 
appropriate, without attempting administrative collection action if such 
action cannot be accomplished in sufficient time to preclude the running 
of the statute of limitations.
    (d) Appealability. This section describes the procedures to be 
followed in the recovery and collection of federal claims in favor of 
the United States arising from the operation of the CHAMPUS. Actions 
taken under this section are not initial determinations for the purpose 
of the appeal procedures of Sec. 199.10 of this part. However, the 
proper exercise of the right to appeal benefit or provider status 
determinations under the procedures set forth in Sec. 199.10 may affect 
the processing of federal claims arising under this section. Those 
appeal procedures afford a CHAMPUS beneficiary or participating provider 
an opportunity for administrative appellate review in cases in which 
benefits have been denied and in which there is a significant factual 
dispute. For example, a fiscal intermediary may erroneously make payment 
for services which are excluded as CHAMPUS benefits because they are 
determined to be not medically necessary. In that event recoupment 
action will be initiated by the fiscal intermediary at the same time the 
fiscal intermediary will offer an administrative appeal as provided in 
Sec. 199.10 of this part on the medical necessity issue raised by the 
adverse benefit determination. The recoupment action and the 
administrative appeal are separate actions. However, in an appropriate 
case, the pendency of the appeal may provide a basis for the suspension 
of collection in the recoupment. Obviously, if the appeal is resolved 
entirely in favor of the appealing party, that would provide a basis for 
the termination of collection action in the recoupment case.

[[Page 213]]

    (e) Delegation. Subject to the limitations imposed by law or 
contained in this section, the authority to assert, settle, compromise 
or to suspend or terminate collection action on claims arising under the 
Federal Claims Collection Act has been delegated to the Director, 
OCHAMPUS, or a designee.
    (f) Recoupment of erroneous payments. (1) Erroneous payments. 
Erroneous payments are expenditures of government funds which are not 
authorized by law or this part. Examples which are sometimes encountered 
in the administration of the CHAMPUS include mathematical errors, 
payment for care provided to an ineligible person, payment for care 
which is not an authorized benefit, payment for duplicate claims, 
inaccurate application of the deductible or co-payment, or payment for 
services which were not medically necessary. Claims in favor of the 
government arising as the result of the filing of false CHAMPUS claims 
or other fraud fall under the direct cognizance of the Department of 
Justice. Consequently, the procedures in this section apply to such 
claims only when specifically authorized or directed by the Department 
of Justice. (See 32 CFR 101.3.)
    (2) Scope. (i) General. Paragraph (f) of this section and the 
paragraphs following contain requirements and procedures for the 
assertion, collection or compromise of, and the suspension or 
termination of collection action on claims for erroneous payments 
against a sponsor, beneficiary, provider, physician or other supplier of 
services under the CHAMPUS. These provisions are adopted pursuant to the 
Federal Claims Collection Act (31 U.S.C. 3701 et seq., as amended by the 
Debt Collection Act of 1982, Pub. L. 97-365), which requires each agency 
of the U.S. Government (pursuant to regulations jointly promulgated by 
the Attorney General and the Comptroller General) to attempt collection 
of federal claims in favor of the United States arising out of the 
activities of the agency, and 5 U.S.C. 5514, which provides for 
installment deduction for indebtedness to the United States, implemented 
by regulations issued by the Office of Personnel Management, 5 CFR part 
550, and the Department of Defense, 32 CFR part 90. Paragraph (f) of 
this section also includes government-wide collections by salary offset 
under 5 U.S.C. 5514.
    (ii) Debtor defined. As used herein, ``debtor'' means a sponsor, 
beneficiary, provider, physician, other supplier of services or 
supplies, or any other person who has for any reason been erroneously 
paid under the CHAMPUS. It includes an individual, partnership, 
corporation, professional corporation or association, estate, trust or 
any other legal entity.
    (iii) Delinquency defined. As used herein, a debt is considered 
``delinquent'' if it has not been paid by the date specified in the 
initial demand for payment (that is, the initial written notification) 
or applicable contractual agreement, unless other satisfactory payment 
arrangements have been made by that date. A debt is also considered 
delinquent if at any time after entering into a repayment agreement, the 
debtor fails to satisfy any obligations under that agreement.
    (3) Other health insurance claims. Claims arising from erroneous 
CHAMPUS payments in situations where the beneficiary has entitlement to 
insurance, medical service, health and medical plan, or other government 
program, except in the case of a plan administered under Title XIX of 
the Social Security Act (42 U.S.C. 1396 et seq.), through employment, by 
law, through membership in an organization, or as a student, or through 
the purchase of a private insurance or health plan, shall be recouped 
under one of the following procedures:
    (i) Where the other health insurance plan has not already made 
benefit payments to the beneficiary or provider, a claim for direct 
reimbursement will be asserted against the plan, pursuant to the fiscal 
intermediary's coordination of benefit procedures.
    (ii) If the other health insurance plan has made its benefit payment 
prior to receiving the CHAMPUS request for reimbursement, the recoupment 
procedures set forth in paragraph (f) of this section will be followed.
    (4) Claims denials due to clarification or change. In those 
instances where claim review results in the denial of benefits 
previously provided but now denied due

[[Page 214]]

to a change, clarification or interpretation of the public law or this 
part, no recoupment action need be taken to recover funds expended prior 
to the effective date of such change, clarification, or interpretation.
    (5) Good faith payment. (i) The Department of Defense, through the 
Defense Enrollment Eligibility Reporting System (DEERS), is responsible 
for establishing and maintaining a file listing persons eligible to 
receive benefits under CHAMPUS. However, it is the responsibility of the 
Uniformed Services to provide eligible CHAMPUS beneficiaries with 
accurate and appropriate means of identification. When sources of 
civilian medical care exercise reasonable care and precaution in 
identifying persons claiming to be eligible CHAMPUS beneficiaries and 
furnish otherwise covered services and supplies to such persons in good 
faith, CHAMPUS benefits may be paid subject to prior approval by the 
Director, OCHAMPUS, or a designee, notwithstanding the fact that the 
person receiving the services and supplies is subsequently determined to 
be ineligible for benefits. Good faith payments will not be authorized 
for services and supplies provided by a civilian source of medical care 
as the result of its own careless identification procedures.
    (ii) When it is determined that a person was not a CHAMPUS 
beneficiary, the CHAMPUS fiscal intermediary and the civilian source of 
medical care are expected to make all reasonable efforts to obtain 
payment or recoup the amount of the good faith payment from the person 
who erroneously claimed to be a CHAMPUS beneficiary. Recoupments of good 
faith payments initiated by the CHAMPUS fiscal intermediary will be 
processed pursuant to the provisions of paragraph (f) of this section.
    (6) Recoupment procedures. (i) Initial action. When an erroneous 
payment is discovered, the CHAMPUS fiscal intermediary normally will be 
required to take the initial action to effect recoupment. Such action 
will be in accordance with the provisions of this part and the fiscal 
intermediary's CHAMPUS contract and will include demands for refund or 
an offset against any other CHAMPUS payment becoming due the debtor. 
When the efforts of the CHAMPUS fiscal intermediary to effect recoupment 
are not successful within a reasonable time, recoupment cases will be 
referred to the General Counsel, OCHAMPUS, for further action in 
accordance with the provisions of paragraph (f) of this section. All 
requests to debtors for refund or notices of intent to offset shall be 
in writing.
    (ii) Demand for payment. The CHAMPUS fiscal intermediary and 
OCHAMPUS normally shall make a total of at least three progressively 
stronger written demands upon the debtor in terms which inform the 
debtor of the consequences of his or her failure to cooperate. The 
initial written demand shall inform the debtor of the basis for and the 
amount of the indebtedness. The initial written demand shall also inform 
the debtor of the following: The debtor's right to inspect and copy all 
records pertaining to the debt; his or her right to request an 
administrative review by the fiscal intermediary; that interest on the 
debt at the current rate as determined by the Director, OCHAMPUS, or a 
designee, will begin to accrue on the date of the initial demand 
notification; that such interest shall be waived on the debt, or any 
portion thereof, which is paid within 30 days of the date of the initial 
demand notification; that payment of the indebtedness is due within 30 
days of the date of the initial demand notification; and that 
administrative costs and penalties will be charged pursuant to 4 CFR 
102.13. The debtor also shall be informed that collection by offset 
against current or subsequent claims may be taken. All debtors will be 
offered an opportunity to enter into a written agreement to repay the 
indebtedness. The fiscal intermediary demand letters must be dated the 
same day as they are mailed. Two written demands, at 30-day intervals, 
normally will be made by the CHAMPUS fiscal intermediary unless a 
response to the first demand indicates that further demand would be 
futile or unless prompt suit or attachment is required in anticipation 
of the departure of the debtor, of his removal or transfer of assets, or 
the running of the statute of limitations. There should be no undue time

[[Page 215]]

lag in responding to any communication received from the debtor. 
Responses should be made within 30 days whenever feasible. If these 
initial efforts at collection are not productive or if immediate legal 
action on the claim appears necessary, the claim either will be referred 
promptly by the CHAMPUS fiscal intermediary to the General Counsel, 
OCHAMPUS, or the CHAMPUS fiscal intermediary will prepare a final notice 
informing the debtor that the debt is to be offset in whole or in part. 
When a case is referred to OCHAMPUS, the Office of General Counsel will 
normally prepare a third written demand unless from the record such 
demand appears futile or otherwise inappropriate.
    (iii) Collection by administrative offset. Collections by offset 
will be undertaken administratively on claims which are liquidated or 
certain in amount in every instance in which this is feasible. No 
collection by offset may be undertaken unless a demand for payment 
containing all of the procedural safeguards described in paragraph 
(f)(6)(ii) of this section, has been sent to the debtor. The 
determinations of indebtedness made for recoupment of erroneous CHAMPUS 
payments rarely involve issues of credibility of veracity. Erroneous 
CHAMPUS payments most frequently arise from claims submitted by 
individuals ineligible for CHAMPUS benefits; from claims submitted for 
services or supplies not covered by CHAMPUS; from claims in which there 
have been other insurance payments which reduce the CHAMPUS liability 
and from claims from participating providers in which payment is 
initially erroneously made to the beneficiary. While these recoupment 
claims normally involve the resolution of factual questions, these 
resolution nearly always require only reference to the documentary 
evidence compiled in the investigation and processing of the claim. The 
appeals system described in Sec. 199.10 of this part affords a CHAMPUS 
beneficiary or participating provider an opportunity for an 
administrative appellate review, including, under certain circumstances, 
the right to oral hearing before a hearing officer. Further, there is no 
statutory provision for the waiver of indebtedness arising from 
erroneous CHAMPUS payments, other than the provisions of the Federal 
Claims Collection Act which allow for the compromise of claims or the 
termination of collection action under certain circumstances specified 
in paragraph (g) of this section. Consequently, the pre-offset oral 
hearing requirements of the Federal Claims Collection Standards (4 CFR 
102.3) do not apply to the recoupment of erroneous CHAMPUS payments. 
CHAMPUS fiscal intermediaries may take administrative action to offset 
erroneous payments against other current CHAMPUS payments owing a 
debtor. Payments on the claims of a debtor pending at or filed 
subsequent to the time collection action is initiated should be 
suspended pending the outcome of the collection action so that these 
funds will be available for offset. All or any part of a debt may be 
offset depending upon the amount available for offset. Only the case in 
which no possibility of offset arises within 60 days of the initiation 
of collection action and on which other collection efforts have been 
unsuccessful or in which the debtor seeks relief from the indebtedness 
will be referred to the General Counsel, OCHAMPUS, by the CHAMPUS fiscal 
intermediary. Offset, under the provisions of 31 U.S.C. 3716, is not to 
be used with respect to debts owed by any state or local government. Any 
requests for offset that are received from other agencies shall be 
forwarded to the General Counsel, OCHAMPUS, for processing, as will 
orders for garnishment issued by courts of competent jurisdiction.
    (iv) Collection of installments. CHAMPUS recoupment claims should be 
collected in one lump sum whenever possible. However, if the debtor is 
financially unable to pay the debt in one lump sum, payment may be 
accepted in regular installments by the CHAMPUS fiscal intermediary or 
the General Counsel, OCHAMPUS. Installment payments normally will be 
required on at least a monthly basis and their size will bear a 
reasonable relation to the size of the debt and the debtor's ability to 
pay. A CHAMPUS fiscal intermediary should not enter into installment 
agreements which extend beyond 24 months. OCHAMPUS installment

[[Page 216]]

agreements normally should liquidate the government's claim within 3 
years. Installment payments of less than $50 per month normally will be 
accepted only if justifiable on grounds of financial hardship or some 
other reasonable cause. Any installment agreement with a debtor in which 
the total amount of the deferred installments will exceed $750 should 
normally include an executed promissory note.
    (v) Interest, penalties, and administrative costs. Interest shall be 
charged on CHAMPUS recoupment debts and debts collected in installments 
in accordance with 4 CFR 102.13 and instructions issued by the Director, 
OCHAMPUS, or a designee. Interest shall accrue from the date on which 
the initial demand is mailed to the debtor. The rate of interest 
assessed shall be the rate of the current value of funds to the United 
States Treasury (that is, the Treasury tax and loan account rate). The 
rate of interest, as initially assessed shall remain fixed for the 
duration of the indebtedness, except that where the debtor has defaulted 
on a repayment agreement and seeks to enter into a new agreement, a new 
interest rate may be set which reflects the current value of funds to 
the Treasury at the time the new agreement is executed. The collection 
of interest on the debt or any portion of the debt, which is paid within 
30 days after the date on which interest began to accrue, shall be 
waived. The agency may extend this 30-day period, on a case-by-case 
basis, if it reasonably determines that such action is appropriate. 
Also, the collection of interest, penalties, and administrative costs 
may be waived in whole or in part as a part of the compromise of a debt 
as provided in paragraph (g) of this section. In addition, the Director, 
OCHAMPUS, or a designee, may waive in whole or in part, the collection 
of interest, penalties, or administrative costs assessed herein, if he 
or she determines that collection of these charges would be against 
equity and good conscience or not in the best interests of the United 
States. Some situations in which such a waiver may be appropriate 
include:
    (A) Waiver of interest consistent with 4 CFR 104.2(c)(2) in 
connection with a suspension of collection action pending a CHAMPUS 
appeal under Sec. 199.10 of this part where there is a substantial issue 
of fact in dispute.
    (B) Waiver of interest where the original debt arose through no 
fault or lack of good faith on the part of the debtor and the collection 
of interest would impose a financial hardship or burden on the debtor. 
Some examples in which such a waiver may be appropriate include: a debt 
arising when a CHAMPUS beneficiary, who is unaware of the loss of 
eligibility for CHAMPUS because he or she has become eligible for 
Medicare, continues to file and be paid for CHAMPUS claims, resulting in 
erroneous CHAMPUS payments; a debt arising when a CHAMPUS beneficiary in 
good faith files and is paid a CHAMPUS claim for medical services or 
supplies which are later determined not to be benefits of CHAMPUS; and a 
debt arising when a CHAMPUS beneficiary is overpaid as the result of a 
calculation error on the part of a fiscal intermediary or OCHAMPUS.
    (C) Waiver of interest where there has been an agreement to repay a 
debt in installments, there is no indication of fault or lack of good 
faith on the part of the debtor, and the amount of interest is so large 
in relation to the size of the installments that the debtor can 
reasonably afford to pay, that it is likely the debt will never be 
repaid in full.

When a debt is paid in installments, the installment payments first will 
be applied to the payment of outstanding penalty and administrative cost 
charges, second to accrued interest and then to principal. 
Administrative costs incurred as the result of a debt becoming 
delinquent (as defined in paragraph (f)(2)(iii) of this section) shall 
be assessed against a debtor. These administrative costs represent the 
additional costs incurred in processing and handling the debt because it 
became delinquent. The calculation of administrative costs should be 
based upon cost analysis establishing an average of actual additional 
costs incurred in processing and handling claims against other debtors 
in similar stages of delinquency. A penalty charge, not exceeding six 
percent a year shall be assessed on any portion of a debt that is 
delinquent for more than 90 days. This

[[Page 217]]

charge, which need not be calculated until the 91st day of delinquency, 
shall accrue from the date that the debt became delinquent.
    (vi) Referral to other federal agencies for administrative offset. 
As appropriate and in accordance with 4 CFR part 1023, agencies will be 
requested to initiate administrative offset to collect CHAMPUS debts. 
When a debtor is employed by the U.S. Government, or is a member or 
retired member of the Uniformed Service, and collection by offset 
against other CHAMPUS payments due the debtor cannot be accomplished, 
and there have been no positive responses to a demand for payment within 
60 days, the Director, OCHAMPUS, or a designee, may contact the agency 
holding funds payable to the debtor for payment by allotment or 
otherwise by salary offset from current disposable pay in accordance 
with 37 U.S.C. 1007 or 5 U.S.C. 5514 as implemented by 32 CFR part 90 
and 5 CFR part 550. Where applicable, the request for recovery of 
erroneous CHAMPUS payments shall be submitted to the debtor's paying 
agency in accordance with 5 CFR 550.1106. Before contacting the paying 
agency, the Director, OCHAMPUS, or a designee, will provide the debtor 
written notification of the agency's intent to collect the debt by means 
of salary offset, authorized by 5 U.S.C. 5514. The notification will 
include, as a minimum:
    (A) The agency's determination that a debt is owed, including the 
origin, nature, and the amount of the debt;
    (B) The date by which payment is to be made, which will normally be 
30 days from the date the demand letter is mailed;
    (C) The amount, frequency, proposed beginning date and duration of 
the intended deductions, which will be determined in accordance with the 
provisions of 5 CFR 550.1104 or 32 CFR part 90, as appropriate. 
Ordinarily, the size of installment deductions must bear a reasonable 
relationship to the size of the debt and the employee's ability to pay 
(4 CFR 102.11). However, the amount deducted for any period must not 
exceed 15 percent of the disposable pay from which the deduction is made 
unless the debtor has agreed in writing to the deduction of a greater 
amount. Debts must be collected in one lump-sum whenever possible. 
However, if the employee is financially unable to pay in one lump-sum, 
or the amount of the debt exceeds 15 percent of current disposable pay 
for an officially established pay interval, collection must be made in 
installments. Such installment deductions must be made to effect 
collection within the period of anticipated active duty or employment. 
If the debtor retires or resigns or if his or her employment or period 
of active duty ends before collection of the debt is completed, offset 
from subsequent payments of any kind due the employee from the paying 
agency as of the date of separation shall be made to the extent 
necessary to liquidate the debt pursuant to 31 U.S.C. 3716 as 
implemented by 5 CFR part 550 and 32 CFR part 90. If possible, the 
installment payments should be sufficient in size and frequency to 
liquidate the government's claim in not more than 3 years. Installment 
payments of less than $50 per month should be accepted only with 
reasonable justification. An employee's involuntary payment of all or 
any portion of a debt being collected under 5 U.S.C. 5514 will not be 
construed as a waiver of any rights the debtor may have under that 
statute or any other provisions of contract or law, unless there are 
statutory or contractual provisions to the contrary.
    (D) An explanation of interest, penalties, and administrative costs, 
including a statement that such assessments must be made unless excused 
in accordance with the Federal Claims Collection Standards;
    (E) Advice that the debtor may inspect and copy government records 
relating to the debt or, if debtor or his or her representative cannot 
personally inspect the records, to request and receive a copy of such 
records. Requests for copies of the records relating to the debt shall 
be made no later than 10 days from the receipt by the debtor of the 
notice of indebtedness.
    (F) An opportunity for a review by the agency of its determination 
regarding the existence or the amount of the debt, or when a repayment 
schedule is established other than by written agreement, concerning the 
terms of the repayment schedule. The debtor shall be advised that a 
challenge to either

[[Page 218]]

the existence of the debt, the amount of the debt, or the repayment 
schedule, must be made within 30 days of the receipt by the debtor of 
the notice of indebtedness or within 45 days after receipt of the 
records relating to the debt, if such records are requested by the 
debtor. A request for waiver or reconsideration should be accompanied by 
supporting documents indicating why the debtor believes he is not so 
indebted, or by a financial affidavit supporting his request for an 
alternative repayment schedule;
    (G) Notice that the timely filing of a petition for review will stay 
the commencement of collection proceedings;
    (H) Notice that a final decision on the review (if one is requested) 
will be issued at the earliest practical date, but not later than 60 
days after the filing of the petition requesting the review unless the 
employee requests, and the agency grants, a delay in the proceedings;
    (I) The opportunity, if it has not been previously provided, to 
enter into a written agreement to establish a schedule for repayment of 
the debt in lieu of offset. The agreement will be signed by both the 
debtor and the agency's representative and will be kept in the agency's 
files;
    (J) Notice that any knowingly false or frivolous statements, 
representations, or evidence may subject the debtor to:
    (1) Disciplinary procedures appropriate under chapter 75 of Title 5 
U.S. Code, 5 CFR part 752, or any other applicable statutes or 
regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable authority, or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001 and 1002, or 
any other applicable authority;
    (K) Where applicable, notice of the debtor's right to appeal, under 
Sec. 199.10 of this part;
    (L) That amounts paid on or deducted for the debt which are later 
waived or found not owed to the United States will promptly be refunded 
to the debtor. Refunds do not bear interest unless required or permitted 
by law or contract;
    (M) The specific address to which all correspondence regarding the 
debt shall be directed. Unless otherwise prohibited by law, moneys which 
are due and payable to a debtor from the Civil Service Retirement and 
Disability Fund may be administratively offset in reasonable amounts in 
order to collect in one full payment or a minimal number of payments 
debts owed to the United States by the debtor. The General Counsel, 
OCHAMPUS, may forward requests for offset of debts arising from the 
operation of CHAMPUS to the appropriate officials of the Office of 
Personnel Management. These requests shall comply with the provisions of 
4 CFR 102.4 and 5 CFR part 550.
    (vii) Referral to debt collection agencies. Pursuant to the 
provisions of the Federal Claims Collection Standards (4 CFR 102.6), the 
Director, OCHAMPUS, or a designee, is authorized to enter into contracts 
for collection services, including contracts with private collection 
agencies for the purpose of supplementing and strengthening the 
collection efforts of the Department of Defense in recouping erroneous 
CHAMPUS payments. Such contracts will supplement but not replace the 
basic collection program described herein. The authority to resolve 
disputes, compromise claims, terminate collection action and initiate 
legal action may not be delegated in such contracts but will be retained 
by the Director, OCHAMPUS, or a designee. Individuals or firms that 
enter into contracts for collection services pursuant to this paragraph 
are subject to the Privacy Act of 1974, as amended, 5 U.S.C. 552a, 
federal and state laws and regulations pertaining to debt collection 
practices, including the Fair Debt Collection Practices Act, 15 U.S.C. 
1692. Debt collection contractors shall be required to account strictly 
for all amounts collected and must agree to provide any data contained 
in their files relating to 4 CFR 105.2(a) (1), (2) and (3). Contracts 
for commercial collection services must comply with 32 CFR part 90.
    (viii) Referrals to consumer reporting agencies. The Director, 
OCHAMPUS, or a designee, is authorized to provide for the reporting of 
delinquent debts to consumer reporting agencies. Delinquent debts are 
those which are not paid or for which satisfactory payment

[[Page 219]]

arrangements are not made by the due date specified in the initial 
notification of indebtedness, or those for which the debtor has entered 
into a written payment agreement and installment payments are past due 
30 days or longer. These referrals may be made only after publication of 
a ``routine use'' for the disclosures involved as required by the 
Privacy Act of 1974, as amended, 5 U.S.C. 552a. Procedures developed for 
such referrals must also insure that an accounting of the disclosures is 
kept which is available to the debtor; that the consumer reporting 
agencies are provided with corrections and annotations of disagreements 
by the debtor; and that reasonable efforts are made to assure that the 
information to be reported is accurate, complete, timely and relevant. 
When requested by a consumer reporting agency, verification of 
information disclosed will promptly be provided. Once a claim has been 
reviewed and determined to be valid, a complete explanation of the claim 
will be given the debtor. When the claim is overdue, the individual will 
be notified in writing that payment is overdue; that within 60 days, 
disclosure of the claim shall be made to a consumer reporting agency 
unless satisfactory payment arrangements are made or unless the debtor 
requests an administrative review and demonstrates some basis on which 
the debt is legitimately disputed; and of the specific information to be 
disclosed to the consumer reporting agency. The information to be 
disclosed to the consumer reporting agency will be limited to 
information necessary to establish the identity of the debtor, including 
name, address and taxpayer identification number; the amount, status and 
history of the claim; and the agency or program under which the claim 
arose. Reasonable action will be taken to locate an individual for whom 
a current address is not available.
    (ix) Use and disclosure of mailing addresses. In attempting to 
locate a debtor in the collection of a debt under this section, the 
Director, OCHAMPUS, or a designee, may send a written request to the 
Secretary of the Treasury, or a designee, for current address 
information from records of the Internal Revenue Service. These requests 
will comply with the provisions of 26 U.S.C. 6103(p)(4) and applicable 
regulations of the Internal Revenue Service. Disclosure of a mailing 
address so obtained may be made pursuant to 4 CFR 102.18(b) and 31 
U.S.C. 3711.
    (g) Compromise, waiver, suspension or termination of collection 
actions arising under the Federal Claims Collection Act. (1) Basic 
considerations. Federal claims against the debtor and in favor of the 
United States arising out of the administration of the CHAMPUS may be 
compromised or collection action taken thereon may be suspended or 
terminated in compliance with the Federal Claims Collection Act, 31 
U.S.C. 3711(a)(2) as implemented by the Federal Claims Collection 
Standards, 4 CFR parts 101 through 105.
    (2) Authority. CHAMPUS fiscal intermediaries are not authorized to 
compromise or to suspend or terminate collection action on federal 
CHAMPUS claims. Only the Director, OCHAMPUS, or a designee, and 
Uniformed Service claims officers acting under the provisions of their 
own regulations, are so authorized.
    (3) Waiver of collection of erroneous payments due from certain 
persons unaware of loss of CHAMPUS eligibility.
    (i) The Director, OCHAMPUS may waive collection of payments 
otherwise due from certain persons as a result of health benefits 
received under this part after the termination of the person's 
eligibility for such benefits. Waiver may be granted if collection of 
such payments would be against equity and good conscience and not in the 
best interest of the United States. These criteria are met by a finding 
that there is no indication of fraud, misrepresentation, fault, or lack 
of good faith on the part of the person who received the erroneous 
payment or any other person having an interest in obtaining such waiver.
    (ii) Persons eligible for waiver. The following persons are eligible 
for waiver:
    (A) A person who:
    (1) Is entitled to Medicare Part A by reason of disability or end 
stage renal disease;
    (2) In the absence of such entitlement, would have been eligible for 
CHAMPUS under 10 U.S.C. 1086; and

[[Page 220]]

    (3) At the time of the receipt of such benefits, was under age 65.
    (B) Any participating provider of care who received direct payment 
for care provided to a person described in paragraph (g)(ii)(A) of this 
section pursuant to an assignment of benefits from such person.
    (iii) The authority to waive collection of payments under this 
section shall apply with regard to health benefits provided during the 
period beginning January 1, 1967, and ending on the later of: the 
termination date of any special enrollment period for Medicare Part B 
provided specifically for such persons; or July 1, 1996.
    (4) Basis for compromise. A claim may be compromised hereunder if 
the government cannot collect the full amount if:
    (i) The debtor or the estate of a debtor does not have the present 
or prospective ability to pay the full amount within a reasonable time;
    (ii) The debtor refuses to pay the claim in full and the government 
is unable to enforce collection of the full amount within a reasonable 
time by enforced collection proceedings;
    (iii) There is real doubt concerning the government's ability to 
prove its case in court for the full amount claimed either because of 
the legal issues involved or a bona fide dispute as to the facts; or
    (iv) The cost of collecting the claim does not justify enforced 
collection of the full amount.
    (5) Basis for suspension. Collection action may be suspended for 
either of the following reasons if future collection action may be 
sufficiently productive to justify periodic review and action on the 
claim giving consideration to its size and the amount which may be 
realized thereon:
    (i) The debtor cannot be located; or
    (ii) The debtor is unable to make payments on the government's claim 
or effect a compromise at the time, but the debtor's future prospects 
justify retention of the claim for periodic review and action and:
    (A) The applicable statute of limitations has been tolled or started 
running anew; or
    (B) Future collection action can be effected by offset, 
notwithstanding the statute of limitations with due regard to the 10-
year limitation prescribed by 31 U.S.C. 3716(c)(1); or
    (C) The debtor agrees to pay interest on the amount of the debt on 
which collection action will be temporarily suspended, and such 
temporary suspension is likely to enhance the debtor's ability to fully 
pay the principal amount of the debt with interest at a later date.
    (iii) Consideration may be given by the Director, OCHAMPUS, or a 
designee, to suspend collection action pending action on a request for a 
review of the government's claim against the debtor or pending an 
administrative review under Sec. 199.10 of this part of any CHAMPUS 
claim or claims directly involved in the government's claim against the 
debtor. Suspension under this paragraph will be based upon appropriate 
consideration, on a case-by-case basis as to whether:
    (A) There is a reasonable possibility that the debt (in whole or in 
part) will be found not owing from the debtor;
    (B) The Government's interest would be protected if suspension were 
granted by reasonable assurance that the debt would be recovered if the 
debtor does not prevail; and
    (C) Collection of the debt will cause undue hardship.
    (6) Basis for termination. Collection action may be terminated for 
one or more of the following reasons:
    (i) The United States cannot collect or enforce collection of any 
significant sum from the debtor having due regard to the judicial 
remedies available to the government, the debtor's future financial 
prospects and the exemptions available to the debtor under state and 
federal law;
    (ii) The debtor cannot be located, and either:
    (A) There is no security remaining to be liquidated, or
    (B) The applicable statute of limitations has run and the prospects 
of collecting by offset, notwithstanding the bar of the statute of 
limitations, are too remote to justify retention of the claim;
    (iii) The cost of further collection action is likely to exceed any 
recovery;
    (iv) It is determined that the claim is legally without merit; or

[[Page 221]]

    (v) Evidence necessary to prove the claim cannot be produced or the 
necessary witnesses are unavailable and efforts to induce voluntary 
payment are unavailing.
    (7) Factors considered. In determining whether a claim will be 
compromised, or collection action terminated or suspended, the 
responsible CHAMPUS collection authority will consider the following 
factors:
    (i) Age and health of the debtor, present and potential income, 
inheritance prospects, possible concealment or improper transfer of 
assets and the availability of assets or income which may be realized 
upon by enforced collection proceedings;
    (ii) Applicability of exemptions available to a debtor under state 
or federal law;
    (iii) Uncertainty as to the price which collateral or other property 
may bring at forced sale; or
    (iv) The probability of proving the claim in court, the probability 
of full or partial recovery, the availability of necessary evidence and 
related pragmatic considerations.
    (8) Amount of compromise. The amount acceptable in compromise will 
be reasonable in relation to the amount that can be recovered by 
enforced collection proceedings. Consideration shall be given to the 
following:
    (i) The exemptions available to the debtor under state and federal 
law;
    (ii) The time necessary to collect the debt;
    (iii) The litigative probabilities involved; and
    (iv) The administrative and litigative costs of collection where the 
cost of collecting the claim is a basis for compromise.
    (9) Payment of compromised claims. (i) Time and manner. Compromised 
claims are to be paid in one lump sum if possible. However, if payment 
of a compromise is necessary, a legally enforceable compromise agreement 
must be obtained. Payment of the amount that CHAMPUS has agreed to 
accept as a compromise in full settlement of a CHAMPUS claim must be 
made within the time and in the manner prescribed in the compromise 
agreement. Any such compromised claim is not settled until the full 
payment of the compromised amount has been made within the time and the 
manner prescribed. Compromise agreements must provide for the 
reinstatement of the prior indebtedness, less sums paid thereon, and 
acceleration of the balance due upon default in the payment of any 
installment.
    (ii) Failure to pay the compromised amount. Failure of any debtor to 
make payment as provided in the compromise agreement will have the 
effect of reinstating the full amount of the original claim, less any 
amounts paid prior to the default.
    (10) Effect of compromise, waiver, suspension or termination of 
collection action. Pursuant to the Internal Revenue Code, 26 U.S.C. 
6041, compromises and terminations of undisputed debts not discharged in 
a Title 11 bankruptcy case and totaling $600 or more for the year will 
be reported to the Internal Revenue Service in the manner prescribed for 
inclusion in the debtor's gross income for that year. Any action taken 
under paragraph (g) of this section regarding the compromise of a 
federal claim, or waiver or suspension or termination of collection 
action on a federal claim is not an initial determination for purposes 
of the appeal procedures Sec. 199.10.
    (h) Referrals for collection. (1) Prompt referral. Federal claims of 
$600 or more on which collection action has been taken in accordance 
with the provisions of this section and which cannot be collected or 
compromised or on which collection action cannot be suspended or 
terminated, as provided herein, will be promptly referred by the 
Director, OCHAMPUS, or a designee, to the Department of Justice for 
litigation in accordance with 4 CFR part 105. Such referrals will be 
made as early as possible consistent with aggressive collection action 
by CHAMPUS fiscal intermediaries and OCHAMPUS and well within the period 
for bringing a timely suit against the debtor. Ordinarily referrals will 
be made within one year of the OCHAMPUS final determination of the fact 
and the amount of the debt.
    (2) Report of prior collection actions. The Director, OCHAMPUS, or a 
designee, will prepare a Claims Collection Litigation Report (CCLR) for 
each case

[[Page 222]]

referred for collection under the provisions of this section. The CCLR 
shall also be used when a claim is referred to the Department of Justice 
in order to obtain approval of that Department with respect to 
compromise, suspension, or termination when such approval is required by 
4 CFR 103.1(b) and 104.1(b). The CCLR will include, as a minimum, the 
following:
    (i) A checklist or brief summary of the actions previously taken to 
collect or compromise the claim. If any of the required administrative 
collection actions have been omitted, the reason for its omission must 
be provided.
    (ii) The current address or the debtor, or the same and address of 
the agent for a corporation upon whom service may be made. Reasonable 
and appropriate steps will be taken to locate missing parties in all 
cases. Referrals to the Department of Justice for the institution of 
foreclosure or other proceedings, in which the current address of any 
party is unknown, will be accompanied by a listing of the prior known 
addresses of such party and a statement of the steps taken to locate 
that party.
    (iii) Reasonably current credit data indicating that there is a 
reasonable prospect of effecting enforced collection from the debtor, 
having due regard for the exemptions available to the debtor under state 
and federal law and the judicial remedies available to the government. 
Such credit data may take the form of a commercial credit report; an 
agency investigative report showing the debtor's assets, liabilities, 
income, and expenses; the individual debtor's own financial statement 
executed under penalty of perjury reflecting the debtor's assets, 
liabilities, income, and expenses; or an audited balance sheet of a 
corporate debtor. Such credit data may be omitted if a surety bond is 
available in an amount sufficient to satisfy the claim in full; the 
forced sale value of any security available for application to the 
government's claim is sufficient to satisfy the claim in full; the 
debtor is in bankruptcy or receivership; the debtor's liability to the 
government is fully covered by insurance, in which case such information 
as can be developed concerning the identity and address of the insurer 
and the type and amount of insurance coverage will be furnished; or the 
nature of the debtor is such that credit data is not normally available 
or cannot reasonably be obtained, for example, a unit of state or local 
government.
    (3) Preservation of evidence. The Director, OCHAMPUS, or a designee, 
will take such action as is necessary to ensure that all files, records 
and exhibits on claims referred hereunder are properly preserved.
    (i) Claims Involving Indications of Fraud, Filing of False Claims or 
Misrepresentation.
    Any case in which there is an indication of fraud, filing of false 
claims or misrepresentation will be promptly referred to the Director, 
OCHAMPUS, or a designee, for processing. The Director, OCHAMPUS, or a 
designee, will investigate and evaluate the case and either refer the 
case to the appropriate investigative law enforcement agency or return 
the claim for other appropriate administrative action, including 
collection action under this section. Payment on all CHAMPUS beneficiary 
or provider claims in which fraud, filing false claims or 
misrepresentation is suspected will be suspended until payment or denial 
of the claim is authorized by the Director, OCHAMPUS, or a designee. 
Collection action on all federal claims in which a suspicion of fraud, 
misrepresentation or filing false claims arises will be suspended 
pending referral to the appropriate law enforcement agencies by the 
Director, OCHAMPUS, or a designee. Only the Department of Justice has 
authority to compromise or terminate collection action on such claims.

[51 FR 24008, July 1, 1986, as amended at 62 FR 35097, June 30, 1997; 63 
FR 27678, May 20, 1998]



Sec. 199.12  Third party recoveries.

    (a) General. This section deals with the right of the United States 
to recover the costs of medical care furnished or paid for on behalf of 
CHAMPUS beneficiaries from third parties. These third parties may be 
individuals, or entities who are liable for tort damages to the injured 
CHAMPUS beneficiary or a liability insurance carrier covering the 
individual or entity.

[[Page 223]]

These third parties may also include other entities who are primarily 
responsible to pay for the medical care provided to the injured 
beneficiary by reason of an insurance policy, workers' compensation law 
or other source of primary payment.
    (b) Authority. (1) Federal statutory authority. The Federal Medical 
Care Recovery Act (42 U.S.C. 2651-2653) provides the basis under which 
claims may be asserted or other actions taken under this Section. The 
Federal Medical Care Recovery Act is a statute enacted to authorize the 
recovery of the reasonable value of medical care furnished or paid for 
by the United States to a person who is injured or suffers a disease 
under circumstances creating tort liability in a third party. This Act 
is implemented by Executive Order 11060 and an Attorney General 
regulation, 28 CFR part 43.
    (2) Other authority. Third party recoveries may arise in whole or in 
part under authorities other than the Medical Care Recovery Act. These 
include, but are not limited to:
    (i) State Workers' Compensation Laws
    (ii) State hospital lien laws
    (iii) State no-fault or uninsured motorist statutes
    (iv) Contract rights under terms of insurance policies.
    (c) Policy. CHAMPUS third party recovery claims can be complex and 
difficult to administer because they often involve recovery potential 
from multiple sources. It is essential that all persons responsible for 
taking action under this section have adequate training and support in 
this area. The Director, OCHAMPUS, or a designee, will insure that 
CHAMPUS personnel (including fiscal intermediary personnel) responsible 
for taking any action under this section are adequately trained and 
supported to take timely and effective action. Responsibility for taking 
third party recovery action at various times can rest with either fiscal 
intermediary personnel, OCHAMPUS employees, or uniformed service claims 
asserting authorities. For this reason close coordination between those 
responsible for any action under this section is essential. Care must 
also be taken to insure that appropriate action to assert any third 
party recovery right is taken in sufficient time to preclude the running 
of any applicable statute of limitations or other bar to the 
government's right to recover.
    (d) Appealability. This section describes the procedures to be 
followed in the assertion and collection of third party recovery claims 
in favor of the United States arising from the operation of CHAMPUS. 
Actions taken under this section are not initial determinations for the 
purpose of the appeal procedures of Sec. 199.10 of this part. However, 
the proper exercise of the right to appeal benefit or provider status 
determinations under the procedures set forth in Sec. 199.10 may affect 
the processing of federal claims arising under this section. Those 
appeal procedures afford a CHAMPUS beneficiary or participating provider 
an opportunity for administrative appellate review in cases in which 
benefits have been denied and in which there is a significant factual 
dispute. For example, a fiscal intermediary may deny payment for 
services which are determined to be excluded as CHAMPUS benefits because 
they are found to be not medically necessary. In that event the fiscal 
intermediary will offer an administrative appeal as provided in 
Sec. 199.10 of this part on the medical necessity issue raised by the 
adverse benefit determination. If the care in question results from an 
accidental injury and if the appeal results in a reversal of the initial 
determination to deny the benefit, a third party recovery claim may 
arise as a result of the appeal decision to pay the benefit. However, in 
no case is the decision to initiate such a claim itself appealable under 
Sec. 199.10 of this part.
    (e) Federal Medical Care Recovery Act Claims. (1) General. The 
Federal Medical Care Recovery Act (FMCRA) (42 U.S.C. 2651-2653) provides 
that in any case in which the United States is authorized or required by 
law to furnish or pay for hospital, medical, surgical or dental care and 
treatment to a person who is injured or suffers a disease under 
circumstances creating tort liability in some third person to pay 
damages for that care, the United States has a right to recover from the 
third person the

[[Page 224]]

reasonable value of the care and treatment furnished or to be furnished.
    (2) Obligations of persons receiving treatment. To insure the 
expeditious and efficient processing of Federal Medical Care Recovery 
Act claims, any person furnished care and treatment under CHAMPUS, his 
or her guardian, personal representative, counsel, estate, dependents or 
survivors shall be required:
    (i) To provide complete information regarding the circumstances 
surrounding an injury as a condition precedent to the processing of a 
CHAMPUS claim involving possible third-party liability.
    (ii) To assign in writing to the United States his or her claim or 
cause of action against the third person to the extent of the reasonable 
value of the care and treatment furnished, or to be furnished, or any 
portion thereof;
    (iii) To furnish such additional information as may be requested 
concerning the circumstances giving rise to the injury or disease for 
which care and treatment are being given and concerning any action 
instituted or to be instituted by or against a third person;
    (iv) To notify the responsible recovery judge advocate, the CHAMPUS 
fiscal intermediary or General Counsel, OCHAMPUS, or other officer who 
is representing the interests of the government at the time, of a 
settlement with, or an offer of settlement from a third person; and,
    (v) To cooperate in the prosecution of all claims and actions by the 
United States against such third person.
    (3) Responsibility for recovery. The Director, OCHAMPUS, or a 
designee, is responsible for insuring that CHAMPUS claims arising under 
the Federal Medical Care Recovery Act are properly referred to and 
coordinated with the Uniformed Services. Generally, federal claims 
arising under this statute will be processed as follows:
    (i) Identification and referral of Federal Medical Care Recovery Act 
claims. (A) CHAMPUS fiscal intermediaries. In most cases where medical 
care is provided by civilian providers and payment for such care has 
been made by a CHAMPUS fiscal intermediary, initial identification of 
potential third-party liability will be by the CHAMPUS fiscal 
intermediary. In such cases, the CHAMPUS fiscal intermediary is 
responsible for conducting a preliminary investigation and referring the 
case to designated appropriate legal officers of the Uniformed Services.
    (B) Initial identification by other agencies. Occasionally, cases 
involving potential third-party liability may be initially identified by 
offices, agencies or individuals other than a CHAMPUS fiscal 
intermediary. When this occurs, these cases should be initially referred 
to the General Counsel, OCHAMPUS, Aurora, CO 80045-6900, for evaluation. 
If appropriate, the General Counsel, OCHAMPUS, may refer the case to the 
fiscal intermediary or the designated Uniformed Service legal office for 
action.
    (ii) Processing CHAMPUS claims. When the CHAMPUS fiscal intermediary 
initially identifies a claim as involving potential third-party 
liability, it shall request additional information concerning 
circumstances of the injury or disease from the beneficiary or other 
responsible party unless adequate information is submitted with the 
claim. The information normally is obtained by requesting the 
beneficiary to complete a personal injury questionnaire. The CHAMPUS 
claim will be suspended and no payment issued pending receipt of the 
third-party liability information. If the requested third-party 
liability information is not received, the claim will be denied. A 
CHAMPUS beneficiary may expedite the processing of his or her CHAMPUS 
claim by submitting a completed third-party liability questionnaire with 
the first claim for treatment of an accidential injury. Third-party 
liability information normally is required only once concerning any 
single accidental injury. Once the third-party liability information 
pertaining to a single incident or episode of care is received, 
subsequent claims associated with the same incident or episode of care 
may be processed to payment in the usual manner. If, however, the 
requested third-party liability information is not received, subsequent 
claims involving the same incident or episode of care will be suspended 
or denied as stated above.

[[Page 225]]

    (iii) Ascertaining total potential liability. It is essential that 
the legal office responsible for asserting the claim against the third 
party receive from the CHAMPUS fiscal intermediary a report of all 
amounts expended by the United States for care resulting from the 
incident upon which potential liability in the third party is based 
(including amounts paid by CHAMPUS for both inpatient and outpatient 
care). Prior to assertion and final settlement of a claim, it will be 
necessary for the responsible legal office to secure from the CHAMPUS 
fiscal intermediary updated information to insure that all amounts 
expended under CHAMPUS are included in the government's claim. It is 
equally important that information on future medical payments be 
obtained through the investigative process and included as a part of the 
government's claim. No CHAMPUS-related claim will be settled, 
compromised or waived without full consideration being given to the 
possible future medical payment aspects of the individual case.
    (4) Representing the government's interest. The government's right 
to recover the amounts expended for the patient's medical care is 
independent of the right the patient has to assert a claim against the 
third person for damages. The existence of the government's right, 
however, is dependent upon establishing the liability of the third 
person under ordinary principles of law.
    (i) Department of Justice. Frequently, collection actions under the 
Federal Medical Care Recovery Act must be referred to the Department of 
Justice for litigation. This is usually necessary because either the 
administrative collection action has been unsuccessful or the injured 
party has initiated suit and the government must be joined to protect 
its interests. When such referrals involve significant cases in which 
the dollar amount of the potential recovery on CHAMPUS claims exceeds 
$40,000 or involve a unique or significant legal issue, notice of the 
referral will be provided to the General Counsel, OCHAMPUS. Upon request 
by the Uniformed Service involved, the General Counsel, OCHAMPUS, will 
assist in the coordination of any use with the Department of Justice.
    (ii) Private attorneys. The attorney for the injured beneficiary may 
be requested to represent the interests of the government and join both 
claims in a single action against the third person. Such representation 
of the government's interest normally must be made at no expense to the 
government. However, when such representation of the government's 
interest is undertaken by the injured party's attorney for the 
government, offices and agencies involved will extend full cooperation 
to the injured party's attorney to insure that the government's 
interests are fully protected. The coordination of such cases is 
normally the responsibility of the designated Uniformed Service claims 
office. However, the General Counsel, OCHAMPUS, may be requested to 
provide assistance in coordinating CHAMPUS matters relating to these 
cases. If the attorney representing the injured beneficiary does not 
wish to join the government's claim with that of his or her client, and 
court action is required to recover the amount expended for the 
patient's medical care, intervention or an independent suit may be 
initiated by the United States for the reasonable value of the care or 
treatment provided.
    (5) Settlement and waiver of Federal Medical Care Recovery Act 
claims. (i) Authority of the Uniformed Services legal offices. Uniformed 
Services legal offices may, under the authority and provisions of 
regulations prescribed by their respective departments, (A) accept the 
full amount of a claim and execute a release therefore, (B) compromise 
or settle and execute a release of any claim, not in excess of $40,000, 
which has been referred to it under the provisions of this section, or 
(C) waive, and in this connection, release any claim not in excess of 
$40,000 in whole or in part, either for the convenience of the 
government, or if it is determined that collection would result in undue 
hardship upon the person who suffered the disease or injury resulting in 
the care and treatment provided under the CHAMPUS.
    (ii) Department of Justice approval required. A claim in excess of 
$40,000 may be compromised, settled, waived and released only with the 
prior approval of

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the Department of Justice. The Department of Justice is also to be 
consulted in all cases involving:
    (A) Unusual circumstances,
    (B) A new point of law which may serve as a precedent, or
    (C) A policy question where there is or may be a difference of views 
between federal departments and agencies.
    (iii) Limitation on the authority of the Uniformed Services legal 
offices. The authority of compromise, settlement, waiver and release 
described by Sec. 199.12(e)(5) can not be exercised in any case in which 
(A) the claim of the United States for such care and treatment has been 
referred to the Department of Justice, or (B) a suit by the third party 
has been instituted against the United States or the individual who 
received or is receiving the care and treatment described herein and the 
suit arises out of the occurrence which gave rise to the third-party 
claim of the United States.
    (6) Reporting requirements. The Department of Defense is required to 
submit an annual report to the Attorney General stating the number and 
dollar amount of claims asserted against, and the number and dollar 
amount of recoveries from third persons for third-party federal claims 
arising from the operation of the CHAMPUS. To facilitate the preparation 
of this report and to maintain program integrity, the following 
reporting requirements are established:
    (i) CHAMPUS fiscal intermediaries. Each CHAMPUS fiscal intermediary 
shall submit on or before January 31 of each year an annual report to 
the Director, OCHAMPUS, or a designee, covering the 12 months of the 
previous calendar year. This report shall contain, as a minimum, the 
number and total dollar amount of cases investigated for potential 
third-party liability and the number and dollar amount of cases referred 
to Uniformed Services claims offices for further investigation and 
collection. These latter figures are to be itemized by the states and 
Uniformed Services to which the cases are referred.
    (ii) Uniformed Services. Each Uniformed Service will submit an 
annual report covering the 12 calendar months of the previous year, 
setting forth, as a minimum, the number and total dollar amount of cases 
involving CHAMPUS payments received from CHAMPUS fiscal intermediaries, 
the number and dollar amount of cases involving CHAMPUS payments 
received from other sources, and the number and dollar amount of claims 
actually asserted against, and the dollar amount of recoveries from, 
third persons. The report, itemized by state and foreign claims 
jurisdictions, shall be provided no later than February 28 of each year, 
by each Uniformed Service to the Director, OCHAMPUS, or a designee.
    (iii) Implementation of the reporting requirements. The reporting 
requirements prescribed by paragraph (e)(6)(i) of his section, are to be 
implemented by the Director, OCHAMPUS, or a designee, by an appropriate 
action. The reporting requirements prescribed by paragraph (e)(6)(ii), 
of this section are to be implemented as soon as practicable by 
agreement between the Director, OCHAMPUS, or a designee, and the 
affected reporting agency. In no event will the reporting requirements 
prescribed in paragraph (e)(6)(ii) of this section, be implemented later 
than December 23, 1988.
    (f) Automobile or other medical payment insurance, no-fault 
insurance, or uninsured motorist insurance. Payment may not be made 
under CHAMPUS for any medical service or supply to the extent that 
payment has been made or can reasonably be expected to be made for the 
service or supply under medical insurance or other plan, automobile 
medical payment insurance policy or plan, uninsured motorist insurance, 
no-fault insurance or other forms of medical payments protection. Unless 
all or a portion of a payment under a no-fault or uninsured motorist 
insurance policy is designated as reimbursement for medical expenses or 
for some other policy benefit, the full amount of all such undesignated 
payments shall be deemed to be for medical expenses incurred by the 
policy beneficiary. Where a CHAMPUS beneficiary is covered by no-fault 
or uninsured motorist insurance, CHAMPUS benefits will not become 
available until the CHAMPUS beneficiary furnishes written documentation 
that he or she has incurred medical expenses equal to the full

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amount of the payment received under the policy, or to that portion of 
the total payment received which was designated for medical expenses. 
Based upon the results of the investigation described in paragraph 
(e)(3)(ii) of this section, the fiscal intermediary will segregate all 
claims involving treatment of personal injuries for which it is likely 
that such other insurance is available. These claims will be processed 
initially as double coverage claims under the provisions of Sec. 199.8 
of this part. Any CHAMPUS payments made after the double coverage 
provisions have been fully complied with will be considered for possible 
third-party liability recovery under the provisions of this section.
    (g) Worker's Compensation Claims. Based upon the results of the 
investigation described in paragraph (e)(3)(ii) of this section, the 
fiscal intermediary will segregate all claims involving treatment of 
work-related injuries. These claims will be processed initially as 
double coverage claims under Sec. 199.8 of this part dealing with 
worker's compensation claims. Any CHAMPUS payments made after the double 
coverage provisions have been fully complied with will be considered for 
possible third-party liability recovery under the provisions of this 
section. Unless all or a portion of a payment made pursuant to a 
worker's compensation claim is designated as reimbursement for medical 
expenses or for some other policy benefit, the full amount of all such 
undesignated payments shall be deemed to be for medical expenses 
incurred by the policy beneficiary.
    (h) Mixed claims. Occasionally, a claim arising under the Medical 
Care Recovery Act will be referred to a claims collection authority 
which also has some other potential for recovery. A typical example of 
such a claim is one arising as the result of an automobile accident in 
which there is a likely tortfeasor and the injured party is also covered 
by some combination of other health insurance which is primary to 
CHAMPUS, such as, worker's compensation, or a medical payments provision 
of an automobile policy. These claims will also initially be processed 
as double coverage claims. In addition, agency claims collection 
authorities should take full cognizance of all avenues of potential 
recovery as long as there is any potential for recovery from the 
tortfeasor. Once final action has been taken, any remaining possible 
recovery under the Federal Claims Collection Act may be referred to the 
General Counsel, OCHAMPUS, for further action in accordance with 
Sec. 199.11 of this part. Such referrals should contain a complete 
report of all actions taken on the case and full and complete 
documentation of the claims involved.



Sec. 199.13  Active duty dependents dental plan.

    (a) General provisions--(1) Purpose. This section prescribes 
guidelines and policies for the delivery and administration of the 
Active Duty Dependents Dental Plan of the Uniformed Services for the 
Army, the Navy, the Air Force, the Marine Corps, the Coast Guard, the 
Commissioned Corps of the U.S. Public Health Service (USPHS), and the 
Commissioned Corps of the National Oceanic and Atmospheric 
Administration (NOAA).
    (2) Applicability--(i) Geographic. This section is applicable 
geographically within the 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, Guam, and the U.S. Virgin 
Islands.
    (ii) Agency. The provisions of this section apply throughout the 
Department of Defense (DoD), the Coast Guard, the Commissioned Corps of 
the USPHS, and the Commissioned Corps of the NOAA.
    (3) Authority and responsibility--(i) Legislative authority--(A) 
Joint regulations. 10 U.S.C. chapter 55, 1076a authorizes the Secretary 
of Defense, in consultation with the Secretary of Health and Human 
Services and the Secretary of Transportation, to prescribe regulations 
for the administration of the Active Duty Dependents Dental Plan.
    (B) Administration. 10 U.S.C. chapter 55 also authorizes the 
Secretary of Defense to administer the Active Duty Dependents Dental 
Plan for the Army, Navy, Air Force, and Marine Corps under DoD 
jurisdiction, the Secretary of Transportation to administer the Active 
Duty Dependents Dental Plan for the Coast Guard, when the Coast

[[Page 228]]

Guard is not operating as a service in the Navy, and the Secretary of 
Health and Human Services to administer the Active Duty Dependents 
Dental Plan for the Commissioned Corps of the NOAA and the USPHS.
    (C) Care outside the United States. 10 U.S.C. 1076a authorizes the 
Secretary of Defense to establish basic dental benefit plans for 
eligible dependents of members of the uniform services accompanying the 
member on permanent assignments of duty outside the United States.
    (ii) Organizational delegations and assignments--(A) Assistant 
Secretary of Defense (Health Affairs) (ASD(HA)). The Secretary of 
Defense, by 32 CFR part 367, delegated authority to the ASD(HA) to 
provide policy guidance, management control, and coordination as 
required for all DoD health and medical resources and functional areas 
including health benefit programs. Implementing authority is contained 
in 32 CFR part 367. For additional implementing authority see Sec. 199.1 
(c) of this part.
    (B) Evidence of eligibility. The Department of Defense, through the 
defense Enrollment Eligibility Reporting System (DEERS), is responsible 
for establishing and maintaining a listing of persons eligible to 
receive benefits under the Active Duty Dependents Dental Plan.
    (4) Active duty dependents dental benefit plan. This is a program of 
dental benefits provided by the U.S. Government under public law to 
specified categories of individuals who are qualified for these benefits 
by virtue of their relationship to one of the seven Uniformed Services, 
and their voluntary decision to accept enrollment in the program and 
cost share with the Government in the premium cost of the benefits. The 
Dependents Dental Plan is an insurance, service, or prepayment plan 
involving a contract guaranteeing the indemnification or payment of the 
enrolled member's dependents against a specified loss in return for a 
premium paid. Where state regulations, charter requirements, or other 
provisions of state and local regulation governing dental insurance and 
prepayment programs conflict with Federal law and regulation governing 
this Program, Federal law and regualtion shall govern. Otherwise, this 
Program shall comply with state and local regulatory requirements.
    (5) Plan funds--(i) Funding sources. The funds used by the Active 
Duty Dependents Dental Plan are appropriated funds furnished by the 
Congress through the annual appropriation acts for the Department of 
Defense and the Department of Health and Human Services and funds 
collected by the Uniformed Services monthly through payroll deductions 
as premium shares from enrolled members.
    (ii) Disposition of funds. Plan funds are paid by the Government as 
premiums to an insurer, service, or prepaid dental care organization 
under a contract negotiated by the Director, OCHAMPUS, or a designee, 
under the provisions of the Federal Acquisition Regulation (FAR).
    (iii) Plan. The Director, OCHAMPUS or designee provides an insurance 
policy, service plan, or prepaid contract of benefits in accordance with 
those prescribed by law and regulation; as interpreted and adjudicated 
in accord with the policy, service plan, or contract and a dental 
benefits brochure; and as prescribed by requirements of the dental plan 
organization's contract with the government.
    (iv) Contracting out. The method of delivery of the Active Duty 
Dependents Dental Benefit Plan is through a competitively procured 
contract. The Director, OCHAMPUS, or a designee is responsible for 
negotiating, under provisions of the FAR, a contract for dental benefits 
insurance or prepayment which includes responsibility for (A) 
development, publication, and enforcement of benefit policy, exclusions, 
and limitations in compliance with the law, regulation, and the contract 
provisions; (B) adjudicating and processing claims; and conducting 
related supporting activities, such as eligibility verification, 
provider relations, and beneficiary communications.
    (6) Role of Health Benefits Advisor (HBA). The HBA is appointed 
(generally by the commander of a Uniformed Services medical treatment 
facility) to serve as an advisor to patients and staff in matters 
involving the Active Duty Dependents Dental

[[Page 229]]

Plan. The HBA may assist beneficiaries or sponsors in applying for 
benefits, in the preparation of claims, and in their relations with 
OCHAMPUS and the dental plan insurer. However, the HBA is not 
responsible for the plan's policies and procedures and has no authority 
to make benefit determinations or obligate the plan's funds. Advice 
given to beneficiaries as to determination of benefits or level of 
payment is not binding on OCHAMPUS or the insurer.
    (7) Disclosure of information to the public. Records and information 
acquired in the administration of the Active Duty Dependents Dental Plan 
are not records of the Department of Defense. The records are 
established by the Dependents Dental Plan insurer in accordance with 
standard business practices of the industry, and are used in the 
determination of eligibility, program management and operations, 
utilization review, quality assurance, program integrity, and 
underwriting in accordance with standard business practices. By 
contract, the records and information are subject to government audit 
and the government receives reports derived from them. Records and 
information specified by contract are provided by an outgoing insurer to 
a successor insurer in the event of a change in the contractor.
    (8) Equality of benefits. All claims submitted for benefits under 
the Active Duty Dependents Dental Plan shall be adjudicated in a 
consistent, fair, and equitable manner, without regard to the rank of 
the sponsor.
    (9) Coordination of benefits. The dental plan insurer shall conduct 
coordination of benefits for the Active Duty Dependents Dental Plan in 
accordance with generally accepted business practices.
    (10) Information on participating providers. The Director, OCHAMPUS 
or designee, shall develop and make available to Uniformed Services 
Health Benefits Advisors and military installation personnel centers 
copies of lists of participating providers and providers accepting 
assignment for all localities with significant numbers of dependents of 
active duty members. In addition, the Director, OCHAMPUS or designee, 
shall respond to inquiries regarding availability of participating 
providers in areas not covered by the lists of participating providers.
    (b) Definitions. For most definitions applicable to the provisions 
of this section, refer to section Sec. 199.2. The following definitions 
apply only to this section.
    Assignment. Acceptance by a nonparticipating provider of payment 
directly from the insurer while reserving the right to charge the 
beneficiary or sponsor for any remaining amount of the fees for services 
which exceeds the prevailing fee allowance of the insurer.
    Authorized provider. A dentist or dental hygienist specifically 
authorized to provide benefits under the Active Duty Dependents Dental 
Plan in paragraph (f) of this section.
    Beneficiary. A dependent of an active duty member who has been 
enrolled in the Active Duty Dependents Dental Plan, and has been 
determined to be eligible for benefits, as set forth in paragraph (c) of 
this section.
    Beneficiary liability. The legal obligation of a beneficiary, his or 
her estate, or responsible family member to pay for the costs of dental 
care or treatment received. Specifically, for the purposes of services 
and supplies covered by the Active Duty Dependents Dental Benefit Plan, 
beneficiary liability includes cost-sharing amounts and any amount above 
the prevailing fee determination by the insurer where the provider 
selected by the beneficiary is not a participating provider or a 
provider within an approved alternative delivery system. Beneficiary 
liability also includes any expenses for services and supplies not 
covered by the Active Duty Dependents Dental Benefit Plan, less any 
discount provided as a part of the insurer's agreement with an approved 
alternative delivery system.
    By report. Dental procedures which are authorized as benefits only 
in unusual circumstances requiring justification of exceptional 
conditions related to otherwise authorized procedures. For example, a 
house call might be justified based on an enrolled dependent's severe 
handicap which prevents visits in the dentist's office for traditional 
prophylaxis. Alternatively, additional drugs might be required 
separately from an otherwise authorized

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procedure because of an emergent reaction caused by drug interaction 
during the performance of a restoration procedure. These services are 
further defined in paragraph (e) of this section.
    Cost-Share. The amount of money for which the beneficiary (or 
sponsor) is responsible in connection with otherwise covered dental 
services (other than disallowed amounts) as set forth in paragraphs (d) 
(6) and (e) of this section. Cost-sharing may also be referred to as 
``co-payment.''
    Defense Enrollment Eligibility Reporting System (DEERS). The 
automated system that is composed of two phases:
    (1) Enrolling all active duty and retired service members, their 
dependents, and the dependents of deceased service members, and
    (2) Verifying their eligibility for health care benefits in the 
direct care facilities and through the Active Duty Dependents Dental 
Plan.
    Dental hygienist. Practitioner in rendering complete oral 
prophylaxis services, applying medication, performing dental 
radiography, and providing dental education services with a certificate, 
associate degree, or bachelor's degree in the field, and licensed by an 
appropriate authority.
    Dentist. Doctor of Dental Medicine (D.M.D.) or Doctor of Dental 
Surgery (D.D.S.) who is licensed to practice dentistry by an appropriate 
authority.
    Diagnostic services. Category of dental services including: (1) 
Clinical oral examinations, (2) radiographic examinations, and (3) 
diagnostic laboratory tests and examinations provided in connection with 
other dental procedures authorized as benefits of the Active Duty 
Dependents Dental Plan and further defined in paragraph (e) of this 
section.
    Emergency palliative services. Minor procedures performed for the 
immediate relief of pain and discomfort as further defined in paragraph 
(e) of this section. This definition excludes those procedures other 
than minor palliative services which may result in the relief of pain 
and discomfort, but constitute the usual initial stage or conclusive 
treatment in procedures not otherwise defined as benefits of the Active 
Duty Dependents Dental Plan.
    Endodontics. The etiology, prevention, diagnosis, and treatment of 
diseases and injuries affecting the dental pulp, tooth root, and 
periapical tissue as further defined in paragraph (e) of this section.
    Initial determination. A formal written decision on an Active Duty 
Dependents Dental Plan claim, a request by a provider for approval as an 
authorized provider, or a decision disqualifying or excluding a provider 
as an authorized provider under the Active Duty Dependents Dental Plan. 
Rejection of a claim or a request for benefit or provider authorization 
for failure to comply with administrative requirements, including 
failure to submit reasonably requested information, is not an initial 
determination. Responses to general or specific inquiries regarding 
Active Duty Dependent Dental Plan benefits are not initial 
determinations.
    Laboratory and Pathology Services. Laboratory and pathology 
examinations (including machine diagnostic tests that produce hard-copy 
results) ordered by a dentist when necessary to, and rendered in 
connection with other covered dental services.
    Nonparticipating provider. A dentist or dental hygienist that 
furnished dental services to an Active Duty Dependents Dental Plan 
beneficiary, but who has not agreed to participate or to accept the 
insurer's fee allowances and applicable cost share as the total charge 
for the services. A nonparticipating provider looks to the beneficiary 
or sponsor for final responsibility for payment of his or her charge, 
but may accept payment (assignment of benefits) directly from the 
insurer or assist the beneficiary in filing the claim for reimbursement 
by the contractor. Where the nonparticipating provider does not accept 
payment directly from the insurer, the insurer pays the beneficiary or 
sponsor, not the provider.
    Oral surgery. Surgical procedures performed in the oral cavity as 
further defined in paragraph (e) of this section.
    Orthodontics. The supervision, guidance, and correction of the 
growing or mature dentofacial structures, including those conditions 
that require movement of teeth or correction or malrelationships and 
malformations of

[[Page 231]]

their related structures and adjustment of relationships between and 
among teeth and facial bones by the application of forces and/or the 
stimulation and redirection of functional forces within the craniofacial 
complex.
    Participating provider. A dentist or dental hygienist who has agreed 
to accept the insurer's reasonable fee allowances or other fee 
arrangements as the total charge (even though less than the actual 
billed amount), including provision for payment to the provider by the 
beneficiary (or sponsor) of any cost-share for services.
    Party to a hearing. An appealing party or parties, the insurer, and 
OCHAMPUS.
    Party to the initial determination. Includes the Active Duty 
Dependents Dental Plan, a beneficiary of the Active Duty Dependents 
Dental Plan and a participating provider of services whose interests 
have been adjudicated by the initial determination. In addition, a 
provider who has been denied approval as an authorized Active Duty 
Dependents Dental Plan provider is a party to that initial 
determination, as is a provider who is disqualified or excluded as an 
authorized provider, unless the provider is excluded under another 
federal or federally funded program. See paragraph (h) of this section 
for additional information concerning parties not entitled to 
administrative review under the Active Duty Dependents Dental Plan 
appeals procedures.
    Periodontics. The examination, diagnosis, and treatment of diseases 
affecting the supporting structures of the teeth as further defined in 
paragraph (e) of this section.
    Preventive services. Traditional prophylaxis including scaling 
deposits from teeth, polishing teeth, and topical application of 
fluoride to teeth as further defined in paragraph (e) of this section.
    Prosthodontics. The diagnosis, planning, making, insertion, 
adjustment, relinement, and repair of artificial devices intended for 
the replacement of missing teeth and associated tissues as further 
defined in paragraph (e) of this section.
    Provider. A dentist or dental hygienist as specified in paragraph 
(f) of this section.
    Representative. Any person who has been appointed by a party to the 
initial determination as counsel or advisor and who is otherwise 
eligible to serve as the counsel or advisor of the party to the initial 
determination, particularly in connection with a hearing.
    Restorative services. Restoration of teeth including those 
procedures commonly described as amalgam restorations, resin 
restorations, pin retention, and stainless steel crowns for primary 
teeth as further defined in paragraph (e) of this section.
    Sealants. A material designed for application on the occlusal 
surfaces of specified teeth to seal the surface irregularities to 
prevent ingress of oral fluids, food, and debris in order to prevent 
tooth decay.
    (c) Enrollment and eligibility--(1) General. 10 U.S.C. 1076a, 
1072(2)(A), (D) or (I) and 1072(6) set forth those persons who are 
eligible for voluntary enrollment in the Active Duty Dependents Dental 
Benefit Plan. A determination that a person is eligible for voluntary 
enrollment does not automatically entitle that person to benefit 
payments. The person must be enrolled in accordance with the provisions 
set forth in this section and meet any additional eligibility 
requirements in other sections of this part in order for dental benefits 
to be extended.
    (2) Persons eligible. Dependent. A person who bears one of the 
following relationships to an active duty member (under a call or order 
that does not specify a period of 30 days or less).
    (i) Spouse. A lawful husband or wife, regardless of whether or not 
dependent upon the active duty member.
    (ii) Child. To be eligible, the child must be unmarried and meet one 
of the requirements of this section.
    (A) A legitimate child.
    (B) An adopted child whose adoption has been completed legally.
    (C) A legitimate stepchild.
    (D) An illegitimate child of a male member whose paternity has been 
determined judicially, or an illegitimate child of record of a female 
member who has been directed judicially to support the child.
    (E) An illegitimate child of a male active duty member whose 
paternity has not been determined judicially, or

[[Page 232]]

an illegitimate child of record of a female active duty member who:
    (1) Resides with or in a home provided by the member and
    (2) Is and continues to be dependent upon the member for over 50 
percent of his or her support.
    (F) An illegitimate child of the spouse of an active duty member 
(that is, the active duty member's stepchild) who:
    (1) Resides with or in a home provided by the active duty member or 
the parent who is the spouse of the member and
    (2) Is and continues to be dependent upon the member for over 50 
percent of his or her support.
    (G) A child placed in the custody of a service member by a court or 
recognized adoption agency on or after October 5, 1994, in anticipation 
of a legal adoption.
    (H) In addition to meeting one of the criteria (A) through (F) of 
this paragraph (c)(2), the child:
    (1) Must not be married.
    (2) Must be in one of the following three age groups:
    (A) Not passed his or her 21st birthday.
    (B) Passed his or her 21st birthday, but incapable of self-support 
because of a mental or physical incapacity that existed before his or 
her 21st birthday and dependent on the member for over 50 percent of his 
or her support. Such incapacity must be continuous. If the incapacity 
significantly improves or ceases at any time after age 21, even if such 
incapacity recurs subsequently, eligibility cannot be reinstated on the 
basis of the incapacity. If the child was not handicapped mentally or 
physically at his or her 21st birthday, but becomes so incapacitated 
after that time, no eligibility exists on the basis of the incapacity.
    (C) Passed his or her 21st birthday, but not his or her 23rd 
birthday, dependent upon the member for over 50 percent of his or her 
support, and pursuing a full-time course of education in an institution 
of higher learning approved by the Secretary of Defense or the 
Department of Education (as appropriate) or by a state agency under 38 
U.S.C., chapters 34 and 35.
    Note: Courses of education offered by institutions listed in the 
``Education Directory, Part 3, Higher Education'' or ``Accredited Higher 
Institutions,'' issued periodically by the Department of Education meet 
the criteria approved by the Secretary of Defense or the Department of 
Education, (refer to Sec. 199.3(b)(2)(iv)(C)(1) of this section). For 
determination of approval of courses offered by a foreign institution, 
by an institution not listed in either of the above directories, or by 
an institution not approved by a state agency pursuant to chapters 34 
and 35 of 38 U.S.C., a statement may be obtained from the Department of 
Education, Washington, DC 20202.
    (3) Enrollment--(i) Basic active duty dependents dental benefit 
plan. The dependent dental plan is effective from August 1, 1987, up to 
the date of implementation of the Expanded Active Duty Dependents Dental 
Benefit Plan.
    (A) Initial enrollment. Eligible dependents of members on active 
duty status as of August 1, 1987 are automatically enrolled in the 
Active Duty Dependents Dental Plan, except where any of the following 
conditions apply:
    (1) Remaining period of active duty at the time of contemplated 
enrollment is expected by the active duty member or the Uniformed 
Service to be less than two years, except that such members' dependents 
may be enrolled during the initial enrollment period for benefits 
beginning August 1, 1987 provided that the member had at least six 
months remaining in the initial enlistment term. Enrollment of 
dependents is for a period of 24 months, subject to the exceptions 
provided in paragraph (c)(5) of this section.
    (2) Active duty member had completed an election to disenroll his or 
her dependents from the Basic Active Duty Dependents Dental Benefit 
Plan.
    (3) Active duty member had only one dependent who is under four 
years of age as of August 1, 1987, and the member did not complete an 
election form to enroll the child.
    (B) Subsequent enrollment. Eligible active duty members may elect to 
enroll their dependents for a period of not less than 24 months, 
provided there is an intent to remain on active duty for a period of not 
less than two years by the member and the Uniformed Service.
    (C) Inclusive family enrollment. All eligible dependents of the 
active duty member must be enrolled if any were

[[Page 233]]

enrolled, except that a member may elect to enroll only those dependents 
who are remotely located from the member (e.g., a child living with a 
divorced spouse or a child in college).
    (ii) Expanded active duty dependents dental benefit plan. The 
expanded dependents dental plan is effective on August 1, 1993. The 
Basic Active Duty Dependents Dental Benefit Plan terminated upon 
implementation of the expanded plan.
    (A) Initial enrollment. Enrollment in the Expanded Active Duty 
Dependents Dental Benefit Plan is automatic for all eligible dependents 
of active duty members known to have at least 24 months remaining in 
service, and for those dependents enrolled in the Basic Dependents 
Dental Benefit Plan regardless of the military member's remaining time 
in service unless the active duty member elects to disenroll his or her 
dependents during the one-time disenrollment option period (one-month 
period before the date on which the expanded plan went into effect, and 
for 4 months after the beginning date). Those active duty members who 
intend to remain in the service for 24 months or more, whose dependents 
were not automatically enrolled, may enroll them at their military 
personnel office by completing the appropriate Uniformed Services Active 
Duty Dependents Dental Plan Enrollment Election Form. Use of the new 
plan during the one-time disenrollment option period by a dependent 
enrolled in the Basic Active Duty Dependents Dental Benefit Plan, 
constitutes acceptance of the plan by the military sponsor and his or 
her family. Once the new plan is used, the family cannot be disenrolled, 
and the premiums will not be refunded.
    (B) Subsequent enrollment. Eligible active duty members may elect to 
enroll their dependents for a period of not less than 24 months, 
provided there is an intent to remain on active duty for a period of not 
less than two years by the member and the Uniformed Service.
    (C) Inclusive family enrollment. All eligible dependents of the 
active duty member must be enrolled if any are enrolled, except as 
defined in paragraphs (c)(3)(ii)(C) (1) and (2) of this section.
    (1) Enrollment will be by either single or family premium as defined 
herein:
    (i) Single premium. (A) Sponsors with only one family member age 
four (4) or older who elect to enroll that family member; or
    (B) Sponsors who have more than one family member under age four (4) 
may elect to enroll one (1) family member under age four (4); or
    (C) Sponsors who elect to enroll one (1) family member age four or 
older but may have any number of family members under age four (4) who 
are not elected to be covered. At such time when the sponsor elects to 
enroll more than one (1) eligible family member, regardless of age, the 
sponsor must then enroll under a family premium which covers all 
eligible family members.
    (ii) Family premium. (A) Sponsors with two (2) or more eligible 
family members age four (4) or older must enroll under the family 
premium.
    (B) Sponsors with one (1) eligible family member age four (4) or 
older and one (1) or more eligible family members under the age of four 
may elect to enroll under a family premium.
    (C) Under the family premium, all eligible family members of the 
sponsor are enrolled.
    (2) Exceptions. (i) A sponsor may elect to enroll only those 
eligible family members residing in one location when the sponsor has 
other eligible family members residing in two or more physically 
separate locations (e.g., children living with a divorced spouse; 
children attending college).
    (ii) Instances where a family member requires hospital or special 
treatment environment (due to a medical, physical handicap, or mental 
condition) for dental care otherwise covered by the dental plan, the 
family member may be excluded from the dental plan enrollment and may 
continue to receive care from a military treatment facility.
    (D) Enrollment period. Enrollment of dependents is for a period of 
24 months except when:
    (1) The dependent's enrollment is based on his or her enrollment in 
the Basic Active Duty Dependents Dental Benefit; or

[[Page 234]]

    (2) One of the conditions for disenrollment in paragraph (c)(5) of 
this section is met.
    (4) Beginning dates of eligibility--(i) Basic active duty dependents 
dental benefit plan--(A) Initial enrollment. The beginning date of 
eligibility for benefits is August 1, 1987.
    (B) Subsequent enrollment. The beginning date of eligibility for 
benefits is the first day of the month following the month in which the 
election of enrollment is completed, signed, and received by the active 
duty member's Service representative, except that the date of 
eligibility shall not be earlier than September 1, 1987.
    (ii) Expanded active duty dependents dental benefit plan--(A) 
Initial enrollment. The beginning date of eligibility for benefits is 
April 1, 1993.
    (B) Subsequent enrollment. The beginning date of eligibility for 
benefits is the first day of the month following the month in which the 
election of enrollment is completed, signed, and received by the active 
duty member's Service representative, except that the date of 
eligibility shall not be earlier than the first of the month following 
the month of implementation of the expanded benefit.
    (5) Changes in and termination of enrollment--(i) Changes in status 
of active duty member. When an active duty member's period of active 
duty ends for any reason, his or her dependents lose their eligibility 
as of 11:59 p.m. of the last day of the month in which the active duty 
ends.
    (ii) Termination of eligibility for basic pay. When a member ceases 
to be eligible for basic pay, eligibility of the member's dependents for 
benefits under the Dependents Dental Plan terminates as of 11:59 p.m. of 
the day the member became ineligible for basic pay and the Uniformed 
Service must notify the Plan of disenrollment based on termination of 
eligibility for basic pay. The member whose eligibility for basic pay is 
subsequently restored may enroll his or her dependents for a minimum of 
two years in accordance with Sec. 199.13(c)(3)(ii).
    (iii) Changes in status of dependent--(A) Divorce. A spouse 
separated from an active duty member by a final divorce decree loses all 
eligibility based on his or her former marital relationship as of 11:59 
p.m. of the last day of the month in which the divorce becomes final. 
The eligibility of the member's own children (including adopted and 
eligible illegitimate children) is unaffected by the divorce. An 
unadopted stepchild, however, loses eligibility with the termination of 
the marriage, also as of 11:59 p.m. of the last day of the month in 
which the divorce becomes final.
    (B) Annulment. A spouse whose marriage to an active duty member is 
dissolved by annulment loses eligibility as of 11:59 p.m. of the last 
day of the month in which the court grants the annulment order. The fact 
that the annulment legally declares the entire marriage void from its 
inception does not affect the termination date of eligibility. When 
there are children, the eligibility of the member's own children 
(including adopted and eligible illegitimate children) is unaffected by 
the annulment. An unadopted stepchild, however, loses eligibility with 
the annulment of the marriage, also as of 11:59 p.m. of the last day of 
the month in which the court grants the annulment order.
    (C) Adoption. A child of an active duty member who is adopted by a 
person, other than a person whose dependents are eligible for the Active 
Duty Dependents Dental Plan benefits while the active duty member is 
living, thereby severing the legal relationship between the child and 
the sponsor, loses eligibility as of 11:59 p.m. of the last day of the 
month in which the adoption becomes final.
    (D) Marriage of child. A child of an active duty member who marries 
a person whose dependents are not eligible for the Active Duty 
Dependents Dental Plan, loses eligibility as of 11:59 p.m. on the last 
day of the month in which the marriage takes place. However, should the 
marriage be terminated by death, divorce, or annulment before the child 
is 21 years old, the child again becomes eligible for enrollment as a 
dependent as of 12:00 a.m. of the first day of the month following the 
month in which the occurrence takes place that terminates the marriage 
and continues up to age 21 if the child does not remarry before that 
time. If the marriage

[[Page 235]]

terminates after the child's 21st birthday, there is no reinstatement of 
eligibility.
    (E) Disabling illness or injury of child age 21 or 22 who has 
eligibility based on his or her student status. A child 21 or 22 years 
old who is pursuing a full-time course of higher education and who, 
either during the school year or between semesters, suffers a disabling 
illness or injury with resultant inability to resume attendance at the 
institution remains eligible for dental benefits for 6 months after the 
disability is removed or until the student passes his or her 23rd 
birthday, whichever occurs first. However, if recovery occurs before the 
23rd birthday and there is resumption of a full-time course of higher 
education, dental benefits can be continued until the 23rd birthday. The 
normal vacation periods during an established school year do not change 
the eligibility status of a dependent child 21 or 22 years old in full-
time student status. Unless an incapacitating condition existed before, 
and at the time of, a dependent child's 21st birthday, a dependent child 
21 or 22 years old in student status does not have eligibility related 
to mental or physical incapacity as described in 
Sec. 199.3(b)(2)(iv)(C)(2) of this section.
    (iv) Disenrollment because of no eligible dependents. When an active 
duty member ceases to have any eligible dependents, the member must 
disenroll.
    (v) Option to disenroll as a result of a change in active duty 
station. When an active duty member transfers with enrolled family 
members to a duty station where space-available dental care is readily 
available at the local military clinic, the member may elect within 90 
days of the transfer to disenroll from the plan. If the member is later 
transferred to a duty station where dental care is not available in the 
local military clinic, the member may re-enroll his or her dependents in 
the plan.
    (vi) Option to disenroll after an initial two-year enrollment. When 
an active duty member's enrollment of his or her dependents has been in 
effect for a continuous period of two years, the member may disenroll 
his or her dependents at any time. Subsequently, the member may enroll 
his or her dependents for another minimum period of two years.
    (6) Eligibility determination and enrollment--(i) Eligibility 
determination and enrollment responsibility of Uniformed Services. 
Determination of a person's eligibility and processing of enrollment in 
the Active Duty Dependents Dental Benefit Plan is the responsibility of 
the active duty member's Uniformed Service. For the purpose of program 
integrity, the appropriate Uniformed Service shall, upon request of the 
Director, OCHAMPUS, review the eligibility of a specific person when 
there is reason to question the eligibility status. In such cases, a 
report on the result of the review and any action taken will be 
submitted to the Director, OCHAMPUS, or a designee.
    (ii) Procedures for determination of eligibility. Uniformed Services 
identification cards do not distinguish eligibility for the Active Duty 
Dependents Dental Plan. Procedures for the determination of eligibility 
are identified in Sec. 199.3(f)(2) of this part, except that Uniformed 
Services identification cards do not provide evidence of eligibility for 
the dental plan.
    (7) Evidence of eligibility required. Eligibility and enrollment in 
the Active Duty Dependents Dental Plan will be verified through the 
DEERS (DoD 1341.1-M, ``Defense Enrollment Eligibility Reporting System 
(DEERS) Program Manual,'' May 1982).
    (i) Acceptable evidence of eligibility and enrollment. Eligibility 
information established and maintained in the DEERS files is the only 
acceptable evidence of eligibility.
    (ii) Responsibility for obtaining evidence of eligibility. It is the 
responsibility of the active duty member, or Active Duty Dependent 
Dental Plan beneficiary, parent, or legal representative, when 
appropriate, to enroll with a Uniformed Service authorized 
representative and provide adequate evidence for entry into the DEERS 
file to establish eligibility for the Active Duty Dependents Dental 
Plan, and to ensure that all changes in status that may affect 
enrollment and eligibility are reported immediately to the appropriate 
Uniformed Service for action. Ineligibility for benefits is presumed in 
the absence of prescribed enrollment

[[Page 236]]

and eligibility evidence in the DEERS file.
    (8) Continuation of eligibility for dependents of service members 
who die on active duty. Eligible dependents of service members who die 
on or after October 1, 1993, while on active duty for a period of more 
than 30 days and who are enrolled in the dental benefits plan on the 
date of the death of the member shall be eligible for continued 
enrollment in the dental benefits plan for up to one year from the date 
of the service member's death.
    (d) Premium sharing--(1) General. Active duty members enrolling 
their dependents in the Active Duty Dependents Dental Plan shall be 
required to pay a share of the premium cost for their dependents.
    (2) Premium classifications. Premium classifications are established 
by the Secretary of Defense, or designee, and provide for a minimum of 
two classifications, single and family.
    (3) Premium amounts. The premium amounts to be paid for the Active 
Duty Dependents Dental plan are established by the Secretary of Defense 
or designee.
    (4) Proportion of member's premium share. The proportion of premium 
share to be paid by the member is established by the Secretary of 
Defense or designee, at not more than 40 percent of the total premium.
    (5) Pay deduction. The member's premium share shall be deducted from 
the basic pay of the member.
    (e) Plan benefits--(1) General--(i) Scope of benefits. The Active 
Duty Dependents Dental Benefit Plan provides coverage for diagnostic and 
preventive services, sealants, restorative services, endodontics, 
periodontics, prosthodontics, orthodontics and oral surgery to eligible, 
enrolled dependents of active duty members as set forth in paragraph (c) 
of this section.
    (ii) Authority to act for the plan. The authority to make benefit 
determinations and authorize plan payments under the Active Duty 
Dependents Dental Plan rests primarily with the insurance, service plan, 
or prepayment dental plan contractor, subject to compliance with federal 
law and regulation and government contract provisions. The Director, 
OCHAMPUS, or designee, provides required benefit policy decisions 
resulting from changes in federal law and regulation and appeal 
decisions. No other persons or agents (such as dentists or Uniformed 
Services health benefits advisors) have such authority.
    (iii) Right to information. As a condition precedent to the 
provision of benefits hereunder, the Director, OCHAMPUS, or designee, 
shall be entitled to receive information from an authorized provider or 
other person, institution, or organization (including a local, state, or 
U.S. Government agency) providing services or supplies to the 
beneficiary for which claims for benefits are submitted. While 
establishing enrollment and eligibility, benefits, and benefit 
utilization and performance reporting information standards; the 
government has not established and does not maintain a system of records 
and information for the Dependents Dental Plan. By contract, the 
government audits the adequacy and accuracy of the dental contractor's 
system of records and requires access to information and records to meet 
program accountabilities. Such information and records may relate to 
attendance, testing, monitoring, examination, or diagnosis of dental 
disease or conditions; or treatment rendered; or services and supplies 
furnished to a beneficiary; and shall be necessary for the accurate and 
efficient administration and payment of benefits under this plan. Before 
a determination will be made on a claim of benefits, a beneficiary or 
active duty member must provide particular additional information 
relevant to the requested determination, when necessary. Failure to 
provide the requested information may result in denial of the claim. The 
recipient of such information shall in every case hold such records 
confidential except when:
    (A) Disclosure of such information is necessary to the determination 
by a provider or the Plan contractor of beneficiary enrollment or 
eligibility for coverage of specific services;
    (B) Disclosure of such information is authorized specifically by the 
beneficiary;
    (C) Disclosure is necessary to permit authorized governmental 
officials to

[[Page 237]]

investigate and prosecute criminal actions; or
    (D) Disclosure constitutes a standard and acceptable business 
practice commonly used among dental insurers which is consistent with 
the principle of preserving confidentiality of personal information and 
detailed clinical data. For example, the release of utilization 
information for the purpose of determining eligibility for certain 
services, such as the number of dental prophylaxis procedures performed 
for a beneficiary, is authorized.
    (E) Disclosure by the Director, OCHAMPUS, or designee, is for the 
purpose of determining the applicability of, and implementing the 
provisions of, other dental benefits coverage or entitlement.
    (iv) Dental insurance policy, prepayment, or dental service plan 
contract. The Director, OCHAMPUS, or designee, shall develop a standard 
insurance policy, prepayment agreement, or dental service plan contract 
designating OCHAMPUS as the policyholder or purchaser. The policy shall 
be in the form customarily employed by the dental plan insurer, subject 
to its compliance with federal law and the provisions of this 
Regulation.
    (v) Dental benefits brochure--(A) Content. The Director, OCHAMPUS, 
or designee, shall establish a dental benefits brochure explaining the 
benefits of the plan in common lay terminology. The brochure shall 
include the limitations and exclusions and other benefit determination 
rules for administering the benefits in accordance with the law and this 
part. The brochure shall include the rules for adjudication and payment 
of claims, appealable issues, and appeal procedures in sufficient detail 
to serve as a common basis for interpretation and understanding of the 
rules by providers, beneficiaries, claims examiners, correspondence 
specialists, employees and representatives of other government bodies, 
health benefits advisors, and other interested parties. Any conflict 
which may occur between the dental benefits brochure and law or 
regulation shall be resolved in favor of law and regulation.
    (B) Distribution. The dental benefits brochure shall be printed and 
distributed with the assistance of the Uniformed Services health 
benefits advisors, major personnel centers at Uniformed Services 
installations, and authorized providers of care to all active duty 
members enrolling their dependents.
    (vi) Utilization review and quality assurance. Claims submitted for 
benefits under the Active Duty Dependents Dental Plan are subject to 
review by the Director, OCHAMPUS or designee for quality of care and 
appropriate utilization. The Director, OCHAMPUS or designee is 
responsible for appropriate utilization review and quality assurance 
standards, norms, and criteria consistent with the level of benefits.
    (vii) Alternative course of treatment policy. The Director, OCHAMPUS 
or designee may establish, in accordance with generally accepted dental 
benefit practices, an alternative course of treatment policy which 
provides reimbursement in instances where the dentist and beneficiary 
select a more expensive service, procedure, or course of treatment than 
is customarily provided. The benefit policy must meet the following 
conditions:
    (A) The service, procedure, or course of treatment must be 
consistent with sound professional standards of dental practice for the 
dental condition concerned.
    (B) The service, procedure, or course of treatment must be a 
generally accepted alternative for a service or procedure covered by 
this plan for the dental condition.
    (C) Payment for the alternative service or procedure may not exceed 
the lower of the prevailing limits for the alternative procedure, the 
prevailing limits or scheduled allowance for the otherwise authorized 
benefit procedure for which the alternative is substituted, or the 
actual charge for the alternative procedure.
    (2) Benefits--(i) Diagnostic and preventive services. Benefits may 
be extended for those dental services described as oral examination, 
diagnostic, and preventive services defined as traditional prophylaxis 
(i.e., scaling deposits from teeth, polishing teeth, and topical 
application of fluoride to teeth) when performed directly by dentists or 
dental hygienists as authorized under paragraph (f) of this section. 
These

[[Page 238]]

services are defined (subject to the dental plan's exclusions, 
limitations, and benefit determination rules approved by OCHAMPUS) using 
the American Dental Association's Code on Dental Procedures and 
Nomenclature as listed in the Current Dental Terminology manual to 
include the following categories of services:
    (A) Diagnostic services. (1) Clinical oral examinations.
    (2) Radiographs.
    (3) Tests and laboratory examinations.
    (B) Preventive services. (1) Dental prophylaxis.
    (2) Topical fluoride treatment (office procedure).
    (3) Sealants.
    (4) Space maintenance (passive appliances).
    (ii) Adjunctive general services (services ``by report''). The 
following categories of services are authorized when performed directly 
by dentists or dental hygienists only in unusual circumstances requiring 
justification of exceptional conditions directly related to otherwise 
authorized procedures. Use of the procedures may not result in the 
fragmentation of services normally included in a single procedure. These 
services are defined (subject to the dental plan's exclusions, 
limitations, and benefit determination rules as adopted by OCHAMPUS) 
using the American Dental Association's Code on Dental Procedures and 
Nomenclature as listed in the Current Dental Terminology manual to 
include the following categories of service:
    (A) Emergency oral examinations.
    (B) Palliative emergency treatment of dental pain.
    (C) Professional consultation.
    (D) Professional visits.
    (E) Drugs.
    (F) Post-surgical complications.
    (iii) Restorative. Benefits may be extended for basic restorative 
services when performed directly by dentists or dental hygienists, or 
under orders and supervision by dentists, as authorized under paragraph 
(f) of this section. These services are defined (subject to the dental 
plan's exclusions, limitations, and benefit determination rules as 
adopted by OCHAMPUS) using the American Dental Association's Code on 
Dental Procedures and Nomenclature as listed in the Current Dental 
Terminology manual to include the following categories of services:
    (A) Restorative services. (1) Amalgam restorations.
    (2) Silicate restorations.
    (3) Resin restorations.
    (4) Prefabricated crowns.
    (5) Pin retention.
    (B) Other restorative services. (1) Diagnostic casts.
    (2) Onlay restoration--metallic.
    (3) Crowns.
    (iv) Endodontic services. Benefits may be extended for those dental 
services involved in treatment of diseases and injuries affecting the 
dental pulp, tooth root, and periapical tissue when performed directly 
by dentists as authorized under paragraph (f) of this section. These 
services are defined (subject to the dental plan's exclusions, 
limitations, and benefit determination rules as adopted by OCHAMPUS) 
using the American Dental Association's Code on Dental Procedures and 
Nomenclature as listed in the Current Dental Terminology manual to 
include the following categories of services:
    (A) Pulp capping--indirect.
    (B) Pulpotomy.
    (C) Root canal therapy.
    (D) Periapical services.
    (E) Hemisection.
    (v) Periodontic services. Benefits may be extended for those dental 
services involved in prevention and treatment of diseases affecting the 
supporting structures of the teeth to include periodontal prophylaxis, 
gingivectomy or gingivoplasty, gingival curettage, etc., when performed 
directly by dentists as authorized under paragraph (f) of this section. 
These services are defined (subject to the dental plan's exclusions, 
limitations, and benefit determination rules as adopted by OCHAMPUS) 
using the American Dental Association's Code on Dental Procedures and 
Nomenclature as listed in the Current Dental Terminology manual to 
include the following categories of services:
    (A) Surgical services.
    (B) Periodontal scaling and root planing.
    (C) Unscheduled dressing change.

[[Page 239]]

    (vi) Prosthodontic services. Benefits may be extended for those 
dental services involved in fabrication, insertion, adjustment, 
relinement, and repair of artificial teeth and associated tissues to 
include removable complete and partial dentures, fixed crowns and 
bridges when performed directly by dentists as authorized under 
paragraph (f) of this section. These services are defined (subject to 
the dental plan's exclusions, limitations, and benefit determination 
rules as adopted by OCHAMPUS) using the American Dental Association's 
Code on Dental Procedures and Nomenclature as listed in the Current 
Dental Terminology manual to include the following categories of 
services:
    (A) Prosthodontics (removable). (1) Complete/partial dentures.
    (2) Adjustments to removable prosthesis.
    (3) Repairs to complete/partial dentures.
    (4) Denture rebase procedures.
    (5) Denture reline procedures.
    (6) Interim complete/partial dentures.
    (7) Tissue conditioning.
    (B) Prosthodontics (fixed). (1) Bridge pontics.
    (2) Retainers (by report).
    (3) Bridge retainers-crowns.
    (4) Other fixed prosthetic services.
    (vii) Orthodontic services. Benefits may be extended for the 
supervision, guidance, and correction of growing or mature dentofacial 
structures, including those conditions that require movement of teeth or 
correction of malrelationships and malformations through the use of 
orthodontic procedures and devices when performed directly by dentists 
as authorized under paragraph (f) of this section to include in-process 
orthodontics. Coverage of in-process orthodontics is limited to services 
rendered on or after the date of enrollment in the expanded dependents 
dental play. These services are defined (subject to the dental plan's 
exclusions, limitations, and benefit determination rules as adopted by 
OCHAMPUS) using the American Dental Association's Code on Dental 
Procedures and Nomenclature as listed in the Current Dental Terminology 
manual to include the following categories of services:
    (A) Minor treatment for tooth guidance.
    (B) Minor treatment to control harmful habits.
    (C) Interceptive orthodontic treatment.
    (D) Comprehensive orthodontic treatment--transitional dentition.
    (E) Comprehensive orthodontic treatment--permanent dentition.
    (F) Treatment of the atypical or extended skeletal case.
    (G) Post-treatment stabilization.
    (viii) Oral surgery services. Benefits may be extended for basic 
surgical procedure of the extraction, reimplantation, stabilization and 
repositioning of teeth, alveoloplasties, incision and drainage of 
abscesses, suturing of wounds, biopsies, etc., when performed directly 
by dentists as authorized under paragraph (f) of this section. These 
services are defined (subject to the dental plan's exclusions, 
limitations, and benefit determination rules as adopted by OCHAMPUS) 
using the American Dental Association's Code on Dental Procedures and 
Nomenclature as listed in the Current Dental Terminology manual to 
include the following categories of services:
    (A) Extractions.
    (B) Surgical extractions.
    (C) Other surgical procedures.
    (D) Alveoloplasty--surgical preparation of ridge for denture.
    (E) Surgical incision and drainage of abscess--intraoral soft 
tissue.
    (F) Repair of traumatic wounds.
    (G) Complicated suturing.
    (H) Excision of pericoronal gingiva.
    (ix) Exclusion of adjunctive dental care. Under limited 
circumstances, benefits are available for dental services and supplies 
under CHAMPUS when the dental care is medically necessary in the 
treatment of an otherwise covered medical (not dental) condition, is an 
integral part of the treatment of such medical condition, and is 
essential to the control of the primary medical condition; or is 
required in preparation for, or as the result of, dental trauma which 
may be or is caused by medically necessary treatment of an injury or 
disease (iatrogenic). These benefits are excluded under the Active Duty 
Dependents Dental Plan. For further information on adjunctive dental 
care

[[Page 240]]

benefits under CHAMPUS, see Sec. 199.4(e)(10).
    (x) Exclusion of benefit services performed in military dental care 
facilities. Except for emergency treatment, dental care provided outside 
the United States, and services incidental to noncovered services, 
dependents enrolled in the Active Duty Dependents Dental Plan may not 
obtain those services which are benefits of the Plan in military dental 
care facilities. Enrolled dependents may continue to obtain noncovered 
services from military dental care facilities subject to the provisions 
for space available care.
    (xi) Benefit limitations and exclusions. The Director, OCHAMPUS or 
designee may establish such exclusions and limitations as are consistent 
with those established by dental insurance and prepayment plans to 
control utilization and quality of care for the services and items 
covered by this dental plan.
    (3) Beneficiary and sponsor liability--(i) Diagnostic and preventive 
services. Enrolled dependents of active duty members or their sponsors 
are responsible for the payment of only those amounts which are for 
services rendered by nonparticipating providers of care which exceed the 
equivalent of the statewide or regional prevailing fee levels as 
established by the insurer, except in the case of sealants where the 
dependents or their sponsors will also be responsible for payment of 20 
percent of the insurer's determined allowable amount. Where the dental 
plan is unable to identify a participating provider of care within 35 
miles of the dependent's place of residence with appointment 
availability within 21 calendar days, the dental plan will reimburse the 
dependent, or sponsor, or the nonparticipating provider selected by the 
dependent within 35 miles of the dependent's place of residence at the 
level of the provider's usual fees less 20 percent of the insurer's 
allowable amount for sealants.
    (ii) Restorative services. Enrolled dependents of active duty 
members or their sponsors are responsible for payment of 20 percent of 
the amounts determined by the insurer for services rendered by 
participating providers of care, or 20 percent of these amounts plus any 
remainder of the charges made by nonparticipating providers of care, 
except in the case of crowns and casts where the dependents or their 
sponsors will be responsible for payment of 50 percent of the insurer's 
determined allowable amount. Where the dental plan is unable to identify 
a participating provider of care within 35 miles of the dependent's 
place of residence with appointment availability within 21 calendar 
days, dependents or their sponsors are responsible for payment of 20 
percent (50 percent in the case of crowns and casts) of the charges made 
by nonparticipating providers located within 35 miles of the dependent's 
place of residence.
    (iii) Endodontic, periodontic, and oral surgery services. Enrolled 
dependents of active duty members or their sponsors are responsible for 
payment of 40 percent of the amounts determined by the insurer for 
services rendered by participating providers of care, or 40 percent of 
these amounts plus any remainder of the charges made by nonparticipating 
providers of care. Where the dental plan is unable to identify a 
participating provider of care within 35 miles of the dependent's place 
of residence with appointment availability within 21 calendar days, 
dependents or their sponsors are responsible for payment of 40 percent 
of the charges made by nonparticipating providers located within 35 
miles of the dependent's place of residence.
    (iv) Prosthodontic and orthodontic services. Enrolled dependents of 
active duty members or their sponsors are responsible for payment of 50 
percent of the amounts determined by the insurer for services rendered 
by participating providers of care, or 50 percent of these amounts plus 
any remainder of the charges made by nonparticipating providers of care. 
Where the dental plan is unable to identify a participating provider of 
care within 35 miles of the dependent's place of residence with 
appointment availability within 21 calendar days, dependents or their 
sponsors are responsible for payment of 50 percent of the charges made 
by nonparticipating providers located within 35 miles of the dependent's 
place of residence.
    (v) Adjunctive general services (services ``by report''). The 
beneficiary or sponsor

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liability is dependent on the particular service provided. Emergency 
oral examinations and palliative emergency treatment of dental pain are 
paid in full except for those amounts for services rendered by 
nonparticipating providers of care which exceed the equivalent of the 
statewide or regional prevailing fee levels as established by the 
insurer which are the responsibility of the enrolled dependents or their 
sponsors. Enrolled dependents or their sponsors are responsible for 
payment of 20 percent of the amounts determined by the insurer for 
professional consultations/visits and postsurgical services and 50 
percent for covered medications when provided by participating providers 
of care, or these percentage payments plus any remaining amounts in 
excess of the prevailing charge limits established by the insurer for 
services rendered by nonparticipating providers, subject to the 
exceptions for dependent lack of access to participating providers as 
provided in paragraphs (e)(3)(i) through (e)(3)(iv) of this section. The 
contracting dental insurer may recognize a ``by report'' condition by 
providing additional allowance to the primary covered procedure instead 
of recognizing or permitting a distinct billing for the ``by report'' 
service.
    (vi) Amounts over the dental insurer's established allowance for 
charges. It is the responsibility of the dental plan insurer to 
determine allowable charges for the procedures identified as benefits of 
this plan. All benefits of the plan are based on the insurer's 
determination of the allowable charges, subject to the exceptions for 
lack of access to participating providers as provided in paragraphs 
(e)(3)(i) through (e)(3)(iv) of this section.
    (vii) Maximum coverage amounts. Enrolled dependents of active duty 
members are subject to an annual maximum coverage amount for non-
orthodontic dental benefits and a lifetime maximum coverage amount for 
orthodontics as established by the Secretary of Defense or designee.
    (f) Authorized providers--(1) General. This section sets forth 
general policies and procedures that are the basis for the Active Duty 
Dependents Dental Plan cost sharing of dental services and supplies 
provided by or under the direct supervision or prescription by dentists, 
and by dental hygienists, within the scope of their licensure.
    (i) Listing of provider does not guarantee payment of benefits. The 
fact that a type of provider is listed in this section is not to be 
construed to mean that the Active Duty Dependents Dental Plan will pay 
automatically a claim for services or supplies provided by such a 
provider. The Director, OCHAMPUS or designee also must determine if the 
patient is an eligible beneficiary, whether the services or supplies 
billed are authorized and medically necessary, and whether any of the 
authorized exclusions of otherwise qualified providers presented in this 
section apply.
    (ii) Conflict of interest. See Sec. 199.9(d).
    (iii) Fraudulent practices or procedures. See Sec. 199.9(c) of this 
part.
    (iv) Utilization review and quality assurance. Services and supplies 
furnished by providers of care shall be subject to utilization review 
and quality assurance standards, norms, and criteria established by the 
dental plan. Utilization review and quality assurance assessments shall 
be performed by the dental plan consistent with the nature and level of 
benefits of the plan, and shall include analysis of the data and 
findings by the dental plan insurer from other dental accounts.
    (v) Provider required. In order to be considered benefits, all 
services and supplies shall be rendered by, prescribed by, or furnished 
at the direction of, or on the order of an Active Duty Dependents Dental 
Plan authorized provider practicing within the scope of his or her 
license.
    (vi) Participating provider. An authorized provider may elect to 
participate and accept the fee or charge determinations as established 
and made known to the provider by the dental plan insurer. The fee or 
charge determinations are binding upon the provider in accordance with 
the dental plan insurer's procedures for participation. The authorized 
provider may not participate on a claim-by-claim basis. The 
participating provider must agree to accept, within one day of a request 
for appointment, beneficiaries in need of emergency palliative 
treatment. Payment to the participating provider

[[Page 242]]

is based on the lower of the actual charge or the insurer's 
determination of the allowable charge. Payment is made directly to the 
participating provider, and the participating provider may only charge 
the beneficiary the percent cost-share of the insurer's allowable charge 
for those benefit categories as specified in paragraphs (e)(3)(i) 
through (e)(3)(v) of this section, in addition to the charges for any 
services not authorized as benefits.
    (vii) Nonparticipating provider. An authorized provider may elect 
for all beneficiaries not to participate and request the beneficiary or 
sponsor to pay any amount of the provider's billed charge in excess of 
the dental plan insurer's determination of allowable charges. Neither 
the government nor the dental plan insurer shall have any responsibility 
for any amounts over the allowable charges as determined by the dental 
plan insurer, except where the dental plan insurer is unable to identify 
a participating provider of care within 35 miles of the dependent's 
place of residence with appointment availability within 21 calendar 
days. In such instances of the nonavailability of a participating 
provider, the nonparticipating provider located within 35 miles of the 
dependent's place of residence shall be paid his or her usual fees, less 
the percent cost-share as specified in paragraphs (e)(3)(i) through 
(e)(3)(v) of this section.
    (A) Assignment. A nonparticipating provider may accept assignment of 
claims for beneficiaries certifying their willingness to make such 
assignment by filing the claims completed with the assistance of the 
beneficiary or sponsor for direct payment by the dental plan insurer to 
the provider.
    (B) Nonassignment. A nonparticipating provider for all beneficiaries 
may request the beneficiary or sponsor to file the claim directly with 
the dental plan insurer, making arrangements with the beneficiary or 
sponsor for direct payment by the beneficiary or sponsor.
    (2) Dentists. Subject to standards of participation provisions of 
this part, the following are authorized providers of care:
    (i) Doctors of Dental Surgery (D.D.S.) having a degree from an 
accredited school of dentistry, licensed to practice dentistry by a 
state board of dental examiners, and practicing within the scope of 
their licenses, whether in individual, group, or clinic practice 
settings.
    (ii) Doctors of Dental Medicine (D.M.D.) having a degree from an 
accredited school of dentistry, licensed to practice dentistry by a 
state board of dental examiners, and practicing within the scope of 
their licenses, whether in individual, group, or clinic practice 
settings.
    (3) Dental hygienists. Subject to state licensure laws and standards 
of participation provisions of this part, dental hygienists having an 
associate degree, certificate, or baccalaureate degree from an 
accredited school of dental hygiene, licensed to practice dental hygiene 
by a state board, and practicing within the scope of their licenses, 
whether in individual, group, or clinic practice settings.
    Note: Dental hygienists may independently bill and receive payment 
only in the few states where the state licensure laws authorized them as 
independent providers of care. In nearly all states at the present time, 
the dental hygienist performs services under the supervision of a 
dentist and the Dependents Dental Plan will pay for such services in 
these states only when supervised and billed by a dentist.
    (4) Alternative delivery system--(i) General. Alternative delivery 
systems may be established by the Director, OCHAMPUS or designee as 
authorized providers. Only dentists and dental hygienists shall be 
authorized to provide or direct the provision of authorized services and 
supplies in an approved alternative delivery system.
    (ii) Defined. An alternative delivery system may be any approved 
arrangement for a preferred provider organization, capitation plan, 
dental health maintenance or clinic organization, or other contracted 
arrangement which is approved by OCHAMPUS in accordance with 
requirements and guidelines.
    (iii) Elective or exclusive arrangement. Alternative delivery 
systems may be established by contract or other arrangement on either an 
elective or exclusive basis for beneficiary selection of participating 
and authorized providers in accordance with contractual requirements and 
guidelines.

[[Page 243]]

    (iv) Provider election of participation. Otherwise authorized 
providers must be provided with the opportunity of applying for 
participation in an alternative delivery system and of achieving 
participation status based on reasonable criteria for timeliness of 
application, quality of care, cost containment, geographic location, 
patient availability, and acceptance of reimbursement allowance.
    (v) Limitation on authorized providers. Where exclusive alternative 
delivery systems are established, only providers participating in the 
alternative delivery system are authorized providers of care. In such 
instances, the dental plan shall continue to pay beneficiary claims for 
services rendered by otherwise authorized providers in accordance with 
established rules for reimbursement of nonparticipating providers where 
the beneficiary has established a patient relationship with the 
nonparticipating provider prior to the dental plan's proposal to 
subcontract with the alternative delivery system.
    (vi) Charge agreements. Where the alternative delivery system 
employs a discounted fee-for-service reimbursement methodology or 
schedule of charges or rates which includes all or most dental services 
and procedures recognized by the American Dental Association, Council on 
Dental Care Programs ``Code on Dental Procedures and Nomenclature (6th 
Revision),'' the discounts or schedule of charges or rates for all 
dental services and procedures shall be extended by its participating 
providers to beneficiaries of the Active Duty Dependents Dental Plan as 
an incentive for beneficiary participation in the alternative delivery 
system.
    (5) Billing practices. The Director, OCHAMPUS, or designee, approves 
the dental plan's procedures governing the itemization and completion of 
claims for services rendered by authorized providers to enrolled 
beneficiaries of the Active Duty Dependents Dental Plan consistent with 
the insurer's existing procedures for completion and submittal of dental 
claims for its other dental plans and accounts.
    (6) Reimbursement of authorized providers. The Director, OCHAMPUS or 
designee, approves the dental plan methodology for reimbursement of 
services rendered by authorized providers consistent with law, 
regulation, and contract provisions, and the benefits of the Active Duty 
Dependents Dental Plan. The following general requirements for 
methodology shall be met, subject to modifications and exceptions 
approved by the Director, OCHAMPUS or a designee.
    (i) Nonparticipating providers (or the dependents or sponsors for 
unassigned claims) shall be reimbursed at the equivalent of not less 
than the 50th percentile of prevailing charges made for similar services 
in the same locality (region) or state, or the provider's actual charge, 
whichever is lower; less any cost-share amount due for authorized 
services, except where the dental plan insurer is unable to identify a 
participating provider of care within 35 miles of the dependent's place 
of residence with appointment availability within 21 calendar days. In 
such instances of the nonavailability of a participating provider, the 
nonparticipating provider located within 35 miles of the dependent's 
place of residence shall be paid his or her usual fees, less the cost-
share for the authorized services.
    (ii) Participating providers shall be reimbursed at the equivalent 
of a percentile of prevailing charges sufficiently above the 50th 
percentile of prevailing charges made for similar services in the same 
locality (region) or state as to constitute a significant financial 
incentive for participation, or the provider's actual charge, whichever 
is lower; less any cost-share amount due for authorized services.
    (g) Benefit payment--(1) General. Active Duty Dependent Dental Plan 
benefit payments are made either directly to the provider or to the 
beneficiary or sponsor, depending on the manner in which the claim is 
submitted or the terms of the subcontract of an alternative delivery 
system with the dental plan insurer.
    (2) Benefit payments made to a participating provider. When the 
authorized provider has elected to participate in accordance with the 
arrangement and procedures established by the dental plan insurer, 
payment is made based on the lower of the actual charge or the

[[Page 244]]

insurer's determination of the allowable charge. Payment is made 
directly to the participating provider as payment in full, less the 
percent cost-share of the insurer's allowable charge as specified in 
paragraphs (e)(3)(i) through (e)(3)(v) of this section.
    (3) Benefit payments made to a nonparticipating provider. When the 
authorized provider has elected not to participate in accordance with 
the arrangement and procedures established by the dental plan, payment 
is made by the insurer based on the lower of the actual charge or the 
insurer's determination of the allowable charge. The beneficiary is 
responsible for payment of a percent cost-share of the insurer's 
allowable charge as specified in paragraphs (e)(3)(i) through (e)(3)(v) 
of this section. Where the dental plan is unable to identify a 
participating provider of care within 35 miles of the dependent's place 
of residence with appointment availability within 21 calendar days, 
dependents or their sponsors are responsible for payment of a percent 
cost-share of the charges made by nonparticipating providers located 
within 35 miles of the dependent's place of residence as specified in 
paragraphs (e)(3)(i) through (e)(3)(v) of this section.
    (i) Assigned claims are claims submitted directly by the 
nonparticipating provider and are paid directly to the provider.
    (ii) Nonassigned claims are claims submitted by the beneficiary, 
provider, or sponsor and are paid directly to the claimant.
    (4) Dental Explanation of Benefits (DEOB). An explanation of 
benefits is sent to the beneficiary or sponsor and provides the 
following information:
    (i) Name and address of the beneficiary.
    (ii) Social Security Account Number (SSAN) of the sponsor.
    (iii) Name and address of the provider.
    (iv) Services or supplies covered by the claim for which the DEOB 
applies.
    (v) Dates the services or supplies were provided.
    (vi) Amount billed; allowable charge; and amount of payment.
    (vii) To whom payment, if any, was made.
    (viii) Reasons for any denial.
    (ix) Recourse available to beneficiary for review of claim decision 
(refer to paragraph (h) of this section).
    (5) Fraud--(i) Federal laws. 18 U.S.C. 287 and 1001 provide for 
criminal penalties for submitting knowingly or making any false, 
fictitious, or fraudulent statement or claim in any matter within the 
jurisdiction of any department or agency of the United States. Examples 
of fraud include situations in which ineligible persons not enrolled in 
the Active Duty Dependents Dental Plan obtain care and file claims for 
benefits under the name and identification of an enrolled beneficiary; 
or when providers submit claims for services and supplies not rendered 
to enrolled beneficiaries; or when a participating provider bills the 
beneficiary for amounts over the dental plan insurer's determination of 
allowable charges; or fails to collect the specified patient copayment 
amount.
    (ii) Suspected fraud. Any person, including the dental plan insurer, 
who becomes aware of a suspected fraud shall report the circumstances in 
writing, together with copies of any available documents pertaining 
thereto, to the Director, OCHAMPUS, or a designee, who shall initiate an 
official investigation of the case.
    (h) Appeal and hearing procedures--(1) General. This action sets 
forth the policies and procedures for appealing decisions made by the 
dental plan adversely affecting the rights and liabilities of 
beneficiaries, participating providers, and providers denied the status 
of authorized provider under the Active Duty Dependents Dental Plan. An 
appeal under the Active Duty Dependents Dental Plan is an administrative 
review of program determinations made under the provisions of law and 
regulation. An appeal cannot challenge the propriety, equity, or 
legality of any provision of law and regulation.
    (i) Initial determination--(A) Notice of initial determination and 
right to appeal. (1) The dental plan contractor shall mail notices of 
initial determinations to the Active Duty Dependents Dental Plan 
beneficiary at the last known address. For beneficiaries who are under 
18 years of age or who are incompetent,

[[Page 245]]

a notice issued to the parent or guardian constitutes notice to the 
beneficiary.
    (2) The dental plan contractor shall notify providers of an initial 
determination on a claim only if the providers participated in the claim 
or accepted assignment.
    (3) Notice of an initial determination on a claim by the dental plan 
contractor shall be made in the contractor's explanation of benefits 
(beneficiary) or with the summary of payment (provider).
    (4) Each notice of an initial determination on a request for benefit 
authorization, a request by a provider for approval as an authorized 
provider, or a decision to disqualify or exclude a provider, or a 
decision to disqualify or exclude a provider as an authorized provider 
under the Active Duty Dependents Dental Plan shall state the reason for 
the determination and the underlying facts supporting the determination.
    (5) In any case when the initial determination is adverse to the 
beneficiary or participating provider or to the provider seeking 
approval as an authorized provider, the notice shall include a statement 
of the beneficiary's or provider's right to appeal the determination. 
The procedure for filing the appeal also shall be explained.
    (B) Effect of initial determination. The initial determination is 
final, unless appealed in accordance with this section or unless the 
initial determination is reopened by OCHAMPUS or the dental plan 
contractor.
    (ii) Participation in an appeal. Participation in an appeal is 
limited to any party to the initial determination, including OCHAMPUS, 
the dental plan contractor, and authorized representatives of the 
parties. Any party to the initial determination, except OCHAMPUS and the 
dental plan contractor, may appeal an adverse determination. The 
appealing party is the party who actually files the appeal.
    (A) Parties to the initial determination. For purposes of these 
appeal and hearing procedures, the following are not parties to an 
initial determination and are not entitled to administrative review 
under this section.
    (1) A provider disqualified or excluded as an authorized provider 
under the Active Duty Dependents Dental Plan based on a determination 
under another Federal or federally funded program is not a party to the 
OCHAMPUS action and may not appeal under this section
    (2) A sponsor or parent of a beneficiary under 18 years of age or 
guardian of an incompetent beneficiary is not a party to the initial 
determination and may not serve as the appealing party, although such 
persons may represent the appealing party in an appeal.
    (3) A third party other than the dental plan contractor, such as an 
insurance company, is not a party to the initial determination and is 
not entitled to appeal, even though it may have an indirect interest in 
the initial determination.
    (4) A nonparticipating provider is not a party to the initial 
determination and may not appeal.
    (B) Representative. Any party to the initial determination may 
appoint a representative to act on behalf of the party in connection 
with an appeal. Generally, the parent of a minor beneficiary and the 
legally appointed guardian of an incompetent beneficiary shall be 
presumed to have been appointed representative without specific 
designation by the beneficiary.
    (1) The representative shall have the same authority as the party to 
the appeal, and notice given to the representative shall constitute 
notice required to be given to the party under this part.
    (2) To avoid possible conflicts of interest, an officer or employee 
of the United States, such as an employee or member of a Uniformed 
Service, including an employee or staff member of a Uniformed Service 
legal office, or a OCHAMPUS advisor, subject to the exceptions in 18 
U.S.C. 205, is not eligible to serve as a representative. An exception 
usually is made for an employee or member of a Uniformed Service who 
represents an immediate family member. In addition, the Director, 
OCHAMPUS, or designee, may appoint an officer or employee of the United 
States as the OCHAMPUS representative at a hearing.

[[Page 246]]

    (iii) Burden of proof. The burden of proof is on the appealing party 
to establish affirmatively by substantial evidence the appealing party's 
entitlement under law and this part to the authorization of the Active 
Duty Dependents Dental Plan benefits or approval as an authorized 
provider. Any cost or fee associated with the production or submission 
of information in support of an appeal may not be paid by OCHAMPUS.
    (iv) Late filing. If a request for reconsideration, formal review, 
or hearing is filed after the time permitted in this section, written 
notice shall be issued denying the request. Late filing may be permitted 
only if the appealing party reasonably can demonstrate to the 
satisfaction of the dental plan contractor, or the Director, OCHAMPUS, 
or designee, that timely filing of the request was not feasible due to 
extraordinary circumstances over which the appealing party had no 
practical control. Each request for an exception to the filing 
requirement will be considered on its own merits.
    (v) Appealable issue. An appealable issue is required in order for 
an adverse determination to be appealed under the provisions of this 
section. Examples of issues that are not appealable under this chapter 
include:
    (A) A dispute regarding a requirement of the law or regulation.
    (B) The amount of the dental plan contractor-determined allowable 
charge since the methodology constitutes a limitation on benefits under 
the provisions of this part.
    (C) Certain other issues on the basis that the authority for the 
initial determination is not vested in OCHAMPUS. Such issues include but 
are not limited to the following examples:
    (1) Determination of a person's eligibility as an enrolled 
beneficiary in the Active Duty Dependents Dental Plan is the 
responsibility of the appropriate Uniformed Service. Although OCHAMPUS 
and the dental plan contractor must make determinations concerning a 
beneficiary's enrollment, ultimate responsibility for resolving a 
beneficiary's eligibility and enrollment rests with the Uniformed 
Services. Accordingly, a disputed question of fact concerning a 
beneficiary's enrollment or eligibility will not be considered an 
appealable issue under the provisions of this section, but shall be 
resolved in accordance with paragraph (c) of this section.
    (2) The decision to disqualify or exclude a provider because of a 
determination against that provider under another Federal or federally 
funded program is not an initial determination that is appealable under 
this part. The provider is limited to exhausting administrative appeal 
rights offered under the Federal or federally funded program that made 
the initial determination. However, a determination to disqualify or 
exclude a provider because of abuse or fraudulent practices or 
procedures under the Active Duty Dependents Dental Plan is an initial 
determination that is appealable under this part.
    (vi) Amount in dispute. An amount in dispute is required for an 
adverse determination to be appealed under the provisions of this 
section, except as set forth in the following:
    (A) The amount in dispute is calculated as the amount of money the 
dental plan contractor would pay if the services and supplies involved 
in dispute were determined to be authorized benefits of the Active Duty 
Dependents Dental Plan. Examples of amounts of money that are excluded 
by this part from payments for authorized benefits include, but are not 
limited to:
    (1) Amounts in excess of the dental plan contractor-determined 
allowable charge.
    (2) The beneficiary's cost-share amounts for restorative services.
    (3) Amounts that the beneficiary, or parent, guardian, or other 
responsible person has no legal obligation to pay.
    (B) There is no requirement for an amount in dispute when the 
appealable issue involves a denial of a provider's request for approval 
as an authorized provider or the determination to disqualify or exclude 
a provider as an authorized provider.
    (C) Individual claims may be combined to meet the required amount in 
dispute if all of the following exist:
    (1) The claims involve the same beneficiary.
    (2) The claims involve the same issue.

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    (3) At least one of the claims so combined has had a reconsideration 
decision issued by the dental plan contractor.
    Note: A request for administrative review under this appeal process 
which involves a dispute regarding a requirement of law or regulation 
(paragraph (h)(1)(v)(A) of this section) or does not involve a 
sufficient amount in dispute (paragraph (h)(1)(vi) of this section) may 
not be rejected at the reconsideration level of appeal. However, an 
appeal shall involve an appealable issue and sufficient amount in 
dispute under these subsections to be granted a formal review or 
hearing.
    (vii) Levels of appeal. The sequence and procedures of an Active 
Duty Dependents Dental Plan appeal are contained in the following:
    (A) Reconsideration by the dental plan contractor.
    (B) Formal review by OCHAMPUS.
    (C) Hearing.
    (2) Reconsideration. Any party to the initial determination made by 
the dental plan contractor may request a reconsideration.
    (i) Requesting a reconsideration--(A) Written request required. The 
request must be in writing, shall state the specific matter in dispute, 
and shall include a copy of the notice of initial determination made by 
the dental plan contractor, such as the explanation of benefits.
    (B) Where to file. The request shall be submitted to the dental plan 
contractor's office as designated in the notice of initial 
determination.
    (C) Allowed time to file. The request must be mailed within 90 days 
after the date of the notice of initial determination.
    (D) Official filing date. A request for a reconsideration shall be 
deemed filed on the date it is mailed and postmarked. If the request 
does not have a postmark, it shall be deemed filed on the date received 
by the dental plan contractor.
    (ii) The reconsideration process. The purpose of