[Federal Register Volume 78, Number 38 (Tuesday, February 26, 2013)]
[Rules and Regulations]
[Pages 12953-12955]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03416]



Office of the Secretary

32 CFR Part 199

[Docket ID: DOD-2011-HA-0035]
RIN 0720-AB49

TRICARE; TRICARE Sanction Authority for Third-Party Billing 

AGENCY: Office of the Secretary, Department of Defense.

ACTION: Final rule.


SUMMARY: This final rule will provide the Director, TRICARE Management 
Activity (TMA), or designee, with the authority to sanction third-party 
billing agents by invoking the administrative remedy of exclusion or 
suspension from the TRICARE program. Such sanctions may be invoked in 
situations involving fraud or abuse on the part of third-party billing 
agents that prepare or submit claims presented to TRICARE for payment.

DATES: Effective date: This rule is effective March 28, 2013.

FOR FURTHER INFORMATION CONTACT: Ms. Ann N. Fazzini, Medical Benefits 
and Reimbursement Branch, TMA, telephone, (303) 676-3803.


I. Executive Summary and Overview

A. Purpose of the Regulatory Action

    As stated in the proposed rule, TRICARE has regulatory authority 
under 32 Code of Federal Regulations (CFR) 199.9 to invoke sanctions in 
situations involving fraud or abuse on the part of providers of TRICARE 
services. A provider is defined in 32 CFR 199.2 as, ``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.'' Third-party billing agents do 
not meet the definition of a provider as stated in 32 CFR 199.2, nor do 
TRICARE regulations currently define third-party billing agents.
    Title 42 of the CFR subpart C--Exclusions at 42 CFR 402.200(b)(1) 
provides for the imposition of an exclusion from the Medicare and 
Medicaid programs (and, where applicable, other Federal health care 
programs) against persons that violate the provisions provided in Sec.  
402.1(e) (and further described in Sec.  402.1(c)). However, TRICARE 
had no independent regulatory authority to sanction or exclude third-
party billing agents. This final rule provides that authority.

B. Summary of Major Provisions

    This final rule establishes that such entities, when acting on 
behalf of a provider, are held to an equal standard in regard to 
accuracy and honesty when filing claims for services and supplies under 
the TRICARE program. As such, these entities should be subject to the 
same administrative controls applied to providers in ensuring that 
funds are disbursed appropriately. This rule will allow TRICARE to 
sanction third-party billing agents to prevent the payment of false or 
improper billings.

C. Summary of Costs and Benefits

    By expanding the scope of sanctioning authority to include third-
party billing agents, TRICARE costs are not anticipated to increase in 
this area. Rather, by expanding the sanctioning authority to include 
third-party billing agents in situations of fraud or abuse, the program 
is safeguarding benefit dollars from being expended for fraudulent or 
abusive charges. The anticipated result of this final rule is a savings 
benefit to the program.

II. Department of Defense Inspector General Report on TRICARE Controls 
Over Claims Prepared by Third-Party Billing Agents

    The Department of Defense, Office of Inspector General (DoD IG) 
initiated an audit in February 2008 to review TRICARE controls over 
claims submitted by third-party billing agents (Department of Defense 
Inspector General Report No. D-2009-037--``TRICARE Controls Over Claims 
Prepared by Third-Party Billing Agencies''). The DoD IG published a 
report on December 31, 2008. The report included a recommendation that 
the Director, TMA strengthen internal controls by initiating action to 
obtain statutory or regulatory authority to sanction billing agencies 
or any entities that prepare or submit improper health care claims to 
TRICARE contractors.

[[Page 12954]]

III. Review of Public Comments

    In the Federal Register of September 20, 2011, (76 FR 58202), the 
Office of the Secretary of Defense published for public comment a 
Proposed Rule regarding sanction authority for third-party billing 
    We received one comment on the proposed rule. The commenter 
recommended that the Code of Federal Regulations (CFR) rule be expanded 
to prohibit sanctioned providers or third party billing agents from 
pursing collection activities against patients in the event that 
sanctions are implemented. We appreciate this comment and note that 
there is presently policy and regulations that address this issue. By 
their very nature, third-party billing agents have a contractual 
relationship with the health care provider that requires them to file 
claims on behalf of the provider. This should normally require that the 
third-party billing agreement meet the claims filing requirements of 
the entity or agency that would be paying the claim. In the case of a 
DoD beneficiary, claims must be filed in accordance with the Code of 
Federal Regulations, including the requirements relating to the maximum 
allowable payments and any balance billing limitations. Additionally, 
TRICARE benefit payments are payable directly to the provider, not the 
third-party billing agent, as federal regulations prohibit the general 
assignment of claims. The agent has no independent right to payment 
from either TRICARE or the beneficiary.
    Per 32 CFR 199.9(h)(4)(i)(c), participating providers are 
considered to have forfeited or waived any right or entitlement to bill 
TRICARE beneficiaries for care involved in claims for services 
furnished on or after the effective date of the provider's exclusion or 
suspension. As a result, any third-party billing agent purporting to 
act on behalf of a sanctioned provider would also be prohibited from 
billing TRICARE beneficiaries on behalf of that provider. Additionally, 
if the proposed authority to sanction third-party billing agents is 
invoked, a suspended or excluded third-party billing agent would also 
be prohibited from submitting a claim to TRICARE on behalf of any 
authorized provider or to bill any TRICARE beneficiary directly. Any 
claim received from an excluded third-party billing agent would be 
returned to the provider with instructions to resubmit the claim 
directly or through another third-party billing agent. As long as the 
provider of services has not been sanctioned and remains an authorized 
TRICARE provider pursuant to the requirements in 32 CFR 199.6, the 
provider remains entitled to reimbursement for covered services. Under 
either of these scenarios, TRICARE beneficiaries should not be subject 
to collection actions.
    It is also important to note that the authority sought under the 
proposed rule to sanction third-party billing agents by invoking 
administrative remedies under 32 CFR 199.9 is in addition to, and not 
in lieu of, any other remedies or sanctions authorized by law or 
regulation, including potential criminal convictions and civil 
judgments for fraud and abuse.

IV. Regulatory Procedures

Executive Order 12866, ``Regulatory Planning and Review'' and Executive 
Order 13563, ``Improving Regulation and Regulatory Review''

    Sec. 801 of Title 5, United States Code (U.S.C.), and Executive 
Orders 12866 and 13563 require certain regulatory assessments and 
procedures for any major rule or significant regulatory action, defined 
as one that would result in an annual effect of $100 million or more on 
the national economy of which would have other substantial impacts. 
This final rule is not a significant regulatory action.

Public Law 104-4, Section 202, ``Unfunded Mandates Reform Act''

    Section 202 of Public Law 104-4, ``Unfunded Mandates Reform Act,'' 
requires that an analysis be performed to determine whether any Federal 
mandate may result in the expenditure by State, local and tribal 
governments, in the aggregate, or by the private sector of $100 million 
in any one year. It has been certified that this final rule does not 
contain a Federal mandate that may result in the expenditure by State, 
local and tribal governments, in aggregate, or by the private sector of 
$100 million or more in any one year, and thus this rule is not subject 
to this requirement.

Public Law 96-354, ``Regulatory Flexibility Act'' (RFA) (5 U.S.C. 601)

    Public Law 96-351, ``Regulatory Flexibility Act'' (RFA) (5 U.S.C. 
601), requires each Federal agency to prepare a regulatory flexibility 
analysis when the agency issues a regulation which would have a 
significant impact on a substantial number of small entities. This 
final rule is not an economically significant regulatory action, and it 
has been certified that it will not have a significant impact on a 
substantial number of small entities. Therefore, this final rule is not 
subject to the requirements of RFA.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    This final rule does not contain a ``collection of information'' 
requirement, and will not impose additional information collection 
requirement on the public under Public Law 96-511, ``Paperwork 
Reduction Act'' (44 U.S.C. Chapter 35).

Executive Order 13132, ``Federalism''

    E.O. 13132, ``Federalism,'' requires that an impact analysis be 
performed to determine whether the rule has federalism implications 
that would have substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. It has been certified that this final rule does not have 
federalism implications, as set forth in E.O. 13132.

List of Subjects in 32 CFR Part 199

    Claims, Dental health, Health care, Health insurance, Individuals 
with disabilities, Military personnel.

    Accordingly, DoD amends 32 CFR part 199 as follows:


1. The authority citation for part 199 continues to read as follows:

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

2. Section 199.2 is amended by adding in alphabetical order to 
paragraph (b), a definition of ``Third-party billing agent'' to read as 

Sec.  199.2  Definitions

* * * * *
    (b) * * *
    Third-party billing agent. Any entity that acts on behalf of a 
provider to prepare, submit and monitor claims, excluding those 
entities that act solely as a collection agency.
* * * * *

3. Section 199.9 is amended by adding paragraph (n) to read as follows:

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

* * * * *
    (n) Third-party billing agents as defined in Sec.  199.2(b) of this 
part, while not considered providers, are subject to the provisions of 
this section to the same extent as such provisions apply to providers.

[[Page 12955]]

    Dated: February 1, 2013.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2013-03416 Filed 2-25-13; 8:45 am]