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Proposed Rule2024-22584

Medical Billing for Healthcare Services Provided by Department of Defense Military Medical Treatment Facilities to Civilian Non-Beneficiaries

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Published

October 1, 2024

Effective

June 21, 2023

Issuing agencies

Defense Department

Abstract

As required by the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (NDAA-23), this document proposes to reduce financial harm to civilians who are not covered beneficiaries of the Military Health System (MHS), and who receive healthcare services at DoD military medical treatment facilities (MTF). The rulemaking, once finalized, will implement the MHS Modified Payment and Waiver Program (MPWP) through which the DoD will apply a sliding fee scale and/or a catastrophic fee waiver to medical invoices of certain non-beneficiaries and will accept payments from health insurers of non-beneficiaries as full payment except for copays, coinsurance, deductibles, nominal fees and non-covered services.

Full Text

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<title>Federal Register, Volume 89 Issue 190 (Tuesday, October 1, 2024)</title>
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[Federal Register Volume 89, Number 190 (Tuesday, October 1, 2024)]
[Proposed Rules]
[Pages 79804-79815]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-22584]

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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 220

[Docket ID: DoD-2022-HA-0054]
RIN 0720-AB87

Medical Billing for Healthcare Services Provided by Department of
Defense Military Medical Treatment Facilities to Civilian Non-
Beneficiaries

AGENCY: Defense Health Agency (DHA), Department of Defense (DoD).

ACTION: Proposed rule.

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SUMMARY: As required by the James M. Inhofe National Defense
Authorization Act for Fiscal Year 2023 (NDAA-23), this document
proposes to reduce financial harm to civilians who are not covered
beneficiaries of the Military Health System (MHS), and who receive
healthcare services at DoD military medical treatment facilities (MTF).
The rulemaking, once finalized, will implement the MHS Modified Payment
and Waiver Program (MPWP) through which the DoD will apply a sliding
fee scale and/or a catastrophic fee waiver to medical invoices of
certain non-beneficiaries and will accept payments from health insurers
of non-beneficiaries as full payment except for copays, coinsurance,
deductibles, nominal fees and non-covered services.

DATES: This rulemaking, once finalized, will apply to non-beneficiary
patient medical care provided on or after June 21, 2023. Comments to
this proposed rule are being accepted and must be received by December
2, 2024.

ADDRESSES: You may submit comments, identified by docket number and/or
Regulation Identifier Number (RIN) number and title, by any of the
following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments.
<bullet> Mail: Department of Defense, Office of the Assistant to
the Secretary of Defense for Privacy, Civil Liberties, and
Transparency, Regulatory Directorate, 4800 Mark Center Drive, Attn:
Mailbox 24, Suite 08D09, Alexandria, VA 22350-1700.
Instructions: All submissions received must include the agency name
and docket number or RIN. The general policy for comments is to make
these submissions available for public viewing at <a href="https://www.regulations.gov">https://www.regulations.gov</a> as they are received without change, including any
personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Ms. Merlyn Jenkins, phone number:
(703) 681-7346, mailing address: Office of the Secretary of Defense for
Health Affairs, Health Resources Management and Policy, 1200 Defense
Pentagon, Washington, DC 20301-1200; email address:
mailto:<a href="/cdn-cgi/l/email-protection#b2dfd7c0decbdc9cd8d7dcd9dbdcc19cd1dbc4f2dad7d3dec6da9cdfdbde"><span class="__cf_email__" data-cfemail="4e232b3c22372060242b202527203d602d27380e262b2f223a2660232722">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION: The NDAA-23 also grants the Director of DHA
discretionary authority to waive assessment of medical fees of non-
beneficiaries when the healthcare provided enhances the knowledge,
skills, and abilities (KSAs) of healthcare providers, as determined by
the Director of DHA. The DHA is proposing to implement the amendments
to 10 U.S.C. 1079b enacted through the NDAA-23. By statute (Pub. L.
117-263, div. A, title VII, Sec. 716(c), Dec. 23, 2022, 136 Stat.
2661), the sliding fee scale and/or catastrophic fee waivers apply to
bills for healthcare services provided at MTFs on or after June 21,
2023.

I. Background and Authority

Title 10, United States Code (U.S.C.), section 1073d requires the
Department of Defense (DoD) to maintain MTFs for the purposes of
supporting the medical readiness of the armed forces and the readiness
of deployable medical personnel. To maintain medical currency and
bolster the KSAs of DoD healthcare providers, the DoD renders
emergency, trauma, and other medical services to beneficiaries of the
MHS which consist of service members and former service members, and
their dependents. The MHS may provide healthcare services to other
individuals who are not eligible beneficiaries, in certain
circumstances, as authorized by law, and typically on a reimbursable
basis (Pub. L. 114-328, 717(c), Dec. 23, 2016, as amended (10 U.S.C.
1071 note); and Sec. 1074(c)).
Proposed rules implementing DoD's authority under 10 U.S.C. 1095
and related provisions of law to compute reasonable charges for
inpatient and ambulatory (outpatient) care provided by MTFs, including
charges for pharmaceuticals, durable medical equipment, supplies,
immunizations, injections, or other medications, are at 32 CFR part
220, last updated on August 20, 2020 (55 FR 21742-21750). Medical
billing is structured under three existing healthcare cost recovery
programs: Third Party Collections (10 U.S.C. 1095); Medical Services
Account (10 U.S.C. 1079b, 1085, and 1104); and Medical Affirmative
Claims (42 U.S.C. 2651-2653). The rates used for billing are modeled
after the rates published by

[[Page 79805]]

the Centers for Medicare & Medicaid Services. The rates are approved
annually by the Assistant Secretary of Defense for Health Affairs
(ASD(HA)) and published on the DoD Comptroller's website at <a href="https://comptroller.defense.gov/Financial-Management/Reports/rates2023/">https://comptroller.defense.gov/Financial-Management/Reports/rates2023/</a>. Funds
collected through the healthcare cost recovery programs are used to
enhance healthcare delivery at MTFs.
In carrying out the DoD's healthcare cost recovery programs,
charges and fees for care provided are assessed, as applicable, to
civilian non-beneficiary patients who receive treatment at MTFs. When
medical care is provided, such individuals become indebted to the
United States. The DoD has authority under the Debt Collection
Improvement Act of 1996 (DCIA) (Pub. L. 104-134) to compromise, or
terminate the collection of, claims involving monetary indebtedness to
the United States. The Federal Claims Collection Standards (FCCS)
promulgated at 31 CFR parts 900through 904, which implement the DCIA,
require that Federal agencies aggressively collect all debts arising
out of activities of that agency. Collection activities must be
undertaken promptly with follow-up action taken as necessary. Although
an individual's financial circumstances are considered in applying the
FCCS, the relevance of such information in determinations concerning
debt compromise or termination concerns the likelihood of repayment or
successful enforced collection within a reasonable period of time,
rather than the impact on or financial harm to an individual that is
consequential to being indebted. Accordingly, DoD MTFs have generated
medical claims and invoices for care to civilian non-beneficiaries
rendered within MTFs and have administered delinquent accounts
consistent with the FCCS.
Title 10 U.S.C. 1079b, as amended by section 716 of NDAA-23,
establishes financial harm to certain individual civilian non-
beneficiaries as a statutory factor used in setting the amount of fees
and charges assessed.

II. Problem Being Addressed Through This Rulemaking

Due to the high cost of healthcare in the United States and the
mandate for Federal agencies to aggressively pursue collection of debts
under FCCS, civilian non-beneficiaries who were provided emergency or
trauma healthcare services in DoD MTFs have experienced financial harm
after receiving substantial medical bills from MTFs. The DoD does not
have authority to forgive indebtedness for MTF charges outside of the
FCCS and has not had authority to discount charges and fees for medical
care, in contrast to for-profit and non-profit hospitals that offer
various financial assistance policies (FAPs). In consequence, Congress
wholly amended 10 U.S.C. 1079b via section 716 of NDAA-23. Section 716
directs DoD to apply a sliding fee and/or a catastrophic fee waiver
when assessing fees and charges to non-beneficiaries. For non-
beneficiaries with health insurance, Section 716 directs DoD to accept
payments from health insurers as full payment and to not balance bill
non-beneficiaries except for copays, coinsurance, deductibles, nominal
fees, and non-covered services. It also provides the Director of DHA
conditional, discretionary authority to waive the assessment of fees
that otherwise would be charged to non-beneficiaries when the
healthcare provided enhances the KSAs of healthcare providers, as
determined by the Director of DHA. The NDAA for FY 2017 (NDAA-17)
authorizes provision of such care on a reimbursable basis to civilians
who are not covered beneficiaries. Public Law 114-328, Sec. 717(c),
Dec. 23, 2016, as amended, 10 U.S.C. 1071 note.

III. Alternatives Considered

Section 716(c) of NDAA-23 mandates that DoD implement the
amendments to 10 U.S.C. 1079b within 180 days of enactment. With this
constrained timeline, the DoD undertook expedited research efforts to
ascertain whether private sector hospitals offered programs similar to
what the statute mandates and which might serve as a model for the DoD.
Research conducted indicated that while there is financial reporting of
charitable care and FAPs by non-Federal entities that provide medical
care, there is no single accessible and authoritative source which
outlines the content and structure of those programs. Programs vary
widely across the researched entities. The market research also
included a review of the rules pertaining to eligibility for Federal
and State programs such as Medicaid. The research provided a few
alternative models for consideration in establishing the MHS MPWP,
including:
<bullet> Alternative #1: Although charity care policies vary by
state, generally, for-profit and non-profit hospitals determine a
patient's eligibility for their FAPs by comparing the applicant's
annual household income against the Federal Poverty Guidelines (FPGs).
The FPGs are published annually by the Department of Health and Human
Services pursuant to 42 U.S.C. 9902(2). There are separate FPGs for the
contiguous 48 states and Washington DC, for Alaska, and for Hawaii. The
Census Bureau annually publishes FPG thresholds. The threshold is a
statistical calculation used to identify the number of people living in
poverty. There is no geographic variation; the same figures are used
for all 50 states and Washington DC. The Office of Management and
Budget (OMB) designates the Census Bureau poverty thresholds as the
Federal Government's official statistical definition of poverty. The
FPGs are also used by State and Federal agencies for determining an
individual's eligibility for programs such as Medicaid.
<bullet> Alternative #2: Both for-profit and non-profit hospitals
often offer discounted charges and fees on a sliding scale based upon
the patient's household income when compared to the FPGs.
Predominantly, discounts are offered to individuals whose household
income falls within the range of 125 percent to 400 percent of the
FPGs, with most hospitals offering discounts to patients whose income
is at or below 200 percent of the FPGs.
<bullet> Alternative #3: Most private sector hospitals do not offer
programs, additional to their needs-based FAPs for further waiver of
charges or fees, that are analogous to Sec. 1079b(c)(3)'s mandate for
a DoD catastrophic fee waiver program, but a few will limit a patient's
bill to a maximum percentage of the patient's household income (range
of 10 to 20 percent of monthly income). In addition, we examined the
maximum percentage that agencies generally can administratively garnish
from an individual's monthly income (generally 15 percent of monthly
income). See 31 U.S.C. 3720D(b)(1); 31 CFR 285.11.

IV. Recommended Proposed Policy

The three alternative models identified through market research
represent fair and reasonable approaches that could readily be adopted
for use in the administration of the MHS MPWP, with some modifications,
and without incurring significant costs to implement. This regulation's
proposed way forward is a combination of all three alternatives that
make up the recommended policy. Specifically:
<bullet> Alternative #1: Since 10 U.S.C. 1079b mandates the
application of a sliding scale and catastrophic fee waivers, the FPGs
will be used as the measure to determine a patient's eligibility for
these discounts. Alternative #2: The FPG range for eligibility for the
sliding scale discount set by the ASD(HA) will be published

[[Page 79806]]

annually on the DoD Comptroller's Reimbursement Rates website available
at <a href="https://comptroller.defense.gov/Financial-Management/Reports/rates2024/">https://comptroller.defense.gov/Financial-Management/Reports/rates2024/</a>. The ASD(HA) may revise the range, when appropriate, to
mitigate financial harm. Alternative #3: Eligibility for a catastrophic
fee waiver will be limited based on a maximum percentage of a patient's
monthly household income determined by the ASD(HA) and published
annually on the DoD Comptroller's Reimbursement Rates website. The
ASD(HA) may revise the percentage applied to household income, when
appropriate, to mitigate financial harm.
In summary, the DoD proposes to adopt and implement fair and
reasonable application of a sliding scale and catastrophic fee waivers
in accordance with precedent and market best practices. The FPGs will
be used as the definitive measure to determine a patient's eligibility
for discounts and waivers.
The FPG range of eligibility for the sliding scale discount will be
published annually on the DoD Comptroller's Reimbursement Rates
website, giving DoD maximum flexibility to mitigate financial harm.
The catastrophic percentage will be published annually on the DoD
Comptroller's Reimbursement Rates website, giving DoD maximum
flexibility to mitigate financial harm.

V. Other Applicable Authority

Section 717 of NDAA-17 conditionally authorizes DoD to evaluate and
treat civilian non-beneficiaries at MTFs if the evaluation and
treatment is necessary to maintain medical readiness skills and
competencies of healthcare providers. Section 717(c) mandates that DoD
bill such individuals for the costs of such healthcare services
provided. By amending 10 U.S.C. 1079b, section 716 of NDAA-23 has
provided discretionary authority to waive an individual's
responsibility to pay those statutorily mandated charges if the
provision of care enhances the KSAs of healthcare providers, as
determined by the DHA. If, under 10 U.S.C. 1079b(b), DoD elects to
waive charges it is otherwise statutorily required to collect from an
individual, any resulting discharge of indebtedness may need to be
reported to the Internal Revenue Service (IRS) in accordance with the
reporting requirements at 26 U.S.C. 6050P. DoD may also be required to
issue a Form 1099-C, ``Cancellation of Debt'' (OMB Control Number 1545-
1424), available at <a href="https://www.irs.gov/pub/irs-pdf/f1099c.pdf">https://www.irs.gov/pub/irs-pdf/f1099c.pdf</a>, to the
patient in accordance with the same reporting requirements. This
discharge of indebtedness could result in gross income being attributed
to the patient under 26 U.S.C. 61. Authority provided by Sec. 1079b(c)
to adjust or waive assessment of fees and charges for medical care will
be exercised by applying criteria applicable to civilian non-
beneficiaries, rather than by exercising discretion to discharge
indebtedness with respect to non-beneficiaries. Consequently, to reduce
avoidable gross income to a patient under 26 U.S.C. 61, DoD will
consider a waiver under 10 U.S.C. 1079b(b) of an individual's
responsibility to pay charges only after any sliding scale discounts
and catastrophic cap on charges have been applied.

VI. Summary of Current Billing and Collection Processes Involving Non-
Beneficaries

For non-beneficiary medical encounters occurring prior to June 21,
2023, an MTF processes a bill to either the patient, the patient's
third-party insurance, or to another guarantor. The current legal
framework to process non-beneficiary bills is established under 10
U.S.C. 1079b (Procedures for Charging Fees to Civilians). Collection of
medical debt resulting from medical bills is subject to the DCIA.
Title 10 U.S.C. 1079b directs the Secretary of Defense to implement
procedures by which a non-beneficiary will be billed. The ASD(HA)
publishes medical rates packages that are updated annually. The ASD(HA)
rates reflect the full cost to the Government of providing care to a
non-beneficiary patient; the rates generally reflect the same amounts
that DoD reimburses to civilian healthcare providers when care is
rendered outside of an MTF to a beneficiary patient, and they are also
the same rates that DoD uses to bill third-party health insurers (under
10 U.S.C. 1095) when a beneficiary patient receives care in an MTF.
A bill generated for care at an MTF must be paid in full, whether
by the patient, medical insurer, or other guarantor. The full amount is
pursued against the patient and/or the patient's guarantor. If the debt
is not paid within 180 days of the due date (or an installment plan due
date), the debt is transferred to the Cross-Servicing Program (``Cross-
Servicing'') of the Department of the Treasury, Bureau of the Fiscal
Service, for collection. Agencies may also refer eligible debts that
are less than 180 days delinquent to the Cross-Servicing program.
Under the current legal framework there is no authority to reduce
the amount of a debt owed by a patient who received care at an MTF.
There is an ability to compromise a balance that cannot be paid by the
non-beneficiary. However, the FCCS governing a compromise requires that
a debtor reasonably demonstrate the inability to pay the debt balance,
which entails evaluation of a debtor's current financial condition, and
obtaining a credit report or other financial information in order to
evaluate the debtor's assets, liabilities, income, and expenses.

VII. Changes With This Rulemaking

A. MHS Modified Payment and Waiver Program

Under title 10 U.S.C. 1079b, as amended by NDAA-23, the DoD is
required to apply a sliding scale and/or catastrophic fee waivers to
medical invoices generated by MTFs in certain instances. The statute
also gives the Director of DHA discretionary authority to waive charges
mandated by section 717 of NDAA-17, when the care provided enhances the
medical KSAs of MHS healthcare providers, as determined by the Director
of DHA. Consequently, the DoD proposes to implement Sec. 1079b
authorities with the objective of mitigating financial harm to civilian
non-beneficiaries. The MHS MPWP will be applied uniformly to all
civilian non-beneficiary patients who apply to the program. Applicable
discounts will be based only on household income and family size. All
patients will be eligible to apply for the MHS MPWP in order to
mitigate financial harm.
The MHS MPWP will involve a cascading, sequential process that
begins with collecting health insurance information from all patients.
For patients with health insurance, the patient must agree to allow DoD
to file medical claims on the patient's behalf. Patients with health
insurance who do not consent to allowing DoD to file insurance claims
on their behalf will not be eligible for the MHS MPWP. By allowing DoD
to file insurance claims on the patient's behalf, the DoD will be
assured that insurance remittances and Explanation of Benefits (EOB)
documents are properly sent to the DoD. This will enable the DoD to
adjust balances on the patient's account inclusive of the amount paid
by the insurance carrier, amounts disallowed, and amounts that are the
patient's responsibility as determined by the insurance carrier (i.e.,
copays, coinsurance, deductibles, nominal fees and non-covered
services). Once the patient's account is properly adjusted in
accordance with the EOB, the DoD will bill insured patients only for
portions of

[[Page 79807]]

the bill that are their responsibility. For patients without health
insurance, DoD will bill the patient.
Patients who are uninsured, underinsured and/or who have a
remaining balance for copay, coinsurance, deductible, nominal fee, or
non-covered services may apply to the MHS MPWP for application of the
sliding scale discounts and catastrophic fee waiver discounts.
Patients unable to pay the remaining balance after the application
of the sliding scale and catastrophic fee waiver may also apply for a
waiver of their medical fees under 10 U.S.C. 1079b(b), by submitting a
completed DD Form 3201-1, ``Request for Medical Debt Waiver, Military
Health System Modified Payment and Waiver Program'' (<a href="https://www.esd.whs.mil/Directives/forms/dd3000_3499/">https://www.esd.whs.mil/Directives/forms/dd3000_3499/</a>). Waivers may be approved
when--at the discretion of the DHA Director, the care rendered to the
patient enhanced the KSAs of the healthcare providers. KSAs are a set
of clinical skill requirements a provider needs in order to provide
medical care/treatment in the deployed environment. Additionally,
waivers will be used sparingly and generally only in instances where
severe financial harm cannot be reasonably mitigated through
application of discounts. Waivers may result in financial reporting to
the IRS and issuance of an IRS Form 1099-C to the patient. Generally,
waivers may be granted if: (a) The patient has completed a DD Form
2569, ``Third Party Collection Program/Medical Services Account/Other
Health Insurance'' (OMB Control Number 0720-0055), available at <a href="https://www.esd.whs.mil/Directives/forms/dd2500_2999/">https://www.esd.whs.mil/Directives/forms/dd2500_2999/</a>; (b) the patient has
submitted a completed application for the MHS MPWP via the DD Form 3201
and any and all appropriate discounts have been applied; (c) DHA
competent medical authority confirms in writing on the DD Form 3201-1
that the care provided to the patient enhanced the KSAs of the DoD
healthcare provider; and (d) the DHA determines that a waiver is
necessary to mitigate severe financial harm. If the above conditions
are met, the Director of DHA may exercise discretionary authority to
waive the medical invoice.

B. Collection of Health Insurance Information

All patients receiving healthcare services at a DoD MTF are asked
to complete a DD Form 2569 to collect health insurance information
along with the patients' consent for the DoD to file a claim on their
behalf. The form advises patients that their ``records may be disclosed
outside of DoD to healthcare clearinghouses, commercial insurance
providers, and other third parties in order to collect amounts owed to
the Department of Defense.''

C. Billing Insurance

For non-beneficiaries with health insurance who complete the DD
Form 2569, the DHA will bill the non-beneficiary's health insurance and
accept remittances. When payment or an EOB is received from the
insurance company, the DoD will not bill the patient except for copays,
coinsurance, deductibles, nominal fees, and amounts for non-covered
services. The DoD will suspend collection against the patient for up to
120 days to allow the patient's insurance to process the claim. The DoD
will not bill the patient until a determination on payment and/or an
EOB is received from the insurance company, or 120 days has lapsed,
whichever comes first. If the DoD receives an insurance remittance
after 120 days have elapsed, the DoD will deposit the check, adjust the
patient's account in accordance with the EOB, and issue the patient a
refund for overpayments, if any have been received. The DoD will ensure
that medical invoices sent to the patient reflect information about the
MHS MPWP, including instructions for applying to the program.

D. Delinquent Accounts

Delinquent accounts will be processed in accordance with the DCIA
as implemented by the FCCS.

E. Applications for MHS MPWP Received for Delinquent Accounts
Transferred to the Department of the Treasury

Individuals may still submit an application for the MHS MPWP even
if their account has been transferred to Cross-Servicing; however, any
reductions to the medical invoice from the MPWP may be subject to
interest, penalties, and costs. For patients who apply and are eligible
for a reduction under the MHS MPWP, the DoD will recall the debt from
Cross-Servicing. For patients who apply and are ineligible for a
reduction under the MHS MPWP, the debt will remain at Cross-Servicing.
Patients may request reconsideration for the MHS MPWP when their
financial circumstances appear to have significantly changed.

F. Income Verification and Collection of Income Information

Required MHS MPWP application documentation. Patients who desire to
apply for the MHS MPWP must do so by completing a DD Form 3201,
``Application for Military Health System Modified Payment and Waiver
Program'' (OMB Control Number PENDING), available at <a href="https://www.esd.whs.mil/Directives/forms/dd3000_3499/">https://www.esd.whs.mil/Directives/forms/dd3000_3499/</a>, and submitting the
requisite documents. All DoD patient invoices will include a
description of the documents that patients must submit together with DD
Form 3201 in order to demonstrate their eligibility for the MHS MPWP.
To demonstrate eligibility for a sliding fee/catastrophic fee waiver,
the patient must first complete a DD Form 2569 (even in cases where the
patient possesses no health insurance). Patients must also attach a
copy of their most recent filed Federal income tax return and the
patient's (or guarantor's if the patient is a minor) last two pay
stubs. Patients who did not file a Federal income tax return for the
preceding year, must certify that they did not file an income tax
return on the DD Form 3201. Additionally, when the patient has no
verifiable income, the patient must provide a certification to that
effect on the DD Form 3201. The last two pay stubs or disability check
stubs may be used if no Federal income tax return is provided in
conjunction with the patient's certification of annual income on the DD
Form 3201 to determine the patient's income. Finally, when the patient
has certified to having no verifiable income and has neither a tax
return nor pay stubs, other information may be used to validate the
patient's lack of income including, but not limited to, the last two
bank statements (savings and checking), or a Social Security benefits
letter.
For patients with health insurance, the patient must agree to allow
DoD to file medical claims on the patient's behalf.

G. Application for MHS MPWP Discounts and Waivers

Consideration for sliding scale and catastrophic fee waiver
requires evaluation of the patient's household income. To receive
consideration for the sliding fee discount or catastrophic fee waiver,
or to be considered for a full waiver of fees under 10 U.S.C. 1079b(b),
the patient must apply to the MHS MPWP after receiving the MTF medical
invoice by completing and submitting the DD Form 3201 (OMB Control
Number PENDING). Applications can be made by: (1) patients with a
remaining balance after insurance has been billed by the DoD and the
insurance remittance and/or EOB has been received by the DoD; (2) by
patients without insurance who have a balance; and (3) by patients with
a remaining balance after recovery from tortfeasors is

[[Page 79808]]

made. Application instructions will be printed on the DoD invoice.
Applicants to the MHS MPWP will be notified of the status of their
application via the following methods: (1) For approved applications,
the DoD will issue to the patient a modified medical invoice reflecting
the balance due after applying the sliding fee and/or catastrophic fee
waiver; (2) for disapproved applications, the DoD will issue a letter
reflecting the reason why the application was disapproved. The letter
will inform the patient of the right to reapply should the patient's
financial circumstances change.

H. Sliding Fee Discount

Applicants to the MHS MPWP will first be considered for a sliding
fee discount, and then for a catastrophic fee waiver. The threshold for
the sliding fee discount will be set to a 100 percent medical bill
discount and no nominal fee for applicants whose annual household
income is at or below 100 percent of the applicable year's FPGs; and a
100 percent medical bill discount plus a stratified nominal fee for
applicants whose annual household income is greater than 100 percent
and up to 400 percent of the applicable year's FPGs. The ASD(HA) may
periodically adjust the threshold limits by issuing policy to be
published on the DoD Reimbursement Rates website (<a href="https://comptroller.defense.gov/Financial-Management/Reports/">https://comptroller.defense.gov/Financial-Management/Reports/</a>). Stratified
nominal fees are generally established in a manner that is equitable
with what military retirees enrolled in the TRICARE program would be
required to pay in the private sector for comparable services. The
ASD(HA) will annually set the stratified nominal fees for outpatient
and inpatient care and may periodically adjust the nominal fee by
issuing policy to be published on the DoD Reimbursement Rates website
(available at <a href="https://comptroller.defense.gov/Financial-Management/Reports/">https://comptroller.defense.gov/Financial-Management/Reports/</a>). The initial nominal stratified fees are as follows:

------------------------------------------------------------------------
Household income falls within the below
federal poverty guidelines (%) Inpatient fee Outpatient fee
------------------------------------------------------------------------
0-100................................... $0 $0
101-120................................. 750 50
121-140................................. 1,250 50
141-160................................. 2,000 50
161-180................................. 3,000 50
181-200................................. 4,000 50
201-220................................. 5,000 50
221-240................................. 6,000 50
241-260................................. 7,000 50
261-280................................. 8,000 50
281-300................................. 9,000 50
301-320................................. 10,000 50
321-340................................. 11,000 50
341-360................................. 12,000 50
361-380................................. 13,000 50
381-400................................. 14,000 50
------------------------------------------------------------------------

Applicants with annual household income of greater than 400 percent
of the applicable year's FPGs will not be eligible for a sliding fee
discount but may be eligible for a catastrophic fee waiver.

I. Catastrophic Fee Waiver

The catastrophic fee waiver is based on a formula for adjusting the
medical invoice over a 36-month period. The catastrophic fee waiver
consists of limiting the patient's medical bill to a maximum percentage
of the patient's monthly household income multiplied by 36 months and
waiving fees associated with the balance of the medical bill that
exceeds the calculation. If the calculation yields an amount greater
than the original medical bill, then the catastrophic fee waiver will
not be applicable. The maximum percentage will be set to 5 percent of
the patient's monthly household income multiplied by 36 months. The
ASD(HA) will annually set the catastrophic fee waiver percentage and
may periodically adjust the percentage by issuing policy to be
published on the DoD Reimbursement Rates website.

J. Collection in Installments

As part of the implementation of the sliding fee and catastrophic
fee waiver protections to prevent severe financial harm, patients
eligible for the MHS MPWP may have amounts collected in installments
for a term not to exceed 72 months. Additionally, patients may request
to pay their balance by lump sum. The minimum amount that may be paid
by installment per month is $25.

K. Alternative Authority for Waiver of Medical Fees Based on KSA
Enhancement

In accordance with 10 U.S.C. 1079b(b), the Director of DHA may
issue a full waiver of fees for care provided to civilian non-
beneficiaries if determined by the Director of DHA to be appropriate.
Accordingly, consideration of a waiver of medical fees will occur on a
case-by-case basis and only after application for the MHS MPWP has
occurred. A waiver under 10 U.S.C. 1079b(b) of $600 or more will result
in reporting to the IRS and issuance of a Form 1099-C to the non-
beneficiary for the amount waived. Waivers under 10 U.S.C. 1079b(b)
shall be used sparingly and only when the Director of DHA determines
that the MHS MPWP did not sufficiently mitigate severe financial harm
and receives certification from competent medical authority that the
care provided to the patient enhanced the KSAs of the treating
healthcare provider(s). All patient invoices will include a statement
that the patient may apply for a waiver based on 10 U.S.C. 1079b(b) and
32 CFR 220.12(n) and include information on how to submit a waiver
request.

L. Applicability of the MHS MPWP to Tortfeasors and Third-Party Payers

No discount or waiver of fees under 10 U.S.C. 1079b shall be
interpreted to be applicable to tortfeasors under the Federal Medical
Care Recovery Act (FMCRA), 42 U.S.C. 2651 or to third-party payers
under 10 U.S.C. 1095. Patients treated at DoD MTFs are responsible to
identify on the DD Form 3201 whether their injury/disease was caused by
a third party. To be eligible to obtain any discounts or waivers

[[Page 79809]]

under the MHS MPWP, the patient must consent and agree to cooperate
with the United States to recover the cost of care against any liable
tortfeasor or insurance under the FMCRA. Patients who have a remaining
balance after recoveries from third-party tortfeasors or their
insurers, may apply for relief of any remaining medical debt or may be
refunded amounts already paid toward their medical debt if no balance
is owed.

VIII. Expected Impact of This Rulemaking

DoD anticipates that section 716 of the NDAA-23 will substantially
mitigate serious financial harm to non-beneficiaries through
application of a sliding fee and/or a catastrophic fee waiver to
medical invoices generated by MTFs. DoD anticipates that the Director
of DHA's discretionary authority to waive fees for non-beneficiaries
will also contribute to reducing severe financial harm.
The anticipated costs for the MHS MPWP include only the time
required for a patient's application to be completed (see Paperwork
Reduction Act section of this preamble) and reviewed. This includes
time required for civilian non-beneficiary patients to complete the
associated DD Form 3201 declaring their income, DoD to receive and
assess the application, followed by the determination of the
eligibility for a sliding scale discount, catastrophic fee waiver, or
waiver under 10 U.S.C. 1079b(b) by the Director of DHA, and the
response time for the decision. The total estimated time is less than
90 days. In addition, costs may be incurred for patients who desire to
apply for a waiver of their medical debt (via a DD Form 3201-1) after
they have been approved for the MHS MPWP.
(1) Government Burden Related to the DD Form 3201, ``Application
for Military Health System Modified Payment and Waiver Program'':

Table A--Government Burden Related to the DD Form 3201, ``Application
for Military Health System Modified Payment and Waiver Program''
------------------------------------------------------------------------
Part A: Labor cost to the Federal Part B: Operational and
government maintenance costs
------------------------------------------------------------------------
(1) Collection Instrument: DD Form 3201 (1) Cost Categories.
(a) Number of Total Annual Responses: (a) Equipment: $0.
2,160.
(b) Processing Time for each Response: (b) Printing: $0.15/printing
10 minutes. adjusted medical bills * 2,160
= $324.
(c) Hourly Wage of Worker(s) Processing (c) Postage: $0.66 * 2,160 =
Responses: $17.28. $1,425.60.
(d) Cost to Process Each Response: (d) Software Purchases: $0.
$2.88.
(e) Total Cost to Process Responses: (e) Licensing Costs: $0.
$6,220.80.
(2) Overall Labor Burden to the Federal (f) Other (Envelope): $0.24 *
Government. 2,160 = $518.40.
(a) Total Number of Annual Responses: (2) Total Operational and
2,160. Maintenance Cost: $2,268.00.
(b) Total Labor Burden: $6,220.80......
------------------------------------------------------------------------
Source: 2023 GS Pay Scale at GS-06, Step 1 (<a href="https://federaljobs.net/salarybase/#Base_Rate_Chart">https://federaljobs.net/salarybase/#Base_Rate_Chart</a>).
Source: Printing page cost (<a href="https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-N/part-286/subpart-E/section-286.12">https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-N/part-286/subpart-E/section-286.12</a>).
Postage costs: United States Postal Service, <a href="https://store.usps.com/store/results/shipping-supplies/_/N-7d0v8v#content">https://store.usps.com/store/results/shipping-supplies/_/N-7d0v8v#content</a>.
------------------------------------------------------------------------
Part C: Total cost to the Federal government
------------------------------------------------------------------------
(1) Total Labor Cost to the Federal Government: $6,220.80.
(2) Total Operational and Maintenance Costs: $2,268.00.
(3) Total Cost to the Federal Government: $8,488.80.
------------------------------------------------------------------------

(2) Government Burden Related to the DD Form 3201-1, ``Request for
a Medical Debt Waiver, Military Health System Modified Payment and
Waiver Program'':

Table B--Government Burden Related to the DD Form 3201-1, ``Request for
a Medical Debt Waiver, Military Health System Modified Payment and
Waiver Program''
------------------------------------------------------------------------
Part A: Labor cost to the Federal Part B: Operational and
government maintenance costs
------------------------------------------------------------------------
(1) Collection Instrument: DD Form 3201- (1) Cost Categories.
1.
(a) Number of Total Annual Responses: (a) Equipment: $0.
1,080.
(b) Processing Time per Response: 4 (b) Printing: $0.15/printing
minutes. adjusted medical bills * 1,080
= $162.
(c) Hourly Wage of Worker(s) Processing (c) Postage: $0.66 * 1,080 =
Responses: $17.28. $712.80.
(d) Cost to Process Each Response: (d) Software Purchases: $0.
$1.15.
(e) Total Cost to Process Responses: (e) Licensing Costs: $0.
$1,244.16.
(2) Overall Labor Burden to the Federal (f) Other (Envelope): $0.24 *
Government. 1,080 = $259.20.
(a) Total Number of Annual Responses: (2) Total Operational and
1,080. Maintenance Cost: $1,134.00.
(b) Total Labor Burden: $1244.16.......
------------------------------------------------------------------------
Source: 2023 GS Pay Scale at GS-06, Step 1 (<a href="https://federaljobs.net/salarybase/#Base_Rate_Chart">https://federaljobs.net/salarybase/#Base_Rate_Chart</a>).
------------------------------------------------------------------------
Part C: Total cost to the Federal government
------------------------------------------------------------------------
(1) Total Labor Cost to the Federal Government: $1,244.16.
(2) Total Operational and Maintenance Costs: $1,134.00.
(3) Total Cost to the Federal Government: $2,378.16.
------------------------------------------------------------------------

[[Page 79810]]

IX. Regulatory Compliance Analysis

A. Executive Order 12866, ``Regulatory Planning and Review,'' as
Amended by Executive Order 14094, ``Modernizing Regulatory Review'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review''

Executive Order 12866, as amended by 14094 (88 FR 21879, April 11,
2023), and Executive Order 13563 direct agencies to assess all costs,
benefits and available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health, safety
effects, distributive impacts, and equity). These Executive Orders
emphasize the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This proposed rule has been designated significant, under section 3(f)
of Executive Order 12866, as amended by Executive Order 14094.

B. Public Law 118-15, Div. B, Title III, ``Administrative Pay-As-You-Go
Act of 2023''

Per the Administrative Pay-As-You-Go Act of 2023 (Fiscal
Responsibility Act of 2023 (Pub. L. 118-5, div. B, title III)),
agencies are required to submit certain information regarding the
direct spending effects of their rules to OMB. Accordingly, the DoD
does not anticipate an increase to direct spending, i.e., mandatory net
outlays, stemming from the implementation of this proposed rule. This
proposed rule affects only DoD's annually appropriated (discretionary)
salaries and expenses resources and does not affect direct spending.
Healthcare services provided by MTFs are funded by discretionary
appropriations. Generally, when MTFs render healthcare services to non-
beneficiaries of the Department of Defense, such as those that will be
covered by implementation of this proposed rule, the care is provided
on a reimbursable basis. On average from 2019-2020, MTFs generated
$235.6 million annually in medical bills for healthcare services
rendered to non-beneficiaries. Of that amount, an average of 29 percent
is reimbursed by the third-party health insurance plans of insured
patients, while another 30 percent is written off in accordance with
agreed upon terms of coverage. An average of 6 percent is collected
from uninsured patients and those who are insured but have remaining
coinsurance and co-pays; and an average of 35 percent is transferred to
the Department of the Treasury for collection actions due to an
individual's unresponsiveness to due process billing activity. Of the
35 percent transferred to the Treasury, many are undocumented
individuals without Social Security Numbers. The Treasury has
historically recovered approximately 1 percent of the amount
transferred by MTFs. All amounts recovered are deposited to the
discretionary appropriation that funds MTF operations.

Table D--Historical Activity
[FY 2019-2020]
------------------------------------------------------------------------
Percent
------------------------------------------------------------------------
Average Non-beneficiary Healthcare $235,618,719
Billed by MTFs Annually................
Average Paid by Third-Party Insurance... 68,473,042 29
Insurance Write-off..................... 70,685,616 30
Average Paid by Patients................ 13,160,172 6
Transferred to Treasury................. 82,621,796 35
Collected by Treasury................... 2,478,654 1
------------------------------------------------------------------------

Uninsured non-beneficiary patients and those who are insured but
have high coinsurance and co-pays will benefit most from implementation
of this proposed rule. Of these uninsured and underinsured, we estimate
a minimum of 50 percent will be eligible for a 100 percent discount of
their MTF medical bill. From Calendar Years (CY) 2018 through 2021, the
average inpatient medical bill for this patient population was $47,009;
and the average outpatient medical bill was $150. In Bexar County,
Texas, where most of these costs were incurred (i.e., Brooke Army
Medical Center in San Antonio, Texas), the median household income is
$67,275 (per the 2020 U.S. Census Bureau) and the same source reports
cite that the average number of persons living in each household in
Bexar County is 2.71. Consequently, we estimate that this patient
population will significantly benefit from this program. For example,
using the 2020 U.S. Census Bureau data for Bexar County and the average
inpatient and outpatient medical bill amounts for CYs 2018-2021,
applying the MHS MPWP discounts would yield a reduction of 83 percent
to the average inpatient medical bill (decreasing it from $47,009 to
$8,000) and a 67 percent reduction to the average outpatient medical
bill (decreasing it from $150 to $50).

----------------------------------------------------------------------------------------------------------------
Average MHS MPWP
CY 2018-2021 medical bill discount % Discount New bill
----------------------------------------------------------------------------------------------------------------
Inpatient....................................... $47,009 $39,009 83 $8,000
Outpatient...................................... 150 100 67 50
----------------------------------------------------------------------------------------------------------------
Notes: Based on 2020 U.S. Census Bureau data for Bexar County, Texas, where median household income is $67,275
and the average number of persons living in each household is 2.71.

With the implementation of the MHS MPWP, we anticipate the
percentage of cases being transferred to the Treasury for collection
activity, and the average amounts paid for by uninsured and
underinsured patients, being substantially decreased. While this may
cause an increase in discretionary spending of the Defense Health
Program appropriation; it will not cause an increase in mandatory net
outlays (direct spending). The Administrative Pay-As-You-Go Act of 2023
is available at <a href="https://www.whitehouse.gov/wp-content/uploads/2023/09/M-23-21-Admin-PAYGO-Guidance.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/09/M-23-21-Admin-PAYGO-Guidance.pdf</a>.

[[Page 79811]]

C. Congressional Review Act (5 U.S.C. 801 et seq.)

Pursuant to Subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996 (also known as the Congressional Review Act),
OMB's Office of Information and Regulatory Affairs has determined that
this proposed rule does not meet the criteria set forth in 5 U.S.C.
804(2).

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

The ASD(HA) certified that this proposed rule is not subject to the
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if
promulgated, have a significant economic impact on a substantial number
of small entities. The Regulatory Flexibility Act aims at taking into
account the impact of regulations on small businesses, small
organizations, small governmental jurisdictions, and small entities.
More specifically, the law states ``. . . agencies shall endeavor . . .
to fit regulatory and informational requirements to the scale of the
business, organizations, and governmental jurisdictions subject to
regulation.'' (Pub. L. 96-354, September 19, 1980; section 2 (b)) The
proposed amendments to 32 CFR part 220 do not impact the small entities
referenced in this paragraph. Therefore, the Regulatory Flexibility
Act, as amended, does not require us to prepare a regulatory
flexibility analysis.

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

Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1532) requires agencies to assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2024, that
threshold is approximately $183 million. This proposed rule will not
mandate any requirements for State, local, or tribal governments, and
will not affect private sector costs. An unfunded mandate occurs when a
State, local, or tribal government must perform certain actions or
offer certain programs but does not receive any Federal funds to make
it happen. The Federal Government passes legislation requiring the
program, but the law does not include any funding. This proposed rule
will only affect a very narrow category of the public and it will not
impact State, local, or tribal governments. Additionally, it will not
affect private sector costs as all proposed actions would be completed
by Federal agencies.

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

It has been determined that this proposed rule contains information
collection requirements. DoD has submitted the following proposal to
OMB under the provisions of the Paperwork Reduction Act (44 U.S.C.
chapter 35). Comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of DoD, including whether the information will have
practical utility; (b) the accuracy of the estimate of the burden of
the proposed information collection; (c) ways to enhance the quality,
utility, and clarity of the information to be collected; and (d) ways
to minimize the burden of the information collection on respondents,
including the use of automated collection techniques or other forms of
information technology.
(1) Respondent Burden Related to DD Form 3201, ``Application for
Military Health System Modified Payment and Waiver Program.'' This is a
new collection. Using the information collected on the form, DoD
medical billing offices will determine whether the patient is eligible
for the medical discount/waiver program. If the patient is eligible,
the billing office will generate an adjusted medical bill and send it
to the patient. If the patient is not eligible, the billing office will
send written correspondence to the patient, informing them that they
are not eligible for the discount program and of their right to reapply
should their financial circumstances change. Processing of the
application will be annotated on the last page of the application. The
application will be filed in the billing office's official records.

------------------------------------------------------------------------
Part A: Estimation of Part B: Labor cost of
respondent burden respondent burden
------------------------------------------------------------------------
(1)...... Collection Instrument: (1)...... Collection Instrument:
DD Form 3201. DD Form 3201.
(a)...... Number of Respondents: (a)...... Number of Total Annual
2,160. Responses: 2,160.
(b)...... Number of Responses Per (b)...... Response Time: 4
Respondent: 1. minutes.
(c)...... Number of Total Annual (c)...... Respondent Hourly Wage:
Responses: 2,160. $33.58.*
(d)...... Response Time: 4 minutes (d)...... Labor Burden per
Response: $2.24.
(e)...... Respondent Burden Hours: (e)...... Total Labor Burden:
144 hours. $4,835.52.
(2)...... Total Submission Burden. (2)...... Overall Labor Burden.
(a)...... Total Number of (a)...... Total Number of Annual
Respondents: 2,160. Reponses: 2,160.
(b)...... Total Number of Annual (b)...... Total Labor Burden:
Responses: 2,160. $4,835.52.
(c)...... Total Respondent Burden
Hours: 144 hours.
------------------------------------------------------------------------
Approximately 8,000 civilian non-beneficiary patients are treated at DoD
MTFs annually. The U.S. Census Bureau estimates that 27 percent of
Americans are uninsured. Based on that estimate, we anticipate that
2,160 (or 27 percent of 8,000) patients will not have insurance and
may face serious financial harm stemming from MTF medical bills. We
anticipate that those uninsured individuals will apply for the MHS
MPWP each year.
* Source: <a href="http://www.bls.gov/web/empsit/ceseesummary.htm">http://www.bls.gov/web/empsit/ceseesummary.htm</a> (Bureau of
Labor Statistics national average hourly wage for all employees June
2023)

(2) Respondent Burden Related to DD Form 3201-1, ``Request for
Waiver of Medical Debt, Military Health System Modified Payment and
Waiver Program''. This is a new collection. The 10 U.S.C. 1079b statute
grants the Director of the Defense Health Agency discretionary
authority to grant waivers to medical bills in certain instances.
Accordingly, the DD Form 3201-1 may be used by non-beneficiary patients
to apply for a waiver. For patients who are approved for waivers (not
discounts) under the Director of the Defense Health Agency's
discretionary authority, the waived amount, along with the patient's
SSN and address, will be relayed to the IRS.

[[Page 79812]]

(b)............... Number of Responses (b)... Response Time: 4
Per Respondent: 1. minutes.
(c)............... Number of Total (c)... Respondent Hourly
Annual Responses: Wage: $33.58.
1,080.
(d)............... Response Time: 4 (d)... Labor Burden per
minutes. Response: $2.24.
(e)............... Respondent Burden (e)... Total Labor Burden:
Hours: 72 hours. $2,417.76.
(2)............... Total Submission (2)... Overall Labor Burden.
Burden.
(a)............... Total Number of (a)... Total Number of
Respondents: 1,080. Annual Reponses:
1,080.
(b)............... Total Number of (b)... Total Labor Burden:
Annual Responses: $2,417.76.
1,080.
(c)............... Total Respondent
Burden Hours: 72
hours.
------------------------------------------------------------------------
Of the 2,160 anticipated applicants to the program, we anticipate that
most will receive a substantially discounted medical bill. However,
this estimate is prepared with a worst-case scenario in which half of
the applicants desire to apply for a waiver.

Written comments and recommendations on the proposed information
collection should be sent to Mr. Matt Eliseo at the Office of
Management and Budget, DoD Desk Officer, Room 10102, New Executive
Office Building, Washington, DC 20503, with a copy to Ms. Merlyn
Jenkins at the Office of the Secretary of Defense for Health Affairs,
Health Resources Management and Policy, 1200 Defense Pentagon,
Washington, DC 20301-1200. Comments can be received from 30 to 60 days
after the date of this notice, but comments to OMB will be most useful
if received by OMB within 30 days after the date of this notice.
You may also submit comments identified by docket number and title
through the Federal eRulemaking Portal at <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
Follow the instructions for submitting comments.
All submissions received must include the agency name, docket number
and title for this Federal Register document. The general policy for
comments and other submissions from members of the public is to make
these submissions available for public viewing on the internet at
<a href="http://www.regulations.gov">http://www.regulations.gov</a> as they are received without change,
including any personal identifiers or contact information.
To request more information on this proposed information collection
or to obtain a copy of the proposal and associated collection
instruments, please write to Ms. Merlyn Jenkins at the Office of the
Secretary of Defense for Health Affairs, Health Resources Management
and Policy, 1200 Defense Pentagon, Washington, DC 20301-1200, (703)
681-7346.

G. Executive Order 13132, ``Federalism''

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a rule that imposes substantial
direct requirement costs on State and local governments, preempts state
law, or otherwise has federalism implications. This proposed rule will
not have a substantial effect on State and local governments.

H. Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments''

Executive Order 13175 establishes certain requirements that an
agency must meet when it promulgates a rule that imposes substantial
direct compliance costs on one or more Indian tribes, preempts tribal
law, or effects the distribution of power and responsibilities between
the Federal Government and Indian tribes. This proposed rule will not
have a substantial effect on Indian tribal governments.

List of Subjects in 32 CFR Part 220

Accounts receivable, Civilian medical debt, Claims, Healthcare,
Health insurance, Medical billing, Medical debt, Medical debt waiver,
Military medical treatment facilities, Military personnel, and Third
party collections.
Accordingly, the DoD proposes to amend 32 CFR part 220 to read as
follows:

PART 220--MEDICAL BILLING FOR HEALTHCARE SERVICES PROVIDED BY
DEPARTMENT OF DEFENSE MILITARY MEDICAL TREATMENT FACILITIES TO
CIVILIAN NON-BENEFICIARIES

0
1. The authority citation for part 220 is revised to read as follows:

Authority: 5 U.S.C. 301; 10 U.S.C. 1095, 1097b(b), 1079b; 31
U.S.C. 3711, 3717; and 42 U.S.C. 2651.
0
2. The part heading is revised to read as set forth above.
0
3. Add Sec. 220.12 to reads as follows:

Sec. 220.12 Medical billing for healthcare services provided by DoD
Military Medical Treatment Facilities to civilian non-beneficiaries.

(a) Applicability. (1) This section applies to all persons who
receive reimbursable care in a military medical treatment facility
(MTF) who are not covered beneficiaries of the Department of Defense
(DoD) as defined in Sec. 220.14, other than persons who receive care
in an MTF pursuant to an agreement between the United States and a
foreign government or other entity.
(2) This section does not apply to third persons (or their
insurers) with a tort liability under the Federal Medical Care Recovery
Act (FMCRA) (42 U.S.C. 2651) or third-party payers under 10 U.S.C.
1095. The discounts and waivers implemented by this section may not be
used to reduce the value of the care and treatment that is recoverable
from those third persons (or their insurers) under the FMCRA or 10
U.S.C. 1095.
(b) Definitions. (1) Military Health System (MHS) Modified Payment
and Waiver Program (MPWP). The MHS MPWP is a DoD program to implement
an enacted Fiscal Year 2023 National Defense Authorization Act (2023-
NDAA) amendment to section 1079b of title 10, United States Code
(U.S.C.). Section 716 of the 2023-NDAA amended 10 U.S.C. 1079b to
require, inter alia, the Director of the Defense Health Agency to
reduce fees that would otherwise be charged to civilian non-
beneficiaries for medical care according to a sliding scale and to
implement a catastrophic fee waiver to prevent severe financial harm.
It also granted the Director of the Defense Health Agency with
discretionary authority to issue waivers of fees for medical care if
the provision of such care enhances the knowledge, skills, and
abilities of healthcare providers.
(2) Covered payer. A third-party payer or other insurance, medical
service, or health plan.
(3) Covered by a covered payer. A medical item or service is deemed
to be covered by a covered payer when:
(i) The patient possesses health insurance that is in effect on the
date(s) that the item or service was provided;
(ii) The health insurance plan provides coverage for the geographic
area where the care was delivered;
(iii) The care provided to the patient is an item or service
covered by the terms of the insurance plan, and;
(iv) The health insurance plan provides coverage for care rendered
in a U.S. Government/DoD facility;

[[Page 79813]]

(v) The insurer agrees to pay the facility directly;
(vi) The insurer agrees to provide the facility with an Explanation
of Benefits (EOB) that details how the insurer processed the claims
according to the insurance plan; and
(vii) The patient authorizes the DoD to file insurance claims
against the insurance policy.
(4) Non-covered item or service. A medical item or service that is
not covered by the terms of the insurance plan.
(5) Third-party payer and insurance, medical service, or health
plan have the meaning given those terms in 10 U.S.C. 1095(h).
(6) Knowledge, skills, and abilities (KSAs). KSAs are a set of
clinical skill requirements that a healthcare provider needs in order
to provide medical care or treatment in the deployed environment.
(7) Reasonable value of medical care. Reasonable value of medical
care is defined in Sec. 220.8. The reasonable value of medical care is
based on the amount billed by the MTF before application of any sliding
scale discount, catastrophic fee waiver discount, or other discount or
waiver under this section.
(c) Notifications concerning MHS MPWP. The Assistant Secretary of
Defense for Health Affairs (ASD(HA)) will maintain a public website
containing information about the MHS MPWP, applicable forms (with links
to the forms), and a fee discount calculator. The DoD will notify non-
beneficiary patients of the availability of the MHS MPWP. Information
about the MHS MPWP will be posted in MTFs (e.g., in waiting rooms and
information desks) and included in DoD patient invoices.
(d) Requirement to complete a DD Form 2569. MTFs will present the
DD Form 2569, ``Third Party Collection Program/Medical Services
Account/Other Health Insurance'' to all patients. It will also be
available at <a href="https://www.esd.whs.mil/Directives/forms/dd2500_2999/">https://www.esd.whs.mil/Directives/forms/dd2500_2999/</a>. All
patients (regardless of insurance status) must complete the DD Form
2569.
(1) Before applying for the MHS MPWP, all patients (regardless of
health insurance status) must fully complete (including by signing) the
DD Form 2569 and ensure that a current and accurate DD Form 2569 is on
file with the applicable MTF. Successful completion of these steps is a
condition of eligibility for the MHS MPWP.
(2) For patients with health insurance, the DoD will file insurance
claims on behalf of the patient. Patients with health insurance who do
not consent to allowing the DoD to file health insurance claims on
their behalf will not be eligible for the MHS MPWP.
(3) Updating the DD Form 2569. The DoD may use a completed DD Form
2569 for multiple episodes of care. Unless a DD Form 2569 completed
within the preceding 12 months for the patient is available, the DoD
will solicit an updated DD Form 2569 from patients who receive a
subsequent episode of care from the MTF. However, the lack of an
updated form will not preclude the DoD from filing additional claims
against encounters for the patient.
(e) Notifications on Medical Invoices. In addition to any
notifications otherwise already required by law, regulation, or DoD
policy, all DoD invoices will notify patients that-
(1) Patients must consent to DoD filing insurance claims on their
behalf to be eligible for the MHS MPWP;
(2) The DoD will suspend fee assessment and patient billing actions
against the debtor for up to 120 days while the DoD is pursuing an
insurance claim or claim against a third-party payer;
(3) For patients who are covered by a covered payer, the DoD will
only bill the patient for the insurer-assigned copays, coinsurance,
deductibles, nominal fees, and non-covered services;
(4) The patient demonstrates potential eligibility for the MHS MPWP
fee discounts and catastrophic fee waivers by completing and submitting
DD Form 2569 and DD Form 3201, which may result in a discount of their
medical invoice after pursuit or recovery of claims against third party
payers (instructions for demonstrating eligibility, including deadline,
will also be included);
(5) In addition to fee discounts and catastrophic fee waivers,
patients may request a full waiver under 10 U.S.C. 1079b(b) by
submitting a DD Form 3201-1, Request for Medical Debt Waiver, Military
Health System Modified Payment and Waiver Program. Patients may be
considered for a full waiver if they previously applied to the MHS MPWP
and it did not sufficiently mitigate financial harm and if the
applicable care provided is determined to enhance the KSAs of DoD
healthcare providers. Waivers under 10 U.S.C. 1079b(b) may result in
information reporting to the Internal Revenue Service and issuance of a
Form 1099-C, Cancellation of Debt, and the waived amount(s) may
constitute gross income to the patient under 26 U.S.C. 61;
(6) If fees or charges (including those reduced under the MHS MPWP)
become delinquent due to non-payment, the DoD will establish a debt for
the delinquent amount and commence efforts to collect the established
debt, which may include transfer to the Department of the Treasury in
accordance with applicable authority; and
(7) That invoices issued after reduction or waiver of charges under
the MHS MPWP will reflect the date by which an unpaid account will
become delinquent.
(f) DoD medical billing rates. Annually, the ASD(HA) publishes the
rates that DoD uses for medical billing. Except for reasons listed in
32 CFR 220.8(f) or (g), the DoD rate will be used for all non-
beneficiary billing, including billing to either the insurer or
patient.
(g) For non-covered items or services. In any instance where an
item or service is not covered by a covered payer, the DoD will bill
the patient for the full amount of the service.
(h) For patients who are potentially covered by a covered payer. In
any instance where a patient submits a DD Form 2569 that indicates that
the patient possesses valid health insurance, the DoD will suspend any
collections against the patient to allow time for the claim remittance
to be processed by the insurer and for a valid EOB to be received, or
until 120 days have passed since filing for payment from the insurance
company, whichever comes first. Upon receipt of an EOB, the DoD will
bill the patient only for those amounts that are designated by the
insurance company as a copay, coinsurance, deductible, nominal fee, or
non-covered service. If insurance remittance and an EOB are not
received within 120 days of filing of a claim, the DoD will deem the
item or service to be a non-covered service. If insurance remittance
and an EOB are received after 120 days have elapsed, the DoD will
deposit the remittance and adjust the patient's account accordingly.
The DoD will issue to the patient a revised medical invoice reflecting
updated balances.
(i) Actions when an insurance payment and/or EOB is received. When
the DoD receives an insurance payment and/or an EOB, the DoD will post
all payments and adjustments for those items or services that are
deemed as covered by a covered payer against the bill in the manner
prescribed by the EOB. The DoD will bill the patient for any remaining
copays, co-insurance, deductibles, nominal fees and non-covered
services.
(j) Application for the MHS MPWP (DD Form 3201). All DoD invoices
generated for non-covered beneficiaries will include a statement that
all patients applying for the MHS MPWP must

[[Page 79814]]

complete DD Form 3201 and must include instructions on how to apply
(i.e., the deadline and where to submit the application). Processing of
the application will be logged on the last page of the DD Form 3201.
Applicants to the MHS MPWP will be notified of the status of their
application via the following methods:
(1) For approved applications, the DoD will issue to the patient a
modified medical invoice reflecting the adjusted balance due after
applying the sliding fee and/or catastrophic fee waiver. The invoice
modified to reflect fee adjustments or waiver under the MHS MPWP will
include notification of the requirement to transfer delinquent debts to
the Department of the Treasury if, after any modification under the MHS
MPWP, an unpaid invoice becomes delinquent.
(2) For disapproved applications, the DoD will issue a letter
reflecting the reason why the application was disapproved. The letter
will inform the patient of their right to reapply should their
financial circumstances change.
(k) Requirements to apply to the MHS MPWP. (1) To apply to the MHS
MPWP all patients must:
(i) Complete a DD Form 2569 (even in cases where the patient
possesses no health insurance). Insurance remittances must be applied
before the patient can be considered for the MHS MPWP.
(ii) Complete a DD Form 3201, ``Application for Military Health
System Modified Payment and Waiver Program.''
(iii) Attach a copy of the patient's (or guarantor's if the patient
is a minor) most recently filed Federal Income Tax Return to the DD
Form 3201.
(iv) Attach a copy of the patient's (or guarantor's if the patient
is a minor) last two pay stubs.
(v) Indicate whether their injury/disease was caused by a third
party and provide explanatory information.
(2) Required certifications.
(i) If the patient did not file a Federal Income Tax Return for the
preceding year, the patient must certify this on the DD Form 3201.
(ii) If the patient has no verifiable income, the patient must
certify this and provide a certification of their current annual income
amount on the DD Form 3201.
(iii) If the patient believes that hospitalization/care occurred as
the result of an action for which another party may be responsible,
then to be eligible for the MHS MPWP, the patient must agree to
cooperate and assist the United States to recover the cost of care from
said party.
(l) Basis to assign a Sliding Fee Discount/Catastrophic Fee
Waiver--(1) MHS Discount Calculator. Once a year, the ASD(HA) will
promulgate an MHS Discount Calculator. The initial calculator will
assign a 100 percent sliding fee discount and no stratified nominal fee
to applicants to the MHS MPWP whose annual household income is at or
below 100 percent of the applicable year's Federal Poverty Guidelines;
and a 100 percent sliding fee discount plus a stratified nominal fee to
applicants whose annual household income is greater than 100 percent
and at or below 400 percent of the Federal Poverty Guidelines current
at the time of application. Applicants with annual household income of
greater than 400 percent of the applicable year's Federal Poverty
Guidelines will not be eligible for a sliding fee discount; but may be
eligible for a catastrophic fee waiver.
(2) Catastrophic Fee Waiver. For applicants who exceed the 400
percent threshold, the calculator will assign an ASD(HA)-approved
maximum percentage that may be charged monthly based on the patient's
monthly household income. The maximum percentage will be set to 5
percent. The monthly household income will be multiplied by 5 percent
and the result will be multiplied by 36 months to derive the amount of
downward adjustment to the patient's bill. Amounts that exceed the
recalculated amount will be waived. If the original bill is less than
the recalculated bill, the original bill will remain as the balance
owed.
(3) Nominal fee. Once a year, the ASD(HA) will publish a stratified
nominal inpatient and outpatient fee. The nominal fee will be assigned
in any case where the sliding fee results in a 100 percent discount of
the medical invoice and the patient's income is above 100 percent and
up to 400 percent of the applicable year's Federal Poverty Guidelines.
Stratified nominal fees are generally established in a manner that is
equitable with what military retirees enrolled in the TRICARE program
would be required to pay in the private sector for comparable services.
The initial nominal stratified fees are as follows:

------------------------------------------------------------------------
Household income falls within the below
Federal poverty guidelines Inpatient fee Outpatient fee
------------------------------------------------------------------------
0%-100%................................. $0
-------------------------------
101%-120%............................... $750 $50
121%-140%............................... 1,250 50
141%-160%............................... 2,000 50
161%-180%............................... 3,000 50
181%-200%............................... 4,000 50
201%-220%............................... 5,000 50
221% -240%.............................. 6,000 50
241%-260%............................... 7,000 50
261%-280%............................... 8,000 50
281%-300%............................... 9,000 50
301%-320%............................... 10,000 50
321%-340%............................... 11,000 50
341%-360%............................... 12,000 50
361%-380%............................... 13,000 50
381%-400%............................... 14,000 50
------------------------------------------------------------------------

(m) Notification of approved/disapproved MHS MPWP applications.
Unless additional time is needed (e.g., to verify a patient's
documentation), the DoD shall determine whether a patient has
demonstrated eligibility for the MHS MPWP within 30 days of receipt of
the complete application. If a decision cannot be made in 30 days, the
DoD shall provide the patient with an interim written response. The DoD
may suspend DoD collection actions against the patient during the
review.
(1) For approved applications, the DoD will issue to the patient a
modified

[[Page 79815]]

medical invoice reflecting the adjusted balance due after applying the
sliding fee and/or catastrophic fee waiver. The invoice modified to
reflect fee adjustments or waiver under the MHS MPWP will include
notification of the requirement to transfer delinquent debts to the
Department of the Treasury if, after any modification under the MHS
MPWP, an unpaid invoice becomes delinquent.
(2) For disapproved applications, the DHA will issue a letter by
U.S. mail to the patient's last known address reflecting the reason why
the application was disapproved. The letter will inform the patient of
the right to reapply should the patient's financial circumstances
change.
(n) Collection in installments. Patients approved for a sliding
scale fee reduction or catastrophic fee waiver shall have amounts
collected in installments for a term not to exceed 72 months. Patients
may choose to pay their balance in a lump sum payment.
(o) Application for a 10 U.S.C. 1079b(b) waiver. (1) Basis for a
waiver. Waivers may be granted when--
(i) The patient has provided the DoD with a completed DD Form 2569
(even for patients who possess no valid health insurance) and
applicable insurance payments have been applied;
(ii) The patient has previously submitted a completed application
to the MHS MPWP (32 CFR 220.12(k)) and was provided any applicable
discounts;
(iii) The patient provided additional information indicating that
the MHS MPWP did not sufficiently mitigate severe financial harm; and
(iv) A DoD competent medical authority confirms in writing (on the
DD Form 3201) that the care provided to the patient enhanced the KSAs
of the DoD healthcare provider.
(v) If the above conditions are met, the Director of DHA may
exercise discretionary authority to waive the medical invoice.
(2) Method to request a waiver. Patients must submit a completed DD
Form 3201-1, ``Request for Medical Debt Waiver Military Health System
Modified Payment and Waiver Program.'' All DoD invoices will include
the address where a patient may submit a waiver request.
(3) Response to a request for waiver. Unless additional time is
needed (e.g., to verify a patient's documentation), the DoD shall make
a decision on the request within 90 days. The DoD will provide a
response in writing to the patient, as well as a copy of the medical
invoice reflecting the balance due. Waivers that are approved under 10
U.S.C. 1079b(b) may require reporting to the IRS and issuance of a IRS
Form 1099-C.
(p) Debts transferred to Treasury that are subsequently processed
through insurance. In any instance where a debt is transferred to
Treasury and a lower balance is assigned to a Treasury-managed debt due
to a claim being subsequently processed through insurance, the DoD
shall recall the debt back to the DoD for management actions and notify
Treasury to delete the debt from its systems and reverse any adverse
reporting that occurred against the debt.
(q) Delinquent Accounts. Delinquent accounts will be processed in
accordance with the Debt Collection Improvement Act of 1996 and its
implementing regulation 31 CFR parts 900-904 (Federal Claims Collection
Standards).
(r) Applications for MHS MPWP Received for Delinquent Accounts
Transferred to the Department of the Treasury. Individuals may still
submit an application for the MHS MPWP after their account has been
transferred to the Cross-Servicing Program (``Cross-Servicing'') of the
Department of the Treasury, Bureau of the Fiscal Service; however, any
reductions to the medical invoice from the MPWP may be subject to
interest, penalties, and costs. When patients apply to the MHS MPWP
after their accounts were transferred to Cross-Servicing, their debts
will remain at Cross-Servicing unless and until the DoD determines that
they are eligible for a reduction under the MHS MPWP. The DoD may
recall the debt from Cross-Servicing after it determines that the debt
is eligible for a reduction under the MHS MPWP. Patients may request
reconsideration for the MHS MPWP when their financial circumstances
appear to have significantly changed.
(s) Reporting to IRS and Furnishing of IRS Forms 1099-C
(Cancellation of Debt). The DoD will report to IRS, and furnish to
patients, IRS Forms 1099-C for all 10 U.S.C. 1079b(b) waivers issued
during the previous calendar year where required by 26 U.S.C. 6050P.
IRS reporting will not be done for portions of a bill which have been
adjusted downwards due to insurance processing, or by assignment of a
sliding fee/catastrophic fee waiver to the debt. The IRS Forms 1099-C
will reflect amounts waived under the DHA Director's discretionary
authority.
(t) Refunds not permitted for amounts previously paid. Except for
circumstances specified in Sec. Sec. 220.12(p) and 220.12(u)(3),
financial relief under the MHS MPWP may only be granted for amounts
still due by the patient; an application for financial relief cannot be
used to obtain a refund for any amounts previously paid.
(u) Claims involving tortfeasors and third-party payers. No
discount or waiver of fees under 10 U.S.C. 1079b shall be interpreted
to be applicable to tortfeasors under the FMCRA, 42 U.S.C. 2651, or
third-party payers under 10 U.S.C. 1095.
(1) For patients who indicate that their injury/disease was caused
by a third party, DoD MTFs will follow procedures established under the
Medical Affirmative Claims program.
(2) Patients who have a remaining balance after insurance
remittances or recoveries from third-party tortfeasors may apply for
relief of any remaining medical debt.
(3) Payments toward the medical debt that were made by the patient
prior to settlement of the claim with the tortfeasor will be offset
against any balances owed by the patient or may be refunded to the
patient if no balance is owed.

Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2024-22584 Filed 9-30-24; 8:45 am]
BILLING CODE 6001-FR-P

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