Rule2026-02437
Medical Billing for Healthcare Services Provided by Department of Defense Military Medical Treatment Facilities to Civilian Non-Beneficiaries
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 6, 2026
Effective
March 9, 2026
Issuing agencies
Defense Department
Abstract
As required by the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (NDAA-23), this rule reduces 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 implements the MHS Modified Payment and Waiver Program (MPWP) through which the DoD applies a sliding fee scale and/or a catastrophic fee waiver to medical invoices of certain non-beneficiaries and accepts 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 91 Issue 25 (Friday, February 6, 2026)</title>
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[Federal Register Volume 91, Number 25 (Friday, February 6, 2026)]
[Rules and Regulations]
[Pages 5303-5316]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-02437]
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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: Final rule.
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SUMMARY: As required by the James M. Inhofe National Defense
Authorization Act for Fiscal Year 2023 (NDAA-23), this rule reduces
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
implements the MHS Modified Payment and Waiver Program (MPWP) through
which the DoD applies a sliding fee scale and/or a catastrophic fee
waiver to medical invoices of certain non-beneficiaries and accepts
payments from health insurers of non-beneficiaries as full payment
except for copays, coinsurance, deductibles, nominal fees and non-
covered services.
DATES: This rulemaking is effective on March 9, 2026.
FOR FURTHER INFORMATION CONTACT: Ms. Merlyn Jenkins, phone number:
(703) 681-8812, 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:
<a href="/cdn-cgi/l/email-protection#80ede5f2ecf9eeaeeae5eeebe9eef3aee3e9f6c0e8e5e1ecf4e8aeede9ec"><span class="__cf_email__" data-cfemail="dab7bfa8b6a3b4f4b0bfb4b1b3b4a9f4b9b3ac9ab2bfbbb6aeb2f4b7b3b6">[email 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 implementing 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
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)).
Regulations 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 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
[[Page 5304]]
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 900 through 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 may be 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.
Title 10 U.S.C. 1079b, as amended by section 716 of NDAA-23,
implements financial protections for certain individual civilian non-
beneficiaries.
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 or waive 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. As a result, Congress
wholly amended 10 U.S.C. 1079b via section 716 of NDAA-23 providing DoD
with significant authority to protect patients from financial harm
under the existing billing and collection laws. 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, 717(c), Dec. 23,
2016, as amended, 10 U.S.C. 1071 note.
III. Discussion of Comments and Changes
The proposed rule titled ``Medical Billing for Healthcare Services
Provided by Department of Defense Military Medical Treatment Facilities
to Civilian Non-Beneficiaries'' was published in the Federal Register
on October 1, 2024 (89 FR 79804-79815). Comments were accepted for 60
days until December 2, 2024. A total of 12 comments were received of
which eight indicated general support for the rule and four expressed
various concerns. Please see a synopsis of the comments received, our
responses to those comments, and clarifications being made to the
regulations at 32 CFR part 220 as a result of the public comments.
1. General Support for the Rule
Comment: The Department received eight public comments expressing
support for the proposed rule and four expressing various concerns.
Response: The Department values public input as an essential
component of the rulemaking process. We extend our sincere thanks to
everyone who submitted comments on the proposed rule. We are
particularly grateful for the support expressed by the eight commenters
who affirmed the rule's goals. We believe this rule represents a
collaborative effort to strengthen financial protections for patients
accessing the exceptional healthcare services offered within the MHS.
2. Simplifying the Application Process and Enhancing Patient
Protections
Comment: Four commenters expressed concern that the application
process seemed too burdensome, specifically that there are too many
forms to fill out and too much paperwork to gather as part of the
application process. Some pointed out that it could be particularly
difficult for people who are homeless, do not speak English well, or
are dealing with other challenges. Commenters advocated that patients
be protected from aggressive debt collection while they are trying to
get their application processed. Recommendations included simplifying
forms, streamlining income verification (including exploring Internal
Revenue Service (IRS) collaboration and accepting alternative
documentation), limiting supporting documents, providing clearer
instructions and dedicated support staff, and translating materials
into multiple languages.
Response: We acknowledge the need for a simplified and accessible
MHS MPWP process:
<bullet> Clearer Communication: Section 220.12(e) of the final rule
requires standardized language on all invoices, explaining the MHS MPWP
in plain terms and directing patients to a dedicated website with
detailed program information, frequently asked questions, and a fee
calculator to help them estimate their potential savings.
<bullet> Easier Income Verification: Section 220.12(k)(2)(iii) of
the final rule clarifies that patients can use documents other than tax
returns and pay stubs to prove their income, such as bank statements or
Social Security benefit letters. While we appreciate the suggestion of
accessing income data directly from the IRS, this may result in
evaluating a patient's income based on outdated information. We will
continue to assess the feasibility of this option in the future.
<bullet> Protection During Application: Section 220.12(m) of the
final rule states that DoD will suspend DoD collection actions against
the patient (excluding processing of insurance claims) during the
application review period.
<bullet> Fresh Start After Approval: Section 220.12(j)(1) clarifies
that we are also resetting the delinquency clock after a decision is
made on the application. This means that approved applicants will have
a new opportunity to manage their payments without the pressure of past
delinquency.
<bullet> Recalling Debt from Treasury: To prevent unnecessary
hardship, the final rule mandates the recall of debts from the
Department of the Treasury's Cross-Servicing Program upon approval of a
discount or waiver, stopping further collection actions.
<bullet> Flexible Payment Plans: We recognize the need for
affordable payment options. The final rule guarantees flexible
installment plans for up to 72 months, allowing patients to spread out
their payments over a manageable timeframe.
<bullet> Tax Implications of Waivers: We understand the concerns
regarding the
[[Page 5305]]
potential tax implications of debt waivers. However, tax matters fall
outside the jurisdiction of the Department.
3. Prioritizing Waivers, Adjusting the Sliding Scale, and Withholding
Delinquent Accounts From Transfers to Treasury
Comment: We heard strong support from four commenters for
prioritizing the use of waivers to provide greater financial relief,
including the use of preemptive waivers, especially for those with
injuries similar to those seen in combat. Commenters also advocated for
adjustments to the sliding scale and catastrophic cap fees; and one
commenter requested that we not transfer delinquent accounts to
Treasury, but rather that we hold onto them for an additional eight-
month period past delinquency.
Response: We carefully considered this feedback:
<bullet> Waiver Authority: While we will maintain the DHA
Director's discretion to determine when a waiver is appropriate, the
final rule makes it clear at Sec. 220.12(o) that after receiving a
discount, patients may further apply for a potential waiver. The final
rule clarifies at Sec. 220.12(o)(iv) that waivers will be considered
in all cases where there is confirmation by a competent medical
authority at the treating MTF that the care provided to the applicant
enhanced the clinical readiness of military medical personnel.
Additionally, we have clarified that waivers may be partial or full and
are applicable to a remaining balance that has already been discounted
by a sliding fee in order to minimize any tax implications for the
patient. The phrase ``used sparingly'' has been deleted from the final
rule.
<bullet> Preemptive Waivers: Two commenters advocated for automatic
or presumptive waivers for specific types of injuries, such as gunshot
wounds or car accidents. We will not implement these because the
training value of each case depends heavily on its unique
circumstances, the experience level of the medical team, and the
specific learning objectives. For example, a common fracture might
provide valuable training for a new medic, while a complex, multi-
system trauma case could offer a significant learning opportunity for
even the most experienced surgeons. Assessing whether a case adds KSAs
in the context of battlefield equivalency value will be done on a case-
by-case basis by the treating facility's competent medical authority as
stated at Sec. 220.12(o).
<bullet> Sliding Scale: Four commenters recommended that we expand
the income thresholds for the sliding scale discount. We carefully
reviewed the recommendations and determined that the current structure
strikes a reasonable balance between providing meaningful relief and
ensuring the program's financial sustainability, allowing us to help as
many patients as possible. However, we clarify at Sec. 220.12(l)(2)
that applicants whose income is between 401 percent through 600 percent
of the Federal Poverty Guidelines (FPGs) are eligible for catastrophic
fee waivers. We are committed to closely monitoring the program's
impact and will consider adjustments to the sliding scale in the future
if data indicates that it is not adequately meeting the needs of our
patients.
<bullet> Withholding Delinquent Accounts From Transferring to
Treasury: Four commenters requested that delinquent accounts not be
transferred to the Treasury. However, per the Federal Claims Collection
Standards, we are mandated to transfer debts that become delinquent
more than 180 days. As stated at Sec. 220.12(r), 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.
4. Clarifying Insurance Billing and Participating in Denials Management
Comment: Three commenters suggested that we clarify our processes
for billing insurance and two commenters suggested automatically
adjusting Medicaid civilians' fees to their copays or to zero under the
sliding scale and abstaining from charging Medicare patients.
Response: We have carefully considered the comments:
<bullet> Streamlined Insurance Processes and Denials: We have
clarified at Sec. 220.12(h) of the final rule that MTFs will engage in
standard denials management practices, including providing supporting
documentation and participating in appeal processes, to facilitate the
resolution of disputed claims.
<bullet> Medicaid and Medicare Billing: DHA does not intentionally
seek out Medicare or Medicaid patients. However, because some MTFs have
arrangements with specific localities to accept trauma patients injured
in close proximity to the MTF, sometimes Medicare and Medicaid
beneficiaries are brought to the MTF for treatment. The DHA has an
election agreement with Medicare as a non-participating provider.
Medicare patients treated in MTFs are stabilized and transferred to a
Medicare participating hospital. Medicare will pay the MTF for the
costs associated with stabilization and transfer. Medicare patients are
never balanced billed for care received in an MTF. Because MTFs, as
Federal entities, are not licensed by the states, at present all MTFs,
except one in Texas, are not allowed to participate in Medicaid. We did
not make any changes to the rule, as Medicaid and Medicare billing are
beyond the scope of what is needed to implement 10 U.S.C. 1079b. The
sliding scale provides substantial reductions based on an individual's
income inclusive of discounting a patient's bill to zero should their
household income be below 100 percent of the FPGs.
5. Address Pre-Enactment Debt
Comments: Three commenters advocated for relief of debts incurred
prior to June 21, 2023, including those currently subject to Treasury
offsets.
Response: We recognize the financial challenges these debts may
pose. While we are sympathetic to individuals with outstanding medical
debt incurred prior to June 21, 2023, the statutory language included
at section 716(c) of the NDAA-23 is clearly prospective. Although we
cannot retroactively apply the MHS MPWP, patients can work with the DHA
Debt Adjudication Office for debts that have not become delinquent. The
DHA has limited authority to compromise debts under $100,000 if an
applicant demonstrates an inability to pay under the FCCS. Once a debt
has become delinquent, the FCCS requires that we transfer the debt to
the Department of Treasury for collection. For delinquent debt,
patients can work with debt management at the Department of Treasury to
request that their debt be lowered (compromised). Patients should
contact the Treasury's Cross-Servicing Program to discuss available
options for financial relief.
IV. 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
[[Page 5306]]
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 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'' (Office of Management and Budget (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.
V. Summary of Current Billing and Collection Processes Involving Non-
Beneficiaries
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, which governs compromises of debt,
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.
VI. Changes With This Rulemaking
A. MHS MPWP
Under 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 is implementing 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.
Applicants to the MHS MPWP whose income is less than 100 percent of the
FPGs will automatically receive a 100 percent discount of their medical
bill. Applicants with income between 101 and 400 percent of the FPGs
will be eligible for a sliding scale discount; and applicants whose
income is between 400 through 600 percent of the FPGs will be eligible
for a catastrophic fee waiver.
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). DoD MTFs will participate in claims disputes through
standard denials management practices. Once the patient's account is
properly adjusted in accordance with the EOB, the DoD will bill insured
patients only for portions of 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 waivers.
Patients unable to pay the remaining balance after the application
of the sliding scale and catastrophic fee waivers 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
at the discretion of the DHA Director when the care rendered to the
patient enhanced the KSAs of the healthcare providers as confirmed by
competent medical authority at the treating MTFs on the DD Form 3201-
1A. Waivers may be partial or full and applied to already waivered
fees. KSAs are a set of clinical skill requirements a provider needs in
order to provide medical care/treatment in the deployed environment.
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
[[Page 5307]]
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; and
(c) DHA competent medical authority confirms in writing on the DD
Form 3201-1A that the care provided to the patient enhanced the KSAs of
the DoD healthcare provider.
(d) 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. The DHA
will support claims appeals through standard MTF denials management
processes.
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 MHS 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 (a section is provided directly on the application
form). Additionally, when the patient has no verifiable income, the
patient must provide a certification to that effect on the DD Form
3201. For this purpose, a section is provided directly on the
application form. 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 waivers
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 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
[[Page 5308]]
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 (available at <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.
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
------------------------------------------------------------------------
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 if their
household income does not exceed 600 percent.
I. Catastrophic Fee Waiver
The catastrophic fee waiver applies to applicants whose household
income is between 401 percent and 600 percent of the FPGs and 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 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 thresholds
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 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 partial or full waiver of already discounted 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 approval for the MHS MPWP has occurred and competent
medical authority at the MTF that treated the patient confirms (on the
DD Form 3201-1A) that the care provided to the patient enhanced
provider KSAs. The DD Form 3201-1A is strictly for internal use and is
not subject to the Paperwork Reduction Act (PRA). 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.
All patient invoices will include a statement that the patient may
apply for a waiver based on 10 U.S.C. 1079b(b) and Sec. 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 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.
VII. 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
[[Page 5309]]
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 calendar 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. Lastly, costs may be
incurred by DHA staff who will be responsible for completing and
processing the DD Form 3201-1A, which will be used by competent medical
authority to confirm that care provided to civilian non-beneficiaries
enhanced provider KSAs.
(1) Government Burden Related to the DD Form 3201, ``Application
for Military Health System Modified Payment and Waiver Program'':
[GRAPHIC] [TIFF OMITTED] TR06FE26.012
(2) Government Burden Related to the DD Form 3201-1, ``Request for
a Medical Debt Waiver, Military Health System Modified Payment and
Waiver Program'':
[[Page 5310]]
[GRAPHIC] [TIFF OMITTED] TR06FE26.013
(3) Government Burden Related to the DD Form 3201-1A, ``MHS
Modified Payment and Waiver Program (MPWP) Medical Skills Sustainment
Scoring Worksheet'':
(4) Note: The DD Form 3201-1A is strictly for internal use and is
not subject to the PRA.
[GRAPHIC] [TIFF OMITTED] TR06FE26.014
[[Page 5311]]
VIII. Regulatory Compliance Analysis
A. Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review''
Executive Order 12866 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 final rule has been designated significant, under
section 3(f) of Executive Order 12866.
B. Executive Order 14192, ``Unleashing Prosperity Through
Deregulation''
Executive Order 14192 establishes a regulatory cap for Fiscal Year
2025 and requires agencies to identify 10 existing regulations to be
repealed unless the regulation meets certain exemptions. This final
rule is not an Executive Order 14192 regulatory action under OMB M-25-
20, ``Guidance Implementing Section 3 of Executive Order 14192,''
because it does not impose any more than de minimis regulatory costs.
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 final 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 final 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
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 2025, that
threshold is approximately $211 million. This final 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 final 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.
G. Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter
35)
Section 220.12 of this final rule contains information collection
requirements. As required by the Paperwork Reduction Act (44 U.S.C.
chapter 35), DoD submitted an information clearance package to the OMB
for review (Control Number 0720-0083). The implementation of the MHS
MPWP requires the collection of information from applicants to
determine eligibility for discounts and waivers, as authorized by 10
U.S.C. 1079b. This information collection has been submitted to and is
pending review by OMB in accordance with the Paperwork Reduction Act
(44 U.S.C. chapter 35). OMB has received the revised collection of
information. OMB's receipt of the revised collection of information is
not an approval to conduct or sponsor an information collection under
the Paperwork Reduction Act of 1995. In accordance with 5 CFR 1320, the
revised collection of information associated with this rulemaking is
not approved by OMB at this time. OMB's approval of the revised
collection of information will occur within 30 days after the Final
rulemaking publishes. If OMB does not approve the new collection of
information as requested, DoD will immediately remove the provision
containing a new collection of information or take such other action as
is directed by OMB. Please note that the DD Form 3201-1A is strictly
for internal use and is not subject to the Paperwork Reduction Act.
In response to DoD's invitation in the proposed rule to comment on
any potential paperwork burden associated with this rule, the following
comments were received.
Comment: Two commenters expressed concern that the MHS MPWP
application process would be overly burdensome for both patients and
administrative staff. They criticized the complexity of the required
forms and procedures, citing multiple forms and excessive detail as
barriers to successful navigation, especially for patients with limited
resources or language access. The required documentation, such as tax
returns and pay stubs, was considered onerous and potentially
prohibitive for vulnerable populations like the homeless, transient,
and recently unemployed.
Response: We acknowledge the concerns raised about the potential
complexity of the MHS MPWP application process and are committed to
making it as simple and accessible as possible. The Department is
considering enabling online applications but notes financial and
logistical challenges with implementation. The final rule, Sec.
220.12(k)(2)(iii), addresses alternative forms of income verification
to ease the burden on patients.
(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.
[[Page 5312]]
[GRAPHIC] [TIFF OMITTED] TR06FE26.015
(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.
[GRAPHIC] [TIFF OMITTED] TR06FE26.016
H. 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 final rule will not
have a substantial effect on State and local Governments.
I. 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
[[Page 5313]]
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
final 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, Health care,
Health insurance, Medical billing, Medical debt, Medical debt waiver,
Military medical treatment facilities, Military personnel, and Third
party collections.
Accordingly, the DoD amends 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 read 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) on or after June 21, 2023, and 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 (NDAA-
23) amendment to section 1079b of title 10, United States Code
(U.S.C.). Section 716 of the NDAA-23 amended 10 U.S.C. 1079b to
require, inter alia, the Director of the Defense Health Agency (DHA) 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 DHA with discretionary authority to
issue waivers of fees for medical care if the provision of such care
enhances the knowledge, skills, and abilities (KSAs) 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;
(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) Knowledges, 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. The
extent to which a patient's care enhances KSAs will be determined via
the DD Form 3201-1A by competent medical authority at the treating MTF.
(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, 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 (inclusive of the
discount and waiver portions).
(3) 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
[[Page 5314]]
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 sliding fee discounts and catastrophic fee
waivers, patients may request a 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 partial or full waiver if they previously
applied to and were approved for the MHS MPWP discount program, and it
did not sufficiently mitigate financial harm and if the applicable care
provided is determined to enhance the KSAs of DoD healthcare providers,
as confirmed by competent medical authority competent medical authority
at the MTF that provided the care. Confirmation will be done by the
competent medical authority on the DD Form 3201-1A. 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.
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
Sec. 220.8(f) or (g) of this part, 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. MTFs will engage in standard denials management
practices, including providing supporting documentation and
participating in appeal processes, to facilitate the resolution of
disputed claims.
(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 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 and including a
revised (reset) payment due date. 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) Patients applying for the MHS MPWP are required to certify
whether or not they filed a Federal Income Tax Return for the preceding
year.
(i) If the patient did not file a Federal Income Tax Return for the
preceding year, the patient must certify this in the space provided 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 in the space provided on the DD Form 3201.
(iii) 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 verifying that no benefits are being
received.
(iv) 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 in the space provided on the DD Form 3201.
(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
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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 (FPGs); 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 FPGs current at the time of application. 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.
(2) Catastrophic Fee Waiver. For applicants who exceed the 400
percent threshold but whose household income is at or below 600 percent
of the FPGs, 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 waiver of
the medical invoice and the patient's income is above 100 percent and
up to 400 percent of the applicable year's FPGs. 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. Nominal fees do not
apply to catastrophic fee waivers. The initial nominal stratified fees
are as follows:
Table 1 to Paragraph (l)(3)
------------------------------------------------------------------------
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 generally determine whether a patient has
demonstrated eligibility for the MHS MPWP within 30 business days of
receipt of the complete application. The DoD will suspend DoD
collection actions (excluding the processing of insurance claims)
against the patient during the review.
(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 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 approved for any applicable
discounts;
(iii) The patient submitted a DD Form 3201-1, ``Request for Medical
Debt Waiver, Military Health System Modified Payment and Waiver
Program,'' requesting waiver of already discounted fees; and
(iv) A DoD competent medical authority at the treating MTF confirms
in writing (on the DD Form 3201-1A, ``MHS Modified Payment and Waiver
Program (MPWP) Medical Skills Sustainment Scoring Worksheet'') that the
care provided to the patient enhanced the KSAs of the DoD healthcare
provider. The completed DD Form 3201-1A yields whether a partial or
full waiver of already discounted fees may be applied.
(v) If the conditions in paragraphs (o)(1)(i) through (iv) 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
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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
generally 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) will require reporting to the IRS and issuance
of an IRS Form 1099-C when required by 26 U.S.C. 6050P.
(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 under 10 U.S.C.
1079b(c)(2) or (3). 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 paragraphs (p) and (u)(3) of this section,
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.
Dated: February 4, 2026.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2026-02437 Filed 2-5-26; 8:45 am]
BILLING CODE 6001-FR-P
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</html>Indexed from Federal Register on February 6, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.