[Federal Register Volume 69, Number 196 (Tuesday, October 12, 2004)]
[Rules and Regulations]
[Pages 60547-60555]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22684]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA89


TRICARE; Changes Included in the National Defense Authorization 
Act for Fiscal Year 2002, (NDAA-02), and a Technical Correction 
Included in the NDAA-03

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This rule makes several changes to the TRICARE program 
authorized by Congress in the NDAA-02. Specifically, revisions to the 
definition of durable medical equipment (DME); adoption of the same 
pricing methods for durable medical equipment, prosthetics, orthotics 
and supplies (DMEPOS) as are in effect for the Centers for Medicare & 
Medicaid Services (CMS); clarification that rehabilitative therapy is a 
TRICARE benefit; addition of augmentative communication devices (ACD)/
speech generating devices (SGDs) as a TRICARE benefit; addition of 
hearing aids for family members of active duty members as a TRICARE 
Basic Program benefit; revisions to the definition of prosthetics; 
permanent authority for transitional health care for certain members 
separated from active duty; and revisions to the time period of 
eligibility for transitional health care.
    This final rule also addresses a technical correction found in 
section 706 of the Bob Stump NDAA-03, relating to transitional health 
care for dependents of certain members separated from active duty.

DATES: This rule is effective December 13, 2004. Actual implementation 
will coincide with the transition in each TRICARE Region to the next 
generation

[[Page 60548]]

TRICARE Managed Care Support Contracts, which are scheduled to take 
effect over a period of months ending on November 1, 2004.

ADDRESSES: TRICARE Management Activity, Medical Benefits and 
Reimbursement Systems, 16401 East Centretech Parkway, Aurora, Colorado 
80011-9066.

FOR FURTHER INFORMATION CONTACT: Ann N. Fazzini, Medical Benefits and 
Reimbursement Systems, TRICARE Management Activity, telephone, (303) 
676-3803. Questions regarding payment of specific claims should be 
addressed to the appropriate TRICARE contractor.

SUPPLEMENTARY INFORMATION:

Background

    In the Federal Register of April 16, 2003, (68 FR 18575), the 
Office of the Secretary of Defense published for public comment a 
proposed rule regarding a number of changes included in the NDAA-02 
(Pub. L. 107-107, December 28, 2001). These changes include revisions 
to the definition of durable medical equipment (DME); adoption of the 
same pricing methods for durable medical equipment, prosthetics, 
orthotics and supplies (DMEPOS) as are in effect for the Centers for 
Medicare & Medicaid Services (CMS); clarification that rehabilitative 
therapy is a TRICARE benefit; addition of augmentative communication 
devices (ACD)/speech generating devices (SGDs) as a TRICARE benefit; 
addition of hearing aids for family members of active duty members as a 
TRICARE Basic Program benefit; and revisions to the definition of 
prosthetics.
    In addition to the above benefit changes, the NDAA 02 gave 
permanent authority for transitional health care for certain members 
separated from active duty. Prior to the NDAA 02, the Transitional 
Assistance Management Program (TAMP)--the program through which certain 
separating members and their dependents receive transitional health 
care--was scheduled to cease as of December 30, 2001. The NDAA 02, 
deleted the expiration date and made the TAMP program a permanent 
program.
    Another change was made to transitional health care by the NDAA 02. 
Prior to the NDAA 02, certain separating members and their dependents 
received transitional health care until the earlier of: (1) 30 days 
after the date of the release of the member from active duty; or (2) 
the date on which the member and the dependents of the member are 
covered by a health plan sponsored by an employer. The groups who 
received transitional health care within the above parameters included: 
(1) A member of a reserve component called or ordered to active duty in 
support of a contingency operation; (2) a member involuntarily retained 
on active duty under section 12305 in support of a contingency 
operation; or (3) a member who voluntarily agrees to remain on active 
duty for a period of less than one year in support of a contingency 
operation.
    The changes made in the NDAA 02 deleted the 30 day limit and 
changed the coverage period to 60 days of coverage for those separated 
with less than six years of active service or 120 days of coverage for 
those separated with six or more years of active service.
    This final rule also provides for a technical correction found in 
the Bob Stump NDAA 03.
    The NDAA 04, Pub. L. 108-136, contains additional changes to the 
transitional health care coverage period. These changes expire on 
December 31, 2004. If these changes are extended or made permanent they 
will be addressed in a separate rule.
    As a result of the publication of the proposed rule, the following 
comments were received from interested parties, associations and the 
government agencies that by law TRICARE is required to consult during 
the rule making process.

Review of Comments

    We noticed the comments that we received could be classified into 
four major areas. The first is that there is a perception that the NDAA 
02 language somehow eliminates or diminishes the ``medical necessity'' 
provision and other provisions found in TRICARE law. The second is a 
lack of understanding or awareness that the Program for Persons with 
Disabilities (PWPWD) and the TRICARE Basic Program are separate and 
distinct programs. The third is disagreement with our statement in the 
proposed rule that TRICARE's current policies in place at the time 
provide coverage within the NDAA 02 criteria. The fourth and final area 
is a concern with our proposed definition of rehabilitative therapy.
    We address each of these major areas separately and then address 
the general comments that we received on the proposed rule.

I. Medical Necessity and Other Provision

    Several of the changes authorized by Congress permit therapy for 
the purpose of either improving, restoring, maintaining, or preventing 
deterioration of function, or an accessory or item of supply that is 
used in conjunction with a device for the purpose of achieving 
therapeutic benefit and proper functioning. We received comments from 
several entities stating that they believe the statutory reference to 
the ``functional status'' of a beneficiary is to be used as the sole 
basis for determining coverage, rather than using the requirement that 
a service or supply must be medically or psychologically necessary as 
required by 10 U.S.C. 1079(a)(13). This belief is incorrect. One is to 
keep in mind that the provisions found in the NDAA 02 must be read in 
conjunction with the all other statutory provisions and parameters that 
govern the TRICARE program under title 10, United States Code, chapter 
55. The most significant parameter for the TRICARE program is found at 
1079(a)(13) and excludes:

    Any service or supply which is not medically or psychologically 
necessary to prevent, diagnose, or treat a mental or physical 
illness, injury, or bodily malfunction as assessed or diagnosed by a 
physician, dentist, clinical psychologist, certified marriage and 
family therapist, optometrist, podiatrist, certified nurse-midwife, 
certified nurse practitioner, or certified clinical social worker, 
as appropriate, may not be provided, except as authorized elsewhere 
* * *.

    The types of health care services authorized by Congress in the 
NDAA-02 that this rule implements provide for the types of health care 
that ``may be'' provided by the TRICARE program. This must be read in 
conjunction with the medical necessity requirement. Consequently, any 
therapy for the purpose of either improving, restoring, maintaining, or 
preventing deterioration of function, or an accessory or item off 
supply that is used in conjunction with a device for the purpose of 
achieving therapeutic benefit and proper functioning must be medically 
necessary before it can be cost shared by TRICARE.
    Another provision/parameter of the TRICARE program that must be 
considered when interpreting the NDAA 02 legislation is the prohibition 
against providing custodial care. Custodial care is excluded from 
TRICARE coverage under section 1077(b)(1) and is defined in section 
1072(a) as:

    Custodial care means treatment or services, regardless of who 
recommends such treatment or services or where such treatment or 
services are provided that--(A) can be rendered safely and 
reasonably by a person who is not medically skilled; or (B) is or 
are designed mainly to help the patient with activities of daily 
living.

    In summary, we do not concur with the interpretation that the NDAA 
02

[[Page 60549]]

language reduces the significance of or eliminates the use of the 
medical necessity provision and other provisions found in TRICARE law. 
TRICARE considers the functional status of an individual as a factor, 
but that factor does not usurp the requirement of medical necessity or 
custodial care. The medical necessity and custodial care provisions, as 
well as all other parameters and provisions that govern the TRICARE 
program, must be considered concurrently with the provisions added in 
the NDAA 02, consistent with the rules of statutory construction 
defined in title 10, Untied States Code.

II. PFPWD in Relation to the Basic Program

    The PFPWD and the TRICARE Basic Program are separate and distinct 
programs with their own statutory basis, to include separate/different 
eligibility provisions, cost-sharing provisions, and benefit 
provisions. The PFPWD, based upon 10 U.S.C. 1079(d)-(f), is implemented 
in 32 CFR 199.5, and describes eligibility provisions, cost-sharing 
provisions, and benefit provisions under the PFPWD. The changes to the 
PFPWD authorized by section 701(d) of the NDAA 02 are being implemented 
under a separate rule. The TRICARE Basic Program Benefits are 
implemented in 32 CFR 199.4. While the programs are separate and 
distinct, the PFPWD is available for use in conjunction with the 
TRICARE Basic Program. The PFPWD was congressionally established 
approximately 35 years ago to help defray the costs of services not 
available either through the TRICARE Basic Program or through other 
public agencies. This includes, but is not limited to, services such as 
training, special education and adjunct services (e.g., equipment 
adaptation).
    This rule makes no changes to the PFPWD program found at 32 CFR 
199.5. There are some services and supplies that are currently covered 
under the PFPWD but are not covered under the TRICARE Basic Program. 
This will continue. For example, training, special education, and 
eyeglasses may be covered under the PFPWD but they are excluded from 
the TRICARE Basic Program.
    Hearing aids are currently allowed exclusively as a benefit under 
the PFPWD; however, upon implementation of this final rule, hearing 
aids will be considered a benefit under the TRICARE Basic Program, 
although still statutorily limited to dependents of active duty 
members.
    Additionally, upon implementation of this rule, those ACDs/SGDs 
defined in this rule and that otherwise meet the policies and 
provisions of the TRICARE Basic Program will be covered as a benefit 
under the Basic Program. There will be some communicative devices, that 
do not meet the definition of ACD/SGD, but that are considered 
communication devices, that have been allowed for coverage under the 
PFPWD. This will not change and those devices will continue to be 
provided.
    Again, this rule makes no change to the regulatory section that 
governs the PFPWD.

III. TRICARE's Current Policies

    We received comments stating that the NDAA 02 provisions ``Congress 
intended that this new law would stimulate TRICARE to provide greater 
access to appropriate assistive devices, technologies and related 
services.'' The comments subsequently expressed concerns with our 
position that TRICARE's policies in place at this time provide coverage 
within these criteria. When we made the ``current policies'' statement, 
we were referring to the policies found in the TRICARE Policy Manual 
and the TRICARE Reimbursement Manual. These manuals contain detailed 
policies on a variety of topics, to include DME and prosthetics. They 
may be accessed through the TRICARE Web site at http://www.tma.osd.mil. 
The policies expressed in these manuals are TRICARE's interpretation of 
its governing statutes (primarily title 10, United States Code, chapter 
55) and our regulation implementing these statutes (32 CFR part 199).
    We reviewed the proposed rule and found that we made the statement 
regarding our current policies in the Supplementary Information Section 
of the rule in two places: the durable medical equipment section and 
the prosthetics section. Regarding DME, we received comments stressing 
that TRICARE needs to be aware of the necessity to customize DME to 
meet an individual's needs. We are. The Durable Medical Equipment 
policy is found at chapter 7, section 3.1 in the TRICARE Policy Manual. 
This policy defines DME and provides guidance on when DME may be 
repaired, replaced, modified, and/or customized. The policy currently 
reflects the provisions added in the NDAA-02. This final rule 
incorporates the new statutory authorization into 32 CFR part 199. In 
the Supplementary Information we were simply saying that our 
interpretation of previous statutory authorizations and implementing 
regulations in the TRICARE Policy Manual were consistent with how we 
interpret the new authorizations. Hence, TRICARE's current policies in 
place provide coverage within the NDAA 02 criteria.
    With regard to prosthetics, section 702 of NDAA-02, gives the 
Department the authority to provide a prosthetic device that includes 
the following: (1) Any accessory or item of supply that is used in 
conjunction with the device for the purpose of achieving therapeutic 
benefit and proper functioning. (2) Services necessary to train the 
recipient of the device in the use of the device. (3) Repair of the 
device for normal wear and tear or damage. (4) Replacement of the 
device if the device is lost or irreparably damaged or the cost of 
repair would exceed 60 percent of the cost of replacement. (5) A 
prosthetic device customized for a patient may be provided under this 
section only by a prosthetic practitioner who is qualified to customize 
the device, as determined under regulations prescribed by the Secretary 
of Defense in consultation with the other Secretaries.
    As stated in the proposed rule, TRICARE's current policies do offer 
benefits for the above criteria 1, 2, 3, and 5. Regarding criterion 
(4), TRICARE currently allows for replacement when required due to 
growth or change in the patient's condition. Nonetheless, our policies 
will be revised to ensure consistency with the language found in 
section 702 and will reflect a greater opportunity to acquire 
replacement prosthesis.
    Regarding criterion 5, TRICARE has no specific provider 
requirements for a prosthetic practitioner to be qualified to customize 
the device. Rather, otherwise authorized TRICARE providers currently 
provide prostheses and customization of prostheses, such as medical 
equipment firms, medical supply firms, and Durable Medical Equipment, 
Prosthetic, Orthotic supplies providers/suppliers. As stated in the 
proposed rule, we are aware that CMS has established a Negotiated 
Rulemaking Committee on Special Payment Provisions and Requirements for 
Prosthetics and Certain Custom-Fabricated Orthotics. The purpose of 
this committee is to advise CMS on developing a proposed rule that 
would establish payment provisions and requirements for providers of 
prostheses and custom-fabricated orthotics under the CMS. Once the 
Committee provides its findings, we will review them for consideration 
under the TRICARE program. After our review, we will use the rulemaking 
process and the public will have an opportunity to comment on our 
proposed provisions regarding these

[[Page 60550]]

types of providers. In the meantime, we will continue to allow 
prostheses customization by otherwise authorized TRICARE providers.
    The proposed rule states that where our current policies deviate 
from the new statutory language, we are adopting the new statutory 
language and will amend our policies to reflect that language.

IV. Rehabilitative Therapy

    We received numerous comments from entities who expressed concern 
with our definition of rehabilitative therapy. The commenters stated 
that defining rehabilitative therapy to include only physical therapy 
(PT), speech therapy (ST), and occupational therapy (OT) violates that 
intent of the statute. The commenters listed numerous additional 
therapies that they believe should be available for coverage under the 
statutory language.
    Again, parameters and provisions that govern the TRICARE program 
must be read in their entirety. By defining rehabilitative therapy as 
PT, OT, and ST, we did not mean to imply that all other therapies are 
excluded and are not eligible for TRICARE coverage. Other therapies 
that are medically necessary and appropriate, that are proven medical 
treatment, that are not considered as custodial care, that are provided 
by an authorized TRICARE provider and that are not otherwise excluded 
as a TRICARE benefit may be considered for TRICARE coverage.
    However, in order to avoid any misunderstanding, we have revised 
the definition of rehabilitative therapy to reflect the statutory 
language rather than define it as PT, OT, and ST only.

V. Additional Comments

    In addition to the four major areas in which we received comments, 
we received general comments regarding most of the proposed provisions. 
Those comments are responded to as follows:

ACD/SGD

    Comment 1: One commenter questioned whether including the highly 
specific definition of an ACD/SGD in the TRICARE regulation is 
appropriate. The commenter proposed that TRICARE adopt a more general 
definition of ACD/SGD devices in its regulations, leaving the specific 
distinctions of the TRICARE Policy Manual.
    Response: We concur with this recommendation. The purpose of the 
CFR is to provide broad guidelines and policies. The publishing of 
detailed criteria for a speech generating device in section 32 CFR 
199.2 may prove difficult to maintain and update, if necessary. To 
assist our beneficiaries in obtaining benefit coverage in a timely 
manner, the detailed ACD/SGD definition included in the proposed rule 
has been replaced with the statutory language. We will, place the 
specific ACD/SGD criteria that were included in the proposed rule into 
the TRICARE Policy Manual (TPM). That is, we will be adopting CMS's 
augmentative communication device guidelines as we indicated in the 
proposed rule and we will incorporate CMS's guidelines into the TPM. 
The TPM contains policies to implement 32 CFR Part 199 and must be used 
in conjunction with the CFR for complete policy information. The TPM 
can be accessed through the TRICARE Web site at http://www.tricare.osd.mil.
    Comment 2: We received comments regarding the specific ACD/SGD 
criteria. For example, it was pointed out to us that we failed to 
include one of CMS's criteria in our definition.
    Response: The omission of the criterion was an oversight and will 
be corrected. We have decided to include only the NDAA 02 statutory 
requirements in the regulation rather than listing the specific ACD/SGD 
criteria. We plan to include the specifics regarding ACD/SGD coverage 
(i.e., criteria similar to CMS's coverage criteria) in the TRICARE 
Policy Manual.
    Comment 3: We received comments regarding our decision to adopt 
CMS's coverage of SGDs for ACDs. Some of the commenters applauded our 
decision to adopt CMS's policy. Others expressed dissatisfaction.
    Response: The NDAA 02 amended title 10, United States Code, by 
adding a new subsection 1077(e)(2), which says, ``An augmentative 
communication device may be provided under subsection (a)(15).'' 
Subsection (a)(15) states that the Department may provide, ``Prosthetic 
devices, as determined by the Secretary of Defense to be necessary 
because of significant conditions resulting from trauma, congenital 
anomalies, or disease.'' The Department, in developing its guidelines, 
policies, and coverage criteria of ACDs/SGDs, is required to classify 
them as voice prosthesis, while CMS may classify ACDs/SGDs as durable 
medical equipment. Although we are required to classify them as voice 
prosthesis, our decision to adopt CMS's coverage of SGDs for ACDs is 
consistent with TRICARE seeking consistency with CMS. CMS, like 
TRICARE, is a federal program, and where appropriate, adoption of their 
national standard helps ensure delivery of a uniform benefit.
    Comment 4: A commenter asked whether argumentative communication 
devices/or speech generating devices were covered previously only under 
the PFPWD. They also asked whether tracheostomy valves and cochlear 
implants were purchased under TRICARE and whether these provisions will 
remain unchanged.
    Response: ACDs/SGDs are currently allowed under the PFPWD when 
there is a serious physical disability and the individual qualifies for 
the PFPWD. Since certain ACDs/SGDs will now be a benefit under the 
Basic Program, the individual will no longer have to qualify for PFPWD. 
Also, unlike hearing aids, this benefit is not limited to dependents of 
active duty members. The PFPWD is a program statutorily limited to only 
active duty dependents, so this is an expansion of benefits.
    Tracheostomy valves and cochlear implants have been TRICARE 
benefits and this remains unchanged.
    Comment 5: A commenter recommended that ACDs/SGDs also include non-
speech generating devices which also help an individual to maximize 
communication skills for functional and effective communication.
    Response: The statutory language states that ACDs may be provided 
as a voice prosthesis. We interpret this as speech generating devices 
only. There will be some communicative devices that do not meet the 
definition of ACD/SGD, but that are considered communication devices, 
that have been allowed for coverage under the PFPWD. This will not 
change and those devices will continue to be provided.
    Comment 6: The narrative introduction to the proposed ACD/SGD 
regulations states that ``In proposing this policy, we have also taken 
into consideration recommendations provided to us by the American 
Speech Language Hearing Association (ASHA) in defining this benefit.'' 
ASHA's recommendations, submitted in March 22, 2002, did not infer that 
covered ACDs should be limited to SGDs as currently proposed.
    Response: We apologize for inferring that the ASHA recommended that 
ACDs should be limited to those SGDs outlined in the proposed rule.
    Comment 7: A commenter recommended that the services of speech-
language pathologists be required as related to ACD/SGD evaluation and 
establishment of a treatment plan. Such is the requirement specified in 
the DMERC Supplier Manual reference above. If it is not appropriate to 
include this requirement in the regulation, then it should appear in 
the policy manual.

[[Page 60551]]

    Response: TRICARE will allow otherwise covered medically necessary 
and appropriate services required and prescribed by a physician that 
are associated with the ACD/SGD.

Prosthetics

    Comment 8: One commenter restated the changes regarding prosthetics 
and expressed concern that the same coverage policies are not being 
applied to TRICARE's orthotic benefit.
    Response: The NDAA 02 statutory language refers only to prosthetic 
devices and makes no mention of orthotic care. Therefore, orthotic care 
is not addressed in this regulation.
    Comment 9: We have concerns about the future findings of the CMS 
established Negotiated Rulemaking Committee on Special Payment 
Provisions and Requirements for Prosthetics and Orthotics.
    Response: If TRICARE decides to make any changes based on CMS's 
negotiated rulemaking, we will publish a proposed rule with a comment 
period giving the public an opportunity to voice their concerns.

Hearing Aids

    Comment 10: Two commenters stated that they agree that there is not 
industry standard or industry definition of ``profound'' hearing loss 
and they proposed changing the dB level of profound hearing loss for 
children. The dB level in the proposed rule was 26 dB. The commenter 
asked us to change it to 15dB.
    Response: The statutory language provides coverage for a hearing 
aid when a ``profound hearing loss'' is present. There is no industry 
standard or industry definition of ``profound'', we consulted with 
TRICARE, Veterans Affairs, and Service physicians and Audiology 
Consultants who informed us a 26dB level falls within a mild hearing 
loss range. Consequently, we believe 26dB is a reasonable and generous 
interpretation of profound hearing loss. Under PFPWD, the dB level was 
45dB or greater in one ear or 30dB in both ears. By lowering the dB 
level to 26 we are making this benefit much more generous than what was 
previously available under the PFPWD.
    Comment 11: We were asked to include a statement that testing areas 
should be in compliance with ANSI standard S3.1-1999, Maximum 
Permissible Ambient Noise Levels for Audiometric Test Rooms, or any 
future revision thereof.
    Response: We have taken this under advisement. If necessary and 
appropriate, we will include such a statement in the TRICARE Policy 
Manual hearing aid issuance.
    Comment 12: A commenter urged TRICARE to require that any hearing 
aid fitting services for a TRICARE beneficiary be provided by an ASHA-
certified, and where applicable, licensed audiologist. We believe that 
audiologists holding the Certificate of Clinical Competence in 
Audiology (CCC-A) as granted by ASHA will help assure a high level of 
quality in the delivery of this important benefit.
    Response: TRICARE has established the regulatory criteria for being 
an authorized TRICARE provider based upon the broad statutory 
guidelines contained in title 10, United States Code, chapter 55, and 
primarily 10 U.S.C. 1079(a)(13) and 1079(a)(8). For individual 
paramedical providers under TRICARE, 32 CFR 199.6(c)(3)(iii)(I)(4) 
lists audiologists. Paramedical providers may be reimbursed for 
services provided on a fee-for-service basis only if the beneficiary is 
referred by a physician for the treatment of a medically diagnosed 
condition and a physician must also provide continuing and ongoing 
oversight and supervision of the program or episode of treatment 
provided by the audiologists. All paramedical providers must be 
licensed if required in that state, and where a state does not license 
a specific category or paramedical, certification by a Qualified 
Accreditation Organization as defined in Sec.  199.2 is required. 
Certification must be at full clinical practice level.
    Comment 13. One commenter stated that they prefer that the 
limitation exists that anyone with hearing loss ``that interferes with 
communication'' would be eligible for coverage.
    Response: The term ``profound'' hearing loss appears in the statute 
and TRICARE has used its discretion in interpreting that term. Prior to 
the implementation of this rule, and when the benefit was available 
under PFPWD, the dB level was 45dB or greater in one ear or 30dB in 
both ears. By lowering the dB level to 26 we are making this benefit 
much more generous than what was previously available under the PFPWD.
    Comment 14: One commenter stated that the proposed criteria for 
adults and children listed in this new rule will appropriately allow 
patients with vocational, social, psychological and environmental needs 
to receive benefits from hearing amplification. However, they also 
stated that the evaluation and treatment process would be greatly 
enhanced by the development of a comprehensive protocol utilizing non-
audiometric data. They state that a comprehensive protocol for 
determining hearing aid candidacy and treatment strategies would 
include data such as the client's physical status (dexterity, visual 
status), psychological status (attitude, motivation, cognitive and 
mental status), and communication status (auditory-visual speech 
perception abilities, auditory speech perception abilities) and the 
unique communication environments in which the client must function.
    Response: In addition to now paying for a hearing aid for a 
dependent of an active duty member who has a profound hearing loss, 
TRICARE will also cover all medically necessary and appropriate 
services and supplies associated with the hearing aid.
    Comment 15: A commenter advised us that we may receive some 
comments which dispute the proposed rule's proposed definition of what 
constitutes a ``profound'' hearing loss, since typical clinical 
categorizations (using pure tone hearing thresholds alone) would not 
typically associate ``profound'' with the range of hearing thresholds 
listed in section 199.2. They stated that they are aware of, and agree 
with, the intentions of the audiologist consultants from the Department 
of Defense and the Department of Veterans Affairs who provided guidance 
in the drafting of this rule. They also agree that there is no 
universal standard for ``profound'' loss. The comment continued by 
stating that if hearing aids were only made available to individuals 
with audiometric thresholds exceeding 90dBHL (considered by many 
physicians to represent a profound loss, using only pure tone 
audiometry results), most hearing impaired patients would be 
inappropriately excluded.
    Response: We thank the commenter for their support and 
acknowledgement of the sufficiency and appropriateness of our criteria 
of 40dB and 26db when defining a profound hearing loss.
    Comment 16: A comment was received recommending that the 
Supplementary Information portion of Section V. Hearing Aids include 
the requirements for a qualified audiologist.
    Response: Audiologists are currently authorized providers under 
TRICARE. See 32 CFR 199.6 (c)(3)(iii)(I). Now that hearing aids are a 
Basic Program benefit for active duty family members, otherwise covered 
services and supplies associated with audiologists and speech 
therapists may be covered. Consequently, we have deleted the Basic 
Program exclusion found at 32 CFR 199.4 (g)(45) regarding audiologists 
and speech therapists. While we are deleting the exclusion, it is 
necessary to point out that otherwise covered

[[Page 60552]]

services and supplies from these types of providers may be provided 
only if the beneficiary is referred by a physician for the treatment of 
a medically diagnosed condition and a physician must also provide 
continuing and ongoing oversight and supervision of these providers.
    Comment 17: We find no reference in the rule to how TRICARE payment 
methods would apply. We anticipate that TRICARE payments for hearing 
aids will remain consistent with what the standard had been under the 
PFPWD. Under this program, the active duty sponsor was responsible for 
a co-payment based on their rank (e.g. ranging from $25 to $250 per 
$1000, per device).
    Response: Under the TRICARE Basic Program, the beneficiary's cost 
share (and deductible, if any) will be based upon which program they 
are participating in (TRICARE Prime, Standard, or Extra), and their 
status as the dependent of an active duty member (statutorily hearing 
aids are available to only the dependent of an active duty family 
member). Cost shares and deductibles are also statutorily based upon 
these two factors. The copayments and cost-shares for the TRICARE Basic 
Program have a different statutory basis than the PFPWD. Because 
hearing aids will now be obtained by dependents of an active duty 
family member under the Basic Program, the Basic Program cost-sharing 
provisions must apply. These copayments are as follows: TRICARE Prime 
active duty beneficiaries will have no copayment (i.e., a $0.00 
copayment); those who use TRICARE Standard will have a 20% cost share 
after meeting their statutory fiscal year deductible ($150 for an 
individual/$300 for a family; $50/$100 for dependents of E--4 or 
below); those who use TRICARE Extra will have 15% cost-sharing after 
meeting their statutory deductible.
    Comment 18: Is this really an expansion of hearing aid benefits to 
AD dependents since it is already being provided under the PFPWD 
guidelines and all who need an aid qualify for PFPWD?
    Response: Hearing aids will be offered under the Basic Program only 
and will not be offered as a benefit under the PFPWD once this rule is 
implemented. It is an enhancement of benefits because we have relaxed 
the hearing levels necessary to qualify for a hearing aid and have 
offered hearing aids to all active duty family members who meet the 
criteria. Additionally, those enrolled in TRICARE Prime will have no 
cost share, as opposed to the statutory cost share based on rank that 
they pay today when they access the benefit under the PFPWD.
    Comment 19: Does the change mean that the military treatment 
facility (MTFs) will be fitting and purchasing the aids through our VA 
contract, rather than in the civilian sector, thus saving tax dollars 
and that is the reason for the change?
    Response: The reason for the change is that the NDAA-02 authorized 
hearing aids as a TRICARE benefit under the Basic program. The use of a 
VA contract to fit and purchase hearing aids is a decision that needs 
to be made by the MTF.
    Comment 20: Currently assistive listening devices are purchased via 
the PFPWD. The exclusion of auditory sensory enhancing devices in the 
proposed rule will not affect what we currently purchase through the 
PFPWD correct?
    Response: Correct. The exclusion found in the proposed rule applies 
to the TRICARE Basic program, not the PFPWD.

DME

    Comment 21: Under the new statute, we would anticipate, assuming 
that other conditions of coverage are met, that TRICARE would cover 
certain sensory or communication aids such as screen readers, Closed 
Circuit TVs, or other optical scanners for people with vision 
impairments. Similarly we would expect that TRICARE would potentially 
cover certain home modifications such as grab bars and raised toilet 
seats that facilitate better functioning with self care, safety, and 
may prevent conditions such as hip fractures and other injuries from 
falls.
    Response: As previously discussed, under 10 U.S.C. 1079(a)(13), 
TRICARE may not provide any service or supply which is not medically or 
psychologically necessary to prevent, diagnose, or treat a mental or 
physical illness, injury, or bodily malfunction as assessed or 
diagnosed by a physician or other authorized provider. Those items of 
DME as defined in section 199.2 that are also medically necessary and 
appropriate are covered. There are some items that may serve a 
preventive purpose, but TRICARE has a very limited preventive benefit 
that is based on statute. Consequently, some of those items listed by 
the commenter do not meet coverage provisions.
    Comment 22: A commenter stated that the Medicaid program makes no 
express reference to DME in contrast to the CMS. They continued to 
express that for the Medicaid program, the operative term is equipment. 
In their opinion, the TRICARE program continues to require covered DME 
to be ``primarily and customarily designed and intended to serve a 
medical purpose rather than primarily for transportation, comfort or 
convenience. The regulations also continue to prohibit coverage for 
``luxury'' or ``deluxe'' items. These requirements appear out of step 
with the new statute's standard of maximizing function and preventing 
deterioration of function.
    Response: Medicaid and TRICARE are separate programs each with 
their own governing statutes and provisions. Medical necessity is a 
requirement for the TRICARE program and the NDAA 02 statutory language 
must be read in conjunction with the existing medical necessity 
requirement. DME with deluxe, luxury, or immaterial features which 
increase the cost of the item to the government relative to a similar 
item without those features is excluded. See 32 CFR 
199.4(d)(3)(ii)((D)(3).
    Comment 23: A commenter opined that technology has blurred the line 
between what can legitimately be called a convenience or luxury and 
what improves the functionality of quality of life of the person, 
thereby improving his or her health status.
    Response: We will allow DME that meets the definition described in 
this final rule, is medically or psychologically necessary, and meets 
all parameters of TRICARE coverage.
    Comment 24: One commenter indicated that in the final rule, TRICARE 
should specifically address the issue of accessing power mobility 
before a long term manual wheelchair user is no longer able to propel 
him or herself due to secondary injury as a result of such wheelchair 
use.
    Response: Current regulatory provisions (32 CFR 199.4(d)(3)(iv)(C)) 
cover a wheelchair, or a CHAMPUS approved alternative, which is 
medically necessary to provide basic mobility, including additional 
cost for medically necessary modifications to accommodate a particular 
disability. These may be covered as durable medical equipment. 
Additionally, the Policy Manual allows for electric-powered, cart-type 
transports as an alternative to an electric wheelchair. DME with 
deluxe, luxury, or immaterial features which increase the cost of the 
term to the government relative to a similar item without those 
features remains a TRICARE exclusion.
    Comment 25: A commenter suggested that we change the current 
definition of DME to conform to CMS's definition of DME. CMS defines 
DME as equipment furnished by a supplier or a home health agency that--
(1) Can withstand repeated use; (2) is primarily and

[[Page 60553]]

customarily used to serve a medical use; (3) generally is not useful to 
an individual in the absence of an illness or injury; (4) is 
appropriate for use in the home. Alternatively, the commenter suggested 
that TRICARE revise its definition of DME by deleting the wording ``* * 
* rather than primarily for transportation, comfort or convenience * * 
*'' and adding a separate criterion that DME ``generally is not useful 
to an individual in the absence of an illness or injury''.
    Response: The proposed rule stated that we intended to modify the 
DME definition to incorporate the NDAA 02 language into the DME 
definition. The revised DME definition was proposed to read as follows: 
Equipment for which the allowable charge is over $100 and which:
    (1) Is medically necessary for the treatment of a covered illness 
or injury;
    (2) Improves, restores, or maintains the function of a malformed, 
diseased, or injured body part, or can otherwise minimize or prevent 
the deterioration of the patient's function or condition;
    (3) Can maximize the patient's function consistent with the 
patient's physiological or medical needs.
    (4) Is primarily and customarily designed and intended to serve a 
medical purpose rather than primarily for transportation, comfort, or 
convenience
    (5) Can withstand repeated use;
    (6) Provides the medically appropriate level of performance and 
quality for the medical condition present (that is, nonluxury or 
nondeluxe);
    (7) Is other than spectacles, eyeglasses, contact lenses, or other 
optical devices, hearing aids (unless otherwise provided as a covered 
TRICARE benefit), or other communication devices (unless otherwise 
provided as a covered TRICARE benefit); and
    (8) Is other than exercise equipment, spas, whirlpools, hot tubs, 
swimming pools or other such items.
    When we received this comment, we reviewed both our current and 
proposed DME definition. It became clear to us that some of the 
criteria included in the definition were actually coverage criteria 
rather than criteria that identify DME. We then compared the current 
and proposed TRICARE definitions for DME to the definition used by CMS. 
Based on that side-by-side comparison, we decided to update our DME 
definition by adopting the same first three criteria listed in CMS's 
definition for use in TRICARE's definition as that these criteria have 
a crosswalk to criteria found in our current DME definition. We did not 
adopt the fourth criteria in the CMS definition regarding in-home use 
because it provides a restriction not currently found under the TRICARE 
program. Additionally, we moved the coverage criteria currently found 
in the DME definition at 32 CFR 199.2, to 32 CFR 199.4(d)(3)(ii)(A) 
which outlines the scope of the DME benefit. This final rule has been 
revised accordingly.

Misc. Comments/Admin Comments

    Comment 26: A commenter expressed concern with the statement in the 
``Regulatory Procedures'' section of the proposed rule stating that 
this regulation is ``not economically significant.'' They interpreted 
this to mean that the TRICARE program ``does not anticipate spending 
any more resources on this benefit category than the program did before 
this new law was adopted.''
    Response: The language does not mean that the TRICARE program does 
not anticipate spending any more resources on this benefit category 
than the program did before the new law. The statement is a requirement 
in rulemaking under the Regulatory Flexibility Act (RFA). There are 
three specific RFA requirements applicable to rulemaking:
    1. Analysis of the impact of each rulemaking on small entities and 
evaluation of alternatives that would accomplish regulatory objectives 
without unduly burdening small entities or erecting barriers to 
competition.
    2. The periodic review of existing agency rules which have a 
significant economic impact on a substantial number of small entities.
    3. Preparation and publication of a semiannual agenda listing rules 
under development that may have a significant economic impact on a 
substantial number of small entities.
    Additionally, Executive Order 12866 requires that comprehensive 
regulatory impact analysis be performed on any economically significant 
regulatory action, defined as one that would result in an annual effect 
of $100 million or more on the national economy or which would have 
other substantial impacts.
    Neither the RFA or Executive Order 12866 provide spending limits 
for these additional benefits and our statement in the proposed rule 
shall have no impact on the resources provided for this new benefit. 
TRICARE shall provide the benefits within the provisions outlined in 
this final rule.
    Comment 27: Add ``Bob Stump'' in front of NDAA-03.
    Response: Done.

Summary of Regulatory Modifications

    The following modifications were made as a result of suggestions 
received during the public comment period:
    (1) We revised the definition of ACD/SGD to comply with the 
statutory language. Additionally, we eliminated the specific criteria 
for an ACD/SGD and will be placing that into the TRICARE Policy Manual.
    (2) We adopted a modified version of CMS's definition of DME and 
moved criteria found in the current DME definition to 32 CFR 199.4.
    (3) We revised the definition of prosthetics to comply with the 
statutory language.
    (4) We revised the definition of rehabilitative therapy to comply 
with the statutory language.
    (5) We clarified that rehabilitative therapy are therapies that are 
medically necessary and appropriate, that are proven medical treatment, 
that are not considered custodial care, that are provided by an 
authorized TRICARE provider and that are not otherwise excluded as a 
TRICARE benefit may be considered for TRICARE coverage.

Regulatory Procedures

    Executive Order 12866 requires that a regulatory impact analysis be 
performed on any economically significant rule. An economically 
significant rule is defined as one that would result in the annual 
effect on the national economy of $100 million or more, or have other 
substantial impact. The Regulatory Flexibility Act (RFA) requires that 
each Federal Agency prepare, and make available for public comment, a 
regulatory flexibility analysis when the agency issues regulations 
which would have a significant impact on a substantial number of small 
entities.
    As previously mentioned this final rule is not a major rule under 
the Congressional Review Act, because its economic impact will be less 
than $100 million. The changes set forth in this final rule are 
revisions to existing regulation. The changes made in this final rule 
involve an expansion of TRICARE benefits. In addition, this final rule 
will have minor impact and will not significantly affect a substantial 
number of small entities. In light of the above, no regulatory impact 
analysis is required.
    This final rule will not impose additional information collection 
requirements on the public under the Paperwork Reduction Act of 1995 
(44 U.S.C. 55).

[[Page 60554]]

List of Subjects in 32 CFR Part 199

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


0
Accordingly, 32 CFR part 199 is amended as follows:

PART 199--[AMENDED]

0
1. The authority citation for Part 199 continues to read as follows:

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

0
2. Section 199.2(b) is amended by revising the definitions of ``Durable 
medical eqiupment'', and ``Prosthetic devices (prosthesis)'', by adding 
definitions of ``Augmentative communication device'', ``Profound 
hearing loss'', ``Prosthetic'', ``Prosthetic supplies'', 
``Rehabilitative therapy'', and ``Speech generating device'' in 
alphabetical order to read as follows:


Sec.  199.2  Definitions.

* * * * *
    (b) * * *
    Augmentative communication device (ACD). A voice prosthesis as 
determined by the Secretary of Defense to be necessary because of 
significant conditions resulting from trauma, congenital anomalies, or 
disease. Also referred to as Speech Generating Device.
* * * * *
    Durable medical equipment. Equipment that--
    (1) Can withstand repeated use;
    (2) Is primarily and customarily used to serve a medical purpose; 
and
    (3) Generally is not useful to an individual in the absence of an 
illness or injury.
    Profound hearing loss (adults). An ``adult'' (a spouse as defined 
in section 32 CFR 199.3(b) of this part of a member of the Uniformed 
Services on active duty for more than 30 days) with a hearing threshold 
of:
    (1) 40 dB HL or greater in one or both ears when tested at 500, 
1,000, 1,500, 2,000, 3,000, or 4,000Hz; or
    (2) 26 dB HL or greater in one or both ears at any three or more of 
those frequencies; or
    (3) A speech recognition score less than 94 percent.
    Profound hearing loss (children). A ``child'' (an unmarried child 
of an active duty member who otherwise meets the criteria (including 
age requirements) in 32 CFR 199.3 of this part) with a 26dB HL or 
greater hearing threshold level in one or both ears when tested in the 
frequency range at 500, 1,000, 2,000, 3,000 or 4,000 Hz.
* * * * *
    Prosthetic or Prosthetic Device (prosthesis). A prosthetic or 
prosthetic device (prosthesis) determined by the Secretary of Defense 
to be necessary because of significant conditions resulting from 
trauma, congenital anomalies, or diseases.
    Prosthetic supplies. Supplies that are necessary for the effective 
use of a prosthetic or prosthetic device.
* * * * *
    Rehabilitative therapy. Any rehabilitative therapy that is 
necessary to improve, restore, or maintain function, or to minimize or 
prevent deterioration of function, of a patient and prescribed by a 
physician.
* * * * *
    Speech generating device (SGD). See Augmentative Communication 
Device.
* * * * *

0
3. Section 199.3 is amended by revising paragraph (e) to read as 
follows:


Sec.  199.3  Eligibility.

* * * * *
    (e) Eligibility Under the Transitional Assistance Management 
Program (TAMP). (1) Transitional health care benefits under TRICARE are 
authorized for the following eligibles:
    (i) A member who is involuntarily separated from active duty and 
the dependents of the member.
    (ii) A member of a reserve component who is separated from active 
duty to which called or ordered in support of a contingency operation 
if the active duty is active duty for a period of more than 30 days and 
the dependents of the member.
    (iii) A member who is separated from active duty for which the 
member is involuntarily retained under 10 U.S.C. 12305, is support of a 
contingency operation and the dependents of the member.
    (iv) A member who is separated from active duty pursuant to a 
voluntary agreement of the member to remain on active duty for a period 
of less than one year in support of a contingency operation and the 
dependents of the member.
    (2) Time period of eligibility. Transitional health care shall be 
available for a specified period of time for members and dependents 
beginning on the date which the member is separated as follows:
    (i) For members separated with less than 6 years of active service, 
60 days.
    (ii) For members separated with 6 or more years of active service, 
120 days.
* * * * *

0
4. Section 199.4 is amended by revising paragraph (d)(3)(ii)(A), 
paragraph (d)(3)(vii), the text of paragraph (g)(41) preceding the 
note, paragraph (g)(47), paragraph (g)(51), by adding new paragraphs 
(e)(23), (e)(24), (e)(25), and by removing and reserving (g)(45) to 
read as follows:


Sec.  199.4  Basic program benefits.

* * * * *
    (d) * * *
    (3) * * *
    (ii) * * *
    (A) Scope of benefit. (1) Subject to the exceptions in paragraphs 
(d)(3)(ii)(B) and (d)(3)(ii)(C) of this section, only durable medical 
equipment (DME) which is ordered by a physician for the specific use of 
the beneficiary shall be covered.
    (2) In addition, any customization of durable medical equipment 
owned by the patient is authorized to be provided to the patient and 
any accessory or item of supply for any such authorized durable medical 
equipment, may be provided to the patient if the customization, 
accessory, or item of supply is essential for--
    (i) Achieving therapeutic benefit for the patient
    (ii) Making the equipment serviceable; or
    (iii) Otherwise assuring the proper functioning of the equipment.
    (3) Further, equipment as defined in Sec.  199.2 of this part and 
which:
    (i) Is medically necessary for the treatment of a covered illness 
or injury;
    (ii) Improves, restores, or maintains the function of a malformed, 
diseased, or injured body part, or can otherwise minimize or prevent 
the deterioration of the patient's function or condition;
    (iii) Can maximize the patient's function consistent with the 
patient's physiological or medical needs;
    (iv) Provides the medically appropriate level of performance and 
quality for the medical condition present (that is, nonluxury or 
nondeluxe);
    (v) Is not otherwise excluded by this Regulation.
* * * * *
    (vii) Prosthetics, prosthetic devices, and prosthetic supplies, as 
determined by the Secretary of Defense to be necessary because of 
significant conditions resulting from trauma, congenital anomalies, or 
disease. Additionally, the following are covered:
    (A) Any accessory or item of supply that is used in conjunction 
with the device for the purpose of achieving therapeutic benefit and 
proper functioning;
    (B) Services necessary to train the recipient of the device in the 
use of the device;
    (C) Repair of the device for normal wear and tear or damage;
    (D) Replacement of the device if the device is lost or irreparably 
damaged or

[[Page 60555]]

the cost of repair would exceed 60 percent of the cost of replacement.
* * * * *
    (e) * * *
    (23) A speech generating device (SGD) as defined in Sec.  199.2 of 
this part is covered as a voice prosthesis. The prosthesis provisions 
found in paragraph (d)(3)(vii) of this section apply.
    (24) A hearing aid, but only for a dependent of a member of the 
uniformed services on active duty and only if the dependent has a 
profound hearing loss as defined in Sec.  199.2 of this part. Medically 
necessary and appropriate services and supplies, including hearing 
examinations, required in connection with this hearing aid benefit are 
covered.
    (25) Rehabilitation therapy as defined in Sec.  199.2 of this part 
to improve, restore, or maintain function, or to minimize or prevent 
deterioration of function, of a patient when prescribed by a physician. 
The rehabilitation therapy must be medically necessary and appropriate 
medical care, rendered by an authorized provider, necessary to the 
establishment of a safe and effective maintenance program in connecti9n 
with a specific medical condition, and must not be custodial care or 
otherwise excluded from coverage.
* * * * *
    (g) * * *
    (41) Hair transplants, wigs/hair pieces/cranial prosthesis.


    Note: * * *

* * * * *
    (45) [Reserved]
* * * * *
    (47) Eye and hearing examinations. Eye and hearing examinations 
except as specifically provided in paragraphs (c)(2)(xvi), (c)(3)(xi), 
and (e)(24) of this section, or except when rendered in connection with 
medical or surgical treatment of a covered illness or injury.
* * * * *
    (51) Hearing aids. Hearing aids or other auditory sensory enhancing 
devices, except those allowed in paragraph (e)(24) of this section.
* * * * *

0
4. Section 199.14 is amended by redesignating paragraphs (k) through 
(n) as (l) through (o) and by adding a new paragraph (k) to read as 
follows:


Sec.  199.14  Provider reimbursement methods.

* * * * *
    (k) Reimbursement of Durable Medical Equipment, Prosthetics, 
orthotics and Supplies 9DMEPOS). Reimbursement of DMEPOS may be based 
on the same amounts established under the Centers for Medicare and 
Medicaid Services (CMS) DMEPOS fee schedule under 42 CFR part 414, 
subpart D.
* * * * *

    Dated: September 28, 2004
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 04-22684 Filed 10-8-04; 8:45 am]
BILLING CODE 5001-06-M