Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / Rules and Regulations 66989

the sale of the residence, in a separate

account.

* * * * *

(9) Sale of residence to grantor,

grantor’s spouse, or entity controlled by

grantor or grantor’s spouse. The

governing instrument must prohibit the

trust from selling or transferring the

residence, directly or indirectly, to the

grantor, the grantor’s spouse, or an

entity controlled by the grantor or the

grantor’s spouse during the retained

term interest of the trust, or at any time

after the retained term interest that the

trust is a grantor trust. For purposes of

the preceding sentence, a sale or transfer

to another grantor trust of the grantor or

the grantor’s spouse is considered a sale

or transfer to the grantor or the grantor’s

spouse; however, a distribution (for no

consideration) upon or after the

expiration of the retained term interest

to another grantor trust of the grantor or

the grantor’s spouse pursuant to the

express terms of the trust will not be

considered a sale or transfer to the

grantor or the grantor’s spouse if such

other grantor trust prohibits the sale or

transfer of the property to the grantor,

the grantor’s spouse, or an entity

controlled by the grantor or the grantor’s

spouse. In the event the grantor dies

prior to the expiration of the retained

term interest, this paragraph (c)(9) does

not apply to the distribution (for no

consideration) of the residence to any

person (including the grantor’s estate)

pursuant to the express terms of the

trust or pursuant to the exercise of a

power retained by the grantor under the

terms of the trust. Further, this

paragraph (c)(9) does not apply to an

outright distribution (for no

consideration) of the residence to the

grantor’s spouse after the expiration of

the retained trust term pursuant to the

express terms of the trust. For purposes

of this paragraph (c)(9), a grantor trust

is a trust treated as owned in whole or

in part by the grantor or the grantor’s

spouse pursuant to sections 671 through

678, and control is defined in

§ 25.2701–2(b)(5)(ii) and (iii).

* * * * *

Par. 3. Section 25.2702–7 is amended

as follows:

1. The first sentence is revised.

2. A sentence is added at the end of

the section.

The revision and addition read as

follows:

§ 25.2702–7 Effective dates.

Except as provided in this section,

§§ 25.2702–1 through 25.2702–6 apply

as of January 28, 1992. * * * The fourth

through eighth sentences of § 25.2702–

5(b)(1) and § 25.2702–5(c)(9) apply with

respect to trusts created after May 16,

1996.

PART 602—OMB CONTROL NUMBERS

UNDER THE PAPERWORK

REDUCTION ACT

Par. 4. The authority citation for part

602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 5. In § 602.101, paragraph (c) is

amended by adding an entry in

numerical order to the table to read as

follows:

§ 602.101 OMB Control numbers.

* * * * *

(c) * * *

CFR part or section where

identified and described

Current

OMB control No.

* * * * *

25.2702–5 ................................. 1545–1485

* * * * *

Michael P. Dolan,

Acting Commissioner of Internal Revenue.

Approved: December 4, 1997.

Donald C. Lubick,

Acting Assistant Secretary of the Treasury.

[FR Doc. 97–33356 Filed 12–22–97; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR 199

[DoD 6010.8–R]

RIN 0720–AA40

Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS);

TRICARE Selected Reserve Dental

Program

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

SUMMARY: This final rule establishes the

TRICARE Selected Reserve Dental

Program (TSRDP) to provide dental care

to members of the Selected Reserves of

the Ready Reserve. The final rule details

operation of the program.

EFFECTIVE DATE: This final rule is

effective January 22, 1998.

ADDRESSES: Office of Health Services

Financing, Department of Defense,

Room 1B657, Pentagon, Washington, DC

20301–1200.

FOR FURTHER INFORMATION CONTACT:

Cynthia P. Speight, Office of the

Assistant Secretary of Defense (Health

Affairs), (703) 697–8975.

SUPPLEMENTARY INFORMATION:

I. Overview of the Final Rule

Implementation of the TRICARE

Selected Reserve Dental Program

(TSRDP) was directed by Congress in

section 705 of the National Defense

Authorization Act for Fiscal Year 1996,

Public Law 104–106, which amended

title 10, United States Code, by adding

section 1076b. This law directed the

implementation of a dental program for

members of the Selected Reserve of the

Ready Reserve, providing for voluntary

enrollment and premium sharing

between DoD and the enrollee. Section

702 of the 1997 National Defense

Authorization Act, Pub. L. 104–201

amended 10 U.S.C. 1076b, by revising

the program’s start date and also

changing several operational

requirements.

Included in the program are the 50

United States and the District of

Columbia, Puerto Rico, Guam, and the

U.S. Virgin Islands. Enrollment in the

TSRDP will be voluntary and

accomplished via an enrollment

application submitted to the contractor.

Initial enrollment shall be for a period

of 12 months followed by month-tomonth enrollment as long as the

enrollee chooses to continue

enrollment. The costs of the program

will be shared between the government

and the enrollee. The premium payment

shall be collected pursuant to

procedures established by the Assistant

Secretary of Defense (Health Affairs).

Dental coverage under the TSRDP will

consist of basic dental care, to include

diagnostic services, preventive services,

basic restorative services, and

emergency oral examinations. Enrollees

will be limited to an annual maximum

of $1,000 of paid allowable charges per

year. Minor administrative changes have

been made in the benefits plan section

in order to correct outdated codes.

Under this final rule, where possible,

Reservists may make use of

participating dental providers in their

areas and may benefit from reduced out

of pocket costs and provider submission

of claims and acceptance of contractor

allowances and arrangements. Enrollees

using non-network providers may be

balance billed amounts in excess of

allowable charges. Dental claims under

the TSRDP will be paid at the lower of

the billed charges or the Usual,

Customary and Reasonable (UCR) level,

in which the customary rate is

calculated at the 85th percentile or

higher of billed charges.
66990 Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / Rules and Regulations

TSRDP eligible beneficiaries will

obtain information concerning the

program and the enrollment process

from the dental contractor. In the event

an issue arises regarding the level of

dental care received or the quality of

care, all appeals and grievances should

first be directed to the contractor for

resolution. Only those issues that

cannot be amicably resolved by the

contractor should be forwarded to the

TRICARE Support Office for review.

This final rule adopts the statutory

preemption authority of 10 U.S.C.

section 1103. This statute broadly

authorizes preemption of state laws in

connection with DoD contracts for

medical and dental care. The Assistant

Secretary of Defense (Health Affairs) has

made the judgment that preemption is

necessary and appropriate to assure the

operation of a consistent, effective, and

efficient federal program. Absent

preemption of certain State and local

laws on insurance regulation and other

matters, competition would be severely

limited and the process substantially

delayed. The final rule incorporates

language to clarify that the preemption

of State laws section includes

preemption of State and local laws

imposing premium taxes on health or

dental insurance carriers or

underwriters or other plan managers, or

similar taxes on such entities.

As directed in the enacting

legislation, the Department of Defense

utilized a full and open competition to

obtain a dental contractor to provide

dental insurance coverage.

II. Public Comments

The interim final rule was published

on May 16, 1997 (62 FR 26939). We

received one public comment. We thank

the commenter; significant items raised

by the commenter and our analysis of

the comments are summarized below in

the appropriate sections of the

preamble.

1. Benefits. The commenter

recommended expanding the benefits

under the program to include

periodontics.

Response. Under the law, 10 U.S.C.

1076b, the TRICARE Selected Reserve

Dental Program shall provide benefits

for basic dental care and treatment,

including diagnostic services,

preventive services, basic restorative

services and emergency oral

examinations; periodontics was not

included.

2. Benefits. We received a comment

suggesting the addition of crowns as a

benefit under the program.

Response. Under the law, 10 U.S.C.

1076b, the TRICARE Selected Reserve

Dental Program shall provide benefits

for basic dental care and treatment,

including diagnostic services,

preventive services, basic restorative

services and emergency oral

examinations. Crowns are not covered

under the program as they are not

considered to be a basic restorative

service.

3. Benefits. Another comment we

received pointed out that code 00130

had been changed to 00140.

Response. We concur with the

comment and procedure code 00130 has

been changed to 00140.

III. Rulemaking Procedures

Executive Order 12866 requires

certain regulatory assessments for any

‘‘significant regulatory action,’’ defined

as one which would result in an annual

effect on the economy of $100 million

or more, or have other substantial

impacts.

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 a

regulation which would have a

significant impact on a substantial

number of small entities.

This is not a significant regulatory

action under the provisions of Executive

Order 12866, and it would not have a

significant impact on a substantial

number of small entities.

The final rule will not impose

additional information collection

requirements on the public under the

Paperwork Reduction Act of 1995 (44

U.S.C. Chapter 55).

List of Subjects in 32 CFR Part 199

Claims, Health insurance, Individuals

with disabilities, Military personnel,

Reporting and recordkeeping

requirements.

Accordingly, 32 CFR part 199 is

amended as follows:

PART 199—[AMENDED]

1. The authority citation for Part 199

continues to read as follows:

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

55.

2. Part 199 is amended by revising

§ 199.21 to read as follows:

§ 199.21 TRICARE Selected Reserve

Dental Program (TSRDP).

(a) Purpose. The TSRDP is a premium

based indemnity dental insurance

coverage program that will be available

to members of the Selected Reserve of

the Ready Reserve. Dental coverage will

be available only to members of the

Selected Reserve, no family coverage

will be offered. The TSRDP is

authorized by 10 U.S.C. 1076b.

(b) General provisions. (1) Benefits are

limited to diagnostic services,

preventive services, basic restorative

services, and emergency oral

examinations.

(2) Premium costs for this coverage

will be shared by the enrollee and the

government.

(3) The program is applicable to

authorized providers in the 50 United

States and the District of Columbia,

Puerto Rico, Guam, and the U.S. Virgin

Islands.

(4) Except as otherwise provided in

this section or by the Assistant Secretary

of Defense (Health Affairs) or designee,

the TSRDP is administered in a manner

similar to the Active Duty Dependents

Dental Plan under § 199.13 of this part.

(5) The TSRDP shall be administered

through a contract.

(c) Definitions. Except as may be

specifically provided in this section, to

the extent terms defined in §§ 199.2 and

199.13(b) of this part are relevant to the

administration of the TRICARE Selected

Reserve Dental Program, the definitions

contained in §§ 199.2 and 199.13(b) of

this part shall apply to the TSRDP as

they do to CHAMPUS and the Active

Duty Dependents Dental Plan.

(d) Eligibility and enrollment.(1)

Eligibility. Enrollment in the TRICARE

Selected Reserve Dental Program is

open to members of the Selected

Reserve of the Ready Reserve.

(2) Notification of eligibility. The

contractor will notify persons eligible to

receive dental benefits under the

TRICARE Selected Reserve Dental

Program.

(3) Election of coverage. Following

this notification, interested Reservists

may elect to enroll. In order to obtain

dental coverage, written election by

eligible beneficiary must be made.

(4) Enrollment. Enrollment in the

TRICARE Selected Reserve Dental

Program is voluntary and will be

accomplished by submission of an

application to the TSRDP contractor.

Initial enrollment shall be for a period

of 12 months followed by month-tomonth enrollment as long as the

enrollee chooses to continue

enrollment.

(5) Period of coverage. TRICARE

Selected Reserve Dental Program

coverage is terminated on the last day of

the month in which the member is

discharged, transferred to the Individual

Ready Reserve, Standby Reserve, or

Retired Reserve, or ordered to active

duty for a period of more than 30 days.

(e) Premium sharing. The Government

and the enrollee will share in the

monthly premium cost.

(f) Premium payments. The enrollee

will be responsible for a monthly
Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / Rules and Regulations 66991

premium payment in order to obtain the

dental insurance.

(1) Premium payment method. The

premium payment may be collected

pursuant to procedures established by

the Assistant Secretary of Defense

(Health Affairs).

(2) Effects of failure to make premium

payments. Failure to make monthly

renewal premium payments will result

in the enrollee being disenrolled from

the TSRDP and subject to a lock-out

period of 12 months. Following this

period of time, eligible Reservists will

be able to reenroll if they so choose.

(3) Member’s share of premiums. The

cost of the TSRDP monthly premium

will be shared between the Government

and the enrollee. Interested eligible

Reservists may contact the dental

contactor to obtain the enrollee

premium cost. The member’s share may

not exceed $25 per month.

(g) Plan benefits. (1) The TSRDP will

provide basic dental coverage, to

include diagnostic services, preventive

services, basic restorative services, and

emergency oral examinations. The

following is the TSRDP covered dental

benefit (using the American Dental

Association, The Council on Dental Care

Program’s Code On Dental Procedures

and Nomenclature):

(i) Diagnostic: Comprehensive oral

evaluation (00150), and Periodic oral

evaluation (00120), Intraoral-complete

series (including bitewings) (00210);

Intraoral-periapical-first film (00220);

Intraoral-periapical-each additional film

(00230); Bitewings-single film (00272);

Bitewings-two films (00272); Bitewingsfour films (00274); Panoramic film

(00330); Pulp Vitality Tests (00460).

(ii) Preventive: Prophylaxis-adult

(limit-two per year) (01110); Tropical

application of fluoride (excluding

prophylaxis)-adult (01204).

(iii) Restorative: Amalgam-one

surface, permanent (02140); Amalgamtwo surfaces, permanent (02150);

Amalgam-three surfaces; permanent

(02160); Amalgam-four or more

surfaces, permanent (02161); Resin-one

surface, anterior (02330); Resin-two

surfaces, anterior (02331); Resin-three

surfaces, anterior (02332); Resin-four or

more surfaces or involving incisal angle

(anterior) (02335); Pin retention-per

tooth, in addition to restoration (02951).

(iv) Oral Surgery: Single tooth

(07110); Each additional tooth (07120);

Root removal-exposed roots (07130);

Surgical removal of erupted tooth

requiring elevation of mucoperiosteal

flap and removal of bone and/or section

of tooth (07210); Surgical removal of

residual tooth roots (cutting procedure)

(07250).

(v) Emergency: Limited oral

evaluation—problem focused (00140);

Palliative (emergency) treatment of

dental pain-minor procedures (09110).

(2) Codes listed in paragraph (g)(1) of

this section may be modified by the

Director, OCHAMPUS, to the extent

determined appropriate based on

developments in common dental care

practices and standard dental insurance

programs.

(h) Maximum annual cap. TSRDP

enrollees will be subject to a maximum

$1,000.00 of paid allowable charges per

year.

(i) Annual notification of rates.

TSRDP premiums will be determined as

part of the competitive contracting

process. Information on the premium

rates will be widely distributed.

(j) Authorized providers. The TSRDP

enrollee may seek covered services from

any provider who is fully licensed and

approved to provide dental care in the

state where the provider is located.

(k) Benefit payment. Enrollees are not

required to utilize the special network

of dental providers established by the

TSRDP contractor. For enrollees who do

use this network, however, providers

shall not balance bill any amount in

excess of the maximum payment

allowable by the TSRDP. Enrollees

using non-network providers may be

balance billed amounts in excess of

allowable charges. The maximum

payment allowable by the TSRDP

(minus the appropriate cost-share) will

be the lesser of:

(1) Billed charges; or

(2) Usual, Customary and Reasonable

rates, in which the customary rate is

calculated at the 85th percentile of

billed charges in that geographic area, as

measured in an undiscounted charge

profile in 1995 or later for that

geographic area (as defined by threedigit zip code).

(l) Appeal and hearing procedures.

All levels of appeals and grievances

established by the Contractor for

internal review shall be exhausted prior

to forwarding to OCHAMPUS for a final

review. Procedures comparable to those

established under § 199.13(h) of this

part shall apply.

(m) Preemption of State laws. (1)

Pursuant to 10 U.S.C. 1103, the

Department of Defense has determined

that in the administration of chapter 55

of title 10, U.S. Code, preemption of

State and local laws relating to health

insurance, prepaid health plans, or

other health care delivery or financing

methods is necessary to achieve

important Federal interests, including

but not limited to the assurance of

uniform national health programs for

military families and the operation of

such programs at the lowest possible

cost to the Department of Defense, that

have a direct and substantial effect on

the conduct of military affairs and

national security policy of the United

States. This determination is applicable

to the dental services contracts that

implement this section.

(2) Based on the determination set

forth in paragraph (m)(1) of this section,

any State or local law or regulation

pertaining to health or dental insurance,

prepaid health or dental plans, or other

health or dental care delivery,

administration, and financing methods

is preempted and does not apply in

connection with the TRICARE Selected

Reserve Dental Program contract. Any

such law, or regulation pursuant to such

law, is without any force or effect, and

State or local governments have no legal

authority to enforce them in relation to

the TRICARE Selected Reserve Dental

Program contract. (However, the

Department of Defense may, by contract,

establish legal obligations on the part of

the TRICARE Selected Reserve Dental

Program contractor to conform with

requirements similar to or identical to

requirements of State or local laws or

regulations).

(3) The preemption of State and local

laws set forth in paragraph (m)(2) of this

section includes State and local laws

imposing premium taxes on health or

dental insurance carriers or

underwriters or other plan managers, or

similar taxes on such entities. Such laws

are laws relating to health insurance,

prepaid health plans, or other health

care delivery or financing methods,

within the meaning of section 1103.

Preemption, however, does not apply to

taxes, fees, or other payments on net

income or profit realized by such

entities in the conduct of business

relating to DoD health services

contracts, if those taxes, fees or other

payments are applicable to a broad

range of business activity. For the

purposes of assessing the effect of

Federal preemption of State and local

taxes and fees in connection with DoD

health and dental services contracts,

interpretations shall be consistent with

those applicable to the Federal

Employees Health Benefits Program

under 5 U.S.C. 8909(f).

(n) Administration. The Assistant

Secretary of Defense (Health Affairs) or

designee may establish other rules and

procedures for the administration of the

TRICARE Selected Reserve Dental

Program.
66992 Federal Register / Vol. 62, No. 246 / Tuesday, December 23, 1997 / Rules and Regulations

Dated: December 15, 1997.

L.M. Bynum,

Alternate OSD Federal Register Liaison

Officer, Department of Defense.

[FR Doc. 97–33108 Filed 12–22–97; 8:45 am]

BILLING CODE 5000–04–M

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR 199

[DoD 6010.8–R]

RIN 0720–AA44

Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS);

TRICARE Retiree Dental Program

(TRDP)

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

SUMMARY: This final rule establishes the

TRICARE Retiree Dental Program

(TRDP), a premium based indemnity

dental insurance coverage program, that

will be available to retired members of

the Uniformed Services, their

dependents, and certain other

beneficiaries.

EFFECTIVE DATE: This final rule is

effective January 22, 1998.

ADDRESSES: Office of Health Services

Financing Policy, Department of

Defense, Room 1B657 Pentagon,

Washington, DC 20301–1200.

FOR FURTHER INFORMATION CONTACT:

Cynthia P. Speight, Office of the

Assistant Secretary of Defense (Health

Affairs), (703) 697–8975.

SUPPLEMENTARY INFORMATION:

I. Overview of the Final Rule

Implementation of the TRICARE

Retiree Dental Program (TRDP) was

directed by Congress in section 703 of

the National Defense Authorization Act

for Fiscal Year 1997, Pub. L. 104–201,

which amended title 10, United States

Code, by adding section 1076c. This

final rule also incorporates the minor

changes in the National Defense

Authorization Act for Fiscal Year 1998

which expand eligibility to retirees of

the Public Health Service and the

National Oceanic and Atmospheric

Administration, and active duty

survivors and their dependents. The law

directs the implementation of a dental

program for: (1) Members of the

Uniformed Services who are entitled to

retired pay, (2) Members of the Retired

Reserve under the age of 60, (3) Eligible

dependents of (1) or (2) who are covered

by the enrollment of the member, and

(4) The unremarried surviving spouse

and eligible child dependents of a

deceased member who died while in

status described in (1) or (2); the

unremarried surviving spouse and

eligible child dependents who receive a

surviving spouse annuity; or the

unremarried surviving spouse and

eligible child dependents of a deceased

member who died while on active duty

for a period of more than 30 days and

whose eligible dependents are not

eligible or no longer eligible for the

Active Duty Dependents Dental Plan.

Included in the program are the 50

United States and the District of

Columbia, Canada, Puerto Rico, Guam,

American Samoa, the Commonwealth of

the Northern Mariana Islands, and the

U.S. Virgin Islands. The final rule

expands the coverage of the program to

include all U.S. Territories. Enrollment

in the program is voluntary and

members enrolled in the dental plan

will be responsible for paying the full

cost of the premiums. Under the final

rule, the initial enrollment period has

been extended from 12 months to 24

months (similar to the Active Duty

Dependents Dental Program) in order to

reduce the risk of adverse selection. The

premium payment may be collected

pursuant to procedures established by

the Assistant Secretary of Defense

(Health Affairs). Dental coverage under

the TRDP will provide basic dental care,

to include diagnostic services,

preventive services, basic restorative

services (including endodontics),

surgical services, and emergency oral

examinations. Minor administrative

changes have been made in the plan

benefits section in order to correct

outdated codes and to include codes

that were inadvertently excluded from

the list.

Under this rule, where possible,

members entitled to retired pay and

eligible family members and their

dependents may make use of

participating dental providers in their

areas and may benefit from reduced outof-pocket and provider submission of

claims and acceptance of contractor

allowances and arrangements. Enrollees

using non-network providers may be

balance billed amounts in excess of

allowable charges. Under the final rule,

the maximum payment allowable by the

TRDP (minus the appropriate costshare) will be the lesser of the billed

charges or the Usual, Customary and

Reasonable rates, in which the

customary rate is calculated at the 50th

percentile of billed charges in that

geographic area, as measured in an

undiscounted charge profile in 1995 or

later for that geographic area (as defined

by three-digit zip code). TRDP eligibles

will obtain information concerning the

program and the application process

from the contractor.

This final rule adopts the statutory

preemption authority of 10 U.S.C.,

section 1103. This statute broadly

authorizes preemption of state laws in

connection with DoD contracts for

medical and dental care. The Assistant

Secretary of Defense (Health Affairs) has

made the judgment that preemption is

necessary and appropriate to assure the

operation of a consistent, effective, and

efficient federal program. Absent

preemption of certain State and local

laws on insurance regulation and other

matters, competition would be severely

limited and the process substantially

delayed. The final rule incorporates

language to clarify that the preemption

of State laws section includes

preemption of State and local laws

imposing premium taxes on health or

dental insurance carriers or

underwriters or other plan managers, or

similar taxes on such entities.

II. Public Comments

The proposed rule was published on

June 24, 1997 (62 FR 34032–34035). We

received one public comment. We thank

the commenter; significant items raised

by the commenter and our analysis of

the comments are summarized below in

the appropriate sections of the

preamble.

1. Benefits: We received a comment

that an error exists in the description of

procedure code 00120, 00140, and

00150.

Response: We appreciate the

comment and we have replaced

‘‘examination’’ with ‘‘evaluation’’ in the

description of the procedure codes

00120, 00140, and 00150.

2. Benefits: The commenter pointed

out an oversight in that two procedures,

Amalgam-one surface, permanent

(02140) and Amalgam (two-surface),

permanent (02150) were not included in

the benefits of the program.

Response: We concur with the

comment and procedures codes 02140

and 02150 have been added under the

restorative benefits under the program.

3. Benefits: Another comment we

received pointed out that several

periodontic (04261, 04262, 04268) codes

are outdated and have been changed.

Response: We appreciate the

comment. These periodontic codes have

been changed in the final rule as

follows: code 04261 has been replaced

by Bone replacement graft-first site in

quadrant (04263); code 04262 has been

replaced by Bone replacement-each

additional site in quadrant; code 04268

has been replaced by Guided tissue

regeneration-resorbable barrier, per site,

per tooth (04266) and Guided tissue