[Federal Register Volume 89, Number 190 (Tuesday, October 1, 2024)]
[Proposed Rules]
[Pages 79804-79815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22584]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 220

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


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

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

ACTION: Proposed rule.

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

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

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

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

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

I. Background and Authority

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

[[Page 79805]]

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

II. Problem Being Addressed Through This Rulemaking

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

III. Alternatives Considered

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

IV. Recommended Proposed Policy

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

[[Page 79806]]

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

V. Other Applicable Authority

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

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

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

VII. Changes With This Rulemaking

A. MHS Modified Payment and Waiver Program

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

[[Page 79807]]

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

B. Collection of Health Insurance Information

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

C. Billing Insurance

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

D. Delinquent Accounts

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

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

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

F. Income Verification and Collection of Income Information

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

G. Application for MHS MPWP Discounts and Waivers

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

[[Page 79808]]

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

H. Sliding Fee Discount

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

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

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

I. Catastrophic Fee Waiver

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

J. Collection in Installments

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

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

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

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

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

[[Page 79809]]

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

VIII. Expected Impact of This Rulemaking

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

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

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

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


[[Page 79810]]

IX. Regulatory Compliance Analysis

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

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

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

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

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

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

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

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

[[Page 79811]]

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

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

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

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

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

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

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

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

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

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

------------------------------------------------------------------------
                    Part A: Estimation of          Part B: Labor cost of
                      respondent burden              respondent burden
------------------------------------------------------------------------
(1)...............  Collection             (1)...  Collection
                     Instrument: DD Form            Instrument: DD Form
                     3201-1.                        3201-1.
(a)...............  Number of              (a)...  Number of Total
                     Respondents: 1,080.            Annual Responses:
                                                    1,080.

[[Page 79812]]

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

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

G. Executive Order 13132, ``Federalism''

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

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

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

List of Subjects in 32 CFR Part 220

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

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

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

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


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

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

[[Page 79813]]

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

[[Page 79814]]

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

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

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

[[Page 79815]]

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

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


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