TRICARE; Mental Health and Substance Use Disorder Treatment, 5061-5085 [2016-01703]

Agencies

• DEPARTMENT OF DEFENSE
• Office of the Secretary

[Federal Register Volume 81, Number 20 (Monday, February 1, 2016)]
[Proposed Rules]
[Pages 5061-5085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01703]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DOD-2015-HA-0109]
RIN 0720-AB65


TRICARE; Mental Health and Substance Use Disorder Treatment

AGENCY: Office of the Secretary, Department of Defense (DoD).

ACTION: Proposed rule.

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SUMMARY: This rulemaking proposes comprehensive revisions to the 
TRICARE regulation to reduce administrative barriers to access to 
mental health benefit coverage and to improve access to substance use 
disorder (SUD) treatment for TRICARE beneficiaries, consistent with 
earlier Department of Defense and Institute of Medicine 
recommendations, current standards of practice in mental health and 
addiction medicine, and governing laws. This proposed rule has four 
main objectives: (1) To eliminate quantitative and qualitative 
treatment limitations on SUD and mental health benefit coverage and 
align beneficiary cost-sharing for mental health and SUD benefits with 
those applicable to medical/surgical benefits; (2) to expand covered 
mental health and SUD treatment under TRICARE, to include coverage of 
intensive outpatient programs and treatment of opioid use disorder; (3) 
to streamline the requirements for mental health and SUD institutional 
providers to become TRICARE authorized providers; and (4) to develop 
TRICARE reimbursement methodologies for newly recognized mental health 
and SUD intensive outpatient programs and opioid treatment programs.

DATES: Written comments received at the addresses indicated below will 
be considered for possible revisions to this rule in development of the 
final rule. Comments must be received on or before April 1, 2016.

ADDRESSES: You may submit comments identified by docket number and or 
Regulatory Information Number (RIN) number and title, by either of the 
following methods:
     Federal eRulemaking Portal: www.regulations.gov. Follow 
the instructions for submitting documents.
     Mail: Department of Defense, Office of the Deputy Chief 
Management Officer, Directorate of Oversight and Compliance, Regulatory 
and Audit Matters Office, 9010 Defense Pentagon, Washington, DC 20301-
9010.
    Instructions: All submissions received must include the agency name 
and docket number or RIN 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 https://www.regulations.gov as they are received without 
change, including any personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Dr. Patricia Moseley, Defense Health 
Agency, Clinical Support Division, Condition-Based Specialty Care 
Section, 703-681-0064.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose of the Proposed Rule

1. The Need for the Regulatory Action
    This proposed rule seeks to comprehensively update TRICARE mental 
health and substance use disorder benefits, consistent with earlier 
Department of Defense and Institute of Medicine recommendations, 
current standards of practice in mental health and addiction medicine, 
and our governing laws. The Department of Defense remains intently 
focused on ensuring the mental health of our service members and their 
families, as this continues to be a top priority. The Department is 
also working to further de-stigmatize mental health treatment and 
expand the ways by which our beneficiaries can access authorized mental 
health services. This proposed regulatory action is in furtherance of 
these goals and imperative in order to eliminate requirements that may 
be viewed as barriers to medically necessary and appropriate mental 
health services.
(a) Eliminating Quantitative and Qualitative Treatment Limitations on 
SUD and Mental Health Benefit Coverage and Aligning Beneficiary Cost-
Sharing for Mental Health and SUD Benefits With Those Applicable to 
Medical/Surgical Benefits
    The requirements of the Mental Health Parity Act (MHPA) of 1996 and 
the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction 
Equity Act (MHPAEA) of 2008, as well as the plan benefit provisions 
contained in the Patient Protection and Affordable Care Act (PPACA) do 
not apply to the TRICARE program. The provisions of MHPAEA and PPACA 
serve as models for TRICARE in proposing changes to existing benefit 
coverage. These changes intend to reduce administrative barriers

[[Page 5062]]

to treatment and increase access to medically or psychologically 
necessary mental health care consistent with TRICARE statutory 
authority.
    Section 703 of the National Defense Authorization Act (NDAA) 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015, 
signed into law December 19, 2014, amends section 1079 of title 10 of 
the U.S.C. to remove prior existing statutory limits and requirements 
on TRICARE coverage of inpatient mental health services. This proposed 
rule is necessary to conform the regulation to provisions in the 
recently enacted law. Specifically, TRICARE coverage is no longer 
subject to an annual limit on stays in inpatient mental health 
facilities of 30 days for adults and 45 days for children. In addition, 
TRICARE coverage is no longer subject to a 150-day annual limit for 
stays at Residential Treatment Centers (RTCs) for eligible 
beneficiaries.
    In addition to the elimination of these statutory inpatient day 
limits, and corresponding waiver provisions, the proposed rule also 
seeks to eliminate other regulatory quantitative and qualitative 
treatment limitations, consistent with principles of mental health 
parity and our governing laws. These include the 60-day partial 
hospitalization program limitation; annual and lifetime limitations on 
SUD treatment; presumptive limitations on outpatient services including 
the number of psychotherapy sessions per week and family therapy 
sessions for the treatment of SUD per benefit period; and limitations 
on the smoking cessation program. While there are clear waiver 
provisions in place for all of the existing quantitative treatment 
benefit limitations in order to ensure that beneficiaries have access 
to medically or psychologically necessary and appropriate care, these 
presumptive limitations may serve as an administrative barrier and thus 
disincentive to continued care regardless of the continued medical 
necessity of such care.
    Additionally, this rulemaking proposes to remove the categorical 
exclusion on treatment of gender dysphoria. This proposed change will 
permit coverage of all non-surgical medically necessary and appropriate 
care in the treatment of gender dysphoria, consistent with the program 
requirements applicable for treatment of all mental or physical 
illnesses. Surgical care remains prohibited by statute at 10 U.S.C. 
1079(a)(11), as discussed further below.
    Finally, following the recent repeal (section 703 of the NDAA for 
FY 15) of the statutory authority (previously codified at 10 U.S.C. 
1079(i)(2)) for separate beneficiary financial liability for mental 
health benefits, the proposed rule revises the cost-sharing 
requirements for mental health and SUD benefits to be consistent with 
those that are applicable to TRICARE medical and surgical benefits.
(b) Expanding Coverage To Include Mental Health and SUD Intensive 
Outpatient Programs and Treatment of Opioid Use Disorder
    Currently, TRICARE benefits do not fully reflect the full range of 
contemporary SUD treatment approaches (i.e., outpatient counseling and 
intensive outpatient program (IOP)) that are now endorsed by the 
American Society of Addiction Medicine (ASAM), the Department of Health 
and Human Services (DHHS) Substance Abuse and Mental Health Services 
Administration (SAMHSA), and the VA/DoD Clinical Practice Guidelines 
(CPGs) for SUDs. Some existing benefit coverage restrictions inhibit 
access to community based outpatient services; may cause beneficiaries 
to be separated from their families while they are receiving treatment 
in geographically distant facilities; and may result in beneficiaries 
electing to forgo treatment. Further, restrictions may lead to 
difficulty receiving appropriate step-down care following acute 
inpatient and residential treatment services. TRICARE currently limits 
SUD treatment to TRICARE-authorized SUD Rehabilitation Facilities 
(SUDRFs) and hospitals.
    An amendment to the regulation is necessary to authorize TRICARE 
benefit coverage of medically and psychologically necessary services 
and supplies which represent appropriate medical care and that are 
generally accepted by qualified professionals to be reasonable and 
adequate for the diagnosis and treatment of mental disorders. Office-
based individual outpatient treatment is an effective, empirically-
validated level of treatment for substance use disorder endorsed by The 
ASAM Criteria: Treatment Criteria for Addictive, Substance-Related, and 
Co-Occurring Conditions, Third Edition, 2013. Furthermore, TRICARE 
coverage of medication assisted treatment (MAT) for opioid use 
disorder, extended through regulatory revisions, as published in the 
Federal Register on October 22, 2013 (78 FR 62427), is currently 
limited to MAT provided by a TRICARE authorized SUDRF. This proposed 
revision of the TRICARE SUD treatment benefit will allow office-based 
opioid treatment (OBOT) by individual TRICARE-authorized physicians and 
will also add coverage of qualified opioid treatment programs (OTPs) as 
TRICARE authorized institutional providers of SUD treatment for opioid 
use disorder, which will expand access to this type of care.
(c) Streamlining Requirements for Institutional Mental Health and SUD 
Providers To Become TRICARE Authorized Providers
    The current TRICARE certification requirements for institutional 
mental health and SUD providers were implemented over 20 years ago and 
designed to create comprehensive, stand-alone standards to address the 
full spectrum of requirements and expectations for mental health 
facilities and providers, rather than as mere supplements to the 
standards employed by the Joint Commission, which at the time had moved 
toward a more general set of facility standards. Over the last several 
decades, the accreditation process for institutional providers has 
evolved, and these standards are now monitored through a number of 
industry-accepted accrediting bodies. While TRICARE's comprehensive 
certification standards were once considered necessary to ensure 
quality and safety, these comprehensive certification requirements are 
now proving to be overly restrictive and at times inconsistent with 
current industry-based institutional provider standards and 
organization. There are currently several geographic areas that are 
inadequately served because providers in those regions do not meet 
TRICARE certification requirements, even though they may meet the 
industry standard. The proposed rule seeks to streamline TRICARE 
regulations to be consistent with industry standards for authorization 
of qualified institutional providers of mental health and SUD 
treatment. It is anticipated that these revisions will result in an 
increase in the number and geographic coverage areas of participating 
institutional providers of mental health and SUD treatment for TRICARE 
beneficiaries.
(d) TRICARE Reimbursement Methodologies for Newly Recognized Mental 
Health and SUD Intensive Outpatient Programs and Opioid Treatment 
Programs
    Along with recognition of several new categories of TRICARE 
authorized providers, the proposed rule establishes reimbursement 
methodologies for these providers. Specifically, new reimbursement 
methodologies have been proposed for IOPs for mental health and SUD 
treatment as well as OTPs, as these providers have not

[[Page 5063]]

previously been recognized by TRICARE and thus appropriate 
reimbursement methodologies must be established. Existing reimbursement 
methodologies for SUDRFs, RTCs, and PHPs will continue to apply.
2. Legal Authority for the Regulatory Action
    This regulation is proposed under the authorities of 10 U.S.C., 
section 1073, which authorizes the Secretary of Defense to make 
decisions concerning TRICARE and to administer the medical and dental 
benefits provided in title 10 U.S.C., chapter 55. The Department is 
authorized to provide medically necessary and appropriate medical care 
for mental and physical illnesses, injuries and bodily malfunctions, 
including hospitalization, outpatient care, drugs, and treatment of 
mental conditions under 10 U.S.C. 1077(a)(1) through (3) and (5). 
Although section 1077 identifies the types of health care to be 
provided in military treatment facilities (MTFs) to those authorized 
such care under section 1076, these same types of health care (with 
certain specified exceptions) are authorized for coverage within the 
civilian health care sector for ADFMs under section 1079 and for 
retirees and their dependents under section 1086. In general, the scope 
of TRICARE benefits covered within the civilian health care sector and 
the TRICARE authorized providers of those benefits are found at 32 CFR 
199.4 and 199.6, respectively.
    TRICARE beneficiary cost-sharing is governed by statute and 
regulation based upon both the beneficiary category and TRICARE option 
being utilized. Pursuant to 10 U.S.C. 1079(b)(1), dependents of members 
of the uniformed services utilizing TRICARE Standard are responsible 
for a $25 beneficiary cost-share for each covered inpatient admission 
to a hospital, or the amount the beneficiary or sponsor would have been 
charged had the inpatient care been provided in a Uniformed Service 
hospital, whichever is greater. Section 1079(i)(2) permits the 
Secretary to prescribe separate payment requirements for the provision 
of mental health services and, under this authority, the Secretary did 
prescribe different copays for mental health versus medical/surgical 
benefits for active duty family members under the TRICARE Standard 
option as well as for retirees, their family members, and survivors 
under the TRICARE Prime option.
    Under TRICARE Standard, an inpatient cost-sharing amount for mental 
health services of $20 per day for each day of inpatient admission was 
established by regulation (32 CFR 199.4(f)(2)(ii)(D)) and applies to 
admissions to any hospital for mental health services, any residential 
treatment facility, any substance use rehabilitation facility, and any 
partial hospitalization program (PHP) providing mental health services.
    Section 731 of the NDAA for FY 1994 (Pub. L. 103-160) directed the 
Secretary of Defense to implement a health benefit option modelled on 
health maintenance organization plans offered in the private sector. 
This uniform health maintenance organization (HMO) benefit is known as 
TRICARE Prime and was implemented through regulation (32 CFR 199.17 and 
199.18). Pursuant to 10 U.S.C. 1097(e), the Secretary of Defense is 
authorized to prescribe by regulation a premium, deductible, copayment, 
or other charge for health care for Prime beneficiaries. The specific 
cost-sharing requirements for Prime are found at 32 CFR 199.18. Under 
TRICARE Prime, the regulation (32 CFR 199.18(f)(3)(ii) and (e)(3)) 
established an outpatient copay of $25 per mental health visit and $17 
per group outpatient mental health visit and $40 per diem charge for 
inpatient mental health for retirees, their family members, and 
survivors. In establishing TRICARE Prime, these separate and higher 
copayments for mental health services were determined to be necessary 
to preserve the distinct treatment of mental health services as 
authorized by law in effect at the time.
    Section 703 of the NDAA for FY 2015 enacted a statutory amendment 
to 10 U.S.C. 1079, effective December 19, 2014. This action removed the 
authority for separate patient cost-sharing of mental health services 
and necessitates regulatory changes to re-classify partial 
hospitalization services as outpatient services for purposes of cost-
sharing and to bring the active duty family member Standard inpatient 
cost-sharing regulations into alignment with the statute. The proposed 
regulatory changes further equalize the retiree and dependent mental 
health copay amounts to the medical/surgical copay amounts under 
TRICARE Prime.
    With respect to institutional provider reimbursement, pursuant to 
10 U.S.C. 1079(i)(2), the Secretary is required to publish regulations 
establishing the amount to be paid to any provider of services, 
including hospitals, comprehensive outpatient rehabilitation 
facilities, and any other institutional facility providing services for 
which payment may be made. The amount of such payments shall be 
determined, to the extent practicable, in accordance with the same 
reimbursement rules as apply to payments to providers of services of 
the same type under Medicare. TRICARE provider reimbursement methods 
are found at 32 CFR 199.14. When it is not practicable to adopt 
Medicare's methods or Medicare has no established reimbursement 
methodology (e.g. Medicare does not reimburse freestanding SUDRFs or 
PHPs that are not hospital-based or part of a Community Mental Health 
Clinic, while TRICARE does), TRICARE establishes its own rates through 
proposed and final rulemaking. This rule invites comments on the 
approach proposed to be adopted by TRICARE.

B. Summary of the Major Provisions of the Proposed Rule

    The proposed rule makes a number of comprehensive revisions to the 
TRICARE mental health and SUD treatment coverage. In an effort to 
further de-stigmatize SUD care, treatment of SUDs is no longer 
separately identified as a limited special benefit under 32 CFR 
199.4(e) but rather has now been incorporated into the general mental 
health provisions in Sec.  199.4(b) governing institutional benefits 
and Sec.  199.4(c) governing professional service benefits. Further, 
this proposed rule seeks to eliminate a number of mental health and SUD 
quantitative and qualitative treatment limitations, and corresponding 
waiver provisions, instead relying on determinations of medical 
necessity and appropriate utilization management tools, as are used for 
all other medical and surgical benefits. Proposed revisions include 
eliminating:
     All inpatient mental health day limits, following the 
statutory revisions to 10 U.S.C. 1079;
     The 60-day partial hospitalization and SUDRF residential 
treatment limitations;
     Annual and lifetime limitations on SUD treatment;
     Presumptive limitations on outpatient services including 
the six-hours per year limit on psychological testing; the limit of two 
sessions per week for outpatient therapy; and limits for family therapy 
(15 visits) and outpatient therapy (60 visits) provided in free-
standing or hospital based SUDRFs;
     The limit of two smoking cessation quit attempts in a 
consecutive 12 month period and 18 face-to-face counseling sessions per 
attempt; and
     The regulatory prohibition that categorically excludes all 
treatment of gender dysphoria.
    The rule also proposes changes to cost-sharing for mental health 
treatment for TRICARE Prime and Standard/Extra

[[Page 5064]]

beneficiaries to align with the applicable cost-sharing provisions for 
other non-mental health inpatient and outpatient benefits. 
Additionally, revisions have been proposed to clearly identify services 
that will be cost-shared on an inpatient (e.g., inpatient admissions to 
a hospital, residential treatment center, SUDRF residential treatment 
program, or skilled nursing facility) versus outpatient (including 
partial hospitalization programs, intensive outpatient treatment 
services, and opioid treatment program services) cost-sharing basis to 
ensure consistency with the statutory requirements in 10 U.S.C. 1079 
and 1086. In many cases, these proposed modifications to cost-sharing 
would enhance TRICARE beneficiary access to care through lower out-of-
pocket costs.
    The proposed regulatory language defines and authorizes new 
services by TRICARE authorized institutional and individual providers 
of SUD care outside of SUDRF settings at Sec. Sec.  199.2 and 199.6. 
Revisions to treatment benefits at Sec.  199.4 and Sec.  199.6 would 
allow intensive outpatient programs (IOPs) for mental health and SUD 
treatment; care in opioid treatment programs (OTPs); and outpatient SUD 
treatment (i.e., office-based opioid treatment, psychosocial treatment 
and family therapy) by individual TRICARE authorized providers.
    Significant revisions to 32 CFR 199.6 are proposed in order to 
eliminate the administratively burdensome provider certification 
process and streamline approval for institutional mental health and SUD 
providers to become TRICARE authorized providers. In multiple regions 
providers may meet industry standards but do not meet TRICARE 
certification requirements. Consequently providers in these regions are 
unable to serve TRICARE beneficiaries. The applicable provisions for 
residential treatment centers, psychiatric and SUD partial 
hospitalization programs, and SUDRFs, have been rewritten in their 
entirety to address institutional provider eligibility, organization 
and administration, participation agreement requirements and any other 
requirements for approval as a TRICARE authorized provider. The 
requirement and formal process of certification is proposed for 
elimination. Similarly, new regulatory provisions have been proposed 
for the newly recognized categories of institutional providers, namely 
IOPs and OTPs.
    Finally, amendments to 32 CFR 199.14, which specifies provider 
reimbursement methods, are proposed to establish allowable all-
inclusive per diem payment rates for psychiatric and SUD PHP, IOP and 
OTP services.

C. Costs and Benefits

    The proposed amendment is not anticipated to have an annual effect 
on the economy of $100 million or more. An independent government cost 
estimate found that this proposed rule is estimated to have a net 
increase in costs of approximately $55 million. The government's 
regulatory impact analysis based on this cost estimate can be found in 
the docket folder associated with this proposed rule at https://www.regulations.gov/#!docketDetail;D=DOD-2015-HA-0109. To summarize, 
provisions to implement mental health parity account for approximately 
$34 million (62%) of the $55 net cost increase. While modifying mental 
health cost-sharing will increase costs, these revisions are required 
as the former statutory authority for mental health-specific cost 
sharing has been deleted from the statute (section 703 of the NDAA for 
FY15). As a result, the existing statutory cost-shares are utilized and 
this aligns mental health cost-shares with the current medical-surgical 
cost-shares. The largest cost increase ($21.6 million) is attributable 
to lowering outpatient mental health cost-sharing for Non-Active Duty 
Dependent (NADD) TRICARE beneficiaries (from $25 per visit to the 
medical/surgical outpatient cost-sharing of $12 per visit).
    Elimination of the statutory day limits for inpatient psychiatric 
and Residential Treatment Center (RTC) care for children (to comply 
with section 703 of the NDAA for FY15) will only minimally increase 
costs. This is because these previously published presumptive day 
limits were also subject to waivers and TRICARE had been reimbursing 
for medically necessary inpatient stays with waivers when continued 
medical necessity was supported. Eliminating the limit of two sessions 
per week for outpatient therapy is estimated to incur an increased cost 
($7.5 million), but this is based on the conservative assumption that 
the proportion of NADD beneficiaries who will pursue three 
psychotherapy sessions per week is comparable to the proportion of 
Active Duty Service Members (ADSMs) who do so (17%), even though ADSMs 
incur no cost-sharing and most receive psychotherapy within MTFs 
instead of civilian providers. Eliminating other limits (e.g., annual 
and lifetime limits on SUD treatment, smoking cessation program limits, 
and others as outlined above) will have a relatively minimal increase 
in costs. Overall, the benefit of removing these quantitative limits to 
mental health treatment will ensure that all beneficiaries receive the 
appropriate amount of care based on medical and psychological 
necessity.
    Creating additional levels, providers, and types of mental health 
care (e.g., intensive outpatient programs, opioid treatment programs, 
non-surgical coverage for gender dysphoria, and also allowing 
outpatient substance use treatment) will increase costs to the program 
by approximately $16.8 million. Some of the cost increases will be 
offset through utilization of lower and less expensive levels of care 
(e.g., IOP versus residential or full day PHP) and prevention of 
relapse requiring more costly, intensive inpatient intervention. 
Currently, PHPs are the only step-down care from inpatient substance 
use disorder treatment currently covered by TRICARE. In many rural and 
sparely-populated states, such as Utah, Arizona, New Mexico, South 
Dakota, Wyoming, Idaho, and Montana, there are relatively few PHPs (on 
average 20 or fewer, with 4 states having fewer than 10 PHPs). IOPs in 
these rural states, on the other hand, are four times more plentiful 
than PHPs, and TRICARE coverage of IOP substance use disorder treatment 
will greatly increase beneficiary access to SUD treatment, particularly 
in these remote geographic areas. Similarly, in FY14, 15,000 services 
of psychotherapy by individual professional providers were denied for 
beneficiaries with an SUD. Coverage of outpatient SUD treatment by 
TRICARE authorized individual providers will facilitate early 
intervention for SUDs and help reduce relapse following more intensive 
treatment though the availability of outpatient aftercare from these 
professionals. Additionally, TRICARE currently has an estimated 15,000 
to 20,000 beneficiaries with opioid use disorder who, under the current 
benefit, cannot access medication-assisted treatment (MAT; e.g., 
buprenorphine or methadone). According to SAMHSA, there are 
approximately 1155 OTPs in the United States and 31,363 physicians with 
a DEA waiver to provide MAT for opioid use disorder, but none of these 
facilities or providers is TRICARE-authorized or eligible to be 
reimbursed by TRICARE under current regulation. Once the changes 
proposed in this rule are implemented, TRICARE beneficiaries will have 
ready access to MAT on an outpatient basis as recommended by ASAM and 
clinical practice guidelines developed jointly by the Department of 
Veterans Affairs (VA) and DoD.
    Streamlining requirements for institutional providers to become 
TRICARE authorized providers of

[[Page 5065]]

mental health and SUD care will incur an estimated increased cost of 
$3.2 million due to an anticipated increase in the number of 
institutional providers joining the TRICARE network. To focus on RTC 
care as an example, TRICARE strives to provide a robust mental health 
treatment benefit to our child beneficiaries, but access to RTC care 
for children is significantly limited in many geographic areas by 
TRICARE's existing certification requirements. Less than one sixth of 
RTCs certified by the Joint Commission are currently TRICARE certified, 
and only about one half of individual states have at least one TRICARE-
certified RTC. California, Oklahoma, Alabama, and Louisiana all have no 
TRICARE-certified RTCs but do have sizeable TRICARE populations. 
Revising TRICARE institutional provider authorization requirements for 
RTCs will make it much more likely that parents will seek RTC care for 
their children whose behavioral health condition is so severe as to 
require RTC services, and this change to the TRICARE behavioral health 
benefit is projected to increase utilization of RTC services by 20 
percent. Ultimately, the net increase in costs associated with this 
proposed rule will greatly be outweighed by the enhanced mental health 
benefits, options and access available to beneficiaries.

II. Discussion of the Proposed Rule

A. Background

    TRICARE implemented both financial and treatment controls to manage 
care, ensure quality, and control costs for medically or 
psychologically necessary and appropriate mental health and substance 
use care. In part, these controls have been implemented in response to 
Congressional concerns. In the National Defense Authorization Act for 
Fiscal Year 1991 and the Defense Appropriations Act for Fiscal Year 
1991, Congress addressed the problem of spiraling costs for mental 
health services under the Civilian Health and Medical Program of the 
Uniformed Services (CHAMPUS). As stated by the House Armed Services 
Committee:

    The cost of mental health and substance abuse is of particular 
concern to the committee. While CHAMPUS expenditures have generally 
increased by 50 percent between 1986 and 1989, CHAMPUS mental health 
expenditures have more than doubled. Last year mental health costs 
accounted for about one-quarter of CHAMPUS's total spending far 
above the typical proportion in private employers' health care 
plans. These statutes established: (1) The new day limits for 
inpatient mental health services: 30 days for acute care for 
patients 19 years of age and older, 45 days for acute care for 
patients under 19 years of age, and 150 days of residential 
treatment-each of these limits subject to waiver that takes into 
account the level, intensity and availability of the care needs of 
the patient; and (2) mandated prior authorization for all 
nonemergency inpatient mental health admissions.

    Additionally, in the early 1990s, two Comptroller General Reports 
highlighted the need for mental health program reform within the 
Civilian Health and Medical Program of the Uniform Services (CHAMPUS). 
At the time, there were widespread concerns with the quality of mental 
health care within CHAMPUS as well as fraud and abuse. The Reports 
highlighted weaknesses within the benefit that resulted in unnecessary 
hospital admissions, excessive inpatient stays and sometimes, 
inadequate quality of care. The first of these two reports, ``Defense 
Health Care: Additional Improvements Needed in CHAMPUS's Mental Health 
Program,'' GAO/HRD-93-34, May 1993, stated that, although DoD has taken 
actions to improve the program, several problems persist.'' A second 
Comptroller General Report, ``Psychiatric Fraud and Abuse: Increased 
Scrutiny of Hospital Stays is Needed to Lessen Federal Health Program 
Vulnerability,'' (GAO/HRD-93-92, September 1993) called for 
improvements in the CHAMPUS mental health program to include reversing 
the financial incentives to use inpatient care by introducing larger 
copayments for CHAMPUS inpatient care.
    In response to these concerns, the certification standards for 
mental health facilities as well as treatment limits and cost-sharing 
requirements applicable to mental health and SUD services under the 
TRICARE program were implemented in a 1995 Final Rule, ``Civilian 
Health and Medical Program of the Uniformed Services (CHAMPUS): Mental 
Health Services.'' These standards, limits, and requirements have 
remained in place over the last 20 years.
    In 1996, Congress enacted the Mental Health Parity Act of 1996 
(MHPA 1996) which required employment-related group health plans and 
health insurance coverage offered in connection with group health plans 
to provide parity in aggregate lifetime and annual dollar limits for 
mental health benefits and medical and surgical benefits. In October 
2008, the Paul Wellstone and Pete Domenici Mental Health Parity and 
Addiction Equity Act (MHPAEA) was signed into law as part of the Tax 
Extenders and Alternative Minimum Tax Relief Act of 2008. The changes 
made by MHPAEA consist of new requirements, including parity for 
substance use disorder benefits, as well as amendments to the existing 
mental health parity provisions enacted in MHPA. This law requires 
group health insurance plans that provide both medical/surgical and 
mental health or substance use disorder benefits to meet parity 
standards. Specifically, financial requirements (e.g., deductibles, co-
payments, or coinsurance) and treatment limitations (e.g., days of 
coverage and number of visits) that apply to mental health or substance 
use disorder benefits cannot be more restrictive than the predominant 
financial requirements and treatment limitations that apply to 
substantially all medical/surgical benefits. The MHPAEA was amended by 
the Patient Protection and Affordable Care Act, as amended by the 
Health Care and Education Reconciliation Act of 2010, to also apply to 
individual health insurance coverage. TRICARE is not a group health 
plan subject to the MHPA 1996, the MHPAEA of 2008, or the Health Care 
and Education Reconciliation Act of 2010. However, the provisions of 
these acts serve as a model for TRICARE in proposing changes to 
existing benefit coverage so as to reduce administrative barriers to 
treatment and increase access to medically or psychologically necessary 
mental health care consistent with TRICARE statutory authority.
    In July 2011, DoD issued a Report to Congress entitled, 
``Comprehensive Plan on Prevention, Diagnosis, and Treatment of 
Substance Use Disorders and Disposition of Substance Use Offenders in 
the Armed Forces,'' in which the Department identified to Congress the 
need to revise certain aspects of TRICARE regulatory language governing 
SUD treatment services to provide a benefit that takes into account 
generally accepted standards of practice. The report is available for 
download at https://health.mil/About-MHS/Defense-Health-Agency/Special-Staff/Congressional-Relations/Reports-to-Congress. DoD's findings were 
affirmed in 2012 by an independent study conducted by the Institute of 
Medicine (IOM) entitled, ``Substance Use Disorders in the U.S. Armed 
Forces,'' (available at www.iom.edu/reports/2012/Substance-Use-Disorders-in-the-Armed-Forces.aspx).
    The Department seeks to revise and streamline TRICARE regulations 
to be consistent with industry standards, as well as to incorporate 
applicable recommendations from the July 2011 Congressional report, the 
IOM 2012 study, and evidence-based practices delineated by the U.S. 
Department of Veterans Affairs (VA) and DoD clinical

[[Page 5066]]

practice guidelines (VA/DoD CPGs) for SUD to improve access to 
medically or psychologically necessary SUD treatment for TRICARE 
beneficiaries in accordance with generally accepted standards of 
practice.

B. Expanded TRICARE Coverage of Mental Health and SUD Treatment

1. Eliminating Quantitative and Qualitative Treatment Limitations on 
SUD and Mental Health Benefit Coverage
    There are existing waiver provisions for all of the quantitative 
treatment benefit limitations to ensure beneficiaries have access to 
medically or psychologically necessary and appropriate treatment. 
However, these limitations, which were designed to contain costs and 
address abuses decades ago, along with differential financial cost-
sharing requirements relative to medical/surgical care are currently 
viewed as barriers to coverage of mental health services.
    This proposed rule seeks to remove a number of quantitative and 
qualitative limits for coverage of mental health and SUD care under the 
TRICARE Program, including:
     All inpatient mental health day (30 days maximum for 
adults and 45 days maximum for children at 32 CFR 199.4(b)(9)) and 
annual day limits (150 days at 32 CFR 199.4(b)(8)) for RTC care for 
beneficiaries 21 years and younger, following the statutory revisions 
to 10 U.S.C. 1079;
     The 60-day limitation on partial hospitalization (32 CFR 
199.4(b)(10)(iv)) and SUDRF residential treatment (32 CFR 
199.4(e)(4)(ii)(A));
     Annual (60 days in a benefit period) and lifetime (three 
treatment episodes--32 CFR 199.4(e)(4)(ii)) limitations on SUD 
treatment;
     Presumptive limitations on outpatient services including 
the six-hour per year limit on psychological testing (32 CFR 
199.4(c)(3)(ix)(A)(5)) and the limit of two sessions per week for 
outpatient therapy (32 CFR 199.4(c)(3)(ix)(B));
     Limits on family therapy (15 visits (32 CFR 
199.4(e)(4)(ii)(C)) and outpatient therapy (60 visits--(32 CFR 
199.4(e)(4)(ii)(B)) provided in free-standing or hospital based SUDRFs; 
and
     The limit of two smoking cessation quit attempts in a 
consecutive 12 month period and 18 face-to-face counseling sessions per 
attempt (32 CFR 199.4(e)(30)).
    This proposed rule will allow coverage of outpatient treatment that 
is medically or psychologically necessary, including family therapy and 
other covered diagnostic and therapeutic services, by a TRICARE 
authorized institutional provider or by authorized individual mental 
health providers without limits on the number of treatment sessions. 
The removal of these limitations also recognizes that SUDs are chronic 
conditions with periodic phases of relapse and readmission, often 
requiring multiple interventions over several years to achieve full 
remission. All claims submitted for services under TRICARE remain 
subject to review for quality and appropriate utilization in accordance 
with the Quality and Utilization Review Peer Review Organization 
Program, under 10 U.S.C. 1079(n) and 32 CFR 199.15.
    The proposed rule also removes certain regulatory exclusions for 
the treatment of gender dysphoria for TRICARE beneficiaries who are 
diagnosed by a TRICARE authorized, qualified mental health 
professional, practicing within the scope of his or her license, to be 
suffering from a mental disorder, as defined in 32 CFR. 199.2. It is no 
longer justifiable to categorically exclude and not cover currently 
accepted medically and psychologically necessary treatments for gender 
dysphoria (such as psychotherapy, pharmacotherapy, and hormone 
replacement therapy) that are not otherwise excluded by statute. 
(Section 1079(a)(11) of title 10, U.S.C., excludes from CHAMPUS 
coverage surgery which improves physical appearance but is not expected 
to significantly restore functions, including mammary augmentation, 
face lifts, and sex gender changes.)
2. Aligning Beneficiary Cost-Sharing for Mental Health and SUD Benefits 
With Those Applicable to Medical/Surgical Benefits
    Following the recent repeal of statutory authority for separate 
beneficiary financial liability for mental health benefits, the 
proposed rule eliminates any differential in cost-sharing between 
mental health and SUD benefits and medical/surgical benefits. The 
following regulatory changes to 32 CFR 199.4(f) and 32 CFR 199.18 will 
reduce financial barriers to both outpatient and inpatient mental 
health and SUD benefits while, consistent with statutory requirements, 
minimizing out-of-pocket risk for those beneficiaries.
TRICARE Prime Co-Pays
    Active duty family members enrolled in TRICARE Prime pay no 
copayment for inpatient or outpatient services. Currently, retirees and 
their dependents enrolled in Prime pay higher copays for inpatient and 
outpatient mental health services than for other similar non-mental 
health services. Retirees and all other non-active duty dependents 
enrolled in Prime would see the following changes:
     The co-pay for individual outpatient mental health visits 
would be reduced from $25 to $12.
     The co-pay for group outpatient mental health visits would 
be reduced from $17 to $12.
    The per diem charge of $40 for mental health and SUD inpatient 
admissions would be reduced to the non-mental health per diem rate of 
$11, with a minimum charge of $25 per admission.
TRICARE Standard Cost-Sharing
    Currently, active duty family members (ADFMs) utilizing TRICARE 
Standard/Extra pay a higher per diem for mental health inpatient care 
than for other inpatient stays. ADFMs would see the following change:
     The per diem cost-share for inpatient mental health 
services would be reduced from $20/day to the daily charge ($18/day for 
FY16) that would have been charged had the inpatient care been provided 
in a Uniformed Services hospital.
    Retirees and their dependents who are not enrolled in Prime but use 
non-network providers (Standard) for mental health care are generally 
required to pay 25% of the allowable charges for inpatient care (for 
inpatient services subject to the DRG-based payment system or mental 
health per diem payment system, beneficiaries pay the lesser of the per 
diem amount (which is equivalent to 25% of the CHAMPUS-determined 
allowable costs) or 25% of the hospital's billed charges). This would 
not change. Retirees and their dependents using Standard and Extra are 
currently responsible for their outpatient deductible and outpatient 
cost-sharing of 25% (Standard)/20% (Extra) of the CHAMPUS-determined 
allowable costs. This also would not change.
    It is also being proposed that cost-sharing for partial 
hospitalization programs (PHPs) be changed from inpatient to outpatient 
to more accurately reflect the services being rendered, ensure 
consistency with the applicable statutes governing cost-sharing, and to 
further ensure parity between the surgical/medical and mental health 
benefit. The definition of partial hospitalization, by its very nature, 
is inconsistent with the definition of inpatient care. Notwithstanding, 
in a final rule (58 FR 35403) published on July 1, 1993, and pursuant 
to the authority granted to the Secretary to establish different cost-

[[Page 5067]]

shares for mental health care [10 U.S.C. 1079(j)(2)], partial 
hospitalization is currently classified as an inpatient level of care 
for the purposes of cost-sharing by beneficiaries. This classification 
was originally adopted out of concern that the cost-sharing associated 
with outpatient care would result in substantially higher out-of-pocket 
expenses for TRICARE beneficiaries which, in turn, would provide a 
financial incentive for beneficiaries to seek a higher level of care 
(i.e., acute or residential) than may be necessary. As a result, 
authority was employed to cost-share partial hospitalization services 
on an inpatient basis. It is important to note, however, beneficiaries 
now have the ability to minimize cost-sharing through enrollment 
options available under the TRICARE managed care program. As noted 
above, ADFMs enrolled in TRICARE Prime/Prime Remote, do not pay co-pays 
for inpatient or outpatient services. For retirees and their dependents 
enrolled in Prime, the current inpatient per diem charge of $40 for 
partial hospitalization program services would be reduced to an 
outpatient co-pay of $12 per day of services.
    Realigning cost-sharing of partial hospitalization program services 
from inpatient to outpatient will impact ADFMs utilizing TRICARE 
Standard/Extra. Specifically, for ADFMs, the current inpatient per diem 
charge of $20/day (with a minimum $25 charge per admission) for partial 
hospitalization program services would instead be subject to the 
applicable outpatient deductible and cost-sharing of 20% (Standard)/15% 
(Extra) of the PHP per diem rate. For example, if the full-day PHP per 
diem rate is $382, the cost-sharing for ADFMs would be $57.30 under 
Extra and $76.40 under Standard. However, these ADFMs would still 
retain the option of enrolling in TRICARE Prime/Prime Remote, where the 
cost-sharing is $0 (i.e., no cost-sharing is applied). The financial 
liability of ADFMs under Extra and Standard would be further limited by 
the annual $1,000 catastrophic cap.
    In an analysis to evaluate the potential financial impact on non-
Prime ADFMs (i.e., ADFMs utilizing TRICARE Extra and Standard options) 
of converting to PHP outpatient cost-sharing, it was found that in FY 
2014 there were only 143 non-Prime ADFMs that had full-day or half-day 
PHP care. On average, they received 17 PHP services during the year 
with an average allowed amount per service of $343. Based on these 
figures, non-Prime ADFMs' out-of-pocket liability (accumulated cost-
sharing) would be approximately $875 under Extra, or $1,166 under 
Standard. (However, Standard ADFM liability in this example would be 
limited by the $1,000 catastrophic cap.) This analysis indicates that a 
very small number of non-Prime ADFMs have historically used PHP care 
and that those who have would, on average, either already hit or would 
be likely to hit the catastrophic cap. It is estimated that shifting to 
outpatient cost-sharing for PHP might cause about 50 to 80 additional 
non-Prime ADFMs to hit the catastrophic cap due to the higher PHP cost-
sharing.
    Conversion of PHP cost-sharing from inpatient to outpatient would 
more accurately reflect the services being provided. Further, Congress 
revoked the statutory authority granted to the Secretary to establish 
different cost-shares for mental health care. These factors provide the 
impetus for adoption of outpatient cost-sharing for PHPs.
3. Intensive Outpatient Program (IOP) Care for Psychiatric and 
Substance Use Disorders
    Substance Use Disorder IOP services are currently not identified as 
separate levels of care from partial hospitalization in TRICARE 
regulations. Although hospital-based and free-standing facilities that 
are TRICARE authorized to offer partial hospitalization services can 
provide less intensive IOP, covered at the half-day partial 
hospitalization rate, the existing TRICARE certification requirements 
for these programs restrict the typical SUD IOP from being recognized 
as a separate program and provider type in its own right. SUD IOPs 
offer a validated level of care endorsed by ASAM, and the provision of 
IOP services through institutional providers also would have the 
potential benefit of expanding the volume of TRICARE participating 
providers and improving access to care.
    While TRICARE beneficiaries may currently receive treatment for SUD 
or psychiatric disorders at a TRICARE authorized PHP, the proposed rule 
clearly authorizes IOP care as a covered benefit for treatment of SUD 
and psychiatric disorders. This proposed rule would authorize IOP care 
by a new class of institutional provider, which will provide a less 
restrictive setting than an inpatient or partial hospital setting. IOP 
care institutional providers will be required to be accredited by an 
accrediting body approved by the Director, Defense Health Agency, and 
meet the proposed requirements outlined in 32 CFR 199.6(b)(4)(xviii) in 
order to become TRICARE authorized.
    Similar to IOPs for SUD treatment, psychiatric IOPs are not 
currently explicitly reimbursed by TRICARE. This lack of authorization 
for IOP psychiatric care has restricted coverage options for TRICARE 
beneficiaries who may require step-down services from an inpatient stay 
or a PHP. As described regarding SUD IOP, psychiatric IOP services are 
considered separate levels of care from psychiatric partial 
hospitalization. Although current regulatory language defines partial 
hospitalization broad enough to permit coverage of IOP treatment 
conducted under the auspices of partial hospitalization, the absence of 
explicit IOP treatment coverage, along with the requirement that all 
IOP level of care be rendered by a TRICARE certified PHP, has limited 
access to this level of care and has led to confusion regarding TRICARE 
coverage of these services. The proposed regulatory language explicitly 
authorizing IOP treatment and establishing an authorized provider 
category will resolve these issues.
4. Treatment of Opioid Use Disorder
    This rule proposes expanded treatment of opioid use disorder, with 
the provision of medication assisted treatment (MAT), through both 
TRICARE authorized institutional and individual providers. In addition 
to SUD IOPs, this rule proposes TRICARE coverage of opioid treatment 
programs (OTPs), with the inclusion of a definition of OTPs in 32 CFR 
199.2 and the requirements for OTPs to become TRICARE authorized 
institutional providers outlined in 32 CFR 199.6(b)(4)(xix). 
Additionally, this rule proposes coverage of OBOT, as defined in 32 CFR 
199.2, and coverage of MAT on an outpatient basis as extended in 32 CFR 
199.4(c)(3)(ix)(A)(9).
5. Outpatient Substance Use Disorder Treatment by Individual 
Professional Providers
    By current regulation, reimbursement for office-based SUD 
outpatient treatment provided by TRICARE authorized individual mental 
health providers, as specified in 32 CFR 199.6, is not permitted. Such 
outpatient SUD treatment services currently must be provided by a 
TRICARE approved institutional provider (i.e., a hospital-based or 
free-standing SUDRF). However, although some accredited TRICARE 
authorized SUDRFs provide office-based SUD outpatient treatment, 
institutional providers of SUD care primarily provide services to 
patients requiring a higher level of SUD care. This creates a counter-
therapeutic restriction on access to office-based outpatient treatment. 
To address this limitation in access, the proposed

[[Page 5068]]

regulation would revise the current reimbursement regime to provide 
coverage for individual outpatient SUD care, such as office-based 
outpatient treatment, outside of a SUDRF.
    The 2007 report of the DoD Task Force on Mental Health 
(recommendation 5.3.4.8) stated, ``TRICARE should allow outpatient 
substance abuse care to be provided by qualified professionals, 
regardless of whether they are affiliated with a day hospital or 
residential treatment program, including standard individual or group 
outpatient care.'' The DoD Task Force recommendation is consistent with 
the American Psychiatric Association, ASAM, and SAMHSA endorsement of 
individual therapies as an accepted and recommended clinical practice, 
also endorsed by National Institute on Drug Abuse, National Quality 
Forum, and VA/DoD CPG for Management of Substance Use Disorders. These 
proposed changes to the regulation would remove barriers to coverage of 
care for beneficiaries who are appropriate for treatment in an 
outpatient office setting, but who would otherwise only be able to 
access care at a SUDRF as required by current regulations.
    This proposed rule also covers services of TRICARE authorized 
individual mental health providers, within the scope of their licensure 
or certification, offering medically or psychologically necessary SUD 
treatment services (including outpatient and family therapy) outside of 
a SUDRF, to include MAT and treatment of opioid use disorder by a 
TRICARE authorized physician delivering OBOT on an outpatient basis.

C. Streamlined Requirements for Institutional Providers To Become 
TRICARE Authorized Institutional Providers of Mental Health and 
Substance Use Disorder Care

    Nearly two decades ago, the Final Rule: ``Civilian Health and 
Medical Program of the Uniformed Services (CHAMPUS): Mental Health 
Services,'' as published in 60 FR 12419, March 7, 1995, reformed 
quality of care standards and reimbursement methods for inpatient 
mental health services. In the 1995 Final Rule, standards were 
developed to address identified problems of quality of care, fraud, and 
abuse in RTCs, SUDRFs, and PHPs. They were developed to provide ``clear 
[and] specific standards for psychiatric facilities on staff 
qualifications, clinical practices, and all other aspects directly 
impacting the quality of care.''
    Since publication of the 1995 Final Rule, several organizations 
that accredit various forms of healthcare delivery have developed 
strong standards to protect patient care in mental health facilities. 
There are now a number of industry-accepted accrediting bodies with 
standards that meet or exceed the current TRICARE-established standards 
(e.g., TJC, Commission on Accreditation of Rehabilitation Facilities). 
Also in the interim, scientific knowledge, standards of care and 
patient safety, technology, and psychotropic pharmaceuticals have 
improved. Alongside with updating the current benefits, we believe 
streamlining procedures to qualify as a TRICARE authorized 
institutional provider will not only increase access to approved care, 
but also decrease the overall cost of certifying duplicative and now 
unnecessary quality standards first implemented by the 1995 Final Rule.
    This proposed rule simplifies the regulation to account for 
existing industry-wide accepted accreditation standards for TRICARE 
institutional providers of mental health care, including RTCs, 
freestanding PHPs, and freestanding SUDRFs. Requirements for TRICARE 
certification beyond industry-accepted accreditation, while once 
considered necessary to ensure quality and safety, are now proving to 
be unnecessarily restrictive and inconsistent with current 
institutional provider standards and organization. Specifically, the 
proposed rule streamlines procedures and requirements for SUDRFs, RTCs, 
PHPs, IOPs and OTPs to qualify as TRICARE authorized providers, relying 
primarily on accreditation by a national body approved by the Director, 
as opposed to detailed, lengthy, stand-alone TRICARE requirements 
(e.g., regarding such things as the qualifications and authority of the 
clinical director, staff composition and qualifications, and standards 
for physical plant and environment, amongst others). In general, mental 
health and SUD institutional providers may become TRICARE authorized 
institutional providers if the facility is accredited by an accrediting 
organization approved by the Director and agrees to execute a 
participation agreement with TRICARE, as outlined in the proposed 
regulations. This streamlined approval process is a greatly simplified 
process from the current, detailed certification process for current 
institutional providers.
    Furthermore, given that there are now a growing number of 
accrediting bodies established for institutional providers of mental 
health care and industry standards that are widely accepted, the 
proposed rule eliminates by name references to specific accrediting 
bodies (e.g., The Joint Commission (TJC)), where appropriate. Instead, 
the specific mention of accrediting bodies is replaced with the term, 
``an accrediting organization, approved by Director.'' This will allow 
the Defense Health Agency (DHA) flexibility in selecting and 
recognizing the authority of various accrediting bodies to assist in 
authorization of institutional providers of mental health care and SUD 
care. Rather than name all the approved accrediting bodies in 
regulation, DHA will identify specific accrediting bodies for various 
types of mental health care in TRICARE sub-regulatory policy found at 
manuals.tricare.osd.mil.

D. TRICARE Reimbursement Methodologies for Newly Recognized Mental 
Health and SUD Intensive Outpatient Programs and Opioid Treatment 
Programs and Cost-Sharing Methodology

    The newly recognized IOPs and methadone OTPs established in this 
rule will be reimbursed using bundled per diem amounts based on the 
intensity, frequency and duration of services and/or drugs provided in 
these well-established treatment programs. Since IOPs provide a step-
down in services from an inpatient stay or full-day PHP (i.e., the 
intensity, frequency and duration of the services provided in IOPs are 
considered to be less than those provided in an inpatient or PHP 
setting), the per diems will be proportionally reduced from currently 
established full-day PHP per diems. This proportional reduction in per 
diems is consistent with past methodologies used in establishing full-
day and half-day PHP payments. Since IOPs are also provided in PHPs as 
a step-down in intensity of care, the IOP designation will be used in 
lieu of half-day PHP for beneficiaries typically receiving treatment 
two to five hours per day, two to five times a week, as directed by 
their individualized treatment plan, in a PHP authorized setting. The 
IOP services, whether provided in a PHP or newly recognized IOP 
setting, will be paid a regionally adjusted per diem rate of 75 percent 
of the rate for a full-day PHP. In other words, PHP treatments of less 
than six hours--with a minimum of two hours--will be recognized as IOPs 
for coverage and reimbursement under the program.
    OTPs that administer methadone as a treatment for SUD will be 
reimbursed a bundled weekly per diem payment to include the cost of the 
medication, along with integrated psychosocial and medical treatment 
support services. When buprenorphine or naltrexone is administered, 
OTPs will, on the other hand, be reimbursed on a fee-for-service

[[Page 5069]]

basis (i.e., separate payments will be allowed for both the medication 
and accompanying support services) due to the variability in the 
recommended dosage and frequency of the administered drugs based on 
conditions requiring medical oversight. The individual fee-for-service 
payments for buprenorphine and naltrexone will be subject to outpatient 
cost-sharing on a per-visit basis, while the cost-sharing for methadone 
OTP services will be applied on a weekly basis. Established per diem 
rates for OTPs administering methadone will be updated annually by the 
Medicare update factor used for that program's Inpatient Prospective 
Payment System. 32 CFR 199.14(a)(4)(ix) is amended in its entirety to 
reflect payment for psychiatric and SUD PHP, IOP and OTP services as 
discussed above.
1. Intensive Outpatient Program Reimbursement
    Under current regulatory provisions [32 CFR 199.14(a)(2)(ix)(C)], 
the maximum per diem payment amount for a full-day partial 
hospitalization program (minimum of six hours) is 40 percent of the 
average per diem amount per case established under the TRICARE mental 
health per diem reimbursement system for both high and low volume 
psychiatric hospitals and units. Likewise, PHPs less than six hours 
(with a minimum of three hours) are paid a per diem rate at 75 percent 
of the rate for a full-day program. In analysis of the reimbursement 
methodology to be used for reimbursement of IOPs, it became apparent 
that the step-down in intensity, frequency and duration of treatment 
designated as half-day PHPs, were in fact, intensive outpatient 
services provided within a PHP authorized setting. While there is some 
variability in the intensity, frequency and duration of treatment under 
both programs (that is, less than six hours per day with a minimum of 
three hours for half-day PHPs; and two to five times per week, two to 
five hours per day for IOPs), it appears that both the services 
rendered and the professional provider categories responsible for 
providing the services are quite similar. As a result of this 
observation/analysis, a decision has been made to use the IOP 
designation in lieu of half-day PHP for treatment of less than six 
hours per day--with a minimum of two hours per day--rendered in a PHP 
authorized setting. While the minimum hours have been reduced from 
three to two hours per day for coverage/reimbursement, they are still 
within the acceptable range for IOP services typically provided in a 
PHP. Since intensive outpatient services can be provided in either a 
PHP or newly authorized IOP setting, and IOP services are essentially 
the same as half-day PHP services, it is only logical that IOP per 
diems be set at 75 percent of the full-day PHP per diem. This would be 
the case regardless of whether the IOP services were provided in a PHP 
or IOP.
2. Opioid Treatment Program Reimbursement and Cost-Sharing
    As defined in this proposed rule, OTPs are outpatient settings for 
opioid treatment that use a therapeutic maintenance drug for a drug 
addiction when medically or psychologically necessary and appropriate 
for the medical care of a beneficiary undergoing supervised treatment 
for a SUD. The program includes an initial assessment, along with 
integrated psychosocial and medical treatment and support services. 
Since OTPs are individually tailored programs of medication therapy, 
separate reimbursement methodologies are being established based on the 
particular medication being administered for treatment of the SUD. By 
far the most common medication used in OTPs is methadone. Methadone OTP 
care includes initial medical intake/assessment, urinalysis and drug 
dispensing and screening as part of the bundled rate, as well as 
ongoing counseling services. Based on a preliminary review of industry 
billing practices, the proposed weekly bundled per diem for 
administration of methadone will include a daily drug cost of $3, along 
with a $15 per day cost for integrated psychosocial and medical support 
services. The daily projected per diem costs ($18/day) will be 
converted to a weekly per diem rate of $126 ($18/day x 7 days) and 
billed once a week to TRICARE using the Healthcare Common Procedure 
Coding System (HCPCS) code H0020, ``Alcohol and/or drug services; 
methadone administration and/or service.'' The bundled per diem rate is 
how Medicaid and other third-party payers typically reimburse for 
methadone treatment in OTPs. The methadone OTP rate will be updated 
annually by the Medicare update factor used for other mental health 
care services rendered (i.e. the Inpatient Prospective Payment System 
update factor) under TRICARE. The updated rates will be effective 
October 1 of each year, and will be published annually on the TRICARE 
Web site. Outpatient cost-sharing will be applied to a weekly per diem, 
since the copayment amounts for Prime NADDs and ADFMs under Extra and 
Standard would be near, or in some cases, above the daily charge for 
OTPs, essentially resulting in a non-benefit.
    While the other two medications (buprenorphine and naltrexone) are 
more likely to be prescribed and administered in an OBOT setting, OTP 
reimbursement methodologies are being established for both medications 
to allow OTPs the full range of medications currently available for 
treatment of SUDs. Since the reimbursement of buprenorphine and 
naltrexone administered in OTPs are not conducive to the bundled per 
diem methodology due to variations in dosage and frequency of the drug 
and the non-drug services (e.g., administration fees and counseling 
services) will be reimbursed separately on a fee-for-service basis. We 
recognize that Healthcare Common Procedure Coding System (HCPCS) and 
Current Procedural Terminology (CPT) codes are updated on a regular 
basis. The following referenced codes are current as of the writing of 
this proposed rule. If necessary, updated codes will be included in the 
TRICARE Policy Manual or TRICARE Reimbursement Manual found at 
manuals.tricare.osd.mil. In the case of Buprenorphine, the OTP will 
bill TRICARE using the HCPCS code H0047, ``Alcohol and/or other drug 
use services, not otherwise specified,'' for the medical intake/
assessment, drug dispensing and monitoring and counseling, along with 
HCPCS code J8499, ``Prescription drug, oral, non-chemotherapeutic, 
nos,'' for the prescribed medication. The OTP will include the National 
Drug Code for the Buprenorphine, along with the dosage and acquisition 
cost on its claim. Prevailing rates will be established for drug 
related services (e.g., drug monitoring and counseling services) billed 
under HCPCS code H0047, while the drug itself will be reimbursed at 95 
percent of the average wholesale price. Outpatient cost-sharing will be 
applied on a per-visit basis. The preliminary weekly cost estimate for 
Buprenorphine OTPs is $115 per week, assuming that the patient is 
stabilized and visiting the OTP twice a week. This is based on an 
estimated drug cost of $10 per day and an estimated non-drug cost of 
$22.50 per visit [(7 x $10) + (2 x $22.50) = $115/week]. These amounts 
mentioned above are preliminary and estimates and not intended to 
reflect final reimbursement rates.
    Naltrexone, unlike methadone and buprenorphine, is not an agonist 
or partial agonist, but an inhibitor designed to block the brain's 
opiate receptors, diminishing the urges and cravings for alcohol, 
heroin, and prescription painkille