[Code of Federal Regulations]
[Title 32, Volume 2]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR199.10]

[Page 231-243]
 
                       TITLE 32--NATIONAL DEFENSE
 
        CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE (CONTINUED)
 
PART 199_CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED SERVICES 
 
Sec. 199.10  Appeal and hearing procedures.

    (a) General. This Section sets forth the policies and procedures for 
appealing decisions made by OCHAMPUS, OCHAMPUSEUR, and CHAMPUS 
contractors adversely affecting the rights and liabilities of CHAMPUS 
beneficiaries, CHAMPUS participating providers, and providers denied the 
status of authorized provider under CHAMPUS. An appeal under CHAMPUS is 
an administrative review of program determinations made under the 
provisions of law and regulation. An appeal cannot challenge the 
propriety, equity, or legality of any provision of law or regulation.
    (1) Initial determination--(i) Notice of initial determination and 
right to appeal. (A) OCHAMPUS, OCHAMPUSEUR, and CHAMPUS contractors 
shall mail notices of initial determinations to the affected provider or 
CHAMPUS beneficiary (or representative) at the last known address. For 
beneficiaries who are under 18 years of age or who are incompetent, a 
notice issued to the parent, guardian, or other representative, under 
established CHAMPUS procedures, constitutes notice to the beneficiary.
    (B) CHAMPUS contractors and OCHAMPUSEUR shall notify a provider of 
an initial determination on a claim only if the provider participated in 
the claim. (See Sec. 199.7 of this part.)
    (C) CHAMPUS peer review organizations shall notify providers and 
fiscal intermediaries of a denial determination on a claim.
    (D) Notice of an initial determination on a claim processed by a 
CHAMPUS contractor or OCHAMPUSEUR normally will be made on a CHAMPUS 
Explanation of Benefits (CEOB) form.
    (E) Each notice of an initial determination on a request for benefit 
authorization, a request by a provider for approval as an authorized 
CHAMPUS provider, or a decision to disqualify or exclude a provider as 
an authorized provider under CHAMPUS shall state

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the reason for the determination and the underlying facts supporting the 
determination.
    (F) In any case when the initial determination is adverse to the 
beneficiary or participating provider, or to the provider seeking 
approval as an authorized CHAMPUS provider, the notice shall include a 
statement of the beneficiary's or provider's right to appeal the 
determination. The procedure for filing the appeal also shall be 
explained.
    (ii) Effect of initial determination. (A) The initial determination 
is final unless appealed in accordance with this chapter, or unless the 
initial determination is reopened by the TRICARE Management Activity, 
the CHAMPUS contractor, or the CHAMPUS peer review organization.
    (B) An initial determination involving a CHAMPUS beneficiary 
entitled to Medicare Part A, who is enrolled in Medicare Part B, may be 
appealed by the beneficiary or their provider under this section of this 
Part only when the claimed services or supplies are payable by CHAMPUS 
and are not payable under Medicare. Both Medicare and CHAMPUS offer an 
appeal process when a claim for healthcare services or supplies is 
denied and most healthcare services and supplies are a benefit payable 
under both Medicare and CHAMPUS. In order to avoid confusion on the part 
of beneficiaries and providers and to expedite the appeal process, 
services and supplies denied payment by Medicare will not be considered 
for coverage by CHAMPUS if the Medicare denial of payment is appealable 
under Medicare. Because such claims are not considered for payment by 
CHAMPUS, there can be no CHAMPUS appeal. If, however, a Medicare claim 
or appeal results in some payment by Medicare, the services and supplies 
paid by Medicare will be considered for payment by CHAMPUS. In that 
situation, any decision to deny CHAMPUS payment will be appealable under 
this section. The following examples of CHAMPUS appealable issues 
involving Medicare-eligible CHAMPUS beneficiaries are illustrative; they 
are not all-inclusive.
    (1) If Medicare processes a claim for a healthcare service or supply 
that is a Medicare benefit and the claim is denied by Medicare for a 
patient-specific reason, the claim is appealable through the Medicare 
appeal process. The Medicare decision will be final if the claim is 
denied by Medicare. The claimed services or supplies will not be 
considered for CHAMPUS payment and there is no CHAMPUS appeal of the 
CHAMPUS decision denying the claim.
    (2) If Medicare processes a claim for a healthcare service or supply 
that is a Medicare benefit and the claim is paid, either on initial 
submission or as a result of a Medicare appeal decision, the claim will 
be submitted to CHAMPUS for processing as a second payer to Medicare. If 
CHAMPUS denies payment of the claim, the Medicare-eligible beneficiary 
or their provider have the same appeal rights as other CHAMPUS 
beneficiaries and their providers under this section.
    (3) If Medicare processes a claim and the claim is denied by 
Medicare because it is not a healthcare service or supply that is a 
benefit under Medicare, the claim is submitted to CHAMPUS. CHAMPUS will 
process the claim under this Part 199 as primary payer (or as secondary 
payer if another double coverage plan exists). If any part of the claim 
is denied, the Medicare-eligible beneficiary and their provider will 
have the same appeal rights as other CHAMPUS beneficiaries and their 
providers under this section.
    (2) Participation in an appeal. Participation in an appeal is 
limited to any party to the initial determination, including CHAMPUS, 
and authorized representatives of the parties. Any party to the initial 
determination, except CHAMPUS, may appeal an adverse determination. The 
appealing party is the party who actually files the appeal.
    (i) Parties to the initial determination. For purposes of the 
CHAMPUS appeals and hearing procedures, the following are not parties to 
an initial determination and are not entitled to administrative review 
under this section.
    (A) A provider disqualified or excluded as an authorized provider 
under CHAMPUS based on a determination of abuse or fraudulent practices 
or procedures under another Federal or federally funded program is not a 
party to

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the CHAMPUS action and may not appeal under this section.
    (B) A beneficiary who has an interest in receiving care or has 
received care from a particular provider cannot be an appealing party 
regarding the exclusion, suspension, or termination of the provider 
under Sec. 199.9 of this part.
    (C) A sponsor or parent of a beneficiary under 18 years of age or 
guardian or an incompetent beneficiary is not a party to the initial 
determination and may not serve as the appealing party, although such 
persons may represent the appealing party in an appeal.
    (D) A third party, such as an insurance company, is not a party to 
the initial determination and is not entitled to appeal even though it 
may have an indirect interest in the initial determination.
    (E) A nonparticipating provider is not a party to the initial 
determination and may not appeal.
    (ii) Representative. Any party to the initial determination may 
appoint a representative to act on behalf of the party in connection 
with an appeal. Generally, the parent of a minor beneficiary and the 
legally appointed guardian of an incompetent beneficiary shall be 
presumed to have been appointed representative without specific 
designation by the beneficiary. The custodial parent or legal guardian 
(appointed by a cognizant court) of a minor beneficiary may initiate an 
appeal based on the above presumption. However, should a minor 
beneficiary turn 18 years of age during the course of an appeal, then 
any further requests to appeal on behalf of the beneficiary must be from 
the beneficiary or pursuant to the written authorization of the 
beneficiary appointing a representative. For example, if the beneficiary 
is 17 years of age and the sponsor (who is a custodial parent) requests 
a formal review, absent written objection by the minor beneficiary, the 
sponsor is presumed to be acting on behalf of the minor beneficiary. 
Following the issuance of the formal review, the sponsor requests a 
hearing; however if, at the time of the request for a hearing, the 
beneficiary is 18 years of age or older, the request must either be by 
the beneficiary or the beneficiary must appoint a representative. The 
sponsor, in this example, could not pursue the request for hearing 
without being appointed by the beneficiary as the beneficiary's 
representative.
    (A) The representative shall have the same authority as the party to 
the appeal and notice given to the representative shall constitute 
notice required to be given to the party under this part.
    (B) To avoid possible conflicts of interest, an officer or employee 
of the United States, such as an employee or member of a Uniformed 
Service, including an employee or staff member of a Uniformed Service 
legal office, or a CHAMPUS advisor, subject to the exceptions in 18 
U.S.C. 205, is not eligible to serve as a representative. An exception 
usually is made for an employee or member of a Uniformed Service who 
represents an immediate family member. In addition, the Director, 
OCHAMPUS, or designee, may appoint an officer or employee of the United 
States as the CHAMPUS representative at a hearing.
    (3) Burden of proof. The burden of proof is on the appealing party 
to establish affirmatively by substantial evidence the appealing party's 
entitlement under law and this part to the authorization of CHAMPUS 
benefits, approval of authorized CHAMPUS provider status, or removal of 
sanctions imposed under Sec. 199.9 of this part. If a presumption 
exists under the provisions of this part or information constitutes 
prima facie evidence under the provisions of this part, the appealing 
party must produce evidence reasonably sufficient to rebut the 
presumption or prima facie evidence as part of the appealing party's 
burden of proof. CHAMPUS shall not pay any part of the cost or fee, 
including attorney fees, associated with producing or submitting 
evidence in support of an appeal.
    (4) Evidence in appeal and hearing cases. Any relevant evidence may 
be used in the administrative appeal and hearing process if it is the 
type of evidence on which reasonable persons are accustomed to rely in 
the conduct of serious affairs, regardless of the existence of any 
common law or statutory

[[Page 234]]

rule that might make improper the admission of such evidence over 
objection in civil or criminal courts.
    (5) Late filing. If a request for reconsideration, formal review, or 
hearings is filed after the time permitted in this section, written 
notice shall be issued denying the request. Late filing may be permitted 
only if the appealing party reasonably can demonstrate to the 
satisfaction of the Director, OCHAMPUS, or a designee, that the timely 
filing of the request was not feasible due to extraordinary 
circumstances over which the appealing party had no practical control. 
Each request for an exception to the filing requirement will be 
considered on its own merits. The decision of the Director, OCHAMPUS, or 
a designee, on the request for an exception to the filing requirement 
shall be final.
    (6) Appealable issue. An appealable issue is required in order for 
an adverse determination to be appealed under the provisions of this 
section. Examples of issues that are not appealable under this section 
include:
    (i) A dispute regarding a requirement of the law or regulation.
    (ii) The amount of the CHAMPUS-determined allowable cost or charge, 
since the methodology for determining allowable costs or charges is 
established by this part.
    (iii) The establishment of diagnosis-related groups (DRGs), or the 
methodology for the classification of inpatient discharges within the 
DRGs, or the weighting factors that reflect the relative hospital 
resources used with respect to discharges within each DRG, since each of 
these is established by this part.
    (iv) Certain other issues on the basis that the authority for the 
initial determination is not vested in CHAMPUS. Such issues include but 
are not limited to the following examples:
    (A) Determination of a person's eligibility as a CHAMPUS beneficiary 
is the responsibility of the appropriate Uniformed Service. Although 
OCHAMPUS, OCHAMPUSEUR, and CHAMPUS contractors must make determinations 
concerning a beneficiary's eligibility in order to ensure proper 
disbursement of appropriated funds on each CHAMPUS claim processed, 
ultimate responsibility for resolving a beneficiary's eligibility rests 
with the Uniformed Services. Accordingly, disputed question of fact 
concerning a beneficiary's eligibility will not be considered an 
appealable issue under the provisions of this section, but shall be 
resolved in accordance with Sec. 199.3 of this part.
    (B) Similarly, decisions relating to the issuance of a 
Nonavailability Statement (DD Form 1251) in each case are made by the 
Uniformed Services. Disputes over the need for a Nonavailability 
Statement or a refusal to issue a Nonavailability Statement are not 
appealable under this section. The one exception is when a dispute 
arises over whether the facts of the case demonstrate a medical 
emergency for which a Nonavailability Statement is not required. Denial 
of payment in this one situation is an appealable issue.
    (C) Any sanction, including the period of the sanction, imposed 
under Sec. 199.9 of this part which is based solely on a provider's 
exclusion or suspension by another agency of the Federal Government, a 
state, or a local licensing authority is not appealable under this 
section. The provider must exhaust administrative appeal rights offered 
by the other agency that made the initial determination to exclude or 
suspend the provider. Similarly, any sanction imposed under Sec. 199.9 
which is based solely on a criminal conviction or civil judgment against 
the provider is not appealable under this section. If the sanction 
imposed under Sec. 199.9 is not based solely on the provider's criminal 
conviction or civil judgment or on the provider's exclusion or 
suspension by another agency of the Federal Government, a state, or a 
local licensing authority, that portion of the CHAMPUS administrative 
determination which is in addition to the criminal conviction/civil 
judgment or exclusion/suspension by the other agency may be appealed 
under this section.
    (v) A decision by the Director, OCHAMPUS, or a designee, as a 
suspending official when the decision is final under the provisions of 
Sec. 199.9(h)(1)(iv)(A).
    (7) Amount in dispute. An amount in dispute is required for an 
adverse determination to be appealed under the provisions of this 
section, except as set forth below.

[[Page 235]]

    (i) The amount in dispute is calculated as the amount of money 
CHAMPUS would pay if the services and supplies involved in dispute were 
determined to be authorized CHAMPUS benefits. Examples of amounts of 
money that are excluded by the Regulation from CHAMPUS payments for 
authorized benefits include, but are not limited to:
    (A) Amounts in excess of the CHAMPUS-determined allowable charge or 
cost.
    (B) The beneficiary's CHAMPUS deductible and cost-share amounts.
    (C) Amounts that the CHAMPUS beneficiary, or parent, guardian, or 
other responsible person has no legal obligation to pay.
    (D) Amounts excluded under the provisions of Sec. 199.8 of this 
part.
    (ii) The amount of dispute for appeals involving a denial of a 
request for authorization in advance of obtaining care shall be the 
estimated allowable charge or cost for the services requested.
    (iii) There is no requirement for an amount in dispute when the 
appealable issue involves a denial of a provider's request for approval 
as an authorized CHAMPUS provider or the determination to exclude, 
suspend, or terminate a provider's authorized CHAMPUS provider status.
    (iv) Individual claims may be combined to meet the required amount 
in dispute if all of the following exist:
    (A) The claims involve the same beneficiary.
    (B) The claims involve the same issue.
    (C) At least one of the claims so combined has had a reconsideration 
decision issued by OCHAMPUSEUR, a CHAMPUS contractor, or a CHAMPUS peer 
review organization.
    Note: A request for administrative review under this appeal process 
which involves a dispute regarding a requirement of law or regulation 
(paragraph (a)(6)(i) of this section) or does not involve a sufficient 
amount in dispute (paragraph (a)(7) of this section) may not be rejected 
at the reconsideration level of appeal. However, an appeal shall involve 
an appealable issue and sufficient amount in dispute under these 
paragraphs to be granted a formal review or hearing.
    (8) Levels of appeal. The sequence and procedures of a CHAMPUS 
appeal vary, depending on whether the initial determination was made by 
OCHAMPUS, OCHAMPUSEUR, a CHAMPUS contractor, or a CHAMPUS peer review 
organization.
    (i) Appeal levels for initial determination made by OCHAMPUSEUR, 
CHAMPUS contractor, or CHAMPUS peer review organization. (A) 
Reconsideration by OCHAMPUSEUR, CHAMPUS contractor, or CHAMPUS peer 
review organization.
    (B) Formal review by OCHAMPUS (except for CHAMPUS peer review 
organization reconsiderations).
    (C) Hearing.
    (ii) Appeal levels for initial determination made by OCHAMPUS. (A) 
Reconsideration by OCHAMPUSEUR or CHAMPUS contractor.
    (B) Formal review by OCHAMPUS except (1) initial determinations 
involving the suspension of claims processing where the Director, 
OCHAMPUS, or a designee, determines that additional proceedings are 
necessary as to disputed material facts and the suspending official's 
decision is not final under the provisions of Sec. 199.9(h) (1)(iv)(A) 
or (2) initial determinations involving the sanctioning (exclusion, 
suspension, or termination) of CHAMPUS providers. Initial determinations 
involving these matters shall be appealed directly to the hearing level.
    (C) Hearing.
    (9) Appeal decision. An appeal decision at any level may address all 
pertinent issues which arise under the appeal or are otherwise presented 
by the information in the case record (for example, the entire episode 
of care in the appeal), and shall not be limited to addressing the 
specific issue appealed by a party. In the case of sanctions imposed 
under Sec. 199.9, the final decision may affirm, increase or reduce the 
sanction period imposed by CHAMPUS, or otherwise modify or reverse the 
imposition of the sanction.
    (b) Reconsideration. Any party to the initial determination made by 
the CHAMPUS contractor, or a CHAMPUS peer review organization may 
request reconsideration.
    (1) Requesting a reconsideration--(i) Written request required. The 
request

[[Page 236]]

must be in writing, shall state the specific matter in dispute, and 
shall include a copy of the notice of initial determination (such as the 
CEOB form) made by OCHAMPUSEUR, the CHAMPUS contractor, or the CHAMPUS 
peer review organization.
    (ii) Where to file. The request shall be submitted to the office 
that made the initial determination (i.e., OCHAMPUSEUR, the CHAMPUS 
contractor, or the CHAMPUS peer review organization) or any other 
CHAMPUS contractor designated in the notice of initial determination.
    (iii) Allowed time to file. The request must be mailed within 90 
days after the date of the notice of initial determination.
    (iv) Official filing date. A request for a reconsideration shall be 
deemed filed on the date it is mailed and postmarked. If the request 
does not have a postmark, it shall be deemed filed on the date received 
by OCHAMPUSEUR, the CHAMPUS contractor or the CHAMPUS peer review 
organization.
    (2) The reconsideration process. The purpose of the reconsideration 
is to determine whether the initial determination was made in accordance 
with law, regulation, policies, and guidelines in effect at the time the 
care was provided or requested, or at the time of the initial 
determination and/or reconsideration decision involving a provider 
request for approval as an authorized provider under CHAMPUS. The 
reconsideration is performed by a member of the OCHAMPUSEUR, CHAMPUS 
contractor, or CHAMPUS peer review organization staff who was not 
involved in making the initial determination and is a thorough and 
independent review of the case. The reconsideration is based on the 
information submitted that led to the initial determination, plus any 
additional information that the appealing party may submit or 
OCHAMPUSEUR, the CHAMPUS contractor, or CHAMPUS peer review organization 
may obtain.
    (3) Timeliness of reconsideration determination. OCHAMPUSEUR, the 
CHAMPUS contractor, or CHAMPUS peer review organization normally shall 
issue its reconsideration determination no later than 60 days from the 
date of receipt of the request for reconsideration by OCHAMPUSEUR, the 
CHAMPUS contractor, or the CHAMPUS peer review organization.
    (4) Notice of reconsideration determination. OCHAMPUSEUR, the 
CHAMPUS contractor, or the CHAMPUS peer review organization shall issue 
a written notice of the reconsideration determination to the appealing 
party at his or her last known address. The notice of the 
reconsideration must contain the following elements:
    (i) A statement of the issues or issue under appeal.
    (ii) The provisions of law, regulation, policies, and guidelines 
that apply to the issue or issues under appeal.
    (iii) A discussion of the original and additional information that 
is relevant to the issue or issues under appeal.
    (iv) Whether the reconsideration upholds the initial determination 
or reverses it, in whole or in part, and the rationale for the action.
    (v) A statement of the right to appeal further in any case when the 
reconsideration determination is less than fully favorable to the 
appealing party and the amount in dispute is $50 or more.
    (5) Effect of reconsideration determination. The reconsideration 
determination is final if either of the following exist:
    (i) The amount in dispute is less than $50.
    (ii) Appeal rights have been offered, but a request for formal 
review is not received by OCHAMPUS within 60 days of the date of the 
notice of the reconsideration determination.
    (c) Formal review. Except as explained in this paragraph, any party 
to an initial determination made by OCHAMPUS, or a reconsideration 
determination made by the CHAMPUS contractor, may request a formal 
review by OCHAMPUS if the party is dissatisfied with the initial or 
reconsideration determination unless the initial or reconsideration 
determination is final under paragraph (b)(5) of this section; involves 
the sanctioning of a provider by the exclusion, suspension or 
termination of authorized provider status; involves a written decision 
issued pursuant to Sec. 199.9(h)(1)(iv)(A) regarding the temporary 
suspension of claims processing; or involves a reconsideration 
determination by a CHAMPUS

[[Page 237]]

peer review organization. A hearing, but not a formal review level of 
appeal, may be available to a party to an initial determination 
involving the sanctioning of a provider or to a party to a written 
decision involving a temporary suspension of claims processing. A 
beneficiary (or an authorized representative of a beneficiary), but not 
a provider (except as provided in Sec. 199.15), may request a hearing, 
but not a formal review, of a reconsideration determination made by a 
CHAMPUS peer review organization.
    (1) Requesting a formal review. (i) Written request required. The 
request must be in writing, shall state the specific matter in dispute, 
shall include copies of the written determination (notice of 
reconsideration determination or OCHAMPUS initial determination) being 
appealed, and shall include any additional information or documents not 
submitted previously.
    (ii) Where to file. The request shall be submitted to the Chief, 
Office of Appeals and Hearings, TRICARE Management Activity, 16401 East 
Centretech Parkway, Auroa, Colorado 80011-9066.
    (iii) Allowed time to file. The request shall be mailed within 60 
days after the date of the notice of the reconsideration determination 
or OCHAMPUS initial determination being appealed.
    (iv) Official filing date. A request for a formal review shall be 
deemed filed on the date it is mailed and postmarked. If the request 
does not have a postmark, it shall be deemed filed on the date received 
by OCHAMPUS.
    (2) The formal review process. The purpose of the formal review is 
to determine whether the initial determination or reconsideration 
determination was made in accordance with law, regulation, policies, and 
guidelines in effect at the time the care was provided or requested or 
at the time of the initial determination, reconsideration, or formal 
review decision involving a provider request for approval as an 
authorized CHAMPUS provider. The formal review is performed by the 
Chief, Office of Appeals and Hearings, OCHAMPUS, or a designee, and is a 
thorough review of the case. The formal review determination shall be 
based on the information, upon which the initial determination and/or 
reconsideration determination was based, and any additional information 
the appealing party may submit or OCHAMPUS may obtain.
    (3) Timeliness of formal review determination. The Chief, Office of 
Appeals and Hearings, OCHAMPUS, or a designee normally shall issue the 
formal review determination no later than 90 days from the date of 
receipt of the request for formal review by the OCHAMPUS.
    (4) Notice of formal review determination. The Chief, Office of 
Appeals and Hearings, OCHAMPUS, or a designee shall issue a written 
notice of the formal review determination to the appealing party at his 
or her last known address. The notice of the formal review determination 
must contain the following elements:
    (i) A statement of the issue or issues under appeal.
    (ii) The provisions of law, regulation, policies, and guidelines 
that apply to the issue or issues under appeal.
    (iii) A discussion of the original and additional information that 
is relevant to the issue or issues under appeal.
    (iv) Whether the formal review upholds the prior determination or 
determinations or reverses the prior determination or determinations in 
whole or in part and the rationale for the action.
    (v) A statement of the right to request a hearing in any case when 
the formal review determination is less than fully favorable, the issue 
is appealable, and the amount in dispute is $300 or more.
    (5) Effect of formal review determination. The formal review 
determination is final if one or more of the following exist:
    (i) The issue is not appealable. (See paragraph (a)(6) of this 
section.)
    (ii) The amount in dispute is less than $300. (See paragraph (a)(7) 
of this section.)
    (iii) Appeal rights have been offered but a request for hearing is 
not received by OCHAMPUS within 60 days of the date of the notice of the 
formal review determination.
    (d) Hearing. Any party to the initial determination may request a 
hearing if

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the party is dissatisfied with the formal review determination and the 
formal review determination is not final under the provisions of 
paragraph (c)(5), of this section, or the initial determination involves 
the sanctioning of a provider under Sec. 199.9 of this part and 
involves an appealable issue.
    (1) Requesting a hearing--(i) Written request required. The request 
shall be in writing, state the specific matter in dispute, include a 
copy of the appropriate initial determination or formal review 
determination being appealed, and include any additional information or 
documents not submitted previously.
    (ii) Where to file. The request shall be submitted to the Chief, 
Appeals and Hearings, OCHAMPUS, Aurora, Colorado 80045-6900.
    (iii) Allowed time to file. The request shall be mailed within 60 
days after the date of the notice of the initial determination or formal 
review determination being appealed.
    (iv) Official filing date. A request for hearing shall be deemed 
filed on the date it is mailed and postmarked. If a request for hearing 
does not have a postmark, it shall be deemed filed on the day received 
by OCHAMPUS.
    (2) Hearing process. A hearing is an administrative proceeding in 
which facts relevant to the appealable issue(s) in the case are 
presented and evaluated in relation to applicable law, regulation, 
policies, and guidelines in effect at the time the care in dispute was 
provided or requested; at the time of the initial determination, formal 
review determination, or hearing decision involving a provider request 
for approval under CHAMPUS as an authorized provider; or at the time of 
the act or event which is the basis for the imposition of sanctions 
under this part. A hearing, except for an appeal involving a provider 
sanction, generally shall be conducted as a nonadversary, administrative 
proceeding. However, an authorized party to any hearing, including 
CHAMPUS, may submit additional evidence or testimony relevant to the 
appealable issue(s) and may appoint a representative, including legal 
counsel, to participate in the hearing process.
    (3) Timeliness of hearing. (i) Except as otherwise provided in this 
section, within 60 days following receipt of a request for hearing, the 
Director, OCHAMPUS, or a designee, normally will appoint a hearing 
officer to hear the appeal. Copies of all records in the possession of 
OCHAMPUS that are pertinent to the matter to be heard or that formed the 
basis of the formal review determination shall be provided to the 
hearing officer and, upon request, to the appealing party.
    (ii) The hearing officer, except as otherwise provided in this 
Section, normally shall have 60 days from the date of written notice of 
assignment to review the file, schedule and hold the hearing, and issue 
a recommended decision to the Director, OCHAMPUS, or designee.
    (iii) The Director, OCHAMPUS, or designee, may delay the case 
assignment to the hearing officer if additional information is needed 
that cannot be obtained and included in the record within the time 
period specified above. The appealing party will be notified in writing 
of the delay resulting from the request for additional information. The 
Director, OCHAMPUS, or a designee, in such circumstances, will assign 
the case to a hearing officer within 30 days of receipt of all such 
additional information, or within 60 days of receipt of the request for 
hearing, whichever shall occur last.
    (iv) The hearing officer may delay submitting the recommended 
decision if, at the close of the hearing, any party to the hearing 
requests that the record remain open for submission of additional 
information. In such circumstances, the hearing officer will have 30 
days following receipt of all such additional information including 
comments from the other parties to the hearing concerning the additional 
information to submit the recommended decision to the Director, 
OCHAMPUS, or a designee.
    (4) Representation at a hearing. Any party to the hearing may 
appoint a representative to act on behalf of the party at the hearing, 
unless such person currently is disqualified or suspended from acting in 
another Federal administrative proceeding, or unless otherwise 
prohibited by law, this part,

[[Page 239]]

or any other DoD regulation (see paragraph (a)(2)(ii) of this section). 
A hearing officer may refuse to allow any person to represent a party at 
the hearing when such person engages in unethical, disruptive, or 
contemptuous conduct, or intentionally fails to comply with proper 
instructions or requests of the hearing officer, or the provisions of 
this part. The representative shall have the same authority as the 
appealing party and notice given to the representative shall constitute 
notice required to be given to the appealing party.
    (5) Consolidation of proceedings. The Director, OCHAMPUS, or a 
designee, may consolidate any number of proceedings for hearing when the 
facts and circumstances are similar and no substantial right of an 
appealing party will be prejudiced.
    (6) Authority of the hearing officer. The hearing officer in 
exercising the authority to conduct a hearing under this part will be 
bound by 10 U.S.C. chapter 55 and this part. The hearing officer in 
addressing substantive, appealable issues shall be bound by policy 
manuals, instructions, procedures, and other guidelines issued by the 
ASD(HA), or a designee, or by the Director, OCHAMPUS, or a designee, in 
effect for the period in which the matter in dispute arose. A hearing 
officer may not establish or amend policy, procedures, instructions, or 
guidelines. However, the hearing officer may recommend reconsideration 
of the policy, procedures, instructions or guidelines by the ASD(HA), or 
a designee, when the final decision is issued in the case.
    (7) Disqualification of hearing officer. A hearing officer 
voluntarily shall disqualify himself or herself and withdraw from any 
proceeding in which the hearing officer cannot give fair or impartial 
hearing, or in which there is a conflict of interest. A party to the 
hearing may request the disqualification of a hearing officer by filing 
a statement detailing the reasons the party believes that a fair and 
impartial hearing cannot be given or that a conflict of interest exists. 
Such request immediately shall be sent by the appealing party or the 
hearing officer to the Director, OCHAMPUS, or a designee, who shall 
investigate the allegations and advise the complaining party of the 
decision in writing. A copy of such decision also shall be mailed to all 
other parties to the hearing. If the Director, OCHAMPUS, or a designee, 
reassigns the case to another hearing officer, no investigation shall be 
required.
    (8) Notice and scheduling of hearing. The hearing officer shall 
issue by certified mail, when practicable, a written notice to the 
parties to the hearing of the time and place for the hearing. Such 
notice shall be mailed at least 15 days before the scheduled date of the 
hearing. The notice shall contain sufficient information about the 
hearing procedure, including the party's right to representation, to 
allow for effective preparation. The notice also shall advise the 
appealing party of the right to request a copy of the record before the 
hearing. Additionally, the notice shall advise the appealing party of 
his or her responsibility to furnish the hearing officer, no later than 
7 days before the scheduled date of the hearing, a list of all witnesses 
who will testify and a copy of all additional information to be 
presented at the hearing. The time and place of the hearing shall be 
determined by the hearing officer, who shall select a reasonable time 
and location mutually convenient to the appealing party and OCHAMPUS.
    (9) Dismissal of request for hearing. (i) By application of 
appealing party. A request for hearing may be dismissed by the Director, 
OCHAMPUS, or a designee, at any time before the mailing of the final 
decision, upon the application of the appealing party. A request for 
dismissal must be in writing and filed with the Chief, Appeals and 
Hearings, OCHAMPUS, or the hearing officer. When dismissal is requested, 
the formal review determination in the case shall be deemed final, 
unless the dismissal is vacated in accordance with paragraph (d)(9)(v) 
of this section.
    (ii) By stipulation of the parties to the hearing. A request for a 
hearing may be dismissed by the Director, OCHAMPUS, or a designee, at 
any time before to the mailing of notice of the final decision under a 
stipulation agreement between the appealing party and OCHAMPUS. When 
dismissal is entered under a stipulation, the formal review decision 
shall be deemed final,

[[Page 240]]

unless the dismissal is vacated in accordance with paragraph (d)(9)(v) 
of this section.
    (iii) By abandonment. The Director, OCHAMPUS, or a designee, may 
dismiss a request for hearing upon abandonment by the appealing party.
    (A) An appealing party shall be deemed to have abandoned a request 
for hearing, other than when personal appearance is waived in accordance 
with Sec. 199.10(d)(11)(xii), if neither the appealing party nor an 
appointed representative appears at the time and place fixed for the 
hearing and if, within 10 days after the mailing of a notice by 
certified mail to the appealing party by the hearing officer to show 
cause, such party does not show good and sufficient cause for such 
failure to appear and failure to notify the hearing officer before the 
time fixed for hearing that an appearance could not be made.
    (B) An appealing party shall be deemed to have abandoned a request 
for hearing if, before assignment of the case to the hearing officer, 
OCHAMPUS is unable to locate either the appealing party or an appointed 
representative.
    (C) An appealing party shall be deemed to have abandoned a request 
for hearing if the appealing party fails to prosecute the appeal. 
Failure to prosecute the appeal includes, but is not limited to, an 
appealing party's failure to provide information reasonably requested by 
OCHAMPUS or the hearing officer for consideration in the appeal.
    (D) If the Director, OCHAMPUS, or a designee, dismisses the request 
for hearing because of abandonment, the formal review determination in 
the case shall be deemed to be final, unless the dismissal is vacated in 
accordance with paragraph (d)(9)(v) of this section.
    (iv) For cause. The Director, OCHAMPUS, or a designee, may dismiss 
for cause a request for hearing either entirely or as to any stated 
issue. If the Director, OCHAMPUS, or a designee, dismisses a hearing 
request for cause, the formal review determination in the case shall be 
deemed to be final, unless the dismissal is vacated in accordance with 
paragraph (d)(9)(v) of this section. A dismissal for cause may be issued 
under any of the following circumstances:
    (A) When the appealing party requesting the hearing is not a proper 
party under paragraph (a)(2)(i) of this section, or does not otherwise 
have a right to participate in a hearing.
    (B) When the appealing party who filed the hearing request dies, and 
there is no information before the Director, OCHAMPUS, or a designee, 
showing that a party to the initial determination who is not an 
appealing party may be prejudiced by the formal review determination.
    (C) When the issue is not appealable (see Sec. 199.10(a)(6)).
    (D) When the amount in dispute is less than $300 (see Sec. 
199.10(a)(7)).
    (E) When all appealable issues have been resolved in favor of the 
appealing party.
    (v) Vacation of dismissal. Dismissal of a request for hearing may be 
vacated by the Director, OCHAMPUS, or a designee, upon written request 
of the appealing party, if the request is received within 6 months of 
the date of the notice of dismissal mailed to the last known address of 
the party requesting the hearing.
    (10) Preparation for hearing. (i) Prehearing statement of 
contentions. The hearing officer may on reasonable notice require a 
party to the hearing to submit a written statement of contentions and 
reasons. The written statement shall be provided to all parties to the 
hearing before the hearing takes place.
    (ii) Discovery. Upon the written request of a party to the initial 
determination (including OCHAMPUS) and for good cause shown, the hearing 
officer will allow that party to inspect and copy all documents, unless 
privileged, relevant to issues in the proceeding that are in the 
possession or control of the other party participating in the appeal. 
The written request shall state clearly what information and documents 
are required for inspection and the relevance of the documents to the 
issues in the proceeding. Depositions, interrogatories, requests for 
admissions, and other forms of prehearing discovery are generally not 
authorized and the Department of Defense does

[[Page 241]]

not have subpoena authority for purposes of administrative hearings 
under this Section. If the hearing officer finds that good cause exists 
for taking a deposition or interrogatory, the expense shall be assessed 
to the requesting party, with copies furnished to the hearing officer 
and the other party or parties to the hearing.
    (iii) Witnesses and evidence. All parties to a hearing are 
responsible for producing, at each party's expense, meaning without 
reimbursement of payment by CHAMPUS, witnesses and other evidence in 
their own behalf, and for furnishing copies of any such documentary 
evidence to the hearing officer and other party or parties to the 
hearing. The Department of Defense is not authorized to subpoena 
witnesses or records. The hearing officer may issue invitations and 
requests to individuals to appear and testify without cost to the 
Government, so that the full facts in the case may be presented.
    (11) Conduct of hearing. (i) Right to open hearing. Because of the 
personal nature of the matters to be considered, hearings normally shall 
be closed to the public. However, the appealing party may request an 
open hearing. If this occurs, the hearing shall be open except when 
protection of other legitimate Government purposes dictates closing 
certain portions of the hearing.
    (ii) Right to examine parties to the hearing and their witnesses. 
Each party to the hearing shall have the right to produce and examine 
witnesses, to introduce exhibits, to question opposing witnesses on any 
matter relevant to the issue even though the matter was not covered in 
the direct examination, to impeach any witness regardless of which party 
to the hearing first called the witness to testify, and to rebut any 
evidence presented. Except for those witnesses employed by OCHAMPUS at 
the time of the hearing, or records in the possession of OCHAMPUS, a 
party to a hearing shall be responsible, that is to say no payment or 
reimbursement shall be made by CHAMPUS for the cost or fee associated 
with producing witnesses or other evidence in the party's own behalf, or 
for furnishing copies of documentary evidence to the hearing officer and 
other party or parties to the hearing.
    (iii) Taking of evidence. The hearing officer shall control the 
taking of evidence in a manner best suited ascertain the facts and 
safeguard the rights of the parties to the hearing. Before taking 
evidence, the hearing officer shall identify and state the issues in 
dispute on the record and the order in which evidence will be received.
    (iv) Questioning and admission of evidence. A hearing officer may 
question any witness and shall admit any relevant evidence. Evidence 
that is irrelevant or unduly repetitious shall be excluded.
    (v) Relevant evidence. Any relevant evidence shall be admitted, 
unless unduly repetitious, if it is the type of evidence on which 
responsible persons are accustomed to rely in the conduct of serious 
affairs, regardless of the existence of any common law or statutory rule 
that might make improper the admission of such evidence over objection 
in civil or criminal actions.
    (vi) CHAMPUS determination first. The basis of the CHAMPUS 
determinations shall be presented to the hearing officer first. The 
appealing party shall then be given the opportunity to establish 
affirmatively why this determination is held to be in error.
    (vii) Testimony. Testimony shall be taken only on oath, affirmation, 
or penalty of perjury.
    (viii) Oral argument and briefs. At the request of any party to the 
hearing made before the close of the hearing, the hearing officer shall 
grant oral argument. If written argument is requested, it shall be 
granted, and the parties to the hearing shall be advised as to the time 
and manner within which such argument is to be filed. The hearing 
officer may require any party to the hearing to submit written memoranda 
pertaining to any or all issues raised in the hearing.
    (ix) Continuance of hearing. A hearing officer may continue a 
hearing to another time or place on his or her own motion or, upon 
showing of good cause, at the request of any party. Written notice of 
the time and place of the continued hearing, except as otherwise 
provided here, shall be in accordance with this part. When a continuance 
is ordered during a hearing, oral notice of the time and place of the 
continued

[[Page 242]]

hearing may be given to each party to the hearing who is present at the 
hearing.
    (x) Continuance for additional evidence. If the hearing officer 
determines, after a hearing has begun, that additional evidence is 
necessary for the proper determination of the case, the following 
procedures may be invoked:
    (A) Continue hearing. The hearing may be continued to a later date 
in accordance with Sec. 199.10(d)(11)(ix), above.
    (B) Closed hearing. The hearing may be closed, but the record held 
open in order to permit the introduction of additional evidence. Any 
evidence submitted after the close of the hearing shall be made 
available to all parties to the hearing, and all parties to the hearing 
shall have the opportunity for comment. The hearing officer may reopen 
the hearing if any portion of the additional evidence makes further 
hearing desirable. Notice thereof shall be given in accordance with 
paragraph (d)(8) of this section.
    (xi) Transcript of hearing. A verbatim taped record of the hearing 
shall be made and shall become a permanent part of the record. Upon 
request, the appealing party shall be furnished a duplicate copy of the 
tape. A typed transcript of the testimony will be made only when 
determined to be necessary by OCHAMPUS. If a typed transcript is made, 
the appealing party shall be furnished a copy without charge. 
Corrections shall be allowed in the typed transcript by the hearing 
officer solely for the purpose of conforming the transcript to the 
actual testimony.
    (xii) Waiver of right to appear and present evidence. If all parties 
waive their right to appear before the hearing officer for presenting 
evidence and contentions personally or by representation, it will not be 
necessary for the hearing officer to give notice of, or to conduct a 
formal hearing. A waiver of the right to appear must be in writing and 
filed with the hearing officer or the Chief, Appeals and Hearings, 
OCHAMPUS. Such waiver may be withdrawn by the party by written notice 
received by the hearing officer or Chief, Appeals and Hearings, no later 
than 7 days before the scheduled hearing or the mailing of notice of the 
final decision, whichever occurs first. For purposes of this Section, 
failure of a party to appear personally or by representation after 
filing written notice of waiver, will not be cause for finding of 
abandonment and the hearing officer shall make the recommended decision 
on the basis of all evidence of record.
    (12) Recommended decision. At the conclusion of the hearing and 
after the record has been closed, the matter shall be taken under 
consideration by the hearing officer. Within the time frames previously 
set forth in this Section, the hearing officer shall submit to the 
Director, OCHAMPUS, or a designee, a written recommended decision 
containing a statement of findings and a statement of reasons based on 
the evidence adduced at the hearing and otherwise included in the 
hearing record.
    (i) Statement of findings. A statement of findings is a clear and 
concise statement of fact evidenced in the record or conclusions that 
readily can be deduced from the evidence of record. Each finding must be 
supported by substantial evidence that is defined as such evidence as a 
reasonable mind can accept as adequate to support a conclusion.
    (ii) Statement of reasons. A reason is a clear and concise statement 
of law, regulation, policies, or guidelines relating to the statement of 
findings that provides the basis for the recommended decision.
    (e) Final decision--(1) Director, OCHAMPUS. The recommended decision 
shall be reviewed by the Director, OCHAMPUS, or a designee, who shall 
adopt or reject the recommended decision or refer the recommended 
decision for review by the Assistant Secretary of Defense (Health 
Affairs). The Director, OCHAMPUS, or designee, normally will take action 
with regard to the recommended decision within 90 days of receipt of the 
recommended decision or receipt of the revised recommended decision 
following a remand order to the Hearing Officer.
    (i) Final action. If the Director, OCHAMPUS, or a designee, concurs 
in the recommended decision, no further agency action is required and 
the recommended decision, as adopted by the Director, OCHAMPUS, is the 
final agency decision in the appeal. In the

[[Page 243]]

case of rejection, the Director, OCHAMPUS, or a designee, shall state 
the reason for disagreement with the recommended decision and the 
underlying facts supporting such disagreement. In these circumstances, 
the Director, OCHAMPUS, or a designee, may have a final decision 
prepared based on the record, or may remand the matter to the Hearing 
Officer for appropriate action. In the latter instance, the Hearing 
Officer shall take appropriate action and submit a new recommended 
decision within 60 days of receipt of the remand order. The decision by 
the Director, OCHAMPUS, or a designee, concerning a case arising under 
the procedures of this section, shall be the final agency decision and 
the final decision shall be sent by certified mail to the appealing 
party or parties. A final agency decision under paragraph (e)(1) of this 
section will not be relied on, used, or cited as precedent by the 
Department of Defense in the administration of CHAMPUS.
    (ii) Referral for review by ASD(HA). The Director, OCHAMPUS, or a 
designee, may refer a hearing case to the Assistant Secretary of Defense 
(Health Affairs) when the hearing involves the resolution of CHAMPUS 
policy and issuance of a final decision which may be relied on, used, or 
cited as precedent in the administration of CHAMPUS. In such a 
circumstance, the Director, OCHAMPUS, or a designee, shall forward the 
recommended decision, together with the recommendation of the Director, 
OCHAMPUS, or a designee, regarding disposition of the hearing case.
    (2) ASD(HA). The ASD(HA), or a designee, after reviewing a case 
arising under the procedures of this section may issue a final decision 
based on the record in the hearing case or remand the case to the 
Director, OCHAMPUS, or a designee, for appropriate action. A decision 
issued by the ASD(HA), or a designee, shall be the final agency decision 
in the appeal and a copy of the final decision shall be sent by 
certified mail to the appealing party or parties. A final decision of 
the ASD(HA), or a designee, issued under this paragraph (e)(2) may be 
relied on, used, or cited as precedent in the administration of CHAMPUS.

[51 FR 24008, July 1, 1986, as amended at 52 FR 33007, Sept. 1, 1987; 54 
FR 25255, June 14, 1989; 55 FR 43341, Nov. 16, 1990; 56 FR 59880, Nov. 
26, 1991; 66 FR 40607, Aug. 3, 2001; 68 FR 11973, Mar. 13, 2003; 68 FR 
23033, Apr. 30, 2003; 68 FR 32362, May 30, 2003; 69 FR 6920, Feb. 12, 
2004]