[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: 32CFR199.6]

[Page 164-203]
 
                       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. 199.6  TRICARE--authorized providers.

    (a) General. This section sets forth general policies and procedures 
that are the basis for the CHAMPUS cost-sharing of medical services and 
supplies provided by institutions, individuals, or other types of 
providers. Providers seeking payment from the Federal Government through 
programs such as CHAMPUS have a duty to familiarize themselves with, and 
comply with, the program requirements.
    (1) Listing of provider does not guarantee payment of benefits. The 
fact that a type of provider is listed in this section is not to be 
construed to mean that CHAMPUS will automatically pay a claim for 
services or supplies provided by such a provider. The provider who 
actually furnishes the service(s) must, in fact, meet all licensing and 
other requirements established by this part to be an authorized 
provider; the provider must not be the subject of sanction under Sec. 
199.9; and, cost-sharing of the services must not otherwise be

[[Page 165]]

prohibited by this part. In addition, the patient must in fact be an 
eligible beneficiary and the services or supplies billed must be 
authorized and medically necessary, regardless of the standing of the 
provider.
    (2) Outside the United States or emergency situations within the 
United States. Outside the United States or within the United States and 
Puerto Rico in emergency situations, the Director, OCHAMPUS, or a 
designee, after review of the facts, may provide payment to or on behalf 
of a beneficiary who receives otherwise covered services or supplies 
from a provider of service that does not meet the standards described in 
this part.
    Note: Only the Secretary of Defense, the Secretary of Health and 
Human Services, or the Secretary of Transportation, or their designees, 
may authorize (in emergency situations) payment to civilian facilities 
in the United States that are not in compliance with title VI of the 
Civil Rights Act of 1964. For the purpose of the Civil Rights Act only, 
the United States includes the 50 states, the District of Columbia, 
Puerto Rico, Virgin Islands, American Samoa, Guam, Wake Island, Canal 
Zone, and the territories and possessions of the United States.
    (3) Dual compensation/Conflict of interest. Title 5, United States 
Code, section 5536 prohibits medical personnel who are active duty 
Uniformed Service members or civilian employees of the Government from 
receiving additional Government compensation above their normal pay and 
allowances for medical care furnished. In addition, Uniformed Service 
members and civilian employees of the Government are generally 
prohibited by law and agency regulations and policies from participating 
in apparent or actual conflict of interest situations in which a 
potential for personal gain exists or in which there is an appearance of 
impropriety or incompatibility with the performance of their official 
duties or responsibilities. The Departments of Defense, Health and Human 
Services, and Transportation have a responsibility, when disbursing 
appropriated funds in the payment of CHAMPUS benefits, to ensure that 
the laws and regulations are not violated. Therefore, active duty 
Uniformed Service members (including a reserve member while on active 
duty and civilian employees of the United States Government shall not be 
authorized to be CHAMPUS providers. While individual employees of the 
Government may be able to demonstrate that the furnishing of care to 
CHAMPUS beneficiaries may not be incompatible with their official duties 
and responsibilities, the processing of millions of CHAMPUS claims each 
year does not enable Program administrators to efficiently review the 
status of the provider on each claim to ensure that no conflict of 
interest or dual compensation situation exists. The problem is further 
complicated given the numerous interagency agreements (for example, 
resource sharing arrangements between the Department of Defense and the 
Veterans Administration in the provision of health care) and other 
unique arrangements which exist at individual treatment facilities 
around the country. While an individual provider may be prevented from 
being an authorized CHAMPUS provider even though no conflict of interest 
or dual compensation situation exists, it is essential for CHAMPUS to 
have an easily administered, uniform rule which will ensure compliance 
with the existing laws and regulations. Therefore, a provider who is an 
active duty Uniformed Service member or civilian employee of the 
Government shall not be an authorized CHAMPUS provider. In addition, a 
provider shall certify on each CHAMPUS claim that he/she is not an 
active duty Uniformed Service member or civilian employee of the 
Government.
    (4) [Reserved]
    (5) Utilization review and quality assurance. Providers approved as 
authorized CHAMPUS providers have certain obligations to provide 
services and supplies under CHAMPUS which are (i) furnished at the 
appropriate level and only when and to the extent medically necessary 
under the criteria of this part; (ii) of a quality that meets 
professionally recognized standards of health care; and, (iii) supported 
by adequate medical documentation as may be reasonably required under 
this part by the Director, OCHAMPUS, or designee, to evidence the 
medical necessity and quality of services furnished, as well as the 
appropriateness of the level of care. Therefore, the authorization of 
CHAMPUS benefits is contingent upon

[[Page 166]]

the services and supplies furnished by any provider being subject to 
pre-payment or post-payment utilization and quality assurance review 
under professionally recognized standards, norms, and criteria, as well 
as any standards or criteria issued by the Director, OCHAMPUS, or a 
designee, pursuant to this part. (Refer to Sec. Sec. 199.4, 199.5, and 
199.7 of this part.)
    (6) Exclusion of beneficiary liability. In connection with certain 
utilization review, quality assurance and preauthorization requirements 
of section 199.4 of this part, providers may not hold patients liable 
for payment for certain services for which CHAMPUS payment is 
disallowed. With respect to such services, providers may not seek 
payment from the patient or the patient's family. Any such effort to 
seek payment is a basis for termination of the provider's authorized 
status.
    (7) Provider required. In order to be considered for benefits, all 
services and supplies shall be rendered by, prescribed by, or furnished 
at the direction of, or on the order of a CHAMPUS-authorized provider 
practicing within the scope of his or her license.
    (8) Participating providers. A CHAMPUS-authorized provider is a 
participating provider, as defined in Sec. 199.2 under the following 
circumstances:
    (i) Mandatory participation. (A) An institutional provider in Sec. 
199.6(b), in order to be an authorized provider under TRICARE, must be a 
participating provider for all claims.
    (B) A SNF or a HHA, in order to be an authorized provider under 
TRICARE, must enter into a participation agreement with TRICARE for all 
claims.
    (C) Corporate services providers authorized as CHAMPUS providers 
under the provisions of paragraph (f) of this section must enter into a 
participation agreement as provided by the Director, OCHAMPUS, or 
designee.
    (ii) Voluntary participation--(A) Total claims participation: The 
participating provider program. A CHAMPUS-authorized provider that is 
not required to participate by this part may become a participating 
provider by entering into an agreement or memorandum of understanding 
(MOU) with the Director, OCHAMPUS, or designee, which includes, but is 
not limited to, the provisions of paragraph (a)(13) of this section. The 
Director, OCHAMPUS, or designee, may include in a participating provider 
agreement/MOU provisions that establish between CHAMPUS and a class, 
category, type, or specific provider, uniform procedures and conditions 
which encourage provider participation while improving beneficiary 
access to benefits and contributing to CHAMPUS efficiency. Such 
provisions shall be otherwise allowed by this part or by DoD Directive 
or DoD Instruction specifically pertaining to CHAMPUS claims 
participation. Participating provider program provisions may be 
incorporated into an agreement/MOU to establish a specific CHAMPUS-
provider relationship, such as a preferred provider arrangement.
    (B) Claim-specific participation. A CHAMPUS-authorized provider that 
is not required to participate and that has not entered into a 
participation agreement pursuant to paragraph (a)(8)(ii)(A) of this 
section may elect to be a participating provider on a claim-by-claim 
basis by indicating ``accept assignment'' on each claim form for which 
participation is elected.
    (iii) Claim-by-claim participation. Individual providers that are 
not participating providers pursuant to paragraph (a)(8)(ii) of this 
section may elect to participate on a claim-by-claim basis. They may do 
so by signing the appropriate space on the claims form and submitting it 
to the appropriate TRICARE contractor on behalf of the beneficiary.
    (9) Limitation to authorized institutional provider designation. 
Authorized institutional provider status granted to a specific 
institutional provider applicant does not extend to any institution-
affiliated provider, as defined in Sec. 199.2, of that specific 
applicant.
    (10) Authorized provider. A hospital or institutional provider, 
physician, or other individual professional provider, or other provider 
of services or supplies specifically authorized in this chapter to 
provide benefits under CHAMPUS. In addition, to be an authorized CHAMPUS 
provider, any hospital which is a CHAMPUS participating

[[Page 167]]

provider under paragraph (a)(7) of this section, shall be a 
participating provider for all care, services, or supplies furnished to 
an active duty member of the uniformed services for which the active 
duty member is entitled under 10 U.S.C. 1074(c). As a participating 
provider for active duty members, the CHAMPUS authorized hospital shall 
provide such care, services, and supplies in accordance with the payment 
rules of Sec. 199.16 of this part. The failure of any CHAMPUS 
participating hospital to be a participating provider for any active 
duty member subjects the hospital to termination of the hospital's 
status as a CHAMPUS authorized provider for failure to meet the 
qualifications established by this part.
    (11) Balance billing limits--(i) In general. Individual providers 
including providers salaried or under contract by an institutional 
provider and other providers who are not participating providers may not 
balance bill a beneficiary an amount that exceeds the applicable balance 
billing limit. The balance billing limit shall be the same percentage as 
the Medicare limiting charge percentage for nonparticipating 
practitioners and suppliers.
    (ii) Waiver. The balance billing limit may be waived by the 
Director, OCHAMPUS on a case-by-case basis if requested by a CHAMPUS 
beneficiary. A decision by the Director, OCHAMPUS to waive or not waive 
the limit in any particular case is not subject to the appeal and 
hearing procedures of Sec. 199.10.
    (iii) Compliance. Failure to comply with the balance billing limit 
shall be considered abuse and/or fraud and grounds of exclusion or 
suspension of the provider under Sec. 199.9.
    (12) Medical records. CHAMPUS-authorized provider organizations and 
individuals providing clinical services shall maintain adequate clinical 
records to substantiate that specific care was actually furnished, was 
medically necessary, and appropriate, and identify(ies) the 
individual(s) who provided the care. This applies whether the care is 
inpatient or outpatient. The minimum requirements for medical record 
documentation are set forth by all of the following:
    (i) The cognizant state licensing authority;
    (ii) The Joint Commission on Accreditation of Healthcare 
Organizations, or the appropriate Qualified Accreditation Organization 
as defined in Sec. 199.2;
    (iii) Standards of practice established by national medical 
organizations; and
    (iv) This part.
    (13) Participation agreements. A participation agreement otherwise 
required by this part shall include, in part, all of the following 
provisions requiring that the provider shall:
    (i) Not charge a beneficiary for the following:
    (A) Services for which the provider is entitled to payment from 
CHAMPUS;
    (B) Services for which the beneficiary would be entitled to have 
CHAMPUS payment made had the provider complied with certain procedural 
requirements.
    (C) Services not medically necessary and appropriate for the 
clinical management of the presenting illness, injury, disorder or 
maternity;
    (D) Services for which a beneficiary would be entitled to payment 
but for a reduction or denial in payment as a result of quality review; 
and
    (E) Services rendered during a period in which the provider was not 
in compliance with one or more conditions of authorization;
    (ii) Comply with the applicable provisions of this part and related 
CHAMPUS administrative policy;
    (iii) Accept the CHAMPUS determined allowable payment combined with 
the cost-share, deductible, and other health insurance amounts payable 
by, or on behalf of, the beneficiary, as full payment for CHAMPUS 
allowed services;
    (iv) Collect from the CHAMPUS beneficiary those amounts that the 
beneficiary has a liability to pay for the CHAMPUS deductible and cost-
share;
    (v) Permit access by the Director, OCHAMPUS, or designee, to the 
clinical record of any CHAMPUS beneficiary, to the financial and 
organizational records of the provider, and to reports of evaluations 
and inspections conducted by state, private agencies or organizations;

[[Page 168]]

    (vi) Provide the Director, OCHAMPUS, or designee, prompt written 
notification of the provider's employment of an individual who, at any 
time during the twelve months preceding such employment, was employed in 
a managerial, accounting, auditing, or similar capacity by an agency or 
organization which is responsible, directly or indirectly for decisions 
regarding Department of Defense payments to the provider;
    (vii) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the Department 
of Defense for the geographic area in which the provider renders 
services;
    (viii) Obtain written authorization before rendering designated 
services or items for which CHAMPUS cost-share may be expected;
    (ix) Maintain clinical and other records related to individuals for 
whom CHAMPUS payment was made for services rendered by the provider, or 
otherwise under arrangement, for a period of 60 months from the date of 
service;
    (x) Maintain contemporaneous clinical records that substantiate the 
clinical rationale for each course of treatment, periodic evaluation of 
the efficacy of treatment, and the outcome at completion or 
discontinuation of treatment;
    (xi) Refer CHAMPUS beneficiaries only to providers with which the 
referring provider does not have an economic interest, as defined in 
Sec. 199.2; and
    (xii) Limit services furnished under arrangement to those for which 
receipt of payment by the CHAMPUS authorized provider discharges the 
payment liability of the beneficiary.
    (14) Implementing instructions. The Director, OCHAMPUS, or a 
designee, shall issue CHAMPUS policies, instructions, procedures, and 
guidelines, as may be necessary to implement the intent of this section.
    (15) Exclusion. Regardless of any provision in this section, a 
provider who is suspended, excluded, or terminated under Sec. 199.9 of 
this part is specifically excluded as an authorized CHAMPUS provider.
    (b) Institutional providers--(1) General. Institutional providers 
are those providers who bill for services in the name of an 
organizational entity (such as hospital and skilled nursing facility), 
rather than in the name of a person. The term ``institutional provider'' 
does not include professional corporations or associations qualifying as 
a domestic corporation under Sec. 301.7701-5 of the Internal Revenue 
Service Regulations nor does it include other corporations that provide 
principally professional services. Institutional providers may provide 
medical services and supplies on either an inpatient or outpatient 
basis.
    (i) Preauthorization. Preauthorization may be required by the 
Director, OCHAMPUS for any health care service for which payment is 
sought under CHAMPUS. (See Sec. Sec. 199.4 and 199.15 for further 
information on preauthorization requirements.)
    (ii) Billing practices.
    (A) Each institutional billing, including those institutions subject 
to the CHAMPUS DRG-based reimbursement method or a CHAMPUS-determined 
all-inclusive rate reimbursement method, must be itemized fully and 
sufficiently descriptive for the CHAMPUS to make a determination of 
benefits.
    (B) Institutional claims subject to the CHAMPUS DRG-based 
reimbursement method or a CHAMPUS-determined all-inclusive rate 
reimbursement method, may be submitted only after the beneficiary has 
been discharged or transferred from the institutional provider's 
facility or program.
    (C) Institutional claims for Residential Treatment Centers and all 
other institutional providers, except those listed in (B) above, should 
be submitted to the appropriate CHAMPUS fiscal intermediary at least 
every 30 days.
    (2) Nondiscrimination policy. Except as provided below, payment may 
not be made for inpatient or outpatient care provided and billed by an 
institutional provider found by the Federal Government to practice 
discrimination in the admission of patients to its services on the basis 
of race, color, or national origin. Reimbursement may not be made to a 
beneficiary who pays for care provided by such a facility and submits a 
claim for reimbursement. In the following circumstances, the Secretary 
of Defense, or a designee, may authorize

[[Page 169]]

payment for care obtained in an ineligible facility:
    (i) Emergency care. Emergency inpatient or outpatient care.
    (ii) Care rendered before finding of a violation. Care initiated 
before a finding of a violation and which continues after such violation 
when it is determined that a change in the treatment facility would be 
detrimental to the health of the patient, and the attending physician so 
certifies.
    (iii) Other facility not available. Care provided in an ineligible 
facility because an eligible facility is not available within a 
reasonable distance.
    (3) Procedures for qualifying as a CHAMPUS-approved institutional 
provider. General and special hospitals otherwise meeting the 
qualifications outlined in paragraphs (b)(4) (i), (ii), and (iii), of 
this section are not required to request CHAMPUS approval formally.
    (i) JCAH accreditation status. Each CHAMPUS fiscal intermediary 
shall keep informed as to the current JCAH accreditation status of all 
hospitals and skilled nursing facilities in its area; and the provider's 
status under Medicare, particularly with regard to compliance with title 
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d(1)). The Director, 
OCHAMPUS, or a designee, shall specifically approve all other authorized 
institutional providers providing services to CHAMPUS beneficiaries. At 
the discretion of the Director, OCHAMPUS, any facility that is certified 
and participating as a provider of services under title XVIII of the 
Social Security Act (Medicare), may be deemed to meet CHAMPUS 
requirements. The facility must be providing a type and level of service 
that is authorized by this part.
    (ii) Required to comply with criteria. Facilities seeking CHAMPUS 
approval will be expected to comply with appropriate criteria set forth 
in paragraph (b)(4) of this section. They also are required to complete 
and submit CHAMPUS Form 200, ``Required Information, Facility 
Determination Instructions,'' and provide such additional information as 
may be requested by OCHAMPUS. An onsite evaluation, either scheduled or 
unscheduled, may be conducted at the discretion of the Director, 
OCHAMPUS, or a designee. The final determination regarding approval, 
reapproval, or disapproval of a facility will be provided in writing to 
the facility and the appropriate CHAMPUS fiscal intermediary.
    (iii) Notice of peer review rights. All health care facilities 
subject to the DRG-based payment system shall provide CHAMPUS 
beneficiaries, upon admission, with information about peer review 
including their appeal rights. The notices shall be in a form specified 
by the Director, OCHAMPUS.
    (iv) Surveying of facilities. The surveying of newly established 
institutional providers and the periodic resurveying of all authorized 
institutional providers is a continuing process conducted by OCHAMPUS.
    (v) Institutions not in compliance with CHAMPUS standards. If a 
determination is made that an institution is not in compliance with one 
or more of the standards applicable to its specific category of 
institution, CHAMPUS shall take immediate steps to bring about 
compliance or terminate the approval as an authorized institution in 
accordance with Sec. 199.9(f)(2).
    (vi) Participation agreements required for some hospitals which are 
not Medicare-participating. Notwithstanding the provisions of this 
paragraph (B)(3), a hospital which is subject to the CHAMPUS DRG-based 
payment system but which is not a Medicare-participating hospital must 
request and sign an agreement with OCHAMPUS. By signing the agreement, 
the hospital agrees to participate on all CHAMPUS inpatient claims and 
accept the requirements for a participating provider as contained in 
paragraph (a)(8) of Sec. 199.6. Failure to sign such an agreement shall 
disqualify such hospital as a CHAMPUS-approved institutional provider.
    (4) Categories of institutional providers. The following categories 
of institutional providers may be reimbursed by CHAMPUS for services 
provided CHAMPUS beneficiaries subject to any and all definitions, 
conditions, limitation, and exclusions specified or enumerated in this 
part.
    (i) Hospitals, acute care, general and special. An institution that 
provides inpatient services, that also may provide

[[Page 170]]

outpatient services (including clinical and ambulatory surgical 
services), and that:
    (A) Is engaged primarily in providing to inpatients, by or under the 
supervision of physicians, diagnostic and therapeutic services for the 
medical or surgical diagnosis and treatment of illness, injury, or 
bodily malfunction (including maternity).
    (B) Maintains clinical records on all inpatients (and outpatients if 
the facility operates an outpatient department or emergency room).
    (C) Has bylaws in effect with respect to its operations and medical 
staff.
    (D) Has a requirement that every patient be under the care of a 
physician.
    (E) Provides 24-hour nursing service rendered or supervised by a 
registered professional nurse, and has a licensed practical nurse or 
registered professional nurse on duty at all times.
    (F) Has in effect a hospital utilization review plan that is 
operational and functioning.
    (G) In the case of an institution in a state in which state or 
applicable local law provides for the licensing of hospitals, the 
hospital:
    (1) Is licensed pursuant to such law, or
    (2) Is approved by the agency of such state or locality responsible 
for licensing hospitals as meeting the standards established for such 
licensing.
    (H) Has in effect an operating plan and budget.
    (I) Is accredited by the JCAH or meets such other requirements as 
the Secretary of Health and Human Services, the Secretary of 
Transportation, or the Secretary of Defense finds necessary in the 
interest of the health and safety of patients who are admitted to and 
furnished services in the institution.
    (ii) Organ transplant centers. To obtain TRICARE approval as an 
organ transplant center, the center must be a Medicare approved 
transplant center or meet the criteria as established by the Executive 
Director, TMA, or a designee.
    (iii) Organ transplant consortia. TRICARE shall approve individual 
pediatric organ transplant centers that meet the criteria established by 
the Executive Director, TMA, or a designee.
    (iv) Hospitals, psychiatric. A psychiatric hospital is an 
institution which is engaged primarily in providing services to 
inpatients for the diagnosis and treatment of mental disorders.
    (A) There are two major categories of psychiatric hospitals:
    (1) The private psychiatric hospital category includes both 
proprietary and the not-for-profit nongovernmental institutions.
    (2) The second category is those psychiatric hospitals that are 
controlled, financed, and operated by departments or agencies of the 
local, state, or Federal Government and always are operated on a not-
for-profit basis.
    (B) In order for the services of a psychiatric hospital to be 
covered, the hospital shall comply with the provisions outlined in 
paragraph (b)(4)(i) of this section. All psychiatric hospitals shall be 
accredited under the JCAHO Accreditation Manual for Hospitals (AMH) 
standards in order for their services to be cost-shared under CHAMPUS. 
In the case of those psychiatric hospitals that are not JCAHO-accredited 
because they have not been in operation a sufficient period of time to 
be eligible to request an accreditation survey by the JCAHO, the 
Director, OCHAMPUS, or a designee, may grant temporary approval if the 
hospital is certified and participating under Title XVIII of the Social 
Security Act (Medicare, Part A). This temporary approval expires 12 
months from the date on which the psychiatric hospital first becomes 
eligible to request an accreditation survey by the JCAHO.
    (C) Factors to be considered in determining whether CHAMPUS will 
cost-share care provided in a psychiatric hospital include, but are not 
limited to, the following considerations:
    (1) Is the prognosis of the patient such that care provided will 
lead to resolution or remission of the mental illness to the degree that 
the patient is of no danger to others, can perform routine daily 
activities, and can be expected to function reasonably outside the 
inpatient setting?

[[Page 171]]

    (2) Can the services being provided be provided more economically in 
another facility or on an outpatient basis?
    (3) Are the charges reasonable?
    (4) Is the care primarily custodial or domiciliary? (Custodial or 
domiciliary care of the permanently mentally ill or retarded is not a 
benefit under the Basic Program.)
    (D) Although psychiatric hospitals are accredited under the JCAHO 
AMH standards, their medical records must be maintained in accordance 
with the JCAHO Consolidated Standard Manual for Child, Adolescent, and 
Adult Psychiatric, Alcoholism, and Drug Abuse Facilities and Facilities 
Serving the Mentally Retarded, along with the requirements set forth in 
Sec. 199.7(b)(3). The hospital is responsible for assuring that patient 
services and all treatment are accurately documented and completed in a 
timely manner.
    (v) Hospitals, long-term (tuberculosis, chronic care, or 
rehabilitation). To be considered a long-term hospital, an institution 
for patients that have tuberculosis or chronic diseases must be an 
institution (or distinct part of an institution) primarily engaged in 
providing by or under the supervision of a physician appropriate medical 
or surgical services for the diagnosis and active treatment of the 
illness or condition in which the institution specializes.
    (A) In order for the service of long-term hospitals to be covered, 
the hospital must comply with the provisions outlined in paragraph 
(b)(4)(i) of this section. In addition, in order for services provided 
by such hospitals to be covered by CHAMPUS, they must be primarily for 
the treatment of the presenting illness.
    (B) Custodial or domiciliary care is not coverable under CHAMPUS, 
even if rendered in an otherwise authorized long-term hospital.
    (C) The controlling factor in determining whether a beneficiary's 
stay in a long-term hospital is coverable by CHAMPUS is the level of 
professional care, supervision, and skilled nursing care that the 
beneficiary requires, in addition to the diagnosis, type of condition, 
or degree of functional limitations. The type and level of medical 
services required or rendered is controlling for purposes of extending 
CHAMPUS benefits; not the type of provider or condition of the 
beneficiary.
    (vi) Skilled nursing facility. A skilled nursing facility is an 
institution (or a distinct part of an institution) that is engaged 
primarily in providing to inpatients medically necessary skilled nursing 
care, which is other than a nursing home or intermediate facility, and 
which:
    (A) Has policies that are developed with the advice of (and with 
provisions for review on a periodic basis by) a group of professionals, 
including one or more physicians and one or more registered nurses, to 
govern the skilled nursing care and related medical services it 
provides.
    (B) Has a physician, a registered nurse, or a medical staff 
responsible for the execution of such policies.
    (C) Has a requirement that the medical care of each patient must be 
under the supervision of a physician, and provides for having a 
physician available to furnish necessary medical care in case of an 
emergency.
    (D) Maintains clinical records on all patients.
    (E) Provides 24-hour skilled nursing service that is sufficient to 
meet nursing needs in accordance with the policies developed as provided 
in paragraph (b)(4)(iv)(A) of this section, and has at least one 
registered professional nurse employed full-time.
    (F) Provides appropriate methods and procedures for the dispensing 
and administering of drugs and biologicals.
    (G) Has in effect a utilization review plan that is operational and 
functioning.
    (H) In the case of an institution in a state in which state or 
applicable local law provides for the licensing of this type facility, 
the institution:
    (1) Is licensed pursuant to such law, or
    (2) Is approved by the agency of such state or locality responsible 
for licensing such institutions as meeting the standards established for 
such licensing.
    (I) Has in effect an operating plan and budget.
    (J) Meets such provisions of the most current edition of the Life 
Safety

[[Page 172]]

Code \8\ as are applicable to nursing facilities; except that if the 
Secretary of Health and Human Services has waived, for such periods, as 
deemed appropriate, specific provisions of such code which, if rigidly 
applied, would result in unreasonable hardship upon a nursing facility.
---------------------------------------------------------------------------

    \8\ Compiled and published by the National Fire Protection 
Association, Batterymarch Park, Quincy, Massachusetts 02269.
---------------------------------------------------------------------------

    (K) Is an authorized provider under the Medicare program, and meets 
the requirements of Title 18 of the social Security Act, sections 
1819(a), (b), (c), and (d) (42 U.S.C. 1395i-3(a)-(d)).

    Note: If a pediatric SNF is certified by Medicaid, it will be 
considered to meet the Medicare certification requirement in order to be 
an authorized provider under TRICARE.

    (vii) Residential treatment centers. This paragraph (b)(4)(vii) 
establishes standards and requirements for residential treatment centers 
(RTCs).
    (A) Organization and administration--(1) Definition. A Residential 
Treatment Center (RTC) is a facility or a distinct part of a facility 
that provides to beneficiaries under 21 years of age a medically 
supervised, interdisciplinary program of mental health treatment. An RTC 
is appropriate for patients whose predominant symptom presentation is 
essentially stabilized, although not resolved, and who have persistent 
dysfunction in major life areas. The extent and pervasiveness of the 
patient's problems require a protected and highly structured therapeutic 
environment. Residential treatment is differentiated from:
    (i) Acute psychiatric care, which requires medical treatment and 24-
hour availability of a full range of diagnostic and therapeutic services 
to establish and implement an effective plan of care which will reverse 
life-threatening and/or severely incapacitating symptoms;
    (ii) Partial hospitalization, which provides a less than 24-hour-
per-day, seven-day-per-week treatment program for patients who continue 
to exhibit psychiatric problems but can function with support in some of 
the major life areas;
    (iii) A group home, which is a professionally directed living 
arrangement with the availability of psychiatric consultation and 
treatment for patients with significant family dysfunction and/or 
chronic but stable psychiatric disturbances;
    (iv) Therapeutic school, which is an educational program 
supplemented by psychological and psychiatric services;
    (v) Facilities that treat patients with a primary diagnosis of 
chemical abuse or dependence; and
    (vi) Facilities providing care for patients with a primary diagnosis 
of mental retardation or developmental disability.
    (2) Eligibility.
    (i) Every RTC must be certified pursuant to CHAMPUS certification 
standards. Such standards shall incorporate the basic standards set 
forth in paragraphs (b)(4)(vii) (A) through (D) of this section, and 
shall include such additional elaborative criteria and standards as the 
Director, OCHAMPUS determines are necessary to implement the basic 
standards.
    (ii) To be eligible for CHAMPUS certification, the facility is 
required to be licensed and fully operational for six months (with a 
minimum average daily census of 30 percent of total bed capacity) and 
operate in substantial compliance with state and federal regulations.
    (iii) The facility is currently accredited by the Joint Commission 
on Accreditation of Healthcare Organizations (JCAHO) under the current 
edition of the Manual for Mental Health, Chemical Dependency, and Mental 
Retardation/Developmental Disabilities Services which is available from 
JCAHO, P.O. Box 75751, Chicago, IL 60675.
    (iv) The facility has a written participation agreement with 
OCHAMPUS. The RTC is not a CHAMPUS-authorized provider and CHAMPUS 
benefits are not paid for services provided until the date upon which a 
participation agreement is signed by the Director, OCHAMPUS.
    (3) Governing body.

[[Page 173]]

    (i) The RTC shall have a governing body which is responsible for the 
policies, bylaws, and activities of the facility. If the RTC is owned by 
a partnership or single owner, the partners or single owner are regarded 
as the governing body. The facility will provide an up-to-date list of 
names, addresses, telephone numbers and titles of the members of the 
governing body.
    (ii) The governing body ensures appropriate and adequate services 
for all patients and oversees continuing development and improvement of 
care. Where business relationships exist between the governing body and 
facility, appropriate conflict-of-interest policies are in place.
    (iii) Board members are fully informed about facility services and 
the governing body conducts annual review of its performance in meeting 
purposes, responsibilities, goals and objectives.
    (4) Chief executive officer. The chief executive officer, appointed 
by and subject to the direction of the governing body, shall assume 
overall administrative responsibility for the operation of the facility 
according to governing body policies. The chief executive officer shall 
have five years' administrative experience in the field of mental 
health. On October 1, 1997, the CEO shall possess a degree in business 
administration, public health, hospital administration, nursing, social 
work, or psychology, or meeting similar educational requirements as 
prescribed by the Director, OCHAMPUS.
    (5) Clinical director. The clinical director, appointed by the 
governing body, shall be a psychiatrist or doctoral level psychologist 
who meets applicable CHAMPUS requirements for individual professional 
providers and is licensed to practice in the state where the residential 
treatment center is located. The clinical director shall possess 
requisite education and experience, credentials applicable under state 
practice and licensing laws appropriate to the professional discipline, 
and a minimum of five years' clinical experience in the treatment of 
children and adolescents. The clinical director shall be responsible for 
planning, development, implementation, and monitoring of all clinical 
activities.
    (6) Medical director. The medical director, appointed by the 
governing body, shall be licensed to practice medicine in the state 
where the residential treatment center is located and shall possess 
requisite education and experience, including graduation from an 
accredited school of medicine or osteopathy, an approved residency in 
psychiatry and a minimum of five years clinical experience in the 
treatment of children and adolescents. The Medical Director shall be 
responsible for the planning, development, implementation, and 
monitoring of all activities relating to medical treatment of patients. 
If qualified, the Medical Director may also serve as Clinical Director.
    (7) Medical or professional staff organization. The governing body 
shall establish a medical or professional staff organization to assure 
effective implementation of clinical privileging, professional conduct 
rules, and other activities directly affecting patient care.
    (8) Personnel policies and records. The RTC shall maintain written 
personnel policies, updated job descriptions and personnel records to 
assure the selection of qualified personnel and successful job 
performance of those personnel.
    (9) Staff development. The facility shall provide appropriate 
training and development programs for administrative, professional 
support, and direct care staff.
    (10) Fiscal accountability. The RTC shall assure fiscal 
accountability to applicable government authorities and patients.
    (11) Designated teaching facilities. Students, residents, interns or 
fellows providing direct clinical care are under the supervision of a 
qualified staff member approved by an accredited university. The 
teaching program is approved by the Director, OCHAMPUS.
    (12) Emergency reports and records. The facility notifies OCHAMPUS 
of any serious occurrence involving CHAMPUS beneficiaries.
    (B) Treatment services--(1) Staff composition. (i) The RTC shall 
follow written plans which assure that medical and clinical patient 
needs will be appropriately addressed 24 hours a day, seven days a week 
by a sufficient number of fully qualified (including license,

[[Page 174]]

registration or certification requirements, educational attainment, and 
professional experience) health care professionals and support staff in 
the respective disciplines. Clinicians providing individual, group, and 
family therapy meet CHAMPUS requirements as qualified mental health 
providers and operate within the scope of their licenses. The ultimate 
authority for planning, development, implementation, and monitoring of 
all clinical activities is vested in a psychiatrist or doctoral level 
psychologist. The management of medical care is vested in a physician.
    (ii) The RTC shall ensure adequate coverage by fully qualified staff 
during all hours of operation, including physician availability, other 
professional staff coverage, and support staff in the respective 
disciplines.
    (2) Staff qualifications. The RTC will have a sufficient number of 
qualified mental health providers, administrative, and support staff to 
address patients' clinical needs and to coordinate the services 
provided. RTCs which employ individuals with master's or doctoral level 
degrees in a mental health discipline who do not meet the licensure, 
certification and experience requirements for a qualified mental health 
provider but are actively working toward licensure or certification, may 
provide services within the all-inclusive per diem rate, provided the 
individual works under the clinical supervision of a fully qualified 
mental health provider employed by the RTC. All other program services 
shall be provided by trained, licensed staff.
    (3) Patient rights (i) The RTC shall provide adequate protection for 
all patient rights, including rights provided by law, privacy, personnel 
rights, safety, confidentiality, informed consent, grievances, and 
personal dignity.
    (ii) The facility has a written policy regarding patient abuse and 
neglect.
    (iii) Facility marketing and advertising meets professional 
standards.
    (4) Behavioral management. The RTC shall adhere to a comprehensive, 
written plan of behavioral management, developed by the clinical 
director and the medical or professional staff and approved by the 
governing body, including strictly limited procedures to assure that the 
restraint or seclusion are used only in extraordinary circumstances, are 
carefully monitored, and are fully documented. Only trained and 
clinically privileged RNs or qualified mental health professionals may 
be responsible for the implementation of seclusion and restraint 
procedures in an emergency situation.
    (5) Admission process. The RTC shall maintain written policies and 
procedures to ensure that, prior to an admission, a determination is 
made, and approved pursuant to CHAMPUS preauthorization requirements, 
that the admission is medically and/or psychologically necessary and the 
program is appropriate to meet the patient's needs. Medical and/or 
psychological necessity determinations shall be rendered by qualified 
mental health professionals who meet CHAMPUS requirements for individual 
professional providers and who are permitted by law and by the facility 
to refer patients for admission.
    (6) Assessments. The professional staff of the RTC shall complete a 
current multidisciplinary assessment which includes, but is not limited 
to physical, psychological, developmental, family, educational, social, 
spiritual and skills assessment of each patient admitted. Unless 
otherwise specified, all required clinical assessments are completed 
prior to development of the multidisciplinary treatment plan.
    (7) Clinical formulation. A qualified mental health professional of 
the RTC will complete a clinical formulation on all patients. The 
clinical formulation will be reviewed and approved by the responsible 
individual professional provider and will incorporate significant 
findings from each of the multidisciplinary assessments. It will provide 
the basis for development of an interdisciplinary treatment plan.
    (8) Treatment planning. A qualified mental health professional shall 
be responsible for the development, supervision, implementation, and 
assessment of a written, individualized, interdisciplinary plan of 
treatment, which shall be completed within 10 days of admission and 
shall include individual, measurable, and observable goals for 
incremental progress and discharge. A preliminary treatment plan

[[Page 175]]

is completed within 24 hours of admission and includes at least an 
admission note and orders written by the admitting mental health 
professional. The master treatment plan is reviewed and revised at least 
every 30 days, or when major changes occur in treatment.
    (9) Discharge and transition planning. The RTC shall maintain a 
transition planning process to address adequately the anticipated needs 
of the patient prior to the time of discharge. The planning involves 
determining necessary modifications in the treatment plan, facilitating 
the termination of treatment, and identifying resources to maintain 
therapeutic stability following discharge.
    (10) Clinical documentation. Clinical records shall be maintained on 
each patient to plan care and treatment and provide ongoing evaluation 
of the patient's progress. All care is documented and each clinical 
record contains at least the following: demographic data, consent forms, 
pertinent legal documents, all treatment plans and patient assessments, 
consultation and laboratory reports, physician orders, progress notes, 
and a discharge summary. All documentation will adhere to applicable 
provisions of the JCAHO and requirements set forth in Sec. 199.7(b)(3). 
An appropriately qualified records administrator or technician will 
supervise and maintain the quality of the records. These requirements 
are in addition to other records requirements of this part, and 
documentation requirements of the Joint Commission on Accreditation of 
Healthcare Organizations.
    (11) Progress notes. RTC's shall document the course of treatment 
for patients and families using progress notes which provide information 
to review, analyze, and modify the treatment plans. Progress notes are 
legible, contemporaneous, sequential, signed and dated and adhere to 
applicable provisions of the Manual of Mental Health, Chemical 
Dependency, and Mental Retardation/Development Disabilities Services and 
requirements set forth in Sec. 199.7(b)(3).
    (12) Therapeutic services. (i) Individual, group, and family 
psychotherapy are provided to all patients, consistent with each 
patient's treatment plan, by qualified mental health providers.
    (ii) A range of therapeutic activities, directed and staffed by 
qualified personnel, are offered to help patients meet the goals of the 
treatment plan.
    (iii) Therapeutic educational services are provided or arranged that 
are appropriate to the patients educational and therapeutic needs.
    (13) Ancillary services. A full range of ancillary services is 
provided. Emergency services include policies and procedures for 
handling emergencies with qualified personnel and written agreements 
with each facility providing the service. Other ancillary services 
include physical health, pharmacy and dietary services.
    (C) Standards for physical plant and environment--(1) Physical 
environment. The buildings and grounds of the RTC shall be maintained so 
as to avoid health and safety hazards, be supportive of the services 
provided to patients, and promote patient comfort, dignity, privacy, 
personal hygiene, and personal safety.
    (2) Physical plant safety. The RTC shall be of permanent 
construction and maintained in a manner that protects the lives and 
ensures the physical safety of patients, staff, and visitors, including 
conformity with all applicable building, fire, health, and safety codes.
    (3) Disaster planning. The RTC shall maintain and rehearse written 
plan for taking care of casualties and handling other consequences 
arising from internal and external disasters.
    (D) Standards for evaluation system--(1) Quality assessment and 
improvement. The RTC shall develop and implement a comprehensive quality 
assurance and quality improvement program that monitors the quality, 
efficiency, appropriateness, and effectiveness of the care, treatments, 
and services it provides for patients and their families, primarily 
utilizing explicit clinical indicators to evaluate all functions of the 
RTC and contribute to an ongoing process of program improvement. The 
clinical director is responsible for developing and implementing quality 
assessment and improvement activities throughout the facility.
    (2) Utilization review. The RTC shall implement a utilization review 
process,

[[Page 176]]

pursuant to a written plan approved by the professional staff, the 
administration, and the governing body, that assesses the 
appropriateness of admission, continued stay, and timeliness of 
discharge as part of an effort to provide quality patient care in a 
cost-effective manner. Findings of the utilization review process are 
used as a basis for revising the plan of operation, including a review 
of staff qualifications and staff composition.
    (3) Patient records review. The RTC shall implement a process, 
including monthly reviews of a representative sample of patient records, 
to determine the completeness and accuracy of the patient records and 
the timeliness and pertinence of record entries, particularly with 
regard to regular recording of progress/non-progress in treatment.
    (4) Drug utilization review. The RTC shall implement a comprehensive 
process for the monitoring and evaluating of the prophylactic, 
therapeutic, and empiric use of drugs to assure that medications are 
provided appropriately, safely, and effectively.
    (5) Risk management. The RTC shall implement a comprehensive risk 
management program, fully coordinated with other aspects of the quality 
assurance and quality improvement program, to prevent and control risks 
to patients and staff and costs associated with clinical aspects of 
patient care and safety.
    (6) Infection control. The RTC shall implement a comprehensive 
system for the surveillance, prevention, control, and reporting of 
infections acquired or brought into the facility.
    (7) Safety. The RTC shall implement an effective program to assure a 
safe environment for patients, staff, and visitors, including an 
incident report system, a continuous safety surveillance system, and an 
active multidisciplinary safety committee.
    (8) Facility evaluation. The RTC annually evaluates accomplishment 
of the goals and objectives of each clinical program and service of the 
RTC and reports findings and recommendations to the governing body.
    (E) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(vii), of this section in 
order for the services of an RTC to be authorized, the RTC shall have 
entered into a Participation Agreement with OCHAMPUS. The period of a 
participation agreement shall be specified in the agreement, and will 
generally be for not more than five years. Participation agreements 
entered into prior April 6, 1995 must be renewed not later than October 
1, 1995. In addition to review of a facility's application and 
supporting documentation, an on-site inspection by OCHAMPUS authorized 
personnel may be required prior to signing a Participation Agreement. 
Retroactive approval is not given. In addition, the Participation 
Agreement shall include provisions that the RTC shall, at a minimum:
    (1) Render residential treatment center impatient services to 
eligible CHAMPUS beneficiaries in need of such services, in accordance 
with the participation agreement and CHAMPUS regulation;
    (2) Accept payment for its services based upon the methodology 
provided in Sec. 199.14(f) or such other method as determined by the 
Director, OCHAMPUS;
    (3) Accept the CHAMPUS all-inclusive per diem rate as payment in 
full and collect from the CHAMPUS beneficiary or the family of the 
CHAMPUS beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec. 199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director, 
OCHAMPUS, to collect those amounts, which represents the beneficiary's 
liability, as defined in Sec. 199.4;
    (5) Comply with the provisions of Sec. 199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Submit claims for services provided to CHAMPUS beneficiaries at 
least 30 days (except to the extent a delay is necessitated by efforts 
to first collect from other health insurance). If claims are not 
submitted at least every 30 days, the RTC agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
CHAMPUS;

[[Page 177]]

    (7) Certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(vii) of this section establishing standards for 
Residential Treatment Centers;
    (ii) It has conducted a self assessment of the facility's compliance 
with the CHAMPUS Standards for Residential Treatment Centers Serving 
Children and Adolescents with Mental Disorders, as issued by the 
Director, OCHAMPUS and notified the Director, OCHAMPUS of any matter 
regarding which the facility is not in compliance with such standards; 
and
    (iii) It will maintain compliance with the CHAMPUS Standards for 
Residential Treatment Centers Serving Children and Adolescents with 
Mental Disorders, as issued by the Director, OCHAMPUS, except for any 
such standards regarding which the facility notifies the Director, 
OCHAMPUS that it is not in compliance.
    (8) Designate an individual who will act as liaison for CHAMPUS 
inquiries. The RTC shall inform OCHAMPUS in writing of the designated 
individual;
    (9) Furnish OCHAMPUS, as requested by OCHAMPUS, with cost data 
certified by an independent accounting firm or other agency as 
authorized by the Director, OCHAMPUS;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning preauthorization, 
concurrent care review, claims processing, beneficiary liability, double 
coverage, utilization and quality review and other matters;
    (11) Grant the Director, OCHAMPUS, or designee, the right to conduct 
quality assurance audits or accounting audits with full access to 
patients and records (including records relating to patients who are not 
CHAMPUS beneficiaries) to determine the quality and cost-effectiveness 
of care rendered. The audits may be conducted on a scheduled or 
unscheduled (unannounced) basis. This right to audit/review includes, 
but is not limited to:
    (i) Examination of fiscal and all other records of the RTC which 
would confirm compliance with the participation agreement and 
designation as an authorized CHAMPUS RTC provider;
    (ii) Conducting such audits of RTC records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspections conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the RTC and 
interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required;
    (v) Audits conducted by the United States General Accounting Office.
    (F) Other requirements applicable to RTCs. (1) Even though an RTC 
may qualify as a CHAMPUS-authorized provider and may have entered into a 
participation agreement with CHAMPUS, payment by CHAMPUS for particular 
services provided is contingent upon the RTC also meeting all conditions 
set forth in Sec. 199.4 especially all requirements of paragraph (b)(4) 
of that section.
    (2) The RTC shall provide inpatient services to CHAMPUS 
beneficiaries in the same manner it provides inpatient services to all 
other patients. The RTC may not discriminate against CHAMPUS 
beneficiaries in any manner, including admission practices, placement in 
special or separate wings or rooms, or provisions of special or limited 
treatment.
    (3) The RTC shall assure that all certifications and information 
provided to the Director, OCHAMPUS incident to the process of obtaining 
and retaining authorized provider status is accurate and that it has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized status will be denied or terminated, and the RTC 
will be ineligible for consideration for authorized provider status for 
a two year period.
    (viii) Christian Science sanatoriums. The services obtained in 
Christian Science sanatoriums are covered by CHAMPUS as inpatient care. 
To qualify for coverage, the sanatorium either

[[Page 178]]

must be operated by, or be listed and certified by the First Church of 
Christ, Scientist.
    (ix) Infirmaries. Infirmaries are facilities operated by student 
health departments of colleges and universities to provide inpatient or 
outpatient care to enrolled students. Charges for care provided by such 
facilities will not be cost-shared by CHAMPUS if the student would not 
be charged in the absence of CHAMPUS, or if student is covered by a 
mandatory student health insurance plan, in which enrollment is required 
as a part of the student's school registration and the charges by the 
college or university include a premium for the student health insurance 
coverage. CHAMPUS will cost-share only if enrollment in the student 
health program or health insurance plan is voluntary.

    Note: An infirmary in a boarding school also may qualify under this 
provision, subject to review and approval by the Director, OCHAMPUS or a 
designee.

    (x) Other special institution providers. (A) General. (1) Care 
provided by certain special institutional providers (on either an 
inpatient or outpatient basis), may be cost-shared by CHAMPUS under 
specified circumstances and only if the provider is specifically 
identified in paragraph (b)(4)(x) of this section.
    (i) The course of treatment is prescribed by a doctor of medicine or 
osteopathy.
    (ii) The patient is under the supervision of a physician during the 
entire course of the inpatient admission or the outpatient treatment.
    (iii) The type and level of care and service rendered by the 
institution are otherwise authorized by this part.
    (iv) The facility meets all licensing or other certification 
requirements that are extant in the jurisdiction in which the facility 
is located geographically.
    (v) Is other than a nursing home, intermediate care facility, home 
for the aged, halfway house, or other similar institution.
    (vi) Is accredited by the JCAH or other CHAMPUS-approved 
accreditation organization, if an appropriate accreditation program for 
the given type of facility is available. As future accreditation 
programs are developed to cover emerging specialized treatment programs, 
such accreditation will be a prerequisite to coverage by CHAMPUS for 
services provided by such facilities.
    (2) To ensure that CHAMPUS beneficiaries are provided quality care 
at a reasonable cost when treated by a special institutional provider, 
the Director, OCHAMPUS may:
    (i) Require prior approval of all admissions to special 
institutional providers.
    (ii) Set appropriate standards for special institutional providers 
in addition to or in the absence of JCAHO accreditation.
    (iii) Monitor facility operations and treatment programs on a 
continuing basis and conduct onsite inspections on a scheduled and 
unscheduled basis.
    (iv) Negotiate agreements of participation.
    (v) Terminate approval of a case when it is ascertained that a 
departure from the facts upon which the admission was based originally 
has occurred.
    (vi) Declare a special institutional provider not eligible for 
CHAMPUS payment if that facility has been found to have engaged in 
fraudulent or deceptive practices.
    (3) In general, the following disclaimers apply to treatment by 
special institutional providers:
    (i) Just because one period or episode of treatment by a facility 
has been covered by CHAMPUS may not be construed to mean that later 
episodes of care by the same or similar facility will be covered 
automatically.
    (ii) The fact that one case has been authorized for treatment by a 
specific facility or similar type of facility may not be construed to 
mean that similar cases or later periods of treatment will be extended 
CHAMPUS benefits automatically.
    (B) Types of providers. The following is a list of facilities that 
have been designated specifically as special institutional providers.
    (1) Free-standing ambulatory surgical centers. Care provided by 
freestanding ambulatory surgical centers may be cost-shared by CHAMPUS 
under the following circumstances:
    (i) The treatment is prescribed and supervised by a physician.

[[Page 179]]

    (ii) The type and level of care and services rendered by the center 
are otherwise authorized by this part.
    (iii) The center meets all licensing or other certification 
requirements of the jurisdiction in which the facility is located.
    (iv) The center is accredited by the JCAH, the Accreditation 
Association for Ambulatory Health Care, Inc. (AAAHC), or such other 
standards as authorized by the Director, OCHAMPUS.
    (v) A childbirth procedure provided by a CHAMPUS-approved free-
standing ambulatory surgical center shall not be cost-shared by the 
CHAMPUS unless the surgical center is also a CHAMPUS-approved birthing 
center institutional provider as established by the birthing center 
provider certification requirement of this Regulation.
    (2) [Reserved]
    (xi) Birthing centers. A birthing center is a freestanding or 
institution-affiliated outpatient maternity care program which 
principally provides a planned course of outpatient prenatal care and 
outpatient childbirth service limited to low-risk pregnancies; excludes 
care for high-risk pregnancies; limits childbirth to the use of natural 
childbirth procedures; and provides immediate newborn care.
    (A) Certification requirements. A birthing center which meets the 
following criteria may be designated as an authorized CHAMPUS 
institutional provider:
    (1) The predominant type of service and level of care rendered by 
the center is otherwise authorized by this part.
    (2) The center is licensed to operate as a birthing center where 
such license is available, or is specifically licensed as a type of 
ambulatory health care facility where birthing center specific license 
is not available, and meets all applicable licensing or certification 
requirements that are extant in the state, county, municipality, or 
other political jurisdiction in which the center is located.
    (3) The center is accredited by a nationally recognized 
accreditation organization whose standards and procedures have been 
determined to be acceptable by the Director, OCHAMPUS, or a designee.
    (4) The center complies with the CHAMPUS birthing center standards 
set forth in this part.
    (5) The center has entered into a participation agreement with 
OCHAMPUS in which the center agrees, in part, to:
    (i) Participate in CHAMPUS and accept payment for maternity services 
based upon the reimbursement methodology for birthing centers;
    (ii) Collect from the CHAMPUS beneficiary only those amounts that 
represent the beneficiary's liability under the participation agreement 
and the reimbursement methodology for birthing centers, and the amounts 
for services and supplies that are not a benefit of the CHAMPUS;
    (iii) Permit access by the Director, OCHAMPUS, or a designee, to the 
clinical record of any CHAMPUS beneficiary, to the financial and 
organizational records of the center, and to reports of evaluations and 
inspections conducted by state or private agencies or organizations;
    (iv) Submit claims first to all health benefit and insurance plans 
primary to the CHAMPUS to which the beneficiary is entitled and to 
comply with the double coverage provisions of this part;
    (v) Notify CHAMPUS in writing within 7 days of the emergency 
transport of any CHAMPUS beneficiary from the center to an acute care 
hospital or of the death of any CHAMPUS beneficiary in the center.
    (6) A birthing center shall not be a CHAMPUS-authorized 
institutional provider and CHAMPUS benefits shall not be paid for any 
service provided by a birthing center before the date the participation 
agreement is signed by the Director, OCHAMPUS, or a designee.
    (B) CHAMPUS birthing center standards. (1) Environment: The center 
has a safe and sanitary environment, properly constructed, equipped, and 
maintained to protect health and safety and meets the applicable 
provisions of the ``Life Safety Code'' of the National Fire Protection 
Association.
    (2) Policies and procedures: The center has written administrative, 
fiscal, personnel and clinical policies and procedures which 
collectively promote the provision of high-quality maternity

[[Page 180]]

care and childbirth services in an orderly, effective, and safe physical 
and organizational environment.
    (3) Informed consent: Each CHAMPUS beneficiary admitted to the 
center will be informed in writing at the time of admission of the 
nature and scope of the center's program and of the possible risks 
associated with maternity care and childbirth in the center.
    (4) Beneficiary care: Each woman admitted will be cared for by or 
under the direct supervision of a specific physician or a specific 
certified nurse-midwife who is otherwise eligible as a CHAMPUS 
individual professional provider.
    (5) Medical direction: The center has written memoranda of 
understanding (MOU) for routine consultation and emergency care with an 
obstetrician-gynecologist who is certified or is eligible for 
certification by the American Board of Obstetrics and Gynecology or the 
American Osteopathic Board of Obstetrics and Gynecology and with a 
pediatrician who is certified or eligible for certification by the 
American Board of Pediatrics or by the American Osteopathic Board of 
Pediatrics, each of whom have admitting privileges to at least one 
backup hospital. In lieu of a required MOU, the center may employ a 
physician with the required qualifications. Each MOU must be renewed 
annually.
    (6) Admission and emergency care criteria and procedures. The center 
has written clinical criteria and administrative procedures, which are 
reviewed and approved annually by a physician related to the center as 
required by paragraph (b)(4)(xi)(B)(5) above, for the exclusion of a 
woman with a high-risk pregnancy from center care and for management of 
maternal and neonatal emergencies.
    (7) Emergency treatment. The center has a written memorandum of 
understanding (MOU) with at least one backup hospital which documents 
that the hospital will accept and treat any woman or newborn transferred 
from the center who is in need of emergency obstetrical or neonatal 
medical care. In lieu of this MOU with a hospital, a birthing center may 
have an MOU with a physician, who otherwise meets the requirements as a 
CHAMPUS individual professional provider, and who has admitting 
privileges to a backup hospital capable of providing care for critical 
maternal and neonatal patients as demonstrated by a letter from that 
hospital certifying the scope and expected duration of the admitting 
privileges granted by the hospital to the physician. The MOU must be 
reviewed annually.
    (8) Emergency medical transportation. The center has a written 
memorandum of understanding (MOU) with at least one ambulance service 
which documents that the ambulance service is routinely staffed by 
qualified personnel who are capable of the management of critical 
maternal and neonatal patients during transport and which specifies the 
estimated transport time to each backup hospital with which the center 
has arranged for emergency treatment as required in paragraph 
(b)(4)(xi)(B)(7) above. Each MOU must be renewed annually.
    (9) Professional staff. The center's professional staff is legally 
and professionally qualified for the performance of their professional 
responsibilities.
    (10) Medical records. The center maintains full and complete written 
documentation of the services rendered to each woman admitted and each 
newborn delivered. A copy of the informed consent document required by 
paragraph (b)(4)(xi)(B)(3), above, which contains the original signature 
of the CHAMPUS beneficiary, signed and dated at the time of admission, 
must be maintained in the medical record of each CHAMPUS beneficiary 
admitted.
    (11) Quality assurance. The center has an organized program for 
quality assurance which includes, but is not limited to, written 
procedures for regularly scheduled evaluation of each type of service 
provided, of each mother or newborn transferred to a hospital, and of 
each death within the facility.
    (12) Governance and administration. The center has a governing body 
legally responsible for overall operation and maintenance of the center 
and a full-time employee who has authority and responsibility for the 
day-to-day operation of the center.
    (xii) Psychiatric partial hospitalization programs. Paragraph 
(b)(4)(xii) of this

[[Page 181]]

section establishes standards and requirements for psychiatric partial 
hospitalization programs.
    (A) Organization and administration--(1) Definition. Partial 
hospitalization is defined as a time-limited, ambulatory, active 
treatment program that offers therapeutically intensive, coordinated, 
and structured clinical services within a stable therapeutic milieu. 
Partial hospitalization programs serve patients who exhibit psychiatric 
symptoms, disturbances of conduct, and decompensating conditions 
affecting mental health.
    (2) Eligibility. (i) Every psychiatric partial hospitalization 
program must be certified pursuant to CHAMPUS certification standards. 
Such standards shall incorporate the basic standards set forth in 
paragraphs (b)(4)(xii) (A) through (D) of this section, and shall 
include such additional elaborative criteria and standards as the 
Director, OCHAMPUS determines are necessary to implement the basic 
standards. Each psychiatric partial hospitalization program must be 
either a distinct part of an otherwise authorized institutional provider 
or a freestanding program.
    (ii) To be eligible for CHAMPUS certification, the facility is 
required to be licensed and fully operational for a period of at least 
six months (with a minimum patient census of at least 30 percent of bed 
capacity) and operate in substantial compliance with state and federal 
regulations.
    (iii) The facility is currently accredited by the Joint Commission 
on Accreditation of Healthcare Organizations under the current edition 
of the Accreditation Manual for Mental Health, Chemical Dependency, and 
Mental Retardation/Developmental Disabilities Services.
    (iv) The facility has a written participation agreement with 
OCHAMPUS. On October 1, 1995, the PHP is not a CHAMPUS-authorized 
provider and CHAMPUS benefits are not paid for services provided until 
the date upon which a participation agreement is signed by the Director, 
OCHAMPUS. Partial hospitalization is capable of providing an 
interdisciplinary program of medical and therapeutic services a minimum 
of three hours per day, five days per week, and may include full- or 
half-day, evening, and weekend treatment programs.
    (3) Governing body. (i) The PHP shall have a governing body which is 
responsible for the policies, bylaws, and activities of the facilities. 
If the PHP is owned by a partnership or single owner, the partners or 
single owner are regarded as the governing body. The facility will 
provide an up-to-date list of names, addresses, telephone numbers, and 
titles of the members of the governing body.
    (ii) The governing body ensures appropriate and adequate services 
for all patients and oversees continuing development and improvement of 
care. Where business relationships exist between the governing body and 
facility, appropriate conflict-of-interest policies are in place.
    (iii) Board members are fully informed about facility services and 
the governing body conducts annual review of its performance in meeting 
purposes, responsibilities, goals and objectives.
    (4) Chief executive officer. The Chief Executive Officer, appointed 
by and subject to the direction of the governing body, shall assume 
overall administrative responsibility for the operation of the facility 
according to governing body policies. The chief executive officer shall 
have five years' administrative experience in the field of mental 
health. On October 1, 1997, the CEO shall possess a degree in business 
administration, public health, hospital administration, nursing, social 
work, or psychology, or meet similar educational requirements as 
prescribed by the Director, OCHAMPUS.
    (5) Clinical director. The clinical director, appointed by the 
governing body, shall be a psychiatrist or doctoral level psychologist 
who meets applicable CHAMPUS requirements for individual professional 
providers and is licensed to practice in the state where the PHP is 
located. The clinical director shall possess requisite education and 
experience, credentials applicable under state practice and licensing 
laws appropriate to the professional discipline, and a minimum of five 
years' clinical experience in the treatment of mental disorders specific 
to the ages and disabilities of the patients served. The clinical 
director shall be responsible for

[[Page 182]]

planning, development, implementation, and monitoring of all clinical 
activities.
    (6) Medical director. The medical director, appointed by the 
governing body, shall be licensed to practice medicine in the state 
where the residential treatment center is located and shall possess 
requisite education and experience, including graduation from an 
accredited school of medicine or osteopathy, an approved residency in 
psychiatry and a minimum of five years clinical experience in the 
treatment of mental disorders specific to the ages and disabilities of 
the patients served. The Medical Director shall be responsible for the 
planning, development, implementation, and monitoring of all activities 
relating to medical treatment of patients. If qualified, the Medical 
Director may also serve as Clinical Director.
    (7) Medical or professional staff organization. The governing body 
shall establish a medical or professional staff organization to assure 
effective implementation of clinical privileging, professional conduct 
rules, and other activities directly affecting patient care.
    (8) Personnel policies and records. The PHP shall maintain written 
personnel policies, updated job descriptions, personnel records to 
assure the selection of qualified personnel and successful job 
performance of those personnel.
    (9) Staff development. The facility shall provide appropriate 
training and development programs for administrative, professional 
support, and direct care staff.
    (10) Fiscal accountability. The PHP shall assure fiscal 
accountability to applicable government authorities and patients.
    (11) Designated teaching facilities. Students, residents, interns, 
or fellows providing direct clinical care are under the supervision of a 
qualified staff member approved by an accredited university. The 
teaching program is approved by the Director, OCHAMPUS.
    (12) Emergency reports and records. The facility notifies OCHAMPUS 
of any serious occurrence involving CHAMPUS beneficiaries.
    (B) Treatment services--(1) Staff composition. (i) The PHP shall 
ensure that patient care needs will be appropriately addressed during 
all hours of operation by a sufficient number of fully qualified 
(including license, registration or certification requirements, 
educational attainment, and professional experience) health care 
professionals. Clinicians providing individual, group, and family 
therapy meet CHAMPUS requirements as qualified mental health providers, 
and operate within the scope of their licenses. The ultimate authority 
for managing care is vested in a psychiatrist or licensed doctor level 
psychologist. The management of medical care is vested in a physician.
    (ii) The PHP shall establish and follow written plans to assure 
adequate staff coverage during all hours of operation, including 
physician availability, other professional staff coverage, and support 
staff in the respective disciplines.
    (2) Staff qualifications. The PHP will have a sufficient number of 
qualified mental health providers, administrative, and support staff to 
address patients' clinical needs and to coordinate the services 
provided. PHPs which employ individuals with master's or doctoral level 
degrees in a mental health discipline who do not meet the licensure, 
certification and experience requirements for a qualified mental health 
provider but are actively working toward licensure or certification, may 
provide services within the all-inclusive per diem rate, provided the 
individual works under the clinical supervision of a fully qualified 
mental health provider employed by the PHP. All other program services 
shall be provided by trained, licensed staff.
    (3) Patient rights. (i) The PHP shall provide adequate protection 
for all patient rights, including rights provided by law, privacy, 
personal rights, safety, confidentiality, informed consent, grievances, 
and personal dignity.
    (ii) The facility has a written policy regarding patient abuse and 
neglect.
    (iii) Facility marketing and advertising meets professional 
standards.
    (4) Behavioral management. The PHP shall adhere to a comprehensive, 
written plan of behavior management, developed by the clinical director 
and the

[[Page 183]]

medical or professional staff and approved by the governing body, 
including strictly limited procedures to assure that restraint or 
seclusion are used only in extraordinary circumstances, are carefully 
monitored, and are fully documented. Only trained and clinically 
privileged RNs or qualified mental health professionals may be 
responsible for implementation of seclusion and restraint procedures in 
an emergency situation.
    (5) Admission process. The PHP shall maintain written policies and 
procedures to ensure that prior to an admission, a determination is 
made, and approved pursuant to CHAMPUS preauthorization requirements, 
that the admission is medically and/or psychologically necessary and the 
program is appropriate to meet the patient's needs. Medical and/or 
psychological necessity determinations shall be rendered by qualified 
mental health professionals who meet CHAMPUS requirements for individual 
professional providers and who are permitted by law and by the facility 
to refer patients for admission.
    (6) Assessments. The professional staff of the PHP shall complete a 
multidisciplinary assessment which includes, but is not limited to 
physical health, psychological health, physiological, developmental, 
family, educational, spiritual, and skills assessment of each patient 
admitted. Unless otherwise specified, all required clinical assessment 
are completed prior to development of the interdisciplinary treatment 
plan.
    (7) Clinical formulation. A qualified mental health provider of the 
PHP will complete a clinical formulation on all patients. The clinical 
formulation will be reviewed and approved by the responsible individual 
professional provider and will incorporate significant findings from 
each of the multidisciplinary assessments. It will provide the basis for 
development of an interdisciplinary treatment plan.
    (8) Treatment planning. A qualified mental health professional with 
admitting privileges shall be responsible for the development, 
supervision, implementation, and assessment of a written, 
individualized, interdisciplinary plan of treatment, which shall be 
completed by the fifth day following admission to a full-day PHP, or by 
the seventh day following admission to a half-day PHP, and shall include 
measurable and observable goals for incremental progress and discharge. 
The treatment plan shall undergo review at least every two weeks, or 
when major changes occur in treatment.
    (9) Discharge and transition planning. The PHP shall develop an 
individualized transition plan which addresses anticipated needs of the 
patient at discharge. The transition plan involves determining necessary 
modifications in the treatment plan, facilitating the termination of 
treatment, and identifying resources for maintaining therapeutic 
stability following discharge.
    (10) Clinical documentation. Clinical records shall be maintained on 
each patient to plan care and treatment and provide ongoing evaluation 
of the patient's progress. All care is documented and each clinical 
record contains at least the following: demographic data, consent forms, 
pertinent legal documents, all treatment plans and patient assessments, 
consultation and laboratory reports, physician orders, progress notes, 
and a discharge summary. All documentation will adhere to applicable 
provisions of the JCAHO and requirements set forth in Sec. 199.7(b)(3). 
An appropriately qualified records administrator or technician will 
supervise and maintain the quality of the records. These requirements 
are in addition to other records requirements of this part, and 
documentation requirements of the Joint Commission on Accreditation of 
Health Care Organization.
    (11) Progress notes. PHPs shall document the course of treatment for 
patients and families using progress notes which provide information to 
review, analyze, and modify the treatment plans. Progress notes are 
legible, contemporaneous, sequential, signed and dated and adhere to 
applicable provisions of the Manual for Mental Health, Chemical 
Dependency, and Mental Retardation/Developmental Disabilities Services 
and requirements set forth in section 199.7(b)(3).
    (12) Therapeutic services.
    (i) Individual, group, and family therapy are provided to all 
patients, consistent with each patient's treatment

[[Page 184]]

plan by qualified mental health providers.
    (ii) A range of therapeutic activities, directed and staffed by 
qualified personnel, are offered to help patients meet the goals of the 
treatment plan.
    (iii) Educational services are provided or arranged that are 
appropriate to the patient's needs.
    (13) Ancillary services. A full range of ancillary services are 
provided. Emergency services include policies and procedures for 
handling emergencies with qualified personnel and written agreements 
with each facility providing these services. Other ancillary services 
include physical health, pharmacy and dietary services.
    (C) Standards for physical plant and environment--(1) Physical 
environment. The buildings and grounds of the PHP shall be maintained so 
as to avoid health and safety hazards, be supportive of the services 
provided to patients, and promote patient comfort, dignity, privacy, 
personal hygiene, and personal safety.
    (2) Physical plant safety. The PHP shall be of permanent 
construction and maintained in a manner that protects the lives and 
ensures the physical safety of patients, staff, and visitors, including 
conformity with all applicable building, fire, health, and safety codes.
    (3) Disaster planning. The PHP shall maintain and rehearse written 
plans for taking care of casualties and handling other consequences 
arising from internal and external disasters.
    (D) Standards for evaluation system--(1) Quality assessment and 
improvement. The PHP shall develop and implement a comprehensive quality 
assurance and quality improvement program that monitors the quality, 
efficiency, appropriateness, and effectiveness of care, treatments, and 
services the PHP provides for patients and their families. Explicit 
clinical indicators shall be used to be used to evaluate all functions 
of the PHP and contribute to an ongoing process of program improvement. 
The clinical director is responsible for developing and implementing 
quality assessment and improvement activities throughout the facility.
    (2) Utilization review. The PHP shall implement a utilization review 
process, pursuant to a written plan approved by the professional staff, 
the administration and the governing body, that assesses distribution of 
services, clinical necessity of treatment, appropriateness of admission, 
continued stay, and timeliness of discharge, as part of an overall 
effort to provide quality patient care in a cost-effective manner. 
Findings of the utilization review process are used as a basis for 
revising the plan of operation, including a review of staff 
qualifications and staff composition.
    (3) Patient records. The PHP shall implement a process, including 
regular monthly reviews of a representative sample of patient records, 
to determine completeness, accuracy, timeliness of entries, appropriate 
signatures, and pertinence of clinical entries. Conclusions, 
recommendations, actions taken, and the results of actions are monitored 
and reported.
    (4) Drug utilization review. The PHP shall implement a comprehensive 
process for the monitoring and evaluating of the prophylactic, 
therapeutic, and empiric use of drugs to assure that medications are 
provided appropriately, safely, and effectively.
    (5) Risk management. The PHP shall implement a comprehensive risk 
management program, fully coordinated with other aspects of the quality 
assurance and quality improvement program, to prevent and control risks 
to patients and staff, and to minimize costs associated with clinical 
aspects of patient care and safety.
    (6) Infection control. The PHP shall implement a comprehensive 
system for the surveillance, prevention, control, and reporting of 
infections acquired or brought into the facility.
    (7) Safety. The PHP shall implement an effective program to assure a 
safe environment for patients, staff, and visitors, including an 
incident reporting system, disaster training and safety education, a 
continuous safety surveillance system, and an active multidisciplinary 
safety committee.
    (8) Facility evaluation. The PHP annually evaluates accomplishment 
of the goals and objectives of each clinical program component or 
facility service of the PHP and reports findings and recommendations to 
the governing body.

[[Page 185]]

    (E) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xii) of this section, in 
order for the services of a PHP to be authorized, the PHP shall have 
entered into a Participation Agreement with OCHAMPUS. The period of a 
Participation Agreement shall be specified in the agreement, and will 
generally be for not more than five years. On October 1, 1995, the PHP 
shall not be considered to be a CHAMPUS authorized provider and CHAMPUS 
payments shall not be made for services provided by the PHP until the 
date the participation agreement is signed by the Director, OCHAMPUS. In 
addition to review of a facility's application and supporting 
documentation, an on-site inspection by OCHAMPUS authorized personnel 
may be required prior to signing a participation agreement. The 
Participation Agreement shall include at least the following 
requirements:
    (1) Render partial hospitalization program services to eligible 
CHAMPUS beneficiaries in need of such services, in accordance with the 
participation agreement and CHAMPUS regulation.
    (2) Accept payment for its services based upon the methodology 
provided in Sec. 199.14, or such other method as determined by the 
Director, OCHAMPUS;
    (3) Accept the CHAMPUS all-inclusive per diem rate as payment in 
full and collect from the CHAMPUS beneficiary or the family of the 
CHAMPUS beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec. 199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director, 
OCHAMPUS, to collect those amounts, which represent the beneficiary's 
liability, as defined in Sec. 199.4;
    (5) Comply with the provisions of Sec. 199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Submit claims for services provided to CHAMPUS beneficiaries at 
least every 30 days (except to the extent a delay is necessitated by 
efforts to first collect from other health insurance). If claims are not 
submitted at least every 30 days, the PHP agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
CHAMPUS;
    (7) Certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(xii) of this section establishing standards for 
psychiatric partial hospitalization programs;
    (ii) It has conducted a self assessment of the facility's compliance 
with the CHAMPUS Standards for Psychiatric Partial Hospitalization 
Programs, as issued by the Director, OCHAMPUS, and notified the 
Director, OCHAMPUS of any matter regarding which the facility is not in 
compliance with such standards; and
    (iii) It will maintain compliance with the CHAMPUS Standards for 
Psychiatric Partial Hospitalization Programs, as issued by the Director, 
OCHAMPUS, except for any such standards regarding which the facility 
notifies the Director, OCHAMPUS that it is not in compliance.
    (8) Designate an individual who will act as liaison for CHAMPUS 
inquiries. The PHP shall inform OCHAMPUS in writing of the designated 
individual;
    (9) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, 
certified by an independent accounting firm or other agency as 
authorized by the Director, OCHAMPUS;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning preauthorization, 
concurrent care review, claims processing, beneficiary liability, double 
coverage, utilization and quality review and other matters;
    (11) Grant the Director, OCHAMPUS, or designee, the right to conduct 
quality assurance audits or accounting audits with full access to 
patients and records (including records relating to patients who are not 
CHAMPUS beneficiaries) to determine the quality and cost-effectiveness 
of care rendered. The audits may be conducted on a scheduled or 
unscheduled (unannounced) basis. This right to audit/review includes, 
but is not limited to:
    (i) Examination of fiscal and all other records of the PHP which 
would confirm compliance with the participation

[[Page 186]]

agreement and designation as an authorized CHAMPUS PHP provider;
    (ii) Conducting such audits of PHP records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspections conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the PHP and 
interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required;
    (v) Audits conducted by the United States General Account Office.
    (F) Other requirements applicable to PHPs.
    (1) Even though a PHP may qualify as a CHAMPUS-authorized provider 
and may have entered into a participation agreement with CHAMPUS, 
payment by CHAMPUS for particular services provided is contingent upon 
the PHP also meeting all conditions set forth in section 199.4 of this 
part.
    (2) The PHP shall provide patient services to CHAMPUS beneficiaries 
in the same manner it provides inpatient services to all other patients. 
The PHP may not discriminate against CHAMPUS beneficiaries in any 
manner, including admission practices, placement in special or separate 
wings or rooms, or provisions of special or limited treatment.
    (3) The PHP shall assure that all certifications and information 
provided to the Director, OCHAMPUS incident to the process of obtaining 
and retaining authorized provider status is accurate and that is has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized provider status will be denied or terminated, and 
the PHP will be ineligible for consideration for authorized provider 
status for a two year period.
    (xiii) Hospice programs. Hospice programs must be Medicare approved 
and meet all Medicare conditions of participation (42 CFR part 418) in 
relation to CHAMPUS patients in order to receive payment under the 
CHAMPUS program. A hospice program may be found to be out of compliance 
with a particular Medicare condition of participation and still 
participate in the CHAMPUS as long as the hospice is allowed continued 
participation in Medicare while the condition of noncompliance is being 
corrected. The hospice program can be either a public agency or private 
organization (or a subdivision thereof) which:
    (A) Is primarily engaged in providing the care and services 
described under Sec. 199.4(e)(19) and makes such services available on 
a 24-hour basis.
    (B) Provides bereavement counseling for the immediate family or 
terminally ill individuals.
    (C) Provides for such care and services in individuals' homes, on an 
outpatient basis, and on a short-term inpatient basis, directly or under 
arrangements made by the hospice program, except that the agency or 
organization must:
    (1) Ensure that substantially all the core services are routinely 
provided directly by hospice employees.
    (2) Maintain professional management responsibility for all services 
which are not directly furnished to the patient, regardless of the 
location or facility in which the services are rendered.
    (3) Provide assurances that the aggregate number of days of 
inpatient care provided in any 12-month period does not exceed 20 
percent of the aggregate number of days of hospice care during the same 
period.
    (4) Have an interdisciplinary group composed of the following 
personnel who provide the care and services described under Sec. 
199.4(e)(19) and who establish the policies governing the provision of 
such care/services:
    (i) A physician;
    (ii) A registered professional nurse;
    (iii) A social worker; and
    (iv) A pastoral or other counselor.
    (5) Maintain central clinical records on all patients.
    (6) Utilize volunteers.
    (7) The hospice and all hospice employees must be licensed in 
accordance with applicable Federal, State and local laws and 
regulations.

[[Page 187]]

    (8) The hospice must enter into an agreement with CHAMPUS in order 
to be qualified to participate and to be eligible for payment under the 
program. In this agreement the hospice and CHAMPUS agree that the 
hospice will:
    (i) Not charge the beneficiary or any other person for items or 
services for which the beneficiary is entitled to have payment made 
under the CHAMPUS hospice benefit.
    (ii) Be allowed to charge the beneficiary for items or services 
requested by the beneficiary in addition to those that are covered under 
the CHAMPUS hospice benefit.
    (9) Meet such other requirements as the Secretary of Defense may 
find necessary in the interest of the health and safety of the 
individuals who are provided care and services by such agency or 
organization.
    (xiv) Substance use disorder rehabilitation facilities. Paragraph 
(b)(4)(xiv) of this section establishes standards and requirements for 
substance use order rehabilitation facilities (SUDRF). This includes 
both inpatient rehabilitation centers for the treatment of substance use 
disorders and partial hospitalization centers for the treatment of 
substance use disorders.
    (A) Organization and administration--(1) Definition of inpatient 
rehabilitation center. An inpatient rehabilitation center is a facility, 
or distinct part of a facility, that provides medically monitored, 
interdisciplinary addiction-focused treatment to beneficiaries who have 
psychoactive substance use disorders. Qualified health care 
professionals provide 24-hour, seven-day-per-week, medically monitored 
assessment, treatment, and evaluation. An inpatient rehabilitation 
center is appropriate for patients whose addiction-related symptoms, or 
concomitant physical and emotional/behavioral problems reflect 
persistent dysfunction in several major life areas. Inpatient 
rehabilitation is differentiated from:
    (i) Acute psychoactive substance use treatment and from treatment of 
acute biomedical/emotional/behavioral problems; which problems are 
either life-threatening and/or severely incapacitating and often occur 
within the context of a discrete episode of addiction-related biomedical 
or psychiatric dysfunction;
    (ii) A partial hospitalization center, which serves patients who 
exhibit emotional/behavioral dysfunction but who can function in the 
community for defined periods of time with support in one or more of the 
major life areas;
    (iii) A group home, sober-living environment, halfway house, or 
three-quarter way house;
    (iv) Therapeutic schools, which are educational programs 
supplemented by addiction-focused services;
    (v) Facilities that treat patients with primary psychiatric 
diagnoses other than psychoactive substance use or dependence; and
    (vi) Facilities that care for patients with the primary diagnosis of 
mental retardation or developmental disability.
    (2) Definition of partial hospitalization center for the treatment 
of substance use disorders. A partial hospitalization center for the 
treatment of substance use disorders is an addiction-focused service 
that provides active treatment to adolescents between the ages of 13 and 
18 or adults aged 18 and over. Partial hospitalization is a generic term 
for day, evening, or weekend programs that treat patients with 
psychoactive substance use disorders according to a comprehensive, 
individualized, integrated schedule of care. A partial hospitalization 
center is organized, interdisciplinary, and medically monitored. Partial 
hospitalization is appropriate for those whose addiction-related 
symptoms or concomitant physical and emotional/behavioral problems can 
be managed outside the hospital environment for defined periods of time 
with support in one or more of the major life areas.
    (3) Eligibility. (i) Every inpatient rehabilitation center and 
partial hospitalization center for the treatment of substance use 
disorders must be certified pursuant to CHAMPUS certification standards. 
Such standards shall incorporate the basic standards set forth in 
paragraphs (b)(4)(xiv) (A) through (D) of this section, and shall 
include such additional elaborative criteria and standards as the 
Director, OCHAMPUS determines are necessary to implement the basic 
standards.

[[Page 188]]

    (ii) To be eligible for CHAMPUS certification, the SUDRF is required 
to be licensed and fully operational (with a minimum patient census of 
the lesser of: six patients or 30 percent of bed capacity) for a period 
of at least six months and operate in substantial compliance with state 
and federal regulations.
    (iii) The SUDRF is currently accredited by the Joint Commission on 
Accreditation of Healthcare Organizations under the Accreditation Manual 
for Mental Health, Chemical Dependency, and Mental Retardation/
Developmental Disabilities Services, or by the Commission on 
Accreditation of Rehabilitation Facilities as an alcoholism and other 
drug dependency rehabilitation program under the Standards Manual for 
Organizations Serving People with Disabilities, or other designated 
standards approved by the Director, OCHAMPUS.
    (iv) The SUDRF has a written participation agreement with OCHAMPUS. 
On October 1, 1995, the SUDRF is not considered a CHAMPUS-authorized 
provider, and CHAMPUS benefits are not paid for services provided until 
the date upon which a participation agreement is signed by the Director, 
OCHAMPUS.
    (4) Governing body. (i) The SUDRF shall have a governing body which 
is responsible for the policies, bylaws, and activities of the facility. 
If the SUDRF is owned by a partnership or single owner, the partners or 
single owner are regarded as the governing body. The facility will 
provide an up-to-date list of names, addresses, telephone numbers and 
titles of the members of the governing body.
    (ii) The governing body ensures appropriate and adequate services 
for all patients and oversees continuing development and improvement of 
care. Where business relationships exist between the governing body and 
facility, appropriate conflict-of-interest policies are in place.
    (iii) Board members are fully informed about facility services and 
the governing body conducts annual reviews of its performance in meeting 
purposes, responsibilities, goals and objectives.
    (5) Chief executive officer. The chief executive officer, appointed 
by and subject to the direction of the governing body, shall assume 
overall administrative responsibility for the operation of the facility 
according to governing body policies. The chief executive officer shall 
have five years' administrative experience in the field of mental health 
or addictions. On October 1, 1997 the CEO shall possess a degree in 
business administration, public health, hospital administration, 
nursing, social work, or psychology, or meet similar educational 
requirements as prescribed by the Director, OCHAMPUS.
    (6) Clinical director. The clinical director, appointed by the 
governing body, shall be a qualified psychiatrist or doctoral level 
psychologist who meets applicable CHAMPUS requirements for individual 
professional providers and is licensed to practice in the state where 
the SUDRF is located. The clinical director shall possess requisite 
education and experience, including credentials applicable under state 
practice and licensing laws appropriate to the professional discipline. 
The clinical director shall satisfy at least one of the following 
requirements: certification by the American Society of Addiction 
Medicine; one year or 1,000 hours of experience in the treatment of 
psychoactive substance use disorders; or is a psychiatrist or doctoral 
level psychologist with experience in the treatment of substance use 
disorders. The clinical director shall be responsible for planning, 
development, implementation, and monitoring of all clinical activities.
    (7) Medical director. The medical director, appointed by the 
governing body, shall be licensed to practice medicine in the state 
where the center is located and shall possess requisite education 
including graduation from an accredited school of medicine or 
osteopathy. The medical director shall satisfy at least one of the 
following requirements: certification by the American Society of 
Addiction Medicine; one year or 1,000 hours of experience in the 
treatment of psychoactive substance use disorders; or is a psychiatrist 
with experience in the treatment of substance use disorders. The medical

[[Page 189]]

director shall be responsible for the planning, development, 
implementation, and monitoring of all activities relating to medical 
treatment of patients. If qualified, the Medical Director may also serve 
as Clinical Director.
    (8) Medical or professional staff organization. The governing body 
shall establish a medical or professional staff organization to assure 
effective implementation of clinical privileging, professional conduct 
rules, and other activities directly affecting patient care.
    (9) Personnel policies and records. The SUDRF shall maintain written 
personnel policies, updated job descriptions, personnel records to 
assure the selection of qualified personnel and successful job 
performance of those personnel.
    (10) Staff development. The SUDRF shall provide appropriate training 
and development programs for administrative, support, and direct care 
staff.
    (11) Fiscal accountability. The SUDRF shall assure fiscal 
accountability to applicable government authorities and patients.
    (12) Designated teaching facilities. Students, residents, interns, 
or fellows providing direct clinical care are under the supervision of a 
qualified staff member approved by an accredited university or approved 
training program. The teaching program is approved by the Director, 
OCHAMPUS.
    (13) Emergency reports and records. The facility notifies OCHAMPUS 
of any serious occurrence involving CHAMPUS beneficiaries.
    (B) Treatment services--(1) Staff composition. (i) The SUDRF shall 
follow written plans which assure that medical and clinical patient 
needs will be appropriately addressed during all hours of operation by a 
sufficient number of fully qualified (including license, registration or 
certification requirements, educational attainment, and professional 
experience) health care professionals and support staff in the 
respective disciplines. Clinicians providing individual, group and 
family therapy meet CHAMPUS requirements as qualified mental health 
providers and operate within the scope of their licenses. The ultimate 
authority for planning, development, implementation, and monitoring of 
all clinical activities is vested in a psychiatrist or doctoral level 
clinical psychologist. The management of medical care is vested in a 
physician.
    (ii) The SUDRF shall establish and follow written plans to assure 
adequate staff coverage during all hours of operation of the center, 
including physician availability and other professional staff coverage 
24 hours per day, seven days per week for an inpatient rehabilitation 
center and during all hours of operation for a partial hospitalization 
center.
    (2) Staff qualifications. Within the scope of its programs and 
services, the SUDRF has a sufficient number of professional, 
administrative, and support staff to address the medical and clinical 
needs of patients and to coordinate the services provided. SUDRFs that 
employ individuals with master's or doctoral level degrees in a mental 
health discipline who do not meet the licensure, certification and 
experience requirements for a qualified mental health provider but are 
actively working toward licensure or certification, may provide services 
within the DRG, provided the individual works under the clinical 
supervision of a fully qualified mental health provider employed by the 
SUDRF.
    (3) Patient rights. (i) The SUDRF shall provide adequate protection 
for all patient rights, safety, confidentiality, informed consent, 
grievances, and personal dignity.
    (ii) The SUDRF has a written policy regarding patient abuse and 
neglect.
    (iii) SUDRF marketing and advertising meets professional standards.
    (4) Behavioral management. When a SUDRF uses a behavioral management 
program, the center shall adhere to a comprehensive, written plan of 
behavioral management, developed by the clinical director and the 
medical or professional staff and approved by the governing body. It 
shall be based on positive reinforcement methods and, except for 
infrequent use of temporary physical holds or time outs, does not 
include the use of restraint or seclusion. Only trained and clinically 
privileged RNs or qualified mental health professionals may be 
responsible for the implementation of seclusion and restraint in an 
emergency situation.

[[Page 190]]

    (5) Admission process. The SUDRF shall maintain written policies and 
procedures to ensure that, prior to an admission, a determination is 
made, and approved pursuant to CHAMPUS preauthorization requirements, 
that the admission is medically and/or psychologically necessary and the 
program is appropriate to meet the patient's needs. Medical and/or 
psychological necessity determinations shall be rendered by qualified 
mental health professionals who meet CHAMPUS requirements for individual 
professional providers and who are permitted by law and by the facility 
to refer patients for admission.
    (6) Assessment. The professional staff of the SUDRF shall provide a 
complete, multidisciplinary assessment of each patient which includes, 
but is not limited to, medical history, physical health, nursing needs, 
alcohol and drug history, emotional and behavioral factors, age-
appropriate social circumstances, psychological condition, education 
status, and skills. Unless otherwise specified, all required clinical 
assessments are completed prior to development of the multidisciplinary 
treatment plan.
    (7) Clinical formulation. A qualified mental health care 
professional of the SUDRF will complete a clinical formulation on all 
patients. The clinical formulation will be reviewed and approved by the 
responsible individual professional provider and will incorporate 
significant findings from each of the multidisciplinary assessments. It 
will provide the basis for development of an interdisciplinary treatment 
plan.
    (8) Treatment planning. A qualified health care professional with 
admitting privileges shall be responsible for the development, 
supervision, implementation, and assessment of a written, 
individualized, and interdisciplinary plan of treatment, which shall be 
completed within 10 days of admission to an inpatient rehabilitation 
center or by the fifth day following admission to full day partial 
hospitalization center, and by the seventh day of treatment for half day 
partial hospitalization. The treatment plan shall include individual, 
measurable, and observable goals for incremental progress towards the 
treatment plan objectives and goals and discharge. A preliminary 
treatment plan is completed within 24 hours of admission and includes at 
least a physician's admission note and orders. The master treatment plan 
is regularly reviewed for effectiveness and revised when major changes 
occur in treatment.
    (9) Discharge and transition planning. The SUDRF shall maintain a 
transition planning process to address adequately the anticipated needs 
of the patient prior to the time of discharge.
    (10) Clinical documentation. Clinical records shall be maintained on 
each patient to plan care and treatment and provide ongoing evaluation 
of the patient's progress. All care is documented and each clinical 
record contains at least the following: demographic data, consent forms, 
pertinent legal documents, all treatment plans and patient assessments, 
consultation and laboratory reports, physician orders, progress notes, 
and a discharge summary. All documentation will adhere to applicable 
provisions of the JCAHO and requirements set forth in Sec. 199.7(b)(3). 
An appropriately qualified records administrator or technician will 
supervise and maintain the quality of the records. These requirements 
are in addition to other records requirements of this part, and 
provisions of the JCAHO Manual for Mental Health, Chemical Dependency, 
and Mental Retardation/Developmental Disabilities Services.
    (11) Progress notes. Timely and complete progress notes shall be 
maintained to document the course of treatment for the patient and 
family.
    (12) Therapeutic services. (i) Individual, group, and family 
psychotherapy and addiction counseling services are provided to all 
patients, consistent with each patient's treatment plan by qualified 
mental health providers.
    (ii) A range of therapeutic activities, directed and staffed by 
qualified personnel, are offered to help patients meet the goals of the 
treatment plan.
    (iii) Therapeutic educational services are provided or arranged that 
are appropriate to the patient's educational and therapeutic needs.

[[Page 191]]

    (13) Ancillary services. A full range of ancillary services is 
provided. Emergency services include policies and procedures for 
handling emergencies with qualified personnel and written agreements 
with each facility providing the service. Other ancillary services 
include physical health, pharmacy and dietary services.
    (C) Standards for physical plant and environment--(1) Physical 
environment. The buildings and grounds of the SUDRF shall be maintained 
so as to avoid health and safety hazards, be supportive of the services 
provided to patients, and promote patient comfort, dignity, privacy, 
personal hygiene, and personal safety.
    (2) Physical plant safety. The SUDRF shall be maintained in a manner 
that protects the lives and ensures the physical safety of patients, 
staff, and visitors, including conformity with all applicable building, 
fire, health, and safety codes.
    (3) Disaster planning. The SUDRF shall maintain and rehearse written 
plans for taking care of casualties and handling other consequences 
arising from internal or external disasters.
    (D) Standards for evaluation system--(1) Quality assessment and 
improvement. The SUDRF develop and implement a comprehensive quality 
assurance and quality improvement program that monitors the quality, 
efficiency, appropriateness, and effectiveness of the care, treatments, 
and services it provides for patients and their families, utilizing 
clinical indicators of effectiveness to contribute to an ongoing process 
of program improvement. The clinical director is responsible for 
developing and implementing quality assessment and improvement 
activities throughout the facility.
    (2) Utilization review. The SUDRF shall implement a utilization 
review process, pursuant to a written plan approved by the professional 
staff, the administration, and the governing body, that assesses the 
appropriateness of admissions, continued stay, and timeliness of 
discharge as part of an effort to provide quality patient care in a 
cost-effective manner. Findings of the utilization review process are 
used as a basis for revising the plan of operation, including a review 
of staff qualifications and staff composition.
    (3) Patient records review. The center shall implement a process, 
including monthly reviews of a representative sample of patient records, 
to determine the completeness and accuracy of the patient records and 
the timeliness and pertinence of record entries, particularly with 
regard to regular recording of progress/non-progress in treatment plan.
    (4) Drug utilization review. An inpatient rehabilitation center and, 
when applicable, a partial hospitalization center, shall implement a 
comprehensive process for the monitoring and evaluating of the 
prophylactic, therapeutic, and empiric use of drugs to assure that 
medications are provided appropriately, safely, and effectively.
    (5) Risk management. The SUDRF shall implement a comprehensive risk 
management program, fully coordinated with other aspects of the quality 
assurance and quality improvement program, to prevent and control risks 
to patients and staff and costs associated with clinical aspects of 
patient care and safety.
    (6) Infection control. The SUDRF shall implement a comprehensive 
system for the surveillance, prevention, control, and reporting of 
infections acquired or brought into the facility.
    (7) Safety. The SUDRF shall implement an effective program to assure 
a safe environment for patients, staff, and visitors.
    (8) Facility evaluation. The SUDRF annually evaluates accomplishment 
of the goals and objectives of each clinical program and service of the 
SUDRF and reports findings and recommendations to the governing body.
    (E) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xiv) of this section, in 
order for the services of an inpatient rehabilitation center or partial 
hospitalization center for the treatment of substance abuse disorders to 
be authorized, the center shall have entered into a Participation 
Agreement with OCHAMPUS. The period of a Participation Agreement shall 
be specified in the agreement, and will generally be for not more than 
five years. On October 1, 1995, the SUDRF shall

[[Page 192]]

not be considered to be a CHAMPUS authorized provider and CHAMPUS 
payments shall not be made for services provided by the SUDRF until the 
date the participation agreement is signed by the Director, OCHAMPUS. In 
addition to review of the SUDRFS application and supporting 
documentation, an on-site visit by OCHAMPUS representatives may be part 
of the authorization process. In addition, such a Participation 
Agreement may not be signed until an SUDRF has been licensed and 
operational for at least six months. The Participation Agreement shall 
include at least the following requirements:
    (1) Render applicable services to eligible CHAMPUS beneficiaries in 
need of such services, in accordance with the participation agreement 
and CHAMPUS regulation;
    (2) Accept payment for its services based upon the methodology 
provided in Sec. 199.14, or such other method as determined by the 
Director, OCHAMPUS;
    (3) Accept the CHAMPUS-determined rate as payment in full and 
collect from the CHAMPUS beneficiary or the family of the CHAMPUS 
beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec. 199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director, 
OCHAMPUS, to collect those amounts which represent the beneficiary's 
liability, as defined in Sec. 199.4;
    (5) Comply with the provisions of Sec. 199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, 
certified to by an independent accounting firm or other agency as 
authorized by the Director, OCHAMPUS;
    (7) Certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(xiv) of the section establishing standards for 
substance use disorder rehabilitation facilities;
    (ii) It has conducted a self assessment of the SUDRF'S compliance 
with the CHAMPUS Standards for Substance Use Disorder Rehabilitation 
Facilities, as issued by the Director, OCHAMPUS, and notified the 
Director, OCHAMPUS of any matter regarding which the facility is not in 
compliance with such standards; and
    (iii) It will maintain compliance with the CHAMPUS Standards for 
Substance Use Disorder Rehabilitation Facilities, as issued by the 
Director, OCHAMPUS, except for any such standards regarding which the 
facility notifies the Director, OCHAMPUS that it is not in compliance.
    (8) Grant the Director, OCHAMPUS, or designee, the right to conduct 
quality assurance audits or accounting audits with full access to 
patients and records (including records relating to patients who are not 
CHAMPUS beneficiaries) to determine the quality and cost effectiveness 
of care rendered. The audits may be conducted on a scheduled or 
unscheduled (unannounced) basis. This right to audit/review included, 
but is not limited to:
    (i) Examination of fiscal and all other records of the center which 
would confirm compliance with the participation agreement and 
designation as an authorized CHAMPUS provider;
    (ii) Conducting such audits of center records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspection conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the SUDRF 
and interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required.
    (v) Audits conducted by the United States General Accounting Office.
    (F) Other requirements applicable to substance use disorder 
rehabilitation facilities. (1) Even though a SUDRF may qualify as a 
CHAMPUS-authorized provider and may have entered into a participation 
agreement with CHAMPUS, payment by CHAMPUS for particular services 
provided is contingent upon

[[Page 193]]

the SUDRF also meeting all conditions set forth in Sec. 199.4.
    (2) The center shall provide inpatient services to CHAMPUS 
beneficiaries in the same manner it provides services to all other 
patients. The center may not discriminate against CHAMPUS beneficiaries 
in any manner, including admission practices, placement in special or 
separate wings or rooms, or provisions of special or limited treatment.
    (3) The substance use disorder facility shall assure that all 
certifications and information provided to the Director, OCHAMPUS 
incident to the process of obtaining and retaining authorized provider 
status is accurate and that it has no material errors or omissions. In 
the case of any misrepresentations, whether by inaccurate information 
being provided or material facts withheld, authorized provider status 
will be denied or terminated, and the facility will be ineligible for 
consideration for authorized provider status for a two year period.
    (xv) Home health agencies (HHAs). HHAs must be Medicare approved and 
meet all Medicare conditions of participation under sections 1861(o) and 
1891 of the Social Security Act (42 U.S.C. 1395x(o) and 1395bbb) and 42 
CFR part 484 in relation to TRICARE beneficiaries in order to receive 
payment under the TRICARE program. An HHA may be found to be out of 
compliance with a particular Medicare condition of participation and 
still participate in the TRICARE program as long as the HHA is allowed 
continued participation in Medicare while the condition of noncompliance 
is being corrected. An HHA is a public or private organization, or a 
subdivision of such an agency or organization, that meets the following 
requirements:
    (A) Engaged in providing skilled nursing services and other 
therapeutic services, such as physical therapy, speech-language 
pathology services, or occupational therapy, medical services, and home 
health aide services.
    (1) Makes available part-time or intermittent skilled nursing 
services and at least one other therapeutic service on a visiting basis 
in place of residence used as a patient's home.
    (2) Furnishes at least one of the qualifying services directly 
through agency employees, but may furnish the second qualifying service 
and additional services under arrangement with another HHA or 
organization.
    (B) Policies established by a professional group associated with the 
agency or organization (including at least one physician and one 
registered nurse) to govern the services and provides for supervision of 
such services by a physician or a registered nurse.
    (C) Maintains clinical records for all patients.
    (D) Licensed in accordance with State and local law or is approved 
by the State or local licensing agency as meeting the licensing 
standards, where applicable.
    (E) Enters into an agreement with TRICARE in order to participate 
and to be eligible for payment under the program. In this agreement the 
HHA and TRICARE agree that the HHA will:
    (1) Not charge the beneficiary or any other person for items or 
services for which the beneficiary is entitled to have payment under the 
TRICARE HHA prospective payment system.
    (2) Be allowed to charge the beneficiary for items or services 
requested by the beneficiary in addition to those that are covered under 
the TRICARE HHA prospective payment system.
    (F) Abide by the following consolidated billing requirements:
    (1) The HHA must submit all TRICARE claims for all home health 
services, excluding durable medical equipment (DME), while the 
beneficiary is under the home health plan without regard to whether or 
not the item or service was furnished by the HHA, by others under 
arrangement with the HHA, or under any other contracting or consulting 
arrangement.
    (2) Separate payment will be made for DME items and services 
provided under the home health benefit which are under the DME fee 
schedule. DME is excluded from the consolidated billing requirements.
    (3) Home health services included in consolidated billing are:
    (i) Part-time or intermittent skilled nursing;
    (ii) Part-time or intermittent home health aide services;

[[Page 194]]

    (iii) Physical therapy, occupational therapy and speech-language 
pathology;
    (iv) Medical social services;
    (v) Routine and non-routine medical supplies;
    (vi) A covered osteoporosis drug (not paid under PPS rate) but 
excluding other drugs and biologicals;
    (vii) Medical services provided by an intern or resident-in-training 
of a hospital, under an approved teaching program of the hospital in the 
case of an HHA that is affiliated or under common control of a hospital;
    (viii) Services at hospitals, SNFs or rehabilitation centers when 
they involve equipment too cumbersome to bring home.
    (G) Meet such other requirements as the Secretary of Health and 
Human Services and/or Secretary of Defense may find necessary in the 
interest of the health and safety of the individuals who are provided 
care and services by such agency or organization.
    (c) Individual professional providers of care--(1) General--(i) 
Purpose. This individual professional provider class is established to 
accommodate individuals who are recognized by 10 U.S.C. 1079(a) as 
authorized to assess or diagnose illness, injury, or bodily malfunction 
as a prerequisite for CHAMPUS cost-share of otherwise allowable related 
preventive or treatment services or supplies, and to accommodate such 
other qualified individuals who the Director, OCHAMPUS, or designee, may 
authorize to render otherwise allowable services essential to the 
efficient implementation of a plan-of-care established and managed by a 
10 U.S.C. 1079(a) authorized professional.
    (ii) Professional corporation affiliation or association membership 
permitted. Paragraph (c) of this section applies to those individual 
health care professionals who have formed a professional corporation or 
association pursuant to applicable state laws. Such a professional 
corporation or association may file claims on behalf of a CHAMPUS-
authorized individual professional provider and be the payee for any 
payment resulting from such claims when the CHAMPUS-authorized 
individual certifies to the Director, OCHAMPUS, or designee, in writing 
that the professional corporation or association is acting on the 
authorized individual's behalf.
    (iii) Scope of practice limitation. For CHAMPUS cost-sharing to be 
authorized, otherwise allowable services provided by a CHAMPUS-
authorized individual professional provider shall be within the scope of 
the individual's license as regulated by the applicable state practice 
act of the state where the individual rendered the service to the 
CHAMPUS beneficiary or shall be within the scope of the test which was 
the basis for the individual's qualifying certification.
    (iv) Employee status exclusion. An individual employed directly, or 
indirectly by contract, by an individual or entity to render 
professional services otherwise allowable by this part is excluded from 
provider status as established by this paragraph (c) for the duration of 
each employment.
    (v) Training status exclusion. Individual health care professionals 
who are allowed to render health care services only under direct and 
ongoing supervision as training to be credited towards earning a 
clinical academic degree or other clinical credential required for the 
individual to practice independently are excluded from provider status 
as established by this paragraph (c) for the duration of such training.
    (2) Conditions of authorization--(i) Professional license 
requirement. The individual must be currently licensed to render 
professional health care services in each state in which the individual 
renders services to CHAMPUS beneficiaries. Such license is required when 
a specific state provides, but does not require, license for a specific 
category of individual professional provider. The license must be at 
full clinical practice level to meet this requirement. A temporary 
license at the full clinical practice level is acceptable.
    (ii) Professional certification requirement. When a state does not 
license a specific category of individual professional, certification by 
a Qualified Accreditation Organization, as defined in Sec. 199.2, is 
required. Certification must be at full clinical practice level. A 
temporary certification at the full clinical practice level is 
acceptable.

[[Page 195]]

    (iii) Education, training and experience requirement. The Director, 
OCHAMPUS, or designee, may establish for each category or type of 
provider allowed by this paragraph (c) specific education, training, and 
experience requirements as necessary to promote the delivery of services 
by fully qualified individuals.
    (iv) Physician referral and supervision. When physician referral and 
supervision is a prerequisite for CHAMPUS cost-sharing of the services 
of a provider authorized under this paragraph (c), such referral and 
supervision means that the physicians must actually see the patient to 
evaluate and diagnose the condition to be treated prior to referring the 
beneficiary to another provider and that the referring physician 
provides ongoing oversight of the course of referral related treatment 
throughout the period during which the beneficiary is being treated in 
response to the referral. Written contemporaneous documentation of the 
referring physician's basis for referral and ongoing communication 
between the referring and treating provider regarding the oversight of 
the treatment rendered as a result of the referral must meet all 
requirements for medical records established by this part. Referring 
physician supervision does not require physical location on the premises 
of the treating provider or at the site of treatment.
    (v) Subject to section 1079(a) of title 10, U.S.C., chapter 55, a 
physician or other health care practitioner who is eligible to receive 
reimbursement for services provided under Medicare (as defined in 
section 1086(d)(3)(C) of title 10 U.S.C., chapter 55) shall be 
considered approved to provide medical care authorized under section 
1079 and section 1086 of title 10, U.S.C., chapter 55 unless the 
administering Secretaries have information indicating Medicare, TRICARE, 
or other Federal health care program integrity violations by the 
physician or other health care practitioner. Approval is limited to 
those classes of provider currently considered TRICARE authorized 
providers as outlined in 32 CFR 199.6. Services and supplies rendered by 
those providers who are not currently considered authorized providers 
shall be denied.
    (3) Types of providers. Subject to the standards of participation 
provisions of this part, the following individual professional providers 
of medical care are authorized to provide services to CHAMPUS 
beneficiaries:
    (i) Physicians. (A) Doctors of Medicine (M.D.).
    (B) Doctors of Osteopathy (D.O.).
    (ii) Dentists. Except for covered oral surgery as specified in Sec. 
199.4(e) of this part, all otherwise covered services rendered by 
dentists require preauthorization.
    (A) Doctors of Dental Medicine (D.M.D.).
    (B) Doctors of Dental Surgery (D.D.S.).
    (iii) Other allied health professionals. The services of the 
following individual professional providers of care are coverable on a 
fee-for-service basis provided such services are otherwise authorized in 
this or other sections of this part.
    (A) Clinical psychologist. For purposes of CHAMPUS, a clinical 
psychologist is an individual who is licensed or certified by the state 
for the independent practice of psychology and:
    (1) Possesses a doctoral degree in psychology from a regionally 
accredited university; and
    (2) Has had 2 years of supervised clinical experience in 
psychological health services of which at least 1 year is post-doctoral 
and 1 year (may be the post-doctoral year) is in an organized 
psychological health service training program; or
    (3) As an alternative to paragraphs (c)(3)(iii)(A)(1) and (2) of 
this section is listed in the National Register of Health Service 
Providers in Psychology.
    (B) Doctors of Optometry.
    (C) Doctors of Podiatry or Surgical Chiropody.
    (D) Certified nurse midwives.
    (1) A certified nurse midwife may provide covered care independent 
of physician referral and supervision, provided the nurse midwife is:
    (i) Licensed, when required, by the local licensing agency for the 
jurisdiction in which the care is provided; and

[[Page 196]]

    (ii) Certified by the American College of Nurse Midwives. To receive 
certification, a candidate must be a registered nurse who has completed 
successfully an educational program approved by the American College of 
Nurse Midwives, and passed the American College of Nurse Midwives 
National Certification Examination.
    (2) The services of a registered nurse who is not a certified nurse 
midwife may be authorized only when the patient has been referred for 
care by a licensed physician and a licensed physician provides 
continuing supervision of the course of care. A lay midwife who is 
neither a certified nurse midwife nor a registered nurse is not a 
CHAMPUS-authorized provider, regardless of whether the services rendered 
may otherwise be covered.
    (E) Certified nurse practitioner. Within the scope of applicable 
licensure or certification requirements, a certified nurse practitioner 
may provide covered care independent of physician referral and 
supervision, provided the nurse practitioner is:
    (1) A licensed, registered nurse; and
    (2) Specifically licensed or certified as a nurse practitioner by 
the state in which the care was provided, if the state offers such 
specific licensure or certification; or
    (3) Certified as a nurse practitioner (certified nurse) by a 
professional organization offering certification in the specialty of 
practice, if the state does not offer specific licensure or 
certification for nurse practitioners.
    (F) Certified Clinical Social Worker. A clinical social worker may 
provide covered services independent of physician referral and 
supervision, provided the clinical social worker:
    (1) Is licensed or certified as a clinical social worker by the 
jurisdiction where practicing; or, if the jurisdiction does not provide 
for licensure or certification of clinical social workers, is certified 
by a national professional organization offering certification of 
clinical social workers; and
    (2) Has at least a master's degree in social work from a graduate 
school of social work accredited by the Council on Social Work 
Education; and
    (3) Has had a minimum of 2 years or 3,000 hours of post-master's 
degree supervised clinical social work practice under the supervision of 
a master's level social worker in an appropriate clinical setting, as 
determined by the Director, OCHAMPUS, or a designee.

    Note: Patients' organic medical problems must receive appropriate 
concurrent management by a physician.

    (G) Certified psychiatric nurse specialist. A certified psychiatric 
nurse specialist may provide covered care independent of physician 
referral and supervision. For purposes of CHAMPUS, a certified 
psychiatric nurse specialist is an individual who:
    (1) Is a licensed, registered nurse; and
    (2) Has at least a master's degree in nursing from a regionally 
accredited institution with a specialization in psychiatric and mental 
health nursing; and
    (3) Has had at least 2 years of post-master's degree practice in the 
field of psychiatric and mental health nursing, including an average of 
8 hours of direct patient contact per week; or
    (4) Is listed in a CHAMPUS-recognized, professionally sanctioned 
listing of clinical specialists in psychiatric and mental health 
nursing.
    (H) Certified physician assistant. A physician assistant may provide 
care under general supervision of a physician (see Sec. 
199.14(j)(1)(ix) of this part for limitations on reimbursement). For 
purposes of CHAMPUS, a physician assistant must meet the applicable 
state requirements governing the qualifications of physician assistants 
and at least one of the following conditions:
    (1) Is currently certified by the National Commission on 
Certification of Physician Assistants to assist primary care physicians, 
or
    (2) Has satisfactorily completed a program for preparing physician 
assistants that:
    (i) Was at least 1 academic year in length;
    (ii) Consisted of supervised clinical practice and at least 4 months 
(in the aggregate) of classroom instruction directed toward preparing 
students to deliver health care; and
    (iii) Was accredited by the American Medical Association's Committee 
on Allied Health Education and Accreditation; or

[[Page 197]]

    (3) Has satisfactorily completed a formal educational program for 
preparing program physician assistants that does not meet the 
requirement of paragraph (c)(3)(iii)(H)(2) of this section and had been 
assisting primary care physicians for a minimum of 12 months during the 
18-month period immediately preceding January 1, 1987.
    (I) Anesthesiologist Assistant. An anesthesiologist assistant may 
provide covered anesthesia services, if the anesthesiologist assistant:
    (1) Works under the direct supervision of an anesthesiologist who 
bills for the services and for each patient;
    (i) The anesthesiologist performs a pre-anesthetic examination and 
evaluation;
    (ii) The anesthesiologist prescribes the anesthesia plan;
    (iii) The anesthesiologist personally participates in the most 
demanding aspects of the anesthesia plan including, if applicable, 
induction and emergence;
    (iv) The anesthesiologist ensures that any procedures in the 
anesthesia plan that he or she does not perform are performed by a 
qualified anesthesiologist assistant;
    (v) The anesthesiologist monitors the course of anesthesia 
administration at frequent intervals;
    (vi) The anesthesiologist remains physically present and available 
for immediate personal diagnosis and treatment of emergencies;
    (vii) The anesthesiologist provides indicated post-anesthesia care; 
and
    (viii) The anesthesiologist performs no other services while he or 
she supervises no more than four anesthesiologist assistants 
concurrently or a lesser number if so limited by the state in which the 
procedure is performed.
    (2) Is in compliance with all applicable requirements of state law, 
including any licensure requirements the state imposes on nonphysician 
anesthetists; and
    (3) Is a graduate of a Master's level anesthesiologist assistant 
educational program that is established under the auspices of an 
accredited medical school and that:
    (i) Is accredited by the Committee on Allied Health Education and 
Accreditation, or its successor organization; and
    (ii) Includes approximately two years of specialized basic science 
and clinical education in anesthesia at a level that builds on a 
premedical undergraduate science background.
    (4) The Director, TMA, or a designee, shall issue TRICARE policies, 
instructions, procedures, guidelines, standards, and criteria as may be 
necessary to implement the intent of this section.
    (J) Certified Registered Nurse Anesthetist (CRNA). A certified 
registered nurse anesthetist may provide covered care independent of 
physician referral and supervision as specified by state licensure. For 
purposes of CHAMPUS, a certified registered nurse anesthetist is an 
individual who:
    (1) Is a licensed, registered nurse; and
    (2) Is certified by the Council on Certification of Nurse 
Anesthetists, or its successor organization.
    (K) Other individual paramedical providers. The services of the 
following individual professional providers of care to be considered for 
benefits on a fee-for-service basis may be provided only if the 
beneficiary is referred by a physician for the treatment of a medically-
diagnosed condition and a physician must also provide continuing and 
ongoing oversight and supervision of the program or episode of treatment 
provided by these individual para-medical providers.
    (1) Licensed registered nurses.
    (2) Licensed registered physical therapists and occupational 
therapists.
    (3) Licensed registered physical therapists.
    (4) Audiologists.
    (5) Speech therapists (speech pathologists).
    (iv) Extramedical individual providers. Extramedical individual 
providers are those who do counseling or nonmedical therapy and whose 
training and therapeutic concepts are outside the medical field. The 
services of extramedical individual professionals are coverable 
following the CHAMPUS determined allowable charge methodology provided 
such services are otherwise authorized in this or other sections of the 
regulation.
    (A) Certified marriage and family therapists. For the purposes of 
CHAMPUS, a certified marriage and family therapist

[[Page 198]]

is an individual who meets the following requirements:
    (1) Recognized graduate professional education with the minimum of 
an earned master's degree from a regionally accredited educational 
institution in an appropriate behavioral science field, mental health 
discipline; and
    (2) The following experience:
    (i) Either 200 hours of approved supervision in the practice of 
marriage and family counseling, ordinarily to be completed in a 2- to 3-
year period, of which at least 100 hours must be in individual 
supervision. This supervision will occur preferably with more than one 
supervisor and should include a continuous process of supervision with 
at least three cases; and
    (ii) 1,000 hours of clinical experience in the practice of marriage 
and family counseling under approved supervision, involving at least 50 
different cases; or
    (iii) 150 hours of approved supervision in the practice of 
psychotherapy, ordinarily to be completed in a 2- to 3-year period, of 
which at least 50 hours must be individual supervision; plus at least 50 
hours of approved individual supervision in the practice of marriage and 
family counseling, ordinarily to be completed within a period of not 
less than 1 nor more than 2 years; and
    (iv) 750 hours of clinical experience in the practice of 
psychotherapy under approved supervision involving at least 30 cases; 
plus at least 250 hours of clinical practice in marriage and family 
counseling under approved supervision, involving at least 20 cases; and
    (3) Is licensed or certified to practice as a marriage and family 
therapist by the jurisdiction where practicing (see paragraph 
(c)(3)(iv)(D) of this section for more specific information regarding 
licensure); and
    (4) Agrees that a patients' organic medical problems must receive 
appropriate concurrent management by a physician.
    (5) Agrees to accept the CHAMPUS determined allowable charge as 
payment in full, except for applicable deductibles and cost-shares, and 
hold CHAMPUS beneficiaries harmless for noncovered care (i.e., may not 
bill a beneficiary for noncovered care, and may not balance bill a 
beneficiary for amounts above the allowable charge). The certified 
marriage and family therapist must enter into a participation agreement 
with the Office of CHAMPUS within which the certified marriage and 
family therapist agrees to all provisions specified above.
    (6) As of the effective date of termination, the certified marriage 
and family therapist will no longer be recognized as an authorized 
provider under CHAMPUS. Subsequent to termination, the certified 
marriage and family therapist may only be reinstated as an authorized 
CHAMPUS extramedical provider by entering into a new participation 
agreement as a certified marriage and family therapist.
    (B) Pastoral counselors. For the purposes of CHAMPUS, a pastoral 
counselor is an individual who meets the following requirements:
    (1) Recognized graduate professional education with the minimum of 
an earned master's degree from a regionally accredited educational 
institution in an appropriate behavioral science field, mental health 
discipline; and
    (2) The following experience:
    (i) Either 200 hours of approved supervision in the practice of 
pastoral counseling, ordinarily to be completed in a 2- to 3-year 
period, of which at least 100 hours must be in individual supervision. 
This supervision will occur preferably with more than one supervisor and 
should include a continuous process of supervision with at least three 
cases; and
    (ii) 1,000 hours of clinical experience in the practice of pastoral 
counseling under approved supervision, involving at least 50 different 
cases; or
    (iii) 150 hours of approved supervision in the practice of 
psychotherapy, ordinarily to be completed in a 2- to 3-year period, of 
which at least 50 hours must be individual supervision; plus at least 50 
hours of approved individual supervision in the practice of pastoral 
counseling, ordinarily to be completed within a period of not less than 
1 nor more than 2 years; and
    (iv) 750 hours of clinical experience in the practice of 
psychotherapy under approved supervision involving at least 30 cases; 
plus at least 250 hours of clinical practice in pastoral counseling 
under approved supervision, involving at least 20 cases; and

[[Page 199]]

    (3) Is licensed or certified to practice as a pastoral counselor by 
the jurisdiction where practicing (see paragraph (c)(3)(iv)(D) of this 
section for more specific information regarding licensure); and
    (4) The services of a pastoral counselor meeting the above 
requirements are coverable following the CHAMPUS determined allowable 
charge methodology, under the following specified conditions:
    (i) The CHAMPUS beneficiary must be referred for therapy by a 
physician; and
    (ii) A physician is providing ongoing oversight and supervision of 
the therapy being provided; and
    (iii) The pastoral counselor must certify on each claim for 
reimbursement that a written communication has been made or will be made 
to the referring physician of the results of the treatment. Such 
communication will be made at the end of the treatment, or more 
frequently, as required by the referring physician (refer to Sec. 
199.7).
    (5) Because of the similarity of the requirements for licensure, 
certification, experience, and education, a pastoral counselor may elect 
to be authorized under CHAMPUS as a certified marriage and family 
therapist, and as such, be subject to all previously defined criteria 
for the certified marriage and family therapist category, to include 
acceptance of the CHAMPUS determined allowable charge as payment in 
full, except for applicable deductibles and cost-shares (i.e., balance 
billing of a beneficiary above the allowable charge is prohibited; may 
not bill beneficiary for noncovered care). The pastoral counselor must 
also agree to enter into the same participation agreement as a certified 
marriage and family therapist with the Office of CHAMPUS within which 
the pastoral counselor agrees to all provisions including licensure, 
national association membership and conditions upon termination, 
outlined above for certified marriage and family therapist.

    Note: No dual status will be recognized by the Office of CHAMPUS. 
Pastoral counselors must elect to become one of the categories of 
extramedical CHAMPUS provides specified above. Once authorized as either 
a pastoral counselor, or a certified marriage and family therapist, 
claims review and reimbursement will be in accordance with the criteria 
established for the elected provider category.

    (C) Mental health counselor. For the purposes of CHAMPUS, a mental 
health counselor is an individual who meets the following requirements:
    (1) Minimum of a master's degree in mental health counseling or 
allied mental health field from a regionally accredited institution; and
    (2) Two years of post-masters experience which includes 3000 hours 
of clinical work and 100 hours of face-to-face supervision; and
    (3) Is licensed or certified to practice as a mental health 
counselor by the jurisdiction where practicing (see paragraph 
(c)(3)(iv)(D) of this section for more specific information); and
    (4) May only be reimbursed when:
    (i) The CHAMPUS beneficiary is referred for therapy by a physician; 
and
    (ii) A physician is providing ongoing oversight and supervision of 
the therapy being provided; and
    (iii) The mental health counselor certifies on each claim for 
reimbursement that a written communication has been made or will be made 
to the referring physician of the results of the treatment. Such 
communication will be made at the end of the treatment, or more 
frequently, as required by the referring physician (refer to Sec. 
199.7).
    (D) The following additional information applies to each of the 
above categories of extramedical individual providers:
    (1) These providers must also be licensed or certified to practice 
as a certified marriage and family therapist, pastoral counselor or 
mental health counselor by the jurisdiction where practicing. In 
jurisdictions that do not provide for licensure or certification, the 
provider must be certified by or eligible for full clinical membership 
in the appropriate national professional association that sets standards 
for the specific profession.
    (2) Grace period for therapists or counselors in states where 
licensure/certification is optional. CHAMPUS is providing a grace period 
for those therapists or counselors who did not obtain optional 
licensure/certification in their jurisdiction, not realizing it

[[Page 200]]

was a CHAMPUS requirement for authorization. The exemption by state law 
for pastoral counselors may have misled this group into thinking 
licensure was not required. The same situation may have occurred with 
the other therapist or counselor categories where licensure was either 
not mandated by the state or was provided under a more general category 
such as ``professional counselors.'' This grace period pertains only to 
the licensure/certification requirement, applies only to therapists or 
counselors who are already approved as of October 29, 1990, and only in 
those areas where the licensure/certification is optional. Any therapist 
or counselor who is not licensed/certified in the state in which he/she 
is practicing by August 1, 1991, will be terminated under the provisions 
of Sec. 199.9. This grace period does not change any of the other 
existing requirements which remain in effect. During this grace period, 
membership or proof of eligibility for full clinical membership in a 
recognized professional association is required for those therapists or 
counselors who are not licensed or certified by the state. The following 
organizations are recognized for therapists or counselors at the level 
indicated: Full clinical member of the American Association of Marriage 
and Family Therapy; membership at the fellow or diplomate level of the 
American Association of Pastoral Counselors; and membership in the 
National Academy of Certified Clinical Mental Health Counselors. 
Acceptable proof of eligibility for membership is a letter from the 
appropriate certifying organization. This opportunity for delayed 
certification/licensure is limited to the counselor or therapist 
category only as the language in all of the other provider categories 
has been consistent and unmodified from the time each of the other 
provider categories were added. The grace period does not apply in those 
states where licensure is mandatory.
    (E) Christian Science practitioners and Christian Science nurses. 
CHAMPUS cost-shares the services of Christian Science practitioners and 
nurses. In order to bill as such, practitioners or nurses must be listed 
or be eligible for listing in the Christian Science Journal \1\ at the 
time the service is provided.
---------------------------------------------------------------------------

    \1\ Copies of this journal can be obtained through the Christian 
Science Publishing Company, 1 Norway Street, Boston, MA 02115-3122 or 
the Christian Science Publishing Society, P.O. Box 11369, Des Moines, IA 
50340.
---------------------------------------------------------------------------

    (d) Other providers. Certain medical supplies and services of an 
ancillary or supplemental nature are coverable by CHAMPUS, subject to 
certain controls. This category of provider includes the following:
    (1) Independent laboratory. Laboratory services of independent 
laboratories may be cost-shared if the laboratory is approved for 
participation under Medicare and certified by the Medicare Bureau, 
Health Care Financing Administration.
    (2) Suppliers of portable x-ray services. Such suppliers must meet 
the conditions of coverage of the Medicare program, set forth in the 
Medicare regulations, or the Medicaid program in that state in which the 
covered service is provided.
    (3) Pharmacies. Pharmacies must meet the applicable requirements of 
state law in the state in which the pharmacy is located.
    (4) Ambulance companies. Such companies must meet the requirements 
of state and local laws in the jurisdiction in which the ambulance firm 
is licensed.
    (5) Medical equipment firms, medical supply firms, and Durable 
Medical Equipment, Prosthetic, Orthotic, Supplies providers/suppliers. 
Any firm, supplier, or provider that is an authorized provider under 
Medicare or is otherwise designated an authorized provider by the 
Director, TRICARE Management Activity.
    (6) Mammography suppliers. Mammography services may be cost-shared 
only if the supplier is certified by Medicare for participation as a 
mammography supplier, or is certified by the American College of 
Radiology as having met its mammography supplier standards.
    (e) Extended Care Health Option Providers--(1) General. (i) Services 
and items cost-shared through Sec. 199.5 must be rendered by a CHAMPUS-
authorized provider.

[[Page 201]]

    (ii) A Program for Persons with Disabilities (PFPWD) provider with 
TRICARE-authorized status on the effective date for the Extended Care 
Health Option (ECHO) Program shall be deemed to be a TRICARE-authorized 
provider until the expiration of all outstanding PFPWD benefit 
authorizations for services or items being rendered by the provider.
    (2) ECHO provider categories--(i) ECHO inpatient care provider. A 
provider of residential institutional care, which is otherwise an ECHO 
benefit, shall be:
    (A) A not-for-profit entity or a public facility; and
    (B) Located within a state; and
    (C) Be certified as eligible for Medicaid payment in accordance with 
a state plan for medical assistance under Title XIX of the Social 
Security Act (Medicaid) as a Medicaid Nursing Facility, or Intermediate 
Care Facility for the Mentally Retarded, or be a TRICARE-authorized 
institutional provider as defined in paragraph (b) of this section, or 
be approved by a state educational agency as a training institution.
    (ii) ECHO outpatient care provider. A provider of ECHO outpatient, 
ambulatory, or in-home services shall be:
    (A) A TRICARE-authorized provider of services as defined in this 
section; or
    (B) An individual, corporation, foundation, or public entity that 
predominantly renders services of a type uniquely allowable as an ECHO 
benefit and not otherwise allowable as a benefit of Sec. 199.4, that 
meets all applicable licensing or other regulatory requirements of the 
state, county, municipality, or other political jurisdiction in which 
the ECHO service is rendered, or in the absence of such licensing or 
regulatory requirements, as determined by the Director, TRICARE 
Management Activity or designee.
    (iii) ECHO vendor. A provider of an allowable ECHO item, such as 
supplies or equipment, shall be deemed to be a TRICARE-authorized vendor 
for the provision of the specific item, supply or equipment when the 
vendor supplies such information as the Director, TRICARE Management 
Activity or designee determines necessary to adjudicate a specific 
claim.
    (3) ECHO provider exclusion or suspension. A provider of ECHO 
services or items may be excluded or suspended for a pattern of 
discrimination on the basis of disability. Such exclusion or suspension 
shall be accomplished according to the provisions of Sec. 199.9.
    (f) Corporate services providers--(1) General. (i) This corporate 
services provider class is established to accommodate individuals who 
would meet the criteria for status as a CHAMPUS authorized individual 
professional provider as established by paragraph (c) of this section 
but for the fact that they are employed directly or contractually by a 
corporation or foundation that provides principally professional 
services which are within the scope of the CHAMPUS benefit.
    (ii) Payment for otherwise allowable services may be made to a 
CHAMPUS-authorized corporate services provider subject to the applicable 
requirements, exclusions and limitations of this part.
    (iii) The Director, OCHAMPUS, or designee, may create discrete types 
within any allowable category of provider established by this paragraph 
(f) to improve the efficiency of CHAMPUS management.
    (iv) The Director, OCHAMPUS, or designee, may require, as a 
condition of authorization, that a specific category or type of provider 
established by this paragraph (f):
    (A) Maintain certain accreditation in addition to or in lieu of the 
requirement of paragraph (f)(2)(v) of this section;
    (B) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the Department 
of Defense for the geographic area in which the provider does business;
    (C) Render services for which direct or indirect payment is expected 
to be made by CHAMPUS only after obtaining CHAMPUS written 
authorization; and
    (D) Maintain Medicare approval for payment when the Director, 
OCHAMPUS, or designee, determines that a category, or type, of provider 
established by this paragraph (f) is substantially comparable to a 
provider or

[[Page 202]]

supplier for which Medicare has regulatory conditions of participation 
or conditions of coverage.
    (v) Otherwise allowable services may be rendered at the authorized 
corporate services provider's place of business, or in the beneficiary's 
home under such circumstances as the Director, OCHAMPUS, or designee, 
determines to be necessary for the efficient delivery of such in-home 
services.
    (vi) The Director, OCHAMPUS, or designee, may limit the term of a 
participation agreement for any category or type of provider established 
by this paragraph (f).
    (vii) Corporate services providers shall be assigned to only one of 
the following allowable categories based upon the predominate type of 
procedure rendered by the organization;
    (A) Medical treatment procedures;
    (B) Surgical treatment procedures;
    (C) Maternity management procedures;
    (D) Rehabilitation and/or habilitation procedures; or
    (E) Diagnostic technical procedures.
    (viii) The Director, OCHAMPUS, or designee, shall determine the 
appropriate procedural category of a qualified organization and may 
change the category based upon the provider's CHAMPUS claim 
characteristics. The category determination of the Director, OCHAMPUS, 
designee, is conclusive and may not be appealed.
    (2) Conditions of authorization. An applicant must meet the 
following conditions to be eligible for authorization as a CHAMPUS 
corporate services provider:
    (i) Be a corporation or a foundation, but not a professional 
corporation or professional association; and
    (ii) Be institution-affiliated or freestanding as defined in Sec. 
199.2; and
    (iii) Provide:
    (A) Services and related supplies of a type rendered by CHAMPUS 
individual professional providers or diagnostic technical services and 
related supplies of a type which requires direct patient contact and a 
technologist who is licensed by the state in which the procedure is 
rendered or who is certified by a Qualified Accreditation Organization 
as defined in Sec. 199.2; and
    (B) A level of care which does not necessitate that the beneficiary 
be provided with on-site sleeping accommodations and food in conjunction 
with the delivery of services; and
    (iv) Complies with all applicable organizational and individual 
licensing or certification requirements that are extant in the state, 
county, municipality, or other political jurisdiction in which the 
provider renders services; and
    (v) Be approved for Medicare payment when determined to be 
substantially comparable under the provisions of paragraph (f)(1)(iv)(D) 
of this section or, when Medicare approved status is not required, be 
accredited by a qualified accreditation organization, as defined in 
Sec. 199.2; and
    (vi) Has entered into a participation agreement approved by the 
Director, OCHAMPUS, or designee, which at least complies with the 
minimum participation agreement requirements of this section.
    (3) Transfer of participation agreement. In order to provide 
continuity of care for beneficiaries when there is a change of provider 
ownership, the provider agreement is automatically assigned to the new 
owner, subject to all the terms and conditions under which the original 
agreement was made.
    (i) The merger of the provider corporation or foundation into 
another corporation or foundation, or the consolidation of two or more 
corporations or foundations resulting in the creation of a new 
corporation or foundation, constitutes a change of ownership.
    (ii) Transfer of corporate stock or the merger of another 
corporation or foundation into the provider corporation or foundation 
does not constitute change of ownership.
    (iii) The surviving corporation or foundation shall notify the 
Director, OCHAMPUS, or designee, in writing of the change of ownership 
promptly after the effective date of the transfer or change in 
ownership.
    (4) Pricing and payment methodology: The pricing and payment of 
procedures rendered by a provider authorized under this paragraph (f) 
shall be limited to those methods for pricing and payment allowed by 
this part which

[[Page 203]]

the Director, OCHAMPUS, or designee, determines contribute to the 
efficient management of CHAMPUS.
    (5) Termination of participation agreement. A provider may terminate 
a participation agreement upon 45 days written notice to the Director, 
OCHAMPUS, or designee, and to the public.

[51 FR 24008, July 1, 1986]

    Editorial Note: For Federal Register citations affecting Sec. 
199.6, see the List of Sections Affected, which appears in the Finding 
Aids section of the printed volume and on GPO Access.