[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: 32CFR220.4]

[Page 431-432]
 
                       TITLE 32--NATIONAL DEFENSE
 
        CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE (CONTINUED)
 
PART 220_COLLECTION FROM THIRD PARTY PAYERS OF REASONABLE CHARGES FOR 
 
Sec. 220.4  Reasonable terms and conditions of health plan permissible.

    (a) Statutory requirement. The statutory obligation of the third 
party to pay is not unqualified. Under 10 U.S.C. 1095(a)(1) (as noted in 
Sec. 220.2 of this part), the obligation to pay is to the extent the 
third party payer would be obliged to pay if the beneficiary incurred 
the costs personally.
    (b) General rules. (1) Based on the statutory requirement, after any 
impermissible exclusions have been made inoperative (see Sec. 220.3 of 
this part), reasonable terms and conditions of the third party payer's 
plan that apply generally and uniformly to services provided in 
facilities other than facilities of the uniformed services may also be 
applied to services provided in facilities of the uniformed services.
    (2) Except as provided by 10 U.S.C. 1095, this part, or other 
applicable law, third party payers are not required to treat claims 
arising from services provided in or through facilities of the Uniformed 
Services more favorably than they treat claims arising from services 
provided in other facilities or by other health care providers.
    (c) Specific examples of permissible terms and conditions. The 
following are several specific examples of permissible terms and 
conditions of third party payer plans. These examples are not all 
inclusive.
    (1) Generally applicable coverage provisions. Generally applicable 
provisions regarding particular types of medical care or medical 
conditions covered by the third party payer's plan are permissible 
grounds to refuse or limit third party payment.
    (2) Generally applicable utilization review provisions. (i) 
Reasonable and generally applicable provisions of a third party payer's 
plan requiring pre-admission screening, second surgical opinions, 
retrospective review or other similar utilization management activities 
may be permissible grounds to refuse or reduce third party payment if 
such refusal or reduction is required by the third party payer's plan.
    (ii) Such provisions are not permissible if they are applied in a 
manner that would result in claims arising from services provided by or 
through facilities of the Uniformed Services being treated less 
favorably than claims arising from services provided by other hospitals 
or providers.
    (iii) Such provisions are not permissible if they would not affect a 
third party payer's obligation under this part. For example, concurrent 
review of an inpatient hospitalization would generally not affect the 
third party payer's obligation because of the DRG-based, per-admission 
basis for calculating reasonable charges under Sec. 220.8(a) (except in 
long stay outlier cases, noted in Sec. 220.8(a)(4)).
    (3) Restrictions in HMO plans. Generally applicable exclusions in 
Health Maintenance Organization (HMO) plans of non-emergency or non-
urgent services provided outside the HMO (or similar exclusions) are 
permissible. However, HMOs may not exclude claims or refuse to certify 
emergent and urgent services provided within the HMO's service area or 
otherwise covered non-emergency services provided out of the HMO's 
service area. In addition, opt-out or point-of-service options available 
under an HMO plan may not exclude services otherwise payable under 10 
U.S.C. 1095 or this part.
    (d) Procedures for establishing reasonable terms and conditions. In 
order to establish that a term or condition of a third party payer's 
plan is permissible, the third party payer must provide appropriate 
documentation to the facility of the Uniformed Services. This includes, 
when applicable, copies of explanation of benefits (EOBs), remittance 
advice, or payment to provider forms. It also includes copies of 
policies, employee certificates, booklets, or handbooks, or other 
documentation

[[Page 432]]

detailing the plan's health care benefits, exclusions, limitations, 
deductibles, co-insurance, and other pertinent policy or plan coverage 
and benefit information.

[55 FR 21748, May 29, 1990, as amended at 65 FR 7728, Feb. 16, 2000; 67 
FR 57740, Sept. 12, 2002]