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The Department of Defense is finalizing an interim final rule that temporarily amended 32 CFR part 199 to revise: (1) 32 CFR part 199.4 to remove the restriction on audio-only telemedicine services; (2) 32 CFR part 199.6 to authorize reimbursement for interstate practice by TRICARE-authorized providers when such authority is consistent with State and Federal licensing requirements; and (3) 32 CFR part 199.17 to eliminate copayments for telemedicine services. The changes in this rule are effective from the date published through the end of the coronavirus 2019 (COVID-19) pandemic. These changes reduce the spread of COVID-19 among TRICARE beneficiaries by incentivizing use of telemedicine services, and aid providers in caring for TRICARE beneficiaries by temporarily waiving some licensure requirements. 

The final rule adopts this interim final rule as final with changes.

Statement of Need:

Pursuant to the President's health emergency declaration and as a result of the worldwide coronavirus 2019 (COVID-19) pandemic, the Assistant Secretary of Defense for Health Affairs hereby modifies the following regulations, but in each case, only to the extent necessary, as determined by the Director, Defense Health Agency, to encourage social distancing and prevent the spread of COVID-19 by incentivizing the use of telehealth services, and to allow TRICARE-authorized providers to care for TRICARE beneficiaries wherever there is need as a result of the consequences of the COVID-19 pandemic.

The modifications to section 199.4(g)(52) in this interim final rule (IFR) will allow TRICARE beneficiaries to obtain telephonic office visits with TRICARE-authorized providers for medically necessary care and treatment and allow reimbursement to those providers during the COVID-19 pandemic. It provides an exception to the regulatory exclusion prohibiting audio-only telephone services.

The modifications to section 199.6(c)(2)(i) in this IFR will allow providers to be reimbursed for interstate practice, both in person and via telehealth, during the global pandemic so long as the provider meets the requirements for practicing in that State or under Federal law. It removes the requirement that the provider must be licensed in the State where practicing, even if that license is optional. For providers overseas, this will allow providers, both in person and via telehealth, to practice outside of the nation where licensed when permitted by the host nation.

The modifications to section 199.17(l)(3) will remove cost-shares and copayments for telehealth services for TRICARE Prime and Select beneficiaries utilizing telehealth services with an in-network, TRICARE-authorized provider during the global pandemic. It adds in-network telehealth services as a special cost-sharing rule to waive the beneficiary copay.

Summary of the Legal Basis:

This rule is issued under 10 U.S.C. 1073 (a)(2) giving authority and responsibility to the Secretary of Defense to administer the TRICARE program.

Alternatives:

1) No action

2) Only apply the regulatory modifications to COVID-19-related diagnoses. This was rejected because the effects of the COVID-19 pandemic are causing stress on the entire health care system. The regulatory modifications in this IFR will take the pressure off of the health care system by: (1) covering telephone appointments with a TRICARE-authorized provider and thereby supporting social distancing recommendations; (2) covering TRICARE-authorized providers practicing across state lines, thereby increasing the overall access to medical care and treatment; and (3) waiving all copayments for in-network telehealth services, thereby removing the potential cost barrier to obtaining medical services remotely and inducing demand for these services, reducing potential person-to-person transmission of COVID-19 during medical appointments.

Anticipated Costs and Benefits:

Health Care Costs Associated with Removing Copays for Telehealth

There are three factors that would increase Department of Defense (DoD) health care costs due to this rule. First, the government would lose cost-sharing revenue paid by beneficiaries on the existing level of telehealth visits. Second, there would be induced demand costs, as removal of patient costs will increase patient demand for these services. Finally, there would be a substitution effect, as the COVID-19 pandemic and removal of telehealth cost-shares would encourage a shift from in-person visits, for which beneficiaries would pay a copay, to telehealth visits, which would be free to beneficiaries.

The below provides a summary of the combined government health care and administrative costs of the IFR.

Summary of Government Costs of the Proposed COVID-19 Telehealth IFR

Beneficiary Cost Impact

There are two types of savings for beneficiaries estimated here. First, beneficiaries would avoid the cost-sharing they otherwise would have paid on existing telehealth visits and on in-person visits that would shift to telehealth. It is estimated the cost-sharing savings to beneficiaries would be: $26,830,844 for a three-month scenario; $48,924,899 for a six-month scenario; and $65,930,641 for a nine-month scenario. Second, for the share of historical visits that is estimated would shift from in-person to telehealth, beneficiaries would avoid travel time and time spent in the provider’s waiting room. Two parameters were considered in developing the estimate of the value of time saved for TRICARE beneficiaries: 1) the average amount of time saved per visit, and 2) a monetized estimate of the value of the time saved, based on the opportunity cost of that time. See the below table Estimated Value to Beneficiaries for the combined results of avoided cost-sharing and dollar value of saved time.

Estimated Value to Beneficiaries

An important value to beneficiaries that is not feasible to estimate but worth noting is the possibility that shifting visits from in-person to telehealth might reduce the risk of COVID-19 exposure, with all the potential benefits that could accompany that reduced exposure risk. This reduced risk of COVID-19 exposure may also result in downstream reductions in cost to the TRICARE Program in avoided COVID-19 diagnostics and treatment.

Risks:

None. This rule will promote the efficient functioning of the economy and markets by temporarily modifying regulations to ensure that actors in the health care market (primarily health care providers) will continue to be reimbursed despite disruption in the health care ecosystem by the COVID-19 pandemic. Reimbursing providers despite changing licensing requirements and in ways that recognize the critical role telehealth will play in the coming months ensures that TRICARE supports not just its beneficiaries, but the economy in general.