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The National Defense Authorization Act (NDAA) section 702 for Fiscal Year (FY) 2021 provides authority to waive fees charged for certain civilian non-beneficiary patients: (1) after the patient’s insurance pays, if any, the civilian is not able to pay for the trauma or other medical care provided to the civilian; and (2) the provision of such care enhances the knowledge, skills, and abilities of health care providers, as determined by the Secretary. The amendment of 32 CFR 220.7 would delegate authority to the Secretary of Defense or a Secretary of Defense established representative to waive medical debt owed for services rendered at Military Treatment Facilities (MTF) if the patient requests a medical debt waiver and meets the two specified criteria.  

This amendment should be made as current legislation and policies can lead to an undue financial burden on non-beneficiary patients who have incurred medical debt from treatment at MTFs. The Debt Collection Improvement Act of 1996 and the Digital Accountability and Transparency act of 2014 drive federal collection activities and can place individuals indebted to the government at risk of financial hardship. By making these changes, the Secretary of Defense would have the ability to waive non-beneficiary civilian debt in cases where the patient is unable to pay as determined using U.S. Treasury guidelines and when the care provided enhances the knowledge, skills, and abilities of health care providers.

Statement of Need:

Section 702 of the FY 2021 NDAA amends 10 U.S.C. 1079b by inserting a new subsection regarding the waiver of fees. Under section 702, the Secretary of Defense may waive a fee charged to a civilian who is not a covered beneficiary if after insurance payments, if any, the civilian is not able to pay for the trauma or other medical care provided to the civilian; and the provision of such care enhanced the medical readiness of the health care provider or health care providers furnishing such care. This rule prescribes a new debt waiver process for medical debt owned for services rendered at Military Treatment Facilities to civilians who are not covered beneficiaries.

Summary of the Legal Basis:

Section 702 of the FY 2021 NDAA amends 10 U.S.C. 1079b by inserting a new subsection regarding the waiver of fees. Under section 702, the Secretary of Defense may waive a fee charged to a civilian who is not a covered beneficiary if after insurance payments, if any, the civilian is not able to pay for the trauma or other medical care provided to the civilian; and the provision of such care enhanced the medical readiness of the health care provider or health care providers furnishing such care.

Alternatives:

ALTERNATIVE #1

The first alternative will use an outside agency, the Centralized Receivable Service (CRS) to complete the patient ability-to-pay assessment and make a recommendation to the DHA Cost Accounting Division (CAD) Financial Operations (FO). CAD FO will then make the final determination based on that recommendation. This alternative will utilize DHA’s existing relationship with CRS, a program under the U.S. Department of Treasury focused on managing pre-delinquent debt and debt in the early stages of delinquency before it is referred to the U.S. Treasury. 

ALTERNATIVE #2

The DoD considered a second alternative in which the DHA UBO will stand up a cell to complete the ability-to-pay assessments and make a recommendation. The recommendations will be directed to either the DHA CAD FO for accounts under $100,000 or to the Deputy Assistant Director (DAD) FO for accounts over $100,000.

ALTERNATIVE #3

Option 3, which is DoD’s preferred approach due to operational efficiency gains, would leverage existing partnerships with CRS and U.S. Treasury. For active  or non-delinquent debt, the MTF UBO will direct all uninsured non-beneficiary accounts to CRS for billing. The patient can request a waiver by contacting CRS as directed on their invoice, the MTF will direct the account information to CRS to complete the financial analysis. If a patient is deemed financially culpable, collections will be pursued by CRS. If not, CRS will calculate an amount the debtor can pay within 3-5 years and waive the remaining debt. CRS would report decisions to DHA following established business rules and guidelines including monthly accounting of all waiver and compromise agreements to DHA, and immediately report waived amounts over $100,000. Any additional business rules will be decided by DHA FO and DHA General Counsel.

Anticipated Costs and Benefits:

This cost will be the fee paid to CRS for their services, totaling an estimated $145, 711.  Time required for this alternative is an estimated 17 days based on CRS reported process completion estimates from the DAMP program. This would include time for the civilian to compile required documents, for CRS to draft the package and assess ability to pay,  as well as CRS response time for a decision and any other follow-up activities for each request for waiver.  

Risks:

None.