DOD Appropriations Bill May Exempt Tricare Coverage from EO 11246

OFCCP has had a long standing position (although never tested) that TRICARE reimbursement (medical services and supplies to active duty and retired military personnel) established coverage as a supply and service contract under Executive Order 11246, VEVRAA and Section 503. This issue was tested in the OFCCP v. Florida Hospital of Orlando, ALJ Case No. 2009-OFC-0002 (October, 18, 2010), where an ALJ ruled in favor of OFCCP and concluded that Orlando Hospital is a federal “subcontractor” subject to OFCCP audit and enforcement actions.


This ruling had major implications for all hospitals and other health care providers that (1) met the $50,000 and 50 employee minimum requirements for contractor status and (2) accepted TRICARE reimbursement, because these hospitals and health care providers were now subject to compliance audits by OFCCP. Apparently, the health care industry was not happy with this ruling and sought assistance from Congress to exempt TRICARE from coverage. In response, Congress put a rider on a Department of Defense (DOD) appropriations bill exempting TRICARE from coverage.


More specifically, the National Defense Authorization Act for Fiscal Year 2012 (S. 1253) was introduced in the Senate on June 22, 2011, and has been placed on the Senate Legislative Calendar under General Orders Calendar No. 80. The text of the proposed bill can be found at: Section 702 of the bill entitled “Maintenance of the Adequacy of Provider Networks under the TRICARE Program” (page 221) specifies “Section 1097b(a) [§ 1097a. TRICARE Prime: automatic enrollment; enrollment fee; payment options] of title 10, United States Code, is amended by adding at the end the following new paragraph: ‘In establishing rates and procedures for reimbursement of providers and other administrative requirements, including those contained in provider network agreements, the Secretary shall to the extent practicable maintain adequate networks of providers, including institutional, professional, and pharmacy. Network providers under such provider network agreements are not considered subcontractors for the purposes of the Federal Acquisition Regulation or any other law.’” (italics supplied)


The same provision was included in the bill passed by the House of Representatives. This provision, if enacted, will significantly affect OFCCP’s expanded enforcement. My understanding is that senior Department of Labor officials have been deployed to the Hill seeking to have this provision dropped from the proposed bill.


Although the intent is clear, the drafting may allow OFCCP to still argue for coverage of TRICARE providers because the Executive Order is not a law; however the regulations that result in contractual obligations are imposed by the Federal Acquisition Regulation (FAR), so perhaps this linkage will be sufficient to deny coverage.


(Thank you to David Fortney of Fortney & Scott for providing information on the bill and content for this article)

    Stay up-to-date with DCI Alerts, sign up here:

    Advice, articles, and the news you need, delivered right to your inbox.


    Stay in the Know!