Obama Signs National Defense Authorization Act (NDAA)

The NDAA was signed into law on December 31, 2011. Critically, Section 715 of the NDAA exempts TRICARE providers from coverage as federal contractors (see link below).

TRICARE is the healthcare program that covers active duty soldiers, retired veterans, as well as their families. What makes this interesting is that on 4/18/11, ALJ Jeffrey Tureck found that Florida Hospital was a subcontractor subject to OFCCP jurisdiction because it was “performing, assuming or undertaking” part of Humana’s prime contract with TRICARE beneficiaries.

Previously, (in December, 2010) OFCCP Directive 293 stated “certain” arrangements with TRICARE constituted government contracts subject to OFCCP jurisdiction. The Directive also provided guidance for assessing when healthcare providers and insurers were federal contractors or subcontractors.

Clearly, the NDAA reverses both ALJ Tureck’s ruling as well as Directive 293 based on plain language in Section 715. Accordingly:

[F]or the purpose of determining whether network providers under such provider network agreements are subcontractors for purposes of the Federal Acquisition Regulation or any other law [e.g. federal contractors subject to OFCCP jurisdiction], a TRICARE managed care support contract that includes the requirement to establish, manage, or maintain a network of providers may not be considered to be a contract for the performance of health care services or supplies on the basis of such requirement.”

Obviously, this comes as welcome news to anyone in the TRICARE system that could have conceivably been considered contractors or subcontractors.

by Art Gutman Ph.D., Professor, Florida Institute of Technology

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