OFCCP Seeks to End Decade-Long TRICARE Dispute

On November 6th 2019, OFCCP announced a Notice of Proposed Rulemaking intended to declare health care providers who solely receive TRICARE funds as sub-contractors exempt from OFCCP oversight under Executive Order (E.O.) 11246, Section 503 of the Rehabilitation Act, and the Veteran’s Readjustment Assistance Act (VEVRAA). The proposed rule only impacts sub-contractors that do not hold separate qualifying federal contracts or sub-contracts.

TRICARE, established in 1997, is a federally managed healthcare plan for uniformed service members, retirees, and their families that serves 9.4 billion beneficiaries worldwide. OFCCP put forward three reasons for the proposed rule: increased access to care for uniformed service members and veterans, cost savings in the healthcare system at large, and, perhaps most critically, certainty for health care providers who serve TRICARE beneficiaries.

Since 2007’s OFCCP v. Florida Hospital of Orlando, OFCCP’s jurisdiction over TRICARE providers has been shrouded in controversy. In turn, OFCCP, Congress, and the Department of Labor’s Administrative Review Board have attempted (and failed) to define the terms and scope of OFCCP’s oversight over TRICARE. In 2014, all sides reached a stalemate as OFCCP implemented a five year moratorium (extended to May, 2021) on initiating new audits of TRICARE subcontractors.

Now, as the moratorium on OFCCP oversight is rapidly coming to an end, the November 6th proposed rule offers two approaches to resolving the sub-contractor dilemma. OFCCP can either change the regulatory definition of “subcontract” to explicitly exclude TRICARE contracts from E.O. 11246, Section 503 and VEVRAA oversight (ironically pulling from the dissenting view in OFCCP v. Florida Hospital) or propose a group national interest exemption for TRICARE providers.

The proposed rule continuously links certainty for providers and patients with more available and better care for TRICARE beneficiaries. Although the proposed rule does not change anything in the short term, given the moratorium is still in place, OFCCP believes clear, permanent guidance will lower administrative costs and burdens, encouraging providers to stay in TRICARE networks. 

The period for public comment on the proposed rule is now open and will close on December 6th, 2019. Comments can be submitted to www.regulations.gov.

By Susanna Vogel, Associate Consultant at DCI Consulting Group

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