§ 220.12 — Medical Billing For Healthcare Services Provided By Dod Military Medical Treatment Facilities To Civilian Non-beneficiaries

(a) Applicability. (1) This section applies to all persons who receive reimbursable care in a military medical treatment facility (MTF) on or after June 21, 2023, and who are not covered beneficiaries of the Department of Defense (DoD) as defined in § 220.14, other than persons who receive care in an MTF pursuant to an agreement between the United States and a foreign government or other entity.

(2) This section does not apply to third persons (or their insurers) with a tort liability under the Federal Medical Care Recovery Act (FMCRA) (42 U.S.C. 2651) or third-party payers under 10 U.S.C. 1095. The discounts and waivers implemented by this section may not be used to reduce the value of the care and treatment that is recoverable from those third persons (or their insurers) under the FMCRA or 10 U.S.C. 1095.

(b) Definitions. (1) Military Health System (MHS) Modified Payment and Waiver Program (MPWP). The MHS MPWP is a DoD program to implement an enacted Fiscal Year 2023 National Defense Authorization Act (NDAA-23) amendment to section 1079b of title 10, United States Code (U.S.C.). Section 716 of the NDAA-23 amended 10 U.S.C. 1079b to require, inter alia, the Director of the Defense Health Agency (DHA) to reduce fees that would otherwise be charged to civilian non-beneficiaries for medical care according to a sliding scale and to implement a catastrophic fee waiver to prevent severe financial harm. It also granted the Director of the DHA with discretionary authority to issue waivers of fees for medical care if the provision of such care enhances the knowledge, skills, and abilities (KSAs) of healthcare providers.

(2) Covered payer. A third-party payer or other insurance, medical service, or health plan.

(3) Covered by a covered payer. A medical item or service is deemed to be covered by a covered payer when:

(i) The patient possesses health insurance that is in effect on the date(s) that the item or service was provided;

(ii) The health insurance plan provides coverage for the geographic area where the care was delivered;

(iii) The care provided to the patient is an item or service covered by the terms of the insurance plan, and;

(iv) The health insurance plan provides coverage for care rendered in a U.S. Government/DoD facility;

(v) The insurer agrees to pay the facility directly;

(vi) The insurer agrees to provide the facility with an Explanation of Benefits (EOB) that details how the insurer processed the claims according to the insurance plan; and

(vii) The patient authorizes the DoD to file insurance claims against the insurance policy.

(4) Non-covered item or service. A medical item or service that is not covered by the terms of the insurance plan.

(5) Third-party payer and insurance, medical service, or health plan have the meaning given those terms in 10 U.S.C. 1095(h).

(6) Knowledges, Skills, and Abilities (KSAs). KSAs are a set of clinical skill requirements that a healthcare provider needs in order to provide medical care or treatment in the deployed environment. The extent to which a patient's care enhances KSAs will be determined via the DD Form 3201-1A by competent medical authority at the treating MTF.

(7) Reasonable value of medical care. Reasonable value of medical care is defined in § 220.8. The reasonable value of medical care is based on the amount billed by the MTF before application of any sliding scale discount, catastrophic fee waiver, or other discount or waiver under this section.

(c) Notifications concerning MHS MPWP. The Assistant Secretary of Defense for Health Affairs (ASD(HA)) will maintain a public website containing information about the MHS MPWP, applicable forms (with links to the forms), and a fee discount calculator. The DoD will notify non-beneficiary patients of the availability of the MHS MPWP. Information about the MHS MPWP will be posted in MTFs (e.g., in waiting rooms and information desks) and included in DoD patient invoices.

(d) Requirement to complete a DD Form 2569. MTFs will present the DD Form 2569, “Third Party Collection Program/Medical Services Account/Other Health Insurance,” to all patients. It will also be available at https://www.esd.whs.mil/Directives/forms/dd2500_2999/. All patients (regardless of insurance status) must complete the DD Form 2569.

(1) Before applying for the MHS MPWP, all patients (regardless of health insurance status) must fully complete (including by signing) the DD Form 2569 and ensure that a current and accurate DD Form 2569 is on file with the applicable MTF. Successful completion of these steps is a condition of eligibility for the MHS MPWP.

(2) For patients with health insurance, the DoD will file insurance claims on behalf of the patient. Patients with health insurance who do not consent to allowing the DoD to file health insurance claims on their behalf will not be eligible for the MHS MPWP (inclusive of the discount and waiver portions).

(3) The DoD may use a completed DD Form 2569 for multiple episodes of care. Unless a DD Form 2569 completed within the preceding 12 months for the patient is available, the DoD will solicit an updated DD Form 2569 from patients who receive a subsequent episode of care from the MTF. However, the lack of an updated form will not preclude the DoD from filing additional claims against encounters for the patient.

(e) Notifications on medical invoices. In addition to any notifications otherwise already required by law, regulation, or DoD policy, all DoD invoices will notify patients that-

(1) Patients must consent to DoD filing insurance claims on their behalf to be eligible for the MHS MPWP;

(2) The DoD will suspend fee assessment and patient billing actions against the debtor for up to 120 days while the DoD is pursuing an insurance claim or claim against a third-party payer;

(3) For patients who are covered by a covered payer, the DoD will only bill the patient for the insurer-assigned copays, coinsurance, deductibles, nominal fees, and non-covered services;

(4) The patient demonstrates potential eligibility for the MHS MPWP fee discounts and catastrophic fee waivers by completing and submitting DD Form 2569 and DD Form 3201, which may result in a discount of their medical invoice after pursuit or recovery of claims against third party payers (instructions for demonstrating eligibility, including deadline, will also be included);

(5) In addition to sliding fee discounts and catastrophic fee waivers, patients may request a waiver under 10 U.S.C. 1079b(b) by submitting a DD Form 3201-1, “Request for Medical Debt Waiver, Military Health System Modified Payment and Waiver Program.” Patients may be considered for a partial or full waiver if they previously applied to and were approved for the MHS MPWP discount program, and it did not sufficiently mitigate financial harm and if the applicable care provided is determined to enhance the KSAs of DoD healthcare providers, as confirmed by competent medical authority competent medical authority at the MTF that provided the care. Confirmation will be done by the competent medical authority on the DD Form 3201-1A. Waivers under 10 U.S.C. 1079b(b) may result in information reporting to the Internal Revenue Service and issuance of a Form 1099-C, Cancellation of Debt. The waived amount(s) may constitute gross income to the patient under 26 U.S.C. 61;

(6) If fees or charges (including those reduced under the MHS MPWP) become delinquent due to non-payment, the DoD will establish a debt for the delinquent amount and commence efforts to collect the established debt, which may include transfer to the Department of the Treasury in accordance with applicable authority; and

(7) That invoices issued after reduction or waiver of charges under the MHS MPWP will reflect the date by which an unpaid account will become delinquent.

(f) DoD medical billing rates. Annually, the ASD(HA) publishes the rates that DoD uses for medical billing. Except for reasons listed in § 220.8(f) or (g) of this part, the DoD rate will be used for all non-beneficiary billing, including billing to either the insurer or patient.

(g) For non-covered items or services. In any instance where an item or service is not covered by a covered payer, the DoD will bill the patient for the full amount of the service.

(h) For patients who are potentially covered by a covered payer. In any instance where a patient submits a DD Form 2569 that indicates that the patient possesses valid health insurance, the DoD will suspend any collections against the patient to allow time for the claim remittance to be processed by the insurer and for a valid EOB to be received, or until 120 days have passed since filing for payment from the insurance company, whichever comes first. Upon receipt of an EOB, the DoD will bill the patient only for those amounts that are designated by the insurance company as a copay, coinsurance, deductible, nominal fee, or non-covered service. If insurance remittance and an EOB are not received within 120 days of filing of a claim, the DoD will deem the item or service to be a non-covered service. If insurance remittance and an EOB are received after 120 days have elapsed, the DoD will deposit the remittance and adjust the patient's account accordingly. The DoD will issue to the patient a revised medical invoice reflecting updated balances. MTFs will engage in standard denials management practices, including providing supporting documentation and participating in appeal processes, to facilitate the resolution of disputed claims.

(i) Actions when an insurance payment and/or EOB is received. When the DoD receives an insurance payment and/or an EOB, the DoD will post all payments and adjustments for those items or services that are deemed as covered by a covered payer against the bill in the manner prescribed by the EOB. The DoD will bill the patient for any remaining copays, co-insurance, deductibles, nominal fees and non-covered services.

(j) Application for the MHS MPWP (DD Form 3201). All DoD invoices generated for non-covered beneficiaries will include a statement that all patients applying for the MHS MPWP must complete DD Form 3201 and must include instructions on how to apply (i.e., the deadline and where to submit the application). Processing of the application will be logged on the last page of the DD Form 3201. Applicants to the MHS MPWP will be notified of the status of their application via the following methods:

(1) For approved applications, the DoD will issue to the patient a modified medical invoice reflecting the adjusted balance due after applying the sliding fee and/or catastrophic fee waiver and including a revised (reset) payment due date. The invoice modified to reflect fee adjustments or waiver under the MHS MPWP will include notification of the requirement to transfer delinquent debts to the Department of the Treasury if, after any modification under the MHS MPWP, an unpaid invoice becomes delinquent.

(2) For disapproved applications, the DoD will issue a letter reflecting the reason why the application was disapproved. The letter will inform the patient of their right to reapply should their financial circumstances change.

(k) Requirements to apply to the MHS MPWP. (1) To apply to the MHS MPWP all patients must:

(i) Complete a DD Form 2569 (even in cases where the patient possesses no health insurance). Insurance remittances must be applied before the patient can be considered for the MHS MPWP.

(ii) Complete a DD Form 3201, “Application for Military Health System Modified Payment and Waiver Program.”

(iii) Attach a copy of the patient's (or guarantor's if the patient is a minor) most recently filed Federal Income Tax Return to the DD Form 3201.

(iv) Attach a copy of the patient's (or guarantor's if the patient is a minor) last two pay stubs.

(v) Indicate whether their injury/disease was caused by a third party and provide explanatory information.

(2) Patients applying for the MHS MPWP are required to certify whether or not they filed a Federal Income Tax Return for the preceding year.

(i) If the patient did not file a Federal Income Tax Return for the preceding year, the patient must certify this in the space provided on the DD Form 3201.

(ii) If the patient has no verifiable income, the patient must certify this and provide a certification of their current annual income amount in the space provided on the DD Form 3201.

(iii) When the patient has certified to having no verifiable income and has neither a tax return nor pay stubs, other information may be used to validate the patient's lack of income including, but not limited to, the last two bank statements (savings and checking), or a Social Security benefits letter verifying that no benefits are being received.

(iv) If the patient believes that hospitalization/care occurred as the result of an action for which another party may be responsible, then to be eligible for the MHS MPWP, the patient must agree to cooperate and assist the United States to recover the cost of care from said party in the space provided on the DD Form 3201.

(l) Basis to assign a Sliding Fee Discount/Catastrophic Fee Waiver—(1) MHS Discount Calculator. Once a year, the ASD(HA) will promulgate an MHS Discount Calculator. The initial calculator will assign a 100 percent sliding fee discount and no stratified nominal fee to applicants to the MHS MPWP whose annual household income is at or below 100 percent of the applicable year's Federal Poverty Guidelines (FPGs); and a 100 percent sliding fee discount plus a stratified nominal fee to applicants whose annual household income is greater than 100 percent and at or below 400 percent of the FPGs current at the time of application. Applicants with annual household income of greater than 400 percent of the applicable year's FPGs will not be eligible for a sliding fee discount; but may be eligible for a catastrophic fee waiver.

(2) Catastrophic Fee Waiver. For applicants who exceed the 400 percent threshold but whose household income is at or below 600 percent of the FPGs, the calculator will assign an ASD(HA)-approved maximum percentage that may be charged monthly based on the patient's monthly household income. The maximum percentage will be set to 5 percent. The monthly household income will be multiplied by 5 percent and the result will be multiplied by 36 months to derive the amount of downward adjustment to the patient's bill. Amounts that exceed the recalculated amount will be waived. If the original bill is less than the recalculated bill, the original bill will remain as the balance owed.

(3) Nominal fee. Once a year, the ASD(HA) will publish a stratified nominal inpatient and outpatient fee. The nominal fee will be assigned in any case where the sliding fee results in a 100 percent waiver of the medical invoice and the patient's income is above 100 percent and up to 400 percent of the applicable year's FPGs. Stratified nominal fees are generally established in a manner that is equitable with what military retirees enrolled in the TRICARE program would be required to pay in the private sector for comparable services. Nominal fees do not apply to catastrophic fee waivers. The initial nominal stratified fees are as follows:

Table 1 to Paragraph (l)(3)

(m) Notification of approved/disapproved MHS MPWP applications. Unless additional time is needed (e.g., to verify a patient's documentation), the DoD shall generally determine whether a patient has demonstrated eligibility for the MHS MPWP within 30 business days of receipt of the complete application. The DoD will suspend DoD collection actions (excluding the processing of insurance claims) against the patient during the review.

(1) For approved applications, the DoD will issue to the patient a modified medical invoice reflecting the adjusted balance due after applying the sliding fee and/or catastrophic fee waiver. The invoice modified to reflect fee adjustments under the MHS MPWP will include notification of the requirement to transfer delinquent debts to the Department of the Treasury if, after any modification under the MHS MPWP, an unpaid invoice becomes delinquent.

(2) For disapproved applications, the DHA will issue a letter by U.S. mail to the patient's last known address reflecting the reason why the application was disapproved. The letter will inform the patient of the right to reapply should the patient's financial circumstances change.

(n) Collection in installments. Patients approved for a sliding scale fee reduction or catastrophic fee waiver shall have amounts collected in installments for a term not to exceed 72 months. Patients may choose to pay their balance in a lump sum payment.

(o) Application for a 10 U.S.C. 1079b(b) waiver—(1) Basis for a waiver. Waivers may be granted when:

(i) The patient has provided the DoD with a completed DD Form 2569 (even for patients who possess no valid health insurance) and applicable insurance payments have been applied;

(ii) The patient has previously submitted a completed application to the MHS MPWP (32 CFR 220.12(k)) and was approved for any applicable discounts;

(iii) The patient submitted a DD Form 3201-1, “Request for Medical Debt Waiver, Military Health System Modified Payment and Waiver Program,” requesting waiver of already discounted fees; and

(iv) A DoD competent medical authority at the treating MTF confirms in writing (on the DD Form 3201-1A, “MHS Modified Payment and Waiver Program (MPWP) Medical Skills Sustainment Scoring Worksheet”) that the care provided to the patient enhanced the KSAs of the DoD healthcare provider. The completed DD Form 3201-1A yields whether a partial or full waiver of already discounted fees may be applied.

(v) If the conditions in paragraphs (o)(1)(i) through (iv) are met, the Director of DHA may exercise discretionary authority to waive the medical invoice.

(2) Method to request a waiver. Patients must submit a completed DD Form 3201-1, “Request for Medical Debt Waiver Military Health System Modified Payment and Waiver Program.” All DoD invoices will include the address where a patient may submit a waiver request.

(3) Response to a request for waiver. Unless additional time is needed (e.g., to verify a patient's documentation), the DoD shall generally make a decision on the request within 90 days. The DoD will provide a response in writing to the patient, as well as a copy of the medical invoice reflecting the balance due. Waivers that are approved under 10 U.S.C. 1079b(b) will require reporting to the IRS and issuance of an IRS Form 1099-C when required by 26 U.S.C. 6050P.

(p) Debts transferred to Treasury that are subsequently processed through insurance. In any instance where a debt is transferred to Treasury and a lower balance is assigned to a Treasury-managed debt due to a claim being subsequently processed through insurance, the DoD shall recall the debt back to the DoD for management actions and notify Treasury to delete the debt from its systems and reverse any adverse reporting that occurred against the debt.

(q) Delinquent Accounts. Delinquent accounts will be processed in accordance with the Debt Collection Improvement Act of 1996 and its implementing regulation 31 CFR parts 900-904 (Federal Claims Collection Standards).

(r) Applications for MHS MPWP Received for Delinquent Accounts Transferred to the Department of the Treasury. Individuals may still submit an application for the MHS MPWP after their account has been transferred to the Cross-Servicing Program (“Cross-Servicing”) of the Department of the Treasury, Bureau of the Fiscal Service; however, any reductions to the medical invoice from the MPWP may be subject to interest, penalties, and costs. When patients apply to the MHS MPWP after their accounts were transferred to Cross-Servicing, their debts will remain at Cross-Servicing unless and until the DoD determines that they are eligible for a reduction under the MHS MPWP. The DoD may recall the debt from Cross-Servicing after it determines that the debt is eligible for a reduction under the MHS MPWP. Patients may request reconsideration for the MHS MPWP when their financial circumstances appear to have significantly changed.

(s) Reporting to IRS and Furnishing of IRS Forms 1099-C (Cancellation of Debt). The DoD will report to IRS, and furnish to patients, IRS Forms 1099-C for all 10 U.S.C. 1079b(b) waivers issued during the previous calendar year where required by 26 U.S.C. 6050P. IRS reporting will not be done for portions of a bill which have been adjusted downwards due to insurance processing, or by assignment of a sliding fee/catastrophic fee waiver to the debt under 10 U.S.C. 1079b(c)(2) or (3). The IRS Forms 1099-C will reflect amounts waived under the DHA Director's discretionary authority.

(t) Refunds not permitted for amounts previously paid. Except for circumstances specified in paragraphs (p) and (u)(3) of this section, financial relief under the MHS MPWP may only be granted for amounts still due by the patient; an application for financial relief cannot be used to obtain a refund for any amounts previously paid.

(u) Claims involving tortfeasors and third-party payers. No discount or waiver of fees under 10 U.S.C. 1079b shall be interpreted to be applicable to tortfeasors under the FMCRA, 42 U.S.C. 2651, or third-party payers under 10 U.S.C. 1095.

(1) For patients who indicate that their injury/disease was caused by a third party, DoD MTFs will follow procedures established under the Medical Affirmative Claims program.

(2) Patients who have a remaining balance after insurance remittances or recoveries from third-party tortfeasors may apply for relief of any remaining medical debt.

(3) Payments toward the medical debt that were made by the patient prior to settlement of the claim with the tortfeasor will be offset against any balances owed by the patient or may be refunded to the patient if no balance is owed.