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Executive Summary: Labor Secretary Perez has announced a five-year moratorium on enforcement "of the affirmative action obligations of all TRICARE providers," and has stated that the Office of Federal Contract Compliance Programs (OFCCP) will administratively close any open and scheduled compliance evaluations for TRICARE subcontractors. Despite this announcement, however, the OFCCP continues to claim jurisdiction over certain healthcare providers that participate in TRICARE as well as the Federal Employees Health Benefits Program (FEHB).
Specifically, during the moratorium, the OFCCP will provide information and technical assistance to TRICARE subcontractors on how to "develop cost effective affirmative action plans, record keeping, and applicant tracking systems." Additionally, the OFCCP will work with various federal agencies to "clarify that those health-care providers that participate as subcontractors in TRICARE and the [FEHB] may, in certain circumstances, be subcontractors for the purposes of the laws that the OFCCP enforces." Furthermore, the moratorium does not apply to holders of prime contracts with the federal government where the contractor is also a TRICARE subcontractor or to TRICARE subcontractors that hold separate, independent, non-healthcare-related subcontracts.
Only Temporary Relief
Although the five-year moratorium offers temporary relief, Secretary Perez's statement does not provide any indication that the OFCCP is relinquishing its claim of jurisdiction over health care providers that receive payments from the federal government. Thus, providers should not assume that the moratorium precludes the need for a specific legislative exclusion from OFCCP jurisdiction.
H.R. 3633 "Protecting Health Care Providers from Increased Administrative Burdens Act"
The Protecting Health Care Providers from Increased Administrative Burdens Act, H.R. 3633, provides that those who receive payment from the federal government related to the delivery of health care services to individuals will not be treated as a federal contractor or subcontractor by the OFCCP.
The bill is a response to the OFCCP's increasingly aggressive attempts to exert jurisdiction over health care providers who receive some form of payment from the federal government, even when the provider does not have a direct contract with a federal agency. Recently the OFCCP has claimed that providers who participate in HMOs for federal employees are subcontractors because they provide services necessary to the performance of the prime contract between a health care plan and a federal agency. The OFCCP has also claimed jurisdiction over health care providers who participate in TRICARE, despite the enactment of the 2012 National Defense Authorization Act (NDAA), which limited the agency's jurisdiction in this area. The OFCCP claims the NDAA only impacts one prong of the subcontractor definition (assumption of a contractor's obligation) and continues to claim that it has jurisdiction over such providers because they provide services necessary to the performance of the prime contract. Even though the agency has announced the five-year moratorium, it has not given any indication that it has retreated from this position.
Employers' Bottom Line:
While the moratorium announced by the OFCCP provides a welcome respite for contractors with open or scheduled compliance evaluations, it does not provide a long-term resolution of the on-going dispute over the agency's jurisdiction over health care providers that receive payment from the federal government. Accordingly, the American Hospital Association has indicated it will continue to support H.R. 3633, and we encourage you to join them and encourage your state associations to do so as well.
If you have questions regarding federal contractors' affirmative action obligations, feel free to contact Karen Tyner, firstname.lastname@example.org or Linda Cavanna-Wilk, email@example.com, who are members of our Affirmative Action/Government Contracts practice group. If you have any questions regarding this legislation, please contact Tom Keim, firstname.lastname@example.org, or Louis Britt, email@example.com, who are members of FordHarrison's Healthcare Practice Group. You may also contact the FordHarrison attorney with whom you usually work.