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OFCCP Final Rule – TRICARE Providers Not Subject to OFCCP Jurisdiction

Date   Aug 11, 2020

Executive Summary: On July 2, 2020, the Office of Federal Contract Compliance Programs (OFCCP) published a Federal Register Notice of Final Rule amending its regulations under 41 CFR 60 regarding OFCCP jurisdiction over TRICARE health care providers.

The OFCCP enforces three equal employment opportunity laws that apply to covered Federal contractors: E.O. 11246, Section 503 of the Rehabilitation Act of 1973 (Section 503), and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA). These laws prohibit discrimination on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, protected veteran status and disability, as well as pay disclosure protection under the Pay Transparency Act. The OFCCP requires government contractors to furnish information about their affirmative action programs (AAPs) and related employment records and data in its compliance enforcement efforts.

TRICARE is a health care program through the U.S. Department of Defense (DOD) that pays health care benefits to active duty and retired military service members and their families. Previously, enforcement of the regulations by the OFCCP over TRICARE providers was subject to a moratorium that is set to expire on May 7, 2021.

The final rule represents a reversal of the OFCCP’s prior position regarding its jurisdiction over TRICARE providers. Specifically, the final rule revises the definition of “subcontractor” under E.O. 11246, VEVRAA and Section 503 regulations and establishes a national interest exemption to exclude health care providers with agreements to furnish medical services and supplies to individuals participating in TRICARE.

Some public comments had addressed whether the final rule should also exempt Federal Employee Health Benefits Programs (FEHBP) and other Veterans Affairs Health Benefits Programs (VAHBP). The OFCCP noted in the final rule that the moratorium would continue to apply to VAHBPs and that it would separately consider additional subregulatory guidance to provide more certainty and clarity of the status of coverage of VAHBP and FEHBP participants.

History:

Following extended litigation in OFCCP v. Fla. Hosp. of Orlando, the OFCCP implemented a five-year moratorium regarding the enforcement of affirmative action obligations of health care providers considered by the OFCCP to be TRICARE subcontractors. The OFCCP also offered outreach and technical assistance to providers regarding their obligations under the laws administered by the OFCCP. Following the enactment of the 2014 moratorium, the OFCCP administratively closed any open compliance evaluations of TRICARE health care providers subject to the moratorium. In 2018, the moratorium was extended until May 7, 2021 and expanded to exempt facilities providing health care benefits under Veterans Health Benefit Programs. For a more detailed discussion of the moratorium, please see our May 8, 2014 Alert, https://www.fordharrison.com/ofccp-issues-directive-on-tricare-moratorium and our Alert of May 23, 2018, https://www.fordharrison.com/us-dol-announces-two-year-tricare-moratorium-extension.

Purpose of the Final Rule:

In support of the final rule, the OFCCP noted the challenges faced by active and retired military service members and their families in obtaining access to health care and the added uncertainty regarding the extent to which OFCCP requirements apply to TRICARE health care providers. The OFCCP expressed concern that the prospect of exercising authority over TRICARE providers is affecting, or will affect, the government's ability to provide health care to uniformed service members, veterans, and their families. The final rule is intended to relieve uncertainty for healthcare providers participating in TRICARE, provide improved access to medical care for uniformed service members, veterans and their families, and more efficiently allocate OFCCP resources.

The Bottom Line:

TRICARE subcontractors will not be subject to OFCCP jurisdiction or the regulatory framework of EO 11246, VEVRAA or Section 503, including affirmative action requirements. However, other Veterans Administration contracts or other federal funding or contracts may still subject health care providers to OFCCP jurisdiction. For example, the final rule undermines the language of the MISSION Act exemption and states that Community Care Network contracts and Patient Centered Community Care contracts have no statutory basis for exemption and are thus subject to OFCCP jurisdiction. We expect further guidance from the OFCCP as to whether it will assert jurisdiction over VAHBP subcontractors upon expiration of the moratorium. However, until then, health-care entities providing service under VA programs other than TRICARE should be prepared to comply with affirmative action obligations when the moratorium expires in May 2021.

The OFCCP will be hosting a public webinar on the TRICARE Final Rule on Monday, August 31, 2020, from 2 p.m. to 3 p.m. Eastern Time. Registration is available here.

If you have any questions regarding the OFCCP’s Final Rule on TRICARE, the moratorium, or federal contractors’ affirmative action and nondiscrimination obligations, please contact Jill Harrison, jharrison@fordharrison.com or Nancy Holt, nholt@fordharrison.com, who are members of FordHarrison’s Affirmative Action/OFCCP practice group. You may also contact the FordHarrison attorney with whom you usually work.