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Bill to exempt health care providers from OFCCP jurisdiction introduced in the House

December 19th, 2013  |  Cynthia L. Hackerott

Representative Tim Walberg (R-MI), Chair of the House Education and the Workforce Committee’s Workforce Protections Subcommittee, has introduced a bill, H.R. 3633, to exempt health care providers from the jurisdiction of the OFCCP. The bill, entitled “Protecting Health Care Providers from Increased Administrative Burdens Act” was introduced the day before a December 4, 2013 hearing held by the subcommittee to discuss the OFCCP’s enforcement activities. A defense budget bill signed by the President in December 2011 was aimed at   exempting TRICARE providers from OFCCP jurisdiction, but the Labor Department’s Administrative Review Board (ARB) issued a ruling this past summer holding that a hospital providing medical services to individuals under TRICARE may still be subject to OFCCP jurisdiction as a federal subcontractor despite this law. Walberg’s bill would go beyond any present exemption for TRICARE providers and exclude all providers of health care services to individuals from OFCCP jurisdiction.

In his introductory remarks to the subcommittee hearing, Walberg said that the bill “will ensure hospitals and doctors reimbursed through federal health care programs are not unilaterally designated contractors and subject to OFCCP’s dictates.”

“Health care providers, who are already subject to federal anti-discrimination law, have expressed concerns that OFCCP’s efforts to expand its jurisdiction will create significant and unnecessary paperwork, potentially raising administrative costs for providers and affecting access to care,” according to a December 3 press release issued by the Education and the Workforce Committee.

“If OFCCP expands its jurisdiction through executive fiat, hospitals will face an administrative nightmare. Administrative burdens carry costs and those costs are almost always passed along to consumers,” Walberg stated in the press release.

Bill provisions. The text of H.R. 3633 provides that:

“A State, a local government, or other recipient that receives a payment from the Federal Government, directly or indirectly and regardless of reimbursement methodology, related to the delivery of health care services to individuals, whether or not such individuals are or have been employed by the Federal Government, shall not be treated as a Federal contractor or subcontractor by the Office of Federal Contract Compliance Programs based on the work performed or actions taken by such individuals that resulted in the receipt of such payments.”

OFCCP policy and the NDAA. On December 16, 2010, the OFCCP issued a directive (Number 293) which, according to the agency, restated existing OFCCP policy for determining whether health care providers and insurers are covered contractors or subcontractors based on their relationship with federal health care programs. Directive 293 stated that the OFCCP used a case-by-case approach in making coverage determinations because of the wide-array of relationships health care providers and insurers may have with the federal government. In addition, Directive 293 stated that TRICARE providers could be subject to OFCCP jurisdiction. TRICARE is a Department of Defense (DOD) Field Activity tasked with administering the TRICARE program, the DOD’s worldwide health care program for active duty and retired military service members and their families.

On December 31, 2011, President Obama signed the National Defense Authorization Act (NDAA) for Fiscal Year 2012 into law. Section 715 of the NDAA states that:

“In establishing rates and procedures for reimbursement of providers and other administrative requirements, including those contained in provider network agreements, the Secretary shall, to the extent practicable, maintain adequate networks of providers, including institutional, professional, and pharmacy. For 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, 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.”

On April 25, 2012, in light of the NDAA, the OFCCP issued Directive 301, rescinding Directive 293. In Directive 301, the agency stated that it “will continue to use a case-by-case approach to make coverage determinations in keeping with its regulatory principles applicable to contract and subcontract relationships and OFCCP case law.”

Because the NDAA is a budget bill, any applicable immunity from OFCCP jurisdiction over TRICARE providers is apparently only effective as long as the FY 2012 budget is in effect. The TRICARE immunity provision may or may not be extended in subsequent budget bills.

Florida Hospital ruling. Further mudding the waters, on July 25, 2013, the ARB ruled en banc, in a 3-2 vote, that Florida Hospital of Orlando (Florida Hospital) — an acute care, not-for-profit hospital that contracted with a government contractor, Humana Military Healthcare Services (HMHS), to provide medical services to military service members, their survivors, and their families as part of the TRICARE program — was subject to OFCCP jurisdiction as a federal subcontractor despite the NDAA. The ARB found that Section 715 of the NDAA only removed one basis for the OFCCP’s jurisdiction over TRICARE network providers and that Florida Hospital was still subject to OFCCP jurisdiction as a federal subcontractor on a separate, alternative basis. (OFCCP v Florida Hospital of Orlando, ARB No 11-011)

As detailed above, Walberg’s bill would go beyond the present NDAA exemption and exclude all providers of health care services to individuals from OFCCP jurisdiction. Moreover, because H.R. 3633 is not a budget bill, it would not be limited to any budgetary period. Thus, if H.R. 3633 were to become law, it would render the ARB’s ruling in Florida Hospital inconsequential.