National Defense Authorization Act’s Impact on Healthcare Industry's Affirmative Action Obligations

On December 16, 2010, Office of Federal Contract Compliance Programs (OFCCP) issued a new directive (No 293) titled "Coverage of Health Care Providers and Insurers.” This directive provided comprehensive guidance for assessing when health care providers and insurers are federal contractors and subcontractors. This directive was issued after an Administrative Law Judge ruled in 2010 that a hospital was a federal sub-contractor because they participated in a health care provider network for TRICARE, and hence was subject to affirmative action laws.
In order to exercise jurisdiction over a company, OFCCP first has to establish the existence of a federal contractor or subcontractor relationship based on a providers participation in one of the three activities listed below:
  • TRICARE Management Activity—this is the Department of Defense’s (DOD) worldwide health care program for active duty and retired military service members and their families.
  • Federal Employees Health Benefit Plan (FEHBP)—this is the federal health care program serving civilian federal employees, retirees and their families.
  • Medicare—Medicare’s Advantage Plan (Part C) and/or Prescription Drug Coverage (Part D).
President Obama signed the National Defense Authorization Act (NDAA) on December 31, 2011. Maintenance of the adequacy of provider networks under the TRICARE program (sec. 715) ends OFCCP’s jurisdiction over healthcare providers. Section 715 states, “… in determining whether TRICARE network providers are subcontractors for the purposes of the FAR or any other law, a TRICARE managed care support contract including the requirement to establish, manage, or maintain a network of providers shall not be considered to be a contract for the performance of healthcare services or supplies on the basis of that requirement.”  
Prior to abandoning your affirmative action obligations under Executive Order 11246, Section 503 of the Rehabilitation Act, and the VEVRAA, please take some time to assess whether OFCCP may still have jurisdiction over your business based on the services you may be rendering under the Federal Employees Health Benefit Plan or Medicare Part C and D.
For more information, please contact one of Berkshire Associates’ compliance experts at 800.882.8904 or email bai@berkshireassociates.com.