On July 2, 2020, the US Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published its final rule amending regulations regarding the OFCCP’s authority over TRICARE healthcare providers with respect to anti-discrimination, affirmative action and other requirements. The changes are intended to increase the availability of healthcare for veterans and provide guidance and cost savings to TRICARE healthcare providers.

IN DEPTH

On July 2, 2020, the US Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published a final rule in the Federal Register, “Affirmative Action and Nondiscrimination Obligations of Federal Contractors and Subcontractors: TRICARE Providers” (Final Rule) to amend regulations regarding OFCCP’s authority over TRICARE healthcare providers. TRICARE is a federal healthcare program for uniformed service members, retirees and their families. The regulatory changes reflected in the Final Rule are intended to increase the availability of healthcare for veterans and provide guidance and cost savings to TRICARE healthcare providers.

OFCCP is responsible for enforcing federal laws and regulations that require entities holding covered government contracts and subcontracts to refrain from discriminating on the basis of race, sex and other grounds, and to take affirmative action to ensure equal employment opportunity. These federal laws include the Executive Order 11246 (E.O. 11246), Section 503 of the Rehabilitation Act of 1973 (Section 503), and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). OFCCP also has the authority to grant exemptions to these requirements if it determines that special circumstances in the national interest require such an exemption.

In March 2014, Congress introduced the Protecting Health Care Providers from Increased Administrative Burdens Act to exempt all healthcare providers from OFCCP’s enforcement activities. In lieu of this legislative action, OFCCP opted to issue Directive 2014-01 in May 2014, which established a five-year moratorium on the enforcement of affirmative action obligations for TRICARE healthcare provider subcontractors. OFCCP extended this moratorium in 2018 for another two years, until May 7, 2021, and expanded it to cover healthcare providers participating in Department of Veterans Affairs’ health benefits programs. The Final Rule makes permanent this moratorium on the enforcement of equal employment opportunity requirements on TRICARE providers, including the requirement for an Affirmative Action Plan pursuant to Executive Order 112536 (E.O. 11246) for certain TRICARE providers.

Below are three (3) key takeaways from the Final Rule for current and potential TRICARE providers to consider:

1. No OFCCP Enforcement for Current TRICARE Providers

   • OFCCP removed federal healthcare providers who serve TRICARE beneficiaries from their authority to enforce equal employment opportunity requirements because OFCCP determined that it lacks authority to regulate these providers solely because they participate in the TRICARE program.

2. No OFCCP Coverage for Future TRICARE Providers

   • The Final Rule establishes a national interest exemption from E.O. 11246, Section 503 and VEVRAA for healthcare providers with agreements to furnish medical services and supplies to individuals participating in TRICARE.

3. No Exemption from OFCCP Coverage for Other Federal Contracts

   • OFCCP will retain authority over TRICARE healthcare providers “if they hold a separate covered Federal contract or subcontract that is not for providing health services under Tricare.” TRICARE healthcare providers must also still comply with other applicable federal, state and local laws prohibiting discrimination and providing for equal employment opportunity. Further, the Final Rule makes no changes regarding the Federal Employees Health Benefits Program (FEHBP) or the US Department of Veterans Affairs Health Benefit Provider (VAHBP) agreements.