July 06, 2020

OFCCP Issues Final Rule Exempting TRICARE Providers From OFCCP Compliance Authority

On July 2, the Department of Labor Office of Federal Contract Compliance Programs (OFCCP) published its final rule to amend the regulations pertaining to its authority over TRICARE health care providers. The final rule effectively exempts TRICARE providers from OFCCP compliance and enforcement activities.

Specifically, the final rule confirms that the OFCCP lacks authority over health care providers who participate in TRICARE. The OFCCP classifies TRICARE providers as health care entities with agreements to furnish medical services and supplies to individuals participating in TRICARE — the health care program for uniformed service members, retirees and their families.

The final rule also established a national interest exemption from Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 for health care providers with agreements to furnish medical services and supplies to individuals participating in TRICARE. The national interest exemption acts as a second layer of protection for TRICARE providers. Even if the final rule was later overturned, the OFCCP, through the exemption, determined that special circumstances exempt TRICARE providers from compliance as it would improve uniformed service members’ and veterans’ access to medical care, more efficiently allocate OFCCP’s limited resources for enforcement activities, and provide greater uniformity, certainty, and notice for health care providers participating in TRICARE.

Despite the final rule and national interest exemption, TRICARE providers remain subject to all other federal, state, and local laws prohibiting discrimination and providing for equal employment opportunity

Under the final rule, the OFCCP will retain authority over health care providers participating in TRICARE if they hold a separate covered federal contract or subcontract that is not for providing health care services under TRICARE. Health care providers with more than one federal contract are encouraged to consult with legal counsel to confirm any ongoing federal affirmative action requirements.

This arrangement is not unexpected for health care providers participating in TRICARE. The OFCCP proposed the preliminary version of this rule in November 2019. There has also been internal moratorium in place prohibiting the investigation of TRICARE providers since 2014. This final rule memorializes the preliminary rule and internal memoranda into law. The final rule will become fully effective 60 days after it is published in the federal register, which is currently scheduled for August 31, 2020.

The Faegre Drinker government contracts and affirmative action compliance teams provide a full suite of affirmative action planning, compliance and audit defense assistance.

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