Hospitals & Health Care Providers with TRICARE Contracts Subject to Affirmative Action Obligations

Date: 11/12/10
Title: Hospitals & Health Care Providers with TRICARE Contracts Subject to Affirmative Action Obligations

On October 18, 2010, a Department of Labor Administrative Law Judge (ALJ) upheld OFCCP's decision that the Florida Hospital of Orlando was a government subcontractor.  The ALJ ruled that the hospital's contract with TRICARE makes it a subcontractor and triggers affirmative action obligations.  Florida Hospital has subsequently appealed the ALJ ruling.  If the ruling stands, numerous health care providers without direct government contracts will be subject to OFCCP's jurisdiction.  This ruling is significant since many hospitals and health care providers have been operating under the assumption that they are not covered by federal affirmative action regulations.

TRICARE is a federal health care program for active and retired military personnel that contracts with health care providers and regional administrators to provide health care services to TRICARE participants.  Florida Hospital provides health care services to TRICARE participants through a network managed by Humana Military Health Services (HMHS).  Even though Florida Hospital does not have any direct federal contracts, it receives more than $100,000 annually in federal reimbursements associated with a managed care contract between HMHS and TRICARE.  Florida Hospital argued that is was not a federal subcontractor because it only received financial assistance from the federal government similar to Medicare funding. [Medicare and Medicaid reimbursements have been consistently considered a grant and not a federal contract and therefore do not subject the health care provider to federal contractor obligations.]  The ALJ disagreed with the Hospital's assertion and said that the difference is that Medicare only pays for medical services whereas TRICARE provides medical services.  The ALJ also rejected the argument that TRICARE did not consider its network providers to be subcontractors and did not communicate in the contract any federal subcontractor compliance requirements.

What should health care providers do immmediately?

Health care providers should review their contracts with any HMOs or other health care network or insurer to determine if they provide medical services pursuant to a federal contract or administer TRICARE or a similar government sponsored health care program.

Compliance Implications for TRICARE (or similar government sponsored program) health care providers

As a federal subcontractors, TRICARE health care providers must comply with the following regulations.

If the provider has one or more contracts (subcontracts) greater than $50,000 annually they are required to develop a written Affirmative Action Plan (AAP) for each of their establishments with more than 50 employees within 120 days from the start of the contract (subcontract).  Additionally, they may be subject to the following requirements:

  • Ensure non-discrimination in employment and support it with a policy statement;
  • File an EEO-1 report annually; (
  • File a VETS100 or VETS100A report annually; (
  • Maintain records of and conduct impact ratio analyses on personnel activity data (applicants, hires, promotions, and terminations); (
  • Engage in good faith efforts (outreach and recruiting efforts) to identify, consider, place, and provide advancement opportunities to people of color, veterans, and individuals with disabilities;
  • Post position vacancies with the state employment delivery system for all positions below the executive level that remain open for more than three days;
  • Comply with recordkeeping requirements and provide OFCCP with access to facilities and records;
  • Provide access to programs and reasonable accommodations to individuals with disabilities; and
  • Include the equal opportunity clause in subcontracts and purchase orders.

If you determine that you are a covered contractor or subcontractor and need assistance in putting together a compliance program and Affirmative Action Plans, we would gladly assist you.