New National Defense Authorization Act Affects Some Medical Providers’ Status with OFCCP

The National Defense Authorization Act (“NDAA”), signed by President Barack Obama on December 31, 2011 exempts from Office of Federal Contract Compliance Programs (OFCCP) jurisdiction those medical providers who participate in the Department of Defense (DoD) TRICARE program, DoD’s health care program for active and retired military personnel. This legislation is intended to overturn a 2010 U.S. Department of Labor administrative law judge’s ruling that a Florida hospital providing medical services on behalf of a federal contractor that had contracted with the DoD to establish a medical provider network for DoD TRICARE beneficiaries was a covered federal subcontractor subject to OFCCP jurisdiction. Thus, under the NDAA, medical providers that participate solely in the TRICARE program will no longer be deemed federal subcontractors subject to OFCCP jurisdiction.

Medical Providers Must Remain Vigilant
Health care employers participating in the TRICARE program also often participate in Medicare Part C and/or D programs.  OFCCP takes the position that receipt of Medicare C or D revenue creates government contractor status and affirmative action obligations.  The NDAA creates an exemption only for TRICARE participation, not participation in Medicare C or D.  Thus, it is imperative employers review their sources of federal government revenue.  If Medicare C and/or D generate revenue for an employer of at least $50,000 annually, the NDAA will have no impact on contractor status and the employer will remain subject to OFCCP jurisdiction.

OFCCP Reaction
OFCCP is in the process of revisiting its policies and reviewing the effect of the legislation. In responding to the prospect of a portion of the federal contractor community being exempted from its jurisdiction, OFCCP Director Patricia Shiu stated, “This isn’t over yet.”