[Federal Register Volume 63, Number 174 (Wednesday, September 9, 1998)]
[Rules and Regulations]
[Pages 48100-48106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22857]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AE64


Civilian Health and Medical Program of the Department of Veterans 
Affairs (CHAMPVA)

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the medical regulations concerning 
medical care for survivors and dependents of certain veterans. These 
regulations establish basic policies and procedures governing the 
administration of the Civilian Health and Medical Program of the 
Department of Veterans Affairs (CHAMPVA), including CHAMPVA claims 
processing procedures, benefits and services.

DATES: Effective Date: October 9, 1998.

FOR FURTHER INFORMATION CONTACT: Susan Schmetzer, Health Administration 
Center (formerly CHAMPVA Center), P.O. Box 65023, Denver, CO 80206-
9023, telephone (303) 331-7552.


[[Page 48101]]


SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register (61 FR 56486) on November 1, 1996, we proposed to amend the 
medical regulations (38 CFR part 17) by including CHAMPVA claims 
processing procedures and a description of benefits and services.
    The provisions of 38 U.S.C. 1713 authorize VA to provide medical 
care to the dependents and survivors of certain veterans ``in the same 
or similar manner and subject to the same or similar limitations'' as 
medical care is furnished by the Department of Defense (DoD) to certain 
dependents and survivors of active duty and retired members of the 
Armed Forces under 10 United States Code, Chapter 55, Civilian Health 
and Medical Program of the Uniformed Services (CHAMPUS/TRICARE). 
Previously, VA had an agreement with DoD to contract with commercial 
claims processors (fiscal intermediaries) for the processing of VA 
claims. However, in an effort to both contain costs and to improve 
services to the beneficiaries, VA now conducts its own claims 
processing services and has consolidated the operations in Denver, 
Colorado.
    Interested parties were invited to submit written comments on or 
before December 31, 1996. We received comments from two organizations, 
the American Academy of Dermatology and the American Podiatric Medical 
Association, Inc. All comments submitted by these two organizations 
were in reference to excluded benefits under Sec. 17.272.
    It was recommended that we clarify the exclusion for cosmetic 
surgery found at Sec. 17.272(19) to distinguish it from reconstructive 
surgery. We agree and have added clarifying language to assist in 
distinguishing between covered and noncovered benefits.
    A recommendation was made to change the term ``podiatry services'' 
in Sec. 17.272(25) to ``foot care services.'' We concur with this 
recommendation as it clarifies that the exclusion is applicable to all 
medical providers who may treat certain foot conditions, not just 
podiatrists.
    A commenter recommended that Sec. 17.272(35) be modified to allow 
for wigs and hairpieces for conditions other than alopecia. No changes 
were made based on this comment. 38 U.S.C. 1713 requires that CHAMPVA 
benefits be subject to the same or similar limitations as medical care 
furnished to Department of Defense dependents through the CHAMPUS/
TRICARE program. In accordance with section 744 of Public Law 96-527, 
CHAMPUS/TRICARE wig and hairpiece benefits are specifically limited to 
alopecia resulting from treatment of malignant disease.
    The exclusion at Sec. 17.272(46) of service or advice rendered by 
telephone or telephonic device with the exception of cardiac pacemaker 
monitoring was suggested as presenting a roadblock to cost-saving 
technology. For the same reason, the commenter also objected to the 
exclusion at Sec. 17.272(75) of services performed when a patient is 
not physically present. These exclusions promote a quality of care 
standard that is established for diagnosis and treatment through face-
to-face contact between a provider and patient. For this reason, no 
changes are made to Sec. 17.272(75). However, we do recognize that 
remote monitoring can be an efficient alternative to certain outpatient 
hospital or physician office visits. Additionally, CHAMPUS/TRICARE has 
recently revised their regulations on this issue to allow for remote 
monitoring under specific circumstances. As CHAMPVA is to be 
administered in a similar manner, the final rule was modified to 
include the applicable criteria to consider an exception to the 
exclusion cited under Sec. 17.272(46) for services rendered by 
telephone.
    It was recommended that the exclusion of benefits for autopsy and 
post-mortem examinations found at Sec. 17.272(53) be eliminated. The 
commenter stated that accrediting bodies look at autopsy rates as a 
quality assurance measure. Although quality assurance is important, the 
CHAMPVA program was established to provide healthcare benefits. 
Autopsies and post-mortem examinations do not come within the scope of 
a healthcare benefit. For this reason, no change was made to the 
regulation.
    One comment asserted that limiting immunotherapy for malignant 
diseases to Stage A and Stage O of the bladder under Sec. 17.272(73) 
was too restrictive as there are some promising treatments being 
researched. No change was made based on this comment. CHAMPVA benefits 
do not include coverage for treatments that are experimental or 
investigational and the stated exclusion is consistent with CHAMPUS/
TRICARE policy.
    A commenter suggested that the exclusion of medical photography at 
Sec. 17.272(76) is inappropriate as it is a procedure utilized by 
dermatologists to document skin disease progression. Medical 
photography, however, is not considered medically essential for the 
treatment of skin diseases and, therefore, no change was made based on 
this comment.
    A recommendation was made to modify the exclusion of dermabrasion 
at Sec. 17.272(84) to allow for treatment related to premalignant 
changes or for patients who are allergic to 5-fluorouracil. Although 
dermabrasion is not a covered benefit in the cases cited by the 
commenter, it is a benefit under limited circumstances. Coverage may be 
extended following authorized reconstructive or plastic surgery if it 
is required to restore body form or revise disfiguring and extensive 
scars resulting from neoplastic surgery. As a result, the language 
relating to this exclusion has been modified.
    Subsequent to the publication of the proposed regulations for the 
Civilian Health and Medical Program of the Department of Veterans 
Affairs (CHAMPVA), the name of the administrating organization for the 
Program was changed from CHAMPVA Center to the Health Administration 
Center. As a result, a modification to 38 CFR 17.270, General 
Provisions, has been made to reflect this change.
    Additional changes were made to the final rule for purposes of 
clarification as well as standardization with other VA programs for 
dependents. These changes, which expand benefits available under 
CHAMPVA, are described below.
    A note was added to 38 CFR 17.271 clarifying that eligibility 
criteria specific to dependency and indemnity are not applicable to 
CHAMPVA eligibility determinations.
    Consistent with CHAMPUS/TRICARE policy, wheelchair lifts were 
removed as an excluded benefit from Sec. 17.272(a).
    Consistent with CHAMPUS/TRICARE policy, the exception to excluded 
coverage of shoes and inserts in Sec. 17.272(a)(45) was modified to 
include medically necessary therapeutic shoes and inserts for diabetics 
as a covered benefit.
    Preauthorization for durable medical equipment detailed in 
Sec. 17.273(a)(5) was clarified to note that the requirement is 
applicable to rentals and purchases.
    For clarification, Sec. 17.274, Cost Sharing, was modified from 
``With the exception of services obtained directly from VA medical 
facilities * * *'' to ``With the exception of services obtained 
directly through VA medical facilities* * *'' This modification was 
made to clarify that cost-sharing is not required for services that are 
provided by VA, whether directly, through sharing agreements or through 
services provided by the VA's Consolidated Mail Outpatient Pharmacy. In 
these cases the services are an extension of VA services although a 
physical examination within the VA may not occur.
    The proposed regulations provided that if there were disagreement 
with a

[[Page 48102]]

determination concerning covered services or calculation of benefits, a 
request for reconsideration may be submitted within one year of the 
initial determination. If there continues to be disagreement with the 
reconsideration decision, a request for written review may be made to 
the Center Director within 30 days. The final rule has been changed 
from allowing 30 days to submit the request for review to the Center 
Director to 90 days. This action provides consistency in the 
reconsideration procedures between CHAMPVA and other VA health benefit 
programs for dependents.
    In addition to the above modifications, three Public Laws were 
enacted which impact the proposed regulations. As noted earlier, under 
the provisions of 38 U.S.C. 1713, the CHAMPVA program is to provide the 
same/similar benefits as those provided under CHAMPUS. The Public Laws 
expand available benefits under CHAMPUS/TRICARE. Accordingly, we are 
making these same changes to the CHAMPVA regulations.
    Public Law 103-322, section 230202, effective September 13, 1994, 
states that, notwithstanding any other law, if a Federal program or 
Federally financed State or local program would otherwise pay benefits 
which are also available under an eligible crime victim compensation 
plan, (1) such crime compensation program must not pay that 
compensation; and (2) the other program must make its payments without 
regard to the existence of the crime victim compensation program. This 
provision, therefore, mandates that CHAMPVA assume primary payer status 
to State Victims of Crime Compensation Programs. As a result, the final 
rule at Sec. 17.272(a)(3) has been modified to indicate that CHAMPVA is 
the primary payer when benefits are also available through the State 
Victims of Crime Compensation Program.
    Public Law 103-337, section 705, enacted October 5, 1994, added 
voice prostheses to the benefits available under CHAMPUS/TRICARE. 38 
U.S.C. 1713 requires that CHAMPVA benefits be subject to the same or 
similar limitations as medical care furnished to Department of Defense 
dependents through the CHAMPUS/TRICARE program. As a result, the 
regulations at Sec. 17.272(a)(44) were modified to include voice 
prostheses as a covered benefit.
    Public Law 104-106, section 701, enacted February 10, 1996, expands 
pediatric coverage under the CHAMPUS/TRICARE program. Previously, 
coverage for well-baby visits and immunizations was provided to 
children up to age two. With the enactment of the Public Law, this 
coverage was extended for children up to age six. As 38 U.S.C. 1713 
requires that CHAMPVA benefits be subject to the same or similar 
limitations as medical benefits furnished to Department of Defense 
dependents through the CHAMPUS/TRICARE program, the regulations at 
Sec. 17.272(a)(31)(i) were modified to provide for well child care up 
to age six.
    This final rule has been reviewed by OMB under Executive Order 
12866.
    The Secretary hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. These amendments would not cause significant economic impact on 
healthcare providers, suppliers, or entities since only a small portion 
of their business concerns CHAMPVA beneficiaries. The final rule would 
mostly impact individuals who are VA beneficiaries. Pursuant to 5 
U.S.C. 605(b), these amendments are exempt from the initial and final 
regulatory flexibility analyses requirements of Secs. 603 and 604.
    The Catalog of Federal Domestic Assistance Program numbers are 
64.009, 64.010, 64.011.

List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Alcohol abuse, Alcoholism, 
Claims, Day care, Dental health, Drug abuse, Foreign relations, 
Government contracts, Grant programs--health, Grants programs--
veterans, Health care, Health facilities, Health professions, Health 
records, Homeless, Medical and dental schools, Medical devices, Medical 
research, Mental health programs, Nursing home care, Philippines, 
Reporting and record-keeping requirements, Scholarships and 
fellowships, Travel and transportation expenses, Veterans.

    Approved: May 8, 1998.
Togo D. West, Jr.,
Secretary.

    For the reasons set out in the preamble, 38 CFR part 17 is amended 
as follows:

PART 17--MEDICAL

    1. The authority citation for part 17 continues to read as follows:

    Authority: 38 U.S.C. 501, 1721, unless otherwise noted.


Sec. 17.84  [Removed]

    2. Section 17.84 is removed.
    3. A new center heading and Secs. 17.270 through 17.278 are added 
to read as follows:

Civilian Health and Medical Program of the Department of Veterans 
Affairs (CHAMPVA)--Medical Care for Survivors and Dependents of 
Certain Veterans

Sec.
17.270  General provisions.
17.271  Eligibility.
17.272  Benefit limitations/exclusions.
17.273  Preauthorization.
17.274  Cost sharing.
17.275  Claim filing deadline.
17.276  Appeal/review process.
17.277  Third party liability/medical care cost recovery.
17.278  Confidentiality of records.


Sec. 17.270  General provisions.

    (a) CHAMPVA is the Civilian Health and Medical Program of the 
Department of Veterans Affairs and is administered by the Health 
Administration Center, Denver, Colorado. Pursuant to 38 U.S.C. 1713, VA 
is authorized to provide medical care in the same or similar manner and 
subject to the same or similar limitations as medical care furnished to 
certain dependents and survivors of active duty and retired members of 
the Armed Forces. The CHAMPVA program is designed to accomplish this 
purpose. Under CHAMPVA, VA shares the cost of medically necessary 
services and supplies for eligible beneficiaries as set forth in 
Secs. 17.271 through 17.278.
    (b) For purposes of this section, the definitions of ``child,'' 
``service-connected condition/disability,'' ``spouse,'' and ``surviving 
spouse'' must be those set forth further in 38 U.S.C. 101. The term 
``fiscal'' year refers to October 1, through September 30.

(Authority: 38 U.S.C. 1713)


Sec. 17.271  Eligibility.

    (a) The following persons are eligible for CHAMPVA benefits 
provided that they are not eligible for CHAMPUS/TRICARE or Medicare 
Part A (except as noted in Sec. 17.271).
    (1) The spouse or child of a veteran who has been adjudicated by VA 
as having a permanent and total service-connected disability;
    (2) The surviving spouse or child of a veteran who died as a result 
of an adjudicated service-connected condition(s); or who at the time of 
death was adjudicated permanently and totally disabled from a service-
connected condition(s);
    (3) The surviving spouse or child of a person who died on active 
military service and in the line of duty and not

[[Page 48103]]

due to such person's own misconduct; and
    (4) An eligible child who is pursuing a full-time course of 
instruction approved under 38 U.S.C. Chapter 36, and who incurs a 
disabling illness or injury while pursuing such course (between terms, 
semesters or quarters; or during a vacation or holiday period) that is 
not the result of his or her own willful misconduct and that results in 
the inability to continue or resume the chosen program of education 
must remain eligible for medical care until:
    (i) The end of the six-month period beginning on the date the 
disability is removed; or
    (ii) The end of the two-year period beginning on the date of the 
onset of the disability; or
    (iii) The twenty-third birthday of the child, whichever occurs 
first.

(Authority: 38 U.S.C. 1713)

    (b) Persons who lose eligibility for CHAMPVA by becoming 
potentially eligible for Medicare Part A as a result of reaching age 65 
or who qualify for Medicare Part A benefits on the basis of a 
disability, including end stage renal disease, may re-establish CHAMPVA 
eligibility by submitting documentation from the Social Security 
Administration (SSA) certifying their non-entitlement to or exhaustion 
of Medicare Part A benefits. Persons under age 65 who are enrolled in 
both Medicare Part A and B may become potentially eligible for CHAMPVA 
as a secondary payer to Medicare. In cases where CHAMPVA eligibility is 
restored upon exhaustion of Medicare benefits, CHAMPVA coverage will 
extend even during subsequent periods of Medicare eligibility. When 
both CHAMPVA and Medicare eligibility exist, CHAMPVA must be the 
secondary payer.

(Authority: 38 U.S.C. 1713(d))

    Note to Sec. 17.271: Eligibility criteria specific to Dependency 
and Indemnity Compensation (DIC) benefits are not applicable to 
CHAMPVA eligibility determinations.


Sec. 17.272  Benefits limitations/exclusions.

    (a) Benefits cover allowable expenses for medical services and 
supplies that are medically necessary and appropriate for the treatment 
of a condition and that are not specifically excluded from program 
coverage. Covered benefits may have limitations. The fact that a 
physician may prescribe, order, recommend, or approve a service or 
supply does not, of itself, make it medically necessary or make the 
charge an allowable expense, even though it is not listed specifically 
as an exclusion. The following are specifically excluded from program 
coverage:
    (1) Services, procedures or supplies for which the beneficiary has 
no legal obligation to pay, or for which no charge would be made in the 
absence of coverage under a health benefits plan.
    (2) Services and supplies required as a result of an occupational 
disease or injury for which benefits are payable under workers' 
compensation or similar protection plan (whether or not such benefits 
have been applied for or paid) except when such benefits are exhausted 
and are otherwise not excluded from CHAMPVA coverage.
    (3) Services and supplies that are paid directly or indirectly by a 
local, State or Federal government agency (Medicaid excluded), 
including court-ordered treatment. In the case of the following 
exceptions, CHAMPVA assumes primary payer status:
    (i) Medicaid.
    (ii) State Victims of Crime Compensation Programs.
    (4) Services and supplies that are not medically or psychologically 
necessary for the diagnosis or treatment of a covered condition 
(including mental disorder) or injury.
    (5) Radiology, laboratory, and pathological services and machine 
diagnostic testing not related to a specific illness or injury or a 
definitive set of symptoms.
    (6) Services and supplies above the appropriate level required to 
provide necessary medical care.
    (7) Services and supplies related to an inpatient admission 
primarily to perform diagnostic tests, examinations, and procedures 
that could have been and are performed routinely on an outpatient 
basis.
    (8) Postpartum inpatient stay of a mother for purposes of staying 
with the newborn infant (primarily for the purpose of breast feeding 
the infant) when the infant (but not the mother) requires the extended 
stay; or continued inpatient stay of a newborn infant primarily for 
purposes of remaining with the mother when the mother (but not the 
newborn infant) requires extended postpartum inpatient stay.
    (9) Therapeutic absences from an inpatient facility or residential 
treatment center (RTC).
    (10) Custodial care.
    (11) Inpatient stays primarily for domiciliary care purposes.
    (12) Inpatient stays primarily for rest or rest cures.
    (13) Services and supplies provided as a part of, or under, a 
scientific or medical study, grant, or research program.
    (14) Services and supplies not provided in accordance with accepted 
professional medical standards or related to experimental or 
investigational procedures or treatment regimens.
    (15) Services or supplies prescribed or provided by a member of the 
beneficiary's immediate family, or a person living in the beneficiary's 
or sponsor's household.
    (16) Services and supplies that are (or are eligible to be) payable 
under another medical insurance or program, either private or 
governmental, such as coverage through employment or Medicare.
    (17) Services or supplies subject to preauthorization (see 
Sec. 17.273) that were obtained without the required preauthorization; 
and services and supplies that were not provided according to the terms 
of the preauthorization.
    (18) Inpatient stays primarily to control or detain a runaway 
child, whether or not admission is to an authorized institution.
    (19) Services and supplies (to include prescription medications) in 
connection with cosmetic surgery which is performed to primarily 
improve physical appearance or for psychological purposes or to restore 
form without correcting or materially improving a bodily function.
    (20) Electrolysis.
    (21) Dental care with the following exceptions:
    (i) Dental care that is medically necessary in the treatment of an 
otherwise covered medical condition, is an integral part of the 
treatment of such medical condition, and is essential to the control of 
the primary medical condition.
    (ii) Dental care required in preparation for, or as a result of, 
radiation therapy for oral or facial cancer.
    (iii) Gingival Hyperplasia.
    (iv) Loss of jaw substance due to direct trauma to the jaw or due 
to treatment of neoplasm.
    (v) Intraoral abscess when it extends beyond the dental alveolus.
    (vi) Extraoral abscess.
    (vii) Cellulitis and osteitis which is clearly exacerbating and 
directly affecting a medical condition currently under treatment.
    (viii) Repair of fracture, dislocation, and other injuries of the 
jaw, to include removal of teeth and tooth fragments only when such 
removal is incidental to the repair of the jaw.
    (ix) Treatment for stabilization of myofascial pain dysfunction 
syndrome, also referred to as temporomandibular joint (TMJ) syndrome. 
Authorization is limited to initial radiographs, up to four office 
visits, and the construction of an occlusal splint.

[[Page 48104]]

    (x) Total or complete ankyloglossia.
    (xi) Adjunctive dental and orthodontic support for cleft palate.
    (xii) Prosthetic replacement of jaw due to trauma or cancer.
    (22) Nonsurgical treatment of obesity or morbid obesity for dietary 
control or weight reduction (with the exception of gastric bypass, 
gastric stapling, or gastroplasty procedures in connection with morbid 
obesity when determined to be medically necessary) including 
prescription medications.
    (23) Services and supplies related to transsexualism or other 
similar conditions such as gender dysphoria (including, but not limited 
to, intersex surgery and psychotherapy, except for ambiguous genitalia 
which was documented to be present at birth).
    (24) Sex therapy, sexual advice, sexual counseling, sex behavior 
modification, psychotherapy for mental disorders involving sexual 
deviations (e.g., transvestic fetish), or other similar services, and 
any supplies provided in connection with therapy for sexual 
dysfunctions or inadequacies.
    (25) Removal of corns or calluses or trimming of toenails and other 
routine foot care services, except those required as a result of a 
diagnosed systemic medical disease affecting the lower limbs, such as 
severe diabetes.
    (26) Services and supplies, to include psychological testing, 
provided in connection with a specific developmental disorder. The 
following exception applies: Diagnostic and evaluative services 
required to arrive at a differential diagnosis for an otherwise 
eligible child unless the state is required to provide those services 
under Public Law 94-142, Education for All Handicapped Children Act of 
1975 as amended, see 20 U.S.C. chapter 33.
    (27) Surgery to reverse voluntary surgical sterilization 
procedures.
    (28) Services and supplies related to artificial insemination 
(including semen donors and semen banks), in vitro fertilization, 
gamete intrafallopian transfer and all other noncoital reproductive 
technologies.
    (29) Nonprescription contraceptives.
    (30) Diagnostic tests to establish paternity of a child; or tests 
to determine sex of an unborn child.
    (31) Preventive care (such as routine, annual, or employment-
requested physical examinations; routine screening procedures; and 
immunizations). The following exceptions apply:
    (i) Well-child care from birth to age six. Periodic health 
examinations designed for prevention, early detection, and treatment of 
disease are covered to include screening procedures, immunizations, and 
risk counseling. The following services are payable when required as 
part of a well-child care program and when rendered by the attending 
pediatrician, family physician, or a pediatric nurse practitioner.
    (A) Newborn examination, heredity and metabolic screening, and 
newborn circumcision.
    (B) Periodic health supervision visits intended to promote optimal 
health for infants and children to include the following services:
    (1) History and physical examination.
    (2) Vision, hearing, and dental screening.
    (3) Developmental appraisal to include body measurement.
    (4) Immunizations as recommended by the Centers for Disease Control 
(CDC) and Prevention Advisory Committee on Immunization Practices.
    (5) Pediatric blood lead level test.
    (6) Tuberculosis screening.
    (7) Blood pressure screening.
    (8) Measurement of hemoglobin and hematocrit for anemia.
    (9) Urinalysis.
    (C) Additional services or visits required because of specific 
findings or because the particular circumstances of the individual case 
are covered if medically necessary and otherwise authorized for 
benefits under CHAMPVA.
    (ii) Rabies vaccine following an animal bite.
    (iii) Tetanus vaccine following an accidental injury.
    (iv) Rh immune globulin.
    (v) Pap smears.
    (vi) Mammography tests.
    (vii) Genetic testing and counseling determined to be medically 
necessary.
    (viii) Chromosome analysis in cases of habitual abortion or 
infertility.
    (ix) Gamma globulin.
    (32) Chiropractic and naturopathic services.
    (33) Counseling services that are not medically necessary in the 
treatment of a diagnosed medical condition (such as educational 
counseling; vocational counseling; and counseling for socioeconomic 
purposes, stress management, life style modification, etc.).
    (34) Acupuncture, whether used as a therapeutic agent or as an 
anesthetic.
    (35) Hair transplants, wigs, or hairpieces, except that benefits 
may be extended for one wig or hairpiece per beneficiary (lifetime 
maximum) when the attending physician certifies that alopecia has 
resulted from treatment of malignant disease and the beneficiary 
certifies that a wig or hairpiece has not been obtained previously 
through the U.S. Government (including the Department of Veterans 
Affairs). The wig or hairpiece benefit does not include coverage for 
the following:
    (i) Maintenance, wig or hairpiece supplies, or replacement of the 
wig or hairpiece.
    (ii) Hair transplant or any other surgical procedure involving the 
attachment of hair or a wig or hairpiece to the scalp.
    (iii) Any diagnostic or therapeutic method or supply intended to 
encourage hair growth.
    (36) Self-help, academic education or vocational training services 
and supplies.
    (37) Exercise equipment, spas, whirlpools, hot tubs, swimming 
pools, health club membership or other such charges or items.
    (38) General exercise programs, even if recommended by a physician.
    (39) Services of an audiologist or speech therapist, except when 
prescribed by a physician and rendered as a part of treatment addressed 
to the physical defect itself and not to any educational or 
occupational deficit.
    (40) Eye exercises or visual training (orthoptics).
    (41) Eye and hearing examinations except when rendered in 
connection with medical or surgical treatment of a covered illness or 
injury or in connection with well-child care.
    (42) Eyeglasses, spectacles, contact lenses, or other optical 
devices with the following exceptions:
    (i) When necessary to perform the function of the human lens, lost 
as a result of intraocular surgery, ocular injury or congenital 
absence.
    (ii) Pinhole glasses prescribed for use after surgery for detached 
retina.
    (iii) Lenses prescribed as ``treatment'' instead of surgery for the 
following conditions:
    (A) Contact lenses used for treatment of infantile glaucoma.
    (B) Corneal or scleral lenses prescribed in connection with 
treatment of keratoconus.
    (C) Scleral lenses prescribed to retain moisture when normal 
tearing is not present or is inadequate.
    (D) Corneal or scleral lenses prescribed to reduce a corneal 
irregularity other than astigmatism.
    (iv) The specified benefits are limited to one set of lenses 
related to one qualifying eye condition as set forth in paragraphs 
(a)(42)(iii)(A) through (D) of this section. If there is a prescription 
change requiring a new set of lenses, but still related to the 
qualifying eye condition, benefits may be extended for a second set of 
lenses, subject to medical review.

[[Page 48105]]

    (43) Hearing aids or other auditory sensory enhancing devices.
    (44) Prostheses with the following exceptions:
    (i) Artificial limbs.
    (ii) Voice prostheses.
    (iii) Eyes.
    (iv) Items surgically inserted in the body as an integral part of a 
surgical procedure.
    (v) Dental prostheses specifically required in connection with 
otherwise covered orthodontia directly related to the surgical 
correction of a cleft palate anomaly.
    (45) Orthopedic shoes, arch supports, shoe inserts, and other 
supportive devices for the feet, including special ordered, custom-made 
built-up shoes, or regular shoes later built up with the following 
exceptions:
    (i) Shoes that are an integral part of an orthopedic brace, and 
which cannot be used separately from the brace.
    (ii) Extra-depth shoes with inserts or custom molded shoes with 
inserts for individuals with diabetes.
    (46) Services or advice rendered by telephone are excluded except 
that a diagnostic or monitoring procedure which incorporates electronic 
transmission of data or remote detection and measurement of a 
condition, activity, or function (biotelemetry) is covered when:
    (i) The procedure, without electronic data transmission, is a 
covered benefit; and
    (ii) The addition of electronic data transmission or biotelemetry 
improves the management of a clinical condition in defined 
circumstances; and
    (iii) The electronic data or biotelemetry device has been 
classified by the U.S. Food and Drug Administration, either separately 
or as part of a system, for use consistent with the medical condition 
and clinical management of such condition.
    (47) Air conditioners, humidifiers, dehumidifiers, and purifiers.
    (48) Elevators.
    (49) Alterations to living spaces or permanent features attached 
thereto, even when necessary to accommodate installation of covered 
durable medical equipment or to facilitate entrance or exit.
    (50) Items of clothing, even if required by virtue of an allergy 
(such as cotton fabric versus synthetic fabric and vegetable-dyed 
shoes).
    (51) Food, food substitutes, vitamins or other nutritional 
supplements, including those related to prenatal care for a home 
patient whose condition permits oral feeding.
    (52) Enuretic (bed-wetting) devices; enuretic conditioning 
programs.
    (53) Autopsy and post-mortem examinations.
    (54) All camping, even when organized for a specific therapeutic 
purpose (such as diabetic camp or a camp for emotionally disturbed 
children), or when offered as a part of an otherwise covered treatment 
plan.
    (55) Housekeeping, homemaker, or attendant services, including a 
sitter or companion.
    (56) Personal comfort or convenience items, such as beauty and 
barber services, radio, television, and telephone.
    (57) Smoking cessation services and supplies.
    (58) Megavitamin psychiatric therapy; orthomolecular psychiatric 
therapy.
    (59) All transportation except for specialized transportation with 
life sustaining equipment, when medically required for the treatment of 
a covered condition.
    (60) Inpatient mental health services in excess of 30 days in any 
fiscal year (or in an admission), in the case of a patient nineteen 
years of age or older; 45 days in any fiscal year (or in an admission), 
in the case of a patient under 19 years of age; or 150 days of 
residential treatment care in any fiscal year (or in an admission) 
unless a waiver for extended coverage is granted in advance.
    (61) Outpatient mental health services in excess of 23 visits in a 
fiscal year unless a waiver for extended coverage is granted in 
advance.
    (62) Institutional services for partial hospitalization in excess 
of 60 treatment days in any fiscal year (or in an admission) unless a 
waiver for extended coverage is granted in advance.
    (63) Detoxification in a hospital setting or rehabilitation 
facility in excess of seven days.
    (64) Outpatient substance abuse services in excess of 60 visits 
during a benefit period. A benefit period begins with the first date of 
covered service and ends 365 days later.
    (65) Family therapy for substance abuse in excess of 15 visits 
during a benefit period. A benefit period begins with the first date of 
covered service and ends 365 days later.
    (66) Services that are provided to a beneficiary who is referred to 
a provider of such services by a provider who has an economic interest 
in the facility to which the patient is referred, unless a waiver is 
granted.
    (67) Abortion except when a physician certifies that the life of 
the mother would be endangered if the fetus were carried to term.
    (68) Abortion counseling.
    (69) Aversion therapy.
    (70) Rental or purchase of biofeedback equipment.
    (71) Biofeedback therapy for treatment of ordinary muscle tension 
states (including tension headaches) or for psychosomatic conditions.
    (72) Drug maintenance programs where one addictive drug is 
substituted for another, such as methadone substituted for heroin.
    (73) Immunotherapy for malignant diseases except for treatment of 
Stage O and Stage A carcinoma of the bladder.
    (74) Services and supplies provided by other than a hospital, such 
as nonskilled nursing homes, intermediate care facilities, halfway 
houses, homes for the aged, or other institutions of similar purpose.
    (75) Services performed when the patient is not physically present.
    (76) Medical photography.
    (77) Special tutoring.
    (78) Surgery for psychological reasons.
    (79) Treatment of premenstrual syndrome (PMS).
    (80) Medications not requiring a prescription, except for insulin 
and related diabetic testing supplies and syringes.
    (81) Thermography.
    (82) Removal of tattoos.
    (83) Penile implant/testicular prosthesis procedures and related 
supplies for psychological impotence.
    (84) Dermabrasion of the face except in those cases where coverage 
has been authorized for reconstructive or plastic surgery required to 
restore body form following an accidental injury or to revise 
disfiguring and extensive scars resulting from neoplastic surgery.
    (85) Chemical peeling for facial wrinkles.
    (86) Panniculectomy, body sculpting procedures.
    (b) CHAMPVA-determined allowable amount.
    (1) The term allowable amount is the maximum CHAMPVA-determined 
level of payment to a hospital or other authorized institutional 
provider, a physician or other authorized individual professional 
provider, or other authorized provider for covered services. The 
CHAMPVA-allowable amount is determined prior to cost sharing and the 
application of deductibles and/or other health insurance.
    (2) A Medicare-participating hospital must accept the CHAMPVA-
determined allowable amount for inpatient services as payment-in-full. 
(Reference 42 CFR parts 489 and 1003).
    (3) An authorized provider of covered medical services or supplies 
must accept the CHAMPVA-determined allowable amount as payment-in-full.

[[Page 48106]]

    (4) A provider who has collected and not made appropriate refund, 
or attempts to collect from the beneficiary, any amount in excess of 
the CHAMPVA-determined allowable amount may be subject to exclusion 
from Federal benefit programs.

(Authority: 38 U.S.C. 1713)


Sec. 17.273  Preauthorization.

    Preauthorization or advance approval is required for any of the 
following:
    (a) Non-emergent inpatient mental health and substance abuse care 
including admission of emotionally disturbed children and adolescents 
to residential treatment centers.
    (b) All admissions to a partial hospitalization program (including 
alcohol rehabilitation).
    (c) Outpatient mental health visits in excess of 23 per calendar 
year and/or more than two (2) sessions per week.
    (d) Dental care.
    (e) Durable medical equipment with a purchase or total rental price 
in excess of $300.00.
    (f) Organ transplants.

(Authority: 38 U.S.C. 1713)


Sec. 17.274  Cost sharing.

    (a) With the exception of services obtained through VA medical 
facilities, CHAMPVA is a cost-sharing program in which the cost of 
covered services is shared with the beneficiary. In addition to the 
beneficiary cost share, an annual (calendar year) outpatient deductible 
requirement ($50 per beneficiary or $100 per family) must be satisfied 
prior to the payment of outpatient benefits. There is no deductible for 
inpatient services. CHAMPVA pays the CHAMPVA-determined allowable 
amount less the deductible, if applicable, and less the beneficiary 
cost share. To provide financial protection against the impact of a 
long-term illness or injury, an annual cost limit or ``catastrophic 
cap'' has been placed on the beneficiary cost-share amount for covered 
services and supplies. This annual cap on cost sharing is $7,500 per 
CHAMPVA-eligible family. Credits to the annual catastrophic cap are 
limited to the applied annual deductible(s) and the beneficiary cost-
share amount. Costs above the CHAMPVA-allowable amount, as well as 
costs associated with noncovered services are not credited to the 
catastrophic cap computation.
    (b) If the CHAMPVA benefit payment is under $1.00, payment will not 
be issued. Catastrophic cap and deductible will, however, be credited.

(Authority: 38 U.S.C. 1713)


Sec. 17.275  Claim filing deadline.

    (a) Unless an exception is granted under paragraph (b) of this 
section, claims for medical services and supplies must be filed with 
the Center no later than:
    (1) One year after the date of service; or
    (2) In the case of inpatient care, one year after the date of 
discharge; or
    (3) In the case of retroactive approval for medical services/
supplies, 180 days following beneficiary notification of authorization; 
or
    (4) In the case of retroactive approval of CHAMPVA eligibility, 180 
days following notification to the beneficiary of authorization for 
services occurring on or after the date of first eligibility.
    (b) Requests for an exception to the claim filing deadline must be 
submitted, in writing, to the Center and include a complete explanation 
of the circumstances resulting in late filing along with all available 
supporting documentation. Each request for an exception to the claim 
filing deadline will be reviewed individually and considered on its own 
merit. The Center Director may grant exceptions to the requirements in 
paragraph (a) if he or she determines that there was good cause for 
missing the filing deadline. For example, when dual coverage exists 
CHAMPVA payment, if any, cannot be determined until after the primary 
insurance carrier has adjudicated the claim. In such circumstances an 
exception may be granted provided that the delay on the part of the 
primary insurance carrier is not attributable to the beneficiary. 
Delays due to provider billing procedures do not constitute a valid 
basis for an exception.


Sec. 17.276  Appeal/review process.

    Notice of the initial determination regarding payment of CHAMPVA 
benefits will be provided to the beneficiary on a CHAMPVA Explanation 
of Benefits (EOB) form. The EOB form is generated by the CHAMPVA 
automated payment processing system. If a beneficiary disagrees with 
the determination concerning covered services or calculation of 
benefits, he or she may request reconsideration. Such requests must be 
submitted to the Center in writing within one year of the date of the 
initial determination. The request must state why the beneficiary 
believes the decision is in error and must include any new and relevant 
information not previously considered. Any request for reconsideration 
that does not identify the reason for dispute will be returned to the 
claimant without further consideration. After reviewing the claim and 
any relevant supporting documentation, a CHAMPVA benefits advisor will 
issue a written determination to the beneficiary that affirms, reverses 
or modifies the previous decision. If the beneficiary is still 
dissatisfied, within 90 days of the date of the decision he or she may 
make a written request for review by the Center Director. The Director 
will review the claim, and any relevant supporting documentation, and 
issue a decision in writing that affirms, reverses or modifies the 
previous decision. The decision of the Director with respect to benefit 
coverage and computation of benefits is final.

(Authority: 38 U.S.C. 1713)

    Note to Sec. 17.276: Denial of CHAMPVA benefits based on legal 
eligibility requirements may be appealed to the Board of Veterans' 
Appeals in accordance with 38 CFR part 20. Medical determinations 
are not appealable to the Board. 20 CFR 20.101.


Sec. 17.277   Third-party liability/Medicare cost recovery.

    The Center will actively pursue third-party liability/medical care 
cost recovery in accordance with applicable law.


Sec. 17.278   Confidentiality of records.

    Confidentiality of records will be maintained in accordance with 38 
CFR 1.460 through 1.582.

[FR Doc. 98-22857 Filed 9-8-98; 8:45 am]
BILLING CODE 8320-01-P