[Federal Register Volume 67, Number 96 (Friday, May 17, 2002)]
[Rules and Regulations]
[Pages 35037-35045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-12133]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AK32


Medical Benefits Package; Copayments for Extended Care Services

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends VA's medical regulations by adding the 
following extended care services to the medical benefits package: 
noninstitutional adult day health care, noninstitutional geriatric 
evaluation, and noninstitutional respite care. Also, this document 
amends VA's medical regulations to establish provisions regarding 
copayments for extended care services. These actions implement 
provisions of the Veterans Millennium Health Care and Benefits Act.

DATES: Effective Date: June 17, 2002.

FOR FURTHER INFORMATION CONTACT: Daniel Schoeps, Geriatrics and 
Extended Care (114), at (202) 273-8540 for issues regarding the medical 
benefits package, and Nancy Howard, Revenue Office (174), at (202) 273-
8198 for issues regarding copayments for extended care services. Both 
are officials in the Veterans Health Administration, 810 Vermont Avenue 
NW, Washington, DC 20420.

SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register on October 4, 2001 (66 FR 50594), we proposed to amend VA's 
medical regulations at 38 CFR 17.38 by adding the following extended 
care services to the medical benefits package for veterans enrolled in 
the VA healthcare system: noninstitutional adult day health care, 
noninstitutional geriatric evaluation, and noninstitutional respite 
care. In the same document we also proposed to amend VA's medical 
regulations at 38 CFR 17.111 to establish provisions regarding 
copayments for extended care services.
    We provided a 60-day comment period that ended December 3, 2001. We 
received five comments. The issues raised by the commenters are 
discussed below. Based on the rationale set forth in the proposed rule 
and this document, we are adopting the provisions of the proposed rule 
subject to clarifying changes and other changes discussed below.

Medical Benefits Package

    One commenter indicated that the provisions regarding 
noninstitutional adult day health care and noninstitutional respite 
care should indicate that VA will pay for enrolled veterans through 
contract where services in VA facilities are not available. No changes 
are made based on this comment. VA's decisions whether to provide 
noninstitutional adult day health care and noninstitutional respite 
care by contract depend on many factors such as the availability of VA 
and contract services, the veteran's needs, and limitations in VA's 
statutory authority (38 U.S.C. 1703, 1720B, and 8153). Within these 
limitations, VA will attempt to provide this care by contract where it 
is not available in VA facilities.

Copayments for Extended Care Services

    The Veterans Millennium Health Care and Benefits Act (Pub.L. 106-
117) established provisions regarding copayments for extended care 
services provided to veterans by VA. These provisions are set forth at 
38 U.S.C. 1710B.
    The final rule states that, with certain exceptions, as a condition 
of receiving extended care services, a veteran must agree to pay VA a 
copayment. This restates statutory provisions at 38 U.S.C. 1710B. The 
final rule provides that the following extended care services are 
subject to the corresponding copayment amount per day:
    (i) Adult day health care--$15.
    (ii) Domiciliary care--$5.
    (iii) Institutional respite care--$97.
    (iv) Institutional geriatric evaluation--$97.
    (v) Non-institutional geriatric evaluation--$15.
    (vi) Non-institutional respite care--$15.
    (vii) Nursing home care--$97.
    One commenter asserted that the copayment for adult day health care 
should be $5 to $7 per day based on her conclusion that the $15 amount 
would be more than some would be able to pay. One commenter noted that 
domiciliary care ``is restricted to veterans with very low incomes'' 
and asserted that the proposal to charge $5 per day is too high. Three 
commenters expressed concern about whether low-income veterans would 
forgo nursing home care because of the $97 copayment amount per day. No 
changes are made based on these comments. Statutory provisions at 38 
U.S.C. 1710B require that VA establish copayment amounts for extended 
care services. Under the final rule a veteran has no copayment 
obligation for the first 21 days of extended care services in any 12-
month period from the date extended care services began. Further, for 
each

[[Page 35038]]

day that extended care services are provided beyond the first 21 days, 
the veteran may not have to pay any copayment or may be required to pay 
only a portion of the copayment. As indicated in the regulatory text 
portion of this document, some veterans, including all veterans whose 
income is below $9,556, are exempt from the copayment requirements 
altogether. Those not exempted are obligated to pay a copayment for 
each day that extended care services are provided to the extent the 
veteran has ``available resources''. We revised the regulatory text to 
clarify that ``available resources'' are calculated on a monthly basis.
    If a veteran has been receiving extended care services for 180 days 
or less, ``available resources'' means the sum of the income of both 
the veteran and the veteran's spouse minus the sum of the veterans 
allowance and the spousal allowance. If the veteran has been receiving 
extended care services for 181 days or more, liquid assets and fixed 
assets would be included in ``available resources''. Expenses are 
included in the veterans allowance if the veteran has been receiving 
extended care services for 180 days or less, the veteran is receiving 
only adult day health care or other noninstitutional care, or the 
veteran has a spouse or dependents residing in the community (not 
institutionalized).
    This formula is designed to ensure that veterans institutionalized 
for 180 days or less will have the means to return home and that their 
resources are not depleted due to the requirement to make copayments.
    One commenter particularly had concerns about veterans in nursing 
homes with incomes between $9,556 and $24,000. The commenter suggested 
that VA establish a sliding scale that would require full copayments 
for only those with income above $24,000. No changes are made based on 
these comments. VA statistics indicate that the average daily copayment 
for those receiving nursing home care provided by VA would be 
approximately $14. The average daily copayment for those in the income 
range mentioned by the commenter would be less than $14.
    One commenter requested that we provide examples of copayment 
calculations for a single veteran and a veteran with a spouse. 
Accordingly, we offer the following examples:

A Veteran in a Nursing Home With no Spouse

    There would be no copayment for the first 21 days of care. For the 
next 169 days the available resources used in determining the copayment 
would be the income of the veteran minus the veterans allowance. During 
this time period, the veterans allowance includes living expenses.
    After 180 days of nursing home care, the available resources used 
in determining the copayment would be the sum of the veteran's income 
and liquid and fixed assets minus the veterans allowance. During this 
time period, the veterans allowance does not include living expenses. 
The veteran's fixed and liquid assets would be reduced each month by 
the amount of the copayment amount that is not covered by the veteran's 
income after the veterans allowance is subtracted.

A Veteran in a Nursing Home With a Spouse or Dependent Residing in the 
Community

    There would be no copayment for the first 21 days of care. For the 
next 169 days the available resources used in determining the copayment 
would be the income of the veteran and spouse minus the veteran's and 
spouse's deductible expenses minus the veterans and spousal allowance. 
On the 181st day of nursing home care, the available resources used in 
determining the copayment would be the sum of the veteran and spousal 
income and the liquid and fixed assets (excluding the primary residence 
of the spouse and one vehicle) minus the veteran's and spouse's 
deductible expenses minus the veterans and spousal allowance. 
Thereafter, the fixed and liquid assets would be reduced each month by 
the copayment amount that is not covered by the veteran and spousal 
income after the allowances (which include expenses) are subtracted.
    The final rule provides that veterans are not subject to the 
copayment requirements if their annual income (determined under 38 
U.S.C. 1503) is less than the amount in effect under 38 U.S.C. 1521(b). 
One commenter asserted that this exemption should be changed to provide 
a different formula with an increased amount. No changes are made based 
on this comment. We have no authority to change the statutory formula.
    As noted above, a veteran would be obligated to pay the copayment 
only to the extent the veteran and the veteran's spouse have 
``available resources.'' As proposed, ``available resources'' include 
IRA's and 401K's. One commenter asserted that IRA's and 401K's should 
not be included if they are subject to penalty if withdrawn early. No 
changes are made based on this comment. We see no reason for treating 
IRA's and 401K's differently from other available assets of the 
veteran. In addition, just because VA considers these investments does 
not require veterans to withdraw the money and incur the penalty. 
Exempting assets that are subject to a penalty for early withdrawal 
would encourage veterans to shelter their assets in these investments. 
Further, treating IRA's and 401K's differently from other assets would 
create an undue administrative burden.
    The final rule provides that ``[a]dult day health care is a 
therapeutic outpatient care program that provides medical services, 
rehabilitation, therapeutic activities, socialization, nutrition and 
transportation services to disabled veterans in a congregate setting.'' 
One commenter asserted that the word ``provides'' should be changed to 
``provides or makes available'' to ensure that the reader would 
understand that VA may obtain such care by contract. No changes are 
made based on this comment. The final rule at Sec. 17.111(a) already 
covers this matter by stating that the extended care services are to be 
provided to veterans by VA ``either directly by VA or paid for by VA.'' 
The commenter also asserted that the term ``medical services'' should 
be defined. No changes are made based on this comment. The definition 
of adult day health care was included merely to distinguish it from 
other types of extended care services and not to establish the 
parameters of medical services provided. The overall parameters of 
medical services provided by VA are specified in the Medical benefits 
package which is set forth at 38 CFR 17.38. The commenter further 
questioned whether transportation and rehabilitation services are 
included in VA contracts for adult day health care services. In 
response, we note that they are included.
    The proposed rule provided that a veteran receiving extended care 
services must submit to VA, among other things, a report of a change in 
income within 10 days of the change. One commenter asserted that the 
10-day period should be extended to 30 to 45 days based on the further 
assertion that the veteran would not know how much to report until the 
``increase shows in a check.'' We intended that the 10-day period begin 
when the veteran received the income. Accordingly, we have clarified 
the final rule to reflect this concept.
    One commenter expressed concern regarding whether VA would provide 
assistance to those needing help in preparing forms and documentation 
under the final rule. No changes are made based on this comment. VA has 
individuals available at VA medical facilities to help veterans prepare 
such forms and documentation.

[[Page 35039]]

    One commenter questioned whether VA has appeal procedures that 
would apply if a veteran were denied services. No changes are made 
based on this comment. We have established voluntary reconsideration 
procedures at 38 CFR 17.133. Further, veterans may appeal VA decisions 
regarding the provision of extended care services to the Board of 
Veterans' Appeals and the U.S. Court of Appeals for Veterans Claims.

Paperwork Reduction Act

    The collection of information contained in the notice of the 
proposed rulemaking was submitted to the Office of Management and 
Budget (OMB) for review in accordance with the Paperwork Reduction Act 
(44 U.S.C. 3501-3520).
    Under the provisions of Sec. 17.111(e), a veteran who wishes to 
receive extended care services must apply by submitting a completed VA 
Form 10-10EC and documentation requested by the Form to a VA medical 
facility. VA Form 10-10EC is set forth in full at Sec. 17.111(g). 
Except for those exempted under Sec. 17.111(f), this information is 
needed to determine whether the veteran's financial circumstances 
require a copayment, and, if so, the amount of that copayment 
obligation. Moreover, a veteran must submit certain updated information 
to a VA medical facility at specified times following the initial 
request for an episode of extended care services, such as after a break 
in provision of extended care services for more than 30 days or when 
changes in the veteran's financial circumstances might change the 
copayment obligation.
    Interested parties were invited to submit comments on the 
collection of information. However, no comments were received. 
Nevertheless, changes to the VA Form 10-10EC published in the Federal 
Register on October 4, 2001 (66 FR 50594) are made in this document.
    The portion of the form concerning fixed assets, liquid assets, 
expenses, and other income are changed for purposes of clarification. 
Also, the consent portion of the form has deleted the authorization 
language to release substance abuse/sickle cell anemia/HIV medical 
records because, under 38 U.S.C. 4132, another specific consent form is 
necessary to authorize release of such records.
    OMB has approved this information collection under control number 
2900-0629. VA is not authorized to impose a penalty on persons for 
failure to comply with information collection requirements which do not 
display a current OMB control number, if required.

Unfunded Mandates

    The Unfunded Mandates Reform Act requires (in section 202) that 
agencies prepare an assessment of anticipated costs and benefits before 
developing any rule that may result in an expenditure by State, local, 
or tribal governments, in the aggregate, or by the private sector of 
$100 million or more in any given year. This rule would have no 
consequential effect on State, local, or tribal governments.

Executive Order 12866

    This document has been reviewed by the Office of Management and 
Budget under Executive Order 12866. The projected cost estimate for 
this final rule is $25,425,282 for nursing home care, $3,397,862 for 
adult day health care, and $6,679,916 for home respite care, for a 
total annual cost of $35,503,060.

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory amendment will 
not have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act (RFA), 5 
U.S.C. 601-612. This amendment would not directly affect any small 
entities. Only individuals could be directly affected. Therefore, 
pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial 
and final regulatory flexibility analysis requirements of sections 603 
and 604.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance numbers for the programs 
affected by this document are 64.005, 64.007, 64.008, 64,009, 64.010, 
64.011, 64.012, 64.013, 64.014, 64.015, 64.016, 64.018, 64.019, 64.022, 
and 64.025.

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, Grant programs-veterans, 
Health care, Health facilities, Health professions, Health records, 
Homeless, Medical and dental schools, Medical devices, Medical 
research, Mental health programs, Nursing homes, Philippines, Reporting 
and recordkeeping requirements, Scholarships and fellowships, Travel 
and transportation expenses, Veterans.

    Approved: March 14, 2002.
Anthony J. Principi,
Secretary of Veterans Affairs.

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

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. 17.36  [Amended]

    2. Section 17.36 is amended by:
    A. In paragraph (a)(1), removing ``VA hospital and outpatient 
care'' and adding, in its place, ``the `medical benefits package' set 
forth in Sec. 17.38''.
    B. In paragraphs (a)(2) and (a)(3), removing ``hospital and 
outpatient''.
    C. In paragraph (b)(3), removing ``hospital and outpatient'' and 
adding, in its place, ``that''.


Sec. 17.37  [Amended]

    3. Section 17.37 is amended by:
    A. In paragraphs (a), (b), (c), (e), (g), (h), and (i), removing 
``hospital and outpatient''.
    B. In paragraph (f), removing ``VA hospital and outpatient care'' 
and adding, in its place, ``care provided for in the `medical benefits 
package'.

    4. Section 17.38 is amended by:
    A. Revising paragraph (a) introductory text.
    B. Revising paragraph (a)(1)(xi).
    C. Revising the authority citation at the end of the section.
    The revisions read as follows:


Sec. 17.38  Medical benefits package.

    (a) Subject to paragraphs (b) and (c) of this section, the 
following hospital, outpatient, and extended care services constitute 
the ``medical benefits package'' (basic care and preventive care):
    (1) * * *
    (xi)(A) Hospice care, palliative care, and institutional respite 
care; and
    (B) Noninstitutional geriatric evaluation, noninstitutional adult 
day health care, and noninstitutional respite care.
* * * * *

(Authority: 38 U.S.C. 101, 501, 1701, 1705, 1710, 1710A, 1721, 1722)


    5. Sections 17.112 through 17.115 including the undesignated center 
heading ``REIMBURSEMENT FOR LOSS BY NATURAL DISASTER OF PERSONAL 
EFFECTS OF HOSPITALIZED OR NURSING HOME PATIENTS'' are redesignated as 
Sec. 17.113 through 17.116, respectively.

[[Page 35040]]


    6. Section 17.111 is redesignated as Sec. 17.112.

    7. A new Sec. 17.111 is added preceding the undesignated center 
heading ``CEREMONIES'' to read as follows:


Sec. 17.111  Copayments for Extended care services.

    (a) General. This section sets forth requirements regarding 
copayments for extended care services provided to veterans by VA 
(either directly by VA or paid for by VA).
    (b) Copayments. (1) Unless exempted under paragraph (f) of this 
section, as a condition of receiving extended care services from VA, a 
veteran must agree to pay VA and is obligated to pay VA a copayment as 
specified by this section. A veteran has no obligation to pay a 
copayment for the first 21 days of extended care services that VA 
provided the veteran in any 12-month period (the 12-month period begins 
on the date that VA first provided extended care services to the 
veteran). However, for each day that extended care services are 
provided beyond the first 21 days, a veteran is obligated to pay VA the 
copayment amount set forth below to the extent the veteran has 
available resources. Available resources are based on monthly 
calculations, as determined under paragraph (d) of this section. The 
following sets forth the extended care services provided by VA and the 
corresponding copayment amount per day:
    (i) Adult day health care--$15.
    (ii) Domiciliary care--$5.
    (iii) Institutional respite care--$97.
    (iv) Institutional geriatric evaluation--$97.
    (v) Non-institutional geriatric evaluation--$15.
    (vi) Non-institutional respite care--$15.
    (vii) Nursing home care--$97.
    (2) For purposes of counting the number of days for which a veteran 
is obligated to make a copayment under this section, VA will count each 
day that adult day health care, non-institutional geriatric evaluation, 
and non-institutional respite care are provided and will count each 
full day and partial day for each inpatient stay except for the day of 
discharge.
    (c) Definitions. For purposes of this section:
    (1) Adult day health care is a therapeutic outpatient care program 
that provides medical services, rehabilitation, therapeutic activities, 
socialization, nutrition and transportation services to disabled 
veterans in a congregate setting.
    (2) Domiciliary care is defined in Sec. 17.30(b).
    (3) Extended care services means adult day health care, domiciliary 
care, institutional geriatric evaluation, noninstitutional geriatric 
evaluation, nursing home care, institutional respite care, and 
noninstitutional respite care.
    (4) Geriatric evaluation is a specialized, diagnostic/consultative 
service provided by an interdisciplinary team that is for the purpose 
of providing a comprehensive assessment, care plan, and extended care 
service recommendations.
    (5) Institutional means a setting in a hospital, domiciliary, or 
nursing home of overnight stays of one or more days.
    (6) Noninstitutional means a service that does not include an 
overnight stay.
    (7) Nursing home care means the accommodation of convalescents or 
other persons who are not acutely ill and not in need of hospital care, 
but who require nursing care and related medical services, if such 
nursing care and medical services are prescribed by, or are performed 
under the general direction of, persons duly licensed to provide such 
care (nursing services must be provided 24 hours a day). Such term 
includes services furnished in skilled nursing care facilities. Such 
term excludes hospice care.
    (8) Respite care means care which is of limited duration, is 
furnished on an intermittent basis to a veteran who is suffering from a 
chronic illness and who resides primarily at home, and is furnished for 
the purpose of helping the veteran to continue residing primarily at 
home. (Respite providers temporarily replace the caregivers to provide 
services ranging from supervision to skilled care needs.)
    (d) Effect of the veteran's financial resources on obligation to 
pay copayment. (1) A veteran is obligated to pay the copayment to the 
extent the veteran and the veteran's spouse have available resources. 
For purposes of this section, available resources means the sum of the 
value of the liquid assets, the fixed assets, and the income of the 
veteran and the veteran's spouse, minus the sum of the veterans 
allowance, and the spousal allowance. Liquid assets and fixed assets 
are included in available resources if the veteran has been receiving 
extended care services for 181 days or more.
    (2) For purposes of determining available resources under this 
section:
    (i) Income means current income (including, but not limited to, 
wages and income from a business (minus business expenses), bonuses, 
tips, severance pay, accrued benefits, cash gifts, inheritance amounts, 
interest income, standard dividend income from non tax deferred 
annuities, retirement income, pension income, unemployment payments, 
worker's compensation payments, black lung payments, tort settlement 
payments, social security payments, court mandated payments, payments 
from VA or any other Federal programs, and any other income). The 
amount of current income will be stated in frequency of receipt, e.g., 
per week, per month.
    (ii) Expenses means basic subsistence expenses, including current 
expenses for the following: rent/mortgage for primary residence; 
vehicle payment for one vehicle; food for veteran, veteran's spouse, 
and veteran's dependents; education for veteran, veteran's spouse, and 
veteran's dependents; court-ordered payments of veteran or veteran's 
spouse (e.g., alimony, child-support); and including the average 
monthly expenses during the past year for the following: utilities and 
insurance for the primary residence; out-of-pocket medical care costs 
not otherwise covered by insurance and medical insurance for the 
veteran, veteran's spouse, and veteran's dependents; and taxes paid on 
income.
    (iii) Fixed Assets means:
    (A) Real property and other non-liquid assets; except that this 
does not include--
    (1) Burial plots,
    (2) A residence if the residence is:
    (i) The primary residence of the veteran and the veteran is 
receiving only noninstitutional extended care service, or
    (ii) The primary residence of the veteran's spouse or the veteran's 
dependents (if the veteran does not have a spouse) if the veteran is 
receiving institutional extended care service.
    (3) A vehicle if the vehicle is:
    (i) The vehicle of the veteran and the veteran is receiving only 
noninstitutional extended care service, or
    (ii) The vehicle of the veteran's spouse or the veteran's 
dependents (if the veteran does not have a spouse) if the veteran is 
receiving institutional extended care service.
    (iv) Liquid assets means cash, stocks, dividends received from IRA, 
401K's and other tax deferred annuities, bonds, mutual funds, and 
retirement accounts (e.g., IRA, 401Ks, annuities), household furniture, 
household goods, clothing, jewelry, personal items.
    (v) Spousal allowance is an allowance of $20 per day that is 
included only if the spouse resides in the community (not 
institutionalized).
    (vi) Veterans allowance is an allowance of $20 per day and includes 
expenses if the veteran has been receiving extended care services for 
180 days or less, the veteran is receiving

[[Page 35041]]

only adult day health care or other noninstitutional care, or the 
veteran has a spouse or dependents residing in the community (not 
institutionalized).
    (3) The maximum amount of a copayment for any month equals the 
copayment amount specified in paragraph (b)(1) of this section 
multiplied by the number of days in the month. The copayment for any 
month may be less than the amount specified in paragraph (b)(1) of this 
section if the veteran provides information in accordance with this 
section to establish that the copayment should be reduced or 
eliminated.
    (e) Requirement to submit information. (1) Unless exempted under 
paragraph (f) of this section, a veteran must submit to a VA medical 
facility a completed VA Form 10-10EC and documentation requested by the 
Form at the following times:
    (i) At the time of initial request for an episode of extended care 
services,
    (ii) At the time of request for extended care services after a 
break in provision of extended care services for more than 30 days, and
    (iii) Each year at the time of submission to VA of VA Form 10-10EZ.
    (2) When there are changes that might change the copayment 
obligation (i.e., changes regarding fixed assets, liquid assets, 
expenses, income (when received), or whether the veteran has a spouse 
or dependents residing in the community), the veteran must report those 
changes to a VA medical facility within 10 days of the change.
    (f) Veterans and care that are not subject to the copayment 
requirements. The following veterans and care are not subject to the 
copayment requirements of this section:
    (1) A veteran with a compensable service-connected disability,
    (2) A veteran whose annual income (determined under 38 U.S.C. 1503) 
is less than the amount in effect under 38 U.S.C. 1521(b),
    (3) Care for a veteran's noncompensable zero percent service-
connected disability,
    (4) An episode of extended care services that began on or before 
November 30, 1999,
    (5) Care authorized under 38 U.S.C. 1710(e) for Vietnam-era 
herbicide-exposed veterans, radiation-exposed veterans, Persian Gulf 
War veterans, or post-Persian Gulf War combat-exposed veterans,
    (6) Care for treatment of sexual trauma as authorized under 38 
U.S.C. 1720D, or
    (7) Care or services authorized under 38 U.S.C. 1720E for certain 
veterans regarding cancer of the head or neck.

(Authority: 38 U.S.C. 101(28), 501, 1701(7), 1710, 1720B, 1720D, 
1722A)

    (g) VA Form 10-10EC.
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[[Page 35045]]


(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-
0629.)


(Authority: 38 U.S.C. 501, 1710B)


[FR Doc. 02-12133 Filed 5-16-02; 8:45 am]
BILLING CODE 8320-01-P