[Federal Register Volume 68, Number 12 (Friday, January 17, 2003)]
[Rules and Regulations]
[Pages 2670-2673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1201]



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Part IV





Department of Veterans Affairs





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38 CFR Part 17



Enrollment--Provision of Hospital and Outpatient Care to Veterans 
Subpriorities of Priority Categories 7 and 8 and Annual Enrollment 
Level Decision; Final Rule

  Federal Register / Vol. 68, No. 12 / Friday, January 17, 2003 / Rules 
and Regulations  

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AL51


Enrollment--Provision of Hospital and Outpatient Care to Veterans 
Subpriorities of Priority Categories 7 and 8 and Annual Enrollment 
Level Decision

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: As required by Pub. L. 104-262, the Veterans' Health Care 
Eligibility Reform Act of 1996, the Secretary of Veterans Affairs must 
make an annual decision concerning enrollment in VA's health-care 
system in order to ensure that medical services provided are both 
timely and acceptable in quality. An enrollment system is necessary 
because the provision of VA health care is discretionary and can be 
provided only to the extent that appropriated resources are available 
for that purpose. In recognition of that fact, Congress has prioritized 
eligibility to enroll in the VA system by creating eight priority 
categories, with priority category 8 veterans (those who do not have 
compensable service-connected disabilities, and whose incomes exceed 
geographic-means tests) having the lowest priority for enrollment. The 
law recognizes the higher obligation owed to veterans requiring care 
for their service-connected disabilities, and to lower-income veterans. 
Since the implementation of the enrollment requirement in 1998, all 
veterans seeking VA care have been permitted to enroll. However, due to 
a tremendous growth in the number of veterans seeking VA health-care 
benefits in recent months, VA has been unable to provide all enrolled 
veterans with appointments within a reasonable time. Many VA facilities 
have either placed new enrollees on waiting lists or have scheduled 
appointments so far in the future that the services cannot be 
considered timely. This document announces the enrollment decision 
required by law. VA will continue to treat all veterans currently 
enrolled in any category, and will treat new enrollees in categories 1 
through 7. However, to protect the quality and improve the timeliness 
of care provided to veterans in higher enrollment-priority categories, 
VA will suspend the enrollment of additional veterans who are in the 
lowest statutory enrollment category (priority category 8). It is 
emphasized that this decision will not affect veterans already enrolled 
in the VA system, nor affect eligibility for treatment of service-
connected disabilities which exists independently of enrollment 
requirements. This enrollment decision is effective January 17, 2003. 
To facilitate this decision, this document also amends existing 
regulations to establish additional subpriorities within priority 
category 8. Although the document takes no action that will affect the 
enrollment of veterans in priority category 7, the document will 
nevertheless also amend the existing regulations to establish the same 
additional subpriorities within priority category 7.

DATES: Effective Date: This interim final rule is effective January 17, 
2003. Comments must be received by VA on or before March 18, 2003.

ADDRESSES: Mail or hand-deliver written comments to: Director, Office 
of Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Ave., NW., Room 1154, Washington, DC 20420; or fax comments to 
(202) 273-9289; or e-mail comments to [email protected]. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AL51.'' All comments received will be available for public 
inspection in the Office of Regulations Management, Room 1158, between 
the hours of 8 a.m. and 4:30 p.m., Monday through Friday (except 
holidays).

FOR FURTHER INFORMATION CONTACT: Amy Hertz, Office of Policy and 
Planning (105D), Veterans Health Administration, Department of Veterans 
Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, telephone (202) 
273-8934.

SUPPLEMENTARY INFORMATION: Public Law 104-262, the Veterans' Health 
Care Eligibility Reform Act of 1996, required VA to establish a 
national enrollment system to manage the delivery of inpatient hospital 
care and outpatient medical care, within available appropriated 
resources. It directed that the enrollment system be managed in such a 
way as ``to ensure that the provision of care to enrollees is timely 
and acceptable in quality,'' and authorized such subprioritization of 
the seven statutory enrollment categories ``as the Secretary determines 
necessary.'' The law also provided that starting October 1, 1998, most 
veterans had to enroll in the VA health-care system as a condition for 
receiving VA hospital and outpatient care. Since that time, VA has 
enrolled all eligible veterans who sought enrollment in the VA system.
    Subsequently on January 23, 2002, Congress enacted the Department 
of Veterans Affairs Health Care Programs Enhancement Act of 2001, 
further amending the law governing enrollment. It altered the 
enrollment system by establishing, effective October 1, 2002, an 
additional priority category 8.
    This document amends 38 CFR 17.36 to add two new subpriorities to 
both enrollment priority categories 7 and 8, for a total of four 
subpriorities in each category. It also announces that VA will suspend 
enrollments of additional veterans in priority category 8. Veterans who 
VA would not enroll would be those who have no compensable service-
connected disability or other status making them eligible for placement 
in a higher priority category. All of these veterans have annual 
incomes above a statutory income threshold (geographic means test 
threshold) applicable to the location in which they reside. The 
suspension of new enrollments is necessary to prevent further erosion 
of VA's capacity to provide needed health-care services of high quality 
to veterans in a timely and medically appropriate manner.

Projections for Increased Placement of Veterans on Wait Lists

    An existing regulation (38 CFR 17.36(c)) requires that the 
Secretary determine which categories of veterans are eligible to be 
enrolled and that the Secretary notify eligible enrollees of the 
determination by announcing it in the Federal Register. In making that 
determination, the Secretary must consider an array of factors 
including economic information such as available resources, projections 
of demand for enrollment, and the length of waiting times for 
appointments for care.
    There has been an unprecedented surge in enrollments in the VA 
health-care system. Between October 1, 2001 and September 2002, VA 
enrolled an additional 830,237 veterans. Of these new enrollees, 
425,000 had annual income and net worth above the statutory ``means 
test'' income threshold that required VA to place them in enrollment 
priority category 7. The majority of those enrollees now fall within 
the new priority category 8. As a result of this growth in enrollment, 
many VA facilities have been unable to provide timely access to needed 
care. Many VA facilities have informed enrolled veterans that they are 
being placed on a wait list for care and that they will be notified 
when an appointment for care is possible. Other facilities have 
scheduled appointments for enrollees far into the future.
    As of December 2002, VA estimates that there were almost 236,000 
veterans who have been unable to schedule an

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appointment or have an appointment scheduled more than 6 months from 
the desired date. Moreover, VA estimates that the number of veterans 
waiting for appointments more than 6 months from the desired date would 
increase in FY 2003. VA also estimates that between January and 
September 2003, as many as 164,367 priority category 8 veterans would 
seek to enroll for VA health care services. Without action to suspend 
new enrollment, this would adversely affect quality, patient safety, 
and access.
    VHA's total FY 2003 medical care appropriation is estimated to be 
$23.892 billion. This is supplemented by an additional $1.881 billion 
from collections for copayments, third-party reimbursements for 
services, other revenue, and carry-over funds. The sum of these 
resources is $25.773 billion. These resources include $4.224 billion 
for services provided that are not included in the medical benefits 
package, including long-term care, domiciliary care, dental care, 
emergency care, CHAMPVA, readjustment counseling, certain prosthetic 
services, and counseling treatment for sexual trauma. This leaves 
$21.549 billion available for the medical benefits package.
    The following table shows the projected average enrollment for FY 
2003 together with the projected expenditures that would be needed to 
provide the medical benefits package to all enrollees.

                                       Table--Fiscal Year 2003 Projections
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                                                                                                   Cumulative
                                                                 Average      Medical benefits  medical benefits
                     Priority category                         enrollment          package           package
                                                                                expenditures      expenditures
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1.........................................................           564,556    $4,170,231,000    $4,170,231,000
2.........................................................           419,580     1,341,312,000     5,511,543,000
3.........................................................           876,839     2,225,614,000     7,737,157,000
4.........................................................           174,887     2,815,995,000    10,553,152,000
5.........................................................         2,509,805     9,595,156,000    20,148,308,000
6.........................................................           142,835       159,128,000    20,307,436,000
7.........................................................           785,243     1,113,375,000    21,420,811,000
8.........................................................         1,517,660     2,034,405,000    23,455,216,000
                                                           -------------------
        Total.............................................         6,991,405    23,455,216,000
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    As can be seen from the expected appropriation and the table above, 
VA projects that available resources will be considerably less than 
needed to meet the strains that new enrollees would place on the 
system. Without VA's actually limiting enrollment, demand will 
overwhelm the system's ability to provide timely care of the quality 
veterans expect and deserve.
    Past enrollment growth has exhausted VA's marginal capacity, and 
the projected growth for FY 2003 and beyond exceeds both VA's primary 
and specialty care capacity. By suspending enrollment of additional 
priority category 8 veterans, VA would avoid very significant 
additional medical benefits costs and begin to bring demand in line 
with capacity, which will reduce the number of veterans on wait lists. 
In FY 2003, 164,367 veterans who were expected to enroll in priority 
category 8 would not be enrolled. Further, this number is expected to 
grow to over 520,000 by FY 2005.

                           Cumulative Applicants for Enrollment From January 17, 2003
----------------------------------------------------------------------------------------------------------------
                                                                      FY 2003         FY 2004         FY 2005
                                                                    applicants      cumulative      cumulative
                       Priority category 8                         from 1/17/03     applicants      applicants
                                                                    to 9/30/03     from 1/17/03    from 1/17/03
----------------------------------------------------------------------------------------------------------------
0% SC...........................................................           5,192          11,500          16,500
NSC.............................................................         159,175         348,500         505,500
                                                                 -----------------
        Total...................................................         164,367         360,000         522,000
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    Moreover, VA projects that enrollment in priority categories 1 
through 7, which totaled 5,089,542 in FY 2002, will continue to grow 
significantly, as shown by the following table.

               Projected Priority Category 1-7 Enrollment
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Fiscal year:
    2003....................................................   5,473,745
    2004....................................................   5,754,701
    2005....................................................   5,966,957
------------------------------------------------------------------------

    Immediate action is needed to limit enrollment to ensure VA's 
ability to provide already-enrolled veterans and new higher-priority 
veterans timely, medically appropriate access to high-quality health-
care services. By suspending additional enrollments of priority 
category 8 veterans, VA will be better able to provide care to veterans 
in higher priority groups. Accordingly, effective January 17, 2003 
additional priority category 8 veterans will not be enrolled. For this 
purpose, veterans who have completed the enrollment forms and submitted 
them to VA (or had them postmarked) prior to January 17, 2003 will be 
considered to have enrolled before the cutoff date.

Subpriorities

    Existing regulations currently provide for two subpriorities within 
both priority categories 7 and 8. The first subpriority includes those 
veterans with noncompensable zero percent service-connected 
disabilities. The second subpriority includes all other veterans in 
priority category 7 or 8.
    This document amends the existing regulation, 38 CFR 17.36, to 
establish a

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total of four subpriorities within both categories 7 and 8. They would 
be the following:
    (i) Noncompensable zero percent service-connected veterans who are 
in an enrolled status on a specified date announced in a Federal 
Register document and who subsequently do not request disenrollment;
    (ii) Nonservice-connected veterans who are in an enrolled status on 
a specified date announced in a Federal Register document and who 
subsequently do not request disenrollment;
    (iii) Noncompensable zero percent service-connected veterans not 
included in paragraph (i); and
    (iv) Nonservice-connected veterans not included in paragraph (ii).
    This rule change reflects VA's view that veterans who are enrolled 
in the VA system should have a higher priority than those who have not 
sought enrollment and that those veterans with a service-connected 
disability should have a higher priority than those without a service-
connected disability. This change also is necessary in order to carry 
out the announcement in this document that VA will cease enrolling 
additional veterans that VA would be required to place in the third and 
fourth subpriority in priority category 8.

Administrative Procedure Act and Congressional Review Act

    We have found good cause to dispense with the notice-and-comment 
and delayed effective date provisions of the Administrative Procedure 
Act (5 U.S.C. 553) and the notice and public procedure provisions of 
the Congressional Review Act (5 U.S.C. 801-808) because compliance with 
such provisions would be impracticable and contrary to the public 
interest.
    Changes made by this rule reflect a VA enrollment decision based on 
available funding. Delaying implementation would exacerbate problems 
with providing enrolled veterans with timely access to needed care.

Unfunded Mandates

    The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, 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.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Executive Order 12866

    This rule is economically significant under Executive Order 12866 
and major under the Congressional Review Act. The Office of Management 
and Budget have reviewed this rule.

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: January 8, 2003.
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.

    2. In Sec.  17.36 paragraphs (b)(7), (b)(8) and (c)(2) are revised 
to read as follows:


Sec.  17.36  Enrollment--provision of hospital and outpatient care to 
veterans.

* * * * *
    (b) * * *
    (7) Veterans who agree to pay to the United States the applicable 
copayment determined under 38 U.S.C. 1710(f) and 1710(g) if their 
income for the previous year constitutes ``low income'' under the 
geographical income limits established by the U.S. Department of 
Housing and Urban Development for the fiscal year that ended on 
September 30 of the previous calendar year. For purposes of this 
paragraph, VA will determine the income of veterans (to include the 
income of their spouses and dependents) using the rules in Sec. Sec.  
3.271, 3.272, 3.273, and 3.276. After determining the veterans' income 
and the number of persons in the veterans' family (including only the 
spouse and dependent children), VA will compare their income with the 
current applicable ``low-income'' income limit for the public housing 
and section 8 programs in their area that the U.S. Department of 
Housing and Urban Development publishes pursuant to 42 U.S.C. 
1437a(b)(2). If the veteran's income is below the applicable ``low-
income'' income limits for the area in which the veteran resides, the 
veteran will be considered to have ``low income'' for purposes of this 
paragraph. To avoid a hardship to a veteran, VA may use the projected 
income for the current year of the veteran, spouse, and dependent 
children if the projected income is below the ``low income'' income 
limit referenced above. This category is further prioritized into the 
following subcategories:
    (i) Noncompensable zero percent service-connected veterans who are 
in an enrolled status on a specified date announced in a Federal 
Register document promulgated under paragraph (c) of this section and 
who subsequently do not request disenrollment;
    (ii) Nonservice-connected veterans who are in an enrolled status on 
a specified date announced in a Federal Register document promulgated 
under paragraph (c) of this section and who subsequently do not request 
disenrollment;
    (iii) Noncompensable zero percent service-connected veterans not 
included in paragraph (b)(7)(i) of this section; and
    (iv) Nonservice-connected veterans not included in paragraph 
(b)(7)(ii) of this section.
    (8) Veterans not included in priority category 4 or 7, who are 
eligible for care only if they agree to pay to the United States the 
applicable copayment determined under 38 U.S.C. 1710(f) and 1710(g). 
This category is further

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prioritized into the following subcategories:
    (i) Noncompensable zero percent service-connected veterans who are 
in an enrolled status on a specified date announced in a Federal 
Register document promulgated under paragraph (c) of this section and 
who subsequently do not request disenrollment;
    (ii) Nonservice-connected veterans who are in an enrolled status on 
a specified date announced in a Federal Register document promulgated 
under paragraph (c) of this section and who subsequently do not request 
disenrollment;
    (iii) Noncompensable zero percent service-connected veterans not 
included in paragraph (b)(8)(i) of this section; and
    (iv) Nonservice-connected veterans not included in paragraph 
(b)(8)(ii) of this section.
    (c) * * *
    (2) Unless changed by a rulemaking document in accordance with 
paragraph (c)(1) of this section, VA will enroll all priority 
categories of veterans set forth in Sec.  17.36(b) beginning January 
17, 2003 except that those veterans in priority category 8 who were not 
in an enrolled status on January 17, 2003 or who requested 
disenrollment after that date, are not eligible to be enrolled.
* * * * *
[FR Doc. 03-1201 Filed 1-16-03; 8:45 am]
BILLING CODE 8320-01-U