[Federal Register Volume 68, Number 145 (Tuesday, July 29, 2003)]
[Proposed Rules]
[Pages 44507-44509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19174]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AK94


Payment for Non-VA Physician Services Associated With Either 
Outpatient or Inpatient Care Provided at Non-VA Facilities

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend Department of Veterans Affairs 
(VA) medical regulations concerning payment for non-VA physician 
services that are associated with either outpatient or inpatient care 
provided to eligible VA beneficiaries at non-VA facilities. Currently, 
the medical regulations require all VA facilities to reimburse for non-
VA physician services based upon the Centers for Medicare and Medicaid 
Services (CMS) physician fee schedule in effect at the time the 
services are provided. However, it appears that special circumstances 
exist in the state of Alaska. If the standard payment methodology is 
implemented in Alaska, VA payments will be significantly less than the 
usual and customary charges for the state. This, in turn, may 
potentially limit VA patient access to non-VA health care. Since a 
large portion of VA health care provided in Alaska is obtained from 
non-VA sources, this could negatively impact the quality of care 
provided veterans living in that state. Therefore, to ensure that 
amounts paid to physicians better represent the local cost to furnish a 
service, while continuing to achieve program cost reductions, we 
propose to establish an Alaska-specific payment methodology for 
inpatient and outpatient non-VA physician services within that state.

DATES: Comments must be received by VA on or before September 29, 2003.

ADDRESSES: Mail or hand-deliver written comments to: Director, 
Regulations Management (00REG1), Department of Veterans Affairs, 810 
Vermont Ave., NW., Room 1064, Washington, DC 20420; or fax comments to 
(202) 273-9289; or e-mail comments to [email protected].

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Comments should indicate that they are submitted in response to ``RIN 
2900-AK94.'' All comments received will be available for public 
inspection at the above address in the Office of Regulation Policy and 
Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m., 
Monday through Friday (except holidays). Please call 202 273-9515 for 
an appointment.

FOR FURTHER INFORMATION CONTACT: Rex Gilmore, Chief Business Office 
(16), Veterans Health Administration, Department of Veterans Affairs, 
810 Vermont Avenue, NW., Washington, DC 20420, (202) 273-0321. (This is 
not a toll-free number.)

SUPPLEMENTARY INFORMATION: The VA Healthcare System converted to a 
Centers for Medicare and Medicaid Services (CMS) Resource Based 
Relative Value System (RBRVS) payment schedule for outpatient care 
purchased from community providers in 1999. At that time, because of 
concerns regarding the high cost of care in the state of Alaska, the 
state was granted an exemption that kept payments for non-VA health 
care in that state under the previous system. That system created a fee 
schedule each year based upon the 75th percentile of at least eight 
billed amounts received in the previous year. This resulted in 
significant fee schedule changes each year, and a schedule that was not 
comprehensive.
    Following an actuarial study completed in 2001 and subsequent 
meetings with VA Alaska officials and community providers, VA 
determined that special circumstances still exist in Alaska. If the 
standard payment methodology is implemented in Alaska, VA payments will 
be significantly less than the usual and customary charges for the 
state. As a result, community practitioners may be unwilling to accept 
VA patients. Since a large portion of VA health care provided in Alaska 
is obtained from non-VA sources, this may limit VA patient access to 
health care and negatively impact the quality of care provided veterans 
living in that state. Therefore, to ensure that amounts paid to 
physicians better represent the local cost to furnish a service, VA 
proposes to establish a special payment methodology for inpatient and 
outpatient non-VA care provided in Alaska. Under the proposed 
methodology, the VA Fee Schedule would include, in the new Sec.  
17.56(d), a payment system for non-VA care in Alaska that does not 
compromise access to care for veterans, is comprehensive for all 
Current Procedural Terminology (CPT) codes, and accounts for the 
geographic and specialty care challenges of Alaska.
    In Alaska, VA proposes to pay for services in accordance with a fee 
schedule that uses CPT codes utilized by CMS. VA would pay a specific 
amount for each service for which there is a corresponding CPT code. 
Under the VA Fee Schedule, the amount paid in Alaska for each CPT code 
would be 90 percent of the average amount VA actually paid in Alaska 
for the same services in Fiscal Year (FY) 2002. For services that VA 
did not have occasion to pay for in Alaska in FY 2002, and for services 
represented by CPT codes established after FY 2002, VA would take the 
CMS rate for each unpaid code and multiply it times the average 
percentage paid by VA in Alaska for CMS like codes. VA would increase 
the amounts on the VA Fee Schedule for Alaska annually in accordance 
with annual inflation rate adjustments published by CMS.
    Finally, this document would make non-substantive revisions in 
paragraphs (a) and (b) of Sec.  17.56 to reflect the name change of the 
former Health Care Financing Administration to Centers for Medicare and 
Medicaid Services.

Unfunded Mandates

    The Unfunded Mandates Reform Act requires, in 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 proposed rule would have 
no consequential effect on State, local, or tribal governments, or the 
private sector.

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

    The Office of Management and Budget has reviewed this document 
under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule would 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 through 612. The proposed rule would not cause a significant 
economic impact on health care providers, suppliers, or entities since 
only a small portion of the business of such entities concerns VA 
beneficiaries. Therefore, pursuant to 5 U.S.C. 605(b), the proposed 
rule 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 are 64.009, 
64.010 and 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, Government 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 recordkeeping requirements, Scholarships and fellowships, 
Travel and transportation expenses, Veterans.

    Approved: April 21, 2003.
Anthony J. Principi,
Secretary of Veterans Affairs.
    For the reasons set forth in the preamble, VA proposes to amend 38 
CFR part 17 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.

    2. Section 17.56 is amended by:
    A. In paragraph (a), first sentence, removing ``Except for 
anesthesia services,'' and adding, in its place, ``Except for 
anesthesia services, and services provided in the State of Alaska under 
paragraph (d) of this section,''; removing ``Department of Health and 
Human Services, Health Care Financing Administration (HCFA) under 
Medicare's participating'' and adding, in its place, ``Centers for 
Medicare and Medicaid Services' participating''; and in the third 
sentence, removing ``calculated under Medicare's participating'' and 
adding, in its place, ``calculated under Centers for Medicare and 
Medicaid Services' participating''.
    B. In paragraph (b), removing ``Medicare's participating'' and 
adding, in its place, ``Centers for Medicare and Medicaid Services' 
participating''; and removing ``calculating the Medicare fee'' and 
adding, in its place, ``calculating the Centers for Medicare and 
Medicaid Services' fee''.
    C. Redesignating paragraphs (d) and (e) as paragraphs (e) and (f),

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respectively. In newly redesignated paragraph (f), removing the phrase 
``paragraphs (a) through (d)'' and adding, in its place, ``paragraphs 
(a) through (e)''.
    D. Adding a new paragraph (d).
    The addition reads as follows:


Sec.  17.56  Payment for non-VA physician services associated with 
outpatient and inpatient care provided at non-VA facilities.

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    (d) In Alaska, VA will pay for services in accordance with a fee 
schedule that uses CPT codes utilized by Centers for Medicare and 
Medicaid Services. VA will pay a specific amount for each service for 
which there is a corresponding CPT code. Under the VA Fee Schedule the 
amount paid in Alaska for each CPT code will be 90 percent of the 
average amount VA actually paid in Alaska for the same services in 
Fiscal Year (FY) 2002. For services that VA did not have occasion to 
pay for in Alaska in FY 2002, and for services represented by CPT codes 
established after FY 2002, VA will take the Centers for Medicare and 
Medicaid Services' rate for each unpaid code and multiply it times the 
average percentage paid by VA in Alaska for Centers for Medicare and 
Medicaid Services-like codes. VA will increase the amounts on the VA 
Fee Schedule for Alaska annually in accordance with annual inflation 
rate adjustments published by Centers for Medicare and Medicaid 
Services. Payment for non-VA physician services in Alaska shall be the 
lesser of the amount billed, or the amount calculated under this 
subpart.

(Authority: 38 U.S.C. 513, 1703, 1728)

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[FR Doc. 03-19174 Filed 7-28-03; 8:45 am]
BILLING CODE 8320-01-P