[Federal Register Volume 70, Number 23 (Friday, February 4, 2005)]
[Rules and Regulations]
[Pages 5926-5927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2107]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AK94


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

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This final rule amends the Department of Veterans Affairs (VA) 
medical regulations concerning payment for non-VA health care 
professional 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 health care professional services 
based upon the Centers for Medicare and Medicaid Services (CMS) 
physician fee schedule in effect at the time the services are provided. 
However, 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 may 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. This rule 
establishes an Alaska-specific payment methodology for inpatient and 
outpatient non-VA health care professional services within that state. 
The rule ensures that amounts paid to health care providers represent 
the local cost to furnish a service, while continuing to achieve 
program cost reductions.

DATES: Effective Date: This rule shall become effective on March 7, 
2005.
    Applicability Date: This rule shall be applicable to all claims for 
payment for services rendered on or after April 1, 2005.

FOR FURTHER INFORMATION CONTACT: Susan Schmetzer, Chief, Policy & 
Compliance Division, Health Administration Center, Department of 
Veterans Affairs, P.O. Box 65020, Denver, CO 80206, telephone 303-331-
7552. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register on July 29, 2003 (68 FR 44507) we proposed to amend VA's 
medical regulations at 38 CFR part 17 to provide for the payment of 
non-VA physician services in Alaska that are associated with either 
outpatient or inpatient care provided to eligible VA beneficiaries at 
non-VA facilities. We provided a 60-day comment period that ended on 
September 29, 2003. We received one comment, in which the commenter 
suggested that VA adopt the Official Alaska Workers' Compensation 
Medical Fee Schedule as a basis for such payments. No changes are made 
based on this comment, as adoption of the Official Alaska Workers' 
Compensation Medical Fee Schedule would not achieve the dual goal of 
ensuring that the amounts paid to health care providers better 
represent the local cost to furnish a service, while continuing to 
achieve program cost reductions.
    A number of technical changes of a non-substantive nature have been 
made in this final rule. The proposed rule described the title of this 
rule as Payment for Non-VA Physician Services Associated with Either 
Outpatient or Inpatient Care Provided at Non-VA Facilities. The use of 
the phrase ``non-VA physician,'' both in the title of 38 CFR 17.56 and 
throughout the regulation, is imprecise, as the rule applies to all 
non-VA physician and other health care professional services associated 
with outpatient or inpatient care provided at non-VA facilities. In 
order to reconcile the terminology used in this rule with common 
practice in VA, the phrase ``non-VA physician'' will be replaced with 
``non-VA health care professional services.'' Additionally, the 
language was clarified to state the rates payable are based on the 
geographic location of where the services were rendered.
    The proposed rule stated that VA would rely on Current Procedural 
Terminology (CPT) codes utilized by Centers for Medicare and Medicaid 
Services (CMS) to pay for these non-VA services. The reference to CPT 
codes was too restrictive, as CMS uses other national coding sets for 
health care professional services. Therefore, the references to CPT 
codes were removed. The final rule refers generally to the use of 
national standard code sets.
    The proposed rule referenced Fiscal Year (FY) 2002 as the base year 
for determining various costs. In light of the passage of time since 
publication of the proposed rule, and in order to reflect the most up-
to-date data, this reference has been changed to FY 2003 throughout the 
final rule.
    The proposed rule stated that 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. Applying this rule only to 
services that VA had no occasion to pay during the previous Fiscal Year 
was unnecessarily narrow and would limit VA's ability to accurately 
gauge a reasonable payment. It is also inconsistent with other 
provisions of this rule, which require a minimum of eight occurrences. 
Therefore, the final rule has been revised to apply this rule to 
services that VA provided less than eight times in Alaska during the 
previous Fiscal Year. Clarification was also made that this rule would 
be applicable to unit-based codes as the VA moved from a single payment 
per code irrespective of units to unit-based payment in FY 2004, and 
development of a fee schedule that is not unit-based would be 
inconsistent and inaccurate.
    The proposed rule stated that VA would increase the amounts on the 
VA Fee Schedule for Alaska annually in accordance with annual inflation 
rate adjustments published by CMS. The VA will use the national 
Medicare Economic Index (MEI) for that purpose. The MEI measures 
inflation in physician practice cost and general wage levels. The VA 
will not make modifications to the MEI based on regional factors 
because doing so would not achieve the dual goal of ensuring that the 
amounts paid to health care providers represent the local cost to 
furnish a service, while continuing to achieve program cost reductions.

Administrative Procedure Act

    The modifications in this final rule are logical and reasonable 
outgrowths of the proposed changes set forth in the proposed rule and 
are intended to clarify the intent of the proposed rule. Based on the 
rationales set forth in the proposed rule and those contained in this 
document, we are adopting the provisions of the proposed rule as a 
final rule with the modifications described above.

[[Page 5927]]

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 final rule would have no 
such 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 final 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 final 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 final 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: October 20, 2004.
Anthony J. Principi,
Secretary of Veterans Affairs.

0
For the reasons set out in the preamble, 38 CFR part 17 is amended as 
set forth below:

PART 17--MEDICAL

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

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

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2. Section 17.56 is amended by:
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a. Revising the section heading.
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b. In paragraph (a), 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 & Human Services, Health Care Financing 
Administration (HCFA) under Medicare's participating'' and adding, in 
its place, ``Centers for Medicare and Medicaid Services' (CMS) 
participating''; removing ``calculated under Medicare's participating'' 
and adding, in its place, ``calculated under Centers for Medicare and 
Medicaid Services' participating''; and removing all references to 
``non-VA physician services'' and adding, in their place, ``non-VA 
health care professional services''.
0
c. 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''.
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d. Redesignating paragraphs (d) and (e) as paragraphs (e) and (f), 
respectively.
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e. Adding a new paragraph (d).
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f. In redesignated paragraph (f), removing the phrase ``paragraphs (a) 
through (d)'' and adding, in its place, ``paragraphs (a) through (e)''.
    The revision and addition read as follows:


Sec.  17.56  Payment for non-VA physician and other health care 
professional services.

* * * * *
    (d) For services rendered in Alaska, VA will pay for services in 
accordance with a fee schedule that uses the Health Insurance 
Portability and Accountability Act mandated national standard coding 
sets. VA will pay a specific amount for each service for which there is 
a corresponding code. Under the VA Alaska Fee Schedule the amount paid 
in Alaska for each code will be 90 percent of the average amount VA 
actually paid in Alaska for the same services in Fiscal Year (FY) 2003. 
For services that VA provided less than eight times in Alaska in FY 
2003, for services represented by codes established after FY 2003, and 
for unit-based codes prior to FY 2004, VA will take the Centers for 
Medicare and Medicaid Services' rate for each 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 Alaska Fee Schedule annually beginning in 2005 in accordance 
with the published national Medicare Economic Index (MEI). For those 
years where the annual average is a negative percentage, the fee 
schedule will remain the same as the previous year. Payment for non-VA 
health care professional 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)


[FR Doc. 05-2107 Filed 2-3-05; 8:45 am]
BILLING CODE 8320-01-P