[Federal Register Volume 72, Number 29 (Tuesday, February 13, 2007)]
[Proposed Rules]
[Pages 6696-6699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2391]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 72, No. 29 / Tuesday, February 13, 2007 / 
Proposed Rules  

[[Page 6696]]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AM35


Reasonable Charges for Medical Care or Services

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department of Veterans 
Affairs (VA) medical regulations concerning ``reasonable charges'' for 
medical care or services provided or furnished by VA to certain 
veterans for nonservice-connected disabilities. We propose to change 
the process for determining interim billing charges when a new 
Diagnosis Related Group (DRG) code or Current Procedure Terminology/
Healthcare Common Procedure Coding System (CPT/HCPCS) code identifier 
is assigned to a particular type or item of medical care or service and 
VA has not yet established a charge for the new identifier. This 
process is designed to provide interim billing charges that are very 
close to what the new billing charges would be when the charges for the 
new identifiers are established in accordance with the regulations. We 
also propose to change the regulations by removing all of the 
provisions for discounts of billed charges. This is expected to reduce 
or eliminate duplicate discounting and thereby prevent unintended 
underpayments to the government.

DATES: Comments must be received on or before March 15, 2007.

ADDRESSES: Written comments may be submitted by: Mail or hand delivery 
to Director, Regulations Management (00REG1), Department of Veterans 
Affairs, 810 Vermont Ave., NW., Room 1068, Washington, DC 20420; fax to 
(202) 273-9026; e-mail through http://www.Regulations.gov. Comments 
should indicate that they are submitted in response to ``RIN 2900-
AM35.'' All comments received will be available for public inspection 
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: Romona Greene, Manager of Rates and 
Charges, VHA Chief Business Office (168), Veterans Health 
Administration, Department of Veterans Affairs, 810 Vermont Avenue, 
NW., Washington, DC 20420, (202) 254-0361. (This is not a toll-free 
number.)

SUPPLEMENTARY INFORMATION: This document proposes to amend VA's medical 
regulations that were established under the authority of 38 U.S.C. 1729 
and are set forth in 38 CFR 17.101 (referred to below as the 
regulations). The regulations establish methodologies for determining 
reasonable charges for medical care or services provided or furnished 
by VA to certain veterans.
    Under the provisions of 38 U.S.C. 1729, VA has the right to recover 
or collect reasonable charges for such medical care and services from a 
third party to the extent that the veteran or a provider of the care or 
services would be eligible to receive payment for:
     A nonservice-connected disability for which the veteran is 
entitled to care (or the payment of expenses of care) under a health 
plan contract,
     A nonservice-connected disability incurred incident to the 
veteran's employment and covered under a worker's compensation law or 
plan that provides reimbursement or indemnification for such care and 
services, or
     A nonservice-connected disability incurred as a result of 
a motor vehicle accident in a State that requires automobile accident 
reparations (no-fault) insurance.
    However, consistent with the statutory authority at 38 U.S.C. 
1729(c)(2)(B), a third-party payer liable for such medical care and 
services under a health plan contract has the option of paying, to the 
extent of its coverage, either the billed charges or the amount the 
third-party payer demonstrates it would pay for care or services 
furnished by providers other than entities of the United States for the 
same care or services in the same geographic area.
    Except for charges for prescription drugs, the regulations were 
promulgated to contain methodologies to establish VA charges that 
replicate, insofar as possible, the 80th percentile of community 
charges (see 68 FR 56876). VA's methodologies to determine reasonable 
charges for prescription drugs are based on VA costs and contained in 
38 CFR 17.102.

Charges When a New DRG or CPT/HCPCS Code Identifier Does Not Have an 
Established Charge

    The methodology for certain charges is based on adjustments to 
average charges developed from a national data base for DRG codes and 
CPT/HCPCS codes. The current regulations at Sec.  17.101(a)(8) provide 
for the development of charges when VA does not have an established 
charge for a new DRG or CPT/HCPCS code. We propose to revise Sec.  
17.101(a)(8) to make it more clear and accurate. The proposed changes 
are explained below.
    The current regulations at Sec.  17.101(a)(8), provide that when VA 
does not have an established charge for new DRG codes or CPT/HCPCS, 
then a charge would be developed by using the first option out of the 
five specified options for which a charge could be determined. 
Accordingly, if an applicable charge could be determined under the 
first option then that would be used without considering any other 
option. If a charge could not be determined under the first option but 
could be determined under the second option then the second option 
would be used, and so on.
    We do not propose to change the substance of the first two options 
which would continue to be set forth at Sec.  17.101(a)(8)(i) and (ii) 
(they are included in the text portion of this document with 
nonsubstantive changes for purposes of clarity). We also do not propose 
to change the substance of the last option (it would be moved from 
Sec.  17.101(a)(8)(v) to Sec.  17.101(a)(8)(viii) and is included in 
the text portion of this document with nonsubstantive changes for 
purposes of clarity).
    The proposed third option would continue to be located at Sec.  
17.101(a)(8)(iii). It concerns prosthetic devices and durable 
equipment. Under the current regulations for this option, VA's charges 
for prosthetic devices and durable equipment reflect the actual cost to 
VA. We propose to change this

[[Page 6697]]

option to provide that the charge would be 1 and \1/2\ times VA's 
actual cost. As noted above, the regulations were intended to contain 
methodologies to establish VA charges that replicate, insofar as 
possible, the 80th percentile of community charges. However, billing 
charges under the current third option fall short of this mark. Based 
on our expertise and experience with charging trend analyses, we have 
concluded that these proposed changes would provide interim billing 
charges that would be as close as possible to what the new billing 
charges will be when the charges for the new identifiers are 
established in accordance with the regulations.
    Under the current regulations involving the fourth option, VA's 
charges for care or services consist of the Medicare participating 
provider allowed charge amount (if one could be determined), 
geographically adjusted using the applicable geographic area adjustment 
factors that are described in the regulations. We propose to change 
this option to consist of four different parts, two for new identifier 
DRG codes and two for new identifier CPT/HCPCS codes, as stated in the 
text portion of this document at Sec.  17.101(a)(8)(iv) through (vii). 
Based on our expertise and experience with charging trend analyses, we 
have concluded that these proposed changes would provide interim 
billing charges that would be as close as possible to what the new 
billing charges will be when the charges for the new identifiers are 
established in accordance with the regulations.

Discounts

    The current regulations at Sec.  17.101(e)(5), (f)(4), (f)(5)(ii), 
and (g) include provisions to discount billing and thereby reflect 
industry standards. As explained below, we are proposing to change the 
regulations to discontinue applying discounts for billed charges by 
removing all of the provisions in the regulations that provide for such 
discounts.
    The current regulations at Sec.  17.101(e)(5) provide discounts 
when multiple surgical procedures were performed during the same 
outpatient encounter by a provider or provider team as indicated by 
multiple surgical CPT/HCPCS procedure codes. Under these provisions, 
the surgical procedure with the highest facility charge under the CPT/
HCPCS procedure code is billed at 100 percent of the charges 
established under the regulations, the second highest at 25 percent, 
the third highest at 15 percent, and the rest at no charge.
    The current regulations at Sec.  17.101(f)(4) set forth a mechanism 
to establish discount factors for specified charge-significant CPT/
HCPCS code modifiers. Under this authority, discounts are based on 
multipliers as follows:
    51--Multiplier procedures 0.94,
    52--Reduced services 0.70,
    53--Discontinued procedure 0.97,
    62--Two surgeons 0.92, and
    80--Assistant surgeon 0.31.
    The current regulations at Sec.  17.101(f)(5)(ii) set forth 
discounts for charges for the professional services of certain 
providers. In this regard, the regulations provide that the charges for 
care would be the indicated percentages of the amount that would be 
charged if the care had been provided by a physician:
     Nurse practitioner: 85 percent.
     Clinical nurse specialist: 85 percent.
     Physician Assistant: 85 percent.
     Clinical psychologist: 80 percent.
     Clinical social worker: 75 percent.
     Dietitian: 75 percent.
     Clinical pharmacist: 80 percent.
    The current regulations at Sec.  17.101(g) provide for a 50 percent 
discount of the charges for professional anesthesia services provided 
by medically directed certified registered nurse anesthetists.
    All of the discounts explained above, which are the same discounts 
that apply to billing under the Medicare program, reflect industry 
practices for billing. This is the same rationale described in the 
Federal Register for establishing paragraphs (f)(4), and (f)(5)(ii) 
(see 63 FR 54758). However, after the discounts are applied to the 
billed charges, virtually all third party payers apply the same 
discounts a second time (discounts are included in industry software), 
thereby reducing the billed charges below what was intended by the 
regulations. We believe that the duplicate discounting would cause 
unintended underpayments to the government of approximately $24 million 
annually. Accordingly, to eliminate duplicate discounting and to help 
ensure that the regulations work as intended, we propose to remove all 
of the provisions in the regulations that provide for such discounts. 
These amendments would not affect discounts applied by third party 
payers under industry billing practices.

Comment Period

    We are providing a 30-day comment period instead of a 60-day 
comment period. We wish to consider any relevant comments prior to 
taking any regulatory action. However, subject to consideration of 
comments, it appears that it is necessary to take expeditious action on 
the proposed rule. As noted above, the regulations were promulgated to 
contain methodologies to establish VA charges that replicate, insofar 
as possible, the 80th percentile of community charges. The proposed 
changes regarding interim charges based on new DRG code or CPT/HCPCS 
code identifiers are intended to make the interim charges as close as 
possible to what the new billing charges will be when the charges for 
the new identifiers are established in accordance with the regulations, 
and, consequently, to make the interim charges as close as possible to 
the 80th percentile of community charges. With respect to the proposed 
changes regarding discounts, it is necessary to take expeditious action 
to prevent unintended underpayments to the government. Under the 
current regulations discounts are applied by VA to the billed charges. 
However, inconsistent with the intent of the regulations, virtually all 
third party payers apply the same discounts a second time (discounts 
are included in industry software), thereby reducing the billed charges 
below what was intended by the regulations.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in an expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any given year. This proposed rule would have no such 
effect on State, local, and tribal governments, or on the private 
sector.

Paperwork Reduction Act

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

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Order 
classifies a rule as a significant regulatory action requiring review 
by the Office of Management and Budget if it meets any one of a number 
of specified conditions, including: Having an annual effect on the 
economy of $100 million or more, creating a serious inconsistency or 
interfering with an

[[Page 6698]]

action of another agency, materially altering the budgetary impact of 
entitlements or the rights of entitlement recipients, or raising novel 
legal or policy issues. VA has examined the economic, legal, and policy 
implications of this proposed rule and has concluded that it is a 
significant regulatory action under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed 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. This proposed rule would affect mainly large insurance 
companies. The proposed rule might have an insignificant impact on a 
few small entities that do an inconsequential amount of their business 
with VA. Accordingly, pursuant to 5 U.S.C. 605(b), this 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 and titles for 
the programs affected by this document are 64.005, Grants to States for 
Construction of State Home Facilities; 64.007, Blind Rehabilitation 
Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical 
Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans 
Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans 
Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, 
Veterans State Nursing Home Care; 64.016, Veterans State Hospital Care; 
64.018, Sharing Specialized Medical Resources; 64.019, Veterans 
Rehabilitation Alcohol and Drug Dependence; 64.022, Veterans Home Based 
Primary Care.

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: November 3, 2006.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

    Editorial Note: This document was received at the Office of the 
Federal Register on February 7, 2007.

    For the reasons set out in the preamble, VA proposes to amend 38 
CFR part 17 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. Section 17.101, paragraph (g) introductory text is amended by 
removing ``50 percent'' and adding in its place ``100 percent''; and by 
revising paragraphs (a)(8), (e)(5), (f)(4), and (f)(5)(ii) to read as 
follows:


Sec.  17.101  Collection or recovery by VA for medical care or services 
provided or furnished to a veteran for a nonservice-connected 
disability.

    (a)* * *
    (8) Charges when a new DRG or CPT/HCPCS code identifier does not 
have an established charge. When VA does not have an established charge 
for a new DRG or CPT/HCPCS code to be used in determining a billing 
charge under the applicable methodology in this section, then VA will 
establish an interim billing charge or establish an interim charge to 
be used for determining a billing charge under the applicable 
methodology in paragraphs (a)(8)(i) through (a)(8)(viii) of this 
section.
    (i) If a new DRG or CPT/HCPCS code identifier replaces a DRG or 
CPT/HCPCS code identifier, the most recently established charge for the 
identifier being replaced will continue to be used for determining a 
billable charge under paragraphs (b), (e), (f), (g), (h), (i), (k), or 
(l) of this section until such time as VA establishes a charge for the 
new identifier.
    (ii) If medical care or service is provided or furnished at VA 
expense by a non-VA provider and a charge cannot be established under 
paragraph (a)(8)(i) of this section, then VA's billing charge for such 
care or service will be the amount VA paid to the non-VA provider 
without additional calculations under this section.
    (iii) If a new CPT/HCPCS code has been established for a prosthetic 
device or durable medical equipment subject to paragraph (l) of this 
section and a charge cannot be established under paragraphs (a)(8)(i) 
or (ii) of this section, VA's charge for such prosthetic device or 
durable medical equipment will be 1 and \1/2\ times VA's average actual 
cost without additional calculations under this section.
    (iv) If a new medical identifier DRG code has been assigned to a 
particular type of medical care or service and a charge cannot be 
established under paragraphs (a)(8)(i) through (iii) of this section, 
then until such time as VA establishes a charge for the new medical 
identifier DRG code, the interim charge for use in paragraph (b) of 
this section will be the average charge of all medical DRG codes that 
are within plus or minus 10 of the numerical relative weight assigned 
to the new medical identifier DRG code.
    (v) If a new surgical identifier DRG code has been assigned to a 
particular type of medical care or service and a charge cannot be 
established under paragraphs (a)(8)(i) through (iv) of this section, 
then until such time as VA establishes a charge for the new surgical 
identifier DRG code, the interim charge for use in paragraph (b) of 
this section will be the average charge of all surgical DRG codes that 
are within plus or minus 10 of the numerical relative weight assigned 
to the new surgical identifier DRG code.
    (vi) If a new identifier CPT/HCPCS code is assigned to a particular 
type or item of medical care or service and a charge cannot be 
established under paragraphs (a)(8)(i) through (v) of this section, 
then until such time as VA establishes a charge for the new identifier 
for use in paragraphs (e), (f), (g), (h), (i), (k), or (l) of this 
section, VA's billing charge will be the Medicare allowable charge 
multiplied by 1 and \1/2\, without additional calculations under this 
section.
    (vii) If a new identifier CPT/HCPCS code is assigned to a 
particular type or item of medical care or service and a charge cannot 
be established under paragraphs (a)(8)(i) through (vi) of this section, 
then until such time as VA establishes a charge for the new identifier, 
VA's interim charge for use in paragraphs (e), (f), (g), (h), (i), (k), 
or (l) of this section, will be the charge for the CPT/HCPCS code that 
is closest in characteristics to the new CPT/HCPCS code.
    (viii) If a charge cannot be established under paragraphs (a)(8)(i) 
through (a)(8)(vii) of this section, then VA will not charge for the 
care or service.
* * * * *
    (e) * * *
    (5) Multiple surgical procedures. When multiple surgical procedures 
are performed during the same outpatient encounter by a provider or 
provider team as indicated by multiple surgical

[[Page 6699]]

CPT/HCPCS procedure codes, then each CPT/HCPCS procedure code will be 
billed at 100 percent of the charges established under this section.
    (f) * * *
    (4) Charge adjustment factors for specified CPT/HCPCS code 
modifiers. Surcharges are calculated in the following manner: From the 
Part B component of the Medicare Standard Analytical File 5 percent 
Sample, the ratio of weighted average billed charges for CPT/HCPCS 
codes with the specified modifier to the weighted average billed charge 
for CPT/HCPCS codes with no charge modifier is calculated, using the 
frequency of procedure codes with the modifier as weights in both 
weighted average calculations. The resulting ratios constitute the 
surcharge factors for specified charge-significant CPT/HCPCS code 
modifiers.
    (5) * * *
    (ii) Charges for professional services. Charges for the 
professional services of the following providers will be 100 percent of 
the amount that would be charged if the care had been provided by a 
physician:
    (A) Nurse practitioner.
    (B) Clinical nurse specialist.
    (C) Physician Assistant.
    (D) Clinical psychologist.
    (E) Clinical social worker.
    (F) Dietitian.
    (G) Clinical pharmacist.
* * * * *
 [FR Doc. E7-2391 Filed 2-12-07; 8:45 am]
BILLING CODE 8320-01-P