[Federal Register Volume 72, Number 232 (Tuesday, December 4, 2007)]
[Rules and Regulations]
[Pages 68070-68072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-23505]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AM35


Reasonable Charges for Medical Care or Services

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule amends 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. It changes the process for 
determining interim billing charges when a new Diagnosis Related Group 
(DRG) code or Current Procedural 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. This final rule also 
changes the regulations by removing all of the provisions for discounts 
of billed charges. This will eliminate or reduce duplicate discounting 
and thereby prevent unintended underpayments to the government.

DATES: Effective Date: January 3, 2008.

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.

SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register on February 13, 2007 (72 FR 6696), VA proposed to amend VA's 
medical regulations that were established under the authority of 38 
U.S.C. 1729 and that 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. VA proposed to make the changes 
described in the SUMMARY portion of this document.
    VA provided a 30-day comment period that ended March 15, 2007. Two 
comments were received. One comment did not directly express agreement 
or disagreement with the proposed rule, but provided information about 
Medicare requirements. We reviewed that information and determined that 
the proposed rule is consistent with those Medicare provisions. 
Accordingly, we are making no change from the proposed rule based on 
that comment. We discuss below the second comment, and include 
background concerning provisions of the proposed rule related to that 
comment.
    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:
    1. A nonservice-connected disability for which the veteran is 
entitled to care (or the payment of expenses of care) under a health 
plan contract;
    2. 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
    3. 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 in 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 describe methodologies for establishing VA charges that 
replicate, insofar as possible, the 80th percentile of community 
charges (see the preamble to VA's proposed rule ``Reasonable Charges 
for Medical Care or Services; 2003 Methodology Changes'' published in 
the Federal Register at 68 FR 56876 (Oct. 2, 2003)). VA's methodologies 
for determining reasonable charges for prescription drugs are based on 
VA costs and are described in 38 CFR 17.102.
    Prior to the effective date of this final rule, the regulations 
included provisions for certain discounts to be applied to billed 
charges. The discounts were intended to reflect industry standards. VA 
proposed to eliminate discounts for VA billed charges to avoid 
unintended duplicate discounting. This was necessary because after VA 
applied discounts to the billed charges, virtually all third party-
payers applied the same discounts a second time (discounts are included 
in industry software), thereby reducing the billed charges below what 
was intended by the regulations. VA accordingly proposed to make a 
number of changes to the regulations to eliminate VA discounts, 
including changing the regulations at Sec.  17.101(f)(5)(ii) to 
increase the charges for the professional services of the following 
providers to 100 percent of the amount that would be charged if the 
care had been provided by a physician:
     Nurse practitioner,
     Clinical nurse specialist,
     Physician Assistant,
     Clinical psychologist,
     Clinical social worker,
     Dietitian, and
     Clinical pharmacist.
    The second comment noted that Public Law 109-461 recently added 
marriage and family therapists to the groups eligible to provide care 
under the VA healthcare system and requested

[[Page 68071]]

that this group be added accordingly to the list in Sec.  
17.101(f)(5)(ii). The second comment otherwise fully supported the 
proposed rule.
    Section 201 of Public Law 109-461 amended 38 U.S.C. 7401 and 7402 
to add provisions under which qualified marriage and family therapists 
are identified as eligible to provide care under the VA healthcare 
system. Section 201 also amended 38 U.S.C. 7401 and 7402 to add 
provisions under which qualified licensed professional mental health 
counselors are similarly identified as eligible to provide care under 
the VA healthcare system. VA has concluded that these statutory 
provisions make it appropriate to make changes from the proposed rule 
in the final rule to include provisions concerning both categories: 
Providers that are marriage and family therapists, and providers that 
are licensed professional mental health counselors. Third party payers 
apply discounts from the physician rate for marriage and family 
therapists and for licensed professional mental health counselors, as 
third party payers similarly do for the other providers included in the 
lists in current and proposed Sec.  17.101(f)(5)(ii). Accordingly, 
after considering the second comment, we are making a change from the 
proposed rule in the final rule by adding marriage and family 
therapists and licensed professional mental health counselors to the 
list of providers in Sec.  17.101(f)(5)(ii). Charges for professional 
services of the providers included in that list will be 100 percent of 
the amount that would be charged if the care had been provided by a 
physician.
    This final rule is making other changes from the proposed rule that 
are nonsubstantive. In the Sec.  17.101(g) introductory paragraph, VA 
proposed to amend a sentence by removing ``50 percent'' and replacing 
it with ``100 percent''. That sentence says in the current regulations 
that certain charges ``will be 50 percent of the charges otherwise 
determined as set forth in this paragraph.'' This final rule further 
amends the sentence by removing ``otherwise'' since that term would no 
longer be needed.
    This final rule also makes a nonsubstantive change from the 
proposed rule's provisions for the authority citation for 38 CFR part 
17, so that the final rule will, as intended by the proposed rule, 
reflect the current language in the part 17 authority citation.
    In addition, the final rule makes nonsubstantive changes from the 
proposed rule for purposes of clarity or grammar. Other than 
nonsubstantive changes in capitalization or punctuation, those changes 
from the proposed rule are in Sec.  17.101(a)(8)(i) to refer to 
``billing charge'' rather than ``billable charge'', in Sec.  
17.101(a)(8)(iii) to refer to ``VA's billing charge'' rather than 
``VA's charge'', in Sec.  17.101(a)(8)(vii) to refer to ``the interim 
charge'' to use the same phrase as in the similar context in paragraphs 
(a)(8)(iv) and (a)(8)(v) of that section, and in Sec.  
17.101(a)(8)(vii) to add for clarity ``under this section'', which is 
used in the current regulations in the analogous provisions of Sec.  
17.101(a)(8)(v) of the regulations but was not in the proposed rule.
    Based on the rationale set forth in the proposed rule and in this 
document, VA is adopting the provisions of the proposed rule as a final 
rule with the changes discussed above.

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 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 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 rule and has 
concluded that it is a significant regulatory action under Executive 
Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this 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 rule would affect mainly large insurance companies. The 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 rule is exempt from the initial and final 
regulatory flexibility analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    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; and 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: August 27, 2007.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

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

PART 17--MEDICAL

0
1. The authority citation for part 17 continues to read as follows:


[[Page 68072]]


    Authority:  38 U.S.C. 501, 1721, and as stated in specific 
sections.


0
2. Amend Sec.  17.101 by:
0
a. In paragraph (g) introductory text, removing ``50 percent of the 
charges otherwise'' and adding, in its place, ``100 percent of the 
charges''.
0
b. Revising paragraphs (a)(8), (e)(5), (f)(4), and (f)(5)(ii).
    The revisions 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 
billing 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 billing 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, 
the 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 under this 
section 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 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.
    (H) Marriage and family therapist.
    (I) Licensed professional mental health counselor.
* * * * *

[FR Doc. E7-23505 Filed 12-3-07; 8:45 am]
BILLING CODE 8320-01-P