[Federal Register Volume 76, Number 224 (Monday, November 21, 2011)]
[Proposed Rules]
[Pages 71920-71922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29994]



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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AN98


Payment for Home Health Services and Hospice Care by Non-VA 
Providers

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
regulation and internal policy documents concerning the billing 
methodology for non-VA providers of home health services and hospice 
care. The proposed rulemaking would include home health services and 
hospice care under the VA regulation governing payment for other non-VA 
health care providers. Because the newly applicable methodology cannot 
supersede rates for which VA has specifically contracted, this 
rulemaking will only affect providers who do not have existing 
negotiated contracts with VA. The proposed rule would also rescind 
internal guidance documents that could be interpreted as conflicting 
with the proposed rule.

DATES: Comment Date: Comments on the proposed rule must be received by 
VA on or before December 21, 2011.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to the Director, 
Regulations Management (02REG), Department of Veterans Affairs, 810 
Vermont Avenue NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. Comments should indicate that they are submitted in response 
to ``RIN 2900-AN98--Payment for home health and services and hospice 
care by non-VA providers.'' Copies of 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) 461-4902 for 
an appointment. This is not a toll-free number. In addition, during the 
comment period, comments may be viewed online at www.Regulations.gov 
through the Federal Docket Management Systems (FDMS).

FOR FURTHER INFORMATION CONTACT: Holley Niethammer, Fee Policy Chief, 
National Fee Program Office, Veterans Health Administration, Department 
of Veterans Affairs, 3773 Cherry Creek Dr. N., East Tower, Ste 495, 
Denver, CO 80209, (303) 370-5062. (This is not a toll-free number).

SUPPLEMENTARY INFORMATION: On December 17, 2010, VA published in the 
Federal Register a rule amending 38 CFR 17.56 to update VA's payment 
methodology for in- and outpatient health care professional services 
provided at non-VA facilities, and other medical charges associated 
with non-VA outpatient care, provided under 38 CFR 17.52 or 17.120. 75 
FR 78901 (Dec. 17, 2010). In paragraph (a) of Sec.  17.56, as amended, 
we state that the new methodology does not apply to ``non-contractual 
payments for home health services and hospice care.'' 38 CFR 17.56(a). 
As explained in the notice of final rulemaking, this exception is based 
on practical, administrative considerations, and not based on a policy 
decision that these services ought to be billed in a different manner. 
See 75 FR 78901. We explained:

Home Health Care and Hospice Care

    [T]he pricing methodology adopted by this rule would be used in 
establishing payment rates for all non-VA inpatient and outpatient 
health care professional services and other outpatient services, 
including hospice care and home health services. However, in 
reviewing implementation strategies and internal procedural 
practices related to the payment of hospice care and home health 
services through means other than a contract, we have encountered 
significant practical problems that prevent immediate implementation 
of this new methodology. These problems relate to separate 
administration of hospice care and home health services by the 
Veterans Health Administration's Office of Geriatrics and Extended 
Care, which uses separate methods for forming agreements for these 
services, and challenges regarding information technology systems 
necessary to move to the new [Centers for] Medicare [and Medicaid] 
rate, but do not relate to the actual payment amounts for these 
services. Such amounts would generally be unchanged by this 
rulemaking because the vast majority of these services are paid 
through a contractual mechanism (and are therefore exempted under 
Sec.  17.56(a)(1)). However, we estimate that there may be about 100 
providers who are not paid through a contractual mechanism and 
therefore who would have been affected by this rulemaking.
    Given separate administration of hospice and home health 
services under separate VA guidance, we have determined that these 
providers did not receive adequate notice regarding the intended 
effect of the proposed rule or of the need for some delay in 
implementation of the rule so that VA may modify its systems. We 
will promulgate, as soon as possible, a proposed rule to make Sec.  
17.56, as revised by this notice, applicable to these providers. 
Therefore, we have added to paragraph (a) of the final rule an 
exception for these two services.

Id. at 78908.
    This rulemaking would remove the exception so that the billing 
methodology in Sec.  17.56 would apply to payments for home health 
services and hospice care. The reasons that we would make the billing 
methodology in Sec.  17.56 applicable to these exempted groups were 
explained thoroughly in the proposed and final rulemakings that amended 
Sec.  17.56. See 75 FR 7218 (Feb. 18, 2010); 75 FR 78901. We need not 
repeat them here. Indeed, in the proposed rule we specifically stated 
that that rationale should be applied to home health services and 
hospice care, noting that we intended to adopt the ``Home Health 
Prospective Payment System'' and ``Hospice'' Medicare schedules. 75 FR 
at 7219. It was not until the final-rule notice that we recognized a 
need to re-propose, for administrative reasons, making the methodology 
applicable to home health and hospice care.
    By this proposed rule, we also notify providers of home health 
services and hospice care that by adopting Sec.  17.56 methodology, VA 
would rescind all conflicting internal VA guidance that could be 
interpreted as providing an alternate billing methodology applicable 
only to these services. Due to VA's historically separate 
administration of hospice and home health care from the other services 
affected by Sec.  17.56, a VHA Handbook provides guidance specific to 
payments for non-VA home health services and hospice care. See Veterans 
Health Administration, U.S. Dep't of Veterans Affairs, VHA Handbook 
1140.3, Home Health and Hospice Care Reimbursement Handbook (Aug. 16, 
2004). VHA Handbook 1140.3 establishes maximum reimbursement rates for 
non-VA home health services and hospice care when a payment methodology 
has not been established under a negotiated contract, but also 
authorizes exemptions from these maximum rates to negotiate contracts 
with providers for home health services and hospice care. This Handbook 
states the following on page 3 regarding establishing maximum rates for 
home health services: ``VA uses locally calculated, discipline-
specific, Medicare LUPA [Low-Utilization Payment Amount] rates as the 
maximum cap for skilled home care and home health aide services. In 
those states that reimburse separately for homemaker services, VA's 
rate will not exceed 110 percent of the established state rate for that 
home care agency or geographic area.'' For establishing maximum rates 
for hospice care, the Handbook also states on page 3: ``VA uses locally 
calculated, Medicare hospice payment rates as the maximum reimbursement 
rates to purchase a comprehensive package of bundled home hospice 
services.'' These alternate

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pricing methodologies would be rescinded by this rulemaking. The prior 
final rule and this proposed rule are intended to prescribe an 
exclusive billing methodology for all covered services.
    We explained in the final rule amending Sec.  17.56 that we 
estimated only about 100 providers will be affected by this revision 
because under Sec.  17.56(a)(1) any negotiated rate will prevail over 
the other methodologies set forth in Sec.  17.56. See 75 FR at 78908. 
However, a more accurate estimate is that about 8400 providers will be 
affected. On average, each of these providers cares for 6 veterans at 
VA expense, and the potential revenue loss is $1,346.28 per provider 
annually. In addition, these providers without negotiated contracts for 
payment may benefit from the ``phase-in'' of the new rates, which is 
contemplated by the language in Sec.  17.56(a)(2)(i), where VA will 
pay: ``[t]he applicable Medicare fee schedule or prospective payment 
system amount (`Medicare Rate') for the period in which the service was 
provided * * *''. 38 CFR 17.56(a)(2)(i).

Comment Period

    Although under the rulemaking guidelines in Executive Order 12866, 
VA ordinarily provides a 60-day comment period, the Secretary has 
determined that there is good cause to limit the public comment period 
on this proposed rule to 30 days. The application of the rates in Sec.  
17.56 to non-VA providers of home health services and hospice care was 
in fact proposed in February 2010. See 75 FR 7218. However, we exempted 
these services in the final rule for the administrative reasons 
discussed above, and indicated that we would soon propose once again to 
include them in Sec.  17.56. See 75 FR 78901. Therefore, significant 
public notice has already been provided, as has the opportunity to 
comment on the applicability of Sec.  17.56 to home health and hospice 
care payments. Accordingly, the Secretary has provided a 30-day comment 
period for this proposed rule.

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 developing any rule that may result in expenditure by 
State, local, or 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, or tribal governments, or the private sector.

Paperwork Reduction Act

    This action contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
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 effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action,'' which requires review by the Office 
of Management and Budget (OMB), as ``any regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed regulatory 
amendment 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 et seq. We estimate that about 8400 
providers without negotiated contracts offer home health care or 
hospice care to veterans at rates that are equivalent to, or not 
significantly higher than, those offered by the proposed amendment. VA 
costs of purchased skilled home care were compared to Medicare Home 
Health Prospective Payment System (HH-PPS) reimbursement for a 60-day 
period. The average VA reimbursement level per veteran for a 60-day 
period was $2,537.40 in FY 2010. The average Medicare reimbursement 
level for skilled home care per beneficiary was $2,312.94 in FY 2010. 
This difference would mean that providers would receive $3.74 less per 
day from VA for a 60-day episode of care. On average, each of the 8400 
providers cares for 6 veterans at VA expense, and the potential revenue 
loss would be $1,346.28 per provider annually, an insignificant amount 
of revenue for these providers. This total would be less than 100 
million dollars annually. Therefore, pursuant to 5 U.S.C. 605(b), this 
proposed amendment is exempt from the initial and final regulatory 
flexibility analysis requirements of sections 603 and 604.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. John R. 
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this 
document on November 14, 2011, for publication.

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, Veterans.

    Dated: November 16, 2011.
Robert C. McFetridge,
Director of Regulation Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans 
Affairs proposes to revise 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, and as noted in specific sections.

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Sec.  17.56  [Amended]

    2. Revise Sec.  17.56(a) by removing ``and except for non-
contractual payments for home health services and hospice care''.

[FR Doc. 2011-29994 Filed 11-18-11; 8:45 am]
BILLING CODE 8302-01-P