[Federal Register Volume 77, Number 188 (Thursday, September 27, 2012)]
[Proposed Rules]
[Pages 59354-59356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23777]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 51

RIN 2900-AO37


Removal of 30-Day Residency Requirement for Per Diem Payments

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) is proposing to amend 
its regulations concerning per diem payments to State homes for the 
provision of nursing home care to veterans. Specifically, this rule 
would remove the requirement that a veteran must have resided in a 
State home for 30 consecutive days before VA will pay per diem for that 
veteran when there is no overnight stay. The intended effect of this 
proposed rule is to permit per diem payments to State homes for 
veterans who do not stay overnight, regardless of how long the veterans 
have resided at the State homes, so that the State homes will hold the 
veterans' beds until the veterans return.

DATES: Written comments must be received on or before October 29, 2012.

ADDRESSES: Written comments may be submitted through http://www.regulations.gov; by mail or hand delivery to the Director, 
Regulation Policy and Management (02REG), Department of Veterans 
Affairs, 810 Vermont Ave., 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-AO37, Removal of 30-Day Residency Requirement 
for Per Diem Payments.'' 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 through the Federal 
Docket Management System at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Harold Bailey, Program Management 
Officer (Director of Administration), VA Health Administration Center, 
Purchased Care (10NB3), Veterans Health Administration, Department of 
Veterans Affairs, 810 Vermont Ave., NW., Washington, DC 20420, (303) 
331-7551. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: This proposed rule would amend part 51 of 
title 38, Code of Federal Regulations (CFR), to remove the requirement 
that a veteran receiving nursing home care in a State home must have 
resided in the State home for at least 30 consecutive days before VA 
would pay per diem when that veteran does not stay in the State home 
overnight. VA pays per diem to State homes for veterans who stay 
elsewhere overnight to create a ``bed hold,'' so that the State home 
reserves the veteran's bed until the veteran returns from a temporary 
absence. Typically, these temporary absences arise from a veteran's 
acute need for a higher level of care, such as a period of 
hospitalization. Temporary absences also arise for reasons other than 
hospital care, such as when a veteran travels to visit family members.
    This proposed rule would also clarify in 38 CFR 51.43 that VA 
calculates occupancy rate ``by dividing the total number of patients in 
the nursing home or domiciliary by the total recognized nursing home or 
domiciliary beds in that facility.'' This would be consistent with 
current practice, and would help ensure that State homes understand our 
methodology.
    The 30-day residency requirement for bed hold per diem payments was 
established in 2009 in 38 CFR 51.43(c), which stated: ``Per diem will 
be paid under Sec. Sec.  51.40 and 51.41 for each day that the veteran 
is receiving care and has an overnight stay. Per diem also will be paid 
when there is no overnight stay if the veteran has resided in the 
facility for 30 consecutive days (including overnight stays) and the 
facility has an occupancy rate of 90 percent or greater. However, these 
payments will be made only for the first 10 consecutive days during 
which the veteran is admitted as a patient for any stay in a VA or 
other hospital (a hospital stay could occur more than once in a 
calendar year) and only for the first 12 days in a calendar year during 
which the veteran is absent for purposes other than receiving hospital 
care.'' See 74 FR 19433.
    In the proposed rule that preceded the addition of Sec.  51.43, we 
stated that the basis for the 30-day residency requirement was that 
``State homes should receive per diem payments to hold beds only for 
permanent residents and only if the State home would likely fill the 
bed without such payments. Allowing payments for bed holds only after a 
veteran has been in a nursing home for at least 30 consecutive days 
(including overnight stays) appears to be sufficient to establish 
permanent residency.'' 73 FR 72402. In addition, the 2009 final rule 
confirmed VA's intent to make the 30-day rule a factor that directly 
affected eligibility for bed hold payments, stating: ``We believe that 
30 days is a minimal amount of time for demonstrating that a veteran 
intends to be a resident at the State home and that the veteran was not 
temporarily placed in the State home.'' 74 FR 19429.
    VA adopted the 30-day residency requirement as the measure for 
determining whether a veteran would likely return to a State home after 
not having stayed there overnight, and in turn whether the State home 
should receive continued per diem payments in the veteran's absence to 
hold the veteran's bed. Through application of this requirement, 
however, VA has come to recognize that duration of residency in a State 
home is not an accurate predictor of whether a veteran is likely to 
return to a State home after a temporary absence. For instance, with 
absences resulting from the veteran's need for hospital care, the 
veteran's health status while hospitalized is actually what determines 
whether and when he or she will return to a nursing home level of care 
at the State home. With absences resulting from non-hospital care 
reasons, the veteran in almost all instances communicates an intent to 
return to the State home within a specific period of time, or 
communicates that he or she will not be returning. With both types of 
absences, we no longer find that a veteran's period of residency at a 
State home is determinative as to whether the veteran will likely 
return to the State home. Therefore, we believe the 30-day residency 
requirement is unnecessary in ensuring standards of bed hold per diem 
payments, and propose to remove this requirement from 38 CFR 51.43(c).
    Based on our experience in applying Sec.  51.43(c) since 2009, we 
believe our determination of whether to pay bed hold per diem for 
veterans who are absent overnight from State homes should be based on 
whether the veteran's bed would otherwise be taken by another resident. 
The best predictor of whether a veteran's bed is likely to be taken by 
another resident during the veteran's absence is the State home's 
occupancy rate, not the length of time the veteran has resided in the 
State home. If a State home has sufficient beds to offer new residents 
so that it need not fill the veteran's bed during the veteran's 
absence, then per diem payments to hold the veteran's bed are not 
needed. If the State home does not have a sufficient number of 
available beds, then per diem payments should be

[[Page 59355]]

paid for a veteran during any absence, subject to the limitation set 
forth in the rest of Sec.  51.43(c) to ensure the bed is reserved for 
the veteran until he or she returns to the State home.
    Thus, the current 90 percent occupancy requirement for State homes 
in Sec.  51.43(c) would serve as the sole criterion to determine 
whether bed hold per diem is paid to State homes, and those payments 
would remain subject to the limitations currently in Sec.  51.43(c) 
(``Per diem also will be paid when there is no overnight stay if * * * 
the facility has an occupancy rate of 90 percent or greater. However, 
these payments will be made only for the first 10 consecutive days 
during which the veteran is admitted as a patient for any stay in a VA 
or other hospital (a hospital stay could occur more than once in a 
calendar year) and only for the first 12 days in a calendar year during 
which the veteran is absent for purposes other than receiving hospital 
care.''). Maintaining the occupancy measure and payment limitations for 
bed hold per diem payments, while removing the residency requirement, 
would help ensure that VA is able to provide stable nursing home care 
via State homes as we intend.
    Additionally, removing the 30-day residency requirement would bring 
VA more in line with generally accepted standards of practice for 
nursing home care. VA's other community nursing home care programs 
(such as the contract nursing home care program) do not have a similar 
residency requirement, and VA seeks to have a consistent bed hold 
policy for nursing home care provided to veterans in non-VA facilities. 
Moreover, it is administratively burdensome to track periods of 
residency in State homes across the country, as the total estimated 
average daily census for State homes is over 18,000 veterans in the 
nursing home level of care. This continuous tracking diverts 
significant VA resources, as this information must be monitored for 139 
state nursing homes 5 days a week at 97 VA Medical Centers (VAMC) of 
jurisdiction, for 52 weeks a year for approximately an hour a day. 
Assuming a GS-06, step 5 grade level employee at each VAMC tracks 
residency for those State nursing homes in its jurisdiction, the 
estimated cost to VA in continuing this practice is $418,000 annually. 
In comparison, VA estimates that 1,095 more per diem payments would be 
made per year if there were no residency requirement, for an estimated 
increased annual cost of $265,000. Based on these calculations, 
tracking residency, due to the current 30-day residency requirement, 
costs VA nearly 60 percent more than the amount of the projected 
increase in per diem payments that VA would make if the 30-day 
residency requirement were removed. In addition, tracking residency 
does not ensure veteran beds are held as we intend and does not 
contribute to our efforts in providing dependable nursing home care to 
veterans through State homes. Under the current rule, State homes also 
shoulder the administrative burden of tracking and reporting the 
residency dates of veterans, and would likely benefit from the removal 
of the 30-day requirement.
    Though in the past we believed a 30-day residency requirement 
helped ensure per diem was paid judiciously, VA now understands that 
the costs of this requirement outweigh possible savings. There have 
been numerous ongoing requests from the State home community and the 
National Association of State Veterans Homes (NASVH) for VA to remove 
the 30-day residency requirement for bed hold per diem payments. 
Because this rule would benefit veterans and liberalize a prerequisite 
for per diem payments, we do not believe that any members of the public 
would be adversely affected by this rule.

Administrative Procedure Act

    Concurrent with this proposed rule, we are publishing a separate, 
substantively identical direct final rule in the ``Rules and 
Regulations'' section of this Federal Register. (See RIN 2900-AO36). 
The simultaneous publication of these documents will speed notice and 
comment rulemaking under section 553 of the Administrative Procedure 
Act should we have to withdraw the direct final rule due to receipt of 
any significant adverse comment.
    For purposes of the direct final rulemaking, a significant adverse 
comment is one that explains why the rule would be inappropriate, 
including challenges to the rule's underlying premise or approach, or 
why it would be ineffective or unacceptable without a change.
    Under direct final rule procedures, if no significant adverse 
comment is received within the comment period, the direct final rule 
will become effective on the date specified in RIN 2900-AO36. After the 
close of the comment period, VA will publish a document in the Federal 
Register indicating that no significant adverse comment was received 
and confirming the date on which the final rule will become effective. 
VA will also publish in the Federal Register a notice withdrawing this 
proposed rule.
    However, if any significant adverse comment is received, VA will 
publish in the Federal Register a notice acknowledging receipt of a 
significant adverse comment and withdrawing the direct final rule. In 
the event the direct final rule is withdrawn because of any significant 
adverse comment, VA can proceed with the rulemaking by addressing the 
comments received and publishing a final rule. Any comments received in 
response to the direct final rule will be treated as comments regarding 
the proposed rule. VA will consider such comments in developing a 
subsequent final rule. Likewise, any significant adverse comment 
received in response to the proposed rule will be considered as a 
comment regarding the direct final rule.

Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as proposed to be 
revised by this proposed rulemaking, would represent the exclusive 
legal authority on this subject. Other than future amendments to this 
regulation or governing statutes, no contrary guidance or procedures 
would be authorized. All VA guidance would be read to conform with this 
rulemaking if possible or, if not possible, such guidance would be 
superseded by this rulemaking.

Paperwork Reduction Act

    This proposed rule contains no provisions constituting a collection 
of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3521).

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed 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. 601-612.
    The State homes that are subject to this proposed rulemaking are 
State government entities under the control of State governments. All 
State homes are owned, operated and managed by State governments except 
for a small number that are operated by entities under contract with 
State governments. These contractors are not small entities. 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.

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

[[Page 59356]]

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 proposed regulatory action have been examined and 
it has been determined not to be a significant regulatory action under 
Executive Order 12866.

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 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.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance numbers and titles are 
64.005, Grants to States for Construction of State Home Facilities; 
64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home 
Care; 64.015, Veterans State Nursing Home Care; 64.018, Sharing 
Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol 
and Drug Dependence.

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 September 10, 2012, for publication.

List of Subjects in 38 CFR Part 51

    Administrative practice and procedure, Claims, Grant programs-
health, Grant programs-veterans, Health care, Health facilities, Health 
professions, Health records, Mental health programs, Nursing homes, 
Reporting and recordkeeping requirements, Travel and transportation 
expenses, Veterans.

    Dated: September 24, 2012.
Robert C. McFetridge,
Director, Office 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 amend 38 CFR part 51 as follows:

PART 51--PER DIEM FOR NURSING HOME CARE OF VETERANS IN STATE HOMES

    1. The authority citation for part 51 continues to read as follows:

    Authority: 38 U.S.C. 101, 501, 1710, 1741-1743, 1745.

    2. Amend Sec.  51.43(c) by removing ``the veteran has resided in 
the facility for 30 consecutive days (including overnight stays) and'', 
and by adding a sentence at the end of the paragraph to read as 
follows:


Sec.  51.43  Per diem and drugs and medicines--principles.

* * * * *
    (c) * * * Occupancy rate is calculated by dividing the total number 
of patients in the nursing home or domiciliary by the total recognized 
nursing home or domiciliary beds in that facility.
* * * * *
[FR Doc. 2012-23777 Filed 9-26-12; 8:45 am]
BILLING CODE 8320-01-P