[Federal Register Volume 83, Number 6 (Tuesday, January 9, 2018)]
[Rules and Regulations]
[Pages 974-980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00232]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AQ08


Reimbursement for Emergency Treatment

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: The Department of Veterans Affairs (VA) revises its 
regulations concerning payment or reimbursement for emergency treatment 
for non-service-connected conditions at non-VA facilities to implement 
the requirements of a recent court decision. Specifically, this 
rulemaking expands eligibility for payment or reimbursement to include 
veterans who receive partial payment from a health-plan contract for 
non-VA emergency treatment and establishes a corresponding 
reimbursement methodology. This rulemaking also expands the eligibility 
criteria for veterans to receive payment or reimbursement for emergency 
transportation associated with the emergency treatment, in order to 
ensure that veterans are adequately covered when emergency 
transportation is a necessary part of their non-VA emergency treatment.

DATES: 
    Effective Date: This rule is effective on January 9, 2018.
    Comment Date: Comments must be received on or before March 12, 
2018.

ADDRESSES: Written comments may be submitted by email through http://www.regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue 
NW, Room 1063B, Washington, DC 20420; or by fax to (202) 273-9026. 
(This is not a toll-free number.) Comments should indicate that they 
are submitted in response to ``RIN 2900-AQ08, Reimbursement for 
Emergency Treatment.'' Copies of comments received will be available 
for public inspection in the Office of Regulation Policy and 
Management, Room 1063B, between the hours of 8:00 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 (FDMS) at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Joseph Duran, Director, Policy and 
Planning VHA Office of Community Care (10D1A1), Veterans Health 
Administration, Department of Veterans Affairs, 810 Vermont Avenue NW, 
Washington, DC 20420, (303-370-1637). (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: 38 U.S.C. 1725 authorizes VA to reimburse 
veterans for the reasonable value of emergency treatment for non-
service connected conditions furnished in a non-VA facility, if certain 
criteria are met. One requirement is that the veteran must be 
personally liable for the emergency treatment. As originally enacted in 
1999, the statute provided that a veteran is personally liable if the 
veteran ``has no entitlement to care or services under a health-plan 
contract,'' and ``no other contractual or legal recourse against a 
third party that would, in part or in whole, extinguish such liability 
to the provider.'' 38 U.S.C. 1725(b)(3)(B) and (C) (1999). VA 
interpreted that version of the statute as barring reimbursement for 
veterans with any coverage from either a health-plan contract or a 
third party because those veterans did not satisfy the requirement to 
have ``no entitlement . . . under a health-plan contract'' and ``no 
other . . . recourse against a third party.''
    In addition, the 1999 version of the statute distinguished 
``health-plan contract'' and ``third party'' by separately defining 
them. 38 U.S.C. 1725(f)(2)-(3)(1999).
    On February 1, 2010, Congress enacted the Expansion of Veteran 
Eligibility for Reimbursement Act, Public Law 111-137 (2010 Act), which 
amended section 1725. The legislative history of the 2010 Act provided:

    The Committee has learned that under current law the VA does not 
pay for emergency treatment for non-service connected conditions in 
non-VA facilities if the veteran has third-party insurance that pays 
any portion of the costs associated with such emergency treatment. 
This situation can inadvertently arise if a veteran has minimal 
health insurance coverage through a state-mandated automobile 
insurance policy. Consequently, if an emergency does occur, and the 
veteran has a policy containing such minimal coverage, the veteran 
may be responsible for essentially the full cost of emergency 
treatment. While some veterans are able to negotiate payment plans 
and debt forgiveness of a portion of their medical bills with the 
non-VA hospital where they received the emergency treatment, many 
veterans are without the financial resources to shoulder such a cost 
and are unaware that the VA would not be responsible for such 
emergency care. H.R. Rep. No. 111-55.

    The 2010 Act amended section 1725 by striking the phrase ``in 
part'' from section 1725(b)(3)(C). It also removed state-mandated 
automobile insurance policies from the definition of ``health-plan 
contract.'' In chief, the effect of the 2010 amendments is that partial 
payment from a third party is not a bar to reimbursement under section 
1725, assuming all of the other eligibility criteria are met; the 
third-party payment is only a bar to reimbursement if it fully 
extinguishes the veteran's personal liability. Thus, eligible veterans 
who receive only partial payment by the third party, including state-
mandated automobile insurance, are eligible for VA payment or 
reimbursement of the unpaid portion of their emergency medical 
expenses, subject to the payment limitations added by that same law.
    VA amended its regulations to comply with the 2010 Act. Relevant to 
this rulemaking, VA revised 38 CFR 17.1001(a)(5), 17.1002(g), and 
17.1005(e) and (f). Section 17.1001(a)(5) was amended to remove state-
mandated automobile insurance from the definition of ``health-plan 
contract.'' Section 17.1002(g) was amended to only prohibit 
reimbursement from VA if a third party extinguished the liability in 
whole, Sec.  17.1005(e) was amended to establish a methodology to 
reimburse veterans when a third-party payment partially extinguished 
the veteran's liability, and Sec.  17.1005(f) was promulgated to 
implement the limitation in 38 U.S.C. 1725(c)(4)(D) that VA may not 
reimburse any deductible, copayment, or similar payment that veterans 
owe to third parties. However, because the 2010 Act did not amend 
section 1725(b)(3)(B), pertaining to health-plan contracts, VA did not 
amend its corresponding regulation at Sec.  17.1002(f) that bars 
reimbursement from VA if the veteran is entitled to either partial or 
full payment from a health-plan contract. Similarly, VA did not specify 
in Sec.  17.1005(f) that it would not reimburse amounts for which the 
veteran is responsible under a health-plan contract because it was 
unnecessary to do so; consistent with VA's interpretation of the 2010 
Act, reimbursement or payment continued to be barred if the veteran had 
coverage under a health-plan contract.
    In Staab v. McDonald, 28 Vet. App. 50 (2016), the U.S. Court of 
Appeals for Veterans Claims (the Court) reversed a Board of Veterans' 
Appeals (the Board) decision denying a claim under section 1725. The 
Board had applied Sec.  17.1002(f) to conclude that partial payment of 
the emergency treatment by the veteran's health-plan contract barred VA 
reimbursement. On appeal, the veteran challenged Sec.  17.1002(f) as

[[Page 975]]

inconsistent with section 1725. The Court agreed, and in a precedential 
decision, held invalid and set aside Sec.  17.1002(f) and remanded the 
case.
    In so doing, the Court interpreted section 1725(b)(3)(B) to bar 
reimbursement only if a veteran's health-plan contract would wholly 
extinguish the veteran's liability. In other words, the Court 
interpreted the 2010 amendments relating to payment by a third party to 
also apply to section 1725(b)(3)(B) relating to payment by health-plan 
contracts.
    To reach this conclusion, the Court gave particular weight to 
sections 1725(c)(4) and (f)(3), which, in the Court's words, ``more 
broadly include health-plan contracts, including Medicare, in the 
category of a `third party.' '' In addition, the Court reasoned that 
its interpretation was consistent with the overall purpose of section 
1725, as amended, i.e., to permit reimbursement when a veteran is 
personally liable to the provider of emergency treatment for the costs 
of such care. The purpose of this rulemaking is to amend the pertinent 
VA regulations to comply with the holding of this Court decision.
    First, this interim final rule revises 38 CFR 17.1002(f). Section 
17.1002 establishes the criteria that must be met for veterans to 
receive payment or reimbursement under 38 U.S.C. 1725 for emergency 
treatment for non-service- connected conditions at non-VA facilities. 
Specifically, current Sec.  17.1002(f) bars reimbursement unless the 
veteran has, ``no coverage under a health-plan contract for payment or 
reimbursement, in whole or in part, for the emergency treatment.'' This 
rule revises the regulation to state that a veteran may be eligible for 
payment or reimbursement as long as the veteran does not have coverage 
under a health-plan contract that will fully extinguish the veteran's 
liability to the provider. This change reflects the Court's 
interpretation that partial coverage for the emergency treatment under 
a veteran's health-plan contract is not a bar to reimbursement under 
section 1725. Reimbursement is only barred if coverage under the 
health-plan contract wholly extinguishes the veteran's liability. We 
believe that this change comports with the holding of Staab. Because, 
in accordance with the Court's decision, VA will now provide payment or 
reimbursement on claims involving partial payment by a health-plan 
contract, we also amend Sec.  17.1005 to specifically clarify that VA 
does not have authority to reimburse copayments or similar payment the 
veteran owes under a health-plan contract. As noted, in implementing 
the 2010 Act, we did not address specifically VA's authority to 
reimburse such amounts owed under a health-plan contract, because 
payment or reimbursement in that circumstance was wholly barred. We do 
so now, based on the Court's decision in Staab that a veteran is 
eligible for payment or reimbursement when there is a partial payment 
by a health-plan contract, to make clear that the prohibition in 38 
U.S.C. 1725(c)(4)(D) (on VA reimbursing a veteran for any copayment or 
similar payment that the veteran owes a third party) applies to amounts 
owed by a veteran under a health-plan contract.
    To clarify the applicability of this regulation change, judicial 
decisions invalidating a statute or regulation, or VA's interpretation 
of a statute or regulation, cannot affect prior final VA decisions. 
See, Jordan v. Nicholson, 401 F.3d 1296 (Fed. Cir. 2005); Disabled 
American Veterans v. Gober, 234 F.3d 682, 697-98 (Fed. Cir. 2000). 
Therefore, VA will not retroactively pay benefits for claims filed 
under Sec.  17.1002(f) that were finally denied before April 8, 2016, 
the date of the Staab decision. In other words, VA can only apply the 
new Sec.  17.1002(f) to claims pending on or after April 8, 2016. We 
note that all claims under Sec.  17.1002(f) involving partial payment 
from a health-plan contract pending on April 8, 2016, or filed on or 
after April 8, 2016, have been held in abeyance pending the publication 
of this interim final rule. Therefore, all such Sec.  17.1002(f) claims 
will be processed using the regulatory revisions published in this 
rule.
    Second, this interim final rule revises 38 CFR 17.1003 related to 
emergency transportation to be consistent with our interpretation that 
the exercise of VA's authority under 38 U.S.C. 1725 should result in 
veterans' liability to providers of emergency treatment being 
extinguished, except for deductibles, copayments, coinsurance, or other 
similar payments owed by the veteran for which VA is barred from 
reimbursing under 38 U.S.C. 1725(c)(4)(D), as described above. Although 
section 1725 does not specifically authorize payment for emergency 
transportation, it authorizes payment for ``emergency treatment'' as 
defined in section 1725(f)(1). VA has interpreted the phrase 
``emergency treatment'' in section 1725(f)(1) to include emergency 
transportation if the transportation is provided as part of the 
emergency medical treatment administered at the non-VA facility. 
Current Sec.  17.1003 authorizes VA to provide payment or reimbursement 
under 38 U.S.C. 1725 for ambulance services (including air ambulance 
services) for transporting a veteran to a non-VA facility if certain 
criteria are met. We amend Sec.  17.1003(a), (c), and (d) and create a 
new paragraph (e) for the following reasons.
    The current regulation states that VA will pay for emergency 
transportation if ``[p]ayment or reimbursement is authorized under 38 
U.S.C. 1725 for emergency treatment provided at [a non-VA] facility (or 
payment or reimbursement could have been authorized under 38 U.S.C. 
1725 for emergency treatment if death had not occurred before emergency 
treatment could be provided).'' We have historically interpreted this 
paragraph to authorize reimbursement for emergency transportation only 
if VA approves and makes actual payment on the claim for the emergency 
treatment provided at the non-VA facility. The reason for this 
interpretation was that the emergency transportation was considered 
part of (not apart or distinct from) the claim for emergency treatment. 
If VA reimbursement was not authorized for the emergency treatment, 
reimbursement was not authorized separately for the emergency 
transportation (in other words, payment on the main treatment claim was 
essentially a condition precedent).
    Under current Sec.  17.1003(a), this results in denials of claims 
for reimbursement for the costs of emergency transportation when a 
third-party payment satisfies the claim for emergency medical 
treatment, despite the transportation claim meeting the other criteria 
for reimbursement by VA under 38 U.S.C. 1725. So if the veteran does 
not have any remaining liability for the treatment provided at the non-
VA facility due to satisfaction of the treatment claim by a third 
party, VA denies that veteran's claim for reimbursement of the 
emergency treatment and, in turn, reimbursement is not be authorized 
for their emergency transportation. In practice then, application of 
VA's existing regulations is in tension with VA's view that emergency 
transportation is part of emergency treatment. If VA's sole basis to 
deny a transportation claim is satisfaction by a third party of the 
related emergency treatment claim, even if that transportation claim 
meets all of the other requirements for reimbursement under 38 U.S.C. 
1725, VA is, in effect, treating the emergency transportation claim 
differently than the related emergency treatment claim.
    To address this, we now revise Sec.  17.1003(a). As amended, Sec.  
17.1003(a) authorizes reimbursement for emergency transportation even 
if the veteran is ineligible to receive

[[Page 976]]

reimbursement or payment for the emergency treatment, if the reason for 
that ineligibility is that the veteran is not personally liable for the 
emergency treatment due to satisfaction of the treatment claim by a 
third party, including a health-plan contract. We note that the veteran 
is still required to be personally liable for the emergency 
transportation as established in paragraphs (b)-(e) of the regulation. 
For example, if a veteran has Medicare insurance and the Medicare 
payment fully extinguishes the veteran's liability for the emergency 
treatment but does not cover the costs of emergency transportation, 
under the prior regulation, VA was not permitted to reimburse or pay 
for the emergency transportation because there was no remaining 
liability for the treatment. However, under the revised regulation, the 
veteran will be eligible to receive reimbursement or payment for the 
emergency transportation, aside from deductibles, copayments, or other 
similar payments owed by the veteran, as described above, assuming all 
the other eligibility criteria of that section are met.
    Therefore, we amend Sec.  17.1003(a) by retaining the general 
criteria that payment or reimbursement must be authorized under section 
1725 for emergency treatment provided at a non-VA facility, but we 
remove the parenthetical and instead list out the two exceptions for 
when payment does not have to be authorized in order for the veteran to 
be eligible for reimbursement: Paragraph (a)(1) says that payment does 
not have to be authorized for the emergency treatment if the veteran 
has no remaining liability for the emergency treatment because prior 
payment by non-VA, third party, sources extinguished the veteran's 
liability, and paragraph (a)(2) contains the language in the current 
parenthetical that authorization is not required if death occurred 
prior to when the treatment could have been provided.
    While not directly compelled by the Court's decision, this interim 
final rule also amends paragraphs (c) and (d) of Sec.  17.1003. These 
changes are necessitated by the Court's holding when read in concert 
with VA's longstanding unchanged regulatory interpretation that 
emergency transportation is an integral part of emergency treatment, as 
discussed above. Otherwise, current Sec.  17.1003 would operate in a 
manner that counteracts the changes to Sec.  17.1002(f) made by this 
rulemaking. Paragraphs (c) and (d) are therefore revised to allow 
veterans to receive reimbursement or payment for emergency 
transportation even if they receive partial payment under a health-plan 
contract or from a third party for the emergency transportation. We 
revise paragraph (c) to state that a veteran may be eligible for 
payment or reimbursement if the veteran does not have coverage under a 
health-plan contract that will fully extinguish the veteran's liability 
to the provider. Similarly, we revise paragraph (d) by stating that the 
veteran may be eligible if the veteran has no contractual or legal 
recourse against a third party that could reasonably be pursued for the 
purpose of fully extinguishing the veteran's liability to the provider.
    We also amend Sec.  17.1003 by creating a new paragraph (e). 
Paragraph (e) states separately the requirement that was formerly in 
paragraph (c) that to be eligible for reimbursement or payment for 
emergency transportation, the veteran cannot be eligible for 
reimbursement for emergency treatment under 38 U.S.C. 1728. This 
requirement was moved for clarity so that each distinct requirement is 
located in a separate paragraph.
    Third, this interim final rule revises Sec.  17.1005 pertaining to 
the payment methodologies and limitations used to calculate payment and 
reimbursement for claims filed under section 1725. Currently, Sec.  
17.1005(e) sets forth VA's payment methodology when a veteran has 
contractual or legal recourse against a third party whose payment only 
partially extinguishes the veteran's liability to the provider of 
emergency treatment. This provision was originally drafted to address 
only third party situations described in section 1725(b)(2)(C), as 
interpreted before the Court decision. If VA applies the methodology in 
current Sec.  17.1005(e) to claims involving partial payments under a 
health-plan contract, it is likely that partial payment under a 
veteran's health-plan contract will exceed the maximum amount that VA 
can pay based on the current payment limitation. (Section 1725(c)(1) 
requires VA to establish the maximum amount that can be paid on claims 
under section 1725(a); for eligible claims where a third party has 
already or will make partial payment, the law still requires the VA 
payment not to exceed that maximum amount.) For this reason, these 
veterans would in most cases be liable to the provider for the 
remaining charges.
    We underscore that the payment limitation in Sec.  17.1005 was 
derived based on an understanding of how payers in the health care 
industry establish payment rates and then VA deliberately reduced the 
maximum payable amount to reflect Congress' original purpose in 
enacting section 1725(c)(1), ensuring that providers had incentive to 
seek other sources of payment before pursuing payment from the 
government. The limitation, which remains today, was not intended to 
apply to claims involving partial payments made under a health-plan 
contract because current Sec.  17.1002(f) bars reimbursement in that 
circumstance. This is why partial payments made under a health-plan 
contract will exceed VA's current maximum payment limitation and why 
applying the current maximum in all instances would result in VA not 
making payments in most cases where there is payment under a health-
plan contract. Applying the current maximum in all cases would thus be 
at cross purposes with the other proposed amendments requiring VA to 
exercise its authority under 38 U.S.C. 1725 when there is partial 
payment by a health-plan contract.
    (This is not to say that this cannot, or has not, occurred in 
connection with claims involving partial payment by a third party other 
than a health-plan contract. In those cases, however, the amount of the 
partial payment typically does not exceed the amount that VA can pay 
under the statute and Sec.  17.1005(e), e.g., partial payments made by 
state-mandated automobile reparations insurance carriers, and so VA's 
authorized payments generally succeed in extinguishing these veterans' 
remaining personal liability to their providers. In cases where the 
third-party payment exceeded VA's payment limits, VA believes that 
veterans with remaining liability simply declined to file claims with 
VA.)
    VA believes that claims properly authorized for payment or 
reimbursement under 38 U.S.C. 1725 should invariably extinguish the 
veterans' liability to the provider, aside from any deductibles, 
copayments, or other similar payments owed by the veteran to a third 
party or under a health-plan contract as required by law. This includes 
claims where partial payment is made by a third-party under a health-
plan contract. This is why amending the methodology in Sec.  17.1005(e) 
to ensure VA can make a payment on claims involving partial payment 
under a health-plan contract is an essential logical outgrowth of the 
Court's decision and consistent with the other amendments made by this 
rulemaking. Otherwise, this rulemaking will merely amend Sec.  
17.1002(f), in accordance with the Court decision, without providing an 
effective mechanism to ensure its complete, successful, timely, and 
practical application. As explained below, any

[[Page 977]]

payment by VA, if accepted by the provider and not rejected and 
refunded within 30 days from the date of receipt, extinguishes the 
remainder of the veteran's liability, thereby ensuring VA is 
responsible for the remainder of the veteran's liability instead of the 
veteran.
    We revise paragraph (a) and remove paragraphs (e) and (f) so that 
paragraph (a) now addresses, in one place, all reimbursement and 
payment methodologies applicable to claims approved under section 1725.
    As revised, paragraph (a)(1) establishes the payment methodology to 
be used when VA is the sole payer on the claim. This includes 
situations when a veteran does not have coverage for the treatment 
under a health-plan contract and does not have any other legal or 
contractual recourse against a third party for payment of the emergency 
treatment expenses. Historically, this payment methodology was 
established in paragraph (a) and provided that VA would pay the lesser 
of the amount for which the veteran is personally liable or 70 percent 
of the amount under the applicable Medicare fee schedule rate, an 
amount that VA and Congress believed would ensure providers still had 
sufficient incentive to pursue reimbursement from other liable parties 
before seeking reimbursement from VA. This paragraph is revised merely 
to clarify that it is applicable when the veteran is the sole payer and 
is not eligible to receive partial payment from a third party, to 
include under a health-plan contract. Paragraph (a)(1) now states that 
where an eligible veteran has personal liability to a provider of 
emergency treatment and has no contractual or legal recourse against a 
third party, to include under a health-plan contract, VA will pay the 
lesser of the amount for which the veteran is personally liable or 70 
percent of the applicable Medicare fee schedule rate.
    New paragraph (a)(2) applies in cases where VA will be the 
secondary payer because the veteran is entitled to partial payment 
under a health-plan contract or has other legal or contractual recourse 
against a third party that results in partial payment of the emergency 
treatment costs. Paragraph (a)(2)(i) requires VA to pay according to 
the current methodology, which is the difference between the amount VA 
would have paid under paragraph (a)(1) for the cost of the emergency 
treatment and the amount paid or payable by the third party. However, 
that provision will apply only when the amount calculated under 
paragraph (a)(2)(i) is greater than zero, meaning that VA is authorized 
to make a payment to extinguish the veteran's liability. If the payment 
amount calculated under paragraph (a)(2)(i) would be zero and the 
veteran has remaining liability to the provider, VA is adopting an 
alternative method to ensure we can make payment and extinguish each 
veteran's personal liability. If the amount paid under paragraph 
(a)(2)(i) would be zero, therefore, the payment method in paragraph 
(a)(2)(ii) will apply. Paragraph (a)(2)(ii) requires VA to pay the 
lesser of the remainder of the veteran's personal liability after 
payment is made by the third party (or health-plan contract) or 70 
percent of the applicable Medicare fee schedule amount for the care 
provided. Similar to paragraph (a)(1), if the veteran's remaining 
liability under paragraph (a)(2)(ii) is less than the 70 percent of the 
applicable Medicare fee schedule amount, VA's payment will equal the 
amount of the veteran's liability, and the veteran will have no 
personal liability for the treatment expenses. If the lesser amount is 
the applicable Medicare rate, VA will pay that rate, even if the amount 
billed by the provider is higher, and acceptance of the VA payment by 
the provider will extinguish the remainder of the veteran's liability. 
This methodology sets an appropriate ``cap'' on VA's payment to ensure 
providers have sufficient incentive to pursue the primary sources of 
payment while also ensuring that VA has an opportunity to make a 
payment which, if accepted by the provider, extinguishes the veteran's 
liability. This is consistent with section 1725(a)(1), which requires 
VA to reimburse a veteran for the reasonable value of the emergency 
treatment furnished to the veteran, and section 1725(c)(1)(A), which 
requires VA to establish the maximum amount payable under subsection 
(a); the application of the Medicare fee schedule represents the 
Federal government's standard for what constitutes appropriate payment 
amounts under the law.
    Paragraph (a)(3) establishes an alternative methodology to use when 
there is no applicable Medicare Fee Schedule rate for the emergency 
services provided. In such cases, we will use the amount already 
established in our own fee schedule, under 38 CFR 17.56(a)(2)(i)(B). 
This is necessary to ensure that all potential emergency services are 
covered by this rule.
    Paragraph (a)(4) is similar to current paragraph (e)(3). It states 
that the provider will consider payments under this section as payment 
in full and extinguish the veteran's liability to the provider. In 
other words, if the provider accepts and does not timely refund VA's 
payment, under either paragraph (a)(1), (a)(2), or (a)(3), the provider 
must consider the payment as payment in full and the provider cannot 
submit additional charges to the veteran for payment. 38 U.S.C. 
1725(c)(4)(C). In addition, paragraph (a)(4) includes a parenthetical 
that explains that neither the absence of a contract or agreement 
between the Secretary and the provider nor any provision of a contract, 
agreement, or assignment to the contrary shall operate to modify, 
limit, or negate the requirement in the paragraph. The ability of the 
provider to reject and refund VA payment within 30 days from the date 
of receipt and the parenthetical at the end of the paragraph are both 
included in order to clarify the rights and responsibilities under this 
paragraph which are established in section 1725(c)(3).
    Paragraph (a)(5) restates current paragraph (f), clarifying that VA 
will not reimburse a claimant under this section for any deductible, 
copayment, coinsurance, or similar payment that the veteran owes the 
third party or is obligated to pay under a health-plan contract. This 
is consistent with 38 U.S.C. 1725(c)(4)(D), which, as noted above 
prohibits VA from reimbursing a veteran for any copayment or similar 
payment that the veteran owes a third party or for which the veteran is 
responsible under a health-plan contract.

Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as revised by this 
interim final rulemaking, represents VA's implementation of its legal 
authority on this subject. Other than future amendments to this 
regulation or governing statutes, no contrary guidance or procedures 
are authorized. All existing or subsequent VA guidance must be read to 
conform with this rulemaking if possible or, if not possible, such 
guidance is superseded by this rulemaking.

Administrative Procedure Act

    In accordance with 5 U.S.C. 553(b)(3)(B) and (d)(3), the Secretary 
of Veterans Affairs has concluded that there is good cause to publish 
this rule without prior opportunity for public comment and to publish 
this rule with an immediate effective date. As explained above, in a 
precedential decision, the Court invalidated 38 CFR 17.1002(f), holding 
that partial payment from a health-plan contract was not a bar to 
reimbursement by VA for emergency treatment rendered for a non-service-
connected condition at a non-VA facility. This means VA is required to 
process all pending, non-

[[Page 978]]

final claims where veterans receive(d) partial payment from health-plan 
contracts, assuming all the other requirements of 38 U.S.C. 1725 are 
met.
    VA initially disagreed with the Court's decision. It unsuccessfully 
sought reconsideration of the decision in 2016 and ultimately the 
Government appealed the Court decision to the U.S. Court of Appeals for 
the Federal Circuit (Court of Appeals). At the start of VA's efforts to 
obtain reversal of the decision in 2016, VA necessarily starting 
holding in abeyance all affected claims. As of September 29, 2017, VA 
is holding almost 822,000.
    While the appeal was pending before the Court of Appeals, VA made 
the decision in 2017 to withdraw its appeal and to proceed with 
rulemaking and then the processing of claims being held in abeyance. 
The Government's appeal unavoidably delayed processing of these claims, 
and the additional time associated with a public comment period would 
cause further delay, which VA believes would cause hardship to veterans 
and is contrary to the public interest.
    As explained above, VA's current payment methodology would 
typically result in partial payments under health-plan contracts 
exceeding VA's maximum allowable amount, leaving many, if not most, 
veterans' still financially liable to their providers for the remaining 
costs of their emergency treatment. Merely revising Sec.  17.1002(f) to 
implement the Court decision without, at the same time, amending the 
payment methodology to avoid this undesired result would, for all 
practical purposes, result in unsound, ineffective, incomplete 
rulemaking. We would provide the right to payment without the means by 
which to achieve the goal in practice. Public interest therefore 
compels concomitant revisions be made to the payment methodology.
    Similarly, as explained above, under current regulations, there are 
circumstances wherein VA must deny otherwise eligible claims for 
reimbursement solely because of satisfaction of the related treatment 
claim by a third-party payer. VA believes this is inconsistent with our 
interpretation of 38 U.S.C. 1725, particularly our view that emergency 
transportation is part and parcel of emergency treatment, and VA 
believes that failing to remedy that would be contrary to the public 
interest because it would also result in veterans receiving no 
reimbursement, causing financial hardship for veterans.
    During recent confirmation hearings for the Secretary of the 
Department, Senator Rounds expressed frustration that VA had not 
originally complied with the amendments to section 1725 made by the 
Emergency Care Fairness Act (ECFA) (2010), and he criticized VA for 
waiting for 6 years until it received the adverse Court decision to 
change its interpretation of section 1725 to accord with the 
Congressional drafters original intent. See Congressional Record, 
November 30, 2016, pages S6609-S6610. As part of his comments, the 
Senator noted that most affected by VA's failure to implement the ECFA 
amendments as originally intended (and confirmed by the Court decision) 
mostly affected elderly veterans, many of whom live on fixed incomes 
and have limited financial resources to pay medical bills. Id. He 
provided anecdotal evidence of veterans being pursued for payment of 
these expenses by collection agencies while these claims have been held 
in abeyance. Id. He also expressed additional concern that this 
situation may be playing into the high rate of veteran suicide among 
elderly veterans and so simply found VA's holding of claims to be 
unacceptable. Id. In response, the Secretary assured the Senator, the 
Committee, and the general public at large that VA would act quickly to 
rectify this situation and get these claims processed.
    Even before this, in December 2016, Senator Rounds and 21 other 
Senators wrote the Department expressing these same concerns, with the 
additional concern that these veteran-claimants may not seek needed 
care in the future out of fear of incurring additional medical bills.
    In addition, the public record, e.g., articles by USA Today, Stars 
and Stripes, etc., Veterans Service Organizations, and social media, 
includes reports readily available on the internet about the Court 
decision as well as follow-up stories tracking VA's actions. They 
convey a collective sense of concern for claimants who are still 
experiencing continued delays in getting their claims processed.
    For these reasons, good cause exists to publish this rule without 
prior opportunity for public comment and to publish this rule with an 
immediate effective date. Thus, the Secretary issues this rule as an 
interim final rule. VA will consider and address comments that are 
received within 60 days of the date this interim final rule is 
published in the Federal Register.

Paperwork Reduction Act

    This interim final 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 the adoption of this interim 
final 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. It will not directly affect any 
small entities as they are defined under the Act. Therefore, pursuant 
to 5 U.S.C. 605(b), this interim final rule will be exempt from the 
initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

Executive Orders 12866, 13563, and 13771

    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 OMB has 
determined to be an economically significant regulatory action because 
it will have an annual effect on the economy of $100 million or more. 
VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48

[[Page 979]]

hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's website 
at http://www.va.gov/orpm by following the link for VA Regulations 
Published from FY 2004 through FYTD. This rule is not subject to the 
requirements of E.O. 13771 because this rule results in no more than de 
minimis costs.

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 the 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 one year. This interim final rule will 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 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.

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. Gina S. 
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, 
approved this document on July 14, 2017, for publication.

    Dated: January 4, 2018.
Michael Shores,
Director, Regulation Policy & Management, Office of the Secretary 
Department of Veterans Affairs.

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

PART 17--MEDICAL

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

    Authority: 38 U.S.C. 501, and as noted in specific sections.
* * * * *

0
2. Amend Sec.  17.1002 by revising paragraph (f) to read as follows:


Sec.  17.1002  Substantive conditions for payment or reimbursement.

* * * * *
    (f) The veteran does not have coverage under a health-plan contract 
that would fully extinguish the medical liability for the emergency 
treatment (this condition cannot be met if the veteran has coverage 
under a health-plan contract but payment is barred because of a failure 
by the veteran or the provider to comply with the provisions of that 
health-plan contract, e.g., failure to submit a bill or medical records 
within specified time limits, or failure to exhaust appeals of the 
denial of payment);
* * * * *

0
3. Amend Sec.  17.1003 by:
0
a. Revising paragraphs (a), (c), and (d).
0
b. Adding paragraph (e).
    The revisions and addition read as follows:


Sec.  17.1003  Emergency transportation.

* * * * *
    (a) Payment or reimbursement is authorized under 38 U.S.C. 1725 for 
emergency treatment provided at a non-VA facility, or payment or 
reimbursement would have been authorized under 38 U.S.C. 1725 for 
emergency treatment had:
    (1) The veteran's personal liability for the emergency treatment 
not been fully extinguished by payment by a third party, including 
under a health-plan contract; or
    (2) Death had not occurred before emergency treatment could be 
provided;
* * * * *
    (c) The veteran does not have coverage under a health-plan contract 
that would fully extinguish the medical liability for the emergency 
transportation (this condition is not met if the veteran has coverage 
under a health-plan contract but payment is barred because of a failure 
by the veteran or the provider to comply with the provisions of that 
health-plan contract);
    (d) If the condition for which the emergency transportation was 
furnished was caused by an accident or work-related injury, the 
claimant has exhausted without success all claims and remedies 
reasonably available to the veteran or provider against a third party 
for payment of such transportation; and the veteran has no contractual 
or legal recourse against a third party that could reasonably be 
pursued for the purpose of fully extinguishing the veteran's liability 
to the provider; and
    (e) If the veteran is not eligible for reimbursement for any 
emergency treatment expenses under 38 U.S.C. 1728.
* * * * *

0
4. Amend Sec.  17.1005 by:
0
a. Revising paragraph (a).
0
b. Removing paragraph (e).
0
c. Removing paragraph (f).
    The revisions read as follows:


Sec.  17.1005  Payment limitations.

    (a) Payment or reimbursement for emergency treatment (including 
emergency transportation) under 38 U.S.C. 1725 will be calculated as 
follows:
    (1) If an eligible veteran has personal liability to a provider of 
emergency treatment and no contractual or legal recourse against a 
third party, including under a health-plan contract, VA will pay the 
lesser of the amount for which the veteran is personally liable or 70 
percent of the applicable Medicare fee schedule amount for such 
treatment.
    (2) If an eligible veteran has personal liability to a provider of 
emergency treatment after payment by a third party, including under a 
health-plan contract, VA will pay:
    (i) The difference between the amount VA would have paid under 
paragraph (a)(1) of this section for the cost of the emergency 
treatment and the amount paid (or payable) by the third party, if that 
amount would be greater than zero, or;
    (ii) If applying paragraph (a)(2)(i) of this section would result 
in no payment by VA, the lesser of the veteran's remaining personal 
liability after such third-party payment or 70 percent of the 
applicable Medicare fee schedule amount for such treatment.

[[Page 980]]

    (3) In the absence of a Medicare fee schedule rate for the 
emergency treatment, VA payment will be the lesser of the amount for 
which the veteran is personally liable or the amount calculated by the 
VA Fee Schedule in Sec.  17.56 (a)(2)(i)(B).
    (4) Unless rejected and refunded by the provider within 30 days 
from the date of receipt, the provider will consider VA's payment made 
under paragraphs (a)(1), (a)(2), or (a)(3) of this section as payment 
in full and extinguish the veteran's liability to the provider. 
(Neither the absence of a contract or agreement between the Secretary 
and the provider nor any provision of a contract, agreement, or 
assignment to the contrary shall operate to modify, limit, or negate 
the requirement in the preceding sentence.)
    (5) VA will not reimburse a veteran under this section for any 
copayment, deductible, coinsurance, or similar payment that the veteran 
owes the third party or is obligated to pay under a health-plan 
contract.
* * * * *
[FR Doc. 2018-00232 Filed 1-8-18; 8:45 am]
BILLING CODE 8320-01-P