[Federal Register Volume 83, Number 11 (Wednesday, January 17, 2018)]
[Proposed Rules]
[Pages 2396-2412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00332]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AP02


Civilian Health and Medical Program of the Department of Veterans 
Affairs

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
regulations governing the Civilian Health and Medical Program of the 
Department of Veterans Affairs (CHAMPVA). The proposed revisions would 
clarify and update these regulations to conform to changes in law and 
policy that control the administration of CHAMPVA and would include 
details concerning the administration of CHAMPVA that are not reflected 
in current regulations. The proposed revisions would also expand 
covered services and supplies to include certain preventive services 
and eliminate cost-share amounts and deductibles for certain covered 
services.

DATES: Written comments must be received on or before March 19, 2018.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to the Director, 
Regulation and Policy Management (00REG), 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

[[Page 2397]]

response to ``RIN 2900-AP02, Civilian Health and Medical Program of the 
Department of Veterans Affairs.'' 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 at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Joseph Duran, Director, Policy and 
Planning, Office of Community Care (OCC), 3773 Cherry Creek North 
Drive, Denver, Colorado 80209, [email protected], (303) 370-1637. 
(This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: The Civilian Health and Medical Program of 
the Department of Veterans Affairs (CHAMPVA) is a health benefits 
program in which the Department of Veterans Affairs (VA) shares the 
cost of covered medical care services and supplies with spouses, 
children, survivors, and certain caregivers of veterans who meet 
eligibility criteria under 38 U.S.C. 1781. CHAMPVA beneficiaries must 
not be eligible for TRICARE, a health care program administered by the 
Department of Defense (DoD) that is also authorized to provide health 
care to certain family members of veterans. Certain Primary Family 
Caregivers designated under 38 U.S.C. 1720G(a)(7)(A) are eligible under 
section 1781 as long as they are not entitled to services under a 
health-plan contract as that term is defined in 38 U.S.C. 1725(f).
    Under section 1781, VA ``shall provide for medical care in the same 
or similar manner and subject to the same or similar limitations as 
medical care is furnished to certain dependents and survivors of active 
duty and retired members of the Armed Forces under chapter 55 of title 
10 [United States Code] (CHAMPUS).'' 38 U.S.C. 1781(b). CHAMPUS was the 
original program administered by DoD to provide civilian health 
benefits for active duty military personnel, military retirees, and 
their dependents. 32 CFR 199.1. Although the CHAMPUS program is still 
referenced in DoD regulations, DoD effectively replaced the CHAMPUS 
program with what is commonly known as the ``TRICARE Standard'' plan 
(``TRICARE''). See 32 CFR 199.1(r), 199.17(a)(6)(ii)(C) (identifying 
``TRICARE Standard'' as the basic CHAMPUS program). TRICARE's current 
benefit structure offers varying degrees of medical benefits under 
multiple plan options beyond its Standard plan, but we administer 
CHAMPVA in the same or similar manner as TRICARE Standard only, because 
that basic program is the one that is referenced by the CHAMPUS 
authority. Thus, all references in this rulemaking to ``TRICARE'' are 
to the TRICARE Standard plan, which we refer to simply as ``TRICARE'' 
throughout most of this rulemaking for ease of reference.
    VA interprets the mandate in 38 U.S.C. 1781(b) to administer 
CHAMPVA in the ``same or similar manner . . . as medical care is 
furnished . . . under title 10 chapter 55 (CHAMPUS)'' to mean that we 
must generally administer CHAMPVA in a ``same or similar manner'' as 
the TRICARE Standard plan. The phrase ``same or similar manner'' does 
not require the programs to be administered in an identical manner. 
Rather, we broadly interpret this language as affording us needed 
flexibility to administer the program for CHAMPVA beneficiaries. For 
this reason, not every aspect of CHAMPVA will find a corollary in the 
TRICARE Standard Plan.
    TRICARE has undergone changes in legal authority and policy that 
have prompted these proposed revisions to our CHAMPVA regulations. This 
rulemaking is intended to ensure that our regulations continue to be, 
again broadly speaking, the same or similar to the regulations and 
policies governing TRICARE. As noted throughout this proposed rule, 
there are necessary variations from TRICARE, particularly due to 
TRICARE's current benefit structure with varying degrees of medical 
benefits under multiple plan options, but we believe these variations 
satisfy the same or similar requirement in 38 U.S.C. 1781(b).
    This rulemaking also proposes clarifications and revisions that 
will improve our ability to effectively administer CHAMPVA, as well as 
technical revisions to make our regulations more understandable.

17.270 General Provisions and Definitions

    Current Sec.  17.270(a) broadly discusses general administrative 
provisions of CHAMPVA, and current Sec.  17.270(b) establishes certain 
definitions for the CHAMPVA regulations. We would revise the title of 
Sec.  17.270 to clearly indicate that it contains both general 
provisions as well as definitions and would revise and reorganize the 
current definitions as well as add new definitions. Finally, we would 
add a new paragraph (c) to permit VA to waive, under certain 
circumstances, any requirements in the CHAMPVA regulations that are not 
otherwise required by statute, as is allowed under TRICARE. See 32 CFR 
199.1(n). Waiver would be limited to very unusual and limited 
circumstances when waiver was determined to be in the best interests of 
VA; would not set a precedent for future decisions; and would not be 
used to deny any individual any right, benefit, or privilege provided 
to him or her by statute or these regulations.
    Proposed Sec.  17.270(a) would continue to provide an overview of 
CHAMPVA, including a general summary of the manner in which CHAMPVA is 
administered. We would refer to CHAMPUS, as we do in the current 
regulation, but would also reference TRICARE because the reference to 
CHAMPUS is outdated, as explained above, and may be misunderstood by 
CHAMPVA beneficiaries. Current Sec.  17.270(a) states that CHAMPVA is 
administered by the ``Health Administration Center'' (HAC) (referred to 
now as the Office of Community Care (OCC)), which is located in Denver, 
Colorado. We propose to delete this statement because that fact is not 
substantively relevant to the regulations. These revisions are not 
substantively different from current Sec.  17.270(a).
    Proposed Sec.  17.270(a)(1) would state that an authorized non-VA 
provider may provide medical services and supplies that are covered by 
CHAMPVA. This is current practice and would reflect in regulation VA's 
authority to provide CHAMPVA-covered services and supplies under 38 
U.S.C. 1781(b)(2). As explained in greater detail below in connection 
with proposed Sec.  17.272(b)(3), CHAMPVA-covered services and supplies 
are those provided by authorized non-VA providers who agree to provide 
covered services and supplies to CHAMPVA beneficiaries in exchange for 
payment of the CHAMPVA determined allowable amount. Proposed Sec.  
17.270(a)(2) would also reference VA's alternate authority under 
section 1781(b) to provide medical care to CHAMPVA beneficiaries 
through VA medical facilities equipped to provide the care and services 
if such resources are not being used for the care of eligible veterans. 
This initiative is called the CHAMPVA In-house Treatment Initiative 
(CITI) and would be referenced as such in proposed Sec.  17.270(a)(2). 
CITI affords beneficiaries the same medical services available to 
veterans. CITI claims submitted to OCC are processed in the same manner 
as all other CHAMPVA claims. However, a monthly transfer of funds, or 
Transfer

[[Page 2398]]

Dispersing Authority (TDA), from OCC to the providing VA facility is 
used to reimburse CITI claims whereas electronic funds transfer or 
paper checks are used to reimburse beneficiaries and providers for non-
CITI claims.
    With regards to CHAMPVA beneficiaries receiving care in VA medical 
facilities through CITI, we have historically interpreted section 
1781(b) to mean that such care may be provided only if the CHAMPVA 
beneficiary is not also eligible for Medicare benefits. We base this 
interpretation on the fact that CHAMPVA has always been the last payer 
for CHAMPVA-covered medical services and supplies when a CHAMPVA 
beneficiary has Medicare (included in this rulemaking's definition of 
``other health insurance'' (OHI), see 38 U.S.C. 1781(d)(2)). The 
mandated coordination of benefits found in section 1781(d)(2) is 
essentially the same as the requirement in TRICARE codified at 32 CFR 
199.8, which provides that if a TRICARE beneficiary is eligible for 
both Medicare and TRICARE, Medicare is the primary payer and TRICARE is 
the secondary payer. In addition, this policy limitation for CITI is 
reasonable because VA is a publicly funded health care system that 
cannot bill Medicare (see section 1814(c) and section 1835(d) of the 
Social Security Act, codified at 42 U.S.C. 1395f(c) and 1395n(d)). 
Moreover, Medicare is an entitlement program, whereas the provision of 
CHAMPVA medical benefits is subject to the availability of 
appropriations which, for any given time period, might or might not be 
sufficient to cover all CHAMPVA-covered medical services and supplies 
in a VA medical facility. Requiring beneficiaries to use their Medicare 
benefits first accomplishes our goal of protecting all patients' access 
to care. Therefore, we would further clarify in proposed Sec.  
17.270(a)(2) that any CHAMPVA beneficiary who is also eligible for 
Medicare benefits may not receive medical services and supplies through 
CITI.
    Proposed Sec.  17.270(a)(3) would newly indicate in regulation that 
outpatient prescription medications may be provided to certain CHAMPVA 
beneficiaries through Medications by Mail (MbM), administered by VA. 
Proposed paragraph (a)(3)(i) would further provide that VA's MbM 
provides prescription medications through the mail to CHAMPVA 
beneficiaries who do not have any OHI that pays for prescriptions, 
including Medicare Part D. This restriction largely is consistent with 
TRICARE policy on the provision of medications by mail, except that 
TRICARE covers prescribed medications for beneficiaries with OHI in two 
instances: When the prescribed medication is not covered by the OHI or 
when the beneficiary's OHI prescription benefit has been exhausted. See 
TRICARE Pharmacy Program Handbook (October 2015), pages 18-19. CHAMPVA 
is unable to duplicate these two exceptions due to system limitations, 
meaning that CHAMPVA will only provide prescription medications through 
the mail to beneficiaries who do not have any OHI prescription 
coverage. Despite this, CHAMPVA's inclusion of prescription medications 
is, broadly speaking, sufficiently similar to TRICARE that VA remains 
in substantial compliance with the requirements of section 1781(b).
    Proposed paragraph (a)(3)(ii) would provide that smoking cessation 
pharmaceutical supplies are available only through MbM. Section 713 of 
the Duncan Hunter National Defense Authorization Act for Fiscal Year 
2009, Public Law 110-417 (October 14, 2008) (``2009 NDAA'') required 
DoD to establish a smoking cessation program under TRICARE under which 
specified smoking cessation benefits are to be made available to 
beneficiaries who are not also eligible for Medicare. This TRICARE 
benefit is codified at 32 CFR 199.4(e)(30). As to the pharmaceutical 
component of this TRICARE benefit, smoking cessation pharmaceutical 
agents (which VA refers to as pharmaceutical supplies) are available 
only through Military Treatment Facility (MTF) pharmacies or the 
TRICARE Mail Order Program. See 32 CFR 199.4(e)(30)(ii)(A) and 
199.21(h)(2)(iii). Similar to 32 CFR 199.4(e)(30)(i), proposed Sec.  
17.270(a)(3)(ii) would provide that the same smoking cessation supplies 
will be made available to CHAMPVA beneficiaries who are not eligible 
for Medicare. Additionally, smoking cessation pharmaceutical supplies 
would be available only through MbM. For purposes of CITI, we would not 
provide smoking cessation pharmaceutical supplies through VA facility 
pharmacies because it is administratively more efficient for CHAMPVA to 
provide these through MbM, and because, in complying with the 
requirements of section 1781(b), as discussed above, VA facility 
pharmacies would be required to administer any needed smoking cessation 
pharmaceutical supplies first to veterans before providing them to 
CHAMPVA beneficiaries. We would also remove the restriction on smoking 
cessation services and supplies in current Sec.  17.272(a)(57), as 
discussed later in this proposed rule.
    For clarity, we would establish abbreviations for the Civilian 
Health and Medical Program of the Department of Veterans Affairs as 
``CHAMPVA'' and the Department of Veterans Affairs as ``VA.'' The 
current regulations refer to the part of VA that administratively 
handles CHAMPVA claims as the ``Center'' in several places (see current 
Sec. Sec.  17.275-17.277), and to the ``Health Administration Center'' 
in other places (see current Sec. Sec.  17.270, 17.275-17.276), and we 
believe that referring to ``VA'' is more appropriately descriptive and 
would eliminate ambiguity.
    Proposed Sec.  17.270(b) would establish definitions for the 
CHAMPVA regulations. We would define ``accepted assignment'' as the 
action of an authorized non-VA provider who accepts responsibility for 
the care of a CHAMPVA beneficiary and thereby agrees to accept the 
CHAMPVA determined allowable amount as full payment for services and 
supplies rendered to the beneficiary. This extinguishes the 
beneficiary's payment liability to the provider with the exception of 
applicable cost shares and deductibles. This definition is consistent 
with our explanation for proposed Sec.  17.272(b)(3), which further 
outlines the necessity for defining ``accepted assignment.'' Our 
current regulations do not define the term ``authorized provider,'' but 
the term ``authorized provider'' (and variations thereof) is used 
throughout current Sec.  17.272 to refer to an institutional or 
individual provider of CHAMPVA-covered services and supplies. The term 
is used to describe persons or institutions that are considered 
appropriately licensed or credentialed to competently provide medical 
services and supplies to CHAMPVA beneficiaries and that VA will pay to 
provide such services and supplies. In addition, an ``authorized 
provider'' has historically been interpreted in CHAMPVA to be a non-VA 
medical provider. To capture this historical interpretation in full, we 
would define an ``authorized non-VA provider'' to mean an individual or 
institutional non-VA provider of CHAMPVA-covered medical services and 
supplies who is licensed or certified by a State to provide the covered 
medical services and supplies, or is otherwise certified by an 
appropriate national or professional association that sets standards 
for the specific medical provider. This requirement for State licensure 
or other certification would be similar to TRICARE, which requires that 
its providers be either licensed or

[[Page 2399]]

certified by a State, or, where States do not offer licensure or 
certification, be otherwise certified by an appropriate national or 
professional association that sets standards for the specific medical 
provider. See TRICARE Policy Manual 6010.60-M, Chapter 11 
(``Providers''), section 3.2 (``State Licensure And Certification''). 
(For general operational-type information, one can also refer to 
TRICARE Operations Manual 6010.59-M, Chapter 4, (``Provider 
Certification And Credentialing'') (April 1, 2015).)
    We would define ``calendar year'' as the period of time between and 
including January 1 through December 31. This is plain language and is 
consistent with the generally understood meaning of the phrase 
``calendar year.''
    The term ``CHAMPVA beneficiary'' would be defined as a person 
enrolled for CHAMPVA under Sec.  17.271. This would be a program-
specific definition, but it is in plain language and is consistent with 
the generally understood meaning of the word ``beneficiary.'' To 
clarify, an individual is enrolled in CHAMPVA only after the individual 
has successfully completed the application process (i.e., where the 
individual submits a completed VA Form 10-10d to VA, and VA has 
confirmed the individual's eligibility).
    We would define ``CHAMPVA-covered services and supplies'' to mean 
those medical services and supplies that are medically necessary and 
appropriate for the treatment of a condition and that are not 
specifically excluded from coverage under proposed Sec.  17.272(a)(1) 
through (84) (current Sec.  17.272(a)(1) through (86)).
    We would define ``CHAMPVA determined allowable amount'' by 
referencing the proposed paragraph that would relate to this term, 
proposed Sec.  17.272(b)(1).
    We would define ``CHAMPVA In-house Treatment Initiative (CITI)'' to 
mean the initiative under section 1781(b) under which participating VA 
medical facilities provide medical services and supplies to CHAMPVA 
beneficiaries who are not also eligible for Medicare, subject to 
availability of space and resources.
    We would define the term ``child'' consistent with 38 U.S.C. 101, 
as we do in the current regulation at Sec.  17.270(b).
    We would define the term ``claim'' consistent with the current use 
and understanding of the term in the context of CHAMPVA, as a request 
by an authorized non-VA provider or CHAMPVA beneficiary for payment or 
reimbursement for medical services and supplies provided to a CHAMPVA 
beneficiary.
    We would define ``fiscal year'' as the period of time starting on 
October 1 and ending on September 30. This is plain language and is 
consistent with the generally understood meaning of the phrase ``fiscal 
year'' as used within the Federal Government.
    We would define ``Medications by Mail (MbM)'' to mean the 
initiative under which VA provides outpatient prescription medications 
through the mail to CHAMPVA beneficiaries.
    We would define ``other health insurance'' (OHI) as a health 
insurance plan or program (to include Medicare) or third-party coverage 
that provides coverage to a CHAMPVA beneficiary for expenses incurred 
for medical services and supplies. The inclusion of Medicare is 
consistent with the TRICARE regulation related to double coverage. See 
32 CFR 199.8(d)(1).
    We would define the term ``payer'' to mean OHI, as defined in this 
rulemaking, that is obligated to pay for CHAMPVA-covered medical 
services and supplies. In a situation in which more than one insurer is 
responsible to pay for such services and supplies (e.g., a ``double 
coverage'' situation), there would be a primary payer (i.e., the payer 
obligated to pay first), a secondary payer (i.e., the payer obligated 
to pay after the primary payer), etc. In double coverage situations, 
CHAMPVA would be the last payer, after payment by the primary payer and 
all other secondary payers.
    Defining a ``payer'' and designating different payer types would 
not affect the administration of CHAMPVA because these concepts of 
relative payment responsibility are all accepted and understood by the 
insurance industry and current CHAMPVA beneficiaries and are an 
essential part of current CHAMPVA billing practices. For instance, 
Medicare would be the primary payer in situations governed by current 
Sec.  17.271(b) (which remains unchanged by this proposed rulemaking). 
See 38 U.S.C. 1781(d)(2).
    The definition of ``service-connected'' in current Sec.  17.270(b) 
would be unchanged and given the same meaning as that term in 38 U.S.C. 
101. However, the terms ``spouse'' and ``surviving spouse'' would no 
longer have the definitions of these same terms in 38 U.S.C. 101(31) 
and (3), respectively, as those definitions are outdated; instead, 
these terms would both be determined by operation of 38 U.S.C. 103(c).
    Consistent with the waiver provisions of TRICARE, see 32 CFR 
199.1(n), new proposed paragraph (c) would establish the discretionary 
authority of VA to waive, when it is deemed to be in the best interest 
of VA, any regulatory requirement of this part that is not required by 
38 U.S.C. 1781 or otherwise imposed by statute. This discretionary 
waiver authority would be limited to very unusual and limited 
circumstances and would not set a precedent for future decisions. In 
addition, it would not be used to deny any individual any right, 
benefit, or privilege provided by statute or these regulations. This 
new provision would enable VA to allow payment under CHAMPVA in cases, 
for example, where, by operation of CHAMPVA rules, the claim is subject 
to complex administrative or accounting procedures that ultimately 
result in determination of the claim's technical noncompliance when the 
underlying claim is otherwise appropriate. Where a claimant's non-
compliance with a purely policy or administrative-based technical 
requirement is both unintentional and harmless, we believe it would be 
in VA's best interest to have the authority to waive the regulatory 
requirement and allow payment.

17.271 Eligibility

    Current Sec.  17.271 identifies persons who may be eligible for 
CHAMPVA benefits. We would revise Sec.  17.271(a) to recognize as 
CHAMPVA beneficiaries those individuals designated as Primary Family 
Caregivers under 38 CFR 71.25(f). This substantive addition to the 
eligibility criterion would be made pursuant to the Caregivers and 
Veterans Omnibus Health Services Act of 2010, Public Law 111-163, 
section 102, which amended 38 U.S.C. 1781(a) by adding a new subsection 
(a)(4) authorizing VA to provide CHAMPVA benefits to ``an individual 
designated as a primary provider of personal care services under [38 
U.S.C. 1720G(a)(7)(A)] who is not entitled to care or services under a 
health-plan contract (as defined in [38 U.S.C. 1725(f)]).'' We amend 
CHAMPVA eligibility criteria to recognize these Primary Family 
Caregivers as CHAMPVA beneficiaries but not to establish substantive 
eligibility rules in the CHAMPVA regulations to determine whether an 
individual is a Primary Family Caregiver. (VA's regulations governing 
the Caregivers Benefits Program established by 38 U.S.C. 1720G are 
codified at 38 CFR part 71, and the specific rules governing the 
identification of such individuals are found at 38 CFR 71.15 through 
71.25.) We would redesignate current Sec.  17.271(a)(4) as Sec.  
17.271(a)(5) and add a new proposed Sec.  17.271(a)(4) to state that a 
Primary Family Caregiver is eligible for CHAMPVA benefits if they are 
not entitled to care or services under a health-plan contract (as 
defined in 38 U.S.C. 1725(f)(2)). We note that VA is already providing 
CHAMPVA services

[[Page 2400]]

and supplies to these individuals pursuant to the statutory mandate in 
section 1720G(a)(3)(A)(ii)(IV) and under the Caregivers Benefits 
Program regulations. This revision would simply update the CHAMPVA 
regulations to conform to these laws.

17.272 Benefits Limitations/Exclusions

    Current Sec.  17.272 provides general information about what 
medical services and supplies are covered by CHAMPVA and lists coverage 
limitations along with the exclusions. The general information 
concerning coverage in current Sec.  17.272(a) continues to be 
accurate, and we do not propose any changes to paragraph (a). Some of 
the coverage limitations and exclusions listed in the numbered 
paragraphs under Sec.  17.272(a) require revision due to either changed 
standards in clinical practice or changes in TRICARE coverage.
    Current Sec.  17.272(a)(2) excludes the provision of services and 
supplies required as a result of an occupational disease or injury for 
which benefits are payable under workers' compensation or a similar 
protection plan. We propose to update the verbiage to clarify the 
exclusion for the reader.
    Current Sec.  17.272(a)(3) excludes the provision of services and 
supplies that are paid directly or indirectly by local, State, or 
Federal government agencies, with certain exceptions listed in Sec.  
17.272(a)(3)(i) and (ii) where CHAMPVA assumes primary payer status. We 
propose to add Indian Health Service and CHAMPVA supplemental policies 
as exceptions where CHAMPVA assumes primary payer status. This would be 
consistent with current CHAMPVA practice as well as the TRICARE 
regulation related to double coverage. See 32 CFR 199.8(b)(4)(ii) and 
(iv). We also propose to remove the ``(Medicaid excluded)'' 
parenthetical language in current Sec.  17.272(a)(3), because Sec.  
17.272(a)(3)(i) already expressly excepts ``Medicaid'' from the general 
exclusion in Sec.  17.272(a)(3).
    Current Sec.  17.272(a)(21) excludes dental care generally, with 
exceptions to such exclusion listed in paragraphs (a)(21)(i) through 
(xii). We would amend paragraph (a)(21)(ix) to clarify that the 
provision of initial imaging services for the treatment of 
temporomandibular joint disorder (TMD) could specifically include 
Computed Tomography (CT) and Magnetic Resonance Imaging (MRI) services. 
We believe the sole reference to ``initial radiographs'' in current 
Sec.  17.272(a)(21)(ix) is outdated and that modern industry standards 
include the use of CT scans as well as MRIs for diagnosing TMD. A CT 
scan provides a more detailed image of the bones in the joint, and an 
MRI provides a more detailed image of the soft tissue to determine 
proper positioning as the jaw moves. We would also update Sec.  
17.272(a)(21)(ix) to refer to the more updated and clinically 
appropriate terminology ``temporomandibular joint disorder (TMD).'' 
These revisions would update CHAMPVA regulations with current standards 
of clinical practice for the benefit of CHAMPVA beneficiaries.
    A majority of the remaining proposed changes to CHAMPVA coverage 
exclusions in proposed Sec.  17.272(a)(1) through (82) are based on 
changes to TRICARE coverage and policy. Virtually all coverage 
limitations and exclusions in current Sec.  17.272(a)(1)-(86), as shown 
in the chart below, are substantially identical to services and 
supplies excluded from, or limited under, TRICARE coverage under 32 CFR 
199.4(g), or as otherwise noted in the chart.

            List of Comparable CHAMPVA and TRICARE Exclusions
------------------------------------------------------------------------
                                          TRICARE provision (identified
     CHAMPVA provision (identified         paragraphs are from 32 CFR
 paragraphs are from 38 CFR 17.272(a))  199.4(g), or as otherwise noted)
------------------------------------------------------------------------
(1)...................................  (11).
(2)...................................  (23).
(3)...................................  (13).
(4)...................................  (1).
(5)...................................  (2).
(6)...................................  (3).
(7)...................................  (4).
(8)...................................  (5).
(9)...................................  (6).
(10)..................................  (7).
(11)..................................  (8).
(12)..................................  (9).
(13)..................................  (14).
(14), (81)............................  (15).
(15)..................................  (16).
(16)..................................  (17).
(17)..................................  (19).
(18)..................................  (21).
(19), (82)............................  (24).
(20)..................................  (26).
(21)..................................  (27).
(22)..................................  (28).
(23)..................................  (29).
(24)..................................  (30).
(25)..................................  (31).
(27)..................................  (33).
(28)..................................  (34).
(29)..................................  (35).
(30)..................................  (36).
(31)..................................  (37).
(32)..................................  (38).
(33)..................................  (39).
(34)..................................  (40).
(35)..................................  (41).
(36)..................................  (20), (42).
(37)..................................  (43).
(38)..................................  (44).
(40)..................................  (46).
(41)..................................  (47).
(42)..................................  (50).
(43)..................................  (51).
(44)..................................  (48).
(45)..................................  (49).
(46)..................................  (52).
(47)..................................  (53).
(48)..................................  (54).
(49)..................................  (55).
(50)..................................  (56).
(51)..................................  (57).
(52)..................................  (58).
(53)..................................  (60).
(54)..................................  (61).
(55), (57)............................  (62).
(56)..................................  (64).
(57)..................................  (65).
(58)..................................  (66).
(59)..................................  (67).
(60)..................................  (72).
(62)..................................  32 CFR 199.4(a)(12) and
                                         (b)(10)(iv).
(63) through (65).....................  32 CFR 199.4(e)(4) and (h).
(66)..................................  (73).
(67), (68)............................  32 CFR 199.2(b) and 199.4(e)(2).
(69)..................................  32 CFR 199.4(c)(3)(ix) and
                                         199.4(e)(4).
(70), (71)............................  32 CFR 199.4(e)(17).
(73)..................................  32 CFR 199.4(g)(15)(iv).
(74)..................................  (69).
(75)..................................  32 CFR 199.4(a)(1).
(76)..................................  32 CFR 199.4(g)(74).
(77)..................................  (39), (42).
(78)..................................  (25).
(79)..................................  32 CFR 199.4(g)(15).
(80)..................................  32 CFR 199.2(b) and
                                         199.4(b)(2)(v), (b)(3)(iii),
                                         (b)(5)(v), (d)(3)(vi),
                                         (e)(11)(i).
(83)..................................  32 CFR 199.4(c)(2), (c)(3),
                                         (e)(8)(i)(E).
(84)..................................  32 CFR 199.4(e)(8).
(85), (86)............................  32 CFR 199.2(b), 199.4(e)(8),
                                         (g)(24).
------------------------------------------------------------------------

    We note that even where our current provisions are not identical to 
a TRICARE provision, our intent has consistently been to apply CHAMPVA 
comparable exclusions or limitations in the same or similar manner to 
their TRICARE counterpart in accordance with 38 U.S.C. 1781(b). The 
same is true for our proposed revisions below, which are consistent 
with changes in DoD's administration of TRICARE.
    The first change we would make to our limitations and exclusions 
based on TRICARE regulatory and policy changes concerns current Sec.  
17.272(a)(26), which is not addressed in the chart above because it 
correlates with a provision that has been removed from TRICARE 
regulations. See 60 FR 12419 (March 7, 1995). Therefore, we propose to 
remove this exclusion from our regulations as well. Paragraph (a)(26) 
in current Sec.  17.272 excludes coverage for services and supplies, 
including psychological testing, provided in connection with a specific 
developmental disorder. By removing this exclusion, CHAMPVA would now 
cover this service, and we would redesignate current

[[Page 2401]]

Sec.  17.272(a)(27) through (38) as Sec.  17.272(a)(26) through (37), 
respectively.
    Under section 711 of the 2009 NDAA, TRICARE must waive all 
beneficiary costs associated with certain preventive services, unless 
the beneficiary is also Medicare-eligible. TRICARE regulations were 
revised to delete from 32 CFR 199.4(g)(37) the list of preventive 
services not excluded from coverage, and these services were moved to 
new Sec.  199.4(e)(28) so that they instead would be reflected as 
preventive services under TRICARE for which out-of-pocket costs are 
eliminated. See 76 FR 81368 (December 28, 2011). We would revise our 
current exclusion of preventive care in Sec.  17.272(a)(31) (proposed 
to be redesignated as Sec.  17.272(a)(30)) to except the same 
preventive services identified in paragraphs (d)(1)(A) through (F) of 
section 711 of the 2009 NDAA and, further, do so in a manner that, on 
the whole, reflects the manner in which these services are provided 
under TRICARE. Section 711 of the 2009 NDAA sets forth the following 
preventive services for which beneficiaries shall pay no associated 
costs: Colorectal cancer screening; breast cancer screening; cervical 
cancer screening; prostate cancer screening; annual physical exam; 
vaccinations. Current Sec.  17.272(a)(31)(i) through (x) set forth 
exceptions to the general exclusion of certain specific preventive 
care. Respectively, the terms of current paragraphs (a)(31)(v) and (vi) 
already except ``[p]ap smears'' and ``[m]ammography tests'' and so 
effectively capture ``cervical cancer screening'' and ``breast cancer 
screening'' as referred to in the 2009 NDAA. However, because the 
singular terms ``mammography test'' and ``pap smear'' are outdated, we 
are updating to ``breast cancer screening'' and ``cervical cancer 
screening.'' Therefore, proposed Sec.  17.272(a)(30) would revise the 
exceptions to the general exclusion of preventive care to include the 
four remaining preventive services specified in the 2009 NDAA, namely 
colorectal cancer screening; prostate cancer screening; annual physical 
examination; and vaccinations/immunizations.
    We note that the TRICARE final rule that implemented the amendments 
made by section 711 of the 2009 NDAA does not include an annual 
physical exam benefit for all TRICARE beneficiaries; instead, such 
benefit is limited to certain dependents of Active Duty military 
personnel who are traveling outside the United States and for 
beneficiaries ages 5 through 11 who require such exams for school 
enrollment. This benefit is also not exempt from cost sharing 
requirements. See 76 FR 81368, and 32 CFR 199.4(e)(29). Broadly 
interpreting our mandate in section 1781(b), VA proposes to modify the 
current exclusion of preventive care in current Sec.  17.272(a)(31) 
insofar as it defines that term to include annual physical examinations 
and create an exception permitting such exams. Despite the limited 
availability of such examinations under TRICARE, it is noteworthy that 
TRICARE nonetheless covers some preventive services that are typically 
provided as part of an annual physical examination such as blood 
pressure screening, cholesterol testing, and body measurements. See 
TRICARE Policy Manual 6010.60-M (``Medicine''), Chapter 7, section 2.1 
(``Clinical Preventive Services-TRICARE Standard'') (April 1, 2015). To 
be paid for by TRICARE, however, these types of health promotion and 
disease prevention services must be billed in connection with another 
preventive service delineated in TRICARE's policy manual. Id. We do not 
believe limiting the provision of annual physical examinations to only 
a few select groups is appropriate from a clinical perspective. 
Further, in the exercise of our discretion, when broadly interpreting 
the mandate of section 1781(b), we conclude it lies within our 
discretion to determine that this benefit should be made available to 
all CHAMPVA beneficiaries. This is particularly the case given that 
some individual health promotion and disease prevention services that 
are typically provided as part of an annual physical examination would 
eventually be approved by TRICARE as long as they are coupled or 
associated with billing submitted for a covered service. (The nature 
and delivery of those services remains the same whether delivered as 
part of an annual examination or under the umbrella of another service 
for which TRICARE billing is permitted.) Furthermore, VA finds that 
annual physical examinations are beneficial for both CHAMPVA 
beneficiaries and VA, by serving to identify serious medical issues 
before they progress and their clinical management becomes more 
difficult and resource-intensive. Even though our proposed approach 
would include elements of an annual physical examination not otherwise 
included as an adjunct service provided under a covered benefit as 
described above, we believe our approach is sufficiently ``similar'' to 
TRICARE. Therefore, we propose to create an exception to the exclusion 
of preventive care, permitting an annual physical examination to be 
among the benefits available to all CHAMPVA beneficiaries.
    We also note that we would except ``[v]accinations/immunizations'' 
from the general exclusion of preventive services. Although subsection 
(d)(1)(F) of section 711 of the 2009 NDAA exempts ``vaccination'' only, 
TRICARE's guidance on this issue additionally exempts immunizations. 
See TRICARE Reimbursement Manual 6010.61-M Chapter 2 (``Beneficiary 
Liability''), section 1 (``Cost-Shares And Deductibles'') (April 1, 
2015). We believe these terms have identical meanings and would use 
both terms just to be clear that this preventive service is covered 
regardless of whether it is called an ``immunization'' or a 
``vaccination.''
    Current Sec.  17.272(a)(39) excludes coverage for audiological 
services or speech therapy, except when prescribed by a physician and 
rendered as part of a treatment addressing a physical defect, which 
correlates with a provision not addressed in the chart above because it 
has been removed from TRICARE regulations. See 75 FR 50880 (August 18, 
2010). Therefore, we propose to remove this exclusion from our 
regulations as well. By removing this exclusion, CHAMPVA would now 
cover this service, and we would redesignate current Sec.  
17.272(a)(40) through (56) as Sec.  17.272(a)(38) through (54), 
respectively.
    As stated earlier in this rulemaking, pursuant to section 713 of 
the 2009 NDAA, TRICARE must make available smoking cessation benefits, 
as specified in the law, to beneficiaries who are not also eligible for 
Medicare. The four categories of smoking cessation benefits available 
to these beneficiaries are set forth in TRICARE's regulations under 32 
CFR 199.4(e)(30)(ii)(A)-(D). Hence, we would revise our regulations by 
removing our correlate restriction on smoking cessation services and 
supplies in current Sec.  17.272(a)(57). In removing current Sec.  
17.272(a)(57), current paragraphs (a)(58) through (71) would be 
redesignated as paragraphs (a)(55) through (68), respectively.
    Redesignated paragraphs (a)(57) through (59) would be revised to 
reference coverage of mental health benefits in a ``calendar year'' 
versus the current reference to ``fiscal year.'' We propose to change 
the yearly basis of this coverage because our beneficiaries and 
providers are more familiar with calendar year events, and the impact 
of the change from fiscal to calendar on the functioning of CHAMPVA 
would be minimal.

[[Page 2402]]

    With the proposed removal of Sec.  17.272(a)(57) and subsequent 
redesignations of paragraphs noted above, current paragraph (a)(67) 
would be redesignated as paragraph (a)(64). CHAMPVA would continue to 
exclude the performance of abortions, except when a physician certifies 
that the life of the mother would be endangered if the fetus were 
carried to term. This is the same restriction in current TRICARE 
regulations (see 32 CFR 199.4(e)(2)), although statute and TRICARE 
policy statements recently established an additional exception to the 
general ban on abortions. Specifically, section 704 of the National 
Defense Authorization Act for Fiscal Year 2013, Public Law 112-239 
(2013 NDAA), amended 10 U.S.C. 1093(a) and (b) to expand the 
circumstances under which funds available to DoD and MTFs may be used 
to provide and perform abortions in cases of pregnancy resulting from 
an act of rape or incest. Despite the recent amendments to section 1093 
of title 10 and TRICARE policy, we do not propose same or similar 
changes to CHAMPVA's current exclusion at this time because TRICARE 
regulations do not provide for it. Additionally, such changes would 
create an even greater disparity between the women's health care 
benefits afforded veterans and CHAMPVA beneficiaries.
    Current Sec.  17.272(a)(72) excludes from coverage drug maintenance 
programs where one addictive drug is substituted for another such as 
methadone substituted for heroin. A TRICARE final rule published on 
October 22, 2013, and effective November 21, 2013, removes a correlate 
restriction from TRICARE regulations, and so we propose to similarly 
remove Sec.  17.272(a)(72). See 78 FR 62427 (October 22, 2013); 32 CFR 
199.4(e)(4)(ii). We agree with the stated rationale in the related 
TRICARE proposed rule that the current restriction fails to recognize 
the accumulated medical evidence supporting certain maintenance 
programs as one component of the continuum of care necessary for the 
effective treatment of substance use disorders. See 76 FR 81899 
(December 29, 2011). In removing current Sec.  17.272(a)(72), current 
paragraphs (a)(73) through (86) would be redesignated as paragraphs 
(a)(69) through (82), respectively.
    Current Sec.  17.272(a)(80), as proposed to be redesignated as 
paragraph (a)(76), excludes from CHAMPVA benefits medications not 
requiring a prescription, except for insulin and related diabetic 
testing supplies and syringes. We would revise redesignated paragraph 
(a)(76) to instead exclude ``over-the-counter products'' and would 
additionally expand the exception to this exclusion to cover over-the-
counter smoking cessation pharmaceutical supplies that are approved by 
the U.S. Food and Drug Administration (FDA), prescribed, and provided 
through MbM. These changes would be consistent with TRICARE 
regulations, which require a prescription from an authorized provider 
for smoking cessation pharmaceutical agents (even for FDA-approved 
over-the-counter smoking cessation agents). See 32 CFR 
199.4(e)(30)(ii)(A).
    Section 702 of the 2013 NDAA grants the Secretary of Defense the 
authority to add certain over-the-counter medications to the TRICARE 
formulary so that such medications may be administered as if they were 
prescription medications. CHAMPVA does not have a same or similar 
uniform formulary as DoD that could be altered to include certain over-
the-counter medications, and we do not interpret section 702 as 
granting authority to alter VA's uniform formulary. Therefore, we would 
not amend our regulations in response to section 702 of the 2013 NDAA. 
Our regulation as revised and redesignated Sec.  17.272(a)(76) would 
permit CHAMPVA to provide the same over-the-counter smoking cessation 
supplies as permitted in TRICARE policy.
    Lastly, we would add two new exclusions to Sec.  17.272. Proposed 
paragraph (a)(83) would exclude medications that are not approved by 
the FDA, excluding FDA exceptions to the approval requirement. Current 
CHAMPVA regulations are silent regarding the need for medications to 
meet FDA approval requirements; however, this has not been a problem as 
a matter of practice because applicable standards of care generally 
require prescribed medications to be FDA-approved or excluded as an 
exception from the approval requirement. Still, we wish to formally and 
expressly exclude medications that do not meet these requirements. In 
addition, to provide benefits in the same or similar manner and subject 
to the same or similar limitations as TRICARE, paragraph (a)(84) would 
establish exclusions for services and supplies related to the treatment 
of dyslexia. See 38 CFR 199.4(g)(32). This change merely reflects in 
regulation current CHAMPVA practice and policy.
    Due to the multiple proposed deletions and additions in Sec.  
17.272(a)(1)-(86), we reiterate that we would redesignate most of the 
current paragraphs under Sec.  17.272(a). With the proposed removal of 
current paragraph (a)(26), current paragraphs (a)(27) through (38) 
would be redesignated as (a)(26) through (37), respectively, with the 
substantive changes to redesignated (a)(30) as noted above. With the 
proposed removal of current paragraph (a)(39), current paragraphs 
(a)(40) through (56) would be redesignated as (a)(38) through (54), 
respectively, with no substantive changes. With the deletion of the 
current paragraphs (a)(57) and (72), current paragraphs (a)(58) through 
(86) would be redesignated as (a)(55) through (82), respectively, with 
the minor substantive changes as noted above to redesignated paragraphs 
(a)(57) through (59) and (a)(76). Lastly, we would add new paragraphs 
(a)(83) and (84).
    Current Sec.  17.272(b) establishes the ``CHAMPVA determined 
allowable amount,'' and paragraph (b)(1) states that the term 
``allowable amount'' is the maximum amount that CHAMPVA will pay an 
authorized provider for a covered benefit, which is determined prior to 
cost sharing and the application of deductibles or OHI. (This means, 
for instance, that the cost-share would be a percentage of the entire 
CHAMPVA determined allowable amount.) However, this is merely a 
definition and not a statement of coverage limitation or exclusions. We 
would revise paragraph (b) to clearly indicate that amounts above the 
CHAMPVA determined allowable amount are excluded from CHAMPVA coverage. 
The actual payment methodology--the amount to which cost sharing and 
deductibles will be applied--is addressed in proposed Sec.  17.274(e) 
and is discussed below.
    Proposed Sec.  17.272(b)(1) would explain that the CHAMPVA 
determined allowable amount is the maximum level of payment to an 
authorized non-VA provider for CHAMPVA-covered services and supplies 
and that this allowable amount is determined before cost sharing and 
the application of deductibles or OHI is considered. This is a 
restatement of current Sec.  17.272(b)(1), except that we would use the 
term ``authorized non-VA provider'' to encompass all those providers 
listed in current Sec.  17.272(b)(1) and include the term ``supplies'' 
after ``covered services'' to underscore they too can be covered. See 
current 38 CFR 17.272(b)(1) (referencing ``a hospital or other 
authorized institutional provider, a physician or other authorized 
individual professional provider, or other authorized provider for 
covered services''). We believe use of the one term ``authorized non-VA 
provider'' as defined in proposed Sec.  17.270(b) properly captures all 
provider types now listed in Sec.  17.272(b)(1) and

[[Page 2403]]

simplifies the regulatory reference to providers for the benefit of 
CHAMPVA beneficiaries. Proposed Sec.  17.272(b)(1) would also clearly 
state that the CHAMPVA determined allowable amount is payment made by 
VA to an authorized non-VA provider for the provision of CHAMPVA-
covered services and supplies to a CHAMPVA beneficiary.
    Current Sec.  17.272(b)(2) states that a Medicare-participating 
hospital must accept the CHAMPVA determined allowable amount for 
inpatient services as payment in full and references 42 CFR parts 489 
and 1003. While this is a true statement of law under 42 CFR 489.25, 
the references to 42 CFR parts 489 and 1003 are vague, and part 1003 is 
not relevant to the issue of what amounts Medicare-participating 
hospitals must accept as payment in full from CHAMPVA. See 42 CFR part 
1003 (describing civil money penalties, assessments, and exclusions 
generally for individuals who violate provisions of or agreements with 
Federal health care programs). Proposed Sec.  17.272(b)(2) would state 
that inpatient services are ``provided to a CHAMPVA beneficiary'' and 
use a single, clarifying reference to 42 CFR 489.25.
    Section 503 of The Caregivers and Veterans Omnibus Health Services 
Act of 2010, Public Law 111-163, revised 38 U.S.C. 1781 by adding new 
subsection (e), which states: ``Payment by the Secretary under this 
section on behalf of a covered beneficiary for medical care shall 
constitute payment in full and extinguish any liability on the part of 
the beneficiary for that care.'' Current Sec.  17.272(b)(3) states 
that: ``An authorized provider of covered medical services or supplies 
must accept the CHAMPVA determined allowable amount as payment in 
full.'' Proposed Sec.  17.272(b)(3) would state more clearly that 
``accepted assignment'' refers to the action of an authorized non-VA 
provider who accepts responsibility for the care of a CHAMPVA 
beneficiary and thereby agrees to accept the CHAMPVA determined 
allowable amount as full payment for services and supplies rendered to 
the beneficiary. The provider's acceptance of the CHAMPVA determined 
allowable amount extinguishes the beneficiary's payment liability to 
the provider with the exception of applicable cost shares and 
deductibles. Proposed Sec.  17.272(b)(3) would not be substantively 
different than current paragraph (b)(3) but would clarify that the 
action of accepting payment is the equivalent of accepting assignment. 
The term ``accepted assignment'' is used currently in the 
administration of CHAMPVA payments, and we believe using it in this 
regulation as described would increase clarity in payment practices for 
both CHAMPVA beneficiaries and authorized non-VA providers.
    Current Sec.  17.272(b)(4) provides that a provider who has 
collected and not made an appropriate refund, or attempts to collect 
from the beneficiary any amount in excess of the CHAMPVA determined 
allowable amount may be subject to exclusion from Federal benefit 
programs. The underlying authority for this rule is 42 CFR 1003.105, 
which establishes the terms for a health care provider's permissive or 
mandatory exclusion from participation in the Medicare program and 
other Federal health care programs. Exclusion may result, for instance, 
if a provider files false claims under these programs. We would move 
this information to proposed Sec.  17.272(b)(3) for increased clarity 
and would remove mention of providers not making an appropriate refund 
of amounts collected from beneficiaries, as the purpose of 38 U.S.C. 
1781(e) and proposed Sec.  17.272(b)(3) is for these amounts to never 
be collected by the provider. By moving this information to proposed 
paragraph (b)(3), we would also remove current paragraph (b)(4).

17.273 Preauthorization

    CHAMPVA preauthorization requirements for certain medical care and 
services are based on CHAMPVA needs and are substantially the same or 
similar as those required by TRICARE. See 32 CFR 199.4 passim. We 
propose to revise the preauthorization requirements by adding language 
to indicate when a beneficiary has ``other health insurance'' that 
provides primary coverage for the benefit, preauthorization 
requirements will not apply. TRICARE waives preauthorization 
requirements in all instances when OHI, to include Medicare, is the 
primary payer. See TRICARE Policy Manual 6010.60-M, Chapter 1 
(``Administration''), section 6.1 (``Special Authorization 
Requirements'') (April 1, 2015). To provide benefits in a similar 
fashion, we would waive any requirement for preauthorization where OHI 
(as defined by this rulemaking) covers the benefit. We would also 
revise current Sec.  17.273(d) to refer to dental coverage limitations 
in Sec.  17.272(a)(21)(i)-(xii) to avoid a potential misconception that 
preauthorization is generally required for dental services. CHAMPVA 
clearly excludes all dental services, except for those listed in 
current Sec.  17.272(a)(21)(i)-(xii). We would remove current Sec.  
17.273(e) and not require preauthorization for durable medical 
equipment as a covered service or supply. Removal of Sec.  17.273(e) 
would be consistent with TRICARE policy. See TRICARE Policy Manual 
6010.60-M, Chapter 8 (``Other Services''), section 2.1 (``Durable 
Medical Equipment: Basic Program'') (April 1, 2015). Based on this 
removal, we would redesignate current Sec.  17.273(f) as Sec.  
17.273(e).
    Finally, we would add new proposed Sec.  17.273(f) to detail the 
reviews of medical necessity. Since CHAMPVA is a secondary payer, VA 
would be required to perform reviews of medical necessity on a 
retrospective basis. If during the coordination of benefits process it 
is determined that CHAMPVA would be the responsible payer for the 
services and supplies but CHAMPVA preauthorization was not obtained 
prior to delivery of the services or supplies, we would obtain the 
necessary information and perform a retrospective medical necessity 
review. We would also propose that any claims, where a retrospective 
review occurs, are filed within the appropriate one-year period.

17.274 Cost Sharing

    Current Sec.  17.274(a) provides in general that CHAMPVA is a cost 
sharing program in which the cost of CHAMPVA-covered services and 
supplies is shared with the beneficiary, with the exception of services 
obtained through VA medical facilities. This provision would remain 
substantively the same, but we would add new paragraphs (a)(1)(i) and 
(ii) to explicate, respectively, that the former language ``services 
obtained through VA facilities'' refers to services and supplies 
provided both through MbM and through CITI. That is, the exception to 
this cost-share requirement would extend specifically to each of these 
initiatives (as these initiatives would be defined by this proposed 
rulemaking).
    Subsections (d)(1)(A) through (d)(1)(F) of section 711 of the 2009 
NDAA, as discussed earlier, set forth certain preventive services for 
which TRICARE waives all out-of-pocket costs, even if the beneficiary 
has not paid the amount necessary to cover the beneficiary's deductible 
requirement for the year. We propose to revise Sec.  17.274(a) to make 
clear that there will be no associated cost share for CHAMPVA 
beneficiaries for such services. (We address waiving the associated 
deductible requirement later in the discussion of proposed Sec.  
17.274(b)). We would add new paragraphs (a)(1)(iii)(A)-(G) to Sec.  
17.274 to waive CHAMPVA beneficiary cost-share requirements for the 
same preventive services identified in paragraphs (d)(1)(A) through (F) 
of

[[Page 2404]]

section 711 of the 2009 NDAA. Section 711 also authorizes, but does not 
require, the Secretary of Defense to extend the waiver of beneficiary 
costs to other preventive services. As such, we state in regulation 
that the list of services is not all-inclusive, enabling us to add 
supplemental items to the list in the future if needed, while enabling 
us to be sufficiently similar to TRICARE. See Public Law 110-417, 
section 711(d)(1)(G). TRICARE regulations and policy guidance extend 
this waiver to well-child visits for children under 6 years of age. See 
32 CFR 199.4(e)(28)(iv), (f); TRICARE Reimbursement Manual 6010.61-M, 
Chapter 2 (``Beneficiary Liability''), section 1 (``Cost-Shares and 
Deductibles), 1.3.3.10.1.6 (Preventive Services''). We would include 
this same waiver in proposed paragraph (a)(1)(iii)(G) of Sec.  17.274. 
We would waive any cost-share requirement for hospice services in 
proposed Sec.  17.274(a)(1)(iv). This waiver is similar to the cost-
share waiver for hospice services in TRICARE regulation. See 32 CFR 
199.14(g)(9). Lastly, to remain similar to TRICARE, in Sec.  
17.274(a)(1)(v), we would add a waiver for other services as determined 
by the Secretary of Veterans Affairs.
    For TRICARE, the waiver of beneficiary costs associated with 
preventive services in proposed Sec.  17.274(a)(1)(iii)(A) through (G) 
do not apply to any TRICARE beneficiary who is also Medicare-eligible. 
See Public Law 110-417, section 711(b). We would not exclude Medicare-
eligible beneficiaries from cost sharing waivers for preventive 
services as this would unfairly disadvantage them as compared to other 
CHAMPVA beneficiaries with OHI. By not including this waiver, CHAMPVA 
will treat all beneficiaries with OHI the same. Additionally, we 
believe most preventive services provided to Medicare-eligible 
beneficiaries will be paid in full by Medicare, and, therefore, CHAMPVA 
will not assume any payment responsibility. In the event a cost share 
or deductible is applied for preventive services, CHAMPVA will treat 
those claims as it would the claims for any other beneficiary with OHI.
    The general provisions in current Sec.  17.274(b) related to 
establishing an annual deductible requirement (in addition to 
beneficiary cost share) would remain substantively the same. We would 
move the exception to this general requirement in current Sec.  
17.274(b) (last sentence) for services obtained through VA facilities 
to a new Sec.  17.274(b)(1) and also explain that it refers to services 
and supplies provided through MbM or CITI under the same rationale as 
expressed above for proposed new Sec.  17.274(a)(1)(i) and (ii), 
respectively. We would also move the exception to the deductible 
requirement in current Sec.  17.274(b) (last sentence) for any 
inpatient services to a new Sec.  17.274(b)(2). Proposed Sec.  
17.274(b)(3) would except the listed preventive services in proposed 
Sec.  17.274(a)(1)(iii)(A)-(G) from the general deductible requirement 
in current and proposed Sec.  17.274(b), in accordance with the mandate 
in section 711 of the 2009 NDAA. See Public Law 110-417, section 
711(a)(2) (mandating that a beneficiary not be charged for preventive 
services during a year even if the beneficiary has not paid the amount 
necessary to cover the beneficiary's deductible for the year. See 32 
CFR 199.4(f)(12)). Proposed Sec.  17.274(b)(4) would waive the CHAMPVA 
beneficiary deductible requirement for hospice services, as is done 
similarly under TRICARE regulations. See 32 CFR 199.14(g)(9). Lastly, 
to remain similar to TRICARE, in Sec.  17.274(b)(5), we would add a 
waiver for other services as determined by the Secretary of Veterans 
Affairs.
    Current Sec.  17.274(c) establishes a calendar year limit on the 
``cost-share amount'' incurred by a CHAMPVA beneficiary through the 
payment of both cost-shares and deductible amounts (See current 38 CFR 
17.274(c), indicating that the cap is ``limited to the applied annual 
deductible(s) and the beneficiary cost-share amount.''). Proposed Sec.  
17.274(c) would retain this basic information but would refer instead 
to a cap on ``out-of-pocket costs'' instead of ``cost-share amounts'' 
so that it is clear that both cost share and deductible amounts apply 
to this cap. Current Sec.  17.274(c)(i) establishes an annual cap of 
cost sharing of $7,500 per CHAMPVA eligible family ``through December 
31, 2001'', which is an outdated provision. Current Sec.  17.274(c)(ii) 
further establishes a current cap of $3000 per CHAMPVA eligible family, 
which was ``[e]ffective January 1, 2002.'' Under proposed Sec.  
17.274(c), we would establish an annual (calendar year) cap on out-of-
pocket costs of $3,000 per CHAMPVA eligible family. The annual cap 
amount would be unchanged from what currently exists but would use the 
new terminology proposed above for the sake of clarity. We would also 
remove current Sec.  17.274(c)(i) and (ii).
    We do not propose any substantive changes to current Sec.  
17.274(d) as this provision is legally adequate, and we are not 
proposing to revise policies related to it. However, we are adding a 
subject heading in an effort to mirror the cost share calculation in 
proposed paragraph (e) to Sec.  17.274.
    We propose to add a new paragraph (e) to Sec.  17.274 which would 
set forth the principles found in current policy manuals that VA uses 
to establish CHAMPVA beneficiary cost-share amounts. The calculation 
methodologies that would be described in proposed Sec.  17.274(e) 
represent current CHAMPVA practice and therefore would not increase or 
decrease the out-of-pocket costs for CHAMPVA beneficiaries. The 
methodologies described in proposed Sec.  17.274(e) are also consistent 
with TRICARE cost-share calculation methodologies for the same or 
similar types of care, except as indicated below.
    In accordance with current practice, and as proposed in Sec.  
17.274(e), the CHAMPVA beneficiary's cost-share amount, if applicable, 
is 25 percent of the CHAMPVA determined allowable amount in excess of 
the annual calendar year deductible for most CHAMPVA-covered services 
and supplies. This calculation is similar to that used in TRICARE to 
determine cost-share amounts for a majority of TRICARE covered 
services. See 32 CFR 199.4(f)(3)(ii)(C) and (f)(3)(iii). Proposed Sec.  
17.274(e)(1) and (2) would establish the services for which the general 
rule of a 25 percent cost share does not always apply. Proposed 
paragraph (e)(1) would establish in regulation the current calculation 
VA uses to determine CHAMPVA beneficiary cost share for inpatient 
facility services and supplies that are subject to the CHAMPVA 
Diagnosis Related Group (DRG) payment system. The CHAMPVA DRG system, 
like that used by TRICARE under 32 CFR 199.14, is based on the Centers 
for Medicare and Medicaid Services (CMS) prospective payment system for 
hospital services, as set forth in 42 CFR part 412. For services based 
on the CHAMPVA DRG system, the CHAMPVA beneficiary cost share would be 
the lesser of the per diem rate multiplied by the number of inpatient 
days; or, 25 percent of the hospital's billed amount; or, the base 
CHAMPVA DRG rate. This calculation is similar to that used in TRICARE 
regulation. See 32 CFR 199.4(f)(3)(ii)(A) and (f)(8)(ii).
    Proposed Sec.  17.274(e)(2) would establish the CHAMPVA beneficiary 
cost share for covered inpatient facility services and supplies that 
are subject to the CHAMPVA mental health low volume per diem 
reimbursement methodology. This methodology covers mental health 
inpatient services for lower volume hospitals and units (less than 25 
mental health discharges per federal fiscal year). For these services, 
the CHAMPVA beneficiary cost share

[[Page 2405]]

would be the lesser of a fixed per diem amount multiplied by the number 
of inpatient days or 25 percent of the hospital's billed charges. This 
calculation is similar to that used in TRICARE regulations. See 32 CFR 
199.4(f)(3)(ii)(B) and (f)(8)(ii).
    Although, as noted above, a majority of the CHAMPVA cost-share 
methodologies are the same or similar as TRICARE's, we would not adopt 
a recent TRICARE exception to its general 25 percent cost-share rule 
for prescription medications. Section 712 of the 2013 NDAA requires the 
Secretary of DoD, through regulations, to establish specified fixed 
dollar amounts for cost shares for pharmacy benefits (e.g., generic, 
formulary, and non-formulary agents or medications). We would not 
establish similar fixed cost-share amounts because CHAMPVA does not 
have an established uniform formulary and, therefore, is unable to 
identify all medications which may be prescribed or approximate their 
standard retail pricing to determine, with certainty, that a fixed 
dollar amount would satisfy beneficiaries' cost-share liability. 
Generally, CHAMPVA coverage of medications depends upon whether 
medications are approved by the FDA for the indications for which they 
are prescribed (as explained above in connection with new proposed 
Sec.  17.272(a)(83)). Additionally, the fixed cost-share amounts 
required by section 712 of the 2013 NDAA would apply even to 
medications administered through TRICARE's mail order service; whereas, 
under proposed Sec.  17.274(a)(1), as revised for clarity, cost-sharing 
requirements would not apply to services and supplies provided through 
VA's MbM. As a matter of policy, VA does not wish to apply a cost share 
for mail order pharmacy supplies provided to CHAMPVA beneficiaries. We 
believe that this departure from TRICARE is necessary to ensure the 
most appropriate care for CHAMPVA beneficiaries. Although we would not 
establish fixed cost-share amounts for medications similar to those set 
forth in section 712 of the 2013 NDAA, we would revise our regulations 
to clarify the methodology CHAMPVA uses to determine allowable amounts 
paid for outpatient medications obtained in the community (explained 
later in the discussion of proposed Sec.  17.275(f)), upon which the 25 
percent CHAMPVA beneficiary cost share is based. We believe these 
clarifications would provide more transparency related to pharmacy 
costs and subsequent CHAMPVA beneficiary cost-share amounts for 
pharmaceutical supplies obtained in the community, which we believe is 
a reasonable interpretation of the goals of section 712 of the 2013 
NDAA in establishing fixed cost-share amounts.

17.275 CHAMPVA Determined Allowable Amount Calculation

    We propose to add a new Sec.  17.275 to describe the various 
payment methodologies used by CHAMPVA to calculate the CHAMPVA 
determined allowable amount for covered services and supplies. CHAMPVA 
uses the same or similar payment methodologies to establish allowable 
reimbursement amounts for providers as TRICARE. See 32 CFR 199.14. As 
with the cost-share methodologies that would be described in Sec.  
17.274(e), proposed Sec.  17.275 represents current practice except as 
noted below and would not cause changes for CHAMPVA beneficiaries. The 
reason that Sec.  17.274(e) (regarding cost share) and Sec.  17.275 
(regarding CHAMPVA determined allowable amount) would be separated is 
to clarify for CHAMPVA beneficiaries how much of the CHAMPVA determined 
allowable amount they are responsible for as a cost share (e.g., 25 
percent) and additionally to provide beneficiaries and providers with 
an idea of how such allowable amounts are calculated.
    Proposed Sec.  17.275(a) would establish in regulation the CHAMPVA 
determined allowable amount for reimbursement of inpatient hospital 
services based on the CHAMPVA DRG-based payment system. Proposed 
paragraph (a) would explain that, unless exempt or subject to a 
methodology in proposed paragraph (b) or (c), hospital services 
provided in the 50 States, the District of Columbia, and Puerto Rico 
are subject to the CHAMPVA DRG-based payment system. The CHAMPVA DRG 
system, similar to that used by TRICARE under 32 CFR 199.14, is also 
based on the CMS prospective payment system as set forth in 42 CFR part 
412. Certain services provided in a DRG reimbursed facility will be 
reimbursed under the CHAMPVA Cost-to-Charge (CTC) payment method. See, 
e.g., 32 CFR 199.14(c). However, we will not list these specifically in 
regulations as the list of services may change more often than 
regulations can be updated.
    Proposed Sec.  17.275(b) would establish in regulation the current 
CHAMPVA inpatient mental health per diem payment system used to 
calculate reimbursement for inpatient mental health hospital care in 
specialty psychiatric hospitals and psychiatric units of general acute 
hospitals that are exempt from the CHAMPVA DRG-based payment system. 
The per diem rate would be calculated based on the daily rate times the 
number of days (length of stay). CHAMPVA's mental health per diem rates 
are updated each fiscal year for both high volume hospitals (25 or more 
discharges per fiscal year) and low volume hospitals (less than 25 
discharges per fiscal year). The per diem rates used by CHAMPVA are 
determined by TRICARE per diem rates. See 32 CFR 199.14(a).
    Proposed Sec.  17.275(c) would establish in regulation the CHAMPVA 
CTC payment system that is used to calculate the CHAMPVA determined 
allowable amount for inpatient services furnished by hospitals or 
facilities that are exempt from the CHAMPVA DRG-based payment system or 
the CHAMPVA inpatient mental health per diem payment system. TRICARE 
establishes an alternate methodology to calculate payments for 
inpatient services that are exempt from its DRG and inpatient mental 
health per diem payment systems. See 32 CFR 199.14(a)(4). Proposed 
Sec.  17.275(c)(1) would establish the CHAMPVA CTC methodology used to 
calculate costs for hospitals or facilities by multiplying a CTC ratio 
by billed charges. We would further propose that the billed charges 
from the applicable hospitals and facilities must be customary and not 
in excess of rates or fees the hospital or facility charges the general 
public for similar services in a community. This requirement that the 
applicable billed charges not be in excess of what is charged of the 
general public is similar to TRICARE's requirements. See 32 CFR 
199.14(a)(4)(i). Proposed Sec.  17.275(c)(2)(i) through (x) would 
establish the types of hospitals and services subject to the CHAMPVA 
CTC methodology, similar to TRICARE at 32 CFR 199.14(a)(1)(ii)(D)(1) 
through (10) and (a)(1)(ii)(E). We would also add in proposed Sec.  
17.275(c)(2)(xi) that hospitals and services as determined by the 
Secretary of Veterans Affairs may be subject to the CHAMPVA CTC 
methodology.
    Proposed Sec.  17.275(d) would establish in regulation the CHAMPVA 
outpatient prospective payment system (OPPS) used to calculate the 
allowable amount for outpatient services provided in a hospital subject 
to Medicare OPPS. This will include the utilization of TRICARE's 
reimbursement methodology to include specific coding requirements, 
ambulatory payment classifications (APCs), nationally established APC 
amounts, and associated adjustments (e.g., discounting for multiple 
surgery procedures, wage adjustments for variations in labor-related 
costs across geographical regions, and outlier

[[Page 2406]]

calculations). The CHAMPVA OPPS is the same as that utilized by TRICARE 
under 32 CFR 199.14, which is similar to Medicare's basic OPPS 
methodology. There are differences between TRICARE's OPPS methodology 
and Medicare's basic OPPS methodology due to variations in benefit 
structure and beneficiary population. CHAMPVA is adopting TRICARE's 
OPPS because the CHAMPVA beneficiary population is more similar to the 
TRICARE beneficiary population than to the Medicare beneficiary 
population. See 32 CFR 199.14(a)(6)(ii).
    Proposed Sec.  17.275(e) would establish in regulation the 
reimbursement methodology for services and supplies provided by 
authorized non-VA providers on an outpatient or inpatient basis where 
the services are distinct from facility-type charges in proposed Sec.  
17.275(a) through (d). Proposed Sec.  17.275(e) would explain that the 
CHAMPVA determined allowable amount paid to authorized non-VA providers 
(not hospitals) for services and supplies provided on an outpatient or 
inpatient basis is the lesser of: The CHAMPVA maximum allowable charge 
(equivalent to the maximum allowable charge for similar services 
provided by other than hospitals and skilled nursing facilities under 
TRICARE, see 32 CFR 199.14(c)); the prevailing amount, which is the 
amount equal to the maximum reasonable amount allowed providers for a 
specific procedure in a specific locality; or the billed amount. 
Certain services that typically may be provided within a hospital 
setting, but not billed as a facility-type charge under proposed 
paragraphs (a) through (d), would be included as examples in proposed 
paragraph (e), namely anesthesia services; laboratory services; and 
other professional services associated with individual authorized non-
VA providers. These examples are not all-inclusive.
    Proposed Sec.  17.275(f) would establish in regulation the current 
payment methodology for outpatient CHAMPVA pharmacy points of service. 
CHAMPVA negotiates rates with retail pharmacies through its contract 
with the pharmacy benefit manager. For services and supplies obtained 
from a retail ``in-network'' pharmacy, proposed Sec.  17.275(f)(1) 
would establish that VA pays the lesser of the billed amount or the 
contracted rate. For supplies from a retail ``out-of-network'' 
pharmacy, proposed Sec.  17.275(f)(2) would establish that VA pays the 
lesser of the billed amount plus a dispensing fee or the average 
wholesale price plus a dispensing fee.
    Proposed Sec.  17.275(g) would set forth in regulation the current 
CHAMPVA reimbursement methodology for the provision of services in a 
Skilled Nursing Facility (SNF). This methodology is based on the CMS 
prospective payment system for SNFs under 42 CFR part 413, subpart J 
(Medicare Resource Utilization Group (RUG) rates), which is the same 
methodology used in TRICARE regulations to calculate SNF payments. See 
32 CFR 199.14(b).
    Proposed Sec.  17.275(h) would set forth in regulation the current 
reimbursement methodology for durable medical equipment, prosthetics, 
orthotics, and supplies (DMEPOS). Reimbursement of DMEPOS would be 
based on the same amounts established under the CMS DMEPOS fee schedule 
under 42 CFR part 414, subpart D, which is the same methodology used in 
TRICARE regulations to calculate DMEPOS payments. See 32 CFR 199.14(k). 
The allowed amount would be that which is in effect in the specific 
geographic location at the time CHAMPVA-covered services and supplies 
are provided to a CHAMPVA beneficiary.
    Proposed Sec.  17.275(i) would establish in regulation the current 
payment methodology for all ambulance services. CHAMPVA adopts 
Medicare's Ambulance Fee Schedule (AFS) for ambulance services, which 
is based on the same methodology used by TRICARE. See TRICARE 
Reimbursement Manual 6010.61-M, Chapter 1 (``General''), section 14 
(``Ambulance Services'') (April 1, 2015). Ambulance services are paid 
based on the lesser of the Medicare AFS or the billed amount. Payments 
for ambulance services furnished by a Critical Access Hospital (CAH) 
are paid on the same basis as the CTC method under paragraph (c) of 
this section.
    Proposed Sec.  17.275(j) would establish in regulation the current 
reimbursement methodology for hospice care. This methodology uses rates 
in the CMS hospice per diem rate payment system, which is the same 
methodology used in TRICARE regulations to calculate hospice payments. 
See 32 CFR 199.14(g)(9).
    Proposed Sec.  17.275(k) would establish in regulation a 
reimbursement methodology for intermittent or part-time home health 
services similar to the methodology used in TRICARE, which is based on 
Medicare's payment methods and rates. See 32 CFR 199.14(h). Under this 
methodology, a fixed case-mix and wage-adjusted national 60-day episode 
payment amount will act as payment in full for costs associated with 
furnishing home health services with exceptions allowing for additional 
payment to be established. This would be a new limitation in payments 
for services but is in line with the 60-day episode amount specified in 
the TRICARE regulation. See 32 CFR 199.14(h).
    Proposed Sec.  17.275(l) would establish in regulation the current 
reimbursement methodology for facility charges associated with 
procedures performed in a freestanding surgery center, which is the 
basis of a prospectively determined amount, similar to that used by 
TRICARE. See 32 CFR 199.14(d). These facility charges would not include 
physician fees, anesthesiologist fees, or fees of other authorized non-
VA providers; such independent professional fees would be submitted 
separately from facility fees and calculated under the methodology in 
proposed Sec.  17.275(e). Ambulatory surgery procedures performed in 
CAHs or in hospital outpatient departments are to be reimbursed in 
accordance with the provisions of paragraph (c) or (d) respectively of 
this section.
    Proposed Sec.  17.275(m) states that VA shall determine the 
appropriate reimbursement method or methods to be used in the extension 
of CHAMPVA benefits for otherwise covered medical services and supplies 
provided by hospitals or other institutional providers, physicians or 
other individual professional providers, or other providers outside the 
United States. The authority to establish these reimbursement methods 
is similar to that in TRICARE regulation. See 32 CFR 199.14(n).
    Proposed Sec.  17.275(n) would establish in regulation the 
reimbursement methodology for inpatient services provided in a Sole 
Community Hospital (SCH). TRICARE reimbursement approximates Medicare 
reimbursement for SCHs. TRICARE reimburses on a two-step process. 
TRICARE makes an initial payment based upon multiplying the billed 
amount by the applicable TRICARE percentage, which is the greater of 
the SCH's most recently available cost-to-charge ratio from the CMS 
inpatient Provider Specific File or the TRICARE allowed-to-billed 
ratio. The second step is a year-end adjustment to compare the 
aggregate allowable cost under the first method to the aggregate amount 
that would have been allowed for the same care using the DRG method. In 
the event that the DRG method amount is the greater, the year-end 
adjustment will be the amount by which it exceeds the aggregate 
allowable costs. See 32 CFR 199.14(a)(7). Due to certain limitations, 
CHAMPVA cannot be the same as TRICARE but can be

[[Page 2407]]

similar. CHAMPVA would compare the cost-to-charge ratio reimbursement 
amount versus the DRG reimbursement amount and then pay the higher of 
the two methods.

17.276 Claim-Filing Deadlines

    Proposed Sec.  17.276 is a revision and renumbering of current 
Sec.  17.275. First, we propose to remove the reference to ``the 
Center'' and ``[t]he Director, Health Administration Center, or his or 
her designee'' in Sec.  17.276(a) and (b), as renumbered by this 
rulemaking. Our intent is to indicate that VA is responsible for 
administering CHAMPVA and has discretion to assign claims processing 
responsibility within the Department.
    Proposed Sec.  17.276(c) would clarify that claims for services and 
supplies provided to an individual before the date of the event that 
qualifies the individual as eligible under Sec.  17.271 are not 
reimbursable.
    We further propose to add new paragraph (d) to proposed Sec.  
17.276 to clarify CHAMPVA policy concerning double coverage situations. 
We would clearly state that CHAMPVA is the last payer to all OHI, with 
the exceptions noted previously, which would mean that in cases of 
double coverage, any CHAMPVA benefits would generally not be paid until 
the claim has first been filed with the OHI and a final payment 
determination or explanation of benefits has been issued by the other 
insurer or payer. This is consistent with the purpose of TRICARE's 
double coverage provisions in 32 CFR 199.8, which address double 
coverage situations with OHI. Once CHAMPVA, as the last payer, makes 
its payment to the authorized non-VA provider, the CHAMPVA 
beneficiary's personal liability for the cost of care is then fully 
extinguished, as discussed earlier. However, TRICARE has special rules 
for double coverage situations involving TRICARE beneficiaries who also 
have Medicare benefits. See 32 CFR 199.8(e)(1). In the case of double 
coverage based on the availability of both CHAMPVA and Medicare 
benefits, the provisions of current Sec.  17.271(b) would still apply 
and be unchanged by this proposed rulemaking. Under current Sec.  
17.271(b), VA is the secondary payer to Medicare, as required under 38 
U.S.C. 1781(d)(2).

17.277 Appeals

    Proposed Sec.  17.277 is a revision and renumbering of current 
Sec.  17.276. We would make two minor revisions to current Sec.  
17.276. First, we would remove references to ``Director, Health 
Administration Center, or his or her designee'' (an outdated reference 
within the current Office of Community Care) and replace it with a 
reference to ``VA.'' This is necessary to ensure that VA is effectively 
put forth as the general administrator of CHAMPVA. In addition, we 
would clarify when a beneficiary has OHI, an appeal must first be filed 
with the OHI, and a determination made, before submitting an appeal to 
CHAMPVA. We would also like to note that there may be instances where 
we would not require a beneficiary to appeal with their OHI first, such 
as when the OHI deems the issue non-appealable. Neither of these 
revisions are substantive changes. We will also keep the note located 
in current Sec.  17.276, relocating it to the body of new Sec.  17.277.
    We propose to renumber current Sec. Sec.  17.277-17.278 to 
Sec. Sec.  17.278-17.279. Additionally, as with proposed Sec.  17.277, 
we would remove reference to ``the Center'' in current Sec.  17.277 and 
in its place insert ``VA.'' This revision would clarify that it is VA, 
and not HAC independently, that has the authority to pursue medical 
care cost recovery in accordance with applicable law. We would also 
remove the reference to third-party liability in proposed Sec.  17.278 
because it is unnecessary. VA's specific authority to recover for 
medical care costs applies to responsible third parties. We would not 
make any substantive changes to proposed Sec.  17.279.

Effect of Rulemaking

    The Code of Federal Regulations, as proposed to be revised by this 
proposed rulemaking, would represent the exclusive legal authority on 
this subject. No contrary rules or procedures would be authorized. All 
VA guidance would be read to conform with this proposed 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 rule 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 new proposed payment methods in this rulemaking 
will include new reimbursement rates for the Outpatient Prospective 
Payment System (OPPS), Home Health Prospective Payment System (HH PPS), 
and Sole Community Hospitals (SCHs) reimbursement methodologies. These 
revised methodologies would not significantly affect small businesses 
due to the following reasons: (1) The health care industry, to include 
Medicare and TRICARE, is currently using these payment methods and most 
providers are used to these reimbursement rates, if not expecting to 
receive them; (2) CHAMPVA's beneficiary population is relatively small 
compared to these other health care payers. Further support and data 
can also be found in VA's impact analysis as a supporting document at 
http://www.regulations.gov, usually within 48 hours after the 
rulemaking document is published. Additionally, a copy of this 
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 Fiscal Year to Date.'' Therefore, 
pursuant to 5 U.S.C. 605(b), this amendment would be exempt from the 
initial and final regulatory flexibility analysis requirements of 5 
U.S.C. 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

[[Page 2408]]

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 the regulatory action to be economically significant, 
because it will have an annual effect on the economy of $100 million or 
more. As noted above, VA's impact analysis is available as a supporting 
document at http://www.regulations.gov, usually within 48 hours after 
the rulemaking document is published. Additionally, a copy of this 
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 Fiscal Year to Date.''
    This proposed rule is not expected to be subject to the 
requirements of EO13771 because this proposed rule is expected to 
result 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, or tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This proposed rule would have no such 
effect on State, local, or tribal governments, or on the private 
sector.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.009, Veterans Medical 
Care Benefits; 64.010, Veterans Nursing Home Care; and 64.011, Veterans 
Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans 
Prosthetic Appliances; and 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. Gina S. 
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, 
approved this document on October 2, 2017, for publication.

List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Archives and records, 
Claims, Dental health, Drug abuse, Health care, Health facilities, 
Health professions, Health records, Medical devices, Mental health 
programs, Nursing homes, Veterans.

    Dated: January 5, 2018.
Michael Shores,
Director, Office of Regulation Policy & Management, Office of the 
Secretary, Department of Veterans Affairs.

    For the reasons stated in the preamble, The Department of Veterans 
Affairs (VA) proposes to amend 38 CFR part 17 as follows:

PART 17--MEDICAL

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

    Authority:  38 U.S.C. 501, and as noted in specific sections.
* * * * *
0
2. Revise Sec.  17.270 to read as follows:


Sec.  17.270  General provisions and definitions.

    (a) Overview of CHAMPVA. CHAMPVA is the Civilian Health and Medical 
Program of the Department of Veterans Affairs (VA). Generally, CHAMPVA 
furnishes medical care in the same or similar manner, and subject to 
the same or similar limitations, as medical care furnished to certain 
dependents and survivors of active duty and retired members of the 
Armed Forces under chapter 55 of title 10, United States Code 
(CHAMPUS), commonly referred to as the TRICARE Standard plan. Under 
CHAMPVA, VA shares the cost of medically necessary services and 
supplies with eligible beneficiaries within the 50 United States, the 
District of Columbia, the U.S. territories, and abroad. Under CHAMPVA, 
medical services and supplies may be provided as follows:
    (1) By an authorized non-VA provider.
    (2) By a VA provider at a VA facility, on a resource-available 
basis through the CHAMPVA In-house Treatment Initiative (CITI) only to 
CHAMPVA beneficiaries who are not also eligible for Medicare.
    (3) Through VA Medications by Mail (MbM).
    (i) Only CHAMPVA beneficiaries who do not have any other type of 
health insurance that pays for prescriptions, including Medicare Part 
D, may use MbM.
    (ii) Smoking cessation pharmaceutical supplies will only be 
provided through MbM and only to CHAMPVA beneficiaries that are not 
also eligible for Medicare.
    (b) Definitions. The following definitions apply to CHAMPVA 
(Sec. Sec.  17.270 through 17.278):
    Accepted assignment refers to the action of an authorized non-VA 
provider who accepts responsibility for the care of a CHAMPVA 
beneficiary and thereby agrees to accept the CHAMPVA determined 
allowable amount as full payment for services and supplies rendered to 
the beneficiary. (The provider's acceptance of the CHAMPVA determined 
allowable amount extinguishes the beneficiary's payment liability to 
the provider with the exception of applicable cost shares and 
deductibles.)
    Authorized non-VA provider means an individual or institutional 
non-VA provider of CHAMPVA-covered medical services and supplies that 
meets any of the following criteria:
    (i) Is licensed or certified by a State to provide the medical 
services and supplies; or
    (ii) Where a State does not offer licensure or certification, is 
otherwise certified by an appropriate national or professional 
association that sets standards for the specific medical provider.
    Calendar year means January 1 through December 31.
    CHAMPVA beneficiary means a person enrolled under Sec.  17.271.
    CHAMPVA-covered services and supplies mean those medical services 
and supplies that are medically necessary and appropriate for the 
treatment of a condition and that are not specifically excluded under 
Sec.  17.272(a)(1) through (84).
    CHAMPVA determined allowable amount has the meaning set forth in 
Sec.  17.272(b)(1).
    CHAMPVA In-house Treatment Initiative (CITI) means the initiative 
under 38 U.S.C. 1781(b) under which participating VA medical facilities 
provide medical services and supplies to CHAMPVA beneficiaries who are 
not also eligible for Medicare, subject to availability of space and 
resources.
    Child has the definition established in 38 U.S.C. 101.
    Claim means a request by an authorized non-VA provider or by a 
CHAMPVA beneficiary for payment or reimbursement for medical services 
and supplies provided to a CHAMPVA beneficiary.
    Fiscal year means October 1 through September 30.
    Medications by Mail (MbM) means the initiative under which VA 
provides outpatient prescription medications

[[Page 2409]]

through the mail to CHAMPVA beneficiaries.
    Other health insurance (OHI) means health insurance plans or 
programs (including Medicare) or third-party coverage that provide 
coverage to a CHAMPVA beneficiary for expenses incurred for medical 
services and supplies.
    Payer refers to OHI, as defined in this section, that is obligated 
to pay for CHAMPVA-covered medical services and supplies. In a 
situation in which, in addition to CHAMPVA, one or more payers is/are 
responsible to pay for such services and supplies (i.e., a ``double 
coverage'' situation), there would be a primary payer (i.e., the payer 
obligated to pay first), secondary payer (i.e., the payer obligated to 
pay after the primary payer), etc. In double coverage situations, 
CHAMPVA would be the last payer.
    Service-connected has the definition established in 38 U.S.C. 101.
    Spouse refers to a person who is married to a veteran and whose 
marriage is valid as determined under 38 U.S.C. 103(c).
    Surviving spouse refers to a person who was married to and is the 
widow(er) of a veteran as determined under 38 U.S.C. 103(c).
    (c) Discretionary authority. When it is determined to be in the 
best interest of VA, VA may waive any requirement in Sec. Sec.  17.270 
through 17.278, except any requirement specifically set forth in 38 
U.S.C. 1781, or otherwise imposed by statute. It is VA's intent that 
such discretionary authority would be used only under very unusual and 
limited circumstances and not to deny any individual any right, 
benefit, or privilege provided to him or her by statute or these 
regulations. Any such waiver shall apply only to the individual 
circumstance or case involved and will in no way be construed to be 
precedent-setting.

(Authority: 38 U.S.C. 501, 1781)


0
3. Amend Sec.  17.271 by:
0
a. Removing the word ``and'' at the end of paragraph (a)(3).
0
b. Redesignating paragraph (a)(4) as paragraph (a)(5).
0
c. Adding a new paragraph (a)(4).
0
d. Revising the authority citation following paragraph (a).
    The addition and revision read as follows:


Sec.  17.271  Eligibility.

    (a) * * *
    (4) An individual designated as a Primary Family Caregiver, under 
38 CFR 71.25(f), who is not entitled to care or services under a 
health-plan contract (as defined in 38 U.S.C. 1725(f)(2)); and
* * * * *

(Authority: 38 U.S.C. 501, 1720G(a)(7)(A), 1781)

* * * * *
0
4. Amend Sec.  17.272 by:
0
a. Revising paragraph (a)(2).
0
b. In paragraph (a)(3) introductory text, removing the phrase 
``(Medicaid excluded)''.
0
c. Adding paragraphs (a)(3)(iii) and (iv).
0
d. Revising paragraph (a)(21)(ix).
0
e. Removing paragraph (a)(26).
0
f. Redesignating paragraphs (a)(27) through (38) as paragraphs (a)(26) 
through (37), respectively.
0
g. In newly redesignated paragraph (a)(30), revising the introductory 
text and paragraphs (a)(30)(v) and (vi) and adding paragraphs 
(a)(30)(xi) through (xiv).
0
h. Removing paragraph (a)(39).
0
i. Redesignating paragraphs (a)(40) through (56) as paragraphs (a)(38) 
through (54), respectively.
0
j. In newly redesiganted paragraph (a)(40)(iv), removing 
``(a)(42)(iii)(A)'' and adding in its place ``(a)(40)(iii)(A).''
0
k. Removing paragraph (a)(57).
0
l. Redesignating paragraphs (a)(58) through (71) as paragraphs (a)(55) 
through (68), respectively.
0
m. Revising newly redesignated paragraphs (a)(57) through (59).
0
n. Removing paragraph (a)(72).
0
o. Redesignating paragraphs (a)(73) through (86) as paragraphs (a)(69) 
through (82), respectively.
0
p. Revising newly redesignated paragraph (a)(76).
0
q. Adding paragraphs (a)(83) and (84).
0
r. Revising paragraph (b).
    The revisions and additions read as follows:


Sec.  17.272  Benefits limitations/exclusions.

    (a) * * *
    (2) Services and supplies required as a result of an occupational 
disease or injury for which benefits are payable under workers' 
compensation or similar protection plan (whether or not such benefits 
have been applied for or paid) except when such benefits are exhausted 
and the services and supplies are otherwise not excluded from CHAMPVA 
coverage.
    (3) * * *
    (iii) Indian Health Service.
    (iv) CHAMPVA supplemental policies.
* * * * *
    (21) * * *
    (ix) Treatment for stabilization of myofascial pain dysfunction 
syndrome, also referred to as temporomandibular joint disorder (TMD). 
Authorization is limited to initial imaging such as radiographs, 
Computed Tomography, or Magnetic Resonance Imaging; up to four office 
visits; and the construction of an occlusal splint.
* * * * *
    (30) Preventive care (such as employment-requested physical 
examinations and routine screening procedures). The following 
exceptions apply, including but not limited to:
* * * * *
    (v) Cervical cancer screening.
    (vi) Breast cancer screening.
* * * * *
    (xi) Colorectal cancer screening.
    (xii) Prostate cancer screening.
    (xiii) Annual physical examination.
    (xiv) Vaccinations/immunizations.
* * * * *
    (57) Unless a waiver for extended coverage is granted in advance: 
Inpatient mental health services in excess of 30 days in any calendar 
year (or in an admission), in the case of a patient 19 years of age or 
older; 45 days in any calendar year (or in an admission), in the case 
of a patient under 19 years of age; or 150 days of residential 
treatment care in any calendar year (or in an admission).
    (58) Outpatient mental health services in excess of 23 visits in a 
calendar year unless a waiver for extended coverage is granted in 
advance.
    (59) Institutional services for partial hospitalization in excess 
of 60 treatment days in any calendar year (or in an admission) unless a 
waiver for extended coverage is granted in advance.
* * * * *
    (76) Over-the-counter products except for pharmaceutical smoking 
cessation supplies that are approved by the U.S. Food and Drug 
Administration, prescribed, and provided through MbM, and insulin and 
related diabetic testing supplies and syringes.
* * * * *
    (83) Medications not approved by the U.S. Food and Drug 
Administration (FDA), excluding FDA exceptions to the approval 
requirement.
    (84) Services and supplies related to the treatment of dyslexia.
    (b) Costs of services and supplies to the extent such amounts are 
billed over the CHAMPVA determined allowable amount are specifically 
excluded from coverage.
    (1) The CHAMPVA determined allowable amount is the maximum level of 
payment by CHAMPVA to an authorized non-VA provider for the provision 
of CHAMPVA-covered services and supplies to a CHAMPVA

[[Page 2410]]

beneficiary. The CHAMPVA determined allowable amount is determined 
before consideration of cost sharing and the application of deductibles 
or OHI.
    (2) A Medicare-participating hospital must accept the CHAMPVA 
determined allowable amount for inpatient services provided to a 
CHAMPVA beneficiary as payment in full. See 42 CFR 489.25.
    (3) An authorized non-VA provider who accepts responsibility for 
the care of a CHAMPVA beneficiary thereby agrees to accept the CHAMPVA 
determined allowable amount as full payment for services and supplies 
rendered to the beneficiary (i.e., accepted assignment). The provider's 
acceptance of the CHAMPVA determined allowable amount extinguishes the 
beneficiary's payment liability to the provider. Any attempts to 
collect any additional amount from the CHAMPVA beneficiary may result 
in the provider being excluded from Federal benefits programs. See 42 
CFR 1003.105.
* * * * *
0
5. Amend Sec.  17.273 by:
0
a. Revising the introductory text and paragraph (d).
0
b. Removing paragraph (e).
0
c. Redesignating paragraph (f) as paragraph (e).
0
d. Adding new paragraph (f).
    The revisions and addition read as follows:


Sec.  17.273  Preauthorization.

    Preauthorization or advance approval is required for any of the 
following, except when the benefit is covered by the CHAMPVA 
beneficiary's other health insurance (OHI):
* * * * *
    (d) Dental care. For limitations on dental care, see Sec.  
17.272(a)(21)(i) through (xii).
* * * * *
    (f) CHAMPVA will perform a retrospective medical necessity review 
during the coordination of benefits process if:
    (1) It is determined that CHAMPVA is the responsible payer for 
services and supplies but CHAMPVA preauthorization was not obtained 
prior to delivery of the services or supplies; and,
    (2) The claim for payment is filed within the appropriate one-year 
period.
* * * * *
0
6. Amend Sec.  17.274 by:
0
a. Revising paragraphs (a), (b), and (c).
0
b. Adding a heading for paragraph (d).
0
c. Adding paragraph (e).
    The revisions and additions read as follows:


Sec.  17.274  Cost sharing.

    (a) Cost sharing generally. CHAMPVA is a cost sharing program in 
which the cost of covered services is shared with the CHAMPVA 
beneficiary. CHAMPVA pays the CHAMPVA determined allowable amount less 
the CHAMPVA deductible, if applicable, and less the CHAMPVA beneficiary 
cost share.
    (1) CHAMPVA beneficiary cost-share requirements do not apply to the 
following:
    (i) Supplies provided through VA MbM.
    (ii) Any medical services and supplies provided to a CHAMPVA 
beneficiary through CITI.
    (iii) The following services, even if not provided through CITI:
    (A) Colorectal cancer screening.
    (B) Breast cancer screening.
    (C) Cervical cancer screening.
    (D) Prostate cancer screening.
    (E) Annual physical exams.
    (F) Vaccinations/immunizations.
    (G) Well child care from birth to age six, as described in Sec.  
17.272(a)(30)(i).
    (iv) Hospice services.
    (v) Or other services as determined by the Secretary of Veterans 
Affairs.
    (2) [Reserved]
    (b) Deductibles. In addition to the CHAMPVA beneficiary cost share, 
an annual (calendar year) outpatient deductible requirement ($50 per 
beneficiary or $100 per family) must be satisfied prior to VA payment 
of outpatient benefits. The deductible requirement is waived for:
    (1) CHAMPVA-covered services and supplies provided through VA MbM 
or through CITI.
    (2) Inpatient services.
    (3) Preventive services listed in paragraph (a)(1)(iii) of this 
section.
    (4) Hospice services.
    (5) Or other services as determined by the Secretary of Veterans 
Affairs.
    (c) Cost sharing limitations. To provide financial protection 
against the impact of a long-term illness or injury, there is a $3,000 
calendar year limit or ``catastrophic cap'' per CHAMPVA eligible family 
on the CHAMPVA beneficiary's out-of-pocket costs for allowable services 
and supplies. After a family has paid $3,000 in out-of-pocket costs, to 
include both cost share and deductible amounts, in a calendar year, 
CHAMPVA will pay the full allowable amounts for the remaining CHAMPVA-
covered services and supplies through the end of that calendar year. 
Credits to the annual catastrophic cap are limited to the applied 
annual deductible(s) and the CHAMPVA beneficiary cost-share amount. 
Costs above the CHAMPVA determined allowable amount, as well as costs 
associated with non-covered medical services and supplies, are not 
credited toward the catastrophic cap calculation.
    (d) Non-payment. * * *
    (e) Cost share calculation. The CHAMPVA beneficiary's cost-share 
amount, if not waived under paragraph (a)(1) of this section, is 25 
percent of the CHAMPVA determined allowable amount in excess of the 
annual calendar year deductible (see Sec.  17.275 for procedures 
related to the calculation of the allowable amount for CHAMPVA-covered 
services and supplies), except for the following:
    (1) For inpatient services subject to the CHAMPVA Diagnosis Related 
Group (DRG) payment system, the cost share is the lesser of:
    (i) The per diem rate multiplied by the number of inpatient days;
    (ii) 25 percent of the hospital's billed amount; or
    (iii) The base CHAMPVA DRG rate.
    (2) For inpatient mental health low volume hospitals and units 
(less than 25 mental health discharges per federal fiscal year), the 
cost share is the lesser of:
    (i) The fixed per diem rate multiplied by the number of inpatient 
days; or
    (ii) 25 percent of the hospital's billed charges.
* * * * *


Sec. Sec.  17.275 through 17.278  [Redesignated as Sec. Sec.  17.276 
through 17.279]

0
7. Redesignate Sec. Sec.  17.275 through 17.278 as Sec. Sec.  17.276 
through 17.279.
0
8. Add new Sec.  17.275 to read as follows:


Sec.  17.275  CHAMPVA determined allowable amount calculation.

    CHAMPVA calculates the allowable amount in the following ways, for 
the following covered services and supplies:
    (a) Inpatient hospital services (non-mental health). Unless exempt 
or subject to a methodology under paragraph (b) or (c) of this section, 
inpatient hospital services provided in the 50 States, the District of 
Columbia, and Puerto Rico are subject to the CHAMPVA Diagnosis Related 
Group (DRG)-based reimbursement methodology. Under the CHAMPVA DRG-
based payment system, hospitals are paid a predetermined amount per 
discharge for inpatient hospital services, which will not exceed the 
billed amount. Certain inpatient services will be reimbursed under the 
CHAMPVA Cost-to-Charge (CTC) reimbursement methodology.
    (b) Inpatient hospital services (mental health). The CHAMPVA 
inpatient mental health per diem reimbursement methodology is used to 
calculate

[[Page 2411]]

reimbursement for inpatient mental health hospital care in specialty 
psychiatric hospitals and psychiatric units of general acute hospitals 
that are exempt from the CHAMPVA DRG-based payment system. The per diem 
rate is calculated by multiplying the daily rate by the number of days 
(length of stay). The daily rate is updated each fiscal year for both 
high volume hospitals (25 or more discharges per fiscal year) and low 
volume hospitals (fewer than 25 discharges per fiscal year).
    (c) Other inpatient hospital services. (1) The CHAMPVA CTC 
reimbursement methodology is used to calculate reimbursement for 
inpatient care furnished by hospitals or facilities that are exempt 
from either of the methodologies in paragraph (a) or (b) of this 
section. Such hospitals or facilities will be paid at the CHAMPVA CTC 
ratio times the billed charges that are customary and not in excess of 
rates or fees the hospital or facility charges the general public for 
similar services in a community.
    (2) The following hospitals and services are subject to the CHAMPVA 
CTC payment methodology:
    (i) Any hospital that qualifies as a cancer hospital under Medicare 
standards and has elected to be exempt from the Centers for Medicare 
and Medicaid Services (CMS) prospective payment system.
    (ii) Christian Science sanatoriums.
    (iii) Critical Access Hospitals.
    (iv) Any hospital outside the 50 States, the District of Columbia, 
or Puerto Rico.
    (v) Hospitals within hospitals.
    (vi) Long-term care hospitals.
    (vii) Non-Medicare participating hospitals.
    (viii) Non-VA Federal Health Care Facilities (e.g., military 
treatment facilities, Indian Health Service).
    (ix) Rehabilitation hospitals.
    (x) Hospital or hospital-based services subject to State waiver in 
any State that has implemented a separate DRG-based payment system or 
similar payment system in order to control costs.
    (xi) Hospitals and services as determined by the Secretary of 
Veterans Affairs.
    (d) Outpatient hospital services. The CHAMPVA outpatient 
prospective payment system (OPPS) is used to calculate the allowable 
amount for outpatient services provided in hospitals subject to 
Medicare OPPS. This will include the utilization of TRICARE's 
reimbursement methodology to include specific coding requirements, 
ambulatory payment classifications (APCs), nationally established APC 
amounts, and associated adjustments.
    (e) Outpatient and inpatient non-hospital services. Payments to 
individual authorized non-VA providers (not hospitals) for CHAMPVA-
covered medical services and supplies provided on an outpatient or 
inpatient basis, including but not limited to, anesthesia services, 
laboratory services, and other professional fees associated with 
individual authorized non-VA providers, are reimbursed based on the 
lesser of:
    (1) The CHAMPVA Maximum Allowable Charge;
    (2) The prevailing amount, which is the amount equal to the maximum 
reasonable amount allowed providers for a specific procedure in a 
specific locality; or,
    (3) The billed amount.
    (f) Pharmacy services and supplies. The CHAMPVA pharmacy services 
and supplies payment methodology is based on specific CHAMPVA pharmacy 
points of service, which dictate the amounts paid by VA. VA pays:
    (1) For services and supplies obtained from a retail in-network 
pharmacy, the lesser of the billed amount or the contracted rate; or
    (2) For supplies obtained from a retail out-of-network pharmacy, 
the lesser of the billed amount plus a dispensing fee or the average 
wholesale price plus a dispensing fee.
    (g) Skilled Nursing Facility (SNF) care. The CHAMPVA SNF 
reimbursement methodology is based on the CMS prospective payment 
system for SNFs under 42 CFR part 413, subpart J (Medicare Resource 
Utilization Group (RUG) rates).
    (h) Durable medical equipment, prosthetics, orthotics, and supplies 
(DMEPOS). The CHAMPVA DMEPOS reimbursement methodology is based on the 
same amounts established under the CMS DMEPOS fee schedule under 42 CFR 
part 414, subpart D. The CHAMPVA determined allowable amount for DMEPOS 
is the amount in effect in the specific geographic location at the time 
CHAMPVA-covered medical services and supplies are provided to a CHAMPVA 
beneficiary.
    (i) Ambulance services. CHAMPVA adopts Medicare's Ambulance Fee 
Schedule (AFS) for ambulance services, with the exception of services 
furnished by a Critical Access Hospital (CAH). Ambulance services are 
paid based on the lesser of the Medicare AFS or the billed amount. 
Ambulance services provided by a CAH are paid on the same bases as the 
CTC method under paragraph (c) of this section.
    (j) Hospice care. CHAMPVA hospice reimbursement methodology uses 
Medicare per diem hospice rates.
    (k) Home health care (intermittent or part-time). CHAMPVA home 
health care reimbursement methodology, based on Medicare's home health 
prospective payment system, uses a fixed case-mix and wage-adjusted 
national 60-day episode payment amount to act as payment in full for 
costs associated with furnishing home health services with exceptions 
allowing for additional payment to be established.
    (l) Ambulatory surgery. The CHAMPVA reimbursement methodology for 
facility charges associated with procedures performed in a freestanding 
ambulatory surgery center is based on a prospectively determined 
amount, similar to that used by TRICARE. These facility charges do not 
include physician fees, anesthesiologist fees, or fees of other 
authorized non-VA providers; such independent professional fees must be 
submitted separately from facility fees and are calculated under the 
methodology in paragraph (e) of this section.
    (m) CHAMPVA-covered medical services and supplies provided outside 
the United States. VA shall determine the appropriate reimbursement 
method(s) for CHAMPVA-covered medical services and supplies provided by 
authorized non-VA providers outside the United States.
    (n) Sole Community Hospitals. The CHAMPVA reimbursement methodology 
for inpatient services provided in a Sole Community Hospital (SCH) will 
be the greater of: The allowable amount determined by multiplying the 
billed charges by the SCH's most recently available cost-to-charge 
ratio from the CMS Inpatient Provider Specific File or the DRG 
reimbursement rate.

(Authority: 38 U.S.C. 501, 1781)


0
9. Amend newly redesignated Sec.  17.276 by:
0
b. Revising paragraphs (a) introductory text and (b).
0
c. Adding paragraphs (c) and (d).
    The revisions and additions read as follows:


Sec.  17.276  Claim-filing deadlines.

    (a) Unless an exception is granted under paragraph (b) of this 
section, claims for medical services and supplies must be filed no 
later than:
* * * * *
    (b) Requests for an exception to the claim filing deadline must be 
submitted in writing and include a complete explanation of the 
circumstances resulting in late filing along with all available 
supporting documentation. Each request for an exception to the

[[Page 2412]]

claim filing deadline will be reviewed individually and considered on 
its own merit. VA may grant exceptions to the requirements in paragraph 
(a) of this section if it determines that there was good cause for 
missing the filing deadline. For example, when dual coverage exists, 
CHAMPVA payment, if any, cannot be determined until after the primary 
insurance carrier has adjudicated the claim. In such circumstances an 
exception may be granted provided that the delay on the part of the 
primary insurance carrier is not attributable to the beneficiary. 
Delays due to provider billing procedures do not constitute a valid 
basis for an exception.
    (c) Claims for CHAMPVA-covered services and supplies provided 
before the date of the event that qualifies an individual under Sec.  
17.271 are not reimbursable.
    (d) CHAMPVA is the last payer to OHI, as that term is defined in 
Sec.  17.270(b). CHAMPVA benefits will generally not be paid until the 
claim has been filed with the OHI and the OHI has issued a final 
payment determination or explanation of benefits. CHAMPVA is secondary 
payer to Medicare per the terms of Sec.  17.271(b).
* * * * *
0
10. Revise newly redesignated Sec.  17.277 to read as follows:


Sec.  17.277  Appeals.

    Notice of the initial determination regarding payment of CHAMPVA 
benefits will be provided to the CHAMPVA beneficiary on a CHAMPVA 
Explanation of Benefits (EOB) form. The EOB form is generated by the 
CHAMPVA automated payment processing system. If a CHAMPVA beneficiary 
or provider disagrees with the determination concerning CHAMPVA-covered 
services and supplies or calculation of benefits, he or she may request 
reconsideration. Such requests must be submitted to VA in writing 
within one year of the date of the initial determination. The request 
must state why the CHAMPVA claimant believes the decision is in error 
and must include any new and relevant information not previously 
considered. Any request for reconsideration that does not identify the 
reason for dispute will be returned to the claimant without further 
consideration. After reviewing the claim and any relevant supporting 
documentation, VA will issue a written determination to the claimant 
that affirms, reverses, or modifies the previous decision. If the 
claimant is still dissatisfied, within 90 days of the date of the 
decision he or she may make a written request for review by VA. After 
reviewing the claim and any relevant supporting documentation, VA will 
issue a written determination to the claimant that affirms, reverses, 
or modifies the previous decision. The decision of VA with respect to 
benefit coverage and computation of benefits is final. When a CHAMPVA 
beneficiary has other health insurance (OHI), an appeal must first be 
filed with the OHI, and a determination made, before submitting the 
appeal to CHAMPVA with limited exceptions such as if the OHI deems the 
issue non-appealable. Denial of CHAMPVA benefits based on legal 
eligibility requirements may be appealed to the Board of Veterans' 
Appeals in accordance with 38 CFR part 20. Medical determinations are 
not appealable to the Board. 38 CFR 20.101.

(Authority: 38 U.S.C. 501, 1781)


0
11. Revise newly redesignated Sec.  17.278 to read as follows:


Sec.  17.278  Medical care cost recovery.

    VA will actively pursue medical care cost recovery in accordance 
with applicable law.

(Authority: 42 U.S.C. 2651; 38 U.S.C. 501, 1781)


[FR Doc. 2018-00332 Filed 1-16-18; 8:45 am]
 BILLING CODE 8320-01-P