[Federal Register Volume 84, Number 145 (Monday, July 29, 2019)]
[Proposed Rules]
[Pages 36507-36516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15891]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AQ56


Center for Innovation for Care and Payment

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) is proposing to amend 
its regulations that govern VA health care. This rule would establish 
parameters and authority for the new Center for Innovation for Care and 
Payment in its conduct of pilot programs designed to develop innovative 
approaches to testing payment and service delivery models to reduce 
expenditures while preserving or enhancing the quality of care 
furnished by VA.

DATES: Comments must be received on or before August 28, 2019.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to: Director, Office of 
Regulation Policy and Management (00REG), Department of Veterans 
Affairs, 810 Vermont Avenue North West, Room 1064, Washington, DC 
20420; or by fax to (202) 273-9026. (This is not a toll-free telephone 
number.) Comments should indicate that they are submitted in response 
to ``RIN 2900-AQ56 Center for Innovation for Care and Payment.'' Copies 
of comments received will be available for public inspection in the 
Office of Regulation Policy and Management, Room 1064, between the 
hours of 8 a.m. and 4:30 p.m., Monday through Friday (except holidays). 
Please call (202) 461-4902 for an appointment. (This is not a toll-free 
telephone number.) In addition, during the comment period, comments may 
be viewed online through the Federal Docket Management System (FDMS) at 
http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Michael Akinyele, VA Chief Innovation 
Officer and Executive Director (Acting), VA Innovation Center (VIC) 
(008E), 810 Vermont Ave. NW, Washington, DC 20420. 
[email protected]. (202) 461-7271. (This is not a toll-free 
number.)

SUPPLEMENTARY INFORMATION: On June 6, 2018, section 152 of Public Law 
115-182, the John S. McCain III, Daniel K. Akaka, and Samuel R. Johnson 
VA Maintaining Internal Systems and Strengthening Integrated Outside 
Networks Act of 2018, or the VA MISSION Act of 2018, amended title 38 
of the United States Code (U.S.C.) by adding a new section 1703E, 
Center for Innovation for Care and Payment. Section 1703E(a)(1) 
establishes the Center for Innovation for Care and Payment (the 
Center). Section 1703E(a)(2) authorizes the conduct of pilot programs 
to develop innovative approaches to testing payment and service 
delivery models to reduce expenditures while preserving or enhancing 
the quality of care furnished by VA, and subsection (a)(3) requires VA 
to determine whether such models improve access to, and quality, 
timeliness, and patient satisfaction of care and services, and create 
cost savings for VA. Section 1703E(a)(4) requires that VA test a model 
in a location where VA determines that the model will address deficits 
in care (including poor clinical outcomes or potentially avoidable 
expenditures) for a defined population; it further directs VA to focus 
on models VA expects to reduce program costs while preserving or 
enhancing the quality of care received by individuals receiving 
benefits under chapter 17 of title 38, United States Code. Under 
section 1703E(a)(4)(C), VA could select those models described in 42 
U.S.C. 1315a(b)(2)(B), the authority for the Center for Medicare and 
Medicaid Innovation. In selecting models for testing, section 
1703E(a)(5) permits VA to consider a number of different factors, 
including whether the model includes a regular process for monitoring 
and updating patient care plans in a manner that is consistent with the 
needs and preferences of individuals receiving benefits under chapter 
17; whether the model places the individual receiving benefits under 
chapter 17 (including family members and other caregivers of such 
individual) at the center of the care team of such individual; whether 
the model uses technology or new systems to coordinate care over time 
and across settings; and whether the model demonstrates effective 
linkage with other public sector payers, private sector payers, or 
statewide payment models. Section 1703E(a)(6) states that VA may not 
design models in such a way that would allow the United States to 
recover or collect reasonable charges from other Federal health care 
programs, such as Medicare, Medicaid, or TRICARE.
    Section 1703E(b) provides that pilot programs must be terminated no 
later than five (5) years after they begin. Section 1703E(c) directs VA 
to ensure that each pilot program carried out under this section occurs 
in an area or areas appropriate for the intended purposes of the pilot 
program; to the extent practicable, VA should ensure that pilot 
programs are located in geographically diverse areas. Section 1703E(d) 
states that funding for each pilot program must come from 
appropriations provided in advance in appropriations acts for the 
Veterans Health Administration (VHA) and information technology 
systems. Section 1703E(e) requires VA publish

[[Page 36508]]

information about each pilot program in the Federal Register and to 
take reasonable actions to provide direct notice to veterans eligible 
to participate in such pilot programs.
    Section 1703E(f) allows VA to waive requirements in subchapters I, 
II, and III of chapter 17, title 38, U.S.C., as VA determines necessary 
for the purposes of carrying out pilot programs under this section. 
Before waiving any such authority, VA will submit to Congress a report 
on a request for a waiver that describes the specific authorities to be 
waived, the standard or standards to be used in lieu of the waived 
authorities, the reasons for such waiver or waivers, and other matters 
including metrics, cost estimates (both budgets and savings), and 
schedules.
    Section 1703E(g) imposes several restrictions on VA's authority 
under this section, notably limiting the number of pilot programs (10) 
that can be carried out concurrently, requiring VA to submit the first 
pilot program proposal to Congress within 18 months of the enactment of 
the Caring for Our Veterans Act of 2018 (June 6, 2018), and requiring 
VA to either modify or terminate a pilot program if VA determines it is 
not improving the quality of care or producing cost savings. Section 
1703E(h) requires VA to conduct an evaluation of each pilot program, 
and section 1703E(i) requires VA to obtain advice from the Under 
Secretary for Health and the Special Medical Advisory Group in the 
development and implementation of any pilot program. VA must also 
consult representatives of relevant Federal agencies, and clinical and 
analytical experts with expertise in medicine and health care 
management. Finally, section 1703E(j) authorizes VA to expand, through 
rulemaking, successful pilot programs in duration or scope.
    This proposed rule would implement the mandates and authorities of 
section 1703E, as added by the VA MISSION Act of 2018, by establishing 
a new Sec.  17.450.
    Proposed paragraph (a) would establish the purpose for this section 
and the organization of the Center. Proposed paragraph (a)(1) would 
explain that the Center for Innovation for Care and Payment will carry 
out pilot programs to develop innovative approaches to testing payment 
and service delivery models to reduce expenditures while preserving or 
enhancing the quality of care furnished by VA. This would be consistent 
with section 1703E(a)(2). We would further state that the Center for 
Innovation for Care and Payment will be operationally independent from 
any of VA's three administrations and will be responsible for 
collaborating across VA to develop and implement pilot programs under 
this section. As further explained in proposed paragraphs (a)(2)-(3), 
being operationally independent refers to the decision-making authority 
of the Center regarding the strategic, procedural, and tactical aspects 
of managing the pilot programs under this section. To ensure the 
limited number (10) of concurrent pilot programs under this section are 
not redundant of or conflicted by ongoing innovation efforts within any 
specific administration, the Center for Innovation for Care and Payment 
will not operate within any specific VA administration but will operate 
in VA's corporate portfolio.
    We are strategically positioning the Center as operationally 
independent to focus on envisioning veteran care and payment 
requirements in the distant future and preparing VA to meet the needs 
of veterans today, as well as in the future; in 2045, for example, the 
population of veterans in the United States is projected to decline to 
12 million. Of the approximately 20 million veterans alive today, VA 
provides health care for approximately 7 million unique patients each 
year, including approximately 1 million unique non-veterans. If current 
trends hold, we anticipate that by 2045, VA would be providing health 
care to approximately 3.6 million unique veteran patients each year. As 
such, we anticipate VA would need to re-imagine its current approach to 
furnishing services and payments for the veterans it hopes to serve in 
2045. For the Center to be positioned for success in its mission to re-
imagine VA's current approach to furnishing services and payments for 
veterans, it must enjoy strategic and operational independence from 
existing processes. In the commercial market, innovation efforts led by 
incumbents or large enterprises are rarely responsible for creating 
sustainably disruptive solutions that revolutionize the products or 
services of the incumbent. This is to be expected, because any new 
solution that threatens the viability or market position of established 
products or services is ultimately stifled by the enterprise focus on 
the near-term objectives of sustaining current products and services in 
lieu of investing additional time and resources in emerging solutions 
that could revolutionize product and service offerings to significantly 
benefit the organization's customers. We believe that creating an 
autonomous, independent organization with its own brand is the best way 
to enable corporate innovation to thrive. Autonomy does not mean the 
Center would work in isolation. The Center will report through the 
Office of the Secretary of Veterans Affairs and ultimately the 
President of the United States and does not have the unilateral 
authority to execute pilot programs.
    Proposed paragraph (b) would define the terms for this section.
    Proposed paragraph (b) would define the term access. Section 
1703E(a)(3)(A) directs VA to test payment and service delivery models 
to determine whether such models improve access to, and quality, 
timeliness, and patient satisfaction of care and services. Because VA 
will be testing models to determine whether they improve access, it is 
important to define the term. We propose to define access as entry into 
or use of VA services. Entry into would refer to basic eligibility and 
enrollment, while use of services would refer to the actual receipt of 
care and services. Access to care is dependent on both availability and 
adequacy of services as well as barriers (e.g., financial, cultural, 
etc.) that may interfere with utilization of available services. See 
Gulliford, M. et al., What Does ``Access to Care'' Mean? Journal of 
Health Services Research and Policy (2002), available at https://www.ncbi.nlm.nih.gov/pubmed/12171751.
    We recognize that our beneficiaries face various issues affecting 
access, including lack of availability of VA services in a specific 
geographic area or barriers to obtaining care for specific populations. 
As such, we believe this comprehensive interpretation of access would 
be of greatest benefit to veterans affected by pilot programs conducted 
by the Center.
    Proposed paragraph (b) would define the term patient satisfaction 
of care and services to mean the patients' rating of their experiences 
of care and services and as further defined in a pilot program 
proposal. In addition to requiring that we test payment and service 
delivery models to determine whether they improve access and 
timeliness, section 1703E(a)(3)(A) also requires that we assess whether 
the models improve patient satisfaction, which is a critical indicator 
of service quality and patient-centric care. The health care industry 
standard is to assess patients' perception of their health care 
experience using the Consumer Assessment of Health Providers and 
Systems (CAHPS) survey, which has been in use since the mid-1990s. For 
example, the Centers for Medicare and Medicaid Services (CMS) has 
adopted CAHPS for care delivered in multiple care settings. Each CAHPS

[[Page 36509]]

survey produces several measures of patient experience. These measures 
include composite measures, which combine two or more related survey 
items; rating measures, which reflect respondents' ratings on a scale 
of 0 to 10; and single-item measures. Measuring patient experience 
measures what is important to the patient: access, service, and 
communication. For years VA has been measuring patient satisfaction by 
focusing on patient experience. VA uses CAHPS to measure veterans' 
experience of care for outpatient care and VA's Survey of Healthcare 
Experience of Patients (SHEP) to measure inpatient experience of care. 
SHEP has been in use for many years and uses the same questions as the 
Hospital Consumer Assessment of Healthcare Providers and Systems 
(HCAHPS), a standardized, nationally-used, public survey that measures 
inpatient experience of care.
    We believe that using these types of patient experience of care 
measures would be in line with health care industry standards and VA 
existing practices and would ensure that veterans and providers alike 
are not burdened with new types of assessments or surveys. In addition, 
measuring patient perceptions by using the industry-accepted patient 
experience of care would allow veterans to better understand how the 
care provided by VA compares to that provided outside of VA by having 
equivalent data to make comparisons, as well as how care furnished 
through the pilot compares with care furnished outside the pilot.
    Proposed paragraph (b) would define the term payment models. 
Section 1703E(a)(2) authorizes VA to carry out innovative approaches to 
testing payment and service delivery models to reduce expenditures 
while preserving or enhancing the quality of care furnished by VA. 
Innovative payment models incorporate different types of arrangements 
that help lower cost while maintaining or improving the quality of 
services. We therefore propose to state that the term payment models 
refers to the types of payment, reimbursement, or incentives that VA 
deems appropriate for advancing the health and well-being of 
beneficiaries. Use of the term incentive indicates anything that is 
intended to motivate service providers to perform better or deliver 
services in a more favorable manner, which is consistent with the usual 
dictionary definition. While the term payment models is specifically 
applicable to service providers, we note that VA could use incentives 
for patients or other beneficiaries; such an approach would need to be 
developed through a pilot program proposal.
    Proposed paragraph (b) would define the term pilot program to refer 
to a pilot program conducted under proposed Sec.  17.450. VA operates 
programs on a pilot or temporary basis under authorities other than 
section 1703E, but because these regulations only implement that 
authority and place requirements or restrictions, or authorize certain 
functions under section 1703E, we propose to define the term here to 
avoid any impression that the proposed Sec.  17.450 extends those 
requirements, restrictions, or authorities to other VA initiatives 
operated under separate legal authorities.
    We aim, through testing innovative payment and service delivery 
models, to discover novel and innovative ways to deliver services that 
enhance the quality of care for beneficiaries. Section 1703E(a)(2) 
refers to testing payment and service delivery models to reduce 
expenditures while preserving or enhancing the quality of care. We 
propose to use the term quality enhancement to refer to enhancing the 
quality of care. We propose in paragraph (b) to state that quality 
enhancement refers to improvement or improvements in such factors as 
clinical quality, beneficiary-level outcomes (for example, symptom 
burden), and functional status, which is indicative of an individual's 
ability to perform normal daily activities required to meet basic 
needs, fulfill usual roles, and maintain health and well-being as 
documented by improvements in measurement data from a reliable and 
valid source, such as the electronic health record, and as further 
defined in a pilot program proposal. Quality enhancements are multi-
faceted, and measurements on such enhancements would be tailored to the 
specific area tested by a pilot program and would be defined in VA's 
proposal, as required by section 1703E(f)(2)(D).
    Similarly, we propose to define quality preservation in paragraph 
(b) to refer to the maintenance of such factors as clinical quality, 
beneficiary-level outcomes, and functional status as documented through 
measurement data from an evidence-based source, and as further defined 
in a pilot program proposal. Maintenance in this sense would mean 
continued, sustained, or improved performance by the patient along 
several dimensions of care as demonstrated by the types of factors 
described above and as documented through an evidence-based source. 
Like quality enhancement, specific measurements would be defined in 
VA's proposal.
    We propose to define in paragraph (b) reduction in expenditure. 
Section 1703E(a)(2) authorizes VA to test payment and service delivery 
models that lead to a reduction in expenditures while enhancing or 
preserving the quality of care furnished by VA. Some innovative models 
will require upfront investment and additional resources that might 
increase associated expenditures in the near term, but we anticipate 
the rise in expenditures will be mitigated by corresponding 
improvements in outcomes and value creation over time. Value creation 
could occur in multiple scenarios such as through cost reduction, cost 
avoidance, or reallocation of resources to alternative, higher-value 
activities. For example, investing in a system that reduces unnecessary 
or duplicative testing could lead to long term cost avoidance. For 
these reasons, we propose to state that reduction in expenditure refers 
to, but is not limited to, cost stabilization, cost avoidance, and/or 
decreases in long- or short-term spending and as further defined in a 
pilot program proposal. We would not limit reduction in expenditures to 
cost stabilization, cost avoidance, and/or decreases in long- or short-
term spending in case there are other methods for determining that VA's 
expenditures have been reduced that do not fit within any of the 
descriptions above. In considering the impact of a pilot program on 
expenditures, VA will estimate how the proposal is anticipated to 
impact VA expenditures and also consider the proposal's potential 
impact on expenditures for other related Federal programs.
    In proposed paragraph (b), we would state that the term service 
delivery models refers to all methods or programs for furnishing care 
and services. Section 1703E(a)(2) authorizes VA to develop innovative 
approaches to testing payment and service delivery models to reduce 
expenditures while preserving or enhancing the quality of care. Health 
care services can be delivered by either VA staff or by non-VA entities 
or providers, as well as through different modalities (like telehealth) 
or different models (like VA's Patient-Aligned Care Teams) and the 
definition proposed here would capture all potential modalities and 
models for furnishing services and would be the common understanding of 
this phrase. The term service delivery model generally includes any 
method for furnishing services, and we believe this is intended to 
apply broadly given the range of services and support that VA provides 
to different beneficiaries.

[[Page 36510]]

    In proposed paragraph (c), we would establish the procedures VA 
would use to determine the geographic locations where pilot programs 
would be conducted. Sections 1703E(a)(4)(A) and 1703E(c) require VA to 
test models and pilot programs in locations where there are deficits in 
care while ensuring that pilot programs are in geographically diverse 
areas of the United States. Because different beneficiary populations 
may have different needs depending on where they live, we believe that 
geographic location will play a critical role in the design of any 
pilot program. However, VA cannot yet define the specific factors that 
we would use to select geographic locations for specific pilot 
programs. We anticipate the basis for these decisions will vary based 
upon the goals and objectives of each specific pilot program. For 
example, if VA were to test a new payment methodology, it may be more 
appropriate to test it in a portion of the country where providers are 
already accustomed to being paid in alignment with that model. While 
market readiness would not serve as the sole reason for geographic 
location selection, it could be a key factor in selecting specific 
markets in which to test specific pilot programs. Consequently, we 
would state in proposed paragraph (c) that VA would make decisions 
regarding the location of each pilot program based upon the 
appropriateness of testing a specific model in a specific area while 
taking efforts to ensure that pilot programs are operated in 
geographically diverse areas of the country. We would identify the 
proposed geographic locations for each pilot program, the rationale for 
those decisions, and how we believe the selected locations would 
address deficits in care for a defined population in VA's proposal to 
Congress to operate the pilot program and a document in the Federal 
Register.
    Proposed paragraph (d) would define limitations on the authority of 
the Center. These limitations would only apply to pilot programs under 
this section. Again, VA operates pilot programs under different 
authorities, and these limits would not affect such other pilot 
programs, nor would these other pilot programs affect the activities of 
the Center. Section 1703E(g) establishes several of VA's limitations in 
carrying out pilot programs through the Center. Section 1703E(g)(1) 
states that VA may not carry out more than 10 pilot programs 
concurrently. We propose to interpret this in paragraph (d)(1) to mean 
that VA cannot actively operate more than 10 pilot programs at one 
time. Conducting pilot programs requires advance preparation, as well 
as data analysis following the completion of a pilot program. VA 
proposes to exclude the time involved with this preparatory and post-
program analysis by considering the operation of a pilot program as 
only the time of active operation. This would ensure that VA is able to 
operate the maximum number of pilot programs at any one time and 
mitigate potential delays to launching new pilot programs that could 
improve quality and reduce cost during the preparatory and post-pilot 
analysis effort of other pilot programs.
    In proposed paragraph (d)(2), we would state that, unless VA 
determines it to be necessary and informs the appropriate Committees of 
Congress, VA would not obligate more than $50 million in any fiscal 
year to operate all the pilot programs under this section. This is 
consistent with section 1703E(d) and section 1703E(g)(2), which state 
that, subject to notification and approval conditions, VA may not 
expend more than $50 million in any fiscal year in the conduct of the 
pilot programs operated under this section. Funding required to operate 
the pilot programs includes all administrative and overhead costs, 
including measurement and evaluation, as well as the funding required 
to implement the specific payment or service delivery models being 
tested. We propose to interpret the term ``expend'' under section 
1703E(g)(2) to mean ``obligate.'' This interpretation accounts for the 
legal requirement to record obligations that may result in immediate or 
future expenditures (outlays). An ``obligation'' is a definite 
commitment that creates a legal liability for payment. At the time that 
VA incurs a liability (e.g., signing a contract) it records the full 
amount of its legal liability against currently-available funds 
pursuant to the recording statute, 31 U.S.C. 1501(a)(1). The timing of 
the incurrence of an obligation is generally within the agency's 
control, while the timing of the liquidation of the obligation is 
largely outside of the agency's control, due to factors such as 
contractor performance and billing. Thus, interpreting ``expend'' to 
mean ``outlay'' rather than ``obligate'' would frustrate the 
legislative intent of authorizing up to $50 million per fiscal year to 
carry out the pilot programs. We note that paragraph (d)(2) would not 
condition VA's obligation of more than $50 million upon approval of the 
Chairmen of the Committees on Veterans' Affairs of the House of 
Representatives and the Senate, as is contemplated in section 
1703E(g)(2)(B)(iii). As noted in the President's Signing Statement, 
issued upon enactment of the VA MISSION Act of 2018, under the 
separation of powers, the Congress may not make the approval of Members 
of Congress a precondition to the execution of the law. See Statement 
of the President, June 6, 2018, available online: https://www.whitehouse.gov/briefings-statements/statement-by-the-president-3/. 
VA, accordingly, treats the section 1703E(g)(2)(B)(iii) approval 
requirement as advisory and non-binding, but may submit the required 
report to the appropriate Congressional Committees before exceeding the 
spending cap, if VA determines that the additional expenditure is 
necessary to carry out the pilot programs. For the public's awareness, 
coordination and approval of funding sources under section 1703E(d) for 
pilot programs will occur prior to public notice.
    In proposed paragraph (e), we would define VA's waiver authority to 
conduct pilot programs. Section 1703E provides a unique ability for VA, 
temporarily and in certain locations, to amend effectively its 
statutory authority when carrying out pilot programs under this 
section. Specifically, section 1703E(f)(1) allows VA to waive any 
provisions of law in subchapters I, II, and III of chapter 17, title 38 
U.S.C., i.e., sections 1701 through 1730C, as VA determines necessary 
solely for the purposes of carrying out this section with respect to 
testing models. However, VA cannot unilaterally waive these 
authorities; it must propose a waiver and describe a proposed pilot 
program in a report to Congressional leadership, and only upon 
Congress' approval may VA carry out the pilot program. VA must submit 
the first request for a waiver by December 6, 2019, as required by 
section 1703E(g)(3).
    Proposed paragraph (e) would clarify VA's authority regarding the 
waiver provisions in section 1703E(f). In proposed paragraph (e), we 
would state that VA's waiver authority includes both the authority to 
propose the removal of provisions of law or the addition of provisions 
of law. VA is a creature of law, and thus only has the authority 
granted to it by statute. Some statutes are restrictive, in that they 
provide a general authority and then place conditions upon the use of 
that authority. For example, section 1705 of title 38, U.S.C., defines 
VA's patient enrollment system and identifies those veterans who are 
eligible to enroll and in which priority group such veterans will be 
enrolled. Under this authority, VA could propose to waive some specific 
provision of law by proposing

[[Page 36511]]

to act as though such language that is in the statute were not there. 
At the same time, because VA is limited by its legal authority to only 
carry out those functions authorized by law, we propose to include in 
VA's waiver authority the ability to include additional language 
creating new authority for VA to act, or restricting language currently 
authorizing or requiring VA to act. For example, section 1708 of title 
38, U.S.C., authorizes VA to provide temporary lodging in certain 
situations and for certain persons. VA could use this waiver authority 
to propose to include additional groups of eligible beneficiaries under 
this regulation.
    We propose to allow VA to propose new or different standards under 
the waiver authority of section 1703E(f). We believe this is authorized 
by section 1703E(f)(1), which authorizes VA to waive such requirements 
in subchapters I, II, or III of chapter 17 of title 38, U.S.C. These 
requirements, as explained above, may either be explicit, which would 
require their removal, or implicit, which would require the addition of 
further language. Moreover, we believe this interpretation is further 
supported by section 1703E(f)(2)(B), which requires VA, in proposing 
the waiver of authority for a pilot program, to identify the standard 
or standards to be used in the pilot program in lieu of the waived 
authorities. We believe this language authorizes VA both to suggest 
additional standards or the removal of standards as well. We believe 
that if Congress or the public disagreed with the scope of this 
authority, Congress could simply choose to not approve VA's waiver 
request, so there is little to no risk associated with this 
interpretation.
    We also would state that VA may propose to waive any provision of 
law in any provision codified in or included as a note to any section 
in subchapters I through III of chapter 17, title 38, U.S.C. Some laws 
are codified in a title of the United States Code. For example, section 
1710 of title 38, U.S.C., defines eligibility for hospital, nursing 
home, and domiciliary care. Other laws are not codified but are 
included as notes to codified provisions when they deal with similar or 
general subject matters. For example, section 205 of Public Law 111-163 
established a pilot program on assistance for child care for certain 
veterans receiving health care. Section 205 of Public Law 111-163 is 
included as a note to section 1710 of title 38, U.S.C. Proposed 
paragraph (e) would allow VA to propose to waive provisions in either 
the text of section 1710 (for example, relating to eligibility for 
hospital, nursing home, or domiciliary care) or a note to section 1710 
(for example, relating to the pilot program on assistance for child 
care for certain veterans receiving health care). We believe this is 
authorized by section 1703E(f)(1), which authorizes VA to waive such 
requirements in subchapters I, II, and III of this chapter. When citing 
to a public law that appears as a note to a codified provision of law, 
we include the U.S.C. section and identify this as a note; public laws 
are assigned as notes to codified provisions of law by the Office of 
the Law Revision Counsel in the U.S. House of Representatives. This 
recognizes that these public laws are requirements in, or at least 
related to, the section of law. We also believe that if Congress or the 
public disagreed with the scope of this authority, Congress could 
simply choose to not approve VA's waiver request, so the risk 
associated with this interpretation is limited. In other words, if VA 
proposed to modify a note to a section of law and Congress did not 
think we had the authority to do that, or disagreed with VA on policy 
grounds, it would simply not approve the waiver request and the 
provision would not be waived.
    Finally, in paragraph (e)(1), we propose, upon Congressional 
approval of a waiver of a provision of law under this section, that VA 
will also deem waived any applicable provision of regulation 
implementing such law as identified in VA's pilot program proposal. We 
believe this would be a necessary component to exercising the statutory 
authority granted by section 1703E(f)(1), which allows VA to waive 
``such requirements'' in subchapters I, II, and III of chapter 17 as 
the Secretary determines necessary solely for the purposes of carrying 
out this section with respect to testing models. We believe regulations 
interpreting and implementing specific statutory provisions in 
subchapters I, II, and III are ``requirements'' within the context of 
this authority. It would be paradoxical for VA to test innovative 
approaches to payment and service delivery if VA could waive provisions 
of statute but not corresponding, and potentially more limiting, 
regulations promulgated by VA. For example, if VA proposed to waive a 
provision in section 1712 concerning dental care, and Congress approved 
such a proposal, VA could also waive any regulatory requirements (such 
as those found in 38 CFR 17.160) that implemented the provision of law 
waived by VA through the pilot program.
    Under proposed paragraph (e)(2), VA would publish a document in the 
Federal Register with information about, and soliciting public comment 
on, each proposed pilot program so that the public has an opportunity 
to comment on VA's proposals while Congressional approval is pending. 
VA would then publish a document in the Federal Register to inform the 
public of any approved pilot programs, as required by section 
1703E(e)(1). While this is not required by law, we believe this would 
be prudent practice to ensure that the public also has an opportunity 
to submit comments directly to VA regarding pending pilot program 
proposals and to inform their Members of Congress if they have any 
issues or concerns so that Congress can appropriately decide whether or 
not to approve a requested waiver of authority for the Center.
    Under proposed paragraph (f), VA would establish procedures 
regarding notice of eligibility requirements. Specifically, we would 
state that VA would take reasonable actions to provide direct notice to 
veterans eligible to participate in pilot programs operated under this 
section and would provide general notice to other individuals eligible 
to participate in a pilot program. We would further state that VA also 
would announce methods of notice in the Federal Register document 
published by VA for each proposed and approved pilot program. While 
section 1703E(e)(2) directs VA to take reasonable actions to provide 
direct notice to veterans eligible to participate in such pilot 
programs, we note that other provisions in section 1703E refer more 
broadly to individuals that are eligible for benefits. See, e.g., 
1703E(a)(4)(B), (a)(5)(A)-(B), (j)(2). Consequently, we read the 
requirement in section 1703E(e)(2) to create an obligation to take 
reasonable actions to provide direct notice to veterans eligible to 
participate in pilot programs on the assumption that VA would have more 
information about veterans, while VA would provide general information 
to notify any other individuals eligible to participate in a pilot 
program. For example, one pilot program could expand access to benefits 
for family members or caregivers of veterans; in this case, VA would 
provide notice to the veterans in the area where the pilot program is 
operating and would provide other general information as well to reach 
the caregivers or family members. Another example would be a pilot 
program involving certain community providers or other private 
entities; VA would provide general information to the community so that 
interested parties could inquire or participate. The exact nature of 
the notice will vary depending upon the type of pilot program

[[Page 36512]]

involved, and so VA will announce how it intends to inform the public, 
in particular, other eligible individuals and entities, through the 
document it publishes in the Federal Register for each pilot program. 
Other forms of more direct communication could include mailed letters, 
emails, announcements to local Veterans Service Organizations, and 
posting of information on the websites of VA medical centers, the VA 
Innovation Center website, and other online sources.
    In proposed paragraph (g), VA would describe generally how it would 
evaluate and report on the pilot programs. Specifically, VA would 
evaluate each pilot program operated under this section and report its 
findings. Section 1703E(h) requires VA to conduct an evaluation of each 
model tested, including at a minimum an analysis of the quality of care 
furnished and the changes in spending because of that model. VA is 
required to make the results of the tested model available to the 
public in a timely fashion. Once again, because each pilot program will 
vary in terms of the specific outcomes involved and how it will achieve 
those outcomes, VA is not proposing a discrete list of measures, but 
will include more specific information with each proposal for a pilot 
program. VA proposes to base its evaluation of pilot programs on 
quantitative data, qualitative data, or both, depending upon the nature 
of the pilot program. Different types of data may be more appropriate 
for different pilot program models, but each type of data is 
instructive and could help VA determine if VA is improving access to, 
and the quality, timeliness and patient satisfaction of care and 
services, as well as creating cost savings for VA. Whenever 
appropriate, such evaluation will also include a survey of participants 
or beneficiaries to determine their satisfaction with the pilot 
program; this participant feedback likely would be subject to the 
Paperwork Reduction Act and would provide direct input regarding the 
effects of the pilot program. We propose to make the evaluation results 
available to the public on the VA Innovation Center website at https://www.innovation.va.gov/. The schedule of the release will be indicated 
in the proposal for each pilot program. By law, VA is required to make 
the results of the tested model available to the public in a timely 
fashion, but we again note that each model will naturally have 
different lengths of time for data collection and analysis. Some pilot 
programs may allow for real-time, or close to real-time reporting of 
information (for example, costs or number of appointments), while 
others may experience lags between an action under the pilot program 
and health outcomes (for example, 6-month or 12-month morbidity or 
mortality data). VA will identify the measures and timelines for public 
reporting in its pilot program proposal submission to Congress and its 
document in the Federal Register.
    In proposed paragraph (h), VA would establish a process in 
regulation for the expansion of pilot programs. Section 1703E(j) 
authorizes VA through rulemaking to expand in scope or duration, 
including nationwide implementation, pilot programs if the expansion is 
expected to reduce spending without reducing the quality of care, or to 
improve the quality of patient care without increasing spending. 
Furthermore, VA is only permitted to expand a pilot program if the 
pilot program does not deny or limit the coverage or provision of 
benefits for individuals under chapter 17. We propose to establish 
through regulation a general process for expanding the scope or 
duration of pilot programs instead of requiring separate rulemakings 
for each expansion for several reasons. First, the promulgation of 
regulations is a lengthy process, taking on average 18-22 months for a 
proposed and final rule to be published and effective. Given the 
limitations on the length of time a pilot program could operate under 
this authority of only 5 years, this would effectively require VA to 
decide at the halfway point of a pilot program, and possibly before 
that, as to whether or not to expand. This may not be enough time for 
VA as a practical matter, which could either lead to the expansion of 
pilot programs that ultimately prove unsuccessful or the inability to 
expand pilot programs that do prove to be successful. Second, if VA 
were required to publish new regulations for each pilot program it 
wished to expand, VA's regulations would become cluttered with rules 
that would only be applicable for limited periods of time and 
locations. This would likely result in confusion regarding these 
provisions. Finally, we believe that by regulating the process we would 
use to expand pilot programs, we are meeting the requirements of the 
law, which does not expressly require VA proceed through notice and 
comment rulemaking for each expansion, but merely states that VA may 
expand pilot programs ``through rulemaking''. This requirement merely 
obligates VA to allow the public to comment on how expansion would 
occur, which this proposal would do. Moreover, and as further discussed 
below, VA is taking other measures to provide the public and Congress 
an opportunity to review and comment on VA's proposal for expansion, 
which we believe would result in an opportunity for feedback similar to 
a subsequent notice and comment rulemaking.
    Initially, we propose in paragraph (h)(1) that VA would only meet 
the statutory requirement of expecting a pilot program to reduce 
spending without reducing the quality of care or to improve the quality 
of patient care without increasing spending based upon an analysis of 
the data collected for the specific pilot and developed pursuant to 
proposed paragraph (g). VA also would have to provide such results to 
Congress through an interim report and to the public through a document 
in the Federal Register. This would be consistent with the general 
structure of the Center's authority, as any decisions regarding 
expansion would have to be based on publicly available data. Similarly, 
VA would have to decide that expansion would not deny or limit the 
coverage or provision of benefits for individuals under chapter 17. 
This is a statutory requirement, and VA's basis for making this 
determination would be available for public scrutiny prior to any 
expansion taking place. VA would propose that it would not expand a 
pilot program until 60 days after submitting an interim report to 
Congress and publishing a document in the Federal Register regarding 
its intent to expand a pilot program. This would provide Congress and 
the public 60 days to evaluate the data VA would be using as the basis 
for such an expansion. In the event the public or Congress do not 
believe the data support expansion, they would have this time to inform 
VA of such views. Upon the completion of the 60-day period, if VA still 
finds that the statutory prerequisites for expansion have been met, VA 
could expand a pilot program in either scope or duration, as noted 
below.
    Proposed paragraph (h)(2) would define how VA could expand a pilot 
program in scope. Proposed paragraph (h)(2) would authorize VA to 
expand the scope of a pilot program by modifying, among other elements 
of a pilot program, the range of services provided, the qualifying 
conditions covered, the geographic location of the pilot program, or 
the population of eligible participants in a manner that increases 
participation in or benefits under a pilot program. These are the 
general dimensions that we believe could be expanded, as that term is 
used in section 1703E(j). Expansion is generally

[[Page 36513]]

defined to mean becoming larger or more extensive, and these are the 
likely areas of a pilot program that could become larger or more 
extensive. For example, if VA were conducting a pilot program related 
to mental health services in Alaska for homeless veterans, and VA 
proposed to expand the pilot under paragraph (h)(1), VA could expand to 
include new beneficiary populations (e.g., non-homeless veterans), 
conditions (e.g., additional health services), or geographic locations 
(e.g., outside Alaska), among others. We would permit some flexibility 
in the forms that expansion could occur in case there are features of a 
pilot program that could be made larger or more extensive that do not 
fall within one of these categories. Again, without knowing exactly 
what pilot programs will be proposed, we are unable now to state 
definitively in what ways we could expand such a pilot program.
    In proposed paragraph (h)(3), we propose the conditions under which 
VA could extend the duration of a pilot program. In general, section 
1703E(b) limits pilot programs to 5 years of operation. Section 
1703E(j)(1), however, authorizes VA to extend the duration of a pilot 
program if the conditions for expansion discussed above are also met. 
We propose to authorize VA to extend the duration of a pilot program 
for up to an additional 5 years. Such extension would be subject to the 
same requirements related to the evaluation and reporting of data that 
would apply to a pilot program within the first 5 years of operation 
under proposed paragraph (g). We propose limiting the expansion of a 
pilot program to an additional 5 years because Congress recognized the 
potential for making successful pilots permanent in section 
1703E(f)(2)(G) when it required VA to report on the feasibility and 
advisability of making a pilot program permanent, but there is no 
indication Congress intended to allow for pilot programs to run in 
perpetuity. Moreover, the very nature of a pilot program is that it has 
a beginning and an end date. Finally, on a practical and legal level, 
because pilot programs under this section would involve the waiver of 
one or more provisions of law, we believe it would create confusion 
over time if a pilot program were operated indefinitely without express 
statutory authority. We believe the balance of powers is best preserved 
when Congress affirmatively establishes VA's parameters through law.
    In proposed paragraph (i), VA would establish its authority to make 
minor modifications to pilot programs approved by Congress. Section 
1703E(g)(5)(A) establishes VA's options (proposing a modification to 
Congress for approval or terminating the pilot program) when the 
Secretary determines that a pilot program is not improving the quality 
of care or producing cost savings, but it and the rest of section 1703E 
are silent in terms of VA's authority to modify pilot programs when VA 
has not made a determination regarding whether the pilot program is 
improving the quality of care or producing cost savings. We anticipate 
there may be pilot programs that we operationalize in a way that 
becomes administratively difficult to continue; alternatively, some 
pilot programs may be operationalized in a way that does not produce 
clear data that would allow VA to determine if the pilot program is 
improving the quality of care or producing cost savings. Under proposed 
paragraph (i), VA could modify the pilot program in a manner that is 
consistent with the parameters of Congressional approval without 
seeking further Congressional approval for the change. Modifications 
that would be consistent with the parameters of Congressional approval 
would vary based on each pilot program, but we offer a few examples for 
the public's understanding. For example, VA may plan to operate a pilot 
program in a particular location, but later determine that this 
location is unsuitable for reasons beyond VA's control. For example, an 
anticipated pilot site may be unavailable due to a natural disaster, or 
interest in participation in the pilot program may be inadequate to 
support valid results. In these cases, it would seem a poor use of 
government resources to continue attempting to operate the pilot 
program while waiting for a subsequent Act of Congress to allow VA to 
select another location. As another example, VA may want to conduct a 
pilot program offering a particular service, but VA may later determine 
this service is not appropriate while another similar service would be. 
VA plans to submit proposals to Congress that provide it enough 
information to know what it is authorizing, while still providing some 
flexibility for VA to address potential minor corrections without 
further Congressional approval. In identifying geographic locations for 
the pilot program under paragraph (c) of this section, for example, 
rather than identifying specifically the VA medical centers or 
facilities that would participate, we anticipate providing the general 
criteria VA will use to identify locations (e.g., urban areas, rural 
areas, highly rural areas; areas near military bases; facilities with 
academic affiliates, etc.) and possibly a list of facilities that could 
meet those requirements. This would allow VA to select another suitable 
location if needed. Similarly, for services that VA might provide, or 
populations of beneficiaries that might be included, we would attempt 
to describe these generally enough to allow for further modification as 
needed to either specify another service or another population. We are 
sensitive to Congress' need to conduct oversight and to understand 
clearly what it is authorizing when it approves a waiver, and so we 
limit VA's ability to modify a pilot program to changes that are 
consistent with the parameters of Congress' initial approval. VA could 
not, for example, modify a Congressionally approved pilot program on 
beneficiary travel to become a pilot program on the provision of care 
to beneficiaries otherwise ineligible for VA care. Such a change would 
clearly be outside the parameters of Congress' initial approval.
    In proposed paragraph (j), we would define the conditions for 
termination of pilot programs. As noted before, section 1703E(g)(5)(A) 
establishes that, when the Secretary determines that a pilot program is 
not improving the quality of care or producing cost savings, VA's 
options include proposing a modification to Congress for approval or 
terminating the pilot program. In proposed paragraph (j), we would use 
the terms quality enhancement and quality preservation to reflect the 
statutory language related to improving the quality of care, and we 
would use the term reduction in expenditures to reflect the statutory 
language related to producing cost savings. These substitutions would 
be consistent with the terms as they would be defined through paragraph 
(b) of this section. We would also clarify that a modification that can 
only be achieved through submission of a new waiver request to Congress 
would be distinct from a modification under paragraph (i) of this 
section, as just discussed. Congress specifically recognized that not 
all pilot programs will meet or exceed their primary goals of enhancing 
or preserving care while reducing costs. Under proposed paragraph (j), 
VA would, upon determining that a pilot program is not producing 
quality enhancement or quality preservation, or is not resulting in the 
reduction of expenditures, and that it is not possible or advisable to 
modify the pilot program either through submission of a new waiver 
request under paragraph (e) or

[[Page 36514]]

through modification under paragraph (i), terminate the pilot program 
within 30 days of submitting an interim report to Congress stating such 
determination. VA also would publish a document in the Federal Register 
regarding the pilot program's termination, and we would notify 
participants in the same manner that we notified them under paragraph 
(f) of their initial eligibility for the pilot program. This would 
ensure determinations regarding expansion and termination are made 
using the same methodology. This 30-day period is the maximum amount of 
time permitted by section 1703E(g)(5)(A)(ii).

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 rulemaking does not contain any provisions constituting 
collections 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. This proposed rule would not have a significant 
economic impact on qualifying non-VA entities or providers. Therefore, 
pursuant to 5 U.S.C. 605(b), this rulemaking is 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 issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.''
    The Office of Information and Regulatory Affairs has determined 
that this rulemaking is a significant regulatory action under Executive 
Order 12866. VA's impact analysis can be found as a supporting document 
at http://www.regulations.gov, usually within 48 hours after the 
rulemaking document is published. Additionally, a copy of the 
rulemaking and its impact analysis are available on VA's website at 
http://www.va.gov/orpm by following the link for VA Regulations 
Published from FY 2004 through FYTD. This proposed rule is not expected 
to be subject to the requirements of Executive Order 13771 because this 
proposed rule is expected to result in no more than de minimis costs.
    Executive Order 12866 also directs agencies to ``in most cases . . 
. include a comment period of not less than 60 days.'' This regulation 
aims to test innovative payment and service delivery models that will 
maintain or enhance the quality of care for beneficiaries while 
reducing cost. Providing a 30-day comment period will allow VA to begin 
pilot programs more quickly, thereby increasing opportunities for 
access to quality, cost-effective care to participating beneficiaries. 
The regulations proposed here are largely procedural, and will not, 
without Congressional approval of a pilot program proposal from VA, 
result in any change in benefits or services by themselves. Moreover, 
we believe that the requirement to receive Congressional approval for 
any waiver of authority, and VA's proposal to publish specific pilot 
program proposals in the Federal Register for public comment while 
Congressional approval is pending, should provide the public a more 
meaningful opportunity to comment on the actual pilot programs 
implemented under section 1703E. For these reasons, we believe that 30 
days would be a sufficient period of time for the public to comment on 
this rulemaking. In sum, providing a 60-day public comment period 
instead of a 30-day public comment period would be against public 
interest. For the above reasons, VA issues this rule with a 30-day 
public comment period. VA will consider and address comments that are 
received within 30 days of the date this proposed rule is published in 
the Federal Register.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This proposed rule would have no such 
effect on State, local, and 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 as follows: 64.007, Blind 
Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, 
Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 
64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 
64.013, Veterans Prosthetic Appliances; 64.014, Veterans State 
Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.016, 
Veterans State Hospital Care; 64.018, Sharing Specialized Medical 
Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; 
and 64.022, Veterans Home Based Primary Care

List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Alcohol abuse, Alcoholism, 
Claims, Day care, Dental health, Drug abuse, Foreign relations, 
Government contracts, Grant programs--health, Grant programs--veterans, 
Health care, Health facilities, Health professions, Health records, 
Homeless, Medical and dental schools, Medical devices, Medical 
research, Mental health programs, Nursing homes, Philippines, Reporting 
and recordkeeping requirements, Scholarships and fellowships, Travel 
and transportation expenses, Veterans.

[[Page 36515]]

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. Robert L. 
Wilkie, Secretary, Department of Veterans Affairs, approved this 
document on April 10, 2019, for publication.

    Dated: July 23, 2019.
Consuela Benjamin,
Regulations Development Coordinator, Office of Regulation Policy & 
Management, Office of the Secretary, Department of Veterans Affairs
    For the reasons set forth in the preamble, we propose to amend 38 
CFR part 17 as follows:

PART 17--MEDICAL

0
1. The authority citation for part 17 is amended by adding an entry for 
Sec.  17.450 to read in part as follows:

    Authority: 38 U.S.C. 501, and as noted in specific sections.
* * * * *
    Section 17.450 is also issued under 38 U.S.C. 1703E.
* * * * *
0
2. Add an undesignated center heading immediately following Sec.  
17.417 to read as follows:

Center for Innovation for Care and Payment

0
3. Add a new Sec.  17.450 to read as follows.


Sec.  17.450  Center for Innovation for Care and Payment.

    (a) Purpose and organization. The purpose of this section is to 
establish procedures for the Center for Innovation for Care and 
Payment.
    (1) The Center for Innovation for Care and Payment will be 
operationally independent from any of VA's administrations and will be 
responsible for working across VA to carry out pilot programs to 
develop innovative approaches to testing payment and service delivery 
models to reduce expenditures while preserving or enhancing the quality 
of care furnished by VA.
    (2) For purposes of this paragraph (a), operational independence 
refers to the strategic, procedural, and tactical aspects of managing 
the pilot programs under this section.
    (3) The Center for Innovation for Care and Payment will not operate 
within any specific administration but will operate in VA's corporate 
portfolio to ensure the limited number of concurrent pilot programs 
under this section are not redundant of or conflicted by ongoing 
innovation efforts within any specific administration.
    (b) Definitions. The following definitions apply to this section.
    Access refers to entry into or use of VA services.
    Patient satisfaction of care and services refers to patients' 
rating of their experiences of care and services and as further defined 
in a pilot program proposal.
    Payment models refer to the types of payment, reimbursement, or 
incentives that VA deems appropriate for advancing the health and well-
being of beneficiaries.
    Pilot program refers to a pilot program conducted under this 
section.
    Quality enhancement refers to improvement or improvements in such 
factors as clinical quality, beneficiary-level outcomes, and functional 
status as documented through improvements in measurement data from a 
reliable and valid source, and as further defined in a pilot program 
proposal.
    Quality preservation refers to the maintenance of such factors as 
clinical quality, beneficiary-level outcomes, and functional status as 
documented through maintenance of measurement data from an evidence-
based source, and as further defined in a pilot program proposal.
    Reduction in expenditure refers to, but is not limited to, cost 
stabilization, cost avoidance, or decreases in long- or short-term 
spending, and as further defined in a pilot program proposal. Note: VA 
will also consider the proposal's potential impact on expenditures for 
other related Federal programs; however, this potential impact will not 
count against the limitation in paragraph (d)(2) of this section.
    Service delivery models refer to all methods or programs for 
furnishing care or services.
    (c) Geographic Locations. VA will make decisions regarding the 
location of each pilot program based upon the appropriateness of 
testing a specific model in a specific area while taking efforts to 
ensure that pilot programs are operated in geographically diverse areas 
of the country. VA will include in its proposal to Congress and publish 
a document in the Federal Register identifying the geographic locations 
proposed for each pilot program, the rationale for those selections, 
and how VA believes the selected locations will address deficits in 
care for a defined population.
    (d) Limitations. In carrying out pilot programs under this section, 
VA will not:
    (1) Actively operate more than 10 pilot programs at the same time; 
and
    (2) Consistent with section 1703E(d), obligate more than $50 
million in any fiscal year in the conduct of the pilot programs 
(including all administrative and overhead costs, such as measurement, 
evaluation, and expenses to implement the pilot programs themselves) 
operated under this section, unless VA determines it to be necessary 
and submits a report to the appropriate Committees of Congress that 
sets forth the amount of, and justification for, the additional 
expenditure.
    (e) Waiver of authorities. In carrying out pilot programs under 
this section, VA may waive statutory provisions by adding to or 
removing from statutory text in subchapters I, II, and III of chapter 
17, title 38, upon Congressional approval, including waiving any 
provisions of law in any provision codified in or included as a note to 
any section in subchapters I, II, or III of chapter 17, title 38, 
U.S.C.
    (1) Upon Congressional approval of the waiver of a provision of law 
under this section, VA will also deem waived any applicable provision 
of regulation implementing such law as identified in VA's pilot program 
proposal.
    (2) VA will publish a document in the Federal Register providing 
information about, and seeking comment on, each proposed pilot program 
upon its submission of a proposal to Congress for approval. VA will 
publish a document in the Federal Register to inform the public of any 
pilot programs that have been approved by Congress.
    (f) Notice of eligibility. VA will take reasonable actions to 
provide direct notice to veterans eligible to participate in a pilot 
program operated under this section and will provide general notice to 
other individuals eligible to participate in a pilot program. VA will 
announce its methods of providing notice to veterans, the public, and 
other individuals eligible to participate through the document it 
publishes in the Federal Register for each proposed and approved pilot 
program.
    (g) Evaluation and reporting. VA will evaluate each pilot program 
operated under this section and report its findings. Evaluations may be 
based on quantitative data, qualitative data, or both. Whenever 
appropriate, evaluations will include a survey of participants or 
beneficiaries to determine their satisfaction with the pilot program. 
VA will make the evaluation results available to the public on the VA 
Innovation Center website on

[[Page 36516]]

the schedule identified in VA's proposal for the pilot program.
    (h) Expansion of pilot programs. VA may expand a pilot program 
consistent with this paragraph (h).
    (1) VA may expand the scope or duration of a pilot program if, 
based on an analysis of the data developed pursuant to paragraph (g) of 
this section for the pilot program, VA expects the pilot program to 
reduce spending without reducing the quality of care or improve the 
quality of patient care without increasing spending. Expansion may only 
occur if VA determines that expansion would not deny or limit the 
coverage or provision of benefits for individuals under chapter 17. 
Expansion of a pilot program may not occur until 60 days after VA has 
published a document in the Federal Register and submitted an interim 
report to Congress stating its intent to expand a pilot program.
    (2) VA may expand the scope of a pilot program by modifying, among 
other elements of a pilot program, the range of services provided, the 
qualifying conditions covered, the geographic location of the pilot 
program, or the population of eligible participants in a manner that 
increases participation in or benefits under a pilot program.
    (3) In general, pilot programs are limited to 5 years of operation. 
VA may extend the duration of a pilot program by up to an additional 5 
years of operation. Any pilot program extended beyond its initial 5-
year period must continue to comply with the provisions of this section 
regarding evaluation and reporting under paragraph (g) of this section.
    (i) Modification of pilot programs. The Secretary may modify 
elements of a pilot program in a manner that is consistent with the 
parameters of the Congressional approval of the waiver described in 
paragraph (e) of this section. Such modification does not require a 
submission to Congress for approval under paragraph (e) of this 
section.
    (j) Termination of pilot programs. If VA determines that a pilot 
program is not producing quality enhancement or quality preservation, 
or is not resulting in the reduction of expenditures, and that it is 
not possible or advisable to modify the pilot program either through 
submission of a new waiver request under paragraph (e) of this section 
or through modification under paragraph (i) of this section, VA will 
terminate the pilot program within 30 days of submitting an interim 
report to Congress that states such determination. VA will also publish 
a document in the Federal Register regarding the pilot program's 
termination.

[FR Doc. 2019-15891 Filed 7-26-19; 8:45 am]
 BILLING CODE 8320-01-P