[Federal Register Volume 84, Number 207 (Friday, October 25, 2019)]
[Rules and Regulations]
[Pages 57327-57331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23484]



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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: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) adopts as final a 
proposed rule amending its regulations that govern VA health care. This 
final rule establishes 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: Effective Date: This rule is effective November 25, 2019.

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. This final rule implements 
this new authority and establishes the parameters and authority for the 
new Center for Innovation for Care and Payment (the Center) 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.
    VA published a proposed rule on the Center on July 29, 2019. 84 FR 
36507. The public comment period closed on August 28, 2019. In response 
to this proposed rule, VA received multiple comments. Several of the 
comments expressed support for the rule in whole or in part. One 
comment supported the proposed ability to expand pilot program duration 
for up to an additional 5 years. The comment suggested that an extended 
pilot program duration would afford clinicians greater opportunity to 
improve care and obtain actionable data beyond the initial pilot 
program duration. One comment supported many elements of the proposed 
rule: VA's definition of the term reduction in expenditures; the 
ability to waive applicable regulations along with provisions of law; 
and VA's ability to extend and expand successful pilot programs. We 
appreciate the comments' support and make no changes to these 
provisions.
    Many of the comments addressed issues related to implementation or 
ideas for specific pilot programs; because these are generally outside 
the scope of the rulemaking, we make no changes based on these 
comments. However, we summarize these comments below and address them 
as appropriate.
    Several comments made recommendations on whom VA should consult in 
developing pilot programs. One comment supported VA's intent to consult 
with Federal agencies and medical and health experts. The comment 
encouraged VA to solicit input from professional associations and 
clinicians to ensure VA obtains a broad swath of input, guidance, and 
suggestions on innovations and programmatic priorities. The comment 
further encouraged VA to prioritize health promotion and disease 
prevention models that focus on keeping people healthy. One comment 
suggested that the inclusion of nurse practitioners (NP) in VA's 
consultation with relevant Federal agencies and clinical and analytical 
experts would be important in developing effective care models. One 
comment urged VA to collaborate with veterans organizations in local 
communities to ensure that veterans receive proper notice and 
information regarding pilot programs. We appreciate these 
recommendations and will take them into consideration when developing 
specific pilot proposals. We make no changes based on these comments.
    Other comments made recommendations as to what types of pilot 
programs VA should pursue. One comment encouraged VA to consider models 
that enhance community design to promote safe physical activity and 
active forms of transportation for individuals and populations of all 
ages and abilities. The comment also recommended VA consider the 
development of a model that directs patients with musculoskeletal 
disorders to physical therapists for primary assessment in primary 
care. The comment also recommended that VA consider how it may 
integrate public information and performance metrics to assess the 
quality, timeliness, and patient satisfaction of care and services 
furnished. We appreciate these recommendations and will take them into 
consideration when developing specific pilot proposals. We make no 
changes based on this comment.
    One comment supported the use of evidence-based health care models 
as necessary to make improvements to VA's health care system. The 
comment stated that finding the right health care model is essential in 
streamlining veterans' care. The comment encouraged VA to be strategic 
in creating pilot studies to provide efficient, cost-effective care 
without sacrificing quality of care. The comment recommended VA health 
care delivery models adhere to proper guideline requirements for 
recommended screenings and health promotion initiatives. The comment 
also encouraged the prioritization of care models addressing common 
health conditions unique to veterans, such as mental health or 
substance abuse disorders. The comment also recommended addressing 
barriers to care including better payment systems with timely 
reimbursement to non-VA health care providers and competency training 
for providers to ensure culturally competent care. We appreciate these 
recommendations and will take them into consideration when developing 
specific pilot proposals; however, because these comments make no 
recommendations regarding the specific provisions of this rule, which 
lays out the parameters of the Center, we make no changes based on 
these comments.
    One comment supported the creation of the Center and noted that it 
looked forward to having NPs working with VA on the development of new 
pilot programs. The comment stated than an overarching goal should be 
to support and create models providing equal opportunity for 
participation of clinicians and their patients. The comment suggested 
including NPs as full participants in pilot programs as one way to 
increase participation. The comment noted that patient outcomes are 
improved and cost savings are realized when NPs are utilized to the 
fullest extent of their educational and clinical training. The comment 
noted this has been demonstrated in a number of models within the 
Center for Medicare and Medicaid Innovation. The comment suggested that 
including NPs as full participants would help VA enhance the quality of 
care provided to veterans while also reducing

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expenditures. We appreciate these recommendations and will take them 
into consideration when developing specific pilot proposals. We make no 
changes based on this comment.
    One comment was broadly supportive of the proposed rule. The 
comment recommended a specific focus on modernizing drug pricing to 
allow for greater adoption of more flexible pricing arrangements, 
greater value for patients, and an improved standard of care. The 
comment encouraged a shift from rebated and volume discount pricing 
arrangements to an outcomes/value-based flexible pricing arrangement. 
The comment also encouraged VA to continue to ensure that existing 
arrangements for value-based health care are not impacted by this 
rulemaking. The comment recommended VA assess the ability to increase 
the amount of value-based health care contracting opportunities within 
VA systems and encouraged further rulemaking in this area. We 
appreciate these recommendations and will take them into consideration 
when developing specific pilot proposals. We make no changes based on 
this comment.
    One comment recommended leveraging existing partnerships to design 
and test innovations in telehealth, data exchange, care transitions, 
and other areas. The comment noted that comparative effectiveness 
studies could identify cost and quality outliers, leading to a mutually 
beneficial exchange of best practices between VA and community-based 
providers. We appreciate this input but make no changes based on this 
comment, which makes no recommendations regarding provisions of the 
proposed rule.
    One comment stated that it believed this new Center has the 
potential to facilitate additional opportunities to more fully engage 
massage therapy within veterans' health care, such as providing test 
cohorts of community-based massage therapists, determining how well 
massage therapists are receiving provider referrals for massage 
therapy, assessing outcomes following a treatment cycle, and providing 
important measurements to add to the research base on massage efficacy 
and cost-effectiveness for various conditions. The comment also noted 
the efficacy of massage therapy as a non-pharmacologic approach to pain 
management, and its recognition in guidelines for non-pharmacologic 
opioid alternatives by the Attorney General of West Virginia. We 
appreciate the comment's perspective regarding potential pilot programs 
but make no changes based on this comment.
    One comment recommended VA consider, in developing pilot programs, 
recommendations made by the Commission on Care established by section 
202 of the Veterans Access, Choice, and Accountability Act of 2014 
(Pub. L. 113-146) that have not yet been acted upon by Congress or VA. 
Other possible pilot programs recommended by the comment included VA 
prioritizing treatment for service-connected conditions that are common 
among veterans, including posttraumatic stress disorder and mental 
health concerns; modifying VA's personnel system to allow for improved 
flexibility to respond to market conditions related to compensation, 
benefits, and recruitment; making VA the secondary payer for all non-
service-connected health care in the community; and fully utilizing 
nurse practitioners and physician assistants to improve access to 
primary care, enhance quality, and reduce expenditures. We appreciate 
these recommendations regarding specific pilot programs and will take 
them under advisement. However, because these deal with specific pilot 
programs, and not with VA's general authority to operate the Center 
addressed in this rulemaking, we make no changes based on this comment.
    Some comments discussed issues generally raised by other parts of 
the rule. One comment generally supported the use of patient health 
care experience tools in determining patient satisfaction but expressed 
concern that some of these tools are outdated and do not recognize NPs. 
The comment stated that survey tools omitting NPs would fail to provide 
accurate health care delivery information. The comment encouraged VA to 
accurately capture patient satisfaction data by developing updated 
patient satisfaction tools that include NPs. We appreciate these 
recommendations and will take them into consideration when developing 
specific pilot proposals. We make no changes based on this comment.
    One comment urged VA to actively seek and fill as many of the new 
leadership positions within the Center as possible with outside 
candidates who have experience with designing and creating proven 
innovative health care delivery solutions and can bring that experience 
to the Center and to VA. The comment also urged VA to select internal 
candidates for the Center's leadership team who can best foster a 
collaborative environment that inspires effective innovation to enhance 
how VA delivers health care services to veterans. We make no changes 
based on this comment.
    One comment recommended VA use the same terminology and definitions 
used by non-VA providers. The comment did not identify any specific 
terms it believed were inconsistent with industry standards; indeed, it 
recognized that many of the terms VA proposed are well established and 
consensus-based definitions. The comment recognized that it may be 
necessary to use a different definition but urged VA to start with the 
presumption of aligning terms and definitions. As we explained in our 
proposed rule, we believe the definitions we proposed are consistent 
with how these terms are used in the industry, and to the extent there 
is any variation, we believe our definitions are broader to allow for 
maximal flexibility in designing and operating pilot programs. We make 
no changes based on this comment.
    One comment proposed VA allow non-VA providers and other 
stakeholders who are not affiliated with VA to propose pilot ideas. The 
comment recommended using the Center for Medicare and Medicaid 
Innovation's process for soliciting ideas as a starting point. The 
comment recognized that a more open process may take more time but 
could provide a greater breadth and depth of innovative pilot program 
concepts. We appreciate this recommendation and anticipate development 
of a system that would permit this type of voluntary input. We make no 
changes based on this comment.
    Two comments expressed differing interpretations of provisions in 
the proposed rule concerning the operational independence of the 
Center. One comment supported the Center's operational independence 
from VA's three administrations because this would grant it the 
appropriate access and decision-making authority to work across the 
entire VA system to re-imagine care delivery, break and eliminate 
internal systemic barriers, create efficiencies, and improve care for 
veterans. Another comment, however, supported the Center being 
operationally independent from VA while also collaborating with VA. 
These comments indicate this language was unclear, so VA is revising 
paragraph (a) to remove the reference to and definition of operational 
independence. VA will retain the language in the proposed rule from 
paragraph (a)(3), now redesignated as paragraph (a)(2), that the Center 
will not operate within any specific administration. This should 
emphasize the Center's role within VA,

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but as an organization that can break and eliminate internal barriers, 
create efficiencies, and improve care for veterans. We further clarify 
that the Center is part of VA and acts at the direction of the 
Secretary, so it is not ``independent'' from VA; in the proposed rule, 
we stated that 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. (84 FR 36507, 36508.)

Effect of Rulemaking

    The Code of Federal Regulations, as revised by this rulemaking, 
represents the exclusive legal authority on this subject. No contrary 
rules or procedures will be authorized. All VA guidance will be read to 
conform with this rulemaking if possible or, if not possible, such 
guidance will be superseded by this rulemaking.

Paperwork Reduction Act

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

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. This final rule adopts regulations that 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. Thus, this final rule will 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.
    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 final rule is not subject to 
the requirements of Executive Order 13771 because this final 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, 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 final rule will have no such effect on 
State, local, and tribal governments, or on the private sector.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

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.

Signing Authority

    The Secretary of Veterans Affairs 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. Pamela Powers, 
Chief of Staff, Department of Veterans Affairs, approved this document 
on October 4, 2019, for publication.

    Dated: October 23, 2019.
Michael P. Shores,
Director, Office of Regulation Policy & Management, Office of the 
Secretary, Department of Veterans Affairs.

    For the reasons set forth in the preamble, we 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 in numerical order 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 and Sec.  17.450 to read as 
follows.

Center for Innovation for Care and Payment


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 
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) 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

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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 38 U.S.C. 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, U.S.C., upon Congressional approval, including waiving 
any provisions of law in any provision codified in or included as a 
note to any section in subchapter I, II, or III of chapter 17, title 
38.
    (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 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 38 U.S.C. 
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

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Register regarding the pilot program's termination.

[FR Doc. 2019-23484 Filed 10-24-19; 8:45 am]
 BILLING CODE 8320-01-P