[Federal Register Volume 84, Number 208 (Monday, October 28, 2019)]
[Proposed Rules]
[Pages 57668-57677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22972]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AQ69


Billing and Collection by VA for Medical Care and Services

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
regulations concerning collection and recovery by VA for medical care 
and services provided to an individual for treatment of a nonservice-
connected disability. Specifically, this rulemaking would revise the 
provisions of VA regulations that determine the charges VA will bill 
third-party payers for non-VA care provided at VA expense, would 
include a time limit for which third-party payers can request a refund, 
and would clarify that third-party payers cannot reduce or refuse 
payment because of the billing methodology used to determine the 
charge. These revisions would clarify VA billing practices, result in 
more equitable charges to third-party payers, and ensure that VA 
collects payments timely and effectively. Additionally, this rulemaking 
would make certain technical corrections to the existing regulations, 
and amend associated definitions.

DATES: Comments must be received by VA on or before December 27, 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 NW, Room 1064, Washington, DC 20420; or by 
fax to (202) 273-9026. (This is not a toll-free number.) Comments 
should indicate that they are submitted in response to ``RIN 2900-AQ69, 
Billing and Collection by VA for Medical Care and Services.'' Copies of 
comments received will be available for public inspection in the Office 
of Regulation Policy and Management, Room 1064, between the hours of 
8:00 a.m. and 4:30 p.m. Monday through Friday (except holidays). Please 
call (202) 461-4902 for an appointment. (This is not a toll-free 
number.) In addition, during the comment period, comments may be viewed 
online through the Federal Docket Management System (FDMS) at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Joseph Duran, Director of Policy and 
Planning, Office of Community Care (10D), Ptarmigan at Cherry Creek 
Denver, CO 80209, [email protected] or (303) 372-4629. (This is not 
a toll-free number.)

SUPPLEMENTARY INFORMATION: Under section 1729 of Title 38, United 
States Code (U.S.C.), VA has the right to recover or collect reasonable 
charges for medical care or services from a third party to the extent 
that the veteran or the provider of the care or services would be 
eligible to receive payment from the third party for: A nonservice-
connected disability for which the veteran is entitled to care (or the 
payment of expenses of care) under a health plan contract; a 
nonservice-connected disability incurred incident to the veteran's 
employment and covered under a worker's compensation law or plan that 
provides reimbursement or indemnification for such care and services; 
or a nonservice-connected disability incurred as a result of a motor 
vehicle accident in a State that requires automobile accident 
reparations (no-fault) insurance. This proposed rule would revise two 
of VA's regulations (i.e., sections 17.101 and 17.106 of title 38, Code 
of Federal Regulations (CFR)) that implement 38 U.S.C. 1729.
    In this proposed rule, we would revise 38 CFR 17.101, which 
establishes the instances when VA will collect and recover for medical 
care and services and the methodology used to determine the reasonable 
charges VA can bill for medical care and services. In this rulemaking, 
we propose to amend the amount VA will bill a third party when the 
medical care was provided at a non-VA facility at VA expense. We also 
propose to make several technical amendments to 38 CFR 17.101, to 
correct clerical errors and update office and data source names. 
Additionally, we propose to add two new definitions and remove one 
current definition to be consistent with the proposed technical 
amendments.
    In addition to revising Sec.  17.101, this rulemaking would also 
revise Sec.  17.106. Section 1729 of 38 U.S.C. authorizes VA

[[Page 57669]]

to collect the reasonable charges for medical care and services from a 
third-party payer and to compromise, settle, or waive a claim (such as 
a refund). Additionally, section 1729 prohibits any contract or other 
agreement operating to prevent recovery or collection by the United 
States.
    Current 38 CFR 17.106 implements 38 U.S.C. 1729 by describing VA's 
rules for recovery and collection of reasonable charges from a third-
party payer for medical care and services provided for a nonservice-
connected disability in or through any VA facility to a veteran who is 
a beneficiary under a thirty-party's plan. This section also explains 
that a third-party payer may not, without consent of the U.S. 
Government, offset or reduce any payment due under 38 U.S.C. 1729 or 
part 17 of 38 CFR in the instance that the third-party payer considers 
itself due a refund; and requires that any request for a refund be 
submitted in writing. Section 17.106 describes those conditions under 
which a third-party payer may not reduce, offset, or request a refund 
for payments made pursuant to 38 U.S.C. 1729. In this rulemaking, we 
propose to amend 38 CFR 17.106 to clarify the timeframe for submitting 
a written request for a refund for claims under part 17 or 38 U.S.C. 
1729, and would explain that VA would not provide a refund for any 
reason, to include if a retroactive service-connection determination is 
made more than 18 months after the date payment is made by the third-
party payer. We also propose to add a new condition under which a 
third-party payer could not refuse or reduce their payment for a claim 
under section 1729.

Changes to 17.101

    As explained in more detail below, we would amend current Sec.  
17.101 by adding and removing definitions, changing the amount VA will 
bill a third party when the medical care was provided at a non-VA 
facility at VA expense, and making several technical amendments.

Sec.  17.101(a)(5) Definitions

    We would revise Sec.  17.101(a)(5) which defines certain terms used 
throughout Sec.  17.101. We would add two new definitions and remove a 
current definition. In proposed Sec.  17.101(a)(5), we would remove the 
definition of ``MDR.'' MDR stands for Medical Data Research, which is 
defined as a medical charge database published by Ingenix, Inc. It is 
referred to throughout Sec.  17.101, as it was a database used to 
calculate charges. However, it is no longer used, and has been replaced 
by FAIR Health. We would insert a definition for ``FAIR Health'' 
immediately following the definition of ``DRG,'' and define ``FAIR 
Health'' in Sec.  17.101(a)(5) to mean any of the FAIR Health Charge 
Benchmarks products developed by FAIR Health. This would be consistent 
with changes we propose to make throughout 17.101 to replace ``MDR'' 
with ``FAIR Health.'' This is explained in more detail later in this 
rulemaking.
    In proposed Sec.  17.101(a)(5), we would insert a definition of 
``MarketScan'' immediately following the definition of ``ICU.'' We 
would define ``MarketScan'' to mean the MarketScan Commercial Claims & 
Encounters Database developed by Truven Health Analytics LLC. 
MarketScan has replaced MedStat, which is referenced throughout Sec.  
17.101 as it is a database used for billing purposes. Since it has been 
replaced by MarketScan, we would define it in Sec.  17.101(a)(5). As 
explained in more detail later this rulemaking, we also would replace 
all references to MedStat with MarketScan.

Sec.  17.101(a)(7)

    Pursuant to 38 U.S.C. 1729, VA is authorized to collect reasonable 
charges in certain circumstances, but the statute does not define what 
reasonable charges are. In current 38 CFR 17.101, VA established the 
methodology it uses to determine what constitutes reasonable charges 
and directs when reasonable charges will be charged to third-party 
payers. Section 17.101 requires that VA charge the higher of the amount 
determined using the methodologies in this section (reasonable charges) 
or the amount VA actually paid to the provider for the care. We propose 
to amend Sec.  17.101(a)(7) to bill third-party payers the reasonable 
charges rate that is determined using the methodology in Sec.  17.101, 
as if the care was provided at a VA facility. In this regard, if an 
individual received surgery at a non-VA facility at VA expense, the 
charges billed to the individual's health insurance (or other third-
party payer) would be the same as if the individual received the 
surgery at a VA facility.
    The current practice of charging the higher of the amount 
determined using the methodologies in Sec.  17.101 (reasonable charges) 
or the amount VA actually paid creates confusion in the field and 
additional administrative burdens when determining the appropriate 
amount to bill payers. Third-party payers have also indicated a 
preference for being charged using the same methodology regardless of 
whether the care was provided at a VA facility or at a non-VA facility 
at VA expense.
    We believe that by removing the portion of the current regulation 
that requires VA to charge the higher of the two rates and, instead, 
requiring VA to bill the rate determined using the methodologies set 
forth in this section, it will provide greater clarity and uniformity 
in VA's billing practices. In this regard, requiring VA to charge the 
same rate regardless of whether the care was provided at a VA facility 
or a non-VA facility at VA expense will cut down on the administrative 
burden associated with determining the charges. Currently, the VA 
billing officials must first determine that the care was provided at a 
non-VA facility, then determine the rates based on two different 
methodologies. Finally, the billing official must determine which is 
higher and enter that cost into the billing system. Under the proposed 
rule, VA billing officials will merely determine one rate using the 
same methodology regardless of where the care was furnished.
    Additionally, we find that it is equitable to charge the same rates 
regardless of the facility in which the individual sought treatment; 
the third-party payer should not be disadvantaged and required to pay 
higher charges because the individual sought care at a non-VA facility. 
Moreover, the proposed revision is beneficial to the third-party payer 
as there is no scenario in which the third-party payer would be charged 
more under the proposed rule than they are charged under the current 
rule. Specifically, if the higher charge is the charge determined 
according to this section, the third-party payer will still be charged 
the amount determined in this section. However, if the higher amount is 
the actual cost VA paid, the third-party payer will be able to pay the 
lower, reasonable charges rate that was determined using the 
methodologies in this section. We note that in the vast majority of 
cases, the reasonable rates are higher than that amount actually paid 
and we do not think that this would ultimately change the amount that 
we are charging and collecting. This is consistent with generally 
accepted billing practices in the industry, as there is typically one 
set of rates that all health care providers charge. However, some of 
the amount charged is written off and the amount the payer ends up 
paying is usually lower than the amount billed.

Technical Amendments to Sec.  17.101

    We propose to make several technical amendments to ensure the 
information contained in Sec.  17.101 is accurate and reflects changes 
to VA's organizational structure, the names of companies and

[[Page 57670]]

data source references. VA has not updated the data sources and names 
since 2003, and there have been several changes to these since that 
time. See 68 FR 70714. However, in the annual publication of the data 
sources used to calculate charges, these changes have been reflected. 
See https://www.va.gov/COMMUNITYCARE/revenue_ops/payer_rates.asp. We 
now propose to update Sec.  17.101 to reflect these changes.
    Currently, Sec.  17.101(a)(2) and (3) jointly explain that the data 
for calculating actual charge amounts based on methodologies in Sec.  
17.101, the specific editions of the data sources used to calculate 
these amounts, and the information on where these data sources may be 
obtained will either be published in a notice in the Federal Register 
or will be posted on the internet site of the Veterans Health 
Administration (VHA) Chief Business Office, currently at http://www.va.gov/cbo, under ``Charge Data.'' Since the promulgation of Sec.  
17.101, the name of the responsible office for billing and collection 
has changed from Chief Business Office to Office of Community Care. 
Relatedly, the website has changed from http://www.va.gov/cbo to 
https://www.va.gov/COMMUNITYCARE.
    To ensure the correct VHA offices and website are referenced in 
Sec.  17.101, we propose to replace all references in Sec.  
17.101(a)(2) and (a)(3) to ``Chief Business Office'' with ``Office of 
Community Care,'' and replace all references in Sec.  17.101(a)(2) and 
(a)(3) to ``http://www.va.gov/cbo, under `Charge Data' '' with 
``https://www.va.gov/COMMUNITYCARE, under `Payer Rates and Charges.''' 
The relevant information on the charges data is located under ``Payer 
Rates and Charges'' and we would update Sec.  17.101(a)(2) and (3) to 
reflect that.
    We would amend Sec.  17.101 by replacing all references to 
``Ingenix/St. Anthony's'' with ``Optum Essential.'' Ingenix/St. 
Anthony's was a data source used to calculate charges under Sec.  
17.101. This data source was used to calculate such charges as 
physician and other professional charges (except for anesthesia and 
certain dental services); pathology and laboratory charges; relative 
value units for durable medical equipment (DME), drugs, injectables, 
and other medical services, items, and supplies. This data source is 
referenced in Sec.  17.101(f)(2)(ii); (i)(2)(ii); and (l)(2)(i)(A)-(B), 
(M). Optum Essential has replaced Ingenix/St. Anthony's, as Ingenix 
went out of business more than five years ago. We propose to revise 
Sec.  17.101 to reference Optum Essential instead of Ingenix/St. 
Anthony's, and we would want the regulation to be consistent with this 
change to the data source.
    In Sec.  17.101, we propose to replace all references to ``MDR'' 
and add in its place ``FAIR Health'' since FAIR Health has replaced 
MDR. We would propose to make these changes throughout Sec.  17.101. 
MDR stands for Medical Data Research, which was a medical charge 
database published by Ingenix, Inc. It is referred to throughout 
current Sec.  17.101, as it was a database used to calculate charges, 
including outpatient facility charges; physician and other professional 
charges (except for certain dental services; professional charges for 
anesthesia services; pathology and laboratory charges; and charges for 
DME, drugs, injectables, and certain other medical services, items, and 
supplies. For example, it is referenced in current Sec.  
17.101(e)(3)(ii), (e)(4), (f)(2)(ii), (f)(3), (g)(3)(i), (i)(2)(i)-
(ii), (i)(3), (l)(2)(iii), (l)(3), and (l)(5)(ii). However, Ingenix 
went out of business over five years ago, and FAIR Health became the 
successor company. MDR is thus no longer used and has been replaced by 
FAIR Health in calculating charges under Sec.  17.101. We would update 
Sec.  17.101 to reflect this change in the name. We propose to replace 
all references in Sec.  17.101 to ``MedStat'' with ``MarketScan'' as 
the name of this data source has changed from MedStat to MarketScan. 
MedStat is referenced throughout Sec.  17.101 as it is a database to 
calculate acute inpatient facility charges and outpatient facility 
charges. It is referenced in Sec.  17.101(b)(2), (b)(3), and 
(e)(3)(ii). Since it has been replaced by MarketScan, we propose to 
replace all references to MedStat with MarketScan in Sec.  17.101 to 
ensure this regulation reflects this change and the correct name of the 
data source.
    Throughout Sec.  17.101, we would replace all references to 
``Milliman USA, Inc.'' and add in its place ``Milliman, Inc.'' since 
that is the correct name of the company which has changed since 2003. 
Milliman USA, Inc. is referenced in current Sec.  17.101(e)(4), (f)(3), 
(g)(3)(i), (h)(3), (i)(3), (l)(3), and (l)(5)(iii). In Sec.  17.101, 
Milliman USA, Inc. is referenced with regards to its various health 
cost guidelines and data sets. These guidelines and data sets have been 
used to calculate outpatient facility charges; physician and other 
professional charges (including anesthesia and dental services); and 
charges for DME, drugs, injectables, and other medical services, items, 
and supplies. Because the name has changed, we would update the 
regulation to accurately reflect the name of this company throughout 
Sec.  17.101. We note that Milliman USA, Inc.'s Health Cost Guidelines 
fee survey which is referenced in current paragraphs (f)(3) and (i)(3) 
is no longer used, and we propose to remove those references to it in 
these paragraphs, as explained later in this rulemaking.
    We propose to amend Sec.  17.101 by replacing all references to 
``percent Sample'' with ``Percent Sample'' as percent should be 
capitalized. ``Percent Sample'' is included in several paragraphs 
within Sec.  17.101 (including but not limited to Sec.  17.101(d)(2), 
(e)(3)(i) through (ii), and (g)(3)(i)) in reference to the Medicare 
Standard Analytical File. This Percent Sample is used to calculate 
partial hospitalization facility charges, outpatient facility charges, 
physician and other professional charges except for anesthesia services 
and certain dental services, observation care facility charges, and 
ambulance and other emergency transportation charges. We would update 
Sec.  17.101 to ensure that references to Percent Sample are correctly 
capitalized.
    We would amend Sec.  17.101(e)(3)(i)(C) by replacing the reference 
to ``2.0'' with ``6.5'', and replacing the references to ``6.5'' with 
``2.0''. This specifically relates to the minimum and maximum 80th 
percentile charge to Medicare Ambulatory Payment Classification payment 
amount ratios, which are used to calculate outpatient facility charges 
under Sec.  17.101. This is a clerical error, as 6.5 should be 2.0 and 
2.0 should be 6.5. We now propose to correct this error in proposed 
Sec.  17.101(e)(3)(i)(C).

[[Page 57671]]

    For ease of reference, the following chart explains these technical 
changes to Sec.  17.101 as discussed in the preceding paragraphs:

------------------------------------------------------------------------
            Section              Propose to remove      Propose to add
------------------------------------------------------------------------
17.101(a).....................  Chief Business       Office of Community
                                 Office.              Care
17.101(a).....................  http://www.va.gov/   https://www.va.gov/
                                 cbo, under           COMMUNITYCARE,
                                 ``Charge Data.''.    under ``Payer
                                                      Rates and
                                                      Charges.''
17.101........................  Ingenix/St.          Optum Essential.
                                 Anthony's.
17.101........................  MDR................  FAIR Health.
17.101........................  MedStat............  MarketScan.
17.101........................  Milliman USA, Inc..  Milliman, Inc.
17.101........................  percent Sample.....  Percent Sample.
17.101(e)(3)(i)(C)............  2.0................  6.5.
17.101(e)(3)(i)(C)............  6.5................  2.0.
------------------------------------------------------------------------

    In addition to the changes proposed above, we would amend paragraph 
(f)(2)(ii) of Sec.  17.101 by removing obsolete references. Section 
17.101(f)(2)(ii) describes the methodology and data sources used to 
calculate physician and other professional charges except for 
anesthesia services and certain dental services. First, we would remove 
the language that states that for any remaining CPT/HCPCS codes, the 
nationwide 80th percentile billed charges are obtained, where 
statistically credible, from the Prevailing Healthcare Charges System 
nationwide commercial insurance database. We would remove this language 
from the paragraph as the Prevailing Healthcare Charges System 
nationwide commercial insurance database is a data source that no 
longer exists, and is no longer applicable or used in calculating these 
charges (i.e., physician and other professional charges except for 
anesthesia services and certain dental services). There is no 
replacement so we would remove this language entirely from this 
paragraph.
    Similarly, we would remove the word ``three'' in Sec.  
17.101(f)(2)(ii). In current paragraph (f)(2)(ii), we reference the 
number of databases used to determine the total RVUs for Current 
Procedural Terminology (CPT) and Healthcare Common Procedure Coding 
System (HCPCS) codes that do not have Medicare Relative Value Units 
(RVUs) and are not designated as unlisted procedures. These three data 
sources are the MDR database, the Part B component of the Medicare 
Standard Analytical File 5 Percent Sample, and Prevailing Healthcare 
Charges System nationwide commercial insurance database. Because we are 
proposing to remove reference to the Prevailing Healthcare Charges 
System nationwide commercial insurance database, as explained in the 
preceding paragraph, there will no longer be three data sources used in 
this determination.
    For the same reasons, we would remove from the final sentence in 
this paragraph the word ``four'' with regard to the number of data 
sources used. The data sources used to make this determination under 
Sec.  17.101(f)(2)(ii) may vary. Thus, we would not list each data 
source used and would also not identify the specific number of data 
sources used. We would include the data source information on https://www.va.gov/COMMUNITYCARE or in a Federal Register notice (referenced in 
proposed Sec.  17.101(a)(3)) instead of publishing them in regulation. 
Therefore, the public will still be informed of the sources used as 
that information will continue to be located on our websites or in a 
notice in the Federal Register, and updated on an annual basis. As 
explained previously, we are also proposing to update the VA website to 
reflect the correct web address (https://www.va.gov/COMMUNITYCARE). We 
note that the most recent Federal Register notices containing this 
information were published on December 14, 2017 and September 19, 2018. 
See 82 FR 59213 and 83 FR 47412.
    We would also remove the word ``untrended'' from Sec.  
17.101(f)(2)(ii). This relates to nationwide conversion factor for the 
corresponding CPT/HCPCS code group. However, this term should not have 
been included in the original regulation as it is not a word, and 
removing it is merely a technical change as its removal would have no 
impact on our practices. We would continue to use the nationwide 
conversion factor for the corresponding CPT/HCPCS code group.
    We propose to revise paragraphs (f)(3) and (i)(3) of Sec.  17.101, 
which reference the Milliman USA, Inc., Health Cost Guidelines fee 
survey in calculating such charges as physician and other professional 
charges except for anesthesia and certain dental services and pathology 
and laboratory charges, respectively. We would remove this language 
from paragraphs (f)(3) and (i)(3), as this data source no longer 
exists. We would not replace it with any specific data source, as the 
data source used can vary. As previously explained, the data sources 
will be available to the public at https://www.va.gov/COMMUNITYCARE or 
in a Federal Register notice (referenced in proposed Sec.  
17.101(a)(3)) instead of publishing them in regulation.
    Current Sec.  17.101(h) describes the methodology for calculating 
professional charges for dental services identified by HCPCS Level II 
codes. Paragraph (h)(2) specifically explains the three data sources 
used to determine the 80th percentile charges for each HCPCS dental 
code. The sources referenced in this paragraph include Prevailing 
Healthcare Charges System database, National Dental Advisory Service 
nationwide pricing index; and the Dental UCR Module of the 
Comprehensive Healthcare Payment System. The Prevailing Healthcare 
Charges System database no longer exists. We would thus revise Sec.  
17.101 (h)(2) to remove the reference to that data source. We would not 
replace it in paragraph (h)(2) with another database as that can vary. 
We propose to revise the first sentence of paragraph (h)(2) to state 
``various independent data sources'' instead of ``three independent 
data sources'' to reflect the fact that the data sources used can vary. 
Because of this, we would not list every data source used in this 
paragraph. As previously mentioned, VA publishes the charges and data 
sources (including the specific editions of these data sources) used to 
calculate the charges either through a Federal Register notice or on 
https://www.va.gov/COMMUNITYCARE as referenced in proposed Sec.  
17.101(a)(3).
    We would also revise the language in this same paragraph that 
references ``UCR Module of the Comprehensive Healthcare Payment System, 
a release from Ingenix from a nationwide database of dental charges'' 
and instead insert ``FAIR Health module'' as the

[[Page 57672]]

FAIR Health module replaced the UCR Module of the Comprehensive 
Healthcare Payment System. Ingenix, which was the original creator of 
this comprehensive health care payment system, went out of business 
over five years ago, and FAIR Health became the successor company. The 
FAIR Health module replaced the UCR Module of the Comprehensive 
Healthcare Payment System, and thus we would revise paragraph (h)(2) 
accordingly.
    We would then amend paragraph (h)(2)(i), which explains the 
methodology used to determine the average charge for any particular 
HCPCS dental code. This is done by computing a preliminary mean average 
of the three charges for each code. We would revise Sec.  
17.101(h)(2)(i) by removing the language ``average'' in reference to 
``preliminary mean'' in the first sentence to correctly state how the 
charges are calculated. The words ``average'' and ``mean'' are 
redundant as these two words have the same meaning. We use the 
preliminary mean and we would update the paragraph (h)(2)(i) to reflect 
this.
    In that same sentence, we would also remove ``three'' and add 
``available'' in reference to the charges for each code as the number 
of charges for each code can vary based on the number of sources used. 
This paragraph references three charges because three data sources are 
reflected in paragraph (h)(2). However, as mentioned previously, we are 
proposing to revise paragraph (h)(2) to reflect that one of these data 
sources (Prevailing Healthcare Charges System database) no longer 
exists, and the number of data sources used to calculate these charges 
under paragraph (h) can vary. Instead of listing the data sources and 
including the specific number of data sources, this information would 
continue to be made available to the public either through a Federal 
Register notice or on https://www.va.gov/COMMUNITYCARE as referenced in 
proposed Sec.  17.101(a)(3).
    In the second sentence in paragraph (h)(2)(i), we propose to remove 
the language ``by testing whether any charge differs from the 
preliminary mean charge by more than 50 percent of the preliminary mean 
charge. In such cases, the charge most distant from the preliminary 
mean is removed as an outlier, and the average charge is calculated as 
a mean of the two remaining charges.'' This language refers to how 
statistical outliers are identified and removed in calculating the 
average charge and is based on using three data sources. Because we 
propose to update Sec.  17.101(h)(2) to eliminate the use of three data 
sources and because the number of data sources can vary, we would 
remove this language to correctly state how charges are calculated and 
allow for variability. Instead, this sentence would simply state that 
``statistical outliers are identified and removed.'' There may not be 
more than two data sources used, and thus there may not be two 
remaining charges. This paragraph would be updated to reflect this 
potential reality.
    The last sentence of paragraph (h)(2)(i) explains that in cases 
where none of the charges differ from the preliminary mean charge by 
more than 50 percent of the preliminary mean charge, the average charge 
is calculated as a mean of all three reported charges. As previously 
explained in the preceding paragraphs, we would no longer use three 
data sources and the number of data sources can vary. We propose to 
remove the language in this last sentence of paragraph (h)(2)(i), 
specifically ``differ from the preliminary mean charge by more than 50 
percent of the preliminary mean charge'' and replace that with 
``removed''. We would also remove ``three'' from the last sentence in 
this paragraph to correctly state how the charges are calculated and to 
reflect that the average charge is no longer based on three reported 
charges. Thus, the proposed revised sentence would explain that where 
none of the charges are removed, the average charge is calculated as a 
mean of all reported charges.
    In calculating professional charges for dental services identified 
by HCPCS Level II codes, paragraph (h)(3) of Sec.  17.101 describes how 
each geographic adjustment factor is determined using Milliman USA, 
Inc., Dental Health Cost Guidelines, and a normalized geographic 
adjustment factors computed from the Dental UCR Module of the 
Comprehensive Payment System compiled by Ingenix. FAIR Health module 
has replaced ``UCR Module of the Comprehensive Healthcare Payment 
System compiled by Ingenix.'' As previously mentioned, Ingenix was the 
original creator of this Dental UCR Module of the Comprehensive Payment 
System and went out of business over five years ago. FAIR Health became 
the successor company, and the FAIR Health module is used in place of 
the Dental UCR Module of the Comprehensive Payment System. Thus, we 
propose to remove the reference to this dental UCR module and replace 
it with ``FAIR Health module.''
    We would revise Sec.  17.101(i)(2)(ii) which describes the 
methodology and data sources used to calculate pathology and laboratory 
charges. Paragraph (i)(2)(ii) specifically describes how total RVUs for 
CPT/HCPCS codes that do not have Medicare-based RVUs are developed 
based on various charge data sources (including the MDR database, Part 
B component of the Medicare Standard Analytical File 5 Percent Sample, 
the Prevailing Healthcare Charges System nationwide commercial 
insurance database and Ingenix/St. Anthony's RBRVS). As explained 
previously in this rulemaking, we note that we propose to update the 
names of several of these databases (i.e., from MDR to FAIR Health, and 
from Ingenix/St. Anthony's to Optum Essentials). We propose to remove 
the current language that explains that for any remaining CPT/HCPCS 
codes, the nationwide 80th percentile billed charges are obtained, 
where statistically credible, from the Prevailing Healthcare Charges 
System nationwide commercial insurance database. We would also remove 
the language that explains that for each of these CPT/HCPCS codes, 
nationwide total RVUs are obtained by taking the nationwide 80th 
percentile billed charges obtained using the preceding three databases 
and dividing by the untrended nationwide conversion factor determined 
pursuant to paragraphs (i)(3) and (i)(3)(i) of this section. We would 
remove these sentences since the Prevailing Healthcare Charges System 
nationwide commercial insurance database is no longer available and 
there is no replacement.
    We would revise the remaining sentences in this same paragraph to 
state that for any remaining CPT/HCPCS codes that have not been 
assigned RVUs using the preceding data sources (i.e., the FAIR Health 
database, Part B component of the Medicare Standard Analytical File 5 
Percent Sample, the Optum Essentials RBRVS will be used in the 
calculation of nationwide total RVUs; and that the resulting nationwide 
total RVUs obtained using these data sources (i.e., FAIR Health 
database and Part B component of the Medicare Standard Analytical File 
5 Percent Sample, and the Optum Essentials) will be multiplied by the 
geographic area adjustment factors determined pursuant to paragraph 
(i)(2)(iv) of this section in order to obtain the area-specific total 
RVUs. We would make these changes to the last two sentences in the 
paragraph to accurately reflect the process for determining total RVUs 
for CPT/HCPCS codes that do not have Medicare-based RVUs. This is 
because the Prevailing Healthcare Charges System nationwide commercial 
insurance database is no longer available and there is no replacement 
for that database. We would also revise the final sentence to

[[Page 57673]]

reflect that we would use the data sources in this paragraph to 
determine RVUs. Because the data sources we use to make this 
determination under Sec.  17.101(i)(2)(ii) may vary, we would not list 
each data source used and would also not identify the specific number 
of data sources used. Since the data sources used can vary, we would 
include the data source information on https://www.va.gov/COMMUNITYCARE 
or in a Federal Register notice (referenced in proposed Sec.  
17.101(a)(3)) instead of publishing them in regulation.
    We would amend several paragraphs in Sec.  17.101(l) to correctly 
state how the charges for DME, drugs, injectables, and other medical 
services, items, and supplies identified by HCPCS Level II codes are 
calculated. Paragraph (l)(3) explains how the 80th percentile charges 
for each applicable HCPCS code are extracted using three independent 
data sources: The MDR database; Medicare, as represented by the 
combined Part B and DME components of the Medicare Standard Analytical 
File 5 Percent Sample; and Milliman USA, Inc., Optimized HMO (Health 
Maintenance Organization) Data Sets. In paragraph (l)(3), we propose to 
remove ``three'' and ``Milliman USA, Inc., Optimized HMO (Health 
Maintenance Organization) Data Sets'' in the first sentence. We would 
make this change because the ``Milliman USA, Inc. Optimized HMO Data 
Sets'' no longer exists and there is no replacement. Thus, we now use 
two data sources instead of three. As explained previously in this 
rulemaking, we would update the reference to the MDR database to 
reflect that the FAIR Health database has replaced this database. MDR 
was a medical charge database published by Ingenix, Inc. However, it is 
no longer used, and has been replaced by the FAIR Health database. We 
would update Sec.  17.101(l) to accurately reflect these changes.
    We would also amend paragraph (l)(3)(ii) in Sec.  17.101 to 
correctly state how the average 80th percentile trended charge for any 
particular HCPCS code is calculated. Currently, this paragraph explains 
that this average charge is calculated by computing a preliminary mean 
average of the three charges for each HCPCS code and explains how 
statistical outliers are identified and removed. Additionally, it 
explains that the average charge is calculated as a mean of three 
reported charges in cases where none of the charges differ from the 
preliminary mean charge by more than five times the preliminary mean 
charge, or less than 0.2 times the preliminary mean charge. We propose 
to revise this paragraph by removing from the first sentence 
``average'' immediately following ``preliminary mean'', and replacing 
in the same sentence ``three'' with ``available.'' The words 
``average'' and ``mean'' are repetitive and redundant, as these two 
words have meant the same to us in the context of this methodology, and 
we would thus remove the word ``average'' after ``preliminary mean.''
    We would also remove ``three'' in the first sentence of this same 
paragraph and replace it with ``available.'' As explained previously, 
Milliman USA, Inc., Optimized HMO (Health Maintenance Organization) 
Data Sets no longer exists, and the number of data sets used under 
paragraph (l)(3) is two (FAIR Health database and the combined Part B 
and DME components of the Medicare Standard Analytical File 5 Percent 
Sample). Because of this, we would revise Sec.  17.101(l)(3)(ii) to 
reflect available charges instead of three charges.
    We propose to further revise the language in paragraph (l)(3)(ii) 
that describes how statistical outliers are identified and removed. The 
paragraph explains that the methodology used to identify and remove 
statistical outliers based on the charges from the three databases 
which is done by testing whether any charge differs from the 
preliminary mean charge by more than five times the preliminary mean 
charge, or by less than 0.2 times the preliminary mean charge. The 
remaining sentences in this paragraph further explain that the charge 
most distance from the preliminary mean is removed as an outlier, and 
that the average charge is calculated as a mean of the two remaining 
charges. The last sentence further states that the average charge is 
calculated as a mean of all three reported charges where none of the 
charges differ from the preliminary mean charge by more than five times 
the preliminary mean charge, or less than 0.2 times the preliminary 
mean charge. As explained previously, because we use two data sources 
now instead of three, this language on how we would determine the 
statistical outliers and the average charge is no longer accurate. 
There would no longer be two remaining charges in identifying and 
removing outliers. We would thus revise this paragraph to correctly 
state how charges are calculated. In addition to those changes we would 
make to paragraph (l)(3)(ii) as proposed in the preceding paragraphs, 
after the first sentence in this paragraph, we would state that 
``statistical outliers are identified and removed.'' After this 
sentence, we would remove the remaining subsequent text of the 
paragraph and add a sentence to state that where none of the charges 
are removed, the average charge is calculated as a mean of all reported 
charges. This paragraph would be updated to reflect how average charges 
are determined under paragraph (l)(3) as we explained previously.

Sec.  17.106 VA Collection Rules; Third-Party Payers

    As previously explained, section 1729 of 38 U.S.C. authorizes VA to 
collect the reasonable charges for medical care and services from a 
third-party payer and to compromise, settle, or waive a claim (such as 
a refund). Additionally, section 1729 prohibits any contract or other 
agreement operating to prevent recovery or collection by the United 
States. This is implemented in 38 CFR 17.106 as current Sec.  17.106 
authorizes VA to collect from third-party payers. Specifically, Sec.  
17.106(c)(4) directs that a third-party payer may not, without the 
consent of a U.S. Government official authorized to take action under 
38 U.S.C. 1729 and this part, offset or reduce any payment due under 38 
U.S.C. 1729 or this part on the grounds that the payer considers itself 
due a refund from a VA facility. A written request for a refund must be 
submitted and adjudicated separately from any other claims submitted to 
the third-party payer under 38 U.S.C. 1729 or this part.
    Currently, third-party payers are requesting refunds many months 
and sometimes years after the original payment was submitted and 
processed by VA. This creates difficulty for VA billing staff and makes 
it increasingly more difficult to approximate the funding needed to 
provide the refunds. Therefore, in this rulemaking, we propose to 
revise Sec.  17.106(c)(4) to add a time frame of 18 months from the 
time the payer makes their original payment to request a refund. We 
also propose to add language to clarify that if a request for a refund 
is not submitted within this 18-month time frame, VA will not provide a 
refund to third-party payers for a claim paid for any reason. VA 
believes that adding a timeframe of 18 months provides ample time for 
the third-party payer to request the refund and also provides VA with 
greater finality when determining the budget. We also believe that we 
are able to require such a timeframe for third-party payer requests for 
these refunds as we interpret the broad language in 38 U.S.C. 1729 to 
authorize us to do so. As proposed in 38 CFR 17.106(c)(4), if a third-
party payer requests a refund outside of the 18-month time frame, we

[[Page 57674]]

would not provide a refund for a claim paid for any reason. As 
previously explained, we believe this is reasonable as 18 months is 
ample time to request a refund and would be consistent with our 
authority in 38 U.S.C. 1729. We note that if a retroactive service-
connection determination is made more than 18 months after the date 
payment is made by the third-party payer, VA would not provide a refund 
to the third-party payer for a paid claim.
    Section 1729(f) provides that no provision of any third-party 
payer's plan having the effect of excluding from coverage or limited 
payment for certain care if that care is provided in or through any VA 
facility shall operate to prevent collection by the United States. 
Pursuant to this authority, VA promulgated Sec.  17.106(f) which 
describes the conditions under which a third-party payer may not 
reduce, offset, or request a refund for payments made to VA. Currently, 
paragraph (f)(2) contains seven such conditions, and we now propose to 
add an eighth condition. In proposed paragraph (f)(2)(viii), we would 
state that a provision in a third-party payer's plan that directs 
payment for care or services be refused or lessened because the billing 
is not presented in accordance with a specified methodology (such as a 
line item methodology) is not by itself a permissible ground for 
refusing or reducing third-party payment of the charges billed by VA. 
Most private sector hospitals in the United States perform itemized 
billing, meaning they bill for those ancillary services, room and 
board, and supplies provided to the patient and include charges for 
each individual item or service that was provided to the patient. VA 
does not use itemized billing when determining charges, and does not 
break down each item or service provided and include charges for such 
item or service. Instead, VA uses a per diem methodology, under which 
there are separate per diem charges for room and board and for all 
ancillary services. VA then sends the third-party payer the bill using 
the per diem methodology. However, as mentioned, this does not break 
down the charges by item or service, and third-party payers have raised 
issues with this methodology because they are unable to determine the 
charge for each individual item or service provided. Because VA's 
billing methodology does not conform to some third-party payers' line-
item billing methodology, some third-party payers have refused to pay 
either the full charges or part of the charges for VA care or medical 
services. We believe revising Sec.  17.106(f)(2) as proposed would be 
equitable to all third-party payers by applying the same standard to 
all third-party payers and would require all third-party payers to pay 
regardless of whether our billing methodologies are the same as their 
preferred method. In addition, upon request from the payer, in 
accordance with the instructions on the billing document, VA would 
provide the medical records that provided the basis for the billing. 
This is not described in the regulation, but is provided here to 
explain that we provide these medical records. Providing the medical 
records would ensure that the third-party payer would have an 
opportunity to review the billing document alongside the medical 
records to fully understand the nature of the charges.

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

    Although this proposed rule contains a provision constituting a 
collection of information, at 38 CFR 17.101, under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3521), no proposed new or 
modified collections of information are associated with this rule. The 
information collection provision for Sec.  17.101 is currently approved 
by the Office of Management and Budget (OMB) and has been assigned OMB 
control number 2900-0606.

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. We have not proposed any new requirements that would 
have such an effect. The changes being made to these regulations are 
mostly technical in nature, and conform to existing statutory 
requirements and existing practices in the program. Therefore, pursuant 
to 5 U.S.C. 605(b), this amendment would be exempt from the initial and 
final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 
604.

Executive Orders 12866, 13563, and 13771

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
The Office of Information and Regulatory Affairs has determined that 
this rule is not 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 FY2004 through FYTD. This rule is not an E.O. 13771 
regulatory action because this rule is not significant under E.O. 
12866.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in 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 Numbers

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.008, Veterans Domiciliary 
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; 64.029--
Purchase Care Program; 64.033--VA Supportive Services for Veteran 
Families Program; 64.034--VA Grants for Adaptive Sports Programs for 
Disabled Veterans and Disabled Members of the Armed Forces; 64.035--

[[Page 57675]]

Veterans Transportation Program; 64.039--CHAMPVA; 64.040--VHA Inpatient 
Medicine; 64.041--VHA Outpatient Specialty Care; 64.042-- VHA Inpatient 
Surgery; 64.043--VHA Mental Health Residential; 64.044-- VHA Home Care; 
64.045--VHA Outpatient Ancillary Services; 64.046--VHA Inpatient 
Psychiatry; 64.047--VHA Primary Care; 64.048--VHA Mental Health 
clinics; 64.049--VHA Community Living Center; 64.050--VHA Diagnostic 
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 home care, Philippines, 
Reporting and recordkeeping requirements, Scholarships and fellows, 
Travel, 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. Robert L. 
Wilkie, Secretary, Department of Veterans Affairs, approved this 
document on May 6, 2019, for publication.

Consuela Benjamin,
Regulation Development Coordinator, Office of Regulation Policy & 
Management, Office of the Secretary, Department of Veterans Affairs.
    For the reasons stated in the preamble, the Department of Veterans 
Affairs proposes to amend 38 CFR part 17 as follows:

PART 17--MEDICAL

0
1. The authority citation for part 17 is revised to read as follows:

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

* * * * *
    Section 17.101 is also issued under 38 U.S.C. 101, 1701, 1705, 
1710, 1721, 1722, 1729.
* * * * *
0
2. Amend 17.101 by:
0
a. In paragraph (a)(5), removing the definition of ``MDR.''
0
b. In paragraph (a)(5), adding alphabetically the definitions of ``FAIR 
Health'' and ``MarketScan''.
0
c. Revising paragraphs (a)(7), (f)(2)(ii), (f)(3), (h)(2) introductory 
text, (h)(2)(i), (h)(2)(ii), (h)(3), (i)(2)(ii), (i)(3), (l)(3) 
introductory text, and (l)(3)(ii).
    The additions and revisions read as follows:


Sec.  17.101  Collection or recovery by VA for medical care or services 
provided or furnished to a veteran for a nonservice-connected 
disability.

* * * * *
    (a) * * *
    (5) * * *
* * * * *
    FAIR Health means any of the Fair Health Charge Benchmarks products 
developed by Fair Health.''
* * * * *
    MarketScan means the MarketScan Commercial Claims & Encounters 
Database developed by Truven Health Analytics LLC.
* * * * *
    (7) Charges for medical care or services provided by non-VA 
providers at VA expense. When medical care or services are furnished at 
the expense of the VA by non-VA providers, the charges billed for such 
care or services will be the charges determined according to this 
section.
* * * * *
    (f) * * *
    (2) * * *
    (ii) RVUs for CPT/HCPCS codes that do not have Medicare RVUs and 
are not designated as unlisted procedures. For CPT/HCPCS codes that are 
not assigned RVUs in paragraphs (f)(2)(i) or (f)(2)(iii) of this 
section, total RVUs are developed based on various charge data sources. 
For these CPT/HCPCS codes, that nationwide 80th percentile billed 
charges are obtained, where statistically credible, from the FAIR 
Health database. For any remaining CPT/HCPCS codes, the nationwide 80th 
percentile billed charges are obtained, where statistically credible, 
from the Part B component of the Medicare Standard Analytical File 5 
Percent Sample. For each of these CPT/HCPCS codes, nationwide total 
RVUs are obtained by taking the nationwide 80th percentile billed 
charges obtained using the preceding databases and dividing by the 
nationwide conversion factor for the corresponding CPT/HCPCS code group 
determined pursuant to paragraphs (f)(3) and (f)(3)(i) of this section. 
For any remaining CPT/HCPCS codes that have not been assigned RVUs 
using the preceding data sources, the nationwide total RVUs are 
calculated by summing the work expense and non-facility practice 
expense RVUs found in Optum Essential RBRVS. The resulting nationwide 
total RVUs obtained using these data sources are multiplied by the 
geographic area adjustment factors determined pursuant to paragraph 
(f)(2)(iv) of this section to obtain the area-specific total RVUs.
* * * * *
    (3) Geographically-adjusted 80th percentile conversion factors. 
CPT/HCPCS codes are separated into the following 23 CPT/HCPCS code 
groups: Allergy immunotherapy, allergy testing, cardiovascular, 
chiropractor, consults, emergency room visits and observation care, 
hearing/speech exams, immunizations, inpatient visits, maternity/
cesarean deliveries, maternity/non-deliveries, maternity/normal 
deliveries, miscellaneous medical, office/home/urgent care visits, 
outpatient psychiatry/alcohol and drug abuse, pathology, physical 
exams, physical medicine, radiology, surgery, therapeutic injections, 
vision exams, and well-baby exams. For each of the 23 CPT/HCPCS code 
groups, representative CPT/HCPCS code group; see paragraph (a)(3) of 
this section for Data Sources. The 80th percentile charge for each 
selected CPT/HCPCS code is obtained from the FAIR Health database. A 
nationwide conversion factor (a monetary amount) is calculated for each 
CPT/HCPCS code group as set forth in paragraph (f)(3)(i) of this 
section. The nationwide conversion factors for each of the 23 CPT/HCPCS 
code groups are trended forward to the effective time period for the 
charges, as set forth in paragraph (f)(3)(ii) of this section. The 
resulting amounts for each of the 23 groups are multiplied by 
geographic area adjustment factors determined pursuant to paragraph 
(f)(3)(iii) of this section, resulting in geographically-adjusted 80th 
percentile conversion factors for each geographic area for the 23 CPT/
HCPCS code groups for the effective charge period.
* * * * *
    (h) * * *
    (2) Nationwide 80th percentile charges by HCPCS code. For each 
HCPCS dental code, 80th percentile charges are extracted from various 
independent data sources, including the National Dental Advisory 
Service nationwide pricing index and the Dental FAIR Health module (see 
paragraph (a)(3) of this section for Data Sources). Charges for each 
database are then trended forward to a common date, based on actual 
changes to the dental services component of the CPI-U. Charges for each 
HCPCS dental code from each data source are combined into

[[Page 57676]]

an average 80th percentile charge by means of the methodology set forth 
in paragraph (h)(2)(i) of this section. HCPCS dental codes designated 
as unlisted are assigned 80th percentile charges by means of the 
methodology set forth in paragraph (h)(2)(ii) of this section. Finally, 
the resulting amounts are each trended forward to the effective time 
period for the charges, as set forth in paragraph (h)(2)(iii) of this 
section. The results constitute the nationwide 80th percentile charge 
for each HCPCS dental code.
    (i) Averaging methodology. The average charge for any particular 
HCPCS dental code is calculated by first computing a preliminary mean 
of the available charges for each code. Statistical outliers are 
identified and removed. In cases where none of the charges are removed, 
the average charge is calculated as a mean of all reported charges.
    (ii) Nationwide 80th percentile charges for HCPCS dental codes 
designated as unlisted procedures. For HCPCS dental codes designated as 
unlisted procedures, 80th percentile charges are developed based on the 
weighted median 80th percentile charge of HCPCS dental codes within the 
series in which the unlisted procedure code occurs. A nationwide VA 
distribution of procedures and services is used for the purpose of 
computing the weighted median.
* * * * *
    (3) Geographic area adjustment factors. A geographic adjustment 
factor (consisting of the ratio of the level of charges in a given 
geographic area to the nationwide level of charges) for each geographic 
area and dental class of service is obtained from Milliman Inc., Dental 
Health Cost Guidelines, a database of nationwide commercial insurance 
charges and relative costs; and a normalized geographic adjustment 
factor computed from the Dental FAIR Health module, as follows: Using 
local and nationwide average charges reported in the FAIR Health 
database, a local weighted average charge for each dental class of 
procedure codes is calculated using utilization frequencies from the 
Milliman Inc., Dental Health Cost Guidelines as weights (see paragraph 
(a)(3) of this section for Data Sources). Similarly, using nationwide 
average charge levels, a nationwide average charge by dental class of 
procedure codes is calculated. The normalized geographic adjustment 
factor for each dental class of procedure codes and for each geographic 
area is the ratio of the local average charge divided by the 
corresponding nationwide average charge. Finally, the geographic area 
adjustment factor is the arithmetic average of the corresponding 
factors from the data sources mentioned in the first sentence of this 
paragraph (h)(3).
* * * * *
    (i) * * *
    (2) * * *
    (ii) RVUs for CPT/HCPCS codes that do not have Medicare-based RVUs 
and are not designated as unlisted procedures. For CPT/HCPCS codes that 
are not assigned RVUs in paragraphs (i)(2)(i) or (iii) of this section, 
total RVUs are developed based on various charge data sources. For 
these CPT/HCPCS codes, the nationwide 80th percentile billed charges 
are obtained, where statistically credible, from the FAIR Health 
database. For any remaining CPT/HCPCS codes, the nationwide 80th 
percentile billed charges are obtained, where statistically credible, 
from the Part B component of the Medicare Standard Analytical File 5 
Percent Sample. For any remaining CPT/HCPCS codes that have not been 
assigned RVUs using the preceding data sources, the nationwide total 
RVUs are calculated by summing the work expense and non-facility 
practice expense RVUs found in Optum Essential RBRVS. The resulting 
nationwide total RVUs obtained using these data sources are multiplied 
by the geographic area adjustment factors determined pursuant to 
paragraph (i)(2)(iv) of this section to obtain the area-specific total 
RVUs.
* * * * *
    (3) Geographically-adjusted 80th percentile conversion factors. 
Representative CPT/HCPCS codes are statistically selected and weighted 
so as to give a weighted average RVU comparable to the weighted average 
RVU of the entire pathology/laboratory CPT/HCPCS code group. The 80th 
percentile charge for each selected CPT/HCPCS code is obtained from the 
FAIR Health database. A nationwide conversion factor (a monetary 
amount) is calculated as set forth in paragraph (i)(3)(i) of this 
section. The nationwide conversion factor is trended forward to the 
effective time period for the charges, as set forth in paragraph 
(i)(3)(ii) of this section. The resulting amount is multiplied by a 
geographic area adjustment factor determined pursuant to paragraph 
(i)(3)(iv) of this section, resulting in the geographically-adjusted 
80th percentile conversion factor for the effective charge period.
* * * * *
    (l) * * *
    (3) Nationwide 80th percentile charges for HCPCS codes without 
RVUs. For each applicable HCPCS code, 80th percentile charges are 
extracted from two independent data sources: the FAIR Health database 
and the combined Part B and DME components of the Medicare Standard 
Analytical File 5 Percent Sample. Charges from each database are then 
trended forward to the effective time period for the charges, as set 
forth in paragraph (l)(3)(i) of this section. Charges for each HCPCS 
code from each data source are combined into an average 80th percentile 
charge by means of the methodology set forth in paragraph (l)(3)(ii) of 
this section. The results constitute the nationwide 80th percentile 
charge for each applicable HCPCS code.
* * * * *
    (ii) Averaging methodology. The average 80th percentile trended 
charge for any particular HCPCS code is calculated by first computing a 
preliminary mean of the available charges for each HCPCS code. 
Statistical outliers are identified and removed. In cases where none of 
the charges are removed, the average charge is calculated as a mean of 
all reported charges.
* * * * *
0
3.


Sec.  17.101   [Amended]

    In the table below, for each section indicated in the left column, 
remove the words indicated in the middle column from wherever it 
appears in the section, and add the words indicated in the right 
column.

------------------------------------------------------------------------
            Section                    Remove                Add
------------------------------------------------------------------------
17.101........................  Chief Business       Office of Community
                                 Office.              Care.
17.101........................  http://www.va.gov/   https://www.va.gov/
                                 cbo, under           COMMUNITYCARE,
                                 ``Charge Data.''.    under ``Payer
                                                      Rates and
                                                      Charges.''
17.101........................  Ingenix/St.          Optum Essential.
                                 Anthony's.
17.101........................  MDR................  FAIR Health.
17.101........................  MedStat............  MarketScan.
17.101........................  Milliman USA, Inc..  Milliman, Inc.

[[Page 57677]]

 
17.101........................  percent Sample.....  Percent Sample.
17.101........................  2.0................  6.5.
17.101........................  6.5................  2.0.
------------------------------------------------------------------------

0
4. Amend Sec.  17.106 by:
0
a. Revising paragraph (c)(4).
0
b. Adding new paragraph (f)(2)(viii).
    The revisions and additions read as follows:


Sec.  17.106  VA collection rules; third-party payers.

* * * * *
    (c) * * *
    (4) A third-party payer may not, without the consent of a U.S. 
Government official authorized to take action under 38 U.S.C. 1729 and 
this part, offset or reduce any payment due under 38 U.S.C. 1729 or 
this part on the grounds that the payer considers itself due a refund 
from a VA facility. A written request for a refund must be submitted 
within 18 months from the original payment date and adjudicated 
separately from any other claims submitted to the third-party payer 
under 38 U.S.C. 1729 or this part. If third-party payers do not submit 
requests for a refund within this 18-month time frame, VA will not 
provide a refund to third-party payers for a paid claim for any reason.
* * * * *
    (f) * * *
    (2) * * *
    (viii) A provision in a third-party payer's plan that directs 
payment for care or services be refused or lessened because the billing 
is not presented in accordance with a specified methodology (such as a 
line item methodology) is not by itself a permissible ground for 
refusing or reducing third-party payment.
* * * * *

[FR Doc. 2019-22972 Filed 10-25-19; 8:45 am]
 BILLING CODE 8320-01-P