    [Federal Register Volume 85, Number 168 (Friday, August 28, 2020)]
    [Rules and Regulations]
    [Pages 53173-53176]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 2020-17042]

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    DEPARTMENT OF VETERANS AFFAIRS

    38 CFR Part 17

    RIN 2900-AQ68

    Provider-Based Requirements

    AGENCY: Department of Veterans Affairs.

    ACTION: Final rule.

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    SUMMARY: The Department of Veterans Affairs (VA) adopts as final, with
    no changes, a proposed rule to revise its medical regulations
    concerning collection and recovery by VA for medical care and services
    provided to an individual at a VA medical facility for treatment of a
    nonservice-connected condition. Specifically, this rulemaking adds a
    regulation that establishes the requirements VA will use to determine
    whether a VA medical facility has provider-based status.

    DATES: This final rule is effective on September 28, 2020.

    FOR FURTHER INFORMATION CONTACT: Joseph Duran, Office of Community Care
    (10D), Veterans Health Administration, Department of Veterans Affairs,
    Ptarmigan at Cherry Creek, Denver, CO 80209; (303) 372-4629. (This is
    not a toll-free number.)

    SUPPLEMENTARY INFORMATION: VA is authorized under 38 U.S.C. 1729 to
    recover or collect from a third party the reasonable charges for
    medical care or services VA furnishes to an individual for a non-
    service connected disability, to the extent that the individual, or the
    provider of care or services, would be eligible to receive payment from
    the third party if the care or services had not been furnished by VA.
    VA's collection or recovery under section 1729 is limited to care or
    services furnished by VA for a nonservice-connected disability:
    Incurred incident to the individual's employment and covered under a
    worker's compensation law or plan that provides reimbursement or
    indemnification for such care and services; incurred as the result of a
    crime of personal violence that occurred in a State, or a political
    subdivision of a State, in which a person injured as the result of such
    a crime is entitled to receive health care and services at such State's
    or subdivision's expense for personal injuries suffered as the result
    of such crime; incurred as a result of a motor vehicle accident in a
    State that requires automobile accident reparations (no-fault)
    insurance; or for which the individual is entitled to care (or the
    payment of expenses of care) under a health plan contract. VA
    implements its authority under section 1729 through regulations at
    title 38 Code of Federal Regulations (CFR) 17.101 through 17.106. More
    specifically, the methodology that VA uses to determine the amount of
    its collection or recovery for is established in 38 CFR 17.101.
        On November 21, 2019, VA published a proposed rule to revise the
    methodology in Sec.  17.101 with regards to calculating the reasonable
    charges for care and services VA provides on an outpatient basis. 84 FR
    64235. That proposed rule primarily sought to revise 38 CFR 17.101 to
    remove the regulatory requirement that VA use the Centers for Medicare
    and Medical Services (CMS) provider-based criteria with regards to VA
    billing of third parties, and sought to add a new regulation at 38 CFR
    17.100 to establish the criteria that VA would use instead to determine
    whether a VA facility has provider-based status. In so doing, VA
    modelled a majority of the criteria in new proposed 38 CFR 17.100 on
    CMS provider-based criteria in 42 CFR 413.65, but VA's revisions
    addressed the unique structure of VA's health care system, versus the
    CMS requirements that are more generally applicable to private health
    care systems. We reiterate from the proposed rule that VA is an
    integrated, national health care system and, therefore, some of the CMS
    requirements in 42 CFR 413.65, especially as they pertain to proximity
    limitations and licensure, are not appropriate to use for VA
    facilities. 84 FR 64235, 64236. The CMS requirements that were not
    appropriate to use for VA facilities were further identified and
    explained in more detail in the proposed rule, as were the alternative
    VA criteria in Sec.  17.100 as proposed. 84 FR 64235, 64236-64239.
        VA received three comments in response to the proposed rule, all of
    which supported the proposed rule and none of which suggested changes
    to any provisions in the proposed rule. We therefore adopt the proposed
    rule as final with no changes.

    Paperwork Reduction Act

        This final rule contains no collections of information under the
    Paperwork

    [[Page 53174]]

    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 facilities
    as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
    612. We identified that 400 out of 745 third-party payers would qualify
    as small entities pursuant to the revenue threshold established by
    NAICS code 524114 (Direct Health and Medical Insurance Carriers) to be
    affected by changes in this rule. The number of 400 was derived by
    assuming potential effects on all entities that fell below the
    applicable revenue threshold, without further numeric breakout.
    Although this 400 number is greater than three percent of the 745 total
    entities, the changes in this rule do not impose any new requirements
    that create a significant economic impact. The changes made in Sec.
    17.100 related to revising the scope and purpose, and related to
    revising, adding, or removing definitions, are technical in nature and
    conform to existing statutory authorities and existing practices in the
    program. The changes in Sec.  17.101 will allow an additional 104 VA
    facilities to recognize an additional billable charge under the
    designation of a provider-based facility, with an estimated increased
    revenue for VA of $3,666,218 in FY21. This $3,666,218 annual revenue
    increase divided by the 745 firms under NAICS code 524114 will result
    in $4,921 additional annual costs per firm. This $4,921 additional cost
    per firm divided by the total receipts per firm of $1, 109,867,678 does
    not create a significant economic impact. Additional training will not
    be required for the 400 small entities potentially to be effected, as
    97 percent of VA facilities already engage in the provider-based
    practices subject to the changes in Sec.  17.101, which makes these
    practices well known to all potentially affected entities.
        Therefore, pursuant to 5 U.S.C. 605(b), the initial and final
    regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do
    not apply.

    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 regulatory 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 E.O. 13771
    because this final rule results in no more than de minimis costs.

    Unfunded Mandates

        The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C.
    1532, that agencies prepare an assessment of anticipated costs and
    benefits before issuing any rule that may result in the expenditure by
    State, local, and tribal governments, in the aggregate, or by the
    private sector, of $100 million or more (adjusted annually for
    inflation) in any one year. This 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: 64.008--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; 64.026--Veterans State Adult Day Health Care; 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, Health care, Health
    facilities, Health professions, Health records, Medical devices,
    Medical research, Mental health programs, Nursing homes, Philippines,
    Veterans.

    Signing Authority

        The Secretary of Veterans Affairs, or designee, approved this
    document and authorized the undersigned to sign and submit the document
    to the Office of the Federal Register for publication electronically as
    an official document of the Department of Veterans Affairs. Brooks D.
    Tucker, Acting Chief of Staff, Department of Veterans Affairs, approved
    this document on July 22, 2020, for publication.

    Consuela Benjamin,
    Regulations Development Coordinator, Office of Regulation Policy &
    Management, Office of the Secretary, Department of Veterans Affairs.

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

    PART 17--MEDICAL

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

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

    0
    2. Add Sec.  17.100 under the undesignated center heading ``Charges,
    Waivers, and Collections'' to read as follows:

    Sec.  17.100  Requirements for provider-based status.

        (a) Scope. This section establishes the criteria that VA uses to
    determine whether a VA medical facility is designated as provider-based
    for purposes of billing for non-service-connected and non-special
    treatment authority conditions.
        (b) Definitions. For purposes of this section:
        Community Based Outpatient Clinic (CBOC). A CBOC is a VA-operated,
    VA-funded, or VA-reimbursed site of care that is not located within a
    VA Medical Center. A CBOC can provide primary, specialty, subspecialty,
    mental health, or any combination of health care delivery services that
    can be appropriately provided in an outpatient setting.
        Community Living Center (CLC). A CLC is a component of the spectrum
    of

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    long-term care that provides a skilled nursing environment and houses a
    variety of specialty programs for persons needing short and long stay
    services. VA CLCs are typically located on, or near a VA medical
    facility and are VA-owned and operated, but may be free-standing in the
    community.
        Facility. A facility is a point of care where individuals can seek
    VA health care services, to include a VA Medical Center, CBOC, Health
    Care Center, CLC, and Other Outpatient Services site.
        Health Care Center (HCC). An HCC is a VA-owned, VA-leased, VA-
    contracted or shared clinic that is operational at least five days per
    week and provides primary care, mental health care, on site specialty
    services, and performs ambulatory surgery and/or invasive procedures
    that may require moderate sedation or general anesthesia.
        Main provider. A main provider (or parent facility/hospital or
    provider-based hospital (PBH)) is a provider that either creates, or
    acquires ownership of, another facility to deliver additional health
    care services under its name, ownership, and financial and
    administrative control. For example, VA Medical Centers and HCCs can be
    main providers.
        Other Outpatient Services (OOS). A site that provides outpatient
    services to veterans, but does not meet the definition of a CBOC or HCC
    per this section.
        Prospective Payment System (PPS). A Prospective Payment System
    (PPS) is a method of reimbursement in which Medicare payment is made
    based on a predetermined, fixed amount. The payment amount for a
    particular service is derived based on the classification system of
    that service (for example, Medicare Severity Diagnosis-Related Groups
    for inpatient hospital services furnished by most acute care
    hospitals).
        Provider-based outpatient facility (PBO). A provider-based
    outpatient facility is a provider of health care services that is
    either created by, or acquired by, a main provider for the purpose of
    furnishing additional health care services under the ownership,
    administrative, and financial control of the main provider, and meets
    the criteria outlined in this section.
        Remote location of a hospital. A remote location of a hospital is a
    CBOC, OOS Site, or HCC that is located offsite from the main facility.
        VA Medical Center (VAMC). A VAMC is a VA facility that provides at
    least two categories of care (inpatient, outpatient, residential, or
    institutional extended care).
        (c) Criteria for provider-based status. In order to be designated
    as a provider-based facility, the following criteria must be met:
        (1) Licensure. The facility seeking provider-based status and the
    main provider must operate under the same license. VA facilities are
    not licensed by States but all VA facilities are considered licensed
    for the purpose of collection and recovery by VA as part of VA's
    national organization structure and in accordance with VA standards,
    including standards established or recognized by VA's Offices of the
    Medical Inspector and Inspector General and major healthcare
    accreditation organizations.
        (2) Clinical services. The clinical services of the facility
    seeking provider-based status and the main provider must be integrated.
    Integration is demonstrated by the following:
        (i) The professional staff of the facility has clinical privileges
    at the main provider.
        (ii) The main provider maintains the same monitoring and oversight
    (i.e. credentialing and privileging) of the facility seeking provider-
    based status as it does for any other department of the provider.
        (iii) The medical director of the facility seeking provider-based
    status maintains a reporting relationship with the chief medical
    officer or other similar official of the main provider that has the
    same frequency, intensity, and level of accountability that exists in
    the relationship between the medical director of a department of the
    main provider and the chief medical officer or other similar official
    of the main provider, and is under the same type of supervision and
    accountability as any other director, medical or otherwise, of the main
    provider.
        (iv) The medical staff committees or other professional committees
    at the main provider are responsible for medical activities in the
    facility seeking provider-based status, including quality assurance,
    utilization review, and the coordination and integration of services,
    to the extent practicable, between the facility seeking provider-based
    status and the main provider.
        (v) Medical records for patients treated in the facility seeking
    provider-based status are integrated into a unified retrieval system
    (or cross reference) of the main provider.
        (vi) Inpatient and outpatient services of the facility seeking
    provider-based status and the main provider are integrated, and
    patients treated at the facility who require further care have full
    access to all services of the main provider and are referred where
    appropriate to the corresponding inpatient or outpatient department or
    service of the main provider.
        (vii) Inpatient and outpatient services of the facility seeking
    provider-based status and the main provider are recognized under the
    main provider's accreditation.
        (3) Financial integration. The financial operations of the facility
    seeking provider-based status are fully integrated within the financial
    system of the main provider, as evidenced by shared income and expenses
    between the main provider and the facility. The costs of a facility
    that is a hospital department are reported in a cost center of the
    provider, costs of a facility other than a hospital department are
    reported in the appropriate cost center or cost centers of the main
    provider. The main provider's integrated health care system manpower
    and labor budget and the financial status of any facility seeking
    provider-based status is incorporated and readily identified in the
    main provider's integrated system reports.
        (4) Public awareness. The facility seeking provider-based status
    must be held out to the public (and other payers) as part of the main
    provider. Patients of the facility must be made aware that the facility
    is part of a main provider and that they will be billed accordingly.
    All literature, brochures, and public relations newsletters from the
    facility seeking provider-based status must provide the relationship
    between the main provider and the facility.
        (5) Obligations of hospital outpatient departments and hospital-
    based facilities. If the facility seeking provider-based status is a
    hospital outpatient department or hospital-based facility, the facility
    must fulfill the obligations described in this paragraph:
        (i) The hospital outpatient department must comply with the
    antidumping rules of 42 CFR 489.20(l), (m), (q), and (r) and Sec.
    489.24.
        (ii) Physician services furnished in hospital outpatient
    departments or hospital-based facilities must be billed with the
    correct site-of-service so that appropriate physician and practitioner
    payment amounts can be determined based on their geographical location.
        (iii) Physicians who work in hospital outpatient departments or
    hospital-based facilities are obligated to comply with the non-
    discrimination provisions in 42 CFR 489.10(b).
        (iv) Hospital outpatient departments must treat all Medicare
    patients seen on an urgent/emergent basis as hospital outpatients.
        (v) In the case of a patient admitted to the hospital as an
    inpatient after receiving treatment in the hospital outpatient
    department or hospital-based

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    facility, payments for services in the hospital outpatient department
    or hospital-based facility are subject to the payment window provisions
    applicable to PPS hospitals and to hospitals and units excluded from
    PPS set forth at 42 CFR 412.2(c)(5) and at 42 CFR 413.40(c)(2),
    respectively.
        (vi) The hospital outpatient department must meet applicable VA
    policies pertaining to hospital health and safety programs.
        (vii) VA must treat any facility that is located on the main
    hospital campus as a department of the hospital.
        (6) Operation under the control of the main provider. The facility
    seeking provider-based status is operated under the control of the main
    provider. Control of the main provider requires:
        (i) The main provider and the facility seeking provider-based
    status have the same governing body.
        (ii) The facility seeking provider-based status is operated under
    the same organizational documents as the main provider. For example,
    the facility seeking provider-based status must be subject to common
    bylaws and operating decisions of the governing body of the main
    provider.
        (iii) The main provider has final responsibility for administrative
    decisions, final approval for contracts with outside parties, final
    approval for personnel actions, final responsibility for personnel
    policies (such as code of conduct), and final approval for medical
    staff appointments in the facility seeking provider-based status.
        (7) Administration and Supervision. The reporting relationship
    between the facility seeking provider-based status and the main
    provider must have the same frequency, intensity, and level of
    accountability that exists in the relationship between the main
    provider and one of its existing departments, as evidenced by
    compliance with all of the following requirements:
        (i) The facility seeking provider-based status is under the direct
    supervision of the main provider.
        (ii) The facility seeking provider-based status is operated under
    the same monitoring and oversight by the main provider as any other
    department of the provider, and is operated just as any other
    department of the provider with regard to supervision and
    accountability. The facility director or individual responsible for
    daily operations at the facility:
        (A) Maintains a reporting relationship with a manager at the main
    provider that has the same frequency, intensity, and level of
    accountability that exists in the relationship between the main
    provider and its existing departments; and
        (B) Is accountable to the governing body of the main provider, in
    the same manner as any department head of the provider.
        (iii) The following administrative functions of the facility
    seeking provider-based status are integrated with those of the main
    provider where the facility is based: Billing services, records, human
    resources, payroll, employee benefit package, salary structure, and
    purchasing services. Either the same employees or group of employees
    handle these administrative functions for the facility and the main
    provider, or the administrative functions for both the facility and the
    main provider are contracted out under the same contract agreement; or
    are handled under different contract agreements, with the contract of
    the facility or organization being managed by the main provider.
        (d) Illustrations of how the criteria are applied. (1) A VA
    facility that is seeking provider-based status that exists under
    contract arrangements, where only VA patients are seen, may be
    designated as provider-based if the provider-based requirements in this
    section are met.
        (2) A VA facility seeking provider-based status that exists under
    contract arrangements, where VA patients and non-VA patients are seen
    at the same non-VA owned facility, will have the same provider-based
    status as the non-VA owned facility that is hosting the VA facility.
        (3) A VA owned and operated facility seeking provider-based status,
    where some or all of the staff are contracted employees, may be
    designated as provider-based if the provider-based requirements in this
    section are met.

    0
    2. Amend Sec.  17.101 by:
    0
    a. Revising the section heading;
    0
    b. In paragraph (a)(5), removing the definitions ``Non-provider-based''
    and ``Provider-based'' from; and

    0
    3. Revising paragraph (a)(6).
        The 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 non-service connected
    disability.

        (a) * * *
        (6) Provider-based status and charges. Facilities that have
    provider-based status by meeting the criteria in Sec.  17.100 are
    entitled to bill outpatient facility charges and professional charges.
    The professional charges for these facilities are produced by the
    methodologies set forth in this section based on facility expense RVUs.
    Facilities that do not have provider-based status because they do not
    meet the criteria in Sec.  17.100 are not permitted to bill outpatient
    facility charges and can only bill a professional charge. The
    professional charges for these facilities are produced by the
    methodologies set forth in this section based on non-facility practice
    expense RVUs.
    * * * * *

    0
    4. Amend Sec.  17.106 by adding paragraph (f)(2)(viii) to read as
    follows:

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

    * * * * *
        (f) * * *
        (2) * * *
        (viii) A third party may not reduce or refuse payment if the
    facility where the medical treatment was furnished is designated by VA
    as provider-based, but the facility does not meet the provider-based
    status requirements under 42 CFR 413.65.
    * * * * *
    [FR Doc. 2020-17042 Filed 8-27-20; 8:45 am]
    BILLING CODE 8320-01-P