[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]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AQ68


Provider-Based Requirements

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

-----------------------------------------------------------------------

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

[[Page 53175]]

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

[[Page 53176]]

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