[Federal Register Volume 86, Number 57 (Friday, March 26, 2021)]
[Rules and Regulations]
[Pages 16050-16055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05717]



[[Page 16050]]

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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: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) adopts as final, with 
nonsubstantive changes, a proposed rule to revise 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 will revise the provisions of 
VA regulations that determine the charges VA will bill third-party 
payers for non-VA care provided at VA expense, will include a time 
limit for which third-party payers can request a refund, and will 
clarify that third-party payers cannot reduce or refuse payment because 
of the billing methodology used to determine the charge.

DATES: This rule is effective on April 26, 2021.

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: 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.
    On October 28, 2019, VA published a proposed rule to revise the 
methodology in 38 CFR 17.101 with regards to how VA calculates 
reasonable charges for purposes of billing third parties when medical 
care was provided at a non-VA facility at VA expense. Specifically, 
that rule proposed calculating these charges in the same manner as if 
the care and services had been provided in VA facilities. See 84 FR 
57668. That proposed rule additionally sought to make several technical 
amendments to Sec.  17.101, to correct clerical errors, update office 
and data source names, add two new definitions, and remove one current 
definition to be consistent with the proposed technical amendments. 
Lastly, the proposed rule sought to revise Sec.  17.106 to clarify the 
timeframe for submitting a written request for a refund for claims 
under 38 U.S.C. 1729, further explaining 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, and adding a new condition under which a 
third-party payer could not refuse or reduce their payment for a claim 
under section 1729.
    VA received five comments in response to the proposed rule, some of 
which supported the proposed rule and requested clarifications and some 
of which suggested changes to provisions in the proposed rule. For the 
reasons stated below, we adopt the proposed rule as final with minor 
nonsubstantive changes.
    One comment expressed support for the rule because it would 
establish additional safeguards to ensure that third-party insurance 
payers could not reject VA's requests for payment due to disagreements 
with administrative issues such as billing methods. This comment did 
not suggest any changes to the proposed regulatory revisions, and we do 
not make changes based on this comment.
    Two comments expressed support for the proposed rule but also 
requested clarification of how VA will treat third-party payments for 
non-VA care for veterans that do not have private health insurance, 
with one comment more specifically requesting clarification of whether 
uninsured veterans will be responsible for payment of the same non-VA 
care that third-party insurers are responsible for under the proposed 
rule. We clarify that veterans without private health insurance would 
not be responsible for the cost of non-VA care where such veterans are 
otherwise eligible for VA to pay for such care, for instance, if such 
veterans were eligible to receive care or services through the Veterans 
Community Care Program pursuant to 38 U.S.C. 1703 and 38 CFR 17.4000 et 
seq. The same comment that specifically requested clarification of a 
veteran's financial responsibility where they have no private health 
insurance also expressed concern that, if veterans without private 
health insurance were not financially responsible for the cost of non-
VA care, then VA may create an incentive for veterans to drop their 
other private health insurance. The rationale for this statement in the 
comment was that where a veteran is privately insured, the VA benefit 
to cover non-VA care is non-existent, and because a majority of private 
insurers impute some level of cost-sharing, it would be more economical 
for veterans to simply not be privately insured. Although this comment 
is beyond the scope of the proposed rule (as Sec.  17.101 has long 
implemented VA's authority under 38 U.S.C. 1729 to collect from third-
party insurers for the costs of care furnished or paid for by VA, this 
was not a new change in the proposed rule), we will correct some 
misstatements from the comment to provide a more full response. We 
first correct the statement from the comment that where a veteran is 
privately insured, the VA benefit to cover non-VA care is non-
existent--VA's legal authority to furnish non-VA care, such as care 
furnished pursuant to 38 U.S.C. 1703 and 38 CFR 17.4000 et seq., is 
controlled outside of VA's authority to collect from third-party 
insurers under section 1729, and VA's provision of non-VA care is not 
dependent on whether a veteran has private health insurance. We also 
correct the potential misunderstanding that veterans without private 
health insurance would be free from cost-sharing responsibilities where 
VA pays for the provision of non-VA care, such veterans may be subject 
to VA copayments as applicable. We do not make changes based on these 
comments.
    One comment requested clarification of the proposed 18-month 
limitation to seek a refund from VA that would be established in Sec.  
17.106(c)(4), and whether a non-VA provider could seek such a refund 
from a veteran if the non-VA provider missed the 18-month window in 
which to seek a refund from VA. This comment further suggested 
including a rule to protect veterans from non-VA providers seeking 
refunds from veterans after the 18-month window. We clarify that the 
proposed regulatory changes would not establish a billing or payment 
relationship between a veteran and a non-VA provider or entity, as 
current Sec.  17.106(c)(4) and the proposed

[[Page 16051]]

revision both relate to only the relationship between a third-party 
payer and VA in instances where VA has collected for the cost of 
nonservice-connected care provided in or through a VA facility where a 
veteran has private health insurance. The proposed 18-month timeframe 
would limit the amount of time a third-party insurance payer may seek a 
refund from VA, where VA has billed that insurer for nonservice-
connected, and the insurer has assessed that it has overpaid VA for 
that care. As such, current Sec.  17.106 and the revisions as proposed 
do not establish any payment relationship between a non-VA provider and 
a Veteran, and we otherwise reiterate from earlier in this preamble 
that veterans would not be responsible for the cost of non-VA care 
where such veterans are otherwise eligible for VA to pay for such care, 
except to the extent there may be applicable copayments for such care. 
We do not make changes based on this comment.
    One comment raised multiple issues related to the proposed rule. 
The comment first asserted that the proposed rule would implement non-
standard third-party billing and collection processes that have the 
potential to impact VA's efforts to create and maintain an integrated 
delivery system with community care. The comment more specifically 
stated that VA's practice of billing the higher of the charges 
determined pursuant to Sec.  17.101 or the amount paid to the non-VA 
provider is unique to VA, inconsistent with industry practice, and 
unnecessarily puts VA into a payment and billing process when veterans 
with other health insurance receive nonservice-connected care from non-
VA providers. We agree with the portion of the comment that the higher 
of language in Sec.  17.101(a)(7) has presented challenges because it 
is not the industry standard practice, which is why we proposed to 
remove that language so that Sec.  17.101 would provide that reasonable 
charges would be calculated only using the methodology set forth in 
Sec.  17.101. To address the concern in this portion of the comment 
related to additional administrative burden for VA and for third-party 
payers, we reiterate from the proposed rule that removing the higher of 
language in Sec.  17.101(a)(7) will reduce administrative burden by 
permitting VA to bill the rate determined using the methodologies set 
forth in Sec.  17.101 (those methodologies that calculate charges as if 
the care was provided at a VA facility), which will provide greater 
clarity and uniformity in VA's billing practices. Revising Sec.  
17.101(a)(7) such that VA charges 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. 84 FR 57668, 57669. We also reiterate from the 
proposed rule that it is equitable to charge the same rates regardless 
of the facility in which the individual sought treatment, and 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. 84 FR 
57668, 57669. We believe the other statements in this portion of the 
comment similarly misread other changes being made in the proposed 
rule, and mistook that VA is not the first-party payor with regards to 
the non-VA care discussed in the proposed rule. We clarify that where 
VA is otherwise responsible for furnishing care to veterans, and such 
veterans are eligible to receive non-VA care in the community, VA 
remains the first party payer and is authorized under 38 U.S.C. 1729 to 
bill and collect reasonable charges for nonservice-connected care where 
such veterans have other private health insurance. Therefore, the 
proposed rule does not create a non-standard third-party billing and 
collection process when veterans with other health insurance receive 
nonservice-connected care from non-VA providers at VA expense. We do 
not make changes based on this portion of the comment.
    The comment next asserted that the proposed rule may result in the 
amounts that VA collects from third-party insurers for non-VA care 
furnished in the community being significantly more than what VA pays 
non-VA providers to furnish such care. In support of this statement, 
the comment more specifically noted that there is a discrepancy 
between: The methodology outlined in 38 CFR 17.101 where charges are 
weighted at the 80th percentile of nationwide charges; and VA's 
payments of applicable Medicare fee schedules or prospective payment 
system amounts for non-VA care in the community, where the comment 
asserted that such Medicare rates were weighted at approximately 23 
percent of nationwide charges. This portion of the comment also noted 
that the pricing methodologies in Sec.  17.101 needed to be generally 
reviewed to incorporate the price transparency requirements of the 
Affordable Care Act and other efforts related to price transparency 
undertaken by the Centers for Medicare and Medicaid Services, as well 
as to be consistent with VA's efforts to conduct market cost 
assessments under section 106 of Public Law 115-182. Ultimately, we 
believe that this portion of the comment is beyond the scope of the 
proposed rule, as Sec.  17.101 has long established use of the 80th 
percentile of nationwide charges in a number of its methodologies, and 
this was not a new change in the proposed rule.
    Similarly, the proposed rule did not raise the issue of VA's 
payment to non-VA providers for the furnishing of care in the 
community, or how VA authorizes the provision of such care; rather, the 
rulemaking concerned how VA bills third parties. Nor did the proposed 
rule raise more general review of the reasonable charges methodologies 
in Sec.  17.101 at large. However, we generally respond to this portion 
of the comment that VA's payment to non-VA providers for care furnished 
in the community is controlled by 38 U.S.C. 1703(i) and 38 CFR 17.4035. 
Such payments are not impacted by what VA bills to third party payers 
for non-VA care where veterans have private health insurance under 
section 1729 and Sec.  17.101. Payments for care in the community and 
billing of third-party payers for non-VA care are distinct from one 
another and conducted pursuant to distinct statutory and regulatory 
authorities. We also do not see any link between VA's conducting of 
market analyses under section 106 of Public Law 115-182 and VA's 
reasonable charge methodologies in Sec.  17.101. We do not make any 
changes based on this portion of the comment.
    The comment next expressed concern regarding the proposed addition 
of new Sec.  17.106(f)(2)(viii) to 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. The comment asserted that VA's 
example of its per diem billing methods as being different from some 
third-party insurer's line item methods was not a sufficient rationale 
for this revision, and further that VA's per diem methodology would 
result in bundled billing practices that could leave third-party 
insurers in the position to be charged and pay for service-connected 
care as well as nonservice-connected care. VA's example of its per diem 
billing methodologies as provided in the proposed rule is only one type 
of practice that may differ from third-party

[[Page 16052]]

billing practices, although we reiterate that even this one example is 
sufficient rationale to support the proposed revision of Sec.  
17.106(f)(2) because this difference in billing methodologies has 
resulted in some third-party payers refusing to pay part or all of the 
charges for VA care or medical services. When a third-party payer's 
plan has provisions that have the effect of excluding from coverage or 
limited payment for certain care if such care is provided in or through 
any VA facility, VA is authorized under 38 U.S.C. 1729(f) to implement 
measures to ensure that such provisions do not operate to prevent 
collection by the United States. 84 FR 57668, 57674. Regarding the 
statement in this portion of the comment related to bundling of 
services in VA's per diem methodologies, we clarify that VA's per diem 
methodologies do not provide for the comingling of billing charges for 
both nonservice-connected care and service-connected care, as 38 U.S.C. 
1729 only permits assessment for reasonable charges for nonservice-
connected care. We do not make changes based on this portion of the 
comment.
    VA makes multiple nonsubstantive changes from the proposed rule, 
none of which are based on public comment. First, VA replaces the term 
Optum Essential every time it was proposed to appear in Sec.  17.101 
(see 84 FR 57668, 57670) with the term Medicare ASP Pricing. This 
change is required because the Optum Essential data set has become 
unavailable to VA since publication of the proposed rule. Similar to 
Optum Essential, the Medical ASP Pricing data set is a longstanding and 
publicly available dataset associated with Centers for Medicare and 
Medicaid Billing, with similar data elements. Next, VA renumbers Sec.  
17.106(f)(2)(viii) as proposed to Sec.  17.106(f)(2)(ix) in this final 
rule, to correct a discrepancy in drafting with another recently 
published VA rulemaking (AQ68), where AQ68 has already added a new 
Sec.  17.106(f)(2)(viii) (see 85 FR 53173). We also correct an 
inadvertent omission of language from Sec.  17.101(f)(3) as proposed, 
related to explanation in paragraph (f)(3) that CPT/CHPCS codes are 
statistically selected and weighted so as to give a weighted average 
RVU comparable to the weighted average RVU of the entire CPT/HCPCS code 
group. This explanatory language existed in Sec.  17.101(f)(3) prior to 
the proposed rule and was followed by additional parenthetical 
explanation that the selected CPT/HCPCS codes are set forth in the 
Milliman USA, Inc., Health Cost Guidelines fee survey. When we proposed 
to change the term ``Milliman USA, Inc.'' to ``Milliman, Inc.'' in 
Sec.  17.101(f)(3), we failed to transcribe the additional explanatory 
language as described above, and now correct that error by reinserting 
in paragraph (f)(3) language that representative CPT/CHPCS codes are 
statistically selected and weighted so as to give a weighted average 
RVU comparable to the weighted average RVU of the entire CPT/HCPCS code 
group (the selected CPT/HCPCS codes are set forth in the Milliman, 
Inc., Health Cost Guidelines fee survey). We correct a similar omission 
in Sec.  17.101(i)(3) as proposed, to now reinsert parenthetical 
language that ``(the selected CPT/HCPCS codes are set forth in the 
Milliman, Inc., Health Cost Guidelines fee survey).'' We additionally 
correct a similar omission in Sec.  17.101(l)(3) as proposed to now 
reinsert language related to Milliman data sets, to read ``; and 
Milliman, Inc., Optimized HMO (Health Maintenance Organization) Data 
Sets (see paragraph (a)(3) of this section for Data Sources).''
    For the reasons stated in the preamble of this rule, VA makes 
nonsubstantive changes from the proposed rule.

Executive Orders 12866 and 13563

    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.

Regulatory Flexibility Act

    The Secretary hereby certifies that this rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. 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 Sec.  17.101 of 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 1 percent of the 745 total 
entities, the changes in Sec.  17.101 of this rule do not impose any 
new requirements that create a significant economic impact, as these 
changes do not result in new or changed fees or significant changes in 
any permissible charges. The changes made in Sec.  17.101 related to 
revising, adding, or removing definitions are technical in nature and 
conform to existing statutory requirements and existing practices in 
the program. Similarly, the change made in Sec.  17.101 related to only 
using the reasonable charges methodology set forth in 17.101 conforms 
to existing statutory authority and is the clearer and more uniform 
calculation method, which will not require any additional training for 
the small entities to understand.
    We further identified that 39 out of 745 third-party payers would 
qualify as small entities pursuant to the revenue thresholds 
established by NAICS code 524114 (Direct Health and Medical Insurance 
Carriers) to be affected by changes in Sec.  17.106 of this rule 
related to the 18-month timeframe in which to submit a request for a 
refund. The number 39 was derived from VA's examination of its 
Consolidated Patient Account Center (CPAC) data pertaining to the 
amount of refund requests received in fiscal year 2019 where such 
requests were received after 18 months. We believe this number 39 is 
appropriate for the specific change in Sec.  17.106 (versus the more 
general 400 number for the changes in Sec.  17.101) because it is our 
experience that entities generally do not wish to wait as long as or 
beyond 18 months to submit refund requests. Although this 39 number is 
greater than 1 percent of the 745 total entities, the average impact on 
such small entities would be $385 per entity (based on VA's examination 
of its fiscal year 2019 CPAC data), which also will not create a 
significant economic impact. 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.

[[Page 16053]]

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.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507) requires that 
VA consider the impact of paperwork and other information collection 
burdens imposed on the public. Except for emergency approvals under 44 
U.S.C. 3507(j), VA may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid OMB control number. Although this rule contains a 
provision constituting a collection of information, at 38 CFR 17.101, 
no 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.

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 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--
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 on March 
12, 2021 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.

Consuela Benjamin,
Regulations 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 amends 38 CFR part 17 as follows:

PART 17--MEDICAL

0
1. The general authority citation for part 17 continues, and an entry 
for Sec.  17.101 is added in numerical order, 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 as follows:
0
a. In paragraph (a)(5), add definitions for ``FAIR Health'' and 
``MarketScan'' in alphabetical order and remove the definition of 
``MDR'';;
0
b. Revise paragraphs (a)(7), (f)(2)(ii), (f)(3) introductory text, 
(h)(2) introductory text, (h)(2)(i) and (ii), (h)(3), (i)(2)(ii), 
(i)(3) introductory text, (l)(3) introductory text, and (l)(3)(ii); and
0
c. In the following table, for each paragraph indicated in the left 
column, remove the words indicated in the middle column from wherever 
it appears in the paragraph, and add in their place the words indicated 
in the right column.

------------------------------------------------------------------------
          Paragraph                  Remove                  Add
------------------------------------------------------------------------
(a)(2) and (3)..............  Chief Business        Office of Community
                               Office.               Care.
(a)(2) and (3)..............  http://www.va.gov/    https://www.va.gov/
                               cbo, under ``Charge   COMMUNITYCARE,
                               Data.''.              under ``Payer Rates
                                                     and Charges.''
(l)(2)(i)(A), (B), and (M)..  Ingenix/St.           Medicare ASP
                               Anthony's.            Pricing.
(e)(3)(ii), (e)(4),           MDR.................  FAIR Health.
 (g)(3)(i), (i)(2)(i),
 (l)(2)(iii), (l)(5)(ii).
(b)(2) introductory text,     MedStat.............  MarketScan.
 (b)(3), (e)(3)(ii).
(e)(4), (g)(3)(i),            Milliman USA, Inc...  Milliman, Inc.
 (l)(5)(iii).
(d)(2) introductory text,     percent Sample......  Percent Sample.
 (e)(3)(i) introductory
 text, (e)(3)(i)(A) and (B),
 (e)(3)(ii), (f)(4),
 (g)(3)(i), (j)(2)(i),
 (k)(2)(i) and (ii),
 (l)(5)(ii).
(e)(3)(i)(C)................  2.0.................  6.5.
(e)(3)(i)(C)................  6.5.................  2.0.
------------------------------------------------------------------------

    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) * * *

[[Page 16054]]

    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 paragraph (f)(2)(i) or (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) introductory text 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 Medicare ASP Pricing 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 codes are statistically selected and 
weighted so as to give a weighted average RVU comparable to the 
weighted average RVU of the entire CPT/HCPCS code group (the selected 
CPT/HCPCS codes are set forth in the Milliman, Inc., Health Cost 
Guidelines fee survey); 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 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

[[Page 16055]]

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 Medicare ASP Pricing 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 
selected CPT/HCPCS codes are set forth in the Milliman, Inc., Health 
Cost Guidelines fee survey). 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; and Milliman, Inc., Optimized HMO 
(Health Maintenance Organization) Data Sets (see paragraph (a)(3) of 
this section for Data Sources). 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
4. Amend Sec.  17.106 by revising paragraph (c)(4) and adding paragraph 
(f)(2)(ix) to 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) * * *
    (ix) 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. 2021-05717 Filed 3-25-21; 8:45 am]
BILLING CODE 8320-01-P