[Federal Register Volume 89, Number 60 (Wednesday, March 27, 2024)]
[Notices]
[Pages 21420-21423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06431]
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DEPARTMENT OF VETERANS AFFAIRS
Methodology for Reimbursing Medical Services, Extended Care
Services, Pharmaceuticals, and Durable Medical Equipment Not on
Medicare Fee Schedules
AGENCY: Department of Veterans Affairs.
ACTION: Notice.
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SUMMARY: This notice is to inform the public about changes to rates
contained within the Department of Veterans Affairs (VA) Fee Schedule.
This fee schedule is currently used as part of the rate structure for
certain agreements that VA uses to purchase community care under the
Veterans Community Care Program (VCCP). Additionally, in this notice,
VA will explain its use of non-reimbursable codes and industry standard
business practices to ensure consistent adjudication of claims for
services deemed non-billable or non-reimbursable.
DATES: The change will be effective March 27, 2024.
FOR FURTHER INFORMATION CONTACT: Joseph Duran, Policy Directorate,
16IVCEO3, Veterans Health Administration, Department of Veterans
Affairs, 810 Vermont Avenue NW, Washington, DC 20420; 303-370-1637
(This is not a toll-free number).
SUPPLEMENTARY INFORMATION:
A. Background
Prior to implementing VCCP, as required by section 101 of the VA
Maintaining Internal Systems and Strengthening Integrated Outside
Networks Act of 2018, VA would pay for community care pursuant to
regulations found at 38 CFR 17.55 and 17.56. These regulations created
a VA 75th Percentile Fee Schedule that was used to determine payment
rates when there was no negotiated rate and no Medicare Rate. While the
VA 75th Percentile Fee Schedule still exists and is used for paying for
care provided under certain authorities (for example, 38 U.S.C. 1728),
it is not used for making payments under VCCP, and is not the subject
of this notice. Under VCCP, there are not specific payment rates
assigned through statute, and the amount that VA pays for health care
provided under this program is determined by the terms of the agreement
the care was purchased under. While the statute does not set rates, 38
U.S.C. 1703(i) does indicate that VA must, when practicable, limit the
amounts it pays to the amounts that would be paid under Medicare for
the same services. Specifically, 38 U.S.C. 1703(i) states that, ``. . .
to the extent practicable, the rate paid for hospital care, medical
services, or extended care services under any provision in this title
may not exceed the rate paid by the United States to a provider of
services . . . or a supplier . . . under the Medicare program under
title XI or title XVIII of the Social Security Act (42
[[Page 21421]]
U.S.C. 1301 et seq.), including section 1834 of such Act (42 U.S.C.
1395m), for the same care or services.'' While this section does not
require VA to pay the same rates as Medicare, VA has determined that
paying the Medicare rate when possible is the best policy. However,
there are a number of services that VA provides to its beneficiaries
through VCCP for which there is no Medicare rate. Therefore, VA
developed the VA Fee Schedule (VAFS) to assign rates for codes that VA
covers for which there is no Medicare rate.
B. Purpose
This notice is to inform the public about VA's methodology for
calculating VAFS rates. The methodology used relies on a combination of
VA claims data, Medicare policies and fee schedules, Medicaid fee
schedules, TRICARE fee schedules, and benchmarking data to support fee
schedule development. This notice will also explain VA's use of non-
reimbursable codes and industry standard business practices to ensure
consistent adjudication of claims for services deemed non-billable or
non-reimbursable.
C. Description of VA Fee Schedule
In most of VA's contracts and agreements for the purchase of
community care, the default payment rate is the Medicare Fee Schedule
amount (outpatient) and the Medicare Prospective Payment System amount
(inpatient and outpatient care in hospital settings). These rates are
collectively referred to throughout this notice as the ``Medicare
rate.'' VA analyzed its payments made under 38 U.S.C. 1703 and 1703A
and found that the Medicare rate was paid for approximately 80% of line
item claims. Pursuant to the terms of agreements VA uses to purchase
community care, when there is no Medicare rate available, VA pays the
lesser of the VAFS amount or billed charges. To determine the VAFS
rates, VA gathers data from several different sources for each
procedure code. These sources include Medicare's relative value unit
(RVU) data, Medicare Administrative Contractor (MAC) rates, geographic
location data, and geographic index adjustments. VAFS rates are
determined using benchmark data from trusted sources in the health care
payment analytics space and validated by either another benchmarking
source or using other sources of supplemental data to support rate
setting decisions. VA may deviate from this methodology when access to
critical care services could be impacted by sudden, significant changes
in payment rates. All VAFS releases are published at the link below:
https://www.va.gov/COMMUNITYCARE/revenue-ops/Fee-Schedule.asp.
D. Methodology
Medicare fee schedules are reviewed to identify which procedure
codes do not have associated rates. When sufficient rate setting data
exists, most codes are placed onto the VAFS, unless they are considered
Unlisted, Not Otherwise Classified (NOC), or other notation used for
miscellaneous services. Codes deemed Unlisted, NOC, and other
miscellaneous services do not have rates calculated due to their broad
range of application and high variance in resources necessary to render
services. This process occurs prior to each new VAFS release. VA's
process includes setting a national base rate via benchmark or Medicare
data sources, and, when applicable, applying an adjustment to account
for geographical cost differences. Inclusion or exclusion of a
procedure code from the VAFS is not an indication of coverage or lack
of coverage.
VA analyzes Medicaid rates for the respective services to ensure
rates are never priced lower than currently published Medicaid rates
for the same or comparable procedure code. Additionally, VA analyzes 12
months of provider billing data to establish maximum rate values at the
national 75th percentile of billed charges for each procedure code.
This value is established by ranking billed charge amounts by providers
and calculating the 75th percentile of the national billed charge
amount. If the methods described below for assigning VAFS rates lead to
a rate that is lower than the minimum amount set for a code, the VAFS
rate will instead be that minimum amount. Similarly, if the
methodologies below lead to a rate that would be higher than the
maximum rate for that code, the VAFS rate for that code will be the
maximum amount. By reviewing Medicaid rates, as well as historical VA
claims data, to establish minimum and maximum rates for each code, VA
is ensuring that its VAFS rates will be reasonably in line with
industry standard pricing. Once the minimum and maximum rates have been
determined, VA applies its methodology, based on the type of code and
service, to determine the base VAFS rate.
When dealing with procedure codes designated by Medicare Status
Indicators as Status I (Medicare uses another procedure code to report
service), R (restricted coverage), or N (non-covered service), the rate
calculation involves leveraging RVU included in the quarterly file
published by the Centers for Medicare & Medicaid Services (CMS). RVUs
are used to calculate rates for medical services and is the basis for
Medicare's rate setting methodology. VA uses the same rate calculation
based on the RVUs as Medicare to establish rates where RVU data exists
for procedure codes not covered by Medicare. Since these codes are
absent from Medicare fee schedules, rates for these procedure codes are
set using CMS RVU calculation when available. This methodology is not
applicable to each Status I, R, or N procedure code, and is only used
when the applicable data is available from CMS. Medicare determines
some procedure codes as ``Carrier Priced'' (Status C), meaning the MACs
are responsible for setting rates based on their own methodologies. For
many Status C codes (the term Carrier is synonymous with MAC), VA
relies on rates from available MAC fee schedules to fill gaps for
locations where the carriers have not established rates. VA analyzes
the fee schedules from each MAC, and if rates are set in at least 28
localities, VA calculates the median rates among these MAC fee
schedules. This median amount is used as the base rate which is then
adjusted based on geographic locality to set rates where the procedure
code is not included in MAC fee schedules. Not all Status C codes are
assigned MAC rates due to limited data. When a code does not have
enough assigned MAC rates available to make a median rate calculation,
VA is unable to use this methodology to assign a rate for that code on
the VAFS.
In many cases, VA relies on a benchmarking method to set rates,
incorporating industry-proven and respected data comprised of Medicare,
Medicaid, and commercial health insurance claims. VA has partnerships
with multiple entities which supply provider payment data that VA uses
in developing fee schedules. To improve the accuracy of benchmarking
practices, VA employs multiple sources of benchmarking data to validate
and confirm each value used in rate setting. VA analyzes the multiple
years of benchmark data to build a robust dataset for analysis and
application. FAIR Health, Truven MarketScan, and 5% Medicare Standard
Analytical data are used as primary sources of benchmark data. As an
additional benchmark source, VA considers the most recent TRICARE,
Medicare Outpatient Prospective Payment System (OPPS), and Medicare
Ambulatory Surgical Center (ASC) rates when available for
[[Page 21422]]
comparable VAFS procedure codes. VA sets rates up to 6 months in
advance, requiring any data element used in rate setting methodology to
be adjusted based on historical Medicare Economic Index values for each
year the data lags the implementation date.
For many home health and community-based services, VA uses a method
derived from the Medicare Home Health Prospective Payment System (PPS).
These rates are calculated by converting Medicare Low Utilization
Payment Adjustment (LUPA) rates into 15-minute rates based on national
Medicare averages for the duration of visits. The labor-related share
of rates is then adjusted by wage indices by geographic locality. VA
also uses Medicaid fee schedules to develop rates for some community-
based services, such as adult daycare, when application of the Medicare
Home Health PPS and/or LUPA rates are not practicable.
VA also analyzes codes to determine if similar services exist. In
some cases, the codes for these similar services provide a comparable
rate that VA can use to set the base VAFS rate. Procedure codes are
assessed based on their clinical similarity, resource utilization, and
patient needs by medical coding subject matter experts to determine if
the codes can be used interchangeably. If codes on the VAFS can be
cross walked to comparable codes from either Medicare fee schedules or
other benchmarking data sources, the similar procedure codes' rates may
be set comparable to another for consistency in payment. Once VA
establishes an association between comparable procedure codes or group
of codes, it ensures the time, complexity, provider-type, wage-index
adjustments, and other resources are factored into the rate for the
procedure code. For instance, when a code has a rate for a procedure
code with a description of ``per 15 minutes'' code, VA prices the ``per
hour'' procedure code in alignment with the respective ``per 15
minutes'' code's rate.
Rates set with Medicare published RVUs have geographic adjustments
built into the calculations based on geographic practice cost index
(GPCI) for their locations. To ensure parity of geographic adjustments
for codes without RVU data, the base rates for all other VAFS procedure
codes are adjusted with an index to account for practice cost
differences in each geographic locality. A geographic cost index is
calculated for each locality using the Medicare fee schedule and
applied to base rates to finalize each locality specific VAFS rate.
This is done by taking the sum of all base rates from the Medicare
Physician Fee Schedule (MPFS) as the denominator while using the sum of
each locality's MPFS rates as the numerator to calculate the index.
This index is then multiplied by the base rate for each procedure code
to develop a locality-dependent rate. Consistent with Medicare, drugs
and laboratory rates do not have geographic adjustments applied.
Procedure codes representing these medications and pathology services
have the same rate for each geographic locality.
E. Business Rules
VA is also developing guidance for non-reimbursable codes and
industry standard business practices to institute additional cost
controls, including but not limited to those associated with VA benefit
exclusions, non-reimbursable codes (for reporting purposes only),
bundled services or supplies, procedure codes representing experimental
& investigational services providing no medical benefit, services
outside of VA approved treatment plan guidance, or services considered
not-medically necessary. VA reviews policies from CMS, private health
insurance, and TRICARE to assess each code and decide if reimbursement
is appropriate according to VA standards. This is a collaborative
process incorporating payment policy, medical policy, and standard
episode of care (SEOC) guidance to provide recommendations on which
codes fall outside of proper reimbursement criteria. VA referrals will
never include authorization for VA payment of certain non-reimbursable
codes. Once codes are identified as potential additions, they are
reviewed to assess the impact to both internal VA and provider
operations. Codes identified as non-reimbursable will be denied.
Decision dates will be included for each code to address potential
changes over time if payment or medical policy changes in the future.
It should be noted that this process of determining which codes can be
paid, and under what circumstances, is distinct from VA's
determinations of what services are clinically available as part of the
VA Medical Benefits Package.
Future releases of VAFS will occur annually, with an option for
more frequent updates to ensure provider payment is aligned with
industry standards. As new procedure codes are added or discontinued
quarterly, VA evaluates the need for the associated rates based on the
absence of an available Medicare rate or Medicare payment mechanism and
adds them as appropriate to VAFS to ensure cost controls are
maintained.
Table of Methodologies
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Category Methodology Data sources
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Status R, N, and I Codes Calculate rate based CMS/Medicare
with RVUs *. on RVUs and GPCI Physician Fee
available through Schedule Relative
publicly available Value with
CMS resources. Conversion Factor
File (GPCI file used
in calculations
included in .zip).
Status C Codes............ When data is MAC Part B Fee
sufficient (over 28 Schedules (CGS
localities) and the Administrators,
variance coefficient Noridian Healthcare
of rates are low Solutions, Novitas
(less than 1.0) Solutions, Palmetto,
among localities, First Coast Service
the base rate is set Options, National
equal to median Government Services,
amounts from Wisconsin Physician
available MAC C- Service Government
Status Fee Schedules Health
and applied to Administrators).
localities where the
rate is absent.
Benchmarked Codes......... Set base rate to FAIR Health, Truven
benchmark national MarketScan, Medicare
value of allowed Standard Analytical
amount. Files (5% Sample),
Medicare OPPS rates,
Medicare ASC rates,
and TRICARE Fee
Schedules.
Cross Walked Services..... Set rate equal to All current Medicare
comparable procedure Fee Schedules,
code or group of Average Sales Price
procedure codes with Drug Pricing file,
available rate or Geriatric and
data, and if Extended Care Fee
required, adjusted Schedule, FAIR
for time, Health Medical
complexity, or other Allowed Amount
payment adjusting Benchmarks, Truven
factors. MarketScan Data,
Medicare Standard
Analytical Files (5%
Sample), and TRICARE
Fee Schedules.
[[Page 21423]]
75th Percentile of Billed Used only as a last 12 months of VA
Charge. effort to set rate provider payment
when other methods data from VA Veteran
are unapplicable. claims processing
Base rate is set at systems.
the national 75th
percentile of billed
charges computed
from the 12 prior
months provider
billing data.
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Signing Authority
Denis McDonough, Secretary of Veterans Affairs, approved and signed
this document on March 15, 2024, 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.
Luvenia Potts,
Regulation Development Coordinator, Office of Regulation Policy &
Management, Office of General Counsel, Department of Veterans Affairs.
[FR Doc. 2024-06431 Filed 3-26-24; 8:45 am]
BILLING CODE 8320-01-P