[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Rules and Regulations]
[Pages 62441-62443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24585]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 17
RIN 2900-AO85
VA Dental Insurance Program--Federalism
AGENCY: Department of Veterans Affairs.
ACTION: Direct final rule.
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SUMMARY: The Department of Veterans Affairs (VA) is taking direct final
action to amend its regulations related to the VA Dental Insurance
Program (VADIP), a pilot program to offer premium-based dental
insurance to enrolled veterans and certain survivors and dependents of
veterans. Specifically, this rule will add language to clarify the
limited preemptive effect of certain criteria in the VADIP regulations.
DATES: This rule is effective on December 23, 2013, without further
notice, unless VA receives a significant adverse comment by November
21, 2013.
ADDRESSES: Written comments may be submitted through http://www.regulations.gov; by mail or hand delivery to the Director,
Regulation Policy and Management (02REG), Department of Veterans
Affairs, 810 Vermont Avenue NW., Room 1068, Washington, DC 20420; or by
fax to (202) 273-9026. Comments should indicate that they are submitted
in response to ``RIN 2900-AO85-VA Dental Insurance Program--
Federalism.'' Copies of comments received will be available for public
inspection in the Office of Regulation Policy and Management, Room
1068, between the hours of 8:00 a.m. and 4:30 p.m., Monday through
Friday (except holidays). Please call (202) 461-4902 (this is not a
toll-free number) for an appointment. In addition, during the comment
period, comments may be viewed online through the Federal Docket
Management System at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Kristin Cunningham, Director, Business
Policy, Chief Business Office (10NB), Veterans Health Administration,
Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC
20420; (202) 461-1599. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: This rule amends 38 CFR 17.169 to add
language to clarify the limited preemptive effect of certain criteria
in the VA Dental Insurance Program (VADIP), a pilot program to offer
premium-based dental insurance to enrolled veterans and certain
survivors and dependents of veterans. Under VADIP, VA contracts with
private insurers through the Federal contracting process to offer
dental insurance, and the private insurer is then responsible for the
administration of the dental insurance plan. VA's role under VADIP is
primarily to form the contract with the private insurer and verify the
eligibility of veterans, survivors, and dependents. VADIP is
authorized, and its implementing regulations are required, by section
510 of the Caregivers and Veterans Omnibus Health Services Act of 2010,
Public Law 111-163 (2010) (section 510).
``Preemption'' refers to the general principle that Federal law
supersedes conflicting State law. U.S. Const. art. VI, cl. 2; Gade v.
Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992); M'Culloch v.
Maryland, 17 U.S. 316, 317 (1819). However, the subject of insurance
regulation is unique. Under 15 U.S.C. 1012, no Act of Congress may be
construed to invalidate, impair, or supersede any law enacted by any
State for the purpose of regulating the business of insurance, unless
such Act specifically relates to the business of insurance. Although
section 510 does not include express preemption language, Congress
intended to legislate about the business of insurance in several
subsections of section 510, hence preempting conflicting State and
local laws. See Swanco Ins. Co.-Arizona v. Hager, 879 F.2d 353, 359
(8th Cir. 1989) (``Instead of total preemption, Congress `selected
particularized means to [an] end in conscious recognition that a
considerable area of state regulation would remain intact.' '')
(quoting Ins. Co. of the State of Pa. v. Corcoran, 850 F.2d 88, 93 (2nd
Cir. 1988)).
For example, section 510(h) requires VA to determine and annually
adjust VADIP insurance premiums. Determining premium rates is an
important aspect of the ``business of insurance.'' Gilchrist v. State
Farm Mut. Auto. Ins. Co., 390 F.3d 1327, 1331 (11th Cir. 2004) (citing
United States Dep't of Treasury v. Fabe, 508 U.S. 491, 503 (1993); Grp.
Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 224 (1979)).
States strictly regulate insurance premium rates. See 5 Steven Plitt et
al., Couch on Insurance Sec. 69:13 (3d ed. 2012). If a State denies
the premium rate set by VA and such rate is required by section
510(h)(1) in order ``to cover all costs associated with the pilot
program,'' then the state would frustrate ``the lawful objective of a
[F]ederal statute.'' United States v. Composite State Bd. of Med.
Exam'rs, State of Georgia, 656 F.2d 131, 135 n.4 (5th Cir. 1981).
Applying these principles here, Congress specifically intended to
legislate on the business of insurance under certain subsections of
section 510. The following chart lists these subsections and their
corresponding regulatory paragraphs.
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Subsection of Paragraph of Sec.
Topic section 510 17.169
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Eligibility for VADIP........... 510(b)............ Sec. 17.169(b).
Duration of VADIP............... 510(c)............ N/A.
Coverage locations.............. 510(d)............ N/A.
Plan benefits................... 510(f)............ Sec.
17.169(c)(2).
Enrollment periods.............. 510(g)............ Sec. 17.169(d).
Establishing amounts of 510(h)............ Sec.
premiums, time frame for 17.169(c)(1).
premium adjustments, and
responsibility for payment of
premiums.
Bases and minimum procedures for 510(i)............ Sec. Sec.
voluntary disenrollment. 17.169(e)(2)-(e)(
5).
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[[Page 62442]]
Consequently, these subsections of section 510 and their relevant
regulatory counterparts preempt conflicting State and local laws.
State and local laws, including laws relating to the business of
insurance, are not preempted by section 510, however, in areas where
section 510 is silent. Examples of such areas of law include claims
processes, licensing, underwriting, and appeals related to
involuntarily disenrollment. Additionally, if State or local laws,
including laws relating to the business of insurance, are not in
conflict with any portion of section 510, then such State or local law
may coexist with section 510.
Preemption allows for the implementation of uniform benefits in all
States and may reduce the overall cost of VADIP. We therefore amend
Sec. 17.169 to add preemption language in accordance with the
discussion above.
Executive Order 13132, Federalism
Section 6(c) of Executive Order 13132 (entitled ``Federalism'')
requires an agency that is publishing a regulation that has federalism
implications and that preempts State law to follow certain procedures.
Regulations that have federalism implications, according to section
1(a) of Executive Order 13132, are those that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
Because this regulation addresses a federalism issue, in particular
preemption of State laws, VA conducted prior consultation with State
officials in compliance with Executive Order 13132. VA solicited
comment and input from State insurance regulators, through their
representative national organization, the National Association of
Insurance Commissioners (NAIC). In response to its request for
comments, VA received a letter from the Chief Executive Officer of the
NAIC, which agreed with VA's position that this rulemaking properly
identifies the limited areas where the statutes and regulations
implementing VADIP preempt state laws and regulations concerning the
business of insurance. The NAIC also agreed with VA's position that
state law and regulation should continue to apply where federal law and
regulations are silent, including in the areas of licensing and claims
processing. VA received no other comments from the NAIC on this
rulemaking.
VA's promulgation of this regulation complies with the requirements
of Executive Order 13132 by (1) in the absence of explicit preemption
in the authorizing statute, identifying the clear evidence that
Congress intended to preempt State law, or where the exercise of State
authority conflicts with the exercise of Federal authority under a
Federal statute; (2) limiting the preemption to only those areas where
we find existence of a clear conflict or clear evidence of Congress'
intention that Federal law preempt State law; (3) restricting the
regulatory preemption to the minimum level necessary to achieve the
objectives of the statute; (4) consulting with the State insurance
regulators, as indicated above; and (5) providing opportunity for
comment through this rulemaking and its companion proposed rulemaking,
see RIN 2900-AO86.
Administrative Procedure Act
VA believes this regulatory amendment is non-controversial and
anticipates that this rule will not result in any significant adverse
comment, and therefore is issuing it as a direct final rule. The
preemptive effect of certain criteria in this rulemaking is limited,
and we have conducted formal consultation on the issue of preemption,
in compliance with Executive Order 13132, Federalism. However, in the
``Proposed Rules'' section of this Federal Register publication, we are
publishing a separate, substantially identical proposed rule document
that will serve as a proposal for the provisions in this direct final
rule if any significant adverse comment is filed. See RIN 2900-AO86.
For purposes of the direct final rulemaking, a significant adverse
comment is one that explains why the rule would be inappropriate,
including challenges to the rule's underlying premise or approach, or
why it would be ineffective or unacceptable without a change. In
determining whether an adverse comment is significant and warrants
withdrawing a direct final rule, we will consider whether the comment
raises an issue serious enough to warrant a substantive response in a
notice-and-comment process in accordance with section 553 of the
Administrative Procedure Act (5 U.S.C. 553). Comments that are
frivolous, insubstantial, or outside the scope of the rule will not be
considered adverse under this procedure. For example, a comment
recommending an additional change to the rule will not be considered a
significant comment unless the comment states why the rule would be
ineffective or unacceptable without the additional change.
Under direct final rule procedures, if no significant adverse
comment is received within the comment period, the rule will become
effective on the date specified above. After the close of the comment
period, VA will publish a document in the Federal Register indicating
that no significant adverse comment was received and confirming the
date on which the final rule will become effective. VA will also
publish a notice in the Federal Register withdrawing the proposed rule.
However, if any significant adverse comment is received, VA will
publish in the Federal Register a notice acknowledging receipt of a
significant adverse comment and withdrawing this direct final rule. In
the event this direct final rule is withdrawn because of receipt of any
significant adverse comment, VA can proceed with the proposed
rulemaking by addressing the comments received and publishing a final
rule. Any comments received in response to this direct final rule will
be treated as comments regarding the proposed rule. Likewise, any
significant adverse comment received in response to the proposed rule
will be considered as a comment regarding this direct final rule. VA
will consider such comments in developing a subsequent final rule.
Effect of Rulemaking
Title 38 of the Code of Federal Regulations, as revised by this
rulemaking, represents VA's implementation of its legal authority on
this subject. Other than future amendments to this regulation or
governing statutes, no contrary guidance or procedures are authorized.
All existing or subsequent VA guidance is read to conform with this
rulemaking if possible or, if not possible, such guidance is superseded
by this rulemaking.
Paperwork Reduction Act
This document contains no provisions constituting a collection of
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).
Regulatory Flexibility Act
The Secretary hereby certifies that this regulatory amendment 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. Only States, dental insurers, certain veterans and
their survivors and dependents, none of which are small entities, will
be affected. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is
exempt from the initial and final regulatory flexibility
[[Page 62443]]
analysis requirements of sections 603 and 604.
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.
Executive Order 12866 (Regulatory Planning and Review) defines a
``significant regulatory action,'' which requires review by the Office
of Management and Budget (OMB), as ``any regulatory action that is
likely to result in a rule that may: (1) Have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, or tribal
governments or communities; (2) Create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order.''
The economic, interagency, budgetary, legal, and policy
implications of this regulatory action have been examined and it has
been determined not to be a significant regulatory action under
Executive Order 12866. VA's impact analysis can be found as a
supporting document at http://www.regulations.gov, usually within 48
hours after the rulemaking document is published. Additionally, a copy
of the rulemaking and its impact analysis are available on VA's Web
site at http://www1.va.gov/orpm/, by following the link for ``VA
Regulations Published.''
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 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 rule will have no such effect on
State, local, and tribal governments, or on the private sector.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers and titles for
the programs affected by this document are 64.009 Veterans Medical Care
Benefits and 64.011 Veterans Dental Care.
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. Jose D.
Riojas, Chief of Staff, Department of Veterans Affairs, approved this
document on September 16, 2013, for publication.
List of Subjects in 38 CFR Part 17
Administrative practice and procedure, Dental health, Government
contracts, Health care, Health professions, Health records, Veterans.
Dated: October 17, 2013.
William F. Russo,
Deputy Director, Regulation Policy and Management, Office of the
General Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, VA amends 38 CFR part 17 as
follows:
PART 17--MEDICAL
0
1. The authority citation for part 17 continues to read as follows:
Authority: 38 U.S.C. 501, and as noted in specific sections.
0
2. In Sec. 17.169, add paragraph (g) to read as follows:
Sec. 17.169 VA Dental Insurance Program for veterans and survivors
and dependents of veterans (VADIP).
* * * * *
(g) Limited preemption of State and local law. To achieve important
Federal interests, including but not limited to the assurance of the
uniform delivery of benefits under VADIP and to ensure the operation of
VADIP plans at the lowest possible cost to VADIP enrollees, paragraphs
(b), (c)(1), (c)(2), (d), and (e)(2) through (5) of this section
preempt conflicting State and local laws, including laws relating to
the business of insurance. Any State or local law, or regulation
pursuant to such law, is without any force or effect on, and State or
local governments have no legal authority to enforce them in relation
to, the paragraphs referenced in this paragraph or decisions made by VA
or a participating insurer under these paragraphs.
* * * * *
[FR Doc. 2013-24585 Filed 10-21-13; 8:45 am]
BILLING CODE 8320-01-P