[Federal Register Volume 62, Number 140 (Tuesday, July 22, 1997)]
[Proposed Rules]
[Pages 39197-39199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19156]
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DEPARTMENT OF VETERANS
38 CFR Part 17
RIN 2900-AH66
Payment for Non-VA Physician Services Associated with Either
Outpatient or Inpatient Care Provided at Non-VA Facilities
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: This document proposes to amend Department of Veterans Affairs
(VA) medical regulations concerning payment for non-VA physician
services that are associated with either outpatient or inpatient care
provided to eligible VA beneficiaries at non-VA facilities. We propose
that when a service specific reimbursement amount has been calculated
under Medicare's Participating Physician Fee Schedule, VA would pay the
lesser of the actual billed charge or the calculated amount. We also
propose that when an amount has not been calculated, VA would pay the
amount calculated under a 75th percentile formula or, in certain
limited circumstances, VA would pay the usual and customary rate. In
our view, adoption of this proposal would establish reimbursement
consistency among federal health benefits programs, would ensure that
amounts paid to physicians better represent the relative resource
inputs used to furnish a service, and, would, as reflected by a recent
VA Office of Inspector General (OIG) audit of the VA fee-basis program,
achieve program cost reductions. Further, consistent with statutory
requirements, the regulations would continue to specify that VA payment
constitutes payment in full.
DATES: Comments must be received on or before September 22, 1997.
ADDRESSES: Mail or hand deliver written comments to: Director, Office
of Regulations Management (02D), Department of Veterans Affairs, 810
Vermont Ave, NW, Room 1154, Washington, DC 20420. Comments should
indicate that they are submitted in response to ``RIN 2900-AH66''. All
written comments will be available for public inspection at the above
address in the Office of Regulations Management, Room 1158, between the
hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (expect
holidays).
FOR FURTHER INFORMATION CONTACT: Abby O'Donnell, Health Administration
Service (161A), Department of Veterans Affairs, 810 Vermont Avenue, NW,
Washington, DC 20420; (202) 273-8307. (This is not a toll-free number)
SUPPLEMENTARY INFORMATION: This document proposes to amend the
Department of Veterans Affairs (VA) medical regulations concerning
payment (regardless of whether or not authorized in advance) for non-VA
physician services associated with either outpatient or inpatient care
provided to eligible VA beneficiaries at non-VA facilities.
Currently, VA pays for non-VA outpatient services based on fee
schedules which are locally developed by VA health care facilities
using a 75th percentile methodology. Payment under this
75th percentile methodology is determined for each VA
medical facility by ranking all treatment occurrences (with a minimum
of eight) under the corresponding Current Procedural Terminology (CPT)
code during the previous fiscal year with charges ranked from the
highest rate billed to the lowest rate billed. A value at the
75th percentile is then established as the maximum amount to
be paid. Also, if there were fewer than eight occurrences in the
previous fiscal year payment currently is made at the amount determined
to be usual and customary. Further, inpatient non-VA physician services
currently are paid at the usual and customary rate.
We propose to change the payment methodology for non-VA physician
services (outpatient and inpatient) provided at non-VA facilities. More
specifically, we propose to provide that payment would be the lesser of
the amount billed or the amount calculated using the formula developed
by the Department of Health & Human Services, Health Care Financing
Administration (HCFA) under the Medicare's participating physician's
fee schedule for the period in which the service is provided (see 42
CFR parts 414 and 415).
The payment amount for each service paid under Medicare's
participating physician fee schedule is the product of three factors: A
nationally uniform relative value for the service; a geographic
adjustment factor for each physician fee schedule area; and a
nationally uniform conversion factor for the service. There are three
conversion factors (CFs)--one for surgical services, one for
nonsurgical services, and one for primary care services. The conversion
factors convert the relative values into payment amounts. For each
physician fee schedule service, there are three relative values: An RVU
for physician work; an RVU for practice expense; and an RVU for
malpractice expense. For each of these components of the fee schedule,
there is a geographic practice cost index (GPCI) for each fee schedule
area. The GPCIs reflect the relative costs
[[Page 39198]]
of practice expenses, malpractice insurance, and physician work in an
area compared to the national average. The GPCIs reflect the full
variation from the national average in the costs of practice expenses
and malpractice insurance, but only one-quarter of the difference in
area costs for physician work. The general formula calculating the
Medicare fee schedule amount for a given service in a given fee
schedule area can be expressed as: Payment = [(RVUwork X GPCIwork) +
(RVUpractice expense x GPCIpractice expense) + (RVUmalpractice x
GPCImalpractice)] x CF.
In our view, adoption of this proposal would establish
reimbursement consistency among federal health benefits programs, would
ensure that amounts paid to physicians better represent the relative
resource inputs used to furnish a service and, would, as reflected by a
recent VA OIG audit of the VA fee-basis program, achieve program cost
reductions. That audit covered all of fiscal year 1993 and the first
half of fiscal year 1994 during which period VA made 2.3 million
payments totaling $180 million for non-VA physician services associated
with either outpatient or inpatient care. The audit compared the amount
paid by VA for a random sample of 1122 fee-basis payments for care to
the amount that would have been paid under Medicare's system of
payment. Audit results showed that VA could save an estimated $25.6
million annually by adopting Medicare's participating physician fee
schedule for payment of such services.
It is further proposed that when HCFA has not specified an amount
under the Medicare Program Fee Schedule for Physicians' Services
formula, VA would utilize the current 75th percentile methodology for
non-VA physician services that are associated with either outpatient or
inpatient care provided to eligible VA beneficiaries at non-VA
facilities.
Further, it is proposed that in those circumstances when HCFA has
not specified an amount under Medicare's participating physician fee
schedule for participating physician and there are insufficient
occurences for using the 75th percentile methodology, payment would be
made at the usual and customary rate. This would continue the current
practice for these payments.
The regulations would continue to specify that VA payment
constitutes payment in full. Accordingly, the provider or agent for the
provider could not impose any additional charge on a veteran or his/her
health care insurer for any services for which payment is made by VA.
In our view, the provisions of 38 U.S.C. 1710 require that VA, without
assistance from the beneficiary, bear the amount paid for services
provided.
The proposal also would make nonsubstantive changes for purposes of
clarity.
The Secretary hereby certifies that this proposed rule would not
have a significant economic impact on a substantial number of small
entities as they are defined in the Regulatory Flexibility Act, 5 USC
601 through 612. The proposed rule would not cause significant economic
impact on health care providers, suppliers, or entities since only a
small portion of the business of such entities concerns VA
beneficiaries. Therefore, pursuant to 5 U.S.C. 605(b), the proposed
rule is exempt from the initial and final regulatory flexibility
analysis requirements of sections 603 and 604.
The Catalog of Federal Domestic Assistance Numbers are 64.009,
64.010 and 64.011.
List of Subjects in 38 CFR Part 17
Alcoholism, Claims, Dental health, Drug abuse, Foreign relations,
Government contracts, Grant programs-health, Health care, Health
facilities, Health professions, Medical devices, Medical research,
Mental health programs, Nursing home care, Philippines, Veterans.
Approved: July 10, 1997.
Hershel W. Gober,
Acting Secretary of Veterans Affairs.
For the reasons set out in the preamble, 38 CFR part 17 is proposed
to be amended as set forth below:
PART 17--MEDICAL
1. The authority citation for Part 17 continues to read as follows:
Authority: 38 U.S.C. 501, 1721, unless otherwise noted.
Sec. 17.55 [Amended]
2. In Sec. 17.55, in the introductory text remove ``38 U.S.C. 1703
or 38 CFR 17.52'' and add, in its place ``38 U.S.C. 1703 and 38 CFR
17.52 of this part or under 38 U.S.C. 1728 and 38 CFR 17.120';
paragraph (h) is removed; and paragraphs (i), (j) and (k) are
redesigned as paragraphs (h), (i) and (j), respectively.
3. Section 17.56 is redesignated as Sec. 17.57 and a new Sec. 17.56
is added to read as follows:
Sec. 17.56 Payment for non-VA physician services associated with
outpatient and inpatient care provided at non-VA facilities.
(a) Payment for non-VA physician services associated with
outpatient and inpatient care provided at non-VA facilities authorized
under Sec. 17.52, or made under Sec. 17.120 of this part, shall be the
lesser of the amount billed or the amount calculated using the formula
developed by the Department of Health & Human Services, Health Care
Financing Administration (HCFA) under Medicare's participating
physician fee schedule for the period in which the service is provided
(see 42 CFR Parts 414 and 415). This payment methodology is set forth
in paragraph (b) of this section. If no amount has been calculated
under Medicare's participating physician fee schedule, payment for such
non-VA physician services associated with outpatient and inpatient care
provided at non-VA facilities authorized under Sec. 17.52, or made
under Sec. 17.120 of this part, shall be the lesser of the actual
amount billed or the amount calculated using the 75th percentile
methodology set forth in paragraph (c) of this section; or the usual
and customary rate if there are fewer than 8 treatment occurrences for
a procedure during the previous fiscal year.
(b) The payment amount for each service paid under Medicare's
participating physician fee schedule is the product of three factors: a
nationally uniform relative value for the service; a geographic
adjustment factor for each physician fee schedule area; and a
nationally uniform conversion factor for the service. There are three
conversion factors (CFs)--one for surgical services, one for
nonsurgical services, and one for primary care services. The conversion
factors convert the relative values into payment amounts. For each
physician fee schedule service, there are three relative values: An RVU
for physician work; an RVU for practice expense; and an RVU for
malpractice expense. For each of these components of the fee schedule,
there is a geographic practice cost index (GPCI) for each fee schedule
area. The GPCIs reflect the relative costs of practice expenses,
malpractice insurance, and physician work in an area compared to the
national average. The GPCIs reflect the full variation from the
national average in the costs of practice expenses and malpractice
insurance, but only one-quarter of the difference in area costs for
physician work. The general formula calculating the Medicare fee
schedule amount for a given service in a given fee schedule area can be
expressed as: Payment=[(RVUwork x GPCIwork) + (RVUpractice expense
x GPCIpractice expense) + (RVUmalpractice x GPCImalpractice)] x
CF.
(c) Payment under the 75th percentile methodology is determined for
each VA medical facility by ranking all
[[Page 39199]]
occurrences (with a minimum of eight) under the corresponding code
during the previous fiscal year with charges ranked from the highest
rate billed to the lowest rate billed and the charge falling at the
75th percentile as the maximum amount to be paid.
(d) Payments made in accordance with this section shall constitute
payment in full. Accordingly, the provider or agent for the provider
may not impose any additional charge for any services for which payment
is made by VA.
4. Section 17.128 is revised to read as follows:
Sec. 17.128 Allowable rates and fees.
When it has been determined that a veteran has received public or
private hospital care or outpatient medical services, the expenses of
which may be paid under Sec. 17.120 of this part, the payment of such
expenses shall be paid in accordance with Secs. 17.55 and 17.56 of this
part.
(Authority: Section 233, Pub. L. 99-576)
[FR Doc. 97-19156 Filed 7-21-97; 8:45 am]
BILLING CODE 8320-01-P