[Federal Register Volume 77, Number 77 (Friday, April 20, 2012)]
[Rules and Regulations]
[Pages 23615-23618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9265]



38 CFR Part 17

RIN 2900-AN86

Payment or Reimbursement for Emergency Services for Nonservice-
Connected Conditions in Non-VA Facilities

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.


SUMMARY: This document amends the Department of Veterans Affairs (VA) 
``Payment or Reimbursement for Emergency Services for Nonservice-
Connected Conditions in Non-VA Facilities'' regulations to conform with 
a statutory change that expanded veterans' eligibility for 
reimbursement. Some of the revisions in this final rule are purely 
technical, matching the language of our regulations to the language of 
the revised statute, while others set out VA's policies regarding the 
implementation of statutory requirements. This final rule expands the 
qualifications for payment or reimbursement to veterans who receive 
emergency services in non-VA facilities, and establishes accompanying 
standards for the method and amount of payment or reimbursement.

DATES: This final rule is effective May 21, 2012.

FOR FURTHER INFORMATION CONTACT: Lisa Brown, Division Chief, Policy 
Management Department, Purchased Care at the Veterans Health 
Administration Center, Department of Veterans Affairs, 3773 Cherry 
Creek Dr. N. East Tower, Suite 485, Denver, CO 80209, (303) 331-7829. 
(This is not a toll-free number).

SUPPLEMENTARY INFORMATION: On February 1, 2010, Congress enacted Public 
Law 111-137 (2010 Act), which amended 38 U.S.C. 1725 by expanding 
veteran eligibility for reimbursement for emergency treatment furnished 
in a non-VA facility. Current VA regulations implement section 1725 in 
38 CFR 17.1000 through 17.1008 under the undesignated heading ``Payment 
or Reimbursement for Emergency Services for Nonservice-Connected 
Conditions in Non-VA Facilities.'' This final rule revises Sec. Sec.  
17.1001, 17.1002, 17.1004, and 17.1005. These revisions eliminate 
certain exclusions from emergency care payment or reimbursement, and 
define the payment limitations for those qualifying for payment or 
reimbursement under the law as amended by the 2010 Act.
    The 2010 Act amended 38 U.S.C. 1725(f)(2) by removing a provision 
that included automobile insurance in the definition of ``health-plan 
contract.'' Under 38 U.S.C. 1725(b)(3)(B), veterans who are covered by 
a health-plan contract are ineligible for VA payment or reimbursement. 
Thus, we are removing current 38 CFR 17.1001(a)(5), which includes 
automobile insurance in the definition of ``health-plan contract.'' 
This amendment will implement VA's authority to pay or reimburse 
claimants for providing emergency services to a veteran if the veteran 
received, or is legally eligible to receive, partial payment towards 
emergency services from an automobile insurer.
    The 2010 Act also amended 38 U.S.C. 1725 by revising a provision 
that precluded certain claimants from payment or reimbursement by VA 
for emergency care at non-VA facilities. Parties who qualified as 
claimants under section 1725 prior to the 2010 Act (as implemented by 
VA in current 38 CFR 17.1004(a)) included veterans, the provider of the 
emergency treatment, or the person or organization that paid for such 
treatment on behalf of the veteran. Under the 2010 Act, claimants who 
are entitled to partial payment from a third party for providing non-VA 
emergency services to a veteran are no longer barred from also 
receiving VA payment or reimbursement for such care. Prior to the 2010 
Act, section 1725(b)(3)(C) required that VA deny any claim in which a 
veteran has ``other contractual or legal recourse against a third party 
that would, in whole or in part, extinguish such liability to the 
provider.'' The 2010 Act removed ``or in part'' from this exclusion. In 
order to remove this partial payment exclusion from VA regulations, we 
are removing the clause ``or in part'' from Sec.  17.1002(g) to 
parallel the language in current 38 U.S.C. 1725.
    In addition, the 2010 Act authorized, but did not require, VA to 
provide repayment under section 1725 ``for emergency treatment 
furnished to a veteran before the date of the enactment of the [2010] 
Act, if the Secretary determines that, under the circumstances 
applicable with respect to the veteran, it is appropriate to do so.'' 
We interpret this provision to allow VA, through regulation, to provide 
retroactive reimbursement, and we are implementing this authority in 
new Sec.  17.1004(f).
    In a document published in the Federal Register on May 26, 2011 (76 
FR 30598), VA proposed to amend the regulations that govern the payment 
or reimbursement for emergency services for nonservice-connected 
conditions in non-VA facilities. We provided a 60 day comment period, 
which ended on July 25, 2011. We received three comments from the 
general public.
    In the proposed rule, we stated that Sec.  17.1005 would be amended 
by adding new paragraphs (c) and (d). However, on December 21, 2011 (76 
FR 79071), VA published an entirely separate final rule that added new 
paragraphs (c) and (d) to Sec.  17.1005. Accordingly, in this final 
rule we are renumbering proposed Sec.  17.1005(c) as new Sec.  
17.1005(e), and we are also renumbering proposed Sec.  17.1005(d) as 
new Sec.  17.1005(f). None of the comments received on the proposed 
rulemaking for this final rule addressed these paragraphs, so the 
discussion below is not affected by this change.
    One commenter applauded VA for ``taking steps to change the 
reimbursement policies.'' The commenter further believes that ``it is 
only fair that the VA reimburse'' veterans for the emergency care they 
receive in non-VA hospitals, especially when the non-VA hospitals are 
``better equipped to handle the injury.'' We appreciate the supportive 
comment on this rulemaking, and thank the commenter.
    A second commenter commended VA for the proposed regulation stating 
that the regulation is ``in the best interest of the local health care 
provider, the veteran, and possibly the veteran's administration.'' We 
thank the commenter for taking the time to

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comment and for the commenter's support of this rulemaking.
    Another commenter identified perceived inconsistencies between 38 
U.S.C. 1725(c)(2) and 1725(d). The commenter stated that section 
1725(c)(2) contains ``a prerequisite to VA payments that the veteran or 
the provider of emergency treatment exhaust without success all 
reasonably available claims and remedies available against a third 
party for payment.'' The commenter then noted that, in section 1725(d), 
VA is given ``[a]n independent right to recover amounts paid for such 
treatment when a third party subsequently makes payment for the same 
treatment ([paragraph] (1)), a lien against any amounts recovered when 
a third party subsequently makes payment for the same treatment 
([paragraph] (3)), and the right to notice of any subsequent payment by 
a third party for the same treatment ([paragraph] (4)).'' The commenter 
explained that the apparent inconsistencies between subsection (c) 
``requiring exhaustion of remedies prior to reimbursement'' and 
subsection (d) ``talking about [the] right to recover subsequent third 
party payment, liens on subsequent third part[y] payments and [the] 
right to notice of third party payments'' can be resolved by 
``understanding the condition precedent to VA payment being that the 
veteran make a demand for payment from the third party for the cost of 
the emergency medical treatment.'' The commenter concluded that 
subsection (d) should come into play after a ``rejection of the demand 
or an offer to pay some but not all of the reasonable and necessary 
emergency medical treatment.'' In order to effectively address these 
perceived inconsistencies, the commenter suggested changes to the 
regulation text that were not addressed in the proposed rulemaking.
    The stated intent of one of the suggested changes would be to allow 
``a demand for payment [to] satisf[y] the exhaustion of remedies 
requirement.'' The commenter suggested adding a new paragraph (d)(3) to 
Sec.  17.1004 as a condition to receive payment or reimbursement for 
emergency services to state: ``The date the veteran filed a demand for 
payment without complete success, against a third party, for payment of 
such treatment.'' Current Sec.  17.1004(d)(4) states: ``The date the 
veteran finally exhausted, without success, action to obtain payment or 
reimbursement for the treatment from a third party.'' By requiring 
merely that the veteran ``file[] a demand for payment without complete 
success'' without requiring resolution of that demand, the text 
suggested by the commenter would, in some circumstances, require VA to 
make payment or reimbursement before the third party has finally 
decided not to make the demanded payment. The current language in Sec.  
17.1004(d)(4) requires the exhaustion of all attempts for reimbursement 
or payment from the third party before the claimant files a claim with 
VA. This ensures that duplicative payments are not made to the claimant 
for the care rendered. If VA were to pay before the claimant fully 
exhausted his or her claim with the third party, and the third party 
ultimately made payment, VA would be required to seek reimbursement of 
its premature payment, resulting in a collection action against the 
claimant and unnecessary administrative costs and resource utilization. 
We will not amend Sec.  17.1004 based on the commenter's suggestion 
because the suggested amendment could result in duplicative payments, 
increased costs and, ultimately, no additional benefit to the veteran. 
Thus, as proposed, we have retained the current language in paragraph 
(d)(4), renumbered as paragraph (d)(3) by this rulemaking.
    Sections 1725(c)(2) and 1725(d) are not inconsistent because, even 
after ``the veteran or the provider of emergency treatment has 
exhausted without success all claims and remedies reasonably available 
to the veteran or provider against a third party for payment of such 
treatment'' and VA has provided reimbursement, a third party may 
subsequently, under certain circumstances, make payment for the same 
    The commenter also suggested that we make changes to current Sec.  
17.1002, which permits payment or reimbursement under 38 U.S.C. 1725 
for emergency treatment only under certain conditions, which are 
specified in the regulation. One such condition bars payment if a 
veteran has coverage under a health-plan contract, such that the 
health-plan contract is responsible to pay for, or reimburse the 
veteran for payment of, the emergency treatment. This condition applies 
whether the health-plan contract's responsibility is for all or part of 
the cost of the emergency treatment.
    The statutory authority for this paragraph is 38 U.S.C. 
1725(b)(3)(B), which states that a veteran is liable for emergency 
treatment if he or she ``has no entitlement to care or services under a 
health-plan contract.'' The commenter suggested that we remove the term 
``or in part'' from current Sec.  17.1002(f). (We note that, although 
the commenter referred to Sec.  17.1002(g), the December 21, 2011, 
rulemaking redesignated paragraph (g) as paragraph (f).) As previously 
stated in this rulemaking, the 2010 Act removed the term ``or in part'' 
from 38 U.S.C. 1725(b)(3)(C). Section 1725(b)(3)(B) had no such 
revision. In other words, section 1725(b)(3)(B) requires that the 
veteran have ``no entitlement to care or services under a health-plan 
contract,'' which means that any entitlement, even a partial one, bars 
eligibility under section 1725(b). In comparison, section 
1725(b)(3)(C), as amended, requires veterans to have ``no other 
contractual or legal recourse against a third party that would, in 
whole, extinguish such liability to the provider'' to be eligible for 
reimbursement under section 1725(b). (Emphasis added.) If a veteran has 
a contractual or legal recourse against a third party that would, in 
part, extinguish liability to the provider, the veteran would not be 
barred from eligibility under section 1725(b). The current language of 
Sec.  17.1002(f) clarifies the language of section 1725(b)(3)(B) by 
reiterating the veteran's liability for emergency treatment if such 
veteran has no health-plan contract ``in whole or in part.'' If we were 
to remove ``or in part,'' the provision would treat a veteran with some 
coverage under a health-plan contract in the same manner as one without 
coverage. We respectfully decline to make any changes to the regulation 
text based on this comment.
    Finally, this rule amends current paragraph (g) of Sec.  17.1002 by 
removing the words ``or in part'' to parallel the language in 38 U.S.C. 
1725(b)(3)(C), and removes the partial payment exclusion from VA 
regulations. A commenter suggested further amending current Sec.  
17.1002(g) by dividing the paragraph into two separate paragraphs. 
However, the commenter's suggested revision does not contain the 
amendment established by the 2010 Act, which removed the term ``or in 
part.'' The suggested revision does not offer any substantive amendment 
to the language of the current paragraph (g), nor does it offer ease of 
readability. We, therefore, will not further amend current paragraph 
(g) of Sec.  17.1002.
    Based on the rationale set forth in the proposed rule and in this 
document, VA is adopting the proposed rule as a final rule, with the 
above stated renumbering change.

Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as revised by this 
final rule, represents the exclusive legal authority on this subject. 
No contrary rules or procedures are authorized. All VA guidance must be 
read to conform with this rulemaking if possible or, if not

[[Page 23617]]

possible, such guidance is superseded by this rulemaking.

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 an 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 Office of Management and Budget (OMB) assigns a control number 
for each collection of information it approves. 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.
    Current Sec.  17.1004 contains a collection of information under 
the Paperwork Reduction Act (44 U.S.C. 3501-3521). OMB previously 
approved the collection of information and assigned Control Number 
2900-0620. Because this final rule does not alter the information 
collection approved by OMB under the existing control number, we are 
not seeking new approval.
    We are inserting a citation to the OMB control number immediately 
after the authority citation for Sec.  17.1004 to clarify that that 
section contains an approved collection of information.

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 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 
    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.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final 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. This final rule will not cause a significant economic impact on 
health care providers, suppliers, or entities since only a small 
portion of the business of such entities concerns VA beneficiaries. 
Further, under this final rule, affected small entities will be 
reimbursed for the expenses they incur for the emergency treatment of 
certain veterans. Therefore, pursuant to 5 U.S.C. 605(b), this final 
rule is exempt from the initial and final regulatory flexibility 
analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance program number and title 
for this final rule are as follows: 64.005, Grants to States for 
Construction of State Home Facilities; 64.007, Blind Rehabilitation 
Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical 
Care Benefits; 64.010, Veterans Nursing Home Care; 64.014, Veterans 
State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 
64.018, Sharing Specialized Medical Resources; 64.019, Veterans 
Rehabilitation Alcohol and Drug Dependence; 64.022, Veterans Home Based 
Primary Care; and 64.024, VA Homeless Providers Grant and Per Diem 

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. John R. 
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this 
document on April 11, 2012, for publication.

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 homes, Philippines, Reporting 
and recordkeeping requirements, Scholarships and fellowships, Travel 
and transportation expenses, Veterans.

    Dated: April 12, 2012.
Robert C. McFetridge,
Director of Regulation Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans 
Affairs amends 38 CFR part 17 as follows:


1. The authority citation for part 17 continues to read as follows:

    Authority: 38 U.S.C. 501, and as noted in specific sections.

Sec.  17.1001  [Amended]

2. Amend Sec.  17.1001 by removing paragraph (a)(5).

Sec.  17.1002  [Amended]

3. Amend Sec.  17.1002 by removing the words ``or in part'' in 
paragraph (g).

4. Amend Sec.  17.1004 as follows:
a. Remove paragraph (d)(1).
b. Redesignate paragraphs (d)(2), (d)(3) and (d)(4) as new paragraphs 
(d)(1), (d)(2), and (d)(3), respectively.
c. Add paragraph (f).
d. Add an information collection approval parenthetical at the end of 
the section.
    The additions read as follows:

Sec.  17.1004  Filing claims.

* * * * *
    (f) Notwithstanding paragraph (d) of this section, VA will provide 
retroactive payment or reimbursement for emergency treatment received 
by the veteran on or after July 19, 2001, but more than 90 days before 
May 21, 2012, if the claimant files a claim for

[[Page 23618]]

reimbursement no later than 1 year after May 21, 2012.
* * * * *
(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 2900-

5. Amend Sec.  17.1005 by adding paragraphs (e) and (f), to read as 

Sec.  17.1005  Payment limitations.

* * * * *
    (e) If an eligible veteran under Sec.  17.1002 has contractual or 
legal recourse against a third party that would only partially 
extinguish the veteran's liability to the provider of emergency 
treatment, then:
    (1) VA will be the secondary payer;
    (2) Subject to the limitations of this section, VA will pay the 
difference between the amount VA would have paid under this section for 
the cost of the emergency treatment and the amount paid (or payable) by 
the third party; and
    (3) The provider will consider the combined payment under paragraph 
(c)(2) of this section as payment in full and extinguish the veteran's 
liability to the provider.
    (f) VA will not reimburse a claimant under this section for any 
deductible, copayment or similar payment that the veteran owes the 
third party.
* * * * *
[FR Doc. 2012-9265 Filed 4-19-12; 8:45 am]