[Federal Register Volume 63, Number 141 (Thursday, July 23, 1998)]
[Rules and Regulations]
[Pages 39514-39515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19682]
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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: Final rule.
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SUMMARY: This document amends 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. Generally, 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. Also, when
an amount has not been calculated or when the services constitute
anesthesia services, VA would pay the amount calculated under a 75th
percentile formula or, in certain limited circumstances, VA would pay
the usual and customary rate. Adoption of this final rule is intended
to establish reimbursement consistency among federal health benefits
programs to ensure that amounts paid to physicians better represent the
relative resource inputs used to furnish a service, and to achieve
program cost reductions. Further, consistent with statutory
requirements, the regulations continue to specify that VA payment
constitutes payment in full.
DATES: Effective Date: August 24, 1998.
FOR FURTHER INFORMATION CONTACT: Abby O'Donnell, Health Administration
Service (10C3), Department of Veterans Affairs, 810 Vermont Avenue, NW,
Washington, DC 20420, (202) 273-8307. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: In a document published in the Federal
Register on July 22, 1997 (62 FR 39197), we proposed to amend the
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. We provided a 60-day comment
period, which ended September 22, 1997. We received comments from seven
sources.
For reasons explained below, the final rule contains only one
conversion factor for calculations under Medicare's Participating
Physicians Fee Schedule and the proposed provisions are not made
applicable for anesthesia services. Otherwise, no changes are made in
response to comments and, based on the rationale set forth in the
proposed rule and this document, the provisions of the proposed rule
are adopted as a final rule.
Comments
All of the comments opposed the proposal based on the assertion
that VA should not lessen physician fees.
Three commenters asserted that VA should not use
Medicare's Participating Physicians Fee Schedule because it was
designed for Medicare patient populations and not for VA populations.
One commenter opposed the use Medicare's Participating
Physicians Fee Schedule by asserting that VA should not use the
geographic adjustment factors unless necessary ``to achieve explicit
policy goals (e.g., targeted adjustments for demonstrated shortfalls in
access to care).''
Two commenters opposed the use of Medicare's Participating
Physicians Fee Schedule by asserting that VA should not use Medicare's
conversion factors. They recommended that VA establish a conversion
factor that would not lessen physician payments. One of the commenters
stated that the Medicare conversion factors should not be used because
they are ``constrained by budget-neutrality and other considerations,
such as the Medicare Volume Performance Standard system, that are not
applicable to VA.''
One commenter who practices psychiatry in a semi-rural
area asserted that his expenses are high and that if VA adopted
Medicare's Participating Physicians Fee Schedule some procedures would
be billed at rates ``at or below'' his overhead expense.
Three commenters questioned whether the availability and
quality of care would be lessened by the adoption of Medicare's
Participating Physicians Fee Schedule.
One commenter asserted that before VA adopt payment
methodology based on Medicare principles, VA should sponsor an
independent study and consult with physician groups.
Two commenters opposed the adoption of the Medicare fee
schedule for anesthesia services.
Response to Comments
As stated in the proposed rule, one of the basic reasons for
conducting this rulemaking proceeding was to achieve cost reductions.
We believe, particularly in this budget-sensitive era, that it is sound
policy to seek to achieve this objective. Also, we note that the
Medicare formula does not merely relate to individuals eligible for
Medicare. It is based on principles applicable to all individuals,
including veterans. Moreover, even though we could establish different
conversion factors and even though VA is not ``constrained by budget-
neutrality and other considerations, such as the Medicare Volume
Performance Standard system,'' we believe that we should not have to
pay more than the Department of Health and Human Services pays for
physician services.
Further, regardless of whether some physicians' ``overhead
payments'' might be out of proportion to the amount of payment received
from VA, we do not believe that this final rule would cause this to be
a common occurrence. In addition, we do not expect that the adoption of
this final rule would lessen significantly the availability and quality
of physician care for veterans, and we believe that even without
additional studies, the rationale in the proposed rule and this
document provide an adequate basis for this final rule.
The proposed rule was intended to provide for reimbursement based
on the lesser of the actual billed charge or the amount calculated
under Medicare's Participating Physician Fee Schedule. The formula for
Medicare's Participating Physician Fee Schedule has been changed (see
62 FR 59048, 59261). For services other than anesthesia, the Medicare
formula was changed to have one conversion factor instead of three
(previously, the Medicare formula contained a separate conversion
factor for surgical services, nonsurgical services, and primary care
services). Accordingly, the final rule also makes this adjustment in
the Medicare formula.
Anesthesia Services
The Medicare formula includes separate provisions for anesthesia
services. These separate anesthesia provisions were not included in the
proposed rule. We intend to publish a new proposal concerning this
issue in
[[Page 39515]]
the near future. Accordingly, this final rule does not make changes
regarding anesthesia services. They remain subject to the payment
provisions for those cases not covered by the Medicare formula (i.e.,
lesser of the actual amount billed or the amount calculated using the
75th percentile methodology; or the usual and customary rate if there
are fewer than 8 treatment occurrences for a procedure during the
previous fiscal year).
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
through 612. The rule would 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.
Therefore, pursuant to 5 U.S.C. 605(b), the 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 Numbers are 64.009,
64.010 and 64.011.
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 fellowships,
Travel and transportation expenses, Veterans.
Approved: May 8, 1998.
Togo D. West, Jr.,
Acting Secretary.
For the reasons set forth in the preamble, 38 CFR part 17 is
amended as follows:
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) Except for anesthesia services, 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 or if the services constitute anesthesia services, 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. The conversion
factor converts 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 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. 98-19682 Filed 7-22-98; 8:45 am]
BILLING CODE 8320-01-U
