[Federal Register Volume 63, Number 197 (Tuesday, October 13, 1998)]
[Proposed Rules]
[Pages 54756-54765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26341]
[[Page 54755]]
_______________________________________________________________________
Part II
Department of Veterans Affairs
_______________________________________________________________________
38 CFR Part 17
Medical Care Collection or Recovery; Proposed Rule and Notice
Federal Register / Vol. 63, No. 197 / Tuesday, October 13, 1998 /
Proposed Rules
[[Page 54756]]
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 17
RIN 2900-AJ30
Medical Care Collection or Recovery
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: This document proposes to amend VA's medical regulations
concerning collection or recovery by VA for medical care or services
provided or furnished to a veteran:
For a non-service connected disability for which the veteran is
entitled to care (or the payment of expenses of care) under a health-
plan contract;
For a non-service connected disability incurred incident to the
veteran's employment and covered under a worker's compensation law or
plan that provides reimbursement or indemnification for such care and
services; or
For a non-service connected disability incurred as a result of a
motor vehicle accident in a State that requires automobile accident
reparations insurance.
Previously, by statute VA was authorized to charge ``reasonable
costs'' for such care or services. However, amended statutory
provisions now authorize VA to charge ``reasonable charges.''
Accordingly, this document proposes to establish methodology for
charging ``reasonable charges'' consistent with the statutory
amendment. Under the proposal, the charges billed using this
methodology, as appropriate, would consist of inpatient facility
charges, skilled nursing facility/sub-acute inpatient facility charges,
outpatient facility charges, physician charges, and non-physician
provider charges. Reasonable charges for outpatient dental care and
prescription drugs not administered during treatment would continue to
be billed using the existing cost-based methodology.
Pursuant to statutory authority, VA has the right to recover or
collect the charges from a third party to the extent that a provider of
the care or services would be eligible to receive payment therefor from
that third party if the care or services had not been furnished by a
department or agency of the United States. With respect to a third-
party payer liable under a health plan contract, consistent with the
statutory authority, the third-party payer would have the option of
paying to the extent of its coverage, either the billed charges or the
amount the third-party payer demonstrates it would pay for care or
services furnished by providers other than entities of the United
States for the same care or services in the same geographic area.
Using the methodology in this proposed rule, the data for
calculating actual amounts for the various inpatient facility charges,
skilled nursing facility/sub-acute inpatient facility charges,
outpatient facility charges, and physician charges at individual VA
facilities for the period August 1998 through September 1999 are set
forth in a companion document published in the ``Notices'' section of
this issue of the Federal Register.
Also, under the proposal, the regulations would be clarified to
state specifically that billing methodology based on costs will
continue to be applied to establish charges for medical care furnished
in error or on tentative eligibility, furnished in a medical emergency,
furnished to certain beneficiaries of the Department of Defense or
other Federal agencies, furnished to pensioners of allied nations, and
furnished to military retirees with chronic disability.
DATES: Comments must be received on or before December 14, 1998.
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-AJ30.'' All
written comments received 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
(except holidays).
FOR FURTHER INFORMATION CONTACT: David Cleaver, VHA Office of Finance
(174), Veterans Health Administration, Department of Veterans Affairs,
810 Vermont Avenue, NW, Washington, DC 20420, (202) 273-8210. (This is
not a toll free number.)
SUPPLEMENTARY INFORMATION:
Background
This document proposes to amend VA's medical regulations which are
set forth at 38 CFR part 17. More specifically, it is proposed to amend
the regulations concerning collection or recovery by VA for medical
care or services provided or furnished to a veteran:
(i) For a non-service connected disability for which the veteran is
entitled to care (or the payment of expenses of care) under a health-
plan contract;
(ii) For a non-service connected disability incurred incident to
the veteran's employment and covered under a worker's compensation law
or plan that provides reimbursement or indemnification for such care
and services; or
(iii) For a non-service connected disability incurred as a result
of a motor vehicle accident in a State that requires automobile
accident reparations insurance.
Pub. L. 105-33 amended the statutory provisions (38 U.S.C. 1729) to
authorize VA to bill ``reasonable charges'' instead of ``reasonable
cost.'' In this regard, the legislative history for these amendments
includes the following statement from the House Conference Report (H.
Rep. No. 105-217, July 30, 1997, at pp. 974-975):
These amendments would allow VA to move away from a cost-based
medical care recovery system to one that more appropriately
resembles market pricing for health care services; the Committee
envisions VA would establish health care charges that would allow it
to recover amounts needed to help preserve the viability of the
health care system for all veterans and that also reflect the
substantial advantages to VA patients both in having the quality
services provided by that system available and in using them. The
amendments reflect the expectation that VA would establish
reasonable charges that are responsive to market prices--charges
that are not constrained to recovery of costs, but which may yield
net revenues. (The concept of ``market price'' here refers to the
price for a service that is based on competition in open markets.
When a substantial competitive demand exists for a service, its
market price normally is determined using commercial practices, such
as by reference to prevailing prices and payments in competitive
markets for services the same or similar to those provided by the
Government.)
Accordingly, this document proposes to establish methodology for
charging ``reasonable charges'' consistent with the statutory
amendment. Under the proposal, as appropriate, the amount billed using
this methodology would consist of inpatient facility charges, skilled
nursing facility/sub-acute inpatient facility charges, outpatient
facility charges, physician charges, and non-physician provider
charges.
Amount of Recovery or Collection--Third Party Liability
Under the provisions of 38 U.S.C. 1729, VA has the right to recover
or collect its reasonable charges from a third party to the extent that
the veteran or a provider of the care or services would be eligible to
receive payment therefor from that third party if the care
[[Page 54757]]
or services had not been furnished by a department or agency of the
United States. With respect to a third-party payer liable under a
health plan contract, consistent with the statutory authority, the
third-party payer would have the option of paying, to the extent of its
coverage, either the billed charges or the amount the third-party payer
demonstrates it would pay for care or services furnished by providers
other than entities of the United States for the same care or services
in the same geographic area.
General
One way to establish ``reasonable'' inpatient facility charges,
skilled nursing facility/sub-acute inpatient facility charges,
outpatient facility charges, physician charges, and non-physician
provider charges would be to use available data to determine prevailing
charges for services in the locality of each VA facility, and bill
those prevailing charges. However, this is impractical because there is
insufficient data for some services at a number of localities.
Therefore, we are proposing formulas designed to establish baseline
reasonable charges for each provided service, commensurate with charges
in each local market, and to enable VA to project from the baseline the
charges applicable to medical care and services provided during
subsequent relevant periods.
We are proposing separate formulas for inpatient facility charges,
skilled nursing facility/sub-acute inpatient facility charges,
outpatient facility charges, physician charges, and non-physician
provider charges. These formulas, developed for VA by Milliman &
Robertson, Inc., Actuaries and Consultants, reflect inherent
differences in the structure and available information for each of
these categories of charges.
Inpatient Facility Charges
The proposed inpatient facility charges consist of per diem charges
for room and board and for ancillary services that vary by VA facility
and by diagnosis related group (DRG). These charges are calculated
based on the following formula.
To establish a baseline, two nationwide average per diem charges
for each DRG were calculated for Calendar Year 1995 (the latest
available data), one from the Medicare Standard Analytical File 5%
Sample and one from the MedStat claim database, a claim database of
nationwide commercial insurance (two widely used data bases that, among
other things, are used for analyzing industry charges). Results
obtained from these two databases were then combined into a single
weighted average per diem charge for each DRG. Using both databases in
this way strengthens the statistical basis for the resulting nationwide
average per diem charges by providing additional data for all DRGs,
especially those that occur infrequently in one or the other database.
The resulting weighted average per diem charge for each DRG was
then separated into its two components, a room and board component and
an ancillary component. This was done to make subsequent calculations
more accurate and to conform with standard industry billing practices.
Consistent with billing practices of many providers, the resulting
amounts for room and board and ancillary services for each DRG were
then adjusted to reflect 80th percentile charges. Since the resulting
nationwide 80th percentile charges represent amounts applicable for
calendar year 1995, the formula includes trending provisions to update
the charges to reflect appropriate economic changes for future periods.
Finally, to account for locality variations, the formula provides for
the trended nationwide 80th percentile charges for room and board and
ancillary services to be multiplied by geographic area adjustment
factors to set charges commensurate with the local market for each VA
facility.
Skilled Nursing Facility/Sub-Acute Inpatient Facility Charges
Under the proposal, skilled nursing facility/sub-acute inpatient
facility charges would be per diem charges that vary by VA facility.
The proposed charges would cover care, including skilled rehabilitation
services (e.g., physical therapy, occupational therapy, and speech
therapy), that is provided in a nursing home or hospital inpatient
setting, is provided under a physician's orders, and is performed by or
under the general supervision of professional personnel such as
registered nurses, licensed practical nurses, physical therapists,
occupational therapists, speech therapists, and audiologists. The
skilled nursing facility/sub-acute inpatient facility charges would
incorporate charges for ancillary services associated with care
provided in these settings. The proposed charges would be calculated
based on the following formula.
To establish a baseline, a nationwide average per diem billed
charge for skilled nursing facility care for July 1, 1998, was obtained
from the 1998 Milliman & Robertson, Inc. Health Cost Guidelines, a
publication that includes nationwide skilled nursing facility charges
(skilled nursing facility charges are also representative of sub-acute
inpatient facility charges). Consistent with billing practices of many
providers, the nationwide average per diem billed charge then was
adjusted to reflect the nationwide 80th percentile charge level. The
resulting nationwide 80th percentile charges represent amounts
applicable for calendar year 1998. Accordingly, the formula includes
trending provisions to update the charges to reflect appropriate
economic changes for future periods. The formula provides for the
trended nationwide charges to be multiplied by geographic area
adjustment factors to set charges commensurate with the local market
for each VA facility.
Outpatient Facility Charges
Under the proposal, outpatient facility charges, as appropriate,
will include separate charges for prosthetic devices and durable
medical equipment that reflect actual costs to VA. It is industry
practice to purchase the devices and provide them at actual cost.
Accordingly, ``actual costs'' and ``reasonable charges'' are the same
for prosthetic devices and durable medical equipment. Otherwise, the
proposed outpatient facility charges consist of charges for outpatient
facility services that vary by VA facility and by CPT procedure code.
These charges are calculated based on the following formula.
Using the 1995 MedStat claims database of nationwide commercial
insurance, the median billed facility charge was calculated for each
CPT procedure code for which outpatient facility charges apply. All
outpatient facility CPT procedure codes were then separated into
outpatient facility CPT procedure code groups that were both subject-
matter-related and statistically-related, resulting in 37 such groups.
This step was designed to ensure that there were sufficient relevant
data for each CPT procedure code, using the smallest number of groups
necessary to obtain this information. Then, for each CPT procedure code
in each of the 37 groups, consistent with billing practices of many
providers, the median charge was adjusted to the 80th percentile. The
formula includes trending provisions to update the 80th percentile
charges to reflect appropriate economic changes for future periods.
Using the resulting charges and 1998 practice expense relative value
units (RVUs), the mathematical approximation methodology of least
squares then was applied to the data for each outpatient facility CPT
procedure code group to
[[Page 54758]]
derive two charge factors. The first factor represents the charge for
each incremental RVU in the CPT procedure code group and the second
factor represents a fixed amount adjustment for the CPT procedure code
group. Then for each CPT procedure code, the outpatient facility RVU
was multiplied by the incremental charge factor and the resulting
charge was adjusted by the fixed amount.
The results constitute nationwide trended 80th percentile
outpatient facility charges. The resulting charges then were multiplied
by geographic area adjustment factors to set charges commensurate with
the local market for each VA facility.
Also, the proposed rule contains special provisions for multiple
surgical procedures performed during the same outpatient encounter by a
provider or provider team. Charges for the second and subsequent
surgical procedures during the same outpatient encounter are reduced
consistent with industry practice.
Further, the proposed rule clarifies that outpatient facility
charges would not be made for services customarily performed in an
independent clinician's office since such services would not usually
create significant outpatient facility expenses.
Physician Charges
The proposed physician charges consist of charges for the services
of physicians which vary by VA facility and by CPT procedure code.
These charges are calculated based on the following formula.
For each CPT procedure code except those for anesthesia and
pathology, the total facility-adjusted RVU (sum of RVU components, with
each component adjusted by the facility's geographic area adjustment
factors) was multiplied by the facility-adjusted conversion factor
(nationwide conversion factor multiplied by the facility's geographic
area adjustment factor). This provides a charge for each CPT procedure
code that reflects the local market for each VA facility. For CPT
procedure codes other than those specifically addressed below in this
paragraph, the calculations by which the total facility-adjusted RVUs
were derived consist of separate calculations for physician work
expense and physician practice expense to obtain more accurate charge
components. The RVU calculations for radiology, pathology, and
anesthesia differ from other physician charges to reflect industry
practice. For radiology CPT procedure codes, the calculation of
physician charges does not include separately identified technical
component RVUs. For each anesthesia and pathology CPT procedure code,
RVUs were multiplied by a nationwide conversion factor to obtain the
nationwide charge. The nationwide charge was multiplied by a geographic
area adjustment factor to obtain the physician charge for each
anesthesia and pathology CPT procedure code at a particular VA
facility. Separate calculations of RVUs also were required for CPT
procedure codes which had only total RVUs (these CPT procedure codes do
not have separate information for physician work expense and physician
practice expense).
To obtain the conversion factors referred to in the preceding
paragraph, CPT procedure codes were separated into physician CPT
procedure code groups that were both subject-matter-related and
statistically-related, resulting in 24 such groups. This step was
designed to ensure that there were sufficient relevant data for each
CPT procedure code, using the smallest number of groups necessary to
obtain this information. Separate conversion factors were calculated
for each of the 24 different physician CPT procedure code groups.
Consistent with billing practices of many providers, the conversion
factors, reflecting nationwide median physician charges, were then
adjusted to reflect nationwide 80th percentile charges. The formula
then provides for multiplying the resulting conversion factors by the
appropriate geographic area adjustment factors to establish conversion
factors commensurate with the local market for each VA facility.
The charges resulting from these calculations represent amounts
applicable for 1996-1997, the latest available data (see paragraph
(e)(3) of proposed Sec. 17.101). Accordingly, the formula includes
trending provisions to update the charges to reflect appropriate
economic changes for future periods.
Certain Non-Physician Provider Charges
The proposal at Sec. 17.101(f) includes non-physician provider
charges for certain non-physician services covered by CPT procedure
codes. The charges consist of percentages of physician charges. The
percentages for a nurse practitioner, clinical nurse specialist,
physician assistant, certified registered nurse anesthetist, clinical
psychologist, and clinical social worker are based on Medicare
percentages. The percentages for a podiatrist, chiropractor, dietitian,
clinical pharmacist, and optometrist are based on the MedStat
nationwide insurance database. We used the Medicare percentages when
available because of their extensive use for billing and payment of
claims. However, all of the percentages are consistent with industry
practice.
Publication of Data for Calculating Actual Amounts for Inpatient
Facility Charges, Skilled Nursing Facility/Sub-Acute Inpatient
Facility Charges, Outpatient Facility Charges, and Physician
Charges
We have set forth in a companion document published in the
``Notices'' section of this issue of the Federal Register, data
(derived from the methodology explained above) for calculating
inpatient facility charges, skilled nursing facility/sub-acute
inpatient facility charges, outpatient facility charges, and physician
charges at individual VA facilities. Should the methodology set forth
in this proposal be adopted, the data in the companion document would
be used for inpatient facility charges, skilled nursing facility/sub-
acute inpatient facility charges, outpatient facility charges, and
physician charges from the effective date of the final rule through
September 1999. Accordingly, interested parties may wish to retain the
``Notices'' document for future reference. Under the proposal, VA would
update annually in the ``Notices'' section of the Federal Register the
data for calculating the charges at individual VA facilities.
Billing Reasonable Costs for Various Hospital Care or Medical
Services not Covered Under Proposed Sec. 17.101
The regulations at current Sec. 17.101 (proposed Sec. 17.102)
contain provisions for billing reasonable costs for hospital care or
medical services. Paragraph (h) includes the following methodology for
billing for hospital care or medical services furnished veterans for
non-service connected disabilities:
The method for computing the charges for medical care and
services is based on the Cost Distribution Report, which sets forth
the actual basic costs and per diem rates by type of inpatient care
and outpatient visit. Factors for depreciation of buildings and
equipment and Central Office overhead are added, based on accounting
manual instructions. Additional factors are added for interest on
capital investment and for standard fringe benefit costs covering
government employee retirement and disability costs. The current
year billing rates are projected on prior year actual rates by
applying the budgeted percentage increase. In addition, based on the
detail available in the Cost Distribution Report, VA intends to, on
each bill break down the all-inclusive rate into its three principal
components; namely, physician cost, ancillary services cost, and
nursing, room and board cost. The rates generated by the foregoing
methodology are the same rates prescribed by the Office of
Management and
[[Page 54759]]
Budget and published in the Federal Register for use under the
Federal Medical Care Recovery Act, 42 U.S.C. 2651-2653.
The adoption of this proposed rule would supersede these quoted
provisions insofar as they relate to charges to third parties liable
under health plan contracts, liable under worker's compensation laws or
plans, or liable as a result of a motor vehicle accident when VA
provides or furnishes hospital care or medical services to veterans for
non-service connected disabilities. However, the proposal would amend
the regulations to provide specifically that this billing methodology
based on costs would continue to apply to charging for medical care
furnished in error or on tentative eligibility, furnished in a medical
emergency, furnished to beneficiaries of the Department of Defense or
other Federal agencies, furnished to pensioners of allied nations, and
furnished to military retirees with chronic disability.
Outpatient Dental Charges and Prescription Drugs not Administered
During Treatment
The proposal at Sec. 17.101(g) includes charges for outpatient
dental care and prescription drugs not administered during treatment.
Under the proposal, these charges would continue to be billed based on
VA costs as set forth in proposed Sec. 17.102. However, in the future,
we intend to consider whether, based on information to be acquired, we
should amend the regulations to reflect a different ``reasonable
charge'' methodology for these charges.
Technical Changes
The proposed rule also proposes to make a number of technical
amendments to the medical regulations for purposes of consistency.
Paperwork Reduction Act of 1995
Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), a
collection of information is set forth in proposed 38 CFR 17.101(a)(2).
Accordingly, under section 3507(d) of the Act, VA has submitted a copy
of this rulemaking action to the Office of Management and Budget (OMB)
for its review of the proposed collection of information.
OMB assigns a control number for each collection of information it
approves. 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.
Comments on the proposed collection of information should be
submitted to the Office of Management and Budget, Attention: Desk
Officer for the Department of Veterans Affairs, Office of Information
and Regulatory Affairs, Washington, DC 20503, with copies mailed or
hand-delivered 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-AJ30.''
Title: Submission of Evidence.
Summary of collection of information: Under the provisions of
proposed Sec. 17.101(a)(2), a third-party payer that is liable for
reimbursing VA for health care VA provided to veterans with non-
service-connected conditions continues to have the option of paying
either the billed charges as described in proposed Sec. 17.101 or the
amount the health plan demonstrates it would pay to providers other
than entities of the United States for the same care or services in the
same geographic area. If the amount submitted for payment is less than
the amount billed, VA will accept the submission as payment, subject to
verification at VA's discretion. A VA employee having responsibility
for collection of such charges may request that the third party payer
submit evidence or information to substantiate the appropriateness of
the payment amount (e.g., health plan policies, provider agreements,
medical evidence, proof of payment to other providers demonstrating the
amount paid for the same care and services VA provided).
Description of need for information and proposed use of
information: This information would be needed to determine whether the
third-party payer has met the test of properly demonstrating its
equivalent private sector provider payment amount for the same care or
services and within the same geographic area as provided by VA.
Description of likely respondents: Third-party payers who are
liable under health plan contracts for reimbursing VA for healthcare it
provides to veterans with non-service-connected conditions.
Estimated number of respondents: 400 per year.
Estimated frequency of responses: Once per year.
Estimated average burden per collection: 2 hours.
Estimated total annual reporting and recordkeeping burden: 800
hours.
The Department considers comments by the public on proposed
collections of information in--
Evaluating whether the proposed collections of information
are necessary for the proper performance of the functions of the
Department, including whether the information will have practical
utility;
Evaluating the accuracy of the Department's estimate of
the burden of the proposed collections of information, including the
validity of the methodology and assumptions used;
Enhancing the quality, usefulness, and clarity of the
information to be collected; and
Minimizing the burden of the collections of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
OMB is required to make a decision concerning the collection of
information contained in this proposed rule between 30 and 60 days
after publication of this document in the Federal Register. Therefore,
a comment to OMB is best assured of having its full effect if OMB
receives it within 30 days of publication. This does not affect the
deadline for the public to comment on the proposed regulations.
Regulatory Flexibility Act
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
U.S.C. 601-612. This rulemaking proceeding mostly would affect large
insurance companies. Further, the provisions of the proposed rule would
not impose a significant economic impact on any entities since VA
billing would not constitute a significant portion of an insurance
company's business. Accordingly, pursuant to 5 U.S.C. 605(b), this
proposed rule is exempt from the initial and final regulatory
flexibility analyses requirements of sections 603 and 604.
OMB Review
This document has been reviewed by OMB pursuant to Executive Order
12866.
The Catalog of Federal Domestic Assistance numbers for the programs
affected by this document are 64.005, 64.007, 64.008, 64,009, 64.010,
64.011, 64.012, 64.013, 64.014, 64.015, 64.016, 64.018, 64.019, 64.022,
and 64.025.
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
[[Page 54760]]
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.
Approved: September 21, 1998.
Togo D. West, Jr.,
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.
Secs. 17.101 and 17.102 [Redesignated as Secs. 17.102 and 17.101,
respectively]
2. Sections 17.101 and 17.102 are redesignated as Secs. 17.102 and
17.101, respectively.
3. Newly redesignated Sec. 17.101 is revised to read as follows:
Sec. 17.101 Collection or recovery by VA for medical care or services
provided or furnished to a veteran for a non-service connected
disability.
(a)(1) General. This section covers collection or recovery by VA,
under 38 U.S.C. 1729, for medical care or services provided or
furnished to a veteran:
(i) For a non-service connected disability for which the veteran is
entitled to care (or the payment of expenses of care) under a health-
plan contract;
(ii) For a non-service connected disability incurred incident to
the veteran's employment and covered under a worker's compensation law
or plan that provides reimbursement or indemnification for such care
and services; or
(iii) For a non-service connected disability incurred as a result
of a motor vehicle accident in a State that requires automobile
accident reparations insurance.
(2) Amount of recovery or collection--third party liability. A
third-party payer liable under a health-plan contract has the option of
paying either the billed charges described in this section or the
amount the health-plan demonstrates is the amount it would pay for care
or services furnished by providers other than entities of the United
States for the same care or services in the same geographic area. If
the amount submitted by the health plan for payment is less than the
amount billed, VA will accept the submission as payment, subject to
verification at VA's discretion in accordance with this section. A VA
employee having responsibility for collection of such charges may
request that the third party health plan submit evidence or information
to substantiate the appropriateness of the payment amount (e.g., health
plan or insurance policies, provider agreements, medical evidence,
proof of payment to other providers in the same geographic area for the
same care and services VA provided).
(3) Methodology. Based on the methodology set forth in this
section, the charges billed will include, as appropriate, inpatient
facility charges, skilled nursing facility/sub-acute inpatient facility
charges, outpatient facility charges, physician charges, and non-
physician provider charges. In addition, the charges billed for
prosthetic devices and durable medical equipment provided on an
outpatient basis will be VA's actual cost and the charges billed for
prescription drugs not administered during treatment will bill a single
nationwide average. Data for calculating actual amounts for inpatient
facility charges, skilled nursing facility/sub-acute inpatient facility
charges, outpatient facility charges, and physician charges will be
published annually in the ``Notices'' section of the Federal Register.
(4) Definitions. For purposes of this section:
Consolidated MSA means a consolidated Metropolitan Statistical
Area.
CPI means Consumer Price Index.
CPI-U means Consumer Price Index--All Urban Consumers.
CPI-W means Consumer Price Index--Urban Wage Earners and Clerical
Workers.
CPT procedure code means a 5 digit-identifier for a specified
physician service or procedure.
DRG means diagnosis related group.
Geographic area means Metropolitan Statistical Area (MSA) or the
local market, if the VA facility is not located in an MSA.
RVU means relative value unit.
(b) Inpatient facility charges. When VA provides or furnishes
inpatient services within the scope of care referred to in paragraph
(a)(1) of this section, inpatient facility charges billed for such
services will be determined in accordance with the provisions of this
paragraph. Inpatient facility charges consist of per diem charges for
room and board and for ancillary services that vary by VA facility and
by DRG. These charges are calculated as follows:
(1) Formula. For each inpatient stay or portion thereof for which a
particular DRG assignment applies, multiply the nationwide room and
board per diem charge as set forth in paragraph (b)(2) of this section
by the appropriate geographic area adjustment factor as set forth in
paragraph (b)(3) of this section. The result constitutes the facility-
specific room and board per diem charge. Also, for each inpatient stay,
multiply the nationwide ancillary per diem charge as set forth in
paragraph (b)(2) of this section by the appropriate geographic area
adjustment factor as set forth in paragraph (b)(3) of this section. The
result constitutes the facility-specific ancillary per diem charge.
Then add the facility-specific room and board per diem charge to the
facility-specific ancillary per diem charge. This constitutes the
facility-specific combined per diem facility charge. Finally, multiply
the facility-specific combined per diem facility charge by the number
of days of inpatient care to obtain the total inpatient facility
charge.
Note to paragraph (b)(1): If there is a change in a patient's
condition and/or treatment during a single inpatient stay such that
the DRG assignment changes (for example, a psychiatric patient who
develops a medical or surgical problem), then the calculations will
be made separately for each DRG, according to the number of days of
care applicable for each DRG, and the total inpatient facility
charge will be the sum of the total inpatient facility charges for
the different DRGs.
(2) Per diem charges. To establish a baseline, two nationwide
average per diem charges for each DRG are calculated for Calendar Year
1995, one from the Medicare Standard Analytical File 5% Sample and one
from the MedStat claim database, a claim database of nationwide
commercial insurance. Results obtained from these two databases are
then combined into a single weighted average per diem charge for each
DRG. The resulting weighted average per diem charge for each DRG is
then separated into its two components, a room and board component and
an ancillary component, with the amount for each component calculated
to reflect the corresponding percentage set forth in paragraph
(b)(2)(i) of this section. The resulting amounts for room and board and
ancillary services for each DRG are then each multiplied by the final
ratio set forth in paragraph (b)(2)(ii) of this section to reflect the
80th percentile charges. Finally, the resulting charges are each
trended forward from their 1995 base to the effective time period for
the charges, as set forth in paragraph (b)(2)(iii) of this section. The
results
[[Page 54761]]
constitute the room and board per diem charge and the ancillary per
diem charge.
(i) Charge component percentages. Using only those cases from the
Medicare Standard Analytical File 5% Sample for which a distinction
between room and board charges and ancillary charges can be determined,
the percentage of the total charges for room and board compared to the
combined total charges for room and board and ancillary services, and
the percentage of the total charges for ancillary services compared to
the combined total charges for room and board and ancillary services,
are calculated by DRG.
(ii) 80th percentile. Using the medical and surgical admissions in
the Medicare Standard Analytical File 5% Sample, obtain for each
consolidated MSA the ratio of the day-weighted 80th percentile semi-
private room and board per diem charge to the average semi-private room
and board per diem charge. The consolidated MSA ratios are averaged to
obtain a final 80th percentile ratio.
(iii) Trending forward. For each DRG, the 80th percentile charges,
representing calculations for calendar year 1995, are trended forward
for the period August 1998 through September 1999, and for each 12-
month period thereafter, beginning October 1, 1999, based on changes to
the CPI. The projected total CPI trend from 1995 to the midpoint of the
effective charge period is calculated as the composite of three
components. The first component trends from 1995 to January 1997, using
the Hospital Room component of the CPI-W for room and board charges and
using the Other Hospital component of the CPI-W for ancillary charges.
The second component trends from January 1997 to the latest available
month, based on the Inpatient Hospital component of the CPI-U for room
and board and ancillary charges. The third component trends from the
latest available month to the midpoint of the effective charge period,
based on the latest three-month average annual trend rate from the
Inpatient Hospital component of the CPI-U. The projected total CPI
trends are then applied to the 1995-base 80th percentile charges.
(3) Geographic area adjustment factors. For each VA facility
location, the average per diem room and board charges and ancillary
charges from the 1995 Medicare Standard Analytical File 5% Sample are
calculated for each DRG. The DRGs are separated into two groups,
surgical and non-surgical. For each of these groups of DRGs, for each
geographic area, average room and board per diem charges and ancillary
per diem charges are calculated for 1995, weighted by FY 1997
nationwide VA discharges and by average lengths of stay from the
combined Medicare Standard Analytical File 5% Sample and the MedStat
claim data base. This results in four average per diem charges for each
geographic area: room and board for surgical DRGs, ancillary for
surgical DRGs, room and board for non-surgical DRGs, and ancillary for
non-surgical DRGs. Four corresponding national average per diem charges
are obtained from the 1995 Medicare Standard Analytical File 5% Sample,
weighted by FY 1997 nationwide VA discharges and by average lengths of
stay from the combined Medicare Standard Analytical File 5% Sample and
the MedStat claim data base. Four geographic area adjustment factors
are then calculated for each geographic area by dividing each
geographic area average per diem charge by the corresponding national
average per diem charge.
(c) Skilled nursing facility/sub-acute inpatient facility charges.
When VA provides or furnishes skilled nursing/sub-acute inpatient
services within the scope of care referred to in paragraph (a)(1) of
this section, skilled nursing facility/sub-acute inpatient facility
charges billed for such services will be determined in accordance with
the provisions of this paragraph. The skilled nursing facility/sub-
acute inpatient facility charges are per diem charges that vary by VA
facility. The facility charges cover care, including skilled
rehabilitation services (e.g., physical therapy, occupational therapy,
and speech therapy), that is provided in a nursing home or hospital
inpatient setting, is provided under a physician's orders, and is
performed by or under the general supervision of professional personnel
such as registered nurses, licensed practical nurses, physical
therapists, occupational therapists, speech therapists, and
audiologists. The skilled nursing facility/sub-acute inpatient facility
charges also incorporate charges for ancillary services associated with
care provided in these settings. The charges are calculated as follows:
(1) Formula. For each stay, multiply the nationwide per diem charge
as set forth in paragraph (c)(2) of this section by the appropriate
geographic area adjustment factor as set forth in paragraph (c)(3) of
this section. The result constitutes the facility-specific per diem
charge. Finally, multiply the facility-specific per diem charge by the
number of days of care to obtain the total skilled nursing facility/
sub-acute inpatient facility charge.
(2) Per diem charge. To establish a baseline, a nationwide average
per diem billed charge for July 1, 1998, was obtained from the 1998
Milliman & Robertson, Inc. Health Cost Guidelines, a publication that
includes nationwide skilled nursing facility charges (Milliman &
Robertson, Inc, 1305 5th Ave., Suite 3800, Seattle, WA 98101-2605).
That average per diem billed charge is then multiplied by the 80th
percentile adjustment factor set forth in paragraph (c)(2)(i) of this
section to obtain a nationwide 80th percentile charge level. Finally,
the resulting charge is trended forward to the effective time period
for the charges, as set forth in paragraph (c)(2)(ii) of this section.
(i) 80th percentile. Using the 1995 Medicare Standard Analytical
File 5% Sample, the median per diem accommodation charge is calculated
for each provider. For each State, the ratio of the 80th percentile of
provider median charges to the average statewide charges for
accommodations is calculated. The State ratios are averaged to produce
a nationwide 80th percentile adjustment factor.
(ii) Trending forward. The 80th percentile charge, representing
charge levels for July 1, 1998, is trended forward to the midpoint of
the period August 1998 through September 1999, and to the midpoint of
each 12-month period thereafter, beginning October 1, 1999, based on
the projected change in Medicare reimbursement from the Annual Report
of the Board of Trustees of the Federal Hospital Insurance Trust Fund
(this report can be found on the Health Care Financing Administration
Internet site at http://www.hcfa.gov under the headings ``Publications
and Forms'' and ``Professional/ Technical Publications'').
(3) Geographic area adjustment factors. A ratio of the average per
diem charge for each State to the nationwide average per diem charge is
obtained (these ratios are set forth in the 1998 Milliman & Robertson,
Inc. Health Cost Guidelines, a data base of nationwide commercial
insurance charges and relative costs) (Milliman & Robertson, Inc., 1301
5th Ave., Suite 3800, Seattle, WA 98101-2605). The geographic area
adjustment factor for charges for each VA facility is the ratio for the
State in which the facility is located.
(d) Outpatient facility charges. When VA provides or furnishes
outpatient services that are within the scope of care referred to in
paragraph (a)(1) of this section and are not customarily performed in
an independent clinician's office, the outpatient facility charges
billed for such services will be
[[Page 54762]]
determined in accordance with the provisions of this paragraph. Except
for prosthetic devices and durable medical equipment, whose charges
will be made separately at actual cost to VA, charges for outpatient
facility services will vary by VA facility and by CPT procedure code.
These charges will be calculated as follows:
(1) Formula. For each outpatient facility charge CPT procedure
code, multiply the nationwide charge as set forth in paragraph (d)(2)
of this section by the appropriate geographic area adjustment factor as
set forth in paragraph (d)(4) of this section. The result constitutes
the facility-specific outpatient facility charge. When multiple
surgical procedures are performed during the same outpatient encounter
by a provider or provider team, the outpatient facility charges for
such procedures will be reduced as set forth in paragraph (d)(5) of
this section.
(2) Nationwide 80th percentile charges by CPT procedure code. For
each CPT procedure code for which outpatient facility charges apply,
the 1998 practice expense RVUs (these RVUs can be found in the 1998 St.
Anthony's Complete RBRVS, Relative Value Studies, Inc., St. Anthony
Publishing, 11410 Isaac Newton Square, Reston, VA 20190) are used as
the outpatient facility RVUs. For each CPT procedure code, the
outpatient facility RVU is multiplied by the charge amount for each
incremental RVU as set forth in paragraph (d)(3) of this section. The
resulting charge is adjusted by a fixed charge amount as also set forth
in paragraph (d)(3) of this section to obtain the nationwide 80th
percentile charge.
(3) Charge factor. Using the 1995 MedStat claims database of
nationwide commercial insurance, the median billed facility charge is
calculated for each applicable CPT procedure code. All outpatient
facility CPT procedure codes are then separated into one of the 37
outpatient facility CPT procedure code groups as set forth in paragraph
(d)(3)(i) of this section. Then, for each CPT procedure code in each
such group, the median charge is adjusted to the 80th percentile as set
forth in paragraph (d)(3)(ii) of this section. The resulting 80th
percentile charge for each CPT procedure code is trended forward to the
effective time period for the charges as set forth in paragraph
(d)(3)(iii) of this section. Using the resulting charges and the RVUs,
the mathematical approximation methodology of least squares is applied
to the data for each CPT procedure code group to derive two charge
factors. The first factor represents the charge amount for each
incremental RVU in the CPT procedure code group and the second factor
represents a fixed charge amount adjustment for the CPT procedure code
group.
(i) Outpatient facility CPT procedure code groups.
(A) Surgery--Integumentery System--Skin, Subcutaneous & Accessory
Structures/Nails;
(B) Surgery--Integumentery System--Repair--Simple, Intermediate,
Complex, Adjacent Tissue Transfer or Rearrangement;
(C) Surgery--Integumentery System--Not Otherwise Classified;
(D) Surgery--Musculoskeletal System--Not Otherwise Classified;
(E) Surgery--Musculoskeletal System--Limbs--Incisions/Excisions/
Insertion/Removal;
(F) Surgery--Musculoskeletal System--Limbs--Shoulders/Humerus &
Elbow/Pelvis & Hip Joint/Femur & Knee Joint--Other than Incisions/
Excisions/ Insertion/Removal;
(G) Surgery--Musculoskeletal System--Limbs--Forearm & Wrist--Other
than Incisions/Excisions/Insertion/Removal;
(H) Surgery--Musculoskeletal System--Limbs--Tibia/Fibula & Ankle
Joint'' Other than Incisions/Excisions/Insertion/Removal;
(I) Surgery--Musculoskeletal System--Limbs--Hand & Fingers/Foot &
Toes--Other than Incisions/Excisions/Insertion/Removal;
(J) Surgery--Musculoskeletal System--Arthroscopy;
(K) Surgery--Respiratory System;
(L) Surgery--Cardiovascular System;
(M) Surgery--Hemic & Lymphatic Systems;
(N) Surgery--Digestive System--Not Otherwise Classified;
(O) Surgery--Digestive System--Endoscopy;
(P) Surgery--Urinary System;
(Q) Surgery--Male Genital System;
(R) Surgery--Laparoscopy/Hysteroscopy;
(S) Surgery--Maternity Care & Delivery;
(T) Surgery--Endocrine System;
(U) Surgery--Eye/Ocular Adnexa;
(V) Surgery--Auditory System;
(W) Radiology--Diagnostic--Head & Neck/Chest/Spine & Pelvis;
(X) Radiology--Diagnostic--Extremities/Abdomen/Gastrointestinal
Tract/Urinary Tract/Gynecological & Obstetrical/Heart;
(Y) Radiology--Diagnostic--Aorta & Arteries/Veins & Lymphatics;
(Z) Radiology--Diagnostic Ultrasound;
(AA) Radiology--Radiation Oncology/Nuclear Medicine/Therapeutic;
(BB) Radiology--Diagnostic--CAT Scans;
(CC) Radiology--Diagnostic--Magnetic Resonance Imaging (MRI);
(DD) Medicine--Global--Not Otherwise Classified;
(EE) Medicine--Global--Dialysis;
(FF) Medicine--Technical Component--Gastroenterology;
(GG) Medicine--Technical Component--Cardiovascular;
(HH) Medicine--Technical Component--Pulmonary;
(II) Medicine--Technical Component--Neurology & Neuromuscular
Procedures;
(JJ) Medicine--Observation Care; and
(KK) Medicine--Emergency.
(ii) 80th percentile. For each of the 37 outpatient facility CPT
procedure code groups set forth in paragraph (d)(3)(i) of this section,
the median charge is increased by the ratio of the 80th percentile
charge to median charge (the data for CPT procedure code groups listed
at paragraphs (d)(3)(i)(DD), (EE), (JJ), and (KK) of this section are
obtained from the MedStat database of nationwide charges; the data for
the other groups are obtained from the Outpatient Facility UCR module
of the Comprehensive Healthcare Payment System from MediCode, Inc., a
1997 release from a nationwide database of outpatient facility charges)
(MediCode, Inc., 5225 Wiley Post Way, Suite 500, Salt Lake, UT 84116).
To mitigate the impact of the variation in the intensity of services by
CPT procedure code, the percent increase from the median to the 80th
percentile in outpatient charges is compared to the percent increase
from the median to the 80th percentile in inpatient semi-private room
and board charges. Any percent increase in outpatient charges in excess
of the inpatient semi-private room and board percent increase is
multiplied by a factor of 0.50. The 80th percentile outpatient facility
charge is reduced accordingly.
(iii) Trending forward. The charges for each CPT procedure code,
representing calculations for calendar year 1995, are trended forward
for the period August 1998 through September 1999, and for each 12-
month period thereafter, beginning October 1, 1999, based on changes to
the Outpatient Hospital component of the CPI-U. Actual CPI-U changes
are used through the latest available month. The three-month average
annual trend rate as of the latest available month is held constant to
the midpoint of the effective charge period. The projected total CPI-U
change from 1995 to this midpoint of the effective charge period is
then applied to the 1995 80th percentile charges.
(4) Geographic area adjustment factors. For each VA outpatient
facility
[[Page 54763]]
location, a single geographic area adjustment factor is calculated as
the arithmetic average of the outpatient geographic area adjustment
factor (this factor constitutes the ratio of the level of charges for
each geographic area to the nationwide level of charges) published in
the Milliman & Robertson, Inc. Health Cost Guidelines (Milliman &
Robertson, Inc., 1301 5th Ave., Suite 3800, Seattle, WA 98101-2605),
and a geographic area adjustment factor developed from the MediCode
data. The MediCode-based geographic area adjustment factors are
calculated as the ratio of the CPT-weighted average charge level for
each VA outpatient facility location to the nationwide CPT-weighted
average charge level.
(5) Multiple surgical procedures. When multiple surgical procedures
are performed during the same outpatient encounter by a provider or
provider team as indicated by multiple surgical CPT procedure codes,
then the highest charge will be billed at 100% of the charges
established under this section; the second highest charge will be
billed at 25% of the charges established under this section; the third
highest charge will be billed at 15% of the charges established under
this section; and no outpatient facility charges will be billed for any
additional surgical procedures.
(e) Physician charges. When VA provides or furnishes physician
services within the scope of care referred to in paragraph (a)(1) of
this section, physician charges billed for such services will be
determined in accordance with the provisions of this paragraph.
Physician charges consist of charges for professional services that
vary by VA facility and by CPT procedure code. These charges are
calculated as follows:
(1) Formula. For each CPT procedure code except those for
anesthesia and pathology, multiply the total facility-adjusted RVU as
set forth in paragraph (e)(2) of this section by the applicable
facility-adjusted conversion factor (facility-adjusted conversion
factors are expressed in monetary amounts) set forth in paragraph
(e)(3) of this section to obtain the physician charge for each CPT
procedure code at a particular VA facility. For each anesthesia and
pathology CPT procedure code, multiply the nationwide physician charge
as set forth in paragraph (e)(4) of this section by the geographic area
adjustment factor as set forth in paragraph (e)(3)(iii) of this section
to obtain the physician charge for each anesthesia and pathology CPT
procedure code at a particular VA facility.
(2)(i) Total facility-adjusted RVUs for physician services other
than anesthesia, pathology, and specified CPT procedure codes. The work
expense and practice expense components of the RVUs for CPT procedure
codes (other than anesthesia, pathology, and those CPT procedure codes
set forth at paragraphs (e)(2)(ii) and (e)(2)(iii) of this section) are
compiled (information concerning the RVUs and their components can be
obtained from Veterans Health Administration, Office of Finance,
Department of Veterans Affairs, 810 Vermont Ave., NW, Washington, DC
20420). For radiology CPT procedure codes, these compilations do not
include separately identified technical component RVUs. For CPT
procedure codes that generate an outpatient facility charge, the
facility practice expense RVU is substitute for the non-facility
practice expense RVU (information concerning facility practice expense
RVUs can be obtained from Veterans Health Administration, Office of
Finance, Department of Veterans Affairs, 810 Vermont Ave., NW,
Washington, DC 20420). For Medicine and Surgery CPT procedure codes
with separate professional and technical components that also generate
an outpatient facility charge, only the professional component is
compiled. The sum of the facility-adjusted work expense RVU as set
forth in paragraph (e)(2)(i)(A) of this section and the facility-
adjusted practice expense RVU as set forth in paragraph (e)(2)(i)(B) of
this section equals the total facility-adjusted RVUs.
(A) Facility-adjusted work expense RVUs. For each CPT procedure
code for each geographic area, the 1998 work expense RVU is multiplied
by the 1998 Medicare work adjuster (0.917) and the results are further
multiplied by the work expense 1998 Medicare Geographic Practice Cost
Index. The result constitutes the facility-adjusted work expense RVU.
(B) Facility-adjusted practice expense RVUs. For each CPT procedure
code for each geographic area, the 1998 practice expense RVU is
multiplied by the practice expense 1998 Medicare Geographic Practice
Cost Index. The result constitutes the facility-adjusted practice
expense RVU.
(ii) RVUs for specified CPT procedure codes. For the following CPT
procedure codes, obtain the nationwide 80th percentile billed charges
from the nationwide commercial insurance data base compiled by the
Health Insurance Association of America (Health Insurance Association
of America, 555 13th Street, NW, Suite 600E, Washington, DC 20004):
20930, 20936, 22841, 48160, 48550, 54440, 79900, 80050, 80055, 80103,
80500, 80502, 85060, 85095, 85097, 85102, 86077, 86078, 86079, 86485,
86490, 86510, 86580, 86585, 86586, 86850, 86860, 86870, 86890, 86891,
86901, 86910, 86911, 86915, 86920, 86921, 86922, 86927, 86930, 86931,
86932, 86945, 86950, 86965, 86970, 86971, 86972, 86975, 86977, 86978,
86985, 88000, 88005, 88012, 88014, 88016, 88036, 88037, 88104, 88106,
88107, 88108, 88125, 88160, 88161, 88162, 88170, 88171, 88172, 88173,
88180, 88182, 88300, 88302, 88304, 88305, 88307, 88309, 88311, 88312,
88313, 88314, 88318, 88319, 88321, 88323, 88325, 88329, 88331, 88332,
88342, 88346, 88347, 88348, 88349, 88355, 88356, 88358, 88362, 88365,
89100, 89105, 89130, 89132, 89135, 89140, 89141, 89250, 89350, 89360,
92390, 92391, 94642, 94772, 99024, 99071, 99078, 99080, 99082, 99100,
99116, 99135, 99140, 99420, 99450, 99455, 99456. For the following CPT
procedure codes, obtain the nationwide 80th percentile billed charges
from the Medicare Standard Analytical File 5% Sample: 99070, M0076,
M0300. Then divide the nationwide 80th percentile billed charges by the
untrended nationwide conversion factor for the corresponding physician
CPT procedure code group as set forth in paragraphs (e)(3) and
(e)(3)(i). The resulting nationwide total RVUs are multiplied by the
geographic adjustment factors as set forth in paragraph (e)(2)(iv) of
this section to obtain the facility-specific total RVUs.
(iii) RVUs for specified CPT procedure codes. For the following
list of CPT procedure codes, the nationwide total RVU is calculated by
multiplying the 1998 Medicare work adjuster (0.917) by the work expense
RVU and adding the practice expense RVU (the work expense RVU and the
practice expense RVU for these CPT procedure codes can be found in the
1998 St. Anthony's Complete RBRVS, Relative Value Studies, Inc., St.
Anthony Publishing, 11410 Isaac Newton Square, Reston, VA 20190):
15824, 15825, 15826, 15828, 15829, 15876, 15877, 15878, 15879, 17380,
21088, 24940, 26587, 32850, 33930, 33940, 36415, 36468, 36469, 41820,
41821, 41850, 41870, 47133, 48554, 50300, 58974, 65760, 65765, 65767,
65771, 69090, 69710, 75556, 76092, 76140, 76350, 78608, 78609, 90700,
90701, 90702, 90703, 90704, 90705, 90706, 90707, 90708, 90709, 90710,
90711, 90712, 90713, 90714, 90716, 90717, 90718, 90179, 90720, 90721,
90724, 90725, 90726, 90727, 90728, 90730, 90732, 90733, 90735,
[[Page 54764]]
90737, 90741, 90742, 90744, 90745, 90746, 90747, 90882, 90889, 90989,
90993, 92531, 92532, 92533, 92534, 92551, 92559, 92560, 92590, 92591,
92592, 92593, 92594, 92595, 92992, 92993, 93760, 93762, 93784, 93786,
93788, 93790, 95120, 95125, 95130, 95131, 95132, 95133, 95134, 96110,
96545, 97545, 97546, 99000, 99001, 99002, 99025, 99050, 99052, 99054,
99056, 99058, 99075, 99090, 99190, 99191, 99192, 99288, 99358, 99359,
99360, 99361, 99362, 99371, 99372, 99373. The resulting nationwide
total RVUs are multiplied by the geographic adjustment factors as set
forth in paragraph (e)(2)(iv) of this section to obtain the facility-
specific total RVUs.
(iv) RVU geographic area adjustment factors for specified CPT
procedure codes. The geographic area adjustment factor for each
facility location consists of the weighted average of the 1998 work
expense and practice expense Medicare Geographic Practice Cost Indices
for each facility location using charge data for representative CPT
procedure codes statistically selected and weighted for work expense
and practice expense.
(3) Facility-adjusted 80th percentile conversion factors. CPT
procedure codes are separated into the following 24 physician CPT
procedure code groups: allergy immunotherapy, allergy testing,
anesthesia, cardiovascular, chiropractor, consults, emergency room
visits and observation care, hearing/speech exams, immunizations,
inpatient visits, maternity/cesarean deliveries, maternity/non-
deliveries, maternity/normal deliveries, miscellaneous medical, office/
home urgent care visits, outpatient psychiatry/alcohol and drug abuse,
pathology, physical exams, physical medicine, radiology, surgery,
therapeutic injections, vision exams, and well baby exams. For each of
the 24 physician CPT procedure code groups, representative CPT
procedure codes were statistically selected and weighted so as to give
a weighted average RVU comparable to the weighted average RVU of the
entire physician CPT procedure code group (the selected CPT procedure
codes are set forth in the 1998 Milliman & Robertson, Inc., Health Cost
Guidelines fee survey) (Milliman &n Robertson, Inc., 1301 5th Ave.,
Suite 3800, Seattle, WA 98101-2605). The 80th percentile charge for
each selected CPT procedure code is obtained (this is contained in the
nationwide commercial insurance data base compiled by the Health
Insurance Association of America, 555 13th Street, NW, Suite 600E,
Washington, DC 20004 (medical data for 5/1/96-4/30/97, including
radiology and pathology; surgical data for 3/1/96-2/28/97; anesthesia
data for 3/1/96-2/28/97)). A nationwide conversion factor (a monetary
amount) is calculated for each physician CPT procedure code group as
set forth in paragraph (e)(3)(i) of this section. The nationwide
conversion factors for each of the 24 physician CPT procedure code
groups are trended forward as set forth in paragraph (e)(3)(ii) of this
section. The resulting amounts for each of the 24 groups are multiplied
by geographic area adjustment factors as set forth in paragraph
(3)(3)(iii) of this section, resulting in facility-adjusted 80th
percentile conversion factors for each VA facility geographic area for
the 24 physician CPT procedure code groups for the effective charge
period.
(i) Nationwide conversion factors. Using the nationwide 80th
percentile charges for the selected CPT procedure codes from paragraph
(e)(3) of this section, a nationwide conversion factor is calculated
for each of the 24 physician CPT procedure code groups by dividing the
weighted average charge by the weighted average RVU. To correspond with
the charge data, for medicine and surgery CPT procedure codes, the
total RVUs are used even when separate professional and technical
components are specified.
(ii) Trending forward. The nationwide conversion factor for each of
the 24 physician CPT procedure code groups, representing charges for
time periods detailed in paragraph (e)(3) of this section, are trended
forward for the period August 1998 through September 1999, and for each
12-month period thereafter, beginning October 1, 1999, based on changes
to the Physician component of the CPI-U. Actual CPI-U changes are used
through the latest available month. The three-month average annual
trend rate as of the latest available month is held constant to the
midpoint of the effective charge period. The projected total CPI-U
change from the midpoint of the source data collection period to the
midpoint of the effective charge period is then applied to the 24
conversion factors.
(iii) Geographic area adjustment factors. Using the 80th percentile
charges for the selected CPT procedure codes from paragraph (e)(3) of
this section for each VA facility geographic area, a geographic area-
specific conversion factor is calculated for each of the 24 physician
CPT procedure code groups by dividing the weighted average charge by
the weighted average facility-adjusted RVU. The resulting geographic
area conversion factor for each facility geographic area for each
physician CPT procedure code group is divided by the corresponding
nationwide conversion factor as set forth in paragraph (e)(3)(i). The
resulting ratios are the geographic area adjustment factors for each of
the 24 physician CPT procedure code groups for each facility geographic
area.
(4) Nationwide 80th percentile charges for anesthesia and pathology
CPT procedure codes. The nationwide charges are calculated by
multiplying the RVUs as set forth in paragraph (e)(4)(i) of this
section for anesthesia CPT procedure codes and as set forth in
paragraph (e)(4)(ii) of this section for pathology CPT procedure codes
by the appropriate nationwide trended 80th percentile conversion
factors as set forth in paragraph (e)(3) of this section.
(i) RVUs for anesthesia. The 1998 base unit value for each
anesthesia CPT procedure code is compiled (the base unit values can be
found in the 1998 St. Anthony's Complete RBRVS, Relative Value Studies,
Inc., St. Anthony Publishing, 11410 Isaac Newton Square, Reston, VA
20190). The average time unit value for each anesthesia CPT procedure
code is compiled from a Health Care Financing Administration study
concerning average time unit values for anesthesia CPT procedure codes
(these values can be obtained from Veterans Health Administration,
Office of Finance, Department of Veterans Affairs, 810 Vermont Ave.,
NW, Washington, DC 20420). For each anesthesia CPT procedure code
introduced since the HCFA study, the time unit value is calculated as
the average time unit value for all other anesthesia CPT procedure
codes with the same base unit value. The sum of the anesthesia base
unit value and the anesthesia time unit value equals the total
anesthesia RVUs.
(ii) RVUs for pathology. For each pathology CPT procedure code, the
1998 Medicare payment amount is used as the RVU for the corresponding
CPT procedure code (the payment amounts can be found on the Health Care
Financing Administration public use files Internet site at http://
www.hcfa.gov/stats/pufiles.htm under the heading ``Payment Rates/ Non-
Institutional Providers'' and the title ``Clinical Diagnostic
Laboratory Fee Schedule.''
(f) Non-physician provider charges. When the following non-
physician providers provide or furnish VA care within the scope of care
referred to in paragraph (a)(1) of this section, charges for that care
covered by a CPT procedure code will be determined based on the
following indicated percentages of the amount that would be charged if
the care had been provided by a physician:
(1) Nurse practitioner: 85%.
[[Page 54765]]
(2) Clinical nurse specialist: 85%.
(3) Physician Assistant: 65% for assistance at surgery; 75% for
other hospital care and 85% for other non-hospital care.
(4) Certified registered nurse anesthetist: 50% when physician
supervised; 100% when not physician supervised.
(5) Clinical psychologist: 80%.
(6) Clinical social worker: 75%.
(7) Podiatrist: 95%.
(8) Chiropractor: 100%.
(9) Dietitian: 75%.
(10) Clinical pharmacist: 80%.
(11) Optometrist: 90%.
(g) Outpatient dental care and prescription drugs not administered
during treatment. Notwithstanding other provisions of this section,
when VA provides or furnishes outpatient dental care or prescription
drugs not administered during treatment, within the scope of care
referred to in paragraph (a)(1) of this section, charges billed
separately for such care will be based on VA costs in accordance with
the methodology set forth in Sec. 17.102 of this part.
(Authority: 38 U.S.C. 101, 501, 1701, 1705, 1710, 1721, 1722, 1729)
Sec. 17.102 [Amended]
4. In newly redesignated Sec. 17.102, the first sentence of the
introductory text is amended by removing ``Charges'' and adding in its
place ``Except as provided in Sec. 17.101, charges'', paragraph (h) is
amended by removing the heading and adding, in its place, ``Computation
of charges.''; by removing paragraphs (h)(1), (2), and (4) through (6);
and by removing ``(3) The method of computing the charges for medical
care and services'' and by adding, in its place, ``The method for
computing the charges under paragraphs (a), (b), (d), (f), and (g), and
the last sentence of paragraph (c) of this section''.
[FR Doc. 98-26341 Filed 10-9-98; 8:45 am]
BILLING CODE 8320-01-U
