[Federal Register Volume 64, Number 80 (Tuesday, April 27, 1999)]
[Rules and Regulations]
[Pages 22676-22683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10373]
[[Page 22675]]
_______________________________________________________________________
Part II
Department of Veterans Affairs
_______________________________________________________________________
38 CFR Part 17
Medical Care Collection or Recovery; Final Rule and Notice
Federal Register / Vol. 64, No. 80 / Tuesday, April 27, 1999 / Rules
and Regulations
[[Page 22676]]
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 17
RIN 2900-AJ30
Medical Care Collection or Recovery
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: This document amends 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 establishes methodology for charging
``reasonable charges'' consistent with the statutory amendment. The
charges billed using this methodology, as appropriate, 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 will 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 therefore
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 continues to 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.
Also, the regulations are 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: Effective Date: September 1, 1999.
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: In a document published in the Federal
Register on October 13, 1998 (63 FR 54756), we proposed to amend VA's
medical regulations as set forth in the SUMMARY portion on this
document. We provided a 60-day comment period that ended December 14,
1998. We received comments from six commenters in response to the
proposal. These comments are discussed below. Based on the rationale
set forth in the proposed rule and in this document, the provisions of
the proposed rule are adopted as a final rule with changes explained
below.
Podiatrists, Optometrists, and Physician Assistants
Three of the comments concerned the proposal at Sec. 17.101(f) to
charge for services of podiatrists and optometrists at 95% and 90%,
respectively, of the amount that would be charged if the care had been
provided by a physician. One of the comments concerned the proposal at
Sec. 17.101(f) to charge for services of physician assistants at 65%
for assistance at surgery, 75% for other hospital care, and 85% for
other non-hospital care. The commenters provided information
establishing that under the Medicare program optometrists and
podiatrists are paid the same as physicians for services provided and
physician assistants are paid for all services at 85% of the amount
that would be charged if the care had been provided by a physician. In
this regard, the commenters asserted that we should adopt the Medicare
payment percentages for VA charges. In the proposed rule we indicated
that we intended to use ``the Medicare percentages when available
because of their extensive use for billing and payment of claims'' (63
FR 54758). Accordingly, since we now understand that the Medicare
regulations provide for payment for optometrists and podiatrists at the
physician rate and provide for payment for physician assistants at 85%
of the physician rate for all billable services, we changed the final
rule to be consistent with Medicare.
Effective Date
We considered whether to make the final rule effective thirty days
after publication in the Federal Register or whether to make the final
rule effective after a longer period. After considering the comments,
we have decided to make the final rule effective September 1, 1999 to
allow more time for industry to prepare for the changes.
One commenter, a representative of an association of insurance
companies, asserted that the effective date should be delayed for
twelve months. The commenter asserted that additional time is needed
for them to establish computer software to process the new VA charges.
The commenter also asserted that now is a difficult time for such
changes since available resources should be devoted as a priority to
``year two thousand compliance'' issues. The commenter also asserted
that their 1999 premiums did not take into account increased payments
and administrative costs that would occur under the new system. The
commenter also asserted that the comment period should be extended to
allow time for engaging outside actuarial or reimbursement consultants
in order to provide substantive comments on the billing methodology.
The comments were supplemented by the inclusion of examples of cost
comparisons between current charges and charges implemented by the
final rule.
Initially, we note that the comments, at least in part, are based
on an incorrect premise. Under the final rule an affected entity is not
necessarily required to pay the full charges. The final rule provides
that an affected entity would continue to have the option of paying to
the extent of its coverage either the billed charges or 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.
Further, we believe insurers have had ample opportunity to adjust
premiums for 1999. Ever since the enactment of Public Law 105-33 on
August 5, 1997, it has been general knowledge in the
[[Page 22677]]
insurance industry that VA would bill based on market pricing as soon
as regulations could be established. Moreover, the legislative history
from the House Conference Report (H. Rep. No. 105-217, July 30, 1997,
at pp. 974-975) for Public Law No. 105-33 states that ``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.'' We believe that any
further delay in implementing this remedial legislation beyond the
September 1, 1999, effective date of these final regulations would be
unreasonable.
Also, we believe that it is reasonable for affected entities to
establish an appropriate mechanism to process VA's billed charges under
this final rule by the time payments to VA become due. In this regard,
we note that VA billing under this final rule more closely accords with
industry practice. Therefore, this should facilitate development of
computer software necessary to process VA charges. In addition, we
believe that the methodology for determining our new charges is based
on sound actuarial principles.
Local Markets
In the proposed rule, we acknowledged that we have insufficient
data for direct determination of prevailing charges for all services in
all local markets (63 FR 54757). One commenter questioned how VA could
determine local reasonable charges under such circumstances for charges
other than those based on DRGs. No changes are made based on this
comment. We believe that our methodology provides an appropriate
remedy. For outpatient facility charges and physician charges, we
grouped CPT codes for each local market, then compiled averages for the
CPT code groups for each locality, and then used these averages to
obtain estimated charges for those CPT codes for which we had
insufficient data. Further, for skilled nursing facility/sub-acute
inpatient facility charges, we used state-wide averages to establish
geographic area adjustment factors.
Co-payments for Non-service Connected Outpatient Care
One commenter appeared to assume that this rulemaking proceeding
would affect co-payments for non-service connected outpatient care.
This rulemaking proceeding does not address this issue. The co-payment
for non-service connected outpatient care continues to be based on the
VA-wide estimated average cost of an outpatient visit (see 38 U.S.C.
1710(g)(2)).
Effective Periods
With respect to inpatient facility charges, skilled nursing
facility/sub-acute inpatient facility charges, outpatient facility
charges, and physician charges, the proposed rule provided in the
trending provisions of the charges methodology, that the effective
period for charges after September 1999 would be from October 1 through
September 30 of each year. We changed these effective periods to
coincide with calendar years (January 1 through December 31) to be
consistent with standard industry practice.
Also, we have added provisions stating that in those cases in which
the effective period for published charges has expired and new charges
have not yet become effective, VA will continue to bill using the most
recently published charges until new charges are published and become
effective. For example, if the most recently published charges state
that they are effective through December and new charges are not
published and effective until February 1, then the charges set forth
for the period through December will continue to be used through
January 31. Although this normally would result in lower charges than
the methodology would allow, this is necessary to ensure that VA will
not have to suspend charging in those cases in which the effective
period for published charges has expired and new charges have not yet
become effective.
The data for determining charges, published in the October 13
Federal Register and in a companion document published in this issue of
the Federal Register, was designed for the period August 1998 through
September 1999. Consistent with the principles explained above, we
intend to use these data for the period September 1, 1999 through
December 31, 1999. This will result in lower charges than we could
otherwise charge. Even so, we do not believe it would be cost effective
to recalculate these data and republish them since they will be used
for such a short period of time.
Nonsubstantive Changes
Nonsubstantive changes are made for purposes of clarity.
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
In a document published in the Federal Register on October 13, 1998
(63 FR 54766), we set forth data (derived from the methodology of the
final rule) for calculating inpatient facility charges, skilled nursing
facility/sub-acute inpatient facility charges, outpatient facility
charges, and physician charges at individual VA facilities. These data
will be used for such charges from the effective date of this final
rule through December 1999, except for those changes (consistent with
the methodology of the final rule) set forth in a companion document
published in the ``Notices'' section of this issue of the Federal
Register. As stated in the proposal, VA will update annually in the
``Notices'' section of the Federal Register the data for calculating
the charges at individual VA facilities.
Paperwork Reduction Act
The collection of information contained in the notice of the
proposed rulemaking was submitted to the Office of Management and
Budget (OMB) for review in accordance with the Paperwork Reduction Act
(44 U.S.C. 3504(h)).
The information collection subject to this rulemaking concerns
submission of evidence. Under the provisions of 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
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). This information is needed to determine whether the
third-party payer has met the test of properly demonstrating its
equivalent private sector provider
[[Page 22678]]
payment amount for the same care or services and within the same
geographic area as provided by VA.
Interested parties were invited to submit comments on the
collection of information. However, no comments were received. OMB has
approved this information collection under control number 2900-0606.
VA is not authorized to impose a penalty on persons for failure to
comply with information collection requirements which do not display a
current OMB control number, if required.
Regulatory Flexibility Act
The Secretary hereby certifies that this final 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 final 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 final rule is exempt
from the initial and final regulatory flexibility analyses requirements
of Secs. 603 and 604.
OMB Review
This document has been reviewed by OMB pursuant to Executive Order
12866.
Catalog of Federal Domestic Assistance Numbers
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 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 record-keeping requirements, Scholarships and fellowships, Travel
and transportation expenses, Veterans.
Approved: March 25, 1999.
Togo D. West, Jr.,
Secretary of Veterans Affairs.
For the reasons set out in the preamble, 38 CFR part 17 is 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 and a parenthetical at
the end of the section is added 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) 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 be 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.
In those cases in which the effective period for published charges has
expired and new charges have not yet become effective, VA will continue
to bill using the most recently published charges until new charges are
published and become effective (for example, if the most recently
published charges state that they are effective through December and
new charges are not published and effective until February 1, then the
charges set forth for the period through December will continue to be
used through January 31).
(3) 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).
(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
[[Page 22679]]
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 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 calendar year period thereafter, beginning January 1, 2000, 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
[[Page 22680]]
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., 1301 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 calendar year period thereafter, beginning January 1,
2000, 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 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 RVU's 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;
[[Page 22681]]
(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 calendar year period thereafter, beginning January 1, 2000, 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 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 CPT procedure code with the highest facility charge will be
billed at 100% of the charges established under this section; the CPT
procedure code with the second highest facility charge will be billed
at 25% of the charges established under this section; the CPT procedure
code with the third highest facility 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 substituted 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
[[Page 22682]]
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, 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 & 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
(e)(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 calendar year period thereafter, beginning January 1, 2000,
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
[[Page 22683]]
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 Health Care Financing Administration 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) Other provider charges. When the following 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 under paragraph (e) of this section:
(1) Nurse practitioner: 85%.
(2) Clinical nurse specialist: 85%.
(3) Physician Assistant: 85%.
(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: 100%.
(8) Chiropractor: 100%.
(9) Dietitian: 75%.
(10) Clinical pharmacist: 80%.
(11) Optometrist: 100%.
(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.
(The Office of Management and Budget has approved the information
collection requirements in this section under control number 2900-
0606.)
(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), (h)(2), and (h)(4)
through (h)(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. 99-10373 Filed 4-26-99; 8:45 am]
BILLING CODE 8320-01-P
