E9-9753. Per Diem for Nursing Home Care of Veterans in State Homes

AGENCY:

Department of Veterans Affairs.

ACTION:

Final rule.

SUMMARY:

The Department of Veterans Affairs (VA) amends its regulations which set forth a mechanism for paying per diem to State homes providing nursing home care to eligible veterans. More specifically, we are updating the basic per diem rate, implementing provisions of the Veterans Benefits, Health Care, and Information Technology Act of 2006, and making several other changes to better ensure that veterans receive quality care in State homes.

DATES:

Effective date: May 29, 2009. The incorporation by reference of certain publications listed in this rule is approved by the Director of the Federal Register as of May 29, 2009.

FOR FURTHER INFORMATION CONTACT:

Theresa Hayes at [phone] (for issues concerning per diem payments), and Christa Hojlo, PhD at [phone] (for all other issues raised by this document), Office of Geriatrics and Extended Care, Veterans Health Administration, Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420. (The telephone numbers set forth above are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

This document amends the regulations at 38 CFR part 51 (referred to below as the regulations), which set forth a mechanism for paying per diem to State homes providing nursing home care to eligible veterans. Under the regulations, VA pays per diem to a State for providing nursing home care to eligible veterans in a facility if the Under Secretary for Health recognizes the facility as a State home based on a determination that the facility meets the standards set forth in subpart D of the regulations. The standards set forth minimum requirements that are intended to ensure that VA pays per diem for eligible veterans only if the State homes provide quality care. This document also makes corresponding changes concerning VA forms set forth at 38 CFR part 58.

This final rule is based on a proposed rule published in the Federal Register on November 28, 2008 (73 FR 72399). The proposed rule called for a 30 day comment period that ended on December 29, 2008. We received a number of comments from eight commenters (one commenter provided two submissions). One commenter merely agreed with the proposed changes. The other comments are discussed below. Based on the rationale set forth in the proposed rule and this document, we have adopted the provisions of the proposed rule as a final rule with changes discussed below.

Nurse Practitioners

Proposed § 51.2 defined the term “nurse practitioner” as “a licensed professional nurse who is currently licensed to practice in the State; who meets the State's requirements governing the qualifications of nurse practitioners; and who is currently certified as an adult, family, or gerontological nurse practitioner by a nationally recognized body that provides such certification for nurse practitioners, such as the American Nurses Credentialing Center or the American Academy of Nurse Practitioners.”

Three commenters argued directly or implicitly that certification is not essential for the provision of high quality care and that licensure is a sufficient measure of competence. One of the commenters argued that national certification would create an undue burden for nurse practitioners (“enroll in an exam course, pay for course work, travel, lodging and registration fees, and sit for the exam”) and indicated that some may fail the exam or fail to meet renewal requirements. The commenter further asserted that nurse practitioners who are currently employed should be subject to a grandfather clause that allows them to work as nurse practitioners without national certification. We made no changes based on these comments. The proposed rule did not create a new certification requirement but merely broadened the list of certifying organizations to any nationally recognized certifying body because the previously listed organization does not provide such certification.

Recognition and Certification

Proposed § 51.30(a)(1) provided that VA would not conduct the recognition survey until the new facility has at least 21 residents or the number of residents consists of at least 50 percent of the new bed capacity of the facility.

One commenter seemed to read the provisions at proposed § 51.30(a)(1) by associating the portion of the formula regarding 21 residents with new facilities and associating the portion of the formula regarding 50 percent of the new bed capacity to renovations. This is not what was intended. Both portions of the formula were intended to apply to recognition surveys. Accordingly, we clarified the regulation to state that the recognition survey will be conducted only after the new facility either has at least 21 residents or has a number of residents that consist of at least 50 percent of the new bed capacity of the new facility. We also note that under § 51.30(b), a separate recognition is required for changes involving an annex, branch, enlargement, expansion, or relocation.

Two commenters asserted that the portion of the formula concerning 21 residents is excessive. One commenter noted that CMS (Centers for Medicare & Medicaid Services) only requires 3 residents to determine whether a facility meets the CMS standards. Another commenter asserted that a facility should only be required to have ten residents for an initial test survey and that per diem could begin after the initial test survey with a more detailed survey to follow. New providers/suppliers must be in operation and providing services to patients when surveyed. This means that at the time of survey, the institution must have opened its doors to admissions, be furnishing all services necessary to meet the applicable provider or supplier definition, and demonstrate the operational capability of all facets of its operations. To be considered “fully operational,” initial applicants must be serving a sufficient number of patients so that compliance with all requirements can be determined. Centers for Medicare & Medicaid Services, State Operations Manual, Pub. No. 100-07, Ch. 2 sec. 2008A. The commenters ultimately asserted that the proposed provisions would place a financial burden on veterans who might be responsible for costs until VA begins paying per diem. We made no changes based on these comments. Based on our experience in conducting surveys and following the progress of new State homes in meeting VA standards, the criteria as proposed set forth the minimum requirements (21 residents or 50 percent of new bed capacity) for conducting a survey that could determine whether a facility meets VA standards.

Proposed § 51.30(d), (e), and (f) sets forth the process by which a State may appeal a decision by a director of a VA medical center of jurisdiction that a State home facility or facility management did not meet the standards of subpart D. The appeal is made to the Under Secretary for Health. The proposed provisions were intended to allow appeals to the Under Secretary in response to directors' recommendations regardless of whether the recommendations were made prior to recognition or after recognition. One commenter indicated that there is no procedure to appeal the decision of the Under Secretary. A decision of the Under Secretary, however, may be appealed to the Board of Veterans' Appeals. For further information on this appeal process, please refer to 38 U.S.C. 7104 and 7105 and 38 CFR part 20. We clarified § 51.30(f) to state that the decisions of the Under Secretary are final decisions that may be appealed to the Board of Veterans' Appeals. The commenter further asserted that there is no requirement that the Under Secretary take into account the arguments and evidence presented in a State's appeal. We made no changes based on this comment. Section 51.30(f) states that the Under Secretary will review any relevant supporting information. This would include the arguments and evidence presented by the State.

Rate Based on Service Connection

The provisions of 38 U.S.C. 1745(a), which were established by section 211 of the Veterans Benefits, Health Care, and Information Technology Act of 2006 (Pub. L. 109-461), set forth a mechanism for paying a higher per diem rate for certain veterans with service-connected disabilities receiving nursing home care in State homes.

Under this authority, the per diem rate was increased for:

• Any veteran in need of nursing home care for a service-connected disability, and
• Any veteran who has a service-connected disability rated at 70 percent or more and is in need of nursing home care.

Under the cited statutory authority, the new per diem rate is the lesser of the following:

• The applicable or prevailing rate payable in the geographic area in which the State home is located, as determined by the Secretary, for nursing home care furnished in a non-Department nursing home (i.e., a public or private institution not under the direct jurisdiction of VA which furnishes nursing home care); or
• A rate not to exceed the daily cost of care in the State home facility, as determined by the Secretary, following a report to the Secretary by the director of the State home.

Several commenters seemed to be confused about the connection between higher per diem for certain veterans with service-connected disabilities and the provision of drugs and medicines to veterans in State homes. As more fully explained below, under the Veterans Benefits, Health Care, and Information Technology Act of 2006, VA does not have authority to provide drugs and medicines to veterans who are receiving care for which the higher per diem is payable.

Proposed § 51.41(a)(2) stated that the higher per diem rate for certain veterans with service-connected disabilities would apply to a veteran with a rating of total disability based on individual unemployability. One commenter questioned whether all veterans must have a rating of total disability based on individual unemployability as a condition for receiving the higher rate of per diem based on service connection. Another commenter questioned whether § 51.41(a)(2) would be applicable to an individual who is unemployable because of disabilities that are not service connected. We made no changes based on these comments. Veterans who are otherwise eligible for the higher per diem do not also need a rating of total disability based on individual unemployability from VA for the State to receive the higher rate of per diem on their behalf. However, the law permits VA to pay a higher per diem for veterans only based on their service-connected disabilities. States thus would not receive the higher per diem for veterans who are unemployable based on disabilities that are not service connected unless these veterans also have service-connected disabilities that meet the requirements for payment of the higher per diem.

With respect to the higher per diem rate for certain veterans in State homes, one commenter questioned whether a State home would receive different amounts based on the rating, i.e., 70 percent of the maximum per diem for a veteran with a rating of 70 percent, 80 percent of the maximum per diem for a veteran with a rating of 80 percent, and so on. We made no changes based on this comment. Under the statutory provisions of 38 U.S.C. 1745 and § 51.41, the State home would receive the same per diem amount for these veterans.

With respect to the calculation of the higher per diem, commenters objected to the methodology in the proposed rule. One commenter asserted that the higher per diem rate should be the actual cost of care as determined by the State home. The commenter also asserted that the amount should be not less than the Medicare amount, the Medicaid amount, or the amount VA pays for veterans in private nursing homes. One commenter argued that, compared to the population used in the proposed methodology, these service-connected veterans would need more care because they are generally older and mostly male. The commenter also indicated that the population used for the calculations would be based in large part on Medicare factors and asserted that some nursing homes do not take Medicare payments. The commenter further asserted that VA should use data from State homes. We made no changes based on these comments. The statutory provisions at 38 U.S.C. 1745 require that the new higher per diem rate be the lesser of the following:

• The applicable or prevailing rate payable in the geographic area in which the State home is located, as determined by the Secretary, for nursing home care furnished in a non-Department nursing home (i.e., a public or private institution not under the direct jurisdiction of VA which furnishes nursing home care); or
• A rate not to exceed the daily cost of care in the State home facility, as determined by the Secretary, following a report to the Secretary by the director of the State home.

The law thus requires VA to use the actual cost of care in State homes based on a report from the home in determining the higher per diem, and the home will receive its actual cost if it is less than the applicable or prevailing rate. However, as stated in the preamble to the proposed rule: “VA is considering a modification to the proposed payment structure to be introduced after two or three years of experience with the [Resource Utilization Group-III (RUG III)] approach. In the modification, VA would use the actual case-mix of the individual state veteran nursing home to determine the reimbursement rate, rather than assuming that every nursing home has an equal number of veterans in each of the 53 RUG III levels. This modification will allow for more accurate payments, reimbursing nursing homes at a higher rate for treating veterans with more intensive needs.” One commenter asserted that we should use the earlier time frame of two years to take action to modify the payment structure. We made no changes based on this comment. We will work as fast as possible to take any actions necessary to improve the payment methodology.

One commenter asserted that there is no indication in the proposed rule as to how frequently adjustments would be made to payments under § 51.41(b)(1) and further asserted that the regulations should include the process for adjustment. One commenter questioned whether VA would recalculate amounts each month for the higher per diem rate. In response, we note that the preamble to the proposed rule made clear that the adjustments would be made annually (see 73 FR 72401-72402). As stated in the preamble, the formula for establishing the rate includes CMS information that is published in the Federal Register every summer and is effective beginning October 1 for the entire fiscal year. We have added information in the note to § 51.41(b)(1), explaining that adjustments will be made annually.

One commenter argued that the conclusion that the physician portion should be based on one hour per month is too little. Another commenter asked how the formula would include costs for physician extenders. Another commenter questioned whether a facility would receive a higher payment “if it is determined that each patient receives (and needs) substantially more than one hour of combined physician contact each month.” Another commenter asserted that Texas does not use salaried physicians at their State homes and questioned whether Texas State homes would receive higher amounts to offset this practice. As an alternative, the commenter asserted that State homes should be allowed to continue to use Medicare Part B for the physician portion. We made no changes based on these comments. Based on our experience, we believe that one hour is the appropriate amount of time for the calculations for all of the primary care that would be provided by physicians or physician extenders as authorized under the regulations. The rate is based on averages, and it would not be administratively feasible to make a separate formula for each facility.

One commenter further asserted that State homes should not be required to pay for outside specialist costs. We made no changes based on this comment. Outside specialty care is not considered a part of nursing home care.

One commenter asked for VA to provide sample calculations to show how the formula works for VA's computation of the higher per diem. We made no changes based on this comment. The commenter was sent a sample calculation. We would be happy to provide sample per diem calculations to others upon request (see FOR FURTHER INFORMATION CONTACT above for contact information).

One commenter asserted that the higher per diem rate should be made applicable to VA programs outside of the State home program. We made no changes based on this comment because it is not within the scope of this rulemaking proceeding. This rule implements only the statutory provisions at 38 U.S.C. 1741-1743 and 1745 regarding nursing home care provided in State homes.

Drugs and Medicines

The provisions of 38 U.S.C. 1745(b) require VA to furnish recognized State homes with such drugs and medicines as may be ordered by prescription of a duly licensed physician as specific therapy in the treatment of illness or injury for certain veterans with service-connected disabilities.

One commenter questioned whether veterans for whom the higher per diem rate is payable would also receive drugs and medicines under section 1745(b). Two commenters argued that the payment of the higher per diem for veterans should not bar the receipt of drugs and medicines under 38 U.S.C. 1712(d) and corresponding VA regulations. One of the commenters questioned whether all veterans with a service-connected disability would receive drugs and medicines under proposed § 51.41. We made no changes based on these comments. Section 1745(b) states that drugs and medicines provided under that statutory provision cannot be provided to veterans who are being provided nursing home care for which the higher per diem is payable. In addition, section 1745(a)(3) provides that payment by VA of the higher per diem constitutes payment in full to the State home for the veteran's nursing home care. We interpret this provision to mean that the higher per diem includes the cost of drugs and medicines, which provides the basis for the provision in § 51.41 that, as a condition of receiving payments, the State home must agree not to accept drugs and medicines from VA on behalf of veterans provided under 38 U.S.C. 1712(d) and corresponding VA regulations. Also, section 1745(b) does not authorize VA to provide drugs to all veterans with a service-connected disability.

One commenter questioned, for purposes of proposed § 51.42, who would determine if drugs and medicines are needed and how fast these determinations would be made. We made no changes based on these comments. As indicated in § 51.42, the physician prescribing the drug or medicine would make this determination. These determinations would be made in the normal course of business.

One commenter questioned whether a facility would have a choice in how the medications sent to the facility would be packaged, e.g., punch cards, unit doses, stock. We made no changes based on this comment. VA will work with State homes and when practical meet the requests of State homes for packaging the drugs and medications.

One commenter questioned how veterans would receive drugs and medicines that may be needed before they could be supplied by VA. Two commenters questioned how the State home would receive reimbursement for supplying such drugs and medications. We made no changes based on these comments. The statute at 38 U.S.C. 1745(b) does not authorize VA to reimburse States for the cost of drugs and medicines. However, as we have done in the existing VA program under which VA provides drugs and medicines to State homes on behalf of certain service-connected veterans, VA will work with State homes to establish working relationships that will allow for the most efficient methods of supplying drugs and medicines.

Retroactive Payments

Section 211(a)(5) of Public Law 109-461 required the higher per diem rate based on service connection to take effect on March 21, 2007 (90 days after enactment of the law). This authority also required that the provision of drugs and medicines for specified veterans take effect on the same date. Accordingly, the preamble to the proposed rule indicated that VA would make retroactive payments constituting the difference between the basic per diem actually paid and the higher per diem required for care provided to specified veterans on and after March 21, 2007. The preamble also indicated that VA would make retroactive payments constituting the amount State homes paid for drugs and medicines for specified veterans on and after March 21, 2007 (not including any administrative costs) (73 FR 72401).

The preamble to the proposed rule also asserted that VA would not make retroactive payments if the State home received any payment for such care or for such medicines and drugs from any source unless the amount received was returned to the payor (73 FR 72401). One commenter indicated that States should not be required to make refunds prior to receipt of VA payments because some States may not have sufficient funds to advance the payor. One commenter asserted that VA should establish a process for returning payments received under the Medicare and Medicaid programs. The commenter also asserted that VA should establish a process for reimbursing physicians who are not State employees and who obtained payments under Medicare Part B. One commenter asserted that a State should make repayments to the estate of a deceased veteran prior to receiving retroactive payments from VA that cover payments previously made by the veteran. We made no changes based on these comments. Regardless of whether the return of payment is made prior to VA's payment or immediately after VA's payment, the responsibility for the return of a payment rests with the State home that received the payment.

One commenter questioned whether VA will make retroactive payments from March 2007. As stated in the preamble to the proposed rule (73 FR 72401), VA will make retroactive payments for care provided on and after March 21, 2007, and for drugs and medicines provided on and after March 21, 2007.

Proposed § 51.43(d) provided that per diem payments would be made retroactively for care that was provided on and after the date of the completion of VA's survey of the facility that provided the basis for determining that the facility met VA's standards. One commenter asserted that VA should pay per diem payments retroactively back to the date the State home opened for operation. We made no changes based on this comment. The statutory provisions at 38 U.S.C. 1741(d) provide for payment of per diem to commence on the date of the completion of the inspection that recognized the State home as meeting VA's standards, as determined by the Secretary.

One commenter essentially questioned when new VA Form 10-0460 (captioned “Request for Prescription Drugs from an Eligible Veteran in a State Home”) would be used by State homes. We made no changes based on this comment. The form should be used from the effective date of this document.

Time Limits

One commenter asserted that a State home should be given 30 days to apply for retroactive payments and monthly per diem and VA should be given 30 days to act on applications and begin making payments. We made no changes based on this comment. State homes are allowed to submit immediately for VA retroactive payments and are allowed to submit requests for monthly payments as soon as they are due. The regulation imposes no deadline on when States must seek retroactive payments. VA will respond promptly to States' requests but will not establish the deadline suggested by the commenter because it is difficult to predict the availability of resources at any given time.

Compensation

One commenter asserted that those veterans receiving VA compensation should not be required to use any of such funds for the cost of their State home care. We made no changes based on this comment. We know of no basis for treating VA compensation differently from other income or other funds of a resident except that the State home is prohibited from charging a veteran for nursing home care when VA pays the higher per diem rate based on service connection because VA's payment constitutes payment in full for the care provided (see 38 U.S.C. 1745(a)(3)).

Bed Holds

We proposed to make changes to the bed hold rule. Proposed § 51.43(c) provided that per diem would be paid for a bed hold only if the veteran has established residency by being in the facility for 30 consecutive days (including overnight stays) and the facility has an occupancy rate of 90 percent or greater. In addition, we proposed that per diem for a bed hold would be paid “only for the first 10 consecutive days during which the veteran is admitted as a patient in a VA or other hospital (this could occur more than once in a calendar year) and only for the first 12 days in a calendar year during which the veteran is absent for purposes other than receiving hospital care.”

One commenter argued that residency should be established by admission and that a transfer to an acute care facility should not affect residency. The commenter further asserted that the proposed rule failed to provide a rationale for the residency requirement. One commenter asserted that the regulations should allow a bed hold for at least 15 days for a resident who is absent due to hospitalization unless the nursing home documents that it has objective information from the hospital confirming that the patient will not return to the nursing home within 15 days of the hospital admission. We made no changes based on these comments. As we indicated in the preamble to the proposed rule, VA believes that State homes should receive per diem for bed holds only if the State would likely fill the bed without such payments and only if the veteran has established residency at the State home (73 FR 72402). We believe that 30 days is a minimal amount of time for demonstrating that a veteran intends to be a resident at the State home and that the veteran was not temporarily placed in the State home.

With respect to hospital absences, one commenter questioned whether the regulations provide for VA to pay per diem “for only 10 consecutive overnight hospital absences or any number of overnight hospital absences but only up to ten consecutive days maximum period each time.” We have clarified the regulations to state that VA will provide per diem “only for the first 10 consecutive days during which the veteran is admitted as a patient for any stay in a VA or other hospital (a hospital stay could occur more than once in a calendar year).”

One commenter asserted that the 90 percent occupancy requirement should not apply to a new facility for the first two years of operation. The commenter asserted that this would afford the time to safely fill the building to the 90 percent occupancy rate. We made no changes based on this comment. The request is inconsistent with the purpose of a bed hold. As stated in the preamble to the proposed rule, payments for bed holds are intended to assure that nursing home residents who are hospitalized or who are granted leave for other purposes are assured a nursing home bed upon return to the nursing home (73 FR 72402). It is unlikely that facilities with an occupancy of less than 90 percent would fill the bed of an absent resident.

One commenter questioned how to determine when a facility has an occupancy rate of 90 percent or greater. We made no changes based on this comment. The occupancy rate would be determined by dividing the number of residents by the number of beds identified in the recognition process. If a facility is recognized as a 100 bed facility and has 90 residents, the occupancy rate is 90 percent.

One commenter asserted that their facility was constructed with a 400-bed capacity but now, because of a nurse shortage, operates at a maximum of 300 beds. The commenter asked whether the 90 percent requirement would apply to the lower amount. We made no changes based on this comment. The lower amount would apply only if the amount were based on a formal re-recognition action.

Resident Rights

Proposed § 51.70(c)(5) provided that “[u]pon the death of a resident with a personal fund deposited with the facility, the facility management must convey within 90 calendar days the resident's funds, and a final accounting of those funds, to the individual or probate jurisdiction administering the resident's estate; or other appropriate individual or entity, if State law allows.” One commenter asserted that the regulations should provide a waiver from the 90 day requirement in those cases when “funds are inadequate, there are multiple creditors and relatives and the matter is tied in probate or no relative or creditor is located or willing to open an estate.” We made no changes based on this comment. The regulations only require that the time limit be met when the funds can be conveyed “to the individual or probate jurisdiction administering the resident's estate; or other appropriate individual or entity, if State law allows.” VA sees no reason why funds should be retained for longer periods under these circumstances.

Quality of Life

Proposed § 51.100(h)(2) clarified the regulations to specify that a nursing home with 100 or more beds would be required to employ one or more qualified social workers who work for a total period that equals at least the work time of one full-time employee (FTE). We also proposed to clarify the regulations to specify that a State home must provide qualified social worker services in proportion to the total number of beds in the home, specifically one or more social worker FTE per 100 beds. For example, under the proposal a nursing home with 50 beds would be required to employ one or more qualified social workers who work for a total period equaling at least one-half FTE and a nursing home with 150 beds would be required to employ qualified social workers who work for a total period equaling at least one and one-half FTE. One commenter asserted that this requirement is too onerous and that others could perform the social work under the supervision of a social worker. The commenter further asserted that a grandfather clause, a waiver, or a phase-in time should be allowed for those not meeting the requirement. The commenter also asserted that, instead of a 1:100 ratio, VA should establish the ratio of 1:120.

We believe that a resident must have access to a quality social work program to help ensure the well being of the resident. We believe that we could increase the ratio to 1:120, which is the CMS standard and still allow for sufficient availability of social workers. Accordingly, the final rule reflects this change. However, we made no further changes because we believe that only qualified social workers would have the skills necessary to provide this specialized help needed by residents.

Resident Assessment

Section 51.110 requires facility management to “conduct initially, annually and as required by a change in the resident's condition a comprehensive, accurate, standardized, reproducible assessment of each resident's functional capacity.” Section 51.110(b)(3) also requires quarterly reassessments.

Proposed § 51.110(b)(1)(i) required officials conducting such assessments, among other things, to use the Centers for Medicare and Medicaid Services (CMS) Resident Assessment Instrument Minimum Data Set (RAI/MDS), Version 2.0. Two commenters asserted that the version will be updated and that we should use a generic reference so that we could require compliance with the changed versions as they are adopted. We made no changes based on these comments. We prefer our incremental approach because it allows us to review each new version of the standard prior to making it applicable.

Two commenters asserted that VA should clarify the purposes for such CMS RAI/MDS submissions. One of the commenters further questioned whether VA would calculate RUG scores from this information and questioned how differences between VA and facilities would be resolved. We made no changes based on these comments. The purpose for obtaining the information is not to challenge the data reviewed. VA uses the quality indicators to prepare for surveys.

Also, we proposed to require each State home to submit each assessment to VA at a VA email address. Two commenters asserted that facilities should be able to submit the data by electronic means other than email. We agree that the information should be submitted electronically in a form other than email. Accordingly, the final rule requires the submission to be made electronically to the IP address provided by VA.

Physical Environment

Proposed § 51.200 required State home facilities to meet certain provisions of the National Fire Protection Association's NFPA 101, Life Safety Code and the NFPA 99, Standard for Health Care Facilities. These documents are incorporated by reference in accordance with the provisions of 5 U.S.C. 552(a) and 1 CFR Part 51. We proposed to change the regulations to update these documents to refer to the current editions of the NFPA code and standard. One commenter asserted that the updates should apply only to new construction and renovation. The commenter further asserted that existing State homes “should be grandfathered and assessed under the standards that were in place when the Homes were constructed and initially surveyed.” These documents represent national consensus standards that are generally recognized as minimum standards for life and safety. Ultimately, we believe that State homes must work to protect residents by meeting the minimum consensus standards contained in these documents.

The standards for existing facilities take into account that some changes may take a considerable amount of time to make, such as installation of sprinkler systems for existing nursing homes. The Centers for Medicare & Medicaid Services (CMS) has determined that August 13, 2013, provides a reasonable amount of time to install sprinkler systems in existing nursing homes, as required by paragraph 19.3.5.1 in the 2006 edition of NFPA 101, which specifically states “Buildings containing nursing homes shall be protected throughout by an approved, supervised automatic sprinkler system in accordance with Section 9.7, unless otherwise permitted by 19.3.5.4.” We agree, and therefore based on the above comment we have included such a requirement in the final rule. We note that paragraph 13-3.5.1 in the 1997 edition of NFPA 101 requires sprinkler protection for buildings of certain construction types. The requirement for sprinkler protection due to construction type is also found in paragraph 19.1.6 in the 2006 edition of NFPA 101. The changes in § 51.200 are not intended to postpone enforcement of the existing requirement for sprinkler protection in nursing homes due to the construction type of the building.

The proposed rule indicated that we would incorporate by reference the 2006 edition of the standard. This was in error since the latest edition of the standard is the 2005 edition. Therefore, we are incorporating by reference the 2005 edition.

Unfunded Mandates

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in an expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any given year. This rule will have no such effect on State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

The final rule at §§ 51.43, 58.11, 58.13, and 58.18 contains collections of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The Office of Management and Budget (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. These regulations set forth a mechanism for State homes to obtain per diem payments as well as drugs and medicines.

The final rule at § 51.110 also contains a collection of information. VA has already obtained OMB clearance for the use of Minimum Data Sets (initial, annual, significant change in condition, and quarterly) (OMB Control Number 2900-0160). However, the final rule requires such Minimum Data Sets to be electronically transmitted to VA.

In a notice published in the Federal Register on November 28, 2008 (73 FR 72399), we requested public comments on these collections of information. We did not receive any comments.

OMB has approved those collections and a number of other collections in part 51 under OMB Control Numbers 2900-0160 and 2900-0091. We are adding a statement to all of the sections in part 51 for which collections have been approved so that each applicable control number is displayed for each collection.

Executive Order 12866

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Executive Order classifies a “significant regulatory action” requiring review by OMB, as any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of entitlement recipients; (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The economic, interagency, budgetary, legal, and policy implications of this final rule have been examined and it has been determined to be a significant regulatory action under Executive Order 12866 because it may result in a rule that raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

Regulatory Flexibility Act

The Secretary hereby certifies that this regulatory amendment will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This rulemaking will affect veterans, State homes, and pharmacies. The State homes that are subject to this rulemaking are State government entities under the control of State governments. All State homes are owned, operated and managed by State governments except for a small number that are operated by entities under contract with State governments. These contractors are not small entities. Also, this rulemaking will have only an insignificant impact on a small number of pharmacies that could be considered small entities. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.005, Grants to States for Construction of State Home Facilities; 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.016, Veterans State Hospital Care; 64.018, Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; 64.022, Veterans Home Based Primary Care; and 64.026, Veterans State Adult Day Health Care.

List of Subjects in 38 CFR Parts 51 and 58

• Administrative practice and procedure
• Claims
• Day care
• Dental health
• Government contracts
• Grant programs—health
• Grant programs—veterans
• Health care
• Health facilities
• Health professions
• Health records
• Incorporation by reference
• Mental health programs
• Nursing homes
• Reporting and recordkeeping requirements
• Travel and transportation expenses
• Veterans

Approved: February 27, 2009.

John R. Gingrich,

Chief of Staff, Department of Veterans Affairs.

For the reasons set forth in the preamble, 38 CFR parts 51 and 58 are amended as follows:

PART 51—PER DIEM FOR NURSING HOME CARE OF VETERANS IN STATE HOMES

1. The authority citation for part 51 is revised to read as follows:

Authority: 38 U.S.C. 101, 501, 1710, 1741-1743, 1745.

2. Amend part 51 by removing the phrase “Geriatrics and Extended Care Strategic Healthcare Group” each place it appears and adding, in its place, “Office of Geriatrics and Extended Care”.

Subpart A—General

3. Amend § 51.2 by revising the definitions of the terms “Clinical nurse specialist” and “Nurse practitioner” to read as follows:

§ 51.2

Definitions.

* * * * *

Clinical nurse specialist means a licensed professional nurse who has a Master's degree in nursing with a major in a clinical nursing specialty from an academic program accredited by the National League for Nursing and who is certified by a nationally recognized credentialing body (such as the National League for Nursing, the American Nurses Credentialing Center, or the Commission on Collegiate Nursing Education).

* * * * *

Nurse practitioner means a licensed professional nurse who is currently licensed to practice in the State; who meets the State's requirements governing the qualifications of nurse practitioners; and who is currently certified as an adult, family, or gerontological nurse practitioner by a nationally recognized body that provides such certification for nurse practitioners, such as the American Nurses Credentialing Center or the American Academy of Nurse Practitioners.

* * * * *

Subpart B—Obtaining Per Diem for Nursing Home Care in State Homes

4. Amend § 51.20 by revising paragraph (a) and adding a parenthetical statement after the authority citation, to read as follows:

§ 51.20

Application for recognition based on certification.

* * * * *

(a) Send a request for recognition and certification to the Chief Consultant, Office of Geriatrics and Extended Care (114), VA Central Office, 810 Vermont Avenue, NW., Washington, DC 20420. The request must be in the form of a letter and must be signed by the State official authorized to establish the State home;

* * * * *

(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)

5. Amend § 51.30 as follows:

a. Revise paragraph (a)(1).

b. Revise paragraphs (d), (e), and (f).

c. Add a parenthetical statement after the authority citation.

The revisions and addition read as follows:

§ 51.30

Recognition and certification.

(a)(1) The Under Secretary for Health will make the determination regarding recognition and the initial determination regarding certification, after receipt of a recommendation from the director of the VA medical center of jurisdiction regarding whether, based on a VA survey, the facility and facility management meet or do not meet the standards of subpart D of this part. The recognition survey will be conducted only after the new facility either has at least 21 residents or has a number of residents that consist of at least 50 percent of the new bed capacity of the new facility.

* * * * *

(d) If, during the process for recognition and certification, the director of the VA medical center of jurisdiction recommends that the State home facility or facility management does not meet the standards of this part or if, after recognition and certification have been granted, the director of the VA medical center of jurisdiction determines that the State home facility or facility management does not meet the standards of this part, the director will notify the State home facility in writing of the standards not met. The director will send a copy of this notice to the State official authorized to oversee operations of the facility, the VA Network Director (10N 1-22), the Chief Network Officer (10N), and the Chief Consultant, Geriatrics and Extended Care (114). The letter will include the reasons for the recommendation or decision and indicate that the State has the right to appeal the recommendation or decision.

(e) The State must submit the appeal to the Under Secretary for Health in writing, within 30 days of receipt of the notice of the recommendation or decision regarding the failure to meet the standards. In its appeal, the State must explain why the recommendation or determination is inaccurate or incomplete and provide any new and relevant information not previously considered. Any appeal that does not identify a reason for disagreement will be returned to the sender without further consideration.

(f) After reviewing the matter, including any relevant supporting documentation, the Under Secretary for Health will issue a written determination that affirms or reverses the previous recommendation or determination. If the Under Secretary for Health decides that the facility does not meet the standards of subpart D of this part, the Under Secretary for Health will withdraw recognition and stop paying per diem for care provided on and after the date of the decision (or not grant recognition and certification and not pay per diem if the appeal occurs during the recognition process). The decision of the Under Secretary for Health will constitute a final decision that may be appealed to the Board of Veterans' Appeals (see 38 U.S.C. 7104 and 7105 and 38 CFR Part 20). The Under Secretary for Health will send a copy of this decision to the State home facility and to the State official authorized to oversee the operations of the State home.

* * * * *

(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)

Subpart C—Per Diem Payments

6. Revise § 51.40 to read as follows:

§ 51.40

Basic per diem.

Except as provided in § 51.41 of this part,

(a) During Fiscal Year 2008 VA will pay a facility recognized as a State home for nursing home care the lesser of the following for nursing home care provided to an eligible veteran in such facility:

(1) One-half of the cost of the care for each day the veteran is in the facility; or

(2) $71.42 for each day the veteran is in the facility.

(b) During Fiscal Year 2009 and during each subsequent Fiscal Year, VA will pay a facility recognized as a State home for nursing home care the lesser of the following for nursing home care provided to an eligible veteran in such facility:

(1) One-half of the cost of the care for each day the veteran is in the facility; or

(2) The basic per diem rate for the Fiscal Year established by VA in accordance with 38 U.S.C. 1741(c).

(Authority: 38 U.S.C. 101, 501, 1710, 1741-1744)

7. Amend part 51 by adding new §§ 51.41 through 51.43, to read as follows:

§ 51.41

Per diem for certain veterans based on service-connected disabilities.

(a) VA will pay a facility recognized as a State home for nursing home care at the per diem rate determined under paragraph (b) of this section for nursing home care provided to an eligible veteran in such facility, if the veteran:

(1) Is in need of nursing home care for a VA adjudicated service-connected disability, or

(2) Has a singular or combined rating of 70 percent or more based on one or more service-connected disabilities or a rating of total disability based on individual unemployability and is in need of nursing home care.

(b) For purposes of paragraph (a) of this section, the rate is the lesser of the amount calculated under the paragraph (b)(1) or (b)(2) of this section.

(1) The amount determined by the following formula. Calculate the daily rate for the CMS RUG III (resource utilization groups version III) 53 case-mix levels for the applicable metropolitan statistical area if the facility is in a metropolitan statistical area, and calculate the daily rate for the CMS Skilled Nursing Prospective Payment System 53 case-mix levels for the applicable rural area if the facility is in a rural area. For each of the 53 case-mix levels, the daily rate for each State home will be determined by multiplying the labor component by the nursing home wage index and then adding to such amount the non-labor component and an amount based on the CMS payment schedule for physician services. The amount for physician services, based on information published by CMS, is the average hourly rate for all physicians, with the rate modified by the applicable urban or rural geographic index for physician work, and then with the modified rate multiplied by 12 and then divided by the number of days in the year.

Note to paragraph (b)(1):

The amount calculated under this formula reflects the applicable or prevailing rate payable in the geographic area in which the State home is located for nursing home care furnished in a non-Department nursing home (a public or private institution not under the direct jurisdiction of VA which furnishes nursing home care). Further, the formula for establishing these rates includes CMS information that is published in the Federal Register every summer and is effective beginning October 1 for the entire fiscal year. Accordingly, VA will adjust the rates annually.

(2) A rate not to exceed the daily cost of care for the month in the State home facility, as determined by the Chief Consultant, Office of Geriatrics and Extended Care, following a report to the Chief Consultant, Office of Geriatrics and Extended Care under the provisions of § 51.43(b) of this part by the director of the State home.

(c) Payment under this section to a State home for nursing home care provided to a veteran constitutes payment in full to the State home by VA for such care furnished to that veteran. Also, as a condition of receiving payments under this section, the State home must agree not to accept drugs and medicines from VA on behalf of veterans provided under 38 U.S.C. 1712(d) and corresponding VA regulations (payment under this section includes payment for drugs and medicines).

(Authority: 38 U.S.C. 101, 501, 1710, 1741-1744)

(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)

§ 51.42

Drugs and medicines for certain veterans.

(a) In addition to per diem payments under § 51.40 of this part, the Secretary shall furnish drugs and medicines to a facility recognized as a State home as may be ordered by prescription of a duly licensed physician as specific therapy in the treatment of illness or injury for a veteran receiving care in a State home, if:

(1) The veteran:

(i) Has a singular or combined rating of less than 50 percent based on one or more service-connected disabilities and is in need of such drugs and medicines for a service-connected disability; and

(ii) Is in need of nursing home care for reasons that do not include care for a VA adjudicated service-connected disability, or

(2) The veteran:

(i) Has a singular or combined rating of 50 or 60 percent based on one or more service-connected disabilities and is in need of such drugs and medicines; and

(ii) Is in need of nursing home care for reasons that do not include care for a VA adjudicated service-connected disability.

(b) VA may furnish a drug or medicine under paragraph (a) of this section only if the drug or medicine is included on VA's National Formulary, unless VA determines a non-Formulary drug or medicine is medically necessary.

(c) VA may furnish a drug or medicine under paragraph (a) of this section by having the drug or medicine delivered to the State home in which the veteran resides by mail or other means determined by VA.

(Authority: 38 U.S.C. 101, 501, 1710, 1741-1744)

§ 51.43

Per diem and drugs and medicines—principles.

(a) As a condition for receiving payment of per diem under this part, the State home must submit to the VA medical center of jurisdiction for each veteran a completed VA Form 10-10EZ, Application for Medical Benefits (or VA Form 10-10EZR, Health Benefits Renewal Form, if a completed Form 10-10EZ is already on file at VA), and a completed VA Form 10-10SH, State Home Program Application for Care—Medical Certification. These VA Forms must be submitted at the time of admission and with any request for a change in the level of care (domiciliary, hospital care or adult day health care). In case the level of care has changed or contact information is outdated, VA Forms 10-10EZ and 10-10EZR are set forth in full at § 58.12 and VA Form 10-10SH is set forth in full at § 58.13. If the facility is eligible to receive per diem payments for a veteran, VA will pay per diem under this part from the date of receipt of the completed forms required by this paragraph, except that VA will pay per diem from the day on which the veteran was admitted to the facility if the completed forms are received within 10 days after admission.

(b) VA pays per diem on a monthly basis. To receive payment, the State must submit to the VA medical center of jurisdiction a completed VA Form 10-5588, State Home Report and Statement of Federal Aid Claimed. This form is set forth in full at § 58.11 of this chapter.

(c) Per diem will be paid under §§ 51.40 and 51.41 for each day that the veteran is receiving care and has an overnight stay. Per diem also will be paid when there is no overnight stay if the veteran has resided in the facility for 30 consecutive days (including overnight stays) and the facility has an occupancy rate of 90 percent or greater. However, these payments will be made only for the first 10 consecutive days during which the veteran is admitted as a patient for any stay in a VA or other hospital (a hospital stay could occur more than once in a calendar year) and only for the first 12 days in a calendar year during which the veteran is absent for purposes other than receiving hospital care.

(d) Initial per diem payments will not be made until the Under Secretary for Health recognizes the State home. However, per diem payments will be made retroactively for care that was provided on and after the date of the completion of the VA survey of the facility that provided the basis for determining that the facility met the standards of this part.

(e) The daily cost of care for an eligible veteran's nursing home care for purposes of §§ 51.40(a)(1) and 51.41(b)(2) consists of those direct and indirect costs attributable to nursing home care at the facility divided by the total number of residents at the nursing home. Relevant cost principles are set forth in the Office of Management and Budget (OMB) Circular number A-87, dated May 4, 1995, “Cost Principles for State, Local, and Indian Tribal Governments.”

(f) As a condition for receiving drugs and medicines under this part, the State must submit to the VA medical center of jurisdiction a completed VA Form 10-0460 for each eligible veteran. This form is set forth in full at § 58.18 of this chapter. The corresponding prescriptions described in § 51.42 also should be submitted to the VA medical center of jurisdiction.

(Authority: 38 U.S.C. 101, 501, 1710, 1741-1744)

(The Office of Management and Budget has approved the information collection requirements in this section under control numbers 2900-0091 and 2900-0160.)

Subpart D—Standards

8. Amend § 51.70, in paragraph (c)(5), by removing “30 days” and adding, in its place, “90 calendar days” and after the authority citation by adding

“(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)”.

9. Amend §§ 51.80, and 51.90 by adding after the authority citation for each section

“(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.).”

10. Amend § 51.100, by revising paragraph (h)(2) and adding a parenthetical statement after the authority citation, to read as follows:

§ 51.100

Quality of life.

* * * * *

(h) * * *

(2) For each 120 beds, a nursing home must employ one or more qualified social workers who work for a total period that equals at least the work time of one full-time employee (FTE). A State home that has more or less than 120 beds must provide qualified social worker services on a proportionate basis (for example, a nursing home with 60 beds must employ one or more qualified social workers who work for a total period equaling at least one-half FTE and a nursing home with 180 beds must employ qualified social workers who work for a total period equaling at least one and one-half FTE).

* * * * *

(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)

11. Amend § 51.110 by:

a. Revising paragraph (b)(1)(i).

b. Removing paragraph (b)(1)(iii).

c. Redesignating paragraphs (d) and (e) as paragraphs (e) and (f), respectively.

d. Adding a new paragraph (d).

e. Adding a parenthetical statement after the authority citation. The revision and additions read as follows:

§ 51.110

Resident assessment.

* * * * *

(b) * * *

(1) * * *

(i) Using the Centers for Medicare and Medicaid Services (CMS) Resident Assessment Instrument Minimum Data Set, Version 2.0; and

* * * * *

(d) Submission of assessments. Each assessment (initial, annual, change in condition, and quarterly) using the Centers for Medicare and Medicaid Services (CMS) Resident Assessment Instrument Minimum Data Set, Version 2.0 must be submitted electronically to VA at the IP address provided by VA to the State within 30 days after completion of the assessment document.

* * * * *

(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)

12. Amend §§ 51.120, 51.130, 51.150, 51.160, 51.180, and 51.190 by adding after the authority citation for each section “(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)”.

13. Amend § 51.200, by:

a. In paragraph (a), removing the phrase, “(1997 edition)” and adding, in its place, “(2006 edition), except that the requirement in paragraph 19.3.5.1 for all buildings containing nursing homes to have an automatic sprinkler system is not applicable until August 13, 2013, unless an automatic sprinkler system was previously required by the Life Safety Code”; removing the phrase, “(1996 edition)” each time it appears and adding, in its place, “(2005 edition)”; and removing “Office of Regulations Management (02D), Room 1154,” and adding, in its place “Office of Regulation Policy and Management (02REG),” and by removing “or at” and adding, in its place “, call 202-461-4902, or at”.

b. In paragraph (b), removing the phrase, “(1997 edition)” each time it appears and adding, in its place, “(2006 edition)” and removing the phrase, “(1996 edition)” each time it appears and adding, in its place, “(2005 edition)”; and

14. Amend §§ 51.210 by adding after the authority citation “(The Office of Management and Budget has approved the information collection requirements in this section under control number 2900-0160.)”.

PART 58—FORMS

15. The authority citation for part 58 is revised to read as follows:

Authority: 38 U.S.C. 101, 501, 1710, 1741-1743, 1745.

16. Amend § 58.11 by revising VA Form 10-5588 to read as follows:

§ 58.11

VA Form 10-5588—State Home Report and Statement of Federal Aid Claimed.

17. Amend § 58.12 by:

a. Revising the section heading.

b. Revising VA Form 10-10EZ.

c. Adding VA Form 10-10EZR.

The revisions and addition read as follows:

§ 58.12

VA Forms 10-10EZ and 10-10EZR—Application for Health Benefits and Renewal Form.

18. Amend § 58.13 by revising VA Form 10-10SH to read as follows:

§ 58.13

VA Form 10-10SH—State Home Program Application for Veteran Care Medical Certification.

19. Add § 58.18 to read as follows:

§ 58.18

VA Form 10-0460—Request for Prescription Drugs from an Eligible Veteran in a State Home.