Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 /Rules and Regulations 39509

1Standards For Business Practices Of Interstate

Natural Gas Pipelines, Order No. 587–G, 63 FR

20072 (Apr. 23, 1998), III FERC Stats. & Regs.

Regulations Preambles ¶ 31,062 (Apr. 16, 1998).

2Standards For Business Practices Of Interstate

Natural Gas Pipelines, Order No. 587, 61 FR 39053

(Jul. 26, 1996), III FERC Stats. & Regs. Regulations

Preambles ¶ 31,038 (Jul. 17, 1996), Order No. 587–

B, 62 FR 5521 (Feb. 6, 1997), III FERC Stats. & Regs.

Regulations Preambles ¶ 31,046 (Jan. 30, 1997),

Order No. 587–C, 62 FR 10684 (Mar. 10, 1997), III

FERC Stats. & Regs. Regulations Preambles ¶ 31,050

(Mar. 4, 1997).

3 18 CFR 284.10(b)(1)(i) (1997), Nominations

Related Standards 1.3.10.

4 18 CFR 284.10(b)(1)(i) (1997), Nominations

Related Standards 1.2.4.

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

18 CFR Part 284

[Docket No. RM96–1–008; Order No. 587–

H]

Standards for Business Practices of

Interstate Natural Gas Pipelines

Issued: July 15, 1998.

AGENCY: Federal Energy Regulatory

Commission, DOE.

ACTION: Final Rule and Order

Establishing Implementation Date.

SUMMARY: The Federal Energy

Regulatory Commission (Commission) is

amending its regulations governing

standards for conducting business

practices and electronic communication

with interstate natural gas pipelines.

The Commission is incorporating by

reference the standards relating to intraday nominations promulgated March

12, 1998 by the Gas Industry Standards

Board (GISB). The Commission also is

establishing the implementation date for

intra-day nomination regulations

adopted in Order No. 587–G published

in the Federal Register April 23, 1998.

DATES: Effective Date: The rule is

effective August 24, 1998.

Incorporation by Reference: The

incorporation by reference of certain

publications listed in the rule is

approved by the Director of the Federal

Register as of August 24, 1998.

Implementation Date: Pipelines are to

implement the intra-day nomination

regulations adopted in this rule and in

Order No. 587–G published at 63 FR

20072 by November 2, 1998.

ADDRESSES: Federal Energy Regulatory

Commission, 888 First Street, N.E.,

Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:

Michael Goldenberg, Office of the

General Counsel, Federal Energy

Regulatory Commission, 888 First

Street, NE, Washington, DC 20426, (202)

208–2294; Marvin Rosenberg, Office of

Economic Policy, Federal Energy

Regulatory Commission, 888 First

Street, N.E., Washington, DC 20426,

(202) 208–1283; Kay Morice, Office of

Pipeline Regulation, Federal Energy

Regulatory Commission, 888 First

Street, N.E., Washington, DC 20426,

(202) 208–0507.

SUPPLEMENTARY INFORMATION: In

addition to publishing the full text of

this document in the Federal Register,

the Commission also provides all

interested persons an opportunity to

inspect or copy the contents of this

document during normal business hours

in the Public Reference Room at 888

First Street, N.E., Room 2A,

Washington, D.C. 20426.

The Commission Issuance Posting

System (CIPS) provides access to the

texts of formal documents issued by the

Commission. CIPS can be accessed via

Internet through FERC’s Homepage

(http://www.ferc.fed.us) using the CIPS

Link or the Energy Information Online

icon. The full text of this document will

be available on CIPS in ASCII and

WordPerfect 6.1 format. CIPS is also

available through the Commission’s

electronic bulletin board service at no

charge to the user and may be accessed

using a personal computer with a

modem by dialing 202–208–1397, if

dialing locally, or 1–800–856–3920, if

dialing long distance. To access CIPS,

set your communications software to

19200, 14400, 12000, 9600, 7200, 4800,

2400, or 1200 bps, full duplex, no

parity, 8 data bits and 1 stop bit. User

assistance is available at 202–208–2474

or by E-mail to

CipsMaster@FERC.fed.us.

This document is also available

through the Commission’s Records and

Information Management System

(RIMS), an electronic storage and

retrieval system of documents submitted

to and issued by the Commission after

November 16, 1981. Documents from

November 1995 to the present can be

viewed and printed. RIMS is available

in the Public Reference Room or

remotely via Internet through FERC’s

Homepage using the RIMS link or the

Energy Information Online icon. User

assistance is available at 202–208–2222,

or by E-mail to

RimsMaster@FERC.fed.us.

Finally, the complete text on diskette

in WordPerfect format may be

purchased from the Commission’s copy

contractor, La Dorn System Corporation.

La Dorn Systems Corporation is located

in the Public Reference Room at 888

First Street, N.E., Washington, D.C.

20426.

Final Rule Adopting Standards for

Intra-Day Nominations and Order

Establishing Implementation Date

Before Commissioners: James J. Hoecker,

Chairman; Vicky A. Bailey, William L.

Massey, Linda Breathitt, and Curt He ́bert, Jr.

The Federal Energy Regulatory

Commission (Commission) is amending

§ 284.10 of its regulations to incorporate

by reference the most recent standards

dealing with intra-day nominations and

nomination and scheduling procedures

promulgated by the Gas Industry

Standards Board (GISB) on March 12,

1998. The Commission adopted

regulations regarding intra-day

nominations in Order No. 587–G 1

(§ 284.10(c)(1)(i)), but deferred

implementation of these regulations

until GISB had considered, and the

Commission had adopted,

implementing standards. This rule

adopts the necessary implementation

standards, and, therefore, Commission

is establishing November 2, 1998 as the

date for pipeline implementation of the

requirements of this rule and the

requirements of § 284.10(c)(1)(i).

1. Background

In Order Nos. 587, 587–B, and 587–

C2 the Commission adopted regulations

to standardize the business practices

and communication methodologies of

interstate pipelines in order to create a

more integrated and efficient pipeline

grid. In those orders, the Commission

incorporated by reference consensus

standards developed by GISB, a private,

consensus standards developer

composed of members from all segments

of the natural gas industry.

In Order No. 587, the Commission

adopted a standard requiring pipelines

to permit shippers to make at least one

intra-day nomination per day.3 An intraday nomination is a nomination

submitted after the initial nomination

deadline at 11:30 a.m. to change a

shipper’s scheduled quantities for the

next gas day.4

In Order No. 587–C, the Commission

did not adopt additional standards

approved by GISB concerning intra-day

nominations, because the standards did

not clearly outline the pipelines’

obligations. The Commission further

noted that pipelines had implemented

GISB’s previous intra-day standards in

divergent ways, for instance, by

establishing different times for

submission of intra-day nominations.

These differences prevented shippers

from coordinating their intra-day

nominations across the pipeline grid.

The Commission gave GISB and the

industry until September 1, 1997, to

propose additional standards that would

create the needed uniformity in intraday procedures.
39510 Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 /Rules and Regulations

5Rehearing of Order No. 587–G is pending.

6Standards for Business Practices of Interstate

Natural Gas Pipelines, Notice of Proposed

Rulemaking, 63 FR 19861 (Apr. 22, 1998), IV FERC

Stats. & Regs. Proposed Regulations ¶ 32,529 (Apr.

16, 1998).

7The new standards are 1.1.17 through 1.1.19,

1.2.8 through 1.2.12, 1.3.39 through 1.3.44. In

addition, modifications were made to existing

standards. Standards 1.2.7, 1.3.10, and 1.3.12 were

deleted. Standards 1.3.2, 1.3.20, 1.3.22, and 1.3.32

were revised.

8The term ‘‘TSP’’ in the chart stands for

transportation service provider.

On September 2, 1997, GISB filed a

report detailing its progress in reaching

consensus on the intra-day standards.

While GISB reported making significant

progress in developing the standards, it

highlighted conflicts between its

members that were inhibiting

completion of the standards. The

disagreements concerned the

circumstances under which intra-day

nominations by shippers holding firm

capacity should be given scheduling

priority over previously scheduled

interruptible service.

In Order No. 587–G, the Commission

resolved these conflicts. It issued a

regulation requiring pipelines to accord

an intra-day nomination submitted by a

firm shipper scheduling priority over

nominated and scheduled volumes for

interruptible shippers.5 The

Commission, however, deferred

implementation of this requirement

until GISB had developed, and the

Commission had adopted, standards to

implement the regulation.

On April 16, 1998, the Commission

issued a Notice of Proposed Rulemaking

(NOPR),6 proposing to adopt standards

governing intra-day nominations

adopted by a consensus of the GISB

membership on March 12, 1998.7 The

proposed date for implementing these

standards was September 1, 1998.

The standards establish three

synchronization times for shippers to

coordinate their intra-day nominations:

6 p.m. to take effect the next gas day;

and 10 a.m. and 5 p.m. to take effect on

the same gas day. Under the standards,

the 10 a.m. intra-day nomination would

become effective, if confirmed, at 5 p.m.

the same day, with any bumping notice

to interruptible shippers given by 2 p.m.

The 5 p.m. intra-day nomination would

become effective, if confirmed, at 9 p.m.

the same day. No bumping is allowed at

the 5 p.m. nomination. The 6 p.m. intraday nomination would become

effective, if confirmed, at 9 a.m. the next

morning if all parties can be scheduled

and bumping notice for the 6 p.m. intraday nomination would be given by 10

p.m. GISB, however, did not establish

the time at which a bumping intra-day

nomination would become effective,

leaving that determination for the

Commission. The following chart

illustrates the nomination timeline

(with a blank for the effective time of a

bumping 6 p.m. nomination).8
Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 /Rules and Regulations 39511

9 18 CFR 284.10(c)(1)(i)(B). Central clock time

adjusts for daylight savings time.

10Order No. 587, 61 FR at 39057, GISB’s III FERC

Stats. & Regs. Regulations Preambles at 30,059–60.

GISB’s consensus process requires a super-majority

vote of 17 out of 25 members with support from at

least two members from each of the five industry

segments—interstate pipelines, local distribution

companies, gas producers, end-users, and services

(including marketers and computer service

providers). For final approval, 67% of GISB’s

general membership must ratify the standards.

The standards also establish protocols

for pipeline processing of nominations

and confirmations for both regular and

intra-day nominations.

As discussed above, the standards do

not establish the time at which a firm

intra-day nomination submitted on the

day prior to gas flow (6 p.m.), which

bumps interruptible service, would take

effect. The standards leave that time to

be determined by the Commission. The

Commission already has resolved this

issue in Order No. 587–G, adopting a

regulation requiring that an intra-day

nomination submitted on the day prior

to gas flow will take effect at the start

of the gas day, 9 a.m. central clock time

(CCT).9

Comments on the NOPR were filed by

American Gas Association (AGA), Enron

Interstate Pipelines (Enron), Natural Gas

Clearinghouse (NGC), Natural Gas

Supply Association (NGSA), ProLiance

Energy, LLC (ProLiance), TransCapacity

Limited Partnership (TransCapacity),

and Williston Basin Interstate Pipeline

Company (Williston Basin).

2. Discussion

The Commission is incorporating the

GISB intra-day nomination standards

into its regulations. As the Commission

found in Order No. 587, adoption of

consensus standards is appropriate

because the consensus process helps

ensure the reasonableness of the

standards by requiring that the

standards draw support from a broad

spectrum of all segments of the

industry.10 Moreover, since the industry

itself has to conduct business under

these standards, the standards should

reflect those business practices that

have the widest possible support.

Section 12(d) of the National

Technology Transfer and Advancement

Act (NTT&AA) of 1995 requires federal

agencies to, whenever possible, use

technical standards developed by

voluntary consensus standards
39512 Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 /Rules and Regulations

11Pub. L. 104–113, section 12(d), 110 Stat. 775

(1996), 15 U.S.C. 272 note (1997).

12Former 18 CFR 284.10(b)(1)(i) (1997),

Nominations Related Standards 1.3.10 (1997).

13See Tennessee Gas Pipeline Company, 78 FERC

¶ 61,007, at 61,019–20 (1997); Texas Eastern

Transmission Corporation, 77 FERC ¶ 61,175, at

61,649 (1996).

14The scheduled quantities document is a

electronic transmittal from the pipeline showing the

quantity of gas scheduled. 18 CFR 284.10(b)(1)(i)

(1997).

15 18 CFR 284.10(c)(3)(vi).

16Order No. 587–G, 63 FR at 20079; III FERC

Stats. & Regs. Regulations Preambles at 30,673–74.

17 18 CFR 284.10(c)(1)(B) (intra-day nomination

prior to gas flow will take effect at 9 a.m. CCT);

Order No. 587–G, 63 FR at 20079, III FERC Stats.

& Regs. Regulations Preambles at 30,673

(Commission will not require overnight

rescheduling opportunity).

organizations, like GISB, to carry out

policy objectives or activities.11

Adoption of these standards will

further the Commission’s policy of

adopting regulations that create a more

integrated and efficient interstate

pipeline grid. The adoption of these

standards will expand from one to three

the number of intra-day opportunities to

which shippers are entitled and will,

therefore, provide them with greater

opportunities to change their nominated

quantities to better accord with changes

in weather or other market

circumstances. By creating times at

which shippers can synchronize their

intra-day nominations across pipelines,

these standards, together with the

Commission’s regulations adopted in

Order No. 587–G, will create the

uniform process shippers need to

coordinate their intra-day nominations

across the pipeline grid. The standards

governing nomination and confirmation

procedures, further, should help create

a more reliable nomination process in

which pipelines will receive accurate

information, so they can schedule

nominations and intra-day nominations

that their systems can accommodate.

The commenters all support adoption

of the GISB standards, although some

suggest modifications or clarifications.

Enron requests that the Commission

extend the implementation date from

September 1, 1998, until November 1,

1998, to give those pipelines which

currently do not permit firm intra-day

nominations to bump interruptible

nominations sufficient time to

reprogram their computers to

accommodate bumping. To permit

pipelines to implement these standards

with a minimum of errors, the

Commission will defer the

implementation date until November 2,

1998. This extension still will provide

shippers with the additional intra-day

flexibility accorded by the standards in

time for the winter heating season.

NGC and NGSA request clarification

of revised standard 1.3.32 which

provides that:

For services that provide for intraday

nominations and scheduling, there is no

limitation as to the number of intraday

nominations (line items as per GISB Standard

1.2.1) which a service requester may submit

at any one standard nomination cycle or in

total across all standard nomination cycles.

Transportation Service Providers may (for an

interim period expiring on April 1, 1999)

limit Service Requesters to one transmittal of

nominations per standard intraday

nomination cycle, (excluding corrections of

errors identified in the Quick Response).

They contend that the sentence

permitting pipelines to limit shippers’

intra-day nominations prior to April 1,

1999, to one nomination per intra-day

nomination cycle should be interpreted

to permit one intra-day nomination per

contract.

The requested clarification comports

with Commission policy. Prior to this

change, Commission regulations

required that the pipelines provide

shippers with only one intra-day

nomination opportunity.12 The

Commission’s policy has been that the

single intra-day nomination opportunity

is available for each contract between

the shipper and the pipeline and that

the shipper can use this opportunity to

request changes at all receipt and

delivery points.13

NGC and NGSA further point out that

the regulations provide for pipelines to

notify interruptible shippers that they

are being bumped, but that the

regulations do not specify the form of

notice. They maintain that notice

limited to the scheduled quantities

document is not sufficient,14 because

gas producers would have to monitor

pipeline web sites until 10 p.m. at night

to make sure they receive the notice.

They argue that the bumping notice

should be provided by telephone or

facsimile or, at least, by Internet E-mail

or direct Internet notification to the

shipper’s URL address, the methods the

Commission chose for pipeline

notification of operational flow orders

(OFOs) in Order No. 587–G.15

The Commission finds this request

reasonable and will expect that, in

addition to notification through the

scheduled quantities statement,

pipelines should provide direct notice

of bumping using Internet E-mail or

direct notification to a shipper’s Internet

URL address when they comply with

the requirement in Order No. 587–G.

Until that time, the pipelines should

provide notice of bumping in the same

manner they currently provide notice of

OFOs.

TransCapacity and NGC submitted

comments that are not germane to this

rulemaking, but instead relate to issues

resolved in Order No. 587–G.

TransCapacity requests that the

Commission make clear that secondary

firm transportation once scheduled has

priority over primary firm intra-day

nominations. As the Commission found

in Order No. 587–G, its regulations

provide only that firm intra-day

nominations have priority over

nominated and scheduled interruptible

service. The Commission did not revise

or change current pipeline tariffs with

respect to the scheduling priority of firm

primary and firm secondary

transportation.16

NGC contends that the Commission

should revisit its determination in Order

No. 587–G that the 6 p.m. intra-day

nomination should take effect at 9 a.m.

or, in the alternative, that shippers be

given an overnight rescheduling

opportunity. These policy issues were

resolved in Order No. 587–G 17, which is

pending rehearing. Such issues are not

appropriately raised with respect to the

standards adopted in this rule, which

involve only the schedule for intra-day

nominations.

3. Implementation Schedule for IntraDay Nominations

In Order No. 587–G, the Commission

deferred implementation of its

regulations relating to intra-day

nominations, § 284.10(c)(1)(i), until

GISB developed, and the Commission

adopted, implementing standards. This

order adopts the necessary

implementation standards, and the

Commission is establishing a November

2, 1998 implementation date for the

standards adopted in this order and

§ 284.10(c)(1)(i) of the Commission

regulations. Pipelines must file revised

tariff sheets to implement these

regulations not more than 60 and not

less than 30 days prior to the November

2, 1998 implementation date.

4. Information Collection Statement

OMB’s regulations in 5 CFR 1320.11

require that it approve certain reporting

and recordkeeping requirements

(collections of information) imposed by

an agency. Upon approval of a

collection of information, OMB shall

assign an OMB control number and an

expiration date. Respondents subject to

the filing requirements of this Rule shall

not be penalized for failing to respond

to these collections of information

unless the collections of information

display valid OMB control numbers.
Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 /Rules and Regulations 39513

18Order No. 486, Regulations Implementing the

National Environment Policy Act, 52 FR 47897

(Dec. 17, 1987), FERC Stats. & Regs. Preambles

1986–1990 ¶ 30,783 (1987).

19 18 CFR 380.4.

20See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5),

380.4(a)(27).

21 5 U.S.C. 601–612.

The collections of information related

to the subject of this Final Rule fall

under FERC–545, Gas Pipeline Rates:

Rate Change (Non-Formal) (OMB

Control No. 1902–0154) and FERC–549–

C, Standards for Business Practices of

Interstate Natural Gas Pipelines (OMB

Control No. 1902–0174). The following

estimates of burden are related only to

this rule and include only the costs of

complying with GISB’s new and revised

standards relating to intra-day

nominations. The burden estimates are

primarily related to start-up and will not

be on-going costs.

Public Reporting Burden: (Estimated

Annual Burden).

Data collection Number of respondents

Number of responses per

respondent

Estimated burden hours per

response

Total annual

hours

FERC–549C ..................................................................................................... 93 1 45 4,185

FERC–545 ........................................................................................................ 93 1 47 4,371

The total annual hours for collection (including recordkeeping) is estimated to be 8,556. The average annualized

cost for all 93 respondents is projected to be the following:

FERC–549C FERC–545 Totals

Annualized Capital/Startup Costs ................................................................................................ $220,252 $230,041 $450,293

Annualized Costs (Operations & Maintenance) ........................................................................... 0 0 0

Total Annualized Costs ......................................................................................................... $220,252 $230,041 $450,293

The Commission regulations adopted

in this order are necessary to further the

process begun in Order No. 587 of

standardizing business practices and

electronic communications with

interstate pipelines. Adoption of these

regulations will provide shippers with

increased options to change their

scheduled gas quantities to reflect

weather and other changed conditions

and enable shippers to more efficiently

transact business across multiple

pipelines.

The Commission has assured itself, by

means of its internal review, that there

is specific, objective support for the

burden estimates associated with the

information requirements. The

information required in this Final Rule

will be reported directly to the industry

users and later be subject to audit by the

Commission. This information also will

be retained for a three year period. The

implementation of these data

requirements will help the Commission

carry out its responsibilities under the

Natural Gas Act and conforms to the

Commission’s plan for efficient

information collection, communication,

and management within the natural gas

industry.

Interested persons may obtain

information on the reporting

requirements by contacting the Federal

Energy Regulatory Commission, 888

First Street, N.E., Washington, DC 20426

[Attention: Michael Miller, Information

Services Division, 202–208–1415] or the

Office of Management and Budget

[Attention: Desk Officer for the Federal

Energy Regulatory Commission 202–

395–3087].

5. Environmental Analysis

The Commission is required to

prepare an Environmental Assessment

or an Environmental Impact Statement

for any action that may have a

significant adverse effect on the human

environment.18 The Commission has

categorically excluded certain actions

from these requirements as not having a

significant effect on the human

environment.19 The actions taken here

fall within categorical exclusions in the

Commission’s regulations for rules that

are clarifying, corrective, or procedural,

for information gathering, analysis, and

dissemination, and for sales, exchange,

and transportation of natural gas that

requires no construction of facilities.20

Therefore, an environmental assessment

is unnecessary and has not been

prepared in this rulemaking.

6. Regulatory Flexibility Act

Certification

The Regulatory Flexibility Act of 1980

(RFA) 21 generally requires a description

and analysis of final rules that will have

significant economic impact on a

substantial number of small entities.

The regulations adopted here impose

requirements only on interstate

pipelines, which are not small

businesses, and, these requirements are,

in fact, designed to reduce the difficulty

of dealing with pipelines by all

customers, including small businesses.

Accordingly, pursuant to section 605(b)

of the RFA, the Commission hereby

certifies that the regulations proposed

herein will not have a significant

adverse impact on a substantial number

of small entities.

7. Effective Date

These regulations become effective

August 24, 1998. The Commission has

concluded, with the concurrence of the

Administrator of the Office of

Information and Regulatory Affairs of

OMB, that this rule is not a ‘‘major rule’’

as defined in section 251 of the Small

Business Regulatory Enforcement

Fairness Act of 1996.

List of Subjects in 18 CFR Part 284

Continental shelf, Incorporation by

reference, Natural gas, Reporting and

recordkeeping requirements.

By the Commission.

David P. Boergers,

Acting Secretary.

In consideration of the foregoing, the

Commission amends Part 284, Chapter I,

Title 18, Code of Federal Regulations, as

set forth below.

PART 284—CERTAIN SALES AND

TRANSPORTATION OF NATURAL GAS

UNDER THE NATURAL GAS POLICY

ACT OF 1978 AND RELATED

AUTHORITIES

1. The authority citation for part 284

continues to read as follows:

Authority: 15 U.S.C. 717–717w, 3301–

3432; 42 U.S.C. 7101–7532; 43 U.S.C. 1331–

1356.

2. In section 284.10, paragraph

(b)(1)(i) is revised to read as follows:

§ 284.10 Standards for Pipeline Business

Operations and Communications.

* * * * *

(b) * * *

(1) * * *
39514 Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 /Rules and Regulations

(i) Nominations Related Standards

(Version 1.2, July 31, 1997), with the

addition of standards 1.1.17 through

1.1.19, 1.2.8 through 1.2.12, 1.3.39

through 1.3.44 (as approved March 12,

1998), the modification of standards

1.3.2, 1.3.20, 1.3.22, 1.3.32 (as approved

March 12, 1998), and the deletion of

standards 1.2.7, 1.3.10, and 1.3.12;

* * * * *

[FR Doc. 98–19368 Filed 7–22–98; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF VETERANS

38 CFR Part 17

RIN 2900–AH66

Payment for Non-VA Physician

Services Associated with Either

Outpatient or Inpatient Care Provided

at Non-VA Facilities

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

SUMMARY: This document amends

Department of Veterans Affairs (VA)

medical regulations concerning

payment for non-VA physician services

that are associated with either

outpatient or inpatient care provided to

eligible VA beneficiaries at non-VA

facilities. Generally, when a servicespecific reimbursement amount has

been calculated under Medicare’s

Participating Physician Fee Schedule,

VA would pay the lesser of the actual

billed charge or the calculated amount.

Also, when an amount has not been

calculated or when the services

constitute anesthesia services, VA

would pay the amount calculated under

a 75th percentile formula or, in certain

limited circumstances, VA would pay

the usual and customary rate. Adoption

of this final rule is intended to establish

reimbursement consistency among

federal health benefits programs to

ensure that amounts paid to physicians

better represent the relative resource

inputs used to furnish a service, and to

achieve program cost reductions.

Further, consistent with statutory

requirements, the regulations continue

to specify that VA payment constitutes

payment in full.

DATES: Effective Date: August 24, 1998.

FOR FURTHER INFORMATION CONTACT:

Abby O’Donnell, Health Administration

Service (10C3), Department of Veterans

Affairs, 810 Vermont Avenue, NW,

Washington, DC 20420, (202) 273–8307.

(This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: In a

document published in the Federal

Register on July 22, 1997 (62 FR 39197),

we proposed to amend the medical

regulations concerning payment

(regardless of whether or not authorized

in advance) for non-VA physician

services associated with either

outpatient or inpatient care provided to

eligible VA beneficiaries at non-VA

facilities. We provided a 60-day

comment period, which ended

September 22, 1997. We received

comments from seven sources.

For reasons explained below, the final

rule contains only one conversion factor

for calculations under Medicare’s

Participating Physicians Fee Schedule

and the proposed provisions are not

made applicable for anesthesia services.

Otherwise, no changes are made in

response to comments and, based on the

rationale set forth in the proposed rule

and this document, the provisions of the

proposed rule are adopted as a final

rule.

Comments

All of the comments opposed the

proposal based on the assertion that VA

should not lessen physician fees.

• Three commenters asserted that VA

should not use Medicare’s Participating

Physicians Fee Schedule because it was

designed for Medicare patient

populations and not for VA populations.

• One commenter opposed the use

Medicare’s Participating Physicians Fee

Schedule by asserting that VA should

not use the geographic adjustment

factors unless necessary ‘‘to achieve

explicit policy goals (e.g., targeted

adjustments for demonstrated shortfalls

in access to care).’’

• Two commenters opposed the use

of Medicare’s Participating Physicians

Fee Schedule by asserting that VA

should not use Medicare’s conversion

factors. They recommended that VA

establish a conversion factor that would

not lessen physician payments. One of

the commenters stated that the Medicare

conversion factors should not be used

because they are ‘‘constrained by

budget-neutrality and other

considerations, such as the Medicare

Volume Performance Standard system,

that are not applicable to VA.’’

• One commenter who practices

psychiatry in a semi-rural area asserted

that his expenses are high and that if VA

adopted Medicare’s Participating

Physicians Fee Schedule some

procedures would be billed at rates ‘‘at

or below’’ his overhead expense.

• Three commenters questioned

whether the availability and quality of

care would be lessened by the adoption

of Medicare’s Participating Physicians

Fee Schedule.

• One commenter asserted that before

VA adopt payment methodology based

on Medicare principles, VA should

sponsor an independent study and

consult with physician groups.

• Two commenters opposed the

adoption of the Medicare fee schedule

for anesthesia services.

Response to Comments

As stated in the proposed rule, one of

the basic reasons for conducting this

rulemaking proceeding was to achieve

cost reductions. We believe, particularly

in this budget-sensitive era, that it is

sound policy to seek to achieve this

objective. Also, we note that the

Medicare formula does not merely relate

to individuals eligible for Medicare. It is

based on principles applicable to all

individuals, including veterans.

Moreover, even though we could

establish different conversion factors

and even though VA is not ‘‘constrained

by budget-neutrality and other

considerations, such as the Medicare

Volume Performance Standard system,’’

we believe that we should not have to

pay more than the Department of Health

and Human Services pays for physician

services.

Further, regardless of whether some

physicians’ ‘‘overhead payments’’ might

be out of proportion to the amount of

payment received from VA, we do not

believe that this final rule would cause

this to be a common occurrence. In

addition, we do not expect that the

adoption of this final rule would lessen

significantly the availability and quality

of physician care for veterans, and we

believe that even without additional

studies, the rationale in the proposed

rule and this document provide an

adequate basis for this final rule.

The proposed rule was intended to

provide for reimbursement based on the

lesser of the actual billed charge or the

amount calculated under Medicare’s

Participating Physician Fee Schedule.

The formula for Medicare’s Participating

Physician Fee Schedule has been

changed (see 62 FR 59048, 59261). For

services other than anesthesia, the

Medicare formula was changed to have

one conversion factor instead of three

(previously, the Medicare formula

contained a separate conversion factor

for surgical services, nonsurgical

services, and primary care services).

Accordingly, the final rule also makes

this adjustment in the Medicare

formula.

Anesthesia Services

The Medicare formula includes

separate provisions for anesthesia

services. These separate anesthesia

provisions were not included in the

proposed rule. We intend to publish a

new proposal concerning this issue in