[Federal Register Volume 87, Number 133 (Wednesday, July 13, 2022)]
[Rules and Regulations]
[Pages 41594-41603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-14285]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AP02


Civilian Health and Medical Program of the Department of Veterans 
Affairs

AGENCY: Department of Veterans Affairs

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) adopts as final, with 
changes, a proposed rule to amend its medical regulations concerning 
the Civilian Health and Medical Program of the Department of Veterans 
Affairs (CHAMPVA). The final rule clarifies

[[Page 41595]]

and updates these regulations to conform to changes in law and policy 
that control the administration of CHAMPVA and include details 
concerning the administration of CHAMPVA that were previously not 
reflected in regulation. The amendments improve our ability to 
effectively administer CHAMPVA and make technical revisions to make our 
regulations more understandable. In addition, this rulemaking expands 
covered services and supplies, to include certain preventive services, 
and eliminates cost-share amounts and deductibles for certain covered 
services.

DATES: Effective date: This final rule is effective August 12, 2022.
    Applicability date: The provisions of this final rule shall apply 
to all applications for benefits that are received by VA on or after 
the effective date of this final rule or that are pending before VA, 
the United States Court of Appeals for Veterans Claims, or the United 
States Court of Appeals for the Federal Circuit on the effective date 
of this final rule.

FOR FURTHER INFORMATION CONTACT: Joseph Duran, Director, Policy and 
Planning, Office of Integrated Veteran Care (OIVC), 3773 Cherry Creek 
North Drive, Denver, Colorado 80209, <a href="/cdn-cgi/l/email-protection#175d786472677f3953626576792557617639707861"><span class="__cf_email__" data-cfemail="f5bf9a8690859ddbb18087949bc7b58394db929a83">[email protected]</span></a>, (303) 370-
1637. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: CHAMPVA is a health benefits program in 
which the Department of Veterans Affairs (VA) shares the cost of 
covered medical care services and supplies with spouses, children, 
survivors, and certain caregivers of veterans who meet eligibility 
criteria under 38 U.S.C. 1781. One criterion is that CHAMPVA 
beneficiaries cannot be eligible for TRICARE, a health care program 
administered by the Department of Defense (DoD) that is authorized to 
provide health care to certain family members of veterans. Another 
criterion is that primary family caregivers designated under 38 U.S.C. 
1720G(a)(7)(A) cannot be entitled to services under a health-plan 
contract as defined in 38 U.S.C. 1725(f).
    VA must operate the CHAMPVA program and provide for medical care in 
the same or similar manner and subject to the same or similar 
limitations as medical care is furnished to certain dependents and 
survivors of active duty and retired members of the Armed Forces under 
the CHAMPUS program. See 38 U.S.C. 1781(b). CHAMPUS was the original 
program administered by DoD to provide civilian health benefits for 
active duty military personnel, military retirees, and their 
dependents. See 32 CFR 199.1. Although the CHAMPUS program is still 
referenced in DoD regulations, DoD effectively replaced the CHAMPUS 
program with what is commonly known as the TRICARE Select plan 
(``TRICARE''). See 32 CFR 199.1(r), 199.17(a)(6)(ii)(D) (identifying 
TRICARE Select as the basic CHAMPUS program). TRICARE's current benefit 
structure offers varying degrees of medical benefits under multiple 
plan options beyond its Select plan. However, we administer CHAMPVA in 
the same or similar manner as TRICARE Select because the basic program 
is what is referenced by the CHAMPUS authority. Thus, all references in 
this rulemaking to TRICARE are to the TRICARE Select plan, which we 
refer to simply as TRICARE throughout most of this rulemaking for ease 
of reference.
    VA interprets the ``same or similar manner'' language in 38 U.S.C. 
1781(b) to mean that we must generally administer CHAMPVA in a same or 
similar manner as the TRICARE Select plan. We do not interpret this 
statutory language as requiring VA to operate CHAMPVA in an identical 
manner to TRICARE. Rather, we interpret this language as affording VA 
needed flexibility to administer the program for CHAMPVA beneficiaries. 
For this reason, not every aspect of CHAMPVA will find a corollary in 
the TRICARE Select Plan.
    On January 17, 2018, VA proposed to amend its regulations governing 
CHAMPVA to expand covered services and supplies to include certain 
preventive services, improve our ability to effectively administer 
CHAMPVA, and waive cost-shares as well as deductibles for certain 
covered services. See 83 FR 2396. VA provided a 60-day period during 
which the public could submit comments to our proposal. The public 
comment period ended on March 19, 2018, and we received six comments on 
the proposed rule. Public comments were generally supportive, however 
several comments suggested substantive changes to the proposed rule. We 
respond to these public comments here.

Sec.  17.270 General Provisions and Definitions

    We proposed amending paragraph (b) by adding definitions for terms 
used in the CHAMPVA program. We proposed defining an ``authorized non-
VA provider'' to mean an individual or institutional non-VA provider of 
CHAMPVA-covered medical services and supplies who is licensed or 
certified by a State to provide the covered medical services and 
supplies, or is otherwise certified by an appropriate national or 
professional association that sets standards for the specific medical 
provider. We stated that this requirement for State licensure or other 
certification would be similar to TRICARE, which requires that its 
providers be either licensed or certified by a State, or, where States 
do not offer licensure or certification, be otherwise certified by an 
appropriate national or professional association that sets standards 
for the specific medical provider. See TRICARE Policy Manual 6010.60-M, 
Chapter 11 (``Providers''), section 3.2 (``State Licensure And 
Certification'').
    One commenter generally supported the proposed definition of 
authorized non-VA provider, and encouraged VA to continue to adopt this 
language throughout the CHAMPVA regulations to increase consistency and 
ensure that all healthcare providers, including nurse practitioners, 
are authorized to provide treatment and services to CHAMPVA members to 
the full extent of their licensure and certification. To clarify, this 
rulemaking does not address the scope of practice of health care 
professionals and does not authorize health care professionals to 
practice beyond the scope of their state license, certification, or 
registration. However, we note that CHAMPVA beneficiaries can seek care 
from qualified nurse practitioners practicing within the scope of their 
State license and privileges. We thank the commenter for their 
recommendations and make no changes to the rule based on the comment.
    One commenter opposed the inclusion of the language ``otherwise 
certified by an appropriate national or professional association that 
sets standards for the specific medical provider.'' The commenter was 
concerned that this language granted full practice authority to non-
physician providers. To clarify, this rulemaking does not grant full 
practice authority to non-physician providers and does not supersede 
any State laws. The language was included to address the limited 
instance where members of a health care occupation or specialty 
practice area are not governed by a state through its licensure or 
certification procedures, but instead are governed by the requirements 
of a national or professional association such as the Joint Commission 
(previously known as the Joint Commission on Accreditation of Health 
Care Organizations) and the Commission on Accreditation of 
Rehabilitation Facilities (CARF).
    Changes to paragraph (c). In addition, VA makes technical edits to 
the rule for clarity. Proposed paragraph (c) addresses VA's 
discretionary authority

[[Page 41596]]

to waive certain regulatory requirements. The second sentence of this 
proposed paragraph states that ``it is VA's intent that such 
discretionary authority would be used only under very unusual and 
limited circumstances and not to deny any individual any right, 
benefit, or privilege provided to him or her by statute or these 
regulations.'' We are amending proposed paragraph (c) to remove the 
phrase ``It is VA's intent that'' at the beginning of the second 
sentence in the definition as VA does not believe this predicate is 
necessary. VA is also amending the paragraph by replacing the word 
``shall'' with ``will'' in the last sentence of the paragraph for 
clarity.

Sec.  17.272 Benefits Limitations/Exclusions

    As part of our reorganization of this section we proposed 
redesignating multiple subparagraphs in paragraph (a) which addresses 
exclusions from CHAMPVA coverage, including redesignating paragraph 
(a)(31) as paragraph (a)(30). This paragraph addresses excluded 
preventive services from CHAMPVA coverage, except for certain listed 
services. In addition, we proposed amending two listed exceptions, 
expanding one exception, and adding three exceptions. The proposed 
changes are intended to generally align CHAMPVA exceptions with those 
under TRICARE.
    One commenter recommended that VA health plans cover all preventive 
services with Grade ``A'' or ``B'' recommendations from the U.S. 
Preventive Services Task Force (USPSTF). The USPSTF is an independent, 
volunteer panel of national experts in prevention and evidence-based 
medicine. The Task Force makes evidence-based recommendations about 
clinical preventive services such as screenings, counseling services, 
and preventive medications.
    Consistent with our mandate to operate the CHAMPVA program in a 
same or similar manner as TRICARE, we follow TRICARE by adding to our 
list of covered preventive screenings the following preventive 
services: colorectal cancer screenings, breast cancer screenings, 
cervical cancer screenings, prostate cancer screenings, and 
immunizations. As explained in the proposed rule, TRICARE expanded its 
program to include certain preventive services, in response to specific 
statutory requirements. However, for the reasons also explained in the 
proposed rule, we add annual physical exams to this list, even though 
not included under TRICARE. 83 FR at 2401. A review of the USPSTF Grade 
``A'' or ``B'' recommendations reveals that the task force recommends 
52 specific preventive medical screenings or interventions, many of 
which would be part of a routine annual physical examination or 
otherwise addressed in CHAMPVA preventive services exceptions. Lastly, 
this rulemaking is limited to amending CHAMPVA regulations, and to the 
extent this public comment touches on other aspects of VA health care, 
the recommended changes exceed the scope of this rulemaking.
    We proposed redesignating paragraph (a)(51) as paragraph (a)(49). 
This paragraph excludes food, food substitutes, vitamins or other 
nutritional supplements, including those related to prenatal care for a 
home patient whose condition permits oral feeding, from CHAMPVA 
coverage.
    One commenter asked why CHAMPVA does not cover prescription 
prenatal vitamins for pregnant beneficiaries when TRICARE provides 
prenatal vitamins. As stated earlier, CHAMPVA must operate in the same 
or similar manner to TRICARE. See 38 U.S.C. 1781(b). TRICARE covers 
medically necessary vitamins used for the management of a covered 
disease or condition pursuant to a prescription, order, or 
recommendation of a TRICARE authorized provider acting within the 
provider's scope of license/certificate of practice. The term ``covered 
disease or condition'' includes pregnancy in relation to prenatal 
vitamins, with the limitation that the prenatal vitamins that require a 
prescription in the United States may be covered for prenatal care 
only. 32 CFR 199.4(d)(3)(vi)(D)(5). We agree that prenatal vitamins 
should be provided when deemed medically necessary as part of a 
treatment plan for a pregnant beneficiary. Accordingly, we are amending 
redesignated paragraph (a)(49), removing the explicit restriction on 
prenatal care, and amending the paragraph to include clarifying 
language. As amended, newly redesignated paragraph (a)(49) excludes 
food, food substitutes, vitamins or other nutritional supplements, 
including those related to care for a home patient whose condition 
permits oral feeding, except for prenatal vitamins which are medically 
necessary as a component of prenatal care and prescribed by a VA 
provider or an authorized non-VA provider as defined in Sec.  17.270.
    Previously, smoking cessation services and supplies were 
specifically excluded from CHAMPVA coverage. In paragraph (a)(76) we 
proposed that over-the-counter pharmaceutical smoking cessation 
supplies approved by the U.S. Food and Drug Administration, prescribed, 
and provided through Medications by Mail (MbM), would not be excluded 
from CHAMPVA coverage. In a related provision, in 38 CFR 
17.270(a)(3)(ii), we proposed that smoking cessation pharmaceutical 
supplies would be available only through MbM. Smoking cessation 
supplies would be available to CHAMPVA beneficiaries who are not 
eligible for Medicare and do not have any other prescription health 
insurance.
    One commenter supported the proposed change but recommended that VA 
increase opportunities for family physicians and other healthcare 
clinicians to counsel patients about tobacco cessation. We agree with 
the commenter and believe that the changes we proposed to CHAMPVA 
exclusions support efforts to promote smoking cessation. By removing 
the regulatory restrictions and allowing for smoking cessation services 
and supplies VA believes it is increasing the opportunities for 
physicians to care for beneficiaries who use tobacco products and 
improving payment for primary care cessation counseling. Under this 
final rule, smoking cessation counseling, including coverage of 
pharmaceuticals, is a covered benefit when CHAMPVA is the primary payer 
and any prescribed, FDA-approved smoking cessation pharmaceutical 
products are delivered through MbM. This mirrors TRICARE, which covers 
smoking cessation pharmaceutical products only when delivered through 
its mail order pharmacy program. Thus, we are covering these services 
in a similar manner to TRICARE. Additionally, by providing smoking 
cessation products through MbM, the beneficiary avoids any CHAMPVA 
cost-sharing amounts which might otherwise apply if purchased through a 
retail pharmacy. We make no changes based on this comment.

Sec.  17.273 Preauthorization

    We proposed revising preauthorization requirements by adding 
language to indicate when a beneficiary has ``other health insurance'' 
that provides primary coverage for the benefit, preauthorization 
requirements will not apply. To provide benefits in a similar fashion 
as TRICARE we proposed waiving any requirement for preauthorization 
where other health insurance covers the benefit. In addition, we 
proposed removing the requirement for preauthorization for durable 
medical equipment (DME) as a covered service or supply.
    One commenter encouraged VA to apply prior authorization principles 
in

[[Page 41597]]

CHAMPVA and other health plans under VA's purview such as: activities 
requiring prior authorization must be justified in terms of financial 
recovery, cost of administration, workflow burden, and lack of another 
feasible method of utilization control; prior authorization should be 
eliminated for physicians with aligned financial incentives (e.g., 
shared savings) and proven successful stewardship; and eliminate prior 
authorization for DME, imaging, supplies, and generic drugs. To the 
extent this comment addresses health care provided by VA other than 
CHAMPVA, it focuses on issues beyond the scope of this rulemaking. VA 
follows guidelines in its CHAMPVA regulations specifying the need for 
prior authorization under specific sets of circumstances. Also, with 
the removal of prior authorization for DME in this final rule, CHAMPVA 
no longer requires preauthorization for DME, imaging, supplies, or 
generic drugs. Whenever prior authorization is required, however, we 
note that VA always determines need based on the best interest of the 
beneficiaries we serve.
    In addition, the commenter recommended the VA apply transitional 
steps for changing preauthorization requirements, and offered 
suggestions primarily related to VA's relationship to VA contractors. 
Generally, CHAMPVA does not engage VA contractors to provide health 
care to CHAMPVA beneficiaries. The only instance where a CHAMPVA 
beneficiary could possibly receive care from a VA contractor working in 
that capacity is where a beneficiary who is not eligible for Medicare 
receives care in a VA medical facility on a space available basis 
through the CHAMPVA In-house Treatment Initiative (CITI). In that 
instance, if the VA provider is operating in the VA medical facility on 
a contractual basis the provider works under the same rules as a health 
care provider who is a VA employee. The transitional steps listed by 
the commenter are beyond the scope of this rulemaking, and we make no 
changes based on this comment.

Sec.  17.274 Cost Sharing

    This section addresses cost sharing and deductibles. Proposed 
paragraph (b) focuses on annual deductibles ($50 per beneficiary or 
$100 per family) as well as instances where the deductible is waived. 
One commenter expressed concern with the patients' inability to afford 
medically necessary care. The commenter stated that the escalation in 
deductibles is limiting access to care, and higher deductibles create a 
financial disconnect between individuals, their primary care physician, 
and the broader health care system. CHAMPVA does not have a high 
deductible plan but an annual deductible of $50 per beneficiary or $100 
per family. CHAMPVA deductible amounts have not escalated and have 
remained unchanged since at least 1999. The commenter's general concern 
regarding escalating deductibles limiting access to care does not apply 
to the CHAMPVA program. We make no changes based on this comment.
    However, we are making one minor edit to paragraph (a)(1)(v) to 
clarify that CHAMPVA beneficiary cost-share requirements do not apply 
to various other preventive services as determined by the Secretary of 
Veterans Affairs. VA determined that this subparagraph was not specific 
enough in that it did not specify that ``preventive'' services as 
determined by the Secretary is not subject to CHAMPVA beneficiary cost-
share requirements.

Sec.  17.275 CHAMPVA Determined Allowable Amount Calculation

    We proposed adding a new Sec.  17.275 to describe the various 
payment methodologies used by CHAMPVA to calculate the CHAMPVA 
determined allowable amount for covered services and supplies. We 
stated that CHAMPVA uses the same or similar payment methodologies to 
establish allowable reimbursement amounts for providers as TRICARE, and 
that proposed payment methodologies would be consistent with current VA 
practice.
    One commenter expressed concerns regarding CHAMPVA's non-VA 
provider reimbursement amounts not being equal to Medicare 
reimbursement amounts in response to CHAMPVA's clarification of a 
provider accepting assignment. When feasible, CHAMPVA determines its 
allowable charges using TRICARE's reimbursement methodologies. In this 
instance, CHAMPVA uses TRICARE's physician fee schedule, which is 
equivalent to Medicare's physician fee schedule, to determine the 
CHAMPVA Maximum Allowable Charge. Additionally, this commenter stated 
that VA should offer contracts at least at the Medicare rate, so family 
physicians and other non-VA entities can afford to treat veterans. 
CHAMPVA does not contract with providers to treat veterans. CHAMPVA is 
a family member health benefits program for dependents of permanently 
and totally disabled and certain other veterans and certain caregivers. 
Under it, VA uses the TRICARE physician fee schedule amount, which is 
equivalent to the Medicare physician fee schedule amount, to determine 
the CHAMPVA Maximum Allowable Charge. We make no changes based on this 
comment.
    Proposed paragraph (h) provided that reimbursement for durable 
medical equipment, prosthetics, orthotics, and supplies (DMEPOS) would 
be based on the same amounts established under the Centers for Medicare 
& Medicaid Services (CMS) DMEPOS fee schedule under 42 CFR part 414, 
subpart D, which is the same methodology used in TRICARE regulations to 
calculate DMEPOS payments. See 32 CFR 199.14(k). The allowed amount 
would be that which is in effect in the specific geographic location at 
the time CHAMPVA-covered services and supplies are provided to a 
CHAMPVA beneficiary.
    One commenter urged VA to review Medicare's current policies 
related to the Medicare benefit for DMEPOS to evaluate potential access 
to care for our beneficiaries. The commenter stated that Medicare's fee 
schedules in non-competitive bidding areas, which are based on single 
payment amounts, results in reduced access to DMEPOS and inadequate 
payment to suppliers. Although we understand the commenter's concern, 
we chose to revise our regulations to be consistent with the Medicare 
fee schedule because TRICARE uses the Medicare fee schedule. Also, we 
believe that matching TRICARE payment methodologies as closely as 
possible is the best way to provide for medical care in the same or 
similar manner as TRICARE pursuant to 38 U.S.C. 1781(b). The rates at 
which VA pays for care are an integral part of the ``provision'' of 
care, and therefore, we think this is an area where VA should remain in 
line with TRICARE. We thank the commenter for their suggestion, but 
make no changes to the rule based on this comment.
    In paragraph (j) we proposed establishing in regulation the current 
CHAMPVA reimbursement methodology for hospice care. This methodology 
uses rates in the CMS hospice per diem rate payment system, which is 
the same methodology used in TRICARE regulations to calculate hospice 
payments. See 32 CFR 199.14(g)(9).
    One commenter inquired whether CHAMPVA will use Medicare rates for 
each year by hospice level of care, including two tiers of payment for 
routine home care. Although TRICARE regulations do not reflect the two-
tiered payment system, it is reflected in its reimbursement manual. See 
TRICARE Reimbursement Manual 6010.61-M, April 1, 2015, Chapter 11, 
Section 4, Subsection 3.1.1.3. TRICARE

[[Page 41598]]

implemented the two-tiered payment rates for routine home care (RHC) 
levels of care effective January 1, 2016. CHAMPVA cannot, however, 
implement the two-tiered payment system due to current IT system 
limitations. We will consider adopting this methodology in the future, 
dependent on increased system capabilities. CHAMPVA already uses 
Medicare's annual hospice rates and utilizes Medicare's rates for each 
level of hospice service, with the exception of the ``61-day and over'' 
routine home care (RHC) rates. For RHC, CHAMPVA currently only 
reimburses Medicare's 1-60 day RHC rate for all routine home care days, 
regardless of the number of days RHC is provided. For RHC provided for 
61 days or more, CHAMPVA reimburses at a higher rate than allowable 
under Medicare rules. The final rule codifies these practices.
    In addition, the commenter asked how CHAMPVA will track any updates 
that Medicare makes in the structure of its hospice payment system. 
CHAMPVA annually reviews Medicare's hospice proposed rules and final 
rules in the Federal Register to maintain awareness of any potential 
change in TRICARE reimbursement methodologies. If TRICARE implements 
any Medicare reimbursement updates in the future, CHAMPVA will assess 
the feasibility of implementing such changes.
    The commenter inquired as to whether changes in the hospice payment 
structure by CMS are mirrored by CHAMPVA in the same time frame as 
Medicare. CHAMPVA is not based on the Medicare program, but instead 
must operate in the same or similar manner as TRICARE.
    Finally, the commenter asked about communication regarding hospice 
updates to Veterans Integrated Service Networks (VISNs) and local VA 
facilities and offered suggestions for improving communications. 
Internal VA processes, including avenues of communication between a VA 
medical facility and the VISN, are not typically addressed via 
regulation. Rather, internal processes and procedures are more properly 
delineated in agency policy. We make no changes to this rulemaking 
based on these comments.
    Changes to paragraph (g). In addition, we are making a technical 
edit to paragraph (g). In the proposed rule, we proposed revising this 
paragraph to state that the CHAMPVA Skilled Nursing Facility (SNF) care 
reimbursement methodology is based on the CMS Prospective Payment 
System for SNFs under 42 CFR part 413, subpart J (Medicare Resource 
Utilization Group (RUG) rates). See 83 FR 2411. Medicare replaced the 
RUG rates in fiscal year 2020 with Patient Driven Payment Model (PDPM) 
rates. Therefore, in this rulemaking, we are removing the phrase 
``Medicare Resource Utilization Group (RUG) rates'' in the 
parenthetical. We note that the PDPM reporting mechanism decreases the 
administrative burden on providers but does not impact reimbursement 
rates. VA makes no other changes in this paragraph.
    Changes to paragraph (k). We are also making a technical edit to 
paragraph (k) to conform with minor changes to Medicare payment 
methodologies that went into effect after the public comment period 
closed. In the proposed rule, we proposed revising paragraph (k) to 
state that the CHAMPVA home health care reimbursement methodology, 
based on Medicare's home health prospective payment system, uses a 
fixed case-mix and wage-adjusted national 60-day episode payment amount 
to act as payment in full for costs associated with furnishing home 
health services with exceptions allowing for additional payment to be 
established. See 83 FR 2396. Additionally, we explained that we would 
make the change of adopting TRICARE's reimbursement methodology for 
intermittent or part-time home health services, which itself is based 
on Medicare's reimbursement methodology. In other words, the proposed 
substantive rule for this paragraph is that CHAMPVA will reimburse 
these services in a manner similar to TRICARE, which adopts Medicare's 
methodology. We received no comments on proposed 17.275(k).
    Since the proposed rule was published (January 17, 2018), Medicare 
has finalized changes that change aspects of its methodology for paying 
for home health services. More specifically, on November 13, 2018, CMS 
published a final rule with comment period (RIN 0938-AT29) that amended 
42 CFR part 484 to, inter alia, update the Home Health Prospective 
Payment System (HH PPS) payment methodology, effective January 1, 2020. 
See 83 FR 56406. Of relevance here, that CMS final rule changed its 
regulations from requiring a 60-day episode payment to a 30-day episode 
payment.
    The ``60-day episode of care'' language in the proposed rule at 38 
CFR 17.275(k) referred to the substantive content in that paragraph, 
which was the proposed use of Medicare's HH PPS payment methodology 
when determining payment for intermittent or part-time home health care 
consistent with that used by TRICARE. The inclusion of the reference to 
the length of the episode of care was intended to be informative in 
nature and aligned with Medicare rules as of the date the proposed rule 
published. In this final rulemaking we are not changing the payment 
methodology that CHAMPVA utilizes when determining payment for 
intermittent or part-time home health care. However, we are removing 
the reference to a specific episode of care length in reference to 
Medicare's HH PPS payment methodology, which no longer uses a 60-day 
episode of care. As discussed above, Medicare has adopted a 30-day 
episode of care in its final rule, effective January 1, 2020 (see RIN 
0938-AT39 (83 FR 56406) published November 13, 2018). Removing 
reference to a specific length for an episode of care as it relates to 
payment for intermittent or part time home health care will preserve 
needed flexibility to adequately implement and update our HH PPS in a 
manner consistent with any changes made by TRICARE. The public was 
fairly apprised of the potential scope and substance of the proposed 
rule--that we would be using Medicare's HH PPS payment methodology for 
payment for intermittent or part time home health care, and that 
remains the same in the final rule. This rulemaking revises paragraph 
(k) to state that the CHAMPVA home health care reimbursement 
methodology, based on TRICARE's home health prospective payment system, 
uses a fixed case-mix and wage-adjusted episode payment amount to act 
as payment in full for costs associated with furnishing home health 
services with exceptions allowing for additional payment to be 
established. Because the proposed substantive rule for paragraph (k) is 
unchanged here, removing the detail describing how it is currently 
calculated under Medicare is a technical fix to avoid the need for 
future updates of such details.

Sec.  17.277 Appeals

    This section addresses appeals. If a CHAMPVA beneficiary or 
provider disagrees with a determination concerning CHAMPVA-covered 
services and supplies or calculation of benefits, a request for 
reconsideration may be made. If the beneficiary or provider disagrees 
with the reconsideration determination, the denial of CHAMPVA benefits 
based on legal eligibility requirements may be appealed to the Board of 
Veterans' Appeals (BVA). Although we received no public comments on 
this section, changes are necessary to address issues raised by the 
Veterans Appeals Improvement and Modernization Act of 2017 (Pub. L. 
115-55) (``the AMA''). The AMA revised processes for resolving VA 
benefits

[[Page 41599]]

claims and appeals of VA benefits decisions. In February 2019, VA 
promulgated rules to implement the AMA under 38 CFR parts 3 and 8, 14, 
19, 20, and 21. 84 FR 138 (January 18, 2019).
    On February 21, 2020, VA published a proposed rule to revise 
several sections of 38 CFR part 17 including 17.276. See 85 FR 10118. 
In that proposed rule, we updated 38 CFR 17.276 to reflect that 
reconsideration within the VHA appeals process is only available in 
legacy claims. Id. The comment period ended on April 21, 2020. VA 
received no comments on the proposed changes to 17.276. Given the 
effect these changes have on the CHAMPVA program, VA adopts the 
proposed changes to 17.276 from 85 FR 10118 in this rulemaking and 
redesignates the section as 17.277.

Paperwork Reduction Act

    This final rule contains no provisions constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. The final payment methods in this rulemaking will include new 
reimbursement rates for the Outpatient Prospective Payment System 
(OPPS), Home Health Prospective Payment System (HH PPS), and Sole 
Community Hospitals (SCHs) reimbursement methodologies. These revised 
methodologies will not significantly affect small businesses due to the 
following reasons: (1) The health care industry, to include Medicare 
and TRICARE, is currently using these payment methods and most 
providers are used to these reimbursement rates, if not expecting to 
receive them; (2) CHAMPVA's beneficiary population is relatively small 
compared to these other health care payers. On this basis, the 
Secretary certifies that the adoption of this final rule will not have 
a significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act. Therefore, 
pursuant to 5 U.S.C. 605(b), the initial and final regulatory 
flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
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 effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
The Office of Information and Regulatory Affairs has determined this 
rule to be a significant regulatory action under Executive Order 12866. 
The Regulatory Impact Analysis associated with this rulemaking can be 
found as a supporting document at www.regulations.gov.

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 the expenditure by 
state, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This final rule will have no such effect on 
state, local, or tribal governments, or on the private sector.

Assistance Listing

    The Assistance Listing numbers and titles for the programs affected 
by this document are 64.009, Veterans Medical Care Benefits; 64.010, 
Veterans Nursing Home Care; and 64.011, Veterans Dental Care; 64.012, 
Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 
and 64.019, Veterans Rehabilitation Alcohol and Drug Dependence.

Congressional Review Act

    This regulatory action is a major rule under the Congressional 
Review Act, 5 U.S.C. 801-808, because it may result in an annual effect 
on the economy of $100 million or more. In accordance with 5 U.S.C. 
801(a)(1), VA will submit to the Comptroller General and to Congress a 
copy of this Regulation and the Regulatory Impact Analysis (RIA) 
associated with the Regulation.

List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Alcohol abuse, Alcoholism, 
Claims, Day care, Dental health, Drug abuse, Foreign relations, 
Government contracts, Grant programs--health, Grant programs--veterans, 
Health care, Health facilities, Health professions, Health records, 
Homeless, Medical and dental schools, Medical devices, Medical 
research, Mental health programs, Nursing homes, Philippines, Reporting 
and recordkeeping requirements, Scholarships and fellowships, Travel 
and transportation expenses, Veterans.

Signing Authority

    Denis McDonough, Secretary of Veterans Affairs, approved this 
document on October 8, 2021, and authorized the undersigned to sign and 
submit the document to the Office of the Federal Register for 
publication electronically as an official document of the Department of 
Veterans Affairs.

Consuela Benjamin,
Regulations Development Coordinator, Office of Regulation Policy & 
Management, Office of General Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans 
Affairs (VA) amends 38 CFR part 17 as follows:

PART 17--MEDICAL

0
1. The general authority citation for part 17 continues and authority 
citations for Sec. Sec.  17.270, 17,271, 17.278 and 17.279 are added in 
numerical order to read as follows to read as follows

    38 U.S.C. 501, and as noted in specific sections.
* * * * *
    Sections 17.270, and 17.272 through 17.277 are also issued under 
38 U.S.C. 1781.
    Section 17.271 is also issued under 38 U.S.C. 1720G(a)(7)(A) and 
1781.
    Section 17.278 is also issued under 38 U.S.C. 1781 and 42 U.S.C. 
2651.
    Section 17.279 is also issued under 5 U.S.C. 552 and 552a; 38 
U.S.C. 1781, 5701, and 7332.
* * * * *


0
2. Revise Sec.  17.270 to read as follows:


Sec.  17.270   General provisions and definitions.

    (a) Overview of CHAMPVA. CHAMPVA is the Civilian Health and Medical 
Program of the Department of Veterans Affairs (VA). Generally, CHAMPVA 
furnishes medical care in the same or similar manner, and subject to 
the same or similar limitations, as medical care furnished to certain 
dependents and survivors of active duty and retired members of the 
Armed Forces under chapter 55 of title 10, United States Code 
(CHAMPUS), commonly referred to as the TRICARE Select plan. Under 
CHAMPVA, VA shares the cost of medically necessary services and 
supplies with eligible beneficiaries within the 50 United States, the 
District of Columbia, the U.S. territories, and abroad. Under

[[Page 41600]]

CHAMPVA, medical services and supplies may be provided as follows:
    (1) By an authorized non-VA provider.
    (2) By a VA provider at a VA facility, on a resource-available 
basis through the CHAMPVA In-house Treatment Initiative (CITI) to 
CHAMPVA beneficiaries who are not also eligible for Medicare.
    (3) Through VA Medications by Mail (MbM).
    (i) Only CHAMPVA beneficiaries who do not have any other type of 
health insurance that pays for prescriptions, including Medicare Part 
D, may use MbM.
    (ii) Smoking cessation pharmaceutical supplies will only be 
provided through MbM and only to CHAMPVA beneficiaries that are not 
also eligible for Medicare.
    (b) Definitions. The following definitions apply to CHAMPVA 
(Sec. Sec.  17.270 through 17.278):
    Accepted assignment refers to the action of an authorized non-VA 
provider who accepts responsibility for the care of a CHAMPVA 
beneficiary and thereby agrees to accept the CHAMPVA determined 
allowable amount as full payment for services and supplies rendered to 
the beneficiary. (The provider's acceptance of the CHAMPVA determined 
allowable amount extinguishes the beneficiary's payment liability to 
the provider with the exception of applicable cost-shares and 
deductibles.)
    Authorized non-VA provider means an individual or institutional 
non-VA provider of CHAMPVA-covered medical services and supplies that 
meets any of the following criteria:
    (i) Is licensed or certified by a state to provide the medical 
services and supplies; or
    (ii) Where a state does not offer licensure or certification, is 
otherwise certified by an appropriate national or professional 
association that sets standards for the specific medical provider.
    Calendar year means January 1 through December 31.
    CHAMPVA beneficiary means a person enrolled under Sec.  17.271.
    CHAMPVA-covered services and supplies mean those medical services 
and supplies that are medically necessary and appropriate for the 
treatment of a condition and that are not specifically excluded under 
Sec.  17.272(a)(1) through (84).
    CHAMPVA determined allowable amount has the meaning set forth in 
Sec.  17.272(b)(1).
    CHAMPVA In-house Treatment Initiative (CITI) means the initiative 
under 38 U.S.C. 1781(b) under which participating VA medical facilities 
provide medical services and supplies to CHAMPVA beneficiaries who are 
not also eligible for Medicare, subject to availability of space and 
resources.
    Child has the definition established in 38 U.S.C. 101.
    Claim means a request by an authorized non-VA provider or by a 
CHAMPVA beneficiary for payment or reimbursement for medical services 
and supplies provided to a CHAMPVA beneficiary.
    Fiscal year means October 1 through September 30.
    Medications by Mail (MbM) means the initiative under which VA 
provides outpatient prescription medications through the mail to 
CHAMPVA beneficiaries.
    Other health insurance (OHI) means health insurance plans or 
programs (including Medicare) or third-party coverage that provide 
coverage to a CHAMPVA beneficiary for expenses incurred for medical 
services and supplies.
    Payer refers to OHI, as defined in this section, that is obligated 
to pay for CHAMPVA-covered medical services and supplies. In a 
situation in which, in addition to CHAMPVA, one or more payers is/are 
responsible to pay for such services and supplies (i.e., a ``double 
coverage'' situation), there would be a primary payer (i.e., the payer 
obligated to pay first), secondary payer (i.e., the payer obligated to 
pay after the primary payer), etc. In double coverage situations, 
CHAMPVA would be the last payer.
    Service-connected has the definition established in 38 U.S.C. 101.
    Spouse refers to a person who is married to a veteran and whose 
marriage is valid as determined under 38 U.S.C. 103(c).
    Surviving spouse refers to a person who was married to and is the 
widow(er) of a veteran as determined under 38 U.S.C. 103(c).
    (c) Discretionary authority. When it is determined to be in the 
best interest of VA, VA may waive any requirement in Sec. Sec.  17.270 
through 17.278, except any requirement specifically set forth in 38 
U.S.C. 1781, or otherwise imposed by statute. Such discretionary 
authority would be used only under very unusual and limited 
circumstances and not to deny any individual any right, benefit, or 
privilege provided to him or her by statute or these regulations. Any 
such waiver will apply only to the individual circumstance or case 
involved and will in no way be construed to be precedent-setting.

0
3. Amend Sec.  17.271 by:
0
a. Removing the word ``and'' at the end of paragraph (a)(3);
0
b. Redesignating paragraph (a)(4) as paragraph (a)(5);
0
c. Adding a new paragraph (a)(4);
0
d. Removing the authority citation following paragraph (a); and
0
e. Removing the authority citation following paragraph (b)(5).
    The addition and revision read as follows:


Sec.  17.271   Eligibility.

    (a) * * *
    (4) An individual designated as a Primary Family Caregiver, under 
38 CFR 71.25(f), who is not entitled to care or services under a 
health-plan contract (as defined in 38 U.S.C. 1725(f)(2)); and
* * * * *

0
4. Amend Sec.  17.272 by:
0
a. Revising paragraph (a)(2);
0
b. In paragraph (a)(3) introductory text, removing the phrase 
``(Medicaid excluded)'';
0
c. Adding paragraphs (a)(3)(iii) and (iv);
0
d. Revising paragraph (a)(21)(ix);
0
e. Removing paragraph (a)(26);
0
f. Redesignating paragraphs (a)(27) through (38) as paragraphs (a)(26) 
through (37), respectively;
0
g. In newly redesignated paragraph (a)(30), revising the introductory 
text and paragraphs (a)(30)(v) and (vi) and adding paragraphs 
(a)(30)(xi) through (xiv);
0
h. Removing paragraph (a)(39);
0
i. Redesignating paragraphs (a)(40) through (56) as paragraphs (a)(38) 
through (54), respectively;
0
j. In newly redesignated paragraph (a)(40)(iv), removing 
``(a)(42)(iii)(A)'' and adding in its place ``(a)(40)(iii)(A)'';
0
k. Revising redesignated paragraph (a)(49);
0
l. Removing paragraph (a)(57);
0
m. Redesignating paragraphs (a)(58) through (71) as paragraphs (a)(55) 
through (68), respectively;
0
n. Revising newly redesignated paragraphs (a)(57) through (59);
0
o. Removing paragraph (a)(72);
0
p. Redesignating paragraphs (a)(73) through (86) as paragraphs (a)(69) 
through (82), respectively;
0
q. Revising newly redesignated paragraph (a)(76);
0
r. Adding paragraphs (a)(83) and (84);
0
s. Revising paragraph (b); and
0
t. Removing the authority citation at the end of the section.
    The revisions and additions read as follows:


Sec.  17.272   Benefits limitations/exclusions.

    (a) * * *
    (2) Services and supplies required as a result of an occupational 
disease or

[[Page 41601]]

injury for which benefits are payable under workers' compensation or 
similar protection plan (whether or not such benefits have been applied 
for or paid) except when such benefits are exhausted and the services 
and supplies are otherwise not excluded from CHAMPVA coverage.
    (3) * * *
    (iii) Indian Health Service.
    (iv) CHAMPVA supplemental policies.
* * * * *
    (21) * * *
    (ix) Treatment for stabilization of myofascial pain dysfunction 
syndrome, also referred to as temporomandibular joint disorder (TMD). 
Authorization is limited to initial imaging such as radiographs, 
Computed Tomography, or Magnetic Resonance Imaging; up to four office 
visits; and the construction of an occlusal splint.
* * * * *
    (30) Preventive care (such as employment-requested physical 
examinations and routine screening procedures). The following 
exceptions apply, including but not limited to:
* * * * *
    (v) Cervical cancer screening.
    (vi) Breast cancer screening.
* * * * *
    (xi) Colorectal cancer screening.
    (xii) Prostate cancer screening.
    (xiii) Annual physical examination.
    (xiv) Vaccinations/immunizations.
* * * * *
    (49) Food, food substitutes, vitamins or other nutritional 
supplements, including those related to care for a home patient whose 
condition permits oral feeding, except for prenatal vitamins which are 
medically necessary as a component of prenatal care and prescribed by a 
VA provider or an authorized non-VA provider as defined in Sec.  17.270 
of this part.
* * * * *
    (57) Unless a waiver for extended coverage is granted in advance: 
Inpatient mental health services in excess of 30 days in any calendar 
year (or in an admission), in the case of a patient 19 years of age or 
older; 45 days in any calendar year (or in an admission), in the case 
of a patient under 19 years of age; or 150 days of residential 
treatment care in any calendar year (or in an admission).
    (58) Outpatient mental health services in excess of 23 visits in a 
calendar year unless a waiver for extended coverage is granted in 
advance.
    (59) Institutional services for partial hospitalization in excess 
of 60 treatment days in any calendar year (or in an admission) unless a 
waiver for extended coverage is granted in advance.
* * * * *
    (76) Over-the-counter products except for pharmaceutical smoking 
cessation supplies that are approved by the U.S. Food and Drug 
Administration, prescribed, and provided through MbM, and insulin and 
related diabetic testing supplies and syringes.
* * * * *
    (83) Medications not approved by the U.S. Food and Drug 
Administration (FDA), excluding FDA exceptions to the approval 
requirement.
    (84) Services and supplies related to the treatment of dyslexia.
    (b) Costs of services and supplies to the extent such amounts are 
billed over the CHAMPVA determined allowable amount are specifically 
excluded from coverage.
    (1) The CHAMPVA determined allowable amount is the maximum level of 
payment by CHAMPVA to an authorized non-VA provider for the provision 
of CHAMPVA-covered services and supplies to a CHAMPVA beneficiary. The 
CHAMPVA determined allowable amount is determined before consideration 
of cost sharing and the application of deductibles or OHI.
    (2) A Medicare-participating hospital must accept the CHAMPVA 
determined allowable amount for inpatient services provided to a 
CHAMPVA beneficiary as payment in full. See 42 CFR 489.25.
    (3) An authorized non-VA provider who accepts responsibility for 
the care of a CHAMPVA beneficiary thereby agrees to accept the CHAMPVA 
determined allowable amount as full payment for services and supplies 
rendered to the beneficiary (i.e., accepted assignment). The provider's 
acceptance of the CHAMPVA determined allowable amount extinguishes the 
beneficiary's payment liability to the provider. Any attempts to 
collect any additional amount from the CHAMPVA beneficiary may result 
in the provider being excluded from Federal benefits programs. See 42 
CFR 1003.105.

0
5. Amend Sec.  17.273 by:
0
a. Revising the introductory text and paragraph (d);
0
b. Removing paragraph (e);
0
c. Redesignating paragraph (f) as paragraph (e);
0
d. Adding new paragraph (f); and
0
e. Removing the authority citation at the end of the section.
    The revisions and addition read as follows:


Sec.  17.273   Preauthorization.

    Preauthorization or advance approval is required for any of the 
following, except when the benefit is covered by the CHAMPVA 
beneficiary's other health insurance (OHI):
* * * * *
    (d) Dental care. For limitations on dental care, see Sec.  
17.272(a)(21)(i) through (xii).
* * * * *
    (f) CHAMPVA will perform a retrospective medical necessity review 
during the coordination of benefits process if:
    (1) It is determined that CHAMPVA is the responsible payer for 
services and supplies but CHAMPVA preauthorization was not obtained 
prior to delivery of the services or supplies; and,
    (2) The claim for payment is filed within the appropriate one-year 
period.

0
6. Amend Sec.  17.274 by:
0
a. Revising paragraphs (a), (b), and (c);
0
b. Adding a heading to paragraph (d);
0
c. Adding paragraph (e); and
0
d. Removing the authority citation at the end of the section.
    The revisions and additions read as follows:


Sec.  17.274   Cost sharing.

    (a) Cost sharing generally. CHAMPVA is a cost sharing program in 
which the cost of covered services is shared with the CHAMPVA 
beneficiary. CHAMPVA pays the CHAMPVA determined allowable amount less 
the CHAMPVA deductible, if applicable, and less the CHAMPVA beneficiary 
cost-share.
    (1) CHAMPVA beneficiary cost-share requirements do not apply to the 
following:
    (i) Supplies provided through VA MbM.
    (ii) Any medical services and supplies provided to a CHAMPVA 
beneficiary through CITI.
    (iii) The following services, even if not provided through CITI:
    (A) Colorectal cancer screening.
    (B) Breast cancer screening.
    (C) Cervical cancer screening.
    (D) Prostate cancer screening.
    (E) Annual physical exams.
    (F) Vaccinations/immunizations.
    (G) Well child care from birth to age six, as described in Sec.  
17.272(a)(30)(i).
    (iv) Hospice services.
    (v) Or other preventive services as determined by the Secretary of 
Veterans Affairs.
    (2) [Reserved]
    (b) Deductibles. In addition to the CHAMPVA beneficiary cost-share, 
an annual (calendar year) outpatient deductible requirement ($50 per 
beneficiary or $100 per family) must be satisfied prior to VA payment 
of outpatient benefits. The deductible requirement is waived for:

[[Page 41602]]

    (1) CHAMPVA-covered services and supplies provided through VA MbM 
or through CITI.
    (2) Inpatient services.
    (3) Preventive services listed in paragraph (a)(1)(iii) of this 
section.
    (4) Hospice services.
    (5) Or other services as determined by the Secretary of Veterans 
Affairs.
    (c) Cost sharing limitations. To provide financial protection 
against the impact of a long-term illness or injury, there is a $3,000 
calendar year limit or ``catastrophic cap'' per CHAMPVA eligible family 
on the CHAMPVA beneficiary's out-of-pocket costs for allowable services 
and supplies. After a family has paid $3,000 in out-of-pocket costs, to 
include both cost-share and deductible amounts, in a calendar year, 
CHAMPVA will pay the full allowable amounts for the remaining CHAMPVA-
covered services and supplies through the end of that calendar year. 
Credits to the annual catastrophic cap are limited to the applied 
annual deductible(s) and the CHAMPVA beneficiary cost-share amount. 
Costs above the CHAMPVA determined allowable amount, as well as costs 
associated with non-covered medical services and supplies, are not 
credited toward the catastrophic cap calculation.
    (d) Non-payment. * * *
    (e) Cost-share calculation. The CHAMPVA beneficiary's cost-share 
amount, if not waived under paragraph (a)(1) of this section, is 25 
percent of the CHAMPVA determined allowable amount in excess of the 
annual calendar year deductible (see Sec.  17.275 for procedures 
related to the calculation of the allowable amount for CHAMPVA-covered 
services and supplies), except for the following:
    (1) For inpatient services subject to the CHAMPVA Diagnosis Related 
Group (DRG) payment system, the cost-share is the lesser of:
    (i) The per diem rate multiplied by the number of inpatient days;
    (ii) 25 percent of the hospital's billed amount; or
    (iii) The base CHAMPVA DRG rate.
    (2) For inpatient mental health low volume hospitals and units 
(less than 25 mental health discharges per federal fiscal year), the 
cost-share is the lesser of:
    (i) The fixed per diem rate multiplied by the number of inpatient 
days; or
    (ii) 25 percent of the hospital's billed charges.

0
7. Redesignate Sec. Sec.  17.275 through 17.278 as Sec. Sec.  17.276 
through 17.279.

0
8. Add new Sec.  17.275 to read as follows:


Sec.  17.275   CHAMPVA determined allowable amount calculation.

    CHAMPVA calculates the allowable amount in the following ways, for 
the following covered services and supplies:
    (a) Inpatient hospital services (non-mental health). Unless exempt 
or subject to a methodology under paragraph (b) or (c) of this section, 
inpatient hospital services provided in the 50 states, the District of 
Columbia, and Puerto Rico are subject to the CHAMPVA Diagnosis Related 
Group (DRG)-based reimbursement methodology. Under the CHAMPVA DRG-
based payment system, hospitals are paid a predetermined amount per 
discharge for inpatient hospital services, which will not exceed the 
billed amount. Certain inpatient services will be reimbursed under the 
CHAMPVA Cost-to-Charge (CTC) reimbursement methodology.
    (b) Inpatient hospital services (mental health). The CHAMPVA 
inpatient mental health per diem reimbursement methodology is used to 
calculate reimbursement for inpatient mental health hospital care in 
specialty psychiatric hospitals and psychiatric units of general acute 
hospitals that are exempt from the CHAMPVA DRG-based payment system. 
The per diem rate is calculated by multiplying the daily rate by the 
number of days (length of stay). The daily rate is updated each fiscal 
year for both high volume hospitals (25 or more discharges per fiscal 
year) and low volume hospitals (fewer than 25 discharges per fiscal 
year).
    (c) Other inpatient hospital services. (1) The CHAMPVA CTC 
reimbursement methodology is used to calculate reimbursement for 
inpatient care furnished by hospitals or facilities that are exempt 
from either of the methodologies in paragraph (a) or (b) of this 
section. Such hospitals or facilities will be paid at the CHAMPVA CTC 
ratio times the billed charges that are customary and not in excess of 
rates or fees the hospital or facility charges the general public for 
similar services in a community.
    (2) The following hospitals and services are subject to the CHAMPVA 
CTC payment methodology:
    (i) Any hospital that qualifies as a cancer hospital under Medicare 
standards and has elected to be exempt from the Centers for Medicare & 
Medicaid Services (CMS) prospective payment system.
    (ii) Christian Science sanatoriums.
    (iii) Critical Access Hospitals.
    (iv) Any hospital outside the 50 states, the District of Columbia, 
or Puerto Rico.
    (v) Hospitals within hospitals.
    (vi) Long-term care hospitals.
    (vii) Non-Medicare participating hospitals.
    (viii) Non-VA Federal Health Care Facilities (e.g., military 
treatment facilities, Indian Health Service).
    (ix) Rehabilitation hospitals.
    (x) Hospital or hospital-based services subject to state waiver in 
any state that has implemented a separate DRG-based payment system or 
similar payment system in order to control costs.
    (xi) Hospitals and services as determined by the Secretary of 
Veterans Affairs.
    (d) Outpatient hospital services. The CHAMPVA outpatient 
prospective payment system (OPPS) is used to calculate the allowable 
amount for outpatient services provided in hospitals subject to 
Medicare OPPS. This will include the utilization of TRICARE's 
reimbursement methodology to include specific coding requirements, 
ambulatory payment classifications (APCs), nationally established APC 
amounts, and associated adjustments.
    (e) Outpatient and inpatient non-hospital services. Payments to 
individual authorized non-VA providers (not hospitals) for CHAMPVA-
covered medical services and supplies provided on an outpatient or 
inpatient basis, including but not limited to, anesthesia services, 
laboratory services, and other professional fees associated with 
individual authorized non-VA providers, are reimbursed based on the 
lesser of:
    (1) The CHAMPVA Maximum Allowable Charge;
    (2) The prevailing amount, which is the amount equal to the maximum 
reasonable amount allowed providers for a specific procedure in a 
specific locality; or,
    (3) The billed amount.
    (f) Pharmacy services and supplies. The CHAMPVA pharmacy services 
and supplies payment methodology is based on specific CHAMPVA pharmacy 
points of service, which dictate the amounts paid by VA. VA pays:
    (1) For services and supplies obtained from a retail in-network 
pharmacy, the lesser of the billed amount or the contracted rate; or
    (2) For supplies obtained from a retail out-of-network pharmacy, 
the lesser of the billed amount plus a dispensing fee or the average 
wholesale price plus a dispensing fee.
    (g) Skilled Nursing Facility (SNF) care. The CHAMPVA SNF 
reimbursement methodology is based on the CMS prospective payment 
system for SNFs under 42 CFR part 413, subpart J.
    (h) Durable medical equipment, prosthetics, orthotics, and supplies

[[Page 41603]]

(DMEPOS). The CHAMPVA DMEPOS reimbursement methodology is based on the 
same amounts established under the CMS DMEPOS fee schedule under 42 CFR 
part 414, subpart D. The CHAMPVA determined allowable amount for DMEPOS 
is the amount in effect in the specific geographic location at the time 
CHAMPVA-covered medical services and supplies are provided to a CHAMPVA 
beneficiary.
    (i) Ambulance services. CHAMPVA adopts Medicare's Ambulance Fee 
Schedule (AFS) for ambulance services, with the exception of services 
furnished by a Critical Access Hospital (CAH). Ambulance services are 
paid based on the lesser of the Medicare AFS or the billed amount. 
Ambulance services provided by a CAH are paid on the same bases as the 
CTC method under paragraph (c) of this section.
    (j) Hospice care. CHAMPVA hospice reimbursement methodology uses 
Medicare per diem hospice rates.
    (k) Home health care (intermittent or part-time). CHAMPVA home 
health care reimbursement methodology, based on Medicare's home health 
prospective payment system, uses a fixed case-mix and wage-adjusted 
episode payment amount to act as payment in full for costs associated 
with furnishing home health services with exceptions allowing for 
additional payment to be established.
    (l) Ambulatory surgery. The CHAMPVA reimbursement methodology for 
facility charges associated with procedures performed in a freestanding 
ambulatory surgery center is based on a prospectively determined 
amount, similar to that used by TRICARE. These facility charges do not 
include physician fees, anesthesiologist fees, or fees of other 
authorized non-VA providers; such independent professional fees must be 
submitted separately from facility fees and are calculated under the 
methodology in paragraph (e) of this section.
    (m) CHAMPVA-covered medical services and supplies provided outside 
the United States. VA shall determine the appropriate reimbursement 
method(s) for CHAMPVA-covered medical services and supplies provided by 
authorized non-VA providers outside the United States.
    (n) Sole Community Hospitals. The CHAMPVA reimbursement methodology 
for inpatient services provided in a Sole Community Hospital (SCH) will 
be the greater of: the allowable amount determined by multiplying the 
billed charges by the SCH's most recently available cost-to-charge 
ratio from the CMS Inpatient Provider Specific File or the DRG 
reimbursement rate.

0
9. Amend newly redesignated Sec.  17.276 by:
0
a. Revising paragraphs (a) introductory text and (b);
0
b. Adding paragraphs (c) and (d); and
0
c. Removing the authority citation at the end of the section.
    The revisions and additions read as follows:


Sec.  17.276   Claim-filing deadlines.

    (a) Unless an exception is granted under paragraph (b) of this 
section, claims for medical services and supplies must be filed no 
later than:
* * * * *
    (b) Requests for an exception to the claim filing deadline must be 
submitted in writing and include a complete explanation of the 
circumstances resulting in late filing along with all available 
supporting documentation. Each request for an exception to the claim 
filing deadline will be reviewed individually and considered on its own 
merit. VA may grant exceptions to the requirements in paragraph (a) of 
this section if it determines that there was good cause for missing the 
filing deadline. For example, when dual coverage exists, CHAMPVA 
payment, if any, cannot be determined until after the primary insurance 
carrier has adjudicated the claim. In such circumstances an exception 
may be granted provided that the delay on the part of the primary 
insurance carrier is not attributable to the beneficiary. Delays due to 
provider billing procedures do not constitute a valid basis for an 
exception.
    (c) Claims for CHAMPVA-covered services and supplies provided 
before the date of the event that qualifies an individual under Sec.  
17.271 are not reimbursable.
    (d) CHAMPVA is the last payer to OHI, as that term is defined in 
Sec.  17.270(b). CHAMPVA benefits will generally not be paid until the 
claim has been filed with the OHI and the OHI has issued a final 
payment determination or explanation of benefits. CHAMPVA is secondary 
payer to Medicare per the terms of Sec.  17.271(b).

0
10. Revise newly redesignated Sec.  17.277 to read as follows:


Sec.  17.277   Appeals.

    (a) This section applies only to legacy claims.
    (b) Notice of the initial determination regarding payment of 
CHAMPVA benefits will be provided to the CHAMPVA beneficiary on a 
CHAMPVA Explanation of Benefits (EOB) form. The EOB form is generated 
by the CHAMPVA automated payment processing system. If a CHAMPVA 
beneficiary or provider disagrees with the determination concerning 
CHAMPVA-covered services and supplies or calculation of benefits, he or 
she may request reconsideration. Such requests must be submitted to VA 
in writing within one year of the date of the initial determination. 
The request must state why the CHAMPVA claimant believes the decision 
is in error and must include any new and relevant information not 
previously considered. Any request for reconsideration that does not 
identify the reason for dispute will be returned to the claimant 
without further consideration. After reviewing the claim and any 
relevant supporting documentation, VA will issue a written 
determination to the claimant that affirms, reverses, or modifies the 
previous decision. If the claimant is still dissatisfied, within 90 
days of the date of the decision he or she may make a written request 
for review by VA. After reviewing the claim and any relevant supporting 
documentation, VA will issue a written determination to the claimant 
that affirms, reverses, or modifies the previous decision. The decision 
of VA with respect to benefit coverage and computation of benefits is 
final. When a CHAMPVA beneficiary has other health insurance (OHI), an 
appeal must first be filed with the OHI, and a determination made, 
before submitting the appeal to CHAMPVA with limited exceptions such as 
if the OHI deems the issue non-appealable. Denial of CHAMPVA benefits 
based on legal eligibility requirements may be appealed to the Board of 
Veterans' Appeals in accordance with 38 CFR part 20. Medical 
determinations are not appealable to the Board. 38 CFR 20.101.

0
11. Revise newly redesignated Sec.  17.278 to read as follows:


Sec.  17.278   Medical care cost recovery.

    VA will actively pursue medical care cost recovery in accordance 
with applicable law.


Sec.  17.279   [Amended]

0
12. In newly redesignated Sec.  17.279, remove the authority citation 
at the end of the section.

[FR Doc. 2022-14285 Filed 7-12-22; 8:45 am]
BILLING CODE 8320-01-P


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