[Federal Register Volume 73, Number 196 (Wednesday, October 8, 2008)]
[Rules and Regulations]
[Pages 58877-58880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23822]



[[Page 58877]]

-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 17 and 59

RIN 2900-AJ43


Grants to States for Construction and Acquisition of State Home 
Facilities

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document affirms as final, with changes, an interim final 
rule that amended regulations regarding grants to States for the 
construction or acquisition of State homes for furnishing domiciliary 
and nursing home care to veterans, or for the expansion, remodeling, or 
alteration of existing State homes for furnishing domiciliary, nursing 
home, or adult day health care to veterans. This rule is necessary to 
update the regulations and to implement statutory provisions, including 
provisions of the Veterans Millennium Health Care and Benefits Act. 
This document also incorporates some non-substantive changes to the 
regulations in the interim final rule and recognizes a change made to 
38 CFR 59.50(b) on February 14, 2007.

DATES: Effective Date: The effective date is October 8, 2008.

FOR FURTHER INFORMATION CONTACT: Stephanie A. Robinson, Chief, State 
Home Construction Grant Program (114), Veterans Health Administration, 
810 Vermont Ave., NW., Washington, DC 20420, 202-461-6767. (This is not 
a toll free number.)

SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register on June 26, 2001 (66 FR 33845), we established a new part 59 
setting forth a mechanism for providing grants to States for the 
construction or acquisition of State homes for furnishing domiciliary 
and nursing home care to eligible veterans, or for the expansion, 
remodeling, or alteration of existing State homes for furnishing 
domiciliary, nursing home, or adult day health care to eligible 
veterans. The new part 59 consists of a comprehensive rewrite of the 
regulations set forth in former 38 CFR 17.210 through 17.222. We 
provided a 60-day comment period which ended August 27, 2001. We 
received responses from 10 commenters. The issues raised in the 
comments are discussed below. Based on the rationale set forth in the 
interim final rule and in this document, we are adopting the provisions 
of the interim final rule as a final rule with changes explained below 
and with the final regulatory change made to Sec.  59.50 that was 
effective on February 14, 2007 (72 FR 6959).
    A number of commenters asserted that the overall change in 
methodology for determining the number of authorized beds per State was 
arbitrary and lowers the overall bed levels nationally. No changes have 
been made based on this comment.
    The provisions of 38 U.S.C. 8134 require VA to prescribe for each 
State the number of nursing home and domiciliary beds for which grants 
may be furnished. Statutorily this is required to be based on the 
projected demand for nursing home and domiciliary care on November 30, 
2009 (10 years after the date of enactment of the Veterans Millennium 
Health Care and Benefits Act (Pub. L. 106-117)) by veterans who at such 
time are 65 years of age or older and who reside in that State. In 
determining the projected demand, VA must take into account travel 
distances for veterans and their families. In determining the maximum 
number of nursing home and domiciliary beds authorized for each State, 
VA used the most recent data available to project, among other things, 
the population of veterans 65 years of age or older in each State and 
veteran domiciliary and nursing needs in each State in 2009. Since the 
publication of the interim final rule, only three States have requested 
exceptions to the published bed levels, which VA has granted. We also 
recognized that all States would have a decrease in bed needs or the 
maximum number of State home and domiciliary beds authorized. For some 
States, such decreases were due in part to migration of veterans out of 
the State. Moreover, the change in methodology itself also resulted in 
lower maximum bed numbers for individual States, but this was due to 
the fact that the previous methodology was no longer relevant. VA 
calculated the previous maximum numbers of beds per State at 4 beds per 
1,000 veterans for nursing home care facilities and 2 beds per 1,000 
veterans for domiciliary care facilities. These formulas were 
established in the 1980's when the use of inpatient facilities was 
increasing and the aim was to increase the number of beds. However, 
these formulas became significantly outdated in the 1990's, when the 
trend went toward trying to keep patients in their homes rather than 
moving them to nursing homes. We also note that, although VA's new 
methodology for determining each State's unmet bed needs resulted in 
less total authorized beds than under the previous methodology, the 
reduced numbers were very similar across the board for all States, 
regardless of State size. VA does not consider the new methodology to 
be arbitrary because it more accurately reflects the projected bed 
needs of each State.
    One commenter asserted that this new methodology is an attempt by 
VA to limit its financial liability for long-term care for veterans. We 
disagree with that assertion. VA also has committed to mandatory long-
term care requirements under provisions in the Veterans Millennium 
Health Care and Benefits Act, which require VA to provide, to certain 
veterans, nursing home care either through VA's own nursing homes or 
contract nursing care. Furthermore, nothing in this rule prohibits the 
States from constructing their own State fully funded facility. The 
awards for construction grants that VA provides under this regulation 
should not be considered in isolation; rather they should be recognized 
as part of the entire spectrum of care VA provides. Provisions of the 
rule also allow for a State to request from the Secretary of Veterans 
Affairs exceptions to the bed levels when exception is needed due to 
travel distances. Our experience has been that this provision, when 
used, ensures that States with rural veteran populations are not 
adversely affected by the provisions of this rule.
    There were a number of comments on the interim final rule's 
inclusion of domiciliary care beds with nursing bed totals in the 
methodology in establishing the State bed limits. No changes have been 
made based on these comments.
    The Veterans Millennium Health Care and Benefits Act requires that 
the Secretary shall take into account the availability of beds already 
operated by the State, which will serve the needs of veterans that the 
State proposes to meet with its application for a grant. We do not 
believe that this requires any distinction between nursing and 
domiciliary beds. States that have participated in the State Home 
Construction Grant Program for the construction of domiciliary and 
nursing facilities have done so to provide care to an identified 
veteran population located within their respective States. A 
determination is made by the State to provide such care and to serve 
these veterans who have very similar care needs. Often, States have 
determined to build a nursing facility, a domiciliary, or both. In some 
cases, such veteran populations are often managed in co-located 
facilities, and as the care needs of domiciliary residing veterans 
increase, these veterans are usually moved into the higher level care 
of nursing home beds. VA, therefore, believes that such beds can and 
should be counted together when assessing the

[[Page 58878]]

total bed needs of the State. Once the facilities are fully constructed 
and operating, the State may take actions to request conversion of 
those beds to a higher or lower level of care, since both nursing home 
and domiciliary beds are constructed to the same VA construction 
standards.
    One commenter remarked that such bed limits do not address the 
great unmet nursing home needs of veterans. No changes were made based 
on this comment. This rule provides grants for those States interested 
in building and providing nursing home, domiciliary, and adult day 
health care to veterans. The State Home Program is an integral part of 
VA's health care for veterans, which includes VA's own nursing homes as 
well as contracted care through community nursing home providers. It is 
not intended to be the only program to address the nursing care of 
veterans.
    One commenter remarked that preference should be given to Vietnam 
veterans. No changes were made based on this comment. Pursuant to 38 
U.S.C. 1742(b), the States have the sole responsibility in managing 
these homes and thus the flexibility to determine certain service era 
preferences, if any, within Federal laws barring discrimination. The 
law specifically prohibits VA from managing the homes.
    A couple of commenters remarked that VA should consider funding 
assisted and supportive living care rather than institutional models. 
No changes were made based on this comment. Congress has authorized VA 
to award funds for nursing home care, domiciliary care or adult day 
health care.
    One commenter cited concerns about the square footage allotment 
requirement and remarked that VA should consider expanding it for 
motorized scooters and patient wheel chairs. No changes were made based 
on this comment. VA has long been in the forefront in the approval and 
design of model nursing home facilities. This rule and VA building 
requirements as well as other Federal laws require open access by 
wheelchair and individuals with such need. The current rule also allows 
for flexibility in the requirements in order for the State to expand 
its building plans to accommodate any State specific requirement, by up 
to 10 percent. Even with the advent of motorized scooters, we believe 
the space requirements remain adequate to meet any additional demands 
placed upon the design for their use.
    A number of comments were received regarding the rule's 
incorporation by reference of the 2000 edition of the National Fire 
Protection Association Life Safety Code (NFPA 101, Life Safety Code) 
and the 1999 edition of the NFPA 99, Standard for Health Care 
Facilities. Although we received comments in support of the utilization 
of such reference and standards, we also received a comment objecting 
to the exclusiveness of the reference. No changes were made based on 
this comment.
    VA's own standards are based on the adopted standards (2000 edition 
of the NFPA 101, Life Safety Code and the 1999 edition of the NFPA 99, 
Standard for Health Care Facilities). VA life safety engineers 
throughout the country have been trained to use such standards for over 
40 years. Other codes including the International Building Code (IBC) 
do not address existing buildings except under renovations. Since VA 
also adopted the NFPA fire codes for the State Home Per Diem program, 
it would be confusing to attempt to use two standards to determine a 
State's compliance.
    One commenter cited concerns with the rule's method for 
establishing or projecting nursing home bed needs for veterans in each 
State. The commenter suggested that the regulation fails to mandate the 
consideration of the availability of community nursing home beds in 
each State when determining the State's projected bed needs and such 
failure has an adverse impact on the scarce health care resources and 
funds. No changes were made based on this comment.
    VA believes that the rule adequately requires the States to assess, 
through a comprehensive report, the feasibility and viability of 
constructing a State veterans home in the State. The rule also 
anticipates that the State, through the legislative appropriations 
process, will properly review and assess the viability and impact of 
the home in the community.
    A number of commenters applauded the rule's flexibility in allowing 
a State to request a waiver from the bed limits whenever veteran 
populations lived beyond a 2-hour radius from the existing State 
veterans home. One commenter suggested, however, that the distance was 
far too great, and a number of commenters suggested that the exception 
apply to all States, including those with ``limited'' needs. No changes 
were made based on these comments.
    The 2-hour radius is a reasonable distance for both veterans and 
their families, beyond which we believe a hardship on their health 
might prevail and visits by their families would become prohibitively 
difficult. VA believes that the waiver supports the concerns of large 
rural States when although population levels might limit bed levels for 
the State, a waiver allows the State to request building grant funds to 
ensure care to veterans in all parts of the State. This exception 
applies to all States regardless of their unmet bed needs, in light of 
the direction given by the Veterans Millennium Health Care and Benefits 
Act to take into account travel distances for veterans and their 
families, and to fairly respond to all State requests.
    A couple of commenters objected to VA's categorization of States as 
in ``great need,'' ``significant need,'' and ``limited need'' for 
purposes of its prioritizing proposed projects and asserted that VA's 
new prioritization process is unfair. The commenters suggested that VA 
use a process that prioritizes proposed projects based on the 
percentage of each State's unmet bed need, instead of based on the 
actual number of beds needed by each State. VA's previous 
prioritization process was based, at least in part, on a State's 
percentage need of unmet beds. No changes have been made based on these 
comments.
    The Veterans Millennium Health Care and Benefits Act required VA to 
identify the need for beds in each State and provided VA with the three 
categories to be used. Although the percentage-based approach is an 
alternative way to prioritize proposed projects, VA believes that its 
new prioritization process, which focuses on the actual number of beds 
needed by each State, is a reasonable approach in satisfying the 
statutory requirement of prioritizing proposed projects between the 
States. The actual number of beds needed by each State clearly reflect 
each State's ``need'' for unmet beds, as referenced by statute. VA 
believes that its new prioritization process may more effectively 
allocate resources and potentially serve more veterans nationally by 
giving priority to proposed projects that will serve the most veterans.
    During the time of the original analysis in 2000, ``small States'' 
such as the District of Columbia, Alaska, Delaware, Hawaii, and 
Wyoming, were at the top of the list because they had no State Nursing 
Homes. Since then, Alaska, Delaware and Hawaii have received VA State 
Home Construction grants, and their homes are under construction. The 
District of Columbia and Wyoming remain, by definition, in the ``great 
need'' category. VA believes that, with its new prioritization process, 
VA will be able to continue to serve both small and large States, but 
more importantly may potentially serve more

[[Page 58879]]

veterans nationally than with an alternative process.
    The number of unmet beds for each State provided clear break points 
for separating the States into the ``great need,'' ``significant 
need,'' and ``limited need'' categories. We have decided to retain the 
break points as follows:

Great = 100 percent Unmet Need or an Unmet Bed Need of at least 2000 
beds.
Significant = 1000-1999 Unmet Bed Need.
Limited = less than 1000 Unmet Bed Need.

Paperwork Reduction Act

    This final rule contains provisions constituting a collection of 
information, including certain new, updated, and revised forms, which 
have been approved by OMB in accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3521). VA has obtained new OMB control 
number 2900-0661 for all the VA Forms identified in Sec.  59.170 of the 
interim-final rule and has renumbered these VA grant forms to comply 
with OMB requirements. At the time the interim-final rule was 
published, VA awarded less than 10 grants per year and did not require 
OMB control numbers for each form. Since the June 26, 2001, 
publication, VA has awarded more than 10 grants per year and was, 
therefore, required to obtain OMB approval for all VA grant forms. 
Accordingly, the VA grant forms have new VA Form numbers and references 
to the previous VA Form numbers in Sec. Sec.  59.20, 59.60, and 59.100 
of the interim-final rule have been changed to reflect the new VA Form 
numbers. VA has removed copies of the grant forms from Sec.  59.170 and 
changed the reference to the Internet Website address at which the 
forms may be found to the following Web site addresses: ``http:/
www.va.gov/forms/'' for VA Forms and ``http://www.gsa.gov'' for 
Standard Forms. VA believes that the forms are easily accessible at 
these Web sites.
    In addition, two new forms have been added to the grant 
requirements. VA Form 10-0388-2, Certification of Compliance with 
Provisions of the Davis-Bacon Act, was added to ensure that applicants 
comply with Federal wage rates. The certification on this form was part 
of the Standard Form 424D certification, which was provided in the 
interim-final rule in Sec.  59.170(p). VA Form 10-0388-14, Checklist of 
Major Requirements for State Home Construction/Acquisition Grants, was 
added to ensure that all grant requirements are met throughout the 
application process. This form is used by the applicants and VA to 
merely summarize the requirements in three other greater-detailed VA 
Forms (10-0388-1, Documents and Information Required for State Home 
Construction and Acquisition Grants--Initial Application; 10-0388-5, 
Additional Documents and Information Required for State Home 
Construction and Acquisition Grants Application; and 10-0388-13, 
Documents and Information Required for State Home Construction and 
Acquisition Grants--Post-Grant Requirements), which were provided in 
the interim-final rule in Sec.  59.170(g), (h), and (i).

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory action 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. All of the entities that would be subject to this final 
rule are State government entities under the control of State 
governments or entities under contract with State governments. Of the 
117 State homes, all are operated by State governments except for 17 
that are operated by entities under contract with State governments. 
These contractors are not small entities. Therefore, pursuant to 5 
U.S.C. 605(b), this final rule is exempt from the initial and final 
regulatory flexibility analysis requirement of sections 603 and 604.

Executive Order 12866

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

Unfunded Mandates

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

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance program number and title 
for this rule is as follows: 64.005, Grants to States for Construction 
of State Home Facilities.

List of Subjects

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, Government programs--
veterans, Health care, Health facilities, Health professions, Health 
records, Homeless, Medical and dental schools, Medical devices, Medical 
research, Mental health programs, Nursing homes, Philippines, Reporting 
and record keeping requirements, Scholarships and fellowships, Travel 
and transportation expenses, Veterans.

38 CFR Part 59

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


[[Page 58880]]


    Approved: July 10, 2008.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

0
Accordingly, the interim final rule amending 38 CFR parts 17 and 59, 
which was published in the Federal Register at 66 FR 33845 on June 26, 
2001, is adopted as a final rule with the following changes and with 
the final regulatory change made to Sec.  59.50 that was effective on 
February 14, 2007 (72 FR 6959):

PART 59--GRANTS TO STATES FOR CONSTRUCTION OR ACQUISITION OF STATE 
HOMES

0
1. The authority citation for part 59 continues to read as follows:

    Authority: 38 U.S.C. 101, 501, 1710, 1742, 8105, 8131-8137.


0
2. Amend Sec.  59.20 by revising paragraph (a) to read as follows:


Sec.  59.20  Initial application requirements.

    (a) For a project to be considered for inclusion on the priority 
list in Sec.  59.50 of this part for the next fiscal year, a State must 
submit to VA an original and one copy of a completed VA Form 10-0388-1 
and all information, documentation, and other forms specified by VA 
Form 10-0388-1 (these forms are available on the internet Web sites 
provided in Sec.  59.170 of this part).
* * * * *

0
3. Amend Sec.  59.60 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  59.60  Additional application requirements.

* * * * *
    (a) Complete, updated Standard Forms 424 (mark the box labeled 
application and submit the information requested for an application), 
424C, and 424D (these forms are available on the internet Web site 
provided in Sec.  59.170 of this part), and
    (b) A completed VA Form 10-0388-5 and all information and 
documentation specified by VA Form 10-0388-5 (this form is available on 
the internet Web site provided in Sec.  59.170).
* * * * *

0
4. Revise Sec.  59.100 to read as follows:


Sec.  59.100  Payment of grant award.

    The amount of the grant award will be paid to the State or, if 
designated by the State representative, the State home for which such 
project is being carried out or any other State agency or 
instrumentality. Such amount shall be paid by way of reimbursement, and 
in such installments consistent with the progress of the project as the 
Chief Consultant, Geriatrics and Extended Care, may determine and 
certify for payment to the appropriate Federal institution. Funds paid 
under this section for an approved project shall be used solely for 
carrying out such project as so approved. As a condition for the final 
payment, the State must comply with the requirements of this part based 
on an architectural and engineering inspection approved by VA, must 
obtain VA approval of the final equipment list submitted by the State 
representative, and must submit to VA a completed VA Form 10-0388-13 
(this form is available on the internet Web site provided in Sec.  
59.170). The equipment list and the completed VA Form 10-0388-13 must 
be submitted to the Chief Consultant, Geriatrics and Extended Care 
(114), VHA Headquarters; 810 Vermont Avenue, NW.; Washington, DC 20420.

     Authority: 38 U.S.C. 101, 501, 1710, 1742, 8105, 8131-8137


0
5. Revise Sec.  59.170 to read as follows:


Sec.  59.170.  Forms.

    All forms required by this part are available on the internet at 
``http:/www.va.gov/forms/'' for VA Forms and at ``http://www.gsa.gov'' 
for Standard Forms, or at the Veterans Health Administration, Room 789, 
810 Vermont Ave., NW., Washington, DC 20420.

    Authority: 38 U.S.C. 101, 501, 1710, 1742, 8105, 8131-8137, 
Section 2, 3, 4, and 4a of the Architectural Barriers Act of 1968, 
as amended, Pub. L. 90-480, 42 U.S.C. 4151-4157

[FR Doc. E8-23822 Filed 10-7-08; 8:45 am]
BILLING CODE 8320-01-P