62348 Federal Register / Vol. 75, No. 195 / Friday, October 8, 2010 / Proposed Rules 

goal is to better serve rights-holders who 

engage in regular, multiple registrations 

and other transactions with the 

Copyright Office every year, and the 

proposed language reflects this intent 

with specificity. 

The Office also proposes to institute 

a requirement that every deposit 

account holder must establish, in 

consultation with the Copyright Office, 

a minimum balance for its deposit 

account. Ideally, this balance will be the 

lowest amount a deposit account holder 

can have in his or her account and still 

be able to pay for their regular number 

of copyright registration applications. 

This amount will be set collaboratively 

so that both the account holder and the 

office are comfortable that it will be 

sufficient for the account holder’s 

expected activity. 

In the event a deposit account reaches 

its minimum balance, the Copyright 

Office will automatically notify the 

account holder, but take no further 

action. The minimum balance 

requirement is intended to act primarily 

as an indicator to the account holder 

that the account may need 

replenishment; going below a minimum 

balance does not in itself expose the 

account holder to any adverse 

consequences. 

2. Consequences of Overdrawing a 

Deposit Account 

The Copyright Office proposes that 

upon the second occasion that a deposit 

account is overdrawn—meaning the 

second time there is not enough money 

in an account to pay the fee for a 

submitted registration—the account will 

be closed. In practice this rule will only 

affect deposit account holders who use 

paper applications, because eService 

will not allow an application to be 

submitted without sufficient funds. 

However, a deposit account holder 

whose account is closed because it has 

been overdrawn twice is not foreclosed 

from using a deposit account in the 

future. The deposit account holder may 

re-open a new account on the condition 

that it is funded through the automatic 

replenishment option. This condition is 

to protect the account holder from the 

risk of overdrawing again and to protect 

the Copyright Office from the risk of 

further suspended applications. 

3. Voluntary Automatic Replenishment 

The Copyright Office proposes to offer 

a voluntary automatic replenishment 

program to all deposit account holders. 

Under this program, the deposit account 

holder would provide pre-authorization 

to the Copyright Office to replenish the 

account from the account holder’s credit 

card or bank account. Replenishment 

would take place when the deposit 

account reaches its minimum balance, 

at which time the Office will also 

immediately notify the account holder 

of the replenishment. The account 

holder would determine the amount of 

replenishment above the predetermined minimum balance at the 

time the account holder enters the 

program. 

The Office seeks comment from the 

public on the following proposed 

regulations for governing deposit 

accounts maintained by the Copyright 

Office. 

List of Subjects in 37 CFR Part 201 

Copyright, General provisions. 

Proposed Regulations 

In consideration of the foregoing, the 

Copyright Office proposes to amend 37 

CFR Ch. II as follows: 

PART 201—GENERAL PROVISIONS 

1. The authority citation for part 201 

continues to read as follows: 

Authority: 17 U.S.C. 702. 

2. Section 201.6(b) is revised to read 

as follows: 

§ 201.6 Payment and refund of Copyright 

Office fees. 

* * * * * 

(b) Deposit accounts. (1) Persons or 

firms having 12 or more transactions a 

year with the Copyright Office may 

prepay copyright expenses by 

establishing a Deposit Account. The 

Office and the Deposit Account holder 

will cooperatively determine an 

appropriate minimum balance for the 

Deposit Account, and the Office will 

automatically notify the Deposit 

Account holder when the account 

reaches that balance. 

(2) The Copyright Office will close a 

Deposit Account the second time the 

Deposit Account holder overdraws his 

or her account. An account closed for 

this reason can be re-opened only if the 

holder elects to fund it through 

automatic replenishment. 

(3) In order to ensure that a Deposit 

Account’s funds are sufficiently 

maintained, a Deposit Account holder 

may authorize the Copyright Office to 

automatically replenish the account 

from the holder’s bank account or credit 

card. The amount by which a Deposit 

Account will be replenished will be 

determined by the deposit account 

holder. Automatic replenishment will 

be triggered when the Deposit Account 

reaches the minimum level of funding 

established pursuant to section (b)(1), 

and Deposit Account holders will be 

automatically notified of the 

replenishment. 

* * * * * 

Dated: October 1, 2010. 

Tanya Sandros, 

Deputy General Counsel. 

[FR Doc. 2010–25129 Filed 10–7–10; 8:45 am] 

BILLING CODE 1410–30–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 17 

RIN 2900–AN55 

Reimbursement Offsets for Medical 

Care or Services 

AGENCY: Department of Veterans Affairs. 

ACTION: Proposed rule. 

SUMMARY: The Department of Veterans 

Affairs (VA) proposes to amend its 

regulations concerning the 

reimbursement of medical care and 

services delivered to veterans for 

nonservice-connected conditions. The 

proposed rule would apply in situations 

where third-party payers are required to 

reimburse VA for costs related to care 

provided by VA to a veteran covered 

under the third-party payer’s plan. This 

proposed rule would add a new section 

barring offsets by third-party payers and 

establishing a process by which thirdparty payers would submit a request for 

a refund on claims for which there is an 

alleged overpayment. 

DATES: Comments must be received on 

or before December 7, 2010. 

ADDRESSES: Written comments may be 

submitted through http:// 

www.Regulations.gov; by mail or hand 

delivery to the Director, Regulations 

Management (02REG), Department of 

Veterans Affairs, 810 Vermont Avenue, 

NW., Room 1068, Washington, DC 

20420; or by fax to (202) 273–9026. 

Comments should indicate that they are 

submitted in response to ‘‘RIN 2900– 

AN55, Reimbursement Offsets for 

Medical Care or Services.’’ Copies of 

comments received will be available for 

public inspection in the Office of 

Regulation Policy and Management, 

Room 1063B, between the hours of 8 

a.m. and 4:30 p.m. Monday through 

Friday (except holidays). Please call 

(202) 461–4902 for an appointment. 

(This is not a toll-free number.) In 

addition, during the comment period, 

comments may be viewed online 

through the Federal Docket Management 

System at http://www.Regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Anthony Norris, Program Analyst, 


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Business Operations, Chief Business 

Office (168), Veterans Health 

Administration, Department of Veterans 

Affairs, 810 Vermont Avenue, NW., 

Washington, DC 20420, (202) 461–1593. 

(This is not a toll free number.) 

SUPPLEMENTARY INFORMATION: Pursuant 

to 38 U.S.C. 1729, a third-party payer, 

such as a private medical insurer, has an 

obligation to pay the United States 

reasonable charges for the cost of 

medical care or services furnished to a 

veteran for a nonservice-connected 

disability when the veteran or the 

provider of the care or services would 

otherwise be eligible to receive payment 

for such medical care from the thirdparty payer. The obligation to pay is to 

the extent that the beneficiary would be 

eligible to receive reimbursement or 

indemnification from the third-party 

payer if the beneficiary were to incur 

the costs on the beneficiary’s own 

behalf. VA’s authority under section 

1729 is generally implemented in 38 

CFR 17.101 through 17.105. However, 

the topic of addressing reimbursement 

offsets for medical care or services as 

proposed in this rulemaking is not 

covered by current VA regulations. As 

explained below in further detail, this 

proposed rule is consistent with 

regulations promulgated by the 

Department of Defense (DOD) in 32 CFR 

part 220. DOD’s collection statute, 10 

U.S.C. 1095, is similar to VA’s 

collection statute, 38 U.S.C. 1729. 

Therefore, VA proposes to implement 

section 1729 in a manner substantially 

similar to DOD’s implementation of 

section 1095. VA’s implementation of 

these changes will provide clarity and 

uniformity in how third-party payers 

interact with both Departments. 

As a matter of common business 

practice, third-party payers who are (or 

who believe that they are) owed a 

refund from VA based on an 

overpayment often recoup such money 

by unilaterally offsetting a future 

payment amount to VA. As a purchaser 

and provider of care, VA medical 

centers are subject to this practice of 

unilateral offsets. An offset occurs when 

the payer, alleging that it made an 

earlier overpayment to VA, reduces or 

takes back the alleged overpayment by 

withholding payment owed to VA on an 

unrelated debt transaction. In an 

attempt to recoup the overpayment, the 

payer seldom associates the reduced 

payment with the alleged overpaid 

claim. Third-party payer unilateral 

offsets disrupt VA accounting practices 

and present certain challenges to VA in 

managing third-party collections and 

evaluating account receivables for 

deficient payments. Further, such 

practices eliminate VA’s opportunity to 

validate the alleged overpayment and 

pursue proper review, if deemed 

appropriate given the circumstances. 

This proposed rule would address 

third-payer offsets and certain policy 

exclusions and, consequently, improve 

VA’s administration of account 

receivables and increase efficiency in 

maintaining third-party payer debts. 

The proposed rule would provide 

specific procedures that VA will use to 

recover payments from third-parties, 

consistent with our interpretation of our 

authority to recover payments from 

third-parties under section 1729. We 

believe that VA’s statutory right to 

recovery of payment is not contingent 

upon a third-party payer’s assertions 

regarding previous alleged 

overpayments and that the authority to 

compromise a claim rests with the 

government, not with the payer. 

Without the consent of the government, 

a third-party payer cannot compromise 

a claim premised on a separate disputed 

transaction. A request must be 

submitted and adjudicated separately. 

Several states prohibit third-party payer 

automatic offsets and require some form 

of notice and due process. We believe 

that VA should have protection from 

off-setting practices similar to that 

afforded individual states. Although 

section 1729 does not specifically 

address all of the issues that are 

addressed by this proposed rule, we 

believe that our proposed 

implementation of the statute is 

consistent with Congress’ intent. 

General Rule and Definitions 

Proposed paragraph (a)(1) of the 

proposed rule would explain the general 

rule, discussed above, that VA has the 

authority to recover or collect 

reasonable charges from third-party 

payers for medical care or services 

provided for nonservice-connected 

disability to a veteran who is also 

covered by the third-party payer’s plan. 

We also state that our right to recover 

or collect is limited to ‘‘the extent that 

the beneficiary or a non-government 

provider of care or services would be 

eligible to receive reimbursement or 

indemnification from the third-party 

payer if the beneficiary were to incur 

the costs on the beneficiary’s own 

behalf.’’ This limitation is statutory, 

because section 1729 states that VA’s 

right applies only ‘‘to the extent that the 

veteran (or the provider of the care or 

services) would be eligible to receive 

payment for such care or services from 

such third-party if the care or services 

had not been furnished by a department 

or agency of the United States.’’ 

Proposed paragraph (a)(1) would 

essentially restate the statute. 

Proposed paragraph (a)(2) would 

provide several definitions applicable to 

this section. These definitions 

incorporate and interpret the statutory 

definitions of health-plan contract and 

third-party in section 1729(i). Also, as 

noted above, this proposed rule would 

be based upon and consistent with 

DOD’s collection regulations in 32 CFR 

part 220. We propose to adopt, with 

only minor non-substantive changes, 

certain definitions promulgated by DOD 

in 32 CFR 220.14. Specifically, we 

propose to define the following terms 

consistent with the same or similar 

terms in § 220.14: Automobile liability 

insurance, health-plan contract, 

Medicare supplemental insurance plan, 

No-fault insurance, participating 

provider organization, and third-party 

payer. We intend that these definitions 

will clearly state the meaning of these 

terms as commonly used in the 

insurance industry. 

Calculating Reasonable Charges 

Proposed paragraph (b)(1) would 

explain that ‘‘reasonable charges’’ for the 

purposes of section 1729 are calculated 

using the regulatory method applicable 

to the particular charge as prescribed in 

current 38 CFR 17.101. We intend no 

substantive change regarding VA’s 

reasonable charges methodology and 

propose this provision only to provide 

notice that VA would bill third parties 

a ‘‘reasonable charge’’ as determined 

under current regulations for its 

services. 

Proposed paragraph (b)(2) would 

explain that, ‘‘If the third-party payer’s 

plan includes a requirement for a 

deductible or copayment by the 

beneficiary of the plan, VA will recover 

or collect reasonable charges less that 

deductible or copayment amount.’’ This 

merely restates the statutory 

requirement in section 1729(a)(3)(B) that 

the collectible or recoverable amount 

must be reduced by any deductible or 

copayment or both. 

VA’s Right To Recover or Collect Is 

Exclusive 

Proposed paragraph (c) would 

establish that VA’s right to recover or 

collect under this section is exclusive 

and prescribe that ‘‘[t]he only way for a 

third-party payer to satisfy its obligation 

under this section is to pay the VA 

facility or other authorized 

representative of the United States. 

Payment by a third-party payer to the 

beneficiary does not satisfy the thirdparty’s obligation under this section.’’ 

This statement would address confusion 

on the part of third-party payers 


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regarding whether VA permits 

offsetting, and explain that payment 

must be provided to VA and not to any 

other party. For example, this provision 

would proscribe third-party payments 

made directly to the beneficiary for care 

or service provided in or through a VA 

medical facility. Section 1729 provides 

to VA (and not to a third-party 

beneficiary) the right to recover or 

collect payments, as we have explained 

above. Accordingly, payments to anyone 

other than VA, including payments 

made by a third-party directly to the 

patient, cannot satisfy 1729. 

Proposed paragraph (c)(1) would 

allow the United States to file a claim 

for payment or institute and prosecute 

legal proceedings against a third-party 

payer, within six years, to enforce a 

right of the United States under 38 

U.S.C. 1729 and this section. This 

proposed provision would restate 

section 1729(b)(2). 

Proposed paragraph (c)(2) would 

restate the United States’ right to 

compromise, settle or waive a claim 

under the proposed rule, consistent 

with section 1729(c)(1). 

Proposed paragraph (c)(3) would list 

the statutory authority for the remedies 

available to the United States in 

collection actions under section 1729. 

These remedies include administrative 

offset and other means to collect. 

Pursuant to section 1729(a) and (f), 

the United States has a right to collect, 

consistent with the statutory terms, the 

reasonable charges for medical care and 

services from a third-party payer. This 

right is not contingent upon a thirdparty payer’s unsubstantiated assertions 

regarding previous alleged 

overpayments, rather a third-party payer 

must provide information sufficient for 

VA to determine that an overpayment 

occurred. Under section 1729(c)(1) and 

38 CFR part 2, the authority to 

compromise, settle, or waive a claim 

rests with the government, not with the 

payer. 

Therefore, proposed paragraph (c)(4) 

would prescribe that, without the 

consent of the government, a third-party 

payer cannot unilaterally compromise 

or settle a claim premised on a separate 

disputed transaction. It would also 

prohibit offsetting and reducing 

subsequent payments. A request for 

refund is a claim against the United 

States and must be submitted and 

adjudicated separately. 

Assignment of Benefits or Other 

Submission by Beneficiary Not 

Necessary 

Proposed paragraph (d) would 

address whether beneficiaries must 

execute an assignment of benefits form 

for the third-party payer to pay. No such 

form would be needed because, under 

section 1729, the right to collect is 

already assigned to the government. 

Unless the patient actually incurs some 

expenses for the hospital care provided 

in or through a VA medical facility, the 

patient likely has no benefit to assign 

under the terms of the third-party 

payer’s plan. Thus, in general, assuming 

that the patient has made no payment 

for the services received, the third-party 

payer need only recognize that its sole 

obligation for payment is to the United 

States and that this obligation is not 

dependent upon any assignment of 

benefits. Proposed paragraph (d) would 

reflect this. 

Preemption of Conflicting State Laws 

and Contracts 

Proposed paragraph (e) would restate 

section 1729(f) and prescribe that any 

law or regulation of a State or political 

subdivision thereof and any provision of 

any contract or agreement that purports 

to establish any requirement on a thirdparty payer that would prevent recovery 

or collection by the United States will 

have no force or effect on a third-party 

payer’s responsibility under section 

1729 or proposed § 17.106. 

Impermissible Exclusions by ThirdParty Payers 

Proposed paragraph (f) would 

implement section 1729(f), which states: 

‘‘[N]o provision of any contract or other 

agreement, shall operate to prevent 

recovery or collection by the United 

States.’’ Proposed paragraph (f)(1) would 

restate this statutory requirement. 

Proposed paragraph (f)(2) would 

establish several general rules derived 

from the statutory requirements. These 

general rules would help interested 

parties resolve issues that may arise in 

the course of collection actions and are 

intended to generally clarify VA’s 

interpretation of its authority under 

section 1729. 

The first general rule, in proposed 

paragraph (f)(2)(i), would state one of 

the clear mandates of section 1729(f): 

Express exclusions of limitations 

inconsistent with 38 U.S.C. 1729 are 

inoperative under Federal law. We 

provide, for clarification, that an 

example of an impermissible exclusion 

under this paragraph is a provision that 

purports to disallow payment for 

services provided by a government 

entity or paid for by a government 

program. 

Proposed paragraph (f)(2)(ii) would 

prescribe that no objection, 

precondition or limitation may be 

asserted that defeats the statutory 

purpose of collecting from third-party 

payers. This would extend the first 

general rule to cover situations in which 

a third-party payer’s plan might at first 

not appear to treat VA medical facilities 

less favorably, but nonetheless produces 

that effect. This interpretation is based 

on the statutory formulation of the 

prohibition in terms of provisions that 

have the effect of excluding or limiting 

payment. A clarifying example is 

provided in the proposed text, and 

explains that a third-party payer cannot 

refuse or reduce payment based on a 

provision in the third-party payer’s plan 

that purports to disallow payment when 

the beneficiary has no legal obligation to 

pay. Such an exclusion is impermissible 

under section 1729(a)(1), which 

provides that the government’s right to 

collect is to the extent the beneficiary or 

nongovernment provider would receive 

reimbursement. 

A basic statutory characteristic of VA 

health care and services is that veterans 

have no obligation to pay (except the 

nominal co-payments for medication 

required by 38 U.S.C. 1722A). 

Recognizing this, Congress concluded 

that the government collects from third 

parties as if the veteran has an 

obligation to pay. Thus, we interpret 

section 1729 to mean that the fact that 

a veteran has no actual obligation is 

irrelevant. The same conclusion would 

apply to any other exclusion in a thirdparty plan that is expressed in similar 

language, such as that no charge would 

be made if the person had no health 

insurance. 

Proposed paragraph (f)(2)(iii) would 

restate statutory requirements and 

prescribe that third-party payers may 

not treat claims arising from services 

provided in or through VA medical 

facilities less favorably than they treat 

claims arising from services provided in 

other hospitals. Under section 1729(f), 

VA has the right to collect reasonable 

charges from a third-party payer to the 

extent that the third-party payer would 

pay for care or services furnished by 

providers other than VA. The general 

rule disallowing less favorable treatment 

would provide a useful method of 

analyzing situations to assure 

compliance with the statute. 

The proposed clarifying example 

concerns an employer-sponsored health 

plan that purports to make ineligible for 

coverage individuals who are provided 

medical care and services in or through 

a VA medical facility. Such an 

exclusion would clearly have the effect 

of treating VA medical facilities less 

favorably than other hospitals. 

Proposed paragraph (f)(2)(iv) would 

prescribe that payments cannot be 

refused or reduced based on the lack of 

a participation agreement or the absence 


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of a specific contractual relationship 

(referred to as ‘‘privity of contract’’) 

between a third-party payer and VA or 

a VA medical facility. This further 

explains the general rule that disallows 

preconditions that are inconsistent with 

the basic nature of medical care and 

services provided to veterans in or 

through VA medical facilities. 

We note that some VA medical 

facilities have understandings or 

agreements with some third-party 

payers concerning claims procedures for 

the purpose of facilitating 

administration of health care and 

collection of payments. Such 

understandings or agreements would 

not offend our rule as long as they do 

not purport to be preconditions to 

complying with statutory and regulatory 

requirements. 

Proposed paragraph (f)(2)(v) and (vi) 

would set forth rules relating to 

Medicare carve-out and Medicare 

secondary payer provisions. The usual 

procedure for Medicare supplemental 

carriers is to accept claims only after the 

primary claim has been processed and 

paid by Medicare. In this way, the 

remaining liability, which becomes the 

responsibility of the supplemental 

policy, is apparent. However, a different 

process is required in section 1729 cases 

because, under section 1729(i)(1)(B)(i), 

there is no claim submitted to Medicare. 

Instead, the third-party payer is 

statutorily required to accept the claim 

as involving Medicare covered services 

from an authorized provider. 

Supplemental insurers do not have a 

statutory entitlement to a particular 

government adjudicatory process. 

Proposed paragraph (f)(2)(vii) would 

bar Health Maintenance Organizations 

(HMOs) from excluding claims or 

refusing to certify emergent and urgent 

services provided within the HMO’s 

service area or otherwise covered nonemergency services provided out of the 

HMO’s service area. In addition, it 

would provide that opt-out or point-ofservice options available under an HMO 

plan may not exclude services otherwise 

payable under section 1729 or this 

section. We interpret section 1729 to 

mean that HMO plans must pay only to 

the extent that HMO plans generally 

cover services (e.g., emergencies) 

provided by health care facilities not 

affiliated with the HMO. Further, we 

interpret the statute to mean that HMO 

plans that have a point-of-service option 

are required to pay VA the same amount 

that would be paid under the plan to 

nongovernment providers. 

Records 

Proposed paragraph (g) would restate 

section 1729(h), which requires that VA 

medical facilities make available for 

inspection and review to representatives 

of third-party payers appropriate health 

care records of patients. However, the 

records would be made available only to 

verify the care and services provided by 

VA for which payment, recovery, or 

collection is sought, and to verify that 

such care or services met the 

permissible criteria under the health 

plan involved. In light of privacy 

concerns, VA will not provide any other 

records maintained by a VA medical 

facility to a third-party payer. 

Paperwork Reduction Act 

This document contains no new 

collections of information under the 

Paperwork Reduction Act (44 U.S.C. 

3501–3521). 

Regulatory Flexibility Act 

The Secretary hereby certifies that 

this proposed rule would not have a 

significant economic impact on a 

substantial number of small entities as 

they are defined in the Regulatory 

Flexibility Act, 5 U.S.C. 601–612. This 

proposed rule would affect mainly large 

insurance companies. This proposed 

rule might have an insignificant impact 

on a few small entities that do an 

inconsequential amount of their 

business with VA. Therefore, pursuant 

to 5 U.S.C. 605(b), this proposed rule is 

also exempt from the initial and final 

regulatory flexibility analyses 

requirements 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 

the Office of Management and Budget 

(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 proposed rule have 

been examined and it has been 

determined not to be a significant 

regulatory action under Executive Order 

12866. 

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, 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 proposed rule would 

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 numbers and titles for the 

programs affected by this document are 

64.009, Veterans Medical Care Benefits; 

64.010, Veterans Nursing Home Care; 

64.011, Veterans Dental Care; 64.012, 

Veterans Prescription Service; 64.013, 

Veterans Prosthetic Appliances; 64.014, 

Veterans State Domiciliary Care; 64.015, 

Veterans State Nursing Home Care; 

64.016, Veterans State Hospital Care; 

64.018, Sharing Specialized Medical 

Resources; 64.019, Veterans 

Rehabilitation Alcohol and Drug 

Dependence; 64.022, Veterans Home 

Based Primary Care. 

Signing Authority 

The Secretary of Veterans Affairs, or 

designee, approved this document 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. John 

R. Gingrich, Chief of Staff, Department 

of Veterans Affairs, approved this 

document on September 10, 2010, for 

publication. 

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 


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programs, Nursing homes, Philippines, 

Reporting and recordkeeping 

requirements, Scholarships and 

fellowships, Travel and transportation 

expenses, Veterans. 

Dated: October 4, 2010. 

Robert C. McFetridge, 

Director, Regulation Policy and Management, 

Office of the General Counsel, Department 

of Veterans Affairs. 

For the reasons set forth in the 

preamble, VA proposes to amend 38 

CFR part 17 as follows: 

PART 17—MEDICAL 

1. The authority citation for part 17 

continues to read as follows: 

Authority: 38 U.S.C. 501, 1721, and as 

noted in specific sections. 

§ 17.106 [Redesignated as § 17.107] 

2. Redesignate § 17.106 as § 17.107. 

3. Add new § 17.106 before the 

undesignated center heading 

‘‘Disciplinary Control of Beneficiaries 

Receiving Hospital, Domiciliary or 

Nursing Home Care’’ to read as follows: 

§ 17.106 Third party claims for refunds 

based on amounts previously paid to the 

Department of Veterans Affairs 

(overpayments). 

(a)(1) General rule. VA has the right 

to recover or collect reasonable charges 

from a third-party payer for medical 

care and services provided for a 

nonservice-connected disability in or 

through any VA facility to a veteran 

who is also a beneficiary under the 

third-party payer’s plan. VA’s right to 

recover or collect is limited to the extent 

that the beneficiary or a nongovernment provider of care or services 

would be eligible to receive 

reimbursement or indemnification from 

the third-party payer if the beneficiary 

were to incur the costs on the 

beneficiary’s own behalf. 

(2) Definitions. For the purposes of 

this section: 

(i) Automobile liability insurance 

means insurance against legal liability 

for health and medical expenses 

resulting from personal injuries arising 

from operation of a motor vehicle. 

Automobile liability insurance includes: 

(A) Circumstances in which liability 

benefits are paid to an injured party 

only when the insured party’s tortious 

acts are the cause of the injuries; and 

(B) Uninsured and underinsured 

coverage, in which there is a third-party 

tortfeasor who caused the injuries (i.e., 

benefits are not paid on a no-fault basis), 

but the insured party is not the 

tortfeasor. 

(ii) Health-plan contract means any 

plan, policy, program, contract, or 

liability arrangement that provides 

compensation, coverage, or 

indemnification for expenses incurred 

by a beneficiary for medical care or 

services, items, products, and supplies. 

It includes but is not limited to: 

(A) Any plan offered by an insurer, reinsurer, employer, corporation, 

organization, trust, organized health 

care group or other entity. 

(B) Any plan for which the 

beneficiary pays a premium to an 

issuing agent as well as any plan to 

which the beneficiary is entitled as a 

result of employment or membership in 

or association with an organization or 

group. 

(C) Any Employee Retirement Income 

and Security Act (ERISA) plan. 

(D) Any Multiple Employer Trust 

(MET). 

(E) Any Multiple Employer Welfare 

Arrangement (MEWA). 

(F) Any Health Maintenance 

Organization (HMO) plan, including any 

such plan with a point-of-service 

provision or option. 

(G) Any individual practice 

association (IPA) plan. 

(H) Any exclusive provider 

organization (EPO) plan. 

(I) Any physician hospital 

organization (PHO) plan. 

(J) Any integrated delivery system 

(IDS) plan. 

(K) Any management service 

organization (MSO) plan. 

(L) Any group or individual medical 

services account. 

(M) Any participating provider 

organization (PPO) plan or any PPO 

provision or option of any third-party 

payer plan. 

(N) Any Medicare supplemental 

insurance plan. 

(O) Any automobile liability 

insurance plan. 

(P) Any no fault insurance plan, 

including any personal injury protection 

plan or medical payments benefit plan 

for personal injuries arising from the 

operation of a motor vehicle. 

(iii) Medicare supplemental insurance 

plan means an insurance, medical 

service or health-plan contract primarily 

for the purpose of supplementing an 

eligible person’s benefit under 

Medicare. The term has the same 

meaning as ‘‘Medicare supplemental 

policy’’ in section 1882(g)(1) of the 

Social Security Act (42 U.S.C. 1395, et. 

seq.) and 42 CFR part 403, subpart B. 

(iv) No-fault insurance means an 

insurance contract providing 

compensation for medical expenses 

relating to personal injury arising from 

the operation of a motor vehicle in 

which the compensation is not 

premised on who may have been 

responsible for causing such injury. Nofault insurance includes personal injury 

protection and medical payments 

benefits in cases involving personal 

injuries resulting from operation of a 

motor vehicle. 

(v) Participating provider 

organization means any arrangement in 

a third-party payer plan under which 

coverage is limited to services provided 

by a select group of providers who are 

members of the PPO or incentives (for 

example, reduced copayments) are 

provided for beneficiaries under the 

plan to receive health care services from 

the members of the PPO rather than 

from other providers who, although 

authorized to be paid, are not included 

in the PPO. However, a PPO does not 

include any organization that is 

recognized as a health maintenance 

organization. 

(vi) Third-party payer means an 

entity, other than the person who 

received the medical care or services at 

issue (first party) and VA who provided 

the care or services (second party), 

responsible for the payment of medical 

expenses on behalf of a person through 

insurance, agreement or contract. This 

term includes, but is not limited to the 

following: 

(A) State and local governments that 

provide such plans other than Medicaid. 

(B) Insurance underwriters or carriers. 

(C) Private employers or employer 

groups offering self-insured or partially 

self-insured medical service or health 

plans. 

(D) Automobile liability insurance 

underwriter or carrier. 

(E) No fault insurance underwriter or 

carrier. 

(F) Workers’ compensation program 

or plan sponsor, underwriter, carrier, or 

self-insurer. 

(G) Any other plan or program that is 

designed to provide compensation or 

coverage for expenses incurred by a 

beneficiary for healthcare services or 

products. 

(H) A third-party administrator. 

(b) Calculating reasonable charges. 

(1) The ‘‘reasonable charges’’ subject to 

recovery or collection by VA under this 

section are calculated using the 

applicable method for such charges 

established by VA in 38 CFR 17.101. 

(2) If the third-party payer’s plan 

includes a requirement for a deductible 

or copayment by the beneficiary of the 

plan, VA will recover or collect 

reasonable charges less that deductible 

or copayment amount. 

(c) VA’s right to recover or collect is 

exclusive. The only way for a thirdparty payer to satisfy its obligation 

under this section is to pay the VA 

facility or other authorized 


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Federal Register / Vol. 75, No. 195 / Friday, October 8, 2010 / Proposed Rules 62353 

representative of the United States. 

Payment by a third-party payer to the 

beneficiary does not satisfy the thirdparty’s obligation under this section. 

(1) Pursuant to 38 U.S.C. 1729(b)(2), 

the United States may file a claim or 

institute and prosecute legal 

proceedings against a third-party payer 

to enforce a right of the United States 

under 38 U.S.C. 1729 and this section. 

Such filing or proceedings must be 

instituted within six years after the last 

day of the provision of the medical care 

or services for which recovery or 

collection is sought. 

(2) An authorized representative of 

the United States may compromise, 

settle or waive a claim of the United 

States under this section. 

(3) The remedies authorized for 

collection of indebtedness due the 

United States under 31 U.S.C. 3701, et 

seq., 4 CFR parts 101–104, 28 CFR part 

11, 31 CFR part 900, and 38 CFR part 

1, are available to effect collections 

under this section. 

(4) A third-party payer may not, 

without the consent of a U.S. 

Government official authorized to take 

action under 38 U.S.C. 1729 and this 

part, offset or reduce any payment due 

under 38 U.S.C. 1729 or this part on the 

grounds that the payer considers itself 

due a refund from a VA facility. A 

written request for a refund must be 

submitted and adjudicated separately 

from any other claims submitted to the 

third-party payer under 38 U.S.C. 1729 

or this part. 

(d) Assignment of benefits or other 

submission by beneficiary not 

necessary. The obligation of the thirdparty payer to pay is not dependent 

upon the beneficiary executing an 

assignment of benefits to the United 

States. Nor is the obligation to pay 

dependent upon any other submission 

by the beneficiary to the third-party 

payer, including any claim or appeal. In 

any case in which VA makes a claim, 

appeal, representation, or other filing 

under the authority of this part, any 

procedural requirement in any thirdparty payer plan for the beneficiary of 

such plan to make the claim, appeal, 

representation, or other filing must be 

deemed to be satisfied. A copy of the 

completed VA Form 10–10EZ or VA 

Form 10–10EZR that includes a 

veteran’s insurance declaration will be 

provided to payers upon request, in lieu 

of a claimant’s statement or 

coordination of benefits form. 

(e) Preemption of conflicting State 

laws and contracts. Any provision of a 

law or regulation of a State or political 

subdivision thereof and any provision of 

any contract or agreement that purports 

to establish any requirement on a thirdparty payer that would have the effect 

of excluding from coverage or limiting 

payment for any medical care or 

services for which payment by the thirdparty payer under 38 U.S.C. 1729 or this 

part is required, is preempted by 38 

U.S.C. 1729(f) and shall have no force or 

effect in connection with the third-party 

payer’s obligations under 38 U.S.C. 1729 

or this part. 

(f) Impermissible exclusions by thirdparty payers. (1) Statutory requirement. 

Under 38 U.S.C. 1729(f), no provision of 

any third-party payer’s plan having the 

effect of excluding from coverage or 

limiting payment for certain care if that 

care is provided in or through any VA 

facility shall operate to prevent 

collection by the United States. 

(2) General rules. The following are 

general rules for the administration of 

38 U.S.C. 1729 and this part, with 

examples provided for clarification. The 

examples provided are not exclusive. A 

third-party payer may not reduce, offset, 

or request a refund for payments made 

to VA under the following conditions: 

(i) Express exclusions or limitations 

in third-party payer plans that are 

inconsistent with 38 U.S.C. 1729 are 

inoperative. For example, a provision in 

a third-party payer’s plan that purports 

to disallow or limit payment for services 

provided by a government entity or paid 

for by a government program (or similar 

exclusion) is not a permissible ground 

for refusing or reducing third-party 

payment. 

(ii) No objection, precondition or 

limitation may be asserted that defeats 

the statutory purpose of collecting from 

third-party payers. For example, a 

provision in a third-party payer’s plan 

that purports to disallow or limit 

payment for services for which the 

patient has no obligation to pay (or 

similar exclusion) is not a permissible 

ground for refusing or reducing thirdparty payment. 

(iii) Third-party payers may not treat 

claims arising from services provided in 

or through VA facilities less favorably 

than they treat claims arising from 

services provided in other hospitals. For 

example, no provision of an employer 

sponsored program or plan that purports 

to make ineligible for coverage 

individuals who are eligible to receive 

VA medical care and services shall be 

permissible. 

(iv) The lack of a participation 

agreement or the absence of privity of 

contract between a third-party payer 

and VA is not a permissible ground for 

refusing or reducing third-party 

payment. 

(v) A provision in a third-party payer 

plan, other than a Medicare 

supplemental plan, that seeks to make 

Medicare the primary payer and the 

plan the secondary payer or that would 

operate to carve out of the plan’s 

coverage an amount equivalent to the 

Medicare payment that would be made 

if the services were provided by a 

provider to whom payment would be 

made under Part A or Part B of Medicare 

is not a permissible ground for refusing 

or reducing payment as the primary 

payer to VA by the third-party payer 

unless the provision expressly disallows 

payment as the primary payer to all 

providers to whom payment would not 

be made under Medicare (including 

payment under Part A, Part B, a 

Medicare HMO, or a Medicare 

Advantage plan). 

(vi) A third-party payer may not 

refuse or reduce third-party payment to 

VA because VA’s claim form did not 

report hospital acquired conditions 

(HAC) or present on admission 

conditions (POA). VA is exempt from 

the Medicare Inpatient prospective 

payment system and the Medicare rules 

for reporting POA or HAC information 

to third-party payers. 

(vii) Health Maintenance 

Organizations (HMOs) may not exclude 

claims or refuse to certify emergent and 

urgent services provided within the 

HMO’s service area or otherwise 

covered non-emergency services 

provided out of the HMO’s service area. 

In addition, opt-out or point-of-service 

options available under an HMO plan 

may not exclude services otherwise 

payable under 38 U.S.C. 1729 or this 

part. 

(g) Records. Pursuant to 38 U.S.C. 

1729(h), VA shall make available for 

inspection and review to representatives 

of third-party payers, from which the 

United States seeks payment, recovery, 

or collection under 38 U.S.C. 1729, 

appropriate health care records (or 

copies of such records) of patients. 

However, the appropriate records will 

be made available only for the purposes 

of verifying the care and services which 

are the subject of the claim(s) for 

payment under 38 U.S.C. 1729, and for 

verifying that the care and services met 

the permissible criteria of the terms and 

conditions of the third-party payer’s 

plan. Patient care records will not be 

made available under any other 

circumstances to any other entity. VA 

will not make available to a third-party 

payer any other patient or VA records. 

(Authority: 31 U.S.C. 3711, 38 U.S.C. 501, 

1729, 42 U.S.C. 2651) 

[FR Doc. 2010–25363 Filed 10–7–10; 8:45 am] 

BILLING CODE 8320–01–P 


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