[Federal Register Volume 74, Number 93 (Friday, May 15, 2009)]
[Rules and Regulations]
[Pages 22832-22835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-11400]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AN23


Expansion of Enrollment in the VA Health Care System

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA) 
medical regulations regarding enrollment in the VA health care system. 
In particular, it establishes additional sub-priorities within 
enrollment priority category 8 and provides that beginning on the 
effective date of the rule, VA will begin enrolling priority category 8 
veterans whose income exceeds the current means test and geographic 
means test income thresholds by 10 percent or less.

DATES: Effective date: This final rule is effective June 15, 2009.

FOR FURTHER INFORMATION CONTACT: Tony Guagliardo, Director, Business 
Policy, Chief Business Office (163), Veterans Health Administration, 
Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 
20420, (202) 461-1591. (This is not a toll free number).

SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register (74 FR 3535) on January 21, 2009, we proposed amendments to 38 
CFR 17.36 regarding enrollment of veterans for purposes of VA hospital 
and outpatient care. This document adopts as a final rule, without 
change, those proposed amendments.
    This final rule amends regulations implementing Public Law 104-262, 
the Veterans' Health Care Eligibility Reform Act of 1996, which 
required VA to

[[Page 22833]]

establish a national enrollment system to manage the delivery of 
inpatient hospital care and outpatient medical care, within available 
appropriated resources. It directed that the enrollment system be 
managed in such a way as ``to ensure that the provision of care to 
enrollees is timely and acceptable in quality,'' and authorized such 
sub-prioritization of the statutory enrollment categories ``as the 
Secretary determines necessary.'' The law also provided that starting 
on October 1, 1998, most veterans had to enroll in the VA health care 
system as a condition for receiving VA hospital and outpatient care.
    We provided a 60-day comment period, which ended on February 20, 
2009. We received comments from one individual who essentially 
expressed concern about VA's evaluation of his service-connected 
disability and recommended that VA amend the current means test for VA 
medical care to provide certain unspecified exceptions. However, we did 
not propose to amend any of the disability evaluation regulations in 38 
CFR part 3 or how VA administers the current means test for VA medical 
care in 38 CFR 17.47(d) through (f). Accordingly, the comments are not 
within the scope of this rulemaking and we will not make any changes 
based upon the comments.

Previous Interim Final Rule and Responses to Comments

    The proposed rule also noted that the amendments would modify 
provisions adopted in the interim final rule published in the Federal 
Register on January 17, 2003 (68 FR 2669), which limited enrollment of 
veterans for VA medical care under priority category 8. We received 
five comments concerning that interim final rule. All of the commenters 
expressed disagreement with VA's decision to suspend enrollment of 
additional veterans in priority category 8. In that regard, each of the 
commenters would support the extension of priority 8 coverage in this 
final rule.
    Each of the commenters also generally expressed the view that VA 
should provide care to all veterans because they served their country. 
However, as discussed in the preambles to the 2003 interim final rule 
and 2009 proposed rule, VA is required to assess available resources 
and determine the number of veterans it is able to enroll to ensure 
that medical services provided are both timely and acceptable in 
quality. An enrollment system is necessary because the provision of VA 
health care is discretionary and can be provided only to the extent 
that appropriated resources are available for that purpose. The 
enrollment decisions made in the interim final rule and this final rule 
were based on an assessment concerning available resources, and we did 
not receive any comments regarding either rule suggesting that VA's 
assessment was incorrect.
    Based on the rationale in the proposed rule, we are adopting the 
provisions of the proposed rule as a final rule without change.

Unfunded Mandates

    The Unfunded Mandates Reform Act 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 in any given year. This rule would have no such 
effect on State, local, or tribal governments.

Paperwork Reduction Act

    This rule contains no provisions constituting a new collection of 
information, but would change, merely by adding an option of a new 
method of submission, a collection of information that has been 
approved by the Office of Management and Budget (OMB) in accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). OMB 
assigns a control number for each collection of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The information collection 
provisions affected by this rule have been approved under control 
number 2900-0091.

Executive Order 12866 and Congressional Review Act

    This is an economically significant regulatory action under 
Executive Order 12866 and constitutes a major rule under the 
Congressional Review Act.
    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). Executive 
Order 12866 classifies a ``significant regulatory action'' requiring 
review by OMB as any regulatory action that is likely to result in a 
rule that may: (1) Have an annual effect on the economy of $100 million 
or more, or adversely affect in a material way the economy, a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) create a serious inconsistency or interfere with an 
action taken or planned by another agency; (3) materially alter the 
budgetary impact of entitlements, grants, user fees, or loan programs 
or the rights and obligations of entitlement recipients; 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.
    VA has examined the economic, interagency, budgetary, legal, and 
policy implications of this rule and has concluded that it is an 
economically significant regulatory action under Executive Order 12866 
because it may have an annual effect on the economy of $100 million or 
more and 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. This rule is also a major rule under the 
Congressional Review Act because it is likely to result in an annual 
effect on the economy of $100 million or more.
    VA has attempted to follow OMB circular A-4 to the extent feasible 
in this analysis. The circular first calls for a discussion of the need 
for the regulation. The Consolidated Security, Disaster Assistance, and 
Continuing Appropriations Act, 2009 (Pub. L. 110-329) was enacted on 
September 30, 2008. The accompanying report language stated that 
funding was included to reopen priority category 8 enrollment. The 
preamble above discusses the need for the regulation in more detail. 
There are not any alternatives to publishing this rule that will 
accomplish the stated provisions in the report language of the 
Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act, 2009 (Pub. L. 110-329).
    VA uses the Enrollee Health Care Projection Model (Model), a health 
care actuarial model, to project veteran demand for VA health care. To 
project enrollment and expenditures under this proposed regulatory 
change, VA first identified the number of non-enrolled veterans whose 
income exceeds the current VA means test and geographic means test 
income thresholds by 10 percent or less. VA then projected the number 
of those veterans who would enroll based on historical priority 
category 8 enrollment rates. The projected health care service 
utilization for these new enrollees was based on the historical 
morbidity and reliance rates of the current priority category 8

[[Page 22834]]

enrollee population. The projected expenditures represent the cost to 
provide the projected health care services to these new enrollees.
    Using the 2008 Model, VA projects that this regulatory change would 
result in an additional 258,705 priority category 8 enrollees in FY 
2009. The projected increase in total health care service expenditures 
associated with this new enrollment is $485 million in FY 2009. The 
revenues generated by the first- and third-party collections are 
projected to be $121 million,\1\ resulting in a $364 million growth in 
net health service expenditures for FY 2009, and $375 million was 
provided in the Consolidated Security, Disaster Assistance, and 
Continuing Appropriations Act, 2009 (Pub. L. 110-329). VA's 
expenditures related to this proposed regulatory change are projected 
to be approximately $2.931 billion for five years.\2\ These 
expenditures exclude services such as Long Term Care, Readjustment 
Counseling, Spina Bifida, Foreign Medical Programs, Non-Veteran Medical 
Care and CHAMPVA.

    \1\ The first party collections are based on the projected 
health care service utilization of the new Priority 8 enrollees. In 
the base year (2007), we applied the appropriate co-payment to the 
projected services. We then balanced the resulting co-payment 
revenue projections to the actual collections for 2007 for four 
categories (inpatient, outpatient, residential rehabilitation, and 
pharmacy) and by Veterans Integrated Service Network (VISN) to 
account for the amount actually collected. The resulting first-party 
revenue per service developed for 2007 is applied to the projected 
services in future years to project the first-party revenue 
associated with health care utilization of the new Priority 8 
enrollees. Further, the pharmacy co-payment is increased over time 
based on the legislated Consumer Price Index (CPI) schedule.
    To develop the third-party collections, we calculated the 
percentage of third-party revenue collected in 2007 as a percent of 
2007 expenditures by VISN, priority level, and two age bands (under 
and over age 65). We then applied these percentages to the projected 
expenditures for the new Priority 8 enrollees in future years. For 
2010, the percentages were increased to reflect VHA's initiatives to 
increase third-party revenue collections.
    \2\ Five Year Projection Table

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($ in billions):
 
Present Value: (Future Value)/
 ((1+i)[supcaret]n):
 
($ in billions)...................    FY 2009      FY 2010      FY 2011      FY 2012      FY 2013       5 year
Future Value (FV).................       $0.485       $0.533       $0.580       $0.631       $0.702       $2.931
3% discount rate (i)..............        3.00%        3.00%        3.00%        3.00%        3.00%  ...........
7% discount rate (i)..............        7.00%        7.00%        7.00%        7.00%        7.00%  ...........
Number of Years (n)...............            0            1            2            3            4  ...........
Present Value (PV) at 3%..........       $0.485       $0.517       $0.546       $0.578       $0.624       $2.751
Present Value (PV) at 7%..........       $0.485       $0.498       $0.506       $0.515       $0.536       $2.540
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Regulatory Flexibility Act

    The Secretary hereby certifies that the adoption of this 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. This rule will not directly affect any small entities. 
Only individuals will be directly affected. Therefore, pursuant to 5 
U.S.C. 605(b), this rule is exempt from the final regulatory 
flexibility analysis requirements of section 604.

Catalog of Federal Domestic Assistance

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

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.

    Approved: April 15, 2009.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.

0
For the reasons set out in the preamble, the Department of Veterans 
Affairs amends 38 CFR part 17 as follows:

PART 17--MEDICAL

0
1. The authority citation for part 17 continues to read as follows:

    Authority:  38 U.S.C. 501, 1721, and as stated in specific 
sections.


0
2. Amend Sec.  17.36 by revising paragraphs (b)(8), (c)(1), (c)(2), and 
(d)(1) and the authority citation to read as follows:


Sec.  17.36  Enrollment--provision of hospital and outpatient care to 
veterans.

* * * * *
    (b) * * *
    (8) Veterans not included in priority category 4 or 7, who are 
eligible for care only if they agree to pay to the United States the 
applicable copayment determined under 38 U.S.C. 1710(f) and 1710(g). 
This category is further prioritized into the following subcategories:
    (i) Noncompensable zero percent service-connected veterans who were 
in an enrolled status on January 17, 2003, or who are moved from a 
higher priority category or subcategory due to no longer being eligible 
for inclusion in such priority category or subcategory and who 
subsequently do not request disenrollment;
    (ii) Noncompensable zero percent service-connected veterans not 
included in paragraph (b)(8)(i) of this section and whose income is not 
greater than ten percent more than the income that would permit their 
enrollment in priority category 5 or priority category 7, whichever is 
higher;
    (iii) Nonservice-connected veterans who were in an enrolled status 
on January 17, 2003, or who are moved from a higher priority category 
or subcategory due to no longer being eligible for inclusion in such 
priority category or subcategory and who

[[Page 22835]]

subsequently do not request disenrollment;
    (iv) Nonservice-connected veterans not included in paragraph 
(b)(8)(iii) of this section and whose income is not greater than ten 
percent more than the income that would permit their enrollment in 
priority category 5 or priority category 7, whichever is higher;
    (v) Noncompensable zero percent service-connected veterans not 
included in paragraph (b)(8)(i) or paragraph (b)(8)(ii) of this 
section; and
    (vi) Nonservice-connected veterans not included in paragraph 
(b)(8)(iii) or paragraph (b)(8)(iv) of this section.
    (c) * * *
    (1) It is anticipated that each year the Secretary will consider 
whether to change the categories and subcategories of veterans eligible 
to be enrolled. The Secretary at any time may revise the categories or 
subcategories of veterans eligible to be enrolled by amending paragraph 
(c)(2) of this section. The preamble to a Federal Register document 
announcing which priority categories and subcategories are eligible to 
be enrolled must specify the projected number of fiscal year applicants 
for enrollment in each priority category, projected healthcare 
utilization and expenditures for veterans in each priority category, 
appropriated funds and other revenue projected to be available for 
fiscal year enrollees, and projected total expenditures for enrollees 
by priority category. The determination should include consideration of 
relevant internal and external factors, e.g., economic changes, changes 
in medical practices, and waiting times to obtain an appointment for 
care. Consistent with these criteria, the Secretary will determine 
which categories of veterans are eligible to be enrolled based on the 
order of priority specified in paragraph (b) of this section.
    (2) Unless changed by a rulemaking document in accordance with 
paragraph (c)(1) of this section, VA will enroll the priority 
categories of veterans set forth in Sec.  17.36(b) beginning [effective 
date of regulation], except that those veterans in subcategories (v) 
and (vi) of priority category 8 are not eligible to be enrolled.
    (d) * * *
    (1) Application for enrollment. A veteran may apply to be enrolled 
in the VA healthcare system at any time. A veteran who wishes to be 
enrolled must apply by submitting a VA Form 10-10EZ to a VA medical 
facility or via an Online submission at https://www.1010ez.med.va.gov/sec/vha/1010ez/.
* * * * *
(Authority: 38 U.S.C. 101, 501, 1521, 1701, 1705, 1710, 1722)

[FR Doc. E9-11400 Filed 5-14-09; 8:45 am]
BILLING CODE 8320-01-P