Contracts and Provider Agreements for State Home Nursing Home Care, 72738-72742 [2012-29521]

Agencies

• DEPARTMENT OF VETERANS AFFAIRS

[Federal Register Volume 77, Number 235 (Thursday, December 6, 2012)]
[Rules and Regulations]
[Pages 72738-72742]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29521]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 51

RIN 2900-AO57


Contracts and Provider Agreements for State Home Nursing Home 
Care

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: This interim final rule amends Department of Veterans Affairs 
(VA) regulations to allow VA to enter into contracts or provider 
agreements with State homes for the nursing home care of certain 
disabled veterans. This rulemaking is required to implement a change in 
law that revises how VA will pay for care provided to these veterans 
and authorizes VA to use provider agreements to pay for such care. The 
change made by this law applies to all care provided to these veterans 
in State homes on and after February 2, 2013.

DATES: Effective Date: This interim final rule is effective on February 
2, 2013. Comments must be received by VA on or before February 4, 2013.

ADDRESSES: Written comments may be submitted by email through https://www.regulations.gov; by mail or hand-delivery to Director, Regulation 
Policy and Management (02REG), Department of Veterans Affairs, 810 
Vermont Avenue NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. (This is not a toll-free number.) Comments should indicate 
that they are submitted in response to ``RIN 2900-AO57--Contracts and 
Provider Agreements for State Home Nursing Home Care.'' Copies of 
comments received will be available for public inspection in the Office 
of Regulation Policy and Management, Room 1063B, between the hours of 
8:00 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 (FDMS) at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Kelly Schneider, State Home Per Diem 
Program Manager, Purchased Care (10NB3), Chief Business Office, 
Veterans Health Administration, 810 Vermont Avenue NW., Washington, DC 
20420. Please call (308) 389-5106. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: This rulemaking implements VA's authority to 
pay for State home nursing home care under section 105 of the Honoring 
America's Veterans and Caring for Camp Lejeune Families Act of 2012 
(the Act), Public Law 112-154, 126 Stat. 1165, which was enacted on 
August 6, 2012.
    VA pays State veterans homes to provide nursing home care to 
eligible veterans under 38 U.S.C. 1741 and 1745. Under 38 U.S.C. 1745, 
as it existed before it was amended by section 105 of the Act, and 
current 38 CFR 51.41, VA currently pays State homes a special daily per 
diem rate for care provided to the following veterans: Those who need 
nursing home care for a service-connected disability, and those who 
need nursing home care and have either a service-connected disability 
rating of 70 percent or more or a rating of total disability based on 
individual unemployability. These payments under current 38 CFR 51.41 
are considered grant payments. Section 105 of the Act requires VA to 
change the mechanism for paying State homes for care provided to these 
veterans. Specifically, as of February 2, 2013, VA will only be 
authorized to use contracts or provider agreements to pay State homes 
for the nursing home care of these veterans. This rulemaking therefore 
will revise VA's regulation at 38 CFR 51.41, effective February 2, 
2013, to implement VA's authority under the Act to enter into provider 
agreements and contracts to pay for this care.
    In Sec.  51.41(a), as revised by this rulemaking (hereinafter 
referred to as ``revised Sec.  51.41''), we identify the veterans whose 
care is affected by this rulemaking, i.e., veterans residing in State 
homes who need nursing home care for a VA adjudicated service-connected 
disability, or who need nursing home care and have either: (1) A 
singular or combined rating of 70 percent or more based on one or more 
service-connected disability, or (2) a rating of total disability based 
on individual unemployability. These veterans are identified by statute 
and are the same veterans for whose care State homes are currently paid 
the special daily per diem rate. 38 U.S.C. 1745(a)(1)(A) and (B). This 
rulemaking will affect payments for State nursing home care only for 
these veterans. VA will continue to pay basic per diem as specified in 
38 CFR part 51 for all other veterans receiving State home nursing home 
care.
    Consistent with current practice, if a veteran receives a 
retroactive VA service-connected disability rating and becomes a 
veteran identified in revised Sec.  51.41(a), the State home may 
request additional payment for care rendered prior to the rating. 
Revised Sec.  51.41(c)(4) provides that in these instances the State 
home may request payment under the VA provider agreement for care back 
to the retroactive effective date or February 2, 2013, whichever is 
later. For care provided to a veteran before February 2, 2013, the 
State home may request payment at the special per diem rate in effect 
at the time that the care was rendered, which will be reimbursed based 
on VA's special per diem authority in current Sec.  51.41. VA cannot 
enter into a contract to make retroactive payments for care rendered in 
the past. This is because contracts can only be created for a bona fide 
need that exists at the time of contract execution, not one that may 
have existed in the past.
    Revised Sec.  51.41(a) states that VA and State homes may enter 
into both contracts and provider agreements, but each veteran's care 
will be paid through only one of these two instruments. This allows VA 
and State homes to use the payment instrument that best meets their 
needs.
    As noted above, section 105 of the Act specifies that VA must pay 
State homes for the nursing home care of these veterans using either 
contracts or provider agreements. Because the Act makes no further 
explanation of the term ``contracts,'' VA has determined that existing 
contracting authorities

[[Page 72739]]

should apply in this regulation. Contracts between VA and State homes 
are currently negotiated under Federal contract statutes and 
regulations, including the Federal Acquisition Regulation, which is set 
forth at 48 CFR chapter 1, and VA Acquisition Regulations, which are 
set forth at 48 CFR chapter 8.
    Paragraph (b) of revised Sec.  51.41 discusses contracts. The Act 
requires that rates of payments be ``based on a methodology, developed 
by the Secretary in consultation with the State home, to adequately 
reimburse the State home for the care provided.'' Pub. L. 112-154, Sec. 
105(a)(2). Contracts are negotiated with each State home, as stated in 
revised Sec.  51.41(b)(1). Additionally, the Act requires that VA 
offer, at the request of the State home, to provide either a contract 
or provider agreement that ``reflects the overall methodology of 
reimbursement for such care that was in effect for such state home on 
the day before the date of enactment of this Act.'' Pub. L. 112-154, 
Sec. 105(c)(2). This mandate is stated in revised Sec.  51.41(b)(2).
    Revised Sec.  51.41(c) sets forth VA's authority to enter into 
provider agreements for State nursing home care. Under 38 U.S.C. 
1745(a)(1), as amended by section 105 of the Act, VA is authorized to 
enter into an agreement under 38 U.S.C. 1720(c)(1) with each State home 
for nursing home care. Section 1720(c)(1) authorizes VA to enter into 
agreements with non-VA providers using ``the procedures available for 
entering into provider agreements under section 1866(a) of the Social 
Security Act.'' Section 1866(a) (codified at 42 U.S.C. 1395cc(a)) 
authorizes the Department of Health and Human Services to enter into 
agreements with participating Medicare providers, and specifies the 
rates and terms of those agreements. Similar agreements are offered 
under State Medicaid programs. Agreements under both Medicare and State 
Medicaid programs are administered by the Centers for Medicare and 
Medicaid Services (CMS).
    Pursuant to the Act, this rulemaking implements VA's authority in 
section 1720(c)(1) to enter into provider agreements with State homes 
to provide care to the veterans covered by the Act. VA provider 
agreements with State homes will be entered into using procedures 
similar to those used in entering into Medicare agreements. VA provider 
agreements will accommodate the differences between VA's State home 
programs and Medicare programs and enable participation in VA provider 
agreements by all State homes.
    The rates of payment for VA provider agreements are reflected in 
revised Sec.  51.41(c)(1), and the procedures and standards of care are 
covered in revised Sec.  51.41(c)(3).
    Revised Sec.  51.41(c)(1) establishes payment rates for VA provider 
agreements by adopting part of VA's existing payment methodology for 
State homes providing care to veterans affected by the Act. For VA 
provider agreements, we have adopted VA's rate calculation from current 
Sec.  51.41(b)(1), which is commonly called the ``prevailing Medicare 
rate'' (``prevailing rate''). The prevailing rate is specific to each 
State home, and is based on an average of CMS case-level data in the 
geographic area, labor costs, and physician's fees. Under provider 
agreements, VA will pay each State home the prevailing rate for the 
veterans under their care each day. By contrast, under a Medicare or 
State Medicaid agreement, the State home would be paid an amount 
determined by a CMS rate schedule specific to each resident, based on 
an assessment of their medical conditions and the amount of care the 
resident would require. We have amended the prevailing rate regulation 
in Sec.  51.41(c) to make it clearer and easier to understand how the 
rates are calculated, but the method used for calculating the rates 
remains the same.
    There are strong administrative reasons to support using the 
prevailing rate to pay for care provided to veterans by State nursing 
homes. Foremost, using a single, fixed rate will provide regular and 
predictable payment amounts, which will make administration of the 
program easier both for VA and for State homes. Second, the prevailing 
rate is familiar to State veterans homes, as it has been one of two 
payment methodologies that have been effective in VA regulations since 
May 29, 2009. It is also familiar to VA for the same reasons, which 
will make it easy to implement as a payment rate in the short period of 
time required by statute (i.e., on and after February 2, 2013). In 
addition, some State homes--particularly the approximately 40 percent 
of State homes that are not CMS certified--are unfamiliar with the 
process of determining an appropriate individualized rate using the CMS 
fee schedule. Moreover, these rates must be adjusted whenever the 
veteran's level of care adjusts, which means that the same veteran 
might be subject to several different rates during any one calendar 
month. These frequent calculations and recalculations would be 
particularly burdensome on State homes that lack current administrative 
mechanisms to perform them, but would also present a significant strain 
on VA's ability to effectively administer payments and ensure that 
payments are correct. Moreover, the prevailing rate methodology should 
not, over time, deviate from the amount that payment would be using the 
Medicare fee schedule. The prevailing rate is based on CMS data, 
therefore it is a close reflection of the payments State homes would 
receive if CMS rates were used. Finally, VA has received comments from 
State homes and groups representing the State homes that they would 
prefer to receive the prevailing rate.
    Under this rule, the VA provider agreement payment mechanism 
presents an option to pay for State home care that is distinct from 
contracting. Apart from the distinct terminology difference, using the 
prevailing rate, which is based on the non-negotiable Medicare fee 
schedule (or State Medicaid payment system), does not permit rate 
negotiation. In this manner, provider agreements are not contractual in 
nature. Allowing VA and State homes to negotiate rates would make the 
agreements subject to the authorities applicable to negotiated 
contracts, which is contrary to Congressional intent.
    Revised Sec.  51.41(c)(2) requires that the provider agreement 
reflect that State homes may not charge any individual, insurer, or 
entity other than VA for nursing home care paid for by VA under a VA 
provider agreement. A similar requirement is in current Sec.  51.41(c), 
and the basis for the requirement that payment under an agreement must 
represent payment in full is not affected by the amendments made by the 
Act. The purpose of this paragraph, consistent with the purpose of the 
current paragraph, is to ensure that VA does not pay for services--such 
as drugs or medical care--that should be provided by the State home as 
part of the home's care for the veteran. It is also to ensure that VA 
does not pay for care that is covered by another responsible party.
    Revised Sec.  51.41(c)(3) states that provider agreements are 
subject to the rest of 38 CFR part 51, unless part 51 conflicts with 
paragraph (c). It also states that the term ``per diem'' in part 51 
includes payments under provider agreements for the purposes of this 
section. This provision will ensure that State homes are subject to 
VA's requirements such as recognition and certification, standards of 
care, enforcement of such standards, etc, in the same manner as they 
are currently. Nothing in the Act suggests that these procedures and 
standards should not

[[Page 72740]]

apply to State homes to which we will pay for care via a provider 
agreement. Moreover, State homes are familiar with our existing 
procedures and standards and will also need to continue to comply with 
them in order to receive VA basic per diem payments for providing 
nursing home care to veterans who are not subject to this rulemaking. 
Revised 51.41(c)(4) describes procedures for payments if a veteran 
receives a retroactive VA service-connected disability rating, as 
discussed previously.
    Revised paragraph (d) requires that the Director of the VA medical 
center of jurisdiction or a designee sign VA provider agreements.
    Revised Sec.  51.41(e) requires a State home to submit a VA Form 
10-10EZ, Application for Medical Benefits (or VA Form 10-10EZR, Health 
Benefits Renewal Form), and VA Form 10-10SH, State Home Program 
Application for Care--Medical Certification, to the VA medical center 
of jurisdiction prior to entering into a VA provider agreement for the 
veterans for whom the State home will seek payment under the provider 
agreement. These VA forms are currently submitted by a new State home 
or when a State home seeks payment for providing care to a new veteran 
in the State home. VA must collect these forms from States seeking to 
enter into provider agreements to assist with administering the change 
from the current per diem payment program to provider agreements. 
Revised Sec.  51.41(e) also requires that State homes with a VA 
provider agreement follow Sec.  51.43(a) regarding submission of 
required forms for payments.
    Revised paragraph (f) sets forth procedures to terminate provider 
agreements. A State home can terminate the agreement by sending VA 
written notice of its intent to terminate the agreement 30 days in 
advance of the termination date under paragraph (f)(1). This provision 
is consistent with the transfer and discharge rights of veterans stated 
in Sec.  51.80. It is important to ensure that VA has advance notice of 
any termination that might cause a disruption in care for veterans, and 
also because State homes may choose to contract with VA to provide 
care, rather than continue to provide care under a provider agreement. 
Under paragraph (f)(2), a VA provider agreement will terminate 
immediately upon a final determination that the State home has lost VA 
recognition under 38 CFR 51.30. This provision is substantively 
consistent with current State home per diem payment procedures at 
Sec. Sec.  51.10 and 51.30(f).
    Revised Sec.  51.41(g) says that under these provider agreements, 
State homes need not comply with the Service Contract Act of 1965 
(codified at 41 U.S.C. 351, et seq.). While the Service Contract Act of 
1965 applies to contracts entered into by the United States for 
services by service employees, it does not apply to Medicare provider 
agreements because these are not contracts with the United States. This 
is consistent with VA's recent interpretation of its provider agreement 
authority under 38 U.S.C. 1720(c)(1) in RIN 2900-AO15, in which we 
explain that VA provider agreements are not contracts. VA provider 
agreements are based on the non-negotiable Medicare fee schedule (or 
State Medicaid payment system), which does not permit rate negotiation. 
In this manner, provider agreements are not contractual in nature. VA 
believes it is reasonable to apply this interpretation to all VA 
provider agreements because their purpose and execution is the same. 
However, paragraph (g) would require that providers comply with all 
other applicable Federal laws concerning employment and hiring 
practices, including the Fair Labor Standards Act, National Labor 
Relations Act, the Civil Rights Acts, the Age Discrimination in 
Employment Act of 1967, the Vocational Rehabilitation Act of 1973, 
Worker Adjustment and Retraining Notification Act, Sarbanes-Oxley Act 
of 2002, Occupational Health and Safety Act of 1970, Immigration Reform 
and Control Act of 1986, Consolidated Omnibus Reconciliation Act, the 
Family and Medical Leave Act, the Americans with Disabilities Act, the 
Uniformed Services Employment and Reemployment Rights Act, the 
Immigration and Nationality Act, the Consumer Credit Protection Act, 
the Employee Polygraph Protection Act, and the Employee Retirement 
Income Security Act.
    The Act requires VA to consult with State homes to develop the 
payment methodology under these authorities. During development of this 
rulemaking, groups representing State veterans homes, such as the 
National Association of State Veterans Homes and the National 
Association of State Directors of Veterans Affairs, and State officials 
on their own wrote to VA and spoke with VA representatives about 
implementing the Act and provided comments about payment methodologies 
under contracts and provider agreements. In addition to these 
discussions and submissions, contracts are negotiated with each State 
home, and that negotiation will provide the opportunity for 
individualized consultation. The comment period for this notice also 
serves as part of the consultation process for payments under provider 
agreements. VA welcomes further comment from the public, particularly 
those who will be affected by this regulation, to ensure we implement 
the new payment methodology required by the Act effectively.

Administrative Procedure Act

    The Secretary of Veterans Affairs finds that there is good cause 
under 5 U.S.C. 553(b)(B) to publish this rule without prior opportunity 
for public comment. This interim final rule is necessary to implement 
the contracting and provider agreement authority of section 105 of the 
Act, which requires VA to change its payment methodology for State home 
nursing home care of severely disabled Veterans. This rule must be in 
place by February 2, 2013, in order to ensure continuity of care for 
affected veterans in State veterans nursing homes. As of February 2, 
2013, VA will no longer have authority to use its current procedures to 
pay State homes for care provided to the affected veterans, and must 
enter into either contracts or provider agreements with State homes by 
that date. VA presently has the authority to enter into contracts with 
State homes on that date, but many State homes have notified VA that 
some States will be unable to enter into contracts with VA for this 
care due to the application of many Federal acquisition laws, such as 
the Service Contract Act of 1965, the applicability of which State 
governing bodies may not support because the provisions would require 
greater expenditures by the States. However, VA lacks the authority to 
enter into provider agreements without this rulemaking. Failure to 
effect this regulatory change by February 2, 2013, may cause serious 
disruptions in VA's ability to pay for the care provided to certain 
veterans in State home nursing homes. For the foregoing reasons, VA is 
issuing this rule as an interim final rule, effective on February 2, 
2013. The Secretary of Veterans Affairs will consider and address 
comments that are received within 60 days after this interim final rule 
is published in the Federal Register.

Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as revised by this 
final rulemaking, represents VA's implementation of its legal authority 
on this subject. Other than future amendments to this regulation or 
governing statutes, no contrary guidance

[[Page 72741]]

or procedures are authorized. All existing or subsequent VA guidance 
must be read to conform with this rulemaking if possible or, if not 
possible, such guidance is superseded by this rulemaking.

Paperwork Reduction Act

    Although this action contains a provision constituting collections 
of information at 38 CFR 51.41(e), under the provisions of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), no new or 
proposed revised collections of information are associated with this 
interim final rule. The information collection requirements for Sec.  
51.41(e) are currently approved by the Office of Management and Budget 
(OMB) and have been assigned OMB control numbers 2900-0091 and 2900-
0160.

Regulatory Flexibility Act

    The Secretary hereby certifies that this interim 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. This interim final rule will directly affect only 
States and will not directly affect small entities. Therefore, pursuant 
to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and 
final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 
604.

Executive Order 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. 
Executive Order 12866 (Regulatory Planning and Review) defines 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 this Executive Order.''
    VA has examined the economic, interagency, budgetary, legal, and 
policy implications of this regulatory action, 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 one year. This interim final 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 numbers and titles for 
the programs affected by this document are 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; 64.015, Veterans State Nursing Home Care; 
64.018, Sharing Specialized Medical Resources; 64.019, Veterans 
Rehabilitation Alcohol and Drug Dependence; and 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 December 3, 2012 for publication.

List of Subjects in 38 CFR Part 51

    Administrative practice and procedure; Claims; Day care; Dental 
health; Government contracts; Grant programs--health; Grant programs--
veterans; Health care; Health facilities; Health professions; Health 
records; Mental health programs; Nursing homes; Reporting and 
recordkeeping requirements; Travel and transportation expenses; 
Veterans.

    Dated: December 3, 2012.
Robert C. McFetridge,
Director of Regulation Policy and Management, Office of General 
Counsel, Department of Veterans Affairs.

    For the reasons set out in the preamble, VA amends 38 CFR part 51 
as follows:

PART 51--PER DIEM FOR NURSING HOME CARE OF VETERANS IN STATE HOMES

0
1. The authority citation for part 51 continues to read as follows:

    Authority:  38 U.S.C. 101, 501, 1710, 1720, 1741-1743; and as 
stated in specific sections.


0
2. Revise Sec.  51.41 to read as follows:


Sec.  51.41  Contracts and provider agreements for certain veterans 
with service-connected disabilities.

    (a) Contract or VA provider agreement required. VA and State homes 
may enter into both contracts and provider agreements. VA will pay for 
each eligible veteran's care through either a contract or a provider 
agreement (called a ``VA provider agreement''). Eligible veterans are 
those who:
    (1) Are in need of nursing home care for a VA adjudicated service-
connected disability, or
    (2) Have a singular or combined rating of 70 percent or more based 
on one or more service-connected disabilities or a rating of total 
disability based on individual unemployability and are in need of 
nursing home care.
    (b) Payments under contracts. Contracts under this section will be 
subject to this part to the extent provided for in the contract and 
will be governed by federal acquisition law and regulation. Contracts 
for payment under this section will provide for payment either:
    (1) At a rate or rates negotiated between VA and the State home; or
    (2) On request from a State home that provided nursing home care on 
August 5, 2012, for which the State home was eligible for payment under 
38 U.S.C. 1745(a)(1), at a rate that reflects the overall methodology 
of reimbursement for such care that was in effect for the State home on 
August 5, 2012.
    (c) Payments under VA provider agreements. (1) State homes must 
sign an agreement to receive payment from VA for providing care to 
certain eligible veterans under a VA provider

[[Page 72742]]

agreement. VA provider agreements under this section will provide for 
payments at the rate determined by the following formula. For State 
Homes in a metropolitan statistical area, use the most recently 
published CMS Resource Utilization Groups (RUG) case-mix levels for the 
applicable metropolitan statistical area. For State Homes in a rural 
area, use the most recently published CMS Skilled Nursing Prospective 
Payment System case-mix levels for the applicable rural area. To 
compute the daily rate for each State home, multiply the labor 
component by the State home wage index for each of the applicable case-
mix levels; then add to that amount the non-labor component. Divide the 
sum of the results of these calculations by the number of applicable 
case-mix levels. Finally, add to this quotient the amount based on the 
CMS payment schedule for physician services. The amount for physician 
services, based on information published by CMS, is the average hourly 
rate for all physicians, with the rate modified by the applicable urban 
or rural geographic index for physician work, then multiplied by 12, 
then divided by the number of days in the year.

    Note to paragraph (c)(1): The amount calculated under this 
formula reflects the prevailing rate payable in the geographic area 
in which the State home is located for nursing home care furnished 
in a non-Department nursing home (a public or private institution 
not under the direct jurisdiction of VA which furnishes nursing home 
care). Further, the formula for establishing these rates includes 
CMS information that is published in the Federal Register every year 
and is effective beginning October 1 for the entire fiscal year. 
Accordingly, VA will adjust the rates annually.

    (2) The State home shall not charge any individual, insurer, or 
entity (other than VA) for the nursing home care paid for by VA under a 
VA provider agreement. Also, as a condition of receiving payments under 
paragraph (c) of this section, the State home must agree not to accept 
drugs and medicines from VA provided under 38 U.S.C. 1712(d) on behalf 
of veterans covered by this section and corresponding VA regulations 
(payment under paragraph (c) of this section includes payment for drugs 
and medicines).
    (3) Agreements under paragraph (c) of this section will be subject 
to this part, except to the extent that this part conflicts with this 
section. For purposes of this section, the term ``per diem'' in part 51 
includes payments under provider agreements.
    (4) If a veteran receives a retroactive VA service-connected 
disability rating and becomes a veteran identified in paragraph (a) of 
this section, the State home may request payment under the VA provider 
agreement for nursing home care back to the retroactive effective date 
of the rating or February 2, 2013, whichever is later. For care 
provided after the effective date but before February 2, 2013, the 
State home may request payment at the special per diem rate that was in 
effect at the time that the care was rendered.
    (d) VA signing official. VA provider agreements must be signed by 
the Director of the VA medical center of jurisdiction or designee.
    (e) Forms. Prior to entering into a VA provider agreement, State 
homes must submit to the VA medical center of jurisdiction a completed 
VA Form 10-10EZ, Application for Medical Benefits (or VA Form 10-10EZR, 
Health Benefits Renewal Form, if a completed VA Form 10-10EZ is already 
on file at VA), and a completed VA Form 10-10SH, State Home Program 
Application for Care--Medical Certification, for the veterans for whom 
the State home will seek payment under the provider agreement. After VA 
and the State home have entered into a VA provider agreement, forms for 
payment must be submitted in accordance with paragraph (a) of this 
section. VA Forms 10-10EZ and 10-10EZR are set forth in full at Sec.  
58.12 of this chapter and VA Form 10-10SH is set forth in full at Sec.  
58.13 of this chapter.
    (The Office of Management and Budget has approved the information 
collection requirements in this section under control numbers 2900-0091 
and 2900-0160.)
    (f) Termination of VA provider agreements. (1) A State home that 
wishes to terminate a VA provider agreement with VA must send written 
notice of its intent to the Director of the VA medical center of 
jurisdiction at least 30 days before the effective date of termination 
of the agreement. The notice shall include the intended date of 
termination.
    (2) VA provider agreements will terminate on the date of a final 
decision that the home is no longer recognized by VA under Sec.  51.30.
    (g) Compliance with Federal laws. Under provider agreements entered 
into under this section, State homes are not required to comply with 
reporting and auditing requirements imposed under the Service Contract 
Act of 1965, as amended (41 U.S.C. 351, et seq.); however, State homes 
must comply with all other applicable Federal laws concerning 
employment and hiring practices including the Fair Labor Standards Act, 
National Labor Relations Act, the Civil Rights Acts, the Age 
Discrimination in Employment Act of 1967, the Vocational Rehabilitation 
Act of 1973, Worker Adjustment and Retraining Notification Act, 
Sarbanes-Oxley Act of 2002, Occupational Health and Safety Act of 1970, 
Immigration Reform and Control Act of 1986, Consolidated Omnibus 
Reconciliation Act, the Family and Medical Leave Act, the Americans 
with Disabilities Act, the Uniformed Services Employment and 
Reemployment Rights Act, the Immigration and Nationality Act, the 
Consumer Credit Protection Act, the Employee Polygraph Protection Act, 
and the Employee Retirement Income Security Act.

(Authority: 38 U.S.C. 101, 501, 1710, 1720, 1741-1745; 42 U.S.C. 
1395cc)


[FR Doc. 2012-29521 Filed 12-5-12; 8:45 am]
BILLING CODE 8320-01-P