Veterans Care Agreements, 21668-21682 [2019-10076]

Agencies

• DEPARTMENT OF VETERANS AFFAIRS

[Federal Register Volume 84, Number 93 (Tuesday, May 14, 2019)]
[Rules and Regulations]
[Pages 21668-21682]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10076]



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Vol. 84

Tuesday,

No. 93

May 14, 2019

Part V





Department of Veterans Affairs





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38 CFR Part 17





Veterans Care Agreements; Interim Final Rule

Federal Register / Vol. 84 , No. 93 / Tuesday, May 14, 2019 / Rules 
and Regulations

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AQ45


Veterans Care Agreements

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: The Department of Veterans Affairs (VA) amends its medical 
regulations to implement its authority to furnish necessary care to 
covered individuals through certain agreements. Section 102 of the John 
S. McCain III, Daniel K. Akaka, and Samuel R. Johnson VA Maintaining 
Internal Systems and Strengthening Integrated Outside Networks Act of 
2018 authorizes VA to enter into agreements to furnish required care 
and services when such care and services are not feasibly available to 
certain individuals through a VA facility, a contract, or a sharing 
agreement. This interim final rule establishes the parameters of those 
agreements, to include: Establishing a certification process for 
providers who will furnish such care or services; establishing a 
methodology by which rates will be calculated for payment of care or 
services under an agreement; and establishing an administrative process 
for adjudicating disputes arising under or related to such agreements, 
including those pertaining to claims for payment for care or services 
provided under an agreement.

DATES: Effective date: This rule is effective on May 14, 2019.
    Comment date: Comments must be received on or before July 15, 2019.

ADDRESSES: Written comments may be submitted by email through https://www.regulations.gov; by mail or hand-delivery to Director, Office of 
Regulation Policy and Management (00REG), Department of Veterans 
Affairs, 810 Vermont Avenue NW, Room 1064, 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-AQ45, 
Veterans Care Agreements.'' Copies of comments received will be 
available for public inspection in the Office of Regulation Policy and 
Management, Room 1064, 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: Joseph Duran, Office of Community Care 
(10D), Veterans Health Administration, Department of Veterans Affairs, 
Ptarmigan at Cherry Creek, Denver, CO, 80209; [email protected], 
(303) 372-4629. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: The John S. McCain III, Daniel K. Akaka, and 
Samuel R. Johnson VA Maintaining Internal Systems and Strengthening 
Integrated Outside Networks Act of 2018 (hereafter referred to as the 
``MISSION Act'') includes five titles containing more than 60 
substantive provisions, many of which amend existing law or create new 
law that affects the way VA furnishes necessary care and services to 
covered individuals. This interim final rule will implement section 102 
of the MISSION Act, which creates a new 38 U.S.C. 1703A to authorize VA 
to enter into agreements to furnish required care and services when 
such care and services are not feasibly available through a VA 
facility, a contract, or a sharing agreement. This interim final rule 
establishes the parameters of those agreements, to include establishing 
a certification process for providers who will furnish such care or 
services; establishing a methodology by which rates will be calculated 
for payment of care or services under an agreement; and establishing an 
administrative process for adjudicating disputes arising under or 
related to such agreements, including those pertaining to claims for 
payment for care or services provided under an agreement. Section 
1703A(k) requires VA to promulgate regulations to carry out section 
1703A.
    This interim final rule will not implement section 101 of the 
MISSION Act, which creates a new VA Community Care Program to furnish 
care to eligible veterans through non-VA providers. The VA Community 
Care Program will be implemented in a separate rulemaking (2900-AQ46), 
however, we provide here a brief explanation regarding the need to 
implement the agreements authorized by section 1703A ahead of the 
community care program itself. In accordance with section 101(c)(1) of 
the MISSION Act, VA is required to promulgate regulations to carry out 
Veterans Community Care Program by June 6, 2019. Concurrent with this 
statutory deadline, section 143 of the MISSION Act amended section 
101(p) of the Veterans Access, Choice, and Accountability Act of 2014 
(the Choice Act) to state that VA may not use the Choice Act to furnish 
care and services after June 6, 2019. As a result, after June 6, 2019, 
VA will no longer be able to use Veterans Choice Program provider 
agreements. The agreements authorized by this rulemaking will 
essentially replace the Veterans Choice Program provider agreements as 
a method for purchasing community care through instruments other than 
conventional procurement contracts that are subject to the Federal 
Acquisition Regulation (FAR) and all other Federal procurement laws. VA 
needs the regulations governing these new agreements to be legally 
effective before June 6, 2019, so that VA has time to establish new 
purchasing relationships with community providers, because VA's 
contractual network of community providers as required by the new 
section 1703(h), as amended by section 101(a) of the MISSION Act, may 
not be at full coverage by June 6, 2019. Additionally, in VA's 
experience, certain care and services (such as home health services) 
have been procured from sources that are unwilling, or unable, to enter 
into conventional procurement contracts subject to the FAR, and VA 
expects this will continue to be true after June 6, 2019. If the 
agreements that will be promulgated by this rulemaking are not in 
effect with enough time to provide VA and community providers an 
opportunity to transition away from the current Veterans Choice Program 
provider agreements before June 6, 2019, there is risk of disruptions 
to veterans receiving community care (see the section that discusses 
the Administrative Procedure Act for more specific information 
regarding disruption to care). To ensure the transition from the 
current Veterans Choice Program to the Veterans Community Care Program 
occurs without such disruption, VA requires this interim final rule to 
establish the parameters of agreements and other related authorities so 
that VA may legally order care and services under them by June 6, 2019.

Sec.  17.4100 Definitions

    Section 17.4100 will establish definitions for Sec. Sec.  17.4100-
17.4135, which are promulgated to implement the agreements authorized 
by 38 U.S.C. 1703A.
    The term covered individual is defined to mean an individual who is 
eligible to receive hospital care, medical services, or extended care 
services from a non-VA provider under title 38 U.S.C. and title 38 CFR. 
This definition is consistent with the definition of covered individual 
in section 1703A(l) and will be used throughout Sec. Sec.  17.4100-
17.4135 to indicate who may be furnished care

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or services under a Veterans Care Agreement (VCA). This definition 
further clarifies that the covered individual must separately be 
eligible under laws administered by VA to receive care from a non-VA 
provider. Section 1703A is strictly an authority related to how VA may 
purchase care and services in the community; it does not establish 
eligibility to receive such care or services from a non-VA provider at 
VA expense. Such authority must exist elsewhere in title 38 U.S.C. 
(e.g., 38 U.S.C. 1703). The definition of covered individual in Sec.  
17.4100 further references ``title 38 CFR,'' to ensure any implementing 
regulatory criteria related to the receipt of care or services from 
non-VA providers at VA expense also apply (more specific applicable 
regulatory criteria in title 38 CFR will not be cited, as such 
references may not be exhaustive or accurate should VA revise its 
regulations in the future).
    The term contract is defined to mean any of the following: Federal 
procurement agreements regulated by the Federal Acquisition Regulation; 
common law contracts; other transactions; or any other instrument. 
However, Veterans Care Agreements are expressly excluded from the 
definition. This definition relates to the assessment by VA in Sec.  
17.4115 of whether care and services are feasibly available from a VA 
facility or through a contract or sharing agreement.
    Extended care services is defined as the services described in 38 
U.S.C. 1710B(a); this definition of ``extended care services'' is 
sufficiently broad to capture all extended care services offered by VA.
    The terms hospital care and medical services are similarly defined 
by cross reference to the applicable statutory definitions at 38 U.S.C. 
1701(5) and (6), respectively, to sufficiently capture those types of 
care furnished by VA.
    The term sharing agreement is defined to mean an agreement, under 
statutory authority other than 38 U.S.C. 1703A, by which VA can obtain 
hospital care, medical services, or extended care services for a 
covered individual.
    The term VA facility is defined to mean a point of VA care where 
covered individuals can receive hospital care, medical services, or 
extended care services, to include a VA medical center, a VA community-
based outpatient clinic, a VA health care center, a VA community living 
center, an VA independent outpatient clinic, and other VA outpatient 
services sites. This definition relates to the assessment by VA in 
Sec.  17.4115 of whether care and services are feasibly available from 
a VA facility or through a contract or sharing agreement. We have 
defined this term in accordance with the types of care and services 
that a VA facility provides, and we have provided a non-exhaustive list 
of examples of designations of such facilities (e.g., VA medical 
center, VA community-based outpatient clinic, etc.) to ensure that any 
future changes to descriptions or designations of VA facilities would 
not result in a gap in our regulations.
    The term Veterans Care Agreement is defined to mean an agreement 
authorized by 38 U.S.C. 1703A. We note that we are using the term 
veterans care agreement, although individuals other than veterans may 
receive care under an agreement authorized by section 1703A (see the 
definition of covered individual). We additionally note that, 
throughout the remainder of the preamble, we may refer more simply to 
agreement rather than veterans care agreement.

Sec.  17.4105 Purpose and Scope

    Section 17.4105 will establish purpose and scope paragraphs. The 
purpose in paragraph (a) will state that Sec. Sec.  17.4100-17.4135 
implement 38 U.S.C. 1703A, as required under section 1703A(j). 
Paragraph (a) will further state that section 1703A authorizes VA to 
enter into and utilize Veterans Care Agreements to furnish hospital 
care, medical services, and extended care services to a covered 
individual when such individual is eligible for and requires such care 
or services that are not feasibly available to the covered individual 
through a VA facility, a contract, or a sharing agreement.
    The scope in paragraph (b) will state that Sec. Sec.  17.4100-
17.4135 contain procedures, requirements, obligations, and limitations 
for: The process of certifying entities or providers under 38 U.S.C. 
1703A; entering into, administering, furnishing care or services 
pursuant to, and discontinuing Veterans Care Agreements; and all 
disputes arising under or related to Veterans Care Agreements. 
Paragraph (b) will further state that Sec. Sec.  17.4100 through 
17.4135 apply to all entities and providers, where applicable, that are 
parties to a Veterans Care Agreement, participate in the certification 
process, and/or furnish hospital care, medical services, or extended 
care services pursuant to a Veterans Care Agreement.

Sec.  17.4110 Entity or Provider Certification

    Section 17.4110 will implement the certification process required 
by 38 U.S.C. 1703A(c), by establishing the standards and process VA 
will use to certify entities or providers that are interested in 
entering into agreements with VA and furnishing care and services 
through such agreements. Generally, section 1703A(c) requires VA to 
establish procedures for application for certification, criteria to 
approve or deny certification and recertification, and criteria to 
revoke certification.
    Paragraph (a) of Sec.  17.4110 will establish the general 
requirement that to be eligible to enter into a Veterans Care 
Agreement, an entity or provider must be certified by VA in accordance 
with the process and criteria established in paragraph (b) of Sec.  
17.4110. Paragraph (a) will also establish that an entity or provider 
must be actively certified while furnishing hospital care, medical 
services, or extended care services pursuant to a Veterans Care 
Agreement that the entity or provider has entered into with VA. We 
believe this meets the intent of section 1703A(c), to ensure that 
entities or providers must meet and maintain VA's certification 
requirements to be considered eligible to furnish care or services 
under a Veterans Care Agreement.
    Paragraph (b) of Sec.  17.4110 will establish the process and 
criteria for entity and provider certification. Paragraph (b)(1) will 
establish that an entity or provider must apply for certification, by 
submitting the following information to VA: (i) Documentation of 
applicable medical licenses, and (ii) all other information and 
documentation that is required by VA. This additional information may 
include (but is not limited to): A provider's first and last names; 
legal business names, National Provider Number (NPI), NPI type, 
provider identifier type (e.g. individual or group practice), tax 
identification number, specialty (taxonomy code), business address, 
billing address, phone number, and care site address. We interpret 
section 1703A(c) as requiring an application for certification (as 
section 1703A(c)(1) requires VA to establish through regulation a 
timeframe by which VA must act upon such application), and we are 
implementing that requirement by establishing that application occurs 
with the entity or provider submitting information as required by VA in 
Sec.  17.4010(b)(1)(i)-(ii). This information is what VA presently 
requires providers to submit to be considered eligible to provide 
community care under Choice Provider Agreements, and we believe 
providers are familiar with this information. Although providers who 
will furnish services through a VCA will be familiar with submitting 
this information, the information collection burden will not be 
grandfathered from the Choice

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Provider Agreements to the VCA program, because the certification 
process required by section 1703A(c) is new and therefore will be 
accounted for as a new information collection as described later in 
this rule. Because this collection is supporting a new statutory 
process VA must account for it as a new collection, which will include 
submission by providers of all new information.
    Paragraph (b)(2) of Sec.  17.4110 will establish the process and 
criteria for approval or denial of an application for certification, as 
required by section 1703A(c)(2). Paragraph (b)(2)(i) will first 
establish that VA will review all information it obtains including 
through applicable federal and state records systems and as submitted 
by the applicant, and will determine eligibility for certification. 
These federal and state records systems would be those that VA accesses 
presently to conduct its certification processes for providers. 
Paragraph (b)(2)(ii) will then establish that an applicant must submit 
all information required under paragraph (b)(1) of this section. VA 
will then review all applicable documentation received to determine 
whether all requirements are met.
    Paragraph (b)(2)(iii) of Sec.  17.4110 will establish the first 
mandatory basis for denial of certification, which is established in 
section 1703A(c), whereby VA must deny an application for certification 
if VA determines that the entity or provider is excluded from 
participating in a Federal health care program, or is identified as an 
excluded source on the System for Award Management Exclusions list. 
This mandatory denial is consistent with section 1703A(c)(3).
    The second mandatory basis for denial of certification that VA is 
establishing is under Sec.  17.4110(b)(2)(iv), whereby VA will deny an 
application for certification if VA determines that the applicant is 
already barred from furnishing hospital care, medical services, and 
extended care services under chapter 17 of title 38, U.S.C., because VA 
has previously determined the applicant submitted to VA a fraudulent 
claim, as that term is defined in 38 U.S.C. 1703D(i)(4), for payment 
for hospital care, medical services, or extended care services. We 
believe this basis of denial is reasonable and consistent with the 
purposes of section 1703A(c) because it would allow VA to deny an 
application based on a separate, previous determination by VA that the 
applicant is barred from furnishing care and services due to submitting 
a fraudulent claim.
    Paragraph (b)(2)(v) of Sec.  17.4110, establishes a discretionary 
standard that would allow VA to deny an application for certification 
if VA determines that, based on programmatic considerations, VA is 
unlikely to enter into a Veterans Care Agreement with the applicant. We 
believe this basis of denial is reasonable because section 1703A is a 
permissive procurement authority that allows (but does not require) VA 
to enter into and use Veterans Care Agreements. Therefore, there is 
little or no benefit to a provider or entity, or to VA, from proceeding 
with the certification process in section 1703A(c), including obtaining 
and monitoring certified status, when VA, in the exercise of its 
programmatic judgment, determines it is unlikely to enter into a VCA 
with the entity or provider. Under those circumstances, in order to 
avoid unnecessary expenditure of resources by the entity or provider, 
and by VA, VA may deny the application. VA's determination that the 
basis of denial in Sec.  17.4110(b)(2)(v) has been met will be assessed 
on a case by case basis. We will not regulate more specific 
circumstances under which VA might apply this basis of denial, although 
such circumstances would generally exist when VA would not likely enter 
into a VCA with an entity or provider because the care or services 
required by a covered individual are instead feasibly available through 
a VA facility, a contract, or a sharing agreement (see 38 U.S.C. 
1703A(a)(1)). For instance, if an entity or provider were already a 
participant in VA's contractual community care network, or if VA's 
contractual community care network in a certain locality already had 
adequate coverage of the services the entity or provider furnishes, VA 
would be unlikely to seek to enter into a VCA with that entity or 
provider.
    As required by section 1703A(c)(1), Sec.  17.4110(b)(2)(vi) will 
establish a deadline for VA to act on an application for certification, 
to require that within 120 days of VA receiving an application, VA will 
issue a written decision approving or denying certification, if 
practicable. We believe 120 days is a reasonable amount of time to make 
such a determination, and we include the if practicable language only 
to provide for limited exceptions where the 120 days may not be met 
(for instance, if a very large quantity of applications is received by 
VA at the same time or within a short timeframe). Section 
17.4110(b)(2)(vi) will further establish that notices of approval will 
set forth the effective date and duration of the certification, while 
notices of denial will set forth the specific grounds for denial and 
supporting evidence. We believe this will provide entities and 
providers adequate notice of their relative certification status. 
Lastly, Sec.  17.4110(b)(2)(vi) will establish that a denial 
constitutes VA's final decision on an application.
    Paragraph (b)(3) of Sec.  17.4110 will establish the duration of 
the certification, in accordance with the requirement to regulate such 
duration in section 1703A(c)(2). Paragraph (b)(3)(i) will provide that 
an entity or provider's certification will last for a three-year 
period, unless VA revokes such certification within that period under 
the standards established in Sec.  17.4110(b)(4) (this revocation is 
discussed further below). This three-year certification period is 
reasonable for VA to administer and should not create any undue burden 
for entities or providers. Paragraph (b)(3)(ii) of Sec.  17.4110 will 
further establish that an entity or provider must maintain 
certification throughout the three-year period and must inform VA of 
any changes or events that would affect its eligibility within 30 
calendar days of the change or event. We believe this maintenance of 
certification is consistent with the intent of section 1703A(c).
    Paragraph (b)(3)(iii) of Sec.  17.4110 will establish that a 
certified entity or provider seeking certification after the end of its 
current three-year certification must apply for recertification at 
least 60 calendar days prior to the expiration of its current 
certification; otherwise, the procedures set forth in paragraph 
(b)(3)(iv) of Sec.  17.4110 will apply. Upon application for 
recertification by the entity or provider, including submitting any new 
or updated information within the scope of paragraph (b)(1) of Sec.  
17.4110 that VA requests in conjunction with such application for 
recertification, VA will reassess the entity or provider under the 
criteria in paragraph (b)(2) of Sec.  17.4110. VA will issue a decision 
approving or denying the application for recertification within 60 
calendar days of receiving the application, if practicable. Notice of 
the decision will be furnished to the applicant in writing. Notices of 
recertification will set forth the effective date and duration of the 
certification. Notices of denial will set forth the specific grounds 
for denial and supporting evidence. A denial constitutes VA's final 
decision on the application for recertification. We believe the 
processes established in Sec.  17.4105(b)(3)(iii) provide an entity or 
provider with adequate notice to begin and complete the process of

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recertification, as well as notice that VA will assess for 
recertification under the criteria established in Sec.  17.4110(b)(2), 
as VA is required to regulate recertification under section 
1703A(c)(2). As with initial certification, we find that written notice 
is adequate to communicate to entities and providers their relative 
recertification status, and that VA's denial notice for recertification 
constitutes VA's final decision on application for recertification. 
Paragraph (b)(3)(iv) of Sec.  17.4110 will lastly establish that if a 
certified entity or provider applies for recertification after the 
deadline in paragraph (b)(3)(iii) of Sec.  17.4110 (fewer than 60 days 
prior to their three-year period lapsing), such application will 
constitute a new application for certification and will be processed in 
accordance with paragraphs (b)(1)-(2) of Sec.  17.4110.
    Paragraph (b)(4) of Sec.  17.4110 will establish the process for 
revocation of certification, in accordance with the requirement to 
regulate such revocation in section 1703A(c)(2). Paragraph (b)(4)(i) 
will establish that VA may revoke an entity's or provider's 
certification in accordance with Sec.  17.4010(b)(2)(ii)-(v). Paragraph 
(b)(4)(ii) will establish that when VA determines revocation is 
appropriate, VA will notify the entity or provider in writing of the 
proposed revocation. The notice of revocation will set forth the 
specific grounds for the action and will notify the entity or provider 
that it has 30 calendar days from the date of issuance to submit a 
written response addressing either of the following: (A) Documenting 
compliance and proving any grounds false, or (B) providing information 
and documentation that demonstrates the entity or provider has, 
subsequent to the notice of proposed revocation, achieved compliance 
with all criteria for certification set forth in Sec.  17.4110(b)(2). 
Paragraph (b)(4)(iii) will establish that following the 30-day response 
period, VA will consider any information and documentation submitted by 
the entity or provider and will, within 30 calendar days, determine 
whether revocation is warranted. If VA determines that revocation is 
not warranted, VA will notify the entity or provider of that 
determination in writing. If VA determines that revocation is 
warranted, the entity or provider will immediately lose certified 
status, and VA will issue a notice of revocation to the entity or 
provider. Notices of revocation will set forth the specific facts and 
grounds for, and the effective date of, such revocation. A notice of 
revocation constitutes VA's final decision. Lastly, paragraph 
(b)(4)(iv) will establish that revocation of certification results in 
such status being rendered void, and the provider or entity may not 
furnish services or care under a VCA prior to applying for and 
obtaining certified VCA status.
    We believe that the processes established in Sec.  17.4110(b)(4) 
provide adequate notice in both timeframes and format to providers and 
entities of VA's decision to revoke to then permit providers and 
entities with an opportunity to respond and potentially remediate 
circumstances that could result in VA not revoking certification. As 
with approvals of initial certification or recertification, VA's 
decision to revoke certification will constitute VA's final decision.

Sec.  17.4115 VA Use of Veterans Care Agreements

    Section 17.4115 will establish basic parameters regarding the use 
of agreements. Paragraph (a)(1) of Sec.  17.4115 will establish that VA 
may furnish hospital care, medical services, or extended care services 
through a VCA only if such care or services are furnished to a covered 
individual who is eligible for such care or services under 38 U.S.C. 
chapter 17 and requires such care or services. The requirement in Sec.  
17.4115(a)(1) that individuals be eligible for care or services is 
consistent with section 1703A(a)(1)(A). Paragraph (a)(2) of Sec.  
17.4115 will restate the general requirement in section 1703A(a)(1)(A) 
that VA may use agreements to furnish care or services only if such 
care or services are not feasibly available to the covered individual 
through a VA facility, contract, or a sharing agreement. Paragraph (a) 
of Sec.  17.4115 essentially restates language from section 1703A(a), 
but modifies it to include that agreements may ``only'' be considered 
for use after considering those other means of furnishing care and 
services. We believe this reflects the clear intent of section 
1703A(a), which only authorizes VA to use agreements to purchase care 
in the community when such care is not feasibly available from a VA 
facility or through a contract or sharing agreement. Paragraph (a)(2) 
of Sec.  17.4115 will also include the express qualifying language from 
section 1703A(a)(1)(C) that VA may consider the medical condition of 
the individual, the travel involved, the nature of the care or 
services, or a combination of these factors when determining if the 
furnishing of care and services through a contract or sharing agreement 
would be impracticable or inadvisable, thereby warranting use of an 
agreement instead.
    Paragraph (b) of Sec.  17.4115 will establish standards of conduct, 
as well as indicate improper business practices, for VA officials and 
for entities and providers. We note that we will not be restating the 
regulatory text verbatim below to explain its inclusion in regulations, 
to avoid unnecessary duplication and because such regulation text is 
predominantly self-explanatory. Paragraph (b)(1)(i) of Sec.  17.4115 
will establish general parameters that Government business shall be 
conducted in a manner above reproach and, except as authorized by 
statute or regulation, with complete impartiality and with preferential 
treatment for none. Paragraph (b)(1)(ii) of Sec.  17.4115 will 
memorialize that certain other statutes and regulations address 
prohibited conduct for VA officials and employees. Examples of such 
authorities are identified in paragraphs (b)(1)(ii)(A)-(D). Paragraph 
(b)(2) of Sec.  17.4115 will establish more specific standards and 
requirements for entities and providers that enter into Veterans Care 
Agreements, to require such an entity or provider to: (i) Have a 
satisfactory performance record; (ii) have a satisfactory record of 
integrity and business ethics; (iii) notify VA within 30 calendar days 
of the existence of an indictment, charge, conviction, or civil 
judgment, or Federal tax delinquency in an amount that exceeds $3,500; 
(iv) not engage in a fraudulent or criminal activity or offense (such 
prohibited activities or offenses are more specifically listed in the 
regulation text under Sec.  17.4115(b)(2)(iv)); and (v) not submit to 
VA a fraudulent claim, as that term is defined in 38 U.S.C. 
1703D(i)(4), for payment for hospital care, medical services, or 
extended care services.

Sec.  17.4120 Payment Rates

    Section 17.4120 will establish that the rate structure for payment 
for hospital care, medical services, and extended care services 
furnished pursuant to an agreement authorized by section 1703A of this 
title will be the rates set forth in the terms of such agreement. Each 
such agreement will contain price terms for all services within its 
scope. Payment rates will comply with the parameters defined in Sec.  
17.4120(a)-(e), as described below. To be consistent with section 
1703A(d), payment rates will be analogous to the parameters established 
in section 1703(i) as amended by section 101 of the MISSION Act. For 
the sake of convenience and understanding, we refer to provisions of 
section 1703, as section 101 of the MISSION Act will amend it, although 
we recognize that section 1703 as so amended is not

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legally effective until VA has published a final rule implementing the 
Veterans Community Care Program (the proposed rule RIN 2900-AQ46, 
Veterans Community Care Program, was published on February 22, 2019, 
see 84 FR 5629). Until section 1703(i) as amended is effective, VA 
exercises its general authority in this interim final rule to establish 
the rates paid for care and services provided through an agreement, and 
such rates will be consistent with section 1703(i) when it comes into 
effect.
    Paragraph (a) of Sec.  17.4120 will establish that, except as 
otherwise provided in Sec.  17.4120, payment rates will not exceed the 
applicable Medicare fee schedule or prospective payment system amount 
(hereafter referred to as ``Medicare rate''), if any, for the period in 
which the service was provided (without any changes based on the 
subsequent development of information under Medicare authorities). This 
will be analogous to the general provision in section 1703(i)(1), that, 
with certain exceptions, the rates paid for care and services may not 
exceed the applicable Medicare rate. The parenthetical language in 
Sec.  17.4120(a), to indicate that VA's rates would be based on 
Medicare rates without any changes based on the subsequent development 
of information under Medicare authorities, is intended to limit VA's 
rate adjustments to an annual basis in line with Medicare's annual 
payment update, versus other adjustments that Medicare may make to its 
rates throughout any given year that is typically provider-specific and 
is based on provider and other reporting.
    Paragraph (b) of Sec.  17.4120 will establish that, with respect to 
services furnished in a State with an All-Payer Model Agreement under 
section 1814(b)(3) of the Social Security Act (42 U.S.C. 1395f(b)(3)) 
that became effective on or after January 1, 2014, the Medicare rate 
under paragraph (a) will be calculated based on the payment rates under 
such agreement. This is consistent with section 1703(i)(4).
    Paragraph (c) of Sec.  17.4120 will establish that payment rates 
for services furnished in a highly rural area may exceed the 
limitations set forth in Sec.  17.4120(a)-(b). VA will use the 
authority in section 1703(i)(1) to establish rates for highly rural 
areas, versus the authority in section 1703(i)(2)A. Section 17.4120(c) 
will further establish that the term ``highly rural area'' means an 
area located in a county that has fewer than seven individuals residing 
in that county per square mile, consistent with the definition of 
``highly rural area'' in section 1703(i)(2)(B). Section 17.4120(c) will 
reflect VA's interpretation that imposing the limitations set forth in 
Sec.  17.4120(a)-(b) may not be practicable for all services furnished 
in highly rural areas. VA's assessment of practicability in Sec.  
17.4120(c) is consistent with the authority in section 1703(i)(1), 
which expressly provides that the payment limitations of that section 
only apply ``to the extent practicable.'' VA may find that it is not 
practicable to impose the payment limitations in Sec.  17.4120(a)-(b) 
for services furnished in highly rural areas primarily because the 
typical laws of supply and demand dictate that in highly rural areas, 
the scarcity of health care providers and other health care resources 
tends to create increased prices for delivery of health care services. 
VA will not implement the more express statutory payment exception in 
section 1703(i)(2)(A) for services furnished to individuals residing in 
highly rural areas, because it would not be practicable to tie payment 
rates to the location of a patient's residence as set forth in section 
1703(i)(2)(A). We reiterate from above that a driver of increased cost 
of services in highly rural areas relates to the location where the 
services are provided, not necessarily to the location from which the 
patient travels to receive the services. Indeed, it may not be accurate 
that, in all cases, individuals who reside in highly rural areas are 
receiving care and services in those same areas. Accordingly, VA does 
not want to adopt a payment methodology that relies on the authority in 
section 1703(i)(2)(A), as that that can universally permit payment of 
higher rates to certain health care providers furnishing services in 
other than highly rural areas. Attempting to tie payment rates to 
particular patients, rather than setting general rates for particular 
health care providers, would be administratively cumbersome and could 
lead to selective acceptance of patients that would adversely affect 
other patients. Using the authority in section 1703(i)(1) to establish 
rates for highly rural areas, versus the authority in section 
1703(i)(2)A), provides for more consistent and fair rate setting for 
these areas.
    Paragraph (d) of Sec.  17.4120 will establish that VA may deviate 
from the parameters set forth in Sec.  17.4120(a)-(c) when VA 
determines that, based on patient needs, market analyses, health care 
provider qualifications, or other factors, it is not practicable to 
limit payments as will be dictated by application of Sec.  17.4120(a)-
(c). This general exception will be consistent with the provision in 
section 1703(i)(1) that authorizes VA to pay at rates not to exceed the 
Medicare rate ``to the extent practicable.'' Paragraph (d) will afford 
VA the flexibility to ensure it can reach agreement with entities or 
providers to furnish necessary services when factors that drive costs 
may shift faster than established Medicare rates. This flexibility will 
not be a guarantee of payments above applicable Medicare rates because 
the introductory language in Sec.  17.4120 will establish that payment 
rates are ultimately set forth in the terms of the agreement under 
which the care and services are furnished. Such agreements will provide 
for the relevant procedures and review process for any payments that 
might utilize the exception in Sec.  17.4120(d), to ensure a consistent 
level of VA oversight.
    Finally, paragraph (e) of Sec.  17.4120 will establish, consistent 
with section 1703(i)(3), that payment rates for services furnished in 
Alaska will not be subject to paragraphs (a) through (d).

Sec.  17.4125 Review of Veterans Care Agreements

    Section 17.4125 will establish basic parameters for VA to review 
certain agreements that have been formed to determine if care and 
services should be furnished through a contract or sharing agreement 
instead, in accordance with the requirements in 38 U.S.C. 1703A(a)(2) 
and (a)(3). Under Sec.  17.4125, VA will periodically review each 
Veterans Care Agreement that exceeds $5,000,000 annually), to determine 
if it is feasible and advisable to furnish the hospital care, medical 
services, and extended care services that VA has furnished or 
anticipates furnishing under such Veterans Care Agreements through a VA 
facility, contract, or sharing agreement instead. If VA determines it 
is feasible and advisable to provide any such hospital care, medical 
services, or extended care services in a VA facility or by contract or 
sharing agreement, it will take action to do so. The $5,000,000 amount 
is established in section 1703A(a)(3) for extended care services, and 
we believe that amount is reasonable to consider for agreements for 
hospital care and medical services as well.

Sec.  17.4130 Discontinuation of Veterans Care Agreements

    Section 17.4130 will establish parameters for the discontinuation 
of agreements, consistent with 38 U.S.C. 1703A(f). Paragraph (a) of 
Sec.  17.4130 will establish that discontinuation of an agreement by an 
entity or provider requires a written notice of request to discontinue 
to be submitted to VA, in accordance with the terms of the VCA

[[Page 21673]]

and additional terms as established in Sec.  17.4130(a)(1) and (a)(2). 
Paragraph (a)(1) will establish that the written notice must be 
received by VA at least 45 calendar days before the intended 
discontinuation date and must specify the discontinuation date, and 
paragraph (a)(2) will state that the notice must be delivered to the 
designated VA official to which such notice must be submitted under the 
terms of the Veterans Care Agreement and in accordance with the terms 
of the Veterans Care Agreement. Paragraphs (a)(1)-(2) will implement 
section 1703A(f)(1), which requires VA to establish, through 
regulations, time and notice requirements for an entity or provider to 
discontinue an agreement. The 45-day notice requirement in advance of 
discontinuation under Sec.  17.4130(a)(1) is consistent with the 
discontinuation notice in current Choice Program provider agreements 
and is familiar to entities and providers, and otherwise necessary to 
ensure continuity of care should VA need to secure other health care 
resources prior to an agreement being discontinued.
    Paragraph (b)(1) of Sec.  17.4130 will establish the parameters 
under which VA may discontinue an agreement with an entity or provider, 
to require a written notice of discontinuation to be submitted by VA to 
the entity or provider, in accordance with the terms of the VCA and 
additional terms as established in paragraphs (b)(1)(i) and (b)(1)(ii). 
Paragraph (b)(1)(i) will establish that the written notice will be 
issued by VA at least 45 calendar days before the intended 
discontinuation date except as provided in paragraph (b)(1)(ii). 
Paragraph (b)(1)(ii) will establish that notice may be issued fewer 
than 45 calendar days before the discontinuation date, including notice 
that is effective immediately upon issuance, when VA determines such 
abbreviated or immediate notice is necessary to protect the health of 
covered individuals or when such abbreviated or immediate notice is 
permitted under the terms of the Veterans Care Agreement. Paragraph 
(b)(1)(ii) of Sec.  17.4130 would provide for fewer than 45 days' 
notice prior to discontinuation in certain circumstances, for two 
reasons. First, VA must be able to discontinue an agreement without 
advance notice in circumstances where doing so is necessary to protect 
the health of covered individuals. Second, VA wants to retain the right 
to discontinue with fewer than 45 days' notice under other 
circumstances if the parties to an agreement negotiate terms permitting 
such an approach. Paragraph (b)(2) of Sec.  17.4130 will establish that 
the written notice will be delivered to the entity or provider in 
accordance with the terms of the Veterans Care Agreement.
    Paragraph (b)(3) of Sec.  17.4130 will provide that VA may 
discontinue an agreement for any reason that is expressly enumerated in 
section 1703A(f)(2). These reasons are: (i) If the entity or provider 
fails to comply substantially with the provisions of 38 U.S.C. 1703A or 
38 CFR 17.4100-17.4135; (ii) if the entity or provider fails to comply 
substantially with a provision of the agreement; (iii) if the entity or 
provider is excluded from participating in a Federal health care 
program or is identified on the System for Award Management exclusions 
list; (iv) if VA ascertains that the entity or provider has been 
convicted of a felony or other serious offense under Federal or State 
law and their continued participation would be detrimental to the best 
interest of the individuals receiving care or of VA; and (v) if VA 
determines it is reasonable to terminate the agreement based on the 
health care needs of the individual receiving care or services.

Sec.  17.4135 Disputes

    Section 17.4135 will establish administrative procedures and 
requirements for eligible entities and providers to present disputes 
arising under agreements, in accordance with 38 U.S.C. 1703A(h)(1). 
Paragraph (a) of Sec.  17.4135 will generally establish the parameters 
of these administrative procedures, consistent with section 
1703A(h)(2)-(h)(4). Paragraph (a)(1) will more specifically establish 
that, for purposes of Sec.  17.4135, a dispute means a disagreement 
between VA and the entity or provider that entered into the subject 
Veterans Care Agreement with VA that meets the following criteria: (i) 
Pertains to one of the subject matters set forth in Sec.  17.4135(b) 
(which, as explained later, are limited to claims for payment or scope 
of authorizations); (ii) is not resolved informally by mutual agreement 
of the parties; and (iii) culminates in one of the parties demanding or 
asserting, as a matter of right, the payment of money in a sum certain 
under the Veterans Care Agreement, the interpretation of the terms of 
the Veterans Care Agreement or a specific authorization thereunder, or 
other relief arising under or relating to the Veterans Care Agreement. 
Paragraph (a)(1)(iii) will also clarify that a dispute does not 
encompass any demand or assertion, as a matter of right, for penalties 
or forfeitures prescribed by a statute or regulation that another 
federal agency is specifically authorized to administer, settle, or 
determine.
    Paragraph (a)(2) of Sec.  17.4135 will establish that the 
procedures in Sec.  17.4135 should only be used when the parties to a 
Veterans Care Agreement have failed to resolve an issue in controversy 
by mutual agreement. This language will reinforce the characterization 
in Sec.  17.4135(a)(1)(ii) that when the parties to an agreement are 
working to informally resolve a matter by mutual agreement, those 
actions and that process do not constitute a dispute within the meaning 
of this section. In other words, the existence of this disputes process 
does not preclude the parties to an agreement from working together to 
mutually resolve any issues arising under or related to the agreement, 
including issues pertaining to claims for payment, the scope of 
authorizations, receipt or non-receipt of medical documentation by VA, 
or simple clerical errors (such as a miscoding of a procedure by an 
entity or provider).
    Paragraph (a)(3) of Sec.  17.4135 will establish that the dispute 
procedures in Sec.  17.4135 constitute an entity or provider's 
exclusive administrative remedies for disputes arising under 
agreements, consistent with section 1703A(h)(2). We interpret section 
1703A(h)(2) to shield disputes under agreements from the application of 
any other administrative remedies that VA may use to adjudicate and/or 
resolve disputes in other contexts, including application of 
administrative requirements and procedures under 38 U.S.C. chapter 71 
and 38 CFR part 19.
    Paragraph (a)(4) of Sec.  17.4135 will provide that disputes under 
Sec.  17.4135 are not considered claims for purposes of such laws that 
would otherwise require the application of 41 U.S.C. 7101-7109, also 
known as the Contract Disputes Act of 1978, which is consistent with 38 
U.S.C. 1703A(h)(4).
    Paragraph (a)(5) of Sec.  17.4135 will establish that an eligible 
entity or provider must first exhaust the procedures further 
established in Sec.  17.4135 before seeking judicial review under 28 
U.S.C. 1346, consistent with 38 U.S.C. 1703A(h)(3).
    Paragraph (b) of Sec.  17.4135 will provide that disputes arising 
under agreements may only pertain to: (1) The scope of one or more 
specific authorizations under the applicable Veterans Care Agreement; 
or (2) claims for payment under the applicable Veterans Care Agreement. 
These limitations as to what may be disputed are consistent with 
section 1703A(h)(4).
    Paragraph (c) of Sec.  17.4135 will establish procedures for 
disputes arising

[[Page 21674]]

under agreements, specifically related to initiation and review of the 
dispute, as well as issuance and effect of VA's decision. Paragraph 
(c)(1) of Sec.  17.4135 will provide that (i) disputes must be 
initiated by submitting a notice of dispute, in writing, to the 
designated VA official to which notice must be submitted under the 
terms of the Veterans Care Agreement and in accordance with the terms 
of the Veterans Care Agreement, and (ii) the notice of dispute must 
contain all specific assertions or demands, all facts pertinent to the 
dispute, any specific resolutions or relief sought, and all information 
and documentation necessary to review and adjudicate the dispute. The 
information in Sec.  17.4135(c)(ii) is what is minimally required by VA 
to assess the matter in dispute and issue a decision.
    Paragraph (c)(1)(iii) of Sec.  17.4135 will establish that the 
notice of dispute must be received by the designated VA official to 
which such notice must be submitted under the terms of the Veterans 
Care Agreement and in accordance with the terms of the Veterans Care 
Agreement, within 90 calendar days after the accrual of the dispute. 
For purposes of Sec.  17.4135(c)(1)(iii), the accrual of the dispute is 
the date when all events, that fix the alleged liability of either VA 
or the entity or provider and permit the applicable demand(s) and 
assertion(s), were known or should have been known. We believe 90 days 
is a reasonable timeframe for entities or providers to submit disputes 
to VA regarding claims for payment or scope of authorizations (based on 
VA's experience, we believe entities or providers will seek to resolve 
any disagreements regarding payment amounts much sooner). To clarify 
when VA would determine a date certain to start the 90-day timeframe 
under this accrual of dispute standard, Sec.  17.4135(c)(1)(iii) would 
further establish that the term accrual of the dispute has the 
following meanings in each of the two specific circumstances: (A) When 
a dispute consists of an entity or provider asserting that VA has made 
payment in an incorrect amount, under circumstances where VA has issued 
a corresponding payment notice and the entity or provider has received 
such notice, the accrual of the dispute is the date such notice was 
received by the entity or provider; and (B) when a dispute consists of 
an entity or provider asserting that VA has improperly denied payment 
to which it is entitled, under circumstances where VA has issued a 
corresponding denial of payment notice and the entity or provider has 
received such notice, the accrual of the dispute is the date such 
notice was received by the entity or provider. We believe that these 
two circumstances will cover a vast majority of disputes, because, 
under section 1703A(h)(4), disputes must pertain to claims for payment 
or the scope of authorizations.
    Paragraph (c)(2) of Sec.  17.4135 will establish the scope of VA's 
authority to decide and resolve disputes. Paragraph (c)(2)(i) will 
establish that a VA official acting within the scope of authority 
delegated by the Secretary of Veterans Affairs (hereafter referred to 
in this section as the responsible VA official) will decide and resolve 
disputes under this section. We believe that it is adequate to 
reference such a VA official, versus a more specific job title or 
position, to avoid a gap in our regulations should such titles or 
positions be renamed or restructured in the future. Paragraph 
(c)(2)(ii) will establish that the authority to decide or resolve 
disputes under this section does not extend to the settlement, 
compromise, payment, or adjustment of any claim for payment that 
involves fraud or misrepresentation of fact. For purposes of Sec.  
17.4135(c)(2)(ii), misrepresentation of fact means a false statement of 
substantive fact, or any conduct which leads to the belief of a 
substantive fact material to proper understanding of the matter in 
hand, made with intent to deceive or mislead. If the responsible VA 
official encounters evidence of misrepresentation of fact or fraud on 
the part of the entity or provider, the responsible VA official shall 
refer the matter to the agency official responsible for investigating 
fraud and may refer the matter to other federal entities as 
appropriate.
    Paragraph (c)(3) of Sec.  17.4135 will establish procedures related 
to review of disputes and VA's decision in resolving disputes. 
Paragraph (c)(3)(i) will establish that upon receipt of a notice of 
dispute, the responsible VA official will review the dispute and all 
facts pertinent to the dispute. Paragraph (c)(3)(ii) will further 
establish that if the responsible VA official determines additional 
information or documentation is required for review and adjudication of 
the dispute, the official will, within 90 calendar days of VA's receipt 
of the notice of dispute, provide written notice to both parties, in 
accordance with the notice provisions of the Veterans Care Agreement, 
that additional information or documentation is required for review and 
adjudication of the dispute. Such notice will identify and request the 
additional information and documentation deemed necessary to review and 
adjudicate the dispute.
    Paragraph (c)(3)(iii) of Sec.  17.4135 will establish that upon VA 
receipt of a notice of dispute that conforms to the requirements of 
Sec.  17.4135(c)(1), the responsible VA official will take one of the 
following actions within 90 calendar days, either: (A) Issue a written 
decision, in accordance with the notice provisions of the Veterans Care 
Agreement, that will include all information further described in Sec.  
17.4135(c)(3)(iii)(A)(1)-(5); or (B) upon a determination that 
additional time is required to issue a decision, provide written notice 
in accordance with the notice provisions of the Veterans Care Agreement 
of the time within which the decision will be issued. The determination 
of the appropriate amount of additional time must be reasonable and 
will take into account the complexity of the dispute and any other 
relevant factors, and the total time will not exceed 150 calendar days. 
Under Sec.  17.4135(c)(3)(iii)(B), if additional time is needed, the 
responsible VA official will subsequently issue a written decision in 
accordance with paragraph (c)(3)(iii)(A) of this section. Under 38 
U.S.C. 1703(A)(h)(4), disputes must pertain to claims for payment or 
the scope of authorizations. With regards to these timeframes of 90 
days and 150 days that will be established in Sec.  17.4134(c)(3) as 
described above, VA has extensive experience dealing with non-VA 
providers regarding both payment and scope of authorizations, including 
resolving discrepancies and disagreements outside of the new process in 
section 1703(A)(h)(4) regarding amounts of payment, nonpayment, and 
scope of authorizations. Based on that experience, VA is familiar with 
the types of information and documentation necessary to resolve these 
matters, and we have found that we can generally identify all such 
information and documentation in fewer than 60 days after an issue is 
first identified. However, to ensure we cover the potential for 
unforeseen delays that may arise given the more formal nature of this 
new disputes process (relative to how VA currently resolves similar 
matters with non-VA community providers) VA has established a 90-day 
timeframe. We believe 90 days is a prudent timeframe for VA to commit 
to identifying information and documentation necessary to adjudicate 
most disputes under this section. Section 17.4135(c)(3) will then 
further provide for an additional 60 days, for a

[[Page 21675]]

total of 150 days, in what we expect to be the rare occurrence when the 
90 days would not be sufficient. We determined that the 90 days and 150 
days were reasonable by balancing uncertainties that may increase the 
timeframe for VA to identify information under this process against the 
interests of providers and entities that enter into VCAs in expeditious 
processing and resolution of formal disputes under this section.
    Paragraph (c)(4) of Sec.  17.4135 will establish that VA will 
furnish its decision on the dispute to the entity or provider by any 
method that provides evidence of receipt. Such methods can include 
electronic means.
    Paragraph (c)(5) of Sec.  17.4135 will establish that the written 
decision issued by the responsible VA official constitutes VA's final 
decision on the dispute. This language serves to clarify that VA 
maintains no administrative process to appeal such a decision and to 
emphasize the reality that, under section 1703A(h)(2), this disputes 
process constitutes entities' and providers' exhaustive and exclusive 
administrative remedy.

Administrative Procedure Act

    The Secretary of Veterans Affairs finds that there is good cause 
under 5 U.S.C. 553(b)(B) and (d)(3) to dispense with the opportunity 
for advance notice and opportunity for public comment and to publish 
this rule with an immediate effective date. As previously stated in 
this rulemaking, VA's contractual network of community providers as 
will be required under section 1703(h), as added by section 101 of the 
MISSION Act, will not be fully operational by June 6, 2019. Further, 
section 143 of the MISSION Act amended section 101(p) of the Choice Act 
to state that VA may not use the Choice Act to furnish care and 
services after June 6, 2019. As a result, on that date, VA will no 
longer be able to use Veterans Choice Program provider agreements. If 
these regulations governing Veterans Care Agreements (VCAs) are not 
legally effective prior to June 6, 2019, VA will not be able to use 
such agreements to replace the Choice Program provider agreements. If 
VA cannot use VCAs to replace Choice Program provider agreements, VA 
will not be able to: (1) Fill gaps in coverage for the furnishing of 
general care and services until the contractual network of community 
providers is fully established, and (2) furnish certain specific care 
and services that VA does not anticipate being secured through the 
contractual network of community providers at least in the near future.
    Concerning gaps in coverage for general care and services until the 
contractual network of community providers is fully established, VA has 
been able to modify some of its current community care contracts for 
expansion until the new network is fully functional. However, even 
these expansions have not been able to absorb all existing Choice 
Program provider agreements that are used within each of the 21 
Veterans Integrated Service Networks (VISN) to secure care and services 
outside of VA's community care contracts. Using data from April 2019, 
there were over 22,000 Choice Program provider agreements still in 
place across all VISNs. There is some disparity between VISNs regarding 
use of Choice Program provider agreements, for instance VISN 8 had 
3,809 outstanding Choice Provider Agreements while VISN 17 had only 71.
    Although continued efforts under current contract expansions as 
well as continued development of the new contractual network might be 
expected to absorb some of this outstanding volume of Choice Program 
provider agreements, there will be coverage gaps across all VISN areas 
nationwide if VCAs are not in place by June 6, 2019. VA uses Choice 
Program provider agreements to purchase a myriad of care and services 
for veterans in the community, all of which are clinically necessary. 
If VCAs are not in place to furnish these care and services when the 
authority for these provider agreements lapses, this care will not be 
furnished and veterans could be harmed. This would be especially true 
for treatment of certain diseases such as cancer that require 
continuous and uninterrupted care and monitoring on an immediate and 
stringent schedule upon diagnosis. Similarly, the health and safety of 
individuals receiving mental health treatment would be at risk if 
continuity of care were not maintained to ensure, for instance, 
retention of current mental health professionals already providing 
these services.
    In addition to the general gaps in coverage as described above as 
VA works to expand its contracted network of care, there are specific 
care and services that are explicitly excluded from VA's current 
community care contracts that are in place as of the date of 
publication of this rulemaking (to include the expansions mentioned 
above) and that will not be covered by the new contracted network 
immediately after June 6, 2019. These services include unskilled home 
health services as well as dental care, and these services would simply 
stop being furnished to affected veterans on June 6, 2019 unless a VCA 
was in place to furnish them. Based on VA's experience, home health 
providers that are parties to the Choice Program provider agreements 
are typically unwilling to enter into a conventional procurement 
contract subject to the Federal Acquisition Regulation (FAR). For 
instance, home health care services are typically furnished by small 
providers serving a limited number of individuals, and it is VA's 
understanding in dealing with such providers for many years that being 
subject to Federal contractor obligations dis-incentivizes their 
participation in VA community care, resulting in the possibility of 
significant disruptions in the provision of home health care services 
to VA beneficiaries.
    Veterans in receipt of these services represent a vulnerable 
population because they require assistance to retain their highest 
level of functioning in the least restrictive environment (their home) 
as possible, often avoiding a higher level of institutionalized care 
that is not yet needed by the veteran. Should such home health services 
stop, then VA could reasonably expect the health conditions of affected 
veterans to worsen, which could more rapidly necessitate the veteran 
requiring institutionalized care. For instance, veterans often receive 
home health aide services to assist them to properly take their 
prescribed medications. Should these services cease, there would be 
clear and unavoidable negative health outcomes for these veterans. 
Because institutionalized care in this type of scenario would be 
required due to an absence of home health care, and not necessarily due 
to the veteran's otherwise progressive and actual need for a higher 
level of service, such institutionalized care would not likely be 
supporting optimal clinical outcomes and would also be furnished at a 
much greater cost to VA.
    Using dental services as another example, VCAs are needed to ensure 
there are not lapses in the provision of medically necessary dental 
care that is furnished under Choice Program provider agreements. 
Without proper oral hygiene and dental care, bacteria in the mouth can 
reach levels that might lead to oral infections, such as tooth decay 
and gum disease. In addition, certain medications--such as 
decongestants, antihistamines, painkillers, diuretics and 
antidepressants--can reduce saliva flow, where saliva washes away food 
and neutralizes acids produced by bacteria in the mouth and helps 
protect from microbial invasion or overgrowth that might lead to gum 
disease. Dental

[[Page 21676]]

care is critical to ensure monitoring or treatment of oral inflammation 
or infection that can be associated with overgrowth of oral bacterial, 
where this inflammation or infection can negatively impact a person's 
overall health and has been linked to specific diseases. For instance, 
endocarditis is an infection of the inner lining of your heart 
(endocardium), which typically occurs when bacteria or other germs from 
another part of your body, such as your mouth, spread through your 
bloodstream and attach to damaged areas in your heart. More generally, 
heart disease, clogged arteries and stroke might be linked to the 
inflammation and infections that oral bacteria can cause. Lastly, 
periodontitis (severe gum disease) has been linked to premature birth 
and low birth weight.
    The lack of full coverage for general care and services that cannot 
be absorbed under the current contract expansions until the contractual 
network of providers is fully functional, and the lack of coverage for 
certain specific services that are excluded under VA's current 
community care contracts (to include expansions) and where some 
providers may not enter into the new contractual network of providers 
in the future, will create disruptions in the provision of care and 
services if VCAs are not in place prior to June 6, 2019. VA reviewed 
data from October 2017 through August 2018 and determined that there 
were more than 183,000 unique patients that were furnished VA community 
care under Choice provider agreements. Two predominant categories of 
care that have briefly been discussed for which these provider 
agreements have been used are home health services (with roughly 53,659 
unique patients affected) and dental care (with roughly 24,846 unique 
patients affected). Although VA cannot predict with certainty that this 
same number of individuals will continue to require care under a 
Veterans Care Agreement, VA expects that a significant number of 
patients will require care and services under such agreements. 
Considering the risk to disrupting the furnishing of care for 
individuals who will need to receive care and services under VCAs, it 
is impracticable and contrary to the public interest to provide advance 
notice and opportunity to comment on these regulations, as this would 
considerably reduce the likelihood that VA will successfully transition 
away from the use of the current Choice provider agreements ahead of 
June 6, 2019.
    The Secretary of Veterans Affairs finds there is good cause under 5 
U.S.C. 553(b)(B) and (d)(3) to publish this rule with an immediate 
effective date, prior to the usual 30-day delay for an interim final 
rule to allow VA to begin entering into agreements immediately. This 
timeline is necessary to avoid potential gaps in community care 
because, for the reasons discussed above, entering into a broad array 
of agreements authorized under section 1703A, in advance of June 6, 
2019, will be critical for the purposes of filling gaps in care 
coverage until the new contractual network is fully functional and 
ensuring VA has replacement instruments in place for specific care and 
services currently provided under Choice provider agreements with those 
entities and providers that are unwilling or unable to enter into 
conventional procurement contracts. Any further delay in the effective 
date of this rulemaking would substantially increase the risk that VA 
will be unable to enter into agreements in the timeframes necessary to 
fully achieve those purposes and mitigate or eliminate risk of 
significant disruptions to eligible individuals receiving community 
care.
    For the above reasons, the Secretary issues this rule as an interim 
final rule with an immediate effective date. However, VA will consider 
and address comments that are received within 60 days of the date this 
interim final rule is published in the Federal Register.

Effect of Rulemaking

    The Code of Federal Regulations, as revised by this rulemaking, 
will represent the exclusive legal authority on this subject. No 
contrary rules or procedures will be authorized. All VA guidance will 
be read to conform with this rulemaking if possible or, if not 
possible, such guidance will be superseded by this rulemaking.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that VA consider the impact of paperwork and other information 
collection burdens imposed on the public. Except for emergency 
approvals under 44 U.S.C. 3507(j), 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. VA has 
requested that OMB approve the collection of information on an 
emergency basis. This interim final rule includes provisions 
constituting new collections of information under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3521) that require approval by 
the Office of Management and Budget (OMB). Accordingly, under 44 U.S.C. 
3507(d), VA has submitted a copy of this rulemaking to OMB for review.
    OMB assigns control numbers to collections 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. Proposed Sec. Sec.  17.4110, 
17.4130, and 17.4135 contain collections of information under the 
Paperwork Reduction Act of 1995. If OMB does not approve the 
collections of information as requested, VA will immediately remove the 
provisions containing a collection of information or take such other 
action as is directed by OMB.
    Comments on the collections of information contained in this 
interim final rule should be submitted to the Office of Management and 
Budget, Attention: Desk Officer for the Department of Veterans Affairs, 
Office of Information and Regulatory Affairs, Washington, DC 20503, 
with copies sent by mail or hand delivery to the Director, Office of 
Regulation Policy and Management (00REG), Department of Veterans 
Affairs, 810 Vermont Avenue NW, Room 1063B, Washington, DC 20420; fax 
to (202) 273-9026; or through www.Regulations.gov. Comments should 
indicate that they are submitted in response to ``RIN 2900-AQ45 
Veterans Care Agreements.''
    OMB is required to make a decision concerning the collections of 
information contained in this proposed rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed rule.
    VA considers comments by the public on proposed collections of 
information in--
     Evaluating whether the proposed collections of information 
are necessary for the proper performance of the functions of VA, 
including whether the information will have practical utility;
     Evaluating the accuracy of VA's estimate of the burden of 
the proposed collections of information, including the validity of the 
methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collections of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology,

[[Page 21677]]

e.g., permitting electronic submission of responses.
    The collections of information contained in the amendments to title 
38 CFR part 17 are described immediately following this paragraph, 
under their respective titles. As discussed in the regulatory impact 
analysis, VA believes that the net impact of the reorganization of the 
collections of information is likely to be regulatory under E.O. 13771. 
For each of the new or proposed collections of information below, VHA 
used general wage data from the Bureau of Labor Statistics (BLS) to 
estimate the respondents' costs associated with completing the 
information collection. According to the latest available BLS data, the 
mean hourly wage of full-time wage and salary workers was $15.57 based 
on the BLS wage code--``31-1000 Healthcare Support Occupations.'' This 
information was taken from the following website: https://www.bls.gov/oes/current/oes_nat.htm (May 2018). This wage code was chosen because 
it represents most closely the types of providers likely to submit this 
information themselves, or those support occupations that will submit 
the information for such providers.

    Title: Submission of information for application for certification.
    OMB Control No.: 2900-xxxx (New).
    CFR Provision: 38 CFR 17.4110.
    Summary of collection of information: Proposed Sec.  17.4110 
requires eligible entities and providers to submit to VA information 
concerning applicable medical licenses, as well as other information as 
requested by VA to evaluate eligibility for certification.
    Description of the need for information and proposed use of 
information: The information collection is authorized under 38 U.S.C. 
1703A(c) and is necessary for and would be used to verify that non-VA 
entities and providers that are applying for certification--and, hence, 
the opportunity to furnish hospital care and medical services to 
covered veterans under a Veterans Care Agreement--meet basic standards 
to ensure patient safety.
    Description of likely respondents: Eligible entities or providers 
furnishing care and services through the Veterans Community Care 
Program.
    Average estimated number of respondents per year: (32,181 eligible 
entities or providers in year 1; 8,850 eligible entities or providers 
in year 2; 4,425 eligible entities or providers in year 3)/3 = 15,152.
    Estimated frequency of responses per year: 1 time annually.
    Estimated average burden per response: 5 minutes.
    Estimated total annual reporting and recordkeeping burden: 1,263 
hours.
    Estimated cost to respondents per year: VHA estimates the total 
cost to all respondents to be $19,664.91 per year (1,263 burden hours x 
$15.57 per hour).

    Title: Submission of notice to discontinue a Veterans Care 
Agreement.
    OMB Control No.: 2900-xxxx (New).
    CFR Provision: 38 CFR 17.4130.
    Summary of collection of information: Proposed Sec.  17.4130 
requires eligible entities and providers to submit to VA a written 
notice of intent to discontinue a Veterans Care Agreement prior to the 
date of such discontinuation.
    Description of the need for information and proposed use of 
information: The information collection is authorized under 38 U.S.C. 
1703A(f)(1) and is necessary for and would be used to provide VA with 
adequate advance notice when an entity or provider intends to 
discontinue an agreement, for purposes of ensuring continuity of care.
    Description of likely respondents: Eligible entities or providers 
furnishing care and services through the Veterans Community Care 
Program.
    Estimated number of respondents per year: 152 eligible entities or 
providers (1% of average annual number of entities and providers 
estimated to be certified per year).
    Estimated frequency of responses per year: 1 time per year.
    Estimated average burden per response: 10 minutes.
    Estimated total annual reporting and recordkeeping burden: 25 
hours.
    Estimated cost to respondents per year: VHA estimates the total 
cost to all respondents to be $389.25 per year (25 burden hours x 
$15.57 per hour).

    Title: Submission of notices of dispute.
    OMB Control No.: 2900-xxxx (New).
    CFR Provision: 38 CFR 17.4135.
    Summary of collection of information: Proposed Sec.  17.4135 
requires eligible entities and providers to submit to VA written 
notices of dispute that contain specific information to allow VA to 
assess and resolve the matter in dispute.
    Description of the need for information and proposed use of 
information: The information collection is authorized under 38 U.S.C. 
1703A(h) and is necessary for and would be used to permit VA to collect 
the minimally necessary information to assess and resolve matters in 
dispute.
    Description of likely respondents: Eligible entities or providers 
furnishing care and services through the Veterans Community Care 
Program.
    Estimated number of respondents per year: 803 eligible entities or 
providers (5% of average annual number of entities and providers 
estimated to be certified per year).
    Estimated frequency of responses per year: 1 time per year.
    Estimated average burden per response: 20 minutes.
    Estimated total annual reporting and recordkeeping burden: 268 
hours.
    Estimated cost to respondents per year: VHA estimates the total 
cost to all respondents to be $4,172.76 per year (268 burden hours x 
$15.57 per hour).

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, is not applicable 
to this rulemaking because notice of proposed rulemaking is not 
required. 5 U.S.C. 601(2), 603(a), 604(a).

Executive Orders 12866, 13563 and 13771

    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,'' which requires 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 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 determined that the 
action is a significant regulatory action under Executive Order 12866, 
because it raises novel legal or policy issues arising out

[[Page 21678]]

of legal mandates, the President's priorities, or the principles set 
forth in this Executive Order. VA's impact analysis can be found as a 
supporting document at https://www.regulations.gov, usually within 48 
hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's website 
at https://www.va.gov/orpm by following the link for VA Regulations 
Published from FY 2004 through FYTD.
    This interim final rule is considered an E.O. 13771 regulatory 
action. Details on the estimated costs of this interim final rule can 
be found in the rule's economic analysis. VA has determined that the 
net costs are $7.4 million over a five-year period (FY2019-FY2023) and 
$656,053.56 per year on an ongoing basis discounted at 7 percent 
relative to year 2016, over a perpetual time horizon.

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 as follows: 64.009, Veterans 
Medical Care Benefits; and 64.018, Sharing Specialized Medical 
Resources.

List of Subjects in 38 CFR Part 17

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

Signing Authority

    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. Robert L. 
Wilkie, Secretary, Department of Veterans Affairs, approved this 
document on March 7, 2019, for publication.

    Dated: May 10, 2019.
Consuela Benjamin,
Regulations Development Coordinator, Office of Regulation Policy & 
Management, Office of the Secretary, Department of Veterans Affairs.

    For the reasons set forth in the preamble, we amend 38 CFR part 17 
as follows:

PART 17--MEDICAL

0
1. The general authority citation for part 17 continues, and an 
authority for section 17.4100 et seq. is added, to read as follows:

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

* * * * *
    Section 17.4100 et seq. is also issued under 38 U.S.C. 1703A.


0
2. Add an undesignated center heading and Sec. Sec.  17.4100 through 
17.4135 to read as follows:

Veterans Care Agreements

Sec.
17.4100 Definitions.
17.4105 Purpose and scope.
17.4110 Entity or provider certification.
17.4115 VA use of Veterans Care Agreements.
17.4120 Payment rates.
17.4125 Review of Veterans Care Agreements.
17.4130 Discontinuation of Veterans Care Agreements.
17.4135 Disputes.


Sec.  17.4100  Definitions.

    For the purposes of Sec. Sec.  17.4100 through 17.4135, the 
following definitions apply:
    Contract is any of the following: Federal procurement agreements 
regulated by the Federal Acquisition Regulation; common law contracts; 
other transactions; or any other instrument. Veterans Care Agreements 
are excluded from this definition.
    Covered individual is an individual who is eligible to receive 
hospital care, medical services, or extended care services from a non-
VA provider under title 38 U.S.C. and title 38 CFR.
    Extended care services are the services described in 38 U.S.C. 
1710B(a).
    Hospital care is defined in 38 U.S.C. 1701(5).
    Medical services is defined in 38 U.S.C. 1701(6).
    Sharing agreement is an agreement, under statutory authority other 
than 38 U.S.C. 1703A, by which VA can obtain hospital care, medical 
services, or extended care services for a covered individual.
    VA facility is a point of VA care where covered individuals can 
receive hospital care, medical services, or extended care services, to 
include a VA medical center, a VA community-based outpatient clinic, a 
VA health care center, a VA community living center, a VA independent 
outpatient clinic, and other VA outpatient services sites.
    Veterans Care Agreement is an agreement authorized under 38 U.S.C. 
1703A for the furnishing of hospital care, medical services, or 
extended care services to covered individuals.


Sec.  17.4105  Purpose and Scope.

    (a) Purpose. Sections 17.4100 through 17.4135 implement 38 U.S.C. 
1703A, as required under section 1703A(j). Section 1703A authorizes VA 
to enter into and utilize Veterans Care Agreements to furnish hospital 
care, medical services, and extended care services to a covered 
individual when such individual is eligible for and requires such care 
or services that are not feasibly available to the covered individual 
through a VA facility, a contract, or a sharing agreement.
    (b) Scope. Sections 17.4100 through 17.4135 contain procedures, 
requirements, obligations, and limitations for: The process of 
certifying entities or providers under 38 U.S.C. 1703A; entering into, 
administering, furnishing care or services pursuant to, and 
discontinuing Veterans Care Agreements; and all disputes arising under 
or related to Veterans Care Agreements. Sections 17.4100 through 
17.4135 apply to all entities and providers, where applicable, that are 
parties to a Veterans Care Agreement, participate in the certification 
process, or furnish hospital care, medical services, or extended care 
services pursuant to a Veterans Care Agreement.


Sec.  17.4110  Entity or provider certification.

    (a) General. To be eligible to enter into a Veterans Care 
Agreement, an entity or provider must be certified by VA in accordance 
with the process and criteria established in paragraph (b) of this 
section. Additionally, an entity or provider must be actively certified 
while furnishing hospital care, medical services, or extended care 
services pursuant to a Veterans Care Agreement that the entity or 
provider has entered into with VA.
    (b) Process and criteria--(1) Application for certification. An 
entity

[[Page 21679]]

or provider must apply for certification by submitting the following 
information and documentation to VA:
    (i) Documentation of applicable medical licenses; and
    (ii) All other information and documentation required by VA. This 
information and documentation may include, but is not limited to, 
provider first and last names, legal business names, National Provider 
Identifier (NPI), NPI type, provider identifier type (e.g., individual 
or group practice), tax identification number, specialty (taxonomy 
code), business address, billing address, phone number, and care site 
address.
    (2) Approval or denial of certification. (i) VA will review all 
information obtained by VA, including through applicable federal and 
state records systems and as submitted by the applicant, and will 
determine eligibility for certification.
    (ii) An applicant must submit all information required under 
paragraph (b)(1) of this section.
    (iii) VA will deny an application for certification if VA 
determines that the entity or provider is excluded from participation 
in a Federal health care program (as defined in section 1128B(f) of the 
Social Security Act (42 U.S.C. 1320a-7b(f)) under section 1128 or 1128A 
of such Act (42 U.S.C. 1320a-7 and 1320a-7a) or is identified as an 
excluded source on the System for Award Management Exclusions list 
described in part 9 of title 48, Code of Federal Regulations, and part 
180 of title 2 of such Code, or successor regulations.
    (iv) VA will deny an application for certification if VA determines 
that the applicant is already barred from furnishing hospital care, 
medical services, and extended care services under chapter 17 of title 
38, U.S.C., because VA has previously determined the applicant 
submitted to VA a fraudulent claim, as that term is defined in 38 
U.S.C. 1703D(i)(4), for payment for hospital care, medical services, or 
extended care services.
    (v) VA may deny an application for certification if VA determines 
that based on programmatic considerations, VA is unlikely to seek to 
enter into a Veterans Care Agreement with the applicant.
    (vi) VA will issue a decision approving or denying an application 
for certification within 120 calendar days of receipt of such 
application, if practicable. Notices of approval will set forth the 
effective date and duration of the certification. Notices of denial 
will set forth the specific grounds for denial and supporting evidence. 
A denial constitutes VA's final decision on the application.
    (3) Duration of certification and application for recertification. 
(i) An entity or provider's certification under this section lasts for 
a three-year period, unless VA revokes certification during that three-
year period pursuant to paragraph (b)(4) of this section.
    (ii) A certified entity or provider must maintain its eligibility 
throughout the period in which it is certified and must inform VA of 
any changes or events that would affect its eligibility within 30 
calendar days of the change or event.
    (iii) A certified entity or provider seeking certification after 
the end of its current three-year certification must apply for 
recertification at least 60 calendar days prior to the expiration of 
its current certification; otherwise, the procedures set forth in 
paragraph (b)(3)(iv) of this section will apply. Upon application for 
recertification by the entity or provider, including submitting any new 
or updated information within the scope of paragraph (b)(1) of this 
section that VA requests in conjunction with such application for 
recertification, VA will reassess the entity or provider under the 
criteria in paragraph (b)(2) of this section. VA will issue a decision 
approving or denying the application for recertification within 60 
calendar days of receiving the application, if practicable. Notice of 
the decision will be furnished to the applicant in writing. Notices of 
recertification will set forth the effective date and duration of the 
certification. Notices of denial will set forth the specific grounds 
for denial and supporting evidence. A denial constitutes VA's final 
decision on the application for recertification.
    (iv) If a certified entity or provider applies for recertification 
after the deadline in paragraph (b)(3)(iii) of this section, such 
application will constitute a new application for certification and 
will be processed in accordance with paragraphs (b)(1) and (2) of this 
section.
    (4) Revocation of certification--(i) Standard for revocation. VA 
may revoke an entity's or provider's certification in accordance with 
paragraphs (b)(2)(ii) through (v) of this section.
    (ii) Notice of proposed revocation. When VA determines revocation 
is appropriate, VA will notify the entity or provider in writing of the 
proposed revocation. The notice of proposed revocation will set forth 
the specific grounds for the action and will notify the entity or 
provider that it has 30 calendar days from the date of issuance to 
submit a written response addressing either of the following:
    (A) Documenting compliance and proving any grounds false, or
    (B) Providing information and documentation that demonstrates the 
entity or provider has, subsequent to the notice of proposed 
revocation, achieved compliance with all criteria for certification set 
forth in paragraph (b)(2) of this section.
    (iii) Decision to revoke. Following the 30-day response period, VA 
will consider any information and documentation submitted by the entity 
or provider and will, within 30 calendar days, determine whether 
revocation is warranted. If VA determines that revocation is not 
warranted, VA will notify the entity or provider of that determination 
in writing. If VA determines that revocation is warranted, the entity 
or provider will immediately lose certified status, and VA will issue a 
notice of revocation to the entity or provider. Notices of revocation 
will set forth the specific facts and grounds for, and the effective 
date of, such revocation. A notice of revocation constitutes VA's final 
decision.
    (iv) Effect of revocation. Revocation of certification results in 
such status being rendered void, and the provider or entity may not 
furnish services or care to a covered individual under a Veterans Care 
Agreement prior to applying for and obtaining certified VCA status.


(The information collection requirements have been submitted to the 
Office of Management and Budget (OMB) and are pending OMB approval.)


Sec.  17.4115  VA use of Veterans Care Agreements.

    (a) Criteria for using. VA may furnish hospital care, medical 
services, or extended care services through a Veterans Care Agreement 
only if:
    (1) Such care or services are furnished to a covered individual who 
is eligible for such care or services under 38 U.S.C. chapter 17 and 
requires such care or services; and
    (2) Such care or services are not feasibly available to that 
covered individual through a VA facility, contract, or sharing 
agreement. For purposes of this subparagraph, hospital care, medical 
services, or extended care services are not feasibly available through 
a VA facility, contract, or sharing agreement when VA determines that 
the medical condition of the covered individual, the travel involved, 
the nature of the care or services, or a combination of these factors 
make the use of a VA facility, contract, or sharing agreement 
impracticable or inadvisable.
    (b) Standards of conduct and improper business practices--(1)

[[Page 21680]]

General. (i) Government business shall be conducted in a manner above 
reproach and, except as authorized by statute or regulation, with 
complete impartiality and with preferential treatment for none. 
Transactions relating to the expenditure of public funds require the 
highest degree of public trust and an impeccable standard of conduct. 
The general rule is to avoid strictly any conflict of interest or even 
the appearance of a conflict of interest in Government-contractor 
relationships. The conduct of Government personnel must be such that 
they would have no reluctance to make a full public disclosure of their 
actions.
    (ii) VA officials and employees are reminded that there are other 
statutes and regulations that deal with prohibited conduct, including:
    (A) The offer or acceptance of a bribe or gratuity is prohibited by 
18 U.S.C. 201. The acceptance of a gift, under certain circumstances, 
is prohibited by 5 U.S.C. 7353, and 5 CFR part 2635;
    (B)(1) Certain financial conflicts of interest are prohibited by 18 
U.S.C. 208 and regulations at 5 CFR part 2635.
    (2) Contacts with an entity or provider that is seeking or receives 
certification under section 17.4110 of this part or is seeking, enters 
into, and/or furnishes services or care under a Veterans Care Agreement 
may constitute ``seeking employment,'' (see Subpart F of 5 CFR part 
2635). Government officers and employees (employees) are prohibited by 
18 U.S.C. 208 and 5 CFR part 2635 from participating personally and 
substantially in any particular matter that would affect the financial 
interests of any person from whom the employee is seeking employment. 
An employee who engages in negotiations or is otherwise seeking 
employment with an offeror or who has an arrangement concerning future 
employment with an offeror must comply with the applicable 
disqualification requirements of 5 CFR 2635.604 and 2635.606. The 
statutory prohibition in 18 U.S.C. 208 also may require an employee's 
disqualification from participation in matters pertaining to the 
certification of an entity or provider or a entering into and 
administering a Veterans Care Agreement with an entity or provider even 
if the employee's duties may not be considered ``participating 
personally and substantially'';
    (C) Post-employment restrictions are covered by 18 U.S.C. 207 and 5 
CFR part 2641, that prohibit certain activities by former Government 
employees, including representation of an entity or provider before the 
Government in relation to any particular matter involving specific 
parties on which the former employee participated personally and 
substantially while employed by the Government. Additional restrictions 
apply to certain senior Government employees and for particular matters 
under an employee's official responsibility; and
    (D) Using nonpublic information to further an employee's private 
interest or that of another and engaging in a financial transaction 
using nonpublic information are prohibited by 5 CFR 2635.703.
    (2) Standards and requirements for entities or providers that enter 
into Veterans Care Agreements. An entity or provider that enters into a 
Veterans Care Agreement must comply with the following standards and 
requirements throughout the term of the Veterans Care Agreement:
    (i) Must have a satisfactory performance record.
    (ii) Must have a satisfactory record of integrity and business 
ethics.
    (iii) Must notify VA within 30 calendar days of the existence of an 
indictment, charge, conviction, or civil judgment, or Federal tax 
delinquency in an amount that exceeds $3,500.
    (iv) Must not engage in any of the following:
    (A) Commission of fraud or a criminal offense in connection with--
    (1) Obtaining;
    (2) Attempting to obtain; or
    (3) Performing a public contract or subcontract, or a Veterans Care 
Agreement;
    (B) Violation of Federal or State antitrust statutes relating to 
the submission of offers;
    (C) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, violating Federal criminal tax laws, or receiving stolen 
property;
    (D) Delinquent Federal taxes in an amount that exceeds $3,500. 
Federal taxes are considered delinquent for purposes of this provision 
if both of the following criteria apply:
    (1) The tax liability is finally determined. The liability is 
finally determined if it has been assessed and all available 
administrative remedies and rights to judicial review have been 
exhausted or have lapsed.
    (2) The taxpayer is delinquent in making payment. A taxpayer is 
delinquent if the taxpayer has failed to pay the tax liability when 
full payment was due and required. A taxpayer is not delinquent in 
cases where enforced collection action is precluded.
    (E) Knowing failure by a principal, until 3 years after final 
payment on any Government contract awarded to the contractor (or any 
Veterans Care Agreement entered into with the entity or provider), to 
timely disclose to the Government, in connection with the award or 
agreement, performance, or closeout of the contract or agreement or a 
subcontract thereunder, credible evidence of--
    (1) Violation of Federal criminal law involving fraud, conflict of 
interest, bribery, or gratuity violations found in Title 18 of the 
United States Code;
    (2) Violation of the civil False Claims Act (31 U.S.C. 3729-3733); 
or
    (3) Significant overpayment(s) on the contract or Veterans Care 
Agreement, other than overpayments resulting from contract financing 
payments. Contract financing payments means an authorized Government 
disbursement of monies to a contractor prior to acceptance of supplies 
or services by the Government; or
    (F) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of an entity or provider.
    (v) Must not submit to VA a fraudulent claim, as that term is 
defined in 38 U.S.C. 1703D(i)(4), for payment for hospital care, 
medical services, or extended care services.


Sec.  17.4120   Payment rates.

    The rates paid by VA for hospital care, medical services, and 
extended care services (hereafter in this section referred to as 
``services'') furnished pursuant to a Veterans Care Agreement will be 
the rates set forth in the price terms of the Veterans Care Agreement. 
Each Veterans Care Agreement will contain price terms for all services 
within its scope. Such payment rates will comply with the following 
parameters:
    (a) Except as otherwise provided in this section, payment rates 
will not exceed the applicable Medicare fee schedule or prospective 
payment system amount (hereafter in this section referred to as 
``Medicare rate''), if any, for the period in which the service was 
provided (without any changes based on the subsequent development of 
information under Medicare authorities).
    (b) With respect to services furnished in a State with an All-Payer 
Model Agreement under section 1814(b)(3) of the Social Security Act (42 
U.S.C. 1395f(b)(3)) that became effective on or after January 1, 2014, 
the Medicare rate under paragraph (a) will be calculated based on the 
payment rates under such agreement.
    (c) Payment rates for services furnished in a highly rural area may

[[Page 21681]]

exceed the limitations set forth in paragraphs (a) and (b) of this 
section. The term ``highly rural area'' means an area located in a 
county that has fewer than seven individuals residing in that county 
per square mile.
    (d) Payment rates may deviate from the parameters set forth in 
paragraphs (a) through (c) of this section when VA determines, based on 
patient needs, market analyses, health care provider qualifications, or 
other factors, that it is not practicable to limit payment for services 
to the rates available under paragraphs (a) through (c).
    (e) Payment rates for services furnished in Alaska are not subject 
to paragraphs (a) through (d) of this section.


Sec.  17.4125   Review of Veterans Care Agreements.

    VA will periodically review each Veterans Care Agreement that 
exceeds $5,000,000 annually, to determine if it is feasible and 
advisable to furnish the hospital care, medical services, and extended 
care services that VA has furnished or anticipates furnishing under 
such Veterans Care Agreements through a VA facility, contract, or 
sharing agreement instead. If VA determines it is feasible and 
advisable to provide any such hospital care, medical services, or 
extended care services in a VA facility or by contract or sharing 
agreement, it will take action to do so.


Sec.  17.4130   Discontinuation of Veterans Care Agreements.

    (a) Discontinuation of the agreement by the entity or provider 
requires a written notice of request to discontinue, in accordance with 
the terms of the Veterans Care Agreement and the following notice 
requirements:
    (1) Written notice must be received by VA at least 45 calendar days 
before the discontinuation date and must specify the discontinuation 
date; and
    (2) Such notice must be delivered to the designated VA official to 
which such notice must be submitted under the terms of the Veterans 
Care Agreement, and the notice and delivery must comply with all terms 
of the Veterans Care Agreement.
    (b)(1) Discontinuation of the agreement by VA requires a written 
notice of discontinuation to the entity or provider in accordance with 
the terms of the Veterans Care Agreement and the following notice 
standards:
    (i) Written notice of discontinuation will be issued at least 45 
calendar days before the discontinuation date, except as provided in 
subparagraph (ii).
    (ii) Notice may be issued fewer than 45 calendar days before the 
discontinuation date, including notice that is effective immediately 
upon issuance, when VA determines such abbreviated or immediate notice 
is necessary to protect the health of covered individuals or when such 
abbreviated or immediate notice is permitted under the terms of the 
Veterans Care Agreement.
    (2) Notice will be delivered to the entity or provider in 
accordance with the terms of the Veterans Care Agreement.
    (3) VA may discontinue a Veterans Care Agreement for the following 
reasons:
    (i) If VA determines the entity or provider failed to comply 
substantially with the provisions of 38 U.S.C. 1703A or 38 CFR 17.4100-
17.4135
    (ii) If VA determines the entity or provider failed to comply 
substantially with the provisions, terms, or conditions of the Veterans 
Care Agreement;
    (iii) If VA determines the entity or provider is excluded from 
participation in a Federal health care program (as defined in section 
1128B(f) of the Social Security Act (42 U.S.C. 1320a-7b(f)) under 
section 1128 or 1128A of such Act (42 U.S.C. 1320a-7 and 1320a-7a), or 
is identified as an excluded source on the System for Award Management 
Exclusions list described in part 9 of title 48, Code of Federal 
Regulations, and part 180 of title 2 of such Code, or successor 
regulations;
    (iv) If VA ascertains that the entity or provider has been 
convicted of a felony or other serious offense under federal or state 
law and determines that discontinuation of the Veterans Care Agreement 
would be in the best interest of a covered individual or VA; or
    (v) If VA determines it is reasonable to discontinue the Veterans 
Care Agreement based on the health care needs of a covered individual.


(The information collection requirements have been submitted to the 
Office of Management and Budget (OMB) and are pending OMB approval.)


Sec.  17.4135   Disputes.

    (a) General. (1) This section establishes the administrative 
procedures and requirements for asserting and resolving disputes 
arising under or related to a Veterans Care Agreement. For purposes of 
this section, a dispute means a disagreement, between VA and the entity 
or provider that entered into the subject Veterans Care Agreement with 
VA, that meets the following criteria:
    (i) Pertains to one of the subject matters set forth in paragraph 
(b) of this section;
    (ii) Is not resolved informally by mutual agreement of the parties; 
and
    (iii) Culminates in one of the parties demanding or asserting, as a 
matter of right, the payment of money in a sum certain under the 
Veterans Care Agreement, the interpretation of the terms of the 
Veterans Care Agreement or a specific authorization thereunder, or 
other relief arising under or relating to the Veterans Care Agreement. 
However, a dispute does not encompass any demand or assertion, as a 
matter of right, for penalties or forfeitures prescribed by a statute 
or regulation that another federal agency is specifically authorized to 
administer, settle, or determine.
    (2) The procedures established in this section should only be used 
when the parties to a Veterans Care Agreement have failed to resolve an 
issue in controversy by mutual agreement.
    (3) The procedures established in this section constitute an 
entity's or provider's exclusive administrative remedy for disputes 
under this section.
    (4) Disputes under this section are not considered claims for the 
purposes of laws that would otherwise require the application of 
sections 7101 through 7109 of title 41 U.S.C.
    (5) An entity or provider must first exhaust the procedures 
established in this section before seeking judicial review under 
section 1346 of title 28 U.S.C.
    (b) Subject matter of disputes. Disputes under this section must 
pertain to:
    (1) The scope of one or more specific authorizations under the 
applicable Veterans Care Agreement; or
    (2) Claims for payment under the applicable Veterans Care 
Agreement.
    (c) Procedures--(1) Initiation of dispute. Disputes under this 
section must be initiated in accordance with the following procedures 
and requirements:
    (i) Disputes must be initiated by submitting a notice of dispute, 
in writing, to the designated VA official to which notice must be 
submitted under the terms of the Veterans Care Agreement. The notice of 
dispute must comply with, and be submitted in accordance with, 
applicable terms of the Veterans Care Agreement.
    (ii) The notice of dispute must contain all specific assertions or 
demands, all facts pertinent to the dispute, any specific resolutions 
or relief sought, and all information and documentation necessary to 
review and adjudicate the dispute.
    (iii) The notice of dispute must be received by the designated VA 
official to which such notice must be submitted, in accordance with the 
terms of the

[[Page 21682]]

Veterans Care Agreement, within 90 calendar days after the accrual of 
the dispute. For purposes of this paragraph, the accrual of the dispute 
is the date when all events, that fix the alleged liability of either 
VA or the entity or provider and permit the applicable demand(s) and 
assertion(s), were known or should have been known. The term ``accrual 
of the dispute,'' as defined, has the following meanings in each of the 
two specific circumstances that follow:
    (A) When a dispute consists of an entity or provider asserting that 
VA has made payment in an incorrect amount, under circumstances where 
VA has issued a corresponding payment notice and the entity or provider 
has received such notice, the accrual of the dispute is the date such 
notice was received by the entity or provider.
    (B) When a dispute consists of an entity or provider asserting that 
VA has improperly denied payment to which it is entitled, under 
circumstances where VA has issued a corresponding denial of payment 
notice and the entity or provider has received such notice, the accrual 
of the dispute is the date such notice was received by the entity or 
provider.
    (2) VA authority to decide and resolve disputes arising under or 
relating to Veterans Care Agreements. (i) A VA official acting within 
the scope of authority delegated by the Secretary of Veterans Affairs 
(hereafter referred to in this section as the ``responsible VA 
official'') will decide and resolve disputes under this section.
    (ii) The authority to decide or resolve disputes under this section 
does not extend to the settlement, compromise, payment, or adjustment 
of any claim for payment that involves fraud or misrepresentation of 
fact. For purposes of this paragraph, ``misrepresentation of fact'' 
means a false statement of substantive fact, or any conduct which leads 
to the belief of a substantive fact material to proper understanding of 
the matter in hand, made with intent to deceive or mislead. If the 
responsible VA official encounters evidence of misrepresentation of 
fact or fraud on the part of the entity or provider, the responsible VA 
official shall refer the matter to the agency official responsible for 
investigating fraud and may refer the matter to other federal entities 
as necessary.
    (3) Review of dispute and written decision. (i) Upon receipt of a 
notice of dispute, the responsible VA official will review the dispute 
and all facts pertinent to the dispute.
    (ii) If the responsible VA official determines additional 
information or documentation is required for review and adjudication of 
the dispute, the official will, within 90 calendar days of VA's receipt 
of the notice of dispute, provide written notice to both parties, in 
accordance with the notice provisions of the Veterans Care Agreement, 
that additional information or documentation is required for review and 
adjudication of the dispute. Such notice will identify and request the 
additional information and documentation deemed necessary to review and 
adjudicate the dispute.
    (iii) Upon VA receipt of a notice of dispute that conforms to the 
requirements of paragraph (c)(1) of this section (including containing 
all information and documentation necessary to review and adjudicate 
the dispute), the responsible VA official will take one of the 
following actions within 90 calendar days:
    (A) Issue a written decision, in accordance with the notice 
provisions of the Veterans Care Agreement, to both parties. The written 
decision will include:
    (1) A description of the dispute;
    (2) A reference to the pertinent terms of the Veterans Care 
Agreement and any relevant authorizations;
    (3) A statement of the factual areas of agreement and disagreement;
    (4) A statement of the responsible official's decision, with 
supporting rationale; and
    (5) A statement that the decision constitutes the final agency 
decision on the matter in dispute.
    (B) Upon a determination that additional time is reasonably 
required to issue a decision, the responsible VA official will provide 
written notice to both parties, in accordance with the notice 
provisions of the Veterans Care Agreement, of such determination and 
the time within which a decision will be issued. The time within which 
a decision will be issued must be reasonable, taking into account the 
complexity of the dispute and any other relevant factors, and must not 
exceed 150 calendar days after receipt of a notice of dispute that 
conforms to the requirements of paragraph (c)(1) of this section and 
all information and documentation necessary to review and adjudicate 
the dispute. The responsible VA official will subsequently issue a 
written decision in accordance with paragraph (c)(3)(iii)(A) of this 
section.
    (4) Issuance of decision. VA will furnish the decision to the 
entity or provider by any method that provides evidence of receipt.
    (5) Effect of decision. A written decision issued by the 
responsible VA official constitutes the agency's final decision on the 
dispute.


(The information collection requirements have been submitted to the 
Office of Management and Budget (OMB) and are pending OMB approval.)

[FR Doc. 2019-10076 Filed 5-13-19; 8:45 am]
 BILLING CODE 8320-01-P