Proposed Rule2022-27436
Payments Under State Home Care Agreements for Nursing Home Care
Primary source
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Published
December 21, 2022
Issuing agencies
Veterans Affairs Department
Abstract
The Department of Veterans Affairs proposes to amend its State home per diem regulation to provide a new formula for calculating the prevailing rate VA would pay a State home that enters into a State home care agreement to provide nursing home care to eligible veterans.
Full Text
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<title>Federal Register, Volume 87 Issue 244 (Wednesday, December 21, 2022)</title>
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[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Proposed Rules]
[Pages 78038-78041]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27436]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 51
RIN 2900-AR62
Payments Under State Home Care Agreements for Nursing Home Care
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: The Department of Veterans Affairs proposes to amend its State
home per diem regulation to provide a new formula for calculating the
prevailing rate VA would pay a State home that enters into a State home
care agreement to provide nursing home care to eligible veterans.
DATES: Comments must be received on or before February 21, 2023.
ADDRESSES: Comments must be submitted through <a href="http://www.regulations.gov">www.regulations.gov</a>.
Except as provided below, comments received before the close of the
comment period will be available at <a href="http://www.regulations.gov">www.regulations.gov</a> for public
viewing, inspection, or copying, including any personally identifiable
or confidential business information that is included in a comment. We
post the comments received before the close of the comment period on
the following website as soon as possible after they have been
received: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. VA will not post on
<a href="http://Regulations.gov">Regulations.gov</a> public comments that make threats to individuals or
institutions or suggest that the commenter will take actions to harm
the individual. VA encourages individuals not to submit duplicative
comments. We will post acceptable comments from multiple unique
commenters even if the content is identical or nearly identical to
other comments. Any public comment received after the comment period's
closing date is considered late and will not be considered in the final
rulemaking.
FOR FURTHER INFORMATION CONTACT: Lisa Minor, National Director,
Facilities Based Care, Geriatrics and Extended Care, 12GEC, Veterans
Health Administration, Department of Veterans Affairs, 810 Vermont
Avenue NW, Washington, DC 20420, (202) 632-8320. (This is not a toll-
free number.)
SUPPLEMENTARY INFORMATION:
I. Background
The State homes program is the largest provider of long-term care
for our Nation's veterans with more than 162 State homes across all 50
states and Puerto Rico, totaling over 30,000 beds. They provide skilled
nursing care, domiciliary care, and adult day health care (ADHC) to
both veterans and non-veterans. Each State home is owned, operated, and
managed by each State's government. In order to qualify for VA per diem
payments, a State home facility must be formally recognized and
certified by VA as meeting the requirements and standards (e.g.,
quality of life, quality of care, physical environment, etc.) necessary
to receive such payments. After certification, VA reviews each State
home annually to ensure continued compliance with VA's requirements and
standards.
As it pertains to nursing home care, VA pays State homes a per diem
for each eligible veteran who receives nursing home care from a State
home. There are two types of per diem rates that VA may pay a State
home for providing nursing home care: a basic rate for veterans who
meet the State nursing home per diem eligibility criteria or a
prevailing rate for certain veterans with service-connected
disabilities for whom the State provides nursing home care pursuant to
a State home care agreement (SHCA). This rulemaking proposes changes
that would affect the prevailing rate for nursing home care, not the
basic rate.
II. Authority
VA has authority to pay State homes for providing nursing home care
to
[[Page 78039]]
eligible veterans under title 38 of the United States Code (U.S.C.),
sections 1741 through 1745. Section 1745(a) sets forth VA's ability to
enter into contracts or agreements with State homes to pay for nursing
home care provided to eligible veterans within such homes. Section
1745(a)(2) further states that the payments by VA to State homes under
such contracts or agreements shall be based on a formula, developed by
the Secretary in consultation with the State home, to adequately
reimburse the State home for the care.
Current Sec. 51.41 of title 38 of the Code of Federal Regulations
(CFR) implements VA's authority under section 1745 to enter into
contracts or agreements with State homes for nursing home care provided
to eligible veterans. Paragraph (a) provides that VA and State homes
may enter into both contracts and agreements, but each veteran's care
will be paid through only one of these two instruments. We are not
proposing any changes to paragraph (a) in this rulemaking. Paragraph
(b) addresses payment to State homes by VA when the State home provides
care under a contract. We are not proposing any changes to paragraph
(b) in this rulemaking. Paragraph (c) addresses payment to State homes
by VA when the State home provides care under a SHCA. Specifically,
paragraph (c) provides the formula for calculating the prevailing rate.
We are proposing changes to paragraph (c) in this rulemaking by:
<bullet> Listing the current steps used to calculate the prevailing
rate in subparagraphs and labeling them.
<bullet> Establishing a baseline fiscal year from the current
prevailing rate and the Market Basket rate.
<bullet> Adding an additional step of applying the Market Basket
rate to track with increased costs in a new subparagraph.
<bullet> Revising the note.
<bullet> Making a few technical corrections (i.e., grammatic
changes).
III. Current Sec. 51.41(c)(1): Formula Used To Calculate Prevailing
Rates
Currently, the prevailing rate is specific to each State home and
is published each year on VA's website. Veterans Affairs, Geriatrics
and Extended Care, <a href="https://www.va.gov/geriatrics/pages/State_Veterans_Home_Program_per_diem.asp">https://www.va.gov/geriatrics/pages/State_Veterans_Home_Program_per_diem.asp</a>, last updated October 6, 2022.
The prevailing rate is based on Centers for Medicare and Medicaid
Services (CMS) case-mix levels. A case-mix is a classification system;
the distribution of patients into categories reflecting differences in
severity of illness or resource consumption. Centers for Medicare and
Medicaid Services, Glossary, <a href="https://www.cms.gov/apps/glossary/default.asp?Letter=C&Language=English">https://www.cms.gov/apps/glossary/default.asp?Letter=C&Language=English</a>, last modified May 14, 2006. VA
began using two CMS case-mix data sets in 2013: Resource Utilization
Groups (RUG), which applies to metropolitan areas, and Skilled Nursing
Facility Prospective Payment System (SNF-PPS), which applies to rural
areas. See 77 FR 72738 (December 6, 2012).
Current Sec. 51.41(c)(1) outlines the formula for calculating
payments. The first step is to determine whether the RUG or SNF-PPS
case-mix level applies. The next step is to compute the daily rate for
each State home by following this formula:
<bullet> Multiply the labor component by the State home wage index
for each of the applicable case-mix levels.
<bullet> Add to that amount the non-labor component.
<bullet> Divide the sum of the results of these calculations by the
number of applicable case-mix levels.
<bullet> Add to this quotient the amount based on the CMS payment
schedule for physician services. The amount for physician services,
based on information published by CMS, is the average hourly rate for
all physicians, with the rate modified by the applicable urban or rural
geographic index for physician work, then multiplied by 12, then
divided by the number of days in the year.
The current note to Sec. 51.41(c)(1) further explains, in
pertinent part, that the amount calculated under this formula reflects
the prevailing rate payable in the geographic area in which the State
home is located for nursing home care furnished in a non-VA nursing
home.
IV. Changes to the CMS Case-Mix Classification System
In July 2018, CMS finalized a new case-mix classification system,
the Patient Driven Payment Model (PDPM), which replaced the RUG and
SNF-PPS case-mix classification systems. It became effective on October
1, 2019. Centers for Medicare and Medicaid Services, Patient Driven
Payment Model Overview, <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM</a>, last modified July 29, 2022. As a result
of changes by CMS to their case-mix classification systems (RUG and
SNF-PPS), VA is now revising its payment formula in Sec. 51.41(c)(1).
Consistent with the requirement in 38 U.S.C. 1745(a)(2) to consult
with State homes in developing the payment formula for nursing home
care provided through SHCAs, VA consulted with the National Association
of State Veterans Homes (NASVH) in June of 2019 on whether VA should
adopt CMS's PDPM formula, or if not, what formula should be utilized.
VA, (2019), Prevailing Rate Consultation State Home Per Diem (SHPD).
Denver, CO. VA and NASVH agreed that it would not be appropriate to use
the PDPM formula. Primarily, VA will not adopt the PDPM formula because
this formula is focused on incentivizing providers to take on new
patients, which is not an issue VA faces with State homes that provide
nursing home care. An additional reason is that the PDPM model is
specific to the needs of CMS facilities, rather than State homes. For
example, under Medicare, CMS only pays for the first 100 days of
skilled nursing home care. After which, the patient's care must be paid
for by another source (i.e., private, insurance, Medicaid), or the
patient is discharged. This does not apply to State homes. In many
cases, State homes provide nursing home care to our veterans for the
remainder of their lives.
Further, 31 percent of the State homes that provide nursing home
care to eligible veterans are not subject to the CMS PDPM formula as
they are not certified by CMS and do not receive CMS payments. After
consultation with NASVH, VA determined to instead propose revising the
current formula as explained further below.
V. Changes to the Prevailing Rate
We propose to keep the current formula described in Sec.
51.41(c)(1) to create a baseline rate and then add, at the end, a
provision for using the CMS Skilled Nursing Facilities (SNF) Market
Basket increase to account for annual increases that will reflect price
inflation facing providers in the provision of medical services. The
CMS SNF Market Basket increase rates are published in the Federal
Register on an annual basis. In 2023, the CMS SNF Market Basket rate
increase was 5.1% percent. See 87 FR 47502 (August 3, 2022).
The CMS SNF Market Basket is a fixed-weight index. Generally, a
market basket is a group of products designed to track the performance
of a specific market segment and determine inflation levels. Thus, the
CMS SNF Market Basket increase measures the price changes of a
permanent mix of goods and services used by nursing homes between two
set dates. They are used to update payments and cost limits in the
various CMS payment systems and reflect price inflation facing
providers in the provision of medical services. Centers for Medicare
and Medicaid
[[Page 78040]]
Services, Market Basket Definitions and General Information, <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/Downloads/info.pdf">https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/Downloads/info.pdf</a>.
VA believes that the CMS SNF Market Basket rate would more
accurately reflect actual costs than would an alternate method such as
a component of the Consumer Price Index (CPI). The CMS SNF Market
Basket rate is adjusted annually based on price changes in goods and
services specifically identified as being utilized in nursing home
care, while other measures such as the CPI reflect price changes in
goods and services in the general medical services field.
VI. Rates for Fiscal Year (FY) 2020 Through 2023
CMS's new payment model PDPM became effective in FY 2020.
Therefore, we established an agreement with CMS to obtain average
market basket data needed to continue providing an annual per diem rate
until this rulemaking is finalized. Thus, for FY 2020 through 2023, we
have and will continue to use the average market basket data provided
by CMS to calculate the per diem rate that we are currently using.
VII. Rates for FY 2024
We plan to use our new formula in FY 2024. In determining the
baseline for this formula, we would use the rate for FY 2023 because we
anticipate this rulemaking to be finalized and effective on or before
October 1, 2023, which is the first day of FY 2024. If that changes due
to delays in the rulemaking process, we will ensure that we receive the
necessary CMS data to continue our current formula until the rule
becomes effective, and we will ensure the correct FY used for the
baseline is appropriately and accurately referenced in the amended
regulation.
VIII. Regulation Text Changes to Sec. 51.41(c)
First, we propose a nonsubstantive revision of changing the title
of Sec. 51.41(c) from ``Payments under State home care agreements.''
to ``Payments for nursing home care under State home care agreements.''
This change clarifies that subparagraph (c) only applies to State
nursing homes.
We also propose to revise Sec. 51.41(c) by making the term
``agreements'' in State home care agreements singular to ensure
consistency with 38 U.S.C. 1745, and with revisions of 38 CFR part 51.
83 FR 61250 (November 28, 2018). Thus, we would revise the sentence
that currently states, ``State home care agreements under this section
will provide for payments at the rate determined by the following
formula'' to instead state ``A State home care agreement for nursing
home care under this section will provide for payments at the rate
determined by the following formula.''
We also propose to reorganize Sec. 51.41(c)(1) by breaking apart
the steps of the formula and putting them into a list for easier
readability. The steps will be listed in proposed Sec. 51.41(c)(1)(i)
through (ii).
Section 51.41(c)(1)(i) would require that one would determine which
case-mix applies, the RUG or SNF-PPS. We also propose to change the
name of the case-mix level used for rural areas in Sec.
51.41(c)(1)(i). Currently, it states Skilled Nursing Prospective
Payment System. We propose to change it to Skilled Nursing Facility
Prospective Payment System. The word ``facility'' was evidently left
off through an inadvertent oversight since the rulemaking that placed
this name in the regulation did not explain an intended deviation from
the proper title. By making this correction, the name will align with
the name that CMS uses.
Proposed Sec. 51.41(c)(1)(ii) would require that one compute the
daily rate for each State home, using the formula described above. The
formula would be listed in proposed paragraphs (c)(1)(ii)(A) through
(E). As previously explained, paragraphs (c)(1)(ii)(A) through (D) are
substantively identical to the current formula, but merely listed out
for ease of readability.
Proposed paragraph (c)(1)(ii)(E) would include the new calculation
to the formula and would provide that one would multiply the current
per diem baseline by the CMS SNF Market Basket increase in effect as of
the fiscal year in which the final rule becomes effective to obtain the
reference total per diem baseline rate from which subsequent fiscal
year per diem rates will be calculated. For calculation of SNF per diem
rates for subsequent fiscal years VA will apply the CMS SNF Market
Basket increase to the total per diem baseline each year.
Lastly, we propose to amend the note in Sec. 51.41(c) by
clarifying that the first sentence is applicable to State homes.
Additionally, we propose to add a sentence stating that the amount
calculated under the new formula applies to both new and existing
facilities with SHCAs.
IX. Technical and Grammatic Corrections to Part 51
We also propose to correct technical errors in 38 CFR 51.70 and
51.300. Section 51.70(n) erroneously refers to Sec. 51.110(d)(2)(ii);
however, the reference should be to Sec. 51.110(e)(2)(ii). Therefore,
we propose to revise Sec. 51.70(n) by removing ``51.110(d)(2)(ii)''
and in its place inserting ``51.110(e)(2)(ii)''.
Section 51.110(d) refers to Version 2.0 of the Centers for Medicare
and Medicaid Services (CMS) Resident Assessment Instrument Minimum Data
Set. The reference should be Version 3.0 as noted in Sec.
51.110(b)(1). The prior amendment stated the change and explained the
rationale. 77 FR 26183 (May 3, 2012). We propose to correct this
inadvertent oversight by changing ``Version 2.0'' to ``Version 3.0'' in
Sec. 51.110(d).
Section 51.300(d)(3) refers to paragraphs (a)(2)(i) through (vii)
of this section. However, the reference should be to paragraphs
(d)(2)(i) through (vii), which lists the circumstances requiring the
documentation to which paragraph (d)(3) refers. We propose to revise
Sec. 51.300(d)(3) by removing ``(a)(2)(i) through (vii)'', and in its
place inserting ``(d)(2)(i) through (vii)''.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, when
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, and other advantages; distributive impacts;
and equity). Executive Order 13563 (Improving Regulation and Regulatory
Review) emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
The Office of Information and Regulatory Affairs has determined that
this rule is not a significant regulatory action under Executive Order
12866.
VA's impact analysis can be found as a supporting document at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, usually within 48 hours after the
rulemaking document is published. Additionally, a copy of the
rulemaking and its Regulatory Impact Analysis (RIA) are available on
VA's website at <a href="https://www.va.gov/orpm/">https://www.va.gov/orpm/</a>, by following the link for
``VA Regulations Published From FY 2004 Through Fiscal Year to Date.''
Regulatory Flexibility Act
The Secretary hereby certifies that this proposed rule would not
have a significant economic impact on a substantial number of small
entities as they are defined in the Regulatory
[[Page 78041]]
Flexibility Act (5 U.S.C. 601-612). The rulemaking would revise the
formula VA uses to calculate the per diem it pays State homes for
nursing home care of certain veterans. The effect of the rule would be
to change VA payments to State homes. Therefore, this rule only affects
veterans and State homes.
All State homes are owned, operated, and managed by State
governments, except for a small number operated by entities under
contract with State governments. Neither these contractors nor State
governments are small entities as defined in 5 U.S.C. 601. State homes
subject to this proposed rulemaking are State homes that are currently
under a State home care agreement, those that enter into a new
agreement, and any facility that begins an agreement for the first
time. The effect of the rule would impose no direct costs on the State
homes. Therefore, pursuant to 5 U.S.C. 605(b), the initial and final
regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do
not apply.
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 proposed rule would have no such
effect on State, local, or tribal governments, or on the private
sector.
Paperwork Reduction Act
Although this action relates to provisions constituting collections
of information at 38 CFR 51.41, under the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-3521), no new or proposed revised
collections of information would be associated with this proposed rule.
The information collection requirements for Sec. 51.41(e) are
currently approved by the Office of Management and Budget (OMB) and
have been assigned OMB control numbers 2900-0091 and 2900-0160.
List of Subjects in 38 CFR Part 51
Administrative practice and procedure; Claims; Adult Day Health
Care; Domiciliary, Dental health; Government contracts; Grant
programs--health; Grant programs--veterans; Health care; Health
facilities; Health professions; Health records; Mental health programs;
Nursing homes; Reporting and recordkeeping requirements; Travel and
transportation expenses; Veterans.
Signing Authority
Denis McDonough, Secretary of Veterans Affairs, approved this
document on December 13, 2022, 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.
Consuela Benjamin,
Regulation Development Coordinator Office of Regulation Policy &
Management, Office of General Counsel, Department of Veterans Affairs.
For the reasons described in the preamble, Department of Veterans
Affairs proposes to amend 38 CFR part 51 as follows:
PART 51--PER DIEM FOR NURSING HOME, DOMICILIARY, OR ADULT DAY
HEALTH CARE OF VETERANS IN STATE HOMES
0
1. The authority citation for part 51 continues to read as follows:
Authority: 38 U.S.C. 101, 501, 1710, 1720, 1741-1743, 1745, and
as follows.
* * * * *
0
2. In Sec. 51.41 revise the introductory text of paragraph (c) and
paragraph (c)(1) and the Note under paragraph (c)(1) to read as
follows:
Sec. 51.41 Contracts and State home care agreements for certain
veterans with service-connected disabilities.
* * * * *
(c) Payments for nursing home care under State home care
agreements.
(1) State homes must sign an agreement to receive payment from VA
for providing care to certain eligible veterans under a State home care
agreement. A State home care agreement for nursing home care under this
section will provide for payments at the rate determined by the
following formula.
(i) Determine whether the Resource Utilization Groups (RUG) or
Skilled Nursing Facility Prospective Payment System (SNF-PPS) applies.
For State Homes in a metropolitan statistical area, use the
published fiscal year Centers for Medicare and Medicaid Services (CMS)
RUG case-mix levels for the applicable metropolitan statistical area.
For State Homes in a rural area, use the published fiscal year CMS
SNF-PPS case-mix levels for the applicable rural area.
(ii) Compute the daily rate for each State home, using the
following formula in the order described:
(A) Multiply the labor component by the State home wage index for
each of the applicable case-mix levels.
(B) Add to that amount the non-labor component.
(C) Divide the sum of the results of these calculations by the
number of applicable case-mix levels.
(D) Add to this quotient the amount based on the CMS payment
schedule for physician services. The amount for physician services,
based on information published by CMS, is the average hourly rate for
all physicians, with the rate modified by the applicable urban or rural
geographic index for physician work, then multiplied by 12, then
divided by the number of days in the year. The resulting sum is the per
diem baseline rate for the State home.
(E) Multiply the per diem baseline rate from the previous year by
the CMS Skilled Nursing Facilities (SNF) Market Basket increase in
effect as of [Date 30 days after date of publication of Final Rule in
the Federal Register]. The sum establishes the reference total per diem
baseline rate from which subsequent fiscal year per diem rates will be
calculated. For calculation of SNF per diem rates for subsequent fiscal
years VA will apply the CMS SNF Market Basket increase to the total per
diem each year.
Note to paragraph (c)(1): The amount calculated under this
formula reflects the prevailing rate payable in the geographic area
in which the State home is located for nursing home care furnished
in a State home. The amount calculated under this formula applies to
both new and existing facilities with State home care agreements.
Further, the formula for establishing these rates includes CMS
information that is published in the Federal Register every year and
is effective beginning October 1 for the entire fiscal year.
Accordingly, VA will adjust the rates annually.
* * * * *
Sec. 51.70 [Amended]
0
3. In Sec. 51.70(n), removing the term ``51.110(d)(2)(ii)'', and
adding in its place, the term ``51.110(e)(2)(ii)''.
Sec. 51.110 [Amended]
0
4. In Sec. 51.110(d), removing the term ``Version 2.0'', and adding in
its place, the term ``Version 3.0''.
Sec. 51.300 [Amended]
0
5. In Sec. 51.300(d)(3), removing the term ``(a)(2)(i) through
(vii)'', and adding in its place, the term ``(d)(2)(i) through (vii)''.
[FR Doc. 2022-27436 Filed 12-20-22; 8:45 am]
BILLING CODE 8320-01-P
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