Proposed Rule2026-03427
State Home Care Agreements for State Home Medical Model Adult Day Health Care
Primary source
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Published
February 20, 2026
Issuing agencies
Veterans Affairs Department
Abstract
The Department of Veterans Affairs (VA) proposes to amend two of its State Veterans Home (State home) regulations. One amendment would define medical model adult day health care (MMADHC). The other would codify into regulation VA's ability to enter into State Home Care Agreements (SHCA) for MMADHC and pay for services rendered. Additionally, this rulemaking proposes the methodology for the payment rate.
Full Text
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<title>Federal Register, Volume 91 Issue 34 (Friday, February 20, 2026)</title>
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[Federal Register Volume 91, Number 34 (Friday, February 20, 2026)]
[Proposed Rules]
[Pages 8170-8173]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03427]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 51
RIN 2900-AS41
State Home Care Agreements for State Home Medical Model Adult Day
Health Care
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend two
of its State Veterans Home (State home) regulations. One amendment
would define medical model adult day health care (MMADHC). The other
would codify into regulation VA's ability to enter into State Home Care
Agreements (SHCA) for MMADHC and pay for services rendered.
Additionally, this rulemaking proposes the methodology for the payment
rate.
DATES: Comments must be received on or before April 21, 2026.
ADDRESSES: You may submit comments through <a href="http://www.regulations.gov">www.regulations.gov</a> under
RIN 2900-AS41. That website includes a plain language summary of this
rulemaking. Instructions for accessing agency documents, submitting
comments, and viewing the rulemaking docket, is available on
<a href="http://www.regulations.gov">www.regulations.gov</a> under ``FAQ.''
FOR FURTHER INFORMATION CONTACT: Dr. Rhonda Toms, Veterans Health
Administration, (202) 632-8320.
SUPPLEMENTARY INFORMATION:
I. Background
State homes provide skilled nursing care, domiciliary care, and
adult day health care (ADHC) to eligible veterans and non-veterans. VA
reimburses State homes for care provided to eligible veterans admitted
into such programs. Each State home is owned, operated, and managed by
each State's government. While VA has no authority over the management
or control of a State home, VA must formally recognize each State home
after verifying certain standards (such as, quality of life, quality of
care, physical environment, etc.). After the initial recognition, VA
certifies each State home annually to ensure continued compliance with
VA standards.
MMADHC includes medical supervision at an intermediary level of
care between a social model of ADHC and nursing home care. The MMADHC
is a medical supervision program intended to help medically complex
veterans remain safely in the community and out of hospital emergency
rooms and hospitalizations. They care for veterans who would otherwise
be institutionalized in a nursing home.\1\ There are currently three
State homes that provide MMADHC; these three facilities are in New
York, Minnesota, and Hawaii. Although there are several similarities
[[Page 8171]]
between MMADHC and ADHC, there are also several differences.
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\1\ Dabelko, H.I., & Zimmerman, J.A. (2008). Outcomes of Adult
Day Services for Participants: A Conceptual Model. Journal of
Applied Gerontology, 27(1), 78-92. <a href="https://doi.org/10.1177/0733464807307338">https://doi.org/10.1177/0733464807307338</a> (Original work published 2008).
Moriah E. Ellen, Peter Demaio, Ariella Lange, Michael G. Wilson,
Adult Day Center Programs and Their Associated Outcomes on Clients,
Caregivers, and the Health System: A Scoping Review, The
Gerontologist, Volume 57, Issue 6, December 2017, Pages e85-e94,
<a href="https://doi.org/10.1093/geront/gnw165">https://doi.org/10.1093/geront/gnw165</a>.
Leitsch, S.A., Zarit, S.H., Townsend, A., & Greene, R. (2001).
Medical and Social Adult Day Service Programs: A Comparison of
Characteristics, Dementia Clients, and their Family Caregivers: A
Comparison of Characteristics, Dementia Clients, and their Family
Caregivers. Research on Aging, 23(4), 473-498. <a href="https://doi.org/10.1177/0164027501234005">https://doi.org/10.1177/0164027501234005</a> (Original work published 2001).
Brown L., Forster A., Young J., Crocker T., Benham A., Langhorne
P.; Day Hospital Group. Medical day hospital care for older people
versus alternative forms of care. Cochrane Database Syst Rev. 2015
Jun 23;2015(6):CD001730. doi: 10.1002/14651858.CD001730.pub3. PMID:
26102196; PMCID: PMC7068157.
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One similarity is that both provide services in a congregate
setting, which is an environment that allows and encourages veterans to
experience camaraderie with other veterans, establish friendships, and
maintain connections within their community. This contributes to better
overall health outcomes. Additionally, both provide respite for the
veterans' caregivers several times a week. Next, both enable disabled
veterans to continue living at home, rather than in an institutional
setting (that is, an assisted living facility, nursing home, etc.).
Lastly, both programs help prevent the need for hospitalization by
providing preventive and maintenance care.
A major difference between MMADHC and ADHC is that MMADHC provides
additional medical resources including a medical director, the
provision of laboratory or radiology services, quality assessments, and
assurance committees. Another way in which MMADHC differs from ADHC is
that under MMADHC, the participant must remain under the care of a
physician and each participant is supervised by a primary care
physician, with another physician available if the primary physician is
unavailable. (38 CFR 51.445(a)). Also, the participant must be seen by
the primary physician at least annually and as indicated by a change in
condition. (38 CFR 51.445(b)). MMADHC is better equipped than ADHC to
assist in deterring the need to admit a veteran into a nursing home,
which is not only a benefit to the veteran but also to the taxpayer
because the cost of MMADHC is a fraction of nursing home care.
Historically, State homes were paid at the same rate for rendering
ADHC and MMADHC services, even though MMADHC provided a higher level of
care. A new law was passed in 2018 allowing VA to pay for MMADHC at a
rate that is higher than that paid for ADHC.
II. Authority
On March 27, 2018, the President signed into law the State Veterans
Home Adult Day Health Care Improvement Act of 2017 (ADHC Improvement
Act). Public Law 115-159, 132 Stat. 1244-1245. The ADHC Improvement Act
was added as a new section in 38 U.S.C. 1745 and labeled it as section
(d). This new law authorized VA to pay State homes for providing
medical supervision model adult day health care to eligible veterans.
Public Law 115-159, 2(a), 132 Stat. 1244. For the purposes of this
rulemaking, we use the term, ``medical model adult day health care
(MMADHC)'' rather than the statutory term, ``medical supervision model
adult day health care.''
To regulate 38 U.S.C. 1745(d), VA proposes to add definitions to 38
CFR 51.2 to provide clarity to providers and the public. Additionally,
we propose the following changes to Sec. 51.41:
<bullet> Revise paragraphs (a) and (c).
<bullet> Create a new paragraph (d).
<bullet> Redesignate current paragraphs (d) through (g) as
paragraphs (e) through (h), respectively.
III. Changes to Sec. 51.2
A. Definition of Medical Model Adult Day Health Care (MMADHC)
VA proposes to add a definition for the term ``medical model adult
day health care'', to mean ``adult day health care that includes the
coordination of physician services, dental services, nursing services,
the administration of drugs, and such other requirements as determined
appropriate by the Secretary.'' The definition VA proposes mirrors the
definition of medical supervision model adult day health care provided
in 38 U.S.C. 1745(d)(4). Although the statute included the word
supervision in its term, VA did not. Instead, VA explains in the
definition that the two phrases (``medical supervision model adult day
health care'' and ``medical model adult day health care'') are
interchangeable. We propose to use the latter term because it has
historically been used by VA and the medical industry. We believe that
including a statement in the definition showing they are
interchangeable would provide clarity in facilities and among the
general public.\2\
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\2\ See U.S. Department of Health and Human Services, Regulatory
Review of Adult Day Services: Final Report, 2014 Edition (Dec. 1,
2014), <a href="https://aspe.hhs.gov/basic-report/regulatory-review-adult-day-services-final-report-2014-edition">https://aspe.hhs.gov/basic-report/regulatory-review-adult-day-services-final-report-2014-edition</a> (last visited August 13,
2025).
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B. Definition for State Home Care Agreement (SHCA)
We propose to add a definition for the term ``State home care
agreement'' to mean ``a legally binding document between a State home
and VA, which is not a contract, is signed by each entity's authorized
representative and defines the terms for payment of per diem for an
eligible Veteran's nursing home care, or medical model adult day health
care.'' This definition is necessary because Public Law 115-159
requires VA to enter into agreements with state homes to pay per diem
at a rate that is prescribed by the Secretary and that ``adequately
reimburse[s] the State home for care provided by the State home,
including necessary transportation expenses.'' These considerations
mean that MMADC payment rates will be different than the basic per diem
rate. Additionally, the term State home care agreement is referenced
throughout current part 51 regulations without the benefit of a
definition. Therefore, we propose to provide a clear understanding of
the term.
IV. Changes to Sec. 51.41(a)
We propose to amend eligibility provisions within Sec. 51.41(a).
First, we propose to revise the initial sentence in Sec. 51.41(a) by
changing the word ``may'' to ``will'' and the word ``and'' to ``or.''
These changes are needed to be consistent with the mandate in 38 U.S.C.
1745(a)(1). Additionally, we propose to revise the first sentence in 38
CFR 51.41(a) from ``VA and State homes may enter into both contracts
and State home care agreements.'' to read: ``VA and a State home shall
enter into a contract or State home care agreement to pay per diem for
each eligible veteran's nursing home care.'' We would then add a second
sentence to paragraph (a) to mirror the restrictions set forth in 38
U.S.C. 1745(d)(1). These restrictions ensure that the State home does
not receive both MMADHC and nursing home per diem for the same veteran
for the same period of medical service.
We propose to add a note stating that MMADHC is intended for
eligible veterans, who would need nursing home care if MMADHC did not
exist or was not available. This distinction comes from 38 U.S.C.
1720(f), which authorizes VA to provide adult day health care to a
veteran who would otherwise need nursing home care.
IV. Changes to Sec. 51.41(c)
In paragraph (c)(1), we propose to add the phrase ``, known as the
prevailing rate, which is'' to the last sentence of (c)(1) to clarify
that when VA uses the term ``prevailing rate'' it is referring to the
rate calculated for the State Home Agreement.
In paragraph (c)(4), we propose to add the phrase ``or for medical
model adult day health care'' to allow the State home to request
retroactive payment in cases where the veteran receives a retroactive
VA service-connected disability rating. We propose this change to
mirror the practice currently used in similar situations in nursing
homes that provide services under SHCAs.
VI. Changes to Sec. 51.41(d) Through (g)
We propose to amend Sec. 51.41 by adding a new paragraph (d) to
establish a rate of payment for MMADHC to
[[Page 8172]]
eligible veterans through a SHCA, as required by 38 U.S.C.
1745(d)(2)(A).
Section 1745(d)(2)(B) required VA to consult with the State homes
in prescribing regulations to establish the rate to be paid for MMADHC.
On February 13, 2020, VA conducted this consultation with the National
Association of State Veterans Homes (NASVH), a national State home
membership organization, that serves as representation for State homes.
During this consultation, members of NASVH stated their preference for
calculating per diem for MMADHC at the rate of 65 percent of the
prevailing rate that VA pays State homes for nursing home care under 38
CFR 51.41(c). There are two main reasons they requested this rate to
calculate per diem for MMADHC to include the following. First, it would
cover the cost of the travel that is needed to transport veterans to
and from the State home. For example, in New York, there is a drive
time restriction stating that people that live more than an hour away
do not qualify for free public transportation; therefore, the State
home would require a vehicle and driver (or contracted transportation
service) to bring the veteran back and forth to and from the facility.
Additionally, new State legislation in New York changed liability
insurance requirements, which caused rates to increase and caused the
State home transportation expenses to increase. Second, the 65 percent
rate would cover the cost for the program to coordinate additional
specialty services (that is, dental services, administration of drugs,
etc.) to participating veterans. In due diligence, VA conducted
research to determine the cost of MMADHC outside of VA but did not find
any consistent payment rate.
Based on the consultation and rationale detailed above, VA agreed
to pay for MMADHC at the rate of 65 percent of the prevailing rate of
nursing home care. We are paying this rate now to State homes because
they are currently providing MMADHC to veterans under the authority of
the statute. In this rulemaking, VA proposes to continue paying at the
65 percent rate described above but add a caveat that if the daily cost
of MMADHC is less, then we will pay the lesser amount. We propose to
pay the lesser of these two rates because 38 U.S.C. 1745(d)(2)(A)
states that VA shall adequately reimburse the State homes for the care
they provide; paying more than the full cost of daily care does not
seem to match with the intent of this language. Lastly, we propose to
use the same criteria for calculating the daily cost of a veteran's
care and determining whether a veteran spent a day receiving MMADHC.
These criteria are detailed in 38 CFR 51.40(b) and (d), respectively.
With the proposed addition of a new paragraph (d) to Sec. 51.41, we
would redesignate current paragraphs (d) through (g) as paragraphs (e)
through (h), respectively.
VII. Technical Corrections
We propose to change the reference to ``VA provider agreement'' in
Sec. 51.41(f) to ``State home care agreement'' because this is the
correct term. This correction would standardize the language throughout
part 51.
Executive Orders 12866, 13563, and 14192
VA examined the impact of this rulemaking as required by Executive
Orders 12866 (Sept. 30, 1993) and 13563 (Jan. 18, 2011), which direct
agencies to assess all costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits. The Office of Information and
Regulatory Affairs has determined that this rulemaking is not a
significant regulatory action under Executive Order 12866. This
proposed rule is an Executive Order 14192 deregulatory action. The
regulatory impact analysis associated with this rulemaking can be found
as a supporting document at <a href="http://www.regulations.gov">www.regulations.gov</a>.
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 defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). The certification is based on the fact that this rule would
affect veterans and State homes. State homes are State government
entities under the control of the State government in which they are
located. 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
This proposed rule would not 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.
Paperwork Reduction Act
Although this action contains 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 are associated with this proposed rule. The
information collection requirements for Sec. 51.41 are currently
approved by the Office of Management and Budget (OMB) and has a valid
OMB control number of 2900-0160.
Assistance Listing
The Assistance Listing number and title for the program affected by
this document is 64.015, Veterans State Nursing Home Care.
List of Subjects in 38 CFR Part 51
Administrative practice and procedure; Claims; Day care; Dental
health; Government contracts; Grant programs--health; Grant programs--
veterans; Health care; Health facilities; Health professions; Health
records; Mental health programs; Nursing homes; Reporting and
recordkeeping requirements; Travel and transportation expenses;
Veterans.
Signing Authority
Douglas A. Collins, Secretary of Veterans Affairs, approved this
document on February 13, 2026 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.
Gabriela DeCuir,
Alternate Federal Register Liaison Officer, Department of Veterans
Affairs.
For the reasons described in the preamble, the Department of
Veterans Affairs proposes to amend 38 CFR part 51 as set forth below:
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. Amend Sec. 51.2 by adding entries for ``medical model adult day
health care (MMADHC)'' and ``State Home Care Agreement'' in
alphabetical order to read as follows:
Sec. 51.2 Definitions.
* * * * *
Medical model adult day health care (MMADHC) means adult day health
care that includes the coordination of physician services, dental
services, nursing services, the administration of drugs, and such other
requirements as determined appropriate by the
[[Page 8173]]
Secretary. This term is interchangeable with ``medical supervision
model adult day health care.''
* * * * *
State Home Care Agreement means a legally binding document between
a State home and VA, which is not a contract; is signed by each
entity's authorized representative; and defines the terms for payment
of per diem for an eligible Veteran's nursing home care, or medical
model adult day health care.
* * * * *
0
3. Amend Sec. 51.41 by:
0
a. Revising paragraph (a);
0
b. Revising paragraph (c)(1) and (c)(4);
0
c. Redesignating paragraphs (d) through (g) as paragraphs (e) through
(h), respectively;
0
d. Adding new paragraphs (d), (d)(1), and (d)(2); and
0
e. Revising paragraph (f)(1).
The revisions and additions read as follows:
Sec. 51.41 Contracts and State home care agreements for certain
veterans with service-connected disabilities.
(a) Contract or State home care agreement required. VA and a State
home will enter into a contract or State home care agreement to pay per
diem for the nursing home (NH) care of each eligible veteran. VA and a
State home will enter into a State home care agreement to pay per diem
for medical model adult day health care (MMADHC) for each eligible
veteran for whom VA does not pay for NH care. Eligible veterans are
those who:
(1) Are in need of nursing home care or MMADHC for a VA adjudicated
service-connected disability, or
(2) Have a singular or combined rating of 70 percent or more based
on one or more service-connected disabilities or a rating of total
disability based on individual unemployability and are in need of
nursing home care or MMADHC.
Note: Per diem for MMADHC is only payable for eligible
veterans, who would need nursing home care if MMADHC did not exist
or was not available.
* * * * *
(c)(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, known as the
prevailing rate, which is determined by the following formula.
(2) * * *
(3) * * *
(4) If a veteran receives a retroactive VA service-connected
disability rating and becomes a veteran identified in paragraph (a) of
this section, the State home may request payment under the State home
care agreement for nursing home care or for medical model adult day
health care back to the retroactive effective date of the rating or
February 2, 2013, whichever is later. For care provided after the
effective date but before February 2, 2013, the State home may request
payment at the special per diem rate that was in effect at the time
that the care was rendered.
(d) Payments for medical model adult day health care under State
home care agreements. A State home care agreement for MMADHC will
provide for payments at the lesser amount of either:
(1) sixty-five percent of the rate calculated for nursing home care
under paragraph (c) of this section, or
(2) the daily cost of care as provided on the invoice.
Note: The criteria set forth in 38 CFR 51.40(b) and (d) apply
to MMADHC in calculating the daily cost of a veteran's care and
determining whether a veteran spent a day receiving MMADHC.
* * * * *
(f) Termination of State home care agreements. (1) A State home
that wishes to terminate a State home care agreement with VA must send
written notice of its intent to the Director of the VA medical center
of jurisdiction at least 30 days before the effective date of
termination of the agreement. The notice shall include the intended
date of termination.
* * * * *
[FR Doc. 2026-03427 Filed 2-19-26; 8:45 am]
BILLING CODE 8320-01-P
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