[Code of Federal Regulations]
[Title 38, Volume 1]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 38CFR17.55]

[Page 604-605]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
                CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS
 
PART 17--MEDICAL--Table of Contents
 
Sec. 17.55  Payment for authorized public or private hospital care.

    Except as otherwise provided in this section, payment for public or 
private hospital care authorized under 38 U.S.C. 1703 and 38 CFR 17.52 
of this part or under 38 U.S.C. 1728 and 38 CFR 17.120 of this part 
shall be based on a prospective payment system similar to that used in 
the Medicare program for paying for similar inpatient hospital services 
in the community. Payment shall be made using the Health Care Financing 
Administration (HCFA) PRICER for each diagnosis-related group (DRG) 
applicable to the episode of care.
    (a) Payment shall be made of the full prospective payment amount per 
discharge, as determined according to the methodology in subparts D and 
G of 42 CFR part 412, as appropriate.
    (b)(1) In the case of a veteran who was transferred to another 
facility before completion of care, VA shall pay the transferring 
hospital an amount calculated by the HCFA PRICER for each patient day of 
care, not to exceed the full DRG rate as provided in paragraph (a) of 
this section. The hospital that ultimately discharges the patient will 
receive the full DRG payment.
    (2) In the case of a veteran who has transferred from a hospital 
and/or distinct part unit excluded by Medicare from the DRG-based 
prospective payment system or from a hospital that does not participate 
in Medicare, the transferring hospital will receive a payment for each 
patient day of care not to exceed the amount provided in paragraph (i) 
of this section.
    (c) VA shall pay the providing facility the full DRG-based rate or 
reasonable cost, without regard to any copayments or deductible required 
by any Federal law that is not applicable to VA.
    (d) If the cost or length of a veteran's care exceeds an applicable 
threshold amount, as determined by the HCFA PRICER program, VA shall 
pay, in addition to the amount payable under paragraph (a) of this 
section, an outlier payment calculated by the HCFA PRICER program, in 
accordance with subpart F of 42 CFR part 412.
    (e) In addition to the amount payable under paragraph (a) of this 
section, VA shall pay, for each discharge, an amount to cover the non-
Federal hospital's capital-related costs, kidney, heart and liver 
acquisition costs incurred by hospitals with approved transplantation 
centers, direct costs of medical education, and the costs of qualified 
nonphysician anesthetists in small rural hospitals. These amounts will 
be determined by the Under Secretary for Health on an annual basis and 
published in the ``Notices'' section of the Federal Register.
    (f) Payment shall be made only for those services authorized by VA.
    (g) Payments made in accordance with this section shall constitute 
payment in full and the provider or agent for the provider may not 
impose any additional charge on a veteran or his or

[[Page 605]]

her health care insurer for any inpatient services for which payment is 
made by the VA.
    (h) Hospitals of distinct part hospital units excluded from the 
prospective payment system by Medicare and hospitals that do not 
participate in Medicare will be paid at the national cost-to-charge 
ratio times the billed charges that are reasonable, usual, customary, 
and not in excess of rates or fees the hospital charges the general 
public for similar services in the community.
    (i) A hospital participating in an alternative payment system that 
has been granted a Federal waiver from the prospective payment system 
under the provisions of 42 U.S.C. section 1395f(b)(3) or 42 U.S.C. 
section 1395ww(c) for the purposes of Medicare payment shall not be 
subject to the payment methodology set forth in this section so long as 
such Federal waiver remains in effect.
    (j) Payments for episodes of hospital care furnished in Alaska that 
begin during the period starting on the effective date of this section 
through the 364th day thereafter will be in the amount determined by the 
HCFA PRICER plus 50 percent of the difference between the amount billed 
by the hospital and the amount determined by the PRICER. Claims for 
services provided during that period will be accepted for payment by VA 
under this paragraph (k) until December 31 of the year following the 
year in which this section became effective.
    (k) Notwithstanding other provisions of this section, VA, for public 
or private hospital care covered by this section, will pay the lesser of 
the amount determined under paragraphs (a) through (j) of this section 
or the amount negotiated with the hospital or its agent.

(Authority: 38 USC 513, 1703, 1728; Sec. 233 of P. L. 99-576)

[55 FR 42852, Oct. 24, 1990. Redesignated and amended at 61 FR 21965, 
21966, May 13, 1996; 62 FR 17072, Apr. 9, 1997; 63 FR 39515, July 23, 
1998; 65 FR 66637, Nov. 7, 2000]