New Proposed Rule Allows VA to Enter into Provider Agreements Exempt from FAR Requirements

On February 13, 2013, the Department of Veteran Affairs issued a proposed rule authorizing VA centers to enter into agreements for extended care services under existing Medicare and Medicaid provider agreements, thus exempting such providers from onerous federal contracting requirements. Extended care services include geriatric evaluation, nursing home care, domiciliary services, adult day health care, non-institutional palliative care, non-institutional hospice care, certain home health care services and respite care.
Currently, providers who have contracted with the VA for such services have found themselves to be considered federal contractors, subjecting these companies to numerous federal contracting statutes and regulations, including the Federal Acquisition Regulation (FAR). These regulations, among other things, require government contractors to implement affirmative action plans and submit detailed reports to the U.S. Department of Labor. Such government contractors are also subject to extensive compliance audits.

Under the proposed regulations, however, the director of each VA medical center will now be authorized to enter into provider agreements with existing Medicare and Medicaid providers of such extended care services. Medicare and Medicaid provider agreements are not considered federal contracts for FAR purposes. Each director will have the discretion to determine what provider agreements to enter into, based on services offered by the center and their ability to meet area veterans’ needs.

When a director desires to enter into a provider agreement, the director will send the provider written notification and identify any changes or additional terms from the existing Medicare or Medicaid provider agreement. Upon written acceptance of these terms, the provider agreement is formed and the VA may reimburse the provider under the applicable Medicare or Medicare rate for these services. If a service is reimbursable under both Medicare and Medicaid, the VA will use the higher rate to determine reimbursement amounts.

This is great news for nursing homes and other long term care providers, who have found themselves subject to onerous audits and other requirements in return for providing as little as a few days of extended care services to veterans under a contract with a local VA center. Once these regulations go into effect, long term care providers who are asked to provide services by a VA center must make sure that the contract expressly states they are providing the services under their existing Medicare or Medicaid provider agreements. Providers must also verify that the services they provide are reimbursable under their existing provider agreements, as the standard federal contracting procedures and obligations will still apply for services not covered by either Medicare or Medicaid.

The comment period on these new regulations ends on March 15, 2013. A final rule is expected to be published shortly thereafter.

You can find a copy of the rule here —>   VA Proposed Rule

For more information on the Proposed Rule, the FAR, DOL/OFFCP or related issues, please feel free to contact Kelly Skeat or  Ari Markenson or any member of our health care practice group for a further discussion.

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