October 3, 2001

Mr. Tim McClain
General Counsel
Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

Dear Mr. McClain:

     For the reasons described below, we are returning to you for reconsideration a draft proposed rule from the Department of Veterans Affairs (VA) entitled, "Medical Care and Treatment for Which VA Will Not Seek Reimbursement submitted to the Office of Management and Budget (OMB) under Executive Order (E.O.) No. 12866 on February 22, 2001.

     This proposed rule would create a new category of medical claims for which the Veterans Health Administration (VHA) would not seek reimbursement from veterans' insurance companies. Currently VA does not charge insurance companies for care of a veteran's service - connected disability. The proposed rule would extend this billing policy to the "manifestations" of service-connected disabilities.

     "Service - connected disabilities" are well established and clearly defined in 38 USC 1110, and throughout regulations used by VA for the purposes of adjudicating benefits in scores of regulations. The Veterans Benefits Administration (VBA) manages the disability compensation program and makes the determination as to whether a disability is service-connected, paying the veteran a monthly amount accordingly. "Manifestations" are not defined in statute or regulations. VA staff have acknowledged the near impossibility of defining this vague term. As such, the term "manifestations" is subject to interpretation and will likely result in different practices within VHA, generating confusion among providers, staff, and veterans. While VA staff have argued that there are currently inconsistencies in billing practices, OMB has not been presented with evidence of this problem or evidence of how this rule would reduce, rather than increase inconsistency.

     Furthermore, veterans may begin to equate "manifestations" with "service-connected;" seeking and pressuring VBA for greater compensation amounts for "manifestations" which may be found to be non-service-connected disabilities. Due to the concerns identified above, we are returning this rule for your reconsideration under Executive Order 12866. Our staff is available for further discussion with you on these issues.



John D. Graham
Office of Information and Regulatory Affairs