Federal Register, Volume 85 Issue 49 (Thursday, March 12, 2020)

[Federal Register Volume 85, Number 49 (Thursday, March 12, 2020)]
[Proposed Rules]
[Pages 14429-14442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04564]

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AP39

Adaptive Equipment Allowance

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department of Veterans
Affairs (VA) regulations governing the provision of a monetary
allowance to certain veterans and eligible members of the Armed Forces
who require adaptive equipment to operate an automobile or other
conveyance. This proposed rule would establish in regulation a VA
Adaptive Equipment Schedule for Automobiles and Other Conveyances to
calculate the amount of the monetary allowance for adaptive equipment
(AE) based on industry standards and our experience administering this
program. This rulemaking addresses reimbursement to eligible persons
who have paid for AE and payments made by VA directly to registered AE
providers, but not the eligibility requirements to receive adaptive
equipment.

DATES: Comments must be received by VA on or before May 11, 2020.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to: Director, Office of
Regulation Policy and Management (00REG), Department of Veterans
Affairs, 810 Vermont Avenue NW, Room 1064, Washington, DC 20420; or by
fax to (202) 273-9026. (This is not a toll-free telephone number.)
Comments should indicate that they are submitted in response to ``RIN
2900-AP39, Adaptive Equipment Allowance.'' Copies of comments received
will be available for public inspection in the Office of Regulation
Policy and Management, Room 1064, between the hours of 8 a.m. and 4:30
p.m., Monday through Friday (except holidays). Please

[[Page 14430]]

call (202) 461-4902 for an appointment. (This is not a toll-free
telephone number.) In addition, during the comment period, comments may
be viewed online through the Federal Docket Management System (FDMS) at
http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Penny Nechanicky, National Program
Director, Prosthetics Sensory Aids Service (10P4R), Department of
Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 20420. (202)
461-0337 (This is not a toll-free number).

SUPPLEMENTARY INFORMATION: Section 3902(b) of Title 38, United States
Code (U.S.C.) requires VA to provide eligible persons with ``the
adaptive equipment deemed necessary to insure that the eligible person
will be able to operate [an] automobile or other conveyance in a manner
consistent with such person's own safety and the safety of others and
so as to satisfy the applicable standards of licensure established by
the State of such person's residency or other proper licensing
authority.'' Under 38 U.S.C. 3901, eligible persons include veterans
and members of the Armed Forces who have been diagnosed with one or
more specified disabilities. Under section 3901(2), adaptive equipment
is defined to include, but is not limited to, power steering, power
brakes, power window lifts, power seats, air conditioning, and other
equipment necessary to help the eligible individual enter, exit, or
operate the automobile or other conveyance.
VA implements these statutory authorities through regulation at
Title 38 Code of Federal Regulations (CFR) sections 17.155-17.159.
Because VA does not have the capacity to build or install AE for
automobiles or other conveyances, VA instead reimburses eligible
persons or pays registered providers for the cost of the AE. See 38 CFR
17.156. This rulemaking addresses reimbursement to eligible persons who
have paid for the AE. Additionally, we address payments made to
registered providers. VA does not address the eligibility requirements
to receive AE in this rulemaking. AE is individually prescribed to
assist the eligible person to operate, or ride safely as a passenger,
in an automobile or other conveyance. In order to claim AE benefits, an
eligible person must complete VA Form 10-1394 after they purchase new
(which includes equipment that has been installed or used for one year
or less from the date of manufacture) or used AE, and must complete the
form if requesting payment or reimbursement for repair to AE. On the
form, the eligible person indicates they are seeking reimbursement for
AE or that payment should be made directly to a registered provider
that pre-installed, modified, or altered the AE.

Sec. 17.156 Eligibility for Automobile Adaptive Equipment

This section addresses eligibility for automobile adaptive
equipment as well as payment or reimbursement by VA for repair,
replacement, or reinstallation of such equipment. Consistent with 38
U.S.C. 3902(b), the introductory text for this section states that VA
may provide automobile adaptive equipment ``if the Under Secretary for
Health or designee determines that such equipment is deemed necessary
to insure that the eligible person will be able to operate the
automobile or other conveyance in a manner consistent with such
person's safety and so as to satisfy the applicable standards of
licensure established by the State of such person's residency or other
proper licensing authority.'' VA believes that this introductory text
does not reflect a definite link between this section and limiting
parameters to this benefit found in the two sections that immediately
follow. We propose adding at the end of this sentence ``subject to the
definitions and limitations in sections 17.157 and 17.158'' to address
the issue.
Current paragraph (b) provides that payment or reimbursement of
reasonable costs for the repair, replacement, or reinstallation of
adaptive equipment deemed necessary for the operation of the automobile
may be authorized by VA. Consistent with the proposed change to this
section's introductory text, we propose revising this paragraph to
state that VA will reimburse or pay for adaptive equipment for
automobiles and other conveyances subject to the requirements of 38 CFR
17.158(b).

Sec. 17.157 Definitions

Current Sec. 17.157 is titled ``Definition--adaptive equipment,''
and the regulatory text defines that term. We would expand this section
to define other terms relevant to VA's provision of automobile adaptive
equipment and amend the title to read ``Definitions'' consistent with
this proposed change. In addition, we would make minor revisions to the
definition of ``adaptive equipment'' for purposes of readability and
clarity. In the first sentence of that definition, we would change
``claimant'' to ``eligible person'' to harmonize the definition with
other proposed changes to the rule. Adaptive equipment is currently
defined to include ``any term specified by the Under Secretary for
Health or designee.'' Adaptive equipment is generally understood to
refer to tangible pieces of equipment rather than words or terms.
Accordingly, we would amend the definition to refer to any item.
In addition, we propose to define the types of registered providers
VA deems eligible to receive payments from this program along with
other definitions appropriate to AE. The Department of Transportation's
National Highway Traffic Safety Administration (NHTSA) is the U.S.
government agency responsible for developing and enforcing automobile
safety standards under U.S.C. Title 49 and its implementing
regulations. Since NHTSA develops and enforces automobile safety
standards, VA thinks it prudent to utilize their already existing
definitions. VA defers to NHTSA's expertise in developing and enforcing
safety standards as established in regulations and acknowledges it as a
resource for identifying registered providers to accommodate all
persons with disabilities. Additionally, VA proposes to rely on NHTSA
expertise in order to ensure that installations and equipment meet
appropriate quality standards. More information is located on NHTSA's
website and brochures at: http://www.nhtsa.gov/Driving+Safety/Disabled+Drivers.
The first term VA would define is manufacturer. For the purposes of
this program, VA would adopt and use the statutory definition of
manufacturer as used in the National Traffic and Motor Vehicle Safety
Act (``The Safety Act''). See 49 U.S.C. 30102(a)(6). The Safety Act is
an appropriate reference source in our proposed rule because the Act
and NHTSA's regulations require vehicle manufacturers to certify that
their vehicles comply with all applicable Federal Motor Vehicle Safety
Standards (FMVSSs) at the time of manufacture. See 49 U.S.C. 30112; 49
CFR part 567. The Safety Act defines manufacturer as a person
manufacturing or assembling motor vehicles or motor vehicle equipment
or importing motor vehicles or motor vehicle equipment for resale. VA
would not restate the definition of manufacturer in the regulation text
in the event the Title 49 definition changes in the future.
VA would also define the term modifier. VA would define modifier to
mean ``a motor vehicle repair business that modifies a motor vehicle to
enable a person with a disability to operate, or ride as a passenger
in, the motor vehicle.'' This language is based on the NHTSA rule that
requires any motor vehicle repair business that modifies a motor
vehicle to enable a person with a disability to operate, or ride as a
passenger in, the motor vehicle and

[[Page 14431]]

intends to avail itself of the regulatory exemption related to making
motor vehicle safety devices inoperative to furnish certain information
to NHTSA. NHTSA administers a program of registering modifiers of AE
pursuant to 49 CFR 595.6 as part of its authority to regulate and
enforce rules on vehicle safety. Participating modifiers can be found
at: http://www.nhtsa.gov/apps/modifier/index.htm. The definition would
also provide that ``VA does not approve, endorse, or assess the
abilities of any modifiers to perform any requested or represented
modification services.'' Because modification issues are beyond the
scope of our expertise, VA would not approve, endorse, or assess the
abilities of any of the listed modifiers to perform any requested or
represented modification services.
VA would define altered vehicle by cross-referencing NHTSA
regulations in 49 CFR 567.3. Section 567.3 defines altered vehicle as a
completed vehicle previously certified in accordance with 49 CFR 567.4
or 567.5 that has been altered other than by the addition,
substitution, or removal of readily attachable components, such as
mirrors or tire and rim assemblies, or by minor finishing operations
such as painting, before the first purchase of the vehicle other than
for resale, in such a manner as may affect the conformity of the
vehicle with one or more Federal Motor Vehicle Safety Standard(s) or
the validity of the vehicle's stated weight ratings or vehicle type
classification. VA would not restate the definition of altered vehicle
in the regulation text in the event it changes in the future.
VA would define alterer by cross-referencing NHTSA regulations in
49 CFR 567.3. Section 567.3 defines alterer as a person who alters by
addition, substitution, or removal of components (other than readily
attachable components) a certified vehicle before the first purchase of
the vehicle other than for resale. VA would not restate the definition
of alterer in the regulation text in the event it changes in the
future.
VA would define registered provider and unregistered provider. In
the proposed definition section, VA would classify all manufacturers,
modifiers, and alterers registered on the NHTSA Modifiers
Identification Database, currently available at http://www.nhtsa.gov/apps/modifier/index.htm, as registered providers. VA would classify any
individual or entity not registered with NHTSA as an unregistered
provider.
As discussed below, VA would provide reimbursement for roadside
services. The terms roadside assistance or roadside services are
commonly used by automobile clubs, automobile dealers, and automobile
insurers to refer to a variety of emergency roadside services provided
to covered drivers including towing a vehicle, mechanical labor at the
breakdown site, changing a flat tire, battery service, providing
essential fuels and fluids such as gasoline necessary to operate the
vehicle, or providing a locksmith if the driver is locked out of the
vehicle. These services focus on vehicle operability, not issues
related to problems with adaptive equipment that may arise at the home
of an eligible person or when an eligible person is on the road. VA
proposes to define roadside service for purposes of this rulemaking to
mean emergency roadside services provided to an eligible person
performed in connection with the repair, reinstallation, or replacement
of adaptive equipment already installed in the automobile or other
conveyance. The term would be limited solely to services provided to
make the adaptive equipment operational and does not include mechanical
repair of the engine or other vehicle systems, towing, providing
essential fuels and fluids such as gasoline necessary to operate the
vehicle, or providing locksmith services. We note that some adaptive
equipment requires electrical power provided by the vehicle battery.
Providing battery service in those instances would be included in
services provided to make the adaptive equipment operational.
Finally, VA would define the term VA Adaptive Equipment Schedule
for Automobiles and Other Conveyances (the Schedule) to mean the VA
schedule that contains the maximum allowable reimbursement amounts for
the listed adaptive equipment. The Schedule would also include the
maximum hourly labor rates for installation, repair, reinstallation,
and replacement of this equipment and allowable fees that VA will pay.
The amounts listed on the Schedule are based on the National Mobility
Equipment Dealers Association's (NMEDA) Average Price Survey for 2018
and represent the historical input of members of the mobility equipment
industry across the United States. The Schedule is discussed in greater
detail below. VA believes that the Schedule is needed to bring
consistency across not only similar jurisdictions but also national
consistency for the same products and services.

Sec. 17.158 Limitations on Assistance

This rulemaking would revise 38 CFR 17.158, which addresses
limitations on when VA will pay or reimburse for AE. Current paragraph
(a) places a limit on the number of automobiles or other conveyances
for which VA will pay or reimburse AE. An eligible person is not
entitled to AE for more than two automobiles or other conveyances at
any one time or during any four-year period except when, due to
circumstances beyond control of such person, one of the automobiles or
conveyances for which adaptive equipment was provided during the
applicable four-year period is no longer available for the use of such
person. Paragraph (a) would remain unchanged except for the insertion
of a paragraph header, a minor wording change, and insertion of a comma
for purposes of clarity.
Current paragraph (a)(1) addresses when VA considers circumstances
to be beyond the control of the eligible person. This subparagraph
would remain unchanged with the exception of clarifying punctuation
changes and removing the term ``vehicle'' and inserting in its places
the phrase ``automobile or other conveyance'' to ensure terminology is
consistent with that used in the statute. Current paragraph (a)(2)
addresses those instances in which VA considers the eligible person to
still retain beneficial use of an automobile or other conveyance even
though that mode of transportation has been sold, given or transferred
to another person or entity. This subparagraph would remain unchanged
except for removing the term ``vehicle'' and inserting in its places
the phrase ``automobile or other conveyance'' and removing the term
``such person'' at the end of the subparagraph and inserting in its
place ``spouse, family member or other person residing in the same
household as the eligible person'' for purposes of clarity. VA believes
the proposed changes to paragraph (a) are nonsubstantive in nature.
In proposed paragraph (b)(1) we would address the issue of balance
billing for any amounts for adaptive equipment not paid by VA. To
ensure that neither the veteran nor their insurer is billed by the
provider when VA is responsible for payment, we would state that
payments made for adaptive equipment that is authorized under this
section shall constitute payment in full and shall extinguish the
eligible person's liability to the registered provider. The registered
provider may not impose any additional charge on the eligible person
for any adaptive equipment that is authorized under this section and
for which payment is made by VA. VA has a mandate under 38 U.S.C.
3902(b)(1) to provide each eligible person the adaptive equipment
deemed necessary to insure that the

[[Page 14432]]

eligible person will be able to operate the automobile or other
conveyance in a manner consistent with such person's own safety and the
safety of others. By accepting payment for adaptive equipment, the
provider agrees that monies received from VA operate as payment in full
for the adaptive equipment.
Current paragraph (b) states that the amount VA may reimburse
eligible persons for AE is subject to a dollar amount for specific
items established from time to time by the Under Secretary for Health.
Current VA practice is to update the allowable reimbursable amounts for
certain equipment on a biennial basis to reflect changes in retail
prices using standard industry pricing. The current rule does not
address reimbursement for AE services provided by registered versus
unregistered providers. While current paragraph (b) addresses only
reimbursement of adaptive equipment to eligible persons, it has been
longstanding VA practice to also allow payment to registered providers
as discussed below. VA proposes to amend paragraph (b) to address these
issues and to establish a standard, publicly available schedule of
allowable payments or reimbursable amounts for the calculation and
provision of AE payments or reimbursements authorized by 38 U.S.C.
3902.
We propose to amend paragraph (b) to state that VA will reimburse
or pay for adaptive equipment that VA determines is needed based on the
information submitted and the Schedule. In addition to payment or
reimbursement rates for specific types of AE listed in the Schedule, VA
would pay or reimburse for roadside service, waste disposal fees, and
hourly labor rates listed in the Schedule, subject to this section.
Schedule labor rates would be classified as ``In Shop (low
technology)'' or ``High Technology'' based on what NMEDA considers low
and high technology as explained in the discussion about the proposed
Schedule. High Technology would mean labor performed on or modification
of adaptive equipment devices or systems that are capable of
controlling vehicle functions or driving controls, and operate with a
designed logic system, or interface or integrate with an electronic
system of the vehicle. In Shop (low technology) would mean labor
performed on adaptive equipment or modifications that do not meet the
definition of High Technology.
Payment or reimbursement rates would be based on the Schedule in
effect on the date installation, reinstallation, replacement, or repair
is complete. As discussed below, VA would pay or reimburse the lesser
of the Schedule rate, invoice, or estimate. To determine the
reimbursement or payment rate VA would use the appropriate amount in
the Schedule for comparison. VA believes that it is appropriate to use
the Schedule in effect on the date installation, reinstallation,
replacement, or repair is complete as the comparator since the right to
reimbursement or payment matures on that date. These proposed changes
would specify the parameters for reimbursement or payment for AE.
Proposed paragraph (b)(2) would identify the persons who are
eligible to receive AE payments or reimbursements and address the type
of documentation that must be submitted for payment or reimbursement.
We would establish different documentation requirements for
reimbursement to eligible persons based on whether services are
provided by a registered or unregistered provider. As discussed above,
we would define registered provider in Sec. 17.157 to mean a
manufacturer, modifier, or alterer registered with the NHTSA Modifiers
Identification Database. The purpose of this database is to provide a
running and cumulative listing of all businesses that have sought
identification as a vehicle modifier under the requirements of 49 CFR
part 595. NHTSA does not approve or endorse any of the modifiers who
have furnished information under part 595. Any manufacturer, modifier,
or alterer who is not registered is considered an unregistered
provider.
VA would use the Schedule for calculating the amount reimbursed to
eligible persons or payments made to registered providers. VA would
review for approval all required documentation (e.g., estimates,
invoices, bill of sale, paid receipts, Form 10-1394). VA is providing
the Schedule for notice and comment in connection with this rulemaking
at www.prosthetics.va.gov. The proposed Schedule includes the amounts
for all equipment costs (e.g., installations, repairs, reinstallations,
replacements) and hourly labor rates. Paragraph (b)(2)(i) through (ii)
would authorize reimbursements to persons eligible to receive the AE
benefit based on the existing eligibility regulations at 38 CFR
17.156(a). In proposed paragraph (b)(2)(i), eligible persons who have
purchased AE from registered providers would receive reimbursement in
accordance with (b)(2)(i) after they have paid for the AE. The eligible
person must complete and submit to VA for approval a VA Form 10-1394,
an itemized estimate, and provide VA with either a final itemized: (1)
Invoice, (2) paid receipt, or (3) bill of sale for the purchase.
VA recognizes that not all adaptive equipment would require a
registered provider. Paragraph (b)(2)(ii), would authorize VA's
reimbursement of eligible persons who purchased AE from unregistered
providers. VA would require the eligible person to provide written
proof (e.g., final itemized invoice, paid receipt, bill of sale) of
their pre-installed or repaired AE in an effort to track costs and
prevent waste. Additionally, the eligible person must complete and
submit to VA for approval a VA Form 10-1394. Only after the eligible
person provides written proof, may VA reimburse the eligible person for
the incurred expenses performed by an unregistered provider. This is
consistent with current VA practice, and VA believes it reduces
transactional costs for eligible persons and unregistered providers
along with expediting the administrative aspects of the AE allowance.
In paragraph (b)(2)(iii), VA would address payments to registered
providers. Section 3902(b) of Title 38 of the United States Code and
current 38 CFR 17.158(b) do not specify whether VA may make payments to
the entity installing or otherwise modifying the automobile or other
conveyance. However, this has been VA practice because it reduces
transactional costs for eligible persons and registered providers. It
is current VA practice that either the eligible person or registered
provider may submit requests for direct payment to a registered
provider. Procedurally, proposed paragraph (b)(2)(iii) would function
identically to proposed paragraph (b)(2)(i). VA would pay registered
providers for AE (e.g., installations, repairs, reinstallations,
replacements, hourly labor rates) furnished to eligible persons
identified in 38 CFR 17.156(a). The eligible person or the registered
provider would complete VA Form 10-1394 and submit an itemized estimate
prior to the completion of work. Note that the eligible person must
sign the form as the applicant. Additionally, the eligible person or
registered provider would provide VA with a final itemized invoice
after the work is completed. The NHTSA Modifiers Identification
Database is currently available at http://www.nhtsa.gov/apps/modifier/index.htm. This website would assist VA or eligible persons to locate
and identify registered providers.
Proposed paragraph (b)(2)(iv) would address those instances where
an eligible person files an application for reimbursement or payment
for installation, repair or replacement of adaptive equipment performed
outside of the United States where an invoice,

[[Page 14433]]

estimate, or bill of sale is calculated in a foreign currency. We would
state that in this case, the application must include the conversion
rate from the foreign currency to U.S. dollars, and calculation of the
invoice, estimate, or bill of sale amount in U.S. dollars.
Proposed paragraph (b)(3) would establish how VA would use the
Schedule for calculating the amount reimbursed to eligible persons or
payments made to registered providers for labor costs. VA proposes
creating a Schedule that would set national payment/reimbursement rates
utilizing the high cost itemized in NMEDA's Average Price Survey, which
is published annually. The 2018 survey was mailed to 324 dealers, and
125 responded. The NMEDA Average Price Survey groups similar types of
adaptive equipment installations or conversion into separate
categories; provides average, low, and high reported costs for
provision of adaptive equipment in different U.S. geographical regions;
and provide a U.S. Summary reflecting average costs in the U.S. for
each specific type of adaptive equipment installations or conversion.
The example Schedule, as would the published VA Schedule, reflects high
costs from the U.S. Summary tables in the NMEDA Average Price Survey.
VA's proposed Schedule would resemble NMEDA's Average Price Survey for
2018, which represents the historical input of members of the mobility
equipment industry across the United States providing fair and
representative prices for our program. We note that there may be some
regional variation in costing, but VA believes that establishing a
Schedule which would be applicable on a national level is the most
equitable option. The example Schedule below differs from the NMEDA
Average Price Survey in one important aspect, as would the Schedule VA
would publish in conjunction with a final rulemaking. The NMEDA Average
Price Survey distinguishes between domestic and foreign vehicles
adaptive equipment costs for Lower Floor Conversions. NMEDA states that
``domestic'' refers to domestic vehicles built in the U.S. by an
American manufacturer, and ``foreign'' refers to vehicles manufactured
either inside or outside the U.S. by a foreign based company. However,
VA believes that distinguishing between adaptive equipment costs based
on this definition is confusing in that many automobile manufacturers
that have been historically viewed as foreign now build or assemble
vehicles in the U.S, and American automobile manufacturers now assemble
vehicles outside the U.S. To avoid confusion, VA would not distinguish
between costs related to installation of adaptive equipment performed
on domestic or foreign vehicles, and we would list the higher cost for
the various types of vehicle configurations (e.g., manual or powered
side entry, manual or powered rear entry).
VA will make the Schedule publicly available for usage by eligible
persons requesting reimbursements and registered providers requesting
payments. VA welcomes the public to submit comments on this Schedule
which we set forth below. The Schedule below would be what the Schedule
would look like if this proposed rule were effective today. We will
publish the final Schedule in the notice section of the Federal
Register in conjunction with the publication of the final rule. The
Schedule would be available [website address to be inserted in final
rule] after September 30 of each calendar year to include any cost of
living adjustments. This would coincide with the Veterans Benefits
Administration's (VBA) annual budget period, which begins on October 1.
Additionally, the October 1 date would be after the Consumer Price
Indices (CPI) are updated on June 30 of each calendar year to allow for
consideration of the increases in the reimbursement amounts in the
Schedule.

Example--VA Adaptive Equipment Schedule for Automobiles and Other
Conveyances

Notes: 1. NMEDA includes pick up trucks under the mini van
conversion schedule.
2. Consistent with NMEDA classifications, Full size Van conversions
are reflected under the Raised Top schedule while Mini Van conversions
are under Lowered Floor Conversions.

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Lowered Floor Conversions (Mini Vans and Pick Up Trucks):
Manual Side Entry Fold Out............................... $28,995
Manual Side Entry In-Floor............................... 28,995
Powered Side Entry Fold Out.............................. 30,975
Powered Side Entry In Floor.............................. 30,675
Manual Rear Entry........................................ 26,995
Powered Rear Entry....................................... 28,995
Transit Connect Rear Entry............................... 21,000
Structurally Modified Pick Up Truck...................... 31,500
Power Topper Pick Up Truck............................... 18,995
Raised Top Conversions (Full size Vans):
Reinforced Cage (Roll Cage).............................. 8,500
Raised Door.............................................. 6,300
Raised Door with Existing High Top....................... 7,500
Vehicle Lifts (Wheelchair, Scooter, Powerchair, Etc.):
Dual Post Platform....................................... 8,900
Dual Post Split Platform................................. 9,500
Under Vehicle Lift....................................... 15,995
Suspension and Drive Shaft Modifications................. 7,800
Wheelchair Tie Downs:
Manual................................................... 4,275
Retractable.............................................. 3,750
Electric with Bracket.................................... 3,900
Scooter Lifts/Carriers:
Pickup Truck Lift: 200 lb................................ 3,800
Outside Hitch Lift: 250 lbs.............................. 4,225
Inside Hoist Lift: Automatic 250 lbs..................... 750
Inside Hoist Lift: Semiautomatic 250 lbs................. 950
Capacity Platform Style Lift: 350 lbs. or less........... 2,850
Hand Controls:
Mechanical............................................... 1,650

[[Page 14434]]

Pneumatic................................................ 18,000
Electronic/Digital Gas and Brake......................... 32,000
Electronic Digital Steering.............................. 42,000
Joystick Gas & Brake..................................... 80,000
Power Gear Selector...................................... 4,700
Spinner Knob............................................. 173
Tri-Pin Spinner Knob..................................... 375
Switches for Lifts and Openers:
Dash Switches............................................ 1,499
Remote Control Entry..................................... 2,400
Hand Held Pendant........................................ 500
Outside Magnetic Switches................................ 995
Entry System:
Power Door Swing......................................... 7,127
Magnetic Switches........................................ 995
Remote Control........................................... 2,400
Sensitized Steering:
Reduced/Low Effort (Rack & Pinion)....................... 5,500
Zero Effort (Rack and Pinion)............................ 5,500
Emergency Backup System (Rack & Pinion).................. 4,200
Reduce/Low Effort (Electric)............................. 9,800
Zero Effort (Electric)................................... 9,800
Back Up (Electric Steering).............................. 4,400
Sensitized Braking and Parking Brake:
Reduced/Low Effort....................................... 2,900
Zero Effort.............................................. 2,950
Emergency Backup System.................................. 3,250
Manual Parking........................................... 295
Electric Parking......................................... 3,600
Driving Aids:
Adapted Key Holder....................................... 350
Pedal Extenders 6-12''................................... 1,500
Pedal Extenders 2'' each................................. 649
Cross Over Gear.......................................... 389
Turn Signal Extensions................................... 389
Left Foot Accelerator with Pedal Block................... 1,850
Non-Driving Aids:
Automatic Transmission................................... 1,363
Air Conditioning......................................... 920
Rubber Flooring.......................................... 800
Seating:
Turing Seat: Auto........................................ 10,800
Power Seat Base: 6 way................................... 4,500
Removable Driver Seat Base............................... 2,300
Leather Seating.......................................... 1,110
Power Seats.............................................. 708
Labor Rates:
In Shop (low technology) Labor (Per Hour)................ 130
High-Technology Labor (Per Hour)......................... 175
Roadside Service (per incident).......................... 200
Fees:
Waste Disposal Fee (flat fee per incident)............... 75
------------------------------------------------------------------------

The Schedule reflects two hourly labor rates, In Shop (low
technology) and High Technology labor. We would distinguish between
what would fall under High Technology and In Shop (low technology)
based on what NMEDA considers high technology and low technology, with
the In Shop labor rate correlating to labor on a low technology device
or system. The NMEDA QAP-103 Guideline 2018 edition states that High
Technology devices or systems are those that meet the following
conditions: Devices capable of controlling vehicle functions or driving
controls, and operate with a designed logic system, or interface or
integrate with an electronic system of the vehicle. Examples include
powered gas/brake systems; power park brake integrated with a powered
gas/brake system; reduced effort steering systems; horizontal steering
system; reduced effort brake systems; backups for primary controls.
Other examples of High Technology listed by NMEDA are remote panel or
switch array interfacing with OEM electronics; wiring extension for OEM
electronics; and powered transmission shifter.
NMEDA Guidelines state that Low Technology includes all other
devices or modifications that do not meet the definition of High
Technology devices or modifications. Examples include a manual gas/
brake hand control; left foot accelerator pedal; park brake lever or
stand-alone powered park brake; steering terminal device; remote horn
button (grounding system); turn signal crossover lever; switch
extension on OEM controls; transmission shifter lever; and transfer
seat base.
In proposed paragraph (b)(3)(i), for any labor costs associated
with the installation of AE by a registered provider, VA will reimburse
or pay the lesser of the relevant Schedule hourly labor rate multiplied
by the number of hours listed by the registered provider; labor costs
included in the itemized estimate; or the hourly labor rate provided by
the registered provider in the final itemized invoice multiplied by the
number of hours listed by the registered provider. Under current VA
practice, the eligible veteran or

[[Page 14435]]

registered provider submits an itemized estimate as part of the claims
process or a final invoice. However, VA has not previously specified in
a rulemaking that we would pay the lesser of the written, itemized
estimated labor rate or the labor rate listed in the Schedule.
In proposed paragraph (b)(3)(ii), VA will specify that it will not
reimburse or pay labor costs for pre-installed (i.e., original
equipment manufacturer) equipment.
Finally, proposed (b)(3)(iii) would state that VA would not
reimburse or pay labor costs to unregistered providers. Since VA's
definition of registered provider serves as an umbrella for
manufacturers, modifiers, and alterers covered by either the Safety Act
or NHTSA regulations, there are requisite standards each group must
adhere to prior to registration. As stated above, manufacturers certify
that their vehicles comply with all applicable FMVSSs at the time of
manufacture. See 49 U.S.C. 30112; 49 CFR part 567. NHTSA administers a
program of registering modifiers of AE pursuant to 49 CFR 595.6 as part
of its authority to regulate and enforce rules on vehicle safety.
Moreover, under 49 CFR 567.3, alterer is defined as a person who alters
by addition, substitution, or removal of components (other than readily
attachable components) a certified vehicle before the first purchase of
the vehicle other than for resale. Manufacturers, modifiers, and
alterers are formally established business entities. VA believes each
registered entity, operating consistent with NHTSA guidelines,
possesses well defined cost schemes and uniform labor pricing.
Conversely, almost anyone can serve as an unregistered provider, and
unregistered providers may not possess the necessary training or access
to information that would tend to normalize or standardize expended
labor time. To ensure some control over programmatic costs, VA would
not reimburse or pay labor costs of unregistered providers.
Proposed paragraph (b)(4) would state that VA will reimburse an
eligible person who meets the requirements of (b)(2)(i) or (ii), or pay
a registered provider who meets the requirements of (b)(2)(iii) for new
adaptive equipment (including equipment that has been installed or used
for one year or less from the date of manufacturer) listed in the
Schedule as follows: VA will pay the lesser of the amount for the new
adaptive equipment listed in either a final itemized invoice, paid
receipt, or bill of sale for the purchase, or the amount established in
the Schedule; VA will reimburse or pay any labor costs consistent with
paragraph (b)(3) of Sec. 17.158. Generally, the timeline for
determining whether adaptive equipment is new commences with the date
of manufacture, and VA would consider adaptive equipment to be new if
installed within one year of manufacture, as it would still be covered
under the manufacturer's warranty. We would use a ``lesser of'' formula
similar to that used for reimbursement or payment of labor costs.
Proposed paragraph (b)(5) would apply to reimbursement or payment
for used adaptive equipment. VA does not believe it is appropriate to
reimburse or pay for the cost of used equipment older than five (5)
years. As the functional lifespan of AE is generally not more than five
(5) years, this is consistent with current practice. However, we have
never formally stated this policy in regulation. According to NHTSA,
all registered providers must keep in original or photocopied form
documentation that a vehicle has been modified in accordance with 49
CFR 595.6 no less than five (5) years after the vehicle has been
modified or after being delivered to an individual. See 49 CFR
595.7(b), (d) through (e).
Proposed paragraph (b)(5)(i) would establish that for used
equipment listed in the Schedule that is more than one (1) year old
from the date of manufacture, VA would depreciate it by twenty (20%)
percent per year from the time the equipment was pre-installed or
installed as new on an automobile or other conveyance to the time of
its reinstallation for which reimbursement or payment is being sought
for a period up to five (5) years. VA would reimburse an eligible
person, who meets the requirements of (b)(2)(i) or (ii), or pay a
registered provider who meets the requirements of (b)(2)(iii) the
lesser of the amount of the adaptive equipment listed in the final
itemized invoice, paid receipt, or bill of sale for the purchase or the
amount established in the Schedule reduced by twenty (20%) percent for
each year from the time the equipment was pre-installed or installed on
the vehicle for a period up to five (5) years. VA would reimburse or
pay any labor costs consistent with paragraph (b)(3) of this section,
but will not reimburse or pay labor costs for used equipment that is
more than five years old from the date of manufacture because we do not
recommend using such equipment (see discussion above regarding the
functional lifespan of adaptive equipment).
The proposed rule contemplates an annual 20% depreciation in
reimbursement or payment for used adaptive equipment, with no
reimbursement or payment for any used equipment more than five years
old. In contrast, VA Manual MP4, Part IV, Chapter 18, section 18A.03
paragraph l provides that the maximum equipment reimbursable rate for
prescribed adaptive equipment on a used vehicle will be reduced by 10
percent for each year of vehicle age up to a maximum reduction of 90
percent. Installation of new prescribed equipment on a used vehicle
will not be prorated. In practice VA Manual MP4, which is utilized by
VBA, bases the reimbursement rate for prescribed adaptive equipment on
a used vehicle on the age of the vehicle regardless of the age of the
adaptive equipment. Annual depreciation for reimbursement or payment
for used adaptive equipment reflected in the proposed rule, in
contrast, would be based on VA's determination that the adaptive
equipment depreciates at a faster rate than the vehicle itself and the
functional lifespan of that equipment is five years. Because of the
finite functional lifespan of adaptive equipment, VA does not recommend
use of any specific adaptive equipment older than five years.
Proposed paragraph (b)(6) would establish that for any AE that does
not appear on the Schedule but meets the definition of adaptive
equipment in Sec. 17.157, VA would reimburse an eligible person who
meets the requirements of (b)(2)(i), (ii), or pay a registered
provider, who meets the requirements of (b)(2)(iii), the lesser of the
cost of the adaptive equipment when equal to or less than what VA has
paid for a similar item in the past or, when available, the
commercially available price for a similar item. If the commercially
available price for a similar item is not available VA will pay or
reimburse the billed charge.
The Schedule is a finite list of AE items that VA frequently
reimburses or pays for, thus the means for determining reimbursement or
payment rates for items that do not appear on the Schedule is defined.
VA would reimburse or pay for items that do not appear on the Schedule
provided the equipment still meets the definition of AE under 38 CFR
17.157.
In many cases, VA will have paid for a similar item in the past, or
VA will be able to compare the item to other items available
commercially. Therefore, authorizing payment of actual cost by
obtaining the final invoice, paid receipt, or bill of sale for the
purchase would provide VA with information that can be used in future
revisions to the Schedule. VA would examine all final invoices, paid
receipts, or bills of sale in

[[Page 14436]]

order to ensure a measure of cost control and that the estimate is
appropriate for the AE item. VA would require that the final invoice,
paid receipt, or bill of sale be equal to or lesser than the prices
paid by VA or in the commercial sector for similar items. In those
cases where there is no commercially available item that can be used
for comparison, VA will pay the billed charge. VA can then use that
billed charge as an available benchmark for determining reimbursement
or payment rates of that or similar items in the future.
Proposed paragraph (b)(6)(ii) would establish that VA will
reimburse or pay any labor costs consistent with paragraph (b)(3) of
this section.
Proposed paragraph (b)(7) would establish the online location for
the Schedule. VA is storing the Schedule on its own website at
www.prosthetics.va.gov. It would state that VA will establish the
Schedule for each fiscal year after September 30, 2019 and publish that
Schedule on a publicly accessible page on the www.prosthetics.va.gov
website. VA intends to also make the Schedule available upon request at
any VA medical facility.
We note that some eligible veterans reside outside the United
States. The NMEDA Average Price Survey, on which the Schedule would be
based, reflects responses on costs in the survey and represents the
historical input of NMEDA members of the mobility equipment industry in
the United States and Canada. VA is aware of no source for determining
average prices for adaptive equipment provided in any foreign country
other than Canada. In addition, we note that inclusion in the NHTSA
Modifiers Identification Database requires those listed in the database
to abide by NHTSA standards, which are only applicable in the United
States or U.S. Territories. The NMEDA Average Price Survey reflects
responses from adaptive equipment providers within the United States,
and the NHTSA Modifiers Identification Database lists adaptive
equipment providers located in the United States including those in
U.S. Territories. As we base our definition of registered provider on
the database, most if not all adaptive equipment providers located
outside the United States would likely be unregistered providers. Given
that we have no reliable way to determine average prices for adaptive
equipment provided in any foreign country other than Canada, VA would
use the Schedule as a comparator when an eligible person residing
outside the United States seeks reimbursement for adaptive equipment
provided by an unregistered provider located outside the United States.
The Schedule would apply to all eligible persons meeting the
requirements of (b)(2)(i), (ii), as well as registered and unregistered
providers.
To assist with determining reimbursement and payment amounts, VA
would rely on the Consumer Price Index (CPI) to update the costs on the
Schedule for all AE. The Consumer Price Index (CPI) is a measure of the
average change over time in the prices paid by urban consumers for a
market basket of consumer goods and services (e.g., utilities,
automotive fuel, food items, construction). VA believes applying the
CPI to payments and reimbursements for adaptive equipment is an
appropriate method of adjusting rates as it is a measure of the average
change over time in the prices paid by urban consumers for consumer
goods and services. Currently, VA uses the CPI as a method of ensuring
certain benefits reflect cost of living increases (e.g., automobile
allowance, specially adapted housing grants, payments for burial and
funeral expenses). This is discussed in further detail below.
The CPI tracks a myriad of different segments of the economy and
also provides more global indices based on classes of consumers paired
with segments of the economy. VA would increase the reimbursement
amounts in the Schedule using the indices for two expenditure
categories of the Consumer Price Index (CPI) for All Urban Consumers.
The index for the expenditure category for ``motor vehicle parts and
equipment'' will be used to calculate the increase in the reimbursement
amount for adaptive equipment on the Schedule, and the index for
``motor vehicle maintenance and repair'' will be used to calculate the
increase in the reimbursement amount for labor. Such increases to the
Schedule for adaptive equipment and labor would be equal to the
percentage by which the respective index increased during the 12-month
period ending with the last month for which CPI data is available. In
the event that such index does not increase during such period, there
would be no change to the Schedule for the reimbursement amounts for
which the index is used to calculate increases. VA would round up to
the whole dollar any amounts for the new fiscal year in the Schedule,
because this decreases the administrative burden on VA and creates less
data entry errors. Additionally, rounding up in this manner would make
it easier for VA to update the Schedule.
Finally, VA proposes changes to paragraph (c). Current paragraph
(c) addresses limitations on reimbursement for repair of AE. It limits
such reimbursement to AE installed on the current vehicles of record,
and only to basic components authorized as AE. It also establishes
criteria for what types of expenses are reimbursable. We would amend
this paragraph to focus on repair of used AE and address reimbursement
standards and documentation required from an eligible person and a
registered provider.
We would state that reimbursement or payment for a repair to an
item of used adaptive equipment may be provided for adaptive equipment
installed on an automobile or other conveyance that meets the
limitations of paragraph (a) of this section. VA will pay or reimburse
labor costs associated with the repairs in accordance with paragraph
(b)(3) of this section. VA will reimburse an eligible person meeting
the requirements of (b)(2)(i) or (ii) the lesser of the amount of the
adaptive equipment listed in either a final itemized invoice, paid
receipt, or bill of sale for the purchase. VA will reimburse a
registered provider meeting the requirements of (b)(2)(iii) the lesser
of the amount of the adaptive equipment listed in the final itemized
invoice, paid receipt, or bill of sale for the purchase. These
requirements would be consistent with other proposed provisions
addressing reimbursement or payment. VA would not pay for repairs to
new equipment (i.e., OEM equipment) because new equipment already
possesses warranties and a retailer or manufacturer already has an
obligation to replace defective equipment.

Paperwork Reduction Act

Although this action contains provisions constituting collections
of information, at proposed 38 CFR 17.158(b) under 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 38 CFR 17.158(b) are currently
approved by the Office of Management and Budget (OMB) and have been
assigned OMB control number 2900-0188.

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 Flexibility Act, 5
U.S.C. 601-612.
On December 14, 2016, the President signed into law the Veterans
Mobility Safety Act of 2016, Public Law 114-256 (hereinafter ``the
Act''). Section 3 of the Act, codified at 38 U.S.C. 3902 Note,

[[Page 14437]]

requires VA to update its policy on adaptive equipment no later than
one year after the date of enactment of the Act, and it requires VA to
develop a comprehensive policy requiring quality standards for
providers who provide modification services to veterans under VA's
adaptive equipment program. This policy must include management of the
adaptive equipment program, development and consistent application of
standards for safety and quality of equipment and installation of
equipment through this program, certification of a provider by a
manufacturer or third party, nonprofit organization if the Secretary
designates the quality standards of such entities as meeting or
exceeding VA's standards, education and training for VA personnel who
administer this program, compliance with the Americans with
Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) when furnishing
adaptive equipment at a facility, and allowance, where technically
appropriate, for veterans to receive modifications at their residence
or location of choice.
VA conducted public hearings with NHTSA, industry representatives,
manufacturers of adaptive equipment, and other entities with expertise
in the installation, repair, replacement, and manufacturing of adaptive
equipment or development of mobility accreditation standards for
adaptive equipment in compliance with section 3 of Public Law 114-256.
VA published a Federal Register Notice (FRN) requesting information and
comments to assist in the development of the program required by the
Act on February 2, 2017. See 82 FR 9114. VA received numerous comments
from adaptive equipment manufacturers, providers, trade associations,
and other interested external stakeholders. Additionally, VA met in
person with several parties, including adaptive equipment
manufacturers, alterers and modifiers; and adaptive equipment related
associations who requested to meet with VA concerning their comments to
the FRN. During these discussions, these parties explained their
individual interpretations of section 3 of the Act and individual
opinions on the implementation of the Act's provisions, including the
impact of certain quality and safety standards on small businesses.
The comments and feedback we received during this consultative
period informed this rulemaking, and the comments allowed us to
understand and consider the various positions different entities had on
implementing the requirements of the law along with the impact of
certain quality and safety standards on small businesses. As a result
of these consultative activities and consistent with the requirements
of section 3(b)(1) of the Act, we propose the above rulemaking as a
necessary element in management of VA's adaptive equipment program.
In proposed 38 CFR 17.157 we would define Modifier to mean a motor
vehicle repair business that modifies a motor vehicle to enable a
person with a disability to operate, or ride as a passenger in, the
motor vehicle. Alterer would mean the same as in 49 CFR 567.3.
Registered provider would mean a manufacturer, modifier, or alterer
registered with the Department of Transportation's National Highway
Traffic Safety Administration (NHTSA) Modifiers Identification Database
(``Database'') currently available at http://www.nhtsa.gov/apps/modifier/index.htm. Any manufacturer, modifier, or alterer who is not
registered would be considered an unregistered provider. The proposed
rule would establish a national schedule for the maximum allowable
reimbursement amounts for the listed adaptive equipment. The schedule
would also include the maximum hourly labor rates for installation,
repair, reinstallation, and replacement of this equipment and allowable
fees that VA will pay for. It would also establish standards for
applying for reimbursement or payment for items listed in this schedule
and delineate limitations on VA's payment for adaptive equipment and
related services.
The database, accessed on November 13, 2019, lists a total of 1,047
modifiers. Many modifiers reflected in the database have multiple
listings, with some having more than 15 separate listings.
For purposes of information collection under the Paperwork
Reduction Act for OMB Control Number 2900-0188, we consider likely
respondents to be veterans, servicemembers, and adaptive equipment
modifiers who are requesting a payment for adaptive equipment. We
estimate the number of respondents to this information collection to be
6,800 annually. Of that number 6,250 would be eligible persons
(veterans or servicemembers). In a related proposed rulemaking we
stated that VA believes that rulemaking would impact 550 modifiers. In
analyzing the Regulatory Flexibility Act effect here we would base our
analysis on that number, and based on our proposed definition of
modifier we will refer to these 550 as registered providers. The
proposed rule also addresses unregistered providers. Unregistered
providers are those that are not listed in the NHTSA database, and VA
believes it is not possible to determine an accurate number for
unregistered providers, some of which may be individuals rather than
small entities. NHTSA has advised that it does not know the number of
modifiers, alterers, or manufacturers of adaptive equipment that have
not registered in the database. For purposes of this analysis we will
assume 100 unregistered providers would provide services under this
proposed rule.
The North American Industry Classification System (NAICS) is the
standard used by Federal statistical agencies in classifying business
establishments for the purpose of collecting, analyzing, and publishing
statistical data related to the U.S. business economy. VA has
identified three broad categories of NAICS codes that we believe
encompasses the term manufacturer in the proposed rule. We propose to
define that term to mean the same as that found at 49 U.S.C.
30102(a)(6), which includes a person manufacturing or assembling motor
vehicles or motor vehicle equipment; or importing motor vehicles or
motor vehicle equipment for resale. While the definition of
manufacturer found at 49 U.S.C. 30102(a)(6) is broad, including the
manufacturing, assembly, or import of motor vehicles, the proposed rule
focuses narrowly on reimbursement and payment for installation,
replacement, or repair of adaptive equipment. Applying the relevant
part of the statutory definition of manufacturer, the proposed rule
focuses on a person manufacturing or assembling motor vehicle adaptive
equipment, or the import of motor vehicle adaptive equipment for
resale. We note here that major automobile manufacturers do not convert
automobiles or vans for their disabled customers.
NAICS Code 336390--Other Motor Vehicle Parts Manufacturing,
comprises establishments primarily engaged in manufacturing and/or
rebuilding motor vehicle parts and accessories (except motor vehicle
gasoline engines and engine parts, motor vehicle electrical and
electronic equipment, motor vehicle steering and suspension components,
motor vehicle brake systems, motor vehicle transmissions and power
train parts, motor vehicle seating and interior trim, and motor vehicle
stampings). NAICS Code 339113, Surgical Appliance and Supplies
Manufacturing, comprises establishments primarily engaged in
manufacturing surgical appliances and supplies. Examples of products
made by these establishments are orthopedic devices, prosthetic
appliances, surgical dressings, crutches,

[[Page 14438]]

surgical sutures, personal industrial safety devices (except protective
eyewear), hospital beds, and operating room tables. NAICS Code 423120--
Motor Vehicle Supplies and New Parts Merchant Wholesalers comprises
establishments primarily engaged in the merchant wholesale distribution
of motor vehicle supplies, accessories, tools, and equipment; and new
motor vehicle parts (except new tires and tubes).
These three NAICS codes cover a broad range of manufacturers of
either medical equipment or motor vehicle equipment, including
manufacturers VA believes would be subject to this proposed rule. While
the categories are overinclusive we believe that analysis of the
regulatory impact based on these codes will result in a reasonable
approximation of costs or impact of the proposed rule on small entities
engaged in the manufacture of adaptive equipment.
Applying the small business standards promulgated in 13 CFR
121.201, a small entity for NAICS Code 336390 is 1,000 employees or
less; NAICS Code 339113 is 750 employees or less; and NAICS Code 423120
is 200 employees or less. Data compiled by the US Census Bureau from
the 2012 Statistics of U.S. Businesses (SUSB) found at https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html
reflects the following for the NAICS codes:

----------------------------------------------------------------------------------------------------------------
Enterprise Estimated Estimated
NAICS code employment Number of receipts receipts per
size firms ($1,000) firm ($1,000)
----------------------------------------------------------------------------------------------------------------
336390.......................................... <500 1,167 14,448,200 12,380
336390.......................................... 500+ 135 43,660,430 323,410
339113.......................................... <500 1,772 9,359,609 5,282
339113.......................................... 500+ 83 26,445,095 318,616
423120.......................................... <20 7,403 14,318,962 1,934
423120.......................................... 20-99 1,260 18,436,535 14,632
423120.......................................... 100-499 9,060 17,743,583 1,958
----------------------------------------------------------------------------------------------------------------

As noted, these NAICS codes are very broad, encompassing many
aspects of either medical/surgical or automotive supplies. VA does not
know with any degree of certainty the total number of these
manufacturers who build, manufacture or import adaptive equipment. We
have estimated that the number of modifiers who would be impacted by
this proposed rule is 550. For purposes of this analysis we will assume
that the proposed rule would affect 250 manufacturers of adaptive
equipment that would qualify as a small entity. We believe this is most
likely a high estimate.
We have identified one six-digit NAISC code that would apply to
modifiers. We propose to define alterer to mean the same as provided in
49 CFR 567.3, and modifier to have the same meaning as provided in 49
CFR 595.6(a). NAICS 5 Digit Industry 81112 Automotive Body, Paint,
Interior, and Glass Repair comprises establishments primarily engaged
in providing one or more of the following: Repairing or customizing
automotive vehicles, such as passenger cars, trucks, and vans, and all
trailer bodies and interiors; painting automotive vehicle and trailer
bodies; replacing, repairing, and/or tinting automotive vehicle glass;
and customizing automobile, truck, and van interiors for the physically
disabled or other customers with special requirements. We believe NAICS
Code 811121 Automotive Body, Paint and Interior Repair and Maintenance
most closely reflects what VA, in this proposed rule, refers to as
alterer or modifier. Applying the small business standards promulgated
in 13 CFR 121.201, a small entity for the NAICS Code series 81112
reflects that an entity with $8,000,000 in annual receipts is
considered a small entity.

----------------------------------------------------------------------------------------------------------------
Estimated Estimated
NAICS code Enterprise employment Number of receipts receipts per
size firms ($1,000) firm ($1,000)
----------------------------------------------------------------------------------------------------------------
811121................................ ALL..................... 32,427 28,348,303 874,219
----------------------------------------------------------------------------------------------------------------

Data compiled by the U.S. Census Bureau from the 2012 Statistics of
U.S. Businesses (SUSB) found at https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html reflects that most, if not all, of
the 32,427 entities in NAICS Code 811121 would qualify as a small
entity based on 13 CFR 121.201.
As noted with manufacturers who would be affected by this proposed
rule, NAISC Code 811121 is very broad, applying to 32,427 business
entities. However, only a small percentage of those entities would be
subject to the proposed rule as an alterer or modifier of adaptive
equipment. We believe that this NAISC code is the appropriate code for
any registered providers not already captured by the other three codes
listed above as well as unregistered providers that would qualify as a
business entity. We believe that number is accurate for purposes of
determining whether this proposed rule would have a significant
economic impact on a substantial number of small entities as they are
defined in the Regulatory Flexibility Act.
Proposed 38 CFR 17.158 addresses limitations on payment. Proposed
paragraph (b) would state that VA will reimburse or pay for adaptive
equipment based on the information submitted and the VA Adaptive
Equipment Schedule for Automobiles and Other Conveyances (Schedule). In
addition to payment or reimbursement rates for specific types of
adaptive equipment listed in the Schedule, VA will pay or reimburse
labor costs, roadside service, and waste disposal fees consistent with
the Schedule. Payment or reimbursement rates are based on the Schedule
in effect on the date installation, reinstallation, replacement, or
repair is complete. The Schedule would establish, inter alia, a
national monetary limit on payment or reimbursement for adaptive
equipment.

[[Page 14439]]

The Schedule is based on results of the NMEDA 2018 Annual Price
Survey. The survey was mailed to 324 dealers; 125 were returned (39%).
Reported returns by region: North 27% (34), South 22% (27), West 27%
(34), Midwest 24% (30).The example of the schedule we publish in this
proposed rulemaking reflects the high limit for prices reported by the
125 respondents to the survey. The high reported price limit for
individual items reflected in the NMEDA survey is significantly higher
than the low reported price in some instances. To highlight one
example, for lowered floor conversions of mini vans, domestic powered
side entry conversions reported by 33 North Region respondents, the
high price is $29,818; average is $28,706 and low price is $2,995. The
survey results do not reflect variations in the type of specific
categories of adaptive equipment that are included in these reported
prices. Generally, there is a close correlation between average prices
and high prices reported for the individual categories of adaptive
equipment. Typically, South and Midwest regions reported lower prices
than other regions. VA believes that the survey responses are a valid
representation of regional costs and that the number of respondents in
each region supports that conclusion.
The proposed rule states that VA will reimburse eligible persons
identified in 38 CFR 17.156(a) who have purchased adaptive equipment
(e.g., installations, repairs, reinstallations, replacements) from
registered providers. The eligible person must sign and submit to VA a
completed VA Form 10-1394, an itemized estimate, and provide VA with
either a final itemized invoice, paid receipt, or bill of sale for the
purchase. VA may reimburse eligible persons identified in 38 CFR
17.156(a) who have purchased adaptive equipment (e.g., installations,
repairs, reinstallations, replacements) from unregistered providers.
The eligible person must submit to VA a completed VA Form 10-1394 and a
final itemized invoice, paid receipt, or bill of sale for the purchase.
In addition, VA will pay registered providers for adaptive equipment
(e.g., installations, repairs, reinstallations, replacements) furnished
to eligible persons identified in 38 CFR 17.156(a). The eligible person
or the registered provider must submit to VA a completed VA Form 10-
1394 and an itemized estimate prior to the completion of work. The
eligible person or registered provider must provide VA with a final
itemized invoice after the work is completed. See 38 CFR
17.158(b)(2)(i) through (iii). Labor costs per hour for registered
providers would be reimbursed or paid based on the lesser amount of
what is reflected in the Schedule, the estimate, or the final invoice.
No payment for labor costs would be approved for pre-installed (i.e.,
original equipment manufacturer) equipment, or labor costs billed by an
unregistered provider. See 38 CFR 17.158(b)(3).
For installation of new adaptive equipment, VA would pay or
reimburse the lesser of the amount for the new adaptive equipment
listed in either a final itemized invoice, paid receipt, or bill of
sale for the purchase, or the amount established in the Schedule. 38
CFR 17.158(b)(4).
VA will use two representative categories of adaptive equipment
costs from the NMEDA 2018 Annual Price Survey to estimate economic
impact on small entities: adaptive equipment under the Lowered Floor
Conversion--Mini Van (15 listed options); and adaptive hand controls (8
listed options). VA believes these categories are a reasonable
representation of adaptive equipment costs. VA will likewise analyze
in-shop and high-tech hourly labor rates.

Lowered Floor Conversion--Mini Van
[Averages of all 15 categories in dollars]
------------------------------------------------------------------------

------------------------------------------------------------------------
Average cost................... 24,206 .......................
High cost...................... 25,186 980 above Average cost.
Low cost....................... 13,855 11,331 below High cost,
10,351 below Average.
------------------------------------------------------------------------

Hand Controls
[Averages of all 8 categories in dollars]
------------------------------------------------------------------------

------------------------------------------------------------------------
Average cost................... 17,070 .......................
High cost...................... 22,362 5,292 above Average.
Low cost....................... 1,727 20,635 below High,
15,343 below Average.
------------------------------------------------------------------------

Retail Labor Rates/Hr--In Shop Labor
[In dollars]
------------------------------------------------------------------------

------------------------------------------------------------------------
Average........................ 112 .......................
High........................... 130 18 above Average.
Low............................ 95 35 below High, 17 below
Average.
------------------------------------------------------------------------

Retail Labor Rates/Hr--High-Tech Labor
[In dollars]
------------------------------------------------------------------------

------------------------------------------------------------------------
Average........................ 138 .......................
High........................... 175 38 above Average.
Low............................ 95 80 below High, 43 below
Average.
------------------------------------------------------------------------

As noted above, VA believes that approximately 6,250 eligible
persons will apply for adaptive equipment payment or reimbursement
annually. For purposes of this analysis we are assuming a total of 550
registered

[[Page 14440]]

providers and 100 unregistered providers will provide services under
this proposed rule. We do not have accurate information readily
available on regional distribution of either eligible persons,
registered providers, or unregistered providers. We will assume for
purposes of this analysis that adaptive equipment services for eligible
persons will be equally distributed between providers, as we believe an
analysis based on actual distribution would not impact our conclusions.
Rounding up to the whole person, each provider would provide services
to 10 eligible persons.
VA would reimburse or pay for adaptive equipment at the amount
invoiced or per the Schedule, whichever is less. For mini-van
conversions, assuming a provider billed at the Schedule amount, the
provider would experience a net gain of $980 to $11,331 per transaction
over invoicing at a different amount. Hand control adaptive equipment
costs vary from $5,292 to $20,635 from the High cost per transaction.
Assuming the maximum difference in invoicing for all 10 assumed
clients, each provider would show a total impact of $113,310 to
$206,350 annually. Labor costs per hour vary from $95 to $130 per hour
for in shop labor, and $95 to $175 for high tech labor. We note that
unregistered providers would not be eligible for payment for labor
costs and would experience a loss of potential revenue as a result. If
we assume a 4-hour assignment requiring high tech labor, that would
amount to $700 per transaction.
Given the relatively small number of eligible persons, cost
variations for provision of adaptive equipment, and the estimate of
gross receipts for affected small entities in the identified NAICS
codes, VA believes 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 Flexibility Act, 5 U.S.C. 601-612. 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.

Executive Orders 12866, 13563, and 13771

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
http://www.regulations.gov, usually within 48 hours after the
rulemaking document is published. Additionally, a copy of the
rulemaking and its impact analysis are available on VA's website at
http://www.va.gov/orpm/, by following the link for ``VA Regulations
Published From FY 2004 Through Fiscal Year to Date.''
This rule is not an E.O. 13771 regulatory action because this rule
is not significant under E.O. 12866.

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, and tribal governments, or on the private
sector.

Catalog of Federal Domestic Assistance Numbers

The Catalog of Federal Domestic Assistance numbers and titles for
the programs affected by this document are as follows: 64.009, Veterans
Medical Care Benefits; 64.013, Veterans Prosthetic Appliances.

List of Subjects in 38 CFR part 17

Administrative practice and procedure, Alcohol abuse, Alcoholism,
Claims, Day care, Dental health, Drug abuse, Foreign relations,
Government contracts, Grant programs-health, Grant programs--veterans,
Health care, Health facilities, Health professions, Health records,
Homeless, Medical and dental schools, Medical devices, Medical
research, Mental health programs, Nursing homes, Philippines, Reporting
and recordkeeping requirements, Scholarships and fellowships, Travel
and transportation expenses, Veterans.

Signing Authority

The Secretary of Veterans Affairs, or designee, approved this
document 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. Pamela
Powers, Chief of Staff, Department of Veterans Affairs, approved this
document on March 2, 2020, for publication.

Consuela Benjamin,
Regulation Development Coordinator, Office of Regulation Policy &
Management, Office of the Secretary, Department of Veterans Affairs.

For the reasons stated in the preamble, the Department of Veterans
Affairs proposes to amend 38 CFR part 17 as follows:

PART 17--MEDICAL

0
1. Amend the authority citation for part 17 by adding the following:
Sections 17.156 and 17.157 are also issued under 38 U.S.C. 3901
and 3902.
Section 17.158 is also issued under 38 U.S.C. 3902 and 3903.
0
2. Amend Sec. 17.156 by:
0
a. Revising the introductory paragraph;
0
b. Revising paragraph (b); and
0
c. Removing the Authority citation at the end of the section.
The revisions read as follows:

Sec. 17.156 Eligibility for automobile adaptive equipment.

Automobile adaptive equipment may be authorized if the Under
Secretary for Health or designee determines that such equipment is
deemed necessary to insure that the eligible person will be able to
operate the automobile or other conveyance in a manner consistent with
such person's safety and so as to satisfy the applicable standards of
licensure established by the State of such person's residency or other
proper licensing authority subject to the definitions and limitations
in Sec. Sec. 17.157 and 17.158.
* * * * *
(b) VA will reimburse or pay for adaptive equipment for automobiles
and other conveyances subject to the requirements of 38 CFR 17.158(b).
0
3. Revise Sec. 17.157 to read as follows:

Sec. 17.157 Definitions.

For the purposes of this part:
Adaptive equipment means equipment which must be part of or added
to a conveyance manufactured for sale to the general public to make it
safe for use by the eligible person and enable that person and the
conveyance to meet the applicable standards of licensure. Adaptive
equipment includes any item specified by the Under Secretary for Health
or designee as ordinarily

[[Page 14441]]

necessary for any of the classes of losses or combination of such
losses specified in 38 CFR 17.156, or as deemed necessary in an
individual case for an eligible person. Adaptive equipment includes,
but is not limited to, a basic automatic transmission, power steering,
power brakes, power window lifts, power seats, air-conditioning
equipment when necessary for the health and safety of the veteran, and
special equipment necessary to assist the eligible person into or out
of the automobile or other conveyance, regardless of whether the
automobile or other conveyance is to be operated by the eligible person
or is to be operated for such person by another person; and any
modification of the interior space of the automobile or other
conveyance if needed because of the physical condition of such person
in order for such person to enter or operate the vehicle.
Manufacturer means the same as in 49 U.S.C. 30102(a)(6).
Modifier means a motor vehicle repair business that modifies a
motor vehicle to enable a person with a disability to operate, or ride
as a passenger in, the motor vehicle. VA does not approve, endorse, or
assess the abilities of any modifiers to perform any requested or
represented modification services.
Altered vehicle means the same as in 49 CFR 567.3.
Alterer means the same as in 49 CFR 567.3
Registered provider means a manufacturer, modifier, or alterer
registered with the Department of Transportation's National Highway
Traffic Safety Administration (NHTSA) Modifiers Identification Database
currently available at http://www.nhtsa.gov/apps/modifier/index.htm.
Any manufacturer, modifier, or alterer who is not registered is
considered an unregistered provider.
Roadside service means emergency roadside services provided to an
eligible person performed in connection with the repair,
reinstallation, or replacement of adaptive equipment already installed
in the automobile or other conveyance. The term is limited solely to
services provided to make the adaptive equipment operational and does
not include mechanical repair of the engine or other vehicle systems,
towing, providing essential fuels and fluids such as gasoline necessary
to operate the vehicle, or providing locksmith services.
VA Adaptive Equipment Schedule for Automobiles and Other
Conveyances (``Schedule'') means the VA schedule that contains the
maximum allowable reimbursement amounts for the listed adaptive
equipment. The Schedule also includes the maximum hourly labor rates
for installation, repair, reinstallation, and replacement of this
equipment and allowable fees that VA will pay.
0
4. Revise Sec. 17.158 to read as follows:

Sec. 17.158 Limitations on assistance.

(a) General. An eligible person will not be provided adaptive
equipment for more than two automobiles or other conveyances at any one
time or during any four-year period except when, due to circumstances
beyond the control of such person, one of the automobiles or other
conveyances for which adaptive equipment was provided during the
applicable four-year period is no longer available for the use of such
person.
(1) Circumstances beyond the control of the eligible person are
those where the automobile or other conveyance was lost due to fire,
theft, accident, or court action; when repairs are so costly as to be
prohibitive; or a different automobile or other conveyance is required
due to a change in the eligible person's physical condition.
(2) For purposes of paragraph (a)(1) of this section, an eligible
person shall be deemed to have access to and use of an automobile or
other conveyance for which the Department of Veterans Affairs has
provided adaptive equipment if that eligible person has sold, given or
transferred the automobile or other conveyance to a spouse, family
member or other person residing in the same household as the eligible
person; or to a business owned by the eligible person, spouse, family
member or other person residing in the same household as the eligible
person.
(b) Basis for payment or reimbursement. VA will reimburse or pay
for adaptive equipment that VA determines is needed in accordance with
this section based on the information submitted and the VA Adaptive
Equipment Schedule for Automobiles and Other Conveyances (Schedule). In
addition to paying or reimbursing for specific types of adaptive
equipment listed in the Schedule, VA will pay, or reimburse for
roadside service, and waste disposal fees consistent with the Schedule.
Determination of payment or reimbursement rates are based on the
Schedule in effect on the date installation, reinstallation,
replacement, or repair is complete. Schedule labor rates are classified
as ``In Shop (low technology)'' or ``High Technology.'' High Technology
means labor performed on or modification of adaptive equipment devices
or systems that are capable of controlling vehicle functions or driving
controls, and operate with a designed logic system, or interface or
integrate with an electronic system of the vehicle. In Shop (low
technology) means labor performed on adaptive equipment all other
devices or modifications that do not meet the definition of High
Technology.
(1) Payments made for adaptive equipment that is authorized under
this section shall constitute payment in full and shall extinguish the
eligible person's liability to the registered provider. The registered
provider may not impose any additional charge on the eligible person
for any adaptive equipment that is authorized under this section and
for which payment is made by VA.
(2) This paragraph sets forth what must be submitted to VA in order
for VA to reimburse or pay for adaptive equipment.
(i) Reimbursement when services performed by registered providers.
VA will reimburse eligible persons identified in 38 CFR 17.156(a) who
have purchased adaptive equipment (e.g., installations, repairs,
reinstallations, replacements) from registered providers. The eligible
person must submit to VA a completed VA Form 10-1394, an itemized
estimate, and provide VA with either a final itemized: (1) Invoice, (2)
paid receipt, or (3) bill of sale for the purchase.
(ii) Reimbursement when services performed by unregistered
providers. VA will reimburse eligible persons identified in 38 CFR
17.156(a) who have purchased adaptive equipment (e.g., installations,
repairs, reinstallations, replacements) from unregistered providers.
The eligible person must submit to VA a completed VA Form 10-1394 and a
final itemized (1) invoice, (2) paid receipt, or (3) bill of sale for
the purchase.
(iii) Payments to registered providers for adaptive equipment. VA
will pay registered providers for adaptive equipment (e.g.,
installations, repairs, reinstallations, replacements) furnished to
eligible persons identified in 38 CFR 17.156(a). The following must be
submitted before VA will pay. The eligible person or the registered
provider must sign and submit to VA a completed VA Form 10-1394 and an
itemized estimate prior to the completion of work. The eligible person
or registered provider must provide VA with a final itemized invoice
after the work is completed.
(iv) In the case of any installation, repair or replacement of
adaptive equipment performed outside of the United States where an
invoice, estimate, or bill of sale is calculated in a foreign currency,
an application submitted under this paragraph must

[[Page 14442]]

include the conversion rate from the foreign currency to U.S. dollars,
and calculation of the invoice, estimate, or bill of sale amount in
U.S. dollars.
(3) VA will reimburse or pay labor costs as follows:
(i) For any labor costs associated with the installation of
adaptive equipment by a registered provider, VA will reimburse or pay
the lesser of:
(A) The relevant Schedule hourly labor rate, per paragraph (b) of
this section, multiplied by the number of hours listed by the
registered provider;
(B) The labor costs included in the itemized estimate; or
(C) The hourly labor rate provided by the registered provider in
the final itemized invoice multiplied by the number of hours listed by
the registered provider.
(ii) VA does not reimburse or pay labor costs for pre-installed
(i.e., original equipment manufacturer) equipment.
(iii) VA does not reimburse or pay labor costs of unregistered
providers.
(4) New adaptive equipment. VA will reimburse an eligible person
who meets the requirements of (b)(2)(i) or (ii) of this section, or pay
a registered provider who meets the requirements of (b)(2)(iii) of this
section for new adaptive equipment (including equipment that has been
installed or used for one year or less from the date of manufacture
listed in the Schedule as follows:
(i) VA will pay the lesser of the amount for the new adaptive
equipment listed in either a final itemized: (1) Invoice, (2) paid
receipt, or (3) bill of sale for the purchase; or (4) the amount listed
in the Schedule.
(ii) VA will reimburse or pay any labor costs consistent with
paragraph (b)(3) of this section.
(5) Used adaptive equipment. For used adaptive equipment listed in
the Schedule that is more than one (1) year old from the date of
manufacture:
(i) VA will depreciate it by twenty (20%) percent per year from the
time the equipment was pre-installed or installed as new on an
automobile or other conveyance to the time of its reinstallation for
which reimbursement or payment is being sought for a period up to five
(5) years. VA will reimburse an eligible person, who meets the
requirements of (b)(2)(i) or (ii) of this section, or pay a registered
provider who meets the requirements of (b)(2)(iii) of this section the
lesser of the amount of the adaptive equipment listed in the final
itemized invoice, paid receipt, or bill of sale for the purchase or the
amount listed in the Schedule reduced by twenty (20%) percent for each
year from the time the equipment was pre-installed or installed on the
automobile or other conveyance for a period up to five (5) years.
(ii) VA will reimburse or pay any labor costs consistent with
paragraph (b)(3) of this section, but will not reimburse or pay labor
costs for used equipment that is more than five (5) years old from the
date of manufacture.
(6) Unlisted adaptive equipment. For adaptive equipment not listed
in the Schedule but meeting the definition of adaptive equipment in 38
CFR 17.157, VA will reimburse an eligible person who meets the
requirements of (b)(2)(i) or (ii) of this section, or pay a registered
provider who meets the requirements of (b)(2)(iii) of this section:
(i) The lesser of the cost of the adaptive equipment when equal to
or less than what VA has paid for a similar item in the past or, when
available, the commercially available price for a similar item. If the
price of a similar commercially available item is not available, or VA
has not previously paid for a similar item, VA will pay or reimburse
the billed charges.
(ii) VA will reimburse or pay any labor costs consistent with
paragraph (b)(3) of this section.
(7) VA will establish the Schedule for each fiscal year after
September 30, 2019 and publish that Schedule on a publicly accessible
page on the www.prosthetics.va.gov website. VA will increase the
reimbursement amounts in the Schedule using the indices for two
expenditure categories of the Consumer Price Index (CPI) for All Urban
Consumers. The index for the expenditure category for ``motor vehicle
parts and equipment'' will be used to calculate the increase in the
reimbursement amounts for adaptive equipment on the Schedule, and the
index for ``motor vehicle maintenance and repair'' will be used to
calculate the increase in the reimbursement amounts for labor. Such
increases to the Schedule for adaptive equipment and labor will be
equal to the percentage by which the respective index increased during
the 12-month period ending with the last month for which CPI data is
available. In the event that such index does not increase during such
period, there will be no change to the Schedule for the reimbursement
amounts for which the index is used to calculate increases. The amounts
for the new fiscal year will be rounded up to the whole dollar amount.
(c) Repair of used adaptive equipment. Reimbursement or payment for
a repair to an item of used adaptive equipment may be provided for
adaptive equipment installed on an automobile or other conveyance that
meets the limitations of paragraph (a) of this section. VA will pay or
reimburse labor costs associated with the repairs in accordance with
paragraph (b)(3) of this section.
(1) For repairs to used adaptive equipment, VA will reimburse the
eligible person meeting the requirements of (b)(2)(i) or (ii) of this
section as follows: the lesser of the amount of the adaptive equipment
listed in either a final itemized: (1) Invoice, (2) paid receipt, or
(3) bill of sale for the purchase.
(2) For repairs to used adaptive equipment, VA will reimburse a
registered provider meeting the requirements of (b)(2)(iii) of this
section as follows: The lesser of the amount of the adaptive equipment
listed in the final itemized (1) invoice, (2) paid receipt, or (3) bill
of sale for the purchase.
(The Office of Management and Budget has approved the information
collection requirements in this section under control number 2900-
0188.)

[FR Doc. 2020-04564 Filed 3-11-20; 8:45 am]
BILLING CODE 8320-01-P