Department of Veterans Affairs.
The Department of Veterans Affairs (VA) proposes to amend its regulations related to the VA Dental Insurance Program (VADIP), a pilot program to offer premium-based dental insurance to enrolled veterans and certain survivors and dependents of veterans. Specifically, this rule would add language to clarify the preemptive effect of certain criteria in the VADIP regulations.
Comments must be received by VA on or before November 22, 2013.
Written comments may be submitted through http://www.regulations.gov; by mail or hand delivery to the Director, Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Avenue NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. Comments should indicate that they are submitted in response to “RIN 2900-AO86-VA Dental Insurance Program—Federalism.” Copies of comments received will be available for public inspection in the Office of Regulation Policy and Management, Room 1068, between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (except holidays). Please call (202) 461-4902 (this is not a toll-free number) for an appointment. In addition, during the comment period, comments may be viewed online through the Federal Docket Management System at http://www.regulations.gov.
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FOR FURTHER INFORMATION CONTACT:
Kristin Cunningham, Director, Business Policy, Chief Business Office (10NB), Veterans Health Administration, Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420; (202) 461-1599. (This is not a toll-free number.)
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This proposed rule would amend 38 CFR 17.169 to add language to clarify the limited preemptive effect of certain criteria in the VA Dental Insurance Program (VADIP), a pilot program to offer premium-based dental insurance to enrolled veterans and certain survivors and dependents of veterans. Under VADIP, VA contracts with private insurers through the Federal contracting process to offer dental insurance, and the private insurer is then responsible for the administration of the dental insurance plan. VA's role under VADIP is primarily to form the contract with the private insurer and verify the eligibility of veterans, survivors, and dependents. VADIP is authorized, and its implementing regulations are required, by section 510 of the Caregivers and Veterans Omnibus Health Services Act of 2010, Public Law 111-163 (2010) (section 510).
“Preemption” refers to the general principle that Federal law supersedes conflicting State law. U.S. Const. art. VI, cl. 2; Gade v. Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992); M'Culloch v. Maryland, 17 U.S. 316, 317 (1819). However, the subject of insurance regulation is unique. Under 15 U.S.C. 1012, no Act of Congress may be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, unless such Act specifically relates to the business of insurance. Although section 510 does not include express preemption language, Congress intended to legislate about the business of insurance in several subsections of section 510, hence preempting conflicting State and local laws. See Swanco Ins. Co.-Arizona v. Hager, 879 F.2d 353, 359 (8th Cir. 1989) (“Instead of total preemption, Congress `selected particularized means to [an] end in conscious recognition that a considerable area of state regulation would remain intact.' ”) (quoting Ins. Co. of the State of Pa. v. Corcoran, 850 F.2d 88, 93 (2nd Cir. 1988)).
For example, section 510(h) requires VA to determine and annually adjust VADIP insurance premiums. Determining premium rates is an important aspect of the “business of insurance.” Gilchrist v. State Farm Mut. Auto. Ins. Co., 390 F.3d 1327, 1331 (11th Cir. 2004) (citing United States Dep't of Treasury v. Fabe, 508 U.S. 491, 503 (1993); Grp. Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 224 (1979)). States strictly regulate insurance premium rates. See 5 Steven Plitt et al., Couch on Insurance § 69:13 (3d ed. 2012). If a State denies the premium rate set by VA and such rate Start Printed Page 63144is required by section 510(h)(1) in order “to cover all costs associated with the pilot program,” then the state would frustrate “the lawful objective of a [F]ederal statute.” United States v. Composite State Bd. of Med. Exam'rs, State of Georgia, 656 F.2d 131, 135 n.4 (5th Cir. 1981).
Applying these principles here, Congress specifically intended to legislate on the business of insurance under certain subsections of section 510. The following chart lists these subsections and their corresponding regulatory paragraphs:
|Topic||Subsection of section 510||Paragraph of § 17.169|
|Eligibility for VADIP||510(b)||§ 17.169(b).|
|Duration of VADIP||510(c)||N/A.|
|Plan benefits||510(f)||§ 17.169(c)(2).|
|Enrollment periods||510(g)||§ 17.169(d).|
|Establishing amounts of premiums, time frame for premium adjustments, and responsibility for payment of premiums||510(h)||§ 17.169(c)(1).|
|Bases and minimum procedures for voluntary disenrollment||510(i)||§§ 17.169(e)(2)-(e)(5).|
Consequently, these subsections of section 510 and their relevant regulatory counterparts preempt conflicting State and local laws.
State and local laws, including laws relating to the business of insurance, are not preempted by section 510, however, in areas where section 510 is silent. Examples of such areas of law include claims processes, licensing, underwriting, and appeals related to involuntarily disenrollment. Additionally, if State or local laws, including laws relating to the business of insurance, are not in conflict with any portion of section 510, then such State or local law may coexist with section 510.
Preemption allows for the implementation of uniform benefits in all States and may reduce the overall cost of VADIP. We therefore propose changes to § 17.169 that would add preemption language in accordance with the discussion above.
Section 6(c) of Executive Order 13132 (entitled “Federalism”) requires an agency that is publishing a regulation that has federalism implications and that preempts State law to follow certain procedures. Regulations that have federalism implications, according to section 1(a) of Executive Order 13132, are those that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”
Because this regulation addresses a federalism issue, in particular preemption of State laws, VA conducted prior consultation with State officials in compliance with Executive Order 13132. VA solicited comment and input from State insurance regulators, through their representative national organization, the National Association of Insurance Commissioners (NAIC). In response to its request for comments, VA received a letter from the Chief Executive Officer of the NAIC, which agreed with VA's position that this rulemaking properly identifies the limited areas where the statutes and regulations implementing VADIP preempt state laws and regulations concerning the business of insurance. The NAIC also agreed with VA's position that state law and regulation should continue to apply where federal law and regulations are silent, including in the areas of licensing and claims processing. VA received no other comments from the NAIC on this rulemaking.
VA's promulgation of this regulation complies with the requirements of Executive Order 13132 by (1) in the absence of explicit preemption in the authorizing statute, identifying the clear evidence that Congress intended to preempt State law, or where the exercise of State authority conflicts with the exercise of Federal authority under a Federal statute; (2) limiting the preemption to only those areas where we find existence of a clear conflict or clear evidence of Congress' intention that Federal law preempt State law; (3) restricting the regulatory preemption to the minimum level necessary to achieve the objectives of the statute; (4) consulting with the State insurance regulators, as indicated above; and (5) providing opportunity for comment through this rulemaking and its companion direct final rulemaking, see RIN 2900-AO85.
Administrative Procedure Act
On October 22, 2013, VA published a separate, substantively identical direct final rule in the Federal Register. See RIN 2900-AO85. The publication of the direct final rule and the proposed rule will speed notification and comments for rulemaking under section 553 of the Administrative Procedure Act should we have to withdraw the direct final rule due to receipt of any significant adverse comment.
For purposes of the direct final rulemaking, a significant adverse comment is one that explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or why it would be ineffective or unacceptable without a change.
Under direct final rule procedures, if no significant adverse comment is received within the comment period, the direct final rule will become effective on the date specified in RIN 2900-AO85. After the close of the comment period, VA will publish a document in the Federal Register indicating that no significant adverse comment was received and confirming the date on which the final rule will become effective. VA will also publish in the Federal Register a notice withdrawing this proposed rule.
However, if any significant adverse comment is received, VA will publish in the Federal Register a notice acknowledging receipt of a significant adverse comment and withdrawing the direct final rule. In the event the direct final rule is withdrawn because of any significant adverse comment, VA can proceed with this proposed rulemaking by addressing the comments received and publishing a final rule. Any comments received in response to the direct final rule will be treated as comments regarding this proposed rule. VA will consider such comments in developing a subsequent final rule. Likewise, any significant adverse comment received in response to this proposed rule will be considered as a comment regarding the direct final rule.
VA believes this regulatory amendment would be non-controversial and anticipates that this rule would not result in any significant adverse Start Printed Page 63145comment, and therefore is issuing it with a 30-day comment period.
Effect of Rulemaking
Title 38 of the Code of Federal Regulations, as proposed to be revised by this proposed rulemaking, would represent VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures would be authorized. All existing or subsequent VA guidance would be read to conform with this rulemaking if possible or, if not possible, such guidance would be superseded by this rulemaking.
Paperwork Reduction Act
This proposed rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).
Regulatory Flexibility Act
The Secretary hereby certifies that this proposed regulatory amendment 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. Only States, dental insurers, certain veterans and their survivors and dependents, none of which are small entities, would be affected. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.
Executive Orders 12866 and 13563
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. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” which requires review by the Office of Management and Budget (OMB), as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”
The economic, interagency, budgetary, legal, and policy implications of this proposed regulatory action have been examined and it has been determined not to be 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 Web site at http://www1.va.gov/orpm/, by following the link for “VA Regulations Published.”
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 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
The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.009 Veterans Medical Care Benefits and 64.011 Veterans Dental Care.
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. Jose D. Riojas, Chief of Staff, Department of Veterans Affairs, approved this document on September 16, 2013, for publication.
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Dated: October 17, 2013.
William F. Russo,
Deputy Director, Regulations Policy and Management, Office of the General Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, VA proposes to amend 38 CFR part 17 as follows:
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1. The authority citation for part 17 continues to read as follows:End Amendment Part
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2. In § 17.169 add paragraph (g) to read as follows:End Amendment Part
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VA Dental Insurance Program for veterans and survivors and dependents of veterans (VADIP).
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(g) Limited preemption of State and local law. To achieve important Federal interests, including but not limited to the assurance of the uniform delivery of benefits under VADIP and to ensure the operation of VADIP plans at the lowest possible cost to VADIP enrollees, paragraphs (b), (c)(1), (c)(2), (d), and (e)(2) through (e)(5) of this section preempt conflicting State and local laws, including laws relating to the business of insurance. Any State or local law, or regulation pursuant to such law, is without any force or effect on, and State or local governments have no legal authority to enforce them in relation to, the paragraphs referenced in this paragraph or decisions made by VA or a participating insurer under these paragraphs.
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[FR Doc. 2013-24588 Filed 10-22-13; 8:45 am]
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