Veteran: The VA ER regulation at a Non-VA hospital is not legal.

Veterans Administration Breaking the Law

Bureaucratic Negligence:

The Veterans’ Health Administration denies benefits for veterans who, under adverse conditions, receive emergency room treatment at a non-VA facility, usually a community hospital. If the veteran has no private insurance, the VA pays the maximum allowable amount for the medical expenses. If the veteran has private insurance, the VA denies payment of the private insurance deductible and copay.

VA Policy:
There are limitations on VA’s ability to provide coverage when a Veteran has other health insurance (OHI). If OHI does not fully cover the costs of treatment, VA can pay certain costs for which the Veteran is personally liable. By law, VA cannot pay:
• Copayments
• Coinsurance
• Deductibles 
• Similar payments a Veteran may owe to the provider as required by their OHI

VA is also legally prohibited from providing coverage for individuals covered under a health-plan contract because of a failure by the Veteran or the provider to comply with the provisions of that health-plan contract, e.g., failure to submit a bill or medical records within specified time limits, or failure to exhaust appeals of the denial of payment

This is the Federal Regulation:
CFR 17.1005 (5) VA will not reimburse a veteran under this section for any copayment, deductible, coinsurance, or similar payment that the veteran owes the third party or is obligated to pay under a health-plan contract.

This is the statue from Title 38:
38 USC 1725 (c) (4) (D) The Secretary may not reimburse a veteran under this section for any copayment or similar payment that the veteran owes the third party or for which the veteran is responsible under a health-plan contract.
T
he policy and the regulation do not conform to the Law. Under some wishful notion, the VA contrived the regulation. The Law is complete and accurate. False facts clues:

The Law is specific the veteran must request reimbursement. Elsewhere in the Law, statue instructs the VA to either pay-the-provider or reimburse-the-veteran.

The Law uses the predicate "may not" Regulations changed the predicate to "will not" which removes executive discretion. 

The Law does not contain the term deductible.

Copay is a binary payout; the insurance owes some, and the patient owes some.

All payout from insurance is owned by the insured. The insured may instruct the insurance to pay the provider. The money from insurance is the insured’s money.

The Law defines third-part to be the insurance company. In the regulations, the VA changed third-party to be the provider.

The veteran is responsible for the insurance premiums that establish rights to the payout.

38 USC 1725 (c) (4) (D) prevents the veteran from double-dipping on reimbursement by identifying the insurance payout is the veteran’s money. The payout is the patient's money.

The Law requires all providers to reconcile payout from other payees before invoicing the VA. When the VA pays, the payment exhausts other fees for the service. When the VA dismisses medical expenses that may be accounted as deductibles, the VA fails to determine the maximum allowable amount (MAA) for the entire episode of care's medical expenses. 

The medical fee exhaust amount is calculated by subtracting the MAA from the total of other payouts. By law, the VA must determine the exhaust value.

 The Law means:
The VA will not pay the veteran for any insurance copays paid by the veteran's private insurance. 

That's all it means. That’s all it can mean. Everything else in the regulation and policy is an invention.

Somebody in the VA does not know a medical expense is a fee for a medical service; an insurance expense is the cost of insurance.  "owes the third party or for which the veteran is responsible under a health-plan contract." means the premiums paid to the insurance for the cost of the policy. Paying the premium means the insured owns the payout.

Cost: This contrived regulation cost veteran and providers millions of dollars. Providers turn the bill over to collections.

Privacy Law:
The VA demands the provider submit the private health insurance explanation of benefit before the VA will pay. The contract between the patient, the provider and the insurance company is a private contract. The Law does not grant the VA authority to demand the terms from a private contract. Providers who submit EOB to the VA can be sued by the patient.