[Federal Register Volume 76, Number 35 (Tuesday, February 22, 2011)]
[Rules and Regulations]
[Pages 9646-9648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3888]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AN65


Copayments for Medications After June 30, 2010

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document affirms as final an interim final rule that 
froze until January 1, 2012, the copayment required for certain 
medications. Under those amendments, the copayment amount for veterans 
in the Department of Veterans Affairs (VA) health care system, 
enrollment priority categories 2 through 6, will remain at $8 and the 
copayment amount for veterans in enrollment priority categories 7 and 8 
will remain at $9. The maximum annual copayment amount will also not 
increase. On January 1, 2012, the copayment amounts will increase based 
on the prescription drug component of the Medical Consumer Price Index 
(CPI-P). When the copayment increases, the maximum annual copayment 
amount automatically increases in turn.

DATES: Effective Date: This rule is effective on February 22, 2011.

FOR FURTHER INFORMATION CONTACT: Roscoe Butler, Acting Director, 
Business Policy, Chief Business Office, 810 Vermont Avenue, Washington, 
DC 20420, 202-461-1586. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: Under 38 U.S.C. 1722A(a), VA must require 
veterans to pay a $2 copayment for each 30-day supply of medication 
furnished on an outpatient basis for the treatment of a nonservice-
connected disability or condition. Under 38 U.S.C. 1722A(b), VA may, by 
regulation, increase that copayment and establish a maximum annual 
copayment (a ``cap''). We interpret section 1722A(b) to mean that VA 
has discretion to determine the appropriate copayment amount and annual 
cap amount for medication furnished on an outpatient basis for covered 
treatment, provided that any decision by VA to increase the copayment 
amount or annual cap amount is the subject of a rulemaking proceeding. 
We have implemented this statute in 38 CFR 17.110.
    On June 9, 2010, we published a final rule that affirmed as final 
an interim final rule that amended Sec.  17.110 to ``freeze'' at $8 the 
copayment required for prescription medications through June 30, 2010. 
75 FR 32668. Also on June 9, 2010, we published an interim final rule 
amending Sec.  17.110 such that the copayment amounts are fixed at $8 
for veterans in enrollment priority categories 2 through 6 of VA's 
health care system, and at $9 for veterans in priority categories 7 and 
8 through December 31, 2011. 75 FR 32670. Any changes to these 
copayment amounts that would take effect after December 31, 2011, would 
be based on changes to the CPI-P, as described in Sec.  
17.110(b)(1)(iv).
    In addition, Sec.  17.110(b)(2) includes a cap on the total amount 
of copayments in a calendar year for a veteran enrolled in one of VA's 
health care enrollment system priority categories 2 through 6. The 
amount of the cap for the period from January 1, 2010, through December 
31, 2011 is fixed at $960. Also under paragraph (b)(2), the ``cap of 
$960 shall be increased by $120 for each $1 increase in the copayment 
amount.''
    In the June 9, 2010, interim final rule, we cited the previous 
interim final rule published on December 31, 2009 (adopted without 
change as a final rule on June 9, 2010 (75 FR 32668)), in which we 
stated that we had concerns about increasing copayments under the 
methodology in current 38 CFR 17.110(b)(1)(iv). 75 FR 32670. We stated 
that we needed ``time to determine whether an increase [in copayments]

[[Page 9647]]

might pose a significant hardship for certain veterans and if so, what 
alternative approach would provide appropriate relief for these 
veterans,'' and therefore issued an interim final rule intended ``to 
temporarily freeze copayments and the copayment cap, following which 
copayments and the copayment cap would increase as prescribed in Sec.  
17.110(b).'' We then stated in the June 9, 2010 interim final rule that 
``[a]lthough we continue to believe that the CPI-P is a relevant 
indicator of the costs of prescriptions nationwide, we need additional 
time to ascertain whether there might be better indicators upon which 
we can base our copayment amounts.'' Thus, we further delayed 
implementation of any increases for veterans in categories 2 through 6 
based on the CPI-P until January 1, 2012. We stated that we would study 
this issue and, depending on the results of such study, may initiate a 
new rulemaking on this subject rather than continue to rely on the CPI-
P escalator provision to determine the copayment amount. This study is 
ongoing. We did not delay increases for veterans in priority categories 
7 and 8 in light of our statutory responsibility to control costs under 
38 U.S.C. 1722A. Also, these veterans would be less affected by an 
increase in copayments than veterans in priority categories 2 through 
6, who likely have a greater need for medical care due to their 
disabilities or conditions of service. Therefore, the copayment amount 
for veterans in priority categories 7 and 8 increased to $9.
    We received one public comment on the interim final rule that 
extended the delay for veterans in priority categories 2 through 6. The 
commenter suggested that VA consider an alternative system for 
copayments, which would base the copayments on the actual costs of each 
medication rather than utilize a standard copayment rate. As noted 
above, we are currently considering copayment options; however, our 
study remains incomplete and we are not at this time ready to discuss 
the merits of any specific option. The commenter noted that increased 
copayment rates have been found in at least one study to decrease the 
patient's use of medical care. We are aware of this issue, and it is 
part of our ongoing study.
    The commenter also noted that the $960 cap on copayments may be too 
high, and that some veterans may not have ``sufficient income to 
support that cost.'' This issue is beyond the scope of the interim 
final rule, which delayed increases in copayments for veterans in 
enrollment priority categories 2 through 6. We will carefully consider 
the commenter's suggestion that copayments may be too high in the 
context of our ongoing study. Depending on the results of the study we 
may choose to address this issue in a future rulemaking and will 
address the commenter's suggestion at that time. We also note that 
preventing the $1 increase in copayments for veterans in priority 
categories 2 through 6, which would have occurred absent this rule, 
also prevents an associated increase in the annual copayment cap to 
$1080 for those veterans. Lastly, for those veterans who may have 
difficulty paying copayments, VA offers repayment plans and waivers as 
assistance.
    Accordingly, we adopt without change, the amendments made in the 
interim final rule.

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 an 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 given year. This rule would have no such effect on 
state, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Executive Order 12866

    Executive Order 12866 directs agencies to assess all 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, 
and other advantages; distributive impacts; and equity). The Executive 
Order classifies a regulatory action as a ``significant regulatory 
action,'' requiring review by the Office of Management and Budget (OMB) 
unless OMB waives such review, if it is a 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 
the Executive Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this rule have been examined and it has been determined 
not to be a significant regulatory action under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory amendment will 
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. This rule will temporarily freeze the copayments that 
certain veterans are required to pay for prescription drugs furnished 
by VA. The rule affects individuals and has no impact on any small 
entities. Therefore, pursuant to 5 U.S.C. 605(b), this rule is exempt 
from the initial and final regulatory flexibility analysis requirements 
of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance program number and title 
for this rule are as follows: 64.005, Grants to States for Construction 
of State Home Facilities; 64.007, Blind Rehabilitation Centers; 64.008, 
Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 
64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 
64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic 
Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans 
State Nursing Home Care; 64.016, Veterans State Hospital Care; 64.018, 
Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation 
Alcohol and Drug Dependence; 64.022, Veterans Home Based Primary Care; 
and 64.024, VA Homeless Providers Grant and Per Diem Program.

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. John R. 
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this 
document on February 8, 2011, for publication.

[[Page 9648]]

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.

    Dated: February 16, 2010.
Robert C. McFetridge,
Director, Regulations Policy and Management, Department of Veterans 
Affairs.

    Accordingly, VA adopts the interim final rule amending 38 CFR 
17.110, which was published in the Federal Register at 75 FR 32670 on 
June 9, 2010, as a final rule without change.

[FR Doc. 2011-3888 Filed 2-18-11; 8:45 am]
BILLING CODE 8320-01-P