[Federal Register Volume 74, Number 250 (Thursday, December 31, 2009)]
[Rules and Regulations]
[Pages 69283-69285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-31124]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AN50


Copayments for Medications

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: The Department of Veterans Affairs (VA) is taking action to 
amend its medical regulations concerning the copayment required for 
certain medications. Under current regulations, the copayment amount 
must be increased based on the prescription drug component of the 
Medical Consumer Price Index, and the maximum annual copayment amount 
must be increased when the copayment is increased. Under the amendments 
in this document, we will freeze copayments at the current rate for the 
next 6 months, and thereafter resume increasing copayments in 
accordance with any change in the prescription drug component of the 
Medical Consumer Price Index.

DATES: This rule is effective on December 31, 2009. Comments must be 
received on or before February 1, 2010.

ADDRESSES: Written comments may be submitted by e-mail through http://www.regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (02REG), Department of Veterans Affairs, 810 Vermont Ave., 
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-AN50 Copayments for Medications.'' Copies of comments received 
will be available for public inspection in the Office of Regulation 
Policy and Management, Room 1063B, between the hours of 8 a.m. and 4:30 
p.m. Monday through Friday (except holidays). Please call (202) 461-
4902 for an appointment. 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: Roscoe Butler, Acting Director, 
Business Policy, Chief Business Office, 810 Vermont Ave., 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.
    Under current 38 CFR 17.110(b)(1), veterans are ``obligated to pay 
VA a copayment for each 30-day or less supply of medication provided by 
VA on an outpatient basis (other than medication administered during 
treatment).'' The regulation ties any increase in that copayment amount 
to the prescription drug component of the Medical Consumer Price Index 
(CPI-P). The current regulation includes an escalator provision for the 
copayment amount. The regulation states that the copayment amount for 
each calendar year after 2002 is established using the CPI-P as 
follows: For each calendar year beginning after December 31, 2002, the 
Index as of the previous September 30 will be divided by the Index as 
of September 30, 2001. The ratio so obtained will be multiplied by the 
original copayment amount of $7. The copayment amount for the new year 
will be this result, rounded down to the whole dollar amount.
    Current Sec.  17.110(b)(2), also includes a cap on the total amount 
of copayments in a calendar year for a veteran enrolled in one of the 
priority categories 2 through 6. The amount of the cap was $840 for the 
year 2002. The current regulation also requires that ``[i]f the 
copayment amount increases * * * the cap of $840 shall be increased by 
$120 for each $1 increase in the copayment amount.'' 38 CFR 
17.110(b)(2).
    In January 2006, based on this regulation, the copayment amount 
increased to $8 and the cap on priority categories 2 through 6 
increased to $960. This change was announced in 70 FR 72329 (December 
2, 2005). These are the current copayment requirements. Based on our 
analysis of the average rate of growth of the CPI-P, the current 
regulatory methodology, calculated according to the CPI-P as of 
September 30, 2009, would automatically escalate the copayment amount 
from $8 to $9 in January 2010. Current Sec.  17.110(b) does not afford 
the Secretary any discretion on increasing the copayment amount as 
calculated by the CPI-P.
    Although we continue to believe that the CPI-P is a relevant 
indicator of the costs of prescriptions nationwide, we need time to 
determine whether an increase might pose a significant financial 
hardship for certain veterans and if so, what alternative approach 
would provide appropriate relief for these veterans. In light of this 
anticipated review, we are delaying implementation of the $1 increase 
in the copayment amount (and the corresponding $120 increase in the 
cap) until the completion of our review. Maintaining the current 
copayment and cap amounts will give us time to determine whether the 
current methodology for establishing copayment amounts, consistent with 
our responsibility under 38 U.S.C. 1722A to require a copayment in 
order to control health-care costs, is appropriate for all veterans.
    Therefore, we are, for the next 6 months (i.e., through June 30, 
2010), freezing the copayment amount at the

[[Page 69284]]

current rate ($8) in order to complete the analysis regarding veterans 
for whom the copayment increase might pose a significant financial 
hardship. We are also freezing the cap at the current level ($960).
    This rule maintains the current escalator clause. Depending on the 
results of the analysis described above, the Secretary may initiate new 
rulemaking on this subject rather than continue to rely on the CPI-P 
escalator provision to determine the copayment amount. Any change in 
the copayment amount and cap, along with the associated calculations 
explaining the basis for the increase, would be published in a Federal 
Register notice.
    At the end of June 30, 2010, unless additional rulemaking is 
initiated, VA would once again utilize the CPI-P methodology in Sec.  
17.110(b)(1) to determine whether to increase copayments and calculate 
any mandated increase in the copayment amount. At that time the CPI-P 
as of June 30, 2010, would be divided by the index as of September 30, 
2001. The ratio would then be multiplied by the original copayment 
amount of $7. The copayment amount of the new calendar year would be 
rounded down to the whole dollar amount. As mandated by the Sec.  
17.110(b)(2), the annual cap would be calculated by increasing the cap 
by $120 for each $1 increase in the copayment amount. Any change in the 
copayment amount and cap, along with the associated calculations 
explaining the basis for the increase, would be published in a Federal 
Register notice. Thus, the intended effect of this rule is to 
temporarily freeze copayments and the copayment cap, following which 
copayments and the copayment cap would increase as prescribed in Sec.  
17.110(b).
    The current regulation includes a note to paragraph (b)(1) that 
provides an example of how the CPI-P calculation is made. We are 
updating this note to provide a recent example of how these amounts are 
calculated. This example reflects the calculation that was made on 
December 2, 2005, when VA published notice of the increase in 
copayments from $7 to $8. This note reflects the last calculation made 
under this regulation.
    We are also adding a new paragraph (b)(3), which informs the public 
where it can find information on the current copayment and cap amounts.

Administrative Procedure Act

    In accordance with 5 U.S.C. 553(b)(3)(B) and (d)(3), the Secretary 
of Veterans Affairs finds that there is good cause to dispense with the 
opportunity for advance notice and opportunity for public comment and 
good cause to publish this rule with an immediate effective date. As 
stated above, this rule freezes at current rates the prescription drug 
copayment that VA charges veterans. The Secretary finds that it is 
impracticable and contrary to the public interest to delay this 
regulation for the purpose of soliciting advance public comment, or to 
have a delayed effective date, because increasing the copayment on 
January 1, 2010, might cause significant financial hardship on certain 
veterans.
    For these reasons, the Secretary of Veterans Affairs is issuing 
this rule as an interim final rule. The Secretary of Veterans Affairs 
will consider and address comments that are received within 30 days of 
the date this interim final rule is published in the Federal Register.

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 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. This rule will 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 interim final 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 numbers and 
titles 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.

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,

[[Page 69285]]

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. John R. 
Gingrich approved this document for publication on December 28, 2009.

John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.

0
For the reasons set forth in the preamble, VA amends 38 CFR part 17 as 
follows:

PART 17--MEDICAL

0
1. The authority citation for part 17 continues to read as follows:

    Authority: 38 U.S.C. 501, 1721, and as noted in specific 
sections.


0
2. In Sec.  17.110, paragraph (b) is revised to read as follows:


Sec.  17.110  Copayments for medication.

* * * * *
    (b) Copayments--(1) Copayment amount. Unless exempted under 
paragraph (c) of this section, a veteran is obligated to pay VA a 
copayment for each 30-day or less supply of medication provided by VA 
on an outpatient basis (other than medication administered during 
treatment). For the period from January 1, 2010 through June 30, 2010, 
the copayment amount is $8. Thereafter, the copayment amount for each 
calendar year or other period as determined by the Secretary will be 
established by using the prescription drug component of the Medical 
Consumer Price Index as follows: The Index as of the previous September 
30 will be divided by the Index as of September 30, 2001. The ratio so 
obtained will be multiplied by the original copayment amount of $7. The 
new copayment amount will be this result, rounded down to the whole 
dollar amount.

    Note to paragraph (b)(1): Example for determining copayment 
amount.
    The ratio of the prescription drug component of the Medical 
Consumer Price Index for September 30, 2005, to the corresponding 
Index for September 30, 2001, was 1.1542. This ratio, when 
multiplied by the original copayment amount of $7 equals $8.08, and 
the copayment amount beginning in calendar year 2006, rounded down 
to the whole dollar amount, was set at $8.

    (2) The total amount of copayments in a calendar year for a veteran 
enrolled in one of the priority categories 2 through 6 of VA's health 
care system (see Sec.  17.36) shall not exceed the cap established for 
the calendar year. During the period from January 1, 2010 through June 
30, 2010, the cap will be $960. If the copayment amount increases after 
June 30, 2010, the cap of $960 shall be increased by $120 for each $1 
increase in the copayment amount.
    (3) Information on copayment/cap amounts. Current copayment and cap 
amounts are available at any VA Medical Center and on our Web site, 
http://www.va.gov. Notice of any increases to the copayment and 
corresponding increases to annual cap amount will be published in the 
Federal Register.
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[FR Doc. E9-31124 Filed 12-30-09; 8:45 am]
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