[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Rules and Regulations]
[Pages 32670-32673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13871]


-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AN65


Copayments for Medications After June 30, 2010

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the Department of Veterans Affairs (VA) 
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 (CPI-P), and the maximum annual copayment amount 
must be increased when the copayment is increased. Under the amendments 
in this rule, until January 1, 2012, we will freeze copayments at the 
current rate for veterans in VA's health care system enrollment 
priority categories 2 through 6 and increase copayments as required by 
the current regulation only for veterans in priority categories 7 and 
8. Thereafter, if VA does not prescribe a new methodology for 
increasing copayments, we will resume increasing copayments in 
accordance with any change in the CPI-P.

DATES: Effective Date: This rule is effective on July 1, 2010.
    Comments must be received on or before August 9, 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 
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-AN65--Copayments for Medications After June 30, 2010.'' 
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 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.
    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 CPI-P. The current regulation includes an escalator provision 
for the copayment amount. The regulation states that the copayment 
amount is established using the CPI-P as follows: For each calendar 
year or other period as determined by the Secretary of Veterans Affairs 
beginning after June 30, 2010, the Index as of the previous September 
30 will be divided by the Index as of September 30, 2001. The

[[Page 32671]]

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.
    Currently, 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 VA's health care enrollment system priority categories 2 through 6. 
There is no cap for a veteran enrolled in priority categories 7 or 8. 
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.'' See 38 CFR 17.110(b)(2).
    In January 2006, based on current Sec.  17.110(b), the copayment 
amount increased to $8 and the cap for priority categories 2 through 6 
increased to $960. VA published a notice regarding this change in the 
Federal Register at 70 FR 72329 (December 2, 2005). Then, on December 
31, 2009, VA issued an interim final rule amending Sec.  17.110 to 
``freeze'' until June 30, 2010, the copayment amount at $8 for all 
veterans. 74 FR 69283 (December 31, 2009). Thereafter, under the 
regulation, the escalator provision described above would take effect. 
In a separate document that published today in the rules section (RIN 
2900-AN50), we addressed the comments we received concerning the 
interim final rule and affirmed the interim final rule as a final rule 
without change. This rulemaking concerns the period beginning on July 
1, 2010, after the end of the freeze implemented by the December 31, 
2009, rulemaking. It revises the language of Sec.  17.110(b), effective 
July 1, 2010.
    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, automatically increased the copayment amount 
from $8 to $9 effective January 1, 2010. Currently, Sec.  17.110(b) 
does not afford the Secretary of Veterans Affairs discretion to alter 
the copayment amount as calculated by the CPI-P formula. In a notice 
announcing the interim final rule, published on December 31, 2009, we 
stated that we had concerns about an imminent increase in copayments 
under the methodology in current 38 CFR 17.110(b). 74 FR 69283. We 
stated that we needed ``time to determine whether an increase [in 
copayments] might pose a significant financial 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).'' Thus, although the appropriate 
copayment amount, under the regulatory formula, increased to $9, we 
suspended the effect of that increase through June 30, 2010.
    Although 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 to ensure certain veterans with 
greater need for medical care and lower income do not face significant 
financial hardships. In light of this anticipated review and given the 
current economic climate, we propose to delay implementation of the $1 
increase in the copayment amount (and the corresponding $120 increase 
in the cap) until the completion of our review for veterans in priority 
categories 2 through 6 of VA's health care system. See 38 CFR 17.36. We 
believe that it is appropriate to maintain the current copayment amount 
for these groups while we review our overall copayment methodology 
because these groups would be impacted more by the increase in the 
copayment due to their likely greater need for medical care due to 
their disabilities or conditions of service. Therefore, we will 
continue the copayment amount at the current $8 rate for veterans in 
priority categories 2 through 6 through December 31, 2011, in order to 
complete the review of indicators to base our copayment amounts. The 
cap will also remain at the current level ($960) for these veterans. 
Depending on the results of the review described above, the Secretary 
may initiate a new rulemaking on this subject rather than continue to 
rely on the CPI-P escalator provision to determine the copayment 
amount.
    At the end of calendar year 2011, unless additional rulemaking is 
initiated, VA will 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 for veterans in priority 
categories 2 through 6. At that time, the CPI-P as of September 30, 
2011, will be divided by the index as of September 30, 2001, which was 
304.8. The ratio will then be multiplied by the original copayment 
amount of $7. The copayment amount of the new calendar year will be 
rounded down to the whole dollar amount. As mandated by current Sec.  
17.110(b)(2), the annual cap will 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, will be published in a Federal 
Register notice. Thus, the intended effect of this rule is to 
temporarily prevent increases in copayment amounts and the copayment 
cap for veterans in priority categories 2 through 6, following which 
copayments and the copayment caps will increase as prescribed in 
current Sec.  17.110(b).
    At the same time, in light of our statutory responsibility to 
control costs under 38 U.S.C. 1722A and the distinctions noted above 
regarding veterans in priority categories 2 through 6, we will allow 
the copayment increase to $9 for veterans in priority categories 7 and 
8. See 66 FR 63449 (discussing ``the statutory intent * * * for VA to 
increase the copayment amount'' consistent with industry standards). 
Consequently, we will not further delay the increase to the copayment 
amount to $9 for priority categories 7 and 8. Consistent with the 
review of the CPI-P methodology and study of private health care 
industry standards described above, we will maintain copayments for 
priority categories 7 and 8 at the $9 rate through December 31, 2011, 
following which copayments will be increased according to the 
methodology in proposed Sec.  17.110(b)(1).
    We note that we have not yet proposed a new methodology to 
establish copayments and, for that reason, request public comment only 
on the effect of this rulemaking, which is to freeze the copayment 
amount for veterans in priority categories 2 through 6 while we study 
alternative methodologies to calculate appropriate copayment amounts 
for all veterans.

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 certain veterans. The Secretary finds that it 
is impracticable and contrary to the public interest to delay this rule 
for the purpose of soliciting advance public comment or to have a 
delayed effective date. Increasing the copayment amount on July 1, 
2010, might cause a significant financial hardship for some veterans.
    For the above reasons, the Secretary issues this rule as an interim 
final rule.

[[Page 32672]]

VA will consider and address comments that are received within 60 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 
to be a significant regulatory action under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this 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. 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, approved this document on March 12, 2010, for 
publication.

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: June 3, 2010.
William F. Russo,
Director of Regulations Management, Office of the General Counsel.

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, revise paragraph (b)(1) 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).
    (i) For the period from January 1, 2010, through June 30, 2010, the 
copayment amount is $8.
    (ii) For the period from July 1, 2010, through December 31, 2011, 
the copayment amount for veterans in priority categories 2 through 6 of 
VA's health care system (see Sec.  17.36) is $8.
    (iii) For veterans in priority categories 7 and 8 of VA's health 
care system (see Sec.  17.36), the copayment amount from July 1, 2010, 
through December 31, 2011, is $9.
    (iv) The copayment amount for all affected veterans for each 
calendar year after December 31, 2011, will be established by using the 
prescription drug component of the Medical Consumer Price Index as 
follows: For each calendar year, the Index as of the previous September 
30 will be divided by the Index as of September 30, 2001 which was 
304.8. The ratio so obtained will be multiplied by the original 
copayment amount of $7. The copayment amount for the new calendar year 
will be this result, rounded down to the whole dollar amount.

    Note to Paragraph (b)(1)(iv):  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 (304.8) 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.

* * * * *

0
3. In Sec.  17.110, amend paragraph (b)(2) by removing ``June 30, 
2010'' in both

[[Page 32673]]

places it appears, and adding, in its place, ``December 31, 2011.''

[FR Doc. 2010-13871 Filed 6-8-10; 8:45 am]
BILLING CODE 8320-01-P