[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Rules and Regulations]
[Pages 32668-32670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13872]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AN50


Copayments for Medications

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document affirms as final an interim final rule that 
froze through June 30, 2010, the copayment required by Department of 
Veterans Affairs (VA) regulations for certain outpatient medications. 
Under those 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.

DATES: This final rule is effective June 9, 2010.

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 have interpreted section 1722A(b) to 
mean that VA has discretion to determine the appropriate copayment 
amount and annual cap amount for medication

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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 includes an escalator provision for the 
copayment amount. Since 2001, the regulation has stated that the 
copayment amount for each calendar year is established using the CPI-P 
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.
    In a notice announcing an 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 notified the public of our need for ``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.'' On that basis, 
we ``froze'' copayments at $8 for the period January 1, 2010, through 
June 30, 2010. We concluded that the copayment freeze would give us 
time to analyze the current methodology and determine whether it might 
cause a significant financial hardship for veterans. We also provided 
notice that based upon VA analysis of copayments, ``the Secretary may 
initiate new rulemaking [regarding the methodology for increasing 
copayments] rather than continue to rely on the CPI-P escalator 
provision.'' Thus, as we stated in the notice announcing the interim 
final rule, the intended effect of this rulemaking was ``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 received 5 comments on the interim final rule. None of the 
comments opposed freezing copayments from January 1 to June 30, 2010.
    Some commenters indicated that VA should not allow the escalator 
clause to become effective again at the end of the 6-month period for a 
variety of reasons related to VA's authority to charge and increase 
copayments and its current methodology for determining copayment 
amounts. However, VA's intent regarding the interim final rule was only 
to delay the effect of the escalator clause that would otherwise have 
required an increase from $8 to $9 on January 1, 2010, while VA further 
considered its copayment policy. The interim final rule did not alter 
the current methodology for increasing copayments, and did not affect 
any period beyond June 30, 2010. To the extent that the commenters 
suggest an extension of the freeze in copayments, we will initiate a 
separate rulemaking that addresses copayments after June 30, 2010. We 
encourage commenters to carefully review the substance of the new 
rulemaking and provide us their comments.
    Several commenters opined that VA should not increase copayments at 
all. Some reasons suggested were the current state of the economy and 
because, the commenters assert, the same medications can be obtained 
for a lower price from commercial vendors. One commenter suggested that 
the copayment amount should ``regress to the earlier, base, [sic] 
amount of $7.00.'' Another suggested that our prices are higher than 
the actual cost of the drugs. All of these comments concern bases for 
the methodology used by VA to calculate copayment amounts, which was 
not the subject of the interim final rule. The rule merely delayed 
application of the methodology while VA considers the merits of its 
copayment policy.
    Regarding comments related to VA's copayment rate versus commercial 
vendors, as we indicated in the December 31, 2009, rulemaking notice, 
we are in the process of examining this matter. See 74 FR 69283. We 
cannot adequately respond to the substance of these comments until we 
have had sufficient time to complete our review and decide on a 
possible alternative methodology for computing the copayment amount. 
When our review is complete, if we determine that a new methodology is 
appropriate, we intend to publish a notice of proposed rulemaking, 
consider public comments, and implement a final rule before the 
expiration of any freeze in copayments. We appreciate the commenters' 
interest in this critical issue and encourage them to submit specific 
comments addressing the provisions of any proposed rule that would 
revise VA's copayment policy.
    Another commenter suggested that after June 30, 2010, we use the 
current methodology to increase the copayment amount only for veterans 
with nonservice-connected disabilities who are in priority category 8. 
Again, the purpose of the interim final rule was to avoid an imminent 
increase in copayments while VA considers its copayment policy--it did 
not change the existing methodology for increasing copayments, and 
merely provided for a return to that methodology after June 30, 2010. 
However, we will use the comment to inform our decision in the separate 
rulemaking noted above that addresses copayments after June 30, 2010.
    Because none of the comments that we received opposed the 6-month 
freeze prescribed by the interim final rule on December 31, 2009, we 
are affirming the interim final rule without change.

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 final 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

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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.
    VA has examined the economic, interagency, budgetary, legal, and 
policy implications of this rule and has concluded that it does 
constitute a significant regulatory action under the Executive Order.

Regulatory Flexibility Act

    The Secretary hereby certifies that this rule 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 freezes for 6 months 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.

PART 17--MEDICAL

0
Accordingly, the interim final rule amending 38 CFR 17.110, which was 
published at 74 FR 69283 on December 31, 2009, is adopted as a final 
rule without change.

[FR Doc. 2010-13872 Filed 6-8-10; 8:45 am]
BILLING CODE 8320-01-P