[Federal Register Volume 76, Number 244 (Tuesday, December 20, 2011)]
[Rules and Regulations]
[Pages 78824-78826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32532]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AO28


Copayments for Medications in 2012

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: The Department of Veterans Affairs (VA) amends its medical 
regulations concerning the copayment required for certain medications. 
Under current regulations, beginning on January 1, 2012, 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. A prior 
action ``froze'' the copayment amount for veterans in VA's health care 
system enrollment priority categories 2 through 6 and allowed for 
increased copayments, as required by the current regulation, only for 
veterans in priority categories 7 and 8. This document freezes 
copayments at the

[[Page 78825]]

current rate for veterans in priority categories 2 through 6 for the 
next 12 months, and thereafter resumes increasing copayments in 
accordance with any change in the prescription drug component of the 
Medical Consumer Price Index (CPI-P).

DATES: Effective Date: This rule is effective on December 20, 2011.
    Comments must be received on or before February 21, 2012.

ADDRESSES: Written comments may be submitted by email 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-AO28, Copayments for Medications in 2012.'' 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: Kristin Cunningham, Director, Business 
Policy, Chief Business Office, 810 Vermont Avenue, Washington, DC 
20420, (202) 461-1599 (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. The copayment amount cannot exceed the cost to the 
Secretary of this medication (including administrative costs). In 66 
Fed Reg 63499 we determined a method for calculating this cost. 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).'' Under the current regulation, 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 * * * is 
$8.'' 38 CFR 17.110(b)(1)(ii). ``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.'' 38 CFR 
17.110(b)(1)(iii). Thereafter, the copayment amount for all affected 
veterans is to be established using a formula based on the prescription 
drug component of the Medical Consumer Price Index, set forth in 38 CFR 
17.110(b)(1)(iv).
    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 VA's health care enrollment system priority categories 2 through 6. 
Through December 31, 2011, that cap is set at $960. Thereafter, the cap 
is to ``increase[ ] by $120 for each $1 increase in the copayment 
amount'' applicable to veterans enrolled in one of VA's health care 
enrollment system priority categories 2 through 6.
    On February 22, 2011, we published a final rulemaking that 
established the copayment amounts discussed above, effective through 
December 31, 2011. 76 FR 9646. In the interim final rule which 
announced our intent to freeze copayments through December 31, 2011, we 
made clear that we would return to the CPI-P methodology ``unless 
additional rulemaking is initiated.'' 75 FR 32670. We are now 
undertaking ``additional rulemaking'' to extend the freeze in copayment 
rates.
    In our prior rulemaking, we indicated that we were reviewing 
whether to revise the current regulatory formula. 76 FR 9647. We are 
still considering such revision, and will continue to review the matter 
in 2012. Therefore, as before, we continue to believe that a freeze is 
appropriate in light of this anticipated review and given the current 
economic climate, and propose to continue to delay implementation of 
the 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. 76 FR 9647. 
We continue to 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, 2012, 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 2012, unless additional rulemaking is 
initiated, VA will once again utilize the CPI-P methodology in Sec.  
17.110(b)(1)(iv) 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, 2012, 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 cap will 
increase as prescribed in current Sec.  17.110(b).
    At the same time, in light of the statutory requirement to share 
costs under 38 U.S.C. 1722A and the distinctions noted above regarding 
veterans in priority categories 2 through 6, we will not implement a 
freeze on any copayment increase pursuant to the regulatory formula for 
veterans in priority categories 7 and 8. A copayment increase for these 
veterans will depend upon the Medical Consumer Price Index.
    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

[[Page 78826]]

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 January 1, 
2012, might cause a significant financial hardship for some veterans.
    For the above reason, the Secretary issues this rule as an interim 
final rule. 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.

Effect of Rulemaking

    The Code of Federal Regulations, as revised by this rulemaking, 
would represent the exclusive legal authority on this subject. No 
contrary rules or procedures are authorized. All VA guidance must be 
read to conform with this rulemaking if possible or, if not possible, 
such guidance is superseded by this rulemaking.

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 Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
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 effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action,'' which requires review by the Office 
of Management and Budget (OMB), as ``any 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 
this Executive Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined and it has 
been determined to be a significant regulatory action. Accordingly, the 
Office of Management and Budget has reviewed this 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.

Regulatory Flexibility Act

    The Secretary hereby certifies that this interim final 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 interim final rule will temporarily freeze the 
copayments that certain veterans are required to pay for prescription 
drugs furnished by VA. The interim final 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 December 2, 2011, 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: December 15, 2011.
Robert C. McFetridge,
Director of Regulation Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.

    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(a), and as noted in specific sections.


0
2. In Sec.  17.110, paragraphs (b)(1)(ii), and (b)(2), remove 
``December 31, 2011'' each place it appears and add, in each place, 
``December 31, 2012''.

[FR Doc. 2011-32532 Filed 12-19-11; 8:45 am]
BILLING CODE 8320-01-P