[Federal Register Volume 81, Number 235 (Wednesday, December 7, 2016)]
[Rules and Regulations]
[Pages 88117-88120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29337]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AP87


Extension of Pharmacy Copayments for Medications

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. 
This rulemaking freezes copayments at the current rate for veterans in 
priority groups 2 through 8 through February 26, 2017.

DATES: Effective Date: This rule is effective on December 7, 2016.
    Comment date: Comments must be received on or before February 6, 
2017.

ADDRESSES: Written comments may be submitted by email through http://www.regulations.gov; by mail or hand-delivery to Director, Regulation 
Policy and Management (00REG), Department of Veterans Affairs, 810 
Vermont Avenue NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. (This is not a toll-free number.) Comments should indicate 
that they are submitted in response to ``RIN 2900-AP87-Copayments for 
Medications in

[[Page 88118]]

2017.'' Copies of comments received will be available for public 
inspection in the Office of Regulation Policy and Management, Room 
1068, between the hours of 8:00 a.m. and 4:30 p.m. Monday through 
Friday (except holidays). Please call (202) 461-4902 for an 
appointment. (This is not a toll-free number.) 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: Bridget Souza, Office of Community 
Care (10D), Veterans Health Administration, Department of Veterans 
Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 382-2537. 
(This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: Under 38 U.S.C. 1722A(a), VA must require 
veterans to pay at least a $2 copayment for each 30-day supply of 
medication furnished on an outpatient basis for the treatment of a non-
service-connected disability or condition unless a veteran has a 
service-connected disability rated 50 percent or more, is a former 
prisoner of war, or has an annual income at or below the maximum annual 
rate of VA pension that would be payable if the veteran were eligible 
for pension. Under 38 U.S.C. 1722A(b), VA ``may,'' by regulation, 
increase that copayment amount and establish a maximum annual copayment 
amount (a ``cap''). We have consistently interpreted 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 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, the copayment amount for 
veterans in priority groups 2 through 6 of VA's health care system is 
$8 through December 31, 2016. 38 CFR 17.110(b)(1)(i). The copayment 
amount for veterans in priority groups 7 and 8 is $9 through December 
31, 2016. 38 CFR 17.110(b)(1)(ii). 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 (CPI-
P), set forth in 38 CFR 17.110(b)(1)(iii). Using this methodology would 
generally result in increased medication prices for veterans.
    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 groups 2 through 6. 
Through December 31, 2016, the annual cap is set at $960. Thereafter, 
the cap is to increase ``by $120 for each $1 increase in the copayment 
amount'' applicable to veterans in priority categories 2 through 6.
    On October 27, 2014, we published an interim final rulemaking that 
``froze'' copayments for veterans in priority categories 2 through 6 at 
$8 and for veterans in priority groups 7 and 8 at $9, through December 
31, 2015. 79 FR 63819. This interim final rule was made final on 
September 16, 2015. 79 FR 55545. In that final rulemaking, we extended 
the copayment freeze to be effective through December 31, 2016. We 
stated that this extended timeframe would permit the freeze to be in 
effect all of calendar year 2016 for the continued benefit of veterans, 
and would allow VA to continue to develop and publish proposed and 
final rules to implement a tiered copayment structure for certain 
medications, which will further align VA's medication copayment 
structure with other Federal agencies and the commercial sector. In 
these rulemakings, we stated that this freeze was appropriate because 
failure to take the action would result in higher copayments, and, as 
described in prior rulemakings, higher copayments reduced the 
utilization of VA pharmacy benefits and caused VA patients to instead 
rely on external providers for medications. 79 FR 63820. We continue to 
believe this to be the case. The ability to ensure that medications are 
taken as prescribed is essential to effective health care management. 
VA can monitor whether its patients are refilling prescriptions at 
regular intervals while also checking for medications that may interact 
with each other when these prescriptions are filled by VA. When both VA 
and non-VA providers are issuing prescriptions to a veteran, there is a 
greater risk of adverse interactions and harm to the patient because it 
is more difficult for each provider to assess whether the patient is 
taking any other medications.
    On January 5, 2016, we published a proposed rule that would 
establish a tiered medication copayment structure. 81 FR 196. In that 
proposed rule, we indicated that VA intended to publish a final rule 
that would make the proposed changes effective January 1, 2017. VA 
proposed an effective date of January 1, 2017 based on our assumption 
that the necessary system changes would be in place by that date to 
allow us to publish a final rule implementing a tiered medication 
copayment structure. VA will be unable to meet that timeline. However, 
VA thinks that the necessary changes will be in place in February 2017, 
and that a final rule establishing a tiered medication copayment regime 
can be published with an effective date of February 27, 2017.
    In this rulemaking, we are removing December 31, 2016, in each 
place it appears in paragraphs (b)(1)(i)-(iii) and (b)(2), and 
inserting February 26, 2017, to continue to keep copayment rates and 
caps at their current levels until the tiered copayment system is 
established.
    If we fail to extend the medication copayment freeze past December 
31, 2016, affected veterans would be subject to increased medication 
copayments until such time as the anticipated final rule implementing 
the tiered medication copayment structure is effective. In that case, 
beginning January 1, 2017, VA would use the CPI-P methodology in Sec.  
17.110(b)(1)(iii) to determine whether to increase copayments and 
calculate any mandated increase in the copayment amount for veterans in 
priority groups 2 through 8. At that time, the copayment amounts would 
be adjusted to a higher rate based on changes in the CPI-P over the 
past five years, and the annual copayment cap would also be raised by 
$120 for each $1 increase in the copayment amount. The end result would 
be increased medication copayments, and a higher annual cap on 
copayments until the effective date of the anticipated final rule 
implementing tiered medication copayments. VA believes this would not 
only have an adverse financial effect on veterans subject to medication 
copayments, but would also cause unnecessary confusion by making two 
changes to veterans' medication copayment amounts over a two-month 
period. Thus, the intended effect of this interim final rule is to 
prevent increases in copayment amounts and the copayment cap for 
veterans in priority groups 2 through 8 until VA has published a final 
rule establishing a new copayment structure. At that time, veterans' 
copayments will be determined according to the methodology contained in 
the final rule that VA will publish to establish a tiered copayment 
system. If VA has not established a new tiered copayment system by the 
end of February, copayments and the copayment cap will increase as 
prescribed in current

[[Page 88119]]

Sec.  17.110(b) in the absence of further rulemaking.

Administrative Procedure Act

    The Secretary of Veterans Affairs finds that there is good cause 
under 5 U.S.C. 553(b)(B) and (d)(3) 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. If the medication copayment freeze is not 
extended, on January 1, 2017, affected veterans would be subject to 
increased medication copayments based on changes to the CPI-P since 
2010, as well as an upward adjustment to the annual copayment cap. VA 
believes that this might cause a significant financial hardship for 
those affected veterans and may decrease patient adherence to medical 
plans and have other unpredictable negative health effects. Further, VA 
believes that failing to extend the current medication copayment 
freeze, without interruption, would likely result in confusion for the 
public and affected veterans because the new tiered medication 
copayment regime will go into effect within a relatively short period 
of time. Lastly, allowing the current medication copayment freeze to 
expire on December 31, 2016, would create programmatic issues that 
would be difficult for VA to administratively manage. Within a 60-day 
period IT algorithms that are currently in place would have to be 
removed, new copayment amounts and annual cap amounts would have to be 
calculated and implemented along with the necessary system changes, 
followed by application of the new IT changes necessary for 
establishing a new tiered medication copayment scheme.
    For the above reasons, 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

    Title 38 of the Code of Federal Regulations, as revised by this 
interim final rulemaking, represents VA's implementation of its legal 
authority on this subject. Other than future amendments to this 
regulation or governing statutes, no contrary guidance or procedures 
are authorized. All existing or subsequent 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 interim final rule contains no provisions constituting a 
collection of information under the Paperwork Reduction Act of 1995 (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,'' requiring review by the Office of 
Management and Budget (OMB), unless OMB waives such review, 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 interim final rule have been examined, and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866. VA's impact analysis can be found as a 
supporting document at http://www.regulations.gov, usually within 48 
hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's Web 
site.

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 the 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 one year. This interim final rule will 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 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 interim final rule will temporarily freeze the 
copayments that certain veterans are required to pay for prescription 
drugs furnished by VA. This interim rule directly affects individual VA 
patients and will not directly affect small entities. Therefore, 
pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial 
and final regulatory flexibility analysis requirements of 5 U.S.C. 603 
and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document 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. Gina S. 
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs,

[[Page 88120]]

approved this document on October 3, 2016, for publication.

    Dated: December 2, 2016.
Michael Shores,
Acting Director, Regulation Policy & Management, Office of the 
Secretary, Department of Veterans Affairs.

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.

    For the reasons set out 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, and as noted in specific sections.
    Sections 17.640 and 17.647 also issued under Public Law 114-2, 
sec. 4.
    Sections 17.641 through 17.646 also issued under 38 U.S.C. 
501(a) and Public Law 114-2, sec. 4.


Sec.  17.110  [Amended]

0
2. Amend Sec.  17.110 as follows:
0
a. In paragraphs (b)(1)(i), (ii), and (iii), remove all references to 
``December 31, 2016'' and add in each place ``February 26, 2017''.
0
b. In paragraph (b)(2), remove all references to ``December 31, 2016'' 
and add in each place ``February 26, 2017''.

[FR Doc. 2016-29337 Filed 12-6-16; 8:45 am]
 BILLING CODE 8320-01-P