[Federal Register Volume 77, Number 250 (Monday, December 31, 2012)]
[Rules and Regulations]
[Pages 76865-76867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31432]



38 CFR Part 17

RIN 2900-AO58

Copayments for Medications in 2013

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.


SUMMARY: The Department of Veterans Affairs (VA) amends its medical 
regulations concerning the copayment required for certain medications. 
But for this rulemaking, beginning on January 1, 2013, the copayment 
amount would increase based on a formula set forth in regulation. The 
maximum annual copayment amount payable by veterans would also 
increase. For 2012, VA ``froze'' the copayment amount for veterans in 
VA's health care system enrollment priority categories 2 through 6, but 
allowed copayments to increase based on the regulatory formula for 
veterans in priority categories 7 and 8. However, that formula did not 
trigger an increase in the copayment amount for veterans in priority 
categories 7 and 8. This rulemaking freezes copayments at the current 
rate for veterans in priority categories 2 through 8 for 2013, and 
thereafter resumes increasing copayments in accordance with the 
regulatory formula.

DATES: Effective Date: This rule is effective on December 31, 2012.
    Comments must be received on or before March 1, 2013.

ADDRESSES: Written comments may be submitted by email through http://www.regulations.gov; by mail or hand-delivery to Director, Regulation 
Policy and Management (02REG), 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-AO58, Copayments for 
Medications in 2013.'' Copies of comments received will be available 
for public inspection in the Office of Regulation Policy and 
Management, Room 1063B, between the hours of 8:00 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: Kristin Cunningham, Director, Business 
Policy, Chief Business Office, 810 Vermont Avenue NW., 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 non-service-
connected disability or

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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, for the period from July 1, 
2010, through December 31, 2012, 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). 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)(iv). For veterans in priority categories 7 and 
8, the copayment amount from July 1, 2010, through December 31, 2011, 
was $9. 38 CFR 17.110(b)(1)(iii). After December 31, 2011, copayments 
for veterans in priority categories 7 and 8 were subject to the 
regulatory formula; however, that formula did not trigger an increase 
in the copayment amount, so it remains $9.
    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, 2012, 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 enrolled in one of VA's health care 
enrollment system priority categories 2 through 6.
    On December 20, 2011, we published a final rulemaking that 
``froze'' copayments for veterans in priority categories 2 through 6 at 
$8, through December 31, 2012. 76 FR 78824, Dec. 20, 2011. In that 
rulemaking, we stated that this freeze was appropriate because this 
group would be impacted more by the increase due to their likely 
greater need for medical care as a result of their service-connected 
disabilities or conditions. This continues to be true, and therefore we 
are continuing to freeze copayments for these veterans for the next 12 
    We also believe that a freeze of the copayment rate is now 
appropriate for veterans enrolled in priority categories 7 and 8. Prior 
rulemakings justified freezing copayment rates on the basis that higher 
copayments reduced the utilization of VA pharmacy benefits. 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 conflict with each other when these 
prescriptions are filled by VA. When non-VA providers are also issuing 
prescriptions, there is a greater risk of adverse interactions and harm 
to the patient because it is more difficult for each provider to know 
if the patient is taking any other medications.
    At the end of calendar year 2013, 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 8. At that time, the CPI-P as of 
September 30, 2013, 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 8, following which copayments and the copayment cap will 
increase as prescribed in current Sec.  17.110(b).

Administrative Procedure Act

    In accordance with 5 U.S.C. 553(b)(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, 
2013, might cause a significant financial hardship for some veterans.
    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,'' 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 

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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 under Executive 
Order 12866.

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 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. The interim final rule affects individuals and 
has no impact on any 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 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 7, 2012, 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.

    Approved: December 7, 2012.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.
    For the reasons set forth in the preamble, VA amends 38 CFR part 17 
as follows:


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.

Sec.  17.110  [Amended]

2. Amend Sec.  17.110 as follows:
a. In paragraphs (b)(1)(ii) and (b)(2), remove ``December 31, 2012'' 
each place it appears and add, in each place, ``December 31, 2013''.
b. In paragraphs (b)(1)(iii) and (b)(1)(iv), remove ``December 31, 
2011'' each place it appears and add, in each place, ``December 31, 
[FR Doc. 2012-31432 Filed 12-28-12; 8:45 am]