[Federal Register Volume 78, Number 250 (Monday, December 30, 2013)]
[Rules and Regulations]
[Pages 79315-79317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31102]



38 CFR Part 17

RIN 2900-AO91

Copayments for Medications in 2014

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, 2014, the copayment 
amount would increase based on a formula set forth in regulation. The 
maximum annual copayment amount payable by veterans would also 
increase. This rulemaking freezes copayments at the current rate for 
2014 for veterans in priority categories 2 through 8, and thereafter 
resumes increasing copayments in accordance with the regulatory 

DATES: Effective Date: This rule is effective on December 30, 2013.
    Comment date: Comments must be received on or before February 28, 

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-AO91, Copayments for 
Medications in 2014.'' 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, Department of Veterans Affairs, 810 
Vermont Avenue NW., Washington, DC 20420, (202) 382-2508. (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 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, 2013, 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 the period July 1, 2010, through December 31, 
2013, the copayment amount for veterans in priority categories 7 and 8 
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 (CPI-
P), 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, 2013, 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.
    Current paragraph (b)(1)(i) provides the amount for copayments for 
medication immediately after VA published revisions to this regulation 
on December 31, 2009. 74 FR 69283, 69285. However, the time period 
governed by this paragraph, between January 1, 2010, and June 30, 2010, 
has now passed. VA is removing paragraph (b)(1)(i) to simplify the 
regulation because this provision is no longer necessary. VA is 
redesignating the remaining paragraphs accordingly and correcting the 
reference in the note to Sec.  17.110(b)(1).
    On December 31, 2012, we published an interim final rulemaking that 
``froze'' copayments for veterans in priority categories 2 through 6 at 
$8 and for veterans in priority categories 7 and 8 at $9, through 
December 31, 2013. 77 FR 76865, Dec. 31, 2012. This interim final rule 
was made final on May 23, 2013. 78 FR 30767, May 23, 2013. In these 
rulemakings, we stated that this freeze was appropriate because, as 
justified in prior rulemakings, higher copayments reduced the 
utilization of VA pharmacy benefits. 77 FR 76866. 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 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 assess if the patient is taking any 
other medications.
    Specifically, we are removing December 31, 2013, in each place it 
appears in the newly designated paragraphs (b)(1)(i), (ii), and (iii), 
and inserting December 31, 2014, to continue to keep copayment rates 
and caps at their current levels.
    At the end of calendar year 2014, unless additional rulemaking is 
initiated, VA will once again utilize the CPI-P methodology in the 
newly re-designated Sec.  17.110(b)(1)(iii) to determine whether to 
increase copayments and calculate any mandated increase in the 
copayment amount for

[[Page 79316]]

veterans in priority categories 2 through 8. At that time, CPI-P as of 
September 30, 2014, 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

    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. Increasing the copayment amount on January 1, 
2014, might cause a significant financial hardship for some veterans 
and may decrease patient adherence to medical plans and have other 
unpredictable negative health effects.
    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), 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 that it may be an economically 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 at http://www1.va.gov/orpm/, by following the link for ``VA 
Regulations Published.''

Congressional Review Act

    This regulatory action may be considered a major rule under the 
Congressional Review Act, 5 U.S.C. 801-08, because it may result in an 
annual effect on the economy of $100 million or more. Although this 
regulatory action may constitute a major rule within the meaning of the 
Congressional Review Act, 5 U.S.C. 804(2), it is not subject to the 60-
day delay in effective date applicable to major rules under 5 U.S.C. 
801(a)(3) because the Secretary finds that good cause exists under 5 
U.S.C. 808(2) to make this regulatory action effective on January 1, 
2014, consistent with the reasons given for the publication of this 
interim final rule. Increasing the copayment amount on January 1, 2014, 
might cause a significant financial hardship for some veterans and may 
decrease patient adherence to medical plans and have other 
unpredictable negative health effects. Accordingly, the Secretary finds 
that additional advance notice and public procedure thereon are 
impractical, unnecessary, and contrary to the public interest. In 
accordance with 5 U.S.C. 801(a)(1), VA will submit to the Comptroller 
General and to Congress a copy of this regulatory action and VA's 
Regulatory Impact Analysis (RIA).

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 

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 directly affects 
individuals 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

[[Page 79317]]

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. Jose D. 
Riojas, Chief of Staff, Department of Veterans Affairs, approved this 
document on December 2, 2013, 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 23, 2013.
Robert C. McFetridge,
Director, 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:


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. Remove paragraph (b)(1)(i).
b. Redesignate paragraphs (b)(1)(ii) through (b)(1)(iv) as (b)(1)(i) 
through (b)(1)(iii), respectively.
c. In redesignated paragraphs (b)(1)(i), (ii), and (iii) and in 
paragraph (b)(2), remove ``December 31, 2013'' each place it appears 
and add, in each place, ``December 31, 2014''.
d. In the note following redesignated (b)(1)(iii), remove 
``(b)(1)(iv)'' and add, in its place, ``(b)(1)(iii)''.

[FR Doc. 2013-31102 Filed 12-27-13; 8:45 am]