Charges Billed to Third Parties for Prescription Drugs Furnished by VA to a Veteran for a Nonservice-Connected Disability, 32819-32822 [E9-16294]

Download as PDF Federal Register / Vol. 74, No. 130 / Thursday, July 9, 2009 / Proposed Rules rmajette on DSK29S0YB1 with PROPOSALS comment and with any disk or CD–ROM you submit. If we cannot read your comment because of technical difficulties and cannot contact you for clarification, we may not be able to consider your comment. Electronic comments should avoid the use of any special characters, any form of encryption, and be free of any defects or viruses. Docket: For access to the docket to read background documents or comments received, go to https:// www.regulations.gov. All documents in the docket are listed. Although listed in the index, some information is not publicly available, such as CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. FOR FURTHER INFORMATION CONTACT: Mr. David Olson, Headquarters, Operations and Regulatory Community of Practice, Washington, DC at 202–761–4922 or Ms. Kari Coler, U.S. Army Corps of Engineers, Los Angeles District, Regulatory Division, at 760–602–4834 or Ms. Therese O’Rourke, U.S. Army Corps of Engineers, Los Angeles District, Regulatory Division, at 760–602–4830. SUPPLEMENTARY INFORMATION: In response to a request from the Department of the Navy and pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat. 266; 33 U.S.C. 1) and Chapter XIX of the Army Appropriations Act of 1919 (40 Stat. 892; 33 U.S.C. 3), the Corps is proposing to amend the regulations at 33 CFR part 334 to establish a new danger zone. The proposed danger zone will prohibit access to waters adjacent to the SAR located on NASNI without prior written permission from the Commander, Navy Region Southwest or a designee, thereby ensuring that no threat is posed to passing water traffic due to ricochet rounds. obtained to the contrary during the public notice comment period, the Corps expects that this danger zone would have practically no economic impact on the public, and minimal anticipated navigational hazard or interference with existing waterway traffic. This proposed rule, if adopted, will have no significant economic impact on small entities. c. Review under the National Environmental Policy Act. Due to the administrative nature of this action and because the proposed site for the danger zone is located in the Pacific Ocean and vessels may navigate around the prohibited area, the Corps expects that this regulation, if adopted, will not have a significant impact to the quality of the human environment and, therefore, preparation of an environmental impact statement will not be required. An environmental assessment will be prepared after the public notice period is closed and all comments have been received and considered. It may be reviewed at the District office listed at the end of the FOR FURTHER INFORMATION CONTACT section, above. d. Unfunded Mandates Act. This proposed rule does not impose an enforceable duty among the private sector and, therefore, it is not a Federal private section mandate and it is not subject to the requirements of either section 202 or Section 205 of the Unfunded Mandates Act. We have also found under Section 203 of the Act, that small governments will not be significantly and uniquely affected by this rulemaking. Procedural Requirements a. Review Under Executive Order 12866. The proposed rule is issued with respect to a military function of the Defense Department and the provisions of Executive Order 12866 do not apply. b. Review Under the Regulatory Flexibility Act. This proposed rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96–354) which requires the preparation of a regulatory flexibility analysis for any regulation that will have a significant economic impact on a substantial number of small entities (i.e., small businesses and small governments). Unless information is 1. The authority citation for 33 CFR part 334 continues to read as follows: VerDate Nov<24>2008 15:18 Jul 08, 2009 Jkt 217001 List of Subjects in 33 CFR Part 334 Danger zones, Marine safety, Navigation (water), Restricted areas, Waterways. For the reasons stated in the preamble, the Corps proposes to amend 33 CFR part 334 as follows: PART 334—DANGER ZONE AND RESTRICTED AREA REGULATIONS Authority: 40 Stat. 266 (33 U.S.C. 1) and 40 Stat. 892 (33 U.S.C. 3). 2. Add § 334.866 to read as follows: § 334.866 Pacific Ocean, at the Naval Air Station North Island, San Diego, California; Naval Danger Zone. (a) The area. The danger zone shall encompass all navigable waters of the United States, as defined at 33 CFR part 329, in the Pacific Ocean contiguous to the existing small arms range located on Naval Air Station North Island, delineated as a 206.1 acre trapezium PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 32819 (quadrilateral with no parallel sides) beginning at latitude 32°41′13″ N., longitude 117°′12′45″ W.; thence easterly, along mean high water, to latitude 32°41′14″ N., longitude 117°12′32″ W.; thence southerly to latitude 32°40′31″ N., longitude 117°12′12″ W.; thence westerly to latitude 32°40′25″ N., longitude 117°12′43″ W.; thence northerly, landward, to the point of origin. (b) The regulations. No person, vessel, craft, article, or thing, except those under the supervision of the military or naval authority, shall enter the area without the permission of the enforcing agency or his/her designee. The restriction shall apply at all times. (c) Enforcement. The regulation in this section shall be enforced by the Commander, Navy Region Southwest, and such agencies and persons as he/ she may designate. Dated: July 2, 2009. Approved. Michael G. Ensch, Chief, Operations, Directorate of Civil Works. [FR Doc. E9–16235 Filed 7–8–09; 8:45 am] BILLING CODE 3710–92–P DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 17 RIN 2900–AN15 Charges Billed to Third Parties for Prescription Drugs Furnished by VA to a Veteran for a Nonservice-Connected Disability Department of Veterans Affairs. Proposed rule. AGENCY: ACTION: SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its medical regulations concerning ‘‘reasonable charges’’ for medical care or services provided or furnished by VA to a veteran for a nonservice-connected disability. More specifically, VA proposes to amend the regulations regarding charges billed for prescription drugs not administered during treatment by changing the billing formula to reflect VA’s actual drug costs for each drug rather than our current practice of using a national average drug cost for all prescriptions dispensed. The revised formula for calculating ‘‘reasonable charges’’ for prescription drug costs would also continue to include an average administrative cost for each prescription. The purpose is to provide VA with a more accurate billing methodology for prescription drugs. E:\FR\FM\09JYP1.SGM 09JYP1 rmajette on DSK29S0YB1 with PROPOSALS 32820 Federal Register / Vol. 74, No. 130 / Thursday, July 9, 2009 / Proposed Rules DATES: Comments must be received by VA on or before August 10, 2009. ADDRESSES: Written comments may be submitted through https:// www.regulations.gov; by mail or handdelivery to the 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– AN15 ‘‘Charges Billed to Third Parties for Prescription Drugs Furnished by VA to a Veteran for a Nonservice-Connected Disability.’’ 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. (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 https://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Romona Greene, Manager of Rates and Charges, VHA Chief Business Office (168), Veterans Health Administration, Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, (202) 461–1595. (This is not a toll-free number.) SUPPLEMENTARY INFORMATION: Under 38 U.S.C. 1729, VA has the right to recover or collect reasonable charges for medical care or services (including the provision of prescription drugs) from a third party to the extent that the veteran or the provider of the care or services would be eligible to receive payment from the third party for: • A nonservice-connected disability for which the veteran is entitled to care (or the payment of expenses of care) under a health plan contract, 38 U.S.C. 1729(a)(2)(D), 38 CFR 17.101(a)(1)(i); • A nonservice-connected disability incurred incident to the veteran’s employment and covered under a worker’s compensation law or plan that provides reimbursement or indemnification for such care and services, 38 U.S.C. 1729(a)(2)(A), 38 CFR 17.101(a)(1)(ii); or • A nonservice-connected disability incurred as a result of a motor vehicle accident in a State that requires automobile accident reparations (nofault) insurance, 38 U.S.C. 1729(a)(2)(B), 38 CFR 17.101(a)(1)(iii). However, under current 38 CFR 17.101(a)(4), which implements 38 U.S.C. 1729(c)(2)(B), a third-party payer liable for such medical care and services VerDate Nov<24>2008 15:18 Jul 08, 2009 Jkt 217001 under a health plan contract has the option of paying, to the extent of its coverage, either the billed charges or the amount the third-party payer demonstrates it would pay for care or services furnished by providers other than entities of the United States for the same care or services in the same geographic area. In general, current regulations set forth a methodology to establish VA charges that replicate, insofar as possible, the 80th percentile of community charges, adjusted to the market areas in which VA facilities are located, and trended forward to the time period during which the charges will be used (see 68 FR 56876, October 2, 2003). To avoid a windfall, the regulations do not apply this methodology to prescription drugs because, under authority of 38 U.S.C. 8126, VA purchases drugs at discounted prices. Instead, VA currently bills for prescription drugs based on the sum of two components: (1) The national average of VA’s drug costs for all prescriptions, and (2) the national average of VA’s administrative costs associated with furnishing prescription drugs. Further, in accordance with § 17.102(h), VA currently bills $51 for each prescription filled (see 70 FR 66866, November 3, 2005). We propose to change the billing methodology for prescription drugs. With respect to the portion of the billing concerning VA’s cost for prescription drugs, we propose to bill based on the actual cost to VA of each prescription drug rather than the $51 national average. Under the current methodology, VA bills more than the actual cost for some prescription drugs and less than the actual cost for others. (For the purpose of the following two examples, VA’s ‘‘actual average cost’’ is based upon the total cost incurred by VA for filling the prescription drug during calendar year 2008 and divided by the sum of the total number of such prescriptions filled nationally.) For example, in 2008 VA’s average actual cost for a 30-day supply of immunological agent was $297.73 (not including administrative cost). Also, in 2008 VA’s average actual cost for a 30day supply of antihistamine was $7.46 (also not including administrative costs). However, under the current methodology, VA billed $51.00 for each of these prescriptions (including administrative costs), regardless of whether the prescription was for 30, 60, or 90 days. Instead of billing based on a national average, it is more accurate to bill as close to the actual costs as possible. Consistent with this conclusion, we PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 propose to change the methodology for billing for prescription drugs not administered during treatment. In this regard, we propose to bill the total of: • The actual cost to VA for prescription drugs (i.e., the cost to the facility that purchased the drugs); and • The average national administrative cost associated with dispensing the drugs for each prescription. We created the current national average for prescription drug costs at a time when it was not feasible to bill for the actual cost of the drugs. However, we now have the capability to bill VA’s actual local cost for each specific drug (i.e., the cost to the facility that purchased the drugs). The cost will be obtained from the Outpatient Pharmacy Prescription file or the Drug file at each VA facility. We would still use VA’s national average for the administrative costs associated with the dispensing of the drugs. The formula that VA would use to determine the average for the administrative costs is set forth in proposed § 17.101(m). This formula considers the sum of the indirect costs (such as utilities and financial service) and the national drug dispensing costs (such as labor and packaging) and then divides the total by the actual number of VA prescriptions filled nationally. The national average is the most administratively feasible methodology to utilize to determine this cost. We know of no other practical manner in which to determine the actual administrative costs associated with each prescription. Further, we propose to calculate the administrative cost annually for the prior Fiscal Year (FY) (October through September) and then apply any changes at the beginning of the next calendar year. Based on the FY 2008 national VA average for the administrative costs associated with the provision of prescription drugs, the administrative cost to be used for calendar year 2009 is $11.17. In FY 2008, we billed health care plans approximately $350.3 million (based upon VA’s average actual cost for each prescription) but due to lesser amounts payable under the terms of the health care plans, we collected approximately $127.5 million. Had the proposed rule been in effect, we would have billed approximately $303.4 million (VA’s actual cost plus an administrative cost for each prescription), and we believe we would have collected approximately $186.6 million (based on our model regarding projected payments under the proposed rule). This reflects a substantial increase in the percentage of payment compared E:\FR\FM\09JYP1.SGM 09JYP1 Federal Register / Vol. 74, No. 130 / Thursday, July 9, 2009 / Proposed Rules to the billed amounts. Accordingly, had the proposed billing methodology been in effect in FY 2008, we believe that the VA collections for prescription drugs would have increased by approximately $59 million. Based on OMB’s Medical Consumer Price Index, when we compare FY 2008 with 2019 (ten year period after projected publication of final rule) we would expect the VA collections amount to increase by almost $87.2 million (an annual increase of slightly more than 3 percent). Based on the amount of time in FY 2010 that the proposed rule is in effect, we project that VA will realize a proportional amount of $62,570,965 in additional collections. We project that in FY 2011 VA will realize $64,760,949 million in additional VA collections (first full year of implementation). We expect that this amount will increase by the projection for the Medical Consumer Price Index (CPI) which is approximately 3 percent each year as shown in the table below. We welcome any comments regarding VA’s projected collections and projected payments. 1st ................. 2nd ............... 3rd ................ 4th ................ 5th ................ 6th ................ 7th ................ 8th ................ 9th ................ 10th .............. FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ $62,570,965 64,760,949 67,157,104 69,709,074 72,358,019 75,107,623 77,961,713 80,924,258 83,999,380 87,191,356 As required by 38 U.S.C. 1729(c)(2)(A), we will consult with the Comptroller General of the United States prior to promulgating a final rule. rmajette on DSK29S0YB1 with PROPOSALS Comment Period Under the rulemaking guidelines in Executive Order 12866, VA ordinarily provides a 60-day comment period for proposed rules. However, as stated in the preamble of this rulemaking notice, the methodology for billing health care plans for prescription drugs in VA’s current regulations is not accurate for certain drugs because it results in significant underpayments. Under the proposed rule, VA would implement an actual-cost methodology that ensures fair and accurate billing for all prescription drugs covered by third party payers. The rule would ensure that VA satisfies its obligation to seek reimbursement for prescription drug purchases and maintain all appropriate funds for the care of veterans. Accordingly, VA has determined that it would be in the public interest to provide a shorter comment period for this proposed rule and has specified that comments must be received within VerDate Nov<24>2008 15:18 Jul 08, 2009 Jkt 217001 30 days of the publication in the Federal Register. 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 year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector. Paperwork Reduction Act This document contains no collections 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 as 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 the Executive Order. VA has examined the economic, interagency, budgetary, legal, and policy implications of this proposed rule and has concluded that it is a significant regulatory action under Executive Order 12866 because it is likely to result in a rule that may raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 32821 Regulatory Flexibility Act The Secretary hereby certifies that this proposed 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 proposed rule would mainly affect large insurance companies. This proposed rule might have an insignificant impact on a few small entities that do an inconsequential amount of their business with VA. Therefore, pursuant to 5 U.S.C. 605(b), this proposed rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604. Catalog of Federal Domestic Assistance Numbers The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 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. 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: April 17, 2009. John R. Gingrich, Chief of Staff, Department of Veterans Affairs. For the reasons stated in the preamble, VA proposes to amend 38 CFR part 17 as follows: PART 17—MEDICAL 1. The authority citation for part 17 continues to read as follows: E:\FR\FM\09JYP1.SGM 09JYP1 32822 Federal Register / Vol. 74, No. 130 / Thursday, July 9, 2009 / Proposed Rules Authority: 38 U.S.C. 501, 1721, and as noted in specific sections. ENVIRONMENTAL PROTECTION AGENCY 2. Revise the second sentence of paragraph (a)(2) and paragraph (m) of § 17.101 to read as follows: 40 CFR Part 63 [EPA–HQ–OAR–2009–0027; FRL–8928–3] § 17.101 Collection or recovery by VA for medical care or services provided or furnished to a veteran for a nonserviceconnected disability. (a) * * * (2) * * * In addition, the charges billed for prescription drugs not administered during treatment will be the amount determined under paragraph (m) of this section. * * * * * * * * (m) Charges for prescription drugs not administered during treatment. Notwithstanding other provisions of this section, when VA provides or furnishes prescription drugs not administered during treatment, within the scope of care referred to in paragraph (a)(1) of this section, charges billed separately for such prescription drugs will consist of the amount that equals the total of the actual cost to VA for the drugs and the national average of VA administrative costs associated with dispensing the drugs for each prescription. The actual VA cost of a drug will be the actual amount expended by the VA facility for the purchase of the specific drug. The administrative cost will be determined annually using VA’s managerial cost accounting system. Under this accounting system, the average administrative cost is determined by adding the total VA national drug indirect costs (such as utilities and financial services) to the total VA national drug dispensing costs (such as labor and packaging) with the sum divided by the actual number of VA prescriptions filled nationally. Based on this accounting system, VA will determine the amount of the average administrative cost annually for the prior fiscal year (October through September) and then apply the charge at the start of the next calendar year. * * * * * [FR Doc. E9–16294 Filed 7–8–09; 8:45 am] rmajette on DSK29S0YB1 with PROPOSALS BILLING CODE 8320–01–P VerDate Nov<24>2008 15:18 Jul 08, 2009 Jkt 217001 RIN 2060–AO94 National Emission Standards for Hazardous Air Pollutants for Area Sources: Asphalt Processing and Asphalt Roofing Manufacturing AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing national emissions standards for the control of emissions of hazardous air pollutants (HAP) from the asphalt processing and asphalt roofing manufacturing area source category. These proposed emissions standards for new and existing sources are based upon EPA’s proposed determination as to what constitutes the generally available control technology or management practices (GACT) for the source category. DATES: Comments must be received on or before August 10, 2009 unless a public hearing is requested by July 20, 2009. If a hearing is requested on the proposed rules, written comments must be received by August 24, 2009. Under the Paperwork Reduction Act, comments on the information collection provisions are best assured of having full effect if the Office of Management and Budget (OMB) receives a copy of your comments on or before August 10, 2009. ADDRESSES: You may submit comments, identified by Docket ID No. EPA–HQ– OAR–2009–0027, by any of the following methods: • Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments. • Agency Web Site: https:// www.epa.gov/oar/docket.html. Follow the instructions for submitting comments on the EPA Air and Radiation Docket Web Site. • E-mail: a-and-r-docket@epa.gov. Include Docket ID No. EPA–HQ–OAR– 2009–0027 in the subject line of the message. • Fax: (202) 566–9744. • Mail: Area Source NESHAP for Asphalt Processing and Asphalt Roofing Manufacturing Docket, Environmental Protection Agency, Air and Radiation Docket and Information Center, Mailcode: 2822T, 1200 Pennsylvania Ave., NW., Washington, DC 20460. Please include a total of two copies. In addition, please mail a copy of your PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 comments on the information collection provisions to the Office of Information and Regulatory Affairs, OMB, Attn: Desk Officer for EPA, 725 17th St., NW., Washington, DC 20503. • Hand Delivery: EPA Docket Center, Public Reading Room, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC 20460. Such deliveries are only accepted during the Docket’s normal hours of operation, and special arrangements should be made for deliveries of boxed information. Instructions: Direct your comments to Docket ID No. EPA–HQ–OAR–2009– 0027. EPA’s policy is that all comments received will be included in the public docket without change and may be made available online at https:// www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be confidential business information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through https:// www.regulations.gov or e-mail. The https://www.regulations.gov Web site is an ‘‘anonymous access’’ system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through https:// www.regulations.gov, your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD–ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. Docket: All documents in the docket are listed in the https:// www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in https:// www.regulations.gov or in hard copy at the Area Source NESHAP for Asphalt Roofing Manufacturing Docket, EPA/DC, E:\FR\FM\09JYP1.SGM 09JYP1

Agencies

[Federal Register Volume 74, Number 130 (Thursday, July 9, 2009)]
[Proposed Rules]
[Pages 32819-32822]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-16294]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AN15


Charges Billed to Third Parties for Prescription Drugs Furnished 
by VA to a Veteran for a Nonservice-Connected Disability

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
medical regulations concerning ``reasonable charges'' for medical care 
or services provided or furnished by VA to a veteran for a nonservice-
connected disability. More specifically, VA proposes to amend the 
regulations regarding charges billed for prescription drugs not 
administered during treatment by changing the billing formula to 
reflect VA's actual drug costs for each drug rather than our current 
practice of using a national average drug cost for all prescriptions 
dispensed. The revised formula for calculating ``reasonable charges'' 
for prescription drug costs would also continue to include an average 
administrative cost for each prescription. The purpose is to provide VA 
with a more accurate billing methodology for prescription drugs.

[[Page 32820]]


DATES: Comments must be received by VA on or before August 10, 2009.

ADDRESSES: Written comments may be submitted through https://www.regulations.gov; by mail or hand-delivery to the 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-AN15 ``Charges Billed to Third Parties for 
Prescription Drugs Furnished by VA to a Veteran for a Nonservice-
Connected Disability.'' 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. (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 https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Romona Greene, Manager of Rates and 
Charges, VHA Chief Business Office (168), Veterans Health 
Administration, Department of Veterans Affairs, 810 Vermont Avenue, 
NW., Washington, DC 20420, (202) 461-1595. (This is not a toll-free 
number.)

SUPPLEMENTARY INFORMATION: Under 38 U.S.C. 1729, VA has the right to 
recover or collect reasonable charges for medical care or services 
(including the provision of prescription drugs) from a third party to 
the extent that the veteran or the provider of the care or services 
would be eligible to receive payment from the third party for:
     A nonservice-connected disability for which the veteran is 
entitled to care (or the payment of expenses of care) under a health 
plan contract, 38 U.S.C. 1729(a)(2)(D), 38 CFR 17.101(a)(1)(i);
     A nonservice-connected disability incurred incident to the 
veteran's employment and covered under a worker's compensation law or 
plan that provides reimbursement or indemnification for such care and 
services, 38 U.S.C. 1729(a)(2)(A), 38 CFR 17.101(a)(1)(ii); or
     A nonservice-connected disability incurred as a result of 
a motor vehicle accident in a State that requires automobile accident 
reparations (no-fault) insurance, 38 U.S.C. 1729(a)(2)(B), 38 CFR 
17.101(a)(1)(iii).
    However, under current 38 CFR 17.101(a)(4), which implements 38 
U.S.C. 1729(c)(2)(B), a third-party payer liable for such medical care 
and services under a health plan contract has the option of paying, to 
the extent of its coverage, either the billed charges or the amount the 
third-party payer demonstrates it would pay for care or services 
furnished by providers other than entities of the United States for the 
same care or services in the same geographic area.
    In general, current regulations set forth a methodology to 
establish VA charges that replicate, insofar as possible, the 80th 
percentile of community charges, adjusted to the market areas in which 
VA facilities are located, and trended forward to the time period 
during which the charges will be used (see 68 FR 56876, October 2, 
2003). To avoid a windfall, the regulations do not apply this 
methodology to prescription drugs because, under authority of 38 U.S.C. 
8126, VA purchases drugs at discounted prices. Instead, VA currently 
bills for prescription drugs based on the sum of two components: (1) 
The national average of VA's drug costs for all prescriptions, and (2) 
the national average of VA's administrative costs associated with 
furnishing prescription drugs. Further, in accordance with Sec.  
17.102(h), VA currently bills $51 for each prescription filled (see 70 
FR 66866, November 3, 2005).
    We propose to change the billing methodology for prescription 
drugs. With respect to the portion of the billing concerning VA's cost 
for prescription drugs, we propose to bill based on the actual cost to 
VA of each prescription drug rather than the $51 national average. 
Under the current methodology, VA bills more than the actual cost for 
some prescription drugs and less than the actual cost for others. (For 
the purpose of the following two examples, VA's ``actual average cost'' 
is based upon the total cost incurred by VA for filling the 
prescription drug during calendar year 2008 and divided by the sum of 
the total number of such prescriptions filled nationally.) For example, 
in 2008 VA's average actual cost for a 30-day supply of immunological 
agent was $297.73 (not including administrative cost). Also, in 2008 
VA's average actual cost for a 30-day supply of antihistamine was $7.46 
(also not including administrative costs). However, under the current 
methodology, VA billed $51.00 for each of these prescriptions 
(including administrative costs), regardless of whether the 
prescription was for 30, 60, or 90 days.
    Instead of billing based on a national average, it is more accurate 
to bill as close to the actual costs as possible. Consistent with this 
conclusion, we propose to change the methodology for billing for 
prescription drugs not administered during treatment. In this regard, 
we propose to bill the total of:
     The actual cost to VA for prescription drugs (i.e., the 
cost to the facility that purchased the drugs); and
     The average national administrative cost associated with 
dispensing the drugs for each prescription.
    We created the current national average for prescription drug costs 
at a time when it was not feasible to bill for the actual cost of the 
drugs. However, we now have the capability to bill VA's actual local 
cost for each specific drug (i.e., the cost to the facility that 
purchased the drugs). The cost will be obtained from the Outpatient 
Pharmacy Prescription file or the Drug file at each VA facility.
    We would still use VA's national average for the administrative 
costs associated with the dispensing of the drugs. The formula that VA 
would use to determine the average for the administrative costs is set 
forth in proposed Sec.  17.101(m). This formula considers the sum of 
the indirect costs (such as utilities and financial service) and the 
national drug dispensing costs (such as labor and packaging) and then 
divides the total by the actual number of VA prescriptions filled 
nationally. The national average is the most administratively feasible 
methodology to utilize to determine this cost. We know of no other 
practical manner in which to determine the actual administrative costs 
associated with each prescription.
    Further, we propose to calculate the administrative cost annually 
for the prior Fiscal Year (FY) (October through September) and then 
apply any changes at the beginning of the next calendar year. Based on 
the FY 2008 national VA average for the administrative costs associated 
with the provision of prescription drugs, the administrative cost to be 
used for calendar year 2009 is $11.17.
    In FY 2008, we billed health care plans approximately $350.3 
million (based upon VA's average actual cost for each prescription) but 
due to lesser amounts payable under the terms of the health care plans, 
we collected approximately $127.5 million. Had the proposed rule been 
in effect, we would have billed approximately $303.4 million (VA's 
actual cost plus an administrative cost for each prescription), and we 
believe we would have collected approximately $186.6 million (based on 
our model regarding projected payments under the proposed rule). This 
reflects a substantial increase in the percentage of payment compared

[[Page 32821]]

to the billed amounts. Accordingly, had the proposed billing 
methodology been in effect in FY 2008, we believe that the VA 
collections for prescription drugs would have increased by 
approximately $59 million. Based on OMB's Medical Consumer Price Index, 
when we compare FY 2008 with 2019 (ten year period after projected 
publication of final rule) we would expect the VA collections amount to 
increase by almost $87.2 million (an annual increase of slightly more 
than 3 percent). Based on the amount of time in FY 2010 that the 
proposed rule is in effect, we project that VA will realize a 
proportional amount of $62,570,965 in additional collections. We 
project that in FY 2011 VA will realize $64,760,949 million in 
additional VA collections (first full year of implementation). We 
expect that this amount will increase by the projection for the Medical 
Consumer Price Index (CPI) which is approximately 3 percent each year 
as shown in the table below. We welcome any comments regarding VA's 
projected collections and projected payments.

1st................................  FY2010...............   $62,570,965
2nd................................  FY2011...............    64,760,949
3rd................................  FY2012...............    67,157,104
4th................................  FY2013...............    69,709,074
5th................................  FY2014...............    72,358,019
6th................................  FY2015...............    75,107,623
7th................................  FY2016...............    77,961,713
8th................................  FY2017...............    80,924,258
9th................................  FY2018...............    83,999,380
10th...............................  FY2019...............    87,191,356
 

    As required by 38 U.S.C. 1729(c)(2)(A), we will consult with the 
Comptroller General of the United States prior to promulgating a final 
rule.

Comment Period

    Under the rulemaking guidelines in Executive Order 12866, VA 
ordinarily provides a 60-day comment period for proposed rules. 
However, as stated in the preamble of this rulemaking notice, the 
methodology for billing health care plans for prescription drugs in 
VA's current regulations is not accurate for certain drugs because it 
results in significant underpayments. Under the proposed rule, VA would 
implement an actual-cost methodology that ensures fair and accurate 
billing for all prescription drugs covered by third party payers. The 
rule would ensure that VA satisfies its obligation to seek 
reimbursement for prescription drug purchases and maintain all 
appropriate funds for the care of veterans. Accordingly, VA has 
determined that it would be in the public interest to provide a shorter 
comment period for this proposed rule and has specified that comments 
must be received within 30 days of the publication in the Federal 
Register.

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 year. This proposed rule would have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This document contains no collections 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 as 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 the Executive 
Order.
    VA has examined the economic, interagency, budgetary, legal, and 
policy implications of this proposed rule and has concluded that it is 
a significant regulatory action under Executive Order 12866 because it 
is likely to result in a rule that may raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed 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 proposed rule would mainly affect large insurance 
companies. This proposed rule might have an insignificant impact on a 
few small entities that do an inconsequential amount of their business 
with VA. Therefore, pursuant to 5 U.S.C. 605(b), this proposed rule is 
exempt from the initial and final regulatory flexibility analysis 
requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 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.

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: April 17, 2009.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.

    For the reasons stated in the preamble, VA proposes to amend 38 CFR 
part 17 as follows:

PART 17--MEDICAL

    1. The authority citation for part 17 continues to read as follows:


[[Page 32822]]


    Authority:  38 U.S.C. 501, 1721, and as noted in specific 
sections.

    2. Revise the second sentence of paragraph (a)(2) and paragraph (m) 
of Sec.  17.101 to read as follows:


Sec.  17.101  Collection or recovery by VA for medical care or services 
provided or furnished to a veteran for a nonservice-connected 
disability.

    (a) * * *
    (2) * * * In addition, the charges billed for prescription drugs 
not administered during treatment will be the amount determined under 
paragraph (m) of this section. * * *
* * * * *
    (m) Charges for prescription drugs not administered during 
treatment. Notwithstanding other provisions of this section, when VA 
provides or furnishes prescription drugs not administered during 
treatment, within the scope of care referred to in paragraph (a)(1) of 
this section, charges billed separately for such prescription drugs 
will consist of the amount that equals the total of the actual cost to 
VA for the drugs and the national average of VA administrative costs 
associated with dispensing the drugs for each prescription. The actual 
VA cost of a drug will be the actual amount expended by the VA facility 
for the purchase of the specific drug. The administrative cost will be 
determined annually using VA's managerial cost accounting system. Under 
this accounting system, the average administrative cost is determined 
by adding the total VA national drug indirect costs (such as utilities 
and financial services) to the total VA national drug dispensing costs 
(such as labor and packaging) with the sum divided by the actual number 
of VA prescriptions filled nationally. Based on this accounting system, 
VA will determine the amount of the average administrative cost 
annually for the prior fiscal year (October through September) and then 
apply the charge at the start of the next calendar year.
* * * * *
[FR Doc. E9-16294 Filed 7-8-09; 8:45 am]
BILLING CODE 8320-01-P
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