Changes Coming to Outpatient VA Medication Copay

Changes Coming to Outpatient VA Medication Copay

Outpatient VA medication copay changes are coming February 2017. While the changes have been touted in news articles and press releases as lowering veterans’ outpatient medication costs the actual benefits remain to be seen.


Current outpatient VA medication copay costs are established according to the health care priority group a veteran is placed in. Veterans in Priority Group 1 do not have copayments. Veterans in Priority Groups 2 through 6 pay $8.00, and veterans in Priority Groups 7 and 8 pay $9.00. The annual copayment cap for a veteran is currently set at $960.

According to the VA’s internal comparison the impact of the new copayment structure will be:

  • Most veterans would realize between 10 and 50 percent reduction in overall yearly pharmacy copayments
  • 94 percent of “copayment eligible” veterans would experience no cost increase
  • 80 percent would save between $1 and $5 per 30-day equivalent of medication
  • A “small percentage” of veterans could experience an increase in medication copayments

The most definitive change – the annual copayment cap will be reduced from $960 to $700. According to an internal Impact Analysis, the VA estimates that approximately nine percent of veterans subject to a medication copayment will benefit from the reduced copayment cap, which means about 225,000 of the estimated 2.5 million patients currently subject to a copayment.

Outpatient VA Medication Copay Change Summary

When will the outpatient medication copayments change?

The announced changes are scheduled to be effective February 27, 2017.

Who do outpatient VA medication copayments apply to?

Copayments apply to Veterans:

  • Without a service-connected condition
  • Rated less than 50% disabled who are receiving outpatient treatment for a non-service-connected condition
  • Whose annual income exceed the limit set by law

Veterans exempt from outpatient medication copayments include:

  • Veterans with a service-connected disability rated 50 % or more
  • Former Prisoners-of-War
  • Veterans whose annual income is at or below the maximum annual rate of VA pension that would be payable if the veteran were eligible for such pension (based on individual circumstances – the annual amount can range from $12,907 to $34,153)

New Outpatient VA Medication Copay Tiers

The VA provided examples of the chronic conditions for which Tier 1 and 2 medications would be prescribed, including: diabetes mellitus, hypertension, and hypercholesterolemia. Once determined, the VA expects to annually publish a list of Tier 1 medications in the Federal Register and on the VA website at www.va.gov/health.

Tier 1 outpatient medication (preferred generics)

  • $5 copay for a 30-day or less supply
  • Includes “multi-source” medications
  • There are “7 exclusionary criteria” that must be met for a medication to be included in Tier 1:
    • VA’s acquisition cost must be less than or equal to $10 for a 30-day supply
    • Tier 1 excludes topical creams, products used to treat musculoskeletal conditions, antihistamines, and steroid-containing medications.
    • Tier 1 excludes medications often used for short time periods and/or for acute skin infections or conditions
    • Tier 1 medications must be on the VA National Formulary
    • Tier 1 excludes antibiotics primarily used for short periods of time to treat infections
    • Tier 1 medications must be primarily prescribed to either treat or manage a chronic condition, or to reduce the risk of adverse health outcomes of secondary conditions
    • Tier 1 medications are for conditions that persist for 3 months or more [considered chronic for this purpose]

The medications that can be included in Tier 1 must satisfy exclusionary criteria and be among the top 75 most commonly prescribed multi-source medications (subject to VA periodic review). Additional considerations include the clinical value of the medication and the VA’s available budgetary resources. Cost is definitely a factor in the VA’s decision-making processas published January 5, 2016, in the Federal Register as a Proposed Rule:

“…Although we believe that lowering copayments for prescription medications would improve clinical outcomes for veterans who take those medications, for budgetary reasons we must limit the number of medications that would qualify for a lower copayment amount as selected multi-source medications.”

Tier 2 outpatient medication (non-preferred generics and some over-the-counter medications)

  • $8 copay for a 30-day or less supply
  • Includes “multi-source” medications
  • Includes the medications that do not meet VA’s established criteria for medications in Tier 1

Tier 3 outpatient medication (brand name medications)

  • $11 copay for a 30-day or less supply
  • Includes medications under patent protection and exclusivity (no generic versions) that are not multi-source medications
  • “…medications approved by the FDA under a New Drug Application (NDA)…” “FDA publishes a list of the medications approved under NDAs on its website at fda.gov

Annual limit on copayments

The annual cap is lowered to $700 for all veterans required to pay medication copayments.

Why the VA is making these changes

  • Concerns that the VA is not competitive with non-VA copayments (medications are cheaper somewhere else)
  • Concerns that Veteran patients are not taking medications as described because of the cost
  • Concerns that Veteran patients are “price-shopping” for outpatient medications, increasing the likelihood of “fragmented care” (i.e., the VA providers are unaware of medication usage)

Definitions

What does “medication” mean?

The VA defines “medication” as prescription and over-the-counter medications. The term excludes medical supplies and devices, as well as oral nutritional supplements.

What does “multi-source medication” mean?

For the purpose of this new VA copayment structure, the VA has defined “multi-source medication” as medication that is available from multiple sources.

Copayment Waivers

Federal Regulation provides an opportunity for a veteran to request a waiver of medication copayment charges:

  • Must submit a VA Form 5655 Financial Status Report
  • Make the waiver request within 180 days after date of notice of indebtedness (may be extended under limited circumstances)
  • The Consolidated Patient Account Center (CPAC) Chief Financial Offer may waive all or part of the claimant’s debts
  • The “equity and good conscience” standard will apply (essentially the decision “to waive or not to waive” must be reasonable and not be unduly favorable or adverse to either the Veteran or the Government).

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