[Federal Register: December 28, 2006 (Volume 71, Number 249)]
[Proposed Rules]
[Page 78110-78115]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de06-21]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 199
[DOD-2006-HA-0149; RIN 0720-AB01]
Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS); TRICARE: Implementation of Changes to the Pharmacy Benefits
Program; Double Coverage With Medicare Part D
AGENCY: Department of Defense.
ACTION: Proposed rule.
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SUMMARY: TRICARE eligible beneficiaries, who are entitled to Medicare
Part A on the basis of age, disability, or end-stage renal disease,
maintain their TRICARE eligibility when they are enrolled in the
supplementary medical insurance program under Part B of Medicare. In
general, in the case of medical or dental care provided to these
individuals for which payment may be made under both Medicare and
TRICARE, Medicare is the primary payer and TRICARE will normally pay
the actual out-of-pocket costs incurred by the person. This proposed
rule prescribes double coverage payment procedures and makes revisions
to TRICARE rules to accommodate beneficiaries who are eligible under
both Medicare and TRICARE, and who participate in Medicare's outpatient
prescription drug program under Medicare Part D. These revisions are
necessary because of the requirements contained in the Centers for
Medicare and Medicaid Services (CMS) final rule for the Medicare
Prescription Drug Benefit, Part D Plans with Other Prescription Drug
Coverage.
This proposed rule also establishes requirements and procedures for
implementation of the improvements to the TRICARE Pharmacy Benefits
Program directed by section 714 of the Ronald W. Reagan National
Defense Authorization Act for Fiscal Year 2005 (NDAA FY 05) (Public Law
108-365). The rule clarifies that the cost-sharing requirements for
Medicare-eligible beneficiaries may not be in excess of the cost-
sharing requirements applicable to other retirees, their dependents,
former spouses and survivors. Additionally, the rule authorizes the DoD
Pharmacy and Therapeutics Committee to make a separate and additional
determination of the relative clinical and cost effectiveness of
pharmaceutical agents to assure pharmacies of the uniformed services
have on their formularies pharmaceutical agents that provide greater
value than other uniform formulary agents in that therapeutic
[[Page 78111]]
class. This rule also describes the transition process that will occur
as the uniform formulary is developed and uniform service facilities
move to a uniform formulary, consistent with their scope of practice.
DATES: Comments on this proposed rule will be accepted until February
26, 2007.
ADDRESSES: You may submit comments, identified by docket number and/or
RIN number and title, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Federal Docket Management System Office, 1160
Defense Pentagon, Washington, DC 20301-1160.
Instructions: All submissions received must include the agency name
and docket number or Regulatory Information Number (RIN) for this
Federal Register document. The general policy for comments and other
submissions from members of the public is to make these submissions
available for public viewing on the Internet at http://regulations.gov
as they are received without change, including any personal identifiers
or contact information.
FOR FURTHER INFORMATION CONTACT: MAJ Travis Watson, TRICARE Management
Activity, Pharmacy Directorate, telephone (703) 681-2890 x6707.
SUPPLEMENTARY INFORMATION:
I. Double Coverage With Medicare Part D
Section 101 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), (Pub. L. 108-173), amended Title XVIII
of the Social Security Act by establishing a new Part D: the Voluntary
Prescription Drug Benefit Program (henceforth, Medicare Part D). The
Department of Health and Human Services, Centers for Medicare and
Medicaid Services (CMS), published their Final Rule on January 28, 2005
(70 FR 4193--4585). The addition of a prescription drug benefit to
Medicare represents a landmark change to the Medicare program, and
became available to beneficiaries beginning on January 1, 2006.
The Floyd D. Spence National Defense Authorization Act for Fiscal
Year 2001 (Pub. L. 106-398), established the TRICARE Senior Pharmacy
Program under section 711 (which was effective April 1, 2001). The Act
also under section 712 (which was effective October 1, 2001) continued
TRICARE eligibility for beneficiaries entitled to Medicare Part A on
the basis of age, provided they also are enrolled in Medicare Part B.
This program has come to be known as TRICARE for Life. Under section
701 of the National Defense Authorization Act for Fiscal Year 2000
(Public Law 106-65), codified at Title 10, United States Code, Section
1074g, the Department established its new pharmacy benefits program for
all TRICARE beneficiaries (as implemented by 32 CFR 199.21). The full
implementation of the pharmacy benefits program was not effective until
May 3, 2004, however, changes in pharmacy cost shares were effective
with the implementation of TRICARE Senior Pharmacy on April 1, 2001.
In implementing TRICARE Senior Pharmacy, DoD stated that the double
coverage rules in 32 CFR 199.8 are applicable to services provided to
all beneficiaries under the retail pharmacy network, retail pharmacy
non-network, or TRICARE Mail Order programs. In implementing TRICARE
for Life, DoD explained the double coverage rules under 10 U.S.C.
1086(d)(3). The statute states that if a TRICARE-Medicare dual-eligible
beneficiary receives medical or dental care for which payment may be
made under Medicare and TRICARE, the amount payable for that care by
TRICARE shall be the amount of the actual out-of-pocket costs incurred
by the person for that care over the sum of (i) the amount paid for
that care under Medicare; and (ii) the total of all amounts paid or
payable by third party payers other than Medicare. The amount payable
by TRICARE may not exceed the total amount that would be paid under
TRICARE if payment for the care were made solely under TRICARE. TRICARE
for Life did not expand the scope of benefits available to this group
of beneficiaries beyond the scope of TRICARE benefits available to
other retirees and their families. The critical fact is whether the
service or supply is payable by both Medicare and TRICARE. For health
care services for which payment may be made under both Medicare and
TRICARE, TRICARE will pay up to the beneficiary's legal liability the
actual out-of-pocket costs incurred by the beneficiary, less any
payments made by Medicare or other sources of insurance). Actual out-
of-pocket costs incurred by the beneficiary include the initial
deductible, which are for services payable by Medicare and TRICARE, but
for the fact that the beneficiary has not met the deductible amount,
and any subsequent beneficiary cost shares. However, if a health care
service or supply is a benefit payable only by Medicare, but not
TRICARE, then Medicare has sole responsibility for payment of the
health care service or supply, as defined by Medicare, and the
beneficiary has the responsibility to pay any corresponding Medicare
cost-share or deductible. Likewise, if a health care service or supply
is a benefit payable only by TRICARE, but not Medicare, then TRICARE
has sole responsibility for payment of the health care service and
supply, and the beneficiary has the responsibility to pay any
corresponding TRICARE cost-shares or deductible. Finally, if a health
care service or supply is neither a benefit payable by Medicare or
TRICARE, the beneficiary pays the total cost.
TRICARE has applied the double coverage rules of 32 CFR 199.8 to
the Pharmacy Benefits Program under section 199.21(m), and said to the
extent they provide a prescription drug benefit, Medicare supplemental
insurance plans or Medicare HMO plans are double coverage plans and
will be primary payer. This rule was written prior to Medicare
providing a prescription drug benefit under Medicare Part D, and CMS's
final rule on the Medicare Prescription Drug Benefit. Under 42 CFR part
423, Subpart J, Coordination of Part D Plans With Other Prescription
Drug Coverage, section 423.464(f)(1)(iv), military coverage, including
TRICARE coverage under chapter 55 of title 10, United States Code,
qualifies as other prescription drug coverage with which a Part D plan
must coordinate benefits.
Medicare Part D plans are offered by private insurance companies
that contract with CMS. Part D benefits may be offered by a stand-alone
prescription drug plan sponsor, a Medicare Advantage Organization
offering qualified prescription drug coverage, a Program for All-
Inclusive Care for the Elderly (PACE) organization offering qualified
prescription drug coverage, or a cost plan offering qualified
prescription drug coverage (collectively referred to as a ``Part D plan
sponsor''). Each Part D plan sponsor submits a bid to CMS for plan
benefit packages, which results in, among other things, the offering of
Part D plans with varying monthly premiums and benefits designs. Part D
plan sponsors may offer a defined standard benefit, which is the type
of benefit used as an example in this preamble, or an actuarially
equivalent standard benefit. Part D plan sponsors may also offer
alternative prescription drug coverage, which may consist of basic
alternative coverage or enhanced alternative coverage. Therefore
depending on the Part D plan that a beneficiary chooses, monthly
premiums, coinsurances, co-pays, deductibles and benefit design may
vary from plan to plan. Under the MMA,
[[Page 78112]]
certain low-income beneficiaries may be eligible for reduced premiums
and cost-sharing for their drug coverage. In some cases, beneficiaries
pay no premium and nominal cost-sharing. Other beneficiaries have a
reduced premium and lower cost-sharing.
The standard Part D benefit includes several phases of beneficiary
spending, as described below.
Premiums. Statute requires a beneficiary to pay a monthly premium
to participate in the plan. A beneficiary who wants to participate in a
standard Medicare Part D plan is solely responsible for payment of any
premium that is not otherwise subsidized under the program. Beneficiary
premiums do not count toward any required beneficiary cost-sharing to
reach the deductible, coverage gap, or catastrophic limit (described
below).
Deductible. Under the Medicare Part D defined standard benefit, the
beneficiary is responsible for paying an out-of-pocket deductible ($265
in 2007) that adjusts annually according to the annual percentage
increase in spending on covered Part D drugs. For purposes of meeting
the deductible, both spending by the beneficiary and spending by
TRICARE on behalf of the beneficiary (i.e., the TRICARE wraparound
coverage) qualify.
Cost-sharing between deductible and coverage gap. After the
deductible is met, the standard Part D plan sponsors are responsible
for 75% of the actual cost of the covered Part D drug, and the
beneficiary is responsible for 25% of the actual cost of the covered
Part D drug, until the beneficiary reaches the coverage gap. TRICARE
wraparound coverage qualifies as beneficiary cost-sharing between the
deductible and coverage gap.
Coverage gap. To reach the coverage gap, the beneficiary must reach
a statutorily-specified amount of total drug spending. Total
beneficiary spending needed to meet the coverage gap is defined as
beneficiary out-of-pocket spending, or TRICARE spending on behalf of
the beneficiary, and spending by the Part D plan sponsor. In 2007, a
beneficiary reaches the coverage gap when he has incurred $2,400 in
total drug spending and remains in the gap until he has incurred $3,850
in beneficiary out-of-pocket spending. Individuals who qualify for the
low-income subsidies pay lower cost-sharing amounts before they reach
the coverage gap. In the coverage gap, the beneficiary is responsible
for 100% of the cost of the drug, although the beneficiary by law is
entitled to receive the plan's negotiated price. Individuals who
qualify for low-income subsidies do not have a coverage gap.
Catastrophic threshold. To reach the catastrophic threshold defined
in the standard benefit, the beneficiary must have incurred total
spending defined in statute as true out-of-pocket spending (TrOOP)
($3,850 in 2007). In the catastrophic phase, the beneficiary is
responsible for the greater of 5% of the cost of the drug, or, in 2007,
$2.15 for a generic/preferred multi-source drug or $5.35 for other
drugs. In the catastrophic phase of the defined standard benefit, the
Part D plan sponsor and Medicare are responsible for what is not paid
by the beneficiary up to the Part D plan sponsor's negotiated price.
Under 42 CFR 423.100, incurred costs means costs incurred by the
Part D enrollee for covered Part D drugs--(1) That are not paid for
under the Part D plan as a result of application of any annual
deductible or other cost-sharing rules for covered Part D drugs prior
to the Part D enrollee satisfying annual out-of-pocket threshold amount
under section 423.104(d)(5)(iii); and (2) That are paid for by the Part
D enrollee or on behalf of the enrollee by another person, and the
enrollee or other person is not reimbursed through insurance or
otherwise, a group health plan or other third party arrangement.
Because TRICARE falls under the definition of ``or otherwise,'' which
refers to ``government-funded health programs,'' wraparound payments
made by TRICARE for covered Part D drugs on behalf of an enrollee
eligible for both Part D and TRICARE do not count towards beneficiary
incurred costs. Therefore, for purposes of reaching the catastrophic
limit, only true beneficiary out-of-pocket spending (TrOOP) counts as
beneficiary spending. Although TRICARE supplementary coverage counts
toward meeting the deductible and the initial coverage limit, it does
not count toward meeting the catastrophic threshold.
Generally, a Part D plan is primary payer under 42 CFR 423.464,
coordination of benefits with other providers of prescription drug
coverage, which includes military coverage (including TRICARE) under
chapter 55 of title 10, United States Code. A Part D plan under section
423.464(f)(2) must exclude expenditures for covered Part D drugs made
by TRICARE for purposes of determining whether a Part D enrollee has
satisfied the out-of-pocket threshold, which for 2007 is $3,850.
As a result of these provisions implementing Medicare Part D,
TRICARE double coverage rules must be modified. If a TRICARE-Medicare
beneficiary enrolls in a Part D plan that adds prescription coverage to
their Medicare plan, the Medicare Part D plan is generally primary
payer and TRICARE is secondary payer. TRICARE will pay the
beneficiary's out-of-pocket costs for Medicare and TRICARE covered
medications, including the initial deductible and Medicare Part D cost-
share. TRICARE will not pay the beneficiary's out-of-pocket cost
associated with any monthly premium required to enroll in and
participate in the Medicare Part D plan.
In the coverage gap, the Part D plan is generally still the primary
payer. Thus, assuming the beneficiary is accessing a pharmacy under
contract with his or her Part D plan, the pharmacy would bill the Part
D plan, which would respond by indicating that it is responsible for
$0, at which point the pharmacy would bill TRICARE. When the
beneficiary becomes responsible for 100% of the drug costs in the
coverage gap, the beneficiary may use the TRICARE pharmacy benefit as
the secondary payer. TRICARE will cost share during the coverage gap to
the same extent as it does under section 199.21 for beneficiaries not
enrolled in a Medicare Part D plan. The beneficiary is responsible for
the applicable TRICARE pharmacy cost-sharing amounts (and deductible if
using a retail non-network pharmacy). During the coverage gap, TRICARE
is incurring the cost of the drugs during the Medicare Part D coverage
gap and not the beneficiary. Thus none of the costs of the drugs borne
by TRICARE will be applied to meeting the beneficiary's annual Medicare
Part D true out-of-pocket (TrOOP) threshold. Generally, however, the
beneficiary's own TRICARE pharmacy benefit cost-share will accrue to
meeting his/her annual Medicare Part D TrOOP spending because this
cost-sharing is an actual out-of-pocket expense incurred by the
beneficiary. Any actual out-of-pocket expense incurred by the
beneficiary also will apply toward the TRICARE fiscal year catastrophic
cap.
Similarly, if the TRICARE-Medicare dual-eligible beneficiary
enrolls in a Medicare Advantage drug plan, the beneficiary has to pay
the plan's monthly premiums and obtain all medical care and
prescription drugs through the Medicare Advantage plan. The Medicare
Advantage plan will generally be the primary payer, and TRICARE will be
the secondary payer. If the Medicare Advantage plan has a Part D drug
benefit, TRICARE will pay secondary as described above.
[[Page 78113]]
II. Legislative Changes for TRICARE-Medicare Dual-Eligible
Beneficiaries
Section 701 of the National Defense Authorization Act for Fiscal
Year 2000 (Public Law 106-65), codified at Title 10, United States
Code, Section 1074g, directs the Department to establish an effective,
efficient, integrated pharmacy benefits program. The Department
published the final rule on the Pharmacy Benefits Program on April 1,
2004 (69 FR 17035-17052) implementing the pharmacy benefits program,
effective May 3, 2004. Congress in section 714 of the Ronald W. Reagan
NDAA for FY 05 has directed certain improvements to the TRICARE
pharmacy benefits program.
Section 714(a) directs that for a TRICARE-Medicare dual-eligible
beneficiary, the cost-sharing requirements under the pharmacy benefits
program may not be greater than the cost-sharing requirements
applicable to all other beneficiaries covered by 10 U.S.C. 1086, which
are beneficiaries who are retirees, their authorized dependents,
survivors, and certain former spouses. Under 10 U.S.C. 1074g(a)(6), the
Department may establish cost-sharing requirements for the pharmacy
benefits program, which may be established as a percentage or fixed
dollar amount, for generic, formulary, and non-formulary pharmaceutical
agents. For non-formulary agents, cost-sharing shall be consistent with
common industry practice and not in excess of amounts generally
comparable to 20 percent for beneficiaries who are dependents of active
duty members of the uniformed services, and 25 percent for
beneficiaries who are retirees, their authorized dependents, survivors,
and certain former spouses.
In the TRICARE Pharmacy Benefits Program final rule, the Department
published the cost share amounts for pharmaceutical agents based upon
two factors: (1) The agent's status as generic, formulary, or non-
formulary; and (2) the venue in which the agent was obtained, that is,
military treatment facility (MTF), TRICARE Mail Order Program (TMOP),
retail network pharmacy, or retail non-network pharmacy. The Department
is authorized under 10 U.S.C. 1074g(a)(6) to have two non-formulary
cost-shares based upon the status of the beneficiary, no more than 20
percent for active duty family members and no more than 25 percent for
all others (other than active duty members who have no cost share). The
Department chose to have one non-formulary cost-share equal to no more
than 20 percent of the anticipated aggregated cost of non-formulary
agents that is $22 for non-formulary agents obtained in the TMOP or
retail network pharmacies, and $22 or 20 percent (whichever is greater)
for non-formulary agents obtained in retail non-network pharmacies.
(For more information on TRICARE Pharmacy Benefit Program cost shares,
see Section 199.21(i)). Section 714(a) emphasizes that if the
Department were to move to a two-tier non-formulary cost-share based
upon the status of the beneficiary, the Department may not have a
higher cost-share for TRICARE-Medicare dual-eligible beneficiaries than
for other retirees, their authorized dependents, survivors, and certain
former spouses. The Department has no intention at this time of
establishing two separate non-formulary cost-shares based upon the
status of the beneficiary as an active duty family member or other
category of beneficiary.
This proposed rule adds to Sec. 199.21 a provision incorporating
into the regulation the new statutory requirement.
III. Legislative Changes To Improve the Uniform Formulary Process
Under 10 U.S.C. 1074g(a)(2)(E)(i), pharmaceutical agents included
on the uniform formulary on the basis of relative clinical
effectiveness and cost effectiveness are required to be available to
beneficiaries through facilities of the uniformed services, consistent
with the scope of health care services offered in such facilities.
Section 714(b) of the Ronald W. Reagan NDAA for FY 05 directs the
Department to allow the DoD Pharmacy and Therapeutics Committee (P&T
Committee) to make additional relative clinical and cost effectiveness
determinations for military treatment facilities (MTFs). This change in
the law means that MTFs are not required to include on their
formularies every pharmaceutical agent in a therapeutic class that is
on the uniform formulary that is consistent with the scope of health
care services offered in the MTF. This proposed rule incorporates into
section 199.21 a provision reflecting the change in statute.
IV. Transition to the Uniform Formulary
The DoD P&T Committee is required under section 199.21 to make
recommendations concerning which pharmaceutical agents should be on the
uniform formulary and the Basic Core Formulary (BCF), and may now make
recommendations concerning which agents should be on the Extended Core
Formulary (ECF). The BCF contains the minimum set of pharmaceutical
agents that each MTF pharmacy must have on its formulary to support the
primary care scope of practice for Primary Care Manager enrollment
sites. The ECF contains the minimum set of pharmaceutical agents that
each MTF pharmacy must have on its formulary to support an extended
care scope of practice if the MTF Pharmacy and Therapeutics Committee
has authorized agents in that class based upon the scope of practice at
that facility.
The DoD Pharmacy and Therapeutics Committee will review the classes
in a methodical but expeditious manner, taking into consideration
circumstances that may include but are not limited to: DoD national
contracting, or DoD and Veterans Affairs national joint contracting or
other agreements with pharmaceutical manufacturers; approval of a new
drug by FDA; approval of a new indication for an existing drug; changes
in the clinical use of existing drugs; new information concerning the
safety, effectiveness or clinical outcomes of existing drugs; price
changes; shifts in market share; scheduled review of a therapeutic
class; and requests from DoD P&T Committee members, military treatment
facilities, or other Military Health System officials. During the
transition period from the previous methodology of formulary management
involving only the MTFs and the TRICARE Mail Order Program, previous
decisions by the DoD P&T Committee or committed use requirements
contracts executed by DoD, or jointly by DoD and VA, shall continue in
effect. This is necessary to comply with the statutory requirements of
38 U.S.C. 8111 and 10 U.S.C. 1104 relating to resource sharing between
DoD and VA, and allow time to incorporate the impact of uniform
formulary management into those agreements. As therapeutic classes are
reviewed under the new formulary management process and pharmaceutical
agents are designated for formulary or non-formulary status, this
transition methodology shall apply.
The P&T Committee will meet at least quarterly to review new and
existing drugs and drug classes, and recommend pharmaceutical agents
for inclusion on or exclusion from the uniform formulary after
evaluating their relative clinical and cost effectiveness. Pending
review of a pharmaceutical agent or class, previous decisions by the
predecessor to the P&T Committee regarding national contracts,
agreements, formulary status, BCF status, pre-authorization
requirements and quantity limits shall remain in effect. The P&T
Committee will eventually evaluate all applicable drug classes at which
time the transition period will be complete.
[[Page 78114]]
During this transition period, pharmaceutical agents in drug
classes not yet evaluated by the P&T Committee will continue to be
available from the TRICARE Mail Order Pharmacy (TMOP) and the TRICARE
Retail Pharmacy network at either the generic or formulary (brand) cost
share. MTFs may evaluate for inclusion on the MTF formulary
pharmaceutical agents in drug classes that do not already have BCF
status, or have not yet been evaluated by the P&T Committee. BCF listed
agents must be on the formulary at all full-service MTF pharmacies at
all times.
V. Regulatory Procedures
Executive Order 12866 directs agencies to assess all costs and
benefits 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 Order
classifies a rule as a significant regulatory action requiring review
by the Office of Management and Budget if it meets any one of a number
of specified conditions, including: having an annual effect on the
national economy of $100 million or more, creating a serious
inconsistency or interfering with an action of another agency,
materially altering the budgetary impact of entitlements or the rights
of entitlement recipients, or raising novel legal or policy issues. DoD
has examined the economic, legal, and policy implications of this
proposed rule and has concluded that it is a significant regulatory
action as it addresses novel policy issues relating to implementation
of coordination of medical benefits programs for covered beneficiaries
of the uniformed services under TRICARE and the Medicare Prescription
Drug Benefit. Thus, this rule has been reviewed by the Office of
Management and Budget under E.O. 12866. The Regulatory Flexibility Act
(RFA) requires that each Federal Agency prepare, and make available for
public comment, a regulatory flexibility analysis when the agency
issues regulations which would have a significant impact on a
substantial number of small entities.
This proposed rule is not a major rule under the Congressional
Review Act, because its economic impact will be less than $100 million.
There are approximately 1.9 million TRICARE-Medicare dual-eligible
beneficiaries, and approximately 7% have enrolled in Medicare Part D
plans. For those who have Medicare Part D coverage, the cost of their
pharmacy benefit to DoD is less, as Medicare Part D Plans are the first
payer as opposed to DoD, resulting in a cost avoidance for DoD. The
amount of the cost avoidance is directly related to the number and cost
of prescriptions filled by beneficiaries for which Medicare is first
payer. Under the standard benefit package, there is a potential of
about $1,601.25 in DoD cost avoidance (in 2007) for Medicare/TRICARE
Part D enrollees whose drug spending is high enough to enter the
Medicare coverage gap. For beneficiaries with lower drug spending,
DoD's cost avoidance would also be lower. In addition, this rule will
have minor impact and will not significantly affect a substantial
number of small entities. In light of the above, no regulatory impact
analysis is required.
This proposed rule will not impose additional information
collection requirements on the public under the Paperwork Reduction Act
of 1995 (44 U.S.C. 55). In order to determine which dual-eligible
beneficiaries are participating in Medicare Part D, TRICARE will rely
on the Defense Eligibility Enrollment Reporting System (DEERS) to
identify which beneficiaries are enrolled in Medicare Part D through
existing data sharing agreements with CMS and will not need to collect
additional information from them.
We have examined the impact(s) of the proposed rule under Executive
Order 13132 and it does not have policies that have federalism
implications that would have substantial direct effects on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government, therefore, consultation with State and local
officials is not required.
List of Subjects in 32 CFR Part 199
Claims, Health care, Health insurance, Military personnel, Pharmacy
benefits.
Accordingly, 32 CFR part 199 is proposed to be amended as follows:
PART 199--[AMENDED]
1. The authority citation for Part 199 continues to read as
follows:
Authority: 5 U.S.C. 301; 10 U.S.C. chapter 55.
2. Section 199.8 is amended by adding paragraph (d)(1)(iii)(C) and
revising paragraph (d)(1)(vi) to read as follows:
Sec. 199.8 Double coverage.
* * * * *
(d) * * *
(1) * * *
(iii) * * *
(C) For Medicare beneficiaries who enroll in Medicare Part D, the
Part D plan is primary and TRICARE is secondary payer. TRICARE will pay
the beneficiary's out-of-pocket costs for Medicare and TRICARE covered
medications, including the initial deductible and Medicare Part D cost
sharing amounts up to the initial coverage limit of the Medicare Part D
plan. The Medicare Part D plan, although the primary plan pays nothing
during any coverage gap period. When the beneficiary becomes
responsible for 100 percent of the drug costs under a Part D coverage
gap period, the beneficiary may use the TRICARE pharmacy benefit as the
secondary payer. TRICARE will cost share during the coverage gap to the
same extent as it does under Sec. 199.21 for beneficiaries not
enrolled in a Medicare Part D plan. The beneficiary is responsible for
the applicable TRICARE pharmacy cost-sharing amounts (and deductible if
using a retail non-network pharmacy). Part D plan sponsors may offer a
defined standard benefit, or an actuarially equivalent standard
benefit. Part D plan sponsors may also offer alternative prescription
drug coverage, which may consist of basic alternative coverage or
enhanced alternative coverage. Therefore depending on the Part D plan
that a beneficiary chooses, monthly premiums, coinsurances, co-pays,
deductibles and benefit design may vary from plan to plan. TRICARE
payment of the beneficiary's initial deductible, if any, along with
payment of any beneficiary cost share count towards total spending on
drugs, and may have the effect of moving the beneficiary more quickly
through the initial phase of coverage to the coverage gap. Irrespective
of the phase of the benefit in which a beneficiary may be, if a
beneficiary is accessing a pharmacy under contract with his or her Part
D plan, the provider will bill the Part D plan first, then TRICARE. If
the beneficiary chooses to use his or her TRICARE pharmacy benefit
during a coverage gap under Part D, the beneficiary may do so, but the
beneficiary is responsible for the TRICARE cost-shares.
* * * * *
(vi) Effect of enrollment in Medicare Advantage Prescription Drug
(MA-PD) plan. In the case of a beneficiary enrolled in a MA-PD plan who
receives items or services for which payment may be made under both the
MA-PD plan and CHAMPUS/TRICARE, a claim for the beneficiary's normal
out-of-
[[Page 78115]]
pocket costs under the MA-PD plan may be submitted for CHAMPUS/TRICARE
payment. However, consistent with paragraph (c)(4) of this section,
out-of-pocket costs do not include costs associated with unauthorized
out-of-system care or care otherwise obtained under circumstances that
result in a denial or limitation of coverage for care that would have
been covered or fully covered had the beneficiary met applicable
requirements and procedures. In such cases, the CHAMPUS/TRICARE amount
payable is limited to the amount that would have been paid if the
beneficiary had received care covered by the Medicare Advantage plan.
If the TRICARE-Medicare beneficiary enrolls in a MA-PD drug plan, it
will be governed by Medicare Part C, although plans that offer a
prescription drug benefit also must comply with Medicare Part D rules.
The beneficiary has to pay the plan's monthly premiums and obtain all
medical care and prescription drugs through the Medicare Advantage plan
before seeking CHAMPUS/TRICARE payment. CHAMPUS/TRICARE payment for
such beneficiaries may not exceed that which would be payable for a
beneficiary under paragraph (d)(1)(iii)(C) of this section.
3. Section 199.21 is amended by adding new paragraphs (g)(4) and
(i)(2)(xi), and by revising paragraphs (h)(2)(ii) and (m), to read as
follows:
Sec. 199.21 Pharmacy benefits program.
* * * * *
(g) * * *
(4) Transition to the uniform formulary. Beginning in Fiscal Year
2005, under an updated charter for the DoD P&T Committee, the committee
shall meet at least quarterly to review therapeutic classes of
pharmaceutical agents and make recommendations concerning which
pharmaceutical agents should be on the Uniform Formulary, Basic Core
Formulary, and Extended Core Formulary. The P&T Committee will review
the classes in a methodical, but expeditious manner. During the
transition period from the previous methodology of formulary management
involving only the MTFs and the TRICARE Mail Order Pharmacy Program,
previous decisions by the predecessor DoD P&T Committee concerning MTF
and Mail Order Pharmacy Program formularies shall continue in effect.
As therapeutic classes are reviewed under the new formulary management
process, the processes established by this section shall apply.
* * * * *
(h) * * *
(2) * * *
(ii) Availability of formulary pharmaceutical agents at military
treatment facilities. Pharmaceutical agents included on the uniform
formulary are available through facilities of uniformed services,
consistent with the scope of health care services offered in such
facilities and additional determinations by the Pharmacy and
Therapeutics Committee of the relative clinical effectiveness and cost
effectiveness, based on costs to the Program associated with providing
the agents to beneficiaries. The Basic Core Formulary (BCF) is a subset
of the uniform formulary and is a mandatory component of formularies at
all full-service MTF pharmacies. The BCF contains the minimum set of
pharmaceutical agents that each full-service MTF pharmacy must have on
its formulary to support the primary care scope of practice for Primary
Care Manager enrollment sites. Limited-service MTF pharmacies (e.g.,
specialty pharmacies within an MTF or pharmacies servicing only active
duty military members) are not required to include the entire BCF on
their formularies, but may limit their formularies to those BCF agents
appropriate to the needs of the patients they serve. An Extended Core
Formulary (ECF) may list preferred agents in drug classes other than
those covered by the BCF. Among BCF and ECF agents, individual MTF
formularies are determined by local Pharmacy and Therapeutics
Committees based on the scope of health care services provided at the
respective MTFs. All pharmaceutical agents on the local formulary of
full-service MTF pharmacies must be available to all categories of
beneficiaries.
* * * * *
(i) * * *
(2) * * *
(xi) For a Medicare-eligible beneficiary, the cost sharing
requirements may not be in excess of the cost-sharing requirements
applicable to all other beneficiaries covered by 10 U.S.C. 1086.
* * * * *
(m) Effect of other health insurance. The double coverage rules of
section 199.8 of this part are applicable to services provided under
the pharmacy benefits program. For this purpose, the Medicare
prescription drug benefit under Medicare Part D, prescription drug
benefits provided under Medicare Part D plans are double coverage plans
and such plans will be the primary payer, to the extent described in
section 199.8 of this part. Beneficiaries who elect to use these
pharmacy benefits shall provide DoD with other health insurance
information.
Dated: December 21, 2006.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, DoD.
[FR Doc. E6-22258 Filed 12-27-06; 8:45 am]
BILLING CODE 5001-06-P