81 FR 76307 - Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)/TRICARE: Refills of Maintenance Medications Through Military Treatment Facility Pharmacies or National Mail Order Pharmacy Program

DEPARTMENT OF DEFENSE
Office of the Secretary

Federal Register Volume 81, Issue 212 (November 2, 2016)

This final rule implements section 702 (c) of the Carl Levin and Howard P. ``Buck'' McKeon National Defense Authorization Act for Fiscal Year 2015 which states that beginning October 1, 2015, the pharmacy benefits program shall require eligible covered beneficiaries generally to refill non-generic prescription maintenance medications through military treatment facility pharmacies or the national mail- order pharmacy program. An interim final rule is in effect. Section 702(c) of the National Defense Authorization Act for Fiscal Year 2015 also terminates the TRICARE For Life Pilot Program on September 30, 2015. The TRICARE For Life Pilot Program described in section 716(f) of the National Defense Authorization Act for Fiscal Year 2013, was a pilot program which began in March 2014 requiring TRICARE For Life beneficiaries to refill non-generic prescription maintenance medications through military treatment facility pharmacies or the national mail-order pharmacy program. TRICARE for Life beneficiaries are those enrolled in the Medicare wraparound coverage option of the TRICARE program. This rule includes procedures to assist beneficiaries in transferring covered prescriptions to the mail order pharmacy program.

[Federal Register Volume 81, Number 212 (Wednesday, November 2, 2016)]
[Rules and Regulations]
[Pages 76307-76311]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26432]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[Docket ID: DOD-2015-HA-0062]
RIN 0720-AB64


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS)/TRICARE: Refills of Maintenance Medications Through Military 
Treatment Facility Pharmacies or National Mail Order Pharmacy Program

AGENCY: Office of the Secretary, Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: This final rule implements section 702 (c) of the Carl Levin 
and Howard P. ``Buck'' McKeon National Defense Authorization Act for 
Fiscal Year 2015 which states that beginning October 1, 2015, the 
pharmacy benefits program shall require eligible covered beneficiaries 
generally to refill non-generic prescription maintenance medications 
through military treatment facility pharmacies or the national mail-
order pharmacy program. An interim final rule is in effect. Section 
702(c) of the National Defense Authorization Act for Fiscal Year 2015 
also terminates the TRICARE For Life Pilot Program on September 30, 
2015. The TRICARE For Life Pilot Program described in section 716(f) of 
the National Defense Authorization Act for Fiscal Year 2013, was a 
pilot program which began in March 2014 requiring TRICARE For Life 
beneficiaries to refill non-generic prescription maintenance 
medications through military treatment facility pharmacies or the 
national mail-order pharmacy program. TRICARE for Life beneficiaries 
are those enrolled in the Medicare wraparound coverage option of the 
TRICARE program. This rule includes procedures to assist beneficiaries 
in transferring covered prescriptions to the mail order pharmacy 
program.

[[Page 76308]]


DATES: Effective Date: This rule is effective January 6, 2017.

FOR FURTHER INFORMATION CONTACT: Dr. George Jones, Jr., Chief, Pharmacy 
Operations Division, Defense Health Agency, telephone 703-681-2890.

SUPPLEMENTARY INFORMATION: 

A. Executive Summary

1. Purpose

    This final rule implements Section 702(c) of the Carl Levin and 
Howard P. ``Buck'' McKeon National Defense Authorization Act for Fiscal 
Year 2015 which states that beginning October 1, 2015, the pharmacy 
benefits program shall require eligible covered beneficiaries generally 
to refill non-generic prescription maintenance medications through 
military treatment facility pharmacies or the national mail-order 
pharmacy program. Eligible covered beneficiaries are defined in 
sections 1072(5) and 1086 of title 10, United States Code.

2. Summary of the Major Provisions of the Final Rule

    TRICARE beneficiaries are generally required to obtain all 
prescription refills for select non-generic maintenance medications 
from the TRICARE mail order program (where beneficiary copayments are 
much lower than in retail pharmacies) or military treatment facilities 
(where there are no copayments). Covered maintenance medications are 
those prescribed for chronic, long-term conditions that are taken on a 
regular, recurring basis, but do not include medications to treat acute 
conditions. TRICARE will follow best commercial practices, including 
that beneficiaries will be notified of the new rules and mechanisms to 
allow them to receive adequate medication during their transition to 
mail for their refills. The statute and rule authorize a waiver of the 
mail order requirement based on patient needs and other appropriate 
circumstances.

3. Costs and Benefits

    The effect of the statutory requirement, implemented by this rule, 
is to shift a volume of prescriptions from retail pharmacies to the 
mail order pharmacy program. This will produce savings to the 
Department of approximately $81 million per year and savings to 
beneficiaries of approximately $20 million per year in reduced 
copayments.

B. Background

    In Fiscal Year 2014, 61 million prescriptions were filled for 
TRICARE beneficiaries through the TRICARE retail pharmacy benefit at a 
net cost of $5.1 billion to the government. On average, the government 
pays 32% less for brand name maintenance medication prescriptions 
filled in the mail order program or military treatment facility 
pharmacies than through the retail program. Not all prescriptions 
filled through the retail program are maintenance/chronic medications. 
However, there is potential for significant savings to the government 
by shifting a portion of TRICARE prescription refills to the mail order 
program or military treatment facility pharmacies. In addition, there 
will be significant savings to TRICARE beneficiaries who will receive 
up to a 90 day refill at no charge for generics in the mail order 
program compared to $10 copay for up to a 30 day in retail. The savings 
is even greater for brand-name prescriptions: $20 for up to 90 days in 
mail versus $24 for up to 30 days in retail, meaning that for a 90-day 
supply the copayment comparison is $20 in mail to $72 in retail. The 
non-formulary copayment amount is $49 for up to 90 days in mail non-
formulary drugs are generally not available in retail.

C. Summary of the Final Rule

    The final rule revises paragraph (r) to 32 CFR 199.21. This 
paragraph (r) establishes rules for the new program of refills of 
maintenance medications for TRICARE through the mail order pharmacy 
program. Paragraph (r)(1) requires that for covered non-generic 
maintenance medications, TRICARE beneficiaries are generally required 
to obtain their prescription refills through the national mail order 
pharmacy program or through military treatment facility pharmacies. 
TRICARE beneficiaries are defined in sections 1072(5) and 1086 of title 
10, United States Code, including those enrolled in the Medicare 
wraparound coverage option of the TRICARE program.
    Paragraph (r)(2) provides that the Director, Defense Health Agency 
will establish, maintain, and periodically revise and update a list of 
covered maintenance medications, which will be accessible through the 
TRICARE Pharmacy Program Web site and by telephone through the TRICARE 
Pharmacy Program Service Center. Each medication included on the list 
will be a medication prescribed for a chronic, long-term condition that 
is taken on a regular, recurring basis. It will be clinically 
appropriate and cost effective to dispense the medication from the mail 
order pharmacy. It will be available for an initial filling of a 30-day 
or less supply through retail pharmacies, and will be generally 
available at military treatment facility pharmacies for initial fill 
and refills. It will be available for refill through the national mail-
order pharmacy.
    Paragraph (r)(3) provides that a refill is a subsequent filling of 
an original prescription under the same prescription number or other 
authorization as the original prescription, or a new original 
prescription issued at or near the end date of an earlier prescription 
for the same medication for the same patient.
    Paragraph (r)(4) provides that a waiver of the general requirement 
to obtain maintenance medication prescription refills from the mail 
order pharmacy or military treatment facility pharmacy will be granted 
in several circumstances. There is a case-by-case waiver to permit 
prescription maintenance medication refills at a retail pharmacy when 
necessary due to personal need or hardship, emergency, or other special 
circumstance, for example, for nursing home residents. This waiver is 
obtained through an administrative override request to the TRICARE 
pharmacy benefits manager under procedures established by the Director, 
Defense Health Agency.
    Paragraph (r)(5) establishes procedures for the effective operation 
of the program. The Department will implement the program by utilizing 
best commercial practices to the extent practicable. An effective 
communication plan that includes efforts to educate beneficiaries in 
order to optimize participation and satisfaction will be implemented. 
Beneficiaries with active prescriptions for a medication on the 
maintenance medication list will be notified that their medication is 
covered under the program. Beneficiaries will be advised that they may 
receive up to two 30 day fills at retail while they transition their 
prescription to the mail order program. The beneficiary will be 
contacted after each of these two fills reminding the beneficiary that 
the prescription must be transferred to mail. Requests for a third fill 
at retail will be blocked and the beneficiary advised to call the 
pharmacy benefits manager (PBM) for assistance. The PBM will provide a 
toll free number to assist beneficiaries in transferring their 
prescriptions from retail to the mail order program. With the 
beneficiary's permission, the PBM will contact the physician or other 
health care provider who prescribed the medication to assist in 
transferring the prescription to the mail order program. In any case in 
which a beneficiary is required to obtain a maintenance medication 
prescription refill from the national mail-order pharmacy program and 
attempts instead

[[Page 76309]]

to refill such medications at a retail pharmacy, the PBM will also 
maintain the toll free number to assist the beneficiary. This 
assistance may include information on how to request a waiver or in 
taking any other appropriate action to meet the beneficiary's needs and 
to implement the program. The PBM will ensure that a pharmacist is 
available at all times through the toll-free telephone number to answer 
beneficiary questions or provide other appropriate assistance.
    Paragraph (r)(6) provides that the program will remain in effect 
indefinitely with any adjustments or modifications required by law.

D. Summary of and Response to Public Comments

    The interim final rule was published in the Federal Register (80 FR 
46796) August 6, 2015, for a 60-day comment period. We received six 
comments on the interim final rule; four comments from individuals and 
two comments from professional associations. We appreciate these 
comments, which are summarized here, along with DoD's response.
    Comment: One comment expressed concern regarding the possibilities 
of delays in the mail causing the patient to miss a day or more of 
their medication.
    Response: The provisions of the TRICARE pharmacy contract permit 
beneficiaries to refill medications well in advance of the refill due 
date to allow for adequate shipping time. Additionally, this final rule 
provides for a case-by-case waiver to permit prescription maintenance 
medication refill at a retail pharmacy when necessary due to personal 
need or hardship, emergency, or special circumstance.
    Comment: One commenter objected to the lack of clear communication 
from ESI by stating that conflicting messages are often given to a 
beneficiary who calls with a question, i.e. your medications has been 
shipped, your medication has not been shipped, etc. The same individual 
suggests that Prior Approvals for brand name products often get deleted 
from the system requiring the beneficiary to repeat the PA process.
    Response: DoD acknowledges the commenter's concerns regarding 
contractor communication and Prior Approvals being deleted from the 
system, both of which are contract specific issues, and not part of the 
regulatory language. It should be noted that Prior Approvals may be 
time limited depending on the medication. DoD will consider the 
feedback for incorporation into future contractor customer service 
performance requirements.
    Comment: One commenter inquired why Active Duty personnel are not 
required to participate in this mandatory program which appears to be 
targeting retirees. In addition, the individual suggested a blanket 
waiver be administered for retirees who live in remote areas with very 
limited MTF pharmacy access. A final concern asked if MTF staffing has 
been increased to accommodate the potential influx of retirees.
    Response: This final rule conforms with the current statutory 
requirement of Section 702 in the fiscal year (FY) 2015 National 
Defense Authorization Act, requiring eligible covered beneficiaries 
generally to refill non-generic prescription maintenance medications 
through military treatment facility pharmacies or the national mail 
order program. Eligible covered beneficiaries are defined in Title 10, 
Section 1072(5) and does not include Active Duty service members. The 
statute and the rule designate military treatment facility (MTF) 
pharmacies or the mail order pharmacy program as the two options 
available to beneficiaries for obtaining refills of non-generic 
prescription maintenance medications. For those beneficiaries who live 
in remote areas with limited MTF access, the mail order pharmacy 
program is an ideal option saving both time and copayment expenses. Our 
experience and data from the TRICARE FOR LIFE maintenance medication 
pilot showed that there was sufficient capacity to accommodate the 
change, both at mail order and in the MTFs. Our data show that the 
overall impact on the MTF workload was very minimal, while majority of 
the prescriptions went to mail order. The movement of brand maintenance 
medications from retail to mail order actually saves beneficiaries out-
of-pocket expenses in the form of reduced copays and up to a 90 day 
supply for less than the 30 day copay at retail. This provides a win-
win scenario for the beneficiary and the government.
    Comment: One commenter cited anecdotal evidence in Alabama that 
resulted in emergency room visits from ingesting mail order 
prescriptions that had been exposed to excessive heat. The commenter 
expressed concerns about proper temperature control of medications 
shipped through the mail and suggests the rule include a requirement 
that all medications must be kept within the FDA's recommended range of 
59-86 degrees.
    Response: The pharmacy contractor reviews all medications dispensed 
through the mail order pharmacy for unique shipping requirements, based 
on information from the manufacturer. For medications that are 
temperature-sensitive, special shipping procedures are followed. The 
temperature-sensitive medications are mailed via expedited overnight 
shipping or 2nd day air, at no cost to the beneficiary. Before certain 
medications are delivered, a scheduling call is made to the beneficiary 
to arrange a delivery time and date.
    Comment: A professional association commented with a number of 
concerns: beneficiaries should continue to have choice, flexibility, 
and easy access to prescription medications; unnecessary waste 
resulting from auto-ship policies and the suggestion to implement 
policies to ensure mail order refills are approved and needed; DoD 
should conduct and publicize a beneficiary satisfaction survey at the 
end of each year; beneficiaries should be properly informed about the 
options to seek a waiver and clear instructions on how to obtain one; 
DoD should develop and make available a complete list of acute care 
meds.
    Response: This final rule conforms with the current statutory 
requirement of Section 702 in the FY 2015 NDAA requiring eligible 
covered beneficiaries generally to refill non-generic prescription 
maintenance medications through military treatment facility pharmacies 
or the national mail order program. DoD believes it is being 
implemented successfully and without adverse effects on beneficiaries. 
Non-generic prescription maintenance medications subject to the program 
are listed at www.health.mil/selectdruglist. DoD has determined it 
unnecessary to have an additional list to specify acute care 
medications that are not subject to the program. DoD continues to 
monitor beneficiary satisfaction of the TRICARE pharmacy program.
    Comment: A professional association commented with the following 
concerns: The rule should clearly indicate that covered maintenance 
medications include non-generic only; beneficiaries should have to 
consent to getting a refill rather than automatic shipping; mandatory 
mail results in a silo approach where the patient gets prescriptions 
from multiple sources resulting the lack of coordinated care; community 
pharmacists are often the sole source for medication and patient 
education and can only judge the patient's understand by in-person 
interactions; communications to beneficiaries regarding waivers should 
include complete information on how to obtain a waiver.
    Response: Section 199.21(r)(1) has been amended to insert ``non-
generic''

[[Page 76310]]

prior to ``covered medications''. Contractor requirements are not part 
of the regulatory language. In order to participate in the mail order 
auto-ship program, beneficiaries must consent to auto-ship enrollment 
but are not required to do so. Beneficiaries enrolled in the auto-ship 
program are notified prior to medication shipment.

E. Regulatory Procedures

Executive Order 12866, ``Regulatory Planning and Review''

    Executive Order (E.O.) 12866 requires that a comprehensive 
regulatory impact analysis be performed on any economically significant 
regulatory action, defined primarily as one that would result in an 
effect of $100 million or more in any one year. The DoD has examined 
the economic and policy implications of this final rule and based on 
the resulting analysis, the Office of Management and Budget has 
concluded that this is an economically significant regulatory action 
under the Executive Order. The program rule will produce savings to the 
Department of approximately $81M per year and savings to beneficiaries 
of approximately $20 million per year in reduced copayments. This rule 
results in a shift of workload from retail pharmacies to the mail order 
program. This workload shift is estimated to result in a net impact to 
retail pharmacy margins nationwide of $15.6 million in FY17 dollars. 
This rule has been designated an economically significant regulatory 
action under section 3(f) of Executive Order 12866. Accordingly, the 
rule has been reviewed by the Office of Management and Budget (OMB).

Congressional Review Act, 5 U.S.C. 801, et seq.

    Under the Congressional Review Act, a major rule may not take 
effect until at least 60 days after submission to Congress of a report 
regarding the rule. A major rule is one that would have an annual 
effect on the economy of $100 million or more or have certain other 
impacts. This final rule is not a major rule under the Congressional 
Review Act.

Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''

    This rule does not contain a Federal mandate that may result in the 
expenditure by State, local and tribal governments, in aggregate, or by 
the private sector, of $100 million or more (adjusted for inflation) in 
any one year.

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    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 a regulation which would 
have a significant impact on a substantial number of small entities. 
This final rule does not have a significant impact on a substantial 
number of small entities.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    This final rule contains no new information collection requirements 
subject to the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-
3511).

Executive Order 13132, ``Federalism''

    This final rule does not have federalism implications, as set forth 
in Executive Order 13132. This rule does not have substantial direct 
effects on the States; the relationship between the National Government 
and the States; or the distribution of power and responsibilities among 
the various levels of Government.

List of Subjects in 32 CFR Part 199

    Administrative practice and procedure, Claims, Dental health, 
Fraud, Health care, Health insurance, Individuals with disabilities, 
Military personnel.

    Accordingly, 32 CFR part 199 is amended as follows:

PART 199--[AMENDED]

0
1. The authority citation for part 199 continues to read as follows:

     Authority: 5 U.S.C. 301; 10 U.S.C. chapter 55.

0
2. Section 199.21 is amended by revising paragraph (r) to read as 
follows:


Sec.  199.21  TRICARE Pharmacy Benefits Program.

* * * * *
    (r) Refills of maintenance medications for eligible covered 
beneficiaries through the mail order pharmacy program--(1) In general 
Consistent with section 702 of the National Defense Authorization Act 
for Fiscal Year 2015, this paragraph requires that for non-generic 
covered maintenance medications, beneficiaries are generally required 
to obtain their prescription through the national mail-order pharmacy 
program or through military treatment facility pharmacies. For purposes 
of this paragraph, eligible covered beneficiaries are those defined 
under sections 1072 and 1086 of title 10, United States Code.
    (2) Medications covered. The Director, DHA, will establish, 
maintain, and periodically revise and update a list of non-generic 
covered maintenance medications subject to the requirement of paragraph 
(r)(1) of this section. The current list will be accessible through the 
TRICARE Pharmacy Program Internet Web site and by telephone through the 
TRICARE Pharmacy Program Service Center. Each medication included on 
the list will meet the following requirements:
    (i) It will be a medication prescribed for a chronic, long-term 
condition that is taken on a regular, recurring basis.
    (ii) It will be clinically appropriate to dispense the medication 
from the mail order pharmacy.
    (iii) It will be cost effective to dispense the medication from the 
mail order pharmacy.
    (iv) It will be available for an initial filling of a 30-day or 
less supply through retail pharmacies.
    (v) It will be generally available at military treatment facility 
pharmacies for initial fill and refills.
    (vi) It will be available for refill through the national mail-
order pharmacy program.
    (3) Refills covered. For purposes of the program under paragraph 
(r)(1) of this section, a refill is:
    (i) A subsequent filling of an original prescription under the same 
prescription number or other authorization as the original 
prescription; or
    (ii) A new original prescription issued at or near the end date of 
an earlier prescription for the same medication for the same patient.
    (4) Waiver of requirement. A waiver of the general requirement to 
obtain maintenance medication prescription refills from the mail order 
pharmacy or military treatment facility pharmacy will be granted in the 
following circumstances:
    (i) There is a blanket waiver for prescription medications that are 
for acute care needs.
    (ii) There is a blanket waiver for prescriptions covered by other 
health insurance.
    (iii) There is a case-by-case waiver to permit prescription 
maintenance medication refills at a retail pharmacy when necessary due 
to personal need or hardship, emergency, or other special circumstance. 
This waiver is obtained through an administrative override request to 
the TRICARE pharmacy benefits manager under procedures established by 
the Director, DHA.
    (5) Procedures. Under the program established by paragraph (r)(1) 
of this section, the Director, DHA will establish

[[Page 76311]]

procedures for the effective operation of the program. Among these 
procedures are the following:
    (i) The Department will implement the program by utilizing best 
commercial practices to the extent practicable.
    (ii) An effective communication plan that includes efforts to 
educate beneficiaries in order to optimize participation and 
satisfaction will be implemented.
    (iii) Beneficiaries with active retail prescriptions for a 
medication on the maintenance medication list will be notified that 
their medication is included under the program. Beneficiaries will be 
advised that they may receive two 30 day fill at retail while they 
transition their prescription to the mail order program.
    (iv) Requests for a third fill at retail will result in 100% 
patient cost shares and will be blocked from any TRICARE payments and 
the beneficiary advised to call the pharmacy benefits manager (PBM) for 
assistance.
    (v) The PBM will provide a toll free number to assist beneficiaries 
in transferring their prescriptions from retail to the mail order 
program. With the beneficiary's permission, the PBM will contact the 
physician or other health care provider who prescribed the medication 
to assist in transferring the prescription to the mail order program.
    (vi) In any case in which a beneficiary required under paragraph 
(r) of this section to obtain a maintenance medication prescription 
refill from national mail order pharmacy program and attempts instead 
to refill such medications at a retail pharmacy, the PBM will also 
maintain the toll free number to assist the beneficiary. This 
assistance may include information on how to request a waiver, 
consistent with paragraph (r)(4)(iii) of this section, or in taking any 
other appropriate action to meet the beneficiary's needs and to 
implement the program.
    (vii) The PBM will ensure that a pharmacist is available at all 
times through the toll-free telephone number to answer beneficiary 
questions or provide other appropriate assistance.
    (6) This program will remain in effect indefinitely with any 
adjustments or modifications required by law.
* * * * *

    Dated: October 28, 2016.
Aaron Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2016-26432 Filed 11-1-16; 8:45 am]
 BILLING CODE 5001-06-P