TRICARE drug co-pay increase still up in the air

TRICARE beneficiaries could see some of their prescription drug costs spike next year if the final Defense authorization bill that Congress sends to the White House is silent on the issue.

Republican senators objected to an amendment in the fiscal 2013 Defense authorization legislation that would have capped certain TRICARE costs, paving the way for the Obama administration to implement higher pharmacy co-payments for beneficiaries. The Defense Department has the authority to increase prescription drug co-payments if Congress is silent on the issue.

Sens. Tom Coburn, R-Okla., and John McCain, R-Ariz., led opposition to the bipartisan amendment that would have modestly increased TRICARE co-payments for name-brand and nonformulary drugs next year, scuttling the provision before the chamber could vote on it and before final passage of the bill Tuesday evening. The amendment, offered by Democrats Jack Reed of Rhode Island and Claire McCaskill of Missouri, and Florida Republican Marco Rubio, also would have capped pharmacy co-pays beginning in 2014 to align them with the annual retiree cost-of-living adjustment.

Under the administration’s proposal, TRICARE beneficiaries would pay double and triple what they do now for brand-name drugs. Beneficiaries would pay $26 for a brand-name prescription at the pharmacy and through the mail for a 90-day supply, and a $51 co-pay for a three-month supply of nonformulary drugs received through the mail under the White House plan. Currently beneficiaries pay $9 for a 90-day supply of brand-name drugs through the mail, and $12 at the pharmacy for a month-supply. For nonformulary drugs, enrollees currently pay $25 for both home delivery and pharmacy. Under the failed Reed amendment, co-pays would have been $17 for brand-name drugs at pharmacies and $44 for nonformulary drugs. Co-pays for 90-day prescriptions obtained through the mail would have increased to $13 for brand-name drugs and $44 for nonformulary medication under the provision.

TRICARE beneficiaries would retain the $5 monthly co-pay for generic drugs obtained at a retail pharmacy under every scenario.

The costs associated with the fee increases in the Reed amendment would have been offset by a pilot program requiring TRICARE for Life recipients to obtain maintenance drug refills through the mail -- an estimated savings of $300 million. That program, however, would have increased the amount the government pays into the TRICARE-for-Life trust fund. Similar language in the House-passed Defense authorization bill included a provision that would require the Pentagon use the money it has saved from TRICARE over the past few years -- about $3 billion -- to pay the cost incurred by the mail-order pilot program. The Pentagon has over-budgeted for TRICARE in the last couple of years based on the rising cost of health care and personnel costs and has reprogrammed some of those funds to help pay for increases in war costs.

But Coburn called the pay-for an accounting trick, and said it would take $1.7 billion away from operations, maintenance and training. “I am OK with mail order. I know we save a lot of money with that, but the [Congressional Budget Office] says as soon as we stop this one year, the mandate is going to go back the other way and the cost is going to be this amount of money,” Coburn said Dec. 4 during debate on the Senate floor. “They have met the literal requirements of pay-go, but they haven’t met the functional requirements.” Coburn praised the Obama administration proposal, noting that the Armed Services Committee had recommended similar hikes. “This is not a large amount of money, unless you are absolutely destitute, in terms of the copays.”

Military service organizations were not happy with the Reed amendment block. “This amendment was [our] top priority for the Senate bill, and its failure over what amounts to an accounting technicality (trust fund deposits are not actual outlays, but amount to ledger entries) is disappointing in the extreme,” said Kathy Beasley, deputy director for government relations at the Military Officers Association of America, in an email. Beasley pointed out that the Pentagon has shifted money from its health care budget to other programs, not vice versa. “We think DoD should be spending health care money where it belongs -- on health care.”

McCain echoed Coburn’s comments and said it wasn’t the time to add an additional cost, and quoting a Dec. 2 editorial from The Washington Post endorsing the administration’s TRICARE proposals. He also indicated that TRICARE beneficiaries eventually will have to pay more for their health care. “I understand the positions of the veterans groups in this country. I respect them. I love them, and I appreciate them. But we are going to have to get serious about entitlements for the military just as we are going to have to get serious about entitlements for nonmilitary.”

Beasley said MOAA and other groups will lobby House and Senate conferees to retain the House-passed version of the Defense authorization bill, which also includes modest increases to pharmacy co-pays. “We’re grateful to our three Senate sponsors for taking the lead on this critical issue, and will work to see that their efforts were not in vain,” she said.