19 November 2012 Legislative News Update 

11/19/2012 

Legislative News is AUSA Government Affairs Directorate's
weekly electronic newsletter, and is published
every Monday when Congress is in session.




In this issue:

  • No Defense Bill Yet
  • 2013 COLA Announced
  • Medicare Physician Reimbursement Rates

★★★

 NO DEFENSE BILL YET

We were hoping that Congress’ return to town last week for the post-election lame-duck session meant that the Senate would start debate on the fiscal 2013 defense authorization bill.  Not so.  The week was consumed with developments/hearings about the terrorist attack in Libya, the sex scandal that forced CIA Director David Petraeus to resign and a lot of rhetoric about avoiding the “fiscal cliff.”  It is expected that the Senate will take up the defense measure after they return from this week’s Thanksgiving break.  

One issue we are focused on is the proposed TRICARE pharmacy fee increase.  We know fees are going to go up, but by how much they will increase in fiscal 2013 and how much they will increase in the out-years is the question.

The fiscal 2013 Defense budget proposed a drastic increase in pharmacy copays.  The proposal would also block retail outlets from dispensing “third tier” drugs, those deemed too expensive to be on the military formulary.   

The House-passed defense authorization bill rejected the DoD proposal and instead came up with an alternative plan.  The bill includes a more moderate increase in TRICARE pharmacy co-pays in 2013 and a cap on pharmacy co-pays beginning in 2014 that would allow fees to rise by no more than the annual retiree cost-of-living allowance (COLA).  

To pay for the difference in the DoD proposal and their version, the House established a 5-year pilot program that would require TRICARE for Life (TFL) beneficiaries to obtain refills of maintenance drugs through the TRICARE mail-order program.  However there are loopholes to the requirement:  Beneficiaries would be allowed to drop the program after a year-long trial period and waivers would be allowed under certain circumstances.

The chart below clearly shows the differences in the plans. 

Retail Rx (30 day fill)

Current Fee

DoD/Senate Proposal

House Proposal

Generic

$5

$5

$5

Brand

$12

$26

$17

Non-Formulary

$25

N/A*

$44

Mail-Order Rx (90 day fill)

Current Fee

DoD/Senate Proposal

House Proposal

Generic

$0

$0

$0

Brand

$9

$26

$13

Non-Formulary

$25

$51

$43

Military Treatment Facility Rx

$0

$0

$0

*N/A - Not available at retail after FY12

The Senate’s version of the defense authorization bill is silent on the pharmacy issue. Their silence means that the Defense Department could proceed with its plan. 

While AUSA does not believe that pharmacy co-pays should increase at all, we realize that they will. Therefore, we recognize that the House plan is the best deal we can get for our members.  Forget the dramatically higher co-pays the DoD proposal would implement immediately, for 2017 and beyond co-pays would be adjusted yearly to match medical inflation.  Again the House bill limits co-pay adjustments to no more than the percentage increase in military retirement.

Therefore, in anticipation of the Senate debate, AUSA joined forces with its partners in The Military Coalition to urge the Senate to adopt the House provision that limits pharmacy copay increases.  The Coalition ran a full page ad in two of Capitol Hill’s most influential newspapers:  The Hill and Politico.  As a result, the Coalition has received interest from several senators' offices about sponsoring a possible amendment on this issue.

You can help!  Click here to send an AUSA-suggested message to your senators.  Use the letter titled "Don’t Triple Military Rx Copays".  Together we can keep the pressure on them to avoid dramatic increases to pharmacy copays by receding to the House and adopting the House language. 

COST OF LIVING ADJUSTMENT FOR 2013 ANNOUNCED

The Social Security Administration announced that based on the increase in the Consumer Price Index from the third quarter of 2011 through the third quarter of 2012, military retirees can expect a 1.7 percent cost-of-living adjustment effective Dec. 1.  The increase will appear in the January checks.

The same percentage increase will apply to Social Security, federal civilian retired pay and other government entitlements linked to the Consumer Price Index.

 IT’S THE MOST WONDERFUL TIME OF THE YEAR. NOT!

As the Second Session of the 112th Congress draws to a close, we are once again facing a huge reduction to Medicare physician reimbursement rates.

A 1997 deficit reduction law called for setting Medicare physician payment rates through a formula based on economic growth.  The "sustainable growth rate" (SGR) worked for the first few years because Medicare expenditures did not exceed the target and doctors received modest pay increases.  However, in 2002, physicians were scheduled to receive a 4.8 percent pay cut which resulted in a huge outcry.  Because payment rates in the TRICARE program are tied to Medicare rates, this affects many military beneficiaries. 

Every year since, Congress has staved off the scheduled cuts by implementing a “fix”. But each deferral just increases the size – and price tag – of the fix needed the next time. Finding a permanent solution to the annual cuts in reimbursement rates has proven to be next to impossible. 

The current fix expires on Dec. 31, and physicians will face a nearly 27 percent drop in reimbursement rates.  By Congressional Budget Office estimations, it would cost about $300 billion to replace the current formula.  Additionally, the uncertainty over reimbursement rates and the constant threat of payment cuts cause more and more physicians to opt out of treating Medicare and TRICARE patients.

AUSA President Gen. Gordon R. Sullivan, USA, Ret., sent a letter to Hill leadership last week urging them to pass legislation that would reverse the 27% reduction.  “Finding doctors who accept TRICARE is an enormous problem for the military community; particularly for Guard and Reserve families, retirees, and survivors living in areas with a small military population.  Payment cuts make the situation even worse,” Sullivan’s letter said.  

More than likely, Congress will approve another one-year patch during the lame-duck session.  AUSA will continue to work with the Hill to find a permanent solution to this old problem.