TRICARE co-pay hikes coming

House-Senate conferees have agreed to the more modest House-passed plan for raising drug co-payments on military family members and retirees who fill prescriptions at TRICARE retail outlets or through mail order.

The fee increases are scheduled to take effect Feb. 1, TRICARE officials said as the fiscal 2013 defense authorization bill, with many other provisions impacting the military community next year, moved toward final passage.

The new pharmacy fee plan includes a requirement that beneficiaries 65 and older have all maintenance drugs for chronic conditions refilled, for at least one year, through TRICARE mail order or at base pharmacies, rather than through retail outlets where the cost to TRICARE is a third higher.

TRICARE likely will need to publish a draft regulation, solicit public comment and launch an education effort for elderly beneficiaries before it begins to enforce home delivery for seniors.

That could delay starting that portion of the pharmacy plan until April or later.

It is a matter "under review and as yet we do not have an implementation time frame established," said Kevin J. Dwyer, deputy chief of benefit information and outreach for the TRICARE Management Activity.

Conferees were persuaded to embrace the House plan, supported by advocates for military beneficiaries, over more aggressive fee hikes sought by the Obama administration.

The Senate version of the defense bill was silent on the issue, which was a nod for the administration to proceed.

But over the past two weeks, a House-Senate conference ironed out differences between separate versions of the defense bill and the House plan prevailed.

So after January, at TRICARE retail outlets, the current $12 co-pay for brand name drugs on the military formulary will rise to $17.

The $25 co-pay for non-formulary drugs will jump to $44.

The co-pay for generic drugs at retail will stay at $5. Drugs will stay free at military pharmacies.

For mail order, the current $9 co-pay for brand names on formulary will increase to $13. The $25 co-pay for brand names off formulary will jump to $43.

Generic drugs will continue to be dispensed by mail at no cost.

For fiscal 2014 and beyond, the plan directs that drug fees be raised annually by the same percentage as retiree cost-of-living adjustments.

In years when a COLA increase applied to pharmacy fees would total less than a dollar, it will be delayed a year and combined with the next adjustment.

So that drug fee increases, when executed, are always a dollar or more.

The administration wanted drug fees reset substantially higher in 2013 and to grow by $2-a-year through 2016. It then wanted annual adjustments to match medical inflation, not retiree COLAs.

Mail order users of brand name drugs save two-thirds on co-pays automatically because refills are for 90 days versus 30 days at retail. Given those savings and the convenience of home delivery, backers of the House plan expect most elderly beneficiaries, once forced to use mail order, to stay with it, saving TRICARE hundreds of millions of dollars year after year.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at:

[email protected]