Zeglin: Medication copayment reimbursement

Zeglin v. Shulkin, 29 Vet.App. 226 (Mar. 6, 2018)

HELD: The Board’s failure to properly discuss VA’s offset policy was harmless error where the record demonstrates that the Board properly applied the policy. Similarly, the Board’s error in finding “that VA does not have the authority to verify that reimbursements it receives from third-party payors are comparable to that which the third party would pay to a non-federal entity” was also harmless error where VA has established policies for ensuring that the rates are comparable.

SUMMARY: Most veterans are required to pay a copayment for each 30-day (or less) supply of medication. For nonservice-connected veterans, VA can seek reimbursement of reasonable charges from their private health insurance – as long as those charges do not exceed the amount that would be paid to a non-federal entity in the same geographic location. Prior to March 2011, VA billed private health insurers a flat rate of $51 for each prescription, regardless of the length of the supply. In March 2011, VA changed its billing practices to more accurately reflect the cost of each medication.

The veteran in this case accrued an outstanding balance of unpaid medication copayments and was denied a waiver of the debt owed to VA. He appealed to the Board, and the Board determined that VA properly charged him an $8 copayment for each 30-day supply of medication. He appealed to the Court.

The Secretary and the Court agreed with Mr. Zeglin that the Board erred in its discussion of VA policy “to offset a veteran’s copayment charge dollar-for-dollar with the amount received from a third[-]party insurance company regardless of whether that amount is less than the amount billed to the third party.” However, because the Board properly applied that policy, the Court determined that the error was harmless.

The Secretary and the Court also agreed with Mr. Zeglin that the Board erred in finding that VA was not authorized to verify that “reimbursements received from third-party payors are comparable” to payments the third party would make to a non-federal entity for the same medication. However, the Court again found that this error was harmless based on information provided by the Secretary showing that VA “has an established third-party payor review process that evaluates reimbursement rates” and that VA will initiate “a formal rate verification” when a third-party insurer reimburses a below-market rate. The Court thus determined that Mr. Zeglin failed to show how he was prejudiced by the Board’s errors, and affirmed the decision.