For Payers
Introduction
By law, the Department of Veterans Affairs (VA) can bill an eligible Veteran’s private health insurance company (third party) for care furnished or paid for by VA for a nonservice-connected condition. In addition, public law granted the VA the authority to bill reasonable charges instead of average cost-based per diems for care provided to Veterans. Implementation of reasonable charges not only changed the amount billed for services but also impacted the VA’s method of doing business. Payer information and annual updates to VA’s reasonable charges and rates can be found below.
Third party payers
By law, the Department of Veterans Affairs (VA) can bill an eligible Veteran’s private health insurance company for care furnished or paid for by VA for a nonservice-connected condition. For the purposes of billing, a Veteran’s health insurance company is known as a Third Party Payer (TPP). Reimbursements VA receives from TPPs supplement appropriations by Congress to pay for VA health care.
For more details, read Code of Federal Regulations Title 38 §17.101, Collection or Recovery by VA for Medical Care or Services Provided or Furnished to a Veteran for a Nonservice-Connected Disability.
TPPs must pay VA billed charges or the amount TPPs pay commercial providers for the same services in the same geographic area, which is subject to verification by VA. TPPs aren’t subject to a rate verification so long as they pay billed charges.
Methodology
Federal regulations (38 C.F.R §17.101) stipulate the basic methodology by which VA bills third party payers. To generate a charge for medical services, VA establishes national reasonable charges which are then adjusted locally by each VA medical center based on their Geographical Area Adjustment Factor (GAAF). Reasonable charges are developed for five categories of care: inpatient facility, outpatient facility, skilled nursing facility, physicians, and nonphysician providers.
Inpatient facility and skilled nursing facility care are billed on a per diem basis. For inpatient facility charges, the per diem charges vary by the treated condition as classified by Medicare Severity Diagnosis Related Groups (MS-DRG) codes.
Billing for outpatient facility care and provider charges vary by procedure performed as classified by Current Procedural Terminology (CPT) codes and Healthcare Common Procedure Coding System (HCPCS) Level II codes.
Billing for third party outpatient pharmacy prescription drugs not administered during treatments and furnished by the VA to a Veteran for a nonservice-connected disability are calculated using the actual VA cost of a drug, which is the actual amount expended by the VA facility for the purchase of the specific drug plus the Pharmacy Administrative cost.
The administrative cost is determined annually using VA’s managerial cost accounting system. Under this accounting system, the average administrative cost is determined by adding the total VA national drug general overhead costs (such as costs of buildings and maintenance, utilities, billing, and collections) to the total VA national drug dispensing costs (such as costs of the labor of the pharmacy department, packaging, and mailing) with the sum divided by the actual number of VA prescriptions filled nationally.
Based on this accounting system, VA determines the amount of the average administrative cost annually for the prior fiscal year (October through September) and then applies the charge at the start of the next calendar year. The annual Outpatient Pharmacy Average Administrative charge is posted on the Average Administrative Cost for Prescriptions page.
Data for calculating actual charge amounts are published in a Federal Register notice, available on the Payer Rates and Charges page. VA bills using the most recently published or posted charge based on the date of service for the treatment provided.
Link to: 38 C.F.R §17.101
Agreements
In some cases, VA may enter into an agreement with a TPP related to billed charges for eligible Veterans to ensure a more predictable business relationship subject ultimately to federal law.
Email us at RevenueOperationsPR@va.gov for more information.
Frequently asked questions
Do Veterans have to provide VA with their private health insurance information?
Yes. Veterans are required to provide information to VA about health insurance coverage, including coverage provided under their spouse’s policies.
See the VA page on Health Insurance for more information.
Does VA collect copayments on behalf of Third Party Payers?
No, VA cannot collect third party insurance copayments on behalf of the TPP. However, VA can charge certain Veterans a VA copayment for care or services provided for non-service connected conditions.
Review the VA copayments page for more information.
Do Veterans have to pay for the remaining balance on the Explanation of Benefits?
No, Veterans are not responsible for the remaining balance shown as patient responsibility on the explanation of benefits from their insurance carrier. Veterans are only responsible for the required VA copayment.
Review the VA copayments page for more information.
Do Veterans need to complete a Coordination of Benefit (COB) form?
No. The obligation of the third-party payer to pay is not dependent upon the Veteran executing an assignment of benefits to VA or any other submission by the Veteran. In other words, denials from Third Party Payers for Coordination of Benefits violates Federal regulations, and the payer is still obligated to pay VA.
Resources
Vendor Webform User Guide Details steps guiding payers through completion and set up of the vendor file.
38 CFR Section17,
Charges Billed to Third Parties for Prescription Drugs Furnished by VA to a Veteran for a Nonservice-Connected Disability
Contact us
Pharmacy Benefit Managers and Third Party Payers may email questions to: RevenueOperationsPR@va.gov
Payer rates and charges
Reasonable Charges are based on amounts that third parties pay for the same services furnished by private-sector health care providers in the same geographic area. In the past, VA used average cost-based, per diem rates for billing insurers. Reasonable charges are calculated for inpatient and outpatient facility charges, and for professional or clinician charges for inpatient and outpatient care.
Reasonable charges data tables
Reasonable charges data sources
Excel files
- V5.26 Reasonable Charges Data Sources (Outpatient & Professional), 01/01/2026
- V5.26 Reasonable Charges Data Sources (Inpatient)
- V5.25 Reasonable Charges Data Sources (Outpatient & Professional), 01/01/2025
- V5.25 Reasonable Charges Data Sources (Inpatient)
- V5.24 Reasonable Charges Data Sources (Outpatient and Professional), 01/01/2024
- V5.24 Reasonable Charges Data Sources (Inpatient)
- V4.235 Reasonable Charges Data Sources (Outpatient and Professional), 01/01/2023
- V4.23 Reasonable Charges Data Sources (Inpatient)
- V4.225 Reasonable Charges Data Sources (Outpatient and Professional), 01/01/2022
- V4.22 Reasonable Charges Data Sources (Inpatient)
- V4.215 Reasonable Charges Data Sources (Outpatient and Professional)
- V4.21 Reasonable Charges Data Sources (Inpatient)
PDF files
VA medical facility locations
- VA Medical Facility Locations, V5.26 (JAN 2026)
- VA Medical Facility Locations, V5.25 (JAN 2025)
- VA Medical Facility Locations, V5.24 (JAN 2024)
- VA Medical Facility Locations, V4.235 (JAN 2023)
- VA Medical Facility Locations, V4.23 (OCT 2022)
- VA Medical Facility Locations, V4.225 (JAN 2022)
- VA Medical Facility Locations, V4.22 (OCT 2021)
- VA Medical Facility Locations, V4.215 (JAN 2021)
- VA Medical Facility Locations, V4.21 (OCT 2020)
- VA Medical Facility Locations, V3.27 (JAN 2020)
- VA Medical Facility Locations, V3.26 (OCT 2019)
- VA Medical Facility Locations, V3.25 (JAN 2019)
Cost-based and interagency rate
- Cost-Based and Interagency Rates FY26, Effective Date: 10/01/25 (PDF)
- Cost-Based and Interagency Rates FY25, Effective Date: 10/01/24 (PDF)
- Cost-Based and Interagency Rates FY24, Effective Date: 10/01/23 (PDF)
- Cost-Based and Interagency Federal Register Notice, 10/01/22 (WEB)
- Cost-Based and Interagency Federal Register Notice, 10/01/21 (WEB)
- Cost-Based and Interagency Federal Register Notice, 10/01/20 (WEB)
- Cost-Based and Interagency Federal Register Notice, 10/01/19 (WEB)
Average administrative cost for prescriptions
The average national administrative cost used for billing third party pharmacy prescription drugs for nonservice-connected disabilities is updated every calendar year (CY). Costs are based on VA’s national average administrative costs associated with prescriptions filled in a prior fiscal year.
VA average administrative cost for prescriptions
The CY 2026 VA average administrative charge is $12.97. This change is effective January 1, 2026.
The CY 2025 VA average administrative charge is $15.61. This change was effective January 1, 2025.
The CY 2024 VA average administrative charge is $17.01. This change was effective January 1, 2024.
The CY 2023 VA average administrative charge is $14.95. This change was effective January 1, 2023.
The CY 2022 VA average administrative charge is $13.26. This change was effective January 1, 2022. For more information, please review the National Average Administrative Prescription Drug Charge Update CY 2022.
Federal Register, Vol. 86, No. 240
The CY 2021 VA average administrative charge is $20.71. This change was effective January 1, 2021. For more information, please review the Reasonable Charges for the National Average Administrative Prescription Drug Charge Calendar Year (CY) 2021 Update.
Federal Register, Vol. 85, No. 243
The CY 2020 VA average administrative charge is $18.38. This change was effective January 1, 2020. For more information, please review the Reasonable Charges for Medical Care or Services; V3.27, 2020 Calendar Year Update and National Average Administrative Prescription Drug Charge Update.
Federal Register, Vol. 84, No. 244
The CY 2019 VA average administrative charge is $17.66. This change was effective January 1, 2019. For more information, please review the Reasonable Charges for Medical Care or Services; V3.25, 2019 Calendar Year Update and National Average Administrative Prescription Drug Charge Update.
Federal Register, Vol. 83, No. 234
The CY 2018 VA average administrative charge is $16.64. This change was effective January 1, 2018. For more information, please review the Reasonable Charges for Medical Care or Services; V3.23, 2018 Calendar Year Update and National Average Administrative Prescription Drug Charge Update.
Federal Register, Vol. 82, No. 239
TRICARE average administrative aost for prescriptions
The CY 2026 TRICARE average administrative charge is $13.16. This change is effective January 1, 2026.
The CY 2025 TRICARE average administrative charge is $14.78. This change was effective January 1, 2025.
The CY 2024 TRICARE average administrative charge is $13.26. This change was effective January 1, 2024.
The CY 2023 TRICARE average administrative charge is $11.77. This change was effective January 1, 2023.
The CY 2022 TRICARE average administrative charge is $11.79. This change was effective January 1, 2022.
The CY 2021 TRICARE average administrative charge is $16.11. This change was effective January 1, 2021.