'97 Government Affairs Overview:

A Year of Challenge and Change

In trying to capture the essence of pharmacy developments in the public policy arena during the past year, the words "acceleration," "expansion," and "intensification" quickly come to mind.

Ending years of gridlock on national health care reform, Congress and the White House this summer passed major Medicare and Medicaid reforms with surprising speed. The accelerating influx of Medicare and Medicaid populations into managed care continues to reshape the face of U.S. health care. The Operation Restore Trust crackdown on health care fraud and abuse has intensified this year and is now poised for a major expansion.

The past 12 months have seen ASCP emerge as a key player in several major legislative and regulatory battles at the national level, while working hard to monitor and influence a broad array of fast-breaking developments in the states. On several fronts, the ASCP staff and ASCP members have joined together to achieve significant advances-including a major lobbying advance this summer that may ultimately prove to have a significant bearing on the quality of medication services provided to millions of Americans for many years to come.

A Historic Agreement

After failed attempts at major Medicare and Medicaid restructuring in 1994 and 1995, national health care reform was back-burnered in 1996 in deference to election-year politicking. As 1997 got under way, however, one sensed that this year might be different: Time had tempered bitter memories of the budget showdowns of late 1995 and early 1996, and both Congress and the White House were under heavy public pressure to deliver on their mutual pledge of balancing the federal budget books by the year 2002.

Infused with a new spirit of compromise, the two sides set aside partisan differences and got down to work. Seven months later, less than a year after enacting the biggest welfare overhaul in 60 years, Congress passed and President Clinton signed an historic balanced-budget package containing major Medicare and Medicaid reforms-some of the most significant in the programs' 30-year history.

For pharmacy, the most important Medicare change will be the transition to a new prospective payment system (PPS) for skilled nursing facilities. This fundamental shift in Medicare payment policy has profound, far-reaching implications for nursing home service providers and the residents they serve.

The Story of a Lobbying Breakthrough

In a year of significant legislative and regulatory advances, the recent Prospective Payment System lobbying victory will go down as ASCP's finest hour. Here's how it came about: January: President Clinton releases his 1998 budget, which calls for $138 billion in Medicare savings and $22 billion in Medicaid savings over six years. February: Congress releases its own Medicaid and Medicare reform plan, calling for an all-inclusive nursing facility prospective payment system (PPS). ASCP launches an intensive PPS-focused lobbying campaign. March: At ASCP's annual legislative conference in Washington, D.C., ASCP Executive Director Tim Webster details the risks of a Medicare PPS including medication services. Eighty meeting attendees visit Capitol Hill to warn lawmakers of these potential dangers. April: ASCP steps up its lobbying campaign. ASCP staff meet with dozens of congressional legislative aides and coordinate a letter-writing campaign by ASCP members targeting dozens of members of the House and Senate. May: At ASCP's Midyear Conference in Scottsdale, Arizona, more than 600 ASCP members carry out an on-site fax campaign, flooding Capitol Hill with 3,500 letters alerting their senators and representatives to the pitfalls of medication services capitation. June: Realizing that passage of a comprehensive PPS is virtually assured, ASCP lobbies for a cautious approach to PPS design and implementation. Several past and present ASCP leaders and individual ASCP members come to Washington to meet with their elected representatives; many others deliver ASCP's message of caution through letters and phone calls. July: As budget negotiations draw to a close, ASCP mounts a final lobbying push. ASCP staff and legislative counsel work with Sen. Bill Frist (R-Tenn.) to draft language calling for HHS to review research on PPS risks and payment levels before finalizing program policies. Frist and three colleagues- Sens. Alfonse D'Amato (R-N.Y.), Jim Jeffords (R-Vt.), and Rick Santorum (R-Penn.)-sign a letter asking Senate Majority Leader Trent Lott (R-Miss.) to forward the ASCP-backed language to budget negotiators. Lott submits the language to the conferees, who incorporate it into their final conference report (see box on page 941). On July 29, the Balanced Budget Act of 1997, including the ASCP-backed explanatory language, is passed by the full House; the Senate follows suit on July 30. August: President Clinton signs the bill into law on August 5.

Fundamental Changes in Medicare Policy

"Until now, Medicare has paid for nursing facility medication services retrospectively: Pharmacy providers bill fiscal intermediaries for services already provided," says ASCP Director of Government Affairs Leigh Davitian. "That `pass-through' system will soon be a thing of the past. Under the new PPS, payments will be made on a prospective, up-front basis at a tightly capped, per-diem rate. The nursing home will receive one per-diem payment to cover all aspects of a resident's care-everything from drug therapy, medical equipment, and physical therapy, to soap and bedsheets."

What will this mean for pharmacists who serve nursing facility residents? "Because Medicare payments to nursing facilities will be tightly capped, facilities will be under great pressure to hold down costs any way they can," Davitian says. Services whose necessity and appropriateness were never challenged may now be called into question. Things once viewed as essential-I.V. therapy, expensive AIDS drugs, or a special delivery system, for example-may now be considered exhorbitant or unnecessary." Pharmacists who serve nursing home residents will face increased pharmacoeconomic scrutiny of all aspects of their services and heightened demands for demonstration of value during contract negotiations.

What about nursing home residents with complex medication needs that don't fit neatly into the new capitation structure? "There is a real danger that cost considerations will supplant therapeutic appropriateness as the key driver of medication decisions in the nation's nursing homes," Davitian says. "A poorly designed prospective payment system will result in suboptimal drug therapy, worse outcomes, slower recovery from illness, more ER visits, and, quite likely, denial of nursing home admission for some patients with especially complex or costly medication needs."

A Critical Footnote The following 18-line passage of explanatory language, inserted into the final Balanced Budget Act conference report by House and Senate conferees, may prove to be a vital link to preservation of appropriate medication services for millions of elderly Americans: "The Conferees note that under the proposed SNF [skilled nursing facility] prospective payment system, services and supplies provided to residents will be included in pre-determined per diem payment rates. To ensure that the frail elderly residing in SNFs receive needed and appropriate medication therapy, the Secretary of Health and Human Services should consider the results of studies conducted by independent organizations including those which examine appropriate payment mechanisms and payment rates for medication therapy under a prospective payment system for SNFs. It is the intent of the Conferees that the Secretary develop case mix adjusters that reflect the needs of such patients." "This language holds the promise of a rational, responsible approach to PPS design and implementation," says ASCP Director of Government Affairs Leigh Davitian. "Now we must work diligently to ensure that the promise becomes reality-that PPS policy makers give the study results the attention they deserve and craft payment mechanisms accordingly. The health and safety of millions of Americans may depend on it."

Pharmacy-Related Provisions of the Balanced Budget Act of 1997
MEDICARE Expected net cost savings, 1998-2002: $115 billion Home Health Care Most services shifted from Part A to Part B Phased-in implementation of PPS over four years, beginning October 1, 1997 HHS Secretary to report estimated spending for 1998-2002 Expected five-year cost savings: $16.2 billion Hospital Discharges to SNFs, Home Care Payment based on specified group of 10 diagnosis-related groups (DRGs), to be chosen by HHS Secretary on basis of volume, high post-acute care transfer rates Payment levels fully or partly based on current per-diem payment policy Expanded Beneficiary Choices Medicare + Choice Choice of managed care plans, medical savings accounts, defined contribution fee-for-service Skilled Nursing Facility PPS Covers all routine, ancillary, and capital costs (with exception of physician services) Case-mix adjusted per-diem payments Geographic labor adjustment Phased in over three years Expected five-year cost savings: $9.5 billion Expanded Preventive Benefits New payments to qualified health care providers for diabetes education and self-management training $8 million expansion of immunization program	Part B Drug Therapy Payment based on 95% of average wholesale price (AWP) Dispensing fee paid to licensed pharmacies HHS Secretary to study and report on impact of AWP-based pricing by July 1999 Oral antinauseant/antiemetic drugs must be administered or prescribed by physician within 48 hours of chemotherapy administration Durable Medical Equipment Fee schedule updates eliminated for 1998-2002 Upgrades allowed for standard items, with beneficiary paying difference of upgraded cost and standard item cost Oxygen Therapy Payment limits reduced 25% in 1998, with additional 5% reduction in 1999; 30% reduction in subsequent years HHS Secretary required to establish minimum service standards General Accounting Office to report on overall cost impact within 18 months of enactment Parenteral and Enteral Nutrition Charges for nutrients, supplies, equipment not to exceed 1995 payment levels Part B Competitive Bidding HHS Secretary to conduct demonstration projects to apply pricing methodology to Medicare + Choice, apply benefits structure and premium structure, evaluate impact of changes on Medicare fee-for-service program HHS Secretary to develop no more than five acquisition projects at three sites each, one of the projects will focus on oxygen services	Part B Consolidated Billing Payment for all services and supplies based on fee schedules set by HHS Secretary Applies to all beneficiaries residing in SNFs or facilities of which any distinct part is an SNF Fraud and Abuse Enforcement Mandatory 10-year exclusion for first fraud conviction Permanent exclusion for two or more convictions New toll-free hotline for beneficiaries to report irregularities directly to HHS Office of Inspector General All DME providers required to carry surety bond of at least $50,000 MEDICAID Expected net cost savings, 1998-2002: $13.6 billion Boren Amendment Repealed, effective for payment or services rendered on or after Oct.1, 1997 Expected five-year cost savings: $1.2 billion Section 1115 waivers Increased flexibility for states to develop mandatory managed care programs HCFA Section 1115 waiver process streamlined Program of All-Inclusive Care for the Elderly (PACE) Current 11-state demonstration expanded as permanent Medicare/Medicaid benefit category Eligibility determined by state agency responsible for PACE program administration

ASCP Rises to the Challenge

Early in the year, as the details of congressional and White House Medicare PPS proposals came to light, ASCP swung into action with an intensive lobbying campaign. "We decided that ASCP's best hope for averting a patient care disaster was to make members of Congress understand that inclusion of medication services in a nursing home PPS must be accompanied by development of mechanisms to ensure that capped payments are sufficient to allow for an appropriate level of spending on drug therapy," Davitian explains.

Educating members of Congress about the dangers inherent in transitioning to an all-inclusive nursing facility PPS has been the major focus of ASCP lobbying activities throughout the year.

But the ASCP government affairs team knew that simply warning lawmakers about the pitfalls of capped payments for medication services wouldn't be enough: "We realized that if we were to succeed in protecting the interests of nursing home residents, we couldn't just say to Congress, `This is a bad idea; this won't work.' We had to point the way to a rational, responsible approach to prospective payment," says Davitian.

In mid-spring, when it became clear that congressional and White House passage of a comprehensive nursing facility PPS was virtually assured, ASCP set its sights on influencing the design and implementation of the new payment system. "The key to ensuring appropriate patient care under any prospective, capitated payment system is development of accurate, reliable risk-adjustment mechanisms to ensure that payments are in line with actual service needs, says Davitian. But in the case of medication services for elderly institutionalized patients, solid data on which to base risk-adjustment decisions and associated payment policies is simply not available. Capitation of medication services for long-term care facility residents has only been tried in one state, and the impact of capitation on treatment outcomes and utilization of other services has not been explored and quantified. The data just isn't there yet."

This July, the ASCP Board of Directors resolved to fill that crucial information gap. The board approved funds for a new study to more clearly define the impact of capitation on drug utilization and drug therapy outcomes and offer guidance on proper payment levels. Conducted by Massachusetts-based research firm Abt Associates, the study is now under way and scheduled for completion in March 1998.

"This study will provide the solid utilization and outcomes data needed to develop sound PPS payment policies," Davitian says. "With this information, federal officials will be able to craft payment mechanisms linking drug therapy decisions to overall health care costs, set minimum standards for medication services, and make case-mix adjustments to accommodate high-tech and high-cost therapies. All this will translate into PPS payments adequate to ensure appropriate drug therapy for nursing facility residents."

More New Challenges

In addition to provisions creating a nursing facility PPS, the Balanced Budget Act includes other Medicare reforms with major ramifications for pharmacy providers:

• Consolidated billing will be required for all nursing facility services; pharmacies and other outside suppliers will no longer be able to bill Medicare directly for Part B services provided to beneficiaries who have exhausted their Part A benefits.
• Competitive bidding will be implemented for virtually all Part B services (priority consideration will be given to prescription drug, oxygen therapy, and durable medical equipment services), raising the prospect of service disruptions and reduced access to 24-hour support and specialized pharmacy services.
• Most home care services will shift from Part A to Part B. Medication pricing will be based on acquisition cost, and service providers will face stepped up enforcement of fraud and abuse.

A detailed summary of the full range of pharmacy-related Medicare and Medicaid reforms contained in the Balanced Budget Act appears on page 961.

A New Window of Opportunity

The Medicare changes that lie ahead will pose many new challenges for pharmacists and other service providers-but also some new opportunities. The budget bill includes a new spending provision that expands Medicare coverage to include screening mammography, pap testing, and other preventive care benefits, including diabetes self-care training and education provided by pharmacists and other qualified health professionals.

The diabetes care provisions, orginally introduced as stand-alone legislation by Rep. Bill Thomas (R-Calif.), will yield an estimated $2.4 billion in Medicare cost savings over five years while greatly improving the level of care for the nation's estimated three million seniors with diabetes.

Thomas' proposal quickly attracted broad support and dozens of cosponsors in both chambers of Congress, including House Speaker Newt Gingrich (R-Ga.), whose strong endorsement helped assure easy passage. Specific payment mechanisms will be worked out in the coming months by the Department of Health and Human Services (HHS), in consultation with the American Diabetes Association and other professional groups.

"Congressional approval of these new diabetes care benefits is a major breakthrough for pharmacy, for two reasons," Davitian says. "First of all, pharmacists will be recognized as worthy of receiving payment for services over and above dispensing; this may pave the way for future recognition of pharmacists as `qualified health care providers' under the Social Security Act. Second, the diabetes coverage provisions may herald a fundamental shift in federal health care policy from a reactive philosophy of disease treatment to a philosophy of preventive care-a shift that could open the door to even greater patient care and reimbursment gains for pharmacy in the years ahead."

Near Misses

Unfortunately, another Medicare proposal for which ASCP lobbied aggressively did not make it into the final budget package. Budget negotiators rejected-by one vote-a proposal by Rep. Frank Pallone (D-N.Y.) to establish Medicare Part B payments for a wide range of pharmacist cognitive services, including patient compliance counseling, physician consultations resulting in modification or discontinuation of drug therapy, and administration of some vaccines.

Although Pallone and ASCP labored diligently to make it clear to Congress that such pharmacist payments would be contingent upon demonstration of associated cost savings, budget negotiators strongly resisted any proposals requiring new spending.

Despite this disappointing setback, Pallone has indicated he will continue working to build bipartisan support for his proposal, with an eye toward reintroduction in 1998. "Rep. Pallone's success in cultivating broad support for this important legislation bodes well for its future passage," Davitian says.

Also rejected during the budget talks was a proposal by Rep. Pete Stark (D-Calif.) to set up a new medication evaluation and dispensing system requiring 24-hour, on-line prospective and retrospective review of all prescriptions dispensed to Medicare beneficiaries, as well as establishment of new patient counseling standards.

Medicaid Reform: The Demise of Boren

While Medicare cost-cutting was clearly the primary focus of Congress' balanced budget negotiations, the final bill also contains provisions aimed at reducing the growth of federal Medicaid spending by about $13.6 billion over five years. Most of the targeted spending cutbacks will be achieved through reduced payments to state Medicaid agencies and major cutbacks in extra payments to hospitals serving large numbers of low-income recipients.

The remainder of the targeted five-year savings will accrue from repeal of the Boren Amendment, which has required states to pay nursing facilities and other Medicaid providers at a level "reasonable and adequate" to achieve minimum standards of care as defined in the Omnibus Budget Reconciliation Act of 1987. The lifting of Boren Amendment restrictions will give states much greater flexibility to reduce those payments-with uncertain implications for pharmacists involved in nursing home care.

"As the impact of the repeal of Boren begins to be felt in the individual states," says Davitian, "we'll be increasingly challenged to demonstrate to cost-minded lawmakers and policy makers that inadequate provider payments can only lead to inadequate patient care and, not very far down the road, overall cost increases."

A Mixed Bag From HCFA

The nation's biggest purchaser of health care services, the Health Care Financing Administration (HCFA), has undertaken a wide range of streamlining and cost-cutting initiatives over the past 12 months, two of which drew the close attention of ASCP.

Just before the year began, ASCP helped derail a HCFA plan to scale back federal nursing home oversight. The proposal came to light last fall, when HCFA notified state health officials of its intent to implement major changes in federal Long-Term Care Facility Survey Procedures. Designed to enable HCFA to focus shrinking survey resources on nursing facilities with the worst compliance track records, the proposal contained many worrisome provisions-scaled back inspections, fewer resident interviews, elimination of reviews of admission contracts and accident reports. Worst of all, the plan would have reduced medication-focused inspection activities to a dangerous level. Phase I med-pass observations would have ended, and all Phase II survey requirements would have been waived if the Phase I survey revealed no significant compliance problems.

In a comment letter to HCFA in early December, ASCP warned of the potential for a "major adverse impact on resident health and safety," noting that elderly nursing home residents are especially vulnerable to the adverse effects of ill-managed drug therapy. "The Phase I survey alone is not sufficient to ensure accurate medication administration," ASCP cautioned.

News of the impending HCFA policy shift prompted a major outcry by consumer advocates and attracted front-page coverage in the New York Times. Days later, President Clinton shelved the plan, saying it would be thoroughly revised and offering assurances that he would fight any attempt to weaken federal oversight of nursing home compliance enforcement.

ASCP responded much more favorably to a proposal by HCFA to revise federal Conditions of Participation for home care companies. In addition to mandatory background checks on home health aides, and routine evaluation of all new admissions using the federal Outcomes and Assessment Information Set (OASIS), the proposed policy revisions would mandate drug regimen review as part of initial and ongoing comprehensive assessments for all home care patients. The proposed revisions did not, however, stipulate that such reviews be performed by pharmacists.

ASCP moved quickly to rectify that important lack of specificity. In a comment paper sent to HCFA in early June, ASCP cited a recent study indicating that home care patients typically take seven prescription medications and three nonprescription drugs and have an average of about five acute and chronic medical diagnoses-medication usage and acuity levels very similar to those among nursing home residents. The comment paper also pointed to data from Phase I of ASCP's Fleetwood Project Research Initiative indicating that consultant pharmacists' drug regimen review (DRR) services and related activities yield cost savings totaling roughly $3.6 billion each year in the nation's nursing homes, mainly through prevention of hospitalizations for medication-related problems.

"Because medication use levels among nursing facility and home health patients are comparable, and because of the demonstrated value of consultant pharmacists in preventing drug-related problems, ASCP believes that pharmacists are the most appropriate group of health professionals to conduct drug regimen reviews for home health patients," the comment paper said.

If HCFA decides not to mandate DRR for all patients in home health settings, ASCP has recommended that regular pharmacist-conducted DRR continue to be performed on high-risk patients, with suggested at-risk criteria including, but not limited to, use of nine or more medications, and use of narrow therapeutic index drugs. HCFA is expected to make a final decision regarding the proposed revisions to the Conditions of Participation by the end of this year.

From DEA, Some Welcome Relief

Long-term care pharmacy received good news this spring, when the Drug Enforcement Administration (DEA) announced a substantive revision of various sections of the Code of Federal Regulations governing dispensing and documentation of controlled substances orders.

The most significant change was the easing of the "72-hour rule"-a much-maligned impediment to pharmacists' efforts to provide prompt relief to patients suffering severe, debilitating pain. Under the revised rules, pharmacies now have seven days, rather than 72 hours, to obtain required hard-copy back-up after dispensing oral emergency orders for Schedule II drugs.

Other revisions to CFR Sections 1300-1316 ease rules governing exchange of information between pharmacies linked by "real-time, on-line" databases; eliminate requirements to mark prescriptions for Schedules III and IV drugs with a red "C," provided automated systems are used and back-up information is readily retrievable; and clear the way for facsimile transmission of Schedule II orders for residents of Medicare-certified and state-licensed hospices.

"We're encouraged by these developments, but much more remains to be done." says Davitian. "Working with DEA officials to strike the right balance between diversion control and proper patient care will continue to be a major challenge for ASCP."

Fraud Crackdown Intensifies

1997 has brought a major expansion of federal and state efforts to detect and punish health care fraud and abuse. Many of these initiatives are being carried out under the aegis of Operation Restore Trust (ORT), the sweeping multiagency federal-state fraud crackdown launched in 1995. During its first two years, ORT initiatives targeted nursing home, durable medical equipment (DME), and home care providers in California, Florida, New York, Texas, and Illinois. About $188 million in improper, recoverable payments to Medicare and Medicaid providers have been identified so far-roughly $23 for each dollar spent on the program. Over the next two years, ORT will be expanded to 12 additional states as a prelude to eventual expansion into all 50 states and the District of Columbia.

Throughout the year, the results of various ORT probes and other audits and investigations were reported, painting a picture of rampant abuses fostered by lax payment control and inadequate HCFA oversight:

• A report from the U.S. General Accounting Office concluded that as many as half of all home care claims contain inappropriate charges.
• The Office of the Inspector General (OIG) of HHS released the fourth in a series of reports detailing "questionable" practices in provision of Medicare nebulizer drug therapy, including inappropriate treatment of some patients and widespread billing improprieties.
• A widely publicized report, OIG revealed the results of a comprehensive claims audit indicating that Medicare losses due to waste, fraud, and abuse totaled a staggering $17 billion to $23 billion last year-roughly 11%-14% of total program outlays.

Some of these reports were issued at the height of the congressional health care reform debate, providing strong impetus for passage of tough new antifraud measures, as well as tighter federal controls on DME procurement and billing for nursing facility and home care services.

Given the resounding success of ORT initiatives to date, intense scrutiny of pharmacists and other health care providers is not likely to abate anytime soon.

FDA Activity

Despite internal turmoil stemming from the departure of Commission David Kessler and the search for a successor, the Food and Drug Administration (FDA) has already approved nearly as many New Drug Applications this year as were approved in all of 1996.

Early this year, FDA officials saw their much-criticized "MedGuide" plan shelved by HHS Secretary Donna Shalala in favor of a private-sector "Action Plan" calling for pharmacies to provide more consumers with standardized, written information on their prescriptions, including drug-specific safety and usage information. The plan was hailed by the pharmacy community as a reasonable, affordable alternative to "MedGuide," which would have required broad distribution of standardized drug information pamphlets-at great cost to pharmacies. HHS has reserved the authority to implement a MedGuide-style program if pharmacies do not achieve the mandated goals of distributing written prescription information to 75% of consumers by the year 2000 and 95% of consumers by 2006.

In July, ASCP and all of the nation's other major pharmacy organizations applauded a proposal by FDA to require that the labeling on all nonprescription drugs direct purchasers to "ask your doctor or pharmacist" for information on proper OTC product use. As a letter signed by all JCPP members noted, "Referencing the pharmacist on the OTC label would be a major step toward assuring that the label's content is made more user-friendly and that consumers are better able to understand how to properly use these medications." A final policy decision by FDA is anticipated in the near future.

STATE LEGISLATIVE AND REGULATORY DEVELOPMENTS

1997 has been an unusually busy year in the state policy arena, as dozens of states have addressed a wide range of bills relating to pharmacy regulation, pharmacist reimbursement, and drug pricing. So far this year, ASCP State Affairs Manager Brad Kile reports, the headquarters staff has analyzed the potential long-term care ramifications of nearly 6,000 pharmacy-related state bills and regulatory initiatives; more than 400 of these items were entered into ASCP's newly enhanced computerized tracking system for close daily monitoring. Here's a rundown of major state-level initiatives over the past 12 months.

NTI Substitution

In one of the most significant developments this year, 11 states considered legislative proposals to prohibit or restrict generic substitution for narrow therapeutic index (NTI) drugs-about two dozen medications widely used in management of heart attack, stroke, epilepsy, and asthma.

So far this year, North Carolina, Virginia, and Texas have enacted new laws mandating that pharmacists notify or obtain the consent of prescribers before dispensing generic substitutes for branded NTI products. The North Carolina law is the most stringent, requiring the documented informed consent of both prescriber and patient prior to any NTI substitution.

Similar NTI substitution bills were defeated in Colorado and Missouri, and bills are still pending in Massachusetts, New Jersey, New York, Ohio, and Pennsylvania.

This summer, in anticipation of continued efforts at the state level to tighten regulations on generic substitution, the ASCP Board of Directors approved a policy statement emphasizing ASCP's opposition to legislation, regulations, reimbursement policies, or pharmacy benefit requirements that mandate, prohibit, or restrict the selection of either a branded drug or its generic equivalent. "The patient's well-being should be the primary concern in drug product selection, not economic incentives," the statement emphasizes.

In a related development this March, Virginia lawmakers narrowly rejected an "anti-switch" bill aimed at prohibiting all forms of incentive-based therapeutic interchange-the first such bill in any state. The proposed law would have made it unlawful for any insurer or pharmacy benefit manager to encourage a prescriber to substitute a therapeutically equivalent but "chemically dissimilar" drug for a prescribed drug by offering rebates or other financial incentives.

Drug Pricing, Mail Order Initiatives

In another major trend this year, 10 states have considered legislative proposals to tighten the ground rules under which drug manufacturers can offer discounted prices to some purchasers.

The sudden emergence of these bills is an outgrowth of last year's landmark $352 million settlement between 11 major drug companies and thousands of independent community pharmacists who charged that the drug makers conspired to deny them access to discounts provided to managed care organizations, long-term care pharmacies, and other purchasers.

Most of the drug pricing initiatives this year were designed to prohibit volume discounts based solely on the purchaser's class of trade. Drug pricing bills died in committee or were otherwise rejected in Mississippi, North Dakota, New Mexico, Oregon, South Dakota, Vermont, and Washington; the remaining bills are still pending.

One of this year's more dramatic drug pricing developments occurred in Minnesota, where the legislature passed a bill calling for creation of a voluntary, state-administered drug contracting alliance for commercial purchasers. ASCP members in the state lobbied aggressively against the measure, but to no avail. When the bill was sent to Gov. Arne Carlson (R) in May, Minnesota ASCP members flooded the governor's office with phone calls and letters requesting a veto. In a final written appeal to Carlson, ASCP criticized the proposed alliance as "unnecessary government intrusion into an already efficient marketplace," emphasizing that the program would not achieve the stated purpose of expanding drug coverage for low-income seniors. Days later, the governor did an abrupt about-face and blocked funding for the program, effectively killing it.

In July, ASCP members successfully opposed a proposal by Gov. Fob James (R) to mandate use of mail order for all maintenance refills. Bowing to pressure from ASCP members and other Alabama pharmacists, James shelved the mail order plan, saying he would explore alternative cost-cutting strategies.

High-Impact Show and Tell Over the past 12 months, several ASCP members have hosted U.S. Senators and Representatives on long-term care facility site visits, raising their awareness of consultant pharmacists' important and growing role in health care-and the real-world impact of actions by Congress. Initiated in early 1996, the site visit program really took off late last year, as Ohio ASCP member Chuck Hunt arranged a visit by Rep. Bob Ney (R-Ohio) to one of his client facilities. Shortly thereafter, Tennessee member Diane Crutchfield arranged a similar visit by Rep. John Duncan (R-Tenn.). She followed up this spring by hosting a site visit for Sen. Fred Thompson (R-Tenn.). This spring, Rhode Island ASCP member Mike Loomis hosted Sen. Jack Reed (D-R.I.) on a visit to his pharmacy, and Connecticut member and ASCP Past President Elliott Tertes toured a long-term care facility with Rep. Nancy Johnson (R-Conn.). In August, Arizona ASCP member Jane Lee arranged a site visit by Rep. John Shadegg (R-Ariz.). ASCP members are currently working to coordinate future site visits by Reps. Mike Bilirakis (R-Fla.) and Henry Waxman (D-Calif.), as well as Sens. Jon Kyl (R-Ariz.), John McCain (R-Ariz.) and Jay Rockefeller (D-W.V.). In 1998, ASCP will broaden the scope of the site visit program to target state governors and legislators in addition to members of Congress.

Cognitive Services Reimbursement

1997 has seen pharmacists across the country step up their efforts to secure reimbursement for a wide range of patient-focused cognitive services-compliance counseling and other activities over and above product dispensing.

In the year's most significant gain, 11 more states enacted new laws mandating insurance coverage of diabetes education and self-care training provided by pharmacists and other qualified health care professionals (see box, page 972).

Other legislative initiatives to establish public and private insurance reimbursement for pharmacists' cognitive services have come up for consideration this year in nine states. In one such initiative, New Mexico ASCP member John Heaton, who was elected to the state legislature last November, introduced a bill that would establish mandatory insurance coverage of patient counseling and other cognitive services within the scope of the state's pharmacy practice act. Other examples include:

• A bill in Missouri that would require Medicaid and all insurance plans offering pharmaceutical services to pay for professional pharmacy services, as well as dispensing services
• A bill calling for the addition of nondispensing pharmacy services to the list of services Nebraska insurers must provide to be eligible for total or partial state reimbursement.
• A bill aimed at establishing insurance reimbursement for Tennessee pharmacists who provide outpatient self-management training and education, including medical nutritional therapy services.

"Unfortunately, none of these bills advanced past committee deliberations, and with most state legislatures now out of session, further movement on pending initiatives is unlikely until the 1998 legislative season," Kile notes. "However, the overall trend in recent years is quite positive. Slowly but surely, more states are recognizing the tremendous value pharmacists can bring to health care."

Pharmacy Choice/Any-Willing-Provider Initiatives

This year 14 states have considered legislation designed to guarantee managed care enrollees freedom to use the pharmacy or other health care provider of their own choosing. Some of these bills also proposed to bar health plans from denying network participation to providers not meeting plan-specified criteria. These so-called "any-willing-provider" (AWP) bills were defeated in Maryland, Montana, and New Mexico, and failed to advance beyond the committee level in the other states, with the exception of Mississippi, where lawmakers approved a limited AWP measure.

The any-willing-provider saga took an unusual twist this spring. A federal judge blocked Arkansas from implementing an AWP law enacted last year, ruling that the statute conflicts with federal proscriptions on state regulation of insurer-provider relationships under self-funded employer-sponsored health plans. In a similar case this summer, however, a federal judge upheld Massachusetts' AWP statute in the face of a challenge by the state's HMO lobby.

Prescribing Authority, Collaborative Practice

Over the past year, a dozen states have considered legislation or regulatory initiatives to establish limited prescribing authority for pharmacists or permitting them to enter into collaborative practice arrangements with physicians.

Lawmakers in Arkansas and Texas passed collaborative practice legislation over the strong objections of drug manufacturers and the powerful physicians' lobby. In Georgia and Maryland, however, the medical lobby suceeded in stripping collaborative practice provisions from pharmacy practice bills.

At press time, bills containing collaborative practice provisions were still pending in New York, Ohio, and Pennsylvania. "Securing passage of the collaborative practice components of practice act revisions in these three states will be a top priority for ASCP for the remainder of the year and into 1998," Kile says.

Despite a lack of major progress this year in securing expanded practice roles for pharmacists, the overall trend in recent years is encouraging. A recent survey by the National Association of Boards of Pharmacy found that 17 states have granted pharmacists some degree of prescribing authority and/or authority to initiate or modify drug therapy pursuant to approved protocols, compared to just seven states in 1995 (see box, page 970). An additional 14 states are currently considering such provisions, NABP reports.

Assisted Living Regulation

Assisted living continues to be an area of explosive growth-and enormous potential opportunity for consultant pharmacists. The Assisted Living Federation of America estimates that up to one million elderly people now reside in as many as 40,000 assisted living facilities (ALFs) across the country.

This year more states have moved to establish a regulatory framework for assisted living or to tighten and refine existing regulations. So far, 22 states have implemented, or are seeking to implement, licensing and/or certification rules designed specifically to regulate assisted living as a distinct category of health care services. In 12 states, assisted living services are now reimbursed by Medicaid, primarily through HCFA home- and community-based care waivers.

Although most ALF residents are medically frail and significantly disabled (one recent survey found that nearly half have Alzheimer's disease or other cognitive impairment, and nearly 40% must use walkers or wheelchairs), many states are only now beginning to craft detailed regulations addressing the crucial issue of medication administration and other health and safety issues.

Existing assisted living regulations in all states include medication-focused rules, but the rules vary widely from state to state. In New Mexico, for instance, medication management is solely the responsibility of the attending physician. In Kansas, the drug regimen of each resident whose medication is managed by the facility must be reviewed at least quarterly by a pharmacist, physician, or licensed nurse. Draft regulations calling for close pharmacist involvement in ALF medication management are currently under consideration in Hawaii and Maine.

An initiative to create a uniform, national framework for assisted living quality assurance is moving forward under the guidance of a coalition of provider, senior housing, and consumer groups. The Assisted Living Quality Coalition (ALQC) plans to release a final set of comprehensive quality assurance standards this fall.

ASCP is currently working to finalize model language to guide states as they develop or refine medication management provisions of assisted living regulations. The ASCP model language will be finalized this fall and furnished to ALQC, as well as health officials in all 50 states and the District of Columbia. Key tenets of the draft ASCP language include:

n Mandatory use of drug regimen review and other consultant pharmacist services, at least monthly, for all residents requiring medication assistance n Close involvement by consultant pharmacists in interdisciplinary care planning, medication monitoring, compliance counseling, resident education, predischarge counseling, and other quality assurance activities

Kile predicts that more states will be looking to regulate the field of assisted living in the near future. "As efforts to craft these regulations move ahead, we'll need to work closely with state lawmakers and policy makers to make sure consultant pharmacists are an integral part of the assisted living quality equation."

Managed Care Waivers

During the past 12 months, HCFA approved two new Section 1115 waiver projects, clearing the way for states to move some or all Medicaid recipients into managed care plans:

n This spring, Maryland began shifting 330,000 Medicaid recipients into managed care plans, with an eye toward future inclusion of long-term care populations. n New York's recently approved waiver program-the most ambitious to date-will shift 2.4 million Medicaid recipients (not including long-term care populations) into managed care, yielding estimated annual cost savings of $300 million to $650 million.

Not all waiver requests are meeting with HCFA's approval. In July, the agency rejected a controversial waiver request by South Dakota officials to implement a continuous quality improvement approach to nursing facility oversight, citing serious concerns over several aspects of the proposed program (see story, page 1041). In a letter rejecting the plan, HCFA chief Bruce Vladeck made it clear that the agency "will not authorize any waiver of regulations which alters in any way the survey, certification, or enforcement process."

HCFA is currently reviewing the first waiver proposal of regional scope. Six New England states (Connecticut, Massachusetts, Maine, Rhode Island, Vermont, New Hampshire) are seeking federal permission to fully integrate acute and long-term care and promote increased use of home- and community-based services for Medicare-Medicaid "dual eligibles."

In a related development, Michigan is awaiting HCFA approval to proceed with an ambitious initiative to fully integrate services for the state's entire Medicaid long-term care population. As state officials crafted plans for the program earlier this year, ASCP and its Michigan affiliate, the Consultant Pharmacists Society of Michigan, submitted a comment paper urging full use of consultant pharmacists' services. "There is much evidence to show that more extensive use of consultant pharmacists produces better patient outcomes," the comment paper noted.

A LOOK AHEAD TO '98

For the remainder of 1997 and into 1998, ASCP will continue lobbying aggressively to keep the Medicare PPS issue in the congressional spotlight, bring ASCP's prospective payment study to successful completion, ensure that the study results receive the attention they deserve, and secure appropriate reimbursement for nursing facility medication services.

In the state arena, the ASCP staff will work closely with society members to influence the outcome of continuing legislative and policy debates over drug pricing, cognitive services reimbursement, assisted living regulation, and many other issues of critical importance to consultant pharmacists and the patients they serve.

In addition, two major new initiatives will be high on ASCP's 1998 legislative slate:

n A campaign to amend the Social Security Act to include pharmacists on the growing list of "qualified health care professionals" who are permitted to bill Medicare directly for their services n An initiative to derail a burgeoning effort led by Sens. Edward Kennedy (D-Mass.) and Kay Bailey Hutchinson (R-Tex.) to give the FDA broad authority for regulation of compounding practices-an area currently under the sole purview of state pharmacy boards

With initiatives such as these already on ASCP's agenda, the next 12 months in the ever-challenging government affairs arena promise to be at least as exciting and action-packed as the last.

Copyright © 1997, American Society of Consultant Pharmacists, Inc. All rights reserved.