Recognizing Professional Services for LTC Pharmacy Dispensing Fees

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Effective January 1, 2013, Section 3310 of the Affordable Care Act of 2010 requires solid oral dose brand drugs dispensed to Medicare Part D beneficiaries residing in skilled nursing facilities to be dispensed in quantities of 14 days or less. This regulation is enforced by the Centers for Medicare & Medicaid Services (CMS) and is intended to reduce medication waste by reducing the quantity of medications dispensed but not consumed by skilled nursing facility residents. It is also intended to incentivize the use of more efficient and cost effective dispensing systems in long-term care (LTC) pharmacies.

Following the implementation of the regulation, certain Medicare Part D Plan sponsors chose to tie days’ supply of medication to the professional fee reimbursed to the pharmacy for the cost to dispense drugs. This is accomplished by prorating a single fee based on a 30-day drug supply without consideration for the fixed costs associated with dispensing the drug. These fixed costs, which are incurred each time a drug is dispensed irrespective of the quantity, include activities such as pharmacists’ clinical review, transcription of orders, and labor to assemble the prescription. When these fixed costs are not properly assessed for pharmacies’ reimbursement due to prorating of the professional fee for quantities of less than 30-days, the result is inadequate reimbursement that does not actually cover the cost to dispense. Tying the professional fee to the days supplied ignores the professional services provided by LTC pharmacies needed to provide appropriate care for skilled nursing facility residents.

Under this type of fee structure, LTC pharmacies are not incentivized to implement more efficient dispensing technologies that dispense quantities of less than 30-days supply. As a result, pharmacies seeking to merely recoup the costs of providing professional services may implement dispensing systems that do not further reduce waste in the Part D program. Additionally, it financially penalizes LTC pharmacies complying with the 14-days-or-less dispensing regulation and discourages the most efficient dispensing methodologies to reduce unnecessary waste and cost in the Part D program.

ASCP supports S. 1493, the Medicare Efficient Drug Dispensing Act of 2013. This proposed legislation clarifies that professional fees paid to LTC pharmacies should continue to be a fixed amount, separate from the number of days supplied, to adequately recognize the fixed cost for professional services required of LTC pharmacies when dispensing to and caring for skilled nursing facility residents.

News Archive

September 2013

Mikulski, Cardin Introduce the Medicare Efficient Drug Dispensing Act

Senators Barbara A. Mikulski and Ben Cardin (both D-Md.) introduced September 10 legislation that would prohibit Medicare Part D Plans (PDPs) from prorating daily dispensing fees that could discourage the implementation of the 14-Days-or-Less dispensing regulation, also known as the short cycle dispensing rule. The bill entitled the Medicare Efficient Drug Dispensing Act of 2013 (PDF) would prohibit PDP fee structures such as prorating the professional fee based upon days’ supplied of a drug. Tying the professional fee to the amount of medication dispensed ignores the reimbursable professional services, such as pharmacists’ clinical review, transcription of orders, and labor to assemble the prescription. It also creates an incentive for pharmacies, per their contracts, to over-dispense medications in a manner that inherently creates waste and higher costs for Medicare Part D. This contradicts the intended outcome of the short-cycle dispensing policy.

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