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May Leg. Update: Health Care Reform, DME Step-Up, OH Rx Drug Abuse Task Force

Health Care Reform Bill Now Law of the Land

On March 23, President Barack Obama signed HR 3590, health care reform, into law.  The several thousand page document contains several important fixes that pharmacy has been working tirelessly on for several years.  All of the provisions in the bill will have to go through the rules process.   OPA will be watching these details very closely.  We thank the National Community Pharmacists Association for the summary used to prepare this article.

Medicaid Generic Drug Pharmacy Reimbursement (AMP Fix)

Background. The Deficit Reduction Act of 2005 (DRA) would have reimbursed pharmacies below their acquisition cost for Medicaid generic drugs. Since 2007, these cuts have been delayed because of a December 2007 court injunction. The health care reform bill improves the definition of Average Manufacturers Price (AMP) so that it includes only manufacturers' sales to retail pharmacies. It directs the Centers for Medicare and Medicaid Services (CMS) to set Medicaid Federal Upper Limit (FUL) for reimbursement of generics at a rate of "no less than 175% of average weighted AMP."  This increase in the FUL is especially important now because the bill also expands Medicaid coverage - starting in 2014 - to individuals up to 133% of the Federal poverty level. This is expected to add 16 million more individuals to the Medicaid program.

What this means for YOU

The bill requires the Secretary to implement the new Medicaid generic rates as early as October 2010.  This new law mitigates the impact of the draconian generic drug cuts that would have gone into effect had these changes not been made, saving pharmacies approximately $3 billion in Medicaid generic drug cuts.  AMPs for brand and generic drugs will be made public later this year. This will give payers access to more AMP data, which are generally assumed to be close to retail pharmacy's acquisition costs for drugs.

Pharmacy Benefit Manager (PBM) Transparency in Health Exchanges

Background. The health care reform bill requires PBMs to confidentially disclose important financial information to the Secretary of Health and Human Services for those health plans operating in new health insurance exchanges and Medicare Part D plans. These new state-based exchanges are set to begin in 2014. This is the first federal requirement for oversight and accountability in the PBM marketplace. These provisions also establish an important initial Federal framework for the regulation of these unregulated entities, which can be enhanced in the future.

What this means for YOU

  • Transparency helps to level the playing field between mail order and community pharmacy by encouraging plans to hold PBMs accountable for excessive profits and the tactics used to drive those profits up.
  • This new law creates an important foundation for future federal regulation. As federal officials learn more about the games PBMs play, they may strengthen disclosure requirements or apply them to additional federal health programs. Hopefully, the private sector will follow suit.

Pharmacists/Pharmacies Exempted from Medicare DME Accreditation Requirement

Background. The bill provides an exemption for most pharmacies from the burdensome accreditation requirements to provide Medicare DME, and changes current law so that pharmacy accreditation requirements are not effective until January 2011. (Pharmacies that want to competitively bid would still be required to be accredited regardless). A pharmacy can be exempt from the accreditation requirements if the pharmacy:

  • has total Medicare DME billings that are 5 percent or less of total prescription sales; (Pharmacies may be asked to submit proof.)
  • has had no adverse fraud or abuse determination against it for the last five years.

What this means for YOU

  • If you're already accredited under current CMS guidelines, you are exempt from the re-accreditation requirements if you meet the criteria above. This will save you thousands of dollars and countless hours to comply.
  • If you're not accredited now, you are required to be accredited after January 2011, but only if you do not meet the criteria above. Most pharmacies are likely going to meet the criteria above and will not have to be accredited. If you have already stepped down from selling DME, CMS has set up procedures to allow pharmacies to step back up. This will require the submission to the NSC (National Supplier Clearinghouse) of an application to "step up."

Pharmacist-Delivered Medication Therapy Management Services

Background. The health care reform bill calls for an expanded patient care role for pharmacists in new health care system models. These new responsibilities will help assure more appropriate use of prescription medications, especially for those patients who have chronic illnesses. These include pharmacist roles in medical homes, "transitions of care" teams, and medication reconciliation activities.  The bill also includes an MTM grant program that will help test new and innovative methods to provide medication therapy management.

What this means for YOU

Community pharmacies may be eligible for grant funding to help provide MTM services, though the government's process for establishing grant criteria, applications, etc. will take many months and will be subject to the annual appropriations process.

Closes the Medicare Part D "Donut Hole"

Background. The health care reform bill closes the Medicare Part D "donut hole" over the next ten years (2010-2020), through new Federal funds as well as discounts from pharmaceutical manufacturers on brand name drugs. Beneficiaries who hit the donut hole in 2010 would receive a one-time $250 rebate. Beginning January 1, 2011, beneficiaries would also automatically receive a 50 percent discount off the negotiated price for brand-name prescription drugs that are covered under Part D and covered by their plan's formulary or are treated as being on plan formularies through exceptions and appeals processes. These discounts would be provided by the pharmacy at point of sale.  The discount increases to 75% on brand-name and generic drugs by 2020. The bill also allows 100% of the negotiated price of discounted drugs (excluding dispensing fees) to count toward the annual out-of-pocket threshold that is used to annually define the coverage gap. Beginning in 2020, the 25% copay applies until Medicare's catastrophic coverage kicks in.

What this means for YOU

Medicare patients who previously struggled financially when in the "donut hole" should be able to purchase their full medication regimen as prescribed - leading to increased adherence. However, the law requires that these brand name manufacturer discounts be paid to the pharmacy by a third party entity under contract with the Secretary. The new prompt pay provisions apply to the payments that these third party entities would have to make to pharmacies, which means that pharmacies should be paid within 14 days of dispensing the brand name drug.

New Requirements for Long Term Care Pharmacies

Background. The health care reform bill requires Part D plans to use specific dispensing techniques such as daily, weekly, or automated dose dispensing to reduce pharmaceutical waste in long term care facilities. 

What this means for YOU

You may have to provide dispensing services to long term care facilities more frequently, with no statutory requirement that there would be corresponding increases in dispensing fees. OPA will continue to monitor this and advocate that full dispensing fees be paid for an increase in the frequency of providing medications to residents of long term care facilities.

340B Provisions

Background. The health care reform bill substantially expands the number of entities eligible to obtain pharmaceutical discounts under the 340B program. These 340B entities are supposed to provide discounted prescription medications to uninsured individuals.  The bill prevents the extension of 340B discount pricing to inpatient services provided by a hospital, which will reduce the number of discounted prescriptions dispensed to potentially inappropriate patients.

What this means for YOU

While the bill's expansion language will mean that an increasingly larger number of covered entities will be able to provide discount 340B drugs, more community pharmacies also have an increased opportunity to participate in the 340B program due to a recently issued HRSA guidance that allows 340B covered entities to contract with multiple pharmacies to provide pharmacy services.

New Definition of Manufacturing

Background. A new definition of manufacturing that includes compounding was included in the physician sunshine section of the bill.

What this means for YOU

OPA is very concerned about the broadness of this definition and the fact that it is not only applicable to this section of this bill.  This is the fourth definition of manufacturing on the books and could directly impact ongoing and future litigation with regard to the status of a pharmacy - it could be pointed to in future court proceedings since it is not explicitly confined to this section of the bill.

OPA is working with IACP (International Academy of Compounding Pharmacists) to remove this language or restrict it to just this section of the law. 


DME Step-Up

Some unaccredited pharmacies chose to step down from selling DME.  Other may have voluntarily terminated. If you wish to now get back into the program, CMS has provided us with the following instructions.

1.  Pharmacies that have "stepped down" MUST immediately amend their National Supplier Clearinghouse (NSC) Medicare Enrollment Application (855s) and "step up" (select the DMEPOS including diabetes supplies you wish to dispense. It may take up to 90 days for NSC to approve the amendments.

Complete Sections 1C, 2 (complete 2A1 and those data elements that are changing), 3, 13, and either 15 (if you are the authorized official) or 16 (if you are the delegated official), and 6 for the signer if that authorized or delegated official has not been established for this DMEPOS supplier.

2.  If you have voluntarily terminated, you must complete all sections of the 855s. To activate once again may take longer than 90 days because the pharmacy must be re-inspected by the NSC to assure that the 25 NSC supplier standards are being met. If you are reactivating your Medicare supplier billing number, complete all sections

3. Send in your 855s application by registered mail or by other tracking carrier to the physical address below:

Overnight Mailing Address
National Supplier Clearinghouse
Palmetto, GBA* AG-495
2300 Springdale Drive, Bldg. 1
Camden, SC 29020


Drug Disposal

Ohio Law Does Not Allow Drop Boxes

Drug disposal programs have been making the news recently, and The National Community Pharmacists Association (NCPA) has initiated a Prescription Disposal Program that is now available to pharmacies so that unused/expired drugs can be removed from the supply chain in a safe environmentally-friendly manner. The program features both convenient postage pre-paid envelopes for patients to mail on their own, and 10 or 20 gallon pharmacy drop boxes to be placed in the pharmacy into which medications can be dropped.            

 The Ohio State Board of Pharmacy has not approved the use of the pharmacy drop boxes. Pharmacies may, however, use the envelopes to accept medications in any dosage form and any type of packaging, provided the medications are not controlled substances.

Information about the NCPA Prescription Drug Disposal Program can be found at: or 703.683.8200.


Ohio Prescription Drug Abuse Task Force

Ohio Governor Ted Strickland signed an executive order that expands the state's role and establishes a more comprehensive, coordinated approach to combating prescription drug abuse across Ohio. The executive order establishes a task force that will help unite the ongoing efforts at the federal, state and local levels, and build on their work to address this rising problem.

The Ohio Prescription Drug Abuse Task Force (OPDATF) will be charged with researching the issue and identifying public health, law enforcement, legislative and additional strategies to reduce the danger of prescription drug abuse in Ohio. The task force will include officials from public safety and public health, from medical and pharmacy backgrounds, and from local, state and federal government. Strickland designated Ohio Department of Public Safety Assistant Director George Maier as chair and Ohio Department of Health Director Alvin Jackson as the task force's vice chair.

One representative from each of the following organizations has been appointed:  Ohio State Medical Association, Ohio Osteopathic Association, Ohio Pharmacists Association, Ohio Hospital Association, and the Ohio Poison Control Collaborative. OPA Executive Director Ernie Boyd has been appointed to the task force. In addition, representatives from each of the following will be appointed: local county sheriff, county prosecutor, county coroner, county or city public health director, and police chief; the U.S. Department of Justice; the U.S. Department of Health and Human Services; U.S. Senators Brown and Voinovich; the Departments of Alcohol & Drug Addiction Services, and Job and Family Services, the Ohio Medical Board, the Ohio Pharmacy Board and the Ohio Attorney General.

Dr. Jackson said, "Prescription drug abuse is harming Ohioans at an epidemic level."

Recommendations from the task force will be forthcoming.

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