Healthcare reform and pharmacies

May 5, 2010

An overview of several provisions of "The Patient Protection and Affordable Care Act" affecting pharmacies and pharmacy practice.

Key Points

The Part D "donut hole"

Under the Act, the Medicare Part D "donut hole" is closed over the next 10 years. Various discounts and rebates are designed to provide seniors access to medication and to cover the payment gap that was arguably interfering with patient compliance. Certain of the discounts will be paid to pharmacies by a third party under contract with the Secretary of Health and Human Services.

The Act provides pharmacists with the opportunity to obtain grant money in exchange for providing medication therapy management (MTM) services to patients. The provisions are designed to offer incentives for medication therapy intervention that increases appropriate medication use by patients. The criteria that will define eligibility for such grants are currently unclear.

DME accreditation

Pharmacies providing Medicare durable medical equipment (DME) are, in some cases, no longer required to comply with DME accreditation requirements. This exemption does not apply to those pharmacies that wish to competitively bid, however.

Qualifying criteria include: (1) DME billings of 5% or less of total prescription sales, (2) an absence of adverse fraud and abuse determination in the previous 5 years, (3) an attestation that DMEPOS billings are less than a rolling 3-year average of 5% of pharmacy sales, and (4) submission of documentation that verifies such information. The accreditation deadline has been delayed until January 2011 for those pharmacies that must be accredited.

PBM transparency

The Act also requires a pharmacy benefit manager (PBM) to disclose certain health-plan financial information to the Secretary of Health and Human Services with respect to Medicare Part D plans and new state-based health-insurance exchanges, set to begin in 2014.

Medicaid payments for generics

One area addressed in the Act included fixing Medicaid reimbursement of generic drugs to pharmacies. Prior legislation provided for reimbursement of pharmacies below acquisition cost. The Act, however, improved the definition of Average Manufacturer Price such that the impact of the drug cuts made by the previous law is somewhat mitigated.

340B drug pricing programs

The Act has expanded the number of entities that are defined as "covered entities" and thus eligible to receive drug discounts under the 340B program. However, the Act also prevents such discounts from being extended to hospital inpatients. Notably, new guidelines for the 340B program provide that covered entities may contract with multiple pharmacies with respect to 340B program pharmacy services.

Long-term care and pharmacy

The Act requires Medicare Part D plans to engage in dispensing techniques that reduce drug waste. Starting in 2012, waste-reducing dispensing of doses on a daily, weekly, or automated basis to Part D enrollees in long-term-care facilities will be required. The risk involved is that pharmacies may be required to dispense drugs more frequently with no requirement to obtain correspondingly increased dispensing fees.

Small-business reforms

Under the Act, employers (such as pharmacies) are required to provide health insurance to employees unless the business has 50 or less employees. If there are more than 50 employees and there is no health insurance, the federal government may assess fines and penalties. Businesses with fewer than 25 employees may receive tax credits for employee health-insurance coverage.

In summary, the goliath Act will affect pharmacies, and although the overall scope of its impact is unclear at this time, one can expect the implementation of regulations that will provide additional guidance on a multitude of issues.

NED MILENKOVICH is a member at McDonald Hopkins LLC and chairs its Drug and Pharmacy Practice Group. He is a member of the Illinois State board of pharmacy. Ned can be reached at 312-642-1480 or nmilenkovich@mcdonaldhopkins.com
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