Medicare law presents new opportunities for pharmacies

May 15, 2005

The Centers for Medicare & Medicaid Services is designing a comprehensive Medicare information Web site for pharmacists, as well as a pharmacy kit. The agency will also be sharing more information through continuing education and special pharmacist outreach events.

These were some messages S. Lawrence Kocot, senior adviser to the CMS administrator, shared with attendees at the Food Marketing Institute's 18th annual Supermarket Pharmacy Conference, which was held in New Orleans last month.

The addition of prescription drug coverage as a Medicare benefit will present several new opportunities for pharmacies next year, said Kocot, who added that about 24% of seniors do not have Rx drug coverage.

The impact on pharmacies will occur not only from drug utilization among those without prior drug coverage, but also from increased foot traffic and increased sales for other goods. Kocot said these changes would occur whether or not pharmacies are prepared to seize the opportunity. The time line for initial enrollment is Nov. 15, 2005, through May 15, 2006, with enrollment of those eligible in 2006 and beyond between Nov. 15 and Dec. 31 every year.

Cost to the beneficiary is based on TrOOP, or true out-of-pocket expenses: the amount a beneficiary must spend on Part D-covered drugs to reach catastrophic coverage. It is based on the standard benefit design: The beneficiary pays a monthly premium of $37 and a yearly $250 deductible. Initial coverage is 75% of the costs over $250, up to $2,250; the beneficiary's co-pay is $500. No further coverage is provided until the beneficiary has paid an additional $2,850. Catastrophic coverage begins after the beneficiary has paid a total of $3,600 in TrOOP costs. Part D prescription drug plans (PDPs) will be responsible for accurately calculating TrOOP for enrollees.

At the pharmacy, the PDP's current information will always be the basis for payment. If there is a disagreement about TrOOP at the pharmacy, the beneficiary must either pay or decline purchase until the dispute between the PDP and beneficiary is resolved.

Each PDP will have a formulary reviewed by CMS. Pharmacies will be required to post or hand out a notice stating that discussions with pharmacists regarding formulary issues will not determine coverage, and enrollees must contact PDPs to request coverage determinations. Some drugs are excluded from coverage by statute. These include drugs for anorexia, weight control, cosmetic purposes, relief of cough and colds, Rx vitamins and minerals, barbiturates, benzodiazepines, and nonprescription drugs. Also, drugs covered under Medicare Part A or Part B are not covered.

Pharmacies will be allowed to charge dispensing fees, but they will be limited to the actual costs associated with transferring possession of a drug. Dispensing fees will not include drug administration, professional services, or supplies and equipment, cautioned Kocot.

PDPs will be required to demonstrate adequate access to home infusion pharmacies and to contract with any willing pharmacy (including long-term care pharmacies) that meets standard terms and conditions. The final regulations do allow PDPs to have preferred pharmacies within their networks; however, the overall network must not discriminate by geography or price and must maintain actuarial equivalence.

The new legislation places many requirements on PDPs to ensure adequate access to covered drugs in a wide variety of instances. They are also required to develop a transition process for the initial enrollment, as well as one for transfer between PDPs, and they must also develop medication management programs targeted to beneficiaries with multiple diseases, to ensure drugs are used appropriately to optimize therapeutic outcomes and reduce the risk of adverse events.

Regarding record-keeping, original hard-copy Rxs must be kept for 10 years by network pharmacies. The legislation does not allow electronically scanned and filed retention but permission has been requested. Provision is also made in the legislation to convert to e-prescribing. A one-year pilot project will begin in 2006.

KT Porter is a writer based in New Orleans.