NCPA urges IRS to act on FSA rules

September 29, 2009

The National Community Pharmacists Association (NCPA) is urging the IRS to quickly act on flexible spending account (FSA) regulations that are disrupting pharmacies? FSA debit card transactions.

The National Community Pharmacists Association (NCPA) is urging the IRS to quickly act on flexible spending account (FSA) regulations that are disrupting pharmacies’ FSA debit card transactions.

Since July 1, Internal Revenue Service (IRS) rules have mandated that pharmacies operate an inventory information approval system (IIAS) that meets certification requirements of the Special Interest Group for IIAS standards (SIGIS). However, the rule provided an exemption for pharmacies with sales comprised of at least 90 percent prescription drugs and other qualifying medical supplies.

The problem, according to the NCPA, is that many health insurance plan administrators and employers have refused to honor the 90 percent exemption. “Patients and community pharmacies have experienced significant disruption as a result of this regulation,” said Bruce T. Roberts, RPh, vice president and CEO of NCPA. “With the year’s end approaching, and FSA balances expiring, the problem will only grow worse without intervention.”

As a result, NCPA proposed two solutions to the U.S. Treasury Department in face-to-face meetings and in a letter sent to IRS officials last week. The IRS should ask health plan sponsors to honor the 90 percent rule, to ensure patients can continue purchasing medications, according to NCPA’s correspondence.

In addition, the IRS should suspend its audit requirements of FSA and Health Reimbursement Act (HRA) transactions at community pharmacies that are registered under the 90 percent exemption. The IRS is still reviewing the request and the NCPA is hoping “that the IRS will take action so legislation does not become necessary,” said Kevin Schweers, vice president of public affairs for NCPA.

“They seem genuinely concerned, so we are hopeful the IRS would intervene. Without action from the administrator, or a change of heart from health plan administrators, patients would continue to be denied their choice of pharmacy.”

Some health plan administrators have not been honoring pharmacies’ FSA transactions that fall under the 90 percent rule, because they are afraid they will receive an IRS audit, according go NCPA.

“A one-year moratorium on auditing this one class of FSA transactions would mitigate the disruption for patients and allow additional time for resolving problems,” Roberts said. “A message from the IRS to plan sponsors, reminding them of the purpose of the 90 percent rule and the need to support it would go a long way as well.”