The reimbursement war: report from the LTC pharmacy front; medication costs and administration have been key issues in the struggles over government reimbursement to providers - Feature Article

Nursing Homes, Oct, 2002 by Jon Rawlson

When Barry Hart, a general manager and pharmacist for PharMerica in Indianapolis, entered Purdue's pharmacy school almost two decades ago, he envisioned owning a store but found the practice of long-term care pharmacy more compelling. Larry Lemchen, a general manager and pharmacist for PharMerica in Washington, was immersed in the molecular structure, preparation and manufacture of pharmaceuticals during his pharmacy education more than 30 years ago.

All that has changed.

Today, Lemchen and Hart are two of the many pharmacists nationwide who have set aside traditional roles and moved into unfamiliar territory--politicking to help curb reimbursement cuts for pharmacy services that impact not only pharmacies, but all providers and patients in long-term care.

Lemchen, Hart and others spend their time these days tracking legislation, working with lobbyists, attending legislative meetings, talking with lawmakers, testifying to legislative committees and helping to educate state decision makers about the crucial role LTC pharmacy plays.

One particularly troubling issue they grapple with, says Lemchen, is "the cost of drugs. With our insurance system, medications are rarely covered, particularly for nursing home residents. So, when lawmakers target pharmacy for cuts as a short-term budget fix, we need to be vocal and stand up for adequate reimbursement."

One of the primary messages that pharmacists, such as Hart and Lemchen, have worked to deliver to state and national lawmakers is that continued cuts to reimbursement will diminish pharmacists' ability to perform their core patient- centered functions. They've also worked hard to teach policymakers that senior-care pharmacy is unique.

Explains Mary Jo Garden, director of government affairs for the American Society of Consultant Pharmacists (ASCP), a national organization representing more than 7,000 consultant pharmacists, "While drugs are critical to improving patient outcomes and quality of life for older Americans, seniors are susceptible to medication-related problems: Physiological changes; higher incidence of multiple chronic conditions and diseases; a greater use of prescription and over-the-counter [OTCI medications; under-use, overuse or use of the wrong drugs; adverse reactions to medications; and not properly following a drug regimen are but a few of the common problems the elderly encounter."

Across the country, states strapped for money because of a lagging economy, growing numbers of Medicare and Medicaid beneficiaries, and overall higher drug costs have targeted aggressive pharmacy cuts to balance their budgets. In particular, Medicaid drug expenses and pharmacists have been targeted in many states. While pharmacists understand that the burden must be shared by all interests to help states meet their fiscal responsibilities, many also warn that the cupboard is bare, that cuts being made will jeopardize patient well-being in long term care facilities.

But that's going to take some educating of legislators. "Few persons realize that not all pharmacies are alike," says David Cole, general manager of several PharMerica pharmacies in Kentucky. "In reality, retail pharmacies bear little resemblance to their specialized institutional counterparts. In managing along-term care pharmacy, I work with a skilled team responsible for 2,500 elderly patients (60%) of whom are on Medicaid). We make daily and 24-hour emergency deliveries to nursing homes, provide staff training, maintain patient data, advise physicians and focus on the endless details necessary for safe, effective drug therapy in this setting. Service of this quality involves alot of time and money."

That is documented by a recent study conducted by BDO Seidman and commissioned by the Long Term Care Pharmacy Alliance, a coalition of some of the largest long-term care pharmacy companies. The study found that dispensing fees for the major national operators of long-term care pharmacies average $11.37 per prescription. This contrasts sharply with estimates by the National Association of Chain Drug Stores that it costs chain pharmacies an average $7.05 to dispense each prescription in the retail environment.

In explaining the added costs, BDO Seidman cited specialized packaging systems, 24/7 delivery service, intravenous medication preparation, higher levels of Medicare and Medicaid patients, and onsite consultation service in LTC facilities. These are facts that legislators in several states are just beginning to absorb.

Issues States Face

Meanwhile, state lawmakers nationwide are discussing such steps as reduction in Medicaid pharmacy payments, cuts in dispensing fees, brand-drug limits, prescription limits, preferred drug lists (PDLs)*, state maximum allowable costs, generic substitution, prior authorization and assisted-living-related medication management, among others.

Medicaid took the legislative spotlight this year, in particular, because it has grown to almost a fifth of all state budgets. With 44 million Americans now insured through Medicaid, it will likely dominate the conversation next year, also. Bellwether states for Medicaid pharmacy-related issues include: