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Medicare Part D: omissions that affect SNFs.

Many long-term care facilities have contracted a special arrangement with a pharmacy that supplies them with resident medications at a significant discount. During the past decade, long-term care facilities increasingly have subscribed to group purchasing organizations (GPOs) for medications and other supplies. This arrangement gives individual nursing homes, assisted living facilities, and small chains the cost advantages formerly enjoyed only by nationwide chains. Many of these advantages, however, have been placed in jeopardy by Medicare Part D, the prescription drug benefit enacted by Congress that is scheduled to enter into force within the next nine months.

The Medicare-sponsored drug discount cards that have been in use since last year did not significantly affect contract arrangements with pharmacies or participation in GPOs. The drug card program specifically recognized that operating standards and contracting arrangements make long-term care pharmacy different from community retail sales. The CMS rules governing the benefit indicated that the agency did not expect the drug discount cards to be used in SNFs.

Residents of assisted living were not included in the special provisions that apply to nursing home residents because there is no federal recognition of assisted living. For the purposes of federal prescription drug benefits, assisted living residents have been treated the same as any Medicare beneficiary living "in the community." Since the transitional assistance cards were designed for ambulatory patients shopping at neighborhood retail pharmacies, it has been difficult for a long-term care pharmacy to obtain adequate compensation through these card programs for the additional services usually provided to assisted living residents.

The final rules on Medicare Part D were released by CMS in January. These rules place nursing homes in roughly the same position as assisted living facilities. Unlike the drug discount cards currently used by Medicare enrollees to save money on prescriptions, Medicare Part D makes few allowances for long-term care facilities. The only accommodation made for SNF residents is that individuals with dual eligibility for Medicare and Medicaid are excused from the requirement of copayments while they are under care in an institution. In other respects, the prescription medication benefit for residents in nursing homes who enroll in Medicare Part D is administered identically to the benefit for enrollees living in a single-family home.


Congress did not intend to penalize nursing homes. The Medicare Modernization Act (MMA) specifically forbids discrimination among enrollees because of health status or location. This provision was designed to protect enrollees from unfair treatment by the private Medicare Part D intermediaries known as PDPs (prescription drug plans). In operation, however, it limits the ability of CMS to grant "special" status to nursing homes and nursing home residents. For example, although CMS recognizes that nursing home residents with cognitive disorders are unable to make appropriate choices among PDPs, the final rules for Part D prohibit caregivers from signing patients up for the plans in the place where they are receiving care. On the other hand, Barbara Mather of the American Association of Homes and Services for the Aging notes that the rules allow patients to change their PDP upon entering or leaving a nursing home.

The administration of Part D means that nursing home residents may be admitted under multiple PDPs, each with its own drug formulary and pharmacy network. Medicare enrollees who also are eligible for Medicaid will automatically be enrolled by the government in a Medicare Part D PDP. This means that SNFs will need to be aware that the diverse PDPs may permit different medications to be used for identical conditions, making residents of a single SNF subject to five or six different prescription drug formularies.

The situation is somewhat less confusing for the long-term care pharmacies serving nursing homes. According to Larry Kocot, senior advisor to the CMS administrator, the final rules on Medicare Part D require PDPs to contract with any pharmacy that is willing to participate in its network providing that it is prepared to meet long-term pharmacy performance and service criteria to be established by CMS. These criteria involve drug packaging, labeling, and delivery, as well as access to urgent medications on an emergency basis. CMS anticipates that nearly all long-term care pharmacies will meet these criteria and will join multiple PDP networks to ensure that they can continue to serve all of the long-term care patients in their area.

The possibility exists, however, that a resident may be admitted who has chosen a PDP that is not affiliated with the long-term care pharmacy used by the SNF. The resident will then be expected to locate a pharmacy that is part of that resident's PDP network.

CMS officials note that the MMA was designed to foster competition among pharmacies and PDPs. This desire for competition, combined with a lack of accommodation for the unique situations of residents in a nursing home or assisted living facility, inadvertently added to the administrative burdens of long-term care.

A similar inattention to detail is allegedly responsible for the most often-cited problems with the medication coverage of Medicare Part D: its exclusion of an array of medications for psychologic and neurologic disorders, and its exclusion of over-the-counter medications. Medicare Part D will not pay for phenobarbital and benzodiazepines, including most sleeping aids. It will pay for prescription drugs to relieve peptic ulcer disease, but it will not pay for nonprescription antacids. These omissions will be a problem for patients dually eligible for Medicare and Medicaid whose medications were formerly included in their state's Medicaid formulary.

According to several sources, the reason for the omission of these medications from Medicare Part D coverage was their description as "options" under existing Medicaid legislation. Congressmen assumed that exclusion of optional medications would protect Medicare Part D from being used for so-called "lifestyle" prescriptions to promote hair growth and renewed sexual potency. They did not realize that the prohibition affected clinicians' ability to control seizures, reduce pain, and help patients cope with mental and emotional disorders. In fact, because of recent decisions, Medicare Part D will pay for Viagra but not Valium.

Cynics and skeptics will say that the exclusions of important medications and the dominant role of the PDP in administration of Medicare Part D are proof that the intent of the legislation was to benefit the pharmaceutical and financial industries. Most people familiar with the history of the Medicare drug benefit, however, believe that the issues raised for nursing homes by Part D result from too little deliberation rather than sinister purposes. In time, long-term care providers, their residents, and their state governments may find common benefit in urging changes that reflect the needs of nursing home and assisted living residents.

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Title Annotation:VIEW ON washington; skilled nursing facilities
Author:Stoil, Michael J.
Publication:Nursing Homes
Geographic Code:1USA
Date:Apr 1, 2005
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