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LTC Pharmacy Alliance Says Reform Regulation would Raise Costs for Part D Payers

January 12, 2011
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The Long Term Care Pharmacy Alliance (LTCPA) expressed concern this week with the Centers for Medicare & Medicaid Services’ proposed rule on short-cycle dispensing within the long-term care setting.

In comments submitted to CMS Tuesday, LTCPA explained that any cost savings generated by implementing a short-cycle, 7-day fill dispensing regimen would be overwhelmingly eliminated by additional dispensing fees resulting from quadrupling the number of dispenses needed to move from 30-day to 7-day cycles.

A study conducted by Managed Solutions, LLC, and released today supports the LTCPA’s argument and finds that moving all Medicare Part D prescriptions to a 7-day fill would result in increased costs to Part D payers of more than $800 million annually. Even moving more expensive brand products to a 7-day fill would still increase costs to Part D payers of $154 million annually.

“While LTCPA supports the goal of reducing waste, we also recognize the need to consider all costs associated with the proposed rule, so that unintended consequences do not result from the application of the rule,” said LTCPA Executive Director Bill Daniel. “Given that it's the American taxpayer ultimately shouldering the burden of paying for this statute, it is critical that calculations such as those provided in our study be factored into the drafting of regulations.”

The study derived its analysis from information received from eight LTC pharmacies. The findings estimated the amount of unconsumed medication among Medicare Part D residents in skilled nursing facilities and the potential cost reductions that could be achieved through shorter fill times.

In addition to the increased cost to payers, other key findings included:

· "Wasteful dispensing" to nursing home residents covered by Medicare Part D, only amounts to approximately 2.9% of total dispensed value. Short cycling this percentage of waste would save only $125 million annually and cost more than $900 million in additional dispensing fees. This is in stark contrast to the $712.5 million in annual savings estimated by the Congressional Budget Office in their scoring of the short-cycling provision.

· The tradeoff between reduced waste associated with unused medication and increased pharmacy operating costs due to more frequent medication dispensing only becomes favorable to the taxpayer for prescriptions with original dispensed value of more than $400.

In its comments, LTCPA stated that CMS's approach on short-cycle dispensing is contrary to Congress' intent that Section 3310 of the Patient Protection and Affordable Care Act result in savings to Medicare Part D. “We believe that it was Congress' intent to decrease costs associated with unused medications for Part D residents in LTC facilities,” Daniel said. “Implementing short cycle dispensing for long-term care patients with an average length of stay of 835 days who are primarily taking maintenance medications does not meet this financial goal.”

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