Berry, Moran emerge as pharmacy’s DME champions

2/9/2009

WASHINGTON —Reps. Marion Berry, D-Ark., and Jerry Moran, R-Kan., last month filed legislation—H.R. 616—that would require the Centers for Medicare and Medicaid Services to exempt pharmacists from accreditation requirements for the Medicare Part B durable medical equipment, prosthetics, orthotics and supplies program.

At stake is the availability of diabetes supplies for Medicare patients at community pharmacies. “Diabetes supplies are among the highest categories of Medicare DME spending,” affirmed Julie Khani, VP federal healthcare programs at the National Association of Chain Drug Stores, in an interview with Drug Store News. And that question of availability could potentially include Medicaid patients as well. “You’re seeing some states rely on decisions made [as part of] Medicare Part B to determine who is an eligible provider for their Medicaid population; some states are requiring that you have to be a Medicare Part B provider to serve Medicaid patients.”

At issue is whether or not this exemption would create an unfair competitive advantage for pharmacy operators versus home healthcare centers.

The bill, currently tabled to both the Committee on Energy and Commerce and the Committee on Ways and Means, was originally introduced last fall before the 110th Congress. But now before the 111th Congress, time plays a more critical role. Pharmacies are currently operating under a Sept. 30 deadline for DMEPOS accreditation, and it could take as long as six months to complete that process.

Not seeking accreditation by that deadline could jeopardize the availability of diabetes supplies to Medicare patients some years down the road.

According to several pharmacy associations, the accreditation requirements are superfluous because pharmacy operators already are subject to extensive regulation. Retail pharmacies are the largest providers of DMEPOS services to Medicare patients—two-thirds of Medicare diabetes patients source their test strips from pharmacy—according to a study conducted by HealthPolicy R&D.

The accreditation requirement for DMEPOS is the point of entry for CMS’ DME competitive acquisition program, mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003. However, gaining accreditation affords no guarantee that the pharmacy in question will ultimately win its competitive bid to participate in the DMEPOS program.

Diabetes supplies, which represent the most crucial DME-related category for pharmacy retailers, have yet to be subjected to that competitive bidding program. Chain pharmacy has lobbied legislators in the past to exclude diabetes supplies from competitive bidding requirements altogether.

The stakes may be considerably higher for independent pharmacists who are more likely to field deeper DME offerings, including diabetic footware, oxygen supplies and such assisted-living devices as canes, walkers and bathroom aids. Sales of DMEPOS products comprise between 6% and 8% of an average independent pharmacy’s annual sales, according to the National Community Pharmacists Association. The vast majority of that business represents diabetes products, noted Bill Popomaronis, NCPA’s VP home health and long-term care pharmacy services. “And the vast majority [of that] comes from the Medicare patient,’” he said.

Precedent for exemption has already been set; CMS has excluded healthcare professionals like doctors and nurse practitioners from accreditation requirements. But the exemptions so far only include prescribers, or professionals practicing at a point of service. Pharmacy is considered by CMS as more a point of distribution, and that any exemption for pharmacy versus other channels would create an unfair competitive advantage.

In reality, the unfair competitive advantage may be held by those other channels of distribution—channels not subject to extensive pharmacy regulations and whose practitioners need not earn a six-year pharmacy degree. “There’s no requirement that [DME suppliers] have a pharmacist, or really any healthcare provider, to sell those items or services,” said Ravi Upabhyay, NACDS director of policies and programs. Consequently, only pharmacies are faced with the higher overhead costs associated with hiring a licensed pharmacist and the administrative costs around ensuring regulatory compliance.

Accreditation fees, training and implementation costs are projected to total at least $5,000 to $7,000 per store over three years, according to NCPA. Coupled with that cost is a requirement that each location hold a $50,000 surety bond against defaulting on any contractual agreements made with CMS. CMS has estimated the administrative costs associated with those bonds would total $2,000 per year, per store. Between accreditation and surety bond requirements, “we’re seeing a significant number of independent pharmacies saying, ‘The juice isn’t worth the squeeze,’” Popomaronis remarked. “And the [Medicare patient] suffers when that happens.”

The DME competitive bidding program currently has been delayed pursuant to the Medicare Improvements for Patients and Providers Act of 2008. There is no current timetable as to when diabetes supplies might be subjected to competitive bidding, and CMS has yet to evaluate the impact a competitive bidding process may have on the distribution of diabetes supplies.

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