NCPA Supports Bill to Save Medicare Funds by Reducing Medication Waste

By Kevin Schweers

NCPA recently wrote to Congress to express its formal support for legislation that would help ensure Medicare receives the full benefits of a new policy to reduce medication waste by having pharmacies dispense smaller amounts of prescription drugs to long term care (LTC) residents.

Under the “short-cycle” policy enacted by Congress and implemented by Medicare, pharmacies must dispense smaller amounts of medication (e.g., seven or 14-day supplies) instead of the traditional 30-day supply in certain instances. The goal is to reduce waste in skilled nursing facilities.

Unfortunately, in the Medicare Part D program, some drug plan sponsors have adopted new policies that could increase medication waste. They are paying pharmacies a lower (“prorated”) dispensing fee for filling short-cycle prescriptions, even though they require just as much work as traditional prescriptions. Thus, these Part D plan sponsors are undermining the anticipated savings from the short-cycle policy by creating a perverse incentive for pharmacies to fill prescriptions for larger quantities, rather than be underpaid for their work.

In September, Maryland Democratic Senators Ben Cardin and Barbara Mikulski introduced legislation to prohibit Part D plans from handicapping the short-cycle policy in this manner. The bill is S. 1493, the Medicare Efficient Drug Dispensing Act.

“Our members were extremely dismayed when Part D plan sponsors began to use payment structures, such as prorated daily dispensing fees, that actually encourage dispensing of greater quantities, at the advent of short-cycle dispensing requirements which went into effect in 2013,” NCPA wrote in a letter to Sen. Cardin and his colleagues.

“These payment structures are absolutely against the intent of short-cycle dispensing, which was enacted by Congress in 2010. Tying the professional fee that Part D plan sponsors pay pharmacies to the amount of medication dispensed simply ignores the clinical oversight necessary to provide care under the unique [Medicare] requirements for LTC pharmacies. It also may create an incentive for pharmacies, per their contracts, to over-dispense medications in a manner that inherently creates waste and higher costs for Medicare Part D. NCPA supports this common-sense legislation as shorter dispensing cycles should reduce waste.”

NCPA first shared concerns of these prorated payment structures with Medicare in late 2012, when plans began implementing them.

In announcing introduction of S. 1493, bill sponsors noted that the short-cycle change was projected to save $5.7 billion over 10 years.

“I believe that ‘Honor Thy Father and Mother’ is a good commandment to live by and a good policy to govern by,” Sen. Mikulski said in a joint statement with Sen. Cardin. “This legislation will save taxpayers money by making sure that Medicare is only paying for the drugs that people use.”

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