Are Nursing Homes Flushing Away Our Tax Dollars?

You may have heard the news earlier this year about drugs being flushed down the toilet and contaminating the water supply. Well, regardless of what you think about the impact on the environment, these drugs cost money. And, as is the case in nursing homes, much of that cost is covered by you, the taxpayer. Since the Medicare Modernization Act of 2003, which introduced the Prescription Drug Program (Part D), over 70% of prescriptions for the 1.5 million nursing home residents are covered by Medicare. And, according to ASCP, 17% of medications in long-term care facilities go unused and are often flushed.

It is estimated that the direct costs of unused medications in Long-Term Care (LTC) facilities costs Medicare between $500 million and $1.25 billion annually. That does not account for the additional labor and expenses that go into packaging, distributing, returning, and disposing of unused medications.

There are numerous reasons why so many medications go unused in long-term care. If you want to know more, read the white paper I co-authored with Shelly Spiro, Carla Corkern's blog on medication waste in LTC, and the cover story of from the September issue of Provider Magazine. All of these sources have great information on the issue. However, it all boils down to one simple fact: LTC pharmacies have no incentive to eliminate the waste.

Most medications are delivered to nursing homes in 14 or 30-day supply "bingo cards" by closed-door pharmacies that primarily service long-term care facilities. Nursing home residents take a large number of medications (9-12 on average) and the medications frequently change. The pharmacy charges for the medications when the supply is delivered, but for a number of reasons, a significant number of those medications are never consumed.


In some cases, like under Medicare Part A where the nursing home is responsible for covering the cost of the medications, the unused medications can be returned to the pharmacy and credited. However, when covered by Medicare Part D, unused medications rarely get credited back to the patient's Prescription Drug Plan (PDP). There are a variety of reasons, but essentially the PDP's do not encourage and even can make it difficult for pharmacies to provide a credit for the returned medications. And, reclaiming the unused medications back into inventory can be labor intensive. Therefore, pharmacies simply do not provide a credit back to the PDP. And why should they? It's much easier and more cost-effective to keep the revenue and throw away the unused medications.

If you're unfamiliar with Medicare Part D (and want to know more), I would recommend watching this tutorial. Basically, private insurance companies, or Pharmacy Benefit Managers (PBM), provide prescription drug coverage through various Prescription Drug Plans (PDP) for anyone eligible for Medicare (seniors and people with disabilities). The PBM's are funded by Medicare and should be ultimately responsible for minimizing he waste. However, since Long-Term Care only represents 4% of the overall pharmaceutical market, the problem has not been big enough for the private insurance companies to take notice.

However, now more than ever, as the country is in the throws of heated debate on healthcare reform, it is paramount that lawmakers identify opportunities to eliminate waste in the system. And, since this issue is projected to cost Medicare over $6 billion in the next ten years, health reform legislation is incomplete without provisions aimed at eliminating medication waste in Long-Term Care.