Lee Ann Stember, NCPDP President, began the meeting by welcoming everyone and clarifying the purpose and intent of the meeting. Ms. Stember explained that the meeting was for informational purpose only and that no voting would take place.
Tracey McCutcheon, Deputy Director of Medicare Drug Benefit & C&D Data Group, then addressed the audience regarding CMS’s position on medication waste in LTC and the language in the Healthcare Reform Bill, which has since been signed into law. Ms. McCutcheon is spearheading the effort within CMS to address medication waste in LTC. On a side note, there is a great article in the Washington Post about Tracey McCutcheon and her role within CMS. In her opening comments to this audience, Ms. McCutcheon made three very key points:
Gary Schoettmer of Continuing Care Rx (CCRx) moderated the three panel discussions, which began with the Pharmacy and Facility Panel. This panel was allocated the entire morning session. The Vendor Panel followed a short break for lunch and the PDP/PBM Panel concluded the meeting. Each panel was first asked a set of prepared questions, which they had been given prior to the meeting. Then, NCPDP solicited questions from the audience via index cards and over the Internet, believe it or not, through Twitter, which were then read to the panel. The conference room at the Sheraton BWI in Baltimore was packed, with well over 200 people in attendance.
Throughout the day, three main dispensing and distribution models were discussed: 7-day manual dispensing (punch cards), centralized automated dispensing (multi-dose strip packaging), and remote dispensing (on-site, on-demand packaging). Unfortunately, many in the industry have not been exposed to centralized automation and/or remote dispensing. Therefore, it is very likely that a many in the audience were unable to differentiate between each of the models. For an explanation of the different options available to pharmacies, see my previous blog on the subject.
The following is a summation of the topics discussed and comments made, many of which are paraphrased. Each section begins with a description of the panel and panelists. And, since many of the topics were repeated across the various questions, the content is organized by topic rather than by a time-line of questions.
Pharmacy and Facility Implementation Panel
The Pharmacy and Facility panel represented a wide range of pharmacy operators from the two largest, Omnicare and PharMerica, to smaller operators that focus exclusively on remote dispensing and centralized automated dispensing. Also on the panel was Bob Warnock, Vice President of Pharmacy for Golden Living, one of the nation’s largest nursing home operators. Golden Living is serviced by PharMerica via traditional 30-day dispensing and Advanced Pharmacy, which provides remote dispensing systems to the facilities. As a result, Mr. Warnock has vast experience with both the traditional 30-day dispensing as well as remote dispensing.
Key Drivers for Adoption:
Remote dispensing pioneer, Jim Moncrief of Advanced Pharmacy, said his key driver was offering a higher level of service at a lower cost to his customers. Remote dispensing helped him accomplish this goal by providing improved medication availability and reduced Part A drug spend for his customers. As a result, his remote dispensing systems have cut medication waste for the Part D and private-pay residents as well.
Bob Warnock, Golden Living, said 40% of their residents stay for 30 days or less, so traditional 30-day dispensing is guaranteed to generate waste. However, he said, the key driver for Golden Living was not reducing waste, but improved medication availability. Dr. Warnock said reduction of medication waste was just a very positive byproduct.
John Froehlich, VP of Finance for Millennium Pharmacy, said their key drivers were to develop the most operationally efficient medication delivery system in long-term care that could deliver cost savings to the customer. Millennium Pharmacy only dispenses medications in 2, 3, and 4-day supplies, which significantly reduce their customer’s Part A drug costs.
Omnicare, PharMerica, and the other pharmacy operators said their primary driver for dispensing in less than 30-day supplies was primarily to reduce the facility’s drug costs on the Part A residents. In most cases, these pharmacies dispense 30-day supplies to Part D residents in skilled nursing facilities. Though, several operators had experience with dispensing 7-day supplies to residents in assisted and independent living facilities. The primary driver in these setting is ease of administration and medication adherence.
Waste Reduction:
Jim Moncrief stated that Advanced Pharmacy has seen a 66% reduction in medications that need to be destroyed as a result of implementing his remote dispensing systems. One of the facilities they service, a 120-bed skilled nursing facility, saved 3,000 pills in waste per month. Mr. Moncrief reported that the savings was not just on the more acute Part A residents, but the Part D and private-pay residents as well. He said that Advanced Pharmacy loses on average $200k in revenue per month by not dispensing in full 30-day supplies to Part D residents.
John Froehlich said that Millennium Pharmacy has several "success stories" on true reduction of cost as a result of dispensing in less than 7-day supplies.
Omnicare contended that the medication waste in long-term care is not nearly as high as the numbers being reported. Some studies suggest as high as 17% medication waste but were based on sub-acute, or Part A, residents. In comparison to more stable Part D residents, Part A residents have shorter stays in the home, change drug regimens more frequently, and experience higher overall medication costs. Jeff Stamps, Omnicare's Senior VP of Pharmacy Operations, said their research shows 90-95% utilization of medications in Part D. Mr. Workman openly questioned the numbers that Advanced Pharmacy reported.
Regulations:
None of the panelists presented any real limitations to dispensing medications in less than 7-day supplies, with the exception of Jim Moncrief at Advanced Pharmacy. Mr. Moncrief said that, when they started, Advanced Pharmacy had to sue the Texas Board of Pharmacy to allow remote dispensing. And, they have run into opposition in many other states, mostly for political reasons. Since then, Advanced Pharmacy has been able to expand into several additional states.
The entire panel agreed that the differing regulations from state to state presented challenges and that we need uniform "best practices." The most common issue was the different state and federal requirements for medication labeling.
Dispensing Costs:
The consensus across all panelists was that 7-day dispensing in traditional punch cards is cost prohibitive and error-prone. It requires, in practical terms, four times the dispensing labor and packaging costs. Summarizing the comments from the panel, NCPDP “tweeted” during the meeting, “Current model not designed for a 7 day cycle” and, “It requires more touching of the prescriptions which yields multiple packages and increases inventory space.”
Millennium has invested significantly in central pharmacy automation in order to increase efficiencies and reduce operating costs. However, Mr. Froehlich said they believe Millennium’s dispensing costs are higher than pharmacies that dispense in traditional 30-day cycles.
In contrast, Jim Moncrief said that as a result of remote dispensing, "our operating efficiencies are significantly higher and labor costs are significantly lower." And, while the delivery models don't change with centralized automation, he said remote dispensing reduces STAT and after-hours deliveries, which can be the most expensive. Furthermore, Advanced Pharmacy has facilities that share in the cost savings from waste reduction on the Part A residents in order to pay for the system.
Dr. Warnock said the biggest costs to the facility in implementing a remote dispensing system are staff training and building preparations. However, because of the benefits, neither has created a huge barrier to the implementation.
Billing / Adjudication:
Panelists agreed that the system would not support billing every 7 days or less without significant changes. Many issues were raised, including how dispensing fees, co-pays, and refill-to-soon would be handled. In addition, billing processes already vary between Part D, Medicaid, commercial, and other payers, and this would only complicate the matter. Mara Mitchel, Director of 3rd Party Claims & Plan Administration at PharMerica, stressed that consistent processes across all of the payers is desperately needed.
However, all of the pharmacy operators had experience with retrospective billing, which accumulates the dispensing until the end of the month and then bills at that time. Jim Moncrief said, "Everybody will think I'm crazy, but we treat every payer the same." He said they bill everything retrospectively. John Froehlich said Millennium also bills all payers retrospectively. However, there are several issues with retrospective billing. It requires an up-front test claim to determine eligibility and mid-month payer changes can cause rejected claims and billing delays. Furthermore, since the pharmacy has to carry the inventory for 30 more days before getting paid, retrospective billing causes cash flow issues, especially for small, independent pharmacies.
Quality of Care:
The panel felt that dispensing 4 times more per month significantly increased the potential for medications error. It increases the number of times medications are “touched” by humans, increasing the chance for human error. Bob Warnock even stressed that the facilities did not want to deal with the increased complexity of 7-day supplies.
However some of the operators, including Millennium, Advanced Pharmacy, and Golden Living, have seen a reduction in drug errors with the use automated dispensing systems. However, several of the panelists objected that while automation has the potential to reduce errors, the right human processes must be in place to ensure safety. Everyone agreed.
Dr. Warnock revealed that remote dispensing provides additional benefits over the other models. Because a majority of the medications are located onsite, facilities are able to provide residents with critical medication immediately. This is especially beneficial for residents admitted late at night or on the weekend. In addition, as a result of remote dispensing Golden Living has seen a reduction in nursing time, which they translated to better care and documentation at the time of the medication pass. Dr. Warnock said Golden Living wants a remote dispensing system in every one of their 309 buildings.
Vendor Panel
The Vendor Panel was a who’s who among LTC pharmacy software and automation vendors. The panel included representatives from the four major pharmacy software system vendors, QS/1, Rescott, RNA, and SoftWriters, and the three major pharmacy automation vendors, MTS Technologies, Talyst, and TCGRx. The solutions these companies provide to LTC pharmacies cover the gamut of dispensing solutions. However, most of the pertinent concerns issues had been raised during the previous panel. As a result, much of what the vendors shared was repetitive, although they were able to bring different perspective to a few of the topics.
Billing / Adjudication:
There was consensus among the software vendors that billing issues would be the biggest challenge for in dealing with shorter dispensing cycles. On Twitter, NCPDP summarized their comments, “The current adjudication model does not support short supply, not in pricing, determining co-pays, edits for dispense too soon, etc.”
All of the pharmacy software systems support retrospective billing. While it still presents several issues, it seems to have the broadest support among the pharmacy software vendors. Because it was never fully adopted under Part D, retrospective billing requires additional and unnecessary transitions. Since there is no pre-adjudication transaction, pharmacy systems must send a test claim and then immediately back it out. In addition, since pharmacies are rarely notified of payers and/or formulary changes, the rate rejected claims increase with retrospective billing.
Prospective billing on a different cycle than the dispensing cycle was briefly discussed. In this scenario, the pharmacy would bill for 30-days, but dispense in less than 7 day supplies. Tim Hutchison, President and CEO of SoftWriters, said that they explored this method but quickly decided on retrospective billing instead. He pointed out that this would create a liability on the books that the pharmacy may not be comfortable with. At the end of every month, the pharmacy would have to “true up” what was billed with what was dispensed. And, just as with retrospective billing, the necessary transactions to provide a credit back to the Part D plans are not properly supported.
Automated / Remote Dispensing:
Much of the conversation regarding automated dispensing systems revolved around remote dispensing. Talyst is currently the only vendor that provides a remote dispensing solution for LTC pharmacies. However, TCGRx said they will be coming out with a remote dispensing system in April and MTS has a prototype in development. Carla Corkern, CEO of Talyst, said “Remote dispensing is really different.” It changes the time line of when medications are dispensed completely changing the expectation of the customer. She also said because the automation is so accurate, it requires richer communication between pharmacy and facility in order to meet maximum efficiency.
Interfaces between each of the pharmacy software and automated dispensing systems have been completed. However, the Vendor Panel agreed that interface standards for communication between the systems would help tremendously.
Waste Reduction
Waste reduction was only briefly mentioned during the Vendor Panel. Duane Chudy, President of TCGRx, recognized that Canada has already converted to 7-day dispensing, primarily to reduce medication waste. And, according to a SoftWriters study, reducing the number of days from a traditional 30-day dispense dispensed reduces the total cost of medications by 17% when going down to 7 days and up to 26% with remote dispensing.
PDP/PBM Panel
Unfortunately, by the time the PDP/PBM panel began, only about two-thirds of the people were still in attendance. By the end, it was likely down to half. This can be mostly attributed to the fact that the meeting was held on a Friday and most people were trying to get home. Fortunately, as with the previous panel, most of the topics had already been address, although the PDP/PBMs were able to offer a unique perspective.
Billing / Adjudication
The focus of the PDP/PBM panel discussion was centered on the billing and adjudication of claims. The entire panel echoed the concerns of the pharmacy operators regarding the billing issues related to 7 day or less dispensing. The problems surrounding co-pays and refill-to-soon were reiterated. The volume of transactions was also a concern. This panel was clearly not in favor of multiple billing cycles per month.
However, Monique Irmen of Argus Health Systems stressed that "billing as dispensed" was not necessarily a requirement of 7 day or less dispensing. She felt that it would have a much bigger impact on their systems than 30-day prospective and/or retrospective billing. In addition, Winston Wong of Blue Cross Blue Shield said that post-consumption billing would be their preference, since most of the infrastructure was already in place. However, regardless of the method, the panel felt that additional billing standards may need to be developed.
Many of the panelists acknowledged that the pharmacy operators deserved higher dispensing fees in order to sustain the conversion to 7 day or less dispensing. Several suggestions were thrown out, some of which were very unpopular with the pharmacies. However, the panelists seemed to be looking for clear direction from CMS on this issue.
Conclusions
The following are my conclusions coming out of the meeting. These opinions do not reflect those of NCPDP, CMS, or any of the panelists.
7 day or less dispensing has proven to reduce medication waste. The amount of waste is heavily debated, but everyone agrees that it exceeds 5% and could be as high as 20%. Omnicare's study was most likely based on medications returned to the pharmacy, not actual consumption, which would explain why the numbers are so conservative. Previous studies were performed on different patient populations and/or do not account for cost. However, the numbers that Advanced Pharmacy and SoftWriters shared during the meeting were very compelling and should be analyzed further. Regardless, everyone, including our friendly neighbors to the north (i.e. Canada), agrees that 7 day or less dispensing reduces medication waste.
7 day or less dispensing using traditional methods, such as punch cards, is far more costly and error prone. Dispensing four or more times per month increases labor and packaging costs and significantly increases the opportunity for human error. Remote and automated dispensing has been shown to streamline pharmacy operations, reducing labor costs and the potential for error. However, smaller independent pharmacies may not be properly capitalized to invest in this type of technology and automation.
Retrospective billing is the most practical solution for billing. It is currently being supported by most, if not all, LTC pharmacy operators today. All of the pharmacy systems automate the process and it is the preferred billing method for the PDPs. Unfortunately, retrospective billing presents cash flow issues for pharmacies and additional standards are required to streamline the process. However, “billing as dispensed” under a 7 day or less dispensing model is simply not a workable solution. A 30-day prospective billing model that allows pharmacies to dispense in smaller supplies and carry a balance is a possible alternative to retrospective billing. CMS is not currently exploring return and reuse as an option.
Remote dispensing is the most preferred medication delivery system for the nursing facilities, residents, and care givers. It provides timely access to medications and reduces nursing time, giving nurses more time to spend with the residents. It virtually eliminates waste and the easy-to-use, multi-dose packaging reduces errors. 7 day dispensing using traditional methods, such as punch cards, is the least preferred by the facilities.
Cost is only one aspect of the medication waste problem in LTC. The industry must also consider the environmental impacts, diversion, and quality of care issues. At the conclusion of the Pharmacy and Facility panel, Bob Warnock of Golden Living made a plea to the pharmacies. He asked that we spend more time talking about taking care of patients than how we divide dollars.
Excellent summary of the conference. I attended it as well and found it very informative. Now those of us that service LTC patients need to get the word to CMS as to what we need.
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