CMS Proposed Rule: Changes to the Conditions of Participation for Long Term Care Facilities – Proposing to Ban Manufacturer Rebates to Long Term Care Pharmacies

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) proposed a Medicare rule that considers requiring the independence of Long Term Care (LTC) consultant pharmacists from Long Term Care pharmacies and drug manufacturers and distributors.   As considered, nursing homes also would be prohibited from contracting for consultant pharmacy services with an LTC pharmacy subsidiary created to provide reorganized services.

In response to the proposed rule, American Society of Consultant Pharmacists (ASCP) President Albert Barber, PharmD, CGP, FASCP noted that he was, “deeply troubled that CMS has mischaracterized our profession by suggesting that consultant pharmacists don’t serve patients’ best interests as a primary goal of our practice.”  In an ASCP news release posted October 14 on the group’s website, he noted that the ASCP Code of Ethics “clearly defines professional conduct that places patients’ needs at the center of care.”

Comments must be received by December 12, 2011. In commenting, refer to file code CMS–4157–P.  For further information contact:  Christian Bauer, (410) 786–6043, and Kathryn Jansak, (410) 786–9364.  CMS is asking for comments on the following:

•  LTC independence from manufacturers and related facilities
•  Waivers to independence requirements
•  Impact on rural LTCs and related entities
•  Financial relationships that should be allowed
•  Drug regimen reviews 

The proposed rules requiring independence potentially are problematic because CMS explicitly recognizes several times that it has no direct evidence to suggest that the current practices with nursing homes and LTC facilities have caused any patient harm.  Overall, the proposed rule seems to be focused on economically controlling the prescribing habits of LTC facilities for the purpose of saving money for CMS programs (by using generics) and not necessarily a focus on what is in the best interest of patients.

Current Regulations

Under current regulations, long term care (LTC) facilities must provide, either directly or under arrangements with others, for the provision of pharmaceutical services to meet the needs of each resident.  This requires LTC facilities to employ or obtain the services of a licensed pharmacist to provide consultation on all aspects of the provision of pharmacy services in the facility, including a drug regimen review at least once a month for each facility resident. 

In the process of performing the drug regimen reviews, if the consultant pharmacist recommends a modification of a resident’s drug treatment regimen, he/she notates the resident’s medical record with the recommendation to the prescribing physician. The prescribing physician must respond to the recommendation and, based on our experience, the physician generally follows it because the consultant pharmacist is considered to be an unbiased expert of pharmacology in the LTC setting.   As a result of their role in LTC facilities, LTC consultant pharmacists have significant influence over the drugs that LTC facility residents receive. 

Part D sponsors are required to provide LTC facility residents who are plan enrollees convenient access to LTC pharmacies.  CMS expects that each LTC facility would select one, or possibly more than one, eligible network LTC pharmacy to provide Medicare drug benefits to its residents. 

Commonly, nursing homes contract with a single LTC pharmacy for prescription drugs for facility residents.  Usually, the same LTC pharmacy then also contracts with the facility to provide consultant pharmacists for required consultation on all aspects of the provision of pharmacy services in the facility, including the monthly resident drug regimen reviews.   

CMS noted that it has “been concerned with the potential effect on patient safety and quality of care of various contractual arrangements involving LTC facilities, LTC pharmacies, the LTC consultant pharmacists these pharmacies provide to LTC facilities, and pharmaceutical manufacturers and/or distributors.  These arrangements may take many forms. The practice of LTC pharmacies’ providing consultant pharmacists to nursing homes at below cost or fair market value is one such type of arrangement.” 

CMS said it was “concerned that these arrangements may be used to entice nursing homes to enter into contracts with the LTC pharmacy for pharmacy dispensing services and the purchase of prescription drugs.”  CMS added that it is also “greatly concerned with financial arrangements that involve payments from pharmaceutical manufacturers directly or indirectly to LTC pharmacies and LTC consultant pharmacists for encouraging physicians to prescribe the manufacturer’s drug(s) for residents.” 

The agency noted that, the impact of these financial incentives is heightened when, as permitted under State law or by the State Pharmacy Board, LTC facilities sign agreements with LTC pharmacies permitting the consultant pharmacists to make medication switches. These types of arrangements may result in incentives for the LTC consultant pharmacist to make recommendations that potentially could conflict with the best interests of nursing home residents, as well as with Part D sponsors’ formularies and/or drug utilization management (DUM) programs. 

CMS asserted that, “any such arrangements have the potential to directly or indirectly influence consultant pharmacist drug regimen recommendations. As a result, the arrangements bring into question the ability of the LTC consultant pharmacists to provide impartial reviews of the residents’ drug regimens, which in turn raises concerns regarding the quality of those reviews and potential impact on resident health and safety.” 

While CMS believes that such arrangements are “widespread” because industry estimates indicate that three LTC pharmacy organizations have 90 percent of the market, they cite no proof to support this claim.  Instead, they express only their concern that the “lack of independence of the consultant pharmacist from the interests of the LTC pharmacy or other LTC pharmacy-related organization may lead to recommendations that steer nursing home residents to certain drugs.”  

Specifically, CMS is concerned that “this steering could result in the overprescribing of medications, the prescribing of drugs that are inappropriate for LTC residents, or the use of unnecessary or inappropriate therapeutic substitutions.”  However, CMS explicitly recognized that it has “no evidence directly linking these arrangements to adverse outcomes.” 

Despite a complete lack of evidence, CMS still recommends having a requirement that LTC consulting pharmacists be independent “because it would ensure that financial arrangements did not influence the consultant pharmacist’s clinical decision making to the detriment of LTC residents.”  Such a recommendation seems premature and overly restrictive considering CMS has no evidence whatsoever to show that relationships have cause any detriment to LTC residents.   

Discussion 

To support its rationale, CMS cites claims brought by qui tam relators (whistleblowers) under the False Claims Act alleging that, for instance, an LTC pharmacy received quarterly payments styled as rebates from the pharmaceutical manufacturer to engage in an active intervention program to convince physicians to prescribe a manufacturer’s antipsychotic agent to the physicians’ nursing home patients and to authorize all competitive products only after the failure of the manufacturer’s product.   

Additionally, CMS cites to a June 2008 study by the HHS Office of Inspector General (OIG) regarding Part D drugs and LTC facility residents.  The report showed that about 80 percent of the 128 nursing home administrators interviewed for the study indicated the consultant pharmacists performing their facility’s drug regimen reviews were employed by the nursing home’s LTC pharmacy. The report stated that 54 percent of the 79 pharmacy directors interviewed for the study reported that their pharmacy receives rebates from pharmaceutical manufacturers that are frequently based on market share or volume.  However, only three of the pharmacy directors reported providing rebate information to the LTC facility.   

As a result, CMS noted that, in delegating responsibility for avoiding use of unnecessary drugs to consultant pharmacists, nursing homes may generally be unaware of any financial interests that can bias the pharmacist’s drug recommendations.  CMS also noted that some research causes concern that unnecessary medications, such as antipsychotics, are problematic in LTC facilities. Based on this research and data, the proposed CMS rule would require the independence of consultant pharmacists. 

However, again, CMS explicitly acknowledges that their “findings do not directly connect LTC pharmacy relationships with consultant pharmacists to these research findings and survey results.”  Nevertheless, CMS believes the proposed rule, which is clearly not evidence-based, is necessary because it is “reasonable to presume that the incentives present in the relationships among consultant pharmacist, LTC pharmacies and drug manufacturers can influence the prescribing practices reflected in these data.” 

CMS is specifically requesting comments on their understanding in this matter.  Given they have no evidence to suggest that the current LTC pharmacy relationships with pharmacists or manufacturers who provide rebates, cause any misuse or unnecessary prescribing, or patient harm, it is prudent for the pharmacy consultant community to provide their input. 

Drug Regimen Review 

Consultant pharmacists perform monthly drug regimen reviews for all LTC facility residents. During this review, the consultant pharmacist may recommend a medication change. In making a decision whether to accept the recommended change, CMS claimed that, “prescribing physicians are likewise generally unaware of the LTC pharmacy rebate arrangements with pharmaceutical manufacturers that may influence the recommendation.”  In the previously cited report, OIG noted that the prescribing physician accepted a consultant pharmacist recommended medication change during the drug regimen review 74% of the time. 

Accordingly, CMS proposes to require that LTC consultant pharmacists be independent of any affiliations with the LTC facilities’, LTC pharmacies, pharmaceutical manufacturers and distributors, or any affiliates of these entities to ensure that consultant pharmacist decisions are objective and unbiased. 

CMS asserted that, “severing the relationship between the consultant pharmacist and the LTC pharmacy, pharmaceutical manufacturers and distributors, and any affiliated entities would further protect the safety of LTC residents because it will ensure that financial arrangements do not influence the consultant pharmacist’s clinical decision making to the detriment of LTC residents.”  That is, LTC facilities must use a qualified professional pharmacist to conduct drug regimen reviews and make medication recommendations based solely on what is in the best interests of the resident. 

CMS believes “this can be achieved only if the consultant pharmacist is working without the influence of conflicting financial interests that might otherwise encourage overprescribing and overutilization, which creates health and safety risks for residents, and can implicate fraud and abuse laws for which the HHS OIG and the Department of Justice (DOJ) have jurisdiction.  However, as noted above, CMS has no evidence to suggest that any such relationships have harmed LTC residents or caused consultant pharmacist decisions to be biased. 

CMS is also “considering requiring that long term care facilities employ or directly or indirectly contract the services of a licensed pharmacist who is independent.”  CMS is “considering including a definition of the term ‘‘independence’’ to mean that the licensed pharmacist must not be employed, under contract, or otherwise affiliated with the facility’s pharmacy, a pharmaceutical manufacturer or distributor, or any affiliate of these entities.”  CMS noted that “affiliate” can be “be broadly interpreted to cover all relationships that incent overprescribing and inappropriate prescribing in LTC facilities.” 

The changes would also prohibit nursing homes from contracting for the provision of consultant pharmacy services with entities (such as a subsidiary of an LTC pharmacy) that have been created for the purpose of providing reorganized consultant pharmacist services.  CMS noted however that these changes would not “prohibit any relationships that would be inherently free of conflict of interest.”  However, CMS provides no examples of such relationships, and instead, solicits comment on the specific relationships that should be permitted.  

Implementation 

To meet the proposed rule requirements, CMS noted that consultant pharmacists would likely reorganize to achieve independence from the parties (facility pharmacies, pharmaceutical manufacturers and distributors, and affiliated entities) with which the consultant pharmacists are currently affiliated.  CMS believes that if the changes under consideration were to take effect beginning January 2013, such a time frame would provide sufficient time for implementation of the requirement. 

However, CMS specifically recognized that LTC facilities in rural areas would face the greatest challenges in recruiting qualified consultant pharmacists, particularly if the

consultant pharmacists currently serving the rural facilities do not reorganize in order to continue to provide services.  Accordingly, CMS is soliciting comment on whether to provide for a later effective date for rural facilities as opposed to other LTC facilities or to make other accommodations for the unique circumstances in which rural facilities operate. 

CMS is “also soliciting comments on whether it would make sense to waive the independence requirement to permit alternative approaches.”  In describing these other approaches, CMS noted that, “comments should address the protections that would be implemented to reduce the risk of conflict of interest due to the lack of independence of the consultant pharmacists.” 

The agency is also soliciting comments on best practices related to the conduct of drug regimen reviews.  Presently, LTC consultant pharmacists commonly perform approximately 60 drug regimen reviews in a day.  CMS suspects this is too high a rate given CMS’s expectation that independent consultant pharmacists would conduct more thorough drug regimen reviews, monitoring for drug side effects and efficacy. 

CMS expects that the Medicare program, State Medicaid programs, as well as other payers, would realize savings as a result of independent pharmacists performing drug regimen reviews that would be uncompromised by any financial incentives. By reducing overprescribing and unnecessary use of high cost brand name drugs, CMS asserts that its proposed rule “would result in lower drug costs to Medicare, Medicaid and other payers.”  CMS also anticipates that this requirement would likewise curb the use of drugs that are inappropriate and should generally be avoided among older LTC residents, leading to further savings to all payers from fewer hospitalizations and treatments for drug-related problems, such as pharmacologic interactions.

ASCP reacts

The American Society of Consultant Pharmacists (ASCP) was aware that the agency was concerned about some areas of conflict of interest, but was not expecting the discussion in the proposed rule, Lynne Batshon, ASCP Director of Policy & Advocacy, told pharmacist.com.  While the agency’s examples of how there could be a potential for conflict of interest are accurate, Batshon said, “We’re concerned that the setting has not been portrayed accurately.”

In a February 2010 position statement that predates the new proposed rule, ASCP recommended that LTC consultant pharmacists should be independent of the LTC pharmacy providing medications to residents because of the potential for, or appearance of, conflicts of interest.  In the absence of separation, the position statement suggested:

• separate contracts for dispensing and consultant pharmacist services,
• payment for consultant pharmacist services at market-based rates, and
• empowerment of consultant pharmacists by their employers to make independent judgments about appropriateness of medication use for patients.

To gather information, ASCP is conducting a survey and also is reaching out to member experts in a variety of settings with good data.

Asked about the impact on consultant pharmacists, as considered, Batshon responded, “We are still in the process of evaluating that.” The day the survey came out, within 30 minutes, ASCP had received 50 responses. As of October 13, ASCP had received nearly 1,200 responses. Also, nonmembers have responded in overwhelming numbers. The reactions continue to pour in.

ASCP will submit comments to CMS based on the feedback. APhA will continue dialogue with ASCP and other pharmacy stakeholders as it analyzes and prepares comments on this issue and other provisions in the proposal.