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Medicare Wants Only ‘Independent’ Consultant Pharmacists in Nursing Homes

Stephen Barlas

Do consultant pharmacists who work in nursing homes have a conflict of interest? The Medicare program thinks they do. That is what’s behind a new proposal from the Centers for Medicare and Medicaid Services (CMS). The agency wants to require long-term-care (LTC) facilities to ensure that their consultant pharmacists are “independent.”

The proposal is included as one of the changes the CMS wants to make in calendar 2012 to its Part C (Medicare Advantage) program and its Part D (outpatient drug prescription) program.

The problem, as perceived by the CMS, is that consultant pharmacists are usually supplied by a nursing home’s LTC pharmacy at a concessionary rate—typically, by PharMerica, Omnicare, or Managed Health Care Associates. These organizations control 90% of the nursing-home market, according to the CMS, and Omnicare is now also in the midst of a takeover attempt aimed at PharMerica.

As one might imagine, the independence proposal doesn’t sit very well with the LTC pharmacies, among others. Gregory S. Weishar, PharMerica’s Chief Executive Officer, said:

PharMerica’s consultant pharmacists play an important role in ensuring safe and cost-effective outcomes for patients. We are concerned that the changes proposed by CMS could adversely affect customers; payers; and, ultimately, residents, resulting in a decrease of much needed benefits and higher costs.”

Although the CMS proposal appears to be directed at alleged conflicts centered on the “big three” LTC pharmacies and their free-standing nursing-home clients, if it becomes final, it is also likely to affect LTC facilities that are part of an integrated health care system. Allied Services Integrated Health System in Scranton, Pa., for example, has its own pharmacy on its campus. It takes care of more than 750 patients and residents via assisted living, behavioral health, skilled nursing, and rehabilitation.

Kevin E. Bowman, PharmD, Assistant Vice President of Pharmacy Services at Allied, acknowledges that his group-purchasing organization (GPO) sometimes recommends drugs for which it and the Allied pharmacy receive rebates from the manufacturer. He asks:

Do we take advantage of those rebates? Sometimes we do, when they are the result of a good, solid clinical recommendation. But our consultants aren’t going to steer patients at our skilled nursing facility to a brand PPI [proton pump inhibitor], for example, even if there is a rebate attached, when there are so many good alternative generics out there. In the end, we want a patient’s family to feel good about our facility. So we work with the family and physician to reduce out-of-pocket drug costs for the resident. We are helping to reduce overall medication costs, which is the opposite of CMS’s concerns.

Whether or not consultant pharmacists are employed by an integrated system such as Allied Services or one of the big three, they are responsible for reviewing the drug regimens for every nursing-home patient once a month. In most states, those pharmacists can switch residents from one drug to another in that same drug class. The CMS is concerned that consultant pharmacists, who are ostensibly beholden to the LTC pharmacy, are likely to change a patient’s medications from those originally prescribed by the physician to those for which the LTC pharmacy gets rebates, directly or indirectly, from a drug manufacturer. That could lead to higher costs for Medicare and could compromise the safety and health of nursing-home residents. In the Federal Register notice dated October 11, 2011, the CMS cites some studies that detail inappropriate prescribing of drugs, especially antipsychotic drugs, at LTC facilities.

To eliminate any potential conflict of interest, the CMS wants nursing homes to employ only independently licensed consultant pharmacists who are not employed by, under contract to, or otherwise affiliated with the facility’s pharmacy, a pharmaceutical manufacturer or distributor, or any affiliate of these entities. A separate company would also be set up by the pharmacy, which would hire the consultant pharmacists. The CMS would interpret the term “affiliate” broadly, but it would probably list some types of affiliates that would be considered free of conflicts of interest.

The CMS doesn’t cite specific or verified conflicts of interest to support its proposal. In the October Federal Register notice, the CMS alluded to qui tam claims, which are lawsuits brought forth by whistleblowers, who can receive all or part of any penalty imposed. For instance, an informant could allege that an LTC pharmacy had received quarterly payments, styled as rebates, from a pharmaceutical manufacturer to engage in an active intervention program to convince physicians to prescribe that company’s antipsychotic agent to the physician’s patients in the nursing home and to authorize all competitive products only after the failure of the manufacturer’s product.

The overprescribing of antipsychotic drugs in nursing homes is a particular irritation to the CMS that was exacerbated by testimony presented on November 30, 2011. Inspector General Daniel Levinson, JD, said that 14% of nursing-home residents had prescriptions for atypical antipsychotic agents and that Medicare should not have paid for half of those drug claims because the drugs were not used for medically accepted indications.