HCFA's 'clarification' could cause joint venture, subcontract problems
HCFA’s clarification’ could cause joint venture, subcontract problems
Pharmacy reg: You may have to purchase drugs from someone else
The Health Care Financing Administration (HCFA) recently shed new light on its pharmacy license requirement when responses to what HCFA said were the industry’s most commonly voiced concerns were released. The answers aren’t likely to please everyone and could bring about substantial changes in how your agency operates.
Announced earlier this year, the requirement will allow only agencies with a pharmacy license to bill HCFA for certain drugs used with durable medical equipment (DME) or prosthetic devices (See Home Infusion Therapy Management, December 1996, p. 133.) Many home infusion agencies wondered how they would be affected, and their concerns now seem well-placed. While HCFA’s responses clarify many points, some say such a measure was due long ago. In addition, some of HCFA’s responses won’t make life easier for many agencies.
For example, some agencies expressed concern that HCFA had not given the industry enough time to adapt to the new requirement. HCFA proved unyielding in that area and remained set in keeping the Dec. 1, 1996, implementation date.
"The policy was issued on July 30, 1996, and . . . we believe that this provides suppliers with adequate notice to adjust to the new billing requirements," is HCFA’s response to the industry’s concern.
HCFA turns a cold shoulder
HCFA similarly turned a cold shoulder toward other concerns. In particular, Medicare-certified home health agencies with supplier numbers may not bill Medicare Part B for pharmaceutical products used in conjunction with DME or a prosthetic device even if the drugs are secured through contracts with licensed pharmacies. Also, the licensed pharmacy, and not the entity acting as the network manager and contractor for delivery and administration of pharmaceutical products, must bill Medicare Part B for prescription drugs.
But all is not lost. HCFA notes that if a home health agency is furnishing services under Part A or Part B as a Medicare "provider of services," it is not affected by the revision as long as it bills under an appropriate provider of services number.
Even if you are already in compliance with the administration of drugs, you may not be able to breathe easy just yet.
The regulation could change the subcontracts of agencies that lack a pharmacy license and have been dispensing and billing HCFA for those drugs.
"It could have a negative impact on many contractual relationships," notes Michael Tortorici, RPh, MS, president of AlternaCare of America in Dayton, OH, an alternate-site consulting company that works with IV providers. "If someone is not a pharmacist, this really negates them from participating in that part of the service."
For example, many home infusion therapy companies have entered joint ventures and strategic alliances as the industry moves toward larger national providers of health care and away from regional or local care providers. Many of these agencies created strategic ventures with pharmacies that provided medication to the agency to dispense and then bill HCFA. Tortorici sees that as changing now.
"My feeling is there were perhaps too many ventures of convenience for referrals, and this [requirement] more or less is preventing that from happening and providing an opportunity to have a free market," notes Tortorici. "What has happened in the past is you’ve had people entering all these joint ventures, and pharmacies were providing medications to nursing agencies, home health agencies and hospital ventures."
Agreements may fall by the wayside’
But Tortorici says the scenario could change. Such agreements are likely to fall by the wayside as home infusion agencies that lack a pharmacy license will no longer be able to bill for drugs. In those cases, the obvious winners are pharmacies.
"It really supports the practice of pharmacy as a profession," says Tortorici. "It puts the dispensing of medication in the hands of the pharmacist, so this has been a very positive thing for the pharmaceutical profession."
"I wouldn’t expect a pharmacist to do nursing care because I wouldn’t expect to dispense pharmaceuticals," says Lynn Nurczynski, BSN, CRNI, home infusion coordinator at the VNA of Chittendon and Grand Isle Counties.
However, Tortorici notes that it’s not a bed of roses for all pharmacies. Mail-order companies may have to drop customers, depending on the state law that governs each jurisdiction. A pharmacy must be licensed in the state in which drugs are dispensed, and, according to HCFA, "for mail-order pharmacies, this would be the state in which the pharmacy is physically located."
Clarification a long time coming
"A lot of these [clarifications] are logical and should have been stipulated upfront," says Kevin O’Donnell, MIM, chairman of Healthcare Resources of America, a consulting firm in Lewisville, TX. "This is a very logical clarification. The regulation was too ambiguous to begin with."
In spite of the prior confusion, HCFA’s pharmacy license requirement is doing little more than enforcing the law of the land, a law that sometimes was overlooked.
"The big fuss was that someone let the horse out of the barn," says O’Donnell. "People were thinking they only had to worry about one thing, and that was HCFA and getting paid."
But that’s no longer the case. "The speed limit has always been 55; It’s just that people have been going 125 and not getting any tickets," says O’Donnell. "It’s very controversial if you’re a provider, but it’s illegal to sell drugs without a license. Anyone who ever presupposed that that was not illegal was not thinking clearly."
He adds that the regulation addresses strictly the sale of drugs and not their packaging or preparation. State boards of pharmacy have not been strict enforcers of requiring a pharmacy license to sell drugs, so "HCFA is using its own reimbursement powers" to do so, notes O’Donnell.
Letter of the law’
The Visiting Nurse Association of Chittendon and Grand Isle Counties in Colchester, VT, made its own corrections prior to learning about HCFA’s reinforcing the already-present pharmacy license requirement.
"We follow everything to the letter of the law," says Nurcyzinski. "At one time, with our IV clients on routine therapy, we would dispense heparin and saline to flush their lines. But we realized that constituted dispensing pharmaceuticals, so we don’t get into that anymore."
Nurcyznski agrees with O’Donnell that HCFA’s enforcement is the right move.
"I really feel that to dispense drugs you need to have a pharmacy license, and you need to have a pharmacist involved," she says.
While HCFA’s release is straightforward for the most part, its response to one question is somewhat confusing. The question reads as follows:
"May Medicare certified home health agencies and hospices continue to bill Medicare Part A for pharmaceuticals used in conjunction with DME, when the drugs are obtained from licensed pharmacies that have contractual arrangements with the agency?"
HCFA’s answer is:
"Yes. The Medicare conditions of participation require HHAs [home health agencies], hospices, and their employees be in compliance with applicable federal, state, and local laws. Therefore, because state or local law require drugs to be dispensed by a pharmacy and for the pharmacy to be licensed, we expect that the HHA or hospice is a licensed pharmacy. This revised manual provision applies only to suppliers that are billing for services covered under Part B of the Medicare program. This manual provision does not apply to providers that bill Part A for DME and the prescription drugs. For this reason, this change to Medicare’s reassignment rules was only made in the Part B carriers’ manual and was not made in the Part A intermediary manual. However, we will continue to review the Part A issue raised here to determine if any additional action is necessary."
Yes’ not necessarily positive
In short, the answer is yes, but that answer troubles O’Donnell.
Home health agencies bill under Medicare Part A, which is cost based, and must charge the lesser of their costs or charges, unlike Medicare Part B, which is rate based, notes O’Donnell. But he argues that the issue isn’t whether you bill under Part A or Part B. "The issue is whether you are legitimate in your state," says O’Donnell. "So HCFA is saying, if it’s a cheaper mode of payment, it’s OK. But that’s not right. It’s either OK, or it’s not OK. If the question is the legality of selling or not selling drugs without a pharmacy license, then what difference does it make what category of provider you are?"
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