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of Representatives Washington, DC 20515 Dear Chairman Issa: Thank you for the opportunity to provide you with examples of existing and proposed regulations that negatively impact the economy and job growth in the chain drug store industry. As a critical driver of the economy, these issues are of the utmost importance to the NACDS membership. NACDS represents traditional drug stores, supermarkets, and mass merchants with pharmacies – from regional chains with four stores to national companies. Chains operate 39,000 pharmacies and employ more than 2.7 million employees, including 118,000 full-time pharmacists. They fill nearly 2.6 billion prescriptions annually, which is more than 72 percent of annual prescriptions in the United States. The total economic impact of all retail stores with pharmacies transcends their $830 billion in annual sales. Every $1 spent in these stores creates a ripple effect of $1.96 in other industries, for a total economic impact of $1.57 trillion, equal to 11 percent of GDP. Health Information Technology for Economic and Clinical Health (HITECH) Act The Health Information Technology for Economic and Clinical Health (HITECH) Act, which passed into law in 2009, included among its provisions a comprehensive revision of the privacy and security regulations adopted by HHS under the Health Insurance Portability and Accountability Act (HIPAA). These revisions include new requirements for healthcare providers to report breaches of sensitive patient information, provisions for patients to exercise more control over their information, and an expansion of a requirement for healthcare providers to maintain a detailed accounting of all disclosures of patient information, to include daily, routine disclosures. This last provision is known as the “accounting of disclosures” requirement. HHS regulations currently require healthcare providers to maintain a detailed accounting of only non-routine disclosures, with the understanding that patients would expect their sensitive health information to be routinely disclosed, or shared, for the purposes of healthcare treatment, payment, and operations. Patients expect their information to be shared for these purposes, and these interactions occur millions of times per day, by pharmacies alone—not including other healthcare providers, to deliver timely, safe, and efficient care. Maintaining detailed records would require an overwhelming amount of information to be stored. The HITECH Act expands the accounting of disclosures requirement to include all disclosures, even daily, routine disclosures. HHS is currently drafting regulations to
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implement this requirement. If this expansion of the accounting requirement were to be imposed on pharmacies, it would cause chain pharmacies to have to completely replace their existing information technology systems nationwide. This would have a significant negative impact on many pharmacies that are currently struggling. In comment letters to HHS and in discussions with the agency, NACDS has urged that this expansion of the accounting of disclosures provision not apply to information technology systems that are not eligible for federal funding under the HITECH Act, as pharmacy systems are not. DMEPOS Accreditation The Medicare Modernization Act of 2003 (MMA) added requirements for suppliers (including state-licensed retail pharmacies) of Medicare Part B durable medical equipment and supplies (DMEPOS) to comply with accreditation quality standards to supply and bill for these items and services. Pharmacies are the most accessible provider in the community for patients to receive these items and services such as diabetic testing supplies, canes, crutches and other items. The process for pharmacies and other suppliers to become accredited by the CMS accreditation organizations requires considerable time, resources, and costs. NACDS actively sought an exemption from accreditation for retail pharmacies in view of the statelicensure requirements - both pharmacies and pharmacists must be licensed by the state to provide pharmacy services including medical equipment and supplies. Section 3109 of the recently enacted healthcare reform law, the “Affordable Care Act” (“ACA”) did establish a conditional set of criteria that would allow pharmacies that have been Medicare suppliers for 5 years or more and sell less that 5% DMEPOS to have the conditional exemption. Although NACDS is supportive of the conditional exemption as it provided some relief for pharmacies, we recognize that the negative impact on certain pharmacies remains. A significant number must still be accredited, e.g. new pharmacies and pharmacies with 5 years or less enrollment as a DMEPOS supplier and those that sell as little as 6% DMEPOS. As such these pharmacies face the economic choice of the costs of accreditation or foregoing providing DMEPOS to their patients. Medicare Provider Enrollment, Chain and Ownership system (PECOS) In 2009, the Centers for Medicare and Medicaid (CMS) announced the first phase of the requirement for the provider that orders or refers Medicare Part B items for a patient to have a current enrollment record in the Provider Enrollment, Chain and Ownership System (PECOS). If the provider did not have an enrollment record, the pharmacy that supplied the medical equipment or supplies to the patient would receive a message indicating the provider was not enrolled. The unfortunate consequence for pharmacies is that they have no control over whether a provider is enrolled in PECOS and no ability to require them to be enrolled. As a result pharmacies who want to assure that their patients receive their ordered medical equipment and supplies face the difficult choice of denying patients their needed healthcare items or providing them and being at risk for no payment.
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We are appreciative of recent actions by CMS to address the issue of a number of providers not being enrolled in PECOS and to not implement the second phase of the PECOS enrollment requirement. Phase two would have automatically rejected and denied payment to pharmacies for Part B claims. CMS had planned to start automatically rejecting payment of the supplier’s Part B claims beginning January 3, 2011 if the provider did not have a current PECOS record. ACA contained a provision to implement this requirement on July 1, 2010 and CMS regulations set the requirement date of July 6, 2010. However, CMS has indicated that they will not implement phase two until a later time yet to be determined. DMEPOS Competitive Bidding On January 1, 2011, CMS implemented a Competitive Bidding Program (CBP) for Durable Medical Equipment and Supplies, including diabetes testing supplies (DTS) purchased through mail order. This initial round of the CBP is limited to 9 competitive bidding areas (CBAs) around the country and is planned to eventually become a nationwide program. As the most readily accessible health care providers, community pharmacies and pharmacists are uniquely positioned to assist Medicare beneficiaries with their DTS needs, their questions, and to assist them with the proper use of these items and supplies. CMS has thus far excluded retail pharmacies from Round 1 and future rounds of the CBP. NACDS has urged that DTS obtained at retail community pharmacies should continue to be excluded from future rounds of the CBP as diabetic patients rely heavily on their local pharmacies for their prescription medications, including insulin. Limiting access to DTS at community pharmacies would fragment care, thereby increasing patient confusion and disrupting therapy, all of which can increase overall program costs. In addition to furnishing supplies, one-on-one patient consultations provided by local pharmacists are often the first opportunity to identify other chronic illnesses and changes in patients’ conditions, and these consultations often result in early detection, referral, and treatment. Continued participation of community retail pharmacies in serving Medicare patients with diabetic supplies and medication should therefore be a priority of the Medicare program. Thank you again for the opportunity to provide you with this information. We look forward to partnering with you in the 112th Congress on issues impacting chain pharmacy. Sincerely,
Steve Anderson, IOM, CAE President and CEO National Association of Chain Drug Stores
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