IRS’ updated FSA rules regarding OTC medicines draw response
WASHINGTON The Internal Revenue Service earlier this month issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements, to pay for over-the-counter medicines and drugs.
The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements. Under the new standard, the cost of an OTC medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or such other healthcare expenses as medical devices, eye glasses, contact lenses, co-pays and deductibles, the agency stated. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 still can be reimbursed in 2011 if allowed by the employer’s plan.
WageWorks, a provider of consumer-directed benefits solutions, including FSAs, this past summer advocated an extension of that Jan. 1 deadline, arguing that all parties — consumers, retailers and third-party administrators — needed additional time to react to the changes. “This restriction will hurt millions of consumers who rely on their FSAs to manage their out-of-pocket healthcare costs and pay for necessary over-the-counter therapies,” stated Joe Jackson, CEO of WageWorks. “If Congress is intent on putting this provision into effect, they should at least push back the deadline so that consumers — and especially retailers — are ready for the transition.”
Jody Dietel, president and chair of the Special Interest Group for Inventory Information Approval System Standard said, “Without clarification on the type of permission needed for FSA reimbursement for OTC drugs, consumers, retailers and third-party administrators will be confused and unlikely to fully comply with the new regulations by the start of new year. Meanwhile, we’re likely to see doctor’s offices overwhelmed with patients seeking prescriptions to use their spending accounts for Claritin, Zyrtec and other OTC items,” she said. “A delay in implementation will provide time for all parties to be better educated on the issue and prepared to comply with the new rules.”
SGIS maintains an electronic list of FSA-eligible products used by most retailers in the country.
The new regulations, even the recent guidance issued by the IRS, leave many questions unanswered, according to a report on The Bulletin published last week. Will physician prescriptions be required to specify a number of pills with the prescription, or can consumers buy bulk-sized containers of pain relievers? And if pharmacies must process prescriptions for aspirin or cold medication, will they seek some dispensing fee for their time?
“We’re concerned that there will be a lot of confusion out there,” Jeff Beadle, CEO of SIGIS, told The Bulletin. “Someone is buying Tylenol in December, and they can’t now buy Tylenol in January unless they go to their doctor and get a prescription first.”
The report suggested retailers will face an additional challenge — when to update the list of eligible products under FSA plans because many FSA plans do not run on a calendar year.
HHS: States must ask for more Medicaid funds
When President Barack Obama signed an emergency federal spending bill Aug. 13, it gave cash-strapped states a chance to share $16.1 billion to extend an enhanced Medicaid spending program, not to mention $10 billion in stopgap funds for teachers in danger of being laid off. But the states still have to ask for it.
That was the message from Health and Human Services secretary Kathleen Sebelius to all 50 state governors. In an Aug. 16 letter, Sebelius told every state chief executive that the emergency spending measure “can stave off the deep cuts to Medicaid that many had feared, and sustain jobs in hospitals, health centers and communities across the country.” However, she added, “these funds are only available for your state if you request them within 45 days of enactment, or by Sept. 24, 2010.”
The spending bill extends for six months the enhanced federal medical assistance percentage. “The FMAP increase was initially authorized by the American Recovery and Reinvestment Act … and is set to expire this December,” the HHS secretary told the governors. “Under the new law, states that request these funds will receive a 3.2 percentage point increase in their FMAP from January to March 2011, and a half percentage point increase from April to June 2011. Additional FMAP increases are available for each calendar quarter during this period for states with high unemployment rates,” Sebelius added.
“I encourage you to take advantage of extended Medicaid support available to you through the Education Jobs and Medical Assistance Act,” Sebelius told the governors. “This new law, along with the Affordable Care Act, will help support jobs and build a healthcare system with lower costs, more choices and higher-quality health care for all Americans.”
Telemedicine: A remote connection
NEW YORK —The doctor and the pharmacist will see you now. Just look into the webcam on the computer.
Spurred by a perfect storm of conditions—a fractured economy that has made some pharmacy labor costs prohibitive, an explosion in new digital communications technologies and a flood of new federal cash to spur the adoption of health information technology—pharmacies, physicians and managed care organizations increasingly are turning to telemedicine to bring real-time care to hard-to-reach patients in remote locations throughout the United States.
Linking distant, far-flung patients in real time with pharmacists by a secure dispensing and two-way video-communications kiosk at a clinic, retail site or even a dedicated room in a city hall—which is the case in at least one small town that lost its sole pharmacy—can mean accessible pharmacy care for millions of patients in rural and small-town settings. The potential benefits of telemedicine go way beyond pharmacy dispensing and video-link counseling, of course. Properly applied, telemedicine—more broadly defined by some as telehealth—can put patients in immediate touch with a whole battery of healthcare professionals for any number of interventions. Those interventions can range from smart phones that monitor a diabetic patient’s glucose levels to a trauma team walking a medic through a triage procedure for a wounded soldier on a battlefield in Afghanistan—and can come through mobile phones, webcams or any other device that opens an instant link between patient and practitioner.
One big impetus for the growth of telemedicine will be the federal government. As part of the Obama administration’s $787 billion economic stimulus plan contained in the American Recovery and Reinvestment Act, more than $19 billion has been allocated to support the health system’s conversion to electronic record-keeping and health IT—including telemedicine.
Telepharmacy solutions are coming from a slew of technology providers, sometimes in partnership with retail pharmacy chains. For Maple Grove, Minn.-based Thrifty White Drug Stores, its commitment to remote-site dispensing beginning in 2003 was driven by necessity; the high costs of operating a fully staffed pharmacy in some distant, smaller communities were prohibitive.
Thrifty White’s answer: Operate a smaller store with a prescription kiosk, staffed by a technician and monitored by a company pharmacist at a full-service pharmacy dozens of miles away. “Our goal is to provide pharmacy services to these under-served areas and keep the business local” said Gary Boehler, EVP pharmacy operations for Thrifty White.
More recently, another Minnesota pharmacy operator, Sterling Drug, turned to pharmacy automation specialist ScriptPro to install its Telepharmacy unit in the town of Adrian, Minn., after that town lost its one drug store. The unit, staffed by a pharmacy technician, serves the prescription needs of the town’s roughly 1,200 residents from a Sterling Drug location in a larger, nearby town, Worthington, Minn.
“Mail order should not be the answer to these communities,” said Tim Gallager, VP pharmacy operations for Sterling’s parent company, Astrup Drug. “You can expand pharmacy services for less than the cost of opening a new pharmacy and support remote pharmacies without adding staff or recruiting pharmacists.”
Major chains also are weighing in. Rite Aid unveiled a new online chat capability in early August that gives customers enrolled in its wellness+ rewards program direct, 24-hour access to a Rite Aid pharmacist. Wellness+ members can access the feature, called “Ask a Pharmacist—Chat Live Now,” via a link on their online personal health page.
Walgreens also rolled out a new, real-time link between patients and pharmacists early last month called Walgreens Pharmacy Chat. The service puts customers in touch with a pharmacy staff member via an online link, 24/7.