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Eliminating Medication Waste in Long-Term Care Can Help the White House Pay for its Health Plan

Corkern2 The news of an $80 billion White House deal with drug companies to lower Medicare drug costs targets $30 billion in savings for consumers covered by Medicare Part D, but the sources of the remaining $50 billion in savings that is supposed to accrue to the government “have not been identified at the moment,” according to an Administration spokesperson.

With the Administration scrambling to find ways to pay for a much-wanted healthcare package estimated to top a trillion dollars in just 10 years, every few billion in potential savings counts.  That’s why the government should take a close look at the extraordinary amount of medication waste that is literally flushed down the toilet every year in long-term care (LTC) facilities.

The United States spends an estimated $1.25 billion annually on direct cost of wasted medications in LTC settings – and this is before the Baby Boomer generation has entered the scene.  Long-term care facilities, pharmacies, wholesalers and manufacturers are expected to incur an additional quarter billion in costs annually due to the labor, distribution and operations costs for distributing and disposing of unused medications.  Throughout this process there are 800,000 medication errors made every year in these facilities.

In February of 2009, The American Society of Consultant Pharmacists (ASCP) surveyed its membership – pharmacists that work in the LTC industry – on the topic of unused medications.  The top three concerns of respondents were preventing diversion, developing cost-effective disposal procedures, and reducing the overall amount of pharmaceutical waste.

Where does all this waste and error originate?  A majority of the approximately 17,000 LTC facilities in the U.S. receive medications in punch cards, cassettes, and/or unit-dose packaging that are delivered on a daily basis by a local or regional offsite LTC pharmacy.  These medications are predominately covered through Medicare Part D.

The most prevalent type of packaging is disposable 30-day punch cards, often referred to as “bingo-cards,” which are sent when the prescription is ordered and every time it is refilled.  However, when a prescription is discontinued or the patient is transferred, discharged, or passes away before the supply is exhausted, the unused medications are either destroyed onsite or sent back to the pharmacy.

However, the ability to return and credit unused medications was not addressed when Medicare Part D was created.  And, because no electronic claim crediting process is available, pharmacies must bill upfront by dispensing the entire supply of medications, up to 30 days, with any unused medications becoming waste.  The pharmacy gets paid either way, because there is no incentive to offer credit for unused medication.

A pharmacy that wants to offer credit for unused medication must use what is known as post-consumption billing – but this requires a hassle that creates cash flow delays and reporting burdens that make it all but impossible to manage.

Baby Boomer demographics indicate long-term care facilities will soon be the new epicenter of spiraling medication costs, and the waste occurring today is astounding.  Medication distribution systems in LTC have not fundamentally changed in decades.  In addition, the current systems are riddled with errors that cost untold billions, and our environment is tainted with unused medications that are flushed or incinerated ever year.  The only group that really benefits from this mess is the pharmaceutical companies.

The U.S. taxpayer can no longer afford the status quo.  While policymakers have their sights set on major reform, they should pursue the needless waste that is growing in this segment of healthcare.

To do that, policymakers and regulators should look for ways to increase automation of medication dispensing in long-term care facilities.  This process is well established in acute care settings, where waste has been virtually eliminated and patient safety has improved dramatically.

Now is the time to incentivize long-term care facilities and the pharmacies that serve them to replace the status quo with systems that will free up taxpayer dollars for health reform, and deliver safer care to our rapidly growing senior population.

More on long-term care reform:

Carla Corkern, is CEO of Talyst,
Bellevue-based automated medication-management company. Previously she worked as
chief operations officer at aerospace supply-management company Vykor,
overseeing areas including software development, customer support.

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Acne TreatmentVaginal Herpesseguros baratosj killeencarla corkern Recent comment authors
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Acne Treatment
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Medicines are produced in bulks anticipating the consumption. After few months another pharmacy company comes up with a better version of the existing medicine. If the Doctors feel satisfied with the new medicine, they would suggest their patients to stop the medication of the medicine that they were already taking. Intead to continue with the new medicine. Thus there would be a less demand with the old medicines which would be a waste and the new medicines would sell as hot cakes.

Vaginal Herpes
Guest

The top three concerns of respondents were preventing diversion,developing cost-effective disposal procedures, and reducing the overall amount of pharmaceutical waste..

seguros baratos
Guest

When a prescription is discontinued or the patient is transferred, discharged or passes away before the supply is exhausted, the unused medications are either destroyed on site or sent back to the pharmacy.

Shelly Spiro
Guest

Tom, Thank you for understanding our pain and the acknowledgment of Standards Development work. I’m involved in pharmacy standards work with HL7, X12 and NCPDP. Standards work can be very tedious but extremely worthwhile especially with everyone looking for technology to be the financial savior of health care reform (HCR). Although getting CMS and payers to recognize the importance of medication waste in LTC might be a small issue in the bigger HCR picture, the potential dollar savings and EPA impact in my opinion are worth it. We can use all the Congressional help we can get and would be… Read more »

Tom Leith
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Tom Leith

So, Shelly, it sounds to me like “waste in the LTC arena” is a small-ish problem that could be solved by contracts and new billing processes, but nobody wants to bother. Fine, I suppose there are bigger fish to fry. If CMS will say something like “you don’t have to keep sending pills after the patient no longer has need of them (patient died, Rx changed, etc) even if you agreed to supply n days’ worth” that’d be good too. That all by itself might possibly trigger action in the area. If CMS won’t say it, I perfectly well agree… Read more »

Shelly Spiro
Guest

Tom, You would think it was common sense but unfortunately it is not in the world of HIPAA compliant claims transactions standards (NCPDP 5.1). I am a Co-Chair for the National Council for Prescription Drug Programs (NCPDP) LTC Work Group and I can assure you over my 8 years involvement we have not been able to fix this problem. There is no credit functionality and the payer claim systems are completely built around a retail pharmacy claim model. The payers “won’t just deal with it” because they do not have an incentive to change their contract, billing and audit process… Read more »

Tom Leith
Guest
Tom Leith

Thanks Shelly. > Contractually the pharmacy agrees > to dispense a 30-day supply. …and gets paid in advance in the custodial care scenario. I see. My bet this that THIS is the whole sticking-point — the payer doesn’t want to pay in advance on a contract because somebody like me (I’m an MBA) told them their cash flow’s better when they don’t. On the other hand, do they REALLY prefer a transaction per day or per dose on every Rx, even the ones that don’t get stop orders??? I shouldn’t think so. Do they expect the pharmacy to accept payment… Read more »

Shelly Spiro
Guest

Tom, A pharmacy has a contract with a Part D payer and agrees to dispense a 30 day supply (or 90 day if mail order) and will be reimbursed for the cost of the drug plus one dispensing fee. The claim is submitted for the full 30 days upon initial dispensing to assure all prior authorization and Drug Utilization Review (DUR) has occurred. The payer adjudicates the claim real time if all the information is correct. Contractually the pharmacy agrees to dispense a 30-day supply. If the pharmacy only dispenses 2 days, the pharmacy is technically violating the contractual agreement… Read more »

j killeen
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j killeen

Anyone wonder why the PHARMACEUTICAL INDUSTRY has ENDORSED HEALTH REFORM legislation? Because it guarantees them a massive expansion of medication waste that will secure their profits for years to come.

carla corkern
Guest

Tom, Happy to take you through my take on the political issues and the ROI that we use to sell our systems today (part A med savings) unfortunately the savings we generate for part D are unable to be “recaptured” and create problems for part D. We are working on a way to save the gov’t dollars on waste that our systems elliminate and yes, if we sell a few more systems, that is GOOD for me but also good for all tax payers. You googled me – you know my phone number – give me a call. Carla Corkern… Read more »

Tom Leith
Guest
Tom Leith

So, Shelly, let me get this straight. Resident has an Rx for (say) spironolactone, 2/day for 30 days – 60 tablets. Pharmacy takes the Rx, submits the bill to some Part D carrier. Gets paid. Are you telling me it is illegal for the pharmacy to deliver 2 tablets per day for 30 days to the facility — they have to send all 60 at once? Or are you tellimg me it is simply difficult, that the pharmacy has to submit a part D claim to pay for the meds themselves, and then the facility has to pay the pharmacy… Read more »

Sydney
Guest

The whole heath care system is a waste. When will the US realize its time to fix/overhaul/redo the whole system?

anon
Guest
anon

here is an idea, pay the physician supervising the care of these folks for actually managing their care. Nursing home medicine is so under reimbursed that, aside from a few healthcare heros, only the docs who can’t get any other job do it.

Shelly Spiro
Guest

As a pharmacist, I’ve been involved with providing pharmacy services to LTC facilities for over 20 years. The reason there is so much waste is because the payment model (especially Medicare Part D) is based off of 30 day dispensing retail pharmacy process. Automated dispensing systems allow LTC pharmacy providers to manage shorter dispensing cycles thereby significantly reducing the medication waste. More than 75% of the patients in LTC are Part D patients and the Part D program never really worked well in the LTC setting. The Prescription Drug Plan’s (PDP’s) electronic claims systems do not handle shorter dispensing cycles.… Read more »

Tom Leith
Guest
Tom Leith

Jabba D. writes: > they want to get legislative support to allow their > systems in states where arcane pharmacy dispensing > rules do not allow it. That isn’t what she said she wanted, but since you can read her mind, name such a state. Show me the regulation that prevents a nursing home from buying and dispensing meds this way. I’ll wait. When you demonstrate that such rules actually exist, tell us why a law requiring a particular technology is needed rather than simply abolishing the old rule that was most likely put in place to similarly protect another… Read more »