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.