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In April of this year, we wrote about the confusion that would ensue from a CMS regulation that would require that hospice providers be responsible for all medications dispensed to patients under their care who were also Medicare Part D recipients. The exception to this requirement would occur only if it could be determined that the medication was unrelated to the terminal condition. To do so, the hospice, physician, beneficiary or their agent would be required to contact the Medicare Part D sponsor and submit a form for prior approval, allowing the claim to be processed and the medication to be paid through Part D. After being in effect for roughly two months, on Friday July 18, the regulation was largely reversed.

We applaud CMS’ quick action to reverse its decision; however, we cannot say that we were surprised that they needed to do so. In the July 18 document, CMS claims their latest action is due to the “operational challenges” imposed by the original edict (a phrase used four times in the first four paragraphs of the memo). They cite the input of “Beneficiary advocates, hospice providers, Part D sponsors/pharmacy benefit managers and pharmacies.” Although they did not specifically state as much, reaction from the field has indicated that the process was a burden on all parties and was resulting in confusion as to who was responsible to resolve issues and delays in patients receiving medication.

The original impetus to make hospices responsible for virtually all medications dispensed to patients under the benefit came from a June 2012 report from the DHHS Office of the Inspector General which indicated that “Medicare may be paying twice for prescription drugs for hospice beneficiaries, who in turn could also be paying unnecessary co-payments for prescription drugs.” Hospice is required to cover all medications related to the hospice diagnosis. At the time a patient is placed on service, the hospice is required to conduct and document a patient specific written comprehensive assessment which would include all medications the patient is taking and whether or not each drug is related to the hospice diagnosis (and thus the responsibility of the hospice). This information is relayed by the hospice to their contracted pharmacy benefit manager who in turn notifies the patient’s pharmacy as to which drugs the hospice will bear responsibility. In this writer’s opinion, one source of the problem that raised the eyebrows of the OIG stems from the fact that hospice patients do not live in a bubble nor do they sit and wait for death once they enter hospice. Although suffering from a terminal diagnosis, many continue to see physicians for conditions related and unrelated to that diagnosis. Medications are changed and added, sometimes without the knowledge of the hospice provider. A patient could use multiple pharmacies, not all of which could be aware of the hospice status. Pharmacy computerized profile systems do not always flag a patient as a hospice recipient nor prevent new medications from being dispensed due to whether or not they are diagnosis related. As a result, related or possibly related medications can be inadvertently billed to Medicare Part D. While this issue is real, the solution proved too cumbersome due to the number of entities involved. The patient and/or their beneficiary, physician, hospice, pharmacy benefit manager, pharmacy, Part D sponsor, and (if the patient resided in a nursing home or other long term care setting) facility staff would all have to be aware of the regulation and work in coordination in order to ensure that the patient received their medication in a timely manner and the correct entity billed. It just is not practical.

Another problem cited in the July 18 document is patients who are live discharges from hospice who attempt to get medications covered by Part D and are denied coverage due to a delay in the Plan receiving and processing the change in status. In fact, CMS states that 70% of all medication related hospice beneficiary complaints relate to hospice election/termination and they urge timely filing of this information by hospice providers.

The revised regulation still requires hospice to be responsible for all hospice diagnosis related medications, but limits the need to get a medication exempted from hospice coverage to only four common drug categories – analgesics, antinauseants, laxatives and antianxiety medications. In other words, if a patient is on hospice, the Part D sponsor would reject claims for all medications in these drug classes unless a prior authorization was requested and approved. Since most laxatives are non-prescription and thus not covered under Part D, and many antianxiety medications are chemically in the class of drugs known as benzodiazepines (which are also excluded by law from Part D coverage) this change greatly reduces the need for prior authorizations.  

If we have any issues with this revised regulation, they relate to the latitude being given Part D sponsors and the burdens still made on hospice organizations. The Plans are “strongly encourage(d)” to limit the prior authorization process to these four categories, and given until October 1, 2014 to implement the change. Hopefully, this process has been so onerous to the Plans that they will accept this recommendation and move quickly to make the necessary program changes to their systems. CMS also “strongly encourage(s)” hospice providers to provide a “compassionate first fill for any medication needed by a beneficiary who is experiencing difficulty in accessing the drug at POS” (point of sale). While we realize that hospice companies by their very nature are compassionate, this can be an expensive proposition, especially when it is the Part D provider who has control of making changes to their programs and processing changes in patient status.  CMS also expects the hospice to report hospice election directly to the Part D sponsor, identify drugs in the four categories determined to be coverable under Part D (prior to the submission of any claim!), and “negotiate repayment” of any claims paid in error by the Plans. Indeed, the memo states that the plans and the hospices “should implement processes to handle payment resolution directly with hospice providers…without requiring the pharmacy reverse and rebill the original claim in the retail setting.” (There is a somewhat confusing addendum involving long-term care pharmacies.) It would do well to point out that, unlike pharmacies, the hospices and the Plans do not have contractual relationships that would dictate any of these interactions. We feel that this is not the best way to proceed and we urge the hospice industry to petition CMS to revise this stance and require the pharmacies (which do have a contractual relationship with hospice) to reverse and rebill the hospice.

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b2ap3_thumbnail_ccb4e23c8aa216f1e96d31ab209c036b_L.jpgLong term care pharmacies are dealing with a new billing problem – the change in Medicare Part D that affects payments for hospice patients' medications. A large percentage of hospice patients live in health care facilities rather than at home or in an in-patient hospice unit. This living condition complicates the issues hospices are dealing with surrounding the change in medication reimbursement because these patients do not receive their medication from “hospice pharmacies.” The vast majority of hospice patients who reside in nursing homes, assisted living centers, residential care or other long term care settings receive their medications from a long term care pharmacy which has a contractual relationship with the center. This situation exists for practical as well as regulatory reasons. Long term care centers, for the most part, must receive medications for their residents in unit dose or unit of use packaging. Furthermore, regulations for long term care centers dictate that all medication must be available for administration in a timely manner. Finally, long term care centers in most states are not accustomed to dealing with multiple pharmacies in procuring medications for their residents and insist that hospice patients receive their medications from the center’s contracted provider. These and other reasons limit the hospice’s ability to have the medications delivered by mail by a hospice pharmacy or sent in conventional packaging from a retail pharmacy.

Historically, the hospice has contracted with a specialized hospice pharmacy and/or PBM (pharmacy benefit manager). If the hospice patient is in a private home, this pharmacy would either over-night the medications directly to the hospice patient's residence or have them sent from a local pharmacy and billed to the hospice pharmacy through their PBM. The hospice pharmacy, in turn, bills the hospice. If the patient is in a long term care center, the hospice pharmacy or the hospice contacts the long term care pharmacy and identifies the medications for which the hospice will now be financially responsible. The long term care pharmacy would continue to bill all other medications on the patient’s profile (which could be a significant number) to the patient’s primary payor source, which is almost always Medicare Part D.

Starting May 1, the Part D sponsors will stop paying for all medications the hospice patient is utilizing (unless it can be demonstrated that the drug is unrelated to the hospice diagnosis), leaving the long term care pharmacy, facility and patient with a financial issue. A few Part D Plans have already begun to reject the claims. Perhaps these Part D Plans perceive this to be a minor issue, affecting only a small percentage of their members. Indeed, for many of these plans, the total number of all members who are long term care patients is a small percentage of their business. As a result, they may have not yet adequately trained their customer service staff to be aware of this change or how properly to react when a hospice or hospice patient’s responsible party or physician calls to gain an exemption from the regulation. Regardless of how the Part D plans are reacting to these charges, the pharmacy is obligated by their contractual relationship with the long term care center to dispense the medication and must therefore reach out to the hospice, long term care center and/or patient’s family in an attempt to find someone who will accept financial responsibility. To date the response to pharmacy’s inquiries has been underwhelming. In too many instances, each party involved in the process instructs the pharmacy to bill someone else. Most of these patients are actually dually eligible Medicare-Medicaid patients. There simply is not adequate money from any source to pay for these medications. This situation will get much worse once all plans begin rejecting claims in May.

Hospices have been slow to react to this situation, not fully understanding the relationship between their own pharmacy or PBM, the long term care center’s pharmacy and the nursing home or assisted living center. Many hospices currently do not have a business or financial agreement with the long term care pharmacy and have been resistant when receiving calls asking if they will accept responsibility. Some have been advising the pharmacy to bill the long term care center. This is not only impractical (especially in the case of a Medicaid resident), but also against the intent of CMS when they issued this ruling. CMS felt that, once a patient chose hospice, most medications would be discontinued as no longer necessary. This may be true for medications such as those given to lower cholesterol, but would anyone advocate discontinuing a medication for hypertension? Anyone who suffers from this condition and experiences the headaches that ensue when the medication is omitted would never deny it to someone who was admitted to hospice for cancer.Less severe, but equally important when considering patient comfort, would be medications such as omeprazole administered for GERD. Would we deny a dying patient the comfort received from this medication due to payment issues, even if not strictly related to the hospice diagnosis? It is true that there is a mechanism for getting these covered under Part D, and hospice must take the responsibility to determine if drugs are necessary or unnecessary and likewise get these necessary drugs covered.

Hospice organizations would be well-advised to take the lead and deal with this new state of affairs proactively. This is true for all hospice patients, but the complication in long term care, where a third party (the long term care center) is obligated to administer the medication until it is discontinued, and is ordering the medication from a pharmacy not strictly contracted with the hospice, makes the situation more complicated. A thoughtful, well-planned response to this situation will benefit all parties involved, including the hospice itself. Ignoring the issue by not communicating with the pharmacy could lead to the pharmacy not dispensing the medication and to the long term care center possibly being cited by state agencies for lack of medication availability. Hospices attempting to avoid the issue by telling the pharmacy to bill the center or the patient will most likely only cause problems for the long term care centers with whom they work in order to provide care. These problems could easily become serious enough to cause cancellation of hospice-facility contracts. Instead, hospices should contact every pharmacy that contracts with the long term care facilities where the hospice normally has patients. The patient’s Part D plan information should be readily available on the patient’s chart, If not, the hospice should set up procedures with the pharmacy to receive information on all current and future patients' Part D plans to better facilitate calls to request prior authorizations for unrelated medications. Currently, every potential patient’s medications are routinely reviewed by the hospice nurse as part of the hospice patient evaluation process. Going forward, the hospice nurse should also find out how many day’s supply of medications the patient has left on hand at the center. Normally, long term care pharmacies dispense a thirty day’s supply of drugs, so there is a good possibility that the patient may have enough medication on hand to last until the hospice, patient’s responsible party and physician can work through the issue of financial responsibility for the medications. If the patient has a supply of five days or less on hand, the hospice nurse should suggest that the center reorder a limited supply of the medication while the patient is still covered by traditional Medicare Part D. This should be used as a stop gap measure and not a routine practice that could be viewed as circumventing the intentions of the regulation change.

The hospice needs to take the lead in this process, determining if a medication is indeed related to the patient's terminal diagnosis (and, with all the comorbidities that need to be documented, the number of unrelated medications is decreasing), working with physicians to discontinue truly unnecessary drugs, educating patients, responsible parties and physicians on the prior authorization process, ensuring that there is follow through in getting necessary but unrelated medications covered and partnering with the long term care pharmacy on communicating whether or not any medications can and should be billed privately on any particular patient.

But hospices cannot be held responsible for handling this issue alone. In addition to the hospice, it is incumbent upon all parties involved (prescribing physicians, LTC pharmacy providers and nursing homes/assisted living centers etc.) to become educated and proactive participants in their prescribing habits, admission procedures and communications with one another.  A non-collaborative approach will ultimately result in failure. Physicians, whether affiliated or unaffiliated with the hospice, drive the prescribing process and now more than ever, need to understand the importance of prospectively limiting the prescribing of medications unrelated to the terminal condition or related but medically unnecessary now that the patient has chosen hospice. If not already in place, LTC pharmacies should pre-establish non-covered drug policies with each nursing facility that they service to ensure that there are no delays or interruptions in therapy while the hospice prior authorization process is under review.  Nursing homes and assisted living communities need to educate their staff to contact the hospice immediately if the attending physician orders a medication for a hospice patient as a result of a non-hospice diagnosis related change in condition.

Even without this newly-initiated payment confusion, hospice census in long term care centers has been under siege from government entities that have been resistant to understanding the value of hospice care being provided in long term care. Hospices must take care to avoid complicating the delivery of care by causing more angst for the long term care center (in dealing with medication billing issues and unavailability) which will only further reduce the incidence of this necessary service being utilized in the long-term care setting.

With experience in leading both Long Term Care Pharmacies and Hospices, Veltri Healthcare Solutions is eminently qualified to assist both types of organizations in achieving sustainable responses to these revenue stream pressures. For more information, please contact us at

Update:  For more on the Medicare Part D problem, see our post Resolved? - The Medicare Part D Mess

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The recent clarification by CMS indicates that hospices must bear the cost of virtually all medications taken by their patients, rather than just those related to the hospice diagnoses. This action should send every provider scurrying for their pharmacy-provider agreement and demanding an in person meeting with their pharmacy representative. Before doing so, take some time to review your agreement. Your next step should be to speak to your finance people and clinical staff to gain a better understanding of the services provided and how you are being charged.

Pricing models for hospice fall into two categories:

  • Fee for Service Where the hospice pays only for the drugs dispensed on a prescription by prescription basis, and 
  • “Per Diem” Where the hospice pays a flat fee per patient regardless of how many or how few prescriptions are ordered. Following the assumption that the number of prescriptions paid for by the hospice is likely to increase under the new ruling, per diems may seem to be a more attractive way to proceed. Due to other factors, this might not be the best course. 

Hospices currently under per diem agreements should first understand how the per diem is calculated. Some older hospice pharmacy agreements state that the per diem is calculated only from the cost of the analgesics being utilized (much of this is buried in the fine print, so read with care). Any effort on the part of the hospice to control drug utilization is useless (from a financial point-of-view) unless it specifically targets that one class of medications. 

Newer per diems may include all medications dispensed. If we assume that the hospices will be paying for more medications, that per diem will likely increase. Since the hospice pharmacy is currently profiling all medications (whether dispensed by that particular pharmacy or not), the pharmacy may have a better handle on what the new costs will be. This gives the pharmacy provider a decided advantage over the hospice in negotiating new per diem agreements. 

Utilizing a fee-for-service program maybe more advantageous, especially in the next several months, because it will provide a true picture of the costs incurred. This will give the hospice a better picture of where to start from if they choose to negotiate a per diem. It will also give emphasis to the need for effort by the clinical team to truly evaluate and eliminate medications not necessary to end-of-life care. Per diems often mask the need for this critical function, at least until the bill comes due and the per diem has to be re-negotiated. Also, the cost of individual prescriptions has decreased dramatically as more medications have changed from brand to generic so individual prescriptions on the whole are less expensive than they once were.

Another savings strategy to consider is to examine the services being provided. The goal would be to determine if those services are truly still necessary. In discussions with clinical staff, it is evident that the most important factors in their minds are quick access to a clinical pharmacist and availability of medications , especially analgesics. Many hospice pharmacy providers are moving from a mail-order based model to a Pharmacy Benefit Management (PBM) model. In the PBM model, the hospice pharmacy provides the clinical expertise but the medications are dispensed by local pharmacies within their networks. This provides the pharmacy with savings on inventory and processing costs, and these savings can become a chip in the negotiations between hospice and vendor. It must be said, however, that utilizing local pharmacies may place a larger burden on the hospice clinical staff and this must be taken into consideration when deciding if this is the path a specific hospice should take.

These are a few of the factors that need to be considered when evaluating pharmacy pricing, and pharmacy is only one of the vendors that need constant review. For example, in recent years a hospice’s Durable Medical Equipment (DME) and Medical Supply costs have outpaced pharmacy. Examining these costs, and their clinical impact, is key to continuing to have a viable hospice in this difficult period.

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Welcome to Veltri Healthcare Solutions and our new website. My name is Sam Veltri and I have been in Healthcare, managing companies in the ancillary services marketplace, for the last thirty plus years. At Veltri Healthcare Solutions, our expertise is in revitalizing and growing companies - taking organizations that are sleeping, failing, “stuck in the mud” – and ensuring that they have a “rebirth”. We do this both by embracing the founding culture and breaking the bounds set by that culture. This strategy keeps the customers who are loyal to the founding principles, and attracts new clients who were turned off by prior boundaries. It may sound contradictory, but it is very effective!

Many times in our career, we have replaced founders who have sold their multimillion dollar companies and left, often taking the customers with them. One even took all the employees! On other occasions, we have inherited organizations that seemed stuck in the past, refusing to embrace innovation and changing times and slowly losing market share. Each time, we have been successful in restoring and growing the customer base, entering new marketplaces, and improving profitability. This takes vision, openness, a belief in the company, and a commitment to its stakeholders, whether they be investors, clients or employees. 

We ask you to review our website for additional information on our services and areas of expertise. Look to Veltri Healthcare Solutions for a range of strategic and tactical services covering enterprise management, logistics, marketing and sales solutions and do not hesitate to contact us to schedule a call or in person evaluation. Let us share our success with you!

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