Chapter 6Chapter 6Federal Regulation of Federal Regulation of Pharmacy PracticePharmacy Practice

ObjectivesObjectives

Understand the provisions and Understand the provisions and requirements of OBRA-90requirements of OBRA-90

Describe the requirements of HIPAADescribe the requirements of HIPAA Identify the basic and pharmacy-Identify the basic and pharmacy-

related provisions of Medicare and related provisions of Medicare and MedicaidMedicaid

Recognize the application of the Recognize the application of the Medicare/Medicaid fraud and abuse Medicare/Medicaid fraud and abuse lawslaws

Objectives (cont’d)Objectives (cont’d)

Describe the application of the Describe the application of the Sherman Antitrust Act to Sherman Antitrust Act to Pharmacy PracticePharmacy Practice

Describe the application of the Describe the application of the Robinson-Patman Act to Robinson-Patman Act to pharmacy practice.pharmacy practice.

OBRA-90OBRA-90

Three major areasThree major areas– RebatesRebates– Demonstration ProjectsDemonstration Projects– DURDUR

OBRA-90 (cont’d)OBRA-90 (cont’d)

RebatesRebates– Manufactures required to provide Manufactures required to provide

drugs to Medicaid at their “best drugs to Medicaid at their “best price.”price.”

– ““Best price” is the lowest price at Best price” is the lowest price at which the manufacturers sell the which the manufacturers sell the product to any customer.product to any customer.

OBRA-90 (cont’d)OBRA-90 (cont’d)

Demonstration ProjectsDemonstration Projects– Determine if the outcomes of patient Determine if the outcomes of patient

care improve and the costs decrease care improve and the costs decrease when pharmacists are paid to when pharmacists are paid to provide DUR services to patients.provide DUR services to patients.

OBRA-90 (cont’d)OBRA-90 (cont’d)

DURDUR Process has 3 componentsProcess has 3 components

– Retrospective reviewRetrospective review– Educational programsEducational programs– Prospective reviewProspective review

OBRA-90 (cont’d)OBRA-90 (cont’d)

Prospective Review has 3 Prospective Review has 3 componentscomponents– A screen of prescriptions before A screen of prescriptions before

dispensingdispensing– Patient counseling by the Patient counseling by the

pharmacistpharmacist– Pharmacist documentation of Pharmacist documentation of

relevant informationrelevant information

HIPAAHIPAA

Goal is to improve the efficiency and Goal is to improve the efficiency and effectiveness of the health care effectiveness of the health care systemsystem

Targets four aspects of health Targets four aspects of health informationinformation– Transaction and code setsTransaction and code sets– National provider identitiesNational provider identities– SecuritySecurity– PrivacyPrivacy

HIPAA (cont’d)HIPAA (cont’d)

Who must comply?Who must comply? ““Covered EntitiesCovered Entities

– Health PlansHealth Plans– Health Care Clearing HousesHealth Care Clearing Houses– Health Care ProvideHealth Care Provide

Conducting financial or administrative Conducting financial or administrative transactions electronicallytransactions electronically

HIPAA (cont’d)HIPAA (cont’d)

Protected InformationProtected Information Electronic informationElectronic information All forms of health information that All forms of health information that

– relate to past, present, or future relate to past, present, or future physical or mental health; the physical or mental health; the provision of care; or payment for careprovision of care; or payment for care

– Identify the patient or could reasonably Identify the patient or could reasonably be expected to identify the patient.be expected to identify the patient.

HIPAA (cont’d)HIPAA (cont’d)

Notice of Privacy PracticesNotice of Privacy Practices– Intended use and disclosure of the Intended use and disclosure of the

informationinformation– Legal duties of the pharmacy to protect Legal duties of the pharmacy to protect

the confidentiality of PHIthe confidentiality of PHI– Patient’s rightsPatient’s rights– ComplaintsComplaints– Contact personContact person– Acknowledgement of NoticeAcknowledgement of Notice

HIPAA (cont’d)HIPAA (cont’d)

Use and DisclosureUse and Disclosure PHI can be used for treatment, PHI can be used for treatment,

payment, and operations (TPO)payment, and operations (TPO) Minimum Necessary RequirementMinimum Necessary Requirement

– PatientPatient– Other providers involved with the Other providers involved with the

treatmenttreatment– Authorized by the patientAuthorized by the patient– When required by HHS for compliance and When required by HHS for compliance and

enforcementenforcement– When required by lawWhen required by law

MEDICAREMEDICARE

Title XVIII of the Social Security ActTitle XVIII of the Social Security Act Provides for federal health insurance Provides for federal health insurance

for those older than 65 years of age for those older than 65 years of age and for certain disabled individuals, and for certain disabled individuals, regardless of age.regardless of age.

Part A—hospitalization insurancePart A—hospitalization insurance Part B—medical expensesPart B—medical expenses

MEDICARE (cont’d)MEDICARE (cont’d)

Prescription Drug Benefit ProgramPrescription Drug Benefit Program Discount cards until 2006Discount cards until 2006 Disease Management Programs termed Disease Management Programs termed

medication therapy management medication therapy management programs—pharmacists to receive programs—pharmacists to receive payment to those patients with multiple payment to those patients with multiple chronic diseases and take multiple chronic diseases and take multiple covered drugs which will likely exceed covered drugs which will likely exceed annual drug costs as determined by HHS.annual drug costs as determined by HHS.

MEDICARE (cont’d)MEDICARE (cont’d)

Conditions of ParticipationConditions of Participation– Pharmacist supervisionPharmacist supervision– Drugs locked upDrugs locked up– No outdated drugsNo outdated drugs– Limited access to pharmacy when pharmacist not Limited access to pharmacy when pharmacist not

on dutyon duty– Drug problems reported to proper individuals or Drug problems reported to proper individuals or

entitiesentities– Abuses and losses of controlled substances Abuses and losses of controlled substances

reportedreported– Drug therapy information available to professional Drug therapy information available to professional

staffstaff– Formulary systemFormulary system

MEDICAIDMEDICAID

Title XIX of the Social Security ActTitle XIX of the Social Security Act– Provides for the health care costs of Provides for the health care costs of

certain categories of indigents certain categories of indigents includingincluding

The blindThe blind The agedThe aged Members of families with dependent Members of families with dependent

childrenchildren Based on individual’s income and assets.Based on individual’s income and assets.

Fraud and Abuse Fraud and Abuse StatuteStatute False statement of material fact False statement of material fact

in any applicationin any application Antikickback provisionAntikickback provision Enforced by the Office of Enforced by the Office of

Inspector General (OIG)Inspector General (OIG)

Sherman Antitrust ActSherman Antitrust Act

Protects competitionProtects competition Makes unlawful every contract, Makes unlawful every contract,

combination, or conspiracy in combination, or conspiracy in restraint of traderestraint of trade

Prohibits monopolies, attempts to Prohibits monopolies, attempts to monopolize, or conspiracies to monopolize, or conspiracies to monopolizemonopolize

Sherman Antitrust Act Sherman Antitrust Act (cont’d)(cont’d)

Types of per se violationsTypes of per se violations Price fixingPrice fixing BoycottingBoycotting Tying arrangementsTying arrangements Exclusive contractsExclusive contracts Joint venturesJoint ventures

Robinson-Patman ActRobinson-Patman Act

Unlawful to discriminate in price Unlawful to discriminate in price between purchasers of like products between purchasers of like products when the effect of the discrimination when the effect of the discrimination may substantially injure competition, may substantially injure competition, unless the discrimination is cost justifiedunless the discrimination is cost justified

Pharmaceutical manufacturers sell Pharmaceutical manufacturers sell products at different prices to different products at different prices to different buyers (often termed preferential or buyers (often termed preferential or differential pricing)differential pricing)