CMS Issues Survey Guidance on Resident Freedom of Choice Under Medicare Part D

CMS recently released a memorandum to State Survey Agency directors that attempts to clarify CMS’s position on a resident’s right to choose a Medicare Part D prescription drug plan (PDP) and pharmacy provider, nursing facilities’ responsibility to provide drugs to residents, and regulators’ responsibilities with respect to the new Medicare prescription drug benefit and nursing facilities.  The memorandum is important to long-term care facilities because it will serve as enforcement guidance during the survey process.

The key points of the memo are as follows:

• Residents have the right to make informed decisions/choices about their care and a facility can violate various survey requirements if it interferes with that right.
• While residents are guaranteed the right to choose a PDP, they do not have freedom to choose a pharmacy;
• CMS expects nursing facilities to work with their current pharmacies to assure that all residents’ PDP choices are accommodated and that the facilities provide all medications and pharmacy services to meet the needs of each resident.

CMS clearly states that a resident has a right to select a PDP of their choosing. That freedom of choice is not lessened “simply by virtue of the beneficiary's admission to a nursing facility.”   That being said, the memo also clearly states that the freedom of choice provisions do not empower nursing facility residents to choose a pharmacy.  The facility has control over its contracts with pharmacy providers. A long-term care facility can continue to contract with a single pharmacy, but it must accommodate the PDP choices of all residents.

CMS provides surveyors with a number of examples of how a nursing facility might frustrate a resident’s ability to chose a PDP and therefore violate that resident’s rights.  Examples include a facility that:

• Engages a pharmacy that does not have an arrangement with the PDP selected by the resident, subjecting the resident to non-coverage of medications and/or higher cost-sharing or premiums (if co-pays are applicable).
• Overreaches its authority and steers a resident to a PDP preferred by the facility or its pharmacy.  In its guidance, CMS explicitly states that a facility should never “require, request, coach, or steer any resident to select or change a plan for any reason” nor “knowingly and/or willingly allow the pharmacy servicing the nursing facility” to do so.  Under this scenario, a facility could be cited at 42 C.F.R. 483.12(d), which prohibits a facility from requiring residents to waive their Medicare rights.
• Fails to permit residents to receive coverage of needed drugs.  This could happen if a facility pressured the resident to join a PDP that was more favorable to the facility and its pharmacy provider, but provided less coverage of the resident’s drugs than the PDP that resident wanted to choose. Under this scenario, a facility could be cited at 42 C.F.R. §483.60, which obligates facilities to acquire all drugs to meet the needs of each resident.

The guidance also appears to create a requirement that nursing facilities provide residents with a notice about Medicare Part D.   It states that facilities should provide residents with “an explanation on admission, or when a plan is selected if the resident is already in the nursing facility, of their right to choose their prescription drug benefit plan.”

Suggestions For Facilities           

Monitoring and managing Part D enrollments, coverage, and other issues are critical to a facility avoiding the survey situations addressed in the CMS memo.  To ensure compliance, facilities should:

• Identify the resident’s PDP selection at admission, and know in which PDP each resident has enrolled.
• Communicate frequently and consistently with its pharmacy provider about resident Part D enrollments, non-coverage of medications, and facility policies on education and steering of residents into PDPs.
• Educate residents regarding the medication coverage of particular PDPs.  This is still allowed, and CMS encourages facilities to assist residents with their choices. However, facilities and their pharmacy contractor(s) must avoid directing residents to a specific plan or plans, because that is likely to be construed as “steering” by surveyors.
• Because the facility is responsible for providing all of the medications for its residents, work with its pharmacy provider to identify the plans that offer the broadest coverage for residents. The facility should then ensure the pharmacy has contracts in place with sufficient plans to ensure that the plan choices and medication coverage of all residents are accommodated.
• If medications are not covered for a resident, consider filing an exception and/or appeal with the PDP to get that medication covered for the resident.  Facilities can file those requests on behalf the residents.
• Consider adding a notice regarding Medicare Part D to its admission documents, as suggested in the CMS guidance.  Such a form can and should also facilitate the resident giving notice to the facility of their PDP selection.
• Allow residents meaningful freedom of choice in the selection of their PDP.  To ensure that happens, CMS expects facilities to either 1) work with their current pharmacies to assure participation in all of the appropriate PDPs chosen by that facility's Medicare beneficiaries, 2) add additional pharmacies to achieve that objective, or 3) contract exclusively with another pharmacy that contracts more broadly with various PDPs.

A link to the text of the letter is at the CMS website at http://www.cms.hhs.gov/SurveyCertificationGenInfo/downloads/SCLetter06-16.pdf.

If you have questions about the guidance or how it affects your facility operations or surveys, contact Chris Puri, attorney with Boult Cummings Senior Housing and Long Term Care Team.