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    By Discount prescription medications

    Medicare reimbursement can help justify residency programs

    There is a source of funding for hospital pharmacies that many are not aware of or are not fully tapping, and ASHP is launching a new drive to ensure that many more of its members take advantage of it. The funding is Medicare reimbursement for pharmacy residents, a subject that was discussed at a preceptors' town hall at ASHP's midyear meeting in Atlanta last month.

    It's "free money" that's pretty easy to access, so why not use it, said Tom Woller, regional director of pharmacy at Aurora HealthCare, Milwaukee, in urging other pharmacists to help themselves to this resource. In an interview with Drug Topics, Woller estimated that his department spends about six hours a year mathematically calculating how much to charge Medicare, and, in return, it gets back "somewhere in the range of a couple of hundred thousand dollars" for its four residents.

    One barrier to the use of these
    federal payments is the complex Medicare rules on this issue. Simply put, the rules involve requiring hospitals to estimate their direct and indirect expenses and multiplying them by the percentage of patients they serve who are Medicare recipients. Direct expenses cover not only costs associated with resident salaries, books, and travel to educational meetings, but also the time spent in training residents by preceptors and the pharmacy director. Indirect expenses are estimated at about 30% of a hospital's direct costs.

    While this formula may seem complicated, Woller said most hospitals have accountants or other Medicare experts who can help their pharmacy department figure out what their reimbursement from the federal government should be. He advised hospitals to have a methodology for determining their costs, so that if they are challenged by Medicare with an audit, they can pull it out and say, "Here's the basis by which we came up with our calculation." He added, however, that, to his knowledge, no hospital has ever been audited for its pharmacy residency costs, since they account for such a small share of Medicare's overall payment for graduate medical education.

    Using Medicare funding, pharmacy managers can justify a resident position or expand their residency programs. And there are good reasons for having residents on hand, Woller said. They can do projects that might otherwise never get done, challenge staff pharmacists in a positive way, provide coverage on weekends and holidays, and help out in downsized hospitals.

    ASHP, which accredits pharmacy residency programs, is pushing the use of Medicare funding, since, as more pharmacy schools convert to an all-Pharm.D. system, more graduates are seeking residencies. The pool of resident candidates is outstripping the training sites available. Statistics over the past few years show that the number of resident candidates who do not match with the program they're seeking has been growing every year, Woller said.

    There are some caveats to note about this form of reimbursement, however. It does not apply to technician training, even if the technician receives certification through an accredited program. The Medicare rules speak only to pharmacy residency programs accredited by ASHP, cautioned Douglas E. Miller, system director of pharmacy and drug information at Grady Health System, Atlanta. Second, Medicare has long intimated that it might reduce its payment for these programs. So pharmacy managers who rely heavily on Medicare-financed residents for staffing could suffer a reduction of services if the cutbacks come through.

    Meanwhile, though, the dollars are there for the asking. All pharmacy managers have to do is make the effort of filling out the paperwork to get the money, Woller said.

    For a copy of the Medicare rules, contact Donald Letendre, director of the accreditation services division at ASHP. He can be reached at (301) 657-3000, ext. 1263. Sometime after January, an updated reimbursement guide will also be available from ASHP. Now being prepared by Miller and Woller, the guide will include some updated examples of how to justify the cost of a residency program.

    Gregory Gousse, pharmacy director at Hartford (Conn.) Hospital, was one who attended the preceptors' town hall. He said he found the session very helpful. It made him realize that, while his department received Medicare reimbursement of $14,000 for the salary of one resident last year, he could have obtained more by including such costs as attendance at the midyear meeting for resident recruitment. He plans to discuss this with his hospital's reimbursement specialist and perhaps scale up to two residents in the future.