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'" DEPARTMENT OF HEALTH & HUMA SERVICES Office of Inspector General
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~o~'"a-Jy..qf~d3.a JUN - 4 20 Washington, D.C. 20201
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TO: Kerry Weems
Acting Administrator
Centers for Medicare & Medicaid Services
J1 . gl.~
Daniel R. Levinson ~
FROM:
Inspector General
SUBJECT: Nursing Homes and
Memorandum Report: "Role of 
Long Term Care Pharmacies in Assisting Dual-Eligible
Residents With Selecting Par D Plans," OEI -02-06-00191
This memorandum report provides information about the role of nursing homes and
long term care pharmacies in assisting dual-eligible residents with selecting their
Part D plans. This information was gathered as part of another study, entitled
Medicare Part D Drugs to Dual-Eligible Nursing Home Residents"
"Availability of 
(OEI-02-06-00l90).
Nursing homes and long term care pharmacies reported providing different types of
assistance to dual-eligible residents who were selecting their Part D plans. The types of
assistance included: identifying multiple plans that met residents' needs, enrollng
residents in a single plan or recommending one plan to residents and providing general
information. Some nursing homes and long term care pharmacies provided no assistance,
at alL. It appears that some of these practices may not be in accordance with the Centers
for Medicare & Medicaid Services (CMS) guidance that does not allow nursing homes to
request, require, coach, or steer residents to select plans. We further note that the Federal
regulations that apply to hospital discharge planning may serve as a useful model for
the discharge-planning process, hospitals must provide a
Part D. For example, as part of 
home health agencies or skilled nursing facilities available to patients.
list of 
BACKGROUND
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
established the Medicare Prescription Drug Program, known as Medicare Part D. i
i The Medicare Prescription Drug, Improvement, and Modernization Act of2003, P.L. No. 108-173,
Title (,  101 et seq. (codified at 42 D.S.C.  1395w-101 et seq. and 42 D.S.C.  1396u-5).
GEl -02-06-00191
Nursing Homes and Long Term Care Pharmacies in Assisting Dual-Eligible Residents With
Role of 
Selecting Part D Plans  
 
Page 2  Kerry Weems 
 
 
CMS contracts with private health insurance companies to provide the Medicare Part D 
benefit. These private health insurance companies offer a variety of Part D plans.  
 
Prior to Medicare Part D, Medicaid paid for most prescription drugs for dual-eligible 
residents, who are eligible to receive both Medicare and Medicaid.  Under 
Part D, they now receive drug coverage through Medicare and must enroll in private  
Part D prescription drug plans. On January 1, 2006, dual-eligible nursing home residents 
were automatically enrolled in randomly assigned eligible Part D plans if they had not 
already selected one.2  Unlike other Medicare beneficiaries, dual-eligible beneficiaries 
may change their plans at any time.3  
 
Pursuant to Federal law, all Medicare beneficiaries have the right to enroll in Part D 
plans.4  Additionally, one of the Conditions of Participation in the Medicare and Medicaid 
programs is that nursing homes must not deny beneficiaries the right to enroll in Part D 
plans.5  However, a nursing home is allowed to select a Part D plan for a resident if it is 
acting as the residents legal representative in accordance with State law.6   
 
State surveyors can cite a nursing home with a deficiency if it fails to allow beneficiaries 
the right to choose their Part D plans.7  In a memorandum to State Survey Agency 
Directors, CMS provided additional guidance about this requirement:   
   
  Under no circumstance should a nursing home require, request, 
coach, or steer any resident to select or change a plan for any reason.  
Furthermore, nursing homes should not knowingly and/or willingly 
allow the pharmacy serving the nursing home to require, request, 
coach, or steer a resident to select or change a plan [42 CFR 
483.12(d)].  Nursing homes may, and are encouraged to, provide 
information and education to residents on all available Part D plans.8    
 
 
 
                                                 
2  42 U.S.C.  1395w-101(b)(1)(C); see also 42  CFR  423.34. 

3 42 CFR   423.38(c)(4). 
 
4  42 U.S.C.  1395w-101(b)(1)(B)(ii).  
   
5 42 CFR   483.12(d). 
 
6 42 CFR   423.32(b)(i); see also  Medicare Program; Medicare Prescription Drug Benefit; Final Rule,  

70 Fed. Reg. 4194, 42034204  (Jan. 28, 2005). 

7 42 CFR  483.12(d) (1) states that  The facility must--(i) Not require residents or potential residents to 

waive their rights to Medicare or Medicaid.  See also Centers for Medicare & Medicaid Services (CMS), 

Center for Medicaid and State Operations/Survey and Certification  Group, Nursing  Homes and Medicare 
  
Part D, Ref:  S&C-06-16 (May 11, 2006).
  
8 CMS, Center for Medicaid and State Operations/Survey and Certification Group, Nursing Homes and 
 
Medicare Part D, Ref:  S&C-06-16 (May 11, 2006). 

OEI-02-06-00191      
Role of Nursing  Homes and Long  Term Care Pharmacies in Assisting Dual-Eligible Residents With  
Selecting Part D Plans                                                                                              
 
Page 3  Kerry Weems 
 
 
In addition, CMS marketing guidelines require Part D plans to ensure that providers and 
subcontractors, including pharmacies and long term care facilities, comply with certain 
requirements.9  Specifically, the guidelines encourage providers to assist beneficiaries in 
objective assessments of their needs and plan options that may meet those needs.  
However, the guidelines state that Providers also cannot direct, urge or attempt to 
persuade beneficiaries to enroll in a specific plan.  
 
METHODOLOGY 
 
The information provided in this memorandum report is based on an analysis of 
structured interviews with a random sample of nursing home administrators and directors 
of operations for long term care pharmacies (referred to hereafter as pharmacy directors).  
These respondents have firsthand knowledge of Part D requirements for dual-eligible 
nursing home residents.  
 
We selected a simple random sample of 150 nursing homes from CMSs Online Survey 
and Certification Reporting System.  We excluded six of these nursing homes because 
they informed us that they did not have any dual-eligible residents in 2006.  Our sample 
included the remaining 144 nursing homes.  We asked each of these nursing homes to 
identify all of the long term care pharmacies that provided Part D drugs to their residents.  
They identified 139 long term care pharmacies.  We excluded 55 of these 139 pharmacies 
from our review because they were under investigation by the Office of Inspector 
General. 
 
We interviewed 128 administrators and 79 pharmacy directors between September 2006 
and March 2007. We asked all administrators and pharmacy directors about their roles in 
assisting dual-eligible residents with selecting their Part D plans.  Estimates derived from  
the administrators responses are projected to the population of administrators of nursing 
homes with dual-eligible residents.  However, estimates derived from pharmacy 
directors responses are limited to the sample respondents because of the small usable 
sample size.  We also cannot make judgments as to whether the nursing homes activities 
are allowable based on State law.  As previously mentioned, a nursing home may select a 
Part D plan for a resident if it is acting as the residents legal representative in accordance 
with State law. The appendix  provides  the confidence intervals for selected estimates.  
 
Our review was conducted in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency and the Executive Council 
on Integrity and Efficiency. 
 
                                                 
9 CMS, Medicare Marketing Guidelines for:  Medicare Advantage Plans, Medicare Advantage 
Prescription Drug  Plans, Prescription Drug  Plans, and 1876 Cost Plans, August 2005, pp. 122124. 
OEI-02-06-00191      
Role of Nursing  Homes and Long  Term Care Pharmacies in Assisting Dual-Eligible Residents With  
Selecting Part D Plans                                                                                              
 
Page 4  Kerry Weems 
 
 
RESULTS 
 
Many Nursing Homes and Long Term Care Pharmacies Identified Multiple Plans 
for Dual-Eligible Residents  
During our interviews, 38 percent of nursing home administrators reported that their 
nursing homes or long term care pharmacies identified multiple plans that met the needs 
of dual-eligible residents. (See Table 1 on page 5.)  Administrators most commonly 
noted that nursing home or long term care pharmacy staff entered the residents 
prescribed drugs into the Medicare Plan Finder,10 assessed the results, and provided a list 
of several plans or the entire list of plans to residents.  Another administrator explained 
that he worked with the pharmacy to identify three or four plans that best fit each 
residents needs. 
 
Similarly, 26 of the 79 pharmacy directors whom we interviewed reported that their 
pharmacies identified multiple plans that met dual-eligible residents needs or provided a 
general list of plans that the pharmacies recommended to all residents.  Most commonly,  
these pharmacy directors reported also using the Medicare Plan Finder to identify 
appropriate plans for residents. In addition, one pharmacy director explained that his 
pharmacy provided a list of recommended plans based on the extent to which they 
covered the most commonly prescribed drugs for the elderly.  Further, prior to the start of 
our study, we obtained a list of plans that one long term care pharmacy had distributed to 
nursing homes. It provided estimates of the potential expense to the nursing home for 
dual-eligible residents enrolled in these plans.11    
 
Several Nursing Homes and Long Term Care Pharmacies Recommended One Plan 
to Dual-Eligible Nursing Home Residents 
About 9 percent of nursing home administrators reported that their nursing homes or long 
term care pharmacies enrolled most dual-eligible residents in a single plan or 
recommended one plan to each resident.  One administrator reported that her nursing 
home obtained residents permission to change their plans and  then enrolled most of them  
in a single plan. Another administrator noted that her nursing home recommended one 
plan to all its residents and enrolled most long term care residents in that plan.  Another 
 
                                                 
10 The Medicare  Prescription Drug Plan Finder  is an Internet site where Medicare beneficiaries can learn 
about Medicare prescription drug coverage, find and compare prescription drug  plans, and enroll in a 
prescription drug plan.  The Plan Finder can be found at   
http://www.medicare.gov/MPDPF/Public/Include/DataSection/Questions/MPDPFIntro.asp. 
11 The analysis compared  potential expenses for noncovered drugs, prior authorizations, and step therapy  
for dual-eligible residents for 20 Part D plans.  Prior authorization requires a beneficiary  to seek  prior 
approval from the plan to receive a drug  on the formulary.   Step therapy requires the beneficiary to try a  
less expensive drug  before the plan will cover a specific drug.  
 
OEI-02-06-00191      
Role of Nursing  Homes and Long  Term Care Pharmacies in Assisting Dual-Eligible Residents With  
Selecting Part D Plans                                                                                              
 
Page 5  Kerry Weems 
 
 
administrator reported that she recommended the same plan to all residents  based on the 
pharmacys advice. 
 
The other eight administrators reported that their nursing homes or long term care 
pharmacies recommended one plan to each resident or to some residents based on their 
individual drug needs. Several of these administrators explained that staff at the nursing 
homes or at the long term care pharmacies reviewed each residents drugs and then 
recommended one plan, as opposed to providing the resident with a list of several plans 
that met his or her needs.    
 
In addition, 6 of the 79  pharmacy directors whom we interviewed also reported that their 
pharmacies generally recommended one plan to each resident.  Five pharmacy directors 
reported that their pharmacies recommended one plan to each resident or to some  
residents based on their individual drug needs.  Another pharmacy director reported that 
his pharmacy recommended the same plan to all residents because its formulary was 
similar to the formulary that physicians used prior to Part D.   
Table 1: Nursing Home Administrators and Pharmacy Directors Responses About 
Assisting Dual-Eligible Residents With Selecting Their Part D Plans  
     
           
Type of Assistance     Nursing Home  Administrators   Pharmacy Directors 
   
Number  Percentage  Number 
Identified multiple plans that met the needs of  
dual-eligible residents or provided a general 
list of plans that the pharmacy recommended 
to all residents*  48  38%  26 
Enrolled most dual-eligible residents in a 
single plan or recommended one plan to each 
resident 
11  9%  6 
Provided general information only 
47  37%  17 
Provided no assistance 
22  17%  30 
  Total  128  100%**  79 
  *Note: Only pharmacy directors responded that  they provided a general list of recommended plans.  

   ** The total of  these percentages does not equal 100 because of rounding. 

  Source:  Office of  Inspector General analysis of interview data, 2007.  
 
 
 
 
OEI-02-06-00191      
Role of Nursing  Homes and Long  Term Care Pharmacies in Assisting Dual-Eligible Residents With  
Selecting Part D Plans                                                                                              
 
Page 6  Kerry Weems 
 
 
The Remaining Nursing Homes and Long Term Care Pharmacies Provided Only 
General Information or No Assistance At All to Dual-Eligible Residents 
Another 37 percent of nursing home administrators and 17 of the 79 pharmacy directors 
whom we interviewed reported that they provided only general information about the 
benefit to dual-eligible residents.  According to these respondents, they most commonly  
provided educational materials or answered questions about the Part D benefit and the 
enrollment process.  
 
In addition, 17 percent of administrators and 30 of the 79 pharmacy directors whom we 
interviewed said that they provided no assistance directly to dual-eligible residents with 
selecting their Part D plans. Several administrators and pharmacy directors noted that 
they had no role in the selection process because the residents were automatically 
enrolled in plans by CMS. 
 
CONCLUSION 
 
Based on our interviews, we found that nursing homes and long term care pharmacies 
provided different types of assistance to dual-eligible residents who were selecting their 
Part D plans. It appears that some of these practices, such as enrolling beneficiaries into 
a single plan or recommending only one plan, may not be in accordance with CMS 
guidance. This guidance does not allow nursing homes to request, require, coach, or steer 
residents to select plans.   We further note that the current Federal regulations that apply 
to hospital discharge planning may serve as a useful model for Part D.  Specifically, as  
part of the discharge-planning process, the hospital must:  provide a list of home health 
agencies or skilled nursing facilities available to the patient,12 document in the patients 
medical record that the list was presented, and inform the patient or the patients family 
of their freedom to choose among participating Medicare providers of posthospital care 
services.13  
 
This report is being issued directly in final form because it contains no recommendations. 
If you have comments or questions about this report, please provide them within 60 days.  
Please refer to report number OEI-02-06-00191 in all correspondence.  
 
 
   
                                                 
12 42 CFR   482.43(c)(6)(iii) states that [T]his list must only be  presented to patients for whom home 

health  care or post-hospital extended care services are indicated as appropriate as determined by the 

discharge planning evaluation.  

13 42 CFR   482.43(c). 

OEI-02-06-00191      
Role of Nursing  Homes and Long  Term Care Pharmacies in Assisting Dual-Eligible Residents With  
Selecting Part D Plans                                                                                             Page 7  Kerry Weems 
Appendix 

Confidence Intervals for Selected Estimates for Nursing Home Administrators 

(Sample Size = 128) 

 
 
              95-Percent 
Estimate Description  Point Estimate  Confidence Interval 
Percentage of nursing home administrators who reported that  
their nursing homes or the long term care pharmacies identified                         37.5%                     29.1%45.9% 
multiple plans that met the needs of dual-eligible residents 
Percentage of nursing home administrators who reported that  
their nursing homes or the long term care pharmacies enrolled  
8.6%                         3.7%13.5% 
dual-eligible residents into a single plan or recommended one plan 
to each resident 
Percentage of nursing home administrators who reported that  
they  provided only general information about the benefit to                           36.7%                         28.4%45.0% 
dual-eligible residents  
Percentage of nursing home administrators who reported that  
they  provided no assistance at all to dual-eligible residents with                          17.2%                         10.7%23.7% 
selecting a Part D plan 
Source:  Office of  Inspector General analysis of interview data, 2007.  
 
 
OEI-02-06-00191      
Role of Nursing  Homes and Long  Term Care Pharmacies in Assisting Dual-Eligible Residents With  
Selecting Part D Plans