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DEPARTMENT OF HEALTH & HUMA SERVICES

JUN - 4 20

Office of Inspector General

Washington, D.C. 20201

TO: Kerry Weems

Acting Administrator

Centers for Medicare & Medicaid Services

FROM: Daniel R. Levinson ~ J1 . g¡l.~

Inspector General

SUBJECT: Memorandum Report: "Role of Nursing Homes and

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

"Availability of Medicare Part D Drugs to Dual-Eligible Nursing Home Residents"

(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

Part D. For example, as part of the discharge-planning process, hospitals must provide a

list of home health agencies or skilled nursing facilities available to patients.

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

Role of Nursing Homes and Long Term Care Pharmacies in Assisting Dual-Eligible Residents With

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 resident’s 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, 4203–4204 (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 CMS’s 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 resident’s 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 President’s 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. 122–124. 

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 

resident’s 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 

pharmacy’s 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 resident’s 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 patient’s 

medical record that the list was presented, and inform the patient or the patient’s 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) 

Estimate Description Point Estimate 

95-Percent 

Confidence Interval 

Percentage of nursing home administrators who reported that 

their nursing homes or the long term care pharmacies identified 

multiple plans that met the needs of dual-eligible residents 

37.5% 29.1%–45.9% 

Percentage of nursing home administrators who reported that 

their nursing homes or the long term care pharmacies enrolled 

dual-eligible residents into a single plan or recommended one plan 

to each resident 

8.6% 3.7%–13.5% 

Percentage of nursing home administrators who reported that 

they provided only general information about the benefit to 

dual-eligible residents 

36.7% 28.4%–45.0% 

Percentage of nursing home administrators who reported that 

they provided no assistance at all to dual-eligible residents with 

selecting a Part D plan 

17.2% 10.7%–23.7% 

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