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Nixon & Peabody, LLP

Part D: Pharmacy Providers, Implementation and Reimbursement
On January 1, 2006, the Medicare voluntary new prescription drug benefit (Medicare Part D) became effective. On May 15, 2006, the initial enrollment deadline for enrollment for seniors ended. Pharmacies are still reeling from the economic turmoil and beneficiary enrollment difficulties related to the implementation of Medicare Part D.

The next open enrollment period begins November 15, 2006. Before this period, pharmacies may want to give due consideration to slower and lower reimbursements associated with Medicare Part D, streamlining and managing increased administrative demands, and optimizing the goal of consumer access to safe, effective, and lower cost drugs and pharmaceutical care.

Overview
The Medicare Part D prescription drug plan works like other forms of insurance. In 2006, beneficiaries pay a monthly premium ranging from less than $20 to $35. After reaching a $250 deductible, Medicare will cover 75% of drug costs up to $2,250. After this point, the beneficiary pays 100% of drug costs up to a total of $5,100, or $3,600 in out-of-pocket expenses. Medicare then covers 95% of any further drug costs.

However, unlike other insurance plans, pharmacy determinations regarding the billing category for medications covered by Medicare are unique and particularly complicated. In fact, pharmacist billing determinations as to whether a drug is covered under Medicare Part D, Medicare Part B, or another insurance provider have been the most troublesome nuance to the successful implementation and reimbursement of the new outpatient drug benefit.

An accurate Medicare Part B versus Part D coverage determination is an integral issue in any pharmacy dispensing drugs covered under different parts of the Medicare benefit. Pharmacies affected are retail, including specialty or home infusion, hospital pharmacies billing for self-administered and take-home drugs, and long-term care pharmacies that routinely bill for drugs covered under various parts of Medicare.

Reimbursement: Part B or Part D Coverage?
Medicare Part D reimbursement principles are relatively complex because they encompass more than just payment for prescription drugs. A basic understanding of how Medicare reimburses providers and suppliers under Part D involves an understanding of the components that comprise the Medicare reimbursement system for medical care generally, and the recently issued guidance by the Centers for Medicare and Medicaid Services (CMS), the agency that administers the Part D benefit.

The guidance and other related issuances provide instructions as to which coverage applies and how a pharmacy should bill for covered drugs. Despite the explanatory charts and FAQs, there are many gray areas open to interpretation that lack meaningful analysis or bright-line clarity. Unclear from the guidance are key concepts central to billing determinations for covered drugs under Medicare Part B and Part D.

Key components that impact Medicare Part D coverage determinations for reimbursement are, among other things: the medical use of the drug, pharmacy certification, medication dosage form, drug administration setting, relevant plan exclusions, and assignment/reassignment restrictions. For more extensive discussion and references regarding Medicare coverage issues related to Medicare Part B versus Part D, please refer to the CMS Summary Chart at www.cms.hhs.gov/Pharmacy/Downloads/partsbdcoverageissues.pdf.

To further complicate coverage and reimbursement, no two Medicare Part D plans are alike. Each plan differs in coverage and premium, while offering at least the two drugs in each category and class, as set forth in the United States Pharmacopeia (USP). Under the Medicare Modernization Act (MMA), Medicare drug plans are allowed to decide the circumstances of prior authorization for prescribed medication, although there is no uniform standard or universal trigger for a prior authorization request.

In fact, there are two noteworthy legislative initiatives intended to address Medicare Part D coverage and reimbursement complexities. First, the Independent Pharmacy Protection Act, H.R. 5166, seeks to improve payments made by prescription drug plans and Medicare Advantage plans (MA-PD) plans to pharmacies for covered Part D dispensed drugs. Specifically, the bill, as introduced, would provide for the availability of direct deposit for payments, increased dispensing fees for generic drugs, and payments within ten days for participating pharmacies that consist of no more than three pharmacies at different locations. Second, the National Association of Chain Drug Stores established a B/D Coalition1 to create solutions to administrative difficulties pharmacies and PBMS face when administering the Medicare Part D benefit when coverage determinations and appropriate reimbursement routes are unclear.

Conclusion
In light of the complexities surrounding Medicare Part B versus Part D, the Office of Inspector General (OIG) Work Plan for 2006 states the OIG is focusing on the coordination of Part B and Part D, so as to avoid duplicate payments, duplicate claims, and “double dipping,” which have become a major concern. Pharmacies billing covered medications for Medicare beneficiaries should be prepared to address in an equally extensive manner both CMS and OIG concerns and potential audit findings.

As such, pharmacies must review their plan documents, plan designs and options, operating procedures, and training programs, and begin to prepare for effective communication with both CMS and OIG representatives, as well as beneficiaries. Coverage decision determinations and a Medicare beneficiaries option to change Medicare Part D plans, in the new enrollment period, will impact reimbursement, financial margins, and pharmaceutical care.

Moreover, the personnel costs involved with pharmacies adjusting to changes in re-enrollment selections may mean learning new formularies, changing medication regimens, working with drug plans on prior authorization appeals, sorting through a whole host of new patient questions related to new provider plans, and coordinating benefits for dually eligible Medicare and Medicaid patients, who may be able to obtain drugs excluded by Medicare Part D coverage through individual state Medicaid programs. Thus, coverage determinations, as well as other billing considerations, may create significant risks for a pharmacy, and each should be given careful consideration.

Moreover, the personnel costs involved with pharmacies adjusting to changes in re-enrollment selections may mean learning new formularies, changing medication regimens, working with drug plans on prior authorization appeals, sorting through a whole host of new patient questions related to new provider plans, and coordinating benefits for dually eligible Medicare and Medicaid patients, who may be able to obtain drugs excluded by Medicare Part D coverage through individual state Medicaid programs. Thus, coverage determinations, as well as other billing considerations, may create significant risks for a pharmacy, and each should be given careful consideration.

08-02-2006

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Hunton & Williams, LLP

USCIS Announces FY2007 Advanced Degree H-1B Cap Has Been Reached
On July 28, 2006, the U.S. Citizenship and Immigration Services announced that as of July 26, 2006, it had received sufficient cases to reach the Fiscal Year 2007 quota for initial H-1B petitions for those holding US-awarded advanced degrees.

08-02-2006

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Dinsmore & Shohl LLP

Employer's Business Judgment Wins: The NLRB Upholds Hospital's Restriction On Nurses Wearing Union-Related Buttons
In a 2-1 decision, the National Labor Relations Board (NLRB) has held that a hospital's restriction on its registered nurses wearing ""RNs Demand Safe Staffing"" buttons is lawful. In Sacred Heart Medical Center, 347 N.L.R.B. 48 (2006), the Board held that the employer hospital satisfied the ""special circumstances"" exception to the general rule that an employer has only a right to restrict the wearing of union-related buttons in immediate patient care areas. The ""special circumstances"" exception was satisfied because the button's message related to issues of patient care and hospital safety and not to collective bargaining issues. Thus, the button restriction could be extended to all areas where a nurse may interact with a patient or a patient's family member. This decision represents a noteworthy expansion of the historically limited ""special circumstances"" exception.

During contract negotiations between the union and the hospital, the registered nurses began wearing the “Safe Staffing” buttons. In response, the hospital issued a memorandum prohibiting the nurses from wearing the buttons in ""any area on [its] campus where they may encounter patients or family members."" Despite the fact that the hospital had previously allowed buttons, the hospital drew the line at this button because it gave ""the impression that we do not have safe staffing."" While the hospital did not discipline any nurses for wearing the buttons, it did request that several of the nurses remove them from their uniforms.

In response, the union filed an unfair labor practice charge alleging that the hospital could not restrict the wearing of buttons in this manner. The Administrative Law Judge agreed, holding that the button restriction was overbroad because it extended beyond immediate patient care to areas where a nurse may encounter a patient or a patient's family member.

On review, the Board, in a 2-1 decision (Chairman Battista and Member Schaumber, with Chairman Liebman dissenting), agreed with the Administrative Law Judge that the button restriction was presumptively invalid, but instead found that the hospital had satisfied the ""special circumstances"" exception which allowed the banning of the buttons in all areas where a nurse may interact with a patient and their families.

The Board reasoned that the button's message that staffing be made safe sent a message to patients that their care was in jeopardy. In fact, according to the Board, this would cause worry among patients and their families disturbing the environment and purpose of the hospital. The Board was careful to distinguish this case from prior decisions in finding that the “Safe Staffing” button’s message was clear rather than cryptic and required no inference to conclude that a reasonable patient would be disturbed by the message. This is important because the Board explicitly rejected any argument that evidence of actual disturbance is required to show “special circumstances.” In contrast, Member Liebman, in dissent, argued that the hospital's evidence of disturbance was ""mere speculation.""

What this means for Employers

This decision reinforces the ability of employers in the healthcare industry to prohibit employees from wearing union-related buttons in immediate patient care areas. But, more importantly, these employers now possess the ability to control the wearing of certain union-related buttons as long as the employer can show “special circumstances.” According to this decision, this may be determined by an employer’s business judgment. But, employers should avoid imposing an overly broad restriction and should provide employees with a well-reasoned and detailed basis for any restriction.

08-02-2006

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Fennemore Craig, P.C.

Fennemore Craig Combines with Local Lawyers in New Las Vegas Office
Tim Berg, managing partner of Fennemore Craig, has announced expansion of the firm into Las Vegas, new leadership and a new shareholder in the firm’s Business and Finance group.

Fennemore Craig has elected John Mowbray and Chris Byrd to the firm as shareholders in the firm’s new Las Vegas Office, which will focus on commercial litigation, real estate and construction law, as well as employment and immigration law. Mowbray, former president of the State Bar of Nevada and the Clark County Bar Association, will serve as the managing partner of the new office. Nancy-Jo Merritt, chair of the firm’s Immigration practice, will split her time between Las Vegas and Phoenix. Fennemore Craig is in the process of hiring three additional attorneys to join the Las Vegas office.

Berg also announced the appointment of Bill Eggleston as chair of the firm’s Business and Finance group and the election of Robert Pasionek as a new shareholder in the Business and Finance group. Pasionek’s practice focuses on public/private offerings, venture capital transactions, debt/equity investments, and mergers and acquisitions. He is an experienced corporate attorney as well as an investment banker, most recently serving as first vice president with J.P. Morgan Chase in Michigan, soliciting and structuring mergers and acquisitions, mezzanine strips and asset-based loans. In addition to a law degree, he holds a master’s degree in accounting and finance, as well as a bachelor’s degree in economics.

Eggleston has extensive experience in mergers and acquisitions, representing both buyers and sellers in asset and stock transactions, mergers, and other business acquisitions and reorganizations. He also represents issuers in public and private securities offerings, and provides other securities services for Arizona public companies. Eggleston is past chair of the Securities Regulation Section for the State Bar of Arizona.

Eggleston replaces Karen McConnell as Business and Finance chair. She, together with Steve Savage, who more than a year ago stepped down from his position as the firm’s managing partner, have left Fennemore Craig for a new office of law firm Ballard Spahr.

08-02-2006

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Bayard, P.A.

The Bayard Firm Active in Sale of Substantially all of the Assets of LoveSac and Confirmation Plan of Liquidation
Charlene D. Davis and Christopher A. Ward of the Bayard Firm, serving as Delaware counsel to The LoveSac Corporation, et al. ("LoveSac"), assisted LoveSac in selling substantially all of its assets to a consortium of prepetition investors and confirming a Plan of Liquidation on July 27, 2006. Despite several hurdles faced by LoveSac, the sale and confirmation were achieved in a mere six months after the January 30 filing date.

08-02-2006

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White & Case, LLP

Dealogic Project Finance Review Recognizes White & Case
Dealogic Project Finance Review for the first half of 2006 ranked White & Case second among Legal Advisers of Global PFI/PPP Project Finance Deals and third among Legal Advisers of Global Project Finance Deals.

08-02-2006

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White & Case, LLP

Partner Finalist in WBJ's Top Washington Lawyer Awards Program
Washington Business Journal recently named Sam Alberts (Washington, DC) one of the three Bankruptcy finalists in the third annual Top Washington Lawyer awards program. Finalists were selected from a pool of more than 400 nominations.

08-02-2006

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