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Pharmacy Assessment - Answers to Frequently Asked Questions

01/09/2003

The Division of Health Care Finance and Policy (DHCFP) is providing this information to answer frequently asked questions about the Pharmacy Assessment. It is based on the contents of the statute and the proposed regulation.

1. What is the Pharmacy Assessment?
- The Pharmacy Assessment was enacted by the Massachusetts Legislature in the FY 2003 State Budget (Section 101 of Chapter 184 of the Acts of 2002). Pharmacies are required to pay an assessment on all non-Medicaid, non-Medicare prescriptions. The statute does not say how the pharmacies are to find the money to pay their assessment. The Division is aware that some pharmacies are requiring their customers who are purchasing prescriptions to pay.

2. How much is the Pharmacy Assessment?
- The assessment is supposed to be sufficient to generate $36,000,000 annually. For the six-month period from January 1 to June 30, 2003, the assessment per prescription is $1.30.

3. What will happen to the money?
- All assessment revenue collected will be credited to the Health Care Security Trust Fund, (established by Massachusetts General Law Chapter 29D), and used to fund MassHealth (i.e., "Medicaid") spending for prescription drugs. The Pharmacy Assessment is being implemented as a broad-based health care related fee consistent with federal law, 42 U.S.C. Sec. 1396(w)(3)(B) so that expenditures made with the amounts collected will be eligible for federal matching funds.

4. What pharmacies are required to pay the Assessment?
- All pharmacies registered by the Massachusetts Board of Registration in Pharmacy and licensed by the Commonwealth including retail pharmacies, hospital outpatient pharmacies, freestanding clinic pharmacies. Hospital inpatient pharmacies or nuclear pharmacies do not have to pay the Assessment.

- Prescriptions dispensed in pharmacies that are not located in Massachusetts do not have to pay the Assessment.

5. Which prescriptions are subject to the Pharmacy Assessment?
- Pharmacies must pay the assessment based on all non-Medicaid, non-Medicare prescriptions, including those reimbursed by the Massachusetts Uncompensated Care Pool, the State's Prescription Advantage Program, and the federal Veterans Administration.

- Unless Medicaid (MassHealth) or Medicare is directly paying for the prescription, the prescription is subject to the Assessment. Prescriptions for individuals who are covered by Medicare, but not for the prescription in question, will be subject to the Assessment. This includes prescriptions covered by Medex or other Medigap policies.

6. Which prescriptions are not subject to the Pharmacy Assessment?
- Pharmacies are not required to pay the assessment on prescriptions reimbursed by the following plans:

  • Medicaid (MassHealth), including Medicaid HMO's such as HealthNet and the PACE program
  • Medicare, including Medicare HMO's such as Secure Horizons, First Seniority, Blue Care 65 and Fallon's Medicare HMO plan.

    - Prescriptions paid for by Medex or other Medigap policies are subject to the assessment because Medicare is not directly paying for the prescription.

    7. How does the Pharmacy Assessment apply to prescriptions for individuals enrolled in a Medicare HMO?
    - A Medicare prescription is defined as a prescription paid for by or on behalf of Medicare under either an indemnity fee-for-service arrangement or a Medicare health maintenance organization. If a prescription is covered under the prescription drug benefit of the Medicare HMO, either under a "quarterly cap" or any other arrangement, then the prescription is considered a Medicare prescription that is not subject to the Pharmacy Assessment.

    - However, if an individual has exceeded his/her "quarterly cap" or other type of limited pharmacy benefit, then subsequent prescriptions that are paid by the individual are considered non-Medicare prescriptions since the Medicare program is not directly or indirectly paying for it. Therefore, such prescriptions would be subject to the Pharmacy Assessment.

    8. Are mail order prescriptions included in the Pharmacy Assessment?
    - The Pharmacy Assessment applies to any pharmacy registered by the Massachusetts Board of Registration in Pharmacy and licensed by the Commonwealth. Thus, if a mail order pharmacy is not located in Massachusetts and is not licensed by the Commonwealth, then its prescriptions are not subject to the Pharmacy Assessment. If a mail order pharmacy is located in Massachusetts and is licensed by the Commonwealth, then its prescriptions are covered by the Pharmacy Assessment.

    9. When does it begin?
    - Pharmacies will be required to pay their first quarterly assessment on May 1, 2003 for all non-Medicaid, non-Medicare prescriptions dispensed from January 1, 2003 to March 31, 2003.

    10. Does the Pharmacy Assessment apply to each separate refill?
    - Yes. The Pharmacy Assessment is applied to each separately dispensed prescription.

    11. How are prescriptions dispensed for 60 or 90-day supplies treated?
    - The Pharmacy Assessment is applied to each non-Medicaid, non-Medicare prescription dispensed. A prescription dispensed for 30-days, 60-days, 90-days, or any other period of time will be treated as one single prescription, if it is being dispensed all at one time.

    12. Are drugs that do not require a prescription but are nonetheless dispensed by a pharmacist subject to the Pharmacy Assessment?
    - Yes. All non-Medicaid, non-Medicare prescriptions dispensed by a pharmacist are subject to the Pharmacy Assessment. This includes drugs that do not require a prescription, also known as "non-legend" or over-the-counter (OTC) drugs.

    13. Are non-drug items, such as syringes and durable medical equipment, that are dispensed by a pharmacist subject to the Pharmacy Assessment?
    - Yes. All non-Medicaid, non-Medicare prescriptions dispensed by a pharmacist are subject to the Pharmacy Assessment, regardless of whether the prescription is for a pharmaceutical product or other item.

    14. What is the definition of "dispense?"
    - A drug is considered to be "dispensed" when the customer, or their representative, picks-up the prescription. A drug that is filled by a pharmacist but never picked-up by a customer is not considered to be dispensed. A prescription that is called-in is not considered to be "dispensed" until it is physically picked-up by the customer or their representative.

    15. How is a prescription that is only partially filled treated?
    - If a prescription is partially filled because the pharmacy does not have enough inventory to fill the entire prescription, the assessment is due only when the initial supply is dispensed.

    16. Can I "write off" the cost of the Pharmacy Assessment on my income taxes?
    - The Division cannot offer opinions about individual personal tax liabilities. Such questions should be addressed to a professional tax accountant.

    17. What happens if the pharmacy doesn't pay the assessment?
    - Pharmacies will be assessed interest and penalties and are subject to license revocation by the Department of Public Health.

    19. Who can I contact if I have additional questions?
    Questions can be e-mailed to: pharmacy.assessment@hcf.state.ma.us For additional information or updates to these questions, visit: http://www.state.ma.us/dhcfp/pages/dhcfp224.htmYou can telephone the Division at (617) 988-3360, but if you are on Medicare and have questions, you should, as usual, call your SHINE counselor. If you do not know who that is, call 1-800-882-2003, then, when the phone answers, press or say "2", to be connected to your regional SHINE counselor.