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When cutting costs doesn’t pay
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When cutting costs doesn’t pay

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On the Docket

David B. Brushwood, BSPharm, JD

Rising health care costs are a concern for every health care institution. Residential assisted living facilities (RALFs) are among the health care institutions constantly looking for ways to promote efficiency and reduce costs. A recent legal case from the Supreme Court of Idaho ruled that a policy denying residents the right to choose their pharmacy or pharmacist is not justifiable as a way for a RALF to reduce its costs.

Image of a gavel

Background

The plaintiff in the case was a RALF that had adopted an integrated management software system to “manage all aspects of its facility’s operations, including the tracking and delivery of residents’ prescription medications.”

The license fee for the system was $11.00 per resident per month. After requesting proposals from various pharmacies, the RALF selected one pharmacy to be its “preferred pharmacy” because the pharmacy offered unit dose packaging and delivery services at no extra cost. The selected pharmacy also offered to help offset the monthly software license fee if the majority of the RALF residents opted to use that pharmacy.

After selecting this preferred pharmacy, the RALF increased the monthly rent by $10.00 for those residents who opted not to use the preferred pharmacy.

A state administrative agency determined that this added fee was in violation of a state Pharmacy Choice Rule that says, “Each resident shall have the right to control his receipt of health-related services, including the right to select the pharmacy or pharmacist of their choice so long as it meets the statutes and rules governing residential care or assisted living and the policies and procedures of the residential care or assisted living facility.”

The RALF argued that “its proposed fee would not inhibit residents from selecting the pharmacy of their choice.” The RALF appealed the administrative agency’s determination.

Rationale

On appeal, the Supreme Court of Idaho concluded that, “The Pharmacy Choice Rule unambiguously protects the right to both control one’s health care services, and to select the pharmacist or pharmacy of one’s choice, so long as the pharmacy meets statutory norms. [The RALF’s] attempt to impose a $10.00 surcharge on residents who do not use [the preferred pharmacy] violates both of these rights. Requiring residents to pay this fee implicitly impels residents to choose [the preferred pharmacy]; otherwise, those residents subsidize the computer licensing fees for the facility in an amount greater than residents who choose [the preferred pharmacy]. This policy would place undue financial pressure on those residents to switch to [the preferred pharmacy]. While the amount is minimal month-by-month, for individuals living in these facilities, typically on fixed incomes, such pressure could make a difference. This tension limits residents’ capacity to control and select pharmaceutical providers free from outside influence.”

The court upheld the determination by the state administrative agency. The RALF’s policy was held to be in violation of the state Pharmacy Choice Rule applicable to RALFs. The court concluded that the state administrative agency was “obliged to restrict facilities from decisions that impede resident rights for the sake of business.”

Takeaways

Patients choose a pharmacy for a variety of reasons, including personal interactions, convenience, quality, service, and cost. Many residents of an assisted living facility have an established relationship with a pharmacy of their choice, and many of these residents choose to continue that relationship when they transition from independent to assisted living. The relationship between a patient and a pharmacist or pharmacy is of value to the patient. Many states have enacted laws recognizing the value of that relationship through the establishment of pharmacy choice laws.

Although health care institutions, such as RALFs must adopt policies of economic efficiency so that they can stay open and continue to provide their valuable services, the value of a patient–pharmacist relationship must be respected under the law. The value of institutional cost-saving measures don’t necessarily outweigh the value of patient choice. Patients have the right to make their own choices. ■

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