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Advocacy >> Memorandum
To: AHCA/NCAL Members
From: Sandra Fitzler
Subject: Reducing Wasteful Dispensing of Outpatient Prescription Drugs in Long Term Care Facilities Under Prescription Drug Plans & MA-PD Plans (§ 3310) Eff. Date: 1/2012
Date: 7/21/2010


Section 3310 of the Patient Protection & Affordable Care Act (PPACA) amends Section 1860 D 4 (c) of the Social Security Act, giving the Secretary of Health & Human Services (HHS) the authority to require Prescription Drug Plan (PDP) sponsors to utilize specific uniform dispensing techniques, as may be required by the Secretary in consultation with relevant stakeholders. Such stakeholders are defined as representatives of nursing homes, residents from nursing facilities, pharmacists, pharmacy industry representatives (retail, LTC pharmacy), Prescription Drug Plans, Medicare Advantage – Prescription Drug (MA – PD) programs, and others.

By requiring uniform dispensing techniques that include weekly, daily or automated drug dispensing, Section 3310 amendment to the Social Security Act seeks to reduce waste from 30-day fills of prescription medications for Part D beneficiaries being care for in long term care facilities.

Effective Date

Section 3310 applies to plan years beginning on or after January 1, 2012.


The intent of Section 3310 of PPACA is to reduce the waste of unused medications associated with 30-day fills – the dispensing cycle most commonly used in long term care facilities. This new requirement will limit drug dispensing cycles to weekly or daily dispensing, or to dispensing of medications by withdrawal from an automatic dose/drug dispensing system (ADS).

Reduced dispensing/fill cycles will have a considerable impact on nursing facilities. For example:

  • Since vast majority of LTC pharmacies provide medications in blister card packaging, Reduced dispensing/fill cycles would likely result in LTC pharmacies dispensing a 7 day blister-carded medication four times a month. This would require additional staff to manage the re-ordering, receipt, verification, and documentation of additional drug ordering transactions.
  • Shorter interval fills would mean an increase in the number of prescription refill requests. Facility distance from the servicing pharmacy, poor weather, and unforeseen events can cause delays in receiving drugs that, in turn, could adversely affect the timeliness with which a patient receives medication, which could jeopardize patient safety.
  • LTC Pharmacies increased handling of prescription refills four times in a monthly period could increase the potential for medication errors.
  • Reduced dispensing/fill cycles would present challenges in terms of managing Part D patients for facilities that deal with multiple pharmacies and create logistical challenges in terms of managing retroactive eligibility.
  • Short cycle fills limit a facility’s options in dealing with medication spoilage due to drops and contamination limiting drug supplies on hand. To ensure enough medication is available at the facility, it is possible that medication would need to be ordered at least every five days to cover a seven day fill process.
  • It is not known how prospective billing would work with short cycle dispensing.  At a minimum, dispensing rates would have to be changed.
  • State laws regarding short cycle dispensing vary from state-to-state.  It is not known what federal rules may be the most appropriate or necessary.

Managing a short cycle medication process represents an additional burden to current facility operations. In addition, short cycle fills also place demands on pharmacy providers by increasing their prescription volume, which will increase packaging, administration, dispensing, billing, and delivery costs. It is not yet known if and how these added pharmacy costs will impact provider costs.

Automated Drug Dispensing Systems (ADS), which first appeared during the 1980s, are drug storage devices or cabinets that electronically dispense medications in a controlled fashion and track medication use. There are many different types of ADSs. Remote dispensing units require a nurse to key in each patient medication from a stock supply contained in the ADS. Most systems require user identifiers and passwords so that internal electronic devices can track those staff having accessed the ADS. Dispensing systems also track patients receiving medications and provides usage data to the facility. ADSs must be filled intermittently to replenish exhausted supplies. 

Pyxis, computerized medication cabinets, used by some facilities for emergency kit (e-kit) medication storage and use, is considered an ADS by DEA and like all other ADSs, is subject to pharmacy regulations. 

Considerations on the use of ADSs include:


  • Unused, unexpired, and undamaged medications stored in the ADS can be reused by the pharmacy stocking the ADS equipment, thereby reducing the amount of drug waste that providers must manage.
  • The cost of unused drug waste is greatly reduced.
  • ADS manufacturers and users report decrease medication error rates with equipment use.


  • Since Medicare and Medicaid providers are subject to federal law, including Part D plan regulations that support individual choice of plans, ADS is impractical as it would mean the facility could contract with only one pharmacy and pharmacist, who would be responsible for stocking the ADS with medications. Often facilities must deal with multiple Part D Plans and pharmacies to accommodate patient/resident choice.
  • Proper storage of ADS equipment is required by state laws; such requirements may be costly.
  • Many state laws prohibit the storage of all, or of certain controlled substances in the ADS. Such restrictions make it impossible to employ ADS as means to ensure that patients receive narcotics or other controlled medications on a timely basis.
  • It is estimated that 80 percent of medications can be stored in most ADSs and that 20 percent of medications, such as eye drops, creams, inhalers, IVs and as needed medications are managed in other systems. Managing multiple systems creates extra work for facility nursing staff.
  • Errors can occur during the refilling of ADS units. Depending on the type of ADS, medications can shift from one drawer or compartment to another, resulting in medication mix-ups that may not be immediately detected by he nurse.
  • Since medication packaging differs by drug manufacturer, national packaging standards would be needed to ensure uniform dispensing in ADSs.
  • Use of remote dispensing would require designating a nurse to attend to the ADS machine when medication is being dispensed. Obviously, such a requirement would increase nurse staffing.
  • The cost of ADS equipment has been estimated to be between $80,000 and $100,000 per unit. Such costs could double if state laws require an ADS to be stored in a room with a key-card entry system. 

Section 3310 fails to identify whether the Prescription Drug Plans, the facilities, or both would be responsible for the cost and maintenance of ADS equipment. It is also unknown if provider costs would be considered in the current reimbursement system.

Action Steps

  • Letter to HHS Secretary Sibelius requesting AHCA participation in whatever consultation group is established by the Secretary.
  • Request a meeting with CMS to discuss Part D roadblock to Section 3310 and to ascertain CMS’ thinking on needed changes.
  • Obtain a consultant who is knowledgeable about ADS; short cycle dispensing; state pharmacy laws and operations; and prescription drug plans to identify legislative and regulatory strategies necessary to comply with Section 3310.
  • Monitor lobbying and regulatory activities of pharmacy associations and trade groups (i.e., ASCP, LTCPA, and others) related to ADS and short cycle dispensing.
  • Request a GAO study on the cost and burden of short cycle dispensing on pharmacy and provider cost versus the actual Part D savings.