Independent pharmacies that both dispense medications and provide consulting services to long-term care facilities at the same time, present a conflict of interest and may land themselves and the facilities in trouble, the U.S. Centers for Medicare and Medicaid (CMS) and other federal agencies say.

It is important for third-party pharmacies to provide consulting services without dispensing drugs so as to bring greater accountability, transparency and competence to medication choice, administration and overall business activities to satisfy state and federal inspection and review requirements, the agencies add.

Research from the U.S. Department of Health and Human Services, with the Agency on Healthcare Research and Quality (AHRQ) and the Centers for Disease Control and Prevention (CDC), finds that the Baby Boomer generation continues to age while the number of seniors over 85 will increase by 90 percent over the space of 20 years — with a total elderly population of 34 million.

Third-party independent pharmacies are increasingly serving the prescription needs of long-term and short-term care patients in those facilities, especially seniors.

With such an aging segment of the nation in need of medical care, pharmacies have grown instrumental in meeting their treatment needs and decreasing the costs to the facilities caring for them.

However, the CMS, federal regulators and policymakers say their daily business undertakings have raised issues of integrity. Some pharmacies who both distribute drugs and advise medical facilities have been reported to look out for their own best interests, especially in terms of profit-making, rather than root out the flaws or errors in a client’s medication policies and practices.

This compromises the quality of drugs, the appropriateness of their administration and medical outcomes for their patients, pointing to point a need for independent pharmacies to provide consultation without distributing drugs, they conclude.

Federal laws, Regulations

The Affordable Care Act of 2012 mandates that a long-term care facility carry out the recommendations of a third-party consultant pharmacist, including advice concerning drug formularies.

While the law recognizes the importance of recommendations made by a third-party consultant pharmacist to a long-term care facility, the nursing staff employed there are not imposed upon to execute these directives without inspections from a state agency.

Still, a long-term care consultant pharmacist’s enforcement of a drug formulary influences the facility’s negotiation of a drug manufacturer’s rebates.

Additionally, a number of states make exceptions to the responsibilities of long-term care consultant pharmacists.

For example, in Colorado, consultant pharmacists are expected to fulfill the tasks of legal compounding, evaluate the implementation of policies of the state’s Pharmacy Advisory Committee and publish quarterly reports to the committee on the status of pharmacy activity.

Under Idaho law, consultant pharmacists must supervise services when their employer-nursing facilities use more than one manufacturer of drugs. Such pharmacists in Mississippi must attend board-approved workshops to be trained in their duties.

In Oklahoma, they must assist with drug destruction and converse with the staff of their employer-facilities about policies and procedures related to destroying medications.

Overall, most states throughout the country are expected to authorize third-party consultant pharmacists to provide these aforementioned services to the employing long-term care facilities.

Still, nursing homes and skilled nursing facilities have stand-alone agreements that spell out duties for pharmacy dispensing services and consultant pharmacy services. For instance, New Jersey is the only one calling for a separation of such services so that the consultant pharmacist cannot work for the dispensing pharmacy.

In October 2011, CMS released a draft regulation that called for more independence on the part of third-party pharmacists employed by consultant pharmacies to avoid the conflict of interests it found when it investigated such practices tied to long-term care facilities, serving mostly seniors.

Titled “Medicare Program; Proposed Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2013 and Other Proposed Changes; Considering Changes to the Conditions of Participation for Long Term Care Facilities,” the draft rule focused on the agency’s concern with pharmaceutical manufacturers paying third-party long-term care pharmacies to have their staff consultant pharmacists urge doctors to prescribe their drugs to facility patients.

Consequently, CMS questioned the ability of third-party consultant pharmacists to review drug regimens impartially and to avoid compromising the quality of such evaluations and, thus, endangering the health and safety of patients. The agency also raised issues about long-term care pharmacists maintaining ties with pharmaceutical manufacturers.

Through its investigations of industry, CMS revealed that third-party, long-term care pharmacies outsource consultant pharmacists to nursing homes for compensation below the expenses of such pharmacies and below market value.

As a result of its findings, the agency stated that it pondered calling for long-term care facilities to hire independent pharmacists. By definition, an “independent” entity would be described as, for example, a licensed pharmacist not employed, under contract or connected otherwise to a long-term care facility’s pharmacy, pharmaceutical company or distributor.

The agency explained that it meant to rid a consultant pharmacist of any financial ties to any long-term care pharmacies or facilities that would prevent him or her from providing impartial drug regimen reviews and evaluations.

In April 2012, CMS unveiled a final rule that would not enforce such a regulation but instead invited comments on the topic. Still, the agency indicated that it would continue to examine the matter of enacting a rule to render long-term care consultant pharmacists independent.

The Role of Consultant Pharmacies in Long-Term Care

Over 20 years ago, industry experts say consultant pharmacies were formed to guarantee that long-term care patients receive the correct medications in the proper dosage at the right time.

Responding to projections of a growing aging population at the time, pharmaceutical companies developed dozens of drugs for each of the most chronic illnesses such as Alzheimer’s disease, diabetes, osteoporosis, rheumatoid arthritis and respiratory lung disorders, they say.

Overtime, such pharmacies evolved to empower 10,000 pharmacists nationwide to provide a broad range of administrative, distributive and clinical services to nearly two million mostly assisted living and skilled nursing facility patients. The most progressive pharmacies would be staffed with other medical professionals such as nurses, physicians, dietitians and laboratory staff.

Seniors, who make up the majority of long-term and short-term care patients, are the main focus of third-party consultant pharmacy practice because they are the most likely to endure drug-related hurdles such as adverse drug reactions, toxic interactions, improper use and fatal, repeated drug administration. As a result, elderly patients account for billions of dollars in drug costs.

According to the American Society of Consultant Pharmacists (ASCP), third-party consultant pharmacists tied to long-term settings provide pharmacological services; educate facility staff and administrators about medicine; serve as clinical practitioners; advocate quality care for patients and families, and; join a patient’s medical team.

Third-party, long-term care consultant pharmacists review drug regimens (DRR); evaluate drug use; develop new formularies and drug distribution systems; assess the health of facility patients; create plans of care; promote infection control; support diet and nutrition services; craft clinical policy and procedure; order and interpret laboratory tests; participate in state surveys, and; engage in clinical research.

They also handle durable medical equipment (DME); perform surgical appliance fittings; counsel patients on pain management; initiate intravenous therapy for patients; create and improve quality assurance programs; manage enteral feeding products; ensure outpatient packaging compliance; provide home diagnostic services; maintain medical/surgical supplies, and; generate computer forms and reports.

Additionally, the federal agency CMS regulates third-party consultant pharmacists to visit licensed nursing facilities every 30 days to provide drug regimen reviews for all patients served.

Long-term and short-term categories of care served by third-party consultant pharmacies include acute care hospitals; adult day care; alcohol/drug rehabilitation centers; ambulatory care; assisted living; community-based care facilities; congregate care; continuing care retirement communities (CCRC); correctional facilities; group homes; health maintenance organizations (HMOs)/preferred provider organizations (PPOs); home health agencies; hospice or post-surgical/palliative care centers; industrial plants; mental institutions; nursing homes; senior independent living, and; skilled nursing facilities.

The most common categories of care that consultant pharmacies serve nationally are assisted living facilities with between 30,000 to 40,000 such centers caring for more than one million persons, and, skilled nursing facilities.

Throughout the country, the remaining most common categories include board and care with 32,000 licensed homes for 500,000 persons; adult day care with 10,000 projected to be built and maintained by the end of the decade, and; home health care at 14,000 such agencies serving six million patients.

Additionally, the pharmacies nationwide serve hospice care with 2,500 centers serving 340,000 persons a year; CCRCs to grow from 1,000 at present to 10,000 over the next few decades; senior independent living with more than 2,500 communities, and; senior citizen centers as 12,000 of them serve between five and eight million patients annually.

Insurance Company Audits

Independent pharmacies, especially those that dispense drugs and may or may not necessarily provide consulting services, must anticipate pharmacy compliance audits and more pharmacies have been subjected to them in recent years.

Before an audit occurs, an audit and compliance vendor/contractor will mail an independent pharmacy a notice, describing plans to visit this facility to carry it out. These vendors or contractors tend to represent third-party prescription insurance companies.

Two weeks before this appointment, an assigned representative will phone a pharmacy to confirm his or her visit. An independent pharmacy may be faxed a copy of all of the prescriptions that must be inspected. The pharmacy may not receive a entire code number but sufficient information to retrieve a prescription drug file.

On the day of the audit, the pharmacy may need hired help to assist with the retrieval, replacement, document management and delivery of the necessary paperwork during the whole process.

Hired help comes in the form of a pharmacy assistant or the pharmacy’s pre-existing ancillary team. A pharmacy needs an assistant or team because an auditor’s direct questions will become more complex if data is not made available.

Consequently, an independent pharmacy must ensure that the pharmacy assistant or team comprehends the company’s entire prescription billing and recordkeeping process as it will satisfy an auditor’s quest for answers.

First, a pharmacy must be sure to make its signature logs, whether electronic or manual, policies and procedures manuals and compound formula worksheets easily accessible. Auditors will request to see its policies to judge how the pharmacy handles compounding even if it performs very little. They may also demand to view its policies on delivering drugs to facilities or patient’s homes.

Some audits can truly escalate. They may examine claims submitted two years ago and may peruse at at least 100 or more prescriptions in an afternoon. Any gaps or inconsistencies may require an adjustment unless an audited pharmacy can produce documentation as evidence of the claim. A mere undocumented refill in a pharmacy’s computer may result in thousands of dollars in adjustments.

When the audit is complete, a pharmacy will receive reports about an auditor’s revelations and adjustments. Adjustments of several thousands of dollars may appear in the audit, which translates into money that the pharmacy may have already paid that an insurer may hold back from future payments until that sum is paid in its entirety.

In fact, it may not escape an audited pharmacy that the auditors focus most of their attention on drugs with the highest potential for financial withholding. An audit may review all of the most expensive prescriptions, insulin pens and vials, brand-name inhalers and any other drug that was reimbursed for more than $500.

While this aspect of the audit is clearly imposing, a pharmacy still has legal recourse to appeal its findings. By state or federal law, an audited pharmacy has 30 days to send documentation that challenges these adjusted claims.

An audited pharmacy is urged to examine all adjustments meticulously. If a prescription lacks refill authorization, the pharmacy should consult a prescribing physician and explain the circumstances of the audit. In turn, the physician must account for the missing refill documentation on letterhead and most are willing to cooperate to assist a pharmacy in this endeavor.

Adjustments of drug supplies that last a matter of days can be appealed for partial pay. Even partial pays on costly drugs can be worthwhile. Categories of drugs that warrant calculations include insulin, drops, topicals, inhaled therapy and liquids.
Challenges To Independence

Many in the industry agree with federal agencies on the importance of third-party independent pharmacists forming their own consulting practices without dispensing medicines whether they’ve just completed their studies or have worked in their professions for a long time.

However, industry experts also acknowledge the difficulties faced by pharmacists to create their own entities with the roles they play in patient care, payment and reimbursement trends and the manner in which they deliver care.

Under the new payment and modes of delivery that include accountable care organizations (ACOs) and bundled Medicare/Medicaid payments, third-party consultant pharmacists are finding it harder to deliver cost-effective, quality patient services that would help avoid hospital admissions as required by the federal ACA law and the CMS’ Hospital Readmission Reduction Program.

Third-party independent pharmacies face the challenges of decreased reimbursements, shrinking margins and large national drug chains planning mergers and acquisitions, thus raising the potential for them to act with a conflict of interest such as making profits off distributing drugs.

However, these same pharmacies are providing new types of services such as medication therapy management and synchronization and are searching for new opportunities to grow and achieve different means of generating incomes.

Developing Independent Practices

Industry experts say that a third-party, independent consultant pharmacy is not restricted to a choice few practitioners and a specific academic degree is not required.

They say that any licensed pharmacist can open up an independent practice as long as they have a solid background in pharmacotherapy, an interest in the field of geriatrics and are grounded in an understanding in the drug and therapy needs of this age cohort.

In other words, knowing how to make recommendations to long-term care facility staff and administrators and understanding what drugs and dosages should be used for seniors is a good start for a long-term care pharmacist who wishes to grow an independent consultant practice.

Such an independent consultant pharmacist will become a Certified Geriatric Pharmacist under the National Commission for Certifying Agencies (NCCA), the accrediting body created to evaluate and regulate pharmacists, ensuring that they have the requisite knowledge in geriatric pharmacotherapy and ability to provide drug care to elderly patients.

To start their practice, experts say, independent pharmacists would have to decide how much it would cost to provide services in order to structure pricing to charge the employing long-term care facilities.

They must also consider travel time, vehicle wear, technology equipment, repair and upkeep and printing costs into their budgets. All of these costs depend on the location of the facility and the number of patients they plan to serve.

Starting out, some of an independent pharmacist’s problems include the starting expense to the employing long-term care facility. Prior to such an arrangement, experts say, long-term care facilities have not borne the costs of a pharmacist’s time because long-term care consultant facilities have always used pharmacist staff as a means of reducing costs.

To convince a prospective employer to accept his or her services, an independent consultant pharmacist must be able to prove that his or her pharmaceutical care skills command a higher price, they say.

Such demonstration tactics include pharmaeconomic reviews for the facility’s patients. Medicare pays for the care of a facility’s patients on a daily basis and any funds saved from obtaining drugs would boost the facility’s income.

This, in turns, reduces the risk of hospital readmissions and ensures that drugs are carefully monitored so that the facility can avert punitive financial fees during surveying.

Industry experts say that, before embarking on building an independent pharmacy practice, a consultant pharmacist ought to explore the opportunity. He or she must conduct market research, ask relevant questions and attempt to answer them on their own.

Specifically, a consultant pharmacist must discover how many facilities exist in their location. He or she must learn whether new nearby entities like his or hers are opening and if his or her market is expanding, experts say.

The independent pharmacist must determine if these prospective long-term care facilities are pleased with the quality of services they are receiving from these rivals and exactly where the gaps in performance are.

The consultant pharmacist must find out what he or she have to offer that is different from that of his or her competitors. He or she must know how he or she would make use of his or her present talents and relationships for this new pharmacy practice.

The pharmacist must also decide what type of investment would be needed to start his or her business, the advantages and disadvantages, the staff needed and the strategy he or she devised to land his or her first assignment.


To get started, Mark Prifogle, CEO of Grandview Pharmacy in Brownsburg, Ind., assembled multiple resources to enable consultant pharmacists to begin.

Aside from the above-mentioned recommendations for planning a launch of an independent pharmacy practice, other tools are available at the following sites:

–McKesson Corporation at and by e-mailing;

–The U.S. Centers for Disease Control and Prevention at;

–The National Consultant Pharmacists Association at;

–Managed HealthCare Associates at;

–The National Association of Boards of Pharmacy at, and;

– website, specifically for starting, buying and selling pharmacies.


Alves, Jared BS, BA; Yee, Colin MPH; Coppage, Mary BA; Lukens, Ellen MPH; Advani, Protima MA; “Long-Term Care Pharmacy: the Evolving Marketplace and Emerging Policy Issues,” Avalere Health LLC, October 2015, pp. 1-33.

Leuck, Peter, “Pharmacy Compliance Audits: What Pharmacists Can Expect,” (Last accessed: Jan. 4, 2017)

McKesson Corporation, “Becoming a Long-Term Care Pharmacy: Opportunities and Important Considerations,”, 2015, pp. 1-16.

Simonson, William PHARM.D., is Associate Professor of Pharmacy Practice, Oregon State University, and Associate Professor of Pharmacy Practice, Oregon Health Sciences University, both in Portland, “Practitioner Update: Pharmacy Practice in the Long-term Care Environment,” Journal of Managed Care Pharmacy, Vol. 3. No.2 Mar/Apr 1997, pp. 189-94.

The Lewin Group, “CMS Review of Current Standards of Practice for Long-Term Care Pharmacy Services: Long-Term Care Pharmacy Primer,” (Prepared for the U.S. Centers for Medicare and Medicaid Services), Dec. 30, 2004, pp. 1-38.