Health System Reform Insight - July 28, 2011
Given the new direction for the nation’s health system, the AMA has developed Health System Reform Insight to help you understand what this new direction means to you and your patients.
Since the Affordable Care Act (ACA) was enacted early last year, the AMA has been working to further incorporate important AMA policies into the law. These include dealing with the Independent Payment Advisory Board, safeguards on physician data release and the successful effort to repeal burdensome IRS Form 1099 reporting requirements.
One issue that has not received as much attention are new restrictions on the use of flexible spending accounts (FSAs), health savings accounts (HSAs) and other tax-preferred arrangements for the purchase of over-the-counter (OTC) medications like aspirin, acid reflux medications, allergy medications and eyedrops.
In 2003, as several popular drugs moved to OTC status, the IRS loosened restrictions on the use of these accounts for the purchase of nonprescription medications and other health care products. As a way to offset costs associated with the ACA, Congress revisited these guidelines as the law was drafted.
As an alternative to returning to the earlier limits, the ACA allowed consumers to continue purchasing OTC medications with pre-tax dollars, but only with a prescription. Though intended as a way discourage overconsumption of health care products, several unintended consequences emerged.
In response to federal rulemaking, the AMA wrote to IRS Commissioner Douglas Shulman in December 2010 to point out the many shortcomings of the new policy. Rather than saving money, the new policy may increase overall health care spending by forcing patients to schedule office visits with their physicians to obtain prescriptions for OTC medications, or they may seek more expensive prescription drugs that are covered by their health insurance plans.
Furthermore, since a prescription for an OTC product must be treated as any other prescription, record keeping requirements are increased for both physicians and pharmacies.
At the 2011 Annual Meeting of the House of Delegates, AMA policy on this issue was further strengthened by the adoption of Resolution 211, which calls on the AMA to support repeal of the federal restriction on the use of tax-exempt funds to buy medications without a prescription and to notify the appropriate federal legislative bodies and regulatory agencies of our support for repeal.
In response, the AMA has joined with the broad coalition of stakeholders, including retailers, consumer health product manufacturers and other physician groups to call for legislation repealing these requirements.
After extensive conversations with this coalition of organizations, Rep. Lynn Jenkins, R-Kan., Rep. Shelley Berkley, D-Nev., Sen. Pat Roberts, R-Kan., and Sen. Ben Nelson, D-Neb., have introduced the Restoring Access to Medication Act (H.R. 2529 and S. 1368, respectively). This legislation repeals the new restrictions and would once again allow consumers to use these accounts to purchase OTC medications.
The AMA continues to work with other organizations to secure passage of these bills to remove these additional burdens from patients and physicians.
An AMA webinar at 1 p.m. Eastern time on Aug. 1 will preview the FAIR Health public online database, which will allow patients to make more informed decisions—and ask more pointed questions—about the costs of their medical care. Space is limited, so register today.
Learn about ICD-10 implementation strategies during a call hosted by the Centers for Medicare & Medicaid Services from 1 to 3 p.m. Eastern time on Aug. 3.