New Rx FSA rule deemed operationally impossible by industry thought leaders

WASHINGTON — A panel of healthcare thought leaders has concluded that a recent IRS rule change going into effect Jan. 14, 2011, will demand retail system challenges that are operationally impossible to overcome in the limited time frame required.

And the National Association of Chain Drug Stores couldn’t agree more.

The new rule is the requirement of a written prescription to qualify over-the-counter medicines as reimbursable medical expenses through the use of pre-tax flexible spending accounts. Before, a consumer would just have to swipe his or her FSA debit card when making an eligible OTC purchase. Now he or she has to make a doctor’s visit and get a prescription.

“We see this as a threat to consumer access and choice at a time when we need our citizens to be more engaged in managing their health and the cost of care,” stated Jon Comola, executive director of the Foundation for HealthSmart Consumers. According to foundation researchers, the resulting costs could reach $2.5 billion annually if doctor visits and lab tests are incurred by even 10% of the insured population; potential new pharmacy costs could reach $3 billion annually.

NACDS is concerned that current IRS guidance would prohibit the use of debit cards in the purchase of not only any prescribed OTC medicine, but also any prescription-only therapy. “Currently, there is no robust interaction between pharmacy dispensing systems and IIAS systems,” NACDS stated. The Inventory Information Approval System is used to substantiate purchases for flexible spending accounts.

“IIAS systems cannot distinguish between a medication for which a prescription is required and an OTC that has been prescribed,” NACDS explained. “As a result, a prohibition on using debit cards for prescribed OTC medications could have the practical effect of prohibiting the use of debit cards for all prescribed medications.”