On September 11, 2013, the Department of Health and Human Services announced its intention to issue guidance regarding the HIPAA Omnibus Final Rule’s limit on remuneration available to covered entities for sending patients refill reminders and other communications regarding currently prescribed drugs and biologics. The announcement came via joint motion filed by HHS and Adheris Inc. in the U.S. District Court for the District of Columbia in Adheris Inc. v. Sebelius, D.D.C., Case No. 13-CV-01342. As currently drafted, HIPAA excludes from the definition of “marketing” those refill reminders that are made in exchange for payment “reasonably related to the covered entity’s cost of making the communication.” This carve-out creates an exception to HIPAA “marketing” rules that otherwise would require patient authorization for sending subsidized refill reminder communications. Pharmacy industry groups are concerned, however, about the limited scope of the refill reminder exception and what types of costs may be reimbursable to covered entities under the exception.

The Final Rule provides some explanation regarding the “reasonably related costs” remuneration standard, but for certain companies whose viability may depend on making these communications, the Final Rule leaves several important questions unanswered. For example, specialty pharmacies may offer comprehensive, patient-focused services to assist customers with managing their complex health conditions. The Final Rule defines as “permissible costs for which a covered entity may receive remuneration…those which cover only the costs of labor, supplies, and postage to make the communication.” Thus, the exception to HIPAA’s authorization requirement would not apply to communications for which payment is made beyond the cost of making the communication. According to a letter to HHS sent by the Specialty Pharmacy Association of America (SPAARx) in July of this year, the Final Rule’s limit on compensation to the costs of labor, supplies and postage do not cover the additional costs that may be borne by specialty pharmacies in providing more comprehensive disease management services, including, for example, expenses of clinicians who communicate telephonically with patients in order to deliver drug therapy management. SPAARx has suggested that HHS expand the exception to permit fair market compensation for refill reminder services as the general guideline for permissible remuneration for which no patient authorization should be required.

Despite the fact that the Office of Civil Rights has indicated that it will not begin enforcing the current refill reminder provision until November 7, 2013, the Final Rule already has had a marked effect on some pharmacy service providers. For example, the CVS drugstore chain has announced that it will discontinue its program, undertaken in collaboration with pharmaceutical companies, to mail prescription refill reminder notices to patients. Others may follow suit, depending on the HHS guidance, which is expected to be released by September 23, 2013. Many consider refill reminder programs to be a beneficial service for patients, in that they help to ensure medication adherence. It will be interesting to observe how, or whether, HHS modifies its current position limiting remuneration for such services in its forthcoming guidance.