The U.S. Senate has introduced a bill to repeal a provision of the Patient Protection and Affordable Care Act (PPACA) that requires consumers to get a prescription to use a medical savings account to buy over-the-counter medicine.

Restoring Access to Medication Act, S. 1647, H.R. 2835, over-the-counter medicine, OTC, flexible spending accounts, FSAs, health savings accounts, HSAs, OTC drugs, Patient Protection and Affordable Care Act, PPACA, Pat Roberts, Mary Landrieu, medical savings accounts, flexible spending arrangements, Lynn Jenkins, John Barrow, Consumer Healthcare Products Association, CHPA, Scott Melville, Bruce Josten, U.S. Chamber of Commerce, CVS Caremark

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Legislation takes aim at 'medicine cabinet tax'

November 6th, 2013

WASHINGTON – The U.S. Senate has introduced a bill to repeal a provision of the Patient Protection and Affordable Care Act (PPACA) that requires consumers to get a prescription to use a medical savings account to buy over-the-counter medicine.

The Restoring Access to Medication Act (S. 1647), introduced Tuesday by Sens. Pat Roberts (R., Kan.) and Mary Landrieu (D., La.), would eliminate section 9003 of the PPACA and restore the ability of people with flexible spending accounts (FSAs) and health savings accounts (HSAs) to use those funds to purchase OTC drugs without a doctor's prescription. Prior to Jan. 1, 2011, consumers had been able to use medical savings account funds to buy OTCs.

S. 1647 is a companion bill to House legislation (H.R. 2835) introduced in July by Reps. Lynn Jenkins (R., Kan.) and John Barrow (D., Ga.).

"This prohibition takes away choice and flexibility from individuals about how to manage their health care expenses and adds yet another burden to physicians," Roberts said in a statement. "Rather than promoting cost-effectiveness and accessibility, this provision directs people to potentially more costly, less convenient, and more time-consuming alternatives."

Almost 50 million Americans participate in FSAs and other health savings accounts, according to Roberts. The accounts let individuals set aside money each year on a pretax basis to pay for health care expenses, such as co-payments, and other health care outlays not covered by insurance, such prescriptions or OTC medications.

He noted that the Restoring Access to Medication Act is supported by a broad coalition of groups, including such organizations as the Consumer Healthcare Products Association, National Association of Chain Drug Stores, National Community Pharmacists Association, CVS Caremark, Food Marketing Institute, Retail Industry Leaders Association, Perrigo, National Grocers Association, American Medical Association, AARP, American Academy of Family Physicians, American Dental Association, America's Health Insurance Plans, American Osteopathic Association, BlueCross BlueShield Association and U.S. Chamber of Commerce.

"Thanks to the leadership of Sens. Roberts and Landrieu, there is now bipartisan, bicameral support for a change to the PPACA that would restore consumers' rights to spend their FSA and HSA dollars on any medicine they need," stated Scott Melville, president and chief executive officer of the Consumer Healthcare Products Association (CHPA). "When the president and leaders of both parties sit down to negotiate improvements to the PPACA, we believe this commonsense legislation should be at the top of their list."

The bipartisan legislation marks another attempt to repeal the controversial PPACA provision. The House and Senate had introduced companion bills in July 2011 (the Restoring Access to Medication Act, H.R. 2529 and S. 1368) and in February 2011 (the Patients' Freedom to Choose Act, H.R. 605 and S. 312), but those measures stalled in committee.

Last week, the Treasury Department and the IRS issued a notice modifying the provision's "use or lose" rule. The change allows participants in employer-sponsored, health care flexible spending arrangements to carry over up to $500 of unused balances from one year to the next without penalty. The Treasury and IRS said the modification stemmed from public feedback, with people reporting difficulty in predicting future medical expenses and, consequently, being hesitant to use such accounts for fear of losing money.

"We are encouraged by the [Obama] administration's recent decision to permit FSA participants to roll over up to $500 from one year to the next, but we feel that more needs to be done to ensure that FSA and HSA users are not penalized by the 'medicine cabinet tax,' " Melville stated.

CHPA reported that, on average, doctors say about 10% of office visits result from minor ailments that could be self-managed by patients, including by using OTCs — amounting to more than 40 million appointments each year that could be avoided.

The association noted that OTC medicines are readily available in a wide range of retail outlets — including pharmacies, supermarkets and convenience stores — and that a January 2012 study by Booz & Co. estimated that OTCs provide $102 billion in savings to the U.S. health care system annually, realized via reduced doctor visits ($77 billion) and lower drug costs ($25 billion).

"Millions of American families have previously relied on flexible spending accounts and other tax-preferred arrangements to purchase affordable and convenient over-the-counter medication," commented Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce. "Passing this bill is critically important to the estimated 19 million working Americans who rely on voluntary contributions of pretax dollars to FSAs to help meet their basic health care needs, including the purchase of safe, affordable OTC medicines."

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