Skip to main content Back to Top


Retain Medicare Funding for Pharmacy Residency Programs, ASHP Tells CMS

Kate Traynor

ASHP on Thursday urged the Centers for Medicare & Medicaid Services to withdraw its plan to eliminate pass-through, reasonable-cost Medicare funding for pharmacy residency programs. The plan, which ASHP said would have devastating effects on Medicare patients in hospitals, was announced in the agency's proposal of changes to the inpatient prospective pricing system.


July 3, 2003

Thomas A. Scully, Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attn: CMS-1470-P
Hubert H. Humphrey Building—Room 443-G
200 Independence Avenue
Washington, DC 20201

RE: CMS-1470-P; Proposed Rule: Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2004 Rates

Dear Administrator Scully:

The American Society of Health-System Pharmacists (ASHP) is pleased to provide comments on the Centers for Medicare & Medicaid Services' (CMS) May 19, 2003, Federal Register notice on proposed changes to the Hospital Inpatient Prospective Payment Systems (IPPS) and fiscal year 2004 rates. ASHP is the 30,000-member national professional and scientific association that represents pharmacists who practice in hospitals, health maintenance organizations, long-term care facilities, home care agencies, and other components of organized health care systems.

One particular aspect of the proposed rule came as a great shock to ASHP and its members—the elimination of pass-through, reasonable cost funding for pharmacy residency programs. It will, if finalized, prove devastating to Medicare patients in hospitals, and we urge CMS to withdraw that portion of its proposal.

ASHP is the sole accrediting body for postgraduate programs in pharmacy in the United States, and was recognized as such by CMS prior to the agency's elimination of the specific listing of accrediting organizations in the January 2001 revision of 42CFR413.85. We launched our first "Accreditation Standard for Hospital Pharmacy Residency Training" in 1963. In that decade, pharmacy schools began implementing Doctor of Pharmacy (Pharm.D.) programs, and many pharmacists expanded their roles as clinical practitioners. ASHP expanded its residency accreditation program, and began accrediting specialized pharmacy residencies in 1979.

ASHP currently accredits 635 pharmacy residency programs in 49 states, the District of Columbia, and Puerto Rico. There are 387 programs in 5 types of pharmacy practice residencies, and 248 programs in 16 areas of specialized residencies. These residency programs, with a total of 1,452 positions, are available in a variety of practice settings. For more detailed information, please see the statistical information in Attachment A: "Program Count Report," "Residency Position Count," "Program County by Institution Type," and "Residency Program Count by State."

Currently there are 83 pharmacy residency programs that have applied for accreditation and are waiting for review by ASHP's Commission on Credentialing or waiting for a site visit. Of these, 54 are pharmacy practice residencies (13 community care, 1 managed care, and 40 pharmacy practice) and 29 are in the specialized residencies.

Our accredited residency programs must meet specific, rigorous goals and objectives. We have attached (Attachment B) copies of the ASHP Accreditation Standard for Residencies in Pharmacy Practice and the goals and objectives for pharmacy practice residencies, as well as the ASHP Accreditation Standard for Specialized Pharmacy Residency Training and the supplemental standard and learning objectives for one prototypical area of specialized residency training, geriatric pharmacy. Also included in this attachment are copies of select pages from the Residency Manual of the Medical University of South Carolina (MUSC), pages from ASHP's accreditation survey of MUSC residencies showing the activities and responsibilities of the residents in that institution's 13 residency programs, and a description of the responsibilities of geriatric pharmacy practice residents and how they are evaluated at South Texas Veterans Health Care System. These documents will demonstrate to you the extensive training that accredited pharmacy residencies demand.

ASHP Objects to the Proposed Revisions to Allied Health Education Programs

In revisions to 42CFR413.85, CMS proposes to change the way pharmacy residency programs will be reimbursed as one of the "approved nursing and allied health education programs." Beginning on October 1, 2003, it proposes that these residency programs will no longer be reimbursed on a pass-through, reasonable cost basis, but only as normal operating costs covered by the IPPS rate.

The proposed rule states that CMS has determined that because pharmacy residencies are not required for a pharmacist to practice or begin work in a hospital, these programs are "continuing education" programs, rather than what the agency calls a "specific certification in a specialty." Thus, CMS classifies current pharmacy residency programs along with educational seminars and workshops as continuing education.

The proposed rule would also add a new definition of "certification" to CMS regulations, defining that term as "the ability to practice or begin employment in a specialty as a whole." The proposed rule adds language to CMS regulations to specify that programs that "do not lead to certification required to practice or begin employment in a nursing or allied health specialty" will be classified as activities treated as normal operating costs.

You will already have heard from many of our members—current residents, former residents, and directors of pharmacy residency programs—who have submitted comments about how detrimental this change in reimbursement policy will be in terms of patient care and patient safety. ASHP has the following additional, specific comments on the proposed rule:

Postgraduate Pharmacy Residency Programs Train Experts in Preventing Adverse Drug Events

According to current CMS regulations at 42CFR413.85(e), "CMS will consider an activity an approved nursing and allied health education program if the program is a planned program of study that is licensed by State law, or if licensing is not required, is accredited by the recognized national professional organization for the particular activity."

This is exactly what pharmacy residency programs are. ASHP defines a pharmacy residency as "an organized, directed, postgraduate training program in a defined area of pharmacy practice." Pharmacy residency programs expressly address the public need, as stated in 42CFR413.85(c)(2), to "enhance the quality of inpatient care at the provider" level. Previous versions of CMS regulations at 42413.85 (prior to the January 2001 revision of those regulations) also stated that programs for what were then called "paramedical specialties" were important because they "contribute to the quality of patient care within an institution and are necessary to meet the community's needs for medical and paramedical personnel."

It is unnecessary to repeat here all of the findings of many recent reports focusing on the seriousness of medication errors and other adverse drug events in our nation's hospitals. The 1999 report by the Institute of Medicine (IOM), "To Err is Human: Building a Safer Health System" is but one of many such reports. A study by RAND ("The Quality of Health Care Delivered to Adults in the United States") that appeared in the June 26, 2003, issue of the New England Journal of Medicine indicating that deficits in the quality of basic care "pose serious threats to the health of the American public" adds to already sizable documentation of these problems.

The IOM report specifically found that a fundamental failing in health systems was the lack of collaboration between health professionals that is needed to ensure patient safety, particularly in terms of medication errors. The IOM recommended that because "the pharmacist has become an essential resource in modern hospital practice,"1 hospitals ensure the availability of pharmacist decision support in the medication use process and that pharmacists be included during rounds of patient care units. Residency training is a key opportunity for physicians and pharmacists to work together in collaborative care. Further, postgraduate pharmacy residency training is essential for preparing pharmacists for a career-long role in collaborative care.

Postgraduate Pharmacy Residency Programs are Not Continuing Education

Page 27210 of the May 19, 2003, proposed rule states that CMS had, in the past, "allowed hospitals to be paid for operating a pharmacy 'residency' program." To place the word residency in quotation marks in this context implies that pharmacy residency programs are not, in fact, legitimate residency programs. This characterization is an affront to pharmacy as a profession, an affront to pharmacists who have completed or are currently enrolled in residency programs, and an affront to ASHP's 40-year history as the accrediting body of pharmacy residency programs.

To suggest that pharmacy residency programs are "continuing education," equivalent to seminars, workshops, poster sessions, and other such instruction, is an unacceptable contention, and an indication of how little CMS knows about pharmacy residency programs and how the practice of pharmacy has evolved from a purely drug-distributive function to a complex, clinical role that is focused on preventing adverse drug events. There is extensive literature on the significant impact that clinical pharmacists have on enhanced patient care, appropriate and cost-effective medication therapy, improved medication safety, reduction in hospital readmissions and lengths of stay, collaborative health care, formulary management, and pharmacy education—exactly the kinds of "value-added skills" that CMS states would satisfy the requirement of "an approved program that qualifies for pass-through payment." Residency-trained pharmacists are the leaders of these types of progressive patient care services in the United States.

According to one definition (by the Uniformed Services University of the Health Sciences), a "continuing education activity" is "an offering that may be an episode or a serial event planned to update health care practice, management or professional growth." Other definitions we have looked at similarly describe continuing education activities as maintaining professional competency, which is why state boards of pharmacy require continuing education credits for relicensure. Professional lectures, seminars, and workshops certainly fit these definitions.

This is in dramatic contrast to the nature of postgraduate pharmacy residency programs accredited by ASHP. These programs offer a vastly higher level of professional development, much like medical residencies, than found in continuing education activities.

During these programs, residents learn how to integrate their knowledge and develop skills and abilities to work as effective members of the health care team to optimize drug therapy. The majority of training involves direct patient care under the mentorship of an experienced clinician.

Many of the comments you have received from our members talk about the research projects completed by pharmacy residents during their training. ASHP's accreditation standards require each resident to complete a research project, and these are presented at regional residency conferences—and, often, at national educational conferences. Many are published in peer-reviewed scientific and professional journals. Some examples of research projects include evaluations of medication use for specific disease states or specific patient populations, improvements in adverse drug reaction reporting and prevention or reduction of medication errors, assessments of the cost effectiveness of clinical pharmacy services, and the effects of clinical pharmacist interventions on patient outcomes. Copies of abstracts of a representative sample of these projects, and a list of projects completed by residents at the Medical University of South Carolina, are included in Attachment B.

The May 19 proposed rule places much emphasis on the point that a pharmacy residency lasts only for one year and, therefore, is not considered "a program of long duration designed to develop trained practitioners." Completion of a residency in pharmacy practice serves as the prerequisite for a second year of postgraduate training that is offered through specialized residencies and fellowships. Some institutions offer a 2-year, post-Pharm.D MS/residency program, and there are many sites that offer specific 2-year residencies—residents complete a pharmacy practice residency in year one, then select a specialty area for the second year. Residency training is a full-time activity, for which residents are paid a modest stipend.

Graduates of these programs go on to practice in all pharmacy settings. The majority (approximately 90%) go into hospitals, but others choose careers in home care, long-term-care facilities, managed care, ambulatory clinics, community pharmacies, and faculty positions in colleges of pharmacy (whose time and funding may be split with hospital practice). Some stay on in pharmacy positions at institutions where they received their residency training; this is similar to the experience of a physician who may, for example, receive his/her medical degree from an eastern medical school, complete a residency in a hospital in the west, and then accept a practice position at that hospital. Most residency graduates, however, go on to other hospitals, thereby providing to another health care setting the benefit of their residency training.

Although it is true, as CMS states in its proposed rule, that there are pharmacists currently practicing in hospitals who have not completed a residency program, and that residency programs are not required to be eligible to practice pharmacy in hospital settings, this is rapidly changing. No so long ago, medical residency training was not required for physicians to practice in hospitals. Postgraduate pharmacy residency training is emerging as a requirement for hospital practice. As a clinical profession, pharmacy is seeking to advance to the point where, because of patient needs, pharmacy residency training will be required for a pharmacist to work in hospitals.

That point may well be 10 to 15 years in the future. Meanwhile, however, more and more hospitals require completion of a pharmacy residency for clinical pharmacist positions, pharmacy department director positions, and other leadership positions in the medication use process. A residency or years of practice experience are required for Board of Pharmaceutical Specialties certification, and for pharmacy practice faculty positions.

Following the publication of the May 19, 2003, proposed rule in the Federal Register, ASHP conducted a survey (Attachment C) that was sent to 231 pharmacy directors of hospitals that have postgraduate pharmacy residency programs. Of the 117 respondents who answered the question "What percentage of your organization's pharmacy positions require residency training?" the most common (17.9%) answer was 21–30%. This fits what we have been told about specific sites. For example, the Director of Pharmacy at Johns Hopkins Hospital reports that 25–30% of their 112 pharmacist positions require completion of a residency, and the Director of Pharmacy at Jackson Memorial Hospital in Florida notes that of their approximately 100 pharmacist positions, 30% require completion of a residency. Our survey indicates, however, that 11.1% of the pharmacy directors responding say that their institutions require residencies for 41–50% of their pharmacist positions, and 9.4% of the respondents say that 76–100% of their pharmacist positions require residencies.

On June 1, 2003, ASHP launched CareerPharm, a Web-based pharmacist placement service. We have included copies (Attachment D) of clinical pharmacist position announcements from that resource that require or prefer completion of a pharmacy practice residency or specialty residency for hiring.

The Proposed Rule Will Harm Patients

The results of ASHP's survey show how truly disastrous the CMS proposal will be for the future of pharmacy residencies and the quality of health care. Continued patient safety and quality care were major concerns addressed by the survey respondents. When asked what impact the elimination of Medicare pass-through funding would have on their organizations, the respondents agreed that the following would result:

Effect of Reduced Funding
for Pharmacy Resident Training
Percent Agreeing
Fewer educational programs for other healthcare workers95%
Decreased pharmacist participation in patient rounds93%
Fewer Medication Use Evaluations93%
Fewer patients receiving patient education93%
Reduction of services to patients91%
Fewer drug information questions answered for other Health care providers90%
Fewer patients receiving discharge counseling89%
Reduced continuity of care for patients88%
Fewer patients interviewed for medication histories84%
Fewer adverse drug reactions reported83%
Fewer chart notes documented in patient records80%
Fewer preventive and wellness programs78%
Fewer drug monograph reviews for P&T Committees75%
More medication errors70%

Out of 49 sites that are receiving CMS funding that answered the survey, representing 380 residency positions (35% of all ASHP-accredited residency positions), 63% are receiving less than $150,000 per site, with no one facility receiving more than $750,000. The total amount being reimbursed to these sites is approximately $7.7 million. Of these 49 sites:


  • 43% said that they would eliminate their residency programs.
  • 90% said that they would decrease future increases in residency positions.
  • 89% said they would cut the development of specialized residency programs.
  • 67% said they will probably or will definitely decrease their current number of residency positions.

Some institutions are not even waiting for CMS to finalize this proposal before making detrimental decisions. ASHP has already heard from one pharmacist that his institution is unwilling to proceed with planned expansion of its pharmacy residency programs because of the proposed rule.

The 49 sites receiving Medicare funding for their pharmacy residency programs represent 46 pharmacy practice programs and approximately 120 specialized pharmacy residency programs. From the survey results, we estimate that these facilities will eliminate 105 (28%) of their 380 positions. This is 10% of the 1,080 pharmacists who will be graduating from residency programs this year. This significant reduction in pharmacy residency graduates, coupled with the estimated reduction in future residency programs, will be devastating in terms of maintaining quality healthcare for Medicare beneficiaries and other patients in acute care settings, as hospitals are already facing a workforce shortage of qualified pharmacists. The impact of the CMS proposal will be a reduction in the number of qualified clinical pharmacists and pharmacy practice leaders needed to ensure appropriate management of high-risk medication therapy in hospitals.

A report to Congress prepared by the Heath Resources and Service Administration (HRSA) in December 20002 discussed the expanding role of clinical pharmacists in health systems in making formulary decisions, conducting medication management programs, tracking adverse drug reactions, affecting physician prescribing patterns, and reducing healthcare costs. The report also discussed the importance of pharmacy residency programs, and their relationship to the workforce shortage: "Pharmacy residencies and fellowships, postgraduate professional programs, are an important mechanism for the training of pharmacy practice faculty, clinical practitioners with specialized skills, and researchers in the medication use process." (p. iv)

The HRSA report also noted "funding of residency programs as an important component of the growth process" to relieve the pharmacist shortage:

At present, Federal support for resident stipends occurs primarily through Medicare funding as it does for medical residencies. These programs need to be expanded and other funding sources need to be identified for programs that do not meet Medicare funding guidelines. Within the profession, the presence of a sufficient number of pharmacists trained beyond the first professional degree is viewed as essential to continuing the progress in optimizing the use of medications in America. (p. 63)

A reduction in pharmacy residency programs will, therefore, have its greatest impact on a hospital's capacity to provide adequate patient care. This will be significantly detrimental as the nation moves forward with a Medicare prescription drug benefit. A decrease on the number of pharmacy residency graduates will lead to fewer pharmacists trained in and for clinical positions and for practice leadership. This will have a domino effect on diminished human resources of a hospital's pharmacy department, and an additional strain on physician and nursing resources. Unattended risks in the medication process will lead to an increased medication errors, other adverse drug events, and increased health care costs.

Continued pass-through funding is in the public interest, given the significant problems that exist in health care regarding the appropriate use of medicines. That funding is a modest investment in addressing one of the nation's most intractable public health problems. The health care system in the United States desperately needs more pharmacists who are qualified to help people make the best use of medicines, and accredited residency training is how the nation achieves that objective.

ASHP appreciates this opportunity to present its comments on this significant public health issue. If you have any questions regarding our comments, please contact Gary C. Stein, Ph.D., ASHP's Director of Federal Regulatory Affairs. Dr. Stein can be reached by telephone at 301-657-3000, extension 1316, or by e-mail at


Henri R. Manasse, Jr., Ph.D., Sc.D.
Executive Vice President and CEO

1. Institute of Medicine, To Err is Human: Building a Safer Health System. 1999, p. 168.
2. The Pharmacist Workforce: A study of the Supply and Demand for Pharmacists. Department of Health and Human Services, Health Resources and Service Administration, Bureau of Health Professions. December 2000.