IIAS stands for inventory information approval system. This will be an IRS requirement come Jan. 1, 2009, for accepting debit cards used for flexible spending accounts. After Jan. 1, 2009, if a pharmacy does not have IIAS in place it will no longer be able to process flex-spending debit cards.

What IIAS does is provide real-time substantiation of OTC purchases at the point of sale. Customers will no longer have to save and submit receipts for reimbursement. However, your POS system must be certified as IIAS compliant in order for this to happen. One purpose of IIAS is to eliminate the sorting through of receipts submitted by consumers for reimbursement in order to cull out those OTC products that are not flex-eligible. The responsibility for this is being shifted to retailers.

A new standards development organization has surfaced because of this. It's called the Special Interest Group for IIAS Standards (SIGIS). I have been told that there is a small fee of $250 to become a member. With this you receive the IIAS product file (UPCs and SKUs) and updates with the flex-eligible OTC items. However, you would want to check to see if the file includes your wholesaler's private-label OTCs. The idea here is that when the flex-spending card is swiped at the register, the purchases are run up against this file, allowing the POS system to provide a separate total for eligible products. These are then charged to the person's flex-spending account.

Certification with SIGIS involves completion of a merchant self-assessment questionnaire. Then there is the actual testing of your system to make sure it's compliant with IIAS. Your system will also have to meet the yet-to-be-determined data retention and retrieval standards necessary in the event of an IRS audit.

If you go to the SIGIS Web site (sig-is.org) you will see a long list of chains in the process of becoming IIAS compliant. Drugstore.com, Sam's Club, Walgreen's, and Wal-Mart are already there. In fact, it was

drugstore.com where IIAS originated. You will also see the credit-card processors that are members. It's possible to work through these processors, particularly if they are SIGIS members, but I would check with your POS vendor first. The ideal would be for the vendor to have its system certified and, as a result, all the users in the vendor's network gain certification as well - the same way it works for the chains. This is also the way it's done with prescription third-party claims. Why should it be any different for IIAS?

The threat to independent pharmacies and small chains is the loss of not only front-store OTC business; consumers could decide to take their prescription business to the chains as well. Point-of-sale systems have new value in the workflow model that is gaining popularity in busy pharmacies. With a bidirectional flow of information between the POS and pharmacy system, there is complete tracking of prescriptions from intake to checkout. That's one good reason for installing a POS system. Now there is another — IIAS. CT