You're probably aware that as of January 1, 2009 there will be new rules for pharmacies processing payments for items eligible for FSA/HRA spending. If you have a point-of-sale (POS) system, you'll need to make sure it is IIAS compliant and that your system has been certified. If you don't have POS, then you may be looking for another solution. In this interview, Retail Management Solutions President Brad Jones and KeyCentrix President Brandon Shuey tell ComputerTalk's Will Lockwood about a new joint venture that aims to offer pharmacists a choice in the technology they use to solve the FSA challenge.
CT: First, what exactly are the challenges pharmacists are facing when processing FSA/HRA cards?
Jones: The bottom line is that customers have invested money into a flexible spending account that must be used before the end of each year or that money is lost. Those customers will find a retail pharmacy who will accept their card whether it is their favorite community pharmacist or a local chain. Now, beginning January 1, 2009 if the community pharmacist does not have an IIAS compliant system - a typical credit card machine will no longer work - then that community pharmacist will not be able to serve those customers and will be forced to turn them away. Compounding the problem, FSA cards often have a similar appearance to credit/debit cards. Many pharmacies do not even realize that they are accepting FSA cards.
CT: Is implementing a solution really that important to the bottom line?
Shuey: If most community pharmacists looked at the number of FSA/HRA transactions they are doing now, they might conclude that they could survive not implementing a solution on January 1, 2009. But they need to be aware that third-party administrators are pushing FSA/HRA cards heavily because the cost savings with these cards is substantial. The number of cards that will be issued will grow substantially before the end of 2009. If a community pharmacy is not recognized as an entity that accepts those cards they will run the risk of not only losing loyal customers but also not gaining new ones.
CT: There's also the matter of the information that administrators send out about these programs, right?
Jones: Yes. Many health benefits administrators tell their employees they can only shop at businesses listed on the SIGIS Certified Merchant List. If your pharmacy is not on the list, customers may simply stop coming to your store.
CT: Why do pharmacists need a solution that stops short of installing POS?
Shuey: Simple - cost. While POS systems have a high return on investment, they are in fact an investment. Most community pharmacies recognize the value of a POS; they simply do not have it in their budgets to purchase a POS between now and the first of the year. There is no denying the benefits of installing a traditional POS. In fact, a POS is the last step in a pharmacy's workflow, which closes the loop on prescription processing. Regardless, most community pharmacists' pocketbooks are stretched too thin to allow them to justify the expense of a POS, especially on short notice. The vast majority of community pharmacies are able to operate their businesses profitably and efficiently with a simple cash register. Before we launched flexTRAX, there was no other solution for pharmacies that wanted to continue to process FSA cards after the beginning of the year without a POS.
CT: What about the 90% rule? Why does a pharmacy that meets this criterion even need a technology solution?
Jones: It is true that the IRS established an exemption rule for pharmacies whose sales are 90% medical products. Unfortunately, there hasn't been any progress on how pharmacists apply for and are recognized for this exemption. What that means is that regardless of your exemption status, all pharmacists who want to process FSA/HRA cards must follow the same procedure: register with SIGIS and implement an IIAS compliant system. At this point there are only two IIAS compliant systems types: flexTRAX or a traditional POS. FlexTRAX is an ideal solution for many pharmacies, especially those with little or no front-end business who still need to accept FSA payments as copays.
CT: How does your solution address these issues?
Shuey: FlexTRAX will allow pharmacies to continue processing FSA/HRA cards without a capital expenditure. flexTRAX is a pay-for-use system that will cost $50 per month and adds a very small transaction fee to all credit card transactions. In addition to processing FSA cards, flexTRAX will allow users to ring up sales and tender cash, check, or credit/debit card payments. It is a cash register replacement system that runs on a Windows PC with minimal hardware.
CT: Are there any special requirements for using it?
Jones: There are no special requirements for using the flexTRAX software. Pharmacies need compatible equipment, which they can purchase independently or choose from one of our packages. They also need to register with SIGIS in order to access the list of FSA eligible items.
CT: Why did KeyCentrix and RMS join forces on flexTRAX.
Shuey: Both of our businesses are focused on helping independent pharmacies remain profitable in an increasingly competitive market. Earlier this year the crisis became clear to both of us. Most community pharmacists were not aware of the issue or were not prepared to make a POS purchase before January 1, 2009, which puts their profits at risk. We discussed it briefly and decided the market needed an alternative in order to assist these community pharmacists and preserve the strength of the independent marketplace.
CT: Where can pharmacists get more information?
Shuey: They can visit our website, www.flextraxsolutions.com , for more information or to register for the product.