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My aunt is a facility in Idaho. She has a list of doctor approved OTC meds such as melatonin, Tylenol, etc that we send to her because the facility takes all her money and and she can't even buy toothpaste, shampoo. First the began imposing a dispensing fee for OTC items. We began mailing them to her (again...Doc knows this). Now they told her they want to call us to find out what we pay for these items, and want us to instead give her a debit card to purchase this from then instead. They take everything from her and now they want to start taking from us. They've known for couple months we send her these items so it can't be against a so-called rule. Can they turn around and say she must get this from them?

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Interesting question. See, a doctor will even list OTC medications and the medications that require a prescription on their chart. Example: Prilosec, but the generic is: "omeprazole"; same type of medication. The doctor also can review the dosage for an OTC medication, because many OTC medications come in varying dose and types. You mentioned Tylenol. See a doctor knows that this is not always the best choice for regular maintenance. Example: Tylenol in high doses can cause liver damage and lead to coma or death or make someone very sick, which is why it is best a doctor and/or nurses who are licensed to manage all the medications, be just that. The doctor might recommend a different dosage and type of acetaminophen that causes less side effects. As for nursing home/buying meds from them: I think it is still a situation where someone needs to be in charge of healthcare management, not licensed and non-licensed people. Work together and bring those questions to doctor so become more educated about pros/cons of OTC medications. Good luck!
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If you are on Medicaid in a nursing home you are not responsible to pay for any medication including OTCs. If ur on Medicaid , the home gets all ur money and leaves u, in my Mom's situation, $35 a month for personal needs. Family is not responsible for any charges. This facility asking for a debt card is fishy.
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Is your LO on Medicaid? If so, this may be their rules. Idk.
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You really do not say what type of facility your Aunt is in. Assisted living or nursing home on Medicaid. 
In my experience the answer is yes, you buy from their pharmacy.
My Mom was paying privately for her AL. All her meds even OTC went thru the pharmacy associated with. A perscription, even for OTC, had to come from her primary Dr. All meds are done in blister packs which helps the facility keep track. I received a bill once a month showing me what meds were order and amounts. The amount owed was the copay on perscription meds and cost of OTC. Money was sent to the pharmacy directly. Any fee from the facility was in the amount I paid for her care.
Now she is privately paying for a long-term nursing facility and I have not seen a bill for her prescription. For the cost of 9300 a month I hope the cost is covered.
Mom goes on Medicaid next month. Everything is covered and there is $35 a month put into an acct they oversee.
You need to find out why the "fee" is not included in her care. Then u need to ask why the pharmacy they use are not billing Mom or you. I would not give them a debit card. I would just have you billed for anything they feel Mom owes. Then you know what they are billing for and can question charges.
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My first call would be to my mother's social worker (not associated with the facility). I have run questions by her and gotten my answers in a timely manner on this journey we are on. My mother has $60 each month for her personal items (Oregon State). However, I have been purchasing her personal items ie. all grooming products, treats, etc. on my dime and our facility is wonderful about it. I have not been questioned for doing this. I do not purchase any meds so that they are totally aware of what she is receiving. I'm very aware of the damage it can do when meds and even vitamins are mixed with prescribed meds so I leave that to them to monitor and dispense. A talk with the administration would be in order for your situation, but before that I'd call and get all the information I needed prior to the meeting. If you go in educated as to rights and governing regulation you'll be miles ahead in solving your situation. Good luck!
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"Dispensing fee"? The facility doesn't "dispense" the OTC meds----they come from the same pharmacy that the Rx prescriptions do, in the same deliveries. The facility is trying to put a name on some fee they're charging to cover the cost of the OTC meds. You need to find out if the OTC meds are considered "house stock" or are dispensed by the pharmacy specifically for your mother.

Regardless of the above, telling you that they want you to give her a debit card that is loaded with your money, not hers (since they take it all), would seem unethical if not illegal. LTC facilities can't ask family for more money than what they're getting from Medicaid/Medicare. Also, it's none of their business what you're paying for the OTC meds you're sending her----unless they're paying for it, it is none of their business. If the issue is solely money, and if the OTC meds you're sending are in a completely sealed & unopened package, there is no reason to give your mother a debit card to pay for them. Plus, since LTC facilities are notoriously money hungry, I wouldn't trust them with a pre-paid debit card. If the doctor is okay with this, then the facility should be okay with it & you should continue sending it to her. If she is taking something like Tylenol every day (or they are telling you that she is), that should be checked out because long term Tylenol use is linked to liver failure & is not an appropriate pain reliever in the elderly.. Maybe she would be better served by a prescription pain reliever which would solve the OTC issue. The same thing applies for melatonin---she might benefit more from a prescription medication to help her sleep. Not a narcotic or controlled medication, but maybe an anti-seizure/anti-psychotic medication.

The facility is supposed to leave your mother with a certain amount of spending money out of every monthly social security/pension check to pay for things like getting her hair done, toothpaste & shampoo. I am not familiar with Idaho, but in the states I am familiar with, that is around $40/month. If they are taking "everything", that is something you should be checking out.
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If your mom has Medicaid, you need to contact them and they will explain what can be provided according to their rules and regulations along with the state rules. It's possibly you may need to contact the state appointed attorney for the nursing homes for assistance
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I would imagine that their justification for this policy is based on quality control. Being responsible for storing and administering any medication that your mother takes, they not unnaturally want to be certain of its source and its quality; and the easiest way for them to do that is to insist on being the supplier. And if they make a profit out of it, hey, they can't help that can they...

Call the facility and negotiate. If they will agree to supply her usual otc intake at the same price or less than you are paying for them (+ postage and packing don't forget), then she gets her meds, you're saved the trouble and they can tick their 'safe storage and handling' boxes. Just keep on eye on price and fee creep thereafter, and don't bind her into a contract that you can't change later if need be.
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I'm not familiar with Medicaid rules which may govern your situation

Mom's private pay memory care requires all meds even Tylenol be dispensed through their pharmacy provider or there's a $300-$400 restocking fee
Licensing prevents them from giving her anything unless it's prescribed by a doctor even vitamin d

When I visit I can give her something but I'm not there everyday
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