Covered Outpatient Drugs Federal Final Rule Medical Assistance (MA) Program Fee-for-Service (FFS) Pharmacy Reimbursement 1
Background On February 1, 2016, the Centers for Medicare and Medicaid Services (CMS) published the Covered Outpatient Drug Final Rule (CMS-2345-FC) (81 FR 5170) The Final Rule includes changes that states need to address when determining their payment methodologies for covered outpatient drugs in the Fee-for-Service (FFS)* program *The provisions for reimbursement do not apply to MCOs. 2
Background, continued Changes required under the new federal rule: 1. Requires states to pay pharmacy providers based on the actual acquisition cost (AAC) of the drug plus a professional dispensing fee 2. Requires states to submit a state plan amendment (SPA) with any proposed changes in payment methodology by June 30, 2017 with an effective date of no later than April 1, 2017 3. Requires states to include a description of reimbursement of drugs dispensed by 340B entities and 340B contract pharmacies in the SPA 3
Executive Summary To comply with the federally required changes, DHS is proposing regulations to implement the following: Adopt an AAC payment methodology for ingredient cost Increase the dispensing fee to $7.00 4
Actual Acquisition Cost (AAC) The agency s determination of the pharmacy providers actual prices paid to acquire drug products marketed or sold by specific manufacturers Options to determine AAC: Conduct a state survey of retail pharmacy providers pricing Use a national survey, such as the National Average Drug Acquisition Cost (NADAC) Use published compendia prices, such as wholesale acquisition cost (WAC) with adjustments to reflect discounts and other price concessions commonly obtained by retail pharmacies Proposed Option: Adopt a lower of methodology that includes NADAC An adjusted WAC when no NADAC is available 5
AAC Reimbursement for Ingredient Cost Outpatient Pharmacies Current Reimbursement For Brand Drugs, the lower of: Provider s Usual & Customary (U&C) charge WAC + 3.2% AWP 14% For Generic Drugs, the lower of: Provider s U&C WAC + 0% AWP 25% CMS FUL State Maximum Allowable Cost (MAC) Proposed Reimbursement For Brand Drugs, the lower of: Provider s U&C NADAC or WAC 3.3% For Generic Drugs: the lower of: Provider s U&C NADAC or WAC 50.5% CMS FUL State MAC 6
AAC 340B Reimbursement for Ingredient Cost - Outpatient Pharmacies Current 340B Drug Reimbursement: For brand drugs, the lower of: Provider s U&C WAC + 3.2% AWP 14% For generic drugs, the lower of: Provider s U&C (same as above) WAC + 0% AWP 25% CMS FUL State Maximum Allowable Cost (MAC) Proposed 340B Drug Reimbursement: For brand drugs, the lower of: Provider s U&C, not to exceed the 340B ceiling price NADAC or WAC 3.3% For generic drugs, the lower of: Provider s U&C, not to exceed the 340B ceiling price NADAC or WAC 50.5% CMS FUL State MAC 7
Professional Dispensing Fee Incurred at the point of sale or service and pays for costs in excess of the ingredient cost of a covered outpatient drug each time a covered outpatient drug is dispensed. Includes only pharmacy costs associated with ensuring that possession of the appropriate covered outpatient drug is transferred to a Medicaid beneficiary. Options: A national survey, regional or neighboring state surveys, or a state-specific survey Approach: Engaged Mercer Government Human Services Consulting (Mercer) to conduct a study on Pennsylvania-specific provider costs associated with professionally dispensing covered outpatient prescription drugs to FFS beneficiaries. Result: Based on the analysis of surveyed responses, $7.00 represents the average cost of professional dispensing as defined by the final rule for pharmacies dispensing prescriptions to Medicaid FFS beneficiaries. 8
Next Steps The Department: Posted the slides and the Mercer PROFESSIONAL DISPENSING FEE (PDF) ANALYSIS FOR MEDICAID BENEFICIARIES PHARMACY SURVEY REPORT on the Department s website for public view Will submit proposed rulemaking to amend the current regulations in Title 55 of the Pennsylvania Code, Chapter 1121, by updating the payment methodology for covered outpatient drugs to reflect the CMS Medicaid Program; Covered Outpatient Drugs; Final Rule; 42 CFR Part 447; [CMS-2345-FC] Will post a link to the proposed rulemaking on the Department website upon publication in the Pennsylvania Bulletin Will submit a SPA to reflect changes in pharmacy payment methodology by June 30, 2017 Regulations will be effective with publication as final in the Pennsylvania Bulletin 9
Comments Interested persons are invited to submit written comments and questions to the Department at the following address: OMAP-Pharmacy@pa.gov Please submit your comments and questions by April 27, 2017. 10