CMS final rule addresses decades-long Medicaid reimbursement issue
BALTIMORE - The end of what has become a decades long battle around fair reimbursement for Medicaid programs and pharmacy appears to be in sight.
On Thursday the Centers for Medicare & Medicaid Services issued the Covered Outpatient Drugs final rule with comment that addresses key areas of Medicaid drug reimbursement and changes made to the Medicaid Drug Rebate Program by the Affordable Care Act. According to a fact sheet published by CMS, this final rule assists states and the federal government in managing drug costs, establishes the long term framework for implementation of the Medicaid drug rebate program and creates a more fair reimbursement system for Medicaid programs and pharmacies.
“This is the latest chapter in a decade-long saga that has required NACDS and our allies to defend pharmacy patient care against the potentially devastating cuts of the Deficit Reduction Act of 2005 – which was enacted in 2006 – and the regulations that were proposed to implement it in 2007," stated Steven Anderson, president and CEO of the National Association of Chain Drug Stores Thursday evening. “We are at this point today because NACDS and our allies have waged a pro-patient and pro-pharmacy effort at the federal and state levels, and in the legislative, executive and judicial branches of government. We have advocated for policies that are appropriate from the perspectives of good government and of high quality, accessible patient care," he said.
According to CMS, the final rule accomplishes the following:
The final rule creates a regulatory definition for Average Manufacturer Price, a key concept underpinning the Medicaid drug rebate program, which is the program’s key metric both for the determination of manufacturer rebates as well as pharmacy reimbursement for certain generic drugs that are subject to the Federal Upper Limit;
The final regulation updates the FUL formula for the payment of certain generic drugs, which creates an incentive for pharmacies to utilize generic drugs because pharmacy costs for these drugs will be regularly updated;
The final regulation also implements the Affordable Care Act provision that extended rebates to covered outpatient drugs provided to beneficiaries enrolled in Medicaid managed care organizations; and
The final rule revises the definition of “states” to include U.S. territories (Puerto Rico, Virgin Islands, Guam, American Samoa and the Northern Mariana Islands) in the rebate program so that territories can also achieve savings in their drug expenditures.
In addition, the final rule is designed to ensure that pharmacy reimbursement is aligned with the acquisition cost of drugs and that the states pay an appropriate professional dispensing fee. The final rule:
Creates an exception to the FUL calculation, which allows for the use of a higher multiplier than 175% to calculate the FUL based on acquisition costs for certain multiple source drugs;
Establishes actual acquisition cost (AAC) as the basis by which states should determine their ingredient cost reimbursement so payments are based on a more accurate estimate of the prices available in the marketplace, while still ensuring sufficient beneficiary access;
Implements the use of the term professional dispensing fee to ensure that the dispensing fee paid to pharmacies reflect the cost of the pharmacist’s professional services and cost to dispense the drug product to a Medicaid beneficiary;
Clarifies that states are required to evaluate the sufficiency of both the ingredient cost reimbursement and the professional dispensing fee reimbursement when proposing changes to either of these components; and
Requires states to specify in the Medicaid state plan that reimbursement methodology to pharmacies that purchase drugs through the Federal Supply Schedule and the 340B Drug Pricing Program is consistent with overall AAC requirements.
NACDS, along with partners including the National Community Pharmacists Association, have been engaged on this issue every step of the way since Congress first enacted the DRA in February 2006, which changed the way Federal Upper Limits were calculated.
"The next step is to evaluate completely this final rule, and to hold it to the same standards that have motivated us consistently throughout the past near-decade: appropriate government policymaking and accessible patient care," Anderson said. "As a member-driven trade association, NACDS will work with member companies to review the rule and to determine exactly where we stand.”
This final rule also requests additional comments on the definition of line extension, which has a 60 day public comment period which will end on April 1.