NCPA's Blog - The Dose

The Dose


by NCPA | Jan 22, 2016

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The Centers for Medicare & Medicaid Services yesterday issued a 658-page, often-delayed, pre-blizzard final rule on use of Average Manufacturer Price to calculate Federal Upper Limits (FULs) in determining reimbursement for generic drugs covered by Medicaid.

"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," a CMS fact sheet states.

NCPA, which along with NACDS had filed a lawsuit to block a previous proposed rule because the AMP formula under consideration wouldn't cover pharmacy acquisition costs, pointed to several positive provisions NCPA had strongly recommended in this final rule for community pharmacies. They included:

  1. CMS has established a revised process by which a multiplier higher than 175% will be used to calculate FULs to ensure they are not lower than the average retail community pharmacies' acquisition costs, determined by the most current CMS monthly NADAC pricing file. NADAC will serve as a reimbursement "floor"—or that in instances where the FUL is below acquisition cost—NADAC value will be used.

  2. CMS is requiring states to consider both the ingredient cost reimbursement and the professional dispensing fee reimbursement when proposing changes of the reimbursement for Medicaid covered drugs. States must provide adequate data such as a state or national survey of retail pharmacy providers, or other reliable data other than a survey, to support any proposed changes through a State Plan Amendment (SPA) formal review process.

  3. State Medicaid Agencies without an established actual acquisition cost reimbursement must submit a SPA with an effective date no later than April 1, 2017, thereby providing an adequate one-year timeframe for compliance.

"We are still early in our assessment of this lengthy policy that was just released. However, in our very early read there are several provisions that appear that CMS listened to the evidence NCPA and others have presented to them and is treating community pharmacies fairly so they can continue to provide patient access to their services. Over the next few days we will complete our analysis and verify if this initial promising impression holds," said B. Douglas Hoey, NCPA CEO.

CMS has also announced plans to publish draft FULs in accordance with the final rule for two months beginning in January 2016. The final FULs will be published in late March 2016 and will be effective on April 1, 2016. States will have up to 30 days to implement the FULs. Thereafter, the FULs will be updated monthly on the website, and will be effective on the first date of the month following the publication of the update.

NCPA expects to file formal comments within the 60 day deadline.