NOTICES
Fee-for-Service Payment for Outpatient Drugs in the Medical Assistance Program
[47 Pa.B. 1921]
[Saturday, April 1, 2017]The Department of Human Services (Department) announces proposed changes to the fee-for-service (FFS) payment methodology for outpatient drugs in the Medical Assistance (MA) program, as required in the ''Medicaid Program; Covered Outpatient Drugs'' final rule of the Centers for Medicare & Medicaid Services (CMS) published at 81 FR 5170 (February 1, 2016) amending 42 CFR Part 447 (relating to payments for services).
Ingredient Cost
The final rule published at 81 FR 5170 requires states to use actual acquisition cost (AAC), rather than estimated acquisition cost, to pay for pharmacy ingredient costs. States had the flexibility to implement AAC payment based on several different benchmarks, including National Average Drug Acquisition Cost (NADAC), a state survey of retail pharmacy providers, or Average Manufacturer Price. NADAC, published monthly by CMS, represents the National average invoice price derived from retail community pharmacies for drug products based on invoices from wholesalers and manufacturers. After considering the various options, the Department will use NADAC to determine AAC because the Department concluded that NADAC was the most economical and efficient option that will continue to assure quality of care and sufficient beneficiary access in accordance with section 1902(a)(30)(A) of the Social Security Act (42 U.S.C.A. § 1396a(a)(30)(A)).
Payment for the ingredient cost of brand outpatient drugs will be based on the lower of the provider's usual and customary (U&C) charge, or NADAC or an equivalent to NADAC when a NADAC is not available. Payment for generic outpatient drugs will be based on the lowest of the provider's U&C charge; NADAC or an equivalent to NADAC when a NADAC is not available; the Federal Upper Limit published by CMS; or the Department's State maximum allowable cost.
When a NADAC is not available for a specific drug product, CMS requires states that adopt NADAC to establish an alternative equivalent to NADAC. Based on research conducted by Mercer Human Services Government Consulting (Mercer), the Department determined that the wholesale acquisition cost (WAC) minus 3.3% and WAC minus 50.5% were equivalent to NADAC values for brand name drugs and generic drugs, respectively, for payment for drugs without a published NADAC. The Department will continue to compare WAC to NADAC values and will issue public notice of changes to the adjusted WAC.
Professional Dispensing Fee
The final rule published at 81 FR 5170 also requires states to pay a professional dispensing fee, rather than a ''reasonable dispensing fee,'' and describes the pharmacy costs that are to be included in the calculation of the professional dispensing fee. The Department will base the professional dispensing fee on the results of a State-specific dispensing fee survey so that the fee accurately reflects the costs of professional dispensing by pharmacy providers in this Commonwealth to dispense a drug product to MA FFS beneficiaries. Mercer conducted the survey, which was designed to be comprehensive and capture expenses incurred by pharmacies to dispense a prescription to an FFS beneficiary and included in the definition of a professional dispensing fee in the final rule published at 81 FR 5170. All 3,280 pharmacies enrolled in the MA Program were included in the study population. The final total usable response rate was 51.5% of pharmacies enrolled in the MA Program. All data was self-reported by and certified as accurate by a representative of each pharmacy. They reported 81.6% of costs were attributed to prescription department payroll; 8.9% to prescription department ''other costs''; 6.1% by facility-related costs; and 3.5% by other nonfacility administrative (overhead) expenses. The survey results support $7 as the average cost of professional dispensing as defined in the final rule published at 81 FR 5170 for pharmacies dispensing prescriptions to FFS beneficiaries. The Department will issue public notice of any future adjustments.
Fiscal Impact
The fiscal impact of the revised payment methodology is estimated at $0.085 million in total funds ($0.041 million in State funds) in Fiscal Year (FY) 2016-2017. The FY 2017-2018 annualized amount is estimated at $1.018 million in total funds ($0.491 million in State funds.)
Effective Date
The final rule published at 81 FR 5170 requires that the new payment methodology be effective April 1, 2017. The Department is in the process of making the system changes needed to implement the new payment methodology and will adjust claims in accordance with the new payment methodology.
Copies of Notice
This public notice is available for review at local County Assistance Offices throughout this Commonwealth.
Public Comment
Interested persons are invited to submit written comments regarding the revised payment methodology within 30 days to the Department of Human Services, Office of Medical Assistance Programs, c/o Regulations Coordinator, Room 515, Health and Welfare Building, Harrisburg, PA 17120, OMAP-Pharmacy@pa.gov.
Persons with a disability who require an auxiliary aid or service may submit comments using the Pennsylvania AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
THEODORE DALLAS,
SecretaryFiscal Note: 14-NOT-1131. (1) General Fund; (2) Implementing Year 2016-17 is $41,000; (3) 1st Succeeding Year 2017-18 through 5th Succeeding Year 2021-22 are $491,000; (4) 2015-16 Program—$392,918,000; 2014-15 Program—$564,772,000; 2013-14 Program—$428,041,000; (7) MA—Fee-for-Service; (8) recommends adoption. Funds have been included in the budget to cover this increase.
[Pa.B. Doc. No. 17-543. Filed for public inspection March 31, 2017, 9:00 a.m.]
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