Additional CMS Guidance on Covered Outpatient Drugs

The U.S. Centers for Medicare & Medicaid Services (CMS) recently provided to state Medicaid directors additional guidance on compliance with the Covered Outpatient Drugs final rule issued 2/1/16 (81 Fed. Reg. 5170; see also previous blog post).  The CMS guidance letter outlines the final rule’s “key changes that states need to address when determining their reimbursement methodologies.”  Key changes include the requirement “for states to reimburse at an aggregate upper limit based on actual acquisition cost (AAC) plus a professional dispensing fee established by the agency; the implementation of the Affordable Care Act federal upper limit (FUL); and requirements for the 340B entities, 340B contract pharmacies, Indian Health Service (HIS), Tribal, and Urban Indian Organization pharmacies.”  [The 340B Drug Pricing Program was created by the Veterans Health Care Act of 1992 (see Pub. L. No. 102-585, §602; 106 Stat. 4963, 4967), and requires drug manufacturers to provide outpatient drugs at reduced prices to eligible health care organizations.]  The CMS guidance letter also addresses “the requirement for states to review both components of their total pharmacy reimbursement methodology when proposing changes to either the ingredient cost or the professional dispensing fee for all reimbursement methodologies,” as well as “provides the information that states must include in a state plan amendment (SPA) relating to any proposed changes in reimbursement and the timeframe established for states to comply with the new requirements.”  For additional information, see the CMS – Medicaid – Federal Policy Guidance page, which includes a link to the 2/11/16 Implementation of the Covered Outpatient Drug Final Regulation Provisions Regarding Reimbursement for Covered Outpatient Drugs in the Medicaid Program letter.