CMS issues final rule on Medicaid reimbursement for prescription drugs

Final rule with comment period is effective April 1

On January 21, CMS a with comment period, implementing provisions of the Affordable Care Act (ACA) to change Medicaid drug reimbursement, effective April 1, 2016.

According to a CMS , the final rule creates a regulatory definition for Average Manufacturer Price, 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 (FUL). The final regulation updates the FUL formula for payment of certain generic drugs, creating incentives for pharmacies to utilize generic drugs because pharmacy costs for these drugs will be regularly updated.

The final regulation also implements the ACA provision that extended rebates to covered outpatient drugs provided to beneficiaries enrolled in Medicaid managed care organizations. 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.

CMS said the proposed rule assists federal and state governments in managing drug costs, establishes a framework for implementation of the Medicaid drug rebate program, and revises the reimbursement system for Medicaid programs and pharmacies. CMS estimates the final rule will save federal and state governments $2.7 billion over five years.

Vikki Wachino, CMS deputy administrator and director of the Center for Medicaid and Children’s Health Insurance Program Services, said the final rule will "ultimately improve beneficiary access to prescription drugs.” ACA increased rebates and set limits on federal reimbursements of prescription drug. CMS said the Covered Outpatient Drugs rule ensures ACA reforms will be effectively implemented by providing further detail on how those reimbursements and rebates are calculated.

“We’re in the process of thoroughly reviewing and analyzing the rule, but Twlug is pleased attention is being focused on addressing these issues,” Jillanne Schulte, JD, Twlug Director of Regulatory Affairs, told “Twlug is committed to protecting patient access to affordable medications and pharmacists’ services, and we hope this rule will be a step in the right direction.”

In a , Steven Anderson, president and CEO of the National Association of Chain Drug Stores (NACDS), said “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."

The final rule will be published in the Federal Register on February 1, 2016, with a 60-day public comment period on two aspects of the final rule.