December 152016Ohio Medicaid Agency Holds Pharmacy Payment Changes Stakeholder Meeting Regarding CMS’s Covered Outpatient Drug Final Rule

- By Jamila Seibel, PharmD, Consultant

On December 6, 2016, Ohio Medicaid, in conjunction with Mercer Government Human Services Consulting, held a stakeholder meeting to discuss changes to pharmacy payments for Medicaid patients in response to the Centers for Medicare and Medicaid Services’ (CMS) Covered Outpatient Drug Final Rule (view here). The live webinar, which largely focused on billing and reimbursement in the retail pharmacy setting, reviewed results from a cost of dispensing survey and pricing analysis conducted by Mercer to assist with setting new rates of reimbursement, which will shift to a model based on actual acquisition cost (AAC) plus a professional dispensing fee (PDF) in 2017.

The changes required by the Final Rule are applicable to “340B covered entities and their contract pharmacies”, per information presented during the December 6th session. For 340B covered entities this means that drugs purchased through the 340B program will be reimbursed at the 340B actual acquisition cost, and at a price no higher than the 340B ceiling price.  It was noted that 340B ceiling prices are not made available to state Medicaid agencies; states will be required to calculate the 340B ceiling price using the known formula and access to the average manufacturer price (AMP) and unit rebate amount (URAs) through the drug data reporting (DDR) system. Representatives from the Ohio Medicaid agency clearly emphasized that CMS’ Final Rule requiring use of AAC reimbursement methodology will only apply to fee for service patients and is not applicable to managed Medicaid, for which the process of drug billing and reimbursement is determined by the contract between the provider and MCO Pharmacy Benefit Management organizations.

One point of confusion for 340B entities surrounds the language used during the information session pertaining to “340B covered entities and their contract pharmacies”. As most 340B entities are well-aware, it has been HRSA’s long-standing guidance that contract pharmacies must carve-out Medicaid, unless the covered entity otherwise has an arrangement with the state Medicaid agency to prevent duplicate discounts. Since the state of Ohio has not made any such arrangements for the use of 340B drugs in Medicaid patients in the contract pharmacy setting, entities are left to wonder whether the Final Rule truly affects 340B contract pharmacies at all. Perhaps the intent was to include 340B entity-owned retail pharmacies, for which this content would be applicable? Also absent from the December 6th information session was any discussion regarding Medicaid billing and reimbursement for drugs administered in the hospital setting or those considered physician administered drugs. Ohio Department of Medicaid (ODM) indicated that they are meeting with the Ohio Hospital Association (OHA), and there has been discussion regarding the need to identify Medicaid claims and the use of claim modifiers, but no formal education or information was provided for hospital entities.

With an April 2017 deadline quickly approaching, 340B entities should remain in close contact with ODM and OHA to fully understand the new billing requirements and operational strategies that will be necessary to comply with upcoming changes.