BEFORE THE DEPARTMENT OF PUBLIC
HEALTH AND HUMAN SERVICES OF THE
STATE OF MONTANA
TO: All Concerned Persons
1. On September 29, 2011, at 10:00 a.m., the Department of Public Health and Human Services will hold a public hearing in the auditorium of the Department of Public Health and Human Services Building, 111 North Sanders, at Helena, Montana, to consider the proposed amendment of the above-stated rules.
2. The Department of Public Health and Human Services will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Department of Public Health and Human Services no later than 5:00 p.m. on September 19, 2011, to advise us of the nature of the accommodation that you need. Please contact Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; telephone (406) 444-4094; fax (406) 444-9744; or e-mail firstname.lastname@example.org.
3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
37.86.1101 OUTPATIENT DRUGS, DEFINITIONS (1) through (3) remain the same.
(4) "Estimated acquisition cost (EAC)" means the calculation of the provider's estimated cost of a drug for which no federal maximum allowable cost (FMAC) or state maximum allowable cost (SMAC) price has been determined. The EAC is the department's best estimate of what price providers are generally paying in the state for a drug in the package size providers buy most frequently. If actual wholesale cost is not available, the EAC is
85% of average wholesale price. the lesser of:
(a) eighty-five percent of average wholesale price (AWP); or
(b) wholesale acquisition cost (WAC) plus 2%.
(5) through (10) remain the same.
(11) "Active Pharmaceutical Ingredient" (API) means a nonrebatable bulk drug substance, which is defined in 21 CFR 207.3(a)(4)(2011) as any substance that is represented for use in a drug and that, when used in manufacturing, processing, or packaging of a drug, becomes an active ingredient of the drug product.
AUTH: 53-2-201, 53-6-113, MCA
IMP: 53-2-201, 53-6-101, 53-6-111, 53-6-113, MCA
37.86.1102 OUTPATIENT DRUGS, REQUIREMENTS (1) and (2) remain the same.
(3) The department will only participate in the payment of legend and over-the-counter drugs listed on the department drug formulary, as determined by the Medicaid Drug Formulary Committee established by the department. The formulary committee is the Drug Use Review Board, established and operating in accordance with 42 USC 1396r-8
(2008) (2011), which governs Medicaid drug programs. The drug formulary includes a preferred drug list (PDL) of selected drugs that have a significant clinical benefit over other agents in the same therapeutic class and also represent s good value to the department based on total cost. Prescribers must prescribe from the preferred drug list if medically appropriate.
(a) through (5)(b) remain the same.
(6) The department will not participate in the payment of a prescription drug:
(a) remains the same.
(b) that is not subject to a rebate agreement between the manufacturer and the secretary of HHS as required by 42 USC 1396r-8
(2008) (2011); and
(c) that does not meet prior authorization criteria as determined by the Medicaid Drug Formulary Committee, established and operating in accordance with 42 USC 1396r-8
(2008) (2011), without the existence of a prior authorization request approved by the department or its designated representative. A list of drugs subject to prior authorization, known as the prior authorization drug list, will be provided to interested Medicaid providers.
(7) The department may pay for nonrebatable API bulk powders and excipients compounded in accordance with ARM 37.86.1105(4).
(7) remains the same but is renumbered (8).
(8) (9) The department has a drug rebate program administered in accordance with 42 USC 1396r-8 (2008) (2011) and CMS state releases, CMS drug manufacturer releases, and the National Drug Rebate Agreement in effect in 2008, which the department adopts and incorporates by reference. A copy of all documents incorporated by reference in this rule may be obtained from the department web site at www.dphhs.mt.gov, or by writing to the Department of Public Health and Human Services, Health Resources Division, Acute Services Bureau, 1400 Broadway, P.O. Box 202951, Helena, MT 59620-2951.
(a) remains the same.
(b) 42 USC 1396r-8
(2008) (2011) states the requirements that must be met by the department, drug manufacturers, and providers to receive reimbursement for outpatient drugs that have been dispensed. This statute describes rebate agreements, covered drugs, prior authorization, reimbursement limits, and drug use review programs.
(9) and (10) remain the same but are renumbered (10) and (11).
AUTH: 53-2-201, 53-6-113, MCA
IMP: 53-2-201, 53-6-101, 53-6-113, 53-6-141, MCA
37.86.1105 OUTPATIENT DRUGS, REIMBURSEMENT (1) through (2)(a) remain the same.
(b) The dispensing fees assigned shall range between:
(i) a minimum of $2.00 and a maximum of $4.94 for brand name drugs; and
(ii) a minimum of $2.00 and a maximum of $6.40 for preferred brand name drugs and generic drugs.
(c) and (d) remain the same.
(3) In-state pharmacy providers that are new to the Montana Medicaid program will be assigned
an interim $4.94 the maximum dispensing fee in (2)(b) until a dispensing fee questionnaire, as provided in (2), can be completed for six months of operation. At that time, a new dispensing fee will be assigned which will be the lower of the dispensing fee calculated in accordance with (2) for the pharmacy or the $4.94 maximum allowed dispensing fee provided in (2)(b). Failure to comply with the six months dispensing fee questionnaire requirement will result in assignment of a dispensing fee of $2.00.
(4) through (4)(h) remain the same.
(i) The department may reimburse for compounded nonrebatable API bulk powders and excipients on the department's drug formulary maintained in accordance with ARM 27.86.1102.
(5) remains the same.
(6) Full-benefit dual eligible recipients qualify for pharmaceutical drug coverage under Medicare Part D prescription drug plans (PDPs) on January 1, 2006 under 42 USC 1302, 1395w-101 through 1395w-152
(2005) (2011), the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). For purposes of the MMA and this rule, the term full-benefit dual eligible has the same meaning as stated in 42 CFR 423.772.
(7) The MMA allows PDPs to exclude from coverage the drug classes listed in 42 USC 1396r-8(d)(2)
(2005) (2011). Montana Medicaid may also exclude these drugs and has chosen to do so except for the prescription and nonprescription drugs identified on the department's drug formulary. On January 1, 2006, Montana Medicaid's reimbursement for outpatient drugs provided to full-benefit dual eligible recipients, for whom third party payment is not available, will be limited to the excluded drugs identified on the department's drug formulary.
AUTH: 53-2-201, 53-6-113, MCA
IMP: 53-2-201, 53-6-101, 53-6-113, MCA
37.86.1106 CALCULATION OF THE STATE MAXIMUM ALLOWABLE CHARGE, THE ESTIMATED ACQUISITION CHARGE, AND PROVIDER'S USUAL AND CUSTOMARY CHARGE (1) remains the same.
(2) The estimated acquisition cost (EAC) for a drug is:
(a) remains the same.
(b) 85% of the average wholesale price (AWP) if there is no direct price available to providers in the state; or
(c) (b) a department set SMAC for specified drugs or drug categories when the department determines that acquisition cost is lower than (2 )(a) or (b) (c) based on national pricing data ., or
(c) the lesser of:
(i) eighty-five percent of the average wholesale price (AWP) if there is no direct price available to providers in the state; or
(ii) the wholesale acquisition cost (WAC) plus 2%;
(3) remains the same.
AUTH: 53-6-101, 53-6-113, MCA
IMP: 53-6-101, 53-6-113, MCA
4. Statement of Reasonable Necessity: The Department of Public Health and Human Services (the department) is proposing amendments to ARM 37.86.1101, 37.86.1102, 37.86.1105, and 37.86.1106 pertaining to Medicaid pharmacy provider reimbursement.
The proposed rule change is necessary to add a wholesale acquisition cost (WAC) pricing field to the pharmacy reimbursement algorithm due to the discontinuance of average wholesale price (AWP) published by First DataBank and to adjust the dispensing fee to maintain cost neutrality and to provide incentives to providers to dispense generic and preferred brand name drugs which offer better value to the state. AWP pricing will remain in the pricing algorithm if it becomes available from another reliable source. In addition, language is being added to allow for the reimbursement of API compound drugs. The Center for Medicare and Medicaid Services (CMS) recently changed its definition of API bulk powders but advised state Medicaid programs that they could continue to be covered by pharmacy programs as nonrebatable products. The language is added to allow for proper reimbursement of these medically necessary compounded products. All federal statutes cited through the rules are also being updated to 2011 standards.
First DataBank, the department's current drug pricing file vendor, contracted through ACS, will discontinue publishing average wholesale price (AWP) as of the last week in September of 2011. Adding a wholesale acquisition cost (WAC), plus pricing mechanism, will allow the department to continue pricing drugs appropriately. AWP will be available through vendors other than First DataBank; however, it is unknown, at this time, how they would compare to the current AWPs as a comparative analysis is pending. Because WAC tends to reimburse generic drugs at a lower rate, an increase in dispensing fees for preferred brands and generic drugs will provide incentives to pharmacy providers to dispense drugs that offer the best value to the state.
The department is proposing to add language to this rule so that it matches what is published in the department's drug pricing file vendor. The department is also proposing to add a definition for "Active Pharmaceutical Ingredient (API)", to the rule.
The department is proposing amendments to update references to 42USC139r-8 from 2008 to 2011. The department is also proposing to add nonrebatable API bulk powders and excipients as reimbursable compound drug ingredients.
The department is proposing language to differentiate the dispensing fee between brand name drugs and preferred brand name drugs and generics. The department is also proposing to remove references to $4.94 and changes the maximum allowed.
The department is proposing to add language to clarify the 85% of average wholesale cost (AWP) and wholesale acquisition cost (WAC) plus 2%.
The proposed changes to ARM 37.86.1102 and 37.86.1106 are expected to have no fiscal impact to the department and no material effects on Medicaid recipients or Medicaid providers.
The estimated federal and state general fund and total cost to the department for the proposed rule changes are listed below, based on the blended federal medical assistance percentages (FMAP) method of 66.19% federal funds and 33.81% state funds:
SFY 2012 Program Fed State Total
37.86.1101 Outpatient Drugs, Definitions ($802,224) ($409,776) ($1,212,000)
37.86.1105 Outpatient Drugs, Reimburse $802,224 $409,776 $1,212,000
$0 $0 $0
Persons and Entities Affected
The proposed rule changes could affect an estimated 105,113 Medicaid recipients and 265 pharmacy providers.
5. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to: Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; fax (406) 444-9744; or e-mail email@example.com, and must be received no later than 5:00 p.m., October 6, 2011.
6. The Office of Legal Affairs, Department of Public Health and Human Services, has been designated to preside over and conduct this hearing.
7. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in 5 above or may be made by completing a request form at any rules hearing held by the department.
8. An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.
9. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.
/s/ John Koch /s/ Anna Whiting Sorrell
Rule Reviewer Anna Whiting Sorrell, Director
Public Health and Human Services
Certified to the Secretary of State August 29, 2011.