BEFORE THE DEPARTMENT OF PUBLIC
HEALTH AND HUMAN SERVICES OF THE
STATE OF MONTANA
TO: All Concerned Persons
1. On April 22, 2016, the Department of Public Health and Human Services published MAR Notice No. 37-746 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 684 of the 2016 Montana Administrative Register, Issue Number 8.
2. The department has amended the following rules as proposed: ARM 37.86.105, 37.86.1102, and 37.86.1106.
3. The department has amended the following rules as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:
37.86.1101 OUTPATIENT DRUGS, DEFINITIONS (1) and (2) remain as proposed.
(3) "Allowed ingredient cost" means the "Average Acquisition Cost (AAC)" or "submitted ingredient cost," whichever is lower. If AAC is not available, drug reimbursement is determined at the lesser of "Wholesale Acquisition Cost (WAC)," "Federal Maximum Allowable Cost (FMAC)," or the "submitted ingredient cost."
(4) through (6) remain as proposed.
(7) "Federal maximum allowable cost" (FMAC) means the per unit amount the department reimburses a provider for a prescription drug included in the federal upper-limit program. FMAC is the federal upper limit the department will pay for multi-source drugs as published by the Centers for Medicare and Medicaid Services (CMS) at: https://www.medicaid.gov/medicaid-chip-program-information/by-topics/benefits/prescription-drugs/pharmacy-pricing.html.
(7) through (14) remain as proposed, but are renumbered (8) through (15).
AUTH: 53-2-201, 53-6-113, MCA
IMP: 53-2-201, 53-6-101, 53-6-111, 53-6-113, MCA
37.86.1105 OUTPATIENT DRUGS, REIMBURSEMENT (1) remains as proposed.
(2) The FMAC limitation will not apply in a case where a physician certifies in their own handwriting the specific brand is medically necessary for a particular member. An example of an acceptable certification is the handwritten notation "Brand Necessary" or "Brand Required." A check-off box on a form or rubber stamp is not acceptable.
(2) remains as proposed, but is renumbered (3).
(3) (4) In-state pharmacy providers that are new to the Montana Medicaid program are assigned the maximum dispensing fee in (2)(b) (3)(b) until a dispensing fee questionnaire, as provided in (2) (3), can be completed for six months of operation. At that time, a new dispensing fee is assigned which is the lower of the dispensing fee calculated in accordance with (2) (3) for the pharmacy or the maximum allowed dispensing fee provided in (2)(b) (3)(b). Failure to comply with the six months dispensing fee questionnaire requirement results in assignment of a dispensing fee of $2.00.
(4) (5) The department reimburses pharmacies for compounding drugs only if the member's drug therapy needs cannot be met by commercially available dosage strengths, forms of the therapy, or both.
(a) through (d) remain as proposed.
(e) The department reimburses pharmacies a compound-drug dispensing fee as provided in ARM 37.85.105(3) in lieu of the dispensing fee stated in
(2) (3). Prior authorization is required for reimbursement above the lowest compound dispensing fee.
(f) through (h) remain as proposed.
(5) (6) The department reimburses pharmacies a vaccine administration fee as provided in ARM 37.85.105(3) in lieu of the dispensing fee stated in (2) (3) for any covered vaccine as allowed by the Montana Pharmacy Practice Act, 37-7-101, MCA.
(6) (7) Reimbursement for outpatient drugs provided to Medicaid persons in state institutions is as follows:
(a) for institutions participating in the state contract for pharmacy services, the rates agreed to in that contract. Such reimbursement must not exceed, in the aggregate, reimbursement under (1); or
(b) for institutions not participating in the state contract for pharmacy services, the actual cost of the drug and dispensing fee. Such reimbursement must not exceed, in the aggregate, reimbursement under (1).
(7) through (10) remain as proposed, but are renumbered (8) through (11).
(11) (12) In accordance with the NCPDP 340B Information Exchange Reference Guide Version 1.0 (July 2011), a claim for Section 340B drugs must be identified through the use of a valid value 20 in the NCPDP Submission Clarification Code (420-DK) field. If a claim is identified as a 340B claim and the submitted ingredient cost is greater than the AAC, or the lower of WAC or FMAC, if no AAC is present, the claim will deny.
AUTH: 53-2-201, 53-6-113, MCA
IMP: 53-2-201, 53-6-101, 53-6-113, MCA
4. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:
COMMENT #1: Several commenters requested that the department implement a tiered dispensing fee based on prescription volume. They addressed concern with the proposed dispensing fee changes in ARM 37.85.105(3)(f) and requested more analysis be completed.
RESPONSE #1: The department appreciates the comments and is withdrawing the proposed dispensing fee changes. The department will propose a tiered dispensing fee based on prescription volume. This proposed rule change will be published in MAR Notice No. 37-757 and a retroactive effective date of July 1, 2016, will be proposed. The department will adjust claims to account for the increase in the professional dispensing fee.
COMMENT #2: The department received several comments requesting a delay in implementation of the Average Acquisition Cost (AAC) pricing methodology and proposed dispensing fees in order to work with the department to develop a different reimbursement structure.
RESPONSE #2: The department will implement the changes outlined in MAR Notice No. 37-746, the changes in drug reimbursement, but will delay the implementation of the professional dispensing fee. The department is withdrawing the proposed dispensing fee changes in this notice (see comment and response #1) and is working on developing a tiered dispensing fee based on prescription volume.
COMMENT #3: The department received several comments expressing concern that the proposed changes would result in a loss of jobs and services, and potentially worsen medical outcomes.
RESPONSE #3: The department has rescinded the proposed professional dispensing fee changes in this notice and is currently working on implementing a tiered dispensing fee based on prescription volume.
COMMENT #4: Several commenters mentioned that the proposed rule did not allow for the ability to reverse and rebill pharmacy claims.
RESPONSE #4: There is no change in policy on the ability to reverse and rebill a pharmacy claim. The practice of reverse and rebill will continue to be allowed. Current procedure allows the department to collect the pricing disputes from providers, research the issue, and adjust rates if appropriate. There will be times when the rate is not adjusted, but when the rate is adjusted the effective date may be retroactive. There may be instances where the new effective date is not able to be dated as far back as desired. The department will issue a Provider Notice in the near future regarding the procedures for reverse and rebill.
COMMENT #5: Several commenters expressed concern that pharmacy providers were the only providers receiving a reimbursement decrease. Several commenters mentioned that the cost savings associated with the decreased pharmacy reimbursement appeared to fund the rate increase for other providers.
RESPONSE #5: The 64th Montana State Legislature appropriated funds for a Medicaid rate increase for all providers. The July 1, 2016 rate increase, described in this rulemaking, incorporates the appropriated funds into rates. The AAC drug reimbursement change is required by federal law and is not related to the state rate increase. The savings to the Medicaid program from the federal change in AAC reimbursement is greater than the increase in pharmacy rates.
COMMENT #6: One commenter mentioned that Montana Medicaid does not have a compounding services fee, or any other additional fees, for delivery and other services.
RESPONSE #6: The pharmacy program provides a compounding-drug dispensing fee, in lieu of a professional dispensing fee in ARM 37.86.1105, with rates outlined in ARM 37.85.105(3)(g). Changes to those rates were not a part of this proposal. The department is withdrawing the proposed professional dispensing fees in this final notice. The department is working on implementing a tiered dispensing fee based on prescription volume. When calculating the average cost of dispensing, the department requests that pharmacy providers report their total prescription delivery costs. This allows delivery cost to be included in the calculation of the cost to dispense.
COMMENT #7: One comment was received stating agreement with the proposed drug reimbursement methodology but there were concerns with the professional dispensing fee proposed.
RESPONSE #7: In response to the comments received on the professional dispensing fee, the department has removed the proposed rates from the rule and is working on implementing a tiered professional dispensing fee system that is based on prescription volume.
COMMENT #8: The department received a comment that the reimbursement methodology does not take into account that rural pharmacies have lower purchasing rates.
RESPONSE #8: To establish the AAC reimbursement rates, the department is surveying a panel of ten pharmacy providers monthly. This panel will include providers from various locations, including rural, throughout the state, with varying prescription volumes. This variance will help account for providers with high purchase cost.
COMMENT #9: Several comments were received asking the department to reconsider the use of drug manufacturer rebates.
RESPONSE #9: The drug rebate program is required by state and federal law. The department will continue to utilize manufacturer's rebates to offset the overall cost of the Medicaid program.
COMMENT #10: One commenter asked if pharmacy providers will continue to be required to counsel members on the medications they receive.
RESPONSE #10: The requirement to counsel patients on medications is a requirement of the Board of Pharmacy and can be found at ARM 24.174.903. It is not part of the proposed rule amendments.
COMMENT #11: One comment was received stating that there is concern with assigning a pharmacy its usual and customary average dispensing fee for filling a prescription when that fee is lower than the fee determined by the yearly state survey.
RESPONSE #11: The Centers for Medicare and Medicaid Services (CMS) requires a professional dispensing fee that covers a pharmacist's professional services and the costs associated with dispensing medications to Medicaid patients. The department determined, based on specific pharmacy survey data, that if a pharmacy has a calculated cost to dispense that is less than the maximum professional dispensing fee, its calculated cost to dispense is awarded and fulfills CMS' requirement. The department will continue to collect responses to the dispensing fee survey through August 1, 2016. Pharmacy providers who have completed the survey are encouraged to review the results submitted and if necessary submit a revision. The survey is completed online and can be found at: http://dphhs.mt.gov/MontanaHealthcarePrograms/HRDSurveys/MTMedicaidDispensingFeeSurvey. Pharmacy providers who update their surveys by August 1, 2016 will have the new dispensing fee reimbursed upon implementation of the tiered dispensing fee that will be effective on July 1, 2016. Providers who submit dispensing surveys after August 1, 2016 will not be updated until July 1, 2017.
COMMENT #12: One commenter expressed that the requirement to submit 340B purchase price will result in a significant impact to services provided to patients of small nonprofits. The commenter emphasized that these businesses rely on the cost savings between the 340B purchase price and the revenue received from dispensing 340B products.
RESPONSE #12: The 340B Drug Pricing Program was established to provide covered entities with outpatient drugs at significantly reduced prices. This rule requires covered entities to pass this discount along to the department if they use 340B drugs for their Medicaid patients, also known as carve-in, and indicate such on the pharmacy claim. This will prevent a duplicate discount. Manufacturers are prohibited from providing a discounted 340B price and a Medicaid drug rebate for the same drug. Covered entities may choose to purchase drugs for their Medicaid patients through other mechanisms, also known as carve-out, and be reimbursed using the standard Medicaid reimbursement methodology. Covered entities are reminded they must accurately report how they bill Medicaid drugs on the Medicaid Exclusion File, as mandated by 42 USC 256b(a)(5)(A)(i).
In notices of proposed amendment MAR Notice No. 37-745 and MAR Notice No. 37-746, the department proposed changes to its method for calculating outpatient pharmacy reimbursement. Federal law requires the changes. Montana Medicaid is eliminating the estimated acquisition cost reimbursement methodology for calculating drug ingredient reimbursement. Instead, it is revising its dispensing fee structure and paying a drug ingredient reimbursement amount set as close to actual acquisition costs as possible.
In response to comments received in MAR Notice No. 37-745 and MAR Notice No. 37-746, the department is not adopting the proposed language in MAR Notice No. 37-745 regarding dispensing fees. Instead, it is proposing a three-tiered professional dispensing fee model based on prescription volume in MAR Notice No. 37-757. The rule amendments in MAR Notice No. 37-757 are proposed to have a retroactive effective date of July 1, 2016. The administrative cost reported in MAR Notice No. 37-745 and MAR Notice No. 37-746 does not change. The cost savings associated with MAR Notice No. 37-746 and MAR Notice No. 37-757 will remain the same at $4.3 million.
5. These rule amendments are effective July 1, 2016.
/s/ Geralyn Driscoll /s/ Richard H. Opper
Geralyn Driscoll, Attorney Richard H. Opper, Director
Rule Reviewer Public Health and Human Services
Certified to the Secretary of State June 6, 2016