Maryland Department of Health 10.09.03 Pharmacy Services (MEDICAL CARE PROGRAMS)

PROPOSAL

Maryland Register

Issue Date: July 7, 2017

Volume 44 • Issue 14 • Pages 661—665

Title 10
MARYLAND DEPARTMENT OF HEALTH [AND MENTAL HYGIENE]

Subtitle 09 MEDICAL CARE PROGRAMS

10.09.03 Pharmacy Services

Authority: Health-General Article, §§2-104(b), 15-103, 15-103.1, 15-105, and 15-118, Annotated Code of Maryland

Notice of Proposed Action

[17-138-P]

The Secretary of Health proposes to amend Regulations .01 and .03—.07 under COMAR 10.09.03 Pharmacy Services.

Statement of Purpose

The purpose of this action is to update the Department’s reimbursement methodology to pharmacy providers as required by the CMS Covered Outpatient Drug final rule (CMS-2345-FC), which mandates the transition from an estimated acquisition cost to an actual acquisition cost as the basis for the State Medicaid pharmacy ingredient cost reimbursement. The proposed action also removes unnecessary references to the Primary Adult Care Program.

Comparison to Federal Standards

There is a corresponding federal standard to this proposed action, but the proposed action is not more restrictive or stringent.

Estimate of Economic Impact

I. Summary of Economic Impact. The proposed action will reduce Medicaid pharmacy ingredient cost reimbursement, and increase dispensing fee reimbursement, for a net increase in Program expenditures by $900,000 annually.

	Revenue (R+/R-)
II. Types of Economic Impact.	Expenditure (E+/E-)	Magnitude


A. On issuing agency:
(1)	(E-)	$26,900,000
(2)	(E+)	$27,800,000
B. On other State agencies:	NONE
C. On local governments:	NONE

	Benefit (+) Cost (-)	Magnitude


D. On regulated industries or trade groups:	(+)	$900,000
E. On other industries or trade groups:	NONE
F. Direct and indirect effects on public:	NONE
III. Assumptions. (Identified by Impact Letter and Number from Section II.)
A(1). In order to comply with federal rules requiring ingredient cost reimbursement based upon the National Average Drug Acquisition Cost (NADAC), the fiscal estimate based on historical fee-for-service claims data ($523.4 million) was recalculated using the NADAC methodology ($496.5 million) in order to determine a reduction of $26.9 million annually, total funds.
A(2). Dispensing fees, which ranged from $2.56 to $4.46, depending on whether they were generic or brand products, whether they were on the preferred drug list, and whether they were dispensed to nursing facility residents, are increased to $10.49 for all brand and generic products, and $11.49 if dispensed to nursing facility residents. This results in an increase from $14.6 million to $42.4 million, or $27.8 million annually, total funds.
D. The combined impact of the increase in dispensing fees and reduction in ingredient cost reimbursement described in Section IIIA. will be an increase in reimbursement to pharmacy providers totaling $900,000 annually.

Economic Impact on Small Businesses

The proposed action has a meaningful economic impact on small business. An analysis of this economic impact follows.

The proposed action has a meaningful economic impact on small business as described in The Estimate of Economic Impact, Section IIIA and D above.

Impact on Individuals with Disabilities

The proposed action has no impact on individuals with disabilities.

Opportunity for Public Comment

Comments may be sent to Michele Phinney, Director, Office of Regulation and Policy Coordination, Maryland Department of Health, 201 West Preston Street, Room 512, Baltimore, MD 21201, or call 410-767-6499 (TTY 800-735-2258), or email to mdh.regs@maryland.gov, or fax to 410-767-6483. Comments will be accepted through August 7, 2017. A public hearing has not been scheduled.

.01 Definitions.

A. (text unchanged)

B. Terms Defined.

(1) “340B price” means the price at which drugs are purchased as authorized under Section 340B of the Public Health Service Act.

[(1)] (2) “Actual acquisition cost (AAC)” means the amount paid by a provider for a drug or product less all discounts, rebates, refunds, chargebacks, incentives, and price reductions.

[(2)] (3)—[(3)] (4) (text unchanged)

[(4) “Average wholesale price (AWP)” means the price of a particular drug product in at least one national compendium based on the average of prices charged for the product by wholesalers throughout the country.]

(5)—(8) (text unchanged)

(9) “Copayment” means the amount a [recipient] participant is liable to pay for prescriptions, when applicable[. The amount of copayment shall be], which is deducted from provider reimbursement.

(10)—(11) (text unchanged)

(12) “Direct price” means,[:

(a) The price charged by a pharmaceutical manufacturer to a dispensing pharmacy for a product supplied to the pharmacy without intermediate distribution charges; or

(b) For specialty] for drugs identified by the Program, the price charged by a pharmaceutical manufacturer to a dispensing pharmacy for a product supplied to the pharmacy without intermediate distribution charges, less any rebates, discounts, refunds, chargebacks, incentives, and price reductions.

(13)—(15) (text unchanged)

[(16) “Estimated acquisition cost (EAC)” means the lowest price of a drug product as determined by the following criteria:

(a) Wholesale acquisition cost (WAC) plus 8 percent;

(b) Direct price plus 8 percent; or

[(17)] (16) (text unchanged)

(17) “Federally qualified health center (FQHC)” means an entity as defined by Health-General Article, §24-1301, Annotated Code of Maryland, and §1905(l)(2)(B) of the Social Security Act.

(18) “Federal supply schedule (FSS)” means the drug pricing program under the collection of multiple award contracts used by federal agencies, U.S. territories, Indian tribes, and other specified entities to purchase supplies and services from outside vendors.

[(18)] (19) “Federal [generic] upper limit [(FGUL)] (FUL)” means the upper limit of payment for multiple source drugs for which a specific maximum allowable cost has been established by the Centers for Medicare & Medicaid Services (CMS) of the Department of Health and Human Services pursuant to 42 CFR §447.514.

[(19)] (20)—[(22)] (23) (text unchanged)

[(23) “Interchangeable drug cost (IDC)” means the maximum amount the Program will reimburse for approved interchangeable multiple source drugs on the State Formulary determined by using the:

(a) Lowest estimated acquisition cost of the generically equivalent products available in the State; or

(b) Price obtained by:

(i) Ascertaining the lowest cost from among the approved interchangeable multiple source products from each wholesaler that the Program has current and accurate pricing information; and

(ii) Selecting as the IDC the highest of the costs ascertained in §B(22)(b)(i) of this regulation; or

(24)—(26) (text unchanged)

(27) “National average drug acquisition cost (NADAC)” means the average price paid by retail community pharmacies to acquire a prescription or over-the-counter covered out-patient drug as calculated by the Centers for Medicare and Medicaid Services.

(28) “Nominal price” means a price that is less than 10 percent of the average manufacturer price (AMP) in the same quarter for which AMP is computed.

[(27)] (29) (text unchanged)

(30) “Participant” means a person who is certified as eligible for and is receiving Medical Assistance benefits.

[(28)] (31)—[(34)] (37) (text unchanged)

[(35)] (38) “Professional dispensing [Fee.

(a) “Professional fee” means the fee as determined by the Program that is incurred at the point of sale or service and pays for costs in excess of the ingredient cost of a covered outpatient drug each time a covered outpatient drug is dispensed.

(b) “Professional fee” includes only direct pharmacy costs associated with ensuring that possession of the appropriate covered outpatient drug is transferred to a recipient.

(c) “Professional fee” does not include administrative costs incurred by the State in the operation of the covered outpatient drug benefit including systems costs for interfacing with pharmacies] fee” means the professional fee as defined in 42 CFR §447.502.

[(36)] (39)—[(37)] (40) (text unchanged)

[(38) “Recipient” means a person who is certified as eligible for and is receiving Medical Assistance benefits.]

[(39)] (41) (text unchanged)

(42) “State actual acquisition cost (SAAC)” means, for those drugs or products identified by the Program, the Program’s or its designee’s calculation of AAC, based on a survey of providers’ actual prices paid to acquire drugs or products marketed or sold by specific manufacturers, when NADAC is unavailable.

[(40)] (43) (text unchanged)

[(41)] (44) “State-only [recipients] participants” means those [recipients] participants in the Program administered and financed by the State who do not meet the technical requirements of Title XIX of the Social Security Act and for whom the State does not claim federal financial participation.

[(42)] (45)—[(43)] (46) (text unchanged)

.03 Conditions for Participation.

To participate in the Program, the provider shall:

A.—G. (text unchanged)

H. [Not] Agree that the provider may not employ knowingly a person who has been disqualified from the Program to compound or dispense Medical Assistance prescriptions, unless prior written approval has been received from the Department;

I. Verify the [recipient’s] participant’s eligibility before dispensing covered drugs;

J. Place no restriction on the [recipient’s] participant’s right to select providers of the [recipient’s] participant’s choice;

K. Agree that if the Program denies payment or requests repayment on the basis that an otherwise covered service was not medically necessary, the provider may not seek payment for that service from the [recipient] participant;

L. (text unchanged)

M. Reverse invoice charges for any prescription not picked up by the [recipient] participant or their designee within 14 days;

N. Maintain a record of a [recipient] participant or designee’s written authorization for automatic refill, if automatic refills are provided;

O. [Except for individuals enrolled in Primary Adult Care under COMAR 10.09.60, not] Agree that the provider may not deny services to any [recipient] participant because of the individual’s inability to pay the copayment; [and]

P. Agree that if the Program denies payment due to late billing, the provider may not seek payment from the [recipient.] participant;

Q. On the Department’s request, provide within 15 days all invoices, as defined in Regulation .01B(24)(b) of this chapter, to assess the AAC; and

R. Participate in the cost of dispensing survey and, on the Department’s request and within the Department’s timeline, provide to the Department all documentation that the Department or its designee determines is necessary.

.04 Covered Services.

A. The Department shall cover:

(1)—(2) (text unchanged)

[(3) Insulin when prescribed in original packages;]

[(4)] (3)—[(8)] (7) (text unchanged)

[(9)] (8) Nonlegend chewable tablets of any ferrous salt if:

(a) (text unchanged)

(b) The [recipient] participant is under 12 years old; and

[(10) Medical supplies used in the preparation of compounded prescriptions for intravenous therapy used in nursing facilities;]

[(11)] (9)—[(12)] (10) (text unchanged)

B. (text unchanged)

.05 Limitations.

A. Except as specifically identified as being covered under Regulation .04 of this chapter, the following are not covered:

(1)—(13) (text unchanged)

(14) Oral drugs or injections for central nervous system stimulants [and anorectic], anorexigenics, and any other agents when used for weight control;

(15)—(19) (text unchanged)

B. (text unchanged)

C. Limitations on Covered Services.

(1)—(4) (text unchanged)

(5) Copayment for Services Rendered on or after July 1, 2005.

(a) There will be no pharmacy copayment for prescriptions for the following:

(i) Individuals younger than 21 years old [unless they are enrolled in the Primary Adult Care Program under COMAR 10.09.60];

(ii) (text unchanged)

(iii) Institutionalized individuals who are inpatients in long-term care facilities or other institutions requiring spending all but a minimal amount of income for medical costs; [and]

(iv) Family planning drugs and devices; and

(v) Individuals who are American Indians or Alaskan Natives.

(b) The copayments for prescriptions not excluded from a copayment under §C(5)(a) of this regulation are:

(i) (text unchanged)

(ii) $1 for prescriptions for generic drugs and brand name drugs on the preferred drug list; and

(iii) $1 for prescriptions for antiretroviral drugs in American Hospital Formulary Service therapeutic class 8:18:08[;].

[(iv) $2.50 for prescriptions of generic drugs and brand name drugs on the preferred drug list for individuals enrolled in the Primary Adult Care Program under COMAR 10.09.60; and

(v) $7.50 for prescriptions of brand name drugs not on the preferred drug list for individuals enrolled in the Primary Adult Care Program under COMAR 10.09.60.]

(6)—(8) (text unchanged)

(9) Prescriptions dispensed to [recipients] participants residing in nursing facilities are subject to the following limitations:

(a)—(c) (text unchanged)

[D. Drug products removed from the State Formulary shall be deleted from the Program’s interchangeable drug list effective with removal from the State Formulary.]

[E.] D.—[F.] E. (text unchanged)

.05-1 Expanded Limitations.

A. A drug is not covered for State-only [recipients] participants if:

(1) The manufacturer has not provided the same rebate to the State for State-only [recipients’] participants’ purchases of drugs as is required under Section 1927(c) of Title XIX of the Social Security Act (42 U.S.C. §1396r-8(c));

(2) (text unchanged)

(3) The manufacturer has failed to demonstrate to the Secretary that the drug’s availability is essential to State-Only [recipients] participants.

B. (text unchanged)

.06 Preauthorization Requirements.

A. The provider shall obtain preauthorization from the Department or its designee for any prescription for:

(1)—(6) (text unchanged)

[(7) Growth hormone;

(8) Palivizumab;]

[(9)] (7)—[(11)] (9) (text unchanged)

B.—D. (text unchanged)

E. Reconsideration of Adverse Decisions.

(1) The Department or its designee shall respond within 48 hours of receiving all necessary documentation of a written request from a [recipient] participant or provider for reconsideration of an adverse decision on a preauthorization request.

(2)—(3) (text unchanged)

F. The Department or its designee may:

(1) Require preauthorization for more than ten prescriptions including refills per 30-day period per noninstitutionalized [recipient] participant; and

(2) (text unchanged)

.07 Payment Procedures.

A.—E. (text unchanged)

F. The pharmacy provider shall charge the Program the provider’s usual and customary charge to the general public for similar prescriptions. [For chewable tablets of ferrous salts in combination as described in Regulation .04A(9) of this chapter, the provider’s usual and customary charge to the general public may not exceed $10 for 100 tablets. Charges for other quantities of chewable tablets of ferrous salts in combination as described in Regulation .04A(9) of this chapter shall be calculated at the same rate.]

G. (text unchanged)

H. Determination of Allowable Cost.

(1) For covered [multiple source] legend drugs [listed on the Program’s Interchangeable Drug List, including Schedule V cough preparations] and nonlegend drugs, allowable cost shall be [the lowest of the]:

[(a) Interchangeable drug cost (IDC);

(b) Estimated acquisition cost (EAC); or

(a) The NADAC; or

(b) When the NADAC is unavailable, the lowest of the:

(i) WAC plus 0 percent;

(ii) FUL; and

(iii) SAAC.

(2) For [all other] covered legend [drugs, including] brand name drugs for which the [prescription requires the brand name drug to be dispensed] prescriber files an official report of an adverse event or product problem regarding a generic drug with the Program or the United States Food and Drug Administration, or when the Department requires the brand name drugs to be dispensed, the allowable cost shall be [the EAC determined by the Department.]:

(a) The NADAC of the branded product; or

(b) When the NADAC of the branded product is unavailable, the lower of the:

(i) WAC plus 0 percent; or

(ii) SAAC.

[(3) Notwithstanding the provisions of §H(1)(a) of this regulation, when a prescriber files an official report of an adverse event or product problem regarding a generic drug with the Program or the United States Food and Drug Administration, the EAC of the product shall be the allowable cost if a brand name drug is dispensed.]

[(4)] (3) For condoms dispensed by pharmacy providers, the allowable cost shall be [the EAC determined by the Department] as described in §H(1) of this regulation.

[(5)] (4) For covered [over-the-counter insulin, covered] over-the-counter [nutritional supplements] products, and covered medical supplies, the allowable cost shall be [based on the AWP of the item] as described in §H(1) of this regulation.

(5) For covered specialty drugs not dispensed by a retail community pharmacy but dispensed primarily through the mail, the allowable cost shall be:

(a) The NADAC; or

(b) When the NADAC is unavailable, the lowest of the:

(i) WAC plus 0 percent;

(ii) FUL; or

(iii) SAAC.

(6) [For covered over-the-counter enteric coated aspirin, oral ferrous sulfate products, chewable tablets of ferrous salts in combination as described in Regulation .04A(9) of this chapter, and all other covered over-the-counter drugs, allowable cost shall be the lowest of] Except when purchased at the 340B price by a provider, the allowable cost for covered clotting factors shall be the lower of the:

(a) [IDC] WAC plus 0 percent; or

(b) [EAC] AAC plus 8 percent[; or].

[(c) FGUL.]

(7) For 340B covered entities or FQHCs that fill Program participant prescriptions with drugs purchased at the prices authorized under Section 340B of the Public Health Service Act, the allowable cost shall be the provider’s AAC.

(8) For facilities that fill Medicaid participant prescriptions with drugs purchased through the FSS, the allowable cost shall be the provider’s AAC.

(9) For facilities that fill Medicaid participant prescriptions with drugs purchased at nominal price, outside of 340B and FSS, the allowable cost shall be the provider’s AAC.

I. Payment for Covered Services to a Pharmacy.

(1) Payment for covered legend and nonlegend drugs, [Schedule V cough preparations, enteric coated aspirin, and oral ferrous sulfate products] over-the-counter products, and covered medical supplies is the lower of:

(a) (text unchanged)

(b) The [total of] amount that is:

(i) The allowable cost of the item in [§H] §H(1) of this regulation;

(ii) Plus the applicable professional dispensing fee indicated in [§I(7)] §I(10) or [§I(8)] (11) of this regulation; and

(iii) (text unchanged)

(2) Payment for [over-the-counter drugs other than enteric coated aspirin and oral ferrous sulfate products] covered legend brand name drugs as indicated in §H(2) of this regulation shall be the [lowest] lower of:

(a) The provider’s charge according to §F of this regulation, less any applicable copayment according to Regulation .05C(5) of this chapter; or

(b) [The allowable cost plus 50 percent, less any applicable copayment according to Regulation .05C(5) of this chapter; or] The total of:

(i) The allowable cost of the item in §H(2) of this regulation;

(ii) Plus the applicable professional dispensing fee indicated in §I(10) or (11) of this regulation; and

(iii) Less any applicable copayment according to Regulation .05C(5) of this chapter.

[(c) The allowable cost plus the applicable professional fee in §I(7) or (8) of this regulation, less any applicable copayment according to Regulation .05C(5) of this chapter.]

(3) Payment for condoms will be the lower of the:

(a) (text unchanged)

(b) Allowable cost according to [§H(4)] §H(3) of this regulation[, plus 50 percent].

(4) (text unchanged)

(5) Payment for [medical supplies] covered specialty drugs not dispensed by a retail community pharmacy but dispensed primarily through the mail shall be the lower of the:

(a) (text unchanged)

(b) [Allowable cost of the item in §H(5) of this regulation, less any applicable copayment according to Regulation .05C(5) of this chapter.] The total of:

(i) The allowable cost of the item in §H(5) of this regulation;

(ii) Plus the applicable professional dispensing fee indicated in §I(11) of this regulation; and

(iii) Less any applicable copayment according to Regulation .05C(5) of this chapter.

(6) Payment for clotting factor shall be lower of the:

(a) Provider charge according to §F of this regulation, less any applicable copayment according to Regulation .05C(5) of this chapter; or

(b) Amount that is:

(i) The allowable cost of the item in §H(6) of this regulation;

(ii) Plus the applicable professional dispensing fee indicated in §I(11) of this regulation; and

(iii) Less any applicable copayment according to Regulation .05C(5) of this chapter.

(7) Payment for providers that fill Medicaid participant prescriptions with drugs purchased at the prices authorized under Section 340B of the Public Health Service Act shall be the total of:

(a) The allowable cost of the item in §H(7) of this regulation;

(b) Plus the applicable professional dispensing fee indicated in §I(12) of this regulation; and

(c) Less any applicable copayment according to Regulation .05C(5) of this chapter.

(8) Payment for facilities that fill Medicaid participant prescriptions with drugs purchased through the FSS shall be the total of:

(a) The allowable cost of item in §H(8) this regulation;

(b) Plus the applicable professional dispensing fee indicated in §I(10) or (11) of this regulation; and

(c) Less any applicable copayment according to Regulation .05C(5) of this chapter.

(9) Payment for facilities that fill Medicaid participant prescriptions with drugs purchased at nominal price, outside of 340B and FSS, shall be the total of:

(a) The allowable cost of item in §H(9) this regulation;

(b) Plus the applicable professional dispensing fee indicated in §I(10) or (11) of this regulation; and

(c) Less any applicable copayment according to Regulation .05C(5) of this chapter.

[(7)] (10) The professional dispensing fee for covered services rendered on or after [July 1, 2011] April 1, 2017 to a pharmacy for [recipients] participants residing in nursing facilities[,] shall be[:] $11.49.

[(a) $4.46 for generic drugs and for drugs on the preferred drug list;

(b) $3.51 for brand name drugs not on the preferred drug list; and

(i) $6.89 per day of therapy; and

(ii) $6.89 per unit of therapy compounded.]

[(8)] (11) The professional dispensing fee for covered services rendered on or after [July 1, 2011] April 1, 2017 to a pharmacy for individuals other than residents in nursing facilities[,] shall be[:] $10.49.

[(a) $3.51 for generic drugs and for drugs on the preferred drug list;

(b) $2.56 for brand name drugs not on the preferred drug list; and

(12) The professional dispensing fee for covered services rendered on or after April 1, 2017 to a pharmacy for medication purchased at the prices authorized under Section 340B of the Public Health Services Act shall be $12.12.

[(6)] (13) The Department may pay a pharmacy using an approved unit dose system on the basis of a [daily or] monthly dispensing fee per nursing home resident. The value of [these fees] the fee may not be higher than the pharmacy’s usual and customary charge to non-Medicaid patients for similar services.

J. Payment for Covered Services to a Physician or Osteopath.

(1) (text unchanged)

(2) The Program shall reimburse a physician or osteopath for covered drugs dispensed to Medicaid [recipients] participants on the same basis as reimbursement to a registered pharmacist if:

(a)—(c) (text unchanged)

K. In order to determine whether the current professional dispensing fee is appropriate, the Department will periodically conduct surveys to determine the actual costs involved in filling a prescription in the State.

DENNIS SCHRADER
Secretary of Health

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