Last week the Centers for Medicare and Medicaid Services (CMS) released additional guidance to states on how they should determine pharmacy professional dispensing fees (PDFs) for Medicaid fee-for-service prescriptions.
CMS basically restates that states must use pharmacy cost-based data—for both drug acquisition cost and dispensing fee costs—to establish their pharmacy reimbursement rates in the Medicaid Fee for Service Program. States may not use "market based" data for such purposes. That is, the state cannot use reimbursement rates that pharmacies accept from PBMs or other plans as justification for their Medicaid reimbursement rates. States can use their own pharmacy cost of dispensing (COD) survey data, data from a neighboring state, or other reliable cost-based data to submit to CMS to justify their PDF rates. These rates must be approved by CMS.
CMS also indicates that, "Although CMS is not requiring that states update their PDFs based on a specific timeframe, whether by an individual survey or another acceptable method, states should review their current PDF regularly to ensure it meets federal requirements under sections 1902(a)(30)(A) and 1927 of the Act, and the implementing regulations, specifically at §§ 447.502, 447.512, and 447.518 to reflect the current costs of dispensing a prescription. In addition, when proposing to update a PDF, states must submit supporting data that provides current and adequate information."
This means that if the pharmacy community in a state believes that the current PDF being paid by the state does not accurately reflect the costs of dispensing, or the state hasn’t undertaken a COD study in a long time, then the state may be out of compliance with federal laws and regulations.
The release of this guidance by CMS may present a good opportunity for the pharmacy community to meet with their state Medicaid pharmacy partners to express concerns that the current PDF may need to be updated, and ask the state to undertake a COD study to determine whether the PDF being paid to pharmacies is based on their current costs. A more accurate COD is critical given that at some point, Congress may pass legislation that requires Medicaid managed care plans to pay the same pharmacy reimbursement rates that the state is paying in the Medicaid pharmacy fee-for-service program.
