Hot Topics in Medicaid

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Beverly Lambert
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1 Hot Topics in Medicaid Chad Hope, Pharm.D. Pharmacy Program Manager DHSS/DHCS ***These slides had to be submitted in December 2014 and may contain outdated information*** 1

gov; 907-334-2654 ***These slides had to be

2 Objectives Identify the two funding sources for Medicaid services. Explain the difference between Fee For Service and Managed Care Medicaid. Describe how the 340B program impacts the federal Medicaid Drug Rebate program, the state, and covered entities (pharmacies). 2

3 Overview Medicaid Medicare Medicaid is a federal entitlement program that is administered by the states. Medicaid is jointly funded by the states and the federal government. Federal Medical Assistance Percentages (FMAP) vary by state, service, or recipient/provider FMAP is calculated by the federal government using income data. Base FMAP for AK is 50% Federal / 50% State Overall funding for AK is ~60% Federal / ~40% State 3

Federal Medical Assistance Percentages (FMAP) vary by state, service, or recipient/provider FMAP is

4 Fee-For-Service Fee-For-Service (FFS) is a payment/delivery system where health care providers are paid for services by the Medicaid program. Claims are usually submitted to and processed by the State or a contractor. Payment rates are developed by the State and listed in the Medicaid State Plan. Alaska is 100% FFS 4

Claims are usually submitted to and processed by the State or a contractor.

5 Managed Care Managed Care is a payment/delivery system where the State pays a set rate (e.g. per member per month) to the Managed Care Organization (MCO) and then the MCO contracts with providers to deliver services to Medicaid recipients. ~70% of Medicaid recipients nationally are enrolled in Medicaid Managed Care. Pharmacy benefits may or may not be part of Managed Care (varies by State). The payment/coverage rules for FFS and Managed Care are different. 5

per member per month) to the d Care Organization (MCO) and then the MCO contracts with providers to deliver services to Medicaid recipients.

6 State Plan A State Plan is an agreement between a state and the federal government on how the state administers Medicaid. Adding or eliminating services, raising or lowering rates, changing calculations, etc. have to be approved by CMS through a State Plan Amendment (SPA) 6

Adding or eliminating services, raising or lowering rates, changing calculations, etc.

7 State Plan SPAs are important. CMS has to approve the SPA before federal funds can be claimed for a service. Federal Funds are in limbo while a SPA is being adjudicated. CMS will not approve a SPA based solely on changes to state statute or regulation Denied SPAs can result in lost federal funds or paybacks to the federal government. 7

Federal Funds are in limbo while a SPA is being adjudicated.

8 Medicaid Expansion Medicaid expansion is one of the top priorities of the new administration. Primarily individuals between ages whose income is below 138 percent of the Federal Poverty Level. Eligibility doesn t depend on whether someone has minor children or they are disabled 8

Primarily individuals between ages 19 65 whose income is below 138

9 Drug Rebates State Medicaid programs and pharmaceutical manufacturers must participate in the federal Medicaid Drug Rebate program (Section 1927 of the Social Security Act). In general drug rebates are applicable to both FFS and MCO Medicaid Basically, a manufacturer has to be part of the Medicaid Drug Rebate program in order for their medications to be eligible for federal funds. 9

In general drug rebates are applicable to both FFS and MCO Medicaid Basically, a manufacturer has to be part of the Medicaid

10 Drug Rebates Most State Medicaid programs, AK included, only cover prescription drugs that are eligible for federal funds. The net result is that if a manufacturer doesn t participate in the drug rebate program, then their drugs aren t covered by Medicaid. Key question: How does this impact us? 10

The net result is that if a manufacturer doesn t participate in the drug

11 Drug Rebates Fictitious Example: your pharmacy is purchasing Lisinopril 20mg from your wholesaler and there are 2 options available. Which one would you order? Manufacturer 1 Manufacturer 2 Package Size 100 units 500 units Package Cost $10 $37.50 Unit Cost $0.10 $0.075 Rebatable (Medicaid) Yes No Manufacturer 2 offers a lower per unit cost but their product won t be covered by Medicaid. 11

Manufacturer 1 Manufacturer 2 Package Size 100 units 500 units Package Cost $10 $37.

12 340B Program The 340B program offers discounted medications to qualifying covered entities (e.g. FQHCs, some hospitals, etc.) The program is administered by the Health Resources and Services Administration (HRSA) Note: CMS and HRSA have different views on 340B Coordination between Medicaid and the 340B program is important because covered entities are responsible for preventing duplicate discounts 12

have different views on 340B Coordination between Medicaid and the 340B program is important because covered

13 340B Program A duplicate discount occurs when a medication purchased through the 340B program is invoiced for a federal Medicaid Drug Rebate. In Alaska, duplicate discounts are generally prevented by one of the following: The entity carves out Medicaid, or Medicaid excludes claims from carve-in providers from drug rebate 13

In Alaska, duplicate discounts are generally prevented by one of the following:

14 340B Program Outpatient pharmacy claims for 340B covered entities carving in Medicaid have to be billed to Medicaid using the actual acquisition cost [7 AAC (m)-(n)] Contract pharmacies (Bill to ship to) From HRSA s FAQ webpage: 340B drugs may not be used for Medicaid patients at a contract pharmacy, absent an arrangement between the contract pharmacy, covered entity, and state Medicaid agency to prevent duplicate discounts. Any such arrangement shall be reported to the HRSA Office of Pharmacy Affairs by the covered entity. For additional information, see the Federal Registry notice 14

an arrangement between the contract pharmacy, covered entity, and state Medicaid agency to prevent duplicate discounts.

15 Federal Upper Limit (FUL) 42 CFR (a): Multiple source drugs. Except for brand name drugs that are certified in accordance with paragraph (c) of this section, the agency payment for multiple source drugs must not exceed, in the aggregate, the amount that would result from the application of the specific limits established in accordance with of this subpart. Formerly 42 CFR (a) with the same aggregate requirement The 42 CFR calculation of the FUL was part of the Deficit Reduction Act (DRA) in 2005 and would have revised the 42 CFR calculation of the FUL to be based on 250 percent of the lowest average manufacturer price, rather than being based on 150 percent of the lowest compendia price. The DRA FUL was supposed to be effective 1/1/2007; however, there were delays. 15

result from the application of the specific limits established in accordance with 447.514 of this subpart. Formerly 42 CFR 447.331(a) with the same aggregate requirement The 42 CFR 447.

16 Federal Upper Limit (FUL) In 2007 the National Association of Chain Drug Stores (NACDS) and National Community Pharmacists Association (NCPA) sued CMS to block the implementation of the AMP based FUL. NADCS and NCPA later withdrew the lawsuit when CMS withdrew the proposed DRA - AMP based FUL regulations (42 CFR ) in December of This left the pre-dra FUL, as calculated under 42 CFR , in effect. The Affordable Care Act (ACA), passed in March of 2010, revised the calculation for the FUL to no less than 175% of the weighted AMP. CMS proposed regulations to implement the ACA FUL in February of The ACA FUL is still in draft status and doesn t replace the 42 CFR FUL until it finalized. 16

This left the pre-dra FUL, as calculated under 42 CFR 447.332, in effect.

17 Federal Upper Limit (FUL) Current issues with the FUL FFS Medicaid is still required to meet the aggregate FUL using the pre-dra FUL. CMS hasn t suspended the pre-dra FUL (lacks authority) and hasn t granted exemptions from meeting the aggregate FUL. Generic drug prices had been relatively stable but rising drug prices have pushed several generic drugs above the pre-dra FUL. 17

CMS hasn t suspended the pre-dra FUL (lacks authority) and hasn t granted exemptions from

18 Generic Drug Prices Over the last months many generic drug prices have been on the rise. Some drugs have had large increases (>1,000%), some have had smaller increases, and others have remained stable or fallen. Rising generic drug prices have recently been the subject of congressional hearings and The Medicaid Generic Drug Price Fairness Act has been introduced in the House by Rep. Elijah Cummings and in the Senate by Sen. Bernie Sanders. 18

19 AAC / NADAC Medicaid Program: Covered Outpatient Drugs CMS at Proposed revision to 42 CFR (b) While AAC is not currently defined in the federal Medicaid regulations it is part of the SPA process in relation to Sec (a)(30)(a). Efficiency, Economy, and Quality of Care 19

512 (b) While AAC is not currently defined in the federal Medicaid regulations

20 Specialty Pharmacy / Limited Distribution Drugs More and more drugs are only available through limited distribution or specialty pharmacies. Several challenges are arising as this becomes more common: A national definition of specialty pharmacy and specialty pharmaceutical is needed Limited distribution can impact access to care Office administered drugs (J-codes) pose a challenge with waste Reimbursement rates for specialty vs. retail 20

Several challenges are arising as this becomes more common: A national definition of specialty pharmacy and

21 Non-Drugs What is a covered outpatient drug? This is a simple question with a very complicated answer(s). For Alaska Medicaid a covered outpatient drug: Is Rx Only Has a NDC Is FDA approved and is listed with the FDA Is eligible for federal Medicaid matching funds 21

22 Opiates Changes to the DEA schedule for Tramadol and hydrocodone containing products (HCP) occurred in the last year. Many see this as a step towards addressing the opiate overdose epidemic; however, the following questions still exist: What is the next step? How does this impact access to care? What are the impacts on the health care system? Pharmacies vs. prescribers 22

23 Questions/Discussion? 23

340B Drug Discount Program Overview and Emerging Issues

340B Drug Discount Program Overview and Emerging Issues I. APPLICABLE STATUTE AND OTHER LEGAL AUTHORITIES Section 340B of the Public Health Service Act (42 U.S.C. 256b) requires pharmaceutical manufacturers,