The National Association of Chain Drug Stores has challenged the proposed federal upper limit (FUL) list for pharmacy reimbursements from Medicaid.

National Association of Chain Drug Stores, NACDS, federal upper limit, FUL, pharmacy reimbursements, Medicaid, prescription medications, pharmacy services, Medicaid patients, pharmacists, community pharmacy, community pharmacies, Centers for Medicare and Medicaid Services, CMS, Medicaid pharmacy reimbursement, average manufacturer price, AMP, Carol Kelly, wholesale drug costs, AMP rule, draft FUL list, Affordable Care Act, Geoff Walden

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CMS’ proposed FULs for Medicaid draw fire

November 21st, 2011

ALEXANDRIA, Va. – The National Association of Chain Drug Stores has challenged the proposed federal upper limit (FUL) list for pharmacy reimbursements from Medicaid.

Consideration of the FULs represents another step in a lengthy, ongoing and highly fluid process that ultimately affects the accessibility of prescription medications and pharmacy services for Medicaid ­patients.

NACDS has consistently emphasized that — in addition to providing access to medications and to pharmacists who enhance their effectiveness by helping patients take them as prescribed — community pharmacy access is vital because additional services such as vaccinations, screenings, health education and innovative programs help improve patient health and prevent more costly forms of care. NACDS maintains that community pharmacies deliver unsurpassed value in health care delivery.

In addition to the FUL list, the Centers for Medicare and Medicaid Services (CMS) is expected to issue shortly a proposed rule to implement Medicaid pharmacy reimbursement according to average manufacturer price (AMP).

In a letter to CMS, NACDS senior vice president of government affairs and public policy Carol Kelly wrote that the association “continues to have significant concerns with [AMP] as a basis for pharmacy reimbursement. AMP is not a price paid in the marketplace. Instead, it is a benchmark to determine manufacturer rebates in the Medicaid program.”

One NACDS member chain found that more than half of the draft FULs were below its wholesale drug costs, she noted. Other member companies have reported similar findings.
Moreover, the lack of a clear regulatory standard for manufacturers “leads to great variability in how AMPs are calculated and reported to CMS,” Kelly added.

She also raised the issue of the applicability of the published FULs, given the current absence of a new AMP rule.

“Because CMS has withdrawn the 2007 AMP rule, including the sections pertaining to the calculation of FULs, there is no regulatory process in place to govern calculation of federal upper limits,” she wrote. “As a result, NACDS believes that the draft FULs, calculated without regulatory guidance and seemingly inaccurate, should neither be made available for nor used as a basis for pharmacy reimbursement. Furthermore, no further draft FUL lists should be published before a final AMP rule is effective. At the completion of rule making, CMS should again issue a draft FUL list for public review and comment.”

Kelly described instances in which CMS will need to make adjustments to FULs in accordance with the new health care reform law to foster workable reimbursement.

“The Affordable Care Act provides CMS with the authority to calculate federal upper limits at ‘no less than’ 175%,” she explained. “The ‘no less than’ language in the [act] is critical. While Congress created a floor of 175% for calculating FULs, it clearly recognized that CMS would require flexibility in the level of multiplier in order to maintain patient access to prescription medications. Congress did not limit the ability of CMS to increase the multiplier to calculate FULs, but rather provided broad authority. Based on analysis of the draft FUL list, it appears that at least initially, CMS may need to increase the multiplier for calculating all FULs.”

She also emphasized the importance of appropriate dispensing fees, saying “fees must be reviewed and adjusted to reflect no less than the true cost of dispensing prescription medications to Medicaid ­patients.”