Medicaid's Dispensing Fee And Compounding Regulations

On November 14th the Montana Pharmacy Association (MPA) was at the ARM Hearing in Helena to explain to Montana Medicaid the importance of special packaging and current compounding regulations.

The ARM amendment 37.86.1101 and 37.86.1105 pertains to Medicaid reimbursement for dispensing fees and outpatient, compound prescriptions. The pharmacy dispensing fee is based on the pharmacy’s average cost of filling prescriptions and whether the pharmacy dispenses a generic, preferred drug list or non-preferred drug. The average cost of filling a prescription will be based on the direct and indirect costs that can be allocated to the cost of the prescription department and that of filling a prescription, as determined from the Montana Dispensing Fee Questionnaire. The average statewide dispensing fee is estimated to be $8.75 for preferred drug list medications. You may call Montana Medicaid to see where your pharmacy dispensing fee falls between $6.16 to a maximum of $10 for brand and generic preferred drug list medications. A dispensing fee of $5.50 will be given for all non-preferred drug list medications.

Unfortunately, the unit dosing fee of $0.75 per prescription will no longer be in effect after January 1st, 2008 when all this kicks in. CMS had tied the cost of unit dosing (special packaging), overhead costs, prescription volume, and personnel wages all into the dispensing fee. Since CMS will not allow for additional unit dosing fees, MPA suggested to give an additional 1$ dispensing fee for each medication to pharmacies who special package medications due to the additional costs of materials, extra “man” hours, delivering of the packages, etc.

In addition, any new store would only be assigned a 6 month interim dispensing fee of $5.50. MPA suggested that the new store be assigned the average fee of $8.75 since the new stores have not built up volumes and costs would be high.

Montana Medicaid’s proposed rule on compounding consists of using line item billing only (no more 00888 codes), and the use of compounding dispensing fees based on level of effort: $12.50, $17.50, $22.50. Any prescription over the level of effort of $12.50 dispensing fee would require a call the to the Prior Authorization unit to receive one of the higher dispensing fees. Another issue is that Medicaid had stated in the hearing notice that “the department encourages providers to explore rebatable or less costly excipients,” this would require extra inventory of rebate able products, and from what was explained by compounding pharmacists, PCCA has no or very few rebate able products and requires their new pharmacies to use their products, exclusively. In addition, reimbursement for mainly the rebate able ingredient still does not account for all the overhead costs associated with compounding. All three compounding pharmacists who spoke, said at these reimbursement rates, they would not be able to serve the Medicaid population. MPA’s position is to have no change in the current compounding program and to continue to use usual and customary fee, especially since compounding prescriptions is less than 1% of the Medicaid budget. Please visit GrizRPh.com or RxMT.org for further information.

H.R. 971 and S.2161...Hand in Hand through Anti-trust Law.

S.2161 was introduced into the Senate by Senator Johnny Isakson [GA] (introduced 10/15/2007). Bill Text here. This is a companion bill to H.R. 971. These are bills to ensure and foster continued patient safety and quality of care by making the antitrust laws apply to negotiations between groups of independent pharmacies and health plans and health insurance issuers (including health plans under parts C and D of the Medicare Program) in the same manner as such laws apply to protected activities under the National Labor Relations Act.

In addition, The House Judiciary Committee passed HR 971 by a unanimous voice vote on Wednesday, Nov. 7. Read ACPCN ALERT here.

Also, H.R. 1474 "Fair and Speedy Treatment (FAST) of Medicare Prescription Drug Claims Act of 2007" Update: has a whopping 229 co-sponsors and is being referred to the Subcommittee on Health.