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APhA CEO Blog

CMS’s AMP rule may mean fairer Medicaid reimbursement

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February 16, 2016

On February 1, CMS published a final rule with comment period that implements provisions of the Affordable Care Act (ACA) to change Medicaid reimbursement for covered outpatient drugs, effective April 1, 2016. What does this mean for pharmacists who have to bill for medications every day? Hopes for fairer reimbursement, depending in large part, on the approach state Medicaid programs take in implementing the rule’s requirements.

CMS itself characterizes the rule as supportive of pharmacy—noting that it is designed to ensure that pharmacy reimbursement is aligned with the acquisition cost of drugs and that the states pay an appropriate professional dispensing fee. The rule’s highly technical provisions include a new regulatory definition for Average Manufacturer Price (AMP) and updates to the Federal Upper Limit (FUL) formula to incentivize pharmacies to use generic drugs.

While our Government Affairs team continues to parse this lengthy and complex rule, our preliminary readings suggest that the AMP rule is responsive to previous comments from APhA and other pharmacy stakeholders (including comments APhA submitted on the proposed rule in 2012). 

We are optimistic that some of the AMP rule’s provisions will translate to fairer reimbursement for Medicaid covered outpatient drugs—including a new FUL calculation methodology that offers some safeguards against reimbursement rates that do not cover a drug’s cost, as well as CMS’s charge to state Medicaid programs to establish “sufficient professional dispensing fees” by taking pharmacist’s time and pharmacy overhead into account. 

Many aspects of the final rule are still up in the air. State Medicaid programs have a great deal of leeway in implementing the rule’s pharmacy reimbursement provisions, including how to determine actual acquisition cost and what to include when calculating professional dispensing fees. The final rule does not set forth proposed AMP-based FULs, which are being published separately in draft and are due to be finalized in late March 2016. Without firm state implementation plans and final FULs, it’s tough to assess the rule’s real-world impact. One needs to look at the various component rules and how the state Medicaid programs will interpret them to determine whether they have addressed our concerns.  As implementation progresses, APhA will do what it can to ensure that the rule is a win for pharmacists by fighting for reimbursement that reflects pharmacists’ value and protects patient access to pharmacists’ services.

Check out the April issue of Pharmacy Today for more details about the rule and its implications.