ACA Now

Implementation Status

CMS issued early guidance to states in 2010 pursuant to this provision in the form of SMD letters (see the April 22 letter and September 28 letter).  CMS issued informational program releases to states and drug manufacturers participating in the Medicaid drug rebate program, including Release No. 81 (which addressed the ACA changes impacting the Unit Rebate Amount (URA) calculation for all drugs covered under the Medicaid drug rebate program).  To view this CMS program issuance, which is available in a zipped file, please visit here and click “2010 Drug Manufacturer Release #80-82 [ZIP].”

In early 2012, CMS issued a proposed rule revising the requirements for Medicaid reimbursement for covered outpatient drugs, addressing, in part, this section.  CMS has yet to finalize the rule; however, per the OMB/OIRA website, final action on the rule is “targeted” for August 2013.

Note also that in the fall of 2012, the OIG examined in a report the extent of states’ collection of rebates for drugs paid through Medicaid MCOs.

For up-to-date information on Medicaid prescription drug policies, including ACA prescription drug rebate provisions, see the CMS webpage dedicated to Medicaid prescription drug coverage as well as the webpage dedicated to the Medicaid prescription drug rebate program.

On a related note, on June 19, CMS released guidance to participating Medicaid drug manufacturers regarding products in the Medicaid drug rebate program that are not listed with the FDA. See under the 2013 releases section here.

2013

On July 23, 2013, HHS posted its updated semiannual regulatory agenda.  Per the updated agenda, consistent with the ACA requirements (at sections 2501, 2503, and 3301, as well as section 1206 of the reconciliation “side car”), CMS tentatively anticipates issuing a final rule on Medicaid reimbursement of outpatient drugs (CMS-2345-F) in January 2014.   Per the agenda listing, “this final rule revises requirements pertaining to Medicaid reimbursement for covered outpatient drugs…[and] also revises other requirements related to covered outpatient drugs, including key aspects of Medicaid coverage, payment, and the drug rebate program.”

On July 23, 2013, HHS posted its updated semiannual regulatory agenda.  Per the updated agenda, consistent with the ACA requirements (at sections 2501, 2503, and 3301, as well as section 1206 of the reconciliation “side car”), CMS tentatively anticipates issuing a final rule on Medicaid reimbursement of outpatient drugs (CMS-2345-F) in January 2014.   Per the agenda listing, “this final rule revises requirements pertaining to Medicaid reimbursement for covered outpatient drugs…[and] also revises other requirements related to covered outpatient drugs, including key aspects of Medicaid coverage, payment, and the drug rebate program.”

In a related event, on September 10, 2013, HHS’ OIG issued a report in which it estimated that if drug manufacturers had been required to pay Medicare Part B rebates – analogous to statutorily required Medicaid drug rebates – the Medicare program could have collected $3.1B in 2011 under an AMP approach and $2.7B if average sales prices (ASP)-based rebates were paid. The OIG report examined 60 high-expenditure drugs and found that the rebates would represent 22 percent and 20 percent of Medicare spending for those drugs, respectively, depending on AMP versus ASP methodology.

2014

In January 2014, CMS posted the FFY 2012 Drug Utilization Review (DUR) Comparison/Summary Report (see here), along with a list of products that are in the Medicaid Drug Rebate Program (MDR) program but are not listed with FDA (see here).

In a related event, on June 25, the OIG issued a report documenting inconsistencies in states’ reporting of Medicaid drug rebates at the applicable federal financial participation (FFP) rate, particularly for certain services – such as family planning, Indian Health Services, and cervical cancer care – for which higher FFP rates are statutorily authorized.

On July 15, CMS posted the list of products in the Medicaid Drug Rebate (MDR) program that are not listed with the FDA here. On July 24, CMS issued an informational bulletin to “provide information to states on reporting Medicaid drug rebates on the Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program (the CMS-64) in the Medicaid Budget and Expenditure System (MBES).”

On August 15, CMS updated its Medicaid Drug Rebate Program Data page to reflect “a new web file structure and data definitions for the drug product data file for 3Q2014 and later, which reflects the new data fields,” as well as “[t]he list of products that are in the MDR program but are not listed with FDA.” Earlier in the month, CMS posted updated 2^nd quarter MDR data on this same site.

On August 20, the OIG released a report (highlights) shedding light on the types of disputes that arise between states and manufacturers in the Medicaid Drug Rebate Program and recommending improvements in the dispute resolution process. Specifically, using data from 29 states, HHS-OIG found that “only a small percentage of rebate dollars were disputed” (24 of those states reported that 2% or less of 2012 rebate invoice dollars were in dispute, although two had more than 6%). The OIG says “while the percentage of money in dispute appears to be small, it still represents millions of dollars.”

On Sept. 12, CMS issued a memorandum to participating Medicaid Drug Rebate program manufacturers. Among other things, the memo addresses issues regarding timely reporting of AMP and Best Price (BP) pricing data, as well as the recent appointment of Dr. John Coster to serve as the Director of the Division of Pharmacy within CMCS. CMS also issued a memo to state technical contacts addressing rebate obligations for terminated manufacturers and terminated products, among other things.

On Sept. 29, CMS updated its FUL page to reflect the July 2014 AMP-based and the three-month rolling average (3MRA) FUL files.

In early Oct., CMS posted the draft July 2014 AMP-based FULs for Medicaid drugs, as well as the draft July 3-month rolling average FULs.

On Dec. 15, the OIG released a report (here; summary here) regarding the Medicaid drug rebate program. The OIG surveyed each state to determine the total amount of “offset rebates” – increased rebate amounts imposed by the ACA in which states do not share – and any supplemental rebate agreement (SRA) that the state may have negotiated with drug manufacturers for 2011 and 2012. The OIG recommended that CMS “consider further whether to encourage all States to establish supplemental rebate programs” to contain costs. CMS agreed, citing state flexibility on whether to proceed and pointed to “multiple states…submitting state plan amendments to include in their supplemental rebate collections the drug utilization of beneficiaries enrolled in Medicaid [managed care organizations].” Also of note, on Dec. 15, HRSA posted a policy clarification on its oversight role in preventing duplicate discounts – via Medicaid rebates – on outpatient prescription drugs acquired through the 340B Drug Pricing Program.

2015

In early Feb., CMS posted 4^th quarter State Drug Utilization data as well as the 4th quarter 2014 Drug Product Data file here.

On Apr. 24, OIG issued a report, which found that total rebates for brand name drugs under Medicaid were substantially higher than under Medicare Part D. OIG also found that Medicaid net unit costs were lower than those under Part D in 2012 for 200 selected drugs.

On a related note, in late Apr., CMS issued guidance (Release No. 170) to state technical contacts delineating information pertaining to the collection of Medicaid rebates for certain outpatient orphan drugs dispensed by 340B entities.

In December 2015, CMS updated its Medicaid FUL landing page to reflect the posting of draft October 2015 AMP based FULs, as well as draft October 2015 three-month rolling average (3MRA) FULs.

On Dec. 31, CMS issued Medicaid Drug Rebate guidance to participating drug manufacturers (Release No. 95), delineating information regarding labeler request for claims level data (CLD) from states, reminders regarding the dispute resolution prevention process, among others topics.

2016

On Jan. 21, 2016, CMS released its final rule (fact sheet; press release) on Medicaid reimbursement for covered outpatient drugs, including key dimensions of the Medicaid Drug Rebate Program. The rule primarily implements statutory changes specified at sections 2501 and 2503 of the ACA and finalizes provisions that the agency proposed in February 2012. The rule takes effect on Apr. 1, 2016. States will have one year following this effective date to submit State Plan Amendments (SPAs) incorporating the final rule’s requirements, with CMS sub-regulatory guidance anticipated that will address this process. Certain provisions of the final rule are open for public comment; submissions are due by April 1.

On Jan. 22, following the release of the Medicaid outpatient drug final rule, CMS provided an update on its planned timeline for publication and implementation of finalized ACA FULs for multi-source Medicaid drugs. Specifically, CMS plans to publish draft ACA FULs for two months beginning in January 2016 before finalizing the FULs. The final ACA FULs will be published in late March 2016 and will be effective on April 1, 2016, which coincides with the effective date of the aforementioned final rule.  CMS notes that “[s]tates will have up to 30 days from the April 1, 2016, effective date to implement the FULs.”

On Jan. 28, CMS posted the draft Jan. 2016 Medicaid FULs for multi-source prescription drugs here. The draft AMP-based ACA FULs are calculated pursuant to last the latest AMP rule. CMS also posted a Methodology and Data Elements Guide discussing the FULs.

On Feb. 11, CMS issued a SMD letter providing more detailed guidance to states on implementing its recently finalized regulation on Medicaid reimbursement of covered outpatient drugs. The letter addresses specific options that states have for effectuating changes to Medicaid drug reimbursement under the final rule and submitting any necessary SPAs (due by Apr. 1, 2017) to CMS.

On Feb. 25, CMS posted draft Feb. 2016 Medicaid FULs for multi-source prescription drugs here. The draft AMP-based ACA FULs are calculated pursuant to last the latest AMP rule. CMS also posted a revised Methodology and Data Elements Guide discussing the FULs.

On Apr. 25, CMS released an extensive final rule on Medicaid and CHIP managed care (press release; add’l fact sheets available here under “final rule”) that seeks to acknowledge increased enrollment in managed care delivery systems and – to facilitate beneficiaries’ transitions and care management across product lines – promote cross-market alignment with Marketplace Qualified Health Plans (QHPs) and Medicare Advantage (MA). The final rule addresses these provisions of the ACA.

On Apr. 27, CMS posted here updated ACA FULs for multi-source prescription drugs pursuant to the Medicaid covered outpatient drug final rule issued in Jan. 2016. CMS states that “[s]tates will have up to 30 days from the May 1, 2016 effective date to implement these updated FULs.” See also here.

On May 27, CMS released the latest Federal Upper Limits (FULs) for multi-source Medicaid drugs, which are calculated according to the methodology finalized in the Medicaid outpatient drug rule. States have 30 days from the June 1 effective date of these FULs to implement them.

On June 30, CMS released the latest Federal Upper Limits (FULs) for multi-source Medicaid drugs, which are calculated according to the methodology finalized in the Medicaid outpatient drug rule. States have 30 days from the July 1 effective date of these FULs to implement them.

On July 6, CMS released an FAQ responding to questions raised by various stakeholders regarding the Covered Outpatient Drug Final Rule with Comment that was published in the Federal Register on Feb. 1, 2016 as well as the State Medicaid Director Letter (#16-001) that was issued on Feb. 11, 2016. Several answers provide guidance on Federal Upper Limits (FULs) and Average Manufacturer Price (AMP) calculations.

On July 14, CMS released parallel guidances for Manufacturers (see here) and States (here) regarding value-based purchasing (VBP) arrangements for drugs in state Medicaid programs. The main issue addressed by the guidance is whether VBP arrangements impact a manufacturer’s “best price,” an amount used to calculate statutory rebates for drugs used by the Medicaid program.

On July 28, CMS released the latest FULs for multi-source Medicaid drugs, which are calculated according to the methodology finalized in the Medicaid outpatient drug rule. States have 30 days from the Aug. 1 effective date of these FULs to implement them.

On Aug. 26, CMS released the latest FULs for multi-source Medicaid drugs, which are calculated according to the methodology finalized in the Medicaid outpatient drug rule. States have 30 days from the September 1 effective date of these FULs to implement them.

On Sept. 29, CMS released the latest FULs for multi-source Medicaid drugs, which are calculated according to the methodology finalized in the Medicaid outpatient drug rule. CMS continues to also post National Average Drug Acquisition Cost (NADAC) weekly and the weekly comparison data.

On Oct. 17, CMS announced the release of the 2016 State Drug Utilization Data on Medicaid.gov. The data is available in individual state-by-state reports, or can be viewed as a whole in the 2016 Entire Dataset. In accordance with the Medicaid Drug Rebate Program, states report this drug utilization data for covered outpatient drugs that are paid for by state Medicaid agencies. The data includes state, drug name, National Drug Code, number of prescriptions, and dollars reimbursed.

2017

On Mar. 9, 2017, CMS issued guidance to states (State Release #179) reiterating certain limitations on Medicaid Federal Financial Participation (FFP) and manufacturer rebates under the Medicaid Drug Rebate Program (MDRP) for drugs used for cosmetic purposes or hair growth, or drugs to treat sexual dysfunction or erectile dysfunction.

On Mar. 29, CMS issued updated ACA-based FULs. States have up to 30 days from the Apr. 1, 2017 effective date to implement the updated FULs, CMS states.In early July, CMS issued two guidance documents (State Release #181 and Manufacturer Release #105) for states and manufacturers, respectively, addressing certain operational issues related to the Medicaid Drug Rebate Program.

In early July, CMS issued two guidance documents (State Release #181 and Manufacturer Release #105) for states and manufacturers, respectively, addressing certain operational issues related to the Medicaid Drug Rebate Program.

In early July, CMS released the latest FULs here for multi-source Medicaid drugs, which are calculated according to the methodology finalized in the Medicaid Covered Outpatient Drug rule. States have 30 days from the July 1, 2017 effective date of these FULs to implement them.

In November, CMS released operational guidances to states and manufacturers regarding the Medicaid Drug Rebate (MDR) Program, and specifically the use of CMS’s drug product data to determine drug coverage by states under the program. The guidances contain a comprehensive list of CMS’ resource mailboxes and their uses to ensure states’ questions and concerns are routed to the correct resource, and provides manufacturers with the following operational guidance: 1) reminds manufacturers of the requirement for timely submission and certification of pricing data; 2) reminds manufacturers of the process for submitting change requests; and 3) provides a comprehensive list of CMS’s resource mailboxes and their uses to ensure the questions and concerns are routed to the correct resource.

2018

On Mar. 26, CMS posted a final notice announcing changes to the Medicaid National Drug Rebate Agreement (NDRA) for use by HHS and manufacturers under the Medicaid Drug Rebate Program (MDRP). The agency said t is updating the NDRA “to incorporate legislative and regulatory changes that have occurred” since the Agreement was published in February 1991, and to make “editorial and structural revisions, such as references to the updated OMB-approved data collection forms and electronic data reporting.”

On Mar. 26, bipartisan lawmakers wrote to CMS questioning the agency on its oversight of the Medicaid drug rebate program. The lawmakers – members of the House Energy and Commerce and Senate Finance Committees – note that they are “troubled” with the “misclassifications of prescription drugs for purposes of the Medicaid drug rebate may have resulted in federal and state Medicaid expenditures for certain drugs that were higher than would otherwise be warranted.” Their inquiry follows a report issued by the HHS OIG last December indicating that “Medicaid may have lost $1.3 billion in base and inflation adjusted rebates for 10 potentially-misclassified drugs with the highest total reimbursement in 2016.”

On May 31, MACPAC issued two issue briefs providing an overview of Medicaid payment for prescription drugs, the Medicaid Drug Rebate Program, and the 340B Drug Pricing Program. The issue brief regarding the former is available here.

In its June report (summary; full report), MACPAC discusses and makes recommendations regarding Medicaid prescription drug policy and its rebate program; the confidentiality of SUD-related patient records; state adoption of managed long-term services and supports (MLTSS); and access substance use disorder (SUD) treatment. A press release is available here.

On a related note, on June 28, CMS approved a Medicaid state plan amendment (SPA) from the State of Oklahoma allowing the state to pursue CMS-authorized supplemental rebate agreements involving value-based purchasing arrangements with manufacturers. The plan will allow Oklahoma to negotiate, on a voluntary basis, tailored supplemental rebate agreements (SRAs) involving value-based purchasing arrangements with drug manufacturers, that could produce extra rebates for the state if clinical outcomes are not achieved. CMS notes that SRAs are exempt from the Medicaid “best price” rule that requires drug manufacturers to extend the lowest price for a drug they negotiate with any other buyer to all states in the Medicaid program.

On Aug. 13, CMS released guidance to states and manufacturers providing information pertaining to the line extension unit rebate amount calculation that was revised by the Bipartisan Budget Act (BBA) of 2018. The provision took effect Oct. 1, 2018.

2019

On Mar. 28, CMS released an interim final rule with comment period (IFC) addressing the Medicaid rebate calculation for certain line extension drugs. Note that the alternative rebate formula for line extension drugs was first codified in the ACA. The IFC serves as confirmation of the Bipartisan Budget Act (BBA)-driven changes to the rebate calculations that apply to certain line extension drugs, with CMS incorporating the statutory changes into the regulatory text and providing examples of rebate calculations. CMS does not finalize a definition of line extensions as part of this rulemaking, although it does address comments previously received on the topic and says any future definition would be promulgated through notice-and-comment rulemaking. Comments were due May 31, 2019.

On a separate but related note, on April 3, Congress passed the Medicaid Services Investment and Accountability Act of 2019 (H.R. 1839). Among the offsets in the bill is a provision intended to prevent the misclassification of drugs under the Medicaid Drug Rebate Program (Right Rebate Act of 2019).