How low is the provider reimbursement exactly? Depending on the specifics of the contract that the PBM has with the managed care plan, some of this margin or spread might be used to pay the PBM for managing or administering the pharmacy benefit but in some cases, this spread may be in addition to administrative fees paid by the plan to the PBM. Therefore, using the authority at section 1927(b)(3)(B) of the Act, which grants the Secretary the ability to survey wholesalers and manufacturers to obtain information about manufacturer's prices for a drug reported to us under section 1927(b)(3)(A) of the Act, we are proposing rules to describe those situations when it is necessary for surveys to be sent to manufacturers and wholesalers to verify prices and charges, and the information that would be requested, to verify prices or charges such that payments can be made. Proposals Related to Managed Care Plan Standard Contract Requirements, a. Generally, a manufacturer cannot make the drug product information corrections in the CMS system without our intervention. . Therefore, under the authority of section 1902(a)(4) of the Act, as well as to ensure effective implementation of and compliance with sections 1927(a)(5)(C) and 1927(j)(1) of the Act, we are proposing to amend 42 CFR 438.3(s) to require MCOs, PIHPs, and PAHPs that provide coverage of CODs to assign and exclusively use unique Medicaid BIN, PCN, and group number identifiers for all Medicaid managed 23, 2018). For purposes of the RFA, approximately 98 percent of Pharmaceutical Preparation Manufacturing (2,722/2,790 firms) and approximately 93 percent of Biologic Product (except Diagnostic) (587/628) firms are considered small businesses according to the SBA's size standards with total employee of 1,250 in any one year. documents in the last year, by the Land Management Bureau [21] The authority citation for part 438 continues to read as follows: 4. For example, these provisions would implement the existing statute and would benefit States as they would be receiving any past rebates that are due to them as a result of a manufacturer's misclassification of drugs. Nevertheless, alternatives which we have considered are detailed below. Manufacturer This final rule had revised the conditions for excluding patient assistance from AMP at 447.504(c)(25) through (29) and (e)(13) through (17), and best price at 447.505(c)(8) through (12), to add language (effective January 1, 2023) that would require manufacturers to ensure the full value of the assistance provided by patient assistance programs is passed on to the consumer and that the pharmacy, agent, or other AMP or best price eligible entity does not receive any price concession. The statute expressly provides at section 1927(b)(3)(B) of the Act the authority to verify manufacturer prices and manufacturer's average sales prices (including wholesale acquisition cost) and that requests for information may span charges or prices. We discuss later in this section which charges and prices we may request to verify the reported manufacturer prices. Therefore, we are proposing at 447.510(k) to identify a process to survey wholesalers and manufacturers to verify prices and charges for certain CODs by requesting and collecting certain information about such prices and charges for a drug reported to us under section 1927(b)(3)(A) of the Act. on NARA's archives.gov. The labeler code is a unique 5-digit number within the NDC,[8] We would also like to specify, whenever we refer to a 3-year timeframe for disputes, we are interpreting it as 12 quarters from the last day of the quarter from the date of the State invoice. (16) Manufacturer-sponsored patient refund/rebate programs, to the extent that the manufacturer provides a full or partial refund or rebate to the patient for out-of-pocket costs and the pharmacy, agent, or other AMP eligible entity does not receive any price concessions. However, for the purposes of our estimate, we assume Availability of FFP. Therefore, in consideration of ensuring that payments to providers are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers, we believe an update to the regulatory text is necessary so that care and services continue to be available to the general population. Thus, this suspension authority would serve as an incentive for manufacturers to report their product and pricing information timely so that drugs of the manufacturer would continue to be covered under Medicaid and the drug rebate program. This proposed rule imposes mandates that would result in anticipated costs to State, local, and Tribal governments or private sector, but the transfer costs will be less than the threshold. In addition, this rule includes a proposal unrelated to MDRP that would make revisions to the third-party liability regulation due to Bipartisan Budget Act (BBA) of 2018. This directly affects Medicaid payments and rebates. The use of the BIN/PCN ensures that a pharmacy claim can be accurately billed by the pharmacy. However, we do not get these requests frequently. In State Release 56 and Manufacturer Release 20, we explained an adjustment is a correction in the number of units for any given NDC, or a correction to the unit rebate amount (URA) by the labeler for any given NDC. Drug classification refers to how a drug should be classifiedas a single source, innovator multiple source, or noninnovator multiple source drug for the purposes of determining the correct rebates that a manufacturer owes A Proposed Rule by the Centers for Medicare & Medicaid Services on 05/26/2023, This document has a comment period that ends in 52 days. Although there is not currently a Federal prohibition on using spread pricing in Medicaid, as noted, we issued the 2019 CIB regarding the impact of the lack of transparency between costs for administrative functions versus actual Medicaid services on the managed care plan's MLR calculation. Beginning October 1, 2023, under section 11405 of the Inflation Reduction Act of 2022, States are required to cover approved adult vaccines recommended by the ACIP, and their administration, for many adults enrolled in Medicaid and the CHIP program, without cost sharing. Because of the specialized nature of the COD benefit, many Medicaid managed care plans (that is, the MCOs, PIHPs, or PAHPs) may contract with, or have their own PBMs to administer the COD benefit. For example, States have reported receiving new disputes on claims from more than 30 years ago. American Rescue Plan Act - Rate Increase Summary Home and Community Based Services (HCBS) rate adjustments due to the COVID-19 Emergency as part of the American Rescue Plan Act of 2021 (ARPA), Section 9817. Counts are subject to sampling, reprocessing and revision (up or down) throughout the day. Subcontractor PBMs of the 282 managed care plans, (52 States + 10 manufacturers + 282 managed care plans), Define manufacturer internal investigation, Modify definition of manufacturer/labeler, Establish a 12-Quarter Rebate Audit Time Limitation, Federal Government Survey for Manufacturers, Drug cost transparency in Medicaid managed care contracts, Removal of manufacturer rebate cap (100% of AMP), Is engaged in the production, preparation, propagation, compounding, conversion, or processing of covered outpatient drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis; or. In 2023, that threshold is approximately $177 million. By working with a Medicaid Planning Professional, families can employ a variety of strategies to help them become Medicaid eligible, as well as to protect their home from Medicaids Estate Recovery Program. CMS continues to encourage individuals not to submit duplicative comments. Further, the supplemental rebate data are reported in the aggregate to CMS from States on a quarterly basis, thus it is difficult to identify individual State supplemental rebate data to net State supplemental rebates from per claim Medicaid spending. In contrast, the PBM might charge the managed care plans for dispensing that same COD based upon a different fixed percentage discount from AWP, or a higher percentage of WAC, either on a per-claim or aggregate spend basis. We also discussed our view that the definition of AAC requires that States establish payment rates based on pharmacies' actual prices paid to acquire drug products, and explained that the expectation is that those prices would reflect current prices (see 81 FR 5176). Manufacturers would need to review their respective labeler codes in the CMS-hosted online information technology system and ensure the list is complete. The Public Inspection page However, CMS' longstanding interpretation of the term was that an original new drug application (NDA) is an NDA approved under section 505(b)(1) or (2) of the Federal Food, Drug, and Cosmetic Act (FFDCA), as distinguished from one approved under an abbreviated NDA (ANDA) under section 505(j) of the FFDCA (Manufacturer's Release 113). When Congress passed the drug rebate provisions in 1990, they established a framework for coverage and payment of covered outpatient drugs under Medicaid, and prescribed drugs, generally. We are proposing that the data submitted cannot solely rely on the amounts that pharmacies are accepting from other private third-party payers. Collection of Information Requirements, B. This change would not produce new burden not already captured in final rule CMS2482F. 3) The extent to which the use of the covered outpatient drug will reduce or eliminate the need for other health care services. In its report titled Medicaid Rebates for Physician Administered Drugs (April 2004, OEI030200660),[45] (B) Manufacturer information regarding the clinical efficacy, effectiveness and outcomes of the drug. (4) For a drug other than a single source drug or innovator multiple source drug, the offset amount is equal to 2.0 percent of the AMP (the difference between 13.0 percent of AMP and 11.0 percent of AMP). We seek comment on whether the proposed definition of vaccine, for purposes of the MDRP only, appropriately distinguishes between preventive vaccines (which would satisfy the definition of vaccine and, therefore, not satisfy the definition of a covered outpatient drug and would not be eligible for statutory rebates), and therapeutic vaccines (which would not satisfy the definition of vaccine and therefore could satisfy the definition of a covered outpatient drug and could therefore be eligible for statutory rebates). We are also requesting comment about the consequences for Medicaid of ACIP recommending immunization with a (9) Manufacturer coupons to a consumer redeemed by a consumer, agent, pharmacy, or another entity acting on behalf of the manufacturer; but only to the extent that the full value of the coupon is passed on to the consumer, and the pharmacy, agent, or other entity does not receive any price concession. that agencies use to create their documents. As such, we continue to believe that when defining a manufacturer, the term entity should be interpreted to include parent, brother-sister, or subsidiary corporations, as well as, labelers that are owned, acquired, subsidiaries, affiliates, parent companies, franchises, business segments, part of holding companies, or under common corporate ownership or control. and not as direct reimbursement . Since Congress excluded vaccines from the definition of COD in the original 1990 law, and vaccines that were licensed at that time have a different intended use than therapeutics, we believe that vaccines were excluded because of their unique characteristics among medical products marketed at the time of preventing disease by inducing an immune response. In other words, we believe it is meant to allow the Secretary to verify prices reported in both situations in which a manufacturer sells to wholesalers and/or distributes them directly on their own. If the agency determines that a misclassification has occurred as described in paragraph (d)(1) of this section, the agency will send written and electronic notification of this misclassification to the manufacturer of the covered outpatient drug, which may include a notification that past rebates are due. This would be helpful to all parties to ensure that Medicaid benefits are applied appropriately. Section 1927(k)(7)(A)(iii) of the Act, which was not expressly amended or clarified by the MSIAA, defines a noninnovator multiple source (N) drug as a multiple source drug that is not an I drug. . Thus, once we review a request for a rebate agreement and the manufacturer confirms, among other things, that all of a manufacturer's CODs are listed, a rebate agreement will be issued. We note that this proposal does not change the applicability of the 2019 CIB to PBM subcontractors or to other subcontracting arrangements used by a Medicaid managed care plan; the 2019 CIB remains CMS' position on how 438.8 and 438.230 apply. The regulatory definition of noninnovator multiple source drug goes beyond this statutory definition but does not capture every covered outpatient drug that is something other than a single source drug or an innovator multiple source drug because not every other drug is a multiple source drug. However, there may be circumstances where a manufacturer is reporting its drug as a S or I drug, when the appropriate category is a N drug. Proposal To Establish a Definition of Market Date for a COD for the Purposes of Determining a Base Date AMP for a COD, 5. Reston, VA 20191 800-373-2204 Center for Research and Innovation (CRI) 50 S. 16th St . Although the rebate agreement notes that States and manufacturers should strive to resolve disputes within a reasonable timeframe, there is no mention of how far back a dispute can be initiated once a manufacturer receives an invoice. Medicaid rate information for providers. The cost charged to the managed care plan for the COD by the PBM often includes both the amount that the PBM reimbursed the medical or pharmacy provider for the COD as well as the PBM's administrative fees for operating the benefit program. At this time, we estimate that the simplified State survey would take 15 minutes at $92.14/hr for an operations research analyst to complete. We proposed to retain this current regulatory language without modification in the 2012 COD proposed rule (77 FR 5367) and since no comments were received on that proposal, the current regulations were finalized without any modifications in the 2016 COD final rule. The costs for States to determine which manufacturers would be included in the State survey would be 0.25 hours per State for an Operations Research Analyst (Code 152031) at $92.14 an hour, including fringe benefits and other indirect costs, or $23.04 per State. documents in the last year, 1428 For example, to be eligible for enhanced Federal funds in certain instances, such as when birth control drugs are used for family planning as opposed to other indications such as acne, moderate to severe abnormal vasomotor function, or postmenopausal osteoporosis the State needs to document when expenditures are being used to treat that condition. Section 1927(c)(3) of the Act describes rebates for other drugs and section 1927(c)(3)(A) of the Act, more specifically describes rebates for covered outpatient drugs other than single source drugs and innovator multiple source drugs. The MDRP reporting system provides for all other drugs that are covered outpatient drugs to be classified in the system as N drugs, regardless of whether they expressly meet the definition of noninnovator multiple source drug. In aggregate, we estimate a one-time burden of 1,000 hours (40 State responses 25 hr/response) at a cost of $92,140 (1,000 hr $92.14/hr). When reimbursement rates for drugs do not adapt to changing market conditions, pharmacies may stop filling prescriptions for Medicaid beneficiaries, or, depending on the number of Medicaid prescriptions they fill, could have to permanently go out of business. We note this rulemaking does not address the separate authority to conduct surveys under section 1847A(f)(2) of the Act to verify prices reported under section 1847A(f)(2). 52. Allergan Sales, LLC, section. That occurs because the claim was not identified as a 340B claim before it was sent to the State. Therefore, we assume that approximately 863 (792 manufacturers + 52 States + 19 trade associations) entities may review the proposed rule. That is, no maximum rebate amount would apply to rebate periods beginning on or after January 1, 2024. Because of the large number of public comments we normally receive on We are proposing to specify the time limitation on manufacturers initiating disputes, hearings, or audits with States. If a particular drug or biological product of a participating manufacturer is excluded from or does not satisfy the definition of COD, then with limited exceptions, a State is not required to cover the product under the prescribed drugs benefit nor would it be subject to section 1927 of the Act. 44. A State that requires additional time to comply with the requirements of this section may apply to the Secretary for an extension. Historically, in such cases where no sales may have occurred in a base date AMP quarter (because sometimes a new NDC may be available for sale during a quarter, but no sales occurred during that quarter), we have advised manufacturers to use reasonable assumptions, as appropriate, and consistent with applicable law to establish an AMP. [41] We issued a Center for Medicaid & CHIP Services (CMCS) Informational Bulletin on May 15, 2019, for Medicaid Managed Care plans, titled Medicaid Loss Ratio (MLR) Requirements Related to Third Party Vendors (2019 CIB) (see If the covered outpatient drug is a line extension of a single source or innovator multiple source drug, manufacturers shall not include the research and development costs of the initial single source or innovator multiple source covered outpatient drug. According to the SBA's website at So as to not under estimate the impact of this rule's proposed provisions, we are using the maximum of ten manufacturers surveyed per year. this will NOT be posted on regulations.gov. (C) Total expenditures of the manufacturer associated with marketing and advertising for the applicable covered outpatient drug. IMPORTANT: Not meeting all of the criteria does not mean one is ineligible or cannot become eligible for Medicaid in Virginia. The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. However, States do not know how those costs relate to the prices available from the manufacturer. Section 1927(c)(3) of the Act, titled Rebate for other drugs, describes in subsections (c)(3)(A) and (B) the basic rebate calculation for covered outpatient drugs other than single source drugs and innovator multiple source drugs. of the issuing agency. (3) * * *. Alternatively, one may take the Medicaid Eligibility Test. 28. If the identification card included a unique Medicaid BIN/PCN/group number, and the State permits the use of 340B drugs at contract pharmacies for individuals enrolled in Medicaid managed care, then it would allow for the inclusion of a modifier at the point of dispensing that would identify the claim as ineligible for a Medicaid rebate. Section 1927 of the Act, specifically, does not define vaccine. (ii) Suspend the misclassified drug and the drug's status as a covered outpatient drug under the manufacturer's rebate agreement from the MDRP, and exclude the misclassified drug from FFP in accordance with section 1903(i)(10)(E) of the Act. We currently require manufacturers to submit drug product information when the covered outpatient drug is entered into the MDP system, although there is no regulatory definition of drug product information. Prior to section 6002 of the DRA of 2005, which added sections 1927(a)(7) and 1903(i)(10)(C) to the Act to require the States to collect and submit certain utilization data on certain PADs in order for FFP to be available for these drugs, and for States to secure rebates, many States did not collect rebates on PADs when they were not identified by a National Drug Code (NDC) number because the NDC number is necessary for States to bill manufacturers for rebates. (State Release 181). No such survey process, however, exists for CODs paid for by Medicaid that are not traditionally dispensed through retail pharmacies, such as many physician-administered drugs and gene therapy drugs, which are not required to follow the regulations noted above with regard to pharmacy reimbursement and AAC and PDF requirements. A misclassification in the MDRP has occurred when a manufacturer has: (i) Reported and certified to the agency its drug category or drug product information related to a covered outpatient drug that is not supported by the statute and applicable regulations; or. ICRs Regarding Proposals Related to State Plan Requirements, Findings, and Assurances (447.518), 4. 3) Regular Medicaid / Aged Blind and Disabled This is an entitlement program; persons who are eligible are guaranteed assistance. estimate The reporting from the subcontractor must have sufficient detail to allow a managed care plan to accurately incorporate the expenditures associated with the subcontractor's activities into the managed care plan's overall MLR calculation. See By stacking, best price reflects the lowest realized price at which the manufacturer made that drug unit available. For example, under the Medicare Drug Price Negotiation program established under sections 11001 and 11002 of the Inflation Reduction Act of 2022, or potentially certain CMMI models that are developed in response to the President's Executive Order 14087 (see HHS response at . to . While the model of distribution from manufacturer to wholesaler to provider still exists, and the predominant provider of pharmacy services remains the community-based pharmacy, there are other arrangements emerging for the production and distribution of specialty and high-cost gene therapy drugs, and pricing structures for these drugs that were not necessarily existing in the market when the MDRP was enacted. In accordance with section 1927(b)(4)(B)(ii) of the Act, and section VII. ( Consequently, none of the definition changes are subject to the requirements of the PRA. In addition to retail community and closed-door specialty pharmacies, other provider types may dispense and/or administer drugs dispensed in non-retail community pharmacy settings to Medicaid beneficiaries. The main difference between the definitions is the authority under which the drug is marketed. Start Printed Page 34254 As a result, other drugs and noninnovator multiple source drugs are not synonymous. Finally, we believe, if such a provision were implemented, that the design and implementation of any adjudication specifications would be left to the States' discretion to meet State-specific needs. Accordingly, we propose to amend 447.502 by revising paragraph (3) of the definition of an N drug to read, a COD that entered the market before 1962 that is not marketed under an NDA. It would remove any potential doubt prospectively that when determining the best price for a COD, the manufacturer should aggregate discounts such that cumulative discounts, rebates or other arrangements must be stacked to generate a final price realized by the manufacturer for a covered outpatient drug, including discounts, rebates or other arrangements provided to different best price eligible entities. Establishing a 12-quarter time limitation for manufacturers to initiate disputes concerning State-invoiced utilization data would align with the timelines for manufacturers to report changes to data elements relevant to the calculation of (5) For the purposes of maintaining an effectuated rebate agreement consistent with section 1927(a)(1) of the Social Security Act, the term manufacturer means that all associated entities of the manufacturer that sell prescription drugs, including, but not limited to, owned, acquired, affiliates, brother or sister corporations, operating subsidiaries, franchises, business segments, part of holding companies, divisions, or entities under common corporate ownership or control, must each maintain an effectuated rebate agreement. 996 (1990). We also note in this proposed subparagraph that research and development costs of a line extension drug shall not include the research and development costs of the initial single source or innovator multiple source covered outpatient drug. Section 447.510(b)(1)(v) provides an exception to the 12-quarter price reporting rule if the change is to address specific rebate adjustments to States by manufacturers, as required by CMS or court order, or under an internal investigation, or an OIG or Department of Justice (DOJ) investigation. Holocaust restitution payments are an exception and are considered non-countable income. Difference between the definitions is the authority under which the manufacturer an extension section which charges prices. Charges and prices we may request to verify the reported manufacturer prices at which the manufacturer that! Not mean one is ineligible or can not solely rely on the amounts that pharmacies accepting. 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