Montana Administrative Register Notice 37-745 No. 12   06/17/2016    
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In the matter of the amendment of ARM 37.85.104 and 37.85.105 pertaining to the revision of fee schedules for Medicaid provider rates effective July 1, 2016







TO: All Concerned Persons


1. On April 22, 2016, the Department of Public Health and Human Services published MAR Notice No. 37-745 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 669 of the 2016 Montana Administrative Register, Issue Number 8. On May 6, 2016, the Department of Public Health and Human Services published an amended notice of proposed amendment at page 804 of the 2016 Montana Administrative Register, Issue Number 9.


2. The department has amended the following rule as proposed: ARM 37.85.104.


3. The department has amended the following rule as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:


          37.85.105 Effective dates, CONVERSION FACTORS, POLICY ADJUSTERS, AND COST-TO-CHARGE RATIOS of Montana Medicaid Provider Fee Schedules (1) and (2) remain as proposed.

          (3) The department adopts and incorporates by reference, the fee schedule for the following programs within the Health Resources Division, on the date stated.

          (a) through (e) remain as proposed.

          (f) The outpatient drugs reimbursement, dispensing fees range as provided in ARM 37.86.1105(2)(b) is effective July 1, 2016 July 1, 2015:

          (i) a minimum of $2.00 and a maximum of $8.47 $4.94 for brand-name and nonpreferred generic drugs;

          (ii) a minimum of $2.00 and a maximum of $11.62 $6.78 for preferred brand-name and generic drugs and generic drugs not identified on the preferred list.

          (g) through (6) remain as proposed.


AUTH: 53-2-201, 53-6-113, MCA

IMP:  53-2-201, 53-6-101, 53-6-402 MCA


4. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:


ARM 37.85.105: Health Resources Division - Pharmacy Dispensing Fee Changes, Comments and Responses


COMMENT #1: Several commenters requested that the department implement a tiered dispensing fee based on prescription volume. They addressed concern with the proposed dispensing fee changes in ARM 37.85.105(3)(f) and requested more analysis be completed.


RESPONSE #1: The department appreciates the comments and is withdrawing the proposed dispensing fee changes. The department will propose a tiered dispensing fee based on prescription volume. This proposed rule change will be published in MAR Notice No. 37-757 and a retroactive effective date of July 1, 2016, will be proposed. The department will adjust claims to account for the increase in the professional dispensing fee.


COMMENT #2:  The department received several comments requesting a delay in implementation of the Average Acquisition Cost (AAC) pricing methodology and proposed dispensing fees in order to work with the department to develop a different reimbursement structure.


RESPONSE #2: The department will implement the changes outlined in MAR Notice No. 37-746, the changes in drug reimbursement, but will delay the implementation of the professional dispensing fee. The department is withdrawing the proposed dispensing fee changes in this notice (see comment and response #1) and is working on developing a tiered dispensing fee based on prescription volume.


COMMENT #3: The department received several comments expressing concern that the proposed changes would result in a loss of jobs and services, and potentially worsen medical outcomes.


RESPONSE #3: The department has rescinded the proposed professional dispensing fee changes in this notice and is currently working on implementing a tiered dispensing fee based on prescription volume.


COMMENT #4: Several commenters mentioned that the proposed rule did not allow for the ability to reverse and rebill pharmacy claims.


RESPONSE #4: There is no change in policy on the ability to reverse and rebill a pharmacy claim. The practice of reverse and rebill will continue to be allowed. Current procedure allows the department to collect the pricing disputes from providers, research the issue, and adjust rates if appropriate. There will be times when the rate is not adjusted, but when the rate is adjusted the effective date may be retroactive. There may be instances where the new effective date is not able to be dated as far back as desired. The department will issue a Provider Notice in the near future regarding the procedures for reverse and rebill.


COMMENT #5: Several commenters expressed concern that pharmacy providers were the only providers receiving a reimbursement decrease. Several commenters mentioned that the cost savings associated with the decreased pharmacy reimbursement appeared to fund the rate increase for other providers.


RESPONSE #5: The 64th Montana State Legislature appropriated funds for a Medicaid rate increase for all providers. The July 1, 2016 rate increase, described in this rulemaking, incorporates the appropriated funds into rates. The AAC drug reimbursement change is required by federal law and is not related to the state rate increase. The savings to the Medicaid program from the federal change in AAC reimbursement is greater than the increase in pharmacy rates.


COMMENT #6: One commenter mentioned that Montana Medicaid does not have a compounding services fee, or any other additional fees, for delivery and other services.


RESPONSE #6: The pharmacy program provides a compounding-drug dispensing fee, in lieu of a professional dispensing fee in ARM 37.86.1105, with rates outlined in ARM 37.85.105(3)(g). Changes to those rates were not a part of this proposal. The department is withdrawing the proposed professional dispensing fees in this final notice. The department is working on implementing a tiered dispensing fee based on prescription volume. When calculating the average cost of dispensing, the department requests that pharmacy providers report their total prescription delivery costs. This allows delivery cost to be included in the calculation of the cost to dispense.


COMMENT #7: One comment was received stating agreement with the proposed drug reimbursement methodology but there were concerns with the professional dispensing fee proposed.


RESPONSE #7: In response to the comments received on the professional dispensing fee, the department has removed the proposed rates from the rule and is working on implementing a tiered professional dispensing fee system that is based on prescription volume.


COMMENT #8:  The department received a comment that the reimbursement methodology does not take into account that rural pharmacies have lower purchasing rates.


RESPONSE #8: To establish the AAC reimbursement rates, the department is surveying a panel of ten pharmacy providers monthly. This panel will include providers from various locations, including rural, throughout the state, with varying prescription volumes. This variance will help account for providers with high purchase cost.


COMMENT #9: Several comments were received asking the department to reconsider the use of drug manufacturer rebates.


RESPONSE #9: The drug rebate program is required by state and federal law. The department will continue to utilize manufacturer's rebates to offset the overall cost of the Medicaid program.


COMMENT #10: One commenter asked if pharmacy providers will continue to be required to counsel members on the medications they receive.


RESPONSE #10: The requirement to counsel patients on medications is a requirement of the Board of Pharmacy and can be found at ARM 24.174.903. It is not part of the proposed rule amendments.


COMMENT #11: One comment was received stating that there is concern with assigning a pharmacy its usual and customary average dispensing fee for filling a prescription when that fee is lower than the fee determined by the yearly state survey.


RESPONSE #11: The Centers for Medicare and Medicaid Services (CMS) requires a professional dispensing fee that covers a pharmacist's professional services and the costs associated with dispensing medications to Medicaid patients. The department determined, based on specific pharmacy survey data, that if a pharmacy has a calculated cost to dispense that is less than the maximum professional dispensing fee, its calculated cost to dispense is awarded and fulfills CMS' requirement. The department will continue to collect responses to the dispensing fee survey through August 1, 2016. Pharmacy providers who have completed the survey are encouraged to review the results submitted and if necessary submit a revision. The survey is completed online and can be found at: http://dphhs.mt.gov/MontanaHealthcarePrograms/HRDSurveys/MTMedicaidDispensingFeeSurvey. Pharmacy providers who update their surveys by August 1, 2016 will have the new dispensing fee reimbursed upon implementation of the tiered dispensing fee that will be effective on July 1, 2016. Providers who submit dispensing surveys after August 1, 2016 will not be updated until July 1, 2017.


COMMENT #12: One commenter expressed that the requirement to submit 340B purchase price will result in a significant impact to services provided to patients of small nonprofits. The commenter emphasized that these businesses rely on the cost savings between the 340B purchase price and the revenue received from dispensing 340B products.


RESPONSE #12: The 340B Drug Pricing Program was established to provide covered entities with outpatient drugs at significantly reduced prices. This rule requires covered entities to pass this discount along to the department if they use 340B drugs for their Medicaid patients, also known as carve-in, and indicate such on the pharmacy claim. This will prevent a duplicate discount. Manufacturers are prohibited from providing a discounted 340B price and a Medicaid drug rebate for the same drug. Covered entities may choose to purchase drugs for their Medicaid patients through other mechanisms, also known as carve-out, and be reimbursed using the standard Medicaid reimbursement methodology. Covered entities are reminded they must accurately report how they bill Medicaid drugs on the Medicaid Exclusion File, as mandated by 42 USC 256b(a)(5)(A)(i).


ARM 37.85.105: Senior and Long Term Care - Community First Choice and Personal Assistance Services Reimbursement, Comments and Responses


COMMENT #1: Support for the increase in provider rates was expressed by a statewide provider agency representing the agency-based and self-directed personal assistance, community first choice, and home and community based waiver service programs. The provider stated the rate increases were necessary to retain quality workers to provide home and community based services.


RESPONSE #1: The department appreciates the provider's support of the provider rate increases for home and community based services and commitment to providing quality workers to deliver home and community based services.


COMMENT #2: One provider expressed concern that the reimbursement rate of $.33 per mile paid for transportation mileage lags behind the state's employee and federal compensation for mileage of $.54 per mile. The commenter requested that the mileage rate be revisited.


RESPONSE #2: The rate for mileage reimbursement in the community first choice and personal assistance program equals the rate Medicaid pays for a similar category of service under Medicaid Transportation. The Medicaid Transportation rate did not increase, thus the rate for mileage in the community first choice and personal assistance program remains at $.33. The Medicaid mileage rate is not tied to the state or federal rate of reimbursement for mileage, and as such, does not adjust when those rates adjust.


COMMENT #3: One provider expressed concern that the reimbursement rate for home and community based waiver services is less than the Medicaid rate for community first choice and personal assistance. The provider requested that the department align the two rates.


RESPONSE #3: The rate for community first choice and personal assistance services increased July 1, 2014 to account for the increased requirements for coordinated service planning and person-centered planning. These are not requirements for home and community based waiver services; thus the waiver rate did not increase accordingly.


COMMENT #4: Most people who are receiving assisted living services are paying for their own care but once their personal funds are depleted they must seek this service to continue to reside in the facility and many do not receive it due to limited availability. The Medicaid waiver rate is less than the rate providers can charge for private pay in assisted living facilities. A commenter stated that it is very difficult to ask someone to move because they can no longer pay to live in the facility.


RESPONSE #4: Medicaid as a state and federal program does not reimburse providers at the private pay rate, but at the Medicaid rate that has been established for the services provided. The waiver program is not an entitlement program and must be managed within the funding provided by the Montana Legislature. When the funding is committed or when no new waiver slots are added or available, individuals must wait until an opening occurs in order to access the waiver program.


COMMENT #5: Several commenters questioned why the Residential Habilitation – Assisted Living Facility rate does not reflect the full 2% increase approved by the legislature. The way the increase is implemented for this service reflects an effective rate increase of only 1.5%. Commenters pointed out that due to the room and board rate not keeping pace with increasing costs it becomes challenging to continue to accept Medicaid members.


RESPONSE #5: Based on the comments received the department has reevaluated the reimbursement rate calculation for the Residential Habilitation – Assisted Living Facility rate. The department will increase the Residential Habilitation – Assisted Living Facility daily rate from the proposed $76.00 to $76.36. This will increase the maximum total facility rate by 1.91% for State Fiscal Year (SFY) 2017. This 1.91% equates to the total funding provided by the Legislature for provider rate increases in SFY 2017 for the waiver program.


ARM 37.85.105 Children's Mental Health Bureau


COMMENT #1: The department discovered a typographical error in the Medicaid Youth Mental Health Services Fee Schedule in ARM 37.85.105(6)(a) for Extraordinary Need Aide Services.


RESPONSE #1: On page three of the fee schedule, Extraordinary Need Aide Services will be corrected to state $3.92 per 15 minute unit rather than $15.69 per hour unit.


Fiscal Impact


In notices of proposed amendment MAR Notice No. 37-745 and MAR Notice No. 37-746, the department proposed changes to its method for calculating outpatient pharmacy reimbursement. Federal law requires the changes. Montana Medicaid is eliminating the estimated acquisition cost reimbursement methodology for calculating drug ingredient reimbursement. Instead, it is revising its dispensing fee structure and paying a drug ingredient reimbursement amount set as close to actual acquisition costs as possible.


In response to comments received in MAR Notice No. 37-745 and MAR Notice No. 37-746, the department is not adopting the proposed language in MAR Notice No. 37-745 regarding dispensing fees. Instead, it is proposing a three-tiered professional dispensing fee model based on prescription volume in MAR Notice No. 37-757. The rule amendments in MAR Notice No. 37-757 are proposed to have a retroactive effective date of July 1, 2016. The administrative cost reported in MAR Notice No. 37-745 and MAR Notice No. 37-746 does not change. The cost savings associated with MAR Notice No. 37-746 and MAR Notice No. 37-757 will remain the same at $4.3 million.


          5. These rule amendments are effective July 1, 2016.



/s/ Geralyn Driscoll                                /s/ Richard H. Opper                            

Geralyn Driscoll, Attorney                      Richard H. Opper, Director

Rule Reviewer                                       Public Health and Human Services


Certified to the Secretary of State June 6, 2016


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