Montana Administrative Register Notice 37-557 No. 21   11/10/2011    
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In the matter of the amendment of ARM 37.86.1101, 37.86.1102, 37.86.1105, and 37.86.1106 pertaining to Medicaid pharmacy reimbursement







TO:  All Concerned Persons


1.  On September 8, 2011, the Department of Public Health and Human Services published MAR Notice No. 37-557 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 1805 of the 2011 Montana Administrative Register, Issue Number 17.


2.  The department has amended ARM 37.86.1101, 37.86.1102, and 37.86.1106 as proposed.


3.  The department has adopted the following rule as proposed with the following changes from the original proposal.  Matter to be added is underlined.  Matter to be deleted is interlined.


            37.86.1105  OUTPATIENT DRUGS, REIMBURSEMENT  (1) through (2)(a) remain as proposed.

            (b)  The dispensing fees assigned shall range between:

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

            (ii)  a minimum of $2.00 and a maximum of $6.40 for preferred brand name and generic drugs and generic drugs not identified on the preferred list.

            (2)(c) through (7) remain as proposed.


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:


COMMENT #1:  The commenter proposed a change to the proposed language defining "Active Pharmaceutical Ingredients" in ARM 37.86.1101(11).  The commenter asked that the department consider the inclusion of the word "compounding" in this section.


RESPONSE #1:  The department appreciates the comment; however, the department will be leaving the language, stated in ARM 37.86.1101(11), as defined in 21 CFR 207.3(a)(4)(2011).  To avoid confusion, the department believes that the definition in the administrative rule should not vary from the definition in the CFR.


COMMENT #2:  A commenter stated they were opposed to the proposed Estimated Acquisition Cost (EAC) formula called for in ARM 37.86.1101.  The commenter also thought the dispensing fees should more accurately reflect Montana pharmacy surveys as Montana Medicaid is moving more and more to cost plus or reductions due to loss of revenue associated with lower reimbursements based on these pricing models.  The commenter also stated the proposed formula fails to recognize the basic cost to dispense relating to such expenses as labor, energy, training, and the increased cost of maintaining an adequate drug inventory.  The commenter asked if the preferred brands, listed on the preferred drug list (PDL), were the same as those in the definition of "preferred brand name drugs" found in ARM 37.86.1105.  The commenter was concerned that there are a significant number of brand name drugs that are not on the PDL and Montana pharmacies will not receive an adequate dispensing fee.  The commenter also asked what vendor the department will be using to calculate the wholesale acquisition cost (WAC) and what is the department's definition of "national pricing data."


RESPONSE #2:  The department appreciates the comments.  In regards to the EAC formula, it will remain as proposed.  The department understands the commenter's concerns regarding an accurate cost to dispense and is working toward that goal through annual cost to dispense surveys, but reminds the commenter that provider reimbursement, including dispensing fees, is tied to appropriations.  ARM 37.86.1105 does not contain a definition for preferred brand name drugs.  The rule does refer to preferred brands that are the identified preferred brands on the department's preferred drug list and can be found at www.mtmedicaid.org.  In regards to the comment about not enough brand name drugs on the PDL and thus not eligible for the higher dispensing fee, the goal of the higher differential dispensing fee is to incentivize pharmacy providers to dispense medications which offer the best value to the state.  The department will obtain WAC pricing data from both First DataBank and Medispan through the department's fiscal agent, Affiliated Computer Services (ACS).  The commenter's question regarding the national pricing data is not related to this rule change, but is in the present rule.  For clarity, national pricing data is related to the state maximum allowable cost (SMAC) data that is obtained by our SMAC contractor through research on drug pricing throughout the nation and then reported back to the department when setting the SMAC pricing.


COMMENT #3:  For purposes of clarity the department needs to address the dispensing fees for nonpreferred generic drugs identified on the preferred drug list (PDL).  The intent of the higher differential dispensing fee is to incentivize drugs that offer the best value to the state.


RESPONSE #3:  The department will amend ARM 37.86.1105(2)(b).


            5. The department intends to apply these amendments retroactively to October 1, 2011.





/s/ John Koch                       _                      /s/ Anna Whiting Sorrell                 _         

Rule Reviewer                                             Anna Whiting Sorrell, Director

                                                                        Public Health and Human Services


Certified to the Secretary of State October 31, 2011


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