907 KAR 1:018. Reimbursement for drugs

      Section 1. Definitions. (1) "Actual 340B acquisition cost" means the acquisition cost of a drug purchased through the 340B program, which is a federally-established drug discount program available for covered entities under 42 U.S.C. 256b(a)(4).

      (2) "Bioequivalent" means determined to be bioequivalent by the FDA in accordance with 21 C.F.R. Part 320.

      (3) "Department" means the Department for Medicaid Services or its designated agent.

      (4) "Direct price" means the estimated acquisition cost for which a retailer can purchase a drug product directly from the manufacturer as listed in a nationally-recognized comprehensive drug data file for which the department has contracted.

      (5) "Dispensing fee" means a professional fee paid to reimburse a pharmacy for costs associated with the dispensing of a prescribed drug.

      (6) "FDA" means the Food and Drug Administration of the United States Department of Health and Human Services.

      (7) "Federal financial participation" is defined by 42 C.F.R. 400.203.

      (8) "Federal upper limit" means the maximum federal financial participation available toward reimbursement for a given drug dispensed to a Medicaid recipient.

      (9) "State maximum allowable cost" or "MAC" means the maximum amount established by the department that the department shall reimburse for a drug.

      (10) "Therapeutically-equivalent" means determined to be therapeutically equivalent by the FDA.

      (11) "Weighted majority of volume purchased" means a calculation used in determining a state maximum allowable cost that is based on market share.

      (12) "Wholesale acquisition cost" or "WAC" means the estimated acquisition cost for the wholesaler as listed in a nationally-recognized comprehensive drug data file for which the department has contracted.

 

      Section 2. Reimbursement. (1) Drug copayment requirements and provisions shall be as established in 907 KAR 1:604.

      (2) The department:

      (a) May establish a state maximum allowable cost for a drug:

      1. If two (2) or more bioequivalent, therapeutically-equivalent, multisource, noninnovator drugs with a significant cost difference exist for the given drug; and

      2. By reviewing the pricing sources for each drug (both the wholesale acquisition cost and the direct price) as identified in a nationally-recognized comprehensive drug data file for which the department has contracted and utilizing the weighted majority of volume purchased; and

      (b) Shall maintain a current listing of drugs and their corresponding state maximum allowable costs via a link from the department web site located at the following address:

http://www.chfs.ky.gov/dms.

      (3) An appeal of a state maximum allowable cost price for a drug shall be as established in this subsection.

      (a) The provider shall email or fax a completed Kentucky Medicaid MAC Price Research Request Form to Magellan Medicaid Administration in accordance with the instructions on the form.

      (b) An appeal of a state maximum allowable cost price for a drug shall be investigated and resolved within three (3) business days.

      (c) If available, the provider shall be supplied with the name of one (1) or more manufacturers who have a price comparable to the state maximum allowable cost price.

      (d) The state maximum allowable cost price and effective date of that price shall be adjusted accordingly, retroactive to the date of service for the state maximum allowable cost price prescription in question, if:

      1. It is determined that no manufacturer exists in the price range referenced in paragraph (c) of this subsection; or

      2. The provider is able to document that despite reasonable efforts to obtain access, he or she does not have access to the one (1) or more manufacturers supplied to the provider.

      (e) When the change in state maximum allowable cost price for a price that is adjusted becomes effective, the provider shall be informed that the claim may be rebilled for the price adjustment.

      (4) Reimbursement to a pharmacy participating in the Medicaid Program for a drug listed in the Kentucky Medicaid Outpatient Drug List established in 907 KAR 1:019 and provided to an eligible recipient shall be determined in accordance with the requirements established in this subsection.

      (a) An appropriate rebate agreement shall be signed by the drug manufacturer or the drug shall be provided based on a prior authorized exemption from the rebate requirement in accordance with 907 KAR 1:019.

      (b) Drug costs shall be determined in the Pharmacy Program using drug pricing and coding information obtained from a nationally-recognized comprehensive drug data file for which the department has contracted with pricing based on the actual package size

utilized.

      (c) Reimbursement for a drug shall be the lesser of:

      1. The federal upper limit, if one (1) exists, plus a dispensing fee and, if applicable, a unit dose addition;

      2. The state maximum allowable cost, if one (1) exists, plus a dispensing fee and, if applicable, a unit dose addition;

      3. The estimated acquisition cost (EAC) which shall:

      a. For a generic drug, equal the WAC plus 3.2 percent, plus a dispensing fee and, if applicable, a unit dose addition; or

      b. For a brand name drug, equal the WAC plus two (2) percent, plus a dispensing fee and, if applicable, a unit dose addition; or

      4. The usual and customary billed charge.

      (d) Reimbursement for the dispensing of an emergency supply of a drug shall be:

      1. Made only outside normal business hours of the department’s Drug Prior Authorization office and as permitted in accordance with 907 KAR 1:019, Section 4; and

      2. The lesser of:

      a. The federal upper limit, if one (1) exists, plus the dispensing fee for the prescription and, if applicable, a unit dose addition;

      b. The state maximum allowable cost, if one (1) exists, plus a dispensing fee and, if applicable, a unit dose addition;

      c. The estimated acquisition cost (EAC), which shall:

      (i) For a generic drug, equal the WAC plus 3.2 percent, plus a dispensing fee and, if applicable, a unit dose addition; or

      (ii) For a brand name drug, equal the WAC plus two (2) percent, plus a dispensing fee and, if applicable, a unit dose addition; or

      d. The usual and customary billed charge.

      (e) If the dispensing of an emergency supply results in partial filling of the quantity or amount prescribed, reimbursement for the partial filling of the remainder of the prescription shall utilize the methodology specified in paragraph (c) of this subsection, except that only one (1) dispensing fee shall be allowed for the combined partial fill and subsequent completion fill.

      (f) Reimbursement shall be denied if:

      1. The recipient is ineligible on the date of service;

      2. The drug is excluded from coverage in accordance with 907 KAR 1:019, Section 3; or

      3. Prior authorization is required by the department and the request for prior authorization has not been submitted prior to dispensing of the drug.

      (g) For a nursing facility resident meeting Medicaid nursing facility level of care criteria in accordance with 907 KAR 1:022, there shall not be more than one (1) dispensing fee allowed per provider per recipient per drug within a rolling twenty-four (24) day period unless:

      1. The drug is a Schedule II, III, or IV controlled substance or a legend intravenous drug, in which case up to three (3) additional dispensing fees shall be allowed;

      2. The drug is a nonsolid dosage form, in which case one (1) additional dispensing fee shall be allowed;

      3. The prescribed dosage has been changed, in which case one (1) additional dispensing fee shall be allowed; or

      4. The department determines that it is in the best interest of the recipient to allow the additional dispensing fee.

      (h) For a nursing facility resident meeting Medicaid nursing facility level of care criteria and if appropriate and in accordance with 201 KAR 2:190 and 902 KAR 55:065, an unused drug, paid for by Medicaid, shall be returned to the originating pharmacy and the department shall be credited for the cost of the drug and the unit dose packaging cost.

      (i)1. A maintenance drug shall be dispensed in accordance with 907 KAR 1:019.

      2. The department shall not reimburse for a refill of a maintenance drug prior to the end of the dispensing period established in 907 KAR 1:019 unless the department determines that it is in the best interest of the recipient to allow any additional dispensations or dispensing fees.

      (j) For an outpatient service recipient receiving services via the Supports for Community Living Program, there shall not be more than:

      1. One (1) dispensing fee allowed per drug per calendar month for a drug classified by the Medicaid Program as a maintenance drug unless there is an exception described in subparagraph 3. of this paragraph;

      2. Four (4) dispensing fees allowed per drug within a calendar month for a legend intravenous drug or a Schedule II, III or IV controlled substance; or

      3.a. Two (2) dispensing fees allowed per drug within a calendar month for a drug that is a nonsolid dosage form; or

      b. Four (4) dispensing fees allowed per maintenance drug in one (1) month if a prescriber requests to prescribe less than a thirty (30) day supply based on medical specialty, best practice standards, and appropriateness of care.

      (k) For a personal care recipient, there shall not be more than:

      1. One (1) dispensing fee allowed per drug per calendar month for a drug classified by the Medicaid Program as a maintenance drug unless there is an exception described in subparagraph 3 of this paragraph;

      2. Four (4) dispensing fees allowed per drug within a calendar month for a legend intravenous drug or a Schedule II, III or IV controlled substance; or

      3.a. Two (2) dispensing fees allowed per drug within a calendar month for a drug that is a nonsolid dosage form; or

      b. Four (4) dispensing fees allowed per maintenance drug in one (1) month if a prescriber requests to prescribe less than a thirty (30) day supply based on medical specialty, best practice standards, and appropriateness of care.

      (l) Reimbursement shall not be made for more than one (1) prescription to the same recipient on the same day for a drug with the same:

      1. National Drug Code (NDC); or

      2. Generic name, strength, and dosage form.

      (5) For a Medicaid recipient participating in a hospice program, payment for a drug shall be in accordance with 907 KAR 1:340.

      (6) A pharmacy claim shall meet the point of sale (POS) requirements for services in accordance with 907 KAR 1:673.

      (7) If a payment is made for a drug for which there is no authorization as required in accordance with 907 KAR 1:019, the provider shall reimburse the department the amount of the payment.

      (8)(a) A timely claim payment shall be processed in accordance with 42 C.F.R. 447.45.

      (b) In accordance with 42 C.F.R. 447.45, a claim shall be submitted to the department within twelve (12) months of the date of service.

      (c)1. The department shall not reimburse for a claim submitted to the department after twelve (12) months from the date of service unless the claim is for a drug dispensed to an individual who was retroactively determined to be eligible for Medicaid.

      2. The department shall reimburse for a claim for a drug dispensed to an individual who was retroactively determined to be eligible for Medicaid for up to 365 days from the date that the department issued a letter to the individual informing the individual of Medicaid eligibility.

      3. The department shall not reimburse for a claim referenced in subparagraph 2. of this paragraph after 365 days have lapsed since the department issued the notice of retroactive eligibility.

      (9) Pursuant to KRS 205.622, prior to billing the department, a provider shall submit a bill to a third party payer if the provider has knowledge that the third party payer may be liable for payment.

      (10)(a) If a provider is aware that a Medicaid recipient has additional insurance or if a recipient’s medical assistance identification card indicates that the Medicaid recipient has additional insurance, the provider shall submit a bill to the third party in accordance with KRS 205.622.

      (b) A provider who is aware that a recipient has other insurance, but no insurance is indicated on the medical assistance identification card, shall notify the department's fiscal agent of the third-party liability.

      (11) Adherence to the requirements established in this section shall be monitored through an on-site audit, postpayment review of the claim, a computer audit or an edit of the claim.

      (12)(a) A pharmacy of a covered entity as defined in 42 U.S.C. 256b which purchases drugs through the United States Public Health Service Discount Program in accordance with 42 U.S.C. 256b shall bill the department the pharmacy’s actual 340B acquisition cost for all drugs.

      (b) The department shall reimburse the pharmacy’s actual 340B acquisition cost for the drug plus a dispensing fee in accordance with Section 3 of this administrative regulation.

      (13) If a covered entity as defined in 42 U.S.C. 256b notifies the United States Office of Pharmacy Affairs that its pharmacy is not included under 42 U.S.C. 256b:

      (a) The pharmacy shall submit its usual and customary amount for a drug; and

      (b) The department shall reimburse for a drug in accordance with this section plus a dispensing fee in accordance with Section 3 of this administrative regulation.

 

      Section 3. Dispensing Fees. (1) Except as provided in subsection (2) of this section and in accordance with KRS 205.561, the dispensing fee, unless excluded by Section 2(4)(e) of this administrative regulation, shall be:

      (a) Five (5) dollars per prescription for a generic drug reimbursed through the Outpatient Drug Program if dispensed to an eligible recipient, including an eligible recipient in a nursing facility meeting the nursing facility level of care criteria requirements established in 907 KAR 1:022; or

      (b) Four (4) dollars and fifty (50) cents per prescription for a brand name drug reimbursed through the outpatient drug program if dispensed to an eligible recipient, including an eligible recipient in a nursing facility meeting the nursing facility level of care criteria requirements established in 907 KAR 1:022.

      (2)(a) For a recipient in a nursing facility meeting the nursing facility level of care criteria requirements established in 907 KAR 1:022, a unit dose addition to the usual reimbursement shall be made for a drug dispensed through the Pharmacy Outpatient Drug Program in the amount of two (2) cents per unit dose for a nonunit dose drug repackaged in unit dose form by the pharmacist.

      (b) The unit dose addition shall be paid, as appropriate, even though the usual dispensing fee of five (5) dollars for a generic drug or four (4) dollars and fifty (50) cents for a brand name drug is not paid due to monthly limits on dispensing fees or in accordance with Section 2(4)(e) of this administrative regulation.

 

      Section 4. Reimbursement to Dispensing Physicians. A participating dispensing physician who practices in a county where a pharmacy is not located shall be reimbursed for the cost of the drug, with the cost computed:

      (1) As the lesser of:

      (a) The maximum allowable cost or estimated acquisition cost established in Section 2(4) of this administrative regulation;

      (b) The physician's usual and customary amount; or

      (c) The federal upper limit; or

      (2) In accordance with 907 KAR 3:010 and 1:680, for a free immunization through the Vaccines for Children Program.

 

      Section 5. Incorporation by Reference. (1) The "Kentucky Medicaid MAC Price Research Request Form", June 18, 2010 edition, is incorporated by reference.

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department for Medicaid Services, 275 East Main Street, Frankfort, Kentucky 40621, Monday through Friday, 8 a.m. to 4:30 p.m., or obtained online at the Department’s Web site at http://www.chfs.ky.gov/dms. (29 Ky.R. 1175; Am. 1642; eff. 12-18-2002; 30 Ky.R. 112; 617; eff. 8-20-03; 31 Ky.R. 1911; 32 Ky.R. 104; 264; 891; eff. 8-25-05; 38 Ky.R. 1062; 1344; 1451; eff. 3-2-2012.)

Notation

      RELATES TO: KRS 205.560, 205.561, 205.5631, 205.5632, 205.5634, 205.5636, 205.5638, 205.5639, 205.6316(4), 217.015, 42 C.F.R. 440.120, 447.500 - 447.520, 42 U.S.C. 256b, 1396a - 1396d, 1396r-8

      STATUTORY AUTHORITY: KRS 194A.030(2), 194A.050(1), 205.520(3), 205.560, 205.561(2), 205.6316(4), 42 U.S.C. 1396a(a)(30), 42 U.S.C. 1396r-8

      NECESSITY, FUNCTION, AND CONFORMITY: The Cabinet for Health and Family Services, Department for Medicaid Services has responsibility to administer the Medicaid Program. KRS 205.520(3) authorizes the cabinet, by administrative regulation, to comply with any requirement that may be imposed or opportunity presented by federal law to qualify for federal Medicaid funds. KRS 205.561(2) and 205.6316(4) require the department to promulgate an administrative regulation to establish a dispensing fee for prescriptions. This administrative regulation establishes the Medicaid program reimbursement policies for drugs dispensed to Medicaid recipients who are not enrolled with a managed care organization.