Dear State Technical and Rebate Contacts,
This is a follow-up to the April 8, 2022 email reminder to states regarding preparation for the upcoming 2021 Branded Prescription Drug (BPD) Fee Year.
Reporting of State Drug Utilization Data for Branded Drug Fee Calculation
In accordance with section 1927(b)(2)(A) of the Social Security Act (the Act), States are required to submit all Medicaid State Drug Utilization Data (SDUD), including physician administered drug utilization and managed care organization (MCO) drug utilization, to CMS within 60 days of the end of each quarter. Additionally, all newly submitted or revised SDUD records submitted on or after January 1, 2022 will need to be certified. This also includes 4Q2021 and 1Q2022 SDUD submissions, as these data were submitted after the January 1, 2022 effective date of the certification requirement.
SDUD continues to be used as part of the methodology for establishing an annual fee on branded prescription drug manufacturers that was enacted by section 9008 of the Affordable Care Act on March 23, 2010. While the Department of Treasury is responsible for imposing these fees, the government drug programs specified in section 9008 (e.g., Medicaid, Medicare Part B, and Medicare Part D, Department of Veteran Affairs (VA), the Department of Defense (DOD) and TRICARE) are required to report drug sales information to the Department of the Treasury each year so that the fees can be accurately calculated. For purposes of the Medicaid data, CMS does not want to impose a new reporting requirement on the states as part of this process; therefore, the SDUD that are currently reported under section 1927(b)(2)(A) of the Act are being provided to the Department of Treasury as one element of Medicaid’s drug sales information. However, if a state has not reported its utilization data, these new fees cannot be appropriately calculated; therefore, timely and complete reporting of SDUD is essential to this process.
Importance of Submitting Correct Data
Over the past few years, it has come to our attention that some states are not submitting the same utilization on the rebate invoice to the manufacturer as are being reported to CMS. In many such cases, it appears the state is either applying different edits to the individual rebate invoice than they do to the quarterly utilization file they send to CMS. Additionally, not all states are applying necessary unit conversion factors prior to billing the manufacturer correctly, and are submitting these erroneous utilization to CMS, causing disputes on the calculated BPD fee. Note: A unit conversion file (created and maintained by North Dakota) is posted to our Dispute Resolution Program (DRP) Medicaid.gov page, under DRP Resources: https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/medicaid-drug-rebate-program-dispute-resolution/index.html). Such states are not in compliance with their SDUD reporting requirements.
It is imperative that states and manufacturers work together to correct these data inconsistencies. Please note that if states fail to update or correct overstated or understated state utilization data reported to CMS, it may result in some manufacturers being assessed higher or lower fees than would have otherwise been the case. For additional information, please refer to State Release No’s 163 & 166 located on Medicaid.gov at https://www.medicaid.gov/medicaid/prescription-drugs/program-releases/index.html or the BPD webpage: https://www.medicaid.gov/medicaid/prescription-drugs/branded-prescription-drug-fee-program/index.html.
We will be reviewing your state’s utilization file submissions for all quarters of 2021 to ensure that CMS has received the data, and that the state has responded to any corresponding utilization emails from either the manufacturers or CMS. Please review the SDUD that has been submitted for 2021 to determine whether any additional submissions or corrections are necessary. If so, please be aware that with MDP, you are able to perform edits either on-line or via direct file upload into MDP. These enhancements reduce the barriers to adjusting any of the SDUD. All updates need to be entered into MDP by COB December 29, 2022 in order to be included in the December 31st BPD Data snapshot.
Thank you for your cooperation with this effort. If you have any questions, please feel free to contact us via this email resource box, MedicaidBPD@cms.hhs.gov.
CMS Medicaid BPD Team