Are drugs reimbursed through the encounter rate eligible for rebates through the Medicaid Drug Rebate Program?

As stated in the above response, reimbursement to IHS and Tribal providers through the encounter rate is an option available to all states as a means to satisfying the requirement to reimburse such providers in accordance with the requirements at 42 CFR 447.518(a)(2). However, states that choose to utilize the encounter rate for reimbursement should be aware that since it is an "all-inclusive rate" (or bundled payment), any drug included in that rate is not eligible for rebates through the Medicaid Drug Rebate Program, as it does not meet the definition of a ""covered outpatient drug"" at section 1927(k)(2) and (3) of the Act. In order to meet the definition of ""covered outpatient drug"" and therefore be eligible for rebates, amongst other requirements, there must be a direct reimbursement for the drug and it cannot be reimbursed as part of a bundled payment.