U.S. flag

An official website of the United States government

Frequently Asked Questions

Frequently Asked Questions are used to provide additional information and/or statutory guidance not found in State Medicaid Director Letters, State Health Official Letters, or CMCS Informational Bulletins. The different sets of FAQs as originally released can be accessed below.

Showing 31 to 40 of 61 results

Can CMS provide further clarification regarding what is meant by "nationwide availability," especially with respect to drugs that are experiencing shortages?

A FUL will only be calculated when pharmaceutically and therapeutically equivalent multiple source drug products are available for purchase by retail community pharmacies on a nationwide basis (see 81 FR 5300, 5302-5304).

CMS plans to regularly monitor the availability of drugs by reviewing the FDA drug shortage list for drugs that have a FUL calculated, but are not likely to have enough supply in the market to meet current demand. Further, CMS plans to monitor weekly pricing changes available to us in the most current national survey of pricing to consider changes to the multiplier used to calculate the FULs, based on average retail community pharmacies' acquisition costs. It is also important to note that CMS currently publishes a monthly and weekly file of NADAC pricing values, which states can use to monitor those changes in average retail community pharmacies' acquisition costs as they apply the FUL aggregate reimbursement. CMS will not calculate a FUL for a given drug if the agency determines that there is a lack of availability of that drug to retail community pharmacies on a nationwide basis.

Supplemental Links:

FAQ ID:94756

SHARE URL

Are 340B ceiling prices available to states? If not, how are states supposed to ensure that reimbursement is not greater than the 340B ceiling price plus a PDF?

The 340B ceiling prices can be calculated by the states using the formula in section 340B of the Public Health Service Act, which is based on the average manufacturer price (AMP) minus the unit rebate amount (URA).

Supplemental Links:

FAQ ID:94761

SHARE URL

In the SMD letter (#16-001) published on February 11, 2016, CMS indicated that states that pay IHS and Tribal providers through encounter rates can continue to pay that rate and that it will satisfy the requirements of 42 CFR 447.518(a)(2), which specify that the state's payment must be in accordance with the definition of AAC. Can CMS please clarify that reimbursement at the encounter rate is available to all states, not just those that already reimburse using the encounter rate.

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).

Supplemental Links:

FAQ ID:94766

SHARE URL

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.

Supplemental Links:

FAQ ID:94771

SHARE URL

Please verify that the AAC methodology for determining Medicaid reimbursement will only apply to FFS and that Medicaid MCOs that are paid a capitated fee by the state for benefits that include provision of Covered Outpatient Drugs are permitted to establish payment terms with prescription drug providers that do not take AAC into account.

The provisions of this final rule related to pharmacy payments do not apply to MCO payment or reimbursement methodologies, including MCO providers participating in the 340B program.

Supplemental Links:

FAQ ID:94776

SHARE URL

Is there a threshold for determining the amount of prescriptions that are delivered through the mail that will exempt a specialty pharmacy from the Retail Community Pharmacy definition? The rule uses the term "primarily" - is this to be interpreted as greater than 50 percent of prescriptions? Is it based on number of prescriptions or sales volume?

As noted in the comment and response in the preamble to the final rule (81 FR 5216), CMS declined to set a threshold in order to allow flexibility to recognize changes that take place in the pharmaceutical marketplace with regard to mail order business. CMS further noted that manufacturers may make reasonable assumptions that a pharmacy is a retail community pharmacy when the majority of the drugs are not dispensed through the mail. A "majority" is generally determined as greater than 50 percent, which could be interpreted as greater than 50 percent. In addition, in cases where a single entity owns both a retail community pharmacy and a mail order pharmacy, manufacturers may exclude the sales to the mail order side of business and include sales to the retail community pharmacy side when calculating AMP, and include the mail order sales when they are calculating AMP for a 5i drug not generally dispensed through retail community pharmacies. Since the definition of retail community pharmacy at 1927(k)(11) of the Act excludes a pharmacy that "dispenses prescription medications primarily through the mail", CMS believes the number of prescriptions dispensed would be a reasonable basis to determine whether the pharmacy dispenses "primarily through the mail."

Supplemental Links:

FAQ ID:94781

SHARE URL

How are AMPs determined for drugs not available from retail community pharmacies that are also not considered 5i drugs, such as oral oncology or topical products only available from mail order specialty pharmacies?

As discussed in the final rule (81 FR 5250), if a specialty pharmacy meets the definition of a retail community pharmacy at section 1927(k)(10) of the Act, sales for such drugs would be included in AMP. This is true even in the event there are a low number of AMP eligible sales. Because CMS is permitting manufacturers to use a presumed inclusion approach when calculating AMP, and to make reasonable assumptions, an AMP will likely be generated for such drugs.

Supplemental Links:

FAQ ID:94786

SHARE URL

Can CMS clarify its expectation when it comes to a situation where a labeler may have two different NDC-9s (that is not an authorized generic situation) that are the exact same drug (for example if an old labeler code is being terminated and replaced with a new labeler code)? Should the manufacturer calculate the two NDC-9s separately or merge the data together for one price across both NDC-9s?

CMS does not require that two separate NDC-9s be blended, however, the agency believes that in certain circumstances, a manufacturer may blend the AMPs of two NDC-9. For example, if a manufacturer acquires a product from a different labeler and has made necessary arrangements with the prior manufacturer, it may have product with the old labeler code (ex. 12345) as well as product from its own labeler code (ex. 67890) in the market at the same time while the supply of the drug under the old labeler code is depleted. Since the two NDC-9s are essentially the same product/strength combination, it may be reasonable to blend the AMPs and report the same AMP for both NDCs. As always, it is recommended that manufacturers retain written documentation of any reasonable assumptions made in the calculation of AMP. Manufacturers may contact CMS for further guidance and discussion as the facts and circumstances of each case should be evaluated independently.

Supplemental Links:

FAQ ID:94791

SHARE URL

By lowest price available for Best Price, do you mean the lowest price offered or the lowest price achieved?

The lowest price available means it is the lowest price available to the best price eligible entity. The best price must include applicable discounts, rebates, or other transactions that adjust prices either directly or indirectly to the best price eligible entities. See 42 CFR 447.505(b) and section 1927(c) of the Act.

We have provided the following example:

If a manufacturer sells a drug to a hospital but also provides a rebate to a PBM (which is excluded from best price); however, the PBM rebate is designed to subsequently adjust the drug price available from the manufacturer to the hospital (the best price eligible entity), the rebate or discount is included in the best price (see 42 CFR 447.505(c)(17)).

Supplemental Links:

FAQ ID:94796

SHARE URL

Can CMS please confirm that inpatient prices provided to 340B eligible children's hospitals, critical access hospitals, rural referral centers, sole community hospitals, and freestanding cancer hospitals may be excluded from AMP and Best Price?

As discussed in the final rule, any prices provided by manufacturers to 340B covered entities are excluded from AMP and best price. This would include inpatient manufacturer prices provided to children's hospitals, critical access hospitals, rural referral centers, sole community hospitals, and freestanding cancer hospitals, where those entities qualify as 340B entities as described in regulation (see 81 FR 5253, 5257-5258).

For specific questions regarding whether a covered entity meets the definition of covered entity as described in section 340B(a)(4) of the Public Health Service Act, please contact the Health Resources and Services Administration (HRSA) at 340Bpricing@hrsa.gov

Supplemental Links:

FAQ ID:94801

SHARE URL
Results per page