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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.

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Does the May 6, 2016 effective date for the change in FFP for EQR-related activities apply based on the date of approval of the EQRO contract, the date the activity was performed, or the date of expenditure for the EQR activity?

Regardless of whether an EQRO contract is approved before or after May 6, 2016, the change in FFP for EQR-related activities was effective May 6, 2016 for expenditures incurred by the state on or after May 6, 2016. Per general CMS-64 claiming principles, a state incurs an expenditure that may be claimed on the CMS-64 on the date the state pays the EQRO for the completed performance of the contracted EQR-associated activity.

The change to the FFP match rate for expenditure reporting takes effect in the middle of a quarter, which means that states must ensure that claims for expenditures for EQR activities affected by the change in FFP which were paid before May 6th and claims for expenditures which were paid on or after May 6th are reported separately. For only the quarter ending June 30, 2016, the CMS-64 EQRO Line 17 will allow states to report state expenditures associated with PIHP EQRO activities paid prior to May 6, 2016 and claim the enhanced 75 percent match. State expenditures associated with PIHP EQRO activities paid on or after May 6th must be claimed at the 50 percent matching rate.

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FAQ ID:94651

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My state is planning for our upcoming EQRO contracting. When does CMS plan to publish a protocol for the new activity relating to the validation of network adequacy?

CMS expects to first issue revised protocols for the current mandatory and optional EQR-related activities in the Fall of 2017. We expect to issue the protocol for the new mandatory EQR activity relating to the validation of network adequacy later in 2017 or early 2018. States will have up to one year from the publication of the protocol to implement the new mandatory EQR activity.

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FAQ ID:94656

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If I have additional questions about EQR and claiming for EQR, who can I ask?

For questions related to state expenditure reporting and claiming instructions for EQR activities, please contact your CMS regional office financial representative. For specific external quality review questions, including what activities qualify for enhanced match, please contact the Division of Quality and Health Outcomes at ManagedCareQualityTA@cms.hhs.gov.

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FAQ ID:94666

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If a state can prove that they are under the aggregate limits of AAC and PDF and have strong participation by pharmacies, are they required to adopt the AAC and PDF reimbursement methodology at the individual claim level?

All states are required to adopt the AAC and professional dispensing fee methodology; however, it is not required to be adopted at the individual claim level, but in the aggregate. In accordance with the regulatory requirements at 42 CFR 447.512(b), the state is responsible for establishing a payment methodology, that must not exceed, in the aggregate, payment levels that the agency has determined by applying the lower of the AAC plus a professional dispensing fee or the providers' usual and customary charges to the general public. In conjunction with this the state is also responsible to ensure that pharmacy reimbursement is consistent

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with the requirements of section 1902(a)(30)(A) of the Act, which specify that provider reimbursement rates should be consistent with efficiency, economy, and quality of care while assuring sufficient beneficiary access.

FAQ ID:94691

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If a state is already using actual acquisition cost (AAC) as their reimbursement methodology, does the state need to file a State Plan Amendment (SPA) or provide assurances that the current formula meets requirements established in the final rule? Is there a requirement for such states to file a SPA to provide assurance that the state's current dispensing fee amount meets the requirements of the final rule?

If a state is already making payment for prescription drugs under its state plan based on AAC, it may continue to use that methodology. However, if a state decides to change its AAC model of reimbursement, (e.g., the state decides to use the National Average Drug Acquisition Cost (NADAC) instead of a state survey to implement a payment methodology based on AAC), the state must submit a new SPA through the formal SPA process for review.

Additionally, the state should review its currently approved professional dispensing fee (PDF) to determine if, in light of the regulation (42 CFR 447.518), the PDF needs to be revised and a SPA needs to be submitted. The state does not have to submit a new SPA to provide assurance that its dispensing fee is reasonable.

Furthermore, we expect that all states, even those currently operating under an AAC reimbursement methodology, will evaluate their current state plans to determine if a SPA will be required to comply with the reimbursement requirements (including, but not limited to, AAC, PDF, 340B and the federal upper limits (FULs)).

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FAQ ID:94671

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Will there be an annual review of PDFs that are required as part of SPA approvals?

No, CMS will not perform an annual review of PDFs; however, states must consider both the ingredient cost reimbursement and the PDF reimbursement when proposing changes to ensure that total reimbursement to the pharmacy provider is calculated in accordance with requirements of section 1902(a)(30)(A) of the Act.

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FAQ ID:94676

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Will CMS be providing guidance to states to ensure that states include reasonable components in their cost of dispensing survey?

To the extent that a state is conducting a cost of dispensing survey, it should be a transparent, comprehensive, and well-designed tool that addresses a pharmacy provider's cost to dispense the drug product to a Medicaid beneficiary. States have the flexibility to set PDFs, including using national or regional data from another state and we do not require that a state use a specific standard or methodology such as a survey to do so.

Further, states are not required to use a specific formula or methodology such as a cost study or use an inflation update where cost studies are not conducted; however, the burden is on each state to ensure that pharmacy providers are reimbursed in accordance with the requirements in section 1902(a)(30)(A) of the Act. CMS will review each SPA submission against these standards (see 81 FR 5311).

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FAQ ID:94681

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After a state evaluates changing reimbursement to actual acquisition cost plus an increased PDF and the state determines that the total cost of their pharmacy reimbursement will be increased compared to current costs, will CMS allow an adjustment in the PDF that would result in a cost neutral outcome?

The intent of the new reimbursement methodology requirements is not necessarily to result in a cost neutral outcome. The requirements are to more accurately reflect the pharmacy providers' actual prices paid to acquire drugs and the professional services required to fill a prescription. Each state's AAC reimbursement methodology and proposed professional dispensing fee will be reviewed through the SPA process to ensure they are meeting the requirements of this final rule.

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FAQ ID:94686

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If NADAC is updated monthly, and a drug has a price change before the next monthly NADAC file is published, can states backdate NADAC in order to reimburse pharmacy providers correctly?

The NADAC files have weekly updates posted on Medicaid.gov that reflect any price changes that have occurred since the last posted monthly file. States using the NADAC for their AAC reimbursement methodology will have access to the weekly updates of the NADAC to ensure pharmacies are reimbursed with the most updated NADAC pricing.

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FAQ ID:94696

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Please confirm whether the final rule's AAC-based reimbursement policy applies to how states pay for drugs administered by providers in hospital clinic areas as part of hospital outpatient services, whether they are paid as part of the service or separately.

AAC reimbursement requirements for covered outpatient drugs extend to retail community pharmacy providers where drugs are covered by Medicaid under the state's covered outpatient drug pharmacy benefit and are not reimbursed as part of a service. Physician-administered drugs are not required to meet AAC reimbursement requirements.

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FAQ ID:94701

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