These resources provide an overview of federal Medicaid prescription drug policies that directly influence states’ reimbursement of prescription drugs, including an in-depth look into each state’s coverage and reimbursement methodologies as provided in the state’s Medicaid plan. We also highlight those states with supplemental drug rebate agreements and provide a list of State Pharmaceutical Assistance Programs (SPAP) that currently meet our criteria for exemption from the manufacturers’ calculations of best price. This state prescription drug resource page includes the following contents related to the Medicaid Pharmacy Program:
- 340B Drug Pricing Program
- Physician Administered Drugs
- State Medicaid Reimbursement Information
- State Supplemental Drug Rebate Agreements
- State Pharmaceutical Assistance Programs Best Price
340B Drug Pricing Program
The 340B Program requires drug manufacturers participating in Medicaid to provide outpatient drugs to covered entities at significantly reduced prices. To participate in the 340B Program, covered entities must register and be enrolled with the 340B program and comply with all 340B Program requirements administered by HRSA. State Medicaid agencies are prohibited from billing manufacturers for Medicaid rebates for drugs dispensed to Medicaid patients that have already been discounted under the 340B Program. Additional information on the 340B Program.
- Best Practices on Avoiding 340B Duplicate Discounts in Medicaid (PDF, 171.27 KB)
Physician Administered Drugs
The Deficit Reduction Act of 2005 (DRA) required states, based on the dates indicated below, to collect and submit utilization data and coding for single source and certain high dollar volume multiple source covered outpatient physician administered drugs in order for payment to be available under Medicaid and to secure Medicaid drug manufacturer rebates.
Beginning January 1, 2006, in order for Medicaid payment to be available, states must collect and submit utilization data for single source, covered outpatient physician administered drugs in order to secure rebates for such drugs. Effective January 1, 2007, states must also collect National Drug Codes (NDC) for certain multiple source covered outpatient physician administered drugs. Similarly, beginning January 1, 2008, in order for Medicaid payment to be available, states must collect and submit utilization data and coding for certain high dollar volume multiple source covered outpatient physician administered drugs in order to receive federal matching funds and secure drug manufacturer rebates for such drugs.
The Secretary's published list of the top 20 multiple source covered outpatient physician administered drugs are ranked in order of highest cost and volume in the Medicaid program. The list provides the Healthcare Common Procedure Coding System (HCPCS) codes for each listed drug. States must collect NDC information on these drugs in order to receive federal matching funds and secure manufacturer rebates. In accordance with section 1927(a)(7)(B)(i) of the Social Security Act, the updated list of the top 20 multiple source physician administered drugs with the highest Medicaid dollar volume can be found at this link (PDF, 122.78 KB). The law allows us to modify the current list to reflect changes in such volume.
In summary, beginning January 1, 2006, for single source physician administered drugs, and January 1, 2008 for certain multiple source physician administered drugs, if states are not collecting NDCs and submitting the appropriate utilization data, such states will not receive Federal matching payments for the drugs. CMS acknowledges that most states require their providers and managed care organizations to collect NDC information on multiple source covered outpatient drugs to invoice for rebates and expect that this practice will continue. For further information on this part of the DRA, please see the SMD letter on physician-administered drugs (PDF, 75.81 KB).
PRA Disclosure Statement: According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0938-1026 (Expires: August 31, 2024). The time required to complete this information collection of National Drug Codes (NDC) for physician-administered drugs is estimated 0.00415 hrs/claim resulting in $0.17/claim. If you have comments concerning the accuracy of the time estimate or suggestions for improving this form, please write to CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.
State Medicaid Reimbursement Information
The Medicaid reimbursement chart outlines the methodologies and professional dispensing fee amounts utilized by states. Pharmacy payment requirements are outlined in Federal regulations at 42 CFR 447 Subpart F. The Code of Federal Regulations specifically covers payment requirements for estimated acquisition cost and reasonable dispensing fees. Co-payment amounts are addressed at 42 CFR 447.54. Information will be updated and posted on the web quarterly with the data provided for in the CMS approved state plans. We update the chart quarterly and archive the previous four quarters.
State Supplemental Drug Rebate Agreements
A state Medicaid program may obtain CMS approval through a State Plan Amendment (SPA) to enter into single-state and/or multi-state supplemental drug rebate agreement that generate rebates that are at least as large as the rebates set forth in the Health and Human Services Secretary's national rebate agreement with drug manufacturers. For your information, we have compiled a chart that depicts the States with Medicaid Pharmacy Supplemental Rebate Agreements (SRA) (PDF, 148.56 KB) with their original effective dates.
Several states have also received CMS approval to enter into value-based purchasing (VBP) supplemental rebate agreements with manufacturers. Such arrangements are intended to allow states to collect supplemental rebates for certain drugs when linked to an observed or expected therapeutic or clinical value in a select population and includes, but is not limited to (1) Evidence-based measures, which substantially link the cost of a covered outpatient drug to existing evidence of effectiveness and potential value for specific uses of that product; and/or (2) Outcomes-based measures, which substantially link payment for the covered outpatient drug to that of the drug's actual performance in patient or a population, or a reduction in other medical expenses.
- US Map Identifying States with VBP SRAs and Original Effective Dates (PDF, 183.16 KB)
State Pharmaceutical Assistance Programs Best Price
The Medicaid statute allows manufacturers participating in the Medicaid Drug Rebate Program to exclude prices to SPAPs from their Medicaid best price calculations. CMS has compiled a list of programs that meet the criteria to be considered SPAPs called Medicaid SPAP Best Price List (PDF, 95.82 KB). For the purposes of determining whether a SPAP is excluded from the Medicaid best price, manufacturers should refer to this list. Please note that this list only includes states that submitted a description of programs to CMS for review based on the established criteria in CMS' Manufacturer Release No. 68 (PDF, 141.03 KB) (April 1, 2005). The qualification of state-only programs as SPAPs is based on the information provided by the state and may be subject to further review if changes occur within the program.
Questions regarding the topics on this page? Email RxDrugPolicy@cms.hhs.gov.
Disclaimer: Please note that the information provided on this web page does not bind or obligate the Centers for Medicare and Medicaid Services (CMS). The statements included on this web page are intended to provide information on State Prescription Drug Resources and do not in any way revise or modify the requirements set forth in Section 1927 of the Act, the national drug rebate agreement (NDRA), subsequent program releases, or regulations.
Page last updated on September 13, 2022