States are required to implement the limits set by the ACA FULs in their reimbursement methodologies as of the effective date of the final rule with comment, that is, April 1, 2016. The FULs are to be applied as an aggregate upper limit, so the states have flexibility to determine payment rates for individual drugs in accordance with the approved State plan, such that the total reimbursement for all drugs to which the FUL applies does not exceed the FUL in the aggregate. Many states have FULs as part of their ""lower of"" logic in their state plans already.

Not necessarily. In the case where a state is using the NADAC to meet the AAC reimbursement benchmark, for drugs that have a FUL calculated, states would generally not exceed the FUL aggregate. However, if a state uses another reimbursement benchmark to establish their AAC model of reimbursement, such as a state survey of retail prices, the state cannot assume that the FUL aggregate will not be exceeded.

As noted in the final rule with comment, we recognize that states may need to revise their state plans to accommodate the reimbursement provisions of the final rule and are allowing states four quarters from the effective date of the final rule to submit a SPA to comply with these provisions. However, states are required to implement pharmacy reimbursement limits, in the aggregate, in accordance with 42 CFR 447.512 and 447.514 as of the effective date of this final rule (81 FR 5310).

The FULs represent an aggregate upper limit, which gives states flexibility to determine payment rates for individual drugs in accordance with the approved state plan. For drugs that have a FUL calculated, a state can use the calculated FUL price for reimbursement, or they can use another metric, such as an AAC, for reimbursement, as long as that metric will allow the state to remain within the FUL aggregate. Generally, we can say with certainty that if a state uses the NADAC to reimburse for those drugs that have a FUL calculated, the state will not exceed the FUL aggregate.

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.

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.

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.

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.

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.

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.