CMS Publishes Final Medicaid Drug Payment Rule
The Centers for Medicare & Medicaid Services (CMS) published a final rule July 6 establishing a new method of setting limits on federal government reimbursement to state Medicaid agencies for prescription drug payments.
“This new payment formula allows Medicaid to pay more appropriately for prescription drugs dispensed to Medicaid beneficiaries,” Leslie Norwalk, acting CMS administrator, said.
The agency expects the new regulation to save states and the federal government $8.4 billion over the next five years, during which time the Medicaid program is expected to spend $140 billion on drugs.
The change, described in the Deficit Reduction Act of 2005, is in part a reaction to a series of reports issued in 2004 by both the Government Accountability Office and the HHS Office of Inspector General, showing that Medicaid payments to pharmacies for generic drugs were much higher than what pharmacies were actually paying for those drugs, according to the CMS.
The reports found that states were overpaying for drugs because they were using commercial drug pricing guides as the basis for setting state reimbursement levels. The investigations showed that these prices were artificially inflated, especially for generic drugs, the CMS said.
The rule can be viewed at www.cms.hhs.gov/MedicaidGenInfo/Downloads/CMS2238FC.pdf.
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