Transcript Medicare _ Medicaid Class Spring 2016 Week 6

The University of Florida
College of Pharmacy
Department of Pharmaceutical Outcomes & Policy
PHA 6280 – Medicare and Medicaid
Course Coordinator:
Cody Wiberg, Pharm.D., M.S., R.Ph.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Social Security Act Sec. 1927. [42 U.S.C. 1396R–8]
• OBRA '90
• Basis for fee-for-service Medicaid pharmacy benefit management
• Covers three broad areas:
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Rebates
Drug coverage, formulary, prior authorization policies
Drug Utilization Review
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Rebates
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Manufacturer signs rebate agreement with federal government:
“In order for payment to be available . . . for covered outpatient drugs of a
manufacturer, the manufacturer must have entered into and have in effect a rebate
agreement . . . with the Secretary (of DHHS – through CMS)”
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Also required to enter into agreements with two other Federal programs
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pricing agreement for the Section 340B Drug Pricing Program, administered
by the Health Resources and Services Administration,
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master agreement with the Secretary of Veterans Affairs for the Federal Supply
Schedule
 Approximately 600 manufacturers participate
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PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Rebates
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Manufacturer signs rebate agreement with federal government:
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Manufacturer gets drug rebate agreement package from CMS, completes, submits
(sample agreement on CMS Web site)
CMS reviews and, if approved, manufacturer is notified and given a start date:
The first day of the first quarter that falls more than 60 days from the postmark
of the signed agreement. Examples:
Postmark April 1st – start date July 1st
Postmark May 15th – start date October 1st
States have option of using earlier dates – back to postmark date
Manufacturers must submit the Average Manufacturer Price (AMP) and Best Price
(BP) for each drug
Upon entering into agreement
Quarterly thereafter
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Rebates
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Calculation of rebates
Single source and innovator multisource drugs - the greater of:
the difference between the AMP and the BP, or
the minimum rebate percentage – 23.1%* (17.1% for blood clotting factors and
pediatric drugs)* of AMP, plus
an inflation component based on the CPI-U (Consumer Price Index for all
Urban Consumers)
Rebate capped at 100% of AMP*
 Drugs Approved by FDA Exclusively for Pediatric Indications
 17.1 % of the AMP per unit or the difference between the AMP and the best
price per unit and adjusted by the CPI-U
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Non-innovator Drugs
13%* of AMP – with no inflation component
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* Changed as a result of 2010 health care reform legislation
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Rebates
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Calculation of rebates
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Line Extensions – (a drug that is a new formulation of a brand name drug that is an
oral solid dosage form):
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the rebate is the amount computed under section 1927 of the Act or, if greater,
the product of:
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the AMP for the line extension drug,
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the highest additional rebate for any strength of the original brand name
drug, and
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the total number of units of each dosage form and strength of the line
extension drug (section 1206 of HCERA, which replaced section
1927(c)(2)(C) as added by section 2501(d) of PPACA).
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
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Rebates
Average Manufacturer Price and Best Price
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Best Price
“best price” means, with respect to a single source drug or innovator multiple
source drug . . . the lowest price available from the manufacturer during the
rebate period to any wholesaler, retailer, provider, health maintenance
organization, nonprofit entity, or governmental entity within the United States,
excluding:
VA, IHS, PHS, DOD, state Veteran's homes and other federal purchasers
State Pharmaceutical Assistance Programs (SPAPs)
Medicare Part D plans (both standalone and MA-PD)
Many, many lawsuits against pharmaceutical manufacturers alleging violations
of best price requirement:
manufacturer enters into arrangement with insurer or pharmacy benefit
manager for educational and/or research grants in exchange for having
drugs on formulary
manufacturer pays fee to HMO or PBM for “services” that have little real
value
Manufacturer simply does not report true level of rebates paid
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
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Rebates
Average Manufacturer Price and Best Price
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AMP
Originally - the average price paid to the manufacturer by wholesalers for drugs
distributed to the retail pharmacy class of trade, after deducting customary
prompt pay discounts
OIG has published several reports critical of CMS handling of AMP – issues
concerning definition of retail class of trades, pricing concessions given to
PBMs, exclusion of Medicaid sales
Prior to Deficit Reduction Act – a “great mystery” to everyone but CMS and
manufacturers. States were not given AMP data.
DRA mandated significant changes to policy concerning AMP:
AMP data given to states monthly
AMP used as reimbursement basis for federal upper limit drugs (250% of
AMP)
Definitions of “retail pharmacy class” (and many other terms) – very broad
Clarifies how manufacturers should account for price reductions and other
pricing arrangements in calculating AMP
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
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Rebates
Average Manufacturer Price and Best Price
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AMP
DRA was booked to save the federal and state governments $8.4 billion over 5
years due to ↑ rebates from manufacturers and ↓payments to pharmacies
CMS promulgated rule to implement pharmacy-related portions of DRA –
would've went into effect January 1, 2008
NACDS and NCPA sued CMS – seeking to block rule (11/07/2007), alleging:
The final rule violates the statutory definition of AMP – by including sales
and discounts to hospitals, surgical centers, dialysis centers, clinics,
pharmacy benefit managers (PBMs), mail service pharmacies, etc.
Violates statutory provisions regarding the availability of multiple source
drugs – by including in AMP calculations drugs that might not be available
in every state
Violates the statute by applying reimbursement to non-equivalent
medications. (i.e. drugs not therapeutically equivalent per Orange Book)
U.S. District Court for the District of Columbia issued injunction 12/19/07
Congress approved a moratorium of the AMP cuts under the Medicare
Improvements for Patients and Providers Act (MIPPA) of 2008. (Through 9/09)
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
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Rebates
Average Manufacturer Price and Best Price
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AMP
Health reform legislation of 2010 changed things again:
» Definition of AMP narrowed – only sales to wholesalers for drugs
distributed to retail community pharmacies (or direct sales to such
pharmacies). Direct sales to HMOs, PBMs, mail order pharmacies, etc.
excluded
» “Community retail pharmacy” - excludes mail order and LTC pharmacies
» Effect – increase federal upper limit and Medicaid reimbursement for
generics. (Assuming state does not have more restrictive state maximum
allowable cost)
» Public disclosure of “weighted” average of all manufacturer's AMPs
permitted. (For multisource drugs). No disclosure for single source drugs.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Rebates
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Additional impact of health care reform on rebates
• Imposes Medicaid rebates on covered outpatient drugs dispensed to
enrollees of Medicaid managed care organizations
– What impact is that likely to have on the amount of rebates that
manufacturers will pay?
• Additional rebates for new formulations
– For a line extension (e.g. sustained-release product), essentially
means that inflation component of original drug may be applied to new
formulation
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Rebates
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States collect the rebates
 After receiving pricing data from manufacturer, CMS calculates unit rebate
amounts (URA) and provides those quarterly to states
 States calculate amount of rebate owed = URA * # units paid for by state
URA for drug A is $0.50 per tablet; state has paid for 50,000 tablets in
the quarter. Rebates owed would be $0.50 * 50,000 = $25,000.
 States submit invoice to each manufacturer for rebates owed by NDC
within 60 days of end of quarter
 Manufacturer must pay within 30 days – interest starts accruing after 38
days
 Manufacturers have the right to dispute the invoiced amount
Can ask for claims level data from which patient identifying info is
removed
Run data through algorithms to try to ID common billing errors
CMS runs a dispute resolution program
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States allowed to negotiate their own rebates – if at least as good as federal
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug coverage, formulary, prior authorization policies
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Why would a manufacturer sign a rebate agreement:
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Manufacturers that don't sign agreement – drugs not eligible for federal match
Manufacturers that do sign agreement – states must cover drugs, except:
(A) Agents when used for anorexia, weight loss, or weight gain.
(B) Agents when used to promote fertility.
(C) Agents when used for cosmetic purposes or hair growth.
(D) Agents when used for the symptomatic relief of cough and colds.
(E) Agents when used to promote smoking cessation.
(F) Prescription vitamins and mineral products, except prenatal vitamins and fluoride
preparations.
(G) Nonprescription drugs.
(H) Covered outpatient drugs which the manufacturer seeks to require as a condition of
sale that associated tests or monitoring services be purchased exclusively from the
manufacturer or its designee.
(I) Barbiturates.
(J) Benzodiazepines.
(K) Agents when used for the treatment of sexual or erectile dysfunction, unless such
agents are used to treat a condition, other than sexual or erectile dysfunction, for which the
agents have been approved by the Food and Drug Administration.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug coverage, formulary, prior authorization policies
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Formularies are allowed, but
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Developed by committee of physicians, pharmacists and “other appropriate
individuals” appointed by Governor. (Or by Drug Utilization Review Board)
Must include the drugs of rebating manufacturers (except for optional categories)
Drug may be excluded if it “does not have a significant, clinically meaningful
therapeutic advantage in terms of safety, effectiveness or clinical outcome . . . over
drugs included in the formulary” and there is a public, written explanation of the
basis for exclusion.
There is a prior authorization procedure in place for excluded drugs.
Prior authorizations:
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Payment not allowed unless certain conditions met - examples
trial of cheaper, equally effective drug
Limitation to approved diagnosis
Duration of treatment limited
State must respond to PA requests within 24 hours
Must pay for 72 hour supply in emergency situations
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug coverage, formulary, prior authorization policies
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Other permissible restrictions
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Limitations on the minimum or maximum quantities per prescription
Limitations on the number of refills
If “such limitations are necessary to discourage waste, and may address instances
of fraud or abuse by individuals in any manner authorized under this Act”.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Pharmacy reimbursement
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Basis for reimbursement (42 CFR 447.331)
 “The agency payments for brand name drugs . . . and drugs other than
multiple source drugs for which a specific limit has been established under
§447.332 must not exceed in the aggregate, payment levels that the
agency has determined by applying the lower of the—
Estimated acquisition costs plus reasonable dispensing fees
established by the agency; or
Providers' usual and customary charges to the general public.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Pharmacy reimbursement
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Federal upper limit (maximum allowable cost)
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CMS establishes list of drugs subject to FUL
Multisource drug for which FDA has rated 3 or more products as therapeutically
& pharmaceutically equivalent. (DRA would have made it 2)
Originally 150% of the published price for the least costly therapeutic
equivalent. DRA made it 250% of AMP (but stopped by courts). Health reform
of 2010 changes it to no less than 175% of weighted avg (based on utilization)
of most recent AMPs for “pharmaceutically & therapeutically equivalent multiple
source drugs)
42 CFR 447.331
Aggregate spending for FUL drugs must not exceed what be calculated as
reimbursement using the FUL
Unless the prescriber has certified that dispensing the brand name drugs
is “medically necessary”
States are allowed to set even lower maximum allowable costs
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PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug Utilization Review
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Purpose
“to assure that prescriptions (i) are appropriate, (ii) are medically necessary, and (iii)
are not likely to result in adverse medical results”
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“to identify and reduce . . . fraud, abuse, gross overuse, or inappropriate or
medically unnecessary care”
'Program shall assess data on drug use against predetermined standards, consistent
with the following”:
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compendia which shall consist of the following:
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American Hospital Formulary Service Drug Information;
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United States Pharmacopeia-Drug Information (or its successor publications);
and
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the DRUGDEX Information System; and
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(ii) the peer-reviewed medical literature.
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PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug Utilization Review
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Prospective DUR
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“a review of drug therapy before each prescription is filled . . . typically at the pointof-sale or point of distribution”
Must look for:
therapeutic duplication
drug-disease contraindications
drug-drug interactions (including serious interactions with nonprescription or
over-the-counter drugs)
incorrect drug dosage or duration of drug treatment
drug-allergy interaction
clinical abuse/misuse.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug Utilization Review
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Prospective DUR
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State law shall establish standards for counseling of individuals receiving benefits
under this title by pharmacists which includes at least the following:
R.Ph. must offer to discuss with each Medicaid recipient or caregiver or . . .
matters which in the exercise of the R.Ph's professional judgment . . the
pharmacist deems significant including the following:
The name and description of the medication.
The route, dosage form, dosage, route of administration, and duration of
drug therapy.
Special directions and precautions for preparation, administration and use
by the patient.
Common severe adverse effects or interactions & therapeutic
contraindications ... how to avoid and action required if they occur.
Techniques for self-monitoring drug therapy
Proper storage
Prescription refill information
Action to be taken in the event of a missed dose
Patient or caregiver can refuse
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug Utilization Review
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Prospective DUR
 For Medicaid recipient's, a R.Ph. must make a A reasonable effort to obtain, record, and maintain at least the following
information regarding individuals receiving benefits under this title:
Name, address, telephone number, date of birth (or age) and gender.
Individual history where significant, including disease state or states,
known allergies and drug reactions, and a comprehensive list of
medications and relevant devices.
Pharmacist comments relevant to the individual's drug therapy.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug Utilization Review
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Retrospective DUR
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“Ongoing periodic examination of claims data and other records in order to identify
patterns of fraud, abuse, gross overuse, or inappropriate or medically unnecessary
care, among physicians, pharmacists and individuals receiving benefits under this
title, or associated with specific drugs or groups of drugs”
DUR Board - health care professionals who have recognized knowledge and
expertise in one or more of the following:
The clinically appropriate prescribing of covered outpatient drugs
The clinically appropriate dispensing and monitoring of covered outpatient
drugs
Drug use review, evaluation, and intervention
Medical quality assurance
Membership . . . made up at least 1/3 but no more than 51 percent licensed and
actively practicing physicians and at least 1/3 licensed and actively practicing
pharmacists.
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Drug Utilization Review
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Retrospective DUR
DUR Board develops criteria for judging appropriate use of drugs
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Claims data (pharmacy, medical) reviewed against criteria
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Potential problems identified
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Interventions:
Letter to prescriber and/or pharmacy - “ containing patient-specific or drugspecific (or both) information and suggested changes in prescribing or
dispensing practices”
“face-to-face discussions between health care professionals who are experts in
rational drug therapy and selected prescribers and pharmacists who have been
targeted for educational intervention, including discussion of optimal
prescribing, dispensing, or pharmacy care practices”
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Example
Criteria – concurrent use of more than three antipsychotics
Annual report filed with CMS
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PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Florida Medicaid Pharmacy Benefit Management
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Medicaid Agency: Agency for Healthcare Administration
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Pharmacy Policy Website:
http://www.fdhc.state.fl.us/Medicaid/Policy_and_Quality/Policy/pharmacy_policy/index.shtml
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Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook:
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http://portal.flmmis.com/FLPublic/Portals/0/StaticContent/Public/HANDBOOKS/Prescribed_Drug_Services_Handbook_July_20
14.pdf
Florida Medicaid Pharmacy Benefit Management
Prior Approval
Required
Limit on Services
Reimbursement Methodology
Preferred Drug
Program
State Maximum
Allowable Cost
Specified drugs
Step therapy required for some
drugs not on PDL, selected OTCs
covered
Lower of AWP-16.4% or WAC+1.5%,
plus $3.73 dispensing fee
Yes
Yes
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Florida Medicaid Pharmacy Benefit Management
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Changes in management in one Midwestern State (2002 - 2005)
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Changes in reimbursement
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Prior Authorization
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Decrease pharmacy reimbursement from AWP – 9% + $3.65 to AWP – 12% + $3.65
Decrease reimbursement for outpatient administered drugs from flat AWP to AWP –
5% to Medicare reimbursement rate
State maximum allowable cost program
Lower reimbursement for “specialty pharmaceuticals (AWP – 17% + $3.65).
Hemophilia factors - AWP – 30% + $3.65
“Traditional” - designed to limit inappropriate use of drugs (e.g. Botox)
To develop “Preferred Drug List” - designed to steer use towards most cost-effective
drugs in class
PDL in conjunction with “supplemental rebates” - negotiate supplemental rebates
agreements with manufacturers.
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Cost-sharing: $1.00 generic/$3.00 brand copay – up to $12 per month. Children,
women and LTC facility residents excluded
PHA 6280 – Medicare and Medicaid
Medicaid Pharmacy Benefits
 Changes in management in one Midwestern State (2002 - 2005)
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Promote use of generics
MAC (as above)
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Require PA for brand name drug when generic available
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Differential copay (as above)
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Generics more likely to be on PDL
Billing system changes
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PA required to override “refill too soon” edits – limited number of times per year that
program would pay for “lost drugs”. Stopped paying for all “lost” controlled
substances.
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Reduced allowed days supply from 90 to 34
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Results - $100,000,000 in savings from 2002 – 2005. Estimated savings 2002 – present
: ½ billion.