ALEXANDRIA, Va. — With the Centers for Medicare & Medicaid Services (CMS) expected to issue a final rule on Medicaid pharmacy reimbursements next year, community pharmacy advocates earlier this month weighed in on the proposal.

In detailed written comments to CMS the National Association of Chain Drug Stores and the National Community Pharmacists Association outlined their concerns about the proposed rule that the agency released in February.

Under the rule’s reimbursement scheme, pharmacies that fill Medicaid prescriptions would be paid according to the average manufacturer price (AMP) and federal upper limits (FULs) of the drugs dispensed.

NACDS and NCPA contend that this is a flawed formula.

“It is important to note that AMP is not a price paid in the marketplace,” NACDS said in its comments. “In fact, analysis of the weighted AMPs published by CMS along with draft FUL lists, as well as government reports, indicate AMP is not a reliable benchmark for pharmacy reimbursement.”

NACDS says it is concerned about the lack of correlation between AMP and pharmacy acquisition costs, suggesting that rather than using estimated acquisition costs to calculate Medicaid reimbursement rates, CMS should use actual acquisition costs.

“Currently three states — Alabama, Oregon and Idaho — use average acquisition cost (AAC) for brand and generic drug reimbursement,” NACDS said. “In each of these states AAC is determined based on costs at the pharmacy location level, which is appropriate.”

In addition, the pharmacy associations asked CMS to require states to reevaluate dispensing fees to assure that they adequately cover pharmacies’ costs.

And they urged the agency not to hastily implement new FULs and asked that it rethink what it considers to be a community pharmacy.

Broadening what qualifies as a community pharmacy to include specialty pharmacies, home infusion pharmacies and home health care providers will drive down the prices used to calculate reimbursements, the associations say, making it harder for actual community pharmacies to continue to be part of the Medicaid program. If that happens, they say, Medicaid patients will have a harder time finding a pharmacy to fill their prescriptions, and many may not fill them at all.

“Inadequate reimbursement could threaten patient access to prescription drugs by forcing community pharmacies out of the Medicaid program,” NCPA chief executive officer B. Douglas Hoey says. “Ultimately, that would only raise health care costs as patients seek more expensive forms of medical care.”

AMP has been a contentious issue for community pharmacy for several years.

CMS’ latest proposal is a result of a successful legal challenge by NACDS and NCPA that forced CMS to reconsider its original plan two years ago.

A new AMP model was included in the Patient Protection and Affordable Care Act (PPACA) that was passed by Congress and signed by President Obama in March 2010.
NACDS and NCPA say they are willing to work with CMS to craft a final rule that is acceptable to everyone.

“We are committed to working with you to implement these provisions in a manner that complies with current law and maintains access to prescription drugs and pharmacy services for Medicaid beneficiaries,” NACDS said in its written comments.