by Christine Woolstenhulme, CPC, CMRS, QCC, QMCS
June 16th, 2017
Drug pricing has been a hot topic for several years, as well as how each state came up with pricing. In the past most states estimated the acquisition cost based on AWP; many of these States obtained AWP data from the pricing published by First DataBank. Following a lawsuit, First DataBank decided to stop publishing AWPs in 2011.
States were in a predicament when it came to setting reimbursement rates without access to AWP. CMS allows states to estimate their own acquisition cost, so each state was left to develop individual plans after the data they were used to getting
OIG states “Federal regulations require that Medicaid reimbursement amounts for prescription drugs not exceed the lower of (1) the estimated acquisition cost plus a dispensing fee or (2) the provider's usual and customary charge to the public for the drug.”
States have requested to CMS to set national benchmarks to set reimbursement rates, as of June 2017 it is yet to be seen.
“Ingredient cost is the lesser of AWP minus 17.4%, FUL, Utah Maximum Allowable Cost, or the ingredient cost submitted; Ingredient cost for 340B drugs is no more than the 340B ceiling price.”
Acronyms to understand for Drug pricing:
- 340B=prices charged to covered entities under the Public Health Services Act
- AAC=actual acquisition cost, ASP=average sale price
- AWP=average wholesale price, DP=Direct Price
- FFS=fee for service, FUL=Federal upper limit
- NADAC= National Averaged Drug Acquisition Cost, State MAC=State Maximum Allowance Cost
- U/C=Usual and Customary
- WAC=wholesaler acquisition cost FQHC=Federally Qualified Health Centers
- NH=nursing home
Check out Findacode.com for UCR fees, ASC fees and much more drug information from Wolters Kluwer.