After years of work to finally create a more transparent, objective reimbursement structure for Ohio Medicaid, we're pleased to report that in April 2017, we began to see the results of that work.
In April, the Ohio Department of Medicaid implemented their new pharmacy reimbursement structure, aimed at reimbursing pharmacies at true acquisition cost, plus a professional dispensing fee (that actually reflects the true cost to dispense).
Pharmacy dispensing fees (for the Medicaid fee-for-service program) now move from a flat rate of $1.80 with exceptions to a tiered dispensing fee with exceptions. The pharmacy tier is based upon the total number of prescriptions filled by the provider during the provider’s last completed fiscal year and based upon the provider’s responses to Medicaid's biennial cost of dispensing survey.
The tiers are as follows:
New pharmacies will be given a $13.64 professional dispensing fee as well.
These professional dispensing fees are a significant increase, but Medicaid is making up the difference by grinding the reimbursement for ingredient cost down. Ingredient cost payment will change from estimated acquisition cost (EAC) to actual acquisition cost (ACC). Payment for the drug ingredient cost shall be the lesser of the submitted charge (which may be no more than the usual and customary amount charged other patients for the same service) or the calculated allowable listed below.
The following details the logic for various products:
Philosophically, this shift in structure is a very positive one. While NADAC rates are lower, they are a better representation of true pharmacy acquisition costs, and because they are transparent, objective, and updated weekly, they are not able to manipulated like MAC rates are today. OPA was successful in prohibiting MAC to be used in instances where a drug had a NADAC available - this prevents any potential gamesmanship that could occur with undefined, non-transparent MAC rates. Furthermore, the shift also accounts for (and pays for) the pharmacist's cost to provide their service - something that did not exist in the prior model.
Note: NADAC rates are based upon surveyed data of pharmacies. While the NADAC rates may not be perfect, generally, we have found the rates to be pretty close to true acquisition. However, we have heard about a few outlier drugs that are reimbursed below cost from time to time. Fortunately, CMS has a process to appeal/review NADAC rates. Pharmacies can contact the help desk via phone or e-mail to initiate a NADAC review. The toll free help desk phone number is 855-457-5264 and the e-mail address is email@example.com. If you initiate a review, please keep OPA in the loop on its progress.
If you recall, last year Ohio Medicaid proposed penalizing pharmacies that failed to complete the cost of dispensing survey with a professional dispensing fee of $1.80. This would have resulted in significant losses for pharmacies. OPA successfully fought back on that change, and now, if you are a pharmacy that failed to complete the Medicaid cost of dispensing survey, your fee is set at $8.30, and you have the opportunity to submit an attestation of your pharmacy's annual volume to get moved into the proper tier.
If you failed to complete the Medicaid cost of dispensing survey, please click here to attest to your pharmacy's prescription volume so that your pharmacy isn't getting reimbursed at a rate that's lower than the one you're entitled to.
For complete details on the fee structure, click here. For complete information on Medicaid pharmacy billing, click here.
Ultimately, OPA is very supportive of this shift in policy, and we believe that they should be extended further. These changes only apply to the Ohio medicaid fee-for-service program, which today is a small chunk of the overall Medicaid patient base. As reimbursements have experienced a major decline within the Medicaid managed care side (which is the bulk of Medicaid patients), OPA will be working to ensure that these changes apply to both buckets of Medicaid: fee-for-service AND managed care.
We encourage members to reach out to legislators to discuss the negative impact of Medicaid managed care reimbursements, and the need to standardize reimbursements across the entire program. Pharmacies need transparent and objectively defined reimbursement policies that reflect at the very least, a break-even point, so that pharmacies don't operate in the red when providing needed medications and services to those in Ohio who need them the most.