Background and Overview
The Centers for Medicare and Medicaid Services (CMS), the organization that oversees the Medicaid Drug Rebate Program (MDRP), first announced the planned release of the AMP Final rule in 2012 with proposed changes made by the Affordable Care Act (ACA). The rule is designed to assist states and the federal government in managing drug costs, defining the structure for implementation of MDRP, and establishing a fair reimbursement system for Medicaid programs and pharmacies.
Finally, after many delays and much anticipation, CMS published the final rule to the Federal Register on February 1, 2016. The final rule provides new legal provisions for the calculation of Average Manufacturer Price (AMP), the determination of Best Price (BP), and pharmacy reimbursement considerations.
A few key highlights:
- Go Live Date: The final rule formally takes effect on April 1, 2016, except for the provision to include Puerto Rico and the U.S. Territories, which does not go into effect until April 1, 2017.
- Determination of Average Manufacturer Price (AMP): CMS has provided a number of clarifications and provisions with the final rule, including retaining presumed inclusion, the classification of specialty pharmacies sometimes being considered RCPs, smoothing, bona fide service fees, and clarification on 5i drugs. They did not, however, finalize the definition of line extension drugs, instead seeking comments on that topic. Comments are due by April 1, 2016.
- Baseline AMP: CMS is allowing manufacturers to calculate a new Affordable Care Act (ACA) Baseline AMP for any existing products, which serves as the foundation for reimbursement of covered drugs to state Medicaid agencies. Manufacturers have a year to restate these values. The New ACA Baseline AMP will be referenced for new quarters moving forward (old quarters will still calculate or recalculate with the previous base AMP values).
- Baseline AMP and 5i Drugs: Additionally, CMS has specified that only one baseline AMP value is supported, even for those products which may sometimes calculate with 5i rules and sometimes with non-5i rules. For new products coming on the market, the base AMP will reflect whatever AMP calculation is in effect for the three months of the base quarter.
- Determination of Best Price: CMS has also provided clarification around the calculation of Best Price, among them specifics of the 340B exclusion, guidance around sales of clinical trial products to other manufacturers, and revisions to bundled sales.
How the Final Rule Affects Revitas Customers
Revitas® Medicaid Rebates™ and Medicaid Classic solutions will require updates to support referencing the ACA Baseline AMP in RPU calculations, if a value is available. Although the Revitas Government Pricing solutions will not have patch updates, customers are required to update their calculation methodologies to match the new AMP requirements. Revitas customers will receive weekly e-mail updates with information on the status of development. Webinars will also be scheduled to disseminate and explain additional information as needed.
Don’t Forget to:
- Double-check and ensure you are on latest version for your code line for Medicaid solutions
- Identify Rebate Per Unit (RPU) calculations impacted by changes to the federal RPU
- Identify impacted areas of your AMP and BP calculations and review internally
- Engage a trusted system implementation partner to help plan and implement required changes
- Contact Model N with any questions or concerns at www.modeln.com.