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NCPA asks feds to carefully review Alabama’s new Medicaid pay plan

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ALEXANDRIA, Va. Does the path away from the Medicaid margin morass lead out of Alabama?

It may, said the independent pharmacy industry. But a new plan for shifting the State of Alabama’s Medicaid reimbursement program for pharmacies away from “average wholesale price” as a payment benchmark for prescriptions dispensed to low-income patients needs to be carefully studied by the federal Medicaid agency before it’s allowed to go forward, the industry’s top lobbying group asserted today.

According to the National Community Pharmacists Association, a new amendment to Alabama's Medicaid administration plan could point the way to a more equitable Medicaid reimbursement system for pharmacies. But while it “represents a new pharmacy reimbursement model,” NCPA told the U.S. Centers for Medicare and Medicaid Services today, the newly devised plan “should be carefully considered to ensure it will treat local pharmacists fairly, while satisfying budgetary pressures.”

Alabama’s new Medicaid payment plan, developed with some input from pharmacy groups, shifts from an AWP-based model to a reimbursement system based on the average acquisition cost, or AAC, of a drug. It also proposes raising payments to pharmacies to better reflect their acquisition and dispensing costs.

But in a June 21 letter to CMS, NCPA senior VP government affairs John Coster warned that Alabama’s plan to base future payments on AAC “should only be approved with clear language requiring the state to update the AAC at least weekly to account for frequent price changes in the market.” In addition, he noted, “because generic acquisition costs can vary widely, states should consider using a ‘median’ rather than ‘average’ reimbursement benchmark to avoid penalizing independent pharmacies that pay higher acquisition costs and lack the resources to self-warehouse.”

The NCPA, for its part, told CMS that it favors the use of wholesale acquisition cost-based reimbursement for brands, along with “a reasonable Maximum Allowable Cost for multiple-source drugs that retains an incentive for promoting the use of generic drugs.” To that end, Coster said, “CMS should recognize both WAC and AAC as legitimate pharmacy pricing models,” and “the use of AAC-based reimbursement should only be allowed when it is irrevocably tied to the higher, more accurate dispensing fee Alabama proposes. Most states traditionally pay pharmacies dispensing fees well below the actual cost of dispensing,” Coster added. And he warned CMS that “combining AAC-based reimbursement with inadequate dispensing fees would force many community pharmacies out of Medicaid or to close altogether.”

The NCPA’s outgoing EVP and CEO Bruce Roberts pledged community pharmacists’ support in the White House’s search for a more equitable Medicaid payment system for prescription drugs. “In the current economy, states face enormous pressure to balance the budget while meeting essential health needs,” Roberts said. “Community pharmacists recognize that and want to work constructively with state and federal Medicaid officials to control costs and improve quality. We commend the state of Alabama for working in that spirit with pharmacy providers to develop this new model.”

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