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Executive Summary

NARD & NACDS STATE CAMPAIGNS AGAINST REIMBURSEMENT FORMULA CHANGES, sought by Health Care Financing Administration (HCFA) regional offices, stress states' rights and obligations and nonobligations to state Medicaid directors who reimburse pharmacists under Rx drug programs financed jointly by the state and federal govts. Besides their insistence at the natl. level that HCFA must follow legal procedures for adopting any new reimbursement policies the Natl. Assn. of Retail Druggists (NARD) and Natl. Assn. of Chain Drug Stores (NACDS) are encouraging resistance by the states to what they claim are "illegal" changes in pharmaceutical reimbursement regs. NACDS has written letters to all state Medicaid directors, while NARD is urging state pharmacy assn. execs -- as well as NARD leaders -- to alert state Medicaid officials "that HCFA's actions are unlawful." NARD's Aug. 16 Washington Bulletin includes a two-page summary of legal issues involved in HCFA's threatened cutoff of funding to states that do not accept "mandated reimbursement changes." NARD asked its Bulletin recipients to tell Medicaid officials that they "expect that the state will assert its rights and protect the state Medicaid program." Ten potential violations of laws, regs or govt. policy are cited by NARD in the document. The states themselves could be involved in two violations because of any reimbursement changes mandated by HCFA without procedural safeguards, according to NARD's legal summary. The states, NARD cautions, could be in a position of violating "state Administrative Procedures Act requiring notice and comment for any such change," and a Medicaid reg "requiring public notice of state method and standards for setting payment." NACDS advises in its letters that state Medicaid directors can ignore HCFA "pressuring" to make changes in the Rx drug reimbursement formula. NACDS President Robert Bolger wrote the Medicaid directors: "We wish to advise you that your office is under no obligation to make these changes" representing a shift away from AWP to Actual Acquisition Cost (AAC) as the basis for reimbursement for pharmacies. HCFA must allow for public review and a period for comments from all interested parties if the agency intends to move from AWP to AAC, Bolger admonished. He added: "Since there has been no notice of rulemaking and opportunity for comment, NACDS firmly believes that HCFA is in violation of the Administrative Procedures Act (APA). Finally, we are of the opinion that the regional offices of HCFA have never been empowered with the authority to make changes in regulatory policy through administrative interpretation." HCFA enclosed in the letters a copy of its May 31 testimony on the issue before Rep. Natcher's (D-Ky.) HHS Appropriations Subcmte.

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