Medicare And Medicaid In Brief

CMS plans AMP guidance: CMS says it will issue guidance on the definition of average manufacturer price, which is used as the basis for reimbursement of drugs in Medicaid. The definition of AMP was adjusted in the Medicaid funding bill, H.R. 1586, signed into law on Aug. 10. The AMP calculation was revised in the Patient Protection and Affordable Care Act to limit it to drugs sold through retail pharmacies, but it failed to account for specialty drugs not distributed through those pharmacies (1"The Pink Sheet" DAILY, May 17, 2010). The corrective language makes an exception to the AMP calculation for drugs that are inhaled, infused, instilled, implanted or injected and are not generally dispensed through a retail community pharmacy. A previous CBO score of the corrective language estimated that it would cost the pharmaceutical industry $2.1 billion over 10 years (2"The Pink Sheet" DAILY, June 25, 2010)

CMS plans AMP guidance: CMS says it will issue guidance on the definition of average manufacturer price, which is used as the basis for reimbursement of drugs in Medicaid. The definition of AMP was adjusted in the Medicaid funding bill, H.R. 1586, signed into law on Aug. 10. The AMP calculation was revised in the Patient Protection and Affordable Care Act to limit it to drugs sold through retail pharmacies, but it failed to account for specialty drugs not distributed through those pharmacies (¹ (Also see "Zero Medicaid Rebate For Specialty Rx? Reform Law Puts CMS In Conundrum" - Pink Sheet, 17 May, 2010.)). The corrective language makes an exception to the AMP calculation for drugs that are inhaled, infused, instilled, implanted or injected and are not generally dispensed through a retail community pharmacy. A previous CBO score of the corrective language estimated that it would cost the pharmaceutical industry $2.1 billion over 10 years (² (Also see "Technical Fix For Medicaid AMP Definition Would Cost Pharma Firms $2.1 Bil. Over 10 Years, CBO Says" - Pink Sheet, 25 Jun, 2010.)).

Part D rebate checks: More than 750,000 beneficiaries who have reached the Medicare Part D coverage gap have received a one-time rebate of $250 from the federal government to help with their drug costs, HHS announced recently. The rebates are being distributed under the PPACA to beneficiaries who are not already receiving the Medicare low income subsidy. Nearly 3 million more checks are expected to go out later this year for a total of approximately 4 million.

CMS listening session on using Medicare claims data for performance evaluation: CMS will host a listening session Sept. 20 to discuss policy and options related to the use of Medicare claims data from Parts A, B, C and D to evaluate the performance of providers and suppliers. Evaluations, to be conducted by qualified entities, are expected to begin on Jan. 1, 2012, according to a provision in the PPACA. The agency is looking for feedback on four subjects: eligibility criteria and the application process for qualified entities; definition and selection of quality performance measures; data extraction and distribution process; and data privacy and security requirements. The session will take place at the agency's headquarters in Baltimore, Md. People also will be able to call in to participate.

Less-than-effective drugs and Medicare: The HHS Inspector General finds in a report released Aug. 16 that during 2006 and 2007, CMS accepted claims totaling $43 million in gross costs for drugs approved prior to 1962 that have been determined by FDA to be less-than-effective. In response, CMS states it now has an "edit" in its Drug Data Processing System that effectively identifies and rejects claims data for those drugs identified in the IG report. The IG also recommends that CMS regularly disseminate a list of such drugs to Part D sponsors. However, such a list is not currently available, and CMS maintains it is FDA's responsibility to create and maintain an inventory of less-than effective products.