Frequently Asked Questions are used to provide additional information and/or statutory guidance not found in State Medicaid Director Letters, State Health Official Letters, or CMCS Informational Bulletins. The different sets of FAQs as originally released can be accessed below.
Frequently Asked Questions
Must distribution service fees, inventory management fees and the other services referenced in the BFSF provision of the AMP definition be subjected to the regulatory BFSF test? The preamble could be read to suggest that these fees are always BFSFs without analysis under the regulatory test.
Even though there were specific examples of bona find service fees provided in statute, the four-part test remains the definitive test to qualify a payment as a bona fide service fee. Therefore, manufacturers are responsible for meeting all four parts of the definition of bona fide service fee before a fee can qualify as a bona fide service fee (see 81 FR 5177-5178).
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94821
SHARE URLCould you please confirm that manufacturers must use the alternative methodology in their Unit Rebate Amount (URA) calculations for quarters beginning January 1, 2010 for line extension drugs that were on the market as of that date, regardless of the approval date? For manufacturers of such drugs that have been waiting for the final rule before adjusting their rebates back to 1Q 2010, will CMS set up any special process for these retroactive rebate adjustments?
The statutory line extension provisions went into effect on January 1, 2010. It is the manufacturers' responsibility to identify their line extension drugs, calculate rebates, and pay the states consistent with the statute as of this effective date, regardless of the approval date of the drugs.
The line extension provisions that are finalized in the final rule with comment are effective prospectively as of April 1, 2016. CMS will not be setting up any special process for retroactive rebate calculations for line extension drugs; therefore, manufacturers of line extension drugs should ensure that all rebates for line extension drugs are calculated and paid appropriately to states as of January 1, 2010.
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94826
SHARE URLWhen calculating the alternative rebate for a line extension drug, must the labeler consider the highest additional rebate ratio ever incurred for an initial drug, or is the highest additional rebate ratio determined by the ratio for the current quarter only?
Effective April 1, 2016, each quarter, the labeler of the line extension drug should determine the initial brand name listed drug for its line extension drug taking into consideration which active initial drug has the highest additional rebate ratio for that quarter. Additionally, the labeler of the line extension drug needs to ensure that the NDC of the initial drug with the highest additional rebate ratio is updated in the Drug Data Reporting for Medicaid (DDR) system, as appropriate, each quarter.
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94831
SHARE URLCan you confirm that manufacturers of extended release formulations will have to calculate the alternative line extension AMP starting April 1, 2016, since extended release formulations are specifically mentioned in the statutory language that established the alternative line extension formula?
The requirements of the line extension provision of the final rule are effective as of the effective date of the final rule (April 1, 2016).
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94836
SHARE URLFor the Affordable Care Act (ACA) Base Date AMP, does the recalculation only go back to 2Q 2016 or would it go back further due to the length of time it has taken for the Final Rule to be published?
A manufacturer's recalculation of its ACA Base Date AMP value can be reported any time during the four quarters allowable period per the final rule with comment beginning 2Q 2016.
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94841
SHARE URLWhen computing monthly AMP, should manufacturers be calculating all the calculation components at the NDC-9 or just the smoothing components?
In accordance with regulations at 42 CFR 447.510(d)(2), monthly AMP is calculated based on a weighted average of prices for all the manufacturer's package sizes (NDC 11) of each covered outpatient drug sold by the manufacturer during a month. It is calculated as the net sales divided by the number of units sold, excluding goods or any other items specifically excluded in statute or regulation. In accordance with the requirements of 42 CFR 447.510(d)(2)(iii) the smoothing of lagged price concessions occurs at the NDC-9 level as part of the monthly AMP calculation.
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94846
SHARE URLIf a manufacturer has a negative monthly AMP, should they use the most recent valid monthly AMP in the quarterly calculation?
CMS has previously provided guidance regarding the reporting of zero or negative AMP in Manufacturer Release #80 (January 5, 2010) in which we specify that if a calculated monthly AMP is zero or negative, we recommend that manufacturers report the most recent prior month's positive AMP. However, the actual calculated monthly AMP should be used to calculate the quarterly AMP. If the quarterly AMP is zero or negative, we recommend that manufacturers report the most recent positive AMP value. Please see Manufacturer Release #80: https://www.medicaid.gov/Medicaid-CHIP-Program-Information/ByTopics/Benefits/Prescription-Drugs/Downloads/Rx-Releases/MFR-Releases/mfr-rel-080.pdf. (PDF, 127.6 KB)
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94851
SHARE URLIf a manufacturer is currently not selling to entities or providers located in Puerto Rico and the U.S. Territories, will they be required to sell covered outpatient drugs to the U.S. Territories going forward (April 2017)?
The final rule does not require that a drug manufacturer sell its drugs to certain purchasers.
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94856
SHARE URLFor smoothing of lagged price concessions and inclusion of sales from the U.S. Territories, should a manufacturer include the sales from the U.S. Territories in the 12 months of data for smoothing as of April 1, 2017 (going back to May 2016), or should they only include it in the smoothing only as of April 1, 2017 and prospectively?
Given the one year delay in the effective date of the definitions of states and United States, manufacturers should begin using sales data in their smoothing process beginning with sales that occur as of April 1, 2017.
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)
FAQ ID:94861
SHARE URLHow does section 1902(a) (25) of the Social Security Act (the Act) define "health insurers"?
Section 1902(a) (25) (I) of the Act defines ""health insurers"" to include self-insured plans, group health plans (as defined in section Medicaid Management Information Systems (MMIS)(l) of the Employee Retirement Income Security Act of 1974 (ERISA)), service benefit plans, managed care organizations (MCOs), pharmacy benefit managers (PBMs), and ""other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service."" Workers' compensation, automobile insurance, and liability insurance plans all are included within the definition of ""health insurer"" for purposes of this section and the requisite state laws which must be enacted pursuant to it.
The CMS interprets ""other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim"" to include:
- Prepaid Inpatient Health Plans (PIHPs) and Prepaid Ambulatory Health Plans (PAHPs). For purposes of Medicaid managed care, PIHPs and PAHPs are entities that contract with the state to deliver Medicaid-covered services; in that context, they would also be considered ""other parties that are, by contract, legally responsible for payment of a claim for a health care item or service;"" and,
- Such entities as third party administrators (TPAs), fiscal intermediaries, and managed care contractors, which administer benefits on behalf of the riskbearing plan sponsor (e.g., an employer with a self-insured health plan). CMS recognizes that entities such as PBMs and TPAs do not necessarily have ultimate financial liability, but, to the extent that they are required, by contract or otherwise, to review claims and authorize payment by the plan sponsor, they are included within the definition of ""third party"" and ""health insurer"" for purposes of section 1902(a) (25) of the Act.
Nothing in revisions to the Social Security Act made by the Deficit Reduction Act of 2005 (DRA) imposes new liability to pay claims on entities that do not otherwise bear such liability. Nor does section 1902(a) (25) of the Act negate any right of indemnification against a plan sponsor or other entity with ultimate liability for health care claims by a contracting party that pays the claims.
Supplemental Links:
- This FAQ was released as part of a larger set. View the full set. (PDF, 252.32 KB)
FAQ ID:94021
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