Frequently Asked Questions

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.

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• This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)

FAQ ID:94826

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.

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FAQ ID:94831

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).

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FAQ ID:94836

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.

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FAQ ID:94841

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.

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• This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)

FAQ ID:94846

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)

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• This FAQ was released as part of a larger set. View the full set. (PDF, 205.53 KB)

FAQ ID:94851

The final rule does not require that a drug manufacturer sell its drugs to certain purchasers.

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FAQ ID:94856

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.

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FAQ ID:94861

The regulation only prohibits insurance policies that would be sold ""in conjunction with"" enrollment in the Medicaid managed care plan. Section 438.104 alone does not prohibit a Medicaid managed care plan from providing information about a Qualified Health Plans (QHP) to potential enrollees who could enroll in such a plan as an alternative to the Medicaid managed care plan due to a loss of Medicaid eligibility or to potential enrollees who may consider the benefits of selecting an Medicaid managed care plan that has a related QHP in the event of future eligibility changes. However, Medicaid managed care plans should consult their contracts and the State Medicaid agency to ascertain if other provisions exist that may prohibit or limit such activity.

Section 438.104(b)(1)(iv) implements a provision in section 1932(d)(2)(C) of the Social Security Act, titled ""Prohibition of Tie-Ins."" In promulgating regulations implementing this provision, CMS clarified that we interpreted it to preclude tying enrollment in the Medicaid managed care plan with purchasing (or the provision of) other types of private insurance. We do not intend the statutory prohibition of tie-ins to apply to a discussion of a possible alternative to the Medicaid managed care plan, which a QHP could be if the consumer is determined to be not Medicaid eligible or loses Medicaid eligibility.

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• This FAQ was released as part of a larger set. View the full set. (PDF, 138.58 KB)

FAQ ID:94351

States are encouraged to review their managed care contracts to clearly identify the legal entity with which they are contracted for Medicaid coverage since federal Medicaid managed care regulations do not address this aspect of contracting. If the party to the contract is an entity (such as a parent company) that has a contract with a state Medicaid agency to provide benefits as a Medicaid managed care plan and is also a QHP issuer, then some contractual provisions may apply to both. Although the federal Medicaid regulations do not apply to a QHP issuer or QHP, state law, regulation, or contract language may have implications for the QHP issuer. If changes are needed to narrow the scope of the contract to apply only to the Medicaid managed care plan, we encourage states to make those changes so as to ensure consistent understanding and application of the Medicaid contract terms.

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FAQ ID:94371