Public Notice of Final Action for Covered Outpatient Drug Reimbursement Methodology Update

The South Carolina Department of Health and Human Services (SCDHHS) gives notice of the following actions regarding reimbursement methodology for covered outpatient drugs (COD) purchased through the pharmacy program under the State Plan under Title XIX of the Social Security Act Medical Assistance Program (Medicaid).

Effective on or after June 1, 2020, SCDHHS will amend the South Carolina Medicaid State Plan to adopt the following policy changes for CODs purchased through the pharmacy program, as described in attachment 4.19-B of the State Plan.

Standard basis for payment, reimbursement for drugs shall be limited to the lowest of:

1. the actual acquisition cost (AAC) plus a professional dispensing fee (PDF) of $10.50
2. the state's maximum allowable cost (MAC) plus a PDF of $10.50
3. the usual and customary (U&C) charges to the general public

The AAC is defined as the National Average Drug Acquisition Cost (NADAC). In those instances where the NADAC does not exist, the AAC is defined as wholesale acquisition cost (WAC).

Standard basis for payment likewise applies to CODs in the outpatient community pharmacy setting and applies to specialty drugs and drugs dispensed by a retail community pharmacy or institutional or long-term care facility when not included as part of an inpatient stay.

The AAC plus a PDF of $10.50 shall be applied to the drugs acquired or dispensed via the Federal Supply Schedule (FSS), at nominal price (outside of 340B or FSS) or by Indian Health Services.

Investigational drugs are not covered.

Clotting factor reimbursement remains to be determined by contractual provisions established by the South Carolina Department of Health and Environmental Control (SCDHEC) Hemophilia Program. Rates are set by a state procurement bid process between SCDHEC and clotting factor manufacturers.

Physician-administered drugs are reviewed on a quarterly basis with rates updated and posted to the SCDHHS website at www.scdhhs.gov/resource/fee-schedules. Rates in classes where there are no therapeutic alternatives are set at an average sales price (ASP) plus 6%, with less expensive medications priced at ASP+10%. Generic agents and drugs in classes with therapeutic alternatives are set by applying the anticipated margin of the most expensive medication, based on the ASP plus 6% methodology, to the acquisition cost of the other medications in the class.

Based on the proposed actions above, SCDHHS anticipates a budget impact of approximately $4.6 million (total dollars).

Copies of this notice are available at each South Carolina Healthy Connections Medicaid county office and at www.scdhhs.gov for public review. Additional information regarding these actions is available upon request at the address cited below.

Any written comments submitted may be reviewed by the public at the SCDHHS, Division of Health Programs, Jefferson Square Building, 1801 Main Street, Columbia, South Carolina, Monday through Friday between 9 a.m.-5 p.m.