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To: IPA Members From: John Covello 1/22/07
Corzine Administration Acts to Maintain Current Medicaid Prescription Reimbursement Rates
The current AWP minus 12.5 percent prescription reimbursement will be maintained for PAAD, Senior Gold and Medicaid programs to pharmacies through June 30th – the end of the State fiscal year. This much needed administrative action by the Corzine Administration can be attributed to months of a diligent coordinated lobbying effort by IPA and all Retail Pharmacy Coalition members as well as your support of IPA’s RxPAC-NJ.
The 2006 budget contained erroneous language that would have applied a federal Average Manufacturers Price (AMP) basis for reimbursements for single source brand name drugs under New Jersey’s Medicaid program after January 1, 2007. Such a Medicaid pricing formula was never contemplated for brand name prescriptions under current federal law. While the Administration was quick to agree with the Coalition that this was incorrect language in the budget act, it took months of hard work and meetings to finally have OMB (Office of Management and Budget) issue a written corrective ruling eliminating this AMP language. You should not see any changes in your Medicaid, PAAD or Senior Gold reimbursement payments on brand name prescriptions from now until June 30th.
We were equally successful on a second front to have the Administration remove budget language by OMB that would have instituted either AMP or AWP minus 20 percent as the price basis for Medicaid generic drug reimbursement after January 1. In addition to the language being incorrectly drafted, the Coalition successfully persuaded the Administration that CMS did not yet have a useable AMP formula for New Jersey to use for such a reimbursement reduction. Therefore, Medicaid reimbursements for generic prescriptions also will remain unchanged until June 30th.
As the Federal government moves to finalize an AMP formula this year, IPA and the Coalition will continue to push the Governor’s Office and Medicaid to utilize our reasonable cost containment alternatives to AMP (i.e. mandatory generic utilization for the most common prescribed drugs with a higher dispensing fee).
We’ll also continue our lobbying efforts to fight AMP, mandatory mail order and PBM abuses that affect your ability to continue in the community pharmacy profession.
If you have any questions or see a change in your Medicaid reimbursements contact either John Covello or Heather Rodgers immediately at (800) 575-2667.
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