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New State SPAs Reimburse 340B Covered Entities at Actual Acquisition Cost:
Creates Disincentives For 340B Entities to Choose the Lowest Cost Drugs
March 11, 2019
(36 States and DC)
On January 21, 2016, the Centers for Medicare & Medicaid Services (CMS) released the Covered Outpatient Drugs (COD) final rule that addresses
key areas of Medicaid drug reimbursement and changes made to the Medicaid Drug Rebate Program by the Affordable Care Act.
The final rule requires states to reimburse 340B safety net outpatient clinics at actual acquisition cost (AAC) plus a state-set “professional”
dispensing fee (PDF). However, the rule allows some flexibility and permits states to reimburse up to the 340B ceiling price (minimum 340B discount
price) event if it exceeds AAC.
To allow for additional flexibility, the final rule permits states to establish an AAC reimbursement based on several different pricing benchmarks,
including: national average drug acquisition cost (NADAC), average manufacturers price (AMP), wholesale acquisition cost (WAC).
Basing Medicaid reimbursement on the 340B ceiling prices allows 340B entities to retain savings obtained through sub-ceiling prices. These
savings could be shared with the state. However, as outlined in the table below, most states submitting SPAs recently have defaulted to AAC to reimburse
340B eligible entities. This removes incentives for entities to use drugs that cost less than alternatives. Additionally, 340B AAC for some drugs could be
higher than the 340B-ceiling price due to add-on costs from wholesalers and others. Purchasing those drugs would create a reimbursement loss for the
340B eligible entities.
To be in compliance with the final rule, states that did not have CMS approved 340B reimbursement policies were required to submit a State Plan
Amendment (SPA) to detail how 340B covered entities will be reimbursed for drugs and drug device combinations by April 2017 (with a grace period to
June 2017).
State –SPA Reimbursement for 340B Reimbursement Reimbursement for Contract Nominal Profession
Number Pharmaceuticals Physician pharmacies Pricing al
Administered Drugs Dispensing
(PAD) Purchased Fee (PDF)
under 340B
1 Alabama The lowest of: AL-AAC; Payment shall not For PADs 340B eligible payment shall $10.64
AL-17-0001 WAC when AL-AAC not exceed the entity’s administered by 340B entities (including not exceed the
available; Federal Upper actual acquisition cost entities, payment shall 340B contract entity's actual
Limit (FUL) or usual and plus a professional not exceed the entity’s pharmacies) not acquisition cost
customary (U&C) dispensing fee of AAC for the drug (no listed on the HRSA for the drug,
charge. $10.64. PDF1) 340B Drug Pricing plus a PDF
Program Database
S i m o n & C o . , L L C
1331 G Street, NW, Suite 910, Washington DC 20005
(202) 204-4707
www.mjsimonandcompany.com
State SPAs Reimburse 340B Covered Entities at AAC
Simon&Co
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State –SPA Reimbursement for 340B Reimbursement Reimbursement for Contract Nominal Profession
Number Pharmaceuticals Physician pharmacies Pricing al
Administered Drugs Dispensing
(PAD) Purchased Fee (PDF)
under 340B
receive AL-AAC;
WAC when AL-AAC
not available; FUL or
U&C charge.
2 Alaska Lowest of: gross amount Reimbursement for Physician Drugs acquired by $13.36 for
AK-17-0005 due; U&C; submitted drugs will be the administered drugs pharmacy under pharmacies
ingredient cost +PDF lowest of the submitted including those contract with a 340B located on
AAC WAC, state-MAC or purchased through the covered entity will the road
NADAC will be used at the FUL 340 B program are be reimbursed at the system;
the state maximum reimbursed at the lowest of amount $21.28 for
allowable cost for both lower of the billed billed, WAC+1%, S- those not
brand and generic drugs amount or WAC + 1%. MAC or FUL. located on
(no PDF) the road
Drugs acquired system, and
through the 340B $10.76 for
program and out-of-state
dispensed by pharmacies.
contract pharmacies
under contract with
a 340B
covered entity
will not be
reimbursed
3 Arkansas AR- AAC is NADAC plus a 340B actual Invoice PADs, including Drugs purchased (outside of Brand and
16-003 PDF. When the NADAC is Price but no more than specialty drugs, through the 340B 340B or FSS) Non-
not available, the 340B ceiling price purchased through pricing program and reimbursed by preferred
reimbursement [provided or calculated the340B Program will dispensed by 340B their AAC Brand =
shall be the lesser of the by AMP minus Unit be reimbursed at the contract pharmacies $9.00
WAC, the State Upper Rebate Amount (URA)] 340B actual invoice are not covered
Limit which is plus the established price but no more Brand
1 “No PDF” means that no Professional Dispensing Fee was mentioned in the provision on physician/practitioner administered drugs.
State SPAs Reimburse 340B Covered Entities at AAC
Simon&Co
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State –SPA Reimbursement for 340B Reimbursement Reimbursement for Contract Nominal Profession
Number Pharmaceuticals Physician pharmacies Pricing al
Administered Drugs Dispensing
(PAD) Purchased Fee (PDF)
under 340B
established at the State PDF. than the 340B ceiling Preferred
Actual Acquisition Cost price [provided or and Generic
(SAAC), or the FUL. calculated by AMP Medication
minus Unit Rebate drug =
Amount (no PDF). $10.50
4 California Lower of the drug’s Amount not to exceed For physician Contract pharmacy (outside of $13.20 for
CA-17-002 ingredient cost plus a the AAC for the drug, as administered drugs may only use 340B 340B or FSS) pharmacies
PDF, or the pharmacy’s charged by the purchased under drugs to dispense reimbursed at with fewer
U&C charge. manufacturer plus PDF. 340B program, a Medicaid no more than than 90,00
covered entity is prescriptions the AAC plus annual
Drug’s ingredient cost Carve in required: 340B required to bill and if the covered entity, PDF Medicaid
means the lowest of: eligible entities that will be reimbursed an the contract prescription
NADAC, or when no purchase drugs through amount not to exceed pharmacy, and the Pharmacy claims;
NADAC is available, the 340B are required to the entity’s AAC for State Medicaid providers $10.05 for
WAC; FUL; or Maximum use 340B for their the drug, as charged agency have purchasing pharmacies
Allowable Ingredient Medicaid patients. If by the manufacturer. established an drugs at with more
Cost (MAIC) covered entity is unable (No PDF) arrangement to nominal price: than 90,00
to purchase 340B drug, prevent duplicate AAC+ PDF annual
may dispense drug discounts. Medicaid
purchased at regular prescription
drug wholesale rates to Reimbursement will claims
Medi-Cal. not exceed the
covered entity’s
actual acquisition
cost + PDF
5 Colorado Based on the lower of their actual acquisition Covered Drugs acquired outside FSS or <60k total
CO-17-0004 U&C or allowed cost plus PDF entities using drugs through 340B and 340B shall be prescription
ingredient cost plus PDF. purchased at 340B dispensed by reimbursed at s filled
The ingredient cost is prices for Medicaid contract pharmacies their actual =$13.40;
the lesser of CO-AAC or members must bill the are not covered acquisition cost 60k-90k
State SPAs Reimburse 340B Covered Entities at AAC
Simon&Co
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State –SPA Reimbursement for 340B Reimbursement Reimbursement for Contract Nominal Profession
Number Pharmaceuticals Physician pharmacies Pricing al
Administered Drugs Dispensing
(PAD) Purchased Fee (PDF)
under 340B
submitted ingredient 340B purchase price. plus PDF scripts:
cost. If AAC is not (No PDF) $11.49;
available lesser of WAC 90k-110k
or ingredient cost. scripts=$10.
AAC is the actual 25; >110k
acquisition cost for like scripts:
drugs. $9.31
6 Connecticut lowest of: 340B actual invoice The SPA does not Pharmacies Their actual $10.75
CT-17-0015 U&C or pharmacy’s price but no more than mention PADs contracting with a acquisition cost,
actual submitted the 340B ceiling price purchased under 340B entity shall be plus the PDF.
ingredient cost; NADAC; plus the PDF of $10.75 340B, but says all reimbursed at the
ACA FUL; or WAC plus governmental and lesser of
zero percent when no private providers are methodology,
NADAC is available for a reimbursed for PADs in the first cell, plus
specific drug according the PDF. The
to the same fee Department
schedules. contracts with
several 340B
pharmacies, which
are reimbursed at
the reimbursed at
the 340B actual
invoice price, plus
the PDF.
7 Delaware DE- The lower of U&C, 340B purchased Drug: AAC for PAD ($0.00 Drugs acquired AAC plus PDF $10
17-002 NADAC, WAC, DE-MAC, AAC for dispensed PDF) through the federal
AAC. drugs + PDF; 340B drug pricing
program and
AAC or AAC for drug Entities must request dispensed by 340B
reimbursement is permission to use 340B contract pharmacies
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