WSR 00-17-080

PROPOSED RULES

DEPARTMENT OF

SOCIAL AND HEALTH SERVICES
(Medical Assistance Administration)

[ Filed August 14, 2000, 3:36 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 00-07-087.

Title of Rule: Amending WAC 388-530-1000 The medical assistance administration (MAA) drug program, 388-530-1050 Definitions, 388-530-1100 Covered drugs and pharmaceutical supplies, 388-530-1150 Noncovered drugs and pharmaceutical supplies and reimbursement limitations, 388-530-1200 Drug formulary, 388-530-1250 Prior authorization, 388-530-1850 Drug utilization and education council, 388-530-1900 Drug utilization and claims review, 388-530-1950 Point-of-sale (POS) system/prospective drug utilization review (pro-DUR), and 388-530-2050 Reimbursement of out-of-state prescriptions.

Purpose: To clarify and update program requirements and to comply with the Governor's Executive Order 97-02, which mandates that all rules be reviewed for clarity, necessity, fairness, etc.

Statutory Authority for Adoption: RCW 74.08.090 and 74.04.050.

Statute Being Implemented: RCW 74.08.090 and 74.04.050.

Summary: The proposed rules update and clarify MAA's prescription drug program policy and furnishes providers with clear and concise policy that is consistent with federal regulations and agency goals.

Reasons Supporting Proposal: To ensure current policy and practice is reflected in rule and to comply with the Governor's Executive Order 97-02.

Name of Agency Personnel Responsible for Drafting: Kathy Sayre, DPS/RIP, P.O. Box 45533, Olympia, WA 98507-5533, (360) 725-1342; Implementation and Enforcement: Marilyn Mueller, DHSQS, P.O. Box 45506, Olympia, WA 98507-5510, (360) 725-1569.

Name of Proponent: Department of Social and Health Services, Medical Assistance Administration, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The proposed rules update and clarify department policy regarding the prescription drug program. The purpose is to comply with requirements to put pharmacy policy in rule. Its anticipated effect is to clearly reflect department policy so those to whom it applies understand it.

Proposal Changes the Following Existing Rules: The rules proposed above have been updated to reflect current department policy and processes for the MAA prescription drug program, as well as to establish consistency with federal regulations and the agency's goals.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The department has analyzed the proposed rule amendments and concludes that they will have a no more than minor impact on the businesses affected by them therefore, no small business economic impact statement is required.

RCW 34.05.328 does not apply to this rule adoption. The department has analyzed these rules and concluded that the proposed amendments do not make "significant amendments to a policy or regulatory program." Therefore, the department concludes that the proposed amendments do not meet the definition of "significant legislative rules."

Hearing Location: Lacey Government Center (behind Tokyo Bento Restaurant), 1009 College Street S.E., Room 104-B, Lacey, WA 98503, on October 10, 2000, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Kelly Cooper by October 3, 2000, phone (360) 664-6094, TTY (360) 664-6178, e-mail coopeKD@dshs.wa.gov.

Submit Written Comments to: Identify WAC Numbers, Kelly Cooper, Rules Coordinator, Rules and Policies Assistance Unit, P.O. Box 45850, Olympia, WA 98504-5850, fax (360) 664-6185, by October 10, 2000.

Date of Intended Adoption: No sooner than October 11, 2000.

August 8, 2000

Marie Myerchin-Redifer, Manager

Rules and Policies Assistance Unit

2718.14
AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1000
The medical assistance administration (MAA) drug program.

(1) The ((department shall)) medical assistance administration (MAA) reimburses providers for prescription drugs ((medically necessary to the health care of clients eligible for medical care programs in accordance with the department's rules.

(2) The pharmacy shall be an MAA provider as agreed under WAC 388-87-007.

(3) Acceptance and filling of a prescription drug for a client eligible for a medical care program constitutes acceptance of the department's rules and fees.

(4) The pharmacy shall bill the department and its clients according to WAC 388-87-010 and 388-87-015)) and pharmaceutical supplies according to department rules and subject to the exceptions and restrictions listed in this chapter.

(2) MAA reimburses only pharmacies that are MAA-enrolled providers and meet the general requirements for providers described under WAC 388-502-0020.

(3) Prescription drugs must be:

(a) Medically necessary as defined in WAC 388-500-0005;

(b) Billed according to the conditions under WAC 388-502-0150 and 388-502-0160; and

(c) Within the scope of an eligible client's medical care program. Refer to chapter 388-529 WAC.

(4) Acceptance and filling of a prescription for a client eligible for a medical care program constitutes acceptance of MAA's rules and fees. See WAC 388-502-0100 for general conditions of payment.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1000, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1050
Definitions.

(((1))) The following definitions and abbreviations and those found in WAC 388-500-0005, Medical definitions, apply to this chapter.

"Actual acquisition cost (AAC)" means the actual price a provider paid for a drug marketed((,)) in the package size of drug purchased, or sold by a particular manufacturer or labeler. Actual acquisition cost ((shall be)) is calculated based on factors ((such as)) including, but not limited to:

(((a))) (1) Invoice price, including other invoice-based considerations;

(((b))) (2) Order quantity and periodic purchase volume discount policies of suppliers (wholesalers and/or manufacturers);

(((c))) (3) Membership/participation in purchasing cooperatives;

(((d))) (4) Advertising and other promotion/display allowances, free merchandise deals; and

(((e))) (5) Transportation or freight allowances.

(((2))) "Administer" means the direct application of a ((legend)) prescription drug ((whether)) by injection, inhalation, ingestion, or any other means, to the body of a patient ((or research subject)) by a practitioner, or ((to the patient or research subject)) at the direction of the practitioner.

(((3) "Authorized prescriber" means a physician, osteopath, osteopathic physician/surgeon, dentist, nurse, physician assistant, optometrist, pharmacist, or other person duly authorized by law or rule in the state of Washington to prescribe drugs. See WAC 246-863-100 for pharmacists.

(4))) "Automated maximum allowable cost (AMAC)" means the ((cost)) rate established for all multiple-source drugs designated by three or more products at least one of which must be under a federal drug rebate contract and which are not on the maximum allowable cost (MAC) list.

(((5))) "Average wholesale price (AWP)" means the average price of a drug product from wholesalers nationwide at a point in time. ((MAA determines AWP as reported by a drug pricing file contractor.

(6) "Brand name" means the proprietary or trade name selected by the manufacturer and placed upon a drug, its container, label or wrapping at the time of packaging.

(7) "Bulk drug delivery system" means the method in which the prescribed amount of a drug product is packaged and dispensed to the patient in one bulk container.

(8))) "Compendia of drug information" includes the following:

(1) The American Hospital Formulary Service Drug Information;

(2) The United States Pharmacopeia Drug Information; and

(3) DRUGDEX Information System.

"Compounding" ((is the professional practice)) means the act of combining two or more ((drugs, as defined in subsection (20)(a) and (b) of this section,)) active ingredients or adjusting therapeutic strengths in the preparation of a prescription.

(((9))) "Contract drugs" ((are)) means drugs manufactured or distributed by manufacturers/labelers who signed a drug rebate agreement with the federal Department of Health and Human Services (DHHS).

(((10) "Controlled substance" means a drug or substance, or an immediate precursor of such drug or substance, as designated by chapter 69.50 RCW.

(11) "Covered outpatient drug" means a drug approved for safety and effectiveness as a prescription drug under the federal Food, Drug, and Cosmetic Act, which is used for a medically accepted indication, and is not subject to the exceptions under WAC 388-530-1150, Noncovered drugs and pharmaceutical supplies.

(12))) "Deliver or delivery" means the ((actual, constructive, or attempted)) transfer of a drug or device from one person to another ((of a drug or device whether or not there is an agency relationship)).

(((13))) "Department" means the department of social and health services (DSHS).

(((14))) "DESI" or "less than effective drug((s))" ((are drugs)) means a drug for which:

(a) Effective approval of the drug application has been withdrawn by the Food and Drug Administration (FDA) for safety or efficacy reasons as a result of the drug efficacy study implementation (DESI) review; or

(b) The secretary of the department of health and human services (DHHS) has issued a notice of an opportunity for a hearing under section 505(e) of the federal Food, Drug, and Cosmetic Act on a proposed order of the secretary to withdraw approval of an application for such drug under such section because the secretary has determined the drug is less than effective for some or all conditions of use prescribed, recommended, or suggested in its labeling.

(((15) "Device" means instruments, apparatus, and contrivances, including their components, parts and accessories, intended:

(a) For use in the diagnosis, cure, mitigation, treatment, or prevention of human disease; or

(b) To affect the human structure or any human function.

(16) "Dispense" means the interpretation of a prescription or order for a legend drug and, pursuant to that prescription or order, the proper selection, measuring, compounding, labeling, or packaging necessary to prepare that prescription or order for delivery.

(17))) "Dispense as written (DAW)" means an instruction to the pharmacist forbidding substitution of a generic drug or a therapeutically equivalent product for the specific drug product prescribed.

(((18))) "Dispensing fee" means the fee ((the department)) MAA sets to reimburse pharmacy providers in addition to ingredient costs, for ((provider administrative costs estimated by the department and, including)) expenses that include but are not limited to, information provided to the client as required by state laws and federal regulations, compounding time, and overhead expenses incurred in filling medical assistance prescriptions.

(((19) "Distribute" means to deliver other than by administering or dispensing a legend drug.

(20) "Double-blind drug study" is a randomized trial in which a single patient undergoes a series of pairs of treatments, consisting of one active and one placebo per pair, with the order determined by random allocation. Appropriate treatment targets (signs, symptoms, or laboratory tests) are used as the measure of efficacy, and the trial is continued until efficacy is established or disproved.

(21) "Drug" means a substance:

(a) Recognized as a drug in the official United States pharmacopoeia, official homeopathic pharmacopoeia of the United States, or official national formulary, or any supplement to any of the above publications;

(b) Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of human disease;

(c) (Other than food, minerals, or vitamins) intended to affect the structure or any function of the human body; and

(d) Intended for use as a component of any article specified in clause (a), (b) or (c) of this subsection, excluding devices or their components, parts or accessories.

(22))) "Drug formulary" means a list of MAA-covered outpatient drugs not requiring prior authorization ((except as listed in 388-530-1250(2), as developed by an appropriate committee or the drug use review (DUR) board)).

(((23))) "Drug pricing file contractor" means the entity which has contracted to provide ((the department)) MAA, at specified intervals, the latest information and/or ((database)) data base on drugs and related supplies produced, prepared, processed, packaged, labeled, distributed, marketed, or sold in the marketplace. Contractor-provided information includes, but is not limited to, identifying characteristics of the drug (national drug code, drug name, manufacturer/labeler, dosage form, and strength) for the purpose of identifying and facilitating payment for ((the)) drugs billed to MAA.

(((24))) "Drug rebates" means payments provided by pharmaceutical manufacturers to state Medicaid programs under the terms of the manufacturers' agreements with the Department of Health and Human Services.

(((25))) "Drug-related supplies" means nonpharmaceutical items necessary for administration or delivery of a drug.

(((26))) "Drug ((use)) utilization review (DUR) ((program))" means a quality ((assurance program)) review for covered outpatient drugs ((which)) that assures ((that)) prescriptions are appropriate, ((are)) medically necessary, and ((are)) not likely to result in adverse medical outcomes.

(((27))) "Emergency kit" means a set of limited pharmaceuticals furnished to a nursing facility by the ((primary)) pharmacy ((which)) that provides prescription dispensing services to that facility. Each kit is specifically set up to meet the ((individual)) emergency needs of ((each)) an individual nursing facility.

(((28))) "Estimated acquisition cost (EAC)" means ((the department's best)) MAA's estimate of the price providers generally and currently pay for a drug marketed or sold by a particular manufacturer or labeler ((in the package size most frequently purchased by providers)).

(((29))) "Expedited prior authorization" means the process for authorizing selected drugs in which providers use a set of numeric codes to indicate to ((the department which)) MAA the acceptable indications/conditions/diagnoses/criteria that are applicable to a particular request for drug authorization.

(((30))) "Experimental drugs" means drugs the FDA has not approved, or approved drugs when used for medical indications other than those listed by the FDA.

(((31))) "Federal upper limit (FUL)" means the maximum allowable payment set by the Health Care Financing Administration (HCFA) for a multiple source drug.

(((32) "Formulary" means a drug formulary. See subsection (22) of this section for a definition of drug formulary.

(33) "Generic code number" means a number MAA uses regardless of manufacturer or package size to identify the generic formulation of a drug.

(34) "Generic name" means the official title of a drug or drug ingredients published in the latest edition of a nationally recognized pharmacopoeia or formulary.

(35))) "Ingredient cost" means the portion of a prescription's cost attributable to the drug ingredients, chemical components, and/or substances.

(((36) "Label" means a display of written, printed or graphic matter upon the immediate container of any article.

(37) "Labeling" means all labels and other written, printed, or graphic matter:

(a) Upon any article or any of its containers or wrappers; or

(b) Accompanying such article.

(38) "Legend or prescription drugs" means any drugs required by any applicable federal or state law or regulation to be dispensed by prescription only or which are restricted to use by practitioners only.

(39))) "Long-term therapy" means treatment a client receives or will receive continuously through and beyond ninety days.

(((40) "Manufacture" means:

(a) The production, preparation, propagation, compounding, or processing of a drug or other substance or device; or

(b) The packaging or repackaging of such substance or device; or

(c) The labeling or relabeling of the commercial container of such substance or device.

"Manufacture" does not include the activities of a practitioner who, as an incident to the practitioner's administration or dispensing such substance or device in the course of professional practice, prepares, compounds, packages, or labels such substance or device.

(41) "Manufacturer" means a person, corporation, or other entity engaged in the manufacture of drugs or devices.

(42))) "Maximum allowable cost (MAC)" means the maximum amount that MAA will pay for a specific dosage form and strength of a multiple source drug product.

(((43))) "Medically accepted indication" means any indicated use for a covered outpatient drug:

(1) Approved under the Federal Food, Drug, and Cosmetic Act((,));

(2) Which appears in peer-reviewed medical literature; or

(3) Which is accepted by one or more of((:

(a) The American Hospital Formulary Service Drug Information;

(b) The American Medical Association Drug Evaluations; or

(c) The United States Pharmacopoeia Drug Information)) the references listed in the compendia of drug information.

(((44) "Medicine cart system" is a patient-specific set of pharmaceuticals prearranged in a medicine cart, for administration over a specified time period.

(45))) "Modified unit dose delivery system" (also known as blister packs((,)) or "bingo/punch cards") means a method in which each patient's medication is delivered to a nursing facility:

(((a))) (1) In individually sealed, single dose packages or "blisters((;"

(b) Usually on one card; and

(c)))"; and

(2) In quantities for one month's supply, unless the prescriber specifies short-term therapy.

(((46))) "Multiple-source drug" means a drug marketed or sold by:

(((a))) (1) Two or more manufacturers or labelers; or

(((b))) (2) The same manufacturer or labeler:

(((i) Under two or more different proprietary names; or

(ii) Both under a proprietary name and without such a name.

(47))) (a) Under two or more different proprietary names; or

(b) Under a proprietary name and a generic name.

"National drug code (NDC)" means the eleven-digit number the manufacturer or labeler assigns to a pharmaceutical product and attaches to the product container at the time of packaging ((which)) that identifies the product's manufacturer, dose form and strength, and package size.

(((48))) "Noncontract drugs" are drugs manufactured or distributed by manufacturers/labelers who have not signed a drug rebate agreement with the federal Department of Health and Human Services.

(((49))) "((Nonlegend or)) Nonprescription drugs" means ((any)) drugs ((which)) that may be lawfully sold without a prescription.

(((50) "Nursing home pharmacy" means a pharmacy serving primarily clients residing in nursing facilities.

(51))) "Obsolete NDC" means a national drug code replaced or discontinued by the manufacturer or labeler.

(((52) "On-line receipt of claims" means claims information received from a switching vender in a National Council for Prescription Data Processing-approved format.

(53) "Outpatient pharmacy" means a pharmacy serving primarily outpatient clients.

(54))) "Over-the-counter (OTC) drugs" means drugs that do not require a prescription before they can be dispensed.

(((55))) "Pharmacist" means a person ((duly)) licensed in the practice of pharmacy by the ((Washington State Board of Pharmacy to engage in the practice of pharmacy)) state in which the prescription is filled.

(((56) "Pharmacist consultant")) "Pharmacy research specialist" means a ((registered)) licensed pharmacist employed by MAA.

(((57))) "Pharmacy" means every ((site, properly)) location licensed by the ((Washington)) State Board of Pharmacy((, in which)) in the state where the practice of pharmacy is conducted.

(((58))) "Point-of-sale (POS)" means a pharmacy claims processing system capable of receiving and adjudicating claims on-line.

(((59))) "Practice of pharmacy" means the practice of and responsibility for:

(((a))) (1) Accurately interpreting prescription orders;

(((b))) (2) Compounding, dispensing, labeling, administering, and distributing of drugs and devices;

(((c))) (3) Providing drug information to the client that includes, but is not limited to, the advising of therapeutic values, hazards, and the uses of drugs and devices;

(4) Monitoring of drug therapy and use;

(((d))) (5) Proper and safe storage of drugs and devices;

(6) Documenting and maintaining records;

(7) Initiating or modifying ((of)) drug therapy in accordance with written guidelines or protocols previously established and approved for a pharmacist's practice by a practitioner authorized to prescribe drugs;

(((e))) and

(8) Participating in drug utilization reviews ((and drug product selection;

(f) Proper and safe storing and distribution of drugs and devices and maintenance of proper records thereof; and

(g) Providing legend drug information which includes, but is not limited to, the advising of therapeutic values, hazards, and the uses of drugs and devices)).

(((60))) "Practitioner" means ((one)) an individual who has met the professional and legal requirements necessary to provide a health care service, such as a physician, nurse, dentist, physical therapist, pharmacist or other person ((duly)) authorized by ((Washington)) state law as a practitioner.

(((61))) "Prescriber" means a physician, osteopathic physician/surgeon, dentist, nurse, physician assistant, optometrist, pharmacist, or other person authorized by law or rule to prescribe drugs. See WAC 246-863-100 for pharmacists' prescriptive authority.

"Prescription" means an order for drugs or devices issued by a practitioner ((duly)) authorized by ((Washington)) state law or rule to prescribe drugs or devices in the course of the practitioner's professional practice for a legitimate medical purpose.

(((62))) "Prescription drugs" means drugs required by any applicable federal or state law or regulation to be dispensed by prescription only or that are restricted to use by practitioners only.

"Prospective drug ((use)) utilization review (Pro-DUR)" means a process in which a request for a drug product for a particular patient is screened, before the product is dispensed, for potential drug therapy problems.

(((63))) "Reconstitution" means the process of returning a ((substance)) single active ingredient, previously altered for preservation and storage, to its approximate original state.

(((64))) "Retrospective drug ((use)) utilization review (Retro-DUR)" ((is)) means the process in which patient drug ((use)) utilization is reviewed on a periodic basis to identify patterns of fraud, abuse, gross overuse, or inappropriate or unnecessary care.

(((65))) "Risk/benefit ratio" means the result of assessing the risk of therapy compared to the benefits of therapy.

"Single source drug" means a drug produced or distributed under an original new drug application approved by the FDA((, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application)).

(((66) "Standard package size" means MAA's designated standard package or container size for a drug dosage form and/or strength for reimbursement purposes.

(67))) "Substitute" means to ((dispense)) replace, with the prescriber's authorization:

(((a) With the practitioner's authorization, a therapeutically)) (1) An equivalent generic drug product of the identical base or salt as the specific drug product prescribed; or

(((b) With the practitioner's prior consent,)) (2) A therapeutically equivalent drug((s)) other than the identical base or salt.

(((68))) "Terminated drug product" ((is)) means a product ((whose)) for which the shelf life expiration date has been met, per manufacturer notification.

(((69))) "Therapeutically equivalent" means ((of essentially)) drugs with the same efficacy ((and toxicity)) when administered to an individual ((in the same dosage regimen)).

(((70))) "Tiered dispensing fee system" means a ((method)) system of paying pharmacies different dispensing fee rates, based on the individual pharmacy's total annual prescription volume and/or drug delivery system used.

(((71))) "True unit dose delivery" means a ((drug delivery system)) method in which each patient's medication is delivered to the nursing facility in quantities sufficient only for the day's required dosage. ((If a medication cart system is used, the pharmacy may deliver the medication cart to the nursing facility every other day, and provide for daily service as needed.

(72))) "Unit dose drug delivery ((systems))" means true unit ((and)) dose or modified unit dose ((or blister packs, also known as "bingo" or punch cards)) delivery systems.

(((73))) "Usual and customary charge" means the ((amount)) fee that the provider typically charges the general public for the product or service((. For any given product, the amount charged by the pharmacy to fifty percent or more of its non-Medicaid clients shall be deemed its usual and customary charge.

(74) "Wholesaler" means a corporation, individual, or other entity which buys drugs or devices for resale and distributes the drugs or devices to corporations, individuals, or entities other than consumers)).

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1050, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1100
Covered drugs and pharmaceutical supplies.

((The department shall reimburse for:

(1) Outpatient legend drugs, generic or brand name, when the manufacturer has a signed rebate agreement with the federal Department of Health and Human Services, except as excluded under WAC 388-530-1150;

(2) Over-the-counter (OTC) drugs when the drug is:

(a) Prescribed;

(b) A less costly therapeutic alternative; and

(c) Formulary.

(3) Compounded prescriptions when billed by each formulary ingredient used in the compound;

(4) Nonformulary drugs when prior authorized by the department;

(5) Drug-related supplies;

(6) Family planning supplies used in conjunction with family planning under WAC 388-86-035, including OTC supplies. Covered family planning OTC supplies include, but are not limited to, hormonal contraceptives, spermicidal contraceptives and barrier contraceptives;

(7) Oral, topical and/or injectable drugs, vaccines for immunizations, and biologicals, prepared or packaged for individual use and dispensed or administered to a client by an authorized provider;

(8) Obsolete national drug codes (NDCs) for up to two years from their date of obsolescence, as long as the drug is not a terminated drug product as defined in WAC 388-530-1050; and

(9) Drugs and supplies administered or provided under unusual and extenuating circumstances to clients by authorized providers who request and receive department approval. The secretary or secretary's designee shall review such requests on a case-by-case basis)) (1) The medical assistance administration (MAA) covers medically necessary prescribed drugs and pharmaceutical supplies, subject to the restrictions described in this section and other published WAC, except for those excluded under WAC 388-530-1150. MAA reimburses a provider for drugs listed in subsection (1)(a) through (e) of this section only when the manufacturer has a signed rebate agreement with the federal Department of Health and Human Services. Refer to WAC 388-530-1125 for information on the drug rebate program. Covered drugs and supplies include:

(a) Outpatient drugs, generic or brand name.

(b) Over-the-counter (OTC) drugs when the drug is:

(i) A less costly therapeutic alternative; and

(ii) Formulary.

(c) Nonformulary drugs when:

(i) Prior authorized by MAA; or

(ii) They meet MAA's published expedited prior authorization criteria and the process described in WAC 388-530-1250(4) is used.

(d) Oral, topical and/or injectable drugs, vaccines for immunizations, and biologicals, prepared or packaged for individual use.

(e) Drugs with obsolete national drug codes (NDCs) for up to two years from the date the NDC is designated obsolete, if the drug is not a terminated drug product as defined in WAC 388-530-1050.

(f) Drug-related supplies as determined in consultation with federal guidelines.

(g) Family planning supplies used in conjunction with family planning under chapter 388-532 WAC, including nonprescribed OTC supplies.

(h) Drugs and supplies provided under unusual and extenuating circumstances to clients by providers who request and receive MAA approval.

(2) MAA determines if certain drugs are covered with or without restrictions based on evidence contained in compendia of drug information and/or peer-reviewed medical literature.

(a) Decisions regarding restrictions are based on, but are not limited to:

(i) Client safety;

(ii) FDA-approved indications;

(iii) Quantity;

(iv) Client age and/or gender; and

(v) Cost.

(b) Restrictions apply to, but are not limited to:

(i) Drugs covered in the nursing facility per diem rate;

(ii) Number of refills within a calendar month; and

(iii) Refills requested before seventy-five percent of the therapy days' supply has elapsed.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1100, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1150
Noncovered drugs and pharmaceutical supplies and reimbursement limitations.

((The department shall not pay for:

(1) Noncontract drugs, brand or generic, when the manufacturer has not signed a rebate agreement with the federal Department of Health and Human Services, except as provided under WAC 388-530-1100(4) of this chapter;

(2) Covered outpatient drugs, biological products, insulin, supplies, appliances, and equipment included in other reimbursement methods, including, but not limited to:

(a) Diagnosis-related group (DRG);

(b) Ratio of cost to charges (RCC);

(c) Nursing facility per diem;

(d) Managed care capitation rates; and

(e) Block grants.

(3) Any drug regularly supplied as an integral part of program activity by other public agencies;

(4) A drug when the drug is prescribed:

(a) For weight loss or gain;

(b) To promote fertility;

(c) For cosmetic purposes or hair growth;

(d) To promote smoking cessation; or

(e) For an indication which is not medically accepted as determined by MAA in consultation with federal guidelines, the Drug Utilization Education Council (DUEC), and MAA medical and pharmacy consultants.

(5) OTC drugs/supplies, unless approved for formulary use or family planning as described under WAC 388-86-035;

(6) Drugs listed in the federal register as "less-than-effective" ("DESI" drugs) or which are identical, similar, or related to such drugs;

(7) Covered outpatient drugs for which the manufacturer seeks to require as a condition of sale that associated tests or monitoring services be purchased exclusively from the manufacturer or manufacturer's designee;

(8) Prescription vitamins and mineral products in the absence of a condition that is clinically recognized to produce a deficiency state, except prenatal vitamins and fluoride preparations. Prenatal vitamins are covered only when prescribed and dispensed to pregnant women. Fluoride preparations are covered only for children, under the early and periodic screening, diagnosis, and treatment (EPSDT or "healthy kids") services;

(9) Drugs that are experimental, investigational, or of unproven efficacy or safety;

(10) Drugs requiring prior authorization for which department authorization has been denied;

(11) Preservatives, flavoring, and/or coloring agents used in the process of compounding;

(12) Less than a one-month supply of drugs for long-term therapy, except as provided under WAC 388-530-1250, Prior authorization. For a definition of long-term therapy, see WAC 388-530-1050(39);

(13) Prescriptions written on pre-signed prescription blanks filled out by nursing facility operators or pharmacists. The department shall terminate the core provider agreement of pharmacies involved in this practice;

(14) Drugs used to replace those taken from nursing facility emergency kits;

(15) Drugs used to replace a physician's stock supply;

(16) Free pharmaceutical samples;

(17) Obsolete NDCs, except that the department may allow reimbursement to a pharmacy for a drug product with an obsolete NDC when the product is dispensed to an eligible client not later than two years from the date the NDC is designated obsolete, if the drug is not a terminated drug product; and

(18) Terminated drug products)) (1) The medical assistance administration (MAA) does not cover:

(a) Noncontract drugs, brand or generic, when the manufacturer has not signed a rebate agreement with the federal Department of Health and Human Services. Refer to WAC 388-530-1125 for information on the drug rebate program.

(b) A drug prescribed:

(i) For weight loss or gain;

(ii) For infertility, frigidity, impotency, or sexual dysfunction;

(iii) For cosmetic purposes or hair growth; or

(iv) To promote smoking cessation.

(c) OTC drugs/supplies, unless approved for formulary use, or family planning as described under chapter 388-532 WAC.

(d) Prescription vitamins and mineral products, except:

(i) When prescribed for clinically documented deficiencies;

(ii) Prenatal vitamins only when prescribed and dispensed to pregnant women; or

(iii) Fluoride preparations for children under the early and periodic screening, diagnosis, and treatment (EPSDT or "healthy kids") services.

(e) A drug prescribed for an indication that is not medically accepted as determined by:

(i) MAA in consultation with federal guidelines; or

(ii) The Drug Utilization and Education (DUE) Council; and

(iii) MAA medical consultants and pharmacy research specialist.

(f) Drugs listed in the federal register as "less-than-effective" ("DESI" drugs) or which are identical, similar, or related to such drugs.

(g) Outpatient drugs for which the manufacturer seeks to require as a condition of sale that associated tests or monitoring services be purchased exclusively from the manufacturer or manufacturer's designee.

(h) Drugs that are:

(i) Not approved by the FDA; or

(ii) Prescribed for non-FDA approved indications or dosing; or

(iii) Unproven for efficacy or safety.

(i) Drugs requiring prior authorization for which MAA authorization has been denied.

(j) Preservatives, flavoring and/or coloring agents.

(k) Less than a one-month supply of drugs for long-term therapy.

(l) A drug with an obsolete NDC more than two years from the date the NDC is designated obsolete.

(m) Products or items that do not have an eleven-digit NDC.

(2) MAA does not reimburse enrolled providers for:

(a) Outpatient drugs, biological products, insulin, supplies, appliances, and equipment included in other reimbursement methods including, but not limited to:

(i) Diagnosis-related group (DRG);

(ii) Ratio of costs-to-charges (RCC);

(iii) Nursing facility per diem;

(iv) Managed care capitation rates;

(v) Block grants; or

(vi) Drugs prescribed for clients who are on the MAA hospice program when the drugs are related to the terminal condition.

(b) Any drug regularly supplied as an integral part of program activity by other public agencies.

(c) Prescriptions written on pre-signed prescription blanks filled out by nursing facility operators or pharmacists. MAA may terminate the core provider agreement of pharmacies involved in this practice.

(d) Drugs used to replace those taken from nursing facility emergency kits.

(e) Drugs used to replace a physician's stock supply.

(f) Free pharmaceutical samples.

(g) Terminated drug products.

(3) MAA evaluates a request for a drug that is listed as noncovered in this section under the provisions of WAC 388-501-0160 which relates to noncovered services. The request for a noncovered drug is called exception to rule. See WAC 388-501-0160 for information about exception to rule.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1150, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1200
Drug formulary.

(1) The medical assistance administration (MAA) ((shall not require prior approval for drug preparations listed in the MAA drug formulary for the initial prescription.

(a) MAA shall apply certain setting restrictions, such as nursing home or home use only as well as limits on quantity.

(b) MAA shall update the formulary list as necessary and shall publish the list periodically)) pharmacy research specialist, medical consultants, and an advisory board evaluate drugs for formulary inclusion, and may consult with the Drug Utilization and Education (DUE) Council, and/or participating MAA providers.

(2) To request ((inclusion of)) consideration to include a drug product in MAA's drug formulary, a drug manufacturer ((shall)) must send ((to)) the ((pharmacist consultant)) pharmacy research specialist a written request and the following supporting documentation:

(a) Background data about the drug ((as requested by MAA));

(b) Product package information ((as requested by MAA));

(c) Any pertinent clinical studies; and

(d) Any additional information the manufacturer ((feels)) considers appropriate.

(3) ((MAA's pharmacist consultants and an advisory board shall evaluate drugs for formulary inclusion. The consultants and board may include MAA's medical consultants, the drug utilization and education council (DUEC), and/or participating MAA pharmacy providers.

(4) The criteria for evaluating whether to include or exclude a drug from MAA's formulary include, but are not limited to the following:

(a) The manufacturer has signed a federal drug rebate contract agreement;

(b) Like drugs are already on the formulary;

(c) The drug is a less-than-effective drug, or is identical, similar, or related to a less-than-effective drug;

(d) The drug falls into one of the categories authorized by federal law to be excluded from coverage;

(e) There are already less costly therapeutic alternatives in the formulary; and

(f) The drug has a potential for abuse.

(5) The MAA shall determine whether a drug should be covered with or without restrictions in a manner similar to how formulary status is determined.

(6) The department shall ensure decisions made in subsections (3) and (5) of this section are subject to review by the MAA assistant secretary or his/her designee. Manufacturers may seek review of adverse decisions by writing to the medical director.

(7) The department may require double blind drug studies to be performed when there is a question of medical necessity or efficacy and the medical literature on the issue is inconclusive. MAA may use the double blind study when:

(a) Considering addition or deletion of a drug to the formulary;

(b) Evaluating the relative merits of two drugs for general use or for a specific individual;

(c) Evaluating requests for prior authorization; or

(d) For whatever purpose the department deems necessary)) The criteria used to determine whether to include or exclude a drug from MAA's formulary include, but are not limited to, an evaluation of whether:

(a) There is a federal drug rebate contract agreement signed by the manufacturer;

(b) There are like drugs already on the formulary;

(c) The drug has a favorable risk/benefit ratio;

(d) The drug is a less-than-effective drug;

(e) The drug falls into one of the categories authorized by federal law to be excluded from coverage;

(f) There are less costly therapeutic alternative drugs already on the formulary; and

(g) The drug has a potential for abuse.

(4) MAA does not require prior approval for drug preparations listed in the MAA drug formulary. MAA updates and reviews the formulary list as necessary and publishes the list periodically.

(5) Manufacturers may seek review of formulary decisions by writing to the MAA medical director.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1200, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1250
Prior authorization.

(1) ((Nonformulary drugs shall require prior authorization.

(2) MAA shall not require pharmacies to obtain prior authorization for formulary drugs, except for:

(a) Subsequent refills of certain drugs, as identified in the Prescription Drug Program Billing Instructions per client, per month;

(b) Those drugs which have specific per-month dose or unit limits as identified in the prescription drug program billing instructions;

(c) Drugs identified in the billing instructions as limited to nursing facility clients when prescribed to clients residing outside a nursing facility; and

(d) Brand name and generic drugs:

(i) Which have an established maximum allowable cost (MAC); and

(ii) For which the prescriber requests reimbursement at estimated acquisition cost (EAC).

(3) The pharmacy shall make a request to the department for drugs requiring prior authorization before dispensing the drug, except as provided for in subsection (6) of this section. The pharmacy shall:

(a) Ensure the request states the medical diagnosis and includes medical justification for the drug; and

(b) Keep on file the medical justification communicated to the pharmacy by the prescriber.

(4) MAA shall evaluate a request for prior authorization based on, but not limited to, the following criteria:

(a) As required under WAC 388-530-1000(1), 388-530-1150, and 388-501-0165;

(b) The drug is of moderate cost as determined by the department. MAA shall select the least costly of two or more preparations of equal effectiveness; and

(c) The drug is not experimental, investigational, or of unproven efficacy or safety.

(5) The department may authorize certain prescribed drugs through a process called "expedited prior authorization." (See WAC 388-530-1050(28), Definitions.) MAA shall determine drugs authorized through expedited prior authorization are those for which the department has established specific utilization criteria to address its concerns over the drugs':

(a) High cost;

(b) Potential for clinical misuse;

(c) Narrow therapeutic indication; or

(d) Safety.

(6) The department)) MAA requires pharmacies to obtain prior authorization for:

(a) Nonformulary drugs;

(b) Drugs that have specific per-month dose or unit limits as indicated by the FDA; and

(c) Additional fills in a calendar month for drugs dispensed for a less than thirty-four day supply when:

(i) Two fills for the same prescription have been dispensed, except for:

(A) Compounded prescriptions;

(B) OTC contraceptives; or

(C) Drugs prescribed to a suicidal patient or a patient at risk for potential drug abuse; or

(ii) Four fills in the same calendar month for the same prescription have been dispensed for any of the following:

(A) Antibiotics;

(B) Anti-asthmatics;

(C) Schedule II and III drugs;

(D) Antineoplastic agents;

(E) Topical preparations; or

(F) Propoxyphene, propoxyphene napsylate, and all propoxyphene combinations.

(2) The pharmacy provider must make a request to MAA for a drug requiring prior authorization before dispensing the drug. The pharmacy provider must:

(a) Ensure the request states the medical diagnosis and includes medical justification for the drug; and

(b) Keep on file the medical justification communicated to the pharmacy by the prescriber.

(3) MAA evaluates a request for prior authorization based on, but not limited to:

(a) Requirements in this section;

(b) Requirements under WAC 388-530-1000, 388-530-1150, and 388-501-0165; and

(c) The least costly alternative between two or more preparations of equal effectiveness.

(4) MAA authorizes certain prescribed drugs through a process called "expedited prior authorization." MAA determines which drugs can be authorized through the expedited prior authorization process by establishing specific utilization criteria which include, but are not limited to:

(a) High cost;

(b) Potential for clinical misuse;

(c) Narrow therapeutic indication; and

(d) Safety.

(5) MAA may authorize reimbursement at the brand name estimated acquisition cost (EAC) for a brand name multiple-source drug that would have been reimbursed at the ((established upper limit)) maximum allowable cost (MAC) for that multiple-source drug, if:

(a) The pharmacist calls for prior authorization; and

(b) The prescriber ((writes)) indicates:

(i) "Dispense as written" ((on)) for the prescription ((form, or certifies in the prescriber's own handwriting)); and

(ii) That a specific brand is "medically necessary" for a particular client; or

(c) The availability of generics in the marketplace is severely curtailed and the price disparity between the brand name EAC and the generic ((maximum allowable cost ())MAC(())) is such that clients would ((be effectively)) be denied the medication.

(((7) The department may pay))

(6) MAA pays for drugs requiring prior authorization ((which)) that are dispensed without prior authorization only when:

(a) Given in an ((acute)) emergency;

(b) ((The department)) MAA receives justification within seventy-two hours of the fill date, excluding weekends and Washington state holidays; and

(c) ((The department)) MAA agrees with the justification and approves the request.

(((8) The pharmacy shall obtain prior authorization from the department for any and all prescription fills in excess of the limits specified under WAC 388-530-1800, Requirements for pharmacy claim payment.

(9) The department shall ensure))

(7) MAA's prior authorization:

(a) Is limited to a decision of medical appropriateness for a drug; and

(b) ((Shall)) Does not guarantee payment.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1250, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1850
Drug utilization and education council.

MAA ((shall establish a DUR board, called the)) establishes a drug utilization and education council (DUEC) and determines membership rotation. ((The DUR board shall:))

(1) The DUEC must:

(a) Have a minimum of eight and a maximum of ten members, representing ((the state professional associations of medicine, pharmacy, and nursing. The board shall:

(a))) actively practicing health care professionals who have recognized knowledge and expertise in one or more of the following:

(i) The clinically appropriate prescribing of covered outpatient drugs;

(ii) The clinically appropriate dispensing and monitoring of covered outpatient drugs;

(iii) Drug use review, evaluation, and intervention;

(iv) Medical quality assurance; and

(v) Disease state management.

(b) Be made up of at least one-third but not more than fifty-one percent physicians, and at least one-third but not more than fifty-one percent pharmacists; and

(((b))) (c) Include an advanced registered nurse practitioner and a physicians assistant((. The department shall determine membership rotation)).

(2) ((Meet)) The DUEC meets periodically to:

(a) Advise ((the department on DUR)) MAA on drug utilization review activities;

(b) Review provider and patient profiles;

(c) Recommend adoption of standards and treatment guidelines for drug therapy;

(d) Provide interventions targeted toward therapy problems; and

(e) Produce an annual report.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1850, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending WSR 96-21-031, filed 10/9/96, effective 11/9/96)

WAC 388-530-1900
Drug ((use)) utilization and claims review.

((The department shall provide for a)) (1) Drug ((use)) utilization review (DUR) ((program consisting)) consists of:

(((1))) (a) A prospective drug ((use)) utilization review (Pro-DUR)((, wherein)) that requires all ((prescription drug)) pharmacy providers ((shall)) to:

(((a))) (i) Obtain ((a)) patient ((history)) allergies, idiosyncracies, or chronic condition which may relate to drug utilization. See WAC 246-875-020 (1)(h)(i);

(((b))) (ii) Screen for potential drug therapy problems; and

(((c))) (iii) Counsel the patient in accordance with existing state pharmacy laws and federal regulations((.

(2))); and

(b) A retrospective drug ((use)) utilization review (Retro-DUR), ((wherein the department shall provide)) in which MAA provides for the ongoing periodic examination of claims data and other records in order to identify patterns of fraud, abuse, gross overuse, or inappropriate or medically unnecessary care among physicians, pharmacists, and individuals receiving benefits.

(2) MAA performs a periodic sampling of claims to determine if drugs are appropriately dispensed and billed. If a review of the sample finds that a provider is inappropriately dispensing or billing for drugs, MAA may implement corrective action that includes, but is not limited to:

(a) Educating the provider regarding the problem practice(s);

(b) Recouping the payment for the drug; and/or

(c) Terminating the provider's core provider agreement.

[Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-1900, filed 10/9/96, effective 11/9/96.]


AMENDATORY SECTION(Amending Order 3960, filed 3/26/96, effective 4/26/96)

WAC 388-530-1950
Point-of-sale (POS) system/prospective drug utilization review (Pro-DUR).

(1) All pharmacy drug claims ((processed through the medical assistance administration ()) received by MAA(())) for payment ((system shall be)) are adjudicated by the MAA point-of-sale (POS) system((. This includes claims received on-line, via paper or by modem, disk, or tape)).

(2) ((MAA shall ensure)) All pharmacy drug claims processed through the POS system undergo a system-facilitated prospective drug utilization review (Pro-DUR) screening((. The system-facilitated Pro-DUR screening shall be performed by the MAA POS computer system at the time a drug claim is received and shall be intended)) as a complement to the Pro-DUR screening required of pharmacists.

(3) ((For the purposes of this section, the following definition applies: "MAA-approved)) MAA selects national council for prescription data processing (NCPDP) codes((" means those NCPDP codes appearing in the MAA prescription drug program billing instructions which MAA has approved)) for pharmacy provider use in overriding MAA POS system alert messages.

(4) If the MAA POS((/Pro-DUR)) system identifies a potential drug therapy problem during ((system-facilitated)) Pro-DUR screening, ((MAA may deny the claim with)) ((an alert)) a message ((indicating)) will alert the pharmacy provider indicating the type of potential problem((, including but not limited to:)).

(a) Alerts to possible drug therapy problems include, but are not limited to:

(i) Therapeutic duplication;

(((b))) (ii) Duration of therapy exceeds maximum;

(((c) Serious)) (iii) Drug-to-drug interaction;

(((d) Overdosage;

(e))) (iv) Drug disease precaution;

(v) High dose;

(vi) Ingredient duplication;

(((f))) (vii) Drug-to-client age conflict; ((or

(g))) (viii) Drug-to-client gender conflict; or

(ix) Refill too soon.

(b) The dispensing pharmacist evaluates the potential drug therapy conflict.

(i) If the conflict is resolved, the pharmacy may process the claim using the applicable NCPDP code.

(ii) If the conflict is not resolved, MAA requires prior authorization for claims when an alert message is triggered in the POS system and NCPDP code is not appropriate.

(5) ((MAA may deny claims:

(a) Which trigger an alert message in the POS system; or

(b) For drugs for which the department has established specific utilization criteria to address MAA concerns over the drug's high cost, potential for clinical misuse, narrow therapeutic indication or safety:

(i) For which prior authorization has not been received; or

(ii) Which do not include an appropriate MAA-approved expedited prior authorization code or MAA-approved NCPDP code.

(6) If the MAA POS/Pro-DUR system identifies a potential drug therapy problem as described in subsection (4) of this section and the claim is denied for this reason, the dispensing pharmacist shall attempt to resolve the issue through professional utilization review. If upon further investigation a therapy problem is found not to exist, the pharmacist may dispense the drug product and:

(a) Request MAA authorization for payment as specified in WAC 388-530-1250, prior authorization; or

(b) Resubmit the claim using an applicable MAA-approved NCPDP override code as listed in the prescription drug program billing instructions.

(7) The department shall determine)) POS/Pro-DUR screening is not applicable to pharmacy claims included in the managed care capitated rate.

[Statutory Authority: RCW 74.08.090. 96-08-018 (Order 3960), 388-530-1950, filed 3/26/96, effective 4/26/96.]


AMENDATORY SECTION(Amending WSR 00-01-088, filed 12/14/99, effective 1/14/00)

WAC 388-530-2050
Reimbursement of out-of-state prescriptions.

(1) ((The department reimburses)) MAA reimburses out-of-state pharmacies for prescription drugs provided to an eligible ((MAA clients who are)) client within the scope of the client's medical care program if the pharmacy:

(a) ((Washington state residents)) Contracts with MAA to be an enrolled provider; and

(b) ((Located temporarily outside the state subject to the provisions of WAC 388-501-0180)) Meets the same criteria MAA requires for in-state pharmacy providers.

(2) ((Border areas, as described under WAC 388-501-0175, are considered in-state and not subject to out-of-state rules. Pharmacies in border areas are eligible to apply to the department to be enrolled as providers of medical services in the state of Washington.

(3) Out-of-state pharmacies must meet the same criteria as in-state pharmacies)) MAA considers pharmacies located in bordering areas listed in WAC 388-501-075 the same as in-state pharmacies.

[Statutory Authority: RCW 74.04.050 and 74.08.090. 00-01-088, 388-530-2050, filed 12/14/99, effective 1/14/00. Statutory Authority: RCW 74.08.090. 96-21-031, 388-530-2050, filed 10/9/96, effective 11/9/96.]

Washington State Code Reviser's Office