Date of Adoption: August 5, 2002.

     Purpose: Medical Assistance Administration (MAA) is revising this chapter of rules to ensure consistency with program policy; to add reimbursement methodology needed to obtain necessary rate-setting data; to add language to comply with federal requirements regarding billing units; to make department reimbursement policy consistent with other healthcare payers, and; to clarify regulatory language.

     Citation of Existing Rules Affected by this Order: Amending WAC 388-530-1000 The medical assistance administration (MAA) drug program, 388-530-1050 Definitions, 388-530-1100 Covered drugs, devices, and pharmaceutical supplies, 388-530-1125 Drug rebate program, 388-530-1150 Noncovered drugs and pharmaceutical supplies and reimbursement limitations, 388-530-1200 Prior authorization program, 388-530-1250 Prior authorization process, 388-530-1300 General reimbursement methodology, 388-530-1350 Estimated acquisition cost (EAC) methodology, 388-530-1400 Maximum allowable cost (MAC) methodology, 388-530-1410 Federal upper limit (FUL) methodology, 388-530-1425 Payment methodology for drugs purchased under the Public Health Service (PHS) Act, 388-530-1450 Dispensing fee determination, 388-530-1500 Reimbursement for compounded prescriptions, 388-530-1550 Unit dose drug delivery systems, 388-530-1600 Unit dose pharmacy billing requirements, 388-530-1625 Compliance packaging services, 388-530-1650 Reimbursement for pharmaceutical supplies, 388-530-1700 Drugs and drug-related supplies from nonpharmacy providers, 388-530-1750 Drugs and pharmaceutical supplies for clients with any third-party coverage, 388-530-1800 Requirements for pharmacy claim payment, 388-530-1850 Drug utilization and education (DUE) 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 for out-of-state prescriptions; and new WAC 388-530-1360 Certified average wholesale rice (CAWP) and 388-530-1405 Automated maximum allowable cost (AMAC).

     Note: The CR-102, Notice of proposed rule, had included a proposal for a new section WAC 388-530-1380. Due to public testimony, that section is not being adopted.

     Statutory Authority for Adoption: RCW 74.09.080.

     Other Authority: RCW 74.04.050 and 42 C.F.R. Subpart K, subsection 162.1102.

      Adopted under notice filed as WSR 02-12-092 on June 4, 2002.

     Changes Other than Editing from Proposed to Adopted Version: As a result of testimony received, the following changes have been made to the text of the proposed rules:

WAC 388-530-1050 Definitions.

     "Peer reviewed medical literature" means a research study, report, or findings regarding the specific use of a drug that has been submitted to one or more professional journals, reviewed by experts with appropriate credentials, and subsequently published by a reputable professional journal. A clinical drug study used as the basis for the publication must be a double blind, randomized, placebo or active control study.

     CES - Chapter 388-530 WAC - Pharmacy Services.

     Page Two.

     "Wholesale acquisition cost (WhAC)" means the net price a manufacturer charges wholesalers for a drug. The WhAC is supplied to the medical assistance administration (MAA) by MAA's drug file contractor.

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

     (3)(c)(ii) They meet MAA's published expedited prior authorization (EPA) criteria and the dispensing pharmacist follows the EPA process ...

     (6) MAA evaluates requests for drugs, devices, and pharmaceutical supplies that are subject to limitations or other restrictions in this chapter on a case-by-case basis. MAA approves the requested services that are beyond the stated limits or restrictions of this chapter when MAA determines that the services are medically necessary, under subsection (5) of this section and under the standards for covered services in WAC 388-501-0165.

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

     (3) MAA evaluates ((a)) each request for a noncovered drug ((that is listed as noncovered in this section)) under WAC 388-530-1100(5) and 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)) 388-501-0165.

WAC 388-530-1300 General reimbursement methodology. (1) ((MAA's)) The medical assistance administration's (MAA) total reimbursement for a prescription drug must not exceed the lowest of:

     (a) Estimated acquisition cost (EAC) plus a dispensing fee;

     (b) Maximum allowable cost (MAC) plus a dispensing fee;

     (c) Federal Upper Limit (FUL) plus a dispensing fee;

     (d) Actual acquisition cost (AAC) plus a dispensing fee for drugs purchased under section 340 B of the Public Health Service (PHS) Act and dispensed to medical assistance clients; ((or))

     (e) Automated maximum allowable cost (AMAC) plus a dispensing fee;

     (f) Certified average wholesale price (CAWP) plus a dispensing fee; or

     (g) Wholesale acquisition cost (WhAC) plus a dispensing fee; or

     (h) The provider's usual and customary charge to the non-Medicaid population.

WAC 388-530-1350 Estimated acquisition cost (EAC) methodology.

     (1)(a) When acquisition cost data are made available to MAA by drug wholesalers:

     (i) MAA determines pharmacies' ((average)) acquisition costs for ((these products.

     (2) The pharmacies' average acquisition cost for the products in the NDC sample is based on in state wholesalers' charges to pharmacy subscribers.

     (3) MAA represents the average)) the top 100 single-source drugs reimbursed by MAA as measured by the total dollars paid for each drug.

New Section

     WAC 388-530-1380 Wholesale acquisition cost (WhAC) methodology. (1) The medical assistance administration (MAA) may use the wholesale acquisition cost (WhAC) provided by MAA's drug pricing file contractor in pricing drugs for the purpose of setting MAA's reimbursement rates.

(2) MAA may use WhAC information to determine a rate that MAA considers to be equivalent to the estimated acquisition cost (EAC). The WhAC and the EAC are both expressed as a percentage of the average wholesale price (AWP) as described in WAC 388-530-1350.

(3) When a WhAC is available for a drug, MAA may use the WhAC price as MAA"s reimbursement rate for the drug when the WhAC price is the lowest of the rates calculated under the methods listed in WAC 388-530-1300(1).

WAC 388-530-1500 Reimbursement for compounded prescriptions.

     (5) Compounded prescriptions are reimbursed as follows:

     (a) MAA allows only the lowest cost for each covered ingredient, whether ((EAC, MAC)) that cost is determined by actual acquisition cost (AAC), estimated acquisition cost (EAC), federal upper limit (FUL), maximum allowable cost (MAC), automated maximum allowable cost (AMAC), certified average wholesale price (CAWP), wholesale acquisition cost (WhAC), or amount billed.

WAC 388-530-1650 Reimbursement for pharmaceutical supplies.

     (4) MAA does not pay a dispensing fee for nondrug items, devices, or supplies. See WAC 388-530-1450 (1)(2).

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 2, Amended 25, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 2, Amended 25, Repealed 0.
     Effective Date of Rule: Thirty-one days after filing.

August 5, 2002

Brian H. Lindgren, Manager

Rules and Policies Assistance Unit

OTS-5713.3

AMENDATORY SECTION(Amending WSR 01-01-028, filed 12/7/00, effective 1/7/01)

WAC 388-530-1000   The medical assistance administration (MAA) drug program.   (1) The medical assistance administration (MAA) reimburses providers for prescription drugs and pharmaceutical supplies according to department rules and subject to the exceptions and restrictions listed in this chapter.

     (2) MAA reimburses only pharmacies that:

     (a) Are MAA-enrolled providers; and

     (b) Meet the general requirements for providers described under WAC 388-502-0020.

     (3) To be both covered and reimbursed under this chapter, prescription drugs must be:

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

     (b) Within the scope of coverage of an eligible client's medical assistance program. Refer to chapter 388-529 WAC for scope of coverage information;

     (c) For a medically accepted indication appropriate to the client's condition;

     (d) 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.)) (e) Billed according to the conditions and requirements of this chapter.

     (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, 74.04.050. 01-01-028, § 388-530-1000, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1000, filed 10/9/96, effective 11/9/96.]

     "Active ingredient" means the chemical component of a drug responsible for a drug's prescribed/intended therapeutic effect. The medical assistance administration (MAA) limits coverage of active ingredients to those with a national drug code (NDC) and those specifically authorized by MAA.

     "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 is calculated based on factors including, but not limited to:

     (1) Invoice price, including other invoice-based considerations, such as prompt payment discounts;

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

     (3) Membership/participation in purchasing cooperatives;

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

     (5) Transportation or freight allowances.

     "Administer" means the direct application of a prescription drug by injection, inhalation, ingestion, or any other means, to the body of a patient by a practitioner, or at the direction of the practitioner.

     "Automated maximum allowable cost (AMAC)" means the rate established by the medical assistance administration (MAA) for ((all)) a multiple-source drug((s)) that is not on the maximum allowable cost (MAC) list and that is designated by ((three)) two 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)).

     "Average wholesale price (AWP)" means the average price of a drug product that is calculated from ((wholesalers)) wholesale prices nationwide at a point in time and reported to the medical assistance administration (MAA) by MAA's drug pricing file contractor.

     "Certified average wholesale price (CAWP)" means the price certified by the First Data Bank to be the actual average wholesale price of an infusion, injectable, or inhalation drug marketed by a manufacturer or labeler who is subject to a consent order with the United States Department of Justice regarding the reporting of average wholesale price(s).

     "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" means the act of combining two or more active ingredients or adjusting therapeutic strengths in the preparation of a prescription.

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

     "Deliver or delivery" means the transfer of a drug or device from one person to another.

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

     "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.

     "Dispensing fee" means the fee the medical assistance administration (MAA) sets to reimburse pharmacy providers ((in addition to ingredient costs,)) for dispensing MAA covered prescriptions. The fee is MAA's maximum reimbursement for 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)) involved in the practice of pharmacy and is in addition to MAA's payment for the costs of covered ingredients.

     "Drug Evaluation Unit (DEU)" means a unit or group designated by the medical assistance administration (MAA) that makes drug coverage recommendations after studying the clinical and pharmacoeconomic attributes of drugs using the Academy of Managed Care Pharmacy drug review submission process. The DEU has physician and pharmacist staff and an advisory committee of actively practicing physicians and pharmacists.

     "Drug file" means a list of drug((s)) products, pricing and other information provided to the medical assistance administration's (MAA's) drug data base and maintained by a drug file contractor.

     "Drug file contractor" also referred to as "drug pricing file contractor," means the entity which has contracted to provide the medical assistance administration (MAA), at specified intervals, the latest information and/or 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 drugs billed to MAA.

     "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.

     "Drug-related supplies" means ((nonpharmaceutical)) nondrug items necessary for the administration ((or)), delivery, or monitoring of a drug or drug regimen.

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

     "Emergency kit" means a set of limited pharmaceuticals furnished to a nursing facility by the pharmacy that provides prescription dispensing services to that facility. Each kit is specifically set up to meet the emergency needs of ((an individual)) each nursing facility's client population and is for use during those hours when pharmacy services are unavailable.

     "Estimated acquisition cost (EAC)" means ((MAA's)) the medical assistance administration's estimate of the price providers generally and currently pay for a drug marketed or sold by a particular manufacturer or labeler.

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

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

     "Expired drug" means a drug for which the shelf life expiration date has been reached.

     "Federal upper limit (FUL)" means the maximum allowable payment set by the ((Health Care Financing Administration ()) Centers for Medicare and Medicaid Services (CMS) (formerly known as HCFA) for a multiple-source drug.

     "Four brand name prescriptions per calendar month limit" means the maximum number of paid prescription claims for brand name drugs that MAA allows for each client in a calendar month without a complete review of the client's drug profile.

     "Generic code number sequence number" means a number used by the medical assistance administration's drug file contractor to group together products that have the same ingredients, route of administration, drug strength, and dosage form. It is applied to all manufacturers and package sizes.

     "Generic drug" means a nonproprietary drug that is required to meet the same bioequivalency tests as the original brand name drug.

     "Inactive ingredient" means a drug component that remains chemically unchanged during compounding but serves as the:

     (1) Necessary vehicle for the delivery of the therapeutic effect; or

     (2) Agent for the intended method or rate of absorption for the drug's active therapeutic agent.

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

     "Less than effective drug" or "DESI" means a drug for which:

     (1) 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

     (2) 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.

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

     "Maximum allowable cost (MAC)" means the maximum amount that ((MAA will)) the medical assistance administration pays for a specific dosage form and strength of a multiple-source drug product.

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

     (1) Which is approved under the federal Food, Drug, and Cosmetic Act; or

     (2) The use of which ((appears in peer-reviewed medical literature; or

     (3) Which is accepted)) is supported by one or more ((of the references listed in)) citations included or approved for inclusion in any of the compendia of drug information, as defined in this chapter.

     "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:

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

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

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

     (1) Two or more manufacturers or labelers; or

     (2) The same manufacturer or labeler:

     (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 ((that identifies the product's manufacturer, dose form and strength, and)). The NDC is composed of digits in 5-4-2 groupings. The first five digits comprise the labeler code assigned to the manufacturer by the Food and Drug Administration (FDA). The second grouping of four digits is assigned by the manufacturer to describe the ingredients, dose form, and strength. The last grouping of two digits describes the package size.

     "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.

     (("Nonprescription drugs" means drugs that may be lawfully sold without a prescription.))

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

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

     "Peer reviewed medical literature" means a research study, report, or findings regarding the specific use of a drug that has been submitted to one or more professional journals, reviewed by experts with appropriate credentials, and subsequently published by a reputable professional journal. A clinical drug study used as the basis for the publication must be a double blind, randomized, placebo or active control study.

     "Pharmacist" means a person licensed in the practice of pharmacy by the state in which the prescription is filled.

     (("Pharmacy research specialist" means a licensed pharmacist employed by MAA.))

     "Pharmacy" means every location licensed by the State Board of Pharmacy in the state where the practice of pharmacy is conducted.

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

     "Practice of pharmacy" means the practice of and responsibility for:

     (1) Accurately interpreting prescription orders;

     (2) Compounding((,)) drugs;

     (3) Dispensing, labeling, administering, and distributing of drugs and devices;

     (((3))) (4) 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))) (5) Monitoring of drug therapy and use;

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

     (((6))) (7) Documenting and maintaining records;

     (((7))) (8) Initiating or modifying 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; and

     (((8))) (9) Participating in drug utilization reviews and drug product selection.

     "Practitioner" means 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 authorized by state law as a practitioner.

     "Preferred drug" means MAA's drug(s) of choice within a selected therapeutic class.

     "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 authorized by state law or rule to prescribe drugs or devices, in the course of the practitioner's professional practice, for a legitimate medical purpose.

     "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.

     "Prior authorization program" means a medical assistance administration (MAA) program, subject to the requirements of 42 U.S.C. 1396r-8 (d)(5), that may require, as a condition of payment, that a drug on MAA's drug file be prior authorized. See WAC 388-530-1200.

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

     "Reconstitution" means the process of returning a single active ingredient, previously altered for preservation and storage, to its approximate original state. Reconstitution is not compounding.

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

     "Risk/benefit ratio" means the result of assessing the side effects of a drug or drug regimen compared to the positive therapeutic outcome of therapy.

     "Single source drug" means a drug produced or distributed under an original new drug application approved by the Food and Drug Administration (FDA).

     "Substitute" means to replace a prescribed drug, with the prescriber's authorization, with:

     (1) An equivalent generic drug product of the identical base or salt as the specific drug product prescribed; or

     (2) A therapeutically equivalent drug other than the identical base or salt.

     "TCS" See "therapeutic consultation service."

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

     "Terminated NDC" means a national drug code (NDC) that is discontinued by the manufacturer for any reason. The NDC may be terminated immediately due to health or safety issues or it may be phased out based on the product's shelf life.

     "Therapeutic alternative" means a drug product that contains a different ((therapeutic agent)) chemical structure than the drug ((in question)) prescribed, but is in the same ((pharmacological)) pharmacologic or therapeutic class and can be expected to have a similar therapeutic effect and adverse reaction profile when administered to patients in a therapeutically equivalent dosage.

     "Therapeutic class" means a group of drugs used for the treatment, remediation, or cure of a specific disorder or disease.

     "Therapeutic consultation service (TCS)" means the prescriber and ((an MAA-designated)) a medical assistance administration (MAA) designated clinical pharmacist jointly review prescribing activity when drug claims for a medical assistance client exceed program limitations.

     "Therapeutically equivalent" means ((chemically dissimilar prescription drugs with)) drug products that contain different chemical structures but have the same efficacy and safety when administered to an individual, as determined by:

     (1) Information from the Food and Drug Administration (FDA);

     (2) Published and peer-reviewed scientific data;

     (3) Randomized controlled clinical trials; ((and)) or

     (4) Other scientific evidence.

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

     "True unit dose delivery" means a method in which each patient's medication is delivered to the nursing facility in quantities sufficient only for the day's required dosage.

     "Unit dose drug delivery" means true unit dose or modified unit dose delivery systems.

     "Usual and customary charge" means the fee that the provider typically charges the general public for the product or service.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-24-066, § 388-530-1050, filed 11/30/01, effective 1/2/02; 01-01-028, § 388-530-1050, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1050, filed 10/9/96, effective 11/9/96.]

     (2) MAA reimburses a provider for medically necessary drugs ((listed in subsection (1)(a) through (e) of this section)) only when the manufacturer has a signed drug rebate agreement with the federal Department of Health and Human Services (DHHS). ((Refer to WAC 388-530-1125 for information on)) Exceptions to the drug rebate requirement are described in WAC 388-530-1125 which describes the drug rebate program. ((Covered drugs))

     (3) MAA covers the following medically necessary drugs, devices, and supplies ((include)):

     (a) Outpatient drugs, generic or brand name.

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

     (i) Is prescribed by a provider with prescribing authority (see exceptions in subsection (4) of this section);

     (ii) Is not excluded from coverage under WAC 388-530-1150;

     (iii) Is a less costly therapeutic alternative; and

     (((ii))) (iv) Does not require prior authorization.

     (c) Drugs requiring prior authorization when:

     (i) Prior authorized by MAA; or

     (ii) They meet MAA's published expedited prior authorization (EPA) criteria and the dispensing pharmacist follows the EPA process ((defined in WAC 388-530-1050)) described in WAC 388-530-1250(4).

     (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)) unless the drug is ((not a terminated drug product)) expired as defined in WAC 388-530-1050.

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

     (g) Family planning)) Drugs and supplies used in conjunction with family planning under subsection (4) of this section and under chapter 388-532 WAC, including drugs dispensed for emergency contraception and nonprescribed OTC contraceptive supplies.

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

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

     (4) MAA covers family planning drugs, devices, and supplies per chapter 388-532 WAC and as follows:

     (a) MAA covers certain over-the-counter (OTC) family planning drugs, devices, and supplies without a prescription when they meet the criteria of WAC 388-530-1200(3); and

     (b) MAA may cover family planning drugs that do not meet the federal drug rebate requirement in WAC 388-530-1125 on a case-by-case basis, under the provisions of subsection (6) of this section.

     (5) MAA determines if certain drugs are medically necessary and 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)) previously dispensed supply is scheduled to be exhausted.

     (6) MAA evaluates requests for drugs, devices, and pharmaceutical supplies that are subject to limitations or other restrictions in this chapter on a case-by-case basis. MAA approves the requested services that are beyond the stated limits or restrictions of this chapter when MAA determines that the services are medically necessary, under subsection (5) of this section and under the standards for covered services in WAC 388-501-0165.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-1100, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1100, filed 10/9/96, effective 11/9/96.]

     (2) Other drugs approved under WAC 388-501-0165.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1125, filed 12/7/00, effective 1/7/01.]

     (a) ((Noncontract drugs,)) Brand or generic drugs, 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, except as described in WAC 388-533-0400(21), smoking cessation for pregnant women.

     (c) Over-the-counter (OTC) drugs((/)) and supplies, ((unless)) except as described under WAC 388-530-1100 (((1)(b), or for 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)) program.

     (e) A drug prescribed for an indication that is not evidence based 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)) MAA pharmacist(s).

     (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 Food and Drug Administration (FDA); or

     (ii) Prescribed for non-FDA approved indications or dosing, unless prior authorized; or

     (iii) Unproven for efficacy or safety.

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

     (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 National Drug Code (NDC) more than two years from the date the NDC is designated obsolete by the manufacturer.

     (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 client's terminal condition.

     (b) Any drug regularly supplied as an integral part of program activity by other public agencies (e.g., immunization vaccines for children).

     (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)) A drug product((s)) after the product's national drug code (NDC) termination date.

     (h) A drug product whose shelf life has expired.

     (3) MAA evaluates ((a)) each request for a noncovered drug ((that is listed as noncovered in this section)) under WAC 388-530-1100(5) and 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)) 388-501-0165.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-1150, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1150, filed 10/9/96, effective 11/9/96.]

     (2) To facilitate the evaluation process for a drug product, a drug manufacturer may send the ((pharmacy research specialist)) MAA pharmacist(s) a written request and the following supporting documentation:

     (a) Background data about the drug;

     (b) Product package information;

     (c) Any pertinent clinical studies; ((and))

     (d) Outcome and effectiveness data using the Academy of Managed Care Pharmacy's drug review submission process; and

     (e) Any additional information the manufacturer considers appropriate.

     (3) ((Evaluation of)) MAA evaluates a drug ((includes)) based on, but ((is)) not limited to, the following criteria:

     (a) ((There is)) Whether the manufacturer has signed a federal drug rebate ((contract)) agreement ((signed by the manufacturer)) except as specified in WAC 388-530-1125;

     (b) Whether the drug is a less-than-effective drug;

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

     (d) ((The)) Whether like drugs are on MAA's drug file ((status of:

     (i) Like drugs;)) list and (((ii))) there are less costly therapeutic alternative drugs;

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

     (f) The drug's ((has a)) potential for abuse; and

     (g) Whether outcome data demonstrate that the drug is cost effective.

     (4) MAA updates and reviews the drug file list as necessary and periodically publishes a list of drugs not requiring prior authorization.

     (5) Manufacturers may seek review of ((formulary)) MAA's prior authorization decisions by writing to ((the MAA medical director)) MAA's chief medical officer.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-1200, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1200, filed 10/9/96, effective 11/9/96.]

     (a) Drugs with a prior authorization indicator on the MAA drug file list;

     (b) Drugs that ((have)) exceed specific ((per-month dose)) dosage or unit limits as indicated by the Food and Drug Administration (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))) Over-the-counter (OTC) contraceptives; or

     (((C))) (B) 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 documentation of the prescriber's medical justification that is communicated to the pharmacy by the prescriber at the time the prescription is filled. The records must be retained for the period specified in WAC 388-502-0020 (1)(c).

     (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)) products of equal effectiveness.

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

     (a) ((High)) Product cost;

     (b) Potential for clinical misuse;

     (c) Narrow therapeutic indication; and

     (d) Safety concerns.

     (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 maximum allowable cost (MAC) for that multiple-source drug, if:

     (a) The pharmacist calls for prior authorization; and

     (b) The prescriber indicates:

     (i) "Dispense as written" ((for)) on the prescription; and

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

     (c) The availability of generic((s)) equivalents in the marketplace is severely curtailed and the price disparity between the brand name EAC and the generic MAC ((is such that)) reimbursement affects clients' ((would be denied)) access to the medication.

     (6) MAA provides a response ((to a request for drugs requiring prior authorization)), by telephone or other telecommunication device, within twenty-four hours of a request for drugs that require prior authorization, if the request is received during normal state business hours. If a provider needs prior authorization to dispense a drug during a weekend or Washington state holiday, the provider may dispense the drug without prior authorization only when:

     (a) Given in an emergency;

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

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

     (7) MAA's prior authorization:

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

     (b) Does not guarantee payment.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-1250, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1250, filed 10/9/96, effective 11/9/96.]

     (a) Estimated acquisition cost (EAC) plus a dispensing fee;

     (b) Maximum allowable cost (MAC) plus a dispensing fee;

     (c) Federal Upper Limit (FUL) plus a dispensing fee;

     (d) Actual acquisition cost (AAC) plus a dispensing fee for drugs purchased under section 340 B of the Public Health Service (PHS) Act and dispensed to medical assistance clients; ((or))

     (e) Automated maximum allowable cost (AMAC) plus a dispensing fee;

     (f) Certified average wholesale price (CAWP) plus a dispensing fee; or

     (g) The provider's usual and customary charge to the non-Medicaid population.

     (2) MAA selects the ((in-state pharmaceutical wholesalers)) sources for pricing information used to set EAC and MAC. These sources may include pharmaceutical wholesalers.

     (3) MAA may solicit assistance from ((representative)) pharmacy providers, ((through their state associations,)) pharmacy benefit managers (PBM), other government agencies, actuaries, and/or other consultants when establishing EAC and/or MAC.

     (4) If the pharmacy provider offers a discount, rebate, promotion or other incentive which directly relates to the reduction of the price of a prescription to the individual non-Medicaid customer, the provider must similarly reduce its charge to MAA for the prescription.

     (5) If a pharmacy gives a product free to the general public, the pharmacy must not submit a claim to MAA when giving the free product to a medical assistance client.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1300, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1300, filed 10/9/96, effective 11/9/96.]

     (((1) No more than once every three years and no less than once every ten years, MAA:))

     (a) ((Takes a minimum sample of two hundred fifty of the top national drug codes (NDCs) paid by MAA, excluding drugs under the MAC program; and

     (b))) When acquisition cost data are made available to MAA by drug wholesalers:

     (i) MAA determines pharmacies' ((average)) acquisition costs for ((these products.

     (2) The pharmacies' average acquisition cost for the products in the NDC sample is based on in-state wholesalers' charges to pharmacy subscribers.

     (3) MAA represents the average)) the top 100 single-source drugs reimbursed by MAA as measured by the total dollars paid for each drug.

     (ii) Establishes the actual acquisition cost (AAC) for each product on the sample list as a percentage of the published average ((published)) wholesale price (AWP), determined for that product by MAA's drug pricing file contractor.

     (((4))) (iii) MAA averages the percentages obtained from the sample, and that average represents the EAC.

     (((5))) (b) When drug wholesalers do not make acquisition cost data available to MAA, MAA may set EAC using acquisition cost information provided, or rates set, by any of the following:

     (i) Audit agencies, federal or state;

     (ii) Other state health care purchasing agencies;

     (iii) Pharmacy benefit managers;

     (iv) Individual pharmacy providers participating in MAA's programs;

     (v) Other third party payers; and/or

     (vi) Actuaries or other consultants.

     (2) MAA establishes EAC as a percentage of AWP, derived by applying a discount to AWP.

     (3) MAA may set EAC for specified drugs or drug categories at a percentage of AWP other than that determined in subsection (((4))) (1)(a) of this section when MAA considers it necessary. MAA ends the exemption when ((it considers)) the necessity no longer exists.

     (((6) MAA pays EAC for a drug with an established MAC when the EAC for the particular drug is lower than the MAC price.

     (7))) The factors MAA considers in setting a rate for a class of drugs under this subsection include, but are not limited to:

     (a) Product cost;

     (b) MAA's documented clinical concerns; and

     (c) MAA's budget limits.

     (4) MAA bases EAC drug reimbursement on the actual package size dispensed.

     (5) MAA uses the EAC as MAA's reimbursement for a drug when the EAC is the lowest of the rates calculated under the methods listed in WAC 388-530-1300(1), or when the conditions of WAC 388-530-1400(3) are met.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1350, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1350, filed 10/9/96, effective 11/9/96.]

     (2) The CAWP is determined by First Data Bank (FDB) through a survey of wholesale prices. FDB reports these prices to states and certifies that they accurately represent the price from wholesalers to retailers for these drugs.

[]

     (2) ((MAA may exclude from MAC selected multiple-source drugs when clinical response significantly differs between brand and generic equivalents.

     (3))) MAA determines the MAC for a multiple-source drug by:

     (a) ((Obtaining copies of in-state wholesalers' product catalogs;

     (b) Identifying)) When drug wholesalers make acquisition cost data available to MAA, MAA:

     (i) Identifies what products are available from ((each in-state)) wholesalers for each MAC drug;

     (((c) Determining the average)) (ii) Determines pharmacy ((subscriber's)) subscribers' approximate acquisition costs for these products;

     (((d) Ranking)) (iii) Ranks the products in descending order by approximate acquisition cost; and

     (((e) Establishing)) (iv) Establishes the MAC at a level which gives ((most)) pharmacists access to ((two)) one product((s)) from a manufacturer with a qualified rebate agreement (see WAC 388-530-1125).

     (b) When drug wholesalers do not make acquisition cost data available to MAA, MAA may set a MAC for a drug in the same manner described in WAC 388-530-1350 (1)(b).

     (((4) MAA may establish a MAC for a drug using the maximum allowable cost set by another third party for that drug.

     (5))) (3) The MAC established for a multiple-source drug does not apply if the written prescription identifies that a specific brand is medically necessary for a particular client. In such cases EAC for the particular brand applies, provided prior authorization is obtained from MAA as specified under WAC 388-530-1250(5), Prior authorization.

     (((6))) (4) Except as provided in subsection (3) of this section, MAA reimburses providers for a multiple-source drug at the lowest of the rates calculated under the methods listed in WAC 388-530-1300(1).

     (5) The MAC established for a multiple-source drug applies to all package sizes of that drug, ((except)) including those identified as unit dose National Drug Codes (NDCs) by the manufacturer(s) of the drug.

     (((7) MAA pays the EAC for a multiple-source product if the EAC for that product is less than the MAC established for the drug.

     (8) The automated maximum allowable cost (AMAC) pricing applies to multiple-source drugs:

     (a) Produced by three or more manufacturers/labelers at least one of which must have a federal drug rebate agreement; and

     (b) Which are not on the MAC list.

     (9) AMAC reimbursement for all products within a generic code number (GCN) sequence is at the EAC of the third lowest priced product in that sequence, or the EAC of the lowest priced drug under a federal rebate agreement in that sequence, whichever is higher.

     (10) For a multiple-source product under AMAC, MAA pays the EAC if the EAC for the multiple-source product is less than the AMAC established for that product.

     (11) MAA recalculates AMAC each time there is a pricing update provided by the drug file contractor to any product in GCN sequences.))

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1400, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1400, filed 10/9/96, effective 11/9/96.]

     (a) Not on the published maximum allowable cost (MAC) or federal upper limit (FUL) lists; and

     (b) Produced by two or more manufacturers/labelers, at least one of which must have a federal drug rebate agreement.

     (2) MAA establishes AMAC as a specified percentage of the published average wholesale price (AWP). MAA may use different percentage discounts from AWP for the estimated acquisition cost (EAC) and AMAC.

     (3) MAA sets the percentage discount from AWP for AMAC reimbursement using any of the information sources identified in WAC 388-530-1350 (1)(b).

     (4) MAA may set AMAC reimbursement at different percentage discounts from AWP for different multiple source drugs. MAA considers the same factors as those in WAC 388-530-1350(3).

     (5) AMAC reimbursement for all products within a generic code number sequence number is at the AMAC determined for the second lowest priced product in that sequence, or the AMAC of the lowest priced drug under a federal rebate agreement.

     (6) MAA recalculates AMAC each time the drug file contractor provides a pricing update to any product in a GCN sequence.

     (7) Except as provided in WAC 388-530-1400(3), MAA reimburses at the lowest of the rates calculated under the methods listed in WAC 388-530-1300(1).

[]

     (2) ((MAA pays the EAC for a multiple source product if the EAC for that product is less than the FUL established for that drug.

     (3))) MAA's maximum payment for multiple-source drugs for which ((HCFA)) CMS has set ((a)) FULs will not exceed, in the aggregate, the prescribed upper limits plus the dispensing fees set by MAA.

     (3) Except as provided in WAC 388-530-1400(3), MAA uses the FUL as MAA's reimbursement rate for the drug when the FUL price is the lowest of the rates calculated under the methods listed in WAC 388-530-1300(1).

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1410, filed 12/7/00, effective 1/7/01.]

     (2) ((Drugs provided or dispensed by other specified providers must be billed using AAC. See WAC 388-530-1700.

     (3) AAC includes allowances or discounts for volume purchases, purchasing cooperatives, and advertising or other promotional allowances.)) Providers dispensing drugs under this section are required to submit their valid MAA provider number(s) to the PHS Health Resources and Services Administration, Office of Pharmacy Affairs. This requirement is to ensure that claims for drugs dispensed under this section and paid by MAA are excluded from the drug rebate claims that are submitted to the manufacturers of the drugs. See WAC 388-530-1125 for information on the drug rebate program.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1425, filed 12/7/00, effective 1/7/01.]

     (((1))) (2) MAA does not pay a dispensing fee for nondrug items, devices, or supplies.

     (3) MAA adjusts the dispensing fee by considering factors including, but not limited to:

     (a) Legislative appropriations for vendor rates;

     (b) Input from provider and/or advocacy groups;

     (c) Input from state-employed or contracted actuaries; and

     (d) Dispensing fees paid by other third-party payers, including, but not limited to, health care plans and other states' Medicaid agencies.

     (((2))) (4) MAA uses a tiered dispensing fee system which reimburses higher volume pharmacies at a lower fee and ((small)) lower volume pharmacies at a higher fee.

     (((3))) (5) MAA uses total annual prescription volume (both Medicaid and non-Medicaid) reported to MAA to determine each pharmacy's dispensing fee tier.

     (a) A pharmacy which fills more than thirty-five thousand prescriptions annually is a high-volume pharmacy. MAA considers hospital-based pharmacies that serve both inpatient and outpatient clients as high-volume pharmacies.

     (b) A pharmacy which fills between fifteen thousand one and thirty-five thousand prescriptions annually is a mid-volume pharmacy.

     (c) A pharmacy which fills fifteen thousand or fewer prescriptions annually is a low-volume pharmacy.

     (((4))) (6) MAA determines a pharmacy's annual total prescription volume as follows:

     (a) MAA sends out a prescription volume survey form to pharmacy providers during the first quarter of the calendar year;

     (b) Pharmacies return completed prescription volume surveys to MAA by the date specified, typically April 15th of each year. Pharmacy providers not responding to the survey by the specified date are assigned to the high volume category;

     (c) Pharmacies must include all prescriptions dispensed from the same physical location in the pharmacy's total prescription count;

     (d) ((Hospital based pharmacies which serve both inpatient and outpatient clients are not required to include hospital inpatient doses/prescriptions in the total volume reported to MAA;

     (e))) MAA considers prescriptions dispensed to nursing facility clients as outpatient prescriptions;

     (((f))) (e) Assignment to a new dispensing fee tier is effective on the first of the month, (typically May 1st of each year) following the date specified by MAA.

     (((5))) (7) A pharmacy may request a change in dispensing fee tier during the interval between the annual prescription volume surveys. The pharmacy must substantiate such a request with documentation showing that the pharmacy's most recent six-month dispensing data, annualized, would qualify the pharmacy for the new tier. If MAA receives the documentation by the twentieth of the month, assignment to a new dispensing fee tier is effective on the first of the following month.

     (((6))) (8) MAA grants general dispensing fee rate increases only when authorized by the legislature. Amounts authorized for dispensing fee increases may be distributed nonuniformly (e.g., tiered dispensing fee based upon volume).

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1450, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1450, filed 10/9/96, effective 11/9/96.]

     (3) MAA does not consider reconstitution to be compounding.

     (a) MAA ((may consider the act of combining two or more active ingredients or the adjustment of therapeutic strengths and/or forms by a pharmacist in the preparation of a prescription to be)) reimburses pharmacists for compounding drugs only if the client's drug therapy needs are unable to be met by commercially available dosage strengths and/or forms of the medically necessary drug.

     (b) The pharmacist must ensure the need for the adjustment of the drug's therapeutic strength and/or form is well documented in the client's file.

     (((2))) (c) The pharmacist must ensure that the ingredients used in a compounded prescription are for an approved use as defined in "medically approved indication" in WAC 388-530-1050.

     (4) MAA requires that each drug ingredient used for a compounded prescription be billed to MAA using its eleven-digit national drug code (NDC) number.

     (5) Compounded prescriptions are reimbursed as follows:

     (a) MAA allows only the lowest cost for each covered ingredient, whether ((EAC, MAC)) that cost is determined by actual acquisition cost (AAC), estimated acquisition cost (EAC), federal upper limit (FUL), maximum allowable cost (MAC), automated maximum allowable cost (AMAC), certified average wholesale price (CAWP), or amount billed.

     (b) MAA applies current prior authorization requirements to drugs used as ingredients in compounded prescriptions, except as provided under subsection (((2)))(5)(c) of this section. MAA denies payment for a drug requiring prior authorization used as an ingredient in a compounded prescription when prior authorization was not obtained.

     (c) MAA may designate selected drugs as not requiring prior authorization when used for compounded prescriptions, but requiring prior authorization for other uses. For the list of selected drugs, refer to ((the pharmacy)) MAA's prescription drug program billing instructions.

     (d) MAA reimburses a dispensing fee as described under WAC 388-530-1450 for:

     (i) Each covered or prior authorized drug ingredient billed separately; and

     (ii) Drugs used in compounding under subsection (((2)))(5)(c) of this section.

     (e) MAA does not pay a separate fee for compounding time.

     (((3) In addition to reimbursement for ingredient and dispensing fees, MAA may set maximum allowable fees, called compounded prescription preparation fees, for special procedures, equipment, or supplies used in compounding prescriptions.

     (a) The pharmacy must note in its records any necessary special procedures, equipment, supplies, or containers used in preparing the compounded prescription.

     (b) MAA adjusts compounded prescription preparation fees by considering factors including, but not limited to:

     (i) Legislative appropriations for vendor rates;

     (ii) Input from provider and/or advocacy groups;

     (iii) Audit findings regarding costs of compounding equipment and supplies, as specified in subsection (4) of this section; and

     (iv) Compounded prescription preparation fees paid by other third-party payers, including but not limited to health care plans and other states' Medicaid agencies.

     (c) MAA does not reimburse compounded prescription preparation fees for infusion products; MAA reimbursement for home infusion and other intravenous admixtures is limited to ingredient costs and dispensing fees only.

     (d) MAA reimburses pharmacies for only one preparation fee for each compounded prescription.

     (e) Pharmacies bill MAA for compounded prescription preparation fees using state-assigned drug codes, which MAA publishes periodically in the pharmacy billing instructions.

     (f) A separate dispensing fee does not apply to the state assigned drug preparation fee codes.

     (4) MAA may audit selected pharmacies dispensing compounded prescriptions, to determine acquisition or estimated costs of equipment and/or supplies used in compounding.)) (6) MAA requires pharmacists to document the need for each inactive ingredient added to the compounded prescription. MAA limits reimbursement to those that meet the following criteria. To be reimbursed by MAA, each inactive ingredient must be:

     (a) A necessary component of a compounded drug; and

     (b) Listed in MAA's prescription drug program billing instructions.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1500, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1500, filed 10/9/96, effective 11/9/96.]

     (2) Unit dose delivery systems may be either true or modified unit dose.

     (3) MAA pays pharmacies that provide unit dose delivery service MAA's highest allowable dispensing fee for each unit dose prescription dispensed to clients in nursing facilities. MAA reimburses ingredient costs for drugs under unit dose systems ((at the appropriate MAC, FUL, AAC, EAC, or billed charge, whichever is lowest. MAA reimburses unit dose providers for drugs dispensed in manufacturers' unit dose packaging at the EAC for the specific unit dose NDCs)) as described in WAC 388-530-1500 (5)(a).

     (4) MAA pays a pharmacy that dispenses drugs in bulk containers or multi-dose form to clients in nursing facilities the regular dispensing fee applicable to the pharmacy's total annual prescription volume tier. Drugs MAA considers not deliverable in unit dose form include, but are not limited to, liquids, creams, ointments, ophthalmic and otic solutions. MAA reimburses ingredient costs ((for such drugs at the lowest of MAC, FUL, AAC, EAC, or billed charge)) as described in WAC 388-530-1500 (5)(a).

     (5) MAA pays a pharmacy that dispenses drugs prepackaged by the manufacturer in unit dose form to clients in nursing facilities the regular dispensing fee applicable ((to that pharmacy's total annual prescription volume tier)) under WAC 388-530-1450(5). MAA reimburses ingredient costs ((at the EAC applicable to the unit dose NDC)) for drugs prepackaged by the manufacturer in unit dose form as described in WAC 388-530-1500 (5)(a).

     (6) MAA limits its coverage and payment for manufacturer-designated unit dose packaging to the following conditions:

     (a) The drug is a single source drug and a multidose package for the drug is not available;

     (b) The drug is a multiple source drug but there is no other multidose package available among the drug's generic equivalents; or

     (c) The manufacturer-designated unit dose package is the most cost-effective package available or it is the least costly alternative form of the drug.

     (7) MAA reimburses a pharmacy provider for manufacturer-designated unit dose drugs dispensed to clients not residing in nursing facilities only when such drugs:

     (a) Are available in the marketplace only in manufacturer-designated unit dose packaging; and

     (b) Would otherwise have been covered outpatient drugs. The unit dose dispensing fee does not apply in such cases. MAA pays the pharmacy the dispensing fee applicable to the pharmacy's total annual prescription volume tier.

     (((7))) (8) MAA may pay for unit dose delivery systems for developmentally disabled (DD) clients residing in approved community living arrangements.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1550, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1550, filed 10/9/96, effective 11/9/96.]

     (a) Notify MAA in writing of its intent to provide unit dose service;

     (b) Identify the nursing facility(ies) to be served;

     (c) Indicate the approximate date unit dose service to the facility(ies) will commence; and

     (d) ((Sign an agreement to)) Follow department requirements for unit dose reimbursement.

     (2) Under a unit dose delivery system, a pharmacy must bill only for the number of drug units actually used by the medical assistance client in the nursing facility, except as provided in subsections (3) ((and)), (4), and (5) of this section. It is the unit dose pharmacy provider's responsibility to coordinate with nursing facilities to ensure that the unused drugs the pharmacy dispensed to MAA clients are returned to the pharmacy for credit.

     (3) The pharmacy must submit an adjustment form or claims reversal of the charge to MAA for the cost of all unused drugs returned to the pharmacy from the nursing facility on or before the sixtieth day following the date the drug was dispensed, except as provided in subsection (((4))) (5) of this section. Such adjustment must conform to the nursing facility's monthly log as described in subsection (((6))) (7) of this section.

     (4) MAA pays a unit dose provider a dispensing fee when a provider-packaged unit dose prescription is returned, in its entirety, to the pharmacy. A dispensing fee is not paid if the returned prescription is for a drug with a manufacturer-designated unit dose national drug code (NDC). In addition to the dispensing fee paid under this subsection, the provider may bill MAA one unit of the tablet or capsule but must credit MAA for the remainder of the ingredient costs for the returned prescription.

     (5) Unit dose providers do not have to credit MAA for federally designated schedule two drugs which are returned to the pharmacy. These returned drugs must be disposed of according to federal regulations.

     (((5))) (6) Pharmacies must not charge clients or MAA a fee for repackaging a client's bulk medications in unit dose form. The costs of repackaging are the responsibility of the nursing facility when the repackaging is done:

     (a) To conform with a nursing facility's drug delivery system; or

     (b) For the nursing facility's convenience.

     (((6))) (7) The pharmacy must maintain detailed records of medications dispensed under unit dose delivery systems. The pharmacy must keep a monthly log for each nursing facility served, including but not limited to the following information:

     (a) Facility name and address;

     (b) Client's name and patient identification code (PIC);

     (c) Drug name/strength;

     (d) National Drug Code (NDC);

     (e) Quantity and date dispensed;

     (f) Quantity and date returned;

     (g) Value of returned drugs or amount credited;

     (h) Explanation for no credit given or nonreusable returns; and

     (i) Prescription number.

     (((7))) (8) Upon MAA's request, the pharmacy must submit copies of the logs referred to in subsection (((6))) (7) of this section.

     (((8))) (9) When the pharmacy submits the completed annual prescription volume survey to MAA, it must include an updated list of all nursing facilities currently served under unit dose systems.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1600, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.04.050, 74.08.090, 42 CFR 447.333 and Attachment 4.19-B, Page 2-b of the State Plan under Title XIX of the Social Security Act. 98-14-005, § 388-530-1600, filed 6/18/98, effective 7/19/98. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1600, filed 10/9/96, effective 11/9/96.]

     (a) Have one or more of the following representative disease conditions:

     (i) Alzheimer's disease;

     (ii) Blood clotting disorders;

     (iii) Cardiac arrhythmia;

     (iv) Congestive heart failure;

     (v) Depression;

     (vi) Diabetes;

     (vii) Epilepsy;

     (viii) HIV/AIDS;

     (ix) Hypertension;

     (x) Schizophrenia; or

     (xi) Tuberculosis.

     (b) Concurrently consume two or more prescribed medications for chronic medical conditions, that are dosed at three or more intervals per day; or

     (c) Have demonstrated a pattern of noncompliance that is potentially harmful to ((their)) the client's health. The client's pattern of noncompliance with the prescribed drug regimen must be fully documented in the provider's file.

     (2) Compliance packaging services include:

     (a) Reusable hard plastic containers of any type (e.g., medisets); and

     (b) Nonreusable compliance packaging devices (e.g., blister packs).

     (3) MAA pays a filling fee and reimburses pharmacies for the compliance packaging device and/or container. The frequency of fills and number of payable compliance packaging devices per client is subject to limits specified by MAA. MAA does not pay filling or preparation fees for blister packs.

     (4) Pharmacies must use the HCFA-1500 claim form to bill MAA for compliance packaging services.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1625, filed 12/7/00, effective 1/7/01.]

     (2) MAA bases reimbursement of pharmaceutical items or supplies that are not payable through the POS on MAA-published fee schedules.

     (3) MAA uses any or all of the following methodologies to set the maximum allowable reimbursement rate for ((a)) pharmaceutical ((device/supply)) items, devices, and supplies:

     (a) A pharmacy provider's acquisition cost. Upon review of the claim, MAA may require an invoice which must show the name of the ((drug)) item, the manufacturer, ((drug strength, and cost)) the product description, the quantity, and the cost including any free goods associated with the invoice;

     (b) Medicare's reimbursement for the item; or

     (c) A specified discount off the item's list price or manufacturer's suggested retail price (MSRP).

     (4) MAA does not pay a dispensing fee for nondrug items, devices, or supplies. See WAC 388-530-1450(2).

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1650, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1650, filed 10/9/96, effective 11/9/96.]

     (1) MAA reimburses actual acquisition cost (AAC) to a physician or ARNP for a covered drug (oral, topical or injectable) prepared or packaged for individual use and provided or administered to a client during an office visit. When the cost of the drug provided or administered to the client exceeds the established fee, the physician or ARNP may submit to MAA a photocopy of the invoice for the actual drug cost. The invoice must show the name of the drug, the manufacturer, the National Drug Code (NDC), drug strength, quantity, and cost.

     (2) MAA reimburses drugs and supplies provided to clients by local health departments according to its established fee schedules.

     (3) MAA does not reimburse providers for the cost of vaccines obtained through the state department of health (DOH); MAA does pay physicians and ARNPs a fee for administering the vaccine.

     (4) MAA reimburses family planning clinics:

     (a) For oral contraceptives, the lesser of the family planning clinic's certified full fee or MAA's maximum allowable fee per cycle of birth control pills. The certified full fee is the clinic's acquisition cost for each cycle of birth control pills, as reported annually by the clinic to DOH;

     (b) For contraceptive supplies and devices, the clinic's actual acquisition cost or MAA's maximum allowable fee, whichever is specified by MAA; and

     (c) For other drugs, supplies, and devices, according to MAA's established fee schedules.

     (5) MAA may request family planning clinics and other nonpharmacy providers to submit an invoice for the actual cost of the drug, supply, or device billed. If an invoice is requested, the invoice must show the:

     (a) Name of the drug, supply, or device((, the));

     (b) Drug or product manufacturer((,));

     (c) NDC of the product(s);

     (d) Drug strength((, and quantity or));

     (e) Product description ((and));

     (f) Quantity((,)); and

     (g) Cost, including any free goods associated with the invoice.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-029, § 388-530-1700, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1700, filed 10/9/96, effective 11/9/96.]

     (2) Except as specified under MAA's managed care contracts, ((the medical assistance administration ())MAA(())) does not reimburse providers for any drugs or pharmaceutical supplies provided to clients who have pharmacy benefits under MAA-contracted managed care plans. The managed care plan is responsible for payment.

     (((2))) (3) The following definitions apply to this section:

     (a) "Closed pharmacy network" means an arrangement made by an insurer which restricts prescription coverage to an exclusive list of pharmacies. This arrangement prohibits the coverage and/or payment of prescriptions provided by a pharmacy that is not included on the exclusive list.

     (b) "Private point-of-sale (POS) authorization system" means an insurer's system, other than the MAA POS system, which requires that coverage be verified by or submitted to the insurer's agent for authorization at the time of service and at the time the prescription is filled.

     (((3))) (4) This subsection applies to MAA clients who have a third-party resource that is a managed care entity other than an MAA-contracted plan, or have other insurance that requires the use of "closed pharmacy networks" or "private point-of-sale authorization." MAA will not pay pharmacies for prescription drug claims until the pharmacy provider submits an explanation of benefits from the private insurance that demonstrates that the pharmacy provider has complied with the terms of the third-party's coverage.

     (a) If the private insurer pays a fee based on the incident of care, the pharmacy provider must file a claim with MAA consistent with MAA's billing requirements.

     (b) If the private insurer pays the pharmacy provider a monthly capitation fee for all prescription costs related to the client, the pharmacy provider must submit a claim to MAA for the amount of the client copayment, coinsurance, and/or deductible. MAA pays the provider the lesser of:

     (i) The billed amount; or

     (ii) MAA's maximum allowable fee for the prescription.

     (((4))) (5) For clients eligible for both Medicare and medical assistance, MAA reimburses providers for:

     (a) An amount up to MAA's maximum allowable fee for drugs Medicare does not cover, but MAA ((does)) covers; or

     (b) Deductible and/or coinsurance amounts up to Medicare's or MAA's maximum allowable fee, whichever is less, for drugs Medicare and MAA cover; or

     (c) Deductible and/or coinsurance amounts for clients under the qualified Medicare beneficiary (QMB) program for drugs Medicare ((does)) covers but MAA does not cover.

[Statutory Authority: RCW 74.08.090, 74.09.035. 00-14-071, § 388-530-1750, filed 7/5/00, effective 8/5/00. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1750, filed 10/9/96, effective 11/9/96.]

     (a) Use the appropriate department claim form or electronic billing specifications; ((and))

     (b) Include the actual eleven-digit National Drug Code (NDC) number of the product dispensed; and

     (c) Bill MAA using metric decimal quantities which is the National Council for Prescription Drug Programs (NCPDP) billing unit standard.

     (2) When billing drugs requiring authorization, providers must insert the authorization number in the appropriate data field on the drug claim.

     (3) When billing drugs under the expedited authorization process, providers must insert the authorization number which includes the corresponding criteria code(s) in the appropriate data field on the drug claim.

     (4) Pharmacy services for clients on restriction under WAC 388-501-0135 must be prescribed by the client's primary care provider and are paid only to the client's primary pharmacy, except in cases of:

     (a) Emergency;

     (b) Family planning services; or

     (c) Services properly referred from the client's assigned pharmacy or physician/ARNP.

[Statutory Authority: RCW 74.04.050 and 74.08.090. 00-01-088, § 388-530-1800, filed 12/14/99, effective 1/14/00. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1800, filed 10/9/96, effective 11/9/96.]

     (1) The DUE council ((must)):

     (a) ((Have)) Has a minimum of eight and a maximum of ten members, representing 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)) Is 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

     (c) Includes an advanced registered nurse practitioner and a physician((s)) assistant.

     (2) The DUE council meets periodically to:

     (a) Advise 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, 74.04.050. 01-01-028, § 388-530-1850, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1850, filed 10/9/96, effective 11/9/96.]

     (a) A prospective drug utilization review (Pro-DUR) that requires all pharmacy providers to:

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

     (ii) Screen for potential drug therapy problems; and

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

     (b) A retrospective drug utilization review (Retro-DUR), 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) Requiring the provider to maintain specific documentation in addition to the normal documentation requirements regarding the provider's dispensing or billing actions;

     (c) Recouping the payment for the drug(s); and/or

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

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-1900, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-21-031, § 388-530-1900, filed 10/9/96, effective 11/9/96.]

     (2) All pharmacy drug claims processed through the POS system undergo a system-facilitated prospective drug utilization review (Pro-DUR) screening as a complement to the Pro-DUR screening required of pharmacists.

     (3) ((MAA selects national council for prescription data processing (NCPDP) codes for pharmacy provider use in overriding MAA POS system alert messages.

     (4))) If the MAA POS system identifies a potential drug therapy problem during Pro-DUR screening, a message will alert the pharmacy provider indicating the type of potential problem.

     (((a))) The alerts ((to)) regarding possible drug therapy problems include, but are not limited to:

     (((i))) (a) Therapeutic duplication;

     (((ii))) (b) Duration of therapy exceeds the recommended maximum period;

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

     (((iv))) (d) Drug disease precaution;

     (((v))) (e) High dose;

     (((vi))) (f) Ingredient duplication;

     (((vii))) (g) Drug-to-client age conflict;

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

     (((ix))) (i) 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))) (4) MAA provides pharmacy providers with a list of codes from which to choose in overriding MAA POS system alert messages. The override codes come from the national council for prescription drug programs (NCPDP).

     (5) The dispensing pharmacist evaluates the potential drug therapy conflict and chooses one of the following:

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

     (b) If the conflict is not resolved, MAA requires prior authorization. This includes all claims for which an alert message is triggered in the POS system and an NCPDP override code is not appropriate.

     (6) MAA requires providers to retain documentation of the justification for the use of payment system override codes as described in subsections (4) and (5) of this section. MAA requires the documentation be retained for the same period as that described in WAC 388-502-0020.

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

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-1950, filed 12/7/00, effective 1/7/01. Statutory Authority: RCW 74.08.090. 96-08-018 (Order 3960), § 388-530-1950, filed 3/26/96, effective 4/26/96.]

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

     (b) Meets the same criteria MAA requires for in-state pharmacy providers.

     (2) MAA considers pharmacies located in bordering areas listed in WAC ((388-501-075)) 388-501-0175 the same as in-state pharmacies.

[Statutory Authority: RCW 74.08.090, 74.04.050. 01-01-028, § 388-530-2050, filed 12/7/00, effective 1/7/01; 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.]

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