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

     Reviser's note: The material contained in this filing exceeded the page-count limitations of WAC 1-21-040 for appearance in this issue of the Register. It will appear in the 02-19 issue of the Register.

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