Notice of Hearing: Reconsideration of Disapproval of Arkansas State Plan Amendment (SPA) 07-024, 62997-62999 [E8-25196]
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Federal Register / Vol. 73, No. 205 / Wednesday, October 22, 2008 / Notices
Place: Hilton Washington Embassy Row,
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[FR Doc. E8–25122 Filed 10–21–08; 8:45 am]
BILLING CODE 4163–18–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
[Document Identifier: CMS–R–137]
Agency Information Collection
Activities: Proposed Collection;
Comment Request
Centers for Medicare &
Medicaid Services, Department of
Health and Human Services.
In compliance with the requirement
of section 3506(c)(2)(A) of the
Paperwork Reduction Act of 1995, the
Centers for Medicare & Medicaid
Services (CMS) is publishing the
following summary of proposed
collections for public comment.
Interested persons are invited to send
comments regarding this burden
estimate or any other aspect of this
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AGENCY:
VerDate Aug<31>2005
17:50 Oct 21, 2008
Jkt 217001
collection of information, including any
of the following subjects: (1) The
necessity and utility of the proposed
information collection for the proper
performance of the agency’s functions;
(2) the accuracy of the estimated
burden; (3) ways to enhance the quality,
utility, and clarity of the information to
be collected; and (4) the use of
automated collection techniques or
other forms of information technology to
minimize the information collection
burden.
1. Type of Information Collection
Request: Extension of a currently
approved collection; Title of
Information Collection: Internal
Revenue Service (IRS)/Social Security
Administration (SSA)/Centers for
Medicare and Medicaid Services (CMS)
Data Match and Supporting Regulations
in 42 CFR 411.20–491.206 Use:
Medicare Secondary Payer (MSP) is
essentially the same concept known in
the private insurance industry as
coordination of benefits; it refers to
those situations where Medicare
assumes a secondary payer role to
certain types of private insurance for
covered services provided to a Medicare
beneficiary.
Congress sought to reduce the losses
to the Medicare program by requiring in
42 U.S.C. 1395y(b)(5) that the Internal
Revenue Service (IRS), the Social
Security Administration (SSA), and
CMS perform an annual data match (the
IRS/SSA/CMS Data Match, or ‘‘Data
Match’’ for short). CMS uses the
information obtained through Data
Match to contact employers concerning
possible application of the MSP
provisions by requesting information
about specifically identified employees
(either a Medicare beneficiary or the
working spouse of a Medicare
beneficiary). This statutory data match
and employer information collection
activity enhances CMS’s ability to
identify both past and present MSP
situations. Form Number: CMS–R–137
(OMB# 0938–0763); Frequency:
Annually; Affected Public: Business or
other for-profit, not-for-profit
institutions, Farms, State, Local or
Tribal Governments; Number of
Respondents: 326,597; Total Annual
Responses: 326,597; Total Annual
Hours: 1,900,795.
To obtain copies of the supporting
statement and any related forms for the
proposed paperwork collections
referenced above, access CMS’ Web site
at https://www.cms.hhs.gov/
PaperworkReductionActof1995, or Email your request, including your
address, phone number, OMB number,
and CMS document identifier, to
Paperwork@cms.hhs.gov, or call the
PO 00000
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62997
Reports Clearance Office on (410) 786–
1326.
In commenting on the proposed
information collections please reference
the document identifier or OMB control
number. To be assured consideration,
comments and recommendations must
be submitted in one of the following
ways by December 22, 2008:
1. Electronically. You may submit
your comments electronically to https://
www.regulations.gov. Follow the
instructions for ‘‘Comment or
Submission’’ or ‘‘More Search Options’’
to find the information collection
document(s) accepting comments.
2. By regular mail. You may mail
written comments to the following
address: CMS, Office of Strategic
Operations and Regulatory Affairs,
Division of Regulations Development,
Attention: Document Identifier/OMB
Control Number llll, Room C4–26–
05, 7500 Security Boulevard, Baltimore,
Maryland 21244–1850.
Dated: October 10, 2008.
Michelle Shortt,
Director, Regulations Development Group,
Office of Strategic Operations and Regulatory
Affairs.
[FR Doc. E8–25201 Filed 10–21–08; 8:45 am]
BILLING CODE 4120–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES (HHS)
Centers for Medicare & Medicaid
Services
Notice of Hearing: Reconsideration of
Disapproval of Arkansas State Plan
Amendment (SPA) 07–024
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Notice of hearing.
AGENCY:
SUMMARY: This notice announces an
administrative hearing to be held on
December 9, 2008, at the CMS Dallas
Regional Office, 1301 Young Street,
Suite 833, Room 1196, Dallas, Texas
75202, to reconsider CMS’ decision to
disapprove Arkansas SPA 07–024.
CLOSING DATE: Requests to participate in
the hearing as a party must be received
by the presiding officer by November 6,
2008.
FOR FURTHER INFORMATION CONTACT:
Benjamin Cohen, Presiding Officer,
CMS, 2520 Lord Baltimore Drive, Suite
L, Baltimore, Maryland 21244,
Telephone: (410) 786–3169.
SUPPLEMENTARY INFORMATION:
This notice announces an
administrative hearing to reconsider
CMS’ decision to disapprove Arkansas
SPA 07–024 which was submitted on
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sroberts on PROD1PC70 with NOTICES
62998
Federal Register / Vol. 73, No. 205 / Wednesday, October 22, 2008 / Notices
January 18, 2008, and disapproved on
August 19, 2008.
Under this SPA, the State would
increase the dispensing fee from $5.51
to $8.68 for brand name prescription
drugs. The dispensing fee for generic
drugs would increase to $11.68, an
increase from $5.51 for drugs with a
maximum allowable cost (MAC) limit
and from $7.51 for drugs without a MAC
limit. The dispensing fee for generic
drugs would be further increased to
$12.68 if there is a 2.3 percent increase
in the proportion of total claims
dispensed as generic drugs. CMS was
unable to approve this SPA because it
does not comply with section
1902(a)(30)(A) of the Social Security Act
(the Act) and the longstanding
requirements of Federal regulations
(previously codified at 42 CFR 447.331
and at 42 CFR 447.332), which specify
that the State must have a reasonable
dispensing fee.
Section 1902(a)(30)(A) of the Act
requires that States have methods and
procedures to assure that payment rates
are consistent with efficiency, economy,
and quality of care. Section
1902(a)(30)(A) and longstanding
requirements of Federal regulations
(previously codified at 42 CFR 447.331
and 42 CFR 447.332) provide that
payments for drugs are to be based on
the ingredient cost of the drug and a
reasonable dispensing fee.
In support of its proposal, the State
submitted survey findings dated
February 2, 2007, performed by
MENTORx that show the median
dispensing cost is $9.25 for all
pharmacies with a spread of $4.44
between the 20th percentile value
($7.45) and the 80th percentile value
($11.89). The study looked at the
difference in dispensing costs between
independent and chain pharmacies, but
not between brand and generic drugs.
The hearing will involve the
following issues:
• The MENTORx survey failed to
present supporting evidence for the
State’s determination of separate
dispensing fees for brand and generic
prescriptions and the State has failed to
provide us with sufficient evidence to
demonstrate that the separate
dispensing fee for brand name and
generic prescription drugs is reasonable.
• MENTORx recommended the 80th
percentile ($11.89) be used as the
dispensing fee for all prescriptions.
While the State did not follow this
recommendation, it did not adequately
explain why it chose the dispensing fee
for brand name drugs based on the 40th
percentile value ($8.68) and the initial
dispensing fee for generics based
slightly below the 80th percentile value
VerDate Aug<31>2005
17:50 Oct 21, 2008
Jkt 217001
($11.89). The State’s current dispensing
fee of $5.51 is one of the highest in the
Nation among State Medicaid programs.
The proposed dispensing fee for generic
drugs would be the highest in the
Nation among State Medicaid programs
and would be the largest variance in
dispensing fees between brand and
generic drugs. Accordingly, the State
failed to adequately explain why a
dispensing fee slightly below the 80th
percentile value would not result in
most pharmacies being overpaid to
dispense generic drugs. Therefore, CMS
did not believe that the State
demonstrated why this is reasonable.
• Despite the fact that the generic
dispensing fee was set at the maximum
cost in the survey, the State did not
adequately explain why it would further
increase the generic fee above the 80th
percentile to $12.68. While the State
claimed that increasing the dispensing
fee would be budget neutral based on a
2.3 percent increase in the proportion of
total claims dispensed as generic drugs,
it did not explain why a further
incentive from the current $2
differential to a $4 differential was
reasonable.
• In response to our formal concerns,
the State indicated that data do not exist
to differentiate dispensing cost of brand
versus generic drugs. The State
indicated that the intent of the proposed
dispensing fee is to encourage the use of
less costly generics, and thus avoid the
higher ingredient reimbursement of a
brand. However, the State failed to
consider the ingredient cost of drugs as
well as the cost of dispensing, to ensure
that both are being paid appropriately.
To increase the dispensing fee without
considering the ingredient cost payment
so that it accurately estimates
acquisition cost results in an overall
payment that is inconsistent with the
requirement of the statute that payments
be consistent with efficiency and
economy.
Section 1116 of the Act and Federal
regulations at 42 CFR Part 430, establish
Department procedures that provide an
administrative hearing for
reconsideration of a disapproval of a
State plan or plan amendment. CMS is
required to publish a copy of the notice
to a State Medicaid agency that informs
the agency of the time and place of the
hearing, and the issues to be considered.
If we subsequently notify the agency of
additional issues that will be considered
at the hearing, we will also publish that
notice.
Any individual or group that wants to
participate in the hearing as a party
must petition the presiding officer
within 15 days after publication of this
notice, in accordance with the
PO 00000
Frm 00050
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Sfmt 4703
requirements contained at 42 CFR
430.76(b)(2). Any interested person or
organization that wants to participate as
amicus curiae must petition the
presiding officer before the hearing
begins in accordance with the
requirements contained at 42 CFR
430.76(c). If the hearing is later
rescheduled, the presiding officer will
notify all participants.
The notice to Arkansas announcing an
administrative hearing to reconsider the
disapproval of its SPA reads as follows:
Mr. Breck Hopkins, Chief Counsel, Arkansas
Department of Human Services, P.O. Box
1437, Slot S–260, Little Rock, AR 72203–
1437.
Dear Mr. Hopkins: I am responding to your
request for reconsideration of the decision to
disapprove the Arkansas State plan
amendment (SPA) 07–024, which was
submitted on January 18, 2008, and
disapproved on August 19, 2008.
Under this SPA, the State proposed to
increase the dispensing fee from $5.51 to
$8.68 for brand name prescription drugs. The
dispensing fee for generic drugs would
increase to $11.68, an increase from $5.51 for
drugs with a maximum allowable cost (MAC)
limit and from $7.51 for drugs without a
MAC limit. The dispensing fee for generic
drugs would be further increased to $12.68
if there is a 2.3 percent increase in the
proportion of total claims dispensed as
generic drugs. I was unable to approve this
SPA because it does not comply with section
1902(a)(30)(A) of the Social Security Act (the
Act) and the longstanding requirements of
Federal regulations (previously codified at 42
CFR 447.331 and at 42 CFR 447.332), which
specify that the State must have a reasonable
dispensing fee.
Section 1902(a)(30)(A) of the Act requires
that States have methods and procedures to
assure that payment rates are consistent with
efficiency, economy, and quality of care.
Section 1902(a)(30)(A) and longstanding
requirements of Federal regulations
(previously codified at 42 CFR 447.331 and
42 CFR 447.332) provide that payments for
drugs are to be based on the ingredient cost
of the drug and a reasonable dispensing fee.
In support of its proposal, the State
submitted survey findings dated February 2,
2007, performed by MENTORx that show the
median dispensing cost is $9.25 for all
pharmacies with a spread of $4.44 between
the 20th percentile value ($7.45) and the 80th
percentile value ($11.89). The study looked
at the difference in dispensing costs between
independent and chain pharmacies, but not
between brand and generic drugs.
The hearing will involve the following
issues:
• The MENTORx survey failed to present
supporting evidence for the State’s
determination of separate dispensing fees for
brand and generic prescriptions and the State
has failed to provide us with sufficient
evidence to demonstrate that the separate
dispensing fee for brand name and generic
prescription drugs is reasonable.
• MENTORx recommended the 80th
percentile ($11.89) be used as the dispensing
E:\FR\FM\22OCN1.SGM
22OCN1
62999
Federal Register / Vol. 73, No. 205 / Wednesday, October 22, 2008 / Notices
fee for all prescriptions. While the State did
not follow this recommendation, it did not
adequately explain why it chose the
dispensing fee for brand name drugs based
on the 40th percentile value ($8.68) and the
initial dispensing fee for generics based
slightly below the 80th percentile value
($11.89). The State’s current dispensing fee of
$5.51 is one of the highest in the Nation
among State Medicaid programs. The
proposed dispensing fee for generic drugs
would be the highest in the Nation among
State Medicaid programs and would be the
largest variance in dispensing fees between
brand and generic drugs. Accordingly, the
State failed to adequately explain why a
dispensing fee slightly below the 80th
percentile value would not result in most
pharmacies being overpaid to dispense
generic drugs. Therefore, we do not believe
that the State has demonstrated why this is
reasonable.
• Despite the fact that the generic
dispensing fee was set at the maximum cost
in the survey, the State did not adequately
explain why it would further increase the
generic fee above the 80th percentile to
$12.68. While the State claimed that
increasing the dispensing fee would be
budget neutral based on a 2.3 percent
increase in the proportion of total claims
dispensed as generic drugs, it did not explain
why a further incentive from the current $2
differential to a $4 differential was
reasonable.
• In response to our formal concerns, the
State indicated that data do not exist to
differentiate dispensing cost of brand versus
generic drugs. The State indicated that the
intent of the proposed dispensing fee is to
encourage the use of less costly generics, and
thus avoid the higher ingredient
reimbursement of a brand. However, the
State failed to consider the ingredient cost of
drugs as well as the cost of dispensing, to
ensure that both are being paid appropriately.
To increase the dispensing fee without
considering the ingredient cost payment so
that it accurately estimates acquisition cost
results in an overall payment that is
inconsistent with the requirement of the
statute that payments be consistent with
efficiency and economy.
I am scheduling a hearing on your request
for reconsideration to be held on December
9, 2008, at the CMS Dallas Regional Office,
1301 Young Street, Suite 833, Room 1196,
Dallas, Texas 75202, in order to reconsider
the decision to disapprove SPA 07–024. If
this date is not acceptable, we would be glad
to set another date that is mutually agreeable
to the parties. The hearing will be governed
by the procedures prescribed by Federal
regulations at 42 CFR Part 430.
I am designating Mr. Benjamin Cohen as
the presiding officer. If these arrangements
present any problems, please contact the
presiding officer at (410) 786–3169. In order
to facilitate any communication which may
be necessary between the parties to the
hearing, please notify the presiding officer to
indicate acceptability of the hearing date that
has been scheduled and provide names of the
individuals who will represent the State at
the hearing.
Sincerely,
Kerry Weems,
Acting Administrator.
Section 1116 of the Social Security
Act (42 U.S.C. 1316; 42 CFR 430.18)
(Catalog of Federal Domestic Assistance
program No. 13.714, Medicaid Assistance
Program.)
Dated: October 16, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare
& Medicaid Services.
[FR Doc. E8–25196 Filed 10–22–08; 8:45 am]
BILLING CODE 4120–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Administration for Children and
Families
Submission for OMB Review;
Comment Request
Title: Annual Statistical Report on
Children in Foster Homes and Children
in Families Receiving Payment in
Excess of the Poverty Income Level from
a State Program Funded Under Part A of
Title IV of the Social Security Act.
OMB No.: 0970–0004.
Description: The Department of
Health and Human Services is required
to collect these data under section 1124
of Title I of the Elementary and
Secondary Education Act, as amended
by Public Law 103–382. The data are
used by the U.S. Department of
Education for allocation of funds for
programs to aid disadvantaged
elementary and secondary students.
Respondents include various
components of State Human Service
agencies.
Respondents: The 52 respondents
include the 50 States, the District of
Columbia, and Puerto Rico.
ANNUAL BURDEN ESTIMATES
Number of respondents
Number of responses per
respondent
Average burden hours per
response
Total burden
hours
Annual Statistical Report on Children in Foster Homes and Children Receiving Payments in Excess of the Poverty Level From a State Program
Funded Under Part A of Title IV of the Social Security Act ........................
sroberts on PROD1PC70 with NOTICES
Instrument
52
1
264.35
13,746.20
Estimated Total Annual Burden
Hours: 13,746.20.
Additional Information: Copies of the
proposed collection may be obtained by
writing to the Administration for
Children and Families, Office of
Administration, Office of Information
Services, 370 L’Enfant Promenade, SW.,
Washington, DC 20447, Attn: ACE
Reports Clearance Officer. All requests
should be identified by the title of the
information collection. E-mail address:
infocollection@acf.hhs.gov.
OMB Comment: OMB is required to
make a decision concerning the
collection of information between 30
and 60 days after publication of this
document in the Federal Register.
VerDate Aug<31>2005
17:50 Oct 21, 2008
Jkt 217001
Therefore, a comment is best assured of
having its full effect if OMB receives it
within 30 days of publication. Written
comments and recommendations for the
proposed information collection should
be sent directly to the following: Office
of Management and Budget, Paperwork
Reduction Project, Fax: 202–395–6974,
Attn: Desk Officer for the
Administration for Children and
Families.
Date: October 15, 2008.
Janean Chambers,
Reports Clearance Officer.
[FR Doc. E8–25038 Filed 10–21–08; 8:45 am]
DEPARTMENT OF HOMELAND
SECURITY
U.S. Citizenship and Immigration
Services
Agency Information Collection
Activities: Form I–539, Extension of an
Existing Information Collection;
Comment Request
30-Day Notice of Information
Collection Under Review: Form I–539,
Application to Extend/Change
Nonimmigrant Status; OMB Control No.
1615–0003.
ACTION:
BILLING CODE 4184–01–M
PO 00000
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]]>Agencies
[Federal Register Volume 73, Number 205 (Wednesday, October 22, 2008)]
[Notices]
[Pages 62997-62999]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-25196]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
Centers for Medicare & Medicaid Services
Notice of Hearing: Reconsideration of Disapproval of Arkansas
State Plan Amendment (SPA) 07-024
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice of hearing.
-----------------------------------------------------------------------
SUMMARY: This notice announces an administrative hearing to be held on
December 9, 2008, at the CMS Dallas Regional Office, 1301 Young Street,
Suite 833, Room 1196, Dallas, Texas 75202, to reconsider CMS' decision
to disapprove Arkansas SPA 07-024.
CLOSING DATE: Requests to participate in the hearing as a party must be
received by the presiding officer by November 6, 2008.
FOR FURTHER INFORMATION CONTACT: Benjamin Cohen, Presiding Officer,
CMS, 2520 Lord Baltimore Drive, Suite L, Baltimore, Maryland 21244,
Telephone: (410) 786-3169.
SUPPLEMENTARY INFORMATION:
This notice announces an administrative hearing to reconsider CMS'
decision to disapprove Arkansas SPA 07-024 which was submitted on
[[Page 62998]]
January 18, 2008, and disapproved on August 19, 2008.
Under this SPA, the State would increase the dispensing fee from
$5.51 to $8.68 for brand name prescription drugs. The dispensing fee
for generic drugs would increase to $11.68, an increase from $5.51 for
drugs with a maximum allowable cost (MAC) limit and from $7.51 for
drugs without a MAC limit. The dispensing fee for generic drugs would
be further increased to $12.68 if there is a 2.3 percent increase in
the proportion of total claims dispensed as generic drugs. CMS was
unable to approve this SPA because it does not comply with section
1902(a)(30)(A) of the Social Security Act (the Act) and the
longstanding requirements of Federal regulations (previously codified
at 42 CFR 447.331 and at 42 CFR 447.332), which specify that the State
must have a reasonable dispensing fee.
Section 1902(a)(30)(A) of the Act requires that States have methods
and procedures to assure that payment rates are consistent with
efficiency, economy, and quality of care. Section 1902(a)(30)(A) and
longstanding requirements of Federal regulations (previously codified
at 42 CFR 447.331 and 42 CFR 447.332) provide that payments for drugs
are to be based on the ingredient cost of the drug and a reasonable
dispensing fee.
In support of its proposal, the State submitted survey findings
dated February 2, 2007, performed by MENTORx that show the median
dispensing cost is $9.25 for all pharmacies with a spread of $4.44
between the 20th percentile value ($7.45) and the 80th percentile value
($11.89). The study looked at the difference in dispensing costs
between independent and chain pharmacies, but not between brand and
generic drugs.
The hearing will involve the following issues:
The MENTORx survey failed to present supporting evidence
for the State's determination of separate dispensing fees for brand and
generic prescriptions and the State has failed to provide us with
sufficient evidence to demonstrate that the separate dispensing fee for
brand name and generic prescription drugs is reasonable.
MENTORx recommended the 80th percentile ($11.89) be used
as the dispensing fee for all prescriptions. While the State did not
follow this recommendation, it did not adequately explain why it chose
the dispensing fee for brand name drugs based on the 40th percentile
value ($8.68) and the initial dispensing fee for generics based
slightly below the 80th percentile value ($11.89). The State's current
dispensing fee of $5.51 is one of the highest in the Nation among State
Medicaid programs. The proposed dispensing fee for generic drugs would
be the highest in the Nation among State Medicaid programs and would be
the largest variance in dispensing fees between brand and generic
drugs. Accordingly, the State failed to adequately explain why a
dispensing fee slightly below the 80th percentile value would not
result in most pharmacies being overpaid to dispense generic drugs.
Therefore, CMS did not believe that the State demonstrated why this is
reasonable.
Despite the fact that the generic dispensing fee was set
at the maximum cost in the survey, the State did not adequately explain
why it would further increase the generic fee above the 80th percentile
to $12.68. While the State claimed that increasing the dispensing fee
would be budget neutral based on a 2.3 percent increase in the
proportion of total claims dispensed as generic drugs, it did not
explain why a further incentive from the current $2 differential to a
$4 differential was reasonable.
In response to our formal concerns, the State indicated
that data do not exist to differentiate dispensing cost of brand versus
generic drugs. The State indicated that the intent of the proposed
dispensing fee is to encourage the use of less costly generics, and
thus avoid the higher ingredient reimbursement of a brand. However, the
State failed to consider the ingredient cost of drugs as well as the
cost of dispensing, to ensure that both are being paid appropriately.
To increase the dispensing fee without considering the ingredient cost
payment so that it accurately estimates acquisition cost results in an
overall payment that is inconsistent with the requirement of the
statute that payments be consistent with efficiency and economy.
Section 1116 of the Act and Federal regulations at 42 CFR Part 430,
establish Department procedures that provide an administrative hearing
for reconsideration of a disapproval of a State plan or plan amendment.
CMS is required to publish a copy of the notice to a State Medicaid
agency that informs the agency of the time and place of the hearing,
and the issues to be considered. If we subsequently notify the agency
of additional issues that will be considered at the hearing, we will
also publish that notice.
Any individual or group that wants to participate in the hearing as
a party must petition the presiding officer within 15 days after
publication of this notice, in accordance with the requirements
contained at 42 CFR 430.76(b)(2). Any interested person or organization
that wants to participate as amicus curiae must petition the presiding
officer before the hearing begins in accordance with the requirements
contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the
presiding officer will notify all participants.
The notice to Arkansas announcing an administrative hearing to
reconsider the disapproval of its SPA reads as follows:
Mr. Breck Hopkins, Chief Counsel, Arkansas Department of Human
Services, P.O. Box 1437, Slot S-260, Little Rock, AR 72203-1437.
Dear Mr. Hopkins: I am responding to your request for
reconsideration of the decision to disapprove the Arkansas State
plan amendment (SPA) 07-024, which was submitted on January 18,
2008, and disapproved on August 19, 2008.
Under this SPA, the State proposed to increase the dispensing
fee from $5.51 to $8.68 for brand name prescription drugs. The
dispensing fee for generic drugs would increase to $11.68, an
increase from $5.51 for drugs with a maximum allowable cost (MAC)
limit and from $7.51 for drugs without a MAC limit. The dispensing
fee for generic drugs would be further increased to $12.68 if there
is a 2.3 percent increase in the proportion of total claims
dispensed as generic drugs. I was unable to approve this SPA because
it does not comply with section 1902(a)(30)(A) of the Social
Security Act (the Act) and the longstanding requirements of Federal
regulations (previously codified at 42 CFR 447.331 and at 42 CFR
447.332), which specify that the State must have a reasonable
dispensing fee.
Section 1902(a)(30)(A) of the Act requires that States have
methods and procedures to assure that payment rates are consistent
with efficiency, economy, and quality of care. Section
1902(a)(30)(A) and longstanding requirements of Federal regulations
(previously codified at 42 CFR 447.331 and 42 CFR 447.332) provide
that payments for drugs are to be based on the ingredient cost of
the drug and a reasonable dispensing fee.
In support of its proposal, the State submitted survey findings
dated February 2, 2007, performed by MENTORx that show the median
dispensing cost is $9.25 for all pharmacies with a spread of $4.44
between the 20th percentile value ($7.45) and the 80th percentile
value ($11.89). The study looked at the difference in dispensing
costs between independent and chain pharmacies, but not between
brand and generic drugs.
The hearing will involve the following issues:
The MENTORx survey failed to present supporting
evidence for the State's determination of separate dispensing fees
for brand and generic prescriptions and the State has failed to
provide us with sufficient evidence to demonstrate that the separate
dispensing fee for brand name and generic prescription drugs is
reasonable.
MENTORx recommended the 80th percentile ($11.89) be
used as the dispensing
[[Page 62999]]
fee for all prescriptions. While the State did not follow this
recommendation, it did not adequately explain why it chose the
dispensing fee for brand name drugs based on the 40th percentile
value ($8.68) and the initial dispensing fee for generics based
slightly below the 80th percentile value ($11.89). The State's
current dispensing fee of $5.51 is one of the highest in the Nation
among State Medicaid programs. The proposed dispensing fee for
generic drugs would be the highest in the Nation among State
Medicaid programs and would be the largest variance in dispensing
fees between brand and generic drugs. Accordingly, the State failed
to adequately explain why a dispensing fee slightly below the 80th
percentile value would not result in most pharmacies being overpaid
to dispense generic drugs. Therefore, we do not believe that the
State has demonstrated why this is reasonable.
Despite the fact that the generic dispensing fee was
set at the maximum cost in the survey, the State did not adequately
explain why it would further increase the generic fee above the 80th
percentile to $12.68. While the State claimed that increasing the
dispensing fee would be budget neutral based on a 2.3 percent
increase in the proportion of total claims dispensed as generic
drugs, it did not explain why a further incentive from the current
$2 differential to a $4 differential was reasonable.
In response to our formal concerns, the State indicated
that data do not exist to differentiate dispensing cost of brand
versus generic drugs. The State indicated that the intent of the
proposed dispensing fee is to encourage the use of less costly
generics, and thus avoid the higher ingredient reimbursement of a
brand. However, the State failed to consider the ingredient cost of
drugs as well as the cost of dispensing, to ensure that both are
being paid appropriately. To increase the dispensing fee without
considering the ingredient cost payment so that it accurately
estimates acquisition cost results in an overall payment that is
inconsistent with the requirement of the statute that payments be
consistent with efficiency and economy.
I am scheduling a hearing on your request for reconsideration to
be held on December 9, 2008, at the CMS Dallas Regional Office, 1301
Young Street, Suite 833, Room 1196, Dallas, Texas 75202, in order to
reconsider the decision to disapprove SPA 07-024. If this date is
not acceptable, we would be glad to set another date that is
mutually agreeable to the parties. The hearing will be governed by
the procedures prescribed by Federal regulations at 42 CFR Part 430.
I am designating Mr. Benjamin Cohen as the presiding officer. If
these arrangements present any problems, please contact the
presiding officer at (410) 786-3169. In order to facilitate any
communication which may be necessary between the parties to the
hearing, please notify the presiding officer to indicate
acceptability of the hearing date that has been scheduled and
provide names of the individuals who will represent the State at the
hearing.
Sincerely,
Kerry Weems,
Acting Administrator.
Section 1116 of the Social Security Act (42 U.S.C. 1316; 42 CFR
430.18)
(Catalog of Federal Domestic Assistance program No. 13.714, Medicaid
Assistance Program.)
Dated: October 16, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. E8-25196 Filed 10-22-08; 8:45 am]
BILLING CODE 4120-01-P
