CMS-179 4.19(b): Attachment 4.19 B

Form Approved CMS-179
OMB No. 0938-0193
58
Revision:

HCFA-PM-93- 6
August 1993

(MB)

OMB No.: 0938-

State/Territory:
Citation
42 CFR 447.201
42 CFR 447.302
52 FR 28648
1902(a)(15), 1902(bb),
1903(a)(1) and
(n), and 1920
of the Act

4.19(b)In addition to the services specified in
paragraphs 4.19(a),(d),(k),(1), and (m),the
Medicaid agency meets the following
requirements:
Sections 1902(a)(15) and 1902(bb) of the Act
regarding payment for services furnished
by Federally Qualified Health Centers (FQHCS)
under section 1905(a)(2)(C) of the Act.
ATTACHMENT 4.19-B describes the method of
payment and how the agency determines the
reasonable costs of the services (for example,
cost-reports, cost or budget reviews, or sample
surveys).

ATTACHMENT 4.19-B describes the methods
and standards used for the payment of each of
these services except for inpatient hospital,
nursing facility services and services in
intermediate care facilities for individuals with
intellectual disabilities that are described in
other attachments.
42 CFR 447.205
42 CFR 447.518(a)
1902(a)(54), 1905(a)(12),
and 1927 of the Act

ATTACHMENT 4.19-B describes the methods
and standards for establishing payment rates for
prescribed drugs. Public notice is required for any
significant
changes in methods and standards for setting
payment rates, except for price changes that occur
as a result of a change in the underlying reference
price on which the reimbursement methodology is
based. For instance, if the State bases its
reimbursement formula on average manufacturer
price (AMP), and the AMP changes for a particular
drug, this would not be a significant change.
However, if the State changes the way it uses AMP
in its reimbursement formula, this would be a
significant change. Whenever a public notice is
required, States must submit a copy of the public
notice for CMS review. The payment rate for

prescribed drugs will have two components, the
ingredient cost of the prescribed drug, which is the
estimated acquisition cost (EAC), and the
dispensing fee. The EAC is the agency’s best
estimate of the price generally and currently paid by
providers for a drug marketed or sold by a particular
manufacturer or labeler in the package size of drug
most frequently purchased by providers. States
should provide a detailed explanation of how EAC
is calculated. For example, States can calculate
EAC by applying an algorithm where they
reimburse the lesser of the billed amount, the
pharmacy’s usual and customary charge to the
public, the applicable Federal Upper Limit (FUL) or
State Maximum Allowable Cost (MAC), or a
specified formula based on reliable pricing
information. States should also specify how they
reimburse for drugs purchased through the 340B
Drug Pricing Program and drugs purchased through
other Federal programs. For covered entities
participating in the 340B Drug Pricing Program,
States should pay no more than the pharmacy’s
actual acquisition cost for 340B drugs or the 340B
ceiling price. States may also include a statement
regarding the requirements of the FULs program
and a description of the State’s MAC program, if
the State has a MAC program.
The dispensing fee pays for the costs of dispensing
a covered outpatient drug. States should provide
the actual dispensing fee or fees in the State plan.
States should carefully evaluate their payment rates
for the ingredient cost and the dispensing fee for
Medicaid prescription drugs to ensure they are
providing appropriate reimbursement for drugs and
for costs associated with dispensing drugs.
Accordingly, we expect that States provide us with
their rationale, data, and analyses when submitting
State plan amendments to substantiate any change
in these payments. Payment rates that are
established pursuant to State legislation should be
supported by further documentation. States should
evaluate their payment methodologies for both
ingredient cost and dispensing fee when making any
changes to ensure that they do not inappropriately
duplicate payments for the same services.
1902(a)(10) and
1902(a)(30) of the Act

SUPPLEMENT 1 to ATTACHMENT 4.19-B
describes general methods and standards used
for establishing payment for Medicare Part A
and B deductible/coinsurance.

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TN No.
Supersedes
Approval Date
Effective Date
TN No.
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