NYS Medicaid Average Actual Acquisition Cost and Cost of Dispensing Project - Frequently asked Questions
In accordance with legislation passed in April 2011, the Department of Health, herein known as the Department, is undertaking a comprehensive survey of Medicaid enrolled pharmacies to identify drug acquisition costs and associated costs of dispensing. The overall goal of this initiative is to create a cost based pharmacy reimbursement methodology that is valid, transparent, timely and sustainable.
- All enrolled Medicaid fee-for-service pharmacies are required to be affiliated with an active HCS account for this project. If you have an active HCS account, your pharmacies may not be affiliated with the account preventing participation in this project.. Please contact HCS to ensure that your pharmacies are affiliated with the HCS account you wish to use.
- To start the process of setting up an account or to affiliate your pharmacy please provide the following information requested in the PDF below named "Affiliating your Pharmacy With the HCS" and return via email to email@example.com.
Affiliating your Pharmacy With Health Commerce System (Form)(PDF, 16KB, 2pg.)
Cost of Dispensing
What is the Cost of Dispensing survey (COD)?
The COD survey is a means by which the Department can identify the costs associated with dispensing a drug to a Medicaid beneficiary and business components that should be analyzed when developing dispensing fees for Medicaid providers.
How will the Department determine which providers will participate in the COD survey?
All enrolled Medicaid fee-for-service pharmacy providers are required to participate in the COD survey.
How will the Department ensure the security of the submitted information?
Business information will be submitted to the Department through the Health Commerce System (HCS). Health data/information originating from the HCS is protected under state and federal confidentiality laws as well as DOH policy and procedures. Authorized HCS users will be assigned a user ID, a Personal Identification Number (PIN), and a password by DOH. These codes are unique for every user, must be saved securely for future reference, and not shared with others. The consequences of sharing an HCS access account are severe, and can include revocation of the account.
Additionally, the Department will include a statement directly on each survey that will allow the provider to identify the information as confidential, proprietary and not subject to FOIL
How often will providers be asked to submit COD information?
Providers are required to participate in the COD survey annually.
In what format will COD information be required?
Independent providers will submit COD information using the secure survey tool on the HCS. Chain stores that will be using a corporate location or central location to submit on behalf of their stores will be required to submit COD information using the Excel Spreadsheet template that will be sent by the Department. Small chains (<6 stores) are encouraged to obtain HCS accounts for each individual store to avoid having to complete the Excel template.
How often will the Department update COD?
The Department will evaluate COD on an annual basis and will make any necessary adjustments after reviewing the data.
What will be included in the calculation for COD?
Expenses that are directly related to the dispensing of a prescription will be included in the new dispensing fee. Examples include, but are not limited to, pharmacy equipment, insurance, supplies, point-of-sale systems, dispensing area mortgage/rent/utility costs, etc. A detailed list of the cost components are can be found by clicking the COD Components document link on this page
What will not be included in the calculation for COD?
Expenses that are not directly related to the dispensing of a prescription, expenses incurred to provide a competitive advantage for a particular business will not be included, nor will expenses that can be reimbursed or recovered elsewhere. Expenses for activities that are contrary to Medicaid rules and regulations will also not be included.
Average Actual Acquisition Cost
What is Average Acquisition Cost (AAC)?
Acquisition cost is defined in regulations as the invoice price to the pharmacy of a prescription drug dispensed to a Medicaid recipient, minus the amount of all discounts and other cost reductions attributable to such dispensed drug. AAC is a statistically valid averaging of acquisition cost.
How will the Department determine which providers will participate in the AAC survey?
Initially, all enrolled providers will submit pricing information. After that, on a monthly basis pricing will be collected from a stratified random selection of all providers.
Are providers required to participate?
Yes. Provider participation is required under emergency regulations that were published on October 27, 2011. The entire regulatory package is available for review.
How often will providers be surveyed for AAC?
Initially, all enrolled providers will submit pricing information. After the initial survey, providers will be required to complete the survey once a year. A stratified random sample will be used to select which providers are to participate each month. Surveys will be sent out on the 1st Monday of each month beginning February 4th, 2013 with submission of data expected by the third Wednesday of the month. It is the Department's intent that each enrolled NPI will only be surveyed once per year.
What format will the Department require providers to use when submitting pricing information?
Pricing information will be submitted using an Excel worksheet.
How will the Department ensure the confidentiality and security of the submitted information?
Business information will be submitted to the Department through the Health Commerce System (HCS). Health data/information originating from the HCS is protected under state and federal confidentiality laws as well as DOH policy and procedures. Additionally, the Department will include a statement directly on each survey that will allow the provider to identify the information as confidential, proprietary and not subject to FOIL.
Who will this information be shared with?
Pricing information will be de-identified by the Department upon receipt. Once de-identified, data will be submitted to the Department's pricing vendor for analysis.
Are over-the counter (OTC) drugs included in this project?
Pricing data is being collected for prescription drugs only. Pricing for OTC products and supplies should not be reported in the survey.
How often will the Department address market place pricing fluctuations??
The Department will establish a process to address market place price fluctuations changes (both increases and decreases) that will be modeled after what other states are doing. An alternative benchmark (e.g. WAC) will be monitored and a methodology developed to address any required weekly updates. (Note: AAC will be collected monthly). This will address pricing fluctuations in a timelier manner.
Will there be a process to appeal published AAC rates?
Providers may submit questions or concerns regarding specific drug prices to the AAC Helpdesk at: firstname.lastname@example.org. If recurrent or common issues are raised, the Department will analyze and if a price requires adjustment, it will be adjusted on the next weekly file.
Is there a difference between the data requested from independent pharmacies and chain pharmacies? If so, please explain these differences.
There is no difference in the data submission requirements.
If a pharmacy uses more than one wholesaler, should the pharmacy submit separate surveys or report the purchases and rebates/discounts on a cumulative basis?
All data can be submitted on one survey reported by invoice date.
How will DOH verify the cost data that is reported by individual pharmacies?
The Department will request submission of invoices from a sample pool to validate cost data.
How will the department determine (or how has the department determined) that the requested survey data is sufficiently valid to produce the desired result, which is a new NDC-specific benchmark for each Medicaid covered medication?
All activity related to the AAC and COD has been based on achieving a 95% confidence interval with a margin of error + or – 5%. This is consistent with other states and NADAC. The Department will verify a sample of submitted data, as well as review outlier data.
What is the process by which preliminary survey results will be evaluated/validated before being proposed as a new reimbursement policy?
Preliminary results will be compared to established pricing benchmarks as well as other AAC survey results (NADAC/ other states, etc).
Would DOH consider variable reimbursement policies based on differences in survey results along the lines suggested by the focus group designations (such as geographic location)?
Final decisions will be made based on the data collected and whether variations are such that it would warrant variable dispensing fees and/or pricing.
How will the department apply the aggregate discounts, rebates and free goods information that is being collected?
Section 505.3 of Title 18 of the Official Compilation of Codes, Rules and Regulations of the State of New York defines acquisition cost as "the invoice price to the pharmacy of a prescription drug dispensed to a Medicaid recipient, minus the amount of all discounts and other cost reductions attributable to such dispensed drug.
There was extensive discussion of this issue during the focus group process. Three options were presented to members:
- Collect discounts, rebates and free goods at NDC level.
- Collect aggregate total discounts, rebates and free goods per month for 12 months.
- Collect NDC level discounts and then cumulative rebates by year.
Focus group members indicated that NDC level rebates and discounts are not available, therefore leaving Option #2 as the only viable option. The Department will review submitted data to determine how, or if, discounts, rebates and free goods can be applied. No decisions will be made until the Department has analyzed the submitted data. Stakeholders have been encouraged to provide the Department with potential options for applying discounts, rebates and free goods.
Will DOH seek further input from associations before implementing new pharmacy reimbursement policy; if so, how? If not, why not?
Stake holders will continue to have the opportunity to comment on this initiative at the various stakeholder meetings and calls. In addition, they will have the opportunity to comment during the regulatory process.
Does the Department have to get approval from the Centers for Medicaid and Medicare (CMS) prior to implementing this project?
Yes, the Department must obtain approval from CMS prior to implementing AAC/COD as the basis of reimbursement. However, we will be collecting data while CMS approval is pending.
How will the Department contact providers that are selected for each monthly release of the survey?
The Department uses the email address given when a provider enrolls in the Health Commerce System (HCS). Providers should ensure that HCS account information is kept up to date.
Will the new pharmacy reimbursement policy be proposed in regulations so as to allow for a comment period?
Can you provide a step by step breakdown of the proposed timeline for implementing the new policy?
The Department is still revising the timeline to address delays that have impacted the collection of data. At this time, the plan is to move to AAC as a method of reimbursement (with a revised dispensing fee) on 5/1/13. Preliminary results are tentatively expected in early March. Keep in mind that the timeline is impacted by the number of validations/verifications that have to be completed.
How will the department enforce participation and the validity of information submitted?
NYCRR Title 18 Section 505.3 mandates that all enrolled providers participate in the AAC survey. The Department will validate a subset of submissions, identify outliers and refer non-responsive providers and/or potentially fraudulent activity to the OMIG for further investigation.
How can I contact the Department with questions related to AAC and COD?
Questions related to either of these surveys should be sent to the AAC Helpdesk at email@example.com. Staff can be reached at 518-486-3209.
How will the Department address 340B pricing information?
Providers should not submit 340B pricing information.
How will the Department address expenses related to pending Medicaid eligibility?
Pharmacy regulations clearly spell out that Medicaid is not liable for payment of prescription drugs dispensed in the pending eligibility period or prior to the effective date of Medicaid eligibility. Long term care (LTC) pharmacy stakeholders report there is a requirement that LTC facilities provide drugs during the pending status but this requirement is placed on the facility not the contracted pharmacy. Guidance regarding the handling of prescription drugs during the Medicaid pending can be found in the June, 2011 Special Edition Medicaid Update
Pharmacies that choose to pend claims and then submit to Medicaid once eligibility has been established should be aware that the Department will work with them to expedite processing of eligible claims that reject due to frequency, quantity or duration limits.
Why doesn't NY just rely on the National Average Drug Acquisition Cost (NADAC) pricing that is being developed by CMS?
The Department is conducting a survey specific to NY Medicaid enrolled providers to ensure that any data variations (i.e., regional, business type, size) are appropriately addressed as they directly relate to pricing in NY. Additionally, the Department is requiring data from all providers while the NADAC data submission will be voluntary.
When will the results from the surveys be made public?
It is our intent to release information on the COD simultaneous to the release of information on the AAC – tentatively late February/ March 2013.
Does DOH plan to re-convene the focus groups to discuss preliminary survey results?
Yes, we will schedule a conference call with focus group members to discuss survey results.
- New York State Medicaid COD Components (XLS, 39.5KB)