Medicaid AMP ‘Fix’ Moves Closer to Finish Line

By John Coster

In the wake of Senate passage of health care reform legislation on Christmas Eve morning, momentum on Capitol Hill is continuing to build for a Medicaid AMP “fix” that is fair to community pharmacies. The support is bipartisan and spans the political spectrum from liberal to conservative and from members of the Congressional Black Caucus to the Congressional Rural Caucus.

A House—Senate conference committee is not expected to officially meet before Jan. 4 to hammer out a compromise between the version of health care reform legislation narrowly passed by the House 220—215 on Nov. 7 and the one approved by the Senate Dec. 24 on a 60 to 39 roll call after a third cloture vote to end debate. Heavy involvement by the White House and Democratic leaders is expected to shape the final package.
Both versions contain an improvement over a pending rule from the Centers for Medicare & Medicaid Services that would base reimbursement for Medicaid generic drugs on an AMP formula that would not come close to covering pharmacy acquisition costs. In December 2007, an NCPA/NACDS lawsuit won an injunction blocking implementation of the rule. As a result, more than $4 billion worth of lower reimbursements have been avoided.

NCPA favors the Senate AMP language, which is not perfect but is better than the House bill and a vast improvement over the CMS rule. The House-passed reform package uses 130% of a weighted AMP for generic federal upper limits (FULs), while the Senate bill specifies the rate at not less than 175%. In other words, hypothetically, reimbursement for the ingredient fee for a drug on the FUL list with a weighted average AMP of $20 would be $35 in the Senate bill vs. $26 under the House approach.

Just before Congress broke for the holidays, 16 Representatives—12 Democrats and four Republicans—urged House Speaker Nancy Pelosi (D-Calif.) to consider a higher FUL than what had passed the House. The signers of a letter to Pelosi ranged from the liberal Anthony Weiner (D-N.Y.) to the conservative Joe Barton (R-Texas) and everything in between. On the other side of the Hill, nine Senators from states with major urban centers (Chicago, Detroit, Philadelphia) joined with those from rural areas (North Dakota, South Dakota) and wrote Senate Democratic Leader Harry Reid (Nev.) in support of the higher figure. Acting at the request of NCPA, they also said additional resources should be made available for small and independent pharmacies that do the highest percentage of Medicaid business.

During Senate debate on the bill, one its chief drafters, Sen. Max Baucus (D-Mont.), engaged in a colloquy with Sen. Blanche Lincoln (D-Ark.) on AMP. Lincoln asked Baucus, chairman of the Finance Committee, “in what cases would it be the intent of the chairman that the federal upper limit would be set at no less than 175%? I am particularly concerned about my small independent pharmacies in Arkansas that fill a significant number of Medicaid prescriptions.

“Would it be the intent to set a higher rate for these pharmacies? Would it be the intent to set a higher rate for generics that might be in short supply or for which there are availability problems to encourage more manufacturers to make them?”

Baucus replied that the FUL at no less than 175% of a weighted AMP “could be used in those types of circumstances. It would give the Secretary [of Health and Human Services] flexibility to set the federal upper limits in cases where there is a need to provide states with a higher match in order to assure that appropriate payment is made to pharmacies to encourage the use of generic drugs.”

“NCPA sincerely appreciates this bipartisan show of support for community pharmacy in both the House and the Senate,” said NCPA Executive Vice President and CEO Bruce T. Roberts, RPh. “Clearly, lawmakers across the political spectrum recognize the important role community pharmacists play in helping Medicaid recipients – and want to continue to play. But for that to happen, Congress must replace the pending deep cuts with an equitable reimbursement system.”

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