2015-06226. Notice of Hearing: Reconsideration of Disapproval Louisiana Medicaid State Plan Amendment (SPA) 12-66-B

AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Notice of hearing: Reconsideration of disapproval.

SUMMARY:

This notice announces an administrative hearing to be held on April 30, 2015, at the Department of Health and Human Services, Centers for Medicare and Medicaid Services, Division of Medicaid & Children's Health, Dallas Regional Office, 1301 Young Street, Room 730, Dallas, TX 75202, to reconsider CMS' decision to disapprove Louisiana's Medicaid SPA 12-66-B.

Closing Date: Requests to participate in the hearing as a party must be received by the presiding officer by April 2, 2015.

FOR FURTHER INFORMATION CONTACT:

Benjamin R. Cohen, Presiding Officer, CMS, 2520 Lord Baltimore Drive, Suite L, Baltimore, Maryland 21244, Telephone: [phone].

SUPPLEMENTARY INFORMATION:

This notice announces an administrative hearing to reconsider CMS' decision to disapprove Louisiana's Medicaid SPA 12-66B which was submitted to the Centers for Medicare and Medicaid Services (CMS) on December 20, 2012 and disapproved on December 11, 2014. In part, this SPA requested CMS approval to revise the current pharmacy reimbursement methodology for estimated acquisition cost (EAC) which is currently calculated as average acquisition cost (AAC) of the drug dispensed to a new calculation of AAC adjusted by a multiplier of 1.1 for multiple source drugs and 1.01 for single source drugs. In addition, propose a reimbursement methodology of wholesale acquisition cost (WAC) adjusted by a multiplier of 1.05 for state-defined specialty therapeutic classes of drugs.

The issues to be considered at the hearing are:

• Whether the state's proposed increased payment methodology under Louisiana Medicaid SPA 12-66-B complies with the requirements of section 1902(a)(30)(A) of the Act which requires, in part, that states have methods and procedures to assure that payment rates are consistent with efficiency, economy, and quality of care.
• Whether the state demonstrated that the proposed payment increases are consistent with the aggregate upper payment limits set in implementing regulations at 42 CFR 447.512 which provide that payments for drugs are to be based on the lower of: (1) The ingredient EAC of the drug and a reasonable dispensing fee; or (2) the provider's usual and customary charges to the general public.
• Whether the proposed calculation of EAC used in calculating upper payment limits (based on a multiple of the AAC) is consistent with the definition of EAC in 42 CFR 447.502, which defines EAC as “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.”

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 Louisiana announcing an administrative hearing to reconsider the disapproval of its SPA reads as follows:

J. Ruth Kennedy

State Medicaid Director

Louisiana Department of Health and Hospitals

628 N. 4th Street

P.O. Box 91030

Baton Rouge, LA 70821

Dear Ms. Kennedy:

I am responding to your request for reconsideration of the decision to disapprove Louisiana's Medicaid state plan amendment (SPA) 12-66B, which was submitted to the Centers for Medicare and Medicaid Services (CMS) on December 20, 2012, and disapproved on December 11, 2014. I am scheduling a hearing on your request for reconsideration to be held on April 30, 2015, at the Department of Health and Human Services, Centers for Medicare and Medicaid Services, Division of Medicaid & Children's Health, Dallas Regional Office, 1301 Young Street, Room 730, Dallas, TX 75202.

I am designating Mr. Benjamin R. Cohen as the presiding officer. If these arrangements present any problems, please contact Mr. Cohen at [phone]. In order to facilitate any communication that may be necessary between the parties prior 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. If the hearing date is not acceptable, Mr. Cohen can set another date mutually agreeable to the parties. The hearing will be governed by the procedures prescribed by federal regulations at 42 CFR part 430.

In part, this SPA would revise the current pharmacy reimbursement methodology for estimated acquisition cost (EAC) which is currently calculated as average acquisition cost (AAC) of the drug dispensed to a new calculation of AAC adjusted by a multiplier of 1.1 for multiple source drugs and 1.01 for single source drugs. In addition, this SPA would apply a reimbursement methodology of wholesale acquisition cost (WAC) adjusted by a multiplier of 1.05 for state-defined specialty therapeutic classes of drugs.

The issues to be considered at the hearing are:

• Whether the state's proposed increased payment methodology under Louisiana Medicaid SPA 12-66-B complies with the requirements of section 1902(a)(30)(A) of the Act which requires, in part, that states have methods and procedures to assure that payment rates are consistent with efficiency, economy, and quality of care.
• Whether the state demonstrated that the proposed payment increases are consistent with the aggregate upper payment limits set in implementing regulations at 42 CFR 447.512 which provide that payments for drugs are to be based on the lower of: 1) the ingredient EAC of the drug and a reasonable dispensing fee; or 2) the provider's usual and customary charges to the general public.
• Whether the proposed calculation of EAC used in calculating upper payment limits (based on a multiple of the AAC) is consistent with the definition of EAC in 42 CFR 447.502, which defines EAC as “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.”

In the event that CMS and the state come to agreement on resolution of the issues which formed the basis for disapproval, this SPA may be moved to approval prior to the scheduled hearing.

Sincerely,

Andrew M. Slavitt

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: March 13, 2015.

Andrew M. Slavitt,

Acting Administrator, Centers for Medicare & Medicaid Services.