N.J. Admin. Code § 10:167C-1.5

Current through Register Vol. 57, No. 1, January 6, 2025

Section 10:167C-1.5 - Basis of payment

(a) This section provides a summary of the elements involved in the calculation of the payment of legend or certain non-legend drugs. The elements include the following:

1. Program restrictions affecting reimbursement for the dispensing of drugs as listed in N.J.A.C. 10:167C-1.4;

2. Price information as supplied from a reference drug file subcontracted for this purpose by the fiscal agent and accepted by the Division of Medical Assistance (Medicaid) as the primary source of pricing information for the New Jersey Medicaid Management Information System (NJMMIS). If reimbursement for a drug is not covered under the Medicare Prescription Drug Program, the drug price shall not exceed the lower of the reimbursement standard set forth in the Fiscal Year 2007 Appropriations Act, P.L. 2006, c. 45, as amended and supplemented by subsequent State appropriations acts, the provider's usual and customary charge; or the drug's maximum allowable cost, if applicable (see (b) below);

i. The NJMMIS reference drug file is updated periodically by the fiscal agent based upon data supplied by First Data Bank (FDB). The update process provides the fiscal agent with current data to include changes in product description. Providers are made aware of therapeutic indications for various classes of drugs by product literature distributed by drug manufacturers and by various trade publications. Based on market information, providers can determine whether a product's therapeutic classification meets the criteria specified in N.J.A.C. 10:167C-1.12, Covered pharmaceutical services;

3. Federal regulations ( 42 CFR 447.301, 331 - 333) that set the aggregate upper limits on payment for certain covered drugs in the Program. The New Jersey Medicaid program refers to these upper limits as the "maximum allowable cost" (see (b) below); and

4. Provider's usual and customary charge for legend drugs (see (c) below), insulin, insulin needles and syringes, or diabetic testing materials.

(b) Payment for legend drugs is based upon the maximum allowable cost. This means the lower of the upper payment limit price list (MAC price) as published by the Federal government or the average wholesale price (AWP). See N.J.A.C. 10:51, Appendix B, incorporated herein by reference, for the listing of MAC drugs.

1. Maximum allowable cost is defined as:

i. The MAC price as stated for listed multi-source drugs published periodically by CMS and in accordance with the Deficit Reduction Act of 2005, Pub. L. 109-171, effective February 8, 2006; or

ii. For legend drugs not included in (b)1i above, the estimated acquisition cost (EAC), which is defined as the average wholesale price (AWP) listed for the package size (billed to the New Jersey Medicaid program), in current national price compendia or other appropriate sources (such as the First Data Bank (FDB) reference drug file contractor), and their supplements, minus regression category or discount.

2. For information about the "pharmacy discounts," see N.J.A.C. 10:167C-1.6 and for usual and customary charge, see N.J.A.C. 10:167C-1.11.

3. If the published MAC price as defined in (b)1i above is higher than the maximum allowable cost which would be paid as defined in (b)1ii above, then (b)1ii above shall apply.

(c) The maximum charge to the Program for drugs, including the charge for the cost of medication and the dispensing fee, shall not exceed the provider's usual and customary and/or posted or advertised charge.

(d) For claims with service dates on or after July 1, 2005, that are not covered by the Medicare Prescription Drug Program, the maximum cost for each eligible prescription claim not covered by the maximum allowable cost price, as defined in (b)1i above, shall be based on the pharmacy reimbursement standards defined in the Fiscal Year 2007 Appropriations Act, P.L. 2006, c. 45, as amended and supplemented by subsequent State appropriations acts, and for multi-source drugs, shall be in accordance with the Deficit Reduction Act of 2005, Pub. L. 109-171, effective February 8, 2006.

N.J. Admin. Code § 10:167C-1.5

Amended by R.2007 d.134, effective 5/7/2007.
See: 38 N.J.R. 5295(a), 39 N.J.R. 1711(a).