N.J. Admin. Code § 10:51-1.5

Current through Register Vol. 56, No. 11, June 3, 2024

Section 10:51-1.5 - Basis of payment

(a) This section provides a summary of the elements involved in the calculation of the payment of a legend or non-legend drug for both the Medicaid and NJ FamilyCare programs. The elements include the following:

1. Program restrictions affecting reimbursement for the dispensing of drugs as listed in 10:51-1.4;

2. Price information as supplied from a reference drug file contracted for this purpose by the fiscal agent and accepted by the Division as the primary source of pricing information for the New Jersey Medicaid Management Information System (NJMMIS). The drug price or ingredient cost shall not exceed the lower of the average wholesale price as supplied by the reference drug file contractor; 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 meet the criteria specified in 10:51-1.11 (Covered Pharmaceutical Services).

3. Federal regulations (42 CFR Part 447, Subpart I) that set the aggregate upper limits on payment for certain covered drugs in the Medicaid and NJ FamilyCare-Plan A pharmaceutical program. The Division applies the limits to NJ FamilyCare-Plans B and C. The Division refers to these upper limits as the "maximum allowable cost" (see (b) below); and

4. The provider's usual and customary charge for legend or non-legend drugs (see (c) below), contraceptive diaphragms and legend or non-legend devices.

(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 Appendix B for the listing of MAC drugs, which is incorporated herein by reference.

1. Maximum allowable cost is defined as:

i. The MAC price for listed multi-source drugs published periodically by the Centers for Medicare and Medicaid Services (CMS) of the United States Department of Health and Human Services; 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 or NJ FamilyCare 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 usual and customary charge, see 10:51-1.10.

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 New Jersey Medicaid or NJ FamilyCare 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) The maximum allowance for protein replacement supplements, specialized infant formulas, and food oils under the Medicaid and NJ FamilyCare program is the lesser of:

1. The product's AWP plus 50 percent; or

2. The usual over-the-counter (OTC) retail price charged to the other persons in the community.

(e) For claims with service dates on or after July 15, 1996, the maximum allowance for non-legend drugs (including protein replacement supplements, specialized infant formulas and food oils), devices, or supplies under the New Jersey Medicaid or NJ FamilyCare program shall be calculated in accordance with (b)1ii above.

1. The product AWP less a volume discount (see 10:51-1.6 ) plus dispensing fee (see 10:51-1.7 ); or

2. The usual over-the-counter (OTC) retail price charged to the other persons in the community.

(f) For claims with service dates on or after July 15, 1996, 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 Average Wholesale Price (AWP) of a drug, as defined in (b)1ii above, less a discount of 10 percent.

N.J. Admin. Code § 10:51-1.5

Amended by 48 N.J.R. 2785(a), effective 12/19/2016