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September Legislative Update: Federal Health Reform, DMEPOS Bidding, Ohio Legislation

Federal Legislative Update

America's Affordable Health Choices Act of 2009 (H.R. 3200)

Below is a summary of the major pharmacy-related provisions in the U.S. House health reform bill.  

1. Medicaid Pharmacy Reimbursement

  • The generic reimbursement is set at 130% of the weighted average AMP, a change from 250% of the lowest AMP.
  • AMP definition is redefined to more accurately reflect retail acquisition costs.
  • Weighted average of brand and generic AMP data will be posted on a public website.
  • The new Medicaid FUL benchmark will not be implemented until January 2011; the current (pre-DRA) benchmark (150% of the lowest published price) will be used until that date. This is important because we need to have time to focus on increasing state dispensing fees.

2. Exemptions from Medicare DME Accreditation and Surety Bond Requirements

  • New accreditation requirements will not apply to pharmacies supplying diabetic testing supplies, canes and crutches.
  • Includes an extension of the October 1, 2009 accreditation deadline for any Part B supplier of DMEPOS if the supplier has submitted an application for accreditation by August 1, 2009
  • This extension will be effective until such time as the accreditation organization has completed the accreditation process, no hard deadline for completing the process.
  • Exemption of surety bond requirements for pharmacies that provide Part B DMEPOS products if that pharmacy has held a provider number for at least five years and a final adverse action has never been imposed on that pharmacy

3. Public Health Insurance Plan Option

  • Legislation gives the HHS Secretary complete discretion to set reimbursement rates for prescription drugs under the option. This concerns us because of the problems pharmacy has had with CMS setting adequate payment rates under Medicaid. CMS has also been unresponsive to situations where payment rates are too low.
  • Legislation does not clarify how the drug benefit will be administered, although it does indicate that the Secretary should contract with "administrators" to operate the benefit. We continue to advocate for the drug benefit to be administered by a pharmacy benefit administrator (PBA), rather than a PBM.
  • Conditions for provider participation in the public plan network would be up to standards developed by the Secretary of HHS. We support an "any willing pharmacy" provision so that any pharmacy that is willing to participate in the plan and accepts the payment rates can do so. This would be consistent with both the policies of the state Medicaid programs, as well as Medicare Part D prescription drug benefit as it relates to pharmacy participation in networks.

4.  Pharmacists' Involvement in Medical Home Pilot Project          

  • May reimburse pharmacists for medication therapy management services

5.  PBM Transparency, MTM Provisions Added

  • New transparency requirements on pharmacy benefit managers participating in any new federally-sponsored health insurance plan
  • Transparency would include disclosing payments from the plan to the PBM, and from the PBM to the pharmacy; rebates and discounts from manufacturers; and information that sheds light on generic and mail-order utilization.
  • Grant program to test new models for pharmacists to provide MTM services

All of the provisions in the bill are up for discussion and can change at any time.  A vote in the House of Representatives is likely this fall.

Bidding Timeline Announced for Medicare Competitive Bidding

CMS has announced the bidding timeline for the Round 1 Re-bid of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. Some of the key target dates are:

  • August 17: Registration for user IDs and passwords begins
  • October 21: Bidding begins
  • December 21: Bidding ends

The actual dates will be announced via the Competitive Bidding Implementation Contractor (CBIC) listserv. To view the entire bidding and program implementation timeline, go to:

The CBIC has a website,, which will include a comprehensive array of important information for suppliers, including bidding rules, user guides, frequently asked questions, policy fact sheets, checklists, and bidding information charts. The CBIC toll-free help desk, 1.877.577.5331, is now open to help bidders with  all of their questions and concerns.  All suppliers interested in bidding are urged to visit the CBIC website to sign up for email updates. To sign up for the CBIC email updates, go to:

Reminder on October Deadlines for Medicare DMEPOS Suppliers

The Centers for Medicare and Medicaid Services (CMS) is reminding Medicare suppliers (including pharmacies) of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) that they must be accredited and obtain a surety bond by October 1, 2009 and October 2, 2009, respectively. Suppliers may choose to voluntarily terminate enrollment if they do not plan to comply.

If your pharmacy has made the decision not to obtain accreditation or a surety bond, CMS is recommending that prior to the October deadlines you consider voluntarily terminating your enrollment as a DME supplier in the Medicare program. If your pharmacy does not comply with the accreditation and surety bond requirements and does not submit a voluntary termination, the pharmacy's Medicare billing privileges will be revoked. A revocation would bar the pharmacy from re-enrolling in Medicare for at least one year after the date of revocation. Pharmacies can voluntarily terminate DME supplier enrollment with the Medicare program by completing the sections associated with voluntary termination on page 4 of the Medicare enrollment application (CMS-855S) which can be found at the following link:

Once completed, you should sign, date and send the application to the National Supplier Clearinghouse (NSC). By voluntarily terminating your Medicare enrollment, pharmacies will preserve the right to re-enroll in Medicare once the requirements to participate in the Medicare program have been met (i.e., accreditation is complete and/or surety bond is in place).

Red Flag Rule Delayed to November 1 

The Federal Trade Commission (FTC) announced a delay for the enforcement date of the Red Flag Rule, an anti-fraud regulation requiring creditors and financial institutions with covered accounts to implement programs to identify, detect, and respond to the warning signs, or "red flags," that could indicate identity theft. The rule, originally set to be implemented on August 1, 2009, will not be required until November 1, 2009. 

Fair and Accurate Credit Transactions Act of 2003 (FACTA) defines a creditor as any entity that regularly extends or renews credit, or arranges for others to do so, and includes all entities that regularly permit deferred payments for goods or services. Accepting credit cards as a form of payment does not, by itself, make an entity a creditor. Financial institutions include entities that offer accounts that enable consumers to write checks or make payments to third parties through other means, such as other negotiable instruments or telephone transfers.

State Legislative Update

HB 267:  Ohio Official Prescription Program

This bill, sponsored by Rep. Clayton Luckie (D-Dayton), would require prescribers to use an official Ohio prescription form when writing prescriptions. Unfortunately, the legislation would require pharmacies to enter a serial number every time a prescription is filled, and could possibly require additional computer software. OPA will work to have the computer software and the serialized prescriptions deleted from the bill. This is just one more unfunded mandate placed on already overburdened pharmacies.

ODJFS Medicaid Bundling Rules Emergency

On July 31, 2009, the Ohio Department of Job & Family Services (ODJFS) filed the emergency rules that implement the ancillary services bundling provision from the state's biennial budget.  These emergency rules are valid for only 90 days. ODJFS will proceed with a regular rules filing to eventually replace the emergency rules.  The Joint Committee on Agency Rule Review's July 27, 2009 report provided the list of affected rules in item #35 on page 14 in this link:,_2009_to_Jul_31,_2009.pdf

It is uncertain as to whether there will be any change in the regular rules filing from the emergency rules, but this provision is now in effect as of August 1, 2009.  OPA will continue to update members as we learn more.

REMINDER! Effective August 1 ODJFS Switched to Electronic Notices

All Medicaid providers were sent ODJFS MHTL 3334-09-01 on June 30, 2009 announcing that the Department will no longer be sending paper copies but switching to electronic notices.  To remind providers of this change, ODJFS released the following article.

Beginning August 1, Medicaid providers will no longer receive paper copies of Medicaid transmittal letters.  Instead, they may sign up to receive communication electronically by submitting their names and e-mail addresses to

Transmittal letters notify Medicaid providers, county agencies and other stakeholders about rule and policy changes and clarifications.  A new rule, OAC 5101:3-1-17.1, Notification of Rule and Program Changes, allows ODJFS to communicate rule changes electronically to those who might be affected by them. A person interested in receiving such an electronic communication must sign up at the website above.  ODJFS will continue to post changes to:

The move to electronic letter transmission is part of a statewide effort to reduce costs and increase efficiencies while at the same time maintaining good customer service and due diligence.  ODJFS remains committed to working closely with Medicaid providers to ensure delivery of services to Ohioans. 

If you have any questions or comments about the issues mentioned in this article, please contact Kelly Vyzral, Director of Government Affairs, at 614.586.1497 or

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