Mercer - Talent. Health. Retirement. Investments
Talent. Health. Retirement. Investments

CMS Releases Pharmacy Rule

After nearly four years, CMS released the final rule on Covered Outpatient Drugs.

This rule addresses key areas of Medicaid drug reimbursement and changes made to the Medicaid Drug Rebate Program by the Affordable Care Act (ACA). The rule will be published in the February 1st edition of the Federal Register and also provides for an additional comment period on the definition and identification of line extension drugs. Comments are due March 31, 2016. Rule is effective on April 1, 2016.

States must submit a State Plan Amendment by June 30, 2017

The amendment is to be effective no later than April 1, 2017 and must comply with three separate requirements.

banner image not configured

Payment Limits

Payments for certain drugs have limits based on the AAC and other factors

View the Rule button image
banner image not configured

Adequate Data

Used to support proposed changes to certain components of the reimbursement methodology

Read the Detail button image
banner image not configured

Payment Methodologies

A comprehensive description of methodologies and alignment with AAC

Attend the Mercer Webinar button image

A Mercer Webinar

CMS Medicaid-Covered Outpatient Drugs Final Rule

Thursday, February 18, 2016 - 1:00 pm Eastern      Register Now

Key Provisions

  • Changes to the reimbursement of covered outpatient drugs to establish AAC as the basis for determining their ingredient cost reimbursement
  • Federal Upper Limits (FUL) for certain generic drugs that create incentives for increased generic utilization
  • Changes to the Medicaid Drug Rebate Program including finalizing definitions and final language regarding ACA provisions for managed care rebate collections
  • Clarifying revisions to the definition of covered outpatient drugs
  • Revisions to the definition of Average Manufacturer Price (AMP) which is used in determining manufacturer rebates and pharmacy reimbursement for certain generic drugs that are subject to the FUL
  • Requirements for states to specify in their State Plans that reimbursement methodologies to retail and 340B pharmacies are consistent with overall AAC requirements including professional dispensing fees
  • Changes to the definition of “states” to include US territories (Puerto Rico, Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands) in the rebate program
  • Allowance of optional state coverage of investigational drugs and other drugs not subject to rebate
  • Clarification that state invoices for rebates should not include units associated with Part D drug claims for dual eligibles

Mercer Contributes to NGA's Medicaid Compendium

Released on January 11, 2016, NGA's Medicaid Health Care Purchasing Compendium is "intended to serve as a reference guide for states when purchasing health care services for their Medicaid program..."
banner image not configured

The NGA Compendium

"States face the ongoing challenge of managing the costs of their Medicaid programs while ensuring beneficiaries have access to quality health care."

Click Here button image
banner image not configured

Section II - Federal Authorities and Compliance

Employees contributing to Compendium Section II include Leena Hiilivirta, Bill Lasowski and Stephanie Kurlanzik

View the Section button image
banner image not configured

Section V - Financial Models

Including rate setting, risk adjustment, performance indicators. Contributors were Fred Gibison, Kevin Lurito, Gabe Smith, Doug Shannon, Amanda Rhodes

View Section V button image

Guidance for States on Prescription Drug Abuse

NAMD Publishes Mercer Study on Prevention of Abuse and Overdose of Prescription Drugs

Mercer developed the report for the National Association of Medicaid Directors providing guidance to reduce prescription drug abuse and overdose risks.  It discusses the epidemic and the effect on Medicaid recipients and provides recommendations to help states.

 Access the report

Industry Hot Topics

banner image not configured

States driven to rethink HCBS

With the 2014 release of the final HCBS federal regulations comes enhanced quality and added protections for recipients, but also new requirements and challenges.

See more button image
banner image not configured

Prescription drug abuse epidemic

The CDC has recognized prescription drug abuse as a growing national epidemic. Prescription drugs are now the second-most abused category of drugs after marijuana.

See more button image
banner image not configured

Medicaid integrity best practices

The US GAO issued a report calling for increased oversight of Medicaid program integrity efforts.

See more button image



Mercer Government Human Services Consulting provides a full range of consulting services.

More infobutton image


Policy and Operations

Rich in experience with strategic planning, interpretation and application of regulations and policy, managed care procurement, operations, waivers, financing, and rate setting.

More infobutton image


Actuarial and Financial

Mercer is well positioned to assist clients on a variety of topics ranging from traditional capitated rate setting to program development and compliance with these new health care delivery models.

More infobutton image

New Mercer Solutions

An overview of our experience assisting government with their Medicaid and Medicare programs.

Our passion is to work as a team with our clients to help those in need throughout the country.


  Download overview