DAR File No. 41556

This notice was published in the May 15, 2017, issue (Vol. 2017, No. 10) of the Utah State Bulletin.

Health, Health Care Financing, Coverage and Reimbursement Policy

Rule R414-60

Medicaid Policy for Pharmacy Program

Five-Year Notice of Review and Statement of Continuation

DAR File No.: 41556
Filed: 04/28/2017 02:25:44 PM


Concise explanation of the particular statutory provisions under which the rule is enacted and how these provisions authorize or require the rule:

Section 26-18-3 requires the Department of Health to implement Medicaid policy through administrative rules, and Section 26-1-5 authorizes the Department to adopt rules that provide services to Medicaid members and reimbursement to Medicaid providers. Additionally, 42 CFR 447.502 through 447.520 sets forth criteria for the payment of drugs.

Summary of written comments received during and since the last five-year review of the rule from interested persons supporting or opposing the rule:

The Department received written comments from Gold Standard after the Department filed an amendment to implement Medicaid policy by rule in 2016. The comment stated that by listing only one nationally recognized database (Medi-Span) to define a "covered outpatient drug", the Department was favoring one particular vendor instead of using broader language to avoid the need for passing a new law whenever a new business enters the marketplace. Gold Standard then suggested either changing the Definitions section of the rule (Section R414-60-2) to include Gold Standard, or using broader language to include any nationally recognized database. The Department also received written requests after filing an amendment to the rule in 2017 to implement the federal Covered Outpatient Drug Rule. These requests came from Convenience, Value and Service (CVS) Health and the Utah Food Industry Association (UFIA). These entities wanted to confirm their understanding of fee-for-service rates in regard to Wholesale Acquisition Cost (WAC), Federal Upper Limit (FUL), and the Utah Maximum Allowable Cost (UMAC), and to verify their understanding of urban, rural, and out-of-state professional dispensing fees. UFIA also wanted to confirm whether UMAC would factor in the National Average Drug Acquisition Cost (NADAC), and wanted to know whether pharmacies would be required to submit their Average Acquisition Cost (AAC) on every claim submitted in regard to the Department's evaluation of Submitted Ingredient Cost.

Reasoned justification for continuation of the rule, including reasons why the agency disagrees with comments in opposition to the rule, if any:

In its initial response to the comments from Gold Standard, the Department maintained that it does not reference other databases because it uses only the Medi-Span drug file. The Department further stated that if a drug is not in the Medi-Span drug file, the Department cannot adjudicate the drug because it is not in the system. Additionally, listing a generic reference could mean the drug is listed in the First DataBank file and not the Medi-Span file, and may render the Department unable to adjudicate the claim. When the Department switches its compendia from Medi-Span to another compendia, it will update the rule accordingly. In the meantime, the Department needs to specify and clearly state what it will cover and not cover. Based on the aforementioned response, the Department made the proposed rule effective in 2016. Nevertheless, after further discussion with Gold Standard and after more internal review, the Department decided to amend the rule further to use broader language. The new proposed change has been published for comment in the April 15, 2017, Utah State Bulletin under Filing No. 41379, and is pending approval to be made effective. In its response to CVS Health and UFIA, the Department confirmed their understanding of the proposed rule in terms of WAC, FUL, and UMAC, and verified their understanding of urban, rural, and out-of-state professional dispensing fees. The Department further confirmed that UMAC will be the NADAC for drugs that the Centers for Medicare and Medicaid Services (CMS) has established at a NADAC price. For drugs that do not have a NADAC, the Department may set a UMAC price. In regard to the Department's evaluation of Submitted Ingredient Cost, pharmacies that use medications purchased through the 340B program, Federal Supply Schedule, or Nominal Price, must submit the actual acquisition cost on the claim. Pharmacies that have purchased medications outside of these programs may continue to bill Utah Medicaid using their Usual and Customary pricing structure. The Department will continue this rule because it implements pharmacy services and prescription drug coverage, clarifies coverage for over-the-counter drugs, specifies reimbursement and pharmacy dispensing fees, and implements federal policy for covered outpatient drugs. There is no opposition to the rule itself, and the Department addressed previous concerns as noted above. Therefore, this rule should be continued.

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Health Care Financing, Coverage and Reimbursement Policy
288 N 1460 W
SALT LAKE CITY, UT 84116-3231

Direct questions regarding this rule to:

  • Craig Devashrayee at the above address, by phone at 801-538-6641, by FAX at 801-538-6099, or by Internet E-mail at cdevashrayee@utah.gov



Authorized by:

Joseph Miner, Executive Director

Additional Information

More information about a Five-Year Notice of Review and Statement of Continuation is available online.

The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull_pdf/2017/b20170515.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.

For questions regarding the content or application of this rule, please contact Craig Devashrayee at the above address, by phone at 801-538-6641, by FAX at 801-538-6099, or by Internet E-mail at cdevashrayee@utah.gov.  For questions about the rulemaking process, please contact the Office of Administrative Rules.