Provider Notice Issued 08/22/2019

Date:   August 22, 2019      
To:       All Pharmacy Providers
Re:      Pharmacy Reimbursement Methodology
The Department has implemented new pharmacy reimbursement methodology, effective July 15, 2019, to comply with the federal Centers for Medicare and Medicaid Services (CMS) Covered Outpatient Drug Rule (CMS-2345-FC). This methodology applies only to fee-for-service claims. It does not apply to claims billed to
HealthChoice Illinois managed care plans.   
The Rule requires states to use Actual Acquisition Cost (AAC) for Medicaid pharmacy reimbursement. CMS created the National Average Drug Acquisition Cost (NADAC) to enable states to reimburse at AAC. In addition, the Rule requires state Medicaid programs to change from a “dispensing fee” to a “professional dispensing fee” to reflect the pharmacist’s professional service and cost to dispense the drug to a Medicaid beneficiary.
The new reimbursement methodology is as follows:
·         Legend and over-the-counter (OTC) brand name drugs:  Lesser of NADAC, WAC – 4.4%, State Upper Limit (SMAC), billed charges
·         Legend and over-the-counter (OTC) generic drugs:  Lesser of NADAC, WAC – 17.5%, FUL, State Upper Limit (SMAC), billed charges
·         Professional dispensing fee for non-critical access pharmacies:  $8.85;
·         Professional dispensing fee for critical access pharmacies (CAPs):  $15.55; 
·         Blood factor:  Lesser of WAC – 10%, State Upper Limit (SMAC), billed charges
The Department has not yet completed the system updates to reimburse CAPs at the professional dispensing fee of $15.55.  In the interim, all claims will pay at a dispensing fee of $8.85, regardless of whether the pharmacy is CAP or non-CAP. Once programming is complete, the Department will notify pharmacies and CAP pharmacies with claims processed between July 15 and the implementation date that they may void and rebill to receive the appropriate professional dispensing fee. Any claims not voided and rebilled will be adjusted by the Department at a later date.
Critical Access Pharmacies are defined as pharmacies physically located within Illinois in counties with less than 50,000 residents; and whose owner(s) do not have ownership or control interest in ten (10) or more pharmacies; and which are brick and mortar,

meaning the pharmacy location is open to the public, recipients present at the pharmacy to fill prescriptions, and the majority of the pharmacy's business is not mail-order based or through delivery to a residential facility and which is not owned/operated by a hospital or located within a hospital. CAPs will be allowed to attest to meeting the aforementioned criteria through the MEDI system. A new attestation site is being developed and will be announced soon. In the interim, the Department will identify CAPs based on the providers who have attested to meeting the state-only CAP program and eliminating those providers who are in counties with 50,000 or more residents, as well as those who are owned/operated by a hospital or located within a hospital.
Questions regarding this notice may be directed to the Bureau of Professional and Ancillary Services at 877-782-5565.
Doug Elwell
Medicaid Director



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