Prescribed Drugs Provider Manual - Iowa Department of Human ...

IowaDepartmentof HumanServicesProvider and ChapterPrescribed DrugsChapter III. Provider-Specific PoliciesPage89DateAugust 1, 2013D. BASIS OF PAYMENT FOR DRUGS AND SUPPLIESThe amount of payment for drugs and supplies is based on several factors, inaccordance with 441 IAC 79.1(8) and upper limits in 42 CFR 447.500 to 447.520.340B actual acquisition cost (340B AAC) means the net cost of a drug paid bya pharmacy for drugs purchased through the 340B drug pricing program. A drug’s340B AAC includes discounts, rebates, chargebacks, and other adjustments to theprice of the drug, but excludes dispensing fees.Average actual acquisition cost (average AAC) is defined as retailpharmacies’ average prices paid to acquire drug products.♦ Average AAC is determined by the Department based on a survey of invoiceprices paid by Iowa Medicaid retail pharmacies.♦ Surveys are conducted at least once every six months, or more often at theDepartment’s discretion.♦ The average AAC is calculated as a statistical mean based on one reported costper drug per pharmacy. The average AAC determined by the Department ispublished on the Iowa Medicaid Enterprise website.♦ If no current average AAC has been determined for a drug, the wholesaleacquisition cost (WAC) published by Medi-Span is used.Federal upper limit (FUL) is defined as the upper limit for multiple-source drugsestablished in accordance with the methodology of the Centers for Medicare andMedicaid Services, as described in 42 CFR 447.514.For drugs with no established FUL, the Department determines the allowableaverage actual acquisition cost in accordance with the provisions of federal drugregulation 42 CFR 447.512. This basis of payment is also applicable tocompounded prescriptions.Professional dispensing fee is added to the ingredient cost to cover thepharmacist’s professional services and costs associated with transferring the drugto a Medicaid member. The dispensing fee is set based on cost of dispensingsurveys of Iowa Medicaid participating pharmacies.