[Federal Register: February 24, 2006 (Volume 71, Number 37)]
[Notices]
[Page 9565-9567]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24fe06-91]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare and Medicaid Services
Notice of Hearing: Reconsideration of Disapproval of Iowa State
Plan Amendments 05-003
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Notice of hearing.
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SUMMARY: This notice announces an administrative hearing to be held on
April 13, 2006, at the Richard Bolling Federal Building, 601 E. 12th
Street, Room 235, Kansas City Conference Room, Kansas City, MO 64106-
2898, to
[[Page 9566]]
reconsider CMS' decision to disapprove Iowa State plan amendment 05-
003.
Closing Date: Requests to participate in the hearing as a party
must be received by the presiding officer by March 13, 2006.
FOR FURTHER INFORMATION CONTACT: Kathleen Scully-Hayes, Presiding
Officer, CMS, Lord Baltimore Drive, Mail Stop LB-23-20, Baltimore,
Maryland 21244, Telephone: (410) 786-2055.
SUPPLEMENTARY INFORMATION:
This notice announces an administrative hearing to reconsider CMS'
decision to disapprove Iowa State plan amendment (SPA) 05-003 which was
submitted on March 29, 2005. This SPA was disapproved on November 23,
2005. Under SPA 05-003, Iowa sought to simplify its State plan
provisions on drug pricing, reflecting the implementation of State
supplemental rebates and preferred drug list.
This amendment was disapproved because it did not comport with the
requirements of the Federal regulations at 42 CFR 447.331(c) and
sections 1902(a)(54) and 1927 of the Social Security Act (the Act) and
implementing regulations.
Specifically, Iowa failed to demonstrate that SPA 05-003 is
consistent with the Federal upper limit (FUL) regulations at 42 CFR
447.331(c). This regulation provides that the upper limit for payment
for multiple source drugs for which a specific limit has been
established does not apply if a physician certifies in his or her own
handwriting that a specific brand is medically necessary. The State
asserted that the physician certification provision (regarding the
medical necessity of a brand name drug) need not be followed as part of
the State's drug reimbursement methodology because the net cost, after
rebates, of these brand name drugs will not exceed the FUL. The State,
however, failed to demonstrate how this assertion is consistent with
the plain language of the regulation which provides for an FUL based on
State payment rates for prescription drugs (without regard to
manufacturer rebates), and an FUL exemption based on physician
certification.
The State also failed to demonstrate compliance with sections
1902(a)(54) and 1927 of the Act, which provide for the calculation of
rebates for covered outpatient drugs, based on payment that was made
under the State plan. Section 1927(b)(1)(B) of the Act provides for an
offset against medical assistance to account for such rebates. Such an
offset would not be necessary if the reference to ``payment'' was
intended to be a net payment and include rebates that are eventually
provided under section 1927. The State did not demonstrate that its
methodology is consistent with sections 1902(a)(54) and 1927 of the Act
which are not intended to change State payment rates for prescription
drugs and which, as noted previously, provide for calculation of
rebates based on State payment.
For the reasons cited above, and after consultation with the
Secretary, as required by the Federal regulations at 42 CFR section
430.15(c)(2), Iowa SPA 05-003 was disapproved.
Section 1116 of the Act and Federal regulations at 42 CFR Part 430,
establish Department procedures that provide an administrative hearing
for reconsideration of a disapproval of a State plan or plan amendment.
CMS is required to publish a copy of the notice to a State Medicaid
agency that informs the agency of the time and place of the hearing,
and the issues to be considered. If we subsequently notify the agency
of additional issues that will be considered at the hearing, we will
also publish that notice.
Any individual or group that wants to participate in the hearing as
a party must petition the presiding officer within 15 days after
publication of this notice, in accordance with the requirements
contained at 42 CFR 430.76(b)(2). Any interested person or organization
that wants to participate as amicus curiae must petition the presiding
officer before the hearing begins in accordance with the requirements
contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the
presiding officer will notify all participants.
The notice to Iowa announcing an administrative hearing to
reconsider the disapproval of its SPA reads as follows:
Mr. Daniel W. Hart, Assistant Attorney General, Counsel to the Iowa
Department of Human Services, Regents and Human Services Division,
1305 E. Walnut Street, Des Moines, IA 50319-0109.
Dear Mr. Hart:
I am responding to your request for reconsideration of the
decision to disapprove the Iowa State plan amendment (SPA) 05-003,
which was submitted on March 29, 2005, and disapproved on November
23, 2005.
Under SPA 05-003, Iowa was seeking to simplify its State plan
provisions on drug pricing, reflecting the implementation of State
supplemental rebates and the preferred drug list.
This amendment was disapproved because it did not comport with
the requirements of the Federal regulations at 42 CFR 447.331(c) and
sections 1902(a)(54) and 1927 of the Social Security Act (the Act)
and implementing regulations.
Specifically, Iowa failed to demonstrate that SPA 05-003 is
consistent with the Federal upper limit (FUL) regulations at 42 CFR
447.331(c). This regulation provides that the upper limit for
payment for multiple source drugs for which a specific limit has
been established does not apply if a physician certifies in his or
her own handwriting that a specific brand is medically necessary.
The State asserted that the physician certification provision
(regarding the medical necessity of a brand name drug) need not be
followed as part of the State's drug reimbursement methodology
because the net cost, after rebates, of these brand name drugs will
not exceed the FUL. The State, however, failed to demonstrate how
this assertion is consistent with the plain language of the
regulation which provides for an FUL based on State payment rates
for prescription drugs (without regard to manufacturer rebates), and
an FUL exemption based on physician certification.
The State also failed to demonstrate compliance with sections
1902(a)(54) and 1927 of the Act, which provide for the calculation
of rebates for covered outpatient drugs, based on payment that was
made under the State plan. Section 1927(b)(1)(B) of the Act provides
for an offset against medical assistance to account for such
rebates. Such an offset would not be necessary if the reference to
``payment'' was intended to be a net payment and include rebates
that are eventually provided under section 1927. The State did not
demonstrate that its methodology is consistent with sections
1902(a)(54) and 1927 of the Act which are not intended to change
State payment rates for prescription drugs and which, as noted
previously, provide for calculation of rebates based on State
payment.
For the reasons cited above, and after consultation with the
Secretary, as required by 42 CFR 430.15(c)(2), Iowa 05-003 was
disapproved.
I am scheduling a hearing on your request for reconsideration to
be held on April 13, 2006, at the Richard Bolling Federal Building,
601 E. 12th Street, Room 235, Kansas City Conference Room, Kansas
City, MO 64106-2898, to reconsider the decision to disapprove SPA
05-003. If this date is not acceptable, we would be glad to set
another date that is mutually agreeable to the parties. The hearing
will be governed by the procedures prescribed at 42 CFR Part 430.
I am designating Ms. Kathleen Scully-Hayes as the presiding
officer. If these arrangements present any problems, please contact
the presiding officer at (410) 786-2055. In order to facilitate any
communication which may be necessary between the parties to the
hearing, please notify the presiding officer to indicate
acceptability of the hearing date that has been scheduled and
provide names of the individuals who will represent the State at the
hearing.
Sincerely,
Mark B. McClellan, M.D., Ph.D.
Section 1116 of the Social Security Act (42 U.S.C. section 1316);
42 CFR section 430.18)
[[Page 9567]]
(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid
Assistance Program)
Dated: February 13, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 06-1647 Filed 2-23-06; 8:45 am]
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