September 27, 2013

State of Alabama
Press Release: Medicaid

Agency employs multiple strategies to save money, preserve access

By employing a combination of financial, clinical and administrative strategies, Alabama Medicaid officials hope to cut approximately $11 million in state dollars from its pharmacy program in FY 2014 while still providing access to most critical medications for more than 600,000 Medicaid recipients who qualify for drug coverage each year.


The first cost-cutting measures were implemented July 1 and included reimbursement changes for compounded drugs, increased co-payments on drugs and a change to prevent stockpiling of medications via early refills. The three measures are estimated to save about $1 million in state funds during the 2014 fiscal year.


The next round of changes will start October 1 and include prescription drug limits, a mandatory three-month supply for certain drugs used to treat selected chronic diseases, and an end to coverage of over-the-counter drugs with exceptions for insulin, specialized nutritional products and second generation (e.g. non-sedating) antihistamines. Other measures set to begin on October 1 include a change to the Agency’s “lower of” payment method and expanded efforts of the Agency’s Drug Utilization Review board. Together they are projected to save $11.1 million during FY 2014.


One of the most visible changes will be the limit on prescription drugs for adults and a mandatory dispensing of a three month supply of certain drugs. Recipients will be limited to a total of five drugs per month, four of which may be brand-name drugs. However, recipients who require anti-psychotic, anti-epileptic (seizure) and/or anti-retroviral (HIV/AIDS) drugs will be allowed to have up to five additional (10 total) brand-name or generic versions of these drugs.


Additionally, the Agency is phasing in the drug limits to allow prescribers, pharmacists and recipients to find the best schedule for recipients, according to Clinical Services Director, Kelli Littlejohn, Pharm.D.


“While the prescription limit for adults may be challenging, the Agency is also implementing a mandatory three-month supply of certain medications for chronic disease states such as hypertension, diabetes, depression, asthma, thyroid disease, and high cholesterol as well as contraceptives,” she said. “The three month supply will only be applied to the recipient’s prescription limit during the month in which the drug is dispensed, however. Not only will this provide flexibility for the recipient, we also hope that this will benefit recipients who may have transportation or other barriers to timely refills.”


Summary of changes – Medicaid Pharmacy Program

·         July 2013

o   Compounding Changes

§  Compounding time no longer reimbursed

§  Most bulk products not covered for adults

§  Change in how claims for bulk powders are submitted

§  Maximum $200 payment for compounded products without prior approval

o   Increased co-payments for drugs based on drug cost

§  From 50 cents - $3, to 65 cents - $3.90)

o   Edits to prevent stockpiling of drugs via early refills

·         October 2013

o   Phase-in period for Prescription Drug Limit for adults begins

o   Phase-in period for Three Month supply for certain drugs begins

o   End coverage of OTC drugs for adults and children  (Non-Sedating Antihistamines, Insulin and Nutritionals excluded)

o   Expansion of Agency’s Drug Utilization Review Board activities

o   Change to Agency’s “lower of” reimbursement method so that Wholesale Acquisition Cost (WAC) is changed from WAC+9% to  WAC+0%

·         January 2014

o   Prescription Drug Limit for adults goes into effect

§  Five total drugs per month, four of which may be brand-name drugs

§  Up to five additional (10 total) for brand-name and generic anti-psychotic, anti-epileptic (seizure) and/or anti-retroviral (HIV/AIDS) drugs

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