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CMS to Review Pharmacy Portion of MSA

On April 6, 2009, The Center for Medicare and Medicaid Services (CMS) announced its preferred method of pricing the future prescription costs in a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) proposal. Effective June 1, 2009, CMS will begin independently pricing the future prescription costs of these proposals using Average Wholesale Price (AWP). The memo goes onto state that they “will not use or recognize any other pricing, discounting, or calculation methods when determining the adequacy of the prescription drug amounts in WCMSA proposals.”

This memo also states that if future prescription costs are not included in the WCMSA proposal, but the Coordination of Benefits (COB) contractor deems that future prescriptions are necessary, CMS will utilize AWP for brand name drugs when determining the sufficiency of the prescription drug amount. Also, if a proposal if priced according to “generic” pricing and the COB determines that a “generic” drug is not available, the proposal will be re-priced using brand name pricing.

While this latest memo does not specifically come out and say it, one is now lead to the conclusion that CMS will now be reviewing the future prescription costs on WCMSA proposals. This move appears to have put to rest the sometimes heated debate regarding the “donut hole” within WCMSAs. Previously there were some who felt that the Medicare Part D deductibles, the donut hole, should be taken out of WCMSAs. There were others who felt it was a direct violation of the Medicare Secondary Payer statute to do so, and subsequently did not account for the donut hole within their specific proposals. What we can all agree on is that CMS left the window open for debate since they were not reviewing the future prescription costs of a WCMSA proposal anyway. Whatever position one may have taken on that issue, it is now clear that CMS has closed the window and will now be reviewing the WCMSA proposals in their entirety.

To view this latest memo in its entirety, please click here.

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