Well, it turns out that the Centers for Medicare & Medicaid Services (CMS) agrees with me because CMS recently rejected the payment increase. In a heretofore unpublished letter from CMS Administrator Dr. Donald Berwick to South Carolina's Department of Health and Human Services, Dr. Berwick wrote that "the State's interpretation of the First DataBank. Inc. settlement is contrary to its intended purpose of correcting the inflated markup of AWP." (More excerpts below.) Oh, snap!
Hat tip to Eric Ward, an intrepid investigative journalist for TheNerve.Org. He obtained the letter through a Freedom of Information Act request and shared it with me. Read his article.
A few more excerpts from the letter for fans of regulatory bureaucratese:
"I am unable to approve this SPA because it does not comply with section 1902(a)(30)(A) of the Social Security Act (the Act), which requires, in part, that States have methods and procedures in place that payment rates are consistent with efficiency, economy, and quality of care."
"As United States District Judge Saris stated in her order approving the settlement, 'AWP has been exposed as a faux inflated price unrelated to actual drug prices ... [and] ... rolling back AWPs or phasing them out as a pricing benchmark is in the public interest.' New England Carpenters Health Benefit Fund v. First DataBank. Inc., (D. Mass. March 17,2009) (order granting final approval of settlement). In addition, the State failed to demonstrate why the increased rate was needed to ensure adequate pharmacy payment given the findings of the Court regarding the AWP inflation in the First DataBank litigation."Medicaid payment to pharmacies will continue to be in news as the states face a fiscal crunch and scrutinize current benefit management practices (as discussed in another controversial article: How to Stop Medicaid from Overpaying for Drugs.) Stay tuned for more battles.