Texas Letter [RE: Proposed Medicaid Fee-For-Service Payment Rates for Pharmaceutical Providers]

November 22, 2015

VIA EMAIL & Hand-delivery

Stacey Johnston
Senior Policy Analyst
Vendor Drug Program
Health and Human Services Commission
PO Box
85200, Mail Code 2250
Austin, TX 78708-5200

RE: Proposed Medicaid Fee-For-Service Payment Rates for Pharmaceutical Providers

Dear Ms. Johnston:

The State Patient Access Coalition appreciates the opportunity to provide comments on the Texas Health and Human Services Commission (HHSC) proposed Medicaid fee-for-service payment rates for pharmaceutical providers contained in the Proposed Rules Section of the Texas Register from October 30, 2015. Although the proposed rules address a wide range of issues, this comment letter focuses on the proposed change from estimated acquisition cost (EAC) to specialty pharmacy acquisition cost (SPAC) for drug ingredient reimbursement and the switch from a “provider’s dispensing fee” to a “professional dispensing fee.” Given the unique requirements of dispensing blood clotting factor, The State Patient Access Coalition would respectfully request that HHSC consider using this rulemaking process to promulgate a unique Medicaid reimbursement for blood clotting factor that takes into account the extensive efforts required to provide blood clotting factor to Medicaid recipients. We would also request language in the final SPAC rule that would ensure Medicaid reimbursements represent the current market value of blood clotting factors.

The State Patient Access Coalition represents the world’s leading manufacturers and the nation’s leading distributors of blood clotting factor. Blood clotting factors are lifesaving therapies for individuals with bleeding disorders, such as hemophilia and von Willebrand Disease. SPAC was created to address issues of patient access to blood clotting factor and to discuss with policy-makers the unique process to manufacture and dispense this vital therapy. It is our hope that these discussions will lead to sound policies that ensure Medicaid recipients have access to their medically appropriate blood clotting factor from qualified providers.
In the notice of proposed rulemaking, HHSC proposes to replace EAC with SPAC to improve accuracy in pharmacy reimbursement through the use of a formula that is more reflective of the actual prices paid for Medicaid outpatient drugs. In developing this provision, we commend HHSC for recognizing that switching to an SPAC-based reimbursement formula in turn requires a dispensing fee that more accurately reflects the actual cost to dispense. This is especially true for the costs associated with the unique services and activities required to dispense blood clotting factor.
It is well documented that blood clotting factor therapies provide an increased quality of life for patients with bleeding disorders and result in long-term savings for patients, providers and payers. Reimbursement proposals that hinder patient access may lead to delays in obtaining proper medical care, resulting in increased hospitalizations, joint damage necessitating surgical intervention, and long term debilitation. The State Patient Access Coalition is concerned that changes to the reimbursement for blood clotting factor that do not consider all that is done to properly provide blood clotting factor could have a negative impact on patient care.
According to the National Hemophilia Foundation’s Medical and Scientific Advisory Council (MASAC), internationally recognized experts on treating individuals with bleeding disorders, there are a number of activities that specialty pharmacies must perform in order to properly provide blood clotting factor to individuals with bleeding disorders1. These standards include the following activities:
  • Maintain a product inventory to provide the full range of available blood clotting factors, including all available assays and vial sizes;
  • Provide all necessary ancillary supplies for administration of blood clotting factor including needles, syringes, and sterile gloves;
  • Provide containers for the disposal of hazardous waste, and the collection of such containers shall be arranged pursuant to state and federal law;
  • Fill all prescription orders within 48 hours and all emergency orders within 12 hours;
  • All prescription orders must be within plus or minus 5-10 % of prescribed assays;
  • 24 hour on call support by nurses, pharmacists, multilingual interpreters and support staff trained in bleeding disorders;
  • Case management services to evaluate and promote adherence to variable and, at times, complex dosing guidelines;
  • Unique delivery requirements including temperature controlled shipments with proof of delivery;
  • Notify patients of product recalls and withdrawals; and
  • Provide medically necessary nursing services, including the administration of clotting factor therapies.
A recent survey by Dobson DaVanzo proves this point.2 They administered a cost survey to five specialty pharmacies to determine the cost of dispensing blood clotting factor. The survey respondents were: Accredo/Express Scripts, BioRX, CVS Health (including the recent acquisition of Coram Infusion), National Cornerstone Healthcare Services, and Walgreens Infusion Services (now Option Care). This study was commissioned by the State Patient Access Coalition under the auspices of PPTA. It is estimated by Dobson DaVanzo that these pharmacies provide at least 85% of all clotting factor to Medicaid recipients.
Dobson DaVanzo used Medicare and Medicaid cost accounting principles in reviewing pharmacy costs that met the federal definition of a dispensing fee.3 The pertinent part of the rule states, “Dispensing fee means the...pharmacy costs associated with ensuring that possession of the appropriate covered outpatient drug is transferred to a Medicaid beneficiary. Based on the federal rule, Dobson DaVanzo surveyed the participants’ direct and indirect costs associated with dispensing clotting factor. These costs reflect the complex and multi-faceted nature of providing clotting factor according to MASAC standards.
The chart4 below highlights the primary finding of the report which concluded that it costs specialty pharmacies on average $998 to dispense blood clotting factor to Medicaid recipients5.
Dispenses to Medicaid Patients Weighted Average Median
Total Direct Costs per Dispense $385.82 $359.53
Total Indirect Costs per Dispense $612.37 $1,409.82
Total Costs per Dispense** $998.19 $1,723.34

HHSC could ensure it meets its mission of providing “the highest standards of customer service” if the proposed rule is finalized in a way that recognizes the professional efforts performed by specialty pharmacies dispensing blood clotting factor to Texans with rare, chronic conditions such as hemophilia. As is outlined above, dispensing blood clotting factor requires enhanced services and activities that vary greatly from those performed by a typical retail pharmacy. In many cases, these services are unique even in comparison to other products sold by a specialty pharmacy. In recognition of these unique services, the State Patient Access Coalition would respectfully request that HHSC consider using this rulemaking process to promulgate a unique Medicaid reimbursement for blood clotting factor that takes into account the extensive efforts required to provide blood clotting factor to Medicaid recipients.

The State Patient Access Coalition appreciates your consideration of our concerns and welcomes the opportunity to discuss them further. Should you have any questions or require additional information please do not hesitate to contact me at: This email address is being protected from spambots. You need JavaScript enabled to view it. or (443) 433-1110.

1 National Hemophilia Foundation. MASAC Recommendations Regarding Standards of Service for Pharmacy Providers of Clotting Factor Concentrates for Home Use to Patients with Bleeding Disorders. (MASAC Document #188).

2 Dobson DaVanzo & Associates is a well respected health economics and policy consulting firm based in Washington, DC, whose work has influenced the design of demonstrations and many public policy decisions, and appears in numerous instances in legislation and regulation.

3 42 CFR 447.502

4 Averages are weighted by number of dispenses. **5th Percentile, Weighted Average, Media, and 95th Percentile determined independently for each row using source data, therefore one cannot sum or re-calculate statistics using the data provided across rows to derive totals. 5th and 95th percentile are derived.

5 Evaluating Blood Clotting Factor Dispensing Cost for Medicaid Beneficiaries; Dobson DaVanzo & Associates (2014).