AMP and BP Methodology Changes are a GO!!

By: Debbe Saez, CIS Senior Compliance Manager
debbesaez@cis-partners.com

Do you remember when there was no limit on how many quarters a manufacturer could recalculate AMP or BP? That was more than 6 years ago. On August 29, 2003, CMS issued a final rule, CMS-2175-FC[1], which implemented the limitation on AMP and BP recalculations to a period not to exceed 12 quarters from the quarter in which the data is due. As clear as that rule is, there were still open questions about AMP and BP recalculations. Does the manufacturer always need CMS’ approval to recalculate? What methodology changes, if any, don’t require prior approval? What about pending requests for approval of methodology changes?

To clarify some of these questions, CMS issued guidance in Drug Manufacturer Release #78[2] on July 26, 2007. More recently, on August 26, 2009, CMS posted changes to this guidance in the form of a Spotlight on the Policy & Reimbursement section of CMS’ website[3]. The topics below highlight the key points from Release 78 and the Guidance in the Spotlight.

Topic:
Treatment of pending recalculation requests due to methodology change…
Release 78(July 26, 2007):
Implement methodology changes prospectively.
Spotlight(August 26, 2009):
Requests submitted to CMS before the 12-quarter limitation took effect:
Retroactive requests for methodology changes may be implemented, without prior review and approval from CMS, for the period specified in the request.
Requests submitted to CMS after the 12-quarter limitation took effect:
Manufacturers may implement changes and recalculate for a period not to exceed 12-quarters.(Contact Tamara Bruce at MDROperations@cms.hhs.gov for instructions about the data submission process.)

Topic:
New recalculation requests, after the date of the respective guidance, due to methodology changes…
Release 78(July 26, 2007):
Implement the change on a prospective basis without review by CMS.
Wait for approval from CMS before making retroactive changes.
Spotlight(August 26, 2009):
Both prospective and retroactive changes can made without prior approval by CMS.
Manufacturers are requested to notify CMS of the methodology change.
Retroactive changes are still subject to the 12-quarter limitation.

Topic:
Additional notes…
Release 78(July 26, 2007):
None
Spotlight(August 26, 2009):
CMS suggests that manufacturers work with States to prevent undue burden of rebate overpayment recovery.
CMS also suggests limiting the recovery of overpayments to 25% of the rebate payable in quarter.

Until now, manufacturers could not make retroactive methodology changes to their AMP and BP calculations without approval. The downside to this was that with the passing of each quarter, another quarter would fall out of the period available to implement the changes. Now that this is no longer an issue… let the recalculations begin!!

Sources:
[1] http://edocket.access.gpo.gov/2003/pdf/03-21548.pdf
[2] http://www.cms.hhs.gov/MedicaidDrugRebateProgram/03_DrugMfrReleases.asp
[3] http://www.cms.hhs.gov/Reimbursement/02_Spotlight.asp