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CMS finalizes Medicaid prescription drug reforms

January 25, 2016
by Nicole Stempak, Associate Editor
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The Centers for Medicare & Medicaid Services (CMS) will save an estimated $2.7 billion over the next five years by revamping the way it charges for prescription drugs within the Medicaid program. 

The final ruling on "Covered Outpatient Drugs," released last week, outlines how Medicaid prescription drug reimbursements and rebates will be calculated and how Medicaid will account for market prices accurately. The rule also closes loopholes, incentivizes pharmacies to use generic drugs and gives territories additional tools to manage Medicaid drug costs.

"Millions of Medicaid beneficiaries rely on prescription medications to manage chronic illnesses or treat acute conditions. But recently, the cost of prescription drugs has been rising rapidly, creating fiscal pressure and potentially compromising beneficiary access," says Vikki Wachino, CMS deputy administrator and director of the Center for Medicaid and CHIP Services, in a press release. "This final rule makes changes that will save taxpayers billions and ultimately improve beneficiary access to prescription drugs."

The Affordable Care Act brought about changes to Medicaid payments for prescription drugs, increased rebates and set limits on federal reimbursements.