Health Reform WK-EDGE Inclusion of territories in Covered Outpatient Drug final rule delayed
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Thursday, December 12, 2019

Inclusion of territories in Covered Outpatient Drug final rule delayed

By Rebecca Mayo, J.D.

An interim final rule will again delay the inclusion of the U.S. territories in the definitions of "State" and "United States" in the Covered Outpatient Drug final rule until 2022.

Including U.S. territories in the definitions of "States" and "United States" in the Covered Outpatient Drug final rule would subject them to program requirements that they are not currently prepared to meet. After delaying their inclusion in the definition from 2017 to 2020, the territories have again raised concerns that they are not ready to implement programs by the 2020 deadline. In response, CMS has issued an interim final rule that would delay including the U.S. territories in the definitions of "States" and "United States" as used in the Covered Outpatient Drug final rule until April 1, 2022 (Final rule, 84 FR 64783, November 25, 2019).

Final rule. The Health Care and Education Reconciliation Act of 2010 amended the Patient Protection and Affordable Care Act to include provisions pertaining to Medicaid reimbursement for covered outpatient drugs (CODs). In 2016, the Covered Outpatient Drug final rule implemented these provisions and revised other requirements related to CODs, including key aspects of the Medicaid coverage and payment and the Medicaid Drug Rebate (MDR) program. It also amended the regulatory definitions of "States" and "United States" to include the U. S. territories (American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands) beginning April 1, 2017. Based on immediate feedback from the U.S. territories, CMS realized that the U.S. territories would not be ready to implement the program by the April 1, 2017 deadline. CMS issued an interim final rule that amended the regulatory definitions of "States" and "United States" to include the U.S. territories beginning April 1, 2020 rather than April 1, 2017.

Impracticability. The U.S. territories have made progress towards developing their Medicaid Managed Information System (MMIS), however only one territory would be prepared to implement the MDR program by the 2020 deadline. Specifically, Puerto Rico has been delayed due to the natural disasters experienced over the past two years and asked for another delay in the inclusion of the U.S. territories in the definitions. CMS considered delaying inclusion of only those territories that are not prepared to implement the MDR program but determined that it would possibly modify the previously finalized definitions rather than merely delay their effective dates. Further, while the territories could seek a waiver from the requirements, it would impose some burdens and would only apply to the States or territories and not to the drug manufacturers that sell covered outpatient drugs in the territories which could raise other problems.

FederalRegisterIssuances: FinalRules AgencyNews DrugNews MedicaidNews NewsFeed

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