Settlement Relieves Safety-Net Hospitals of Burdensome and Costly Reporting Mandate - October 13, 2009

The Safety Net Hospitals for Pharmaceutical Access (SNHPA) expects CMS will notify state Medicaid programs within the next 30 days, clarifying that states may exempt hospitals from a federal mandate to collect national drug codes (NDCs) on physician-administered drugs if such drugs are billed at their “purchasing cost” as defined under a state’s Medicaid plan. The CMS transmittal will also advise the states that if a hospital drug qualifies for the exemption, it is not subject to a rebate under the Medicaid drug rebate program. The CMS action follows settlement of August 2008 litigation that SNHPA and the University Medical Center of Southern Nevada filed against CMS to reverse the implementation of the July 2007 CMS Medicaid regulation mandating the NDC reporting by hospitals, a requirement that would cost safety net hospitals millions of dollars and would be very difficult to implement.