SI Final Rule - White Paper

February 22, 2016
IT Supplement:
2016 Medicaid Program- Covered
Outpatient Drug Final Rule
Key Implementation Considerations for Manufacturers
Confidential and Proprietary
© 2016 IMS Health Incorporated and its affiliates. All rights reserved.
Trademarks are registered in the United States and in various other countries.

Page 2
Authors
Ari Ilan, Susan Dunne, Gladys Arnold, Julian Barron, Jay Patel,
Daniel Choi, Nicholas Torre, Matthew Schroyer, and Adam Kaufman

Page 3
Table of Contents
Introduction ....................................................................................4
1.0 Master Data Considerations...................................................7
2.0 Monthly AMP Methodology Determination ...........................10
3.0 Quarterly AMP Considerations.............................................12
4.0 Price Type Filters.................................................................16
5.0 Base Date AMP ...................................................................20
6.0 Bundled Sales Arrangements...............................................21
7.0 Authorized Generics ............................................................22
8.0 Medicaid Rebates ................................................................24

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Introduction
Intended Audience
The target audience for this guide is Government Pricing (GP) and
Medicaid Rebates Business Technology professionals; however, we
encourage all stakeholders impacted by the Final Rule to embrace these
considerations. We believe this will provide crucial cross-functional
insight into the Business Technology thought process, which may
facilitate a more efficient implementation of changes.
Overview
On January 25, 2016, IMS Health distributed a white paper entitled
“2016 Medicaid Program; Covered Outpatient Drug Final Rule Key
Operational Considerations for Manufacturers” to assist manufacturers
in analyzing the Center for Medicaid and Medicare Services (“CMS”)
Covered Outpatient Drug Final Rule [CMS-2345-F].
This document is an IT supplement and serves to assist technology
teams in understanding the business requirements that may need to be
implemented in a manufacturer’s chosen software solution. While many
of the provisions may appear straightforward from a business
perspective, there are typically substantial and cumbersome SDLC
requirements which must be met.
In this supplement IMS provides analysis of the Final Rule’s potentially
broad reach on business processes, technology systems, reports, and
other downstream enterprise integrations. We do not provide specific,
prescriptive solutions because systems and processes are not identical
among all manufacturers. Instead we offer a set of considerations for
stakeholders to discuss when evaluating implementation options.
As we are always striving to enhance our understanding of issues that
manufacturers face, we encourage you to provide detailed feedback.
Please also reach out if you would like to discuss any questions,
concerns, or for assistance with IT implementation of any specific
provisions in the Final Rule. Contact information for your local IMS
leadership can be found at the end of the document.

Page 5
Notes
• This document is for informational purposes only. IMS does not
engage in the practice of law and does not make any formal legal
interpretation of statutes, regulations, and other government-
issued guidance.
• The information contained herein is neither comprehensively
exhaustive nor specific to any individual manufacturer. IMS
recommends a full analysis and review of the Final Rule with your
company’s relevant stakeholders and Legal Counsel.
• Most, if not all, of the considerations provided may have an impact
on your business processes and associated documentation.
Manufacturers should make updates to business processes and
documentation in accordance with your company’s compliance
policies and change management requirements.
• Our analysis of what constitutes a configuration change versus a
core code change assumes newer versions of GP and Medicaid
commercially available systems, which have configurable user
interfaces (as opposed to back-end updates via SQL packs).
Some recommendations may not be applicable to older versions
of these software applications or homegrown systems solutions,
which may require robust code changes.
• This document is vendor neutral. No software vendors
participated in the creation of this document, which is strictly
based on the IMS team’s experience with a wide variety of tools.
• The considerations in this guide may lead to system changes.
Manufacturers will need to document and test all changes in
accordance with their company’s SDLC.

Page 6
Format and Structure
Our analysis of each issue is presented using the following structure:
Metric Definitions
Complexity
Relative level of difficulty to implement
Cost
Relative level of costs to implement
Time
Relative level of resource hours required to implement
Configuration Change
Can be implemented using out-of-box system functionality
Code Change
May require a patch/hotfix from the system vendor to implement
Customization Change
Code change that is specific to one manufacturer (not applicable to all
manufacturer deployments, as in the case of a patch/hotfix)
Reporting Change
May require modifications to the application reporting layer
Interface Change
May require modifications to inbound/outbound interfaces
Impacted Functionality
Relevant system functionality or module to which the changes apply
1
2
7
8
3
4
5
6
9

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1.0 Master Data Considerations
The provisions of the Final Rule may require manufacturers to make
changes to Master Data tables, including elements of the Customer
Master(s) and the Product Master(s).
1.1 Pediatric Indication Definition
The definition of “Pediatric Indication” was broadened. Drugs that
were not previously considered “pediatric” may now qualify for the
reduced 17.1% minimum rebate.
Considerations:
• Does the Product Master have a way to flag drugs as
“pediatric”?
o Is there a way to add additional related attributes
(e.g. Effective Date) to the Product Master?
• If changes are made to the Product Master, do any
interfaces need to be reconfigured?
• Does the Medicaid Rebates system allow for calculation of
the 17.1% base rebate for these products?
1.2 Identification of a Line Extension that is an Oral Solid Dosage Form
Manufacturers are required to identify line extensions of S/I drugs
that are an Oral Solid Dosage (OSD) form of the original drug. Line
extensions that are an OSD form may be subject to the alternative
Unit Rebate Amount (URA) calculation. OSD is defined to mean
capsules, tablets, or similar drug products intended for oral use.
Considerations:
• Does the Product Master have the ability to identify line
extensions?
o Does the Product Master need to be modified to
identify the link(s) between the original S/I drug and
the associated line extensions?
• Does the Product Master have a field to capture whether or
not a drug is an OSD?
o Is this field populated manually or via an interface?
• Does the Product Master require a field to identify corporate
relationship(s) between the S/I drug and the associated line
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Product Master
Medicaid
Section 1.1
Complexity:
Low
Cost:
Low
Time:
Low
Effective Date:
04/01/2016
Section 1.2
Complexity:
High
Cost:
Medium
Time:
High
Effective Date:
04/01/2016

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extensions?
• Does the URA formula need to be updated to account for
these changes to the Product Master?
1.3 Distinguishing Mail Order Pharmacies and RCPs
A distinction is drawn between an RCP that provides a home
delivery service versus an entity that owns both a retail community
pharmacy and a mail order pharmacy.
• Pharmacies that offer home delivery as a service, and do
not offer prescriptions primarily through the mail, should be
included in AMP.
o Manufacturers have latitude in how they determine
whether or not an entity dispenses covered drugs
primarily through the mail.
• If an entity owns both an RCP and a mail order pharmacy,
the mail order pharmacy sales should be excluded when
calculating AMP.
Considerations:
• How are parent-child relationships between RCPs and mail
order pharmacies captured?
• Did the Business create new Classes of Trade or any other
customer attributes to distinguish each of the following?:
o A) an entity that owns both an RCP and a mail order
pharmacy
o B) a pharmacy that provides a home delivery service
and does not dispense primarily through the mail
o C) a pharmacy that provides a home delivery service
and does dispense primarily through the mail
• Did the Business make updates to the system price type
policies to capture these changes?
o Are calculation filter configuration updates required?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Product Master
Medicaid
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Customer
Master
Government
Pricing
Section 1.3
Complexity:
Low
Cost:
Low
Time:
Medium
Effective Date:
04/01/2016

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1.4 Covered Outpatient Drugs (“CODs”)
CMS confirmed the multi-step process that manufacturers should
use to determine when a drug is a COD. Notably,
radiopharmaceuticals may be considered as CODs.
Considerations:
• Are there any products that are now CODs, but were not
previously consider CODs and vice versa?
• In the case of S/I drugs that are now CODs, is the
necessary data available to perform base date AMP
calculations and historical Best Price calculations?
• How will the required Government Pricing calculations be
performed if they were not previously done so? How will
Medicaid Rebate claims be received, validated, and paid?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 1.4
Complexity:
High
Cost:
High
Time:
High
Effective Date:
Retroactive to start
of MDR program?

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2.0 Monthly AMP Methodology Determination
The Final Rule requires manufacturers to determine whether a 5i
drug is “not generally dispensed” by Retail Community
Pharmacies (RCPs) using a 70% threshold (“70/30 test”).
Considerations:
• Should the system perform the 70/30 test before or after
AMP calculations?
o If after- 5i and RCP AMP both may need to be
calculated.
o If before- only one AMP calculation may be
necessary.
• What methodology and data should be used to calculate the
70/30 ratio? See Section 2.1
• How often should the ratio be calculated? See Section 2.2
2.1 Methodology and Data
Manufacturers have the option to perform the 70/30 test using a
smoothing process. The application of a smoothing process
should minimize the likelihood of “flip-flopping” between 5i/RCP
designations. Manufacturers have latitude in determining the time
span of historical data used for smoothing.
Considerations:
• What data should be used to calculate the ratio?
o Transactional sales versus 3rd
party data
• What time span of historical data should be used when
calculating the ratio?
• What, if any, smoothing methodology should be used when
calculating the ratio?
• What filters should be applied to the data when calculating
the ratio?
2.2 Frequency of Calculations and Reporting
Manufacturers must perform the 70/30 test on a monthly basis
and report which methodology was used and should therefore
assess their GP and Master Data Management (MDM) system’s
readiness to handle alternating 5i versus RCP designation
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 2.1
Complexity:
High
Cost:
Medium
Time:
Medium
Effective Date:
04/01/2016
Section 2.2
Complexity:
Medium
Cost:
Medium

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changes.
Considerations:
• How will the 70/30 ratio be calculated within the GP
system?
• How will the ratio be used to automate the choice of
Average Manufacturer Price (AMP) methodology?
• Where will the 5i designation be stored (e.g., MDM)?
• How will historical 5i designation changes be stored and
maintained for restatements and auditing?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
MDM
Time:
High
Effective Date:
04/01/2016

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3.0 Quarterly AMP Considerations
Provisions of the Final Rule may require manufacturers to
reconfigure their quarterly AMP price type.
Considerations:
• How does the 70/30 test requirement affect quarterly AMP?
See Section 3.1
o How does the business interpret CMS’ expected
method for calculating quarterly AMP?
• How does the interpretation impact quarterly AMP price
type configuration? See Section 3.2
3.1 Impact of 70/30 Test to Quarterly AMP
Monthly AMP methodologies may now switch between 5i and RCP
within a single-quarter depending on the results of the monthly
70/30 test, and a single quarterly AMP calculation may include
monthly AMPs calculated using both methodologies. See Figure
1 below for an illustration of a quarterly AMP calculation with “flip-
flopping” monthly AMP methodologies.
Considerations:
• How can the quarterly AMP price type be configured to
include 5i and RCP monthly AMP in the same reporting
period?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 2.0
Complexity:
High
Cost:
High
Time:
High
Effective Date:
04/01/2016
Section 3.1
Complexity:
Medium
Cost:
Low
Time:
Low
Effective Date:
04/01/2016

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Figure 1: Monthly AMP Methodology Impact to Quarterly AMP Determination
Month1Month2Month3qAMP
RCP AMP
5i? Y 70/30?
N Y
5i AMPN
RCP AMP
5i? Y 70/30?
N Y
5i AMPN
RCP AMP
5i? Y 70/30?
N Y
5i AMPN
qAMP

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3.2 Quarterly AMP Mechanics Considerations
Manufacturers are now expected to use the following calculation
for quarterly AMP:
Quarterly AMP =
(month 1 AMP × month 1 AMP units) + (month 2 AMP × month 2 AMP units) + (month 3 AMP × month 3 AMP units)
month 1 AMP units + month 2 AMP units + month 3 AMP units
If month 𝑛 AMP =
month 𝑛 AMP $
month 𝑛 AMP units
then the above is an exact mathematical
transformation of the following formula:
Quarterly AMP =
(month 1 AMP $ + month 2 AMP $ + month 3 AMP $)
month 1 AMP units + month 2 AMP units + month 3 AMP units
However, CMS clarifies that the second formula is inconsistent
with their expectation of how manufacturers should calculate
quarterly AMP. CMS’s comments imply that it expects
manufacturers to use reported monthly AMP values when
calculating quarterly AMP, which may be different than the
manufacturer’s calculated values (e.g. when there are calculation
exceptions).
See Figure 2 below for an illustration of the CMS expectation for
the quarterly AMP calculation using reported monthly AMP values
where the manufacturer data leads to calculation exceptions.
Considerations:
• Are changes to the quarterly AMP price type configuration
required to reflect the expected quarterly AMP
methodology?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 3.2
Complexity:
High
Cost:
High
Time:
High
Effective Date:
04/01/2016

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Figure 2: Effects of Exceptions on Calculated and Reported Monthly AMP
NegativeDollarsNegativeUnitsFalsePositive
Calculated
RCP AMP
Y 70/30?
N
N
Calculated
5i AMP
Exception?
5i?Start
Y
Exception?
Y
N
Y
N
RCP mAMP
$/Units
Month 3
Prior
Month AMP
Month 2
5i AMP
$/Units
Month 1
Calculated
RCP AMP
Y
70/30?
N
N
Calculated
5i AMP
Exception?
5i?Start
Y
Exception?
Y
N
Y
N
RCP mAMP
$/Units
Month 3
Prior
Month AMP
Month 2
5i AMP
$/Units
Month 1
Calculated
RCP AMP
Y 70/30?
N
N
Calculated
5i AMP
Exception?
5i?Start
Y
Exception?
Y
N
Y
N
RCP mAMP
$/Units
Month 3
Prior
Month AMP
Month 2
5i AMP
$/Units
Month 1
When using calculated values (not reported values),
monthly AMP is the same under both methods. Using
reported values may yield different results when there
are calculation exceptions.

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4.0 Price Type Filters
Provisions of the Final Rule may require manufacturers to make
various adjustments to price type calculation filters.
4.1 Sales and Price Concessions to U.S. Territories in AMP and Best
Price
The definition of “United States” and “States” will include Puerto
Rico and the U.S. territories (U.S. Virgin Islands, Guam, American
Samoa, and the Northern Mariana Islands).
Many manufacturers’ IT systems may already be equipped to
handle these configuration changes if their data for Puerto Rico
and the U.S. territories is already included in Non-FAMP
calculations. However, there may be instances where sales to
these regions are excluded from Non-FAMP but included in AMP
and Best Price (e.g. transfer prices from the U.S. parent to a
foreign subsidiary for drugs dispensed in Puerto Rico and the U.S.
territories).
Considerations:
• Do the business circumstances require transactional data
for sales to Puerto Rico and the U.S. territories to be
included in the calculations?
o Where is that data stored? Can it be accessed?
• Do price type configurations require updates to include
these sales and discounts?
o How will this data be included in applicable discount
reallocation, smoothing, and factoring processes?
o Do reports need to be updated to reflect this
additional data?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 4.1
Complexity:
Medium
Cost:
Low
Time:
Medium
Effective Dates:
04/01/2017

Page 17
4.2 Returned Goods in AMP and Best Price
The AMP and Best Price definitions are modified with regard to
what constitutes a return as follows: “reimbursement by the
Manufacturers for recalled, damaged, expired, or otherwise
unsalable returned goods, including (but not limited to)
reimbursement for the cost of goods and any reimbursement of
costs associated with return goods handling and processing,
reverse logistics, and drug destruction, but only to the extent that
such payment covers only these costs.”
Considerations:
• Do the reason codes and transaction types in the data
contain the required specificity?
• Do new reason codes and transaction types need to be
configured?
• Are there any price type filter updates required?
• Can the system maintain a history of reason code and
transaction type changes for restatement purposes?
4.3 Exclusion of Customary Prompt Pay Discounts (CPPDs) from AMP
The Final Rule confirms that CPPDs occur only between a
Manufacturer and a Wholesaler (as narrowly defined in the
regulation). CPPDs to Wholesalers only are excluded from AMP;
CPPDs to non-Wholesalers are included.
Considerations:
• Do the following attributes exist in the PPD transactional
data for calculation filtering?
o PPD Type: Customary versus Non-customary
o Customer Type: Wholesaler, RCP, and Non-RCP
• If the CPPD value is contained in the direct sales data, are
any changes to the interface required?
• Do changes need to be made to monthly AMP calculation
filters?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 4.2
Complexity:
Medium
Cost:
Low
Time:
Medium
Effective Dates:
04/01/2016
Section 4.3
Complexity:
Low
Cost:
Low
Time:
Low
Effective Dates:
04/01/2016

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4.4 Exclusion of Sales to Charitable or Not-for-Profit Pharmacies from
AMP
Transactions to “charitable” and/or not-for-profit pharmacies are
excluded from 5i and RCP AMP. Notably, these entity types are
listed under the exclusions list for both Standard and 5i AMP.
Considerations:
• Is there a way to determine “charitable” and/or not-for-profit
status?
o How often should verification occur for “charitable”
and/or not-for-profit status?
o Can this check be automated on a set schedule?
• Is the customer data granular enough to filter “charitable”
and/or not-for-profit pharmacies?
• Is the system able to capture effective and expiration dates of
entity designation?
4.5 Exclusion of Bona Fide Service Fees to Wholesalers and RCPs from
5i AMP
Bona Fide Service Fees (BFSFs) paid to Wholesalers and RCPs
are excluded from 5i AMP calculations.
Considerations:
• What is the company’s position on BFSFs to non-
wholesalers and non-RCPs?
• Does the BFSF data contain attributes necessary to identify
payments to Wholesalers versus payments to RCPs versus
payments to other customer types?
o Does the BFSF data contain attributes to identify the
type of payment (e.g. data fees, inventory
management fees, etc.)
• Do the 5i AMP calculation filters need to be updated to
exclude BFSFs to Wholesalers and RCPs?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 4.4
Complexity:
Low
Cost:
Low
Time:
Low
Effective Dates:
04/01/2016
Section 4.5
Complexity:
Low
Cost:
Low
Time:
Low
Effective Dates:
04/01/2016

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4.6 Any Prices to Covered Entities Excluded from AMP and Best Price
Manufacturers are required to exclude “any prices” provided to
340B covered entities from AMP and Best Price.
Considerations:
• How does the business define “any prices”?
• Does the customer data contain filterable attributes
necessary to identify all purchases at all prices for eligible
covered entities?
• If there is a business requirement to include prices to the
expansion entities, does the data contain attributes to filter
on covered entity type?
• How are these purchases excluded from AMP and Best
Price?
4.7 Clarification of Nominal Sales Excluded from Best Price
All transactions that satisfy the “nominal sales” definition are
excluded from Best Price.
Considerations:
• Does the system have a way to flag Best Price excludable
nominal sales?
• Does the system utilize price filters to exclude nominal sale
transactions from Best Price determination?
• Are there any nominal sales reports that need to be updated?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Section 4.6
Complexity:
Medium
Cost:
Low
Time:
Medium
Effective Dates:
04/01/2016
Section 4.7
Complexity:
Low
Cost:
Low
Time:
Low
Effective Dates:
04/01/2016

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5.0 Base Date AMP
Base date AMP may be restated on a product-by-product basis if
the necessary transaction data is available to do so. There may be
application implementation considerations when deciding to restate
base date AMP.
5.1 Base Date AMP Restatement
Manufacturers may recalculate base date AMP on a product-by-
product basis.
Considerations:
• Is the historical data required to restate base date AMP
available?
o Do the COT definitions from that data align to the
ACA definitions (e.g., wholesaler)?
• Can a new field for ACA base date AMP be added to the
Product Master?
• Does the system allow for inflationary penalties to be
calculated using more than one base date AMP field?
• Are there systems or interfaces accessing new fields?
• Do adjustments need to be made to the reporting layer(s) to
account for the modification of existing fields or the addition
of new fields to the Product Master?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Product Master
Section 5.1
Complexity:
Medium
Cost:
Medium
Time:
Medium
Effective Date:
04/01/2016

Page 21
6.0 Bundled Sales Arrangements
Discounts in bundled sales arrangements may need to be
reallocated in accordance with the regulation. Manufacturers may
need to make changes to the way they are currently reallocating
discounts in their software application. Many manufacturers may be
using custom solutions for discount reallocation, and the associated
system changes are likely more complex than User Interface (UI)
configuration updates.
6.1 Discount Reallocation
All discounts in a bundled sale arrangement must be allocated
proportionally to the total dollar value of the units of all products
sold under the bundled arrangement.
CMS also added “or products” when referring to the total dollar
value of the units in the bundled sale. This change means
manufacturers should reconsider whether other products that are
not Covered Outpatient Drugs (CODs) but are part of the bundled
sale arrangement should be included in the unbundling process.
Considerations:
• Will the business be making changes to its discount
reallocation methodology?
• How will these changes be implemented in the system?
o Do contract attributes need to be created or
modified?
o Does the unbundling logic need to be updated?
o Are there devices that need to be unbundled with
drugs?
o Are there any discount reallocation interfaces that
need to be updated?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Contracting
Discount
Reallocation
Section 6.1
Complexity:
High
Cost:
High
Time:
High
Effective Date:
04/01/2016

Page 22
7.0 Authorized Generics
The business requirements for including sales of authorized
generics in AMP calculations are complex and may require
manufacturers to make system changes. Detailed analysis should
be performed to determine the necessary transactional data and
price type calculation logic.
7.1 Sales from Primary Manufacturers to Secondary Manufacturers
Manufacturers are required to include sales of authorized generic
drugs from a Primary Manufacturer to a Secondary Manufacturer
(both as defined in the regulation) in its AMP calculation, if the
Secondary Manufacturer engages in wholesale distribution of
drugs to RCPs. The Primary Manufacturer is to include sales of
authorized generics in its Best Price determination of the branded
product, provided the authorized generic drug is sold by the
Primary Manufacturer.
Considerations:
• Is the company a Primary Manufacturer of a drug for which
there is also an authorized generic drug in the
marketplace?
o If so, is it also selling the authorized generic version
through a related legal entity?
 How can it be determined if the related entity is
functioning as a wholesaler to RCPs?
 Can a quantitative analysis be performed to
make this determination?
• What data should be used?
 Can the determination be made on a product-
by-product basis?
 How frequently should this determination be
made?
o Should the Secondary Manufacturer’s lagged exempt
sales, price concessions, and royalty payments be
included in the GP calculations for the branded
AMP?
 Should there be combined or separate
smoothing ratios?
o What changes need to be made to the price type
filters and calculation logic?
Section 7.1
Complexity:
High
Cost:
High
Time:
High
Effective Date:
04/01/2016

Page 23
o Do any changes need to be made to the Master Data
to account for Secondary Manufacturers that act as
wholesalers to RCPs for some authorized generics,
but not others?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Government
Pricing
Master Data

Page 24
8.0 Medicaid Rebates
Provisions of the Final Rule may require manufacturers to make
changes to their Medicaid Rebate system.
Considerations:
• How will the inclusion of Puerto Rico and the U.S. Territories
impact the system? See Section 8.1
• How will the system calculate alternative URA for line
extensions? See Section 8.2
• Can the system effectively validate Medicaid MCO rebate
claims? See Section 8.3
8.1 Inclusion of Puerto Rico and U.S. Territories for Medicaid Rebate
Processing
As noted above in Section 4.1, the definition of “States” is
expanded to include Puerto Rico and the U.S. Territories (Virgin
Islands, Guam, Northern Mariana Islands, and American Samoa).
Manufacturers will need to pay rebates to the additional States for
the associated Medicaid rebate claims.
Considerations:
• How will claims from the additional States be received and
validated?
• Does the Medicaid Rebate system allow for payment of
claims to the additional States?
• Can the system handle supplemental rebate contracts with
the additional States?
8.2 Alternative Unit Rebate Amount (“URA”) for Line Extension Drugs
As noted above in Section 1.2, manufacturers are required to
calculate an alternative URA for line extensions that are an Oral
Solid Dosage form of the original S/I drug.
This alternative URA is the product of the AMP of the line extension
drug and the highest additional rebate (calculated as a percentage
of AMP) for any strength of the original S/I drug.
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Medicaid
Section 8.2
Complexity:
Low
Cost:
Medium
Time:
Medium
Effective Dates:
04/01/2016
Section 8.1
Complexity:
Medium
Cost:
Medium
Time:
High
Effective Dates:
04/01/2017

Page 25
Considerations:
• Does the system have the ability to calculate alternative
URA?
• Can the system compare alternative URA to “standard”
URA?
8.3 Managed Care Organizations (“MCO”) Utilization – Date of Service
States that have participating Medicaid MCOs must provide
utilization data with rebate claims based on the date dispensed (i.e.
date of service) as opposed to the claim paid date.
Considerations:
• Can the system validate that invoices received from Medicaid
MCOs are processed based on the date dispensed (date of
service)?
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Medicaid
Configuration
Change
Code
Change
Customization
Change
Reporting
Change
Interface
Change
Medicaid
Section 8.3
Complexity:
Medium
Cost:
Low
Time:
Medium
Effective Dates:
04/01/2016

Page 26
Practice Leadership
New York
Ari Ilan
ailan@us.imshealth.com
Los Angeles
Cynthia Hwang
chwang@us.imshealth.com
Washington, DC
Susan Dunne
sdunne@us.imshealth.com
San Francisco
David Chan
dchan@us.imshealth.com
Chicago
Jeremy Docken
jdocken@us.imshealth.com
Philadelphia
Kathleen Kulp
kmkulp@us.imshealth.com

SI Final Rule - White Paper

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