Drug Rebate Programs
In order to receive federal funds for out-patient prescription claims, the drug must be made by a drug manufacturer that participates in the CMS drug rebate program. In return for having their drugs covered by state Medicaid programs, the manufacturer agrees to pay rebates according to their state and federal contracts.
Medicaid Drug Rebate Program
The Medicaid Drug Rebate Program requires drug manufacturers to sign a rebate contract with the Center for Medicare and Medicaid Services’ (CMS). Manufacturers must pay rebates to the states based on the number of units of their product that were paid for by the state, and the states in turn, must cover the drug manufacturers' products. The drug rebates apply to drugs supplied to Medicaid fee-for-service or managed care clients either through a contracted pharmacy or administered by a contracted physician/clinician.
Supplemental Medicaid Drug Rebate Program
The Supplemental Drug Rebate Program works in conjunction with the Medicaid Preferred Drug List (PDL). In order for a manufacturer's product to be included on the PDL, a manufacturer must agree to pay an additional, supplemental rebate amount on their products. Physicians that prescribe a manufacturer's product that is in a reviewed class, but were not selected as the preferred drug, are required to obtain a prior authorization for the non-preferred product.
CHIP Drug Rebate Program
The Kidney Health Care program provides wrap-around Part D coverage for eligible clients. CMS has classified this program as a State Pharmaceutical Assistance Plan (SPAP).
Drug manufacturers that want to participate in either the CSHCN Drug Rebate Program or KHC Drug Rebate Program must complete and sign two originals of the CSHCN Drug Rebate Agreement or KHC Drug Rebate Agreement and return two originals to the CSHCN and KHC Drug Rebate contact.
Rebate contracts that require manufacturer pricing or inquiries about manufacturer payments should be directed to the appropriate rebate administration contact.
Manufacturer Dispute of Claims
Please refer to Sections 5.3 (Dispensing Limits) and 9 (Rebates) of the Pharmacy Provider Procedure Manual to ensure the correct quantity is reported on the claim and how incorrect claims will be adjusted.