Title of Regulation: 12VAC30-50. Amount, Duration, and Scope of Medical and Remedial Care Services (amending 12VAC30-50-35, 12VAC30-50-75).

Statutory Authority: § 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: October 7, 2015.

Effective Date: October 22, 2015.

Agency Contact: Emily McClellan, Regulatory Supervisor, Policy Division, Department of Medical Assistance Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219, telephone (804) 371-4300, FAX (804) 786-1680, or email emily.mcclellan@dmas.virginia.gov.

Basis: Section 32.1-325 of the Code of Virginia grants to the Board of Medical Assistance Services the authority to administer and amend the Plan for Medical Assistance. Section 32.1-324 of the Code of Virginia authorizes the Director of the Department of Medical Assistance Services (DMAS) to administer and amend the Plan for Medical Assistance according to the board's requirements. The Medicaid authority as established by § 1902 (a) of the Social Security Act (42 USC 1396a) provides governing authority for payments for services.

Purpose: This amendment to the state Medicaid regulations eliminates redundant coverage of benzodiazepines and barbiturates between Medicare and Medicaid. This amendment will not prevent full benefit dual eligibles from receiving these drugs. With this change, full benefit dual eligibles will obtain these two drugs from their Medicare Part D pharmacy benefit provider, rather than through the Medicaid fee-for-service program. In accordance with existing Medicaid policy, DMAS will continue to provide coverage for all other Virginia Medicaid-covered drugs that are not covered under Medicare Part D coverage.

Rationale for Using Fast-Track Process: DMAS is utilizing the fast-track rulemaking process because the agency does not anticipate any objections to these changes. Full benefit dual eligibles will continue to have the same access to all of the classes of drugs they previously had under Medicaid. This change is anticipated by the provider community because the expanded Medicare Part D drug coverage for benzodiazepines and barbiturates, regardless of medical condition, will be a national change that all Medicare Part D pharmacy benefit plans must implement. These plans are required by the Centers for Medicare & Medicaid Services to inform their enrollees of these changes.

Substance: The sections of the State Plan for Medical Assistance that will be affected by this action are 12VAC30-50-35 (Requirements relating to payment for covered outpatient drugs for the categorically needy) and 12VAC30-50-75 (Requirements relating to payment for covered outpatient drugs for the medically needy). Prior to the Medicare Improvement for Patients and Providers Act of 2008 (MIPPA), federal law restricted coverage of these two drugs under Medicare Part D, but they were available through Medicaid. Effective January 1, 2014, benzodiazepines and barbiturates will be covered for full benefit dual eligibles under Medicare Part D for all health conditions.

This change resulted from the passage of § 175 of MIPPA and the Affordable Care Act of 2010. MIPPA amended § 1860D-2(e)(2)(A) of the Social Security Act to remove the blanket exclusion of these two drugs from Part D coverage. The Affordable Care Act amended § 1927(d)(2) of the Social Security Act to require Medicare Part D coverage of benzodiazepines and barbiturates for any health condition, effective January 1, 2014.

Because of this additional Part D drug coverage, DMAS no longer needs to provide this class of drugs to full benefit dual eligible individuals. Therefore, DMAS terminates coverage of benzodiazepines and barbiturates for full benefit dual eligibles in order to eliminate redundant coverage of these two drugs.

Issues: The primary advantage to the general public and private citizens with this proposed regulatory amendment is the cost savings associated with the implementation of this change. DMAS will no longer need to provide benzodiazepines and barbiturates. With the implementation of this change, the cost of these drugs will be borne by the Medicare Part D plan of the enrollee, not by the Virginia Medicaid program. There are no disadvantages to the general public or private citizens.

The primary advantage to the agency and the Commonwealth is the transfer of coverage for barbiturates and benzodiazepines to the federally funded Medicare Part D plans, which will save money for the Commonwealth.

Medicaid enrolled pharmacies that provide coverage to full benefit dual eligibles also participate in the Medicare Part D plans that will be providing this additional coverage. It is anticipated that the transition to a different payor for these classes of drugs from the Virginia Medicaid program to Medicare Part D plans should cause no disruption in coverage. There are no perceived disadvantages to the Commonwealth for this proposed regulatory change.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to changes in federal law, the proposed regulations eliminate Medicaid coverage of benzodiazepines and barbiturates as of January 1, 2014, for recipients who will be eligible to receive these drugs under their Medicare coverage.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. Prior to the Medicare Improvement for Patients and Providers Act of 2008 (MIPPA), federal law restricted coverage of these two drugs under Medicare Part D, but they were available through Medicaid.

Effective January 1, 2014, benzodiazepines and barbiturates will be covered for full benefit dual eligibles under Medicare Part D for all health conditions. This change resulted from the passage of both Section 175 of MIPPA and the Affordable Care Act of 2010. MIPPA amended section 1860D-2(e)(2)(A) of the Social Security Act to remove the blanket exclusion of these two drugs from Part D coverage. The Affordable Care Act amended section 1927(d)(2) of the Social Security Act, to require Medicare Part D coverage of benzodiazepines and barbiturates for any health condition, effective January 1, 2014.

Because of this additional Part D drug coverage, Virginia Medicaid no longer needs to provide this class of drugs to full benefit dual eligible individuals. Thus, the proposed regulations terminate coverage of benzodiazepines and barbiturates for approximately 109,000 full benefit dual eligibles. With this change, full benefit dual eligibles will obtain these two drugs from their Medicare Part D pharmacy benefit provider, rather than through the Medicaid fee-for-service program.

While changes in coverage of these drugs will take place regardless of this regulatory action, the main economic impact of these changes is the shift in the funding sources. Currently, these drugs are paid by Virginia Medicaid which is funded jointly by state (50%) and by federal (50%) governments. As of January 1, 2014, Medicare program which is funded l00% by federal government will pay for these drugs. Thus, the Commonwealth will realize some fiscal savings and there will be additional federal funds coming into Virginia. Since additional federal funds coming into Virginia do not have offsetting reductions elsewhere in the state, these funds represent a net injection into Virginia's economy. These injections are likely to have positive impacts on state gross domestic product, employment, and income.

Businesses and Entities Affected. There are approximately 109,000 categorically and medically needy full benefit dual eligibles and approximately 1,000 pharmacies participating in the Medicaid program currently.

Localities Particularly Affected. The proposed regulations apply throughout the Commonwealth.

Projected Impact on Employment. This change should have a positive impact on employment in the Commonwealth as there will be some state fiscal savings and inflow of additional federal funds in the Commonwealth.

Effects on the Use and Value of Private Property. These changes are not anticipated to have a direct impact on the use and value of private property.

Small Businesses: Costs and Other Effects. These changes are not anticipated to have costs or other adverse impacts on small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. These changes are not anticipated to have an adverse impact on small businesses.

Real Estate Development Costs. No effect on real estate development costs is expected.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, a determination of the public benefit, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

Agency's Response to Economic Impact Analysis: The agency has reviewed the economic impact analysis prepared by the Department of Planning and Budget. The agency concurs with this analysis.

Summary:

The amendments eliminate redundant coverage of benzodiazepines and barbiturates between Medicare and Medicaid. Individuals who are eligible for both Medicare and Medicaid will obtain these medications under Medicare Part D drug coverage.

12VAC30-50-35. Requirements relating to payment for covered outpatient drugs for the categorically needy.

A. Effective January 1, 2006, the Medicaid agency will not cover any Part D drug for full-benefit dual eligible individuals who are entitled to receive Medicare benefits under Part A or Part B.

The Medicaid agency provides coverage for the following excluded or otherwise restricted drugs or classes of drugs, or their medical uses to all Medicaid recipients, including full benefit dual eligible beneficiaries under the Medicare Prescription Drug Benefit-Part D. The following excluded drugs are covered:

1. Agents when used for anorexia, weight loss, or weight gain (see specific drug categories in subsection B of this section);

2. Agents when used for the symptomatic relief of cough and colds (see specific drug categories in subsection B of this section);

3. Prescription vitamins and mineral products, except prenatal vitamins and fluoride (see specific drug categories in subsection B of this section); and

4. Nonprescription drugs (see specific drug categories in subsection B of this section);.

5. Barbiturates, except for dual eligible individuals when used in the treatment of epilepsy, cancer, or a chronic mental health disorder (see specific drug categories in subsection B of this section); and

6. Benzodiazepines, except for dual eligible individuals as Part D will provide coverage for all conditions (see specific drug categories in subsection B of this section).

B. Coverage of specific categories of excluded drugs will be in accordance with existing Medicaid policy as described in 12VAC30-50-520.

12VAC30-50-75. Requirements relating to payment for covered outpatient drugs for the medically needy.

A. Effective January 1, 2006, the Medicaid agency will not cover any Part D drug for full-benefit dual eligible individuals who are entitled to receive Medicare benefits under Part A or Part B.

The Medicaid agency provides coverage for the following excluded or otherwise restricted drugs or classes of drugs, or their medical uses to all Medicaid recipients, including full benefit dual eligible beneficiaries under the Medicare Prescription Drug Benefit Part D. The following excluded drugs are covered:

1. Agents when used for anorexia, weight loss, or weight gain (see specific drug categories in subsection B of this section);

2. Agents when used for the symptomatic relief of cough and colds (see specific drug categories in subsection B of this section);

3. Prescription vitamins and mineral products, except prenatal vitamins and fluoride (see specific drug categories in subsection B of this section); and

4. Nonprescription drugs (see specific drug categories in subsection B of this section);.

5. Barbiturates, except for dual eligible individuals when used in the treatment of epilepsy, cancer, or a chronic mental health disorder (see specific drug categories in subsection B of this section); and

6. Benzodiazepines, except for dual eligible individuals as Part D will provide coverage for all conditions (see specific drug categories in subsection B of this section).

B. Coverage of specific categories of excluded drugs will be in accordance with existing Medicaid policy as described in 12VAC30-50-520.