CMS: New rule to save Medicaid billions in drug payments

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A new rule designed to stop the federal government from making inflated drug reimbursements to state agencies will save billions of dollars, the Centers for Medicare & Medicaid Services announced recently.

The new rule, which refigures the Medicaid drug-pricing formula, is expected to save $8.4 billion over the next five years, CMS said. Still, the Medicaid program is expected to spend $140 billion for drugs over the same time period, fiscal years 2007 through 2011, CMS said.

The rule, issued under the Deficit Reduction Act, is set to take effect Oct. 1. It is a response, in part, to a series of reports by the Government Accountability Office and the Department of Health and Human Services Office of Inspector General that found Medicaid payments to pharmacies for generic drugs were much higher than what pharmacies were actually paying for those drugs.