ModifiedKansas Department of Health and EnvironmentPolicy N/A

Medicaid Pharmacy Services (Chapter 9) — Coverage Criteria

Customize your policy alerts

Sign up for all Kansas Department of Health and Environment policy alerts

Know when Kansas Department of Health and Environment releases new policies or updates existing guidance.

Monitor payer policy activity

Receive email alerts as soon as relevant payer policies are published or updated.

Governance and operational policies for the Kansas Medicaid fee-for-service pharmacy program, including PDL, prior authorization, DUR, reimbursement, provider education, and administrative requirements for pharmacies and prescribers.

Policy Summary

PayerKansas Department of Health and Environment

PolicyMedicaid Pharmacy Services (Chapter 9) — Coverage Criteria

Policy CodePolicy N/A

Change TypeUpdated management authority, automated PA, and reimbursement changes

Effective DateN/A

Next Review DateN/A

Key ActionSubmit prior authorization requests for non-preferred drugs (or follow automated point-of-sale PA when implemented) with clinical justification and required documentation.

SourceLink

POLICY UPDATE CHANGES

Recommend removal of the statutory limitation on management of mental health prescriptions and establishment of a Mental Health Prescription Drug Advisory Committee.

Recommend implementation of an automated prior authorization (electronic PA) system to enable point-of-sale screening and near-instant approvals.

Recommend updating drug pricing formulas and reimbursement limits, including review of maximum allowable cost (MAC) to limit reimbursement for generics.

113,446unique beneficiaries (FY2008)

~2,000,000

OpenPayer is powered by Trek Health's payer performance platform. Trek continuously ingests, validates, and normalizes Transparency in Coverage data alongside payer policies and other commercial payer data to create a structured payer intelligence foundation. OpenPayer uses this foundation to deliver personalized search results, dynamically generated policy pages, and tailored policy monitoring based on each user's payers, specialties, billing codes, and areas of interest. The same intelligence powers broader payer performance workflows, including reimbursement benchmarking, contract evaluation, payer negotiations, and financial decision-making.

ModifiedKansas Department of Health and EnvironmentPolicy N/A

Medicaid Pharmacy Services (Chapter 9) — Coverage Criteria

Customize your policy alerts

Sign up for all Kansas Department of Health and Environment policy alerts

Know when Kansas Department of Health and Environment releases new policies or updates existing guidance.

Monitor payer policy activity

Receive email alerts as soon as relevant payer policies are published or updated.

Policy Summary

PayerKansas Department of Health and Environment

PolicyMedicaid Pharmacy Services (Chapter 9) — Coverage Criteria

Policy CodePolicy N/A

Change TypeUpdated management authority, automated PA, and reimbursement changes

Effective DateN/A

Next Review DateN/A

Key ActionSubmit prior authorization requests for non-preferred drugs (or follow automated point-of-sale PA when implemented) with clinical justification and required documentation.

SourceLink

POLICY UPDATE CHANGES

Recommend removal of the statutory limitation on management of mental health prescriptions and establishment of a Mental Health Prescription Drug Advisory Committee.

Recommend implementation of an automated prior authorization (electronic PA) system to enable point-of-sale screening and near-instant approvals.

Recommend updating drug pricing formulas and reimbursement limits, including review of maximum allowable cost (MAC) to limit reimbursement for generics.

113,446unique beneficiaries (FY2008)

~2,000,000

prescriptions dispensed (FY2008)

745contracted pharmacies

89%% pharmacies contracted

12%increase in non-HealthWave costs

47%share psychotherapeutic spending

Coverage Criteria and Mental Health Drug Management

PDL/DUR governance and coverage determinations

Covered with criteria when decisions follow PDL/DUR committee recommendations and KHPA approval

PDL/DUR approval pathway: Therapeutic equivalence and prior authorization criteria are based on PDL committee recommendations and are reviewed and approved by the DUR committee, the KHPA Board, and the Legislative Rules and Regulations Committee before being implemented.

Clinical determinations by PDL precede economic negotiation and placement on PA

Mental health drug management criteria and protections

Conditions for managing mental health prescriptions if statutory limits are removed

Advisory committee safeguards: Establish a Mental Health Prescription Drug Advisory Committee composed of psychiatrists, psychologists, psychiatric pharmacists, stakeholders and consumers to determine PDL placement, prior authorization requirements, and billing limits; ensure committee guidance is used to develop clinical edits and point-of-sale management to promote safety.

Convene experts to guide use of mental health drugs statewide

Beneficiary protections: Beneficiaries would retain access to all medically necessary medications; only inappropriate therapy would be limited through pharmacy edits and prior authorizations. Protections include grandfathering of beneficiaries stable on regimens and timely access safeguards such as a 72-hour emergency supply when PA cannot be confirmed.

Preserve continuity of therapy and timely access at pharmacy

Medications used for mental health are explicitly excluded from placement on the Kansas Medicaid Preferred Drug List by statute. This statutory exclusion means these products are not subject to routine PDL designations that would otherwise make an agent “preferred” for dispensing under standard PDL processes.

Kansas Statute 39-7,121b prohibits imposing prior authorization or other restrictions on medications used to treat mental illnesses (for example, schizophrenia, depression, or bipolar disorder) for Medicaid recipients. That statutory language prevents application of typical pharmacy management tools to these medications unless the statute is changed.

When Kansas first implemented PDL and PA authorities in 2002, mental health drugs were exempted from direct management tools due to concerns about restricting access to care. The document recommends removal of that statutory limitation and describes establishing a Mental Health Prescription Drug Advisory Committee to provide clinical oversight if management authority is restored.

The policy is clear that any pharmacy edits or prior authorization applied to mental health medications would be targeted to limit only inappropriate therapy; beneficiaries must retain access to all medically necessary medications. The document does not enumerate specific clinical scenarios that would meet a not-medically-necessary standard in this excerpt, but frames restrictions as intended to address safety and inappropriate prescribing rather than to block needed treatment.

Provider Actions, Prior Authorization, and Billing Rules

Prior Authorization

Prior authorization required for non‑preferred drugs

Prescriptions for drugs that are non-preferred (not on the Kansas Medicaid PDL) require prior authorization; prescribers must provide reasons justifying use of a non-preferred agent and submit PA requests (currently by mail or fax) to the KHPA fiscal agent's PA unit for review against DUR Board-established criteria.

Non-preferred drugs require PA prior to dispensing.
PA requests are compared against criteria established by the DUR Advisory Board.
Current PA submission is manual (mail or fax); automated point-of-sale PA is recommended to enable near-instant approvals.

Prior Authorization

Use of prior authorization for mental health drugs

Prior authorization is identified as the standard pharmacy management tool to promote safety and to direct beneficiaries toward therapeutically equivalent, less expensive agents; application to mental health medications is discussed as contingent on statutory change and expert advisory oversight.

Point-of-Sale Screening and Pharmacy Operations

Note

Automated Point‑of‑Sale PA Screening and Emergency Fill Protection

Implement point‑of‑sale automated PA screening to enable near‑instant decisions and reduce delays; federal rules allow dispensing of a 72‑hour supply when PA cannot be confirmed to protect beneficiaries from treatment interruption.

Use automated PA to screen claims at the pharmacy counter for rapid guideline‑based determinations.
If PA cannot be confirmed at point of sale, a 72‑hour supply may be dispensed per federal protections.

Continuation and Grandfathering Protections

Grandfathering for stable beneficiaries

Protections proposed for beneficiaries stable on medications

Grandfathering: Beneficiaries already stable on a medication regimen would be grandfathered into the new PDL to ensure no disruption of therapy.

Operational detail recommended by KHPA

Access and transition safeguards: Ensure beneficiaries maintain access to medically necessary medications during implementation of PDL/PA changes; advisory committee guidance and point-of-sale management should include provisions to prevent interruptions and support rural/underserved areas with limited access to mental health prescribers.

Includes advisory input and 72-hour emergency supply protections

Step Therapy Process and PDL Placement

Role	Function / Effect on Coverage
PDL Advisory Board (established 2002; advises KHPA)	Evaluates therapeutic classes and designates preferred agents based on safety, effectiveness and cost‑effectiveness; when agents are therapeutically equivalent, KHPA selects the most cost‑effective agent for placement on the PDL; agents not placed as preferred remain available only via prior authorization requiring prescriber justification per DUR Board criteria.

Committee Action	Operational Impact
Establish therapeutic equivalence and support pricing negotiations	PDL committee confirms therapeutic equivalence within drug classes to facilitate competitive pricing; KHPA staff use recommendations to negotiate with manufacturers and, based on that competition, place the least cost‑effective drugs on prior authorization.

Advisory Committee Authority	Step Therapy / PA / Limits (coverage effect)
Mental Health Prescription Drug Advisory Committee (experts: psychiatrists, psychologists, psychiatric pharmacists, stakeholders, consumers)	Committee has sole ability to determine PDL placement, which medications (if any) should require prior authorization, and what billing limits/flags should be used; specific step‑therapy sequences are not specified in this excerpt — implementation decisions (PA criteria, billing edits) would be determined by the advisory committee and approved through the established PDL/DUR/KHPA review process.

Advisory Committee Authority

Step Therapy / PA / Limits (coverage effect)

Mental Health Prescription Drug Advisory Committee (experts: psychiatrists, psychologists, psychiatric pharmacists, stakeholders, consumers)

Committee has sole ability to determine PDL placement, which medications (if any) should require prior authorization, and what billing limits/flags should be used; specific step‑therapy sequences are not specified in this excerpt — implementation decisions (PA criteria, billing edits) would be determined by the advisory committee and approved through the established PDL/DUR/KHPA review process.

Quantity Limits and Class Examples

Proton Pump Inhibitors — Twice-daily dosing restriction

RestrictionPrior authorization edit added (Feb 2008) to limit unnecessary twice-daily dosing of proton pump inhibitors; reduced unnecessary twice-daily use by over 75% and saved an estimated $1.2M.

ScopeApplies to the Proton Pump Inhibitor (PPI) therapeutic class where twice-daily dosing is frequently used without sufficient evidence of necessity.

AuthorityEdit implemented using criteria developed by the DUR Board and applied at point-of-sale via PA edits.

OutcomeProduced a nearly flat cost-per-prescription curve for gastrointestinal drugs between FY2007 and FY2008.

Coding, Quality Indicators, and DUR Metrics

BPMS quality indicators — examples

Indicator 1Use of two or more atypical antipsychotics within 45 days.

Indicator 2Use of five or more psychotropic medications within a 90-day period.

PurposeBPMS uses these quality indicators to identify potentially inappropriate mental health prescribing and trigger educational outreach to prescribers.

Definitions and Advisory Committee

Preferred Drug List (PDL) — definition and role

DefinitionA Preferred Drug List (PDL) is a list of drugs advised by the PDL Advisory Board and established in regulation to promote clinically appropriate, cost-effective treatment based on safety, effectiveness, and clinical outcome data.

PDL placementWhen agents are judged therapeutically equivalent, the most cost-effective agent is placed as the PDL preferred drug to guide dispensing and negotiation.

Statutory roleThe PDL committee's recommendations facilitate competitive pricing and prior authorization placement; placement and PA criteria are reviewed by the DUR committee and approved by KHPA Board and Legislative Rules and Regulations Committee.

Drug Utilization Review (DUR)

DefinitionDrug Utilization Review (DUR) is a federally mandated program that provides education to prescribers and pharmacists, conducts patient profile reviews, population-based interventions, and sets criteria for prior authorization.

Background and Program Context

Medicaid pharmacy spending drivers include high-cost classes such as psychotherapeutic and central nervous system drugs, which together represented a large share of fee-for-service drug expenditures in FY2008. The document highlights concerns about safety—particularly atypical antipsychotic use in children—and notes that these psychotherapeutic medications were a major contributor to rising prescription costs and program spending growth.

Policy Summary

PayerKansas Department of Health and Environment

PolicyMedicaid Pharmacy Services (Chapter 9) — Coverage Criteria

Policy CodePolicy N/A

Change TypeUpdated management authority, automated PA, and reimbursement changes

Effective DateN/A

Next Review DateN/A

Key ActionSubmit prior authorization requests for non-preferred drugs (or follow automated point-of-sale PA when implemented) with clinical justification and required documentation.

SourceLink

On This Page

PA used to improve safety and ensure appropriate dispensing of commonly misused drugs.

Statutory restriction (K.S.A. 39-7,121b) currently prohibits PA/other restrictions on mental health drugs; recommendations seek removal of that limitation with advisory safeguards.

Prior Authorization

Prior authorization criteria and approval process

PA criteria are developed from PDL committee recommendations and approved by the DUR committee, KHPA Board and Legislative Rules and Regulations Committee; PA requests that fall outside established criteria are reviewed by KHPA clinical staff.

DUR Board establishes reasons justifying non-preferred use and approves PA criteria.
All PA criteria are reviewed and approved by DUR Board, KHPA Board and Legislative Rules and Regulations Committee before implementation.
Requests outside criteria are reviewed by a nurse or pharmacist at KHPA.

Note

PDL preference determines PA placement

The PDL Advisory Board evaluates therapeutic classes and designates preferred agents; when agents are judged therapeutically equivalent the PDL places a preferred agent and other agents may be managed via PA per committee guidance.

PDL Advisory Board assesses therapeutic equivalence and recommends PDL placement based on safety, effectiveness and cost-effectiveness.
PDL recommendations facilitate DUR committee determinations and negotiation that may place less cost‑effective drugs on PA.

Step Therapy

PDL and step‑therapy to encourage preferred agents

Step‑therapy and PDL-driven therapeutic equivalence are used to encourage use of less costly, clinically equivalent alternatives; DUR and PDL committees develop criteria before operational implementation, though specific step sequences are not specified here.

Step‑therapy and PDL mechanisms direct beneficiaries toward preferred agents when therapeutically equivalent.
DUR and PDL committees develop criteria prior to implementation; operational details for step sequences are not provided in this excerpt.

Note

Advisory board sets PDL placement and PA/limits

The Mental Health Prescription Drug Advisory Committee will determine PDL placement and which medications (if any) should require PA or billing limits; specific step‑therapy sequences and numeric limits are not detailed in this excerpt.

Advisory committee has sole ability to determine PDL placement and PA/limits for mental health drugs.
Step/limit specifics remain to be defined by the advisory board and implemented in billing systems.

Documentation Required

Documentation required for prior authorization requests

Prescribers must provide documented justification when requesting prior authorization for non‑preferred drugs; PA requests are submitted to the KHPA fiscal agent and reviewed by nurses/pharmacists against DUR Board criteria.

Reasons for use of a non‑preferred agent must be provided by the prescribing physician.
All PA requests are submitted (currently by mail or fax) and compared against DUR Board criteria by PA unit staff.

Denial Risk

Tamper‑resistant prescription requirement and fill restriction

Prescriptions for Medicaid recipients must be written on tamper‑resistant paper that meets federal requirements; pharmacies are not permitted to fill prescriptions on noncompliant pads (final implementation Oct 1, 2008).

Federal tamper‑resistant prescription requirement announced and implemented Oct 1, 2008.
Pharmacies must not fill Medicaid prescriptions written on pads that do not meet federal requirements.

Billing Rule

NDC and utilization data required on physician‑administered claims

Claims for physician‑administered medications must include the National Drug Code (NDC), quantity used, and related utilization data for rebate purposes; claims with NDCs that are not rebate‑eligible are denied as of January 1, 2008.

KHPA began collecting and submitting utilization data in January 2007.
As of Jan 1, 2008, claims submitted with NDCs not rebate‑eligible are denied.

Billing Rule

Prescriber NPI must be submitted on pharmacy claims

Pharmacy claims must include the prescribing provider's National Provider Identifier (NPI); KHPA required NPIs on all claims beginning April 1, 2008 and conducted outreach for denials between April 1 and May 23, 2008.

Legislative directive required NPIs on all pharmacy claims; KHPA enforced NPI submission as of Apr 1, 2008.
EDS contacted pharmacies receiving high numbers of denials due to NPI issues during outreach period.

Prior Authorization

Prior authorization workflow and 72‑hour emergency fill protection

Prior authorization at point of sale is recommended: the pharmacist notifies the prescriber and prescriber completes documentation for manual PA, EDS reviews submitted documentation, and federal rules permit a 72‑hour emergency supply if PA cannot be confirmed.

Current manual workflow: pharmacist notifies prescriber → prescriber completes documentation → EDS reviews → determination communicated to pharmacy.
Federal Medicaid rules allow dispensing of a 72‑hour supply when the pharmacy cannot confirm or reject a PA request.

Prior Authorization

Current PA submission is paper‑based; automated point‑of‑sale PA recommended

PA requests are currently submitted on paper and reviewed by nurses or pharmacists; implementation of an automated PA system is recommended to screen prescriptions at point of sale against prescription and medical claims history to speed approvals and reduce administrative burden.

Nearly 80% of submitted PAs are approved and could be handled via point‑of‑sale screening.
Automated PA enables instantaneous approvals for guideline‑concordant therapies and reduces documentation burden on pharmacists and physicians.

Denial Risk

PA triggers and interception at point of sale

Claims that do not meet PA criteria are intercepted at point of sale and require manual PA; non‑preferred drugs (not on the PDL) will trigger PA requirements and may be denied or delayed if PA is not obtained.

Automated PA systems intercept claims not meeting criteria at the point of sale and prompt the pharmacist to begin the manual PA process.
Non‑preferred drugs require PA prior to dispensing; failure to obtain PA can result in denial or delay.

Denial Risk

Denial for NDCs not rebate‑eligible

Claims submitted with NDCs that are not rebate‑eligible will be denied effective January 1, 2008; ensure NDCs submitted are rebate‑eligible to avoid denials.

States required collection of NDC and utilization data for rebate purposes.
Non‑rebate‑eligible NDC claims denied as of Jan 1, 2008.

Denial Risk

Tamper‑resistant prescription non‑compliance causes denial/refusal to fill

Pharmacies are prohibited from filling Medicaid prescriptions written on prescription pads that do not meet federal tamper‑resistant paper requirements; such prescriptions must not be dispensed.

Federal tamper‑resistant requirement announced through provider bulletins and posted on KHPA website.
Final implementation date: Oct 1, 2008; noncompliant pads result in non‑fill by pharmacies.

Denial Risk

Claims missing prescriber NPI risk denial

Claims missing the prescribing provider's NPI may be denied; KHPA required NPIs on pharmacy claims beginning April 1, 2008 and conducted provider outreach to reduce denials.

KHPA began requiring NPIs on all claims as of Apr 1, 2008.
EDS proactively contacted pharmacies experiencing high denial rates due to NPI submission issues.

Denial Risk

Prior authorization can function as a denial/management mechanism for mental health drugs

If prior authorization or PDL edits are applied to mental health drugs following statutory change, PA edits and PDL management could serve as denial or utilization‑management mechanisms; such application would follow the established PDL/DUR approval and advisory committee processes.

Prior authorization is described as the standard tool used to improve safety and ensure appropriate dispensing.
Application to mental health drugs would be subject to advisory committee determination and statutory change, and could result in denials or managed access.

Denial Risk

PA‑placement creates point‑of‑sale denial risk

Drugs placed on prior authorization by PDL/DUR committees or through pricing negotiations may be denied at the point of sale if PA is not obtained; providers should anticipate PA requirements for drugs identified by the committees.

PDL recommendations and DUR determinations guide placement of drugs on PA.
Failure to obtain required PA at point of sale can result in claim denial or interception.

GovernanceThe DUR program is supervised by a DUR Board composed by law of four physicians, four pharmacists, and one ARNP or PA; the board convenes every other month.

FunctionsDUR determines appropriate criteria for medications on prior authorization and oversees education activities such as academic detailing and newsletters.

Behavioral Pharmacy Management System (BPMS)

DefinitionBehavioral Pharmacy Management System (BPMS) is a retrospective educational system that analyzes prescription claims for mental health prescribing quality indicators and mails educational outreach to prescribers who exceed thresholds.

MechanismQuarterly prescription claims are submitted to CNS for analysis; prescribers exceeding QI thresholds receive mailed letters outlining triggered indicators and evidence-based alternatives.

LimitationsBPMS interventions occur months after prescribing and have shown inconsistent impacts, suggesting modest effectiveness of retrospective education alone.

Atypical antipsychotics — definition and safety concerns

DefinitionAtypical antipsychotics are newer-generation antipsychotic drugs associated with weight gain and metabolic adverse events and are major contributors to mental health drug spending.

Pediatric concernsThese agents are frequently used off-label in children; only risperidone and aripiprazole have specific adolescent pediatric approvals noted (risperidone for ages 5–17 for certain indications; aripiprazole for schizophrenia in ages 13–17).

Safety issuesRecent safety warnings (e.g., antidepressant black box for adolescents) and metabolic risks have raised concern about use and prompted calls for more direct management tools.

Preferred Drug List (PDL) — statutory role

Statutory basisThe PDL is established under Kansas statute and regulation; the PDL Advisory Board (established in 2002, K.S.A. 39-7,121a) provides direction for PDL implementation.

PurposePDL guides therapeutic equivalence determinations and supports negotiation for cost-effective placement of preferred agents within classes.

ProcessPDL committee recommendations are used by the DUR committee to set PA criteria and by KHPA staff to negotiate with manufacturers; final recommendations are reviewed by KHPA Board and Legislative Rules and Regulations Committee before regulatory implementation.

Mental Health Prescription Drug Advisory Committee — composition and advisory role

CompositionThe Mental Health Prescription Drug Advisory Committee is composed of experts such as psychiatrists, psychologists, psychiatric pharmacists, other stakeholders, and consumers.

RoleThe Committee advises KHPA/DUR on PDL placement, which medications (if any) should require prior authorization, and what billing limits should flag potentially inappropriate use.

SafeguardsThe Committee's work includes ensuring safe use statewide, identifying clinical edits for serious safety issues (e.g., atypical antipsychotic use in children), and supporting grandfathering and access protections.