Outpatient Drug Coverage, Formulary, Prior Authorization, and Dispensing Limits
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Rules governing Medicaid reimbursement, formulary, prior authorization, dispensing limits, rebate obligations, and development of the preferred drug list for outpatient drugs under Montana Medicaid; applies to providers, pharmacies, manufacturers, and the Medicaid Drug Formulary Committee.
No material clinical or coverage changes in this revision.
Coverage & Payment Conditions
General payment participation conditions
Department will pay for outpatient drugs only when ALL of the following conditions are met:
Derived from ARM 37.86.1102 paragraphs (2),(3),(3)(a),(6).
Dispensing limits
Dispensing quantity rules (apply when filling prescriptions):
From ARM 37.86.1102 paragraphs (5) and (2)(a).
The department does not participate in payment for certain outpatient prescription drugs. Specifically, drugs determined by the Secretary of Health and Human Services to be less than effective for all labeled uses are excluded from payment. The department also will not pay for drugs not subject to the rebate agreements required by 42 USC 1396r-8 or for drugs that do not meet prior authorization criteria as determined by the Medicaid Drug Formulary Committee unless an approved prior authorization exists. A prior authorization drug list is provided to interested Medicaid providers.
Provider Requirements & Authorization
Prior authorization required for non‑preferred or non‑authorized drugs
Prior authorization is required for drugs not identified as preferred on the preferred drug list and for drugs that do not meet prior authorization criteria determined by the Medicaid Drug Formulary Committee; a prior authorization drug list will be provided to providers.
- Drugs in the same therapeutic class as those on the PDL but not identified as preferred are subject to prior authorization.
- A prior authorization drug list is maintained and provided to interested Medicaid providers.
Use preferred drug list when medically appropriate
Prescribers must prescribe from the department's preferred drug list (PDL) if medically appropriate; drugs in the same therapeutic class that are not identified as preferred are subject to prior authorization.
- The PDL includes drugs subject to CMS‑approved supplemental rebate agreements.
- PDL and formulary decisions are made by the Medicaid Drug Formulary Committee (Drug Use Review Board) under 42 USC 1396r‑8.
Maintain signature log as proof of receipt
A provider must maintain a signature log as proof that the dispensed medication has been received by the member or an individual acting on the member's behalf; for nursing facilities, the person responsible for the security of pharmaceutical supplies may sign after verifying delivery.
- The member or their representative must sign the log each time they receive a prescription drug from a pharmacy provider.
- For prescriptions delivered to a nursing facility, the designated security person may sign after verifying delivery of all prescription drugs.
Do not dispense without prescribing practitioner authorization
Outpatient drugs may not be filled or refilled without authorization of the prescribing physician or other licensed practitioner recognized by the Medicaid program.
- Authorization must come from a practitioner who is authorized by law to prescribe drugs and is recognized by Medicaid.
Drugs not meeting formulary, rebate, or PA requirements will not be paid
The department will not participate in payment for prescriptions that are not on the department drug formulary, not subject to required rebate agreements, or that do not meet prior authorization criteria without an approved prior authorization.
- Drugs determined by HHS to be less than effective for all labeled uses are excluded from payment.
- Drugs not subject to a rebate agreement as required by 42 USC 1396r‑8 are not payable.
- An approved prior authorization is required for drugs that do not meet the committee's prior authorization criteria.
Dispensing Quantity Limits
Policy Background & Scope
These rules are administrative state requirements governing outpatient drug coverage, the drug formulary, and program operations under Montana Medicaid. They establish that the department maintains and updates the drug formulary, preferred drug list (PDL), and prior authorization drug list on a monthly basis and posts current listings on the department website. The rule also defines dispensing limits for prescriptions: maintenance medications may be dispensed up to a 90-day supply or 100 units, whichever is greater; other medications may not be dispensed in quantities greater than a 34-day supply; and when no specific quantity is ordered for injectable antibiotics, quantities sufficient to cover a three-day period are allowed. These provisions apply to providers, pharmacies, manufacturers, and the Medicaid Drug Formulary Committee under the authority cited in the rule.
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