CurrentNew Mexico Health Care AuthorityPolicy 8.324.4
Pharmacy Services, Prescribing, and Practitioner-Administered Drug Reimbursement
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State rule governing Medicaid (MAP) coverage, provider eligibility, provider responsibilities, coverage limits, prior authorization, utilization review, and reimbursement methods for pharmacy and practitioner-administered drug items administered by the New Mexico Medical Assistance Division (MAD). Applies to providers and MAP eligible recipients under New Mexico MAD.
Policy Summary
PayerNew Mexico Health Care Authority
PolicyPharmacy Services, Prescribing, and Practitioner-Administered Drug Reimbursement
Policy CodePolicy 8.324.4
Change TypeNo material change
Effective DateJan 1, 2014
Last ReviewJul 9, 1984
Next Review DateN/A
Key ActionSubmit pharmacy claims via point-of-sale and obtain prior authorization when POS indicates adequate supply or excessive quantity.
SourceLink
POLICY UPDATE CHANGES
No material clinical or coverage changes in this revision.
6+Provider types
6 yearsRecord retention
Required340B billing
90 daysMaintenance supply max
34 daysNon-maintenance max
No extra payUnit dose payment
Coverage Criteria and Billing Rules
COVERAGE CRITERIA
Covered when ALL of the following are met:
MAD covers medically necessary prescription drugs and some over-the-counter (OTC) items; claims for injectables, IV admixtures, IV nutritionals and other expensive medications may be reviewed for medical necessity before or after reimbursement.
For MAP recipients age 21 and older who are not institutionalized, OTC coverage is limited to specified items (insulin, diabetic test strips, prenatal vitamins, electrolyte replacement system, ophthalmic lubricants, pediculosides and scabicides, sodium chloride for inhalations, topical and vaginal antifungals, and topical anti-inflammatories); other OTC items require recipient purchase unless prior authorization is granted.
When drugs are on a preferred drug list, generic-first provisions apply: the MAP recipient must first try one or more generic items on the preferred list before MAD will cover a brand-name drug; brand coverage requires prescriber medical justification and MAD (or designee/MCO) approval; generic-first does not apply to injectable drug items.
MAD pays only for drugs from manufacturers that participate in federal rebate agreements, except where single-source or essential innovator multiple-source drugs are necessary for patient health.
MAD does not cover drugs that meet the federal definition of Medicare Part D covered drugs for MAP recipients who are Medicare Part D–eligible; MAD will not cover Part D copayments or drugs during a Part D coverage gap.
Specific non-covered items include: drugs not eligible for federal financial participation (e.g., DESI drugs), fertility drugs, certain compounded drugs lacking FDA-approved ingredients or NDCs, weight loss drugs, sexual dysfunction drugs, barbiturate hypnotics (except for nursing home residents), and cough/cold preparations for recipients under age four.
Non-prescription items may be covered without prior authorization for nursing facility or ICF-IID residents when not included in facility reimbursable cost; certain items (diabetic testing supplies/equipment, aspirin/acetaminophen, routine ointments/lotions/creams, rubbing alcohol and other station-stocked non-prescription items) cannot be charged to the recipient or billed to MAD.
All MAD services are subject to utilization review for medical necessity and program compliance; prior authorization may be required for services where a less expensive or therapeutically preferred alternative should be used first. Providers may request reconsideration of denials.
MAD's DUR program includes prospective (ProDUR), concurrent and retrospective review; ProDUR screening is required before each prescription is dispensed and pharmacists are required to perform prospective DUR and offer counseling with documentation of refusals.
Ingredient cost reimbursement will be the lowest of EAC, MAC, actual acquisition cost for 340B drugs, or FUL; dispensing fee is added where applicable; practitioner-administered drugs are reimbursed per MAD fee schedule.
Pharmacy coverage and billing criteria
Key coverage and billing requirements (must be followed for claims to be processed):
Drugs purchased under Section 340B and dispensed to MAP recipients must have the provider's actual ingredient cost placed in the ingredient cost field and be indicated/flagged on the billing transaction as a 340B drug item; when a recipient requests fill by a contract 340B pharmacy, the pharmacist must dispense 340B-purchased items.
Provider billed charge must be the provider's usual and customary charge; OTC items billed at the OTC price unless labeled and dispensed as a prescription; usual and customary charges must reflect discounts available to the general public and applicable recipient discounts.
All in-state and border-area pharmacy providers must submit claims through the point-of-sale (POS) system unless an exception applies; if POS indicates adequate supply or excessive quantity, the pharmacist must resolve the alert and obtain authorization to dispense.
Maintenance drugs: up to three dispensings in 90 days with a 14-calendar-day grace period (up to 90-day supply for recipients with likely continuous eligibility); non-maintenance drugs: 34-day supply; Schedule II controlled substances: maximum 34-day supply; oral contraceptives: up to one-year supply when appropriate.
Refills must be consistent with prescribed dosage and law; consistent early refills will adjust allowed refill dates; controlled substances may not be refilled until 75% of prior days' supply used unless prescriber approves; pharmacies must verify dispensing history (including PDMP) when linked and are responsible for assuring refill criteria are met; dispenses not meeting criteria are subject to recoupment.
If pharmacist suspects over-utilization or abuse (excessive doses, overlapping therapies), pharmacist must contact prescriber and MAD; such prescriptions may be subjected to prior authorization or recoupment if prescriber contact is not made and documented.
MAD does not pay additional reimbursement for unit dose packaging.
MAD selects sources to set EAC and MAC (wholesalers, manufacturers, federal agencies, clearinghouses, invoices) and may solicit assistance from PBMs, pharmacists, actuaries or consultants; pharmacy price reductions or promotions that reduce consumer price must similarly reduce the charge to MAD.
MAD may provide mail service pharmacy as an option; retail pharmacies may mail, ship or deliver prescriptions consistent with law.
If a pharmacy gives a product free to the general public, the provider must not submit a claim to MAD for that product when provided to a MAP recipient.
Coding, Reimbursement Methods, and Definitions
DUR / billing overridesmixed
| ProDUR overrides / DUR override codes | Pharmacist may be required to insert appropriate DUR override codes when ProDUR detects therapy issues. |
340B drug billingmixedCovered
| 340B | Drugs purchased under Section 340B must be indicated on the billing transaction and billed at provider actual acquisition cost. |
Generic‑first requirement
RequirementMAP eligible recipients must first use one or more generic items available on the preferred drug list before MAD covers a brand name drug for the condition; injectables are exempt.
Exemptions published byMAD publishes therapeutic categories and specific items exempt from generic-first coverage.
Brand coverageBrand name drug items may be covered upon approval by MAD or its designee based on prescriber medical justification.
Relation to OTC coverageMAD may expand covered over-the-counter items as part of generic-first provisions when economical or therapeutically preferred.
Reimbursement floor/ceiling determination
General ruleEstimated ingredient cost will not exceed the lowest of EAC, MAC, actual acquisition cost of a 340B drug, or the federal upper limit (FUL).
Dispensing feeA dispensing fee established by MAD is added where applicable; reimbursement uses the lowest total when comparing methods.
Provider billed lower costMAD will use the ingredient cost indicated on the billing transaction as the EAC when that indicated ingredient cost is lower than MAD's EAC.
Medicare interactionWhere applicable, reimbursement may be limited to Medicare-allowed amounts plus dispensing fee if that total is the lowest of EAC, MAC, FUL, U&C or 340B amount.
Maintenance drug maximum supply and refill rules
Maximum supplyMaintenance drugs: prescriptions for recipients with likely continuous eligibility may be dispensed in amounts up to a 90‑day supply.
Dispensing frequencyMaintenance drugs are subject to a maximum of three dispensings in 90 days with a 14‑calendar day grace period for necessary early refills.
Refill adjustmentsConsistent early refills will trigger recalculation of on‑hand supply and allowed refill dates will be adjusted accordingly.
Definition sourceMaintenance drugs are those on the MAD‑approved maintenance drug list.
Non‑maintenance drug maximum supply
Default supply limitPrescriptions for non‑maintenance drugs are limited to 34‑day supplies.
Schedule II controlled substancesSchedule II controlled substances are limited to a maximum 34‑day supply; initial use may be further limited by state law.
ExceptionsCertain drugs may have more flexibility due to dosage forms, packaging, or clinical concerns as specified by MAD.
Provider Responsibilities and Authorization
Prior Authorization
Prior authorization and utilization review may be required
All MAD services are subject to utilization review for medical necessity and program compliance. Reviews may be performed before or after services are furnished and before or after payment. MAD or its designee reviews all prior authorization requests; prior authorization does not guarantee that an individual is eligible for MAD services. Providers must verify recipient eligibility at the time services are furnished. Providers may request reconsideration of prior authorization denials.
- Verify MAP recipient eligibility at time of service.
- Submit prior authorization requests to MAD or its designee when required (e.g., less expensive or therapeutically preferred alternatives first).
- Reconsideration of denials available per 8.350.2 NMAC.
Documentation Required
Drug utilization review (ProDUR) and counseling required
Prospective drug use review (ProDUR) screening is required before each prescription is dispensed. The dispensing pharmacist must perform ProDUR, offer counseling on new prescriptions, and document any refusal of counseling.
- Perform ProDUR screening for potential therapy problems (over-/under-utilization, dosage/duration errors, therapeutic duplication, drug interactions, allergies, clinical abuse/misuse) before dispensing each prescription.
- Offer counseling to the MAP eligible recipient on new prescriptions and document if the recipient refuses counseling.
Prior Authorization
Obtain authorization on POS alerts and manage suspected abuse
When point-of-sale (POS) indicates an adequate supply or excessive quantity, or when the pharmacist suspects over-utilization or abuse, the pharmacist must contact the prescriber and MAD and obtain authorization as required; failure to contact and document may lead to prior authorization or recoupment.
- If POS shows adequate supply or excessive quantity, resolve the POS alert and obtain authorization before dispensing.
- If pharmacist suspects over-utilization, overlapping therapy, or abuse, contact the prescriber and MAD for review and document the contact.
- Prescriptions deemed excessive or potentially abusive may be subjected to prior authorization or recoupment if prescriber contact is not made and documented.
Terminology and Pricing Method Definitions
EAC — Estimated acquisition cost
TermEstimated acquisition cost (EAC).
MAD definitionMAD's approximation of the net or actual acquisition costs of drugs; used as reimbursement when EAC plus dispensing fee is the lowest method.
Calculation sourcesEAC is calculated using published AWP less a percentage, AMP plus a percentage, WAC plus a percentage, and other selected pricing information sources.
OverridesMAD uses the ingredient cost from the billing transaction as the EAC when that indicated ingredient cost is lower than MAD's EAC.
MAC — Maximum allowable cost methodology
TermMAC — Maximum allowable cost.
ScopeApplied to certain multiple‑source drugs with FDA A‑rated therapeutic equivalents and certain over‑the‑counter and non‑drug items.
MethodologyMAC is determined by arraying costs for A‑rated therapeutic equivalents and selecting a reasonable price or using a national baseline when state MAC not calculated.
Medical necessity exceptionMAC will not be applied when a specific brand is determined medically necessary; reimbursement then is the lower of EAC plus dispensing fee or provider's billed U&C charge.
FUL — Federal upper limit
TermFUL — Federal upper limit adopted by MAD.
SourceMAD adopts FULs set by CMS or recommended by the Department of Justice.
Payment capMAD's maximum payment for multiple‑source drugs with CMS FULs will not exceed the prescribed upper limits in the aggregate plus dispensing fees set by MAD.
Medical necessity exceptionWhen the prescriber certifies a specific brand as medically necessary, MAD will not use the individual drug FUL as reimbursement; instead reimbursement is the lower of EAC plus dispensing fee or provider's U&C charge.
340B — 340B actual acquisition cost
Term340B actual acquisition cost.
Billing instructionThe actual ingredient cost for drugs purchased under Section 340B and dispensed to a MAP recipient must be placed in the ingredient cost field and indicated on the billing transaction as a 340B drug item.
Reimbursement basisDrugs purchased under 340B must be billed at the provider's actual acquisition cost and indicated as 340B on the transaction; contracted 340B pharmacies must dispense 340B‑purchased items when filling such prescriptions.
U&C — Usual and customary charge (short)
TermU&C — Usual and customary charge.
Basic meaningThe provider's billed charge must be its usual and customary charge for services; OTC items billed at OTC price unless labeled as a prescription.
Discounts and promotionsUsual and customary charges must reflect discounts given to the general public; MAD must receive the advantage of such discounts when usually charged to non‑MAP recipients.
Usual and customary charge — definition
Definition'Usual and customary charge' refers to the amount that the individual provider charges the general public in the majority of cases for a specific procedure or service.
OTC pricingOver‑the‑counter items must be billed with the over‑the‑counter price as the usual and customary charge unless labeled and dispensed as a prescription.
Price adjustmentsCharges must reflect discounts given to MAP recipients and MAD must be given the advantage of general public promotions or prices normally charged to non‑MAP recipients.
Prohibited additionsProviders cannot add additional costs for time, paperwork, or anticipated turnaround time for payment.
340B drug discount actual acquisition cost — billing instructions
InstructionWhen billing 340B purchased drugs, place the provider's actual ingredient cost in the ingredient cost field and indicate the claim as a 340B drug item on the billing transaction.
Billing requirementDrugs purchased under Section 340B and dispensed to a MAP recipient must be billed at the provider's actual acquisition cost and indicated on the transaction as 340B.
Dispensing by contracted 340B pharmaciesIf a MAP recipient requests dispensing by a 340B pharmacy under contract to the 340B entity, the pharmacist must dispense 340B‑purchased items when filling the prescription.
Policy Summary
PayerNew Mexico Health Care Authority
PolicyPharmacy Services, Prescribing, and Practitioner-Administered Drug Reimbursement
Policy CodePolicy 8.324.4
Change TypeNo material change
Effective DateJan 1, 2014
Last ReviewJul 9, 1984
Next Review DateN/A
Key ActionSubmit pharmacy claims via point-of-sale and obtain prior authorization when POS indicates adequate supply or excessive quantity.
SourceLink
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