(1) Drugs will be paid for on the basis of the Montana "estimated acquisition cost", "the federal maximum allowable cost", or the "state maximum allowable cost", plus a dispensing fee established by the department, or the provider's "usual and customary charge", whichever is lower; except that the "federal maximum allowable cost", or the "state maximum allowable cost" limitation shall not apply in those cases where a physician or other licensed practitioner who is authorized by law to prescribe drugs and is recognized by the Medicaid program certifies in their own handwriting that in their medical judgment a specific brand name drug is medically necessary for a particular patient. An example of an acceptable certification would be the notation "brand necessary" or "brand required". A check-off box on a form or a rubber stamp is not acceptable.

(2) The dispensing fee for filling prescriptions will be determined for each pharmacy provider annually.

(a) The dispensing fee is based on the pharmacy's average cost of filling prescriptions. The average cost of filling a prescription will be based on the direct and indirect costs that can be allocated to the cost of the prescription department and that of filling a prescription, as determined from the Montana Dispensing Fee Questionnaire. A provider's failure to submit, upon request, the dispensing fee questionnaire properly completed will result in the assignment of the minimum dispensing fee offered. A copy of the Montana Dispensing Fee Questionnaire is available upon request from the department.

(b) The dispensing fees assigned will be as provided in ARM 37.85.105(3).

(c) If the individual provider's usual and customary average dispensing fee for filling prescription is less than the foregoing method of determining the dispensing fee, then the lesser dispensing fee will be applied in the computation of the payment to the pharmacy provider.

(3) In-state pharmacy providers that are new to the Montana Medicaid program will be assigned the maximum dispensing fee in (2)(b) until a dispensing fee questionnaire, as provided in (2), can be completed for six months of operation. At that time, a new dispensing fee will be assigned which will be the lower of the dispensing fee calculated in accordance with (2) for the pharmacy or the maximum allowed dispensing fee provided in (2)(b). Failure to comply with the six months dispensing fee questionnaire requirement will result in assignment of a dispensing fee of $2.00.

(4) The department will reimburse pharmacies for compounding drugs only if the client's drug therapy needs cannot be met by commercially available dosage strengths, forms of the therapy, or both.

(a) Prescription claims for compound drugs will be billed and reimbursed using the National Drug Code (NDC) number and quantity for each compensable ingredient in the compound.

(b) No more than 25 ingredients may be reimbursed in any compound.

(c) Reimbursement for each drug component will be determined in accordance with ARM 37.86.1101.

(d) Prior authorization requirements for individual components of a compound must be met for reimbursement purposes.

(e) The department will reimburse pharmacies a compound-drug dispensing fee as provided in ARM 37.85.105(3) in lieu of the dispensing fee stated in (2). Prior authorization will be required for reimbursement above the lowest compound dispensing fee.

(f) The department does not consider reconstitution to be compounding.

(g) The department will publish guidelines for billing the different level of effort fees.

(h) The department may reimburse for compounded nonrebatable API bulk powders and excipients on the department's drug formulary maintained in accordance with ARM 37.86.1102.

(5) The department will reimburse pharmacies a vaccine administration fee as provided in ARM 37.85.105(3) in lieu of the dispensing fee stated in (2) for any covered vaccine as allowed by the Montana Pharmacy Practice Act, 37-7-101, MCA.

(6) Reimbursement for outpatient drugs provided to Medicaid persons in state institutions will be as follows:

(a) for institutions participating in the state contract for pharmacy services, the rates agreed to in that contract. Such reimbursement must not exceed, in the aggregate, reimbursement under (1); or

(b) for institutions not participating in the state contract for pharmacy services, the actual cost of the drug and dispensing fee. Such reimbursement must not exceed, in the aggregate, reimbursement under (1).

(7) Full-benefit dual eligible persons qualify for pharmaceutical drug coverage under Medicare Part D prescription drug plans (PDPs) on January 1, 2006 under 42 USC 1302, 1395w-101 through 1395w-152 (2011), the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). For purposes of the MMA and this rule, the term full-benefit dual eligible has the same meaning as stated in 42 CFR 423.772.

(8) The MMA allows PDPs to exclude from coverage the drug classes listed in 42 USC 1396r-8(d)(2) (2011). Montana Medicaid may also exclude these drugs and has chosen to do so except for the prescription and nonprescription drugs identified on the department's drug formulary. On January 1, 2006, Montana Medicaid's reimbursement for outpatient drugs provided to full-benefit dual eligible persons, for whom third party payment is not available, will be limited to the excluded drugs identified on the department's drug formulary.

(9) The department will reimburse pharmacies a unit dose prescription fee as provided in ARM 37.85.105(3). The unit dose prescription fee will offset the additional cost of packaging supplies and materials which are directly related to filling unit dose prescriptions by the individual pharmacy. This fee is in addition to the regular dispensing fee allowed. The unit dose prescription fee will not be paid for a unit dose prescription packaged by drug manufacturers. Unit dose prescriptions may not exceed the 34-day supply limit. Only one unit dose prescription fee is allowed each month for each prescribed medication.