Effective for dates of service on or after October 1, 2009, establishment of the lowest price paid by a private third-party payer, for all brand and generic legend drug products, will be determined by the following formula:

• Assume a $100.00 Average Wholesale Price (AWP).
• Provider reviews contracts for the base reimbursement formula for brand and generic drugs.
• In the place of AWP, insert $100.00.  The formula that generates the lowest total dollar amount is the forumla the provider will use for billing Medi-Cal claims. “Mail-at-Retail” (MAR) agreements are to be excluded from this calculation.

Examples

Formula 1
Brand name product = AWP - 16% + $5.00 or $100.00 - $16.00 + $5.00= $89.00

Formula 2
Brand name product = AWP - 15% + $2.00 or $100.00 - $15.00 + $2.00 = $87.00

Since $87.00 < $89.00, the pharmacy would use AWP -15% + $2.00 when billing Medi-Cal.

For generic drugs that are paid by Maximum Allowable Cost (MAC) set by individual plans, the Department of Health Care Services (DHCS) recognizes the complexity of this process and will delay implementation until Jaunary 1, 2010 to allow DHCS and providers to work out the details.

Those pharmacies that offer a discount program for cash-paying customers (for example, $4.00 per prescription for certain generics on a pre-determined formulary) must use the cash price as the usual and customery rate when billing Medi-Cal..