Request By:
Honorable John P. Godfrey
Assistant General Counsel
Health & Administrative Law Unit
Department for Human Resources
209 St Clair Street
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: George Geoghegan, III, Assistant Attorney General
This is in answer to your letter dated March 23, 1977 in which you requested that this office extend its discussion in OAG 76-758 to make a distinction between the requirements of KRS 217.822(2) and the requirements of the policies adopted by the Department for Human Resources implementing Title XIX of the Social Security Act, 42 U.S.C. § 1346 and 45 C.F.R. § 250.30.
KRS 217.822(2) provides:
"If, in the opinion of a practitioner, it is to the best interest of his patient that an equivalent drug should not be dispensed, he may indicate in the manner of his choice on the prescription 'Do Not Substitute,' except that the indication shall not be pre-printed on a prescription. "
In OAG 76-758, we opined that under KRS 217.822(2), a physician could indicate in any manner he chose that a generic equivalent drug should not be substituted. However, the last act in so indicating should be completed at the time of issuing and writing the prescription. This, of course, would permit a physician to use a form with the words "Do Not Substitute" together with a box in blank preprinted on it for the physician to indicate whether substitution is appropriate in the particular case.
Title XIX of the Social Security Act, 42 U.S.C. § 1396 makes federal funds available to qualifying states to be used in their medical assistance programs. In order to qualify, a state must submit a medical assistance plan which satisfies the requirements of 42 U.S.C. § 1396, et seq. and implementing federal regulations. One of the implementing federal regulations deals with reimbursing pharmacists for drugs dispensed to persons on medical assistance. 45 C.F.R. § 250.30(b)(2)(ii) provides:
"For each multiple source drug designated by the Pharmaceutical Reimbursement Board and published in the FEDERAL REGISTER, cost will be limited to the lower of (a) the maximum allowable cost established by the Board for such drug, and published in the FEDERAL REGISTER, or (b) the estimated acquisition cost (as defined in paragraph (b)(2)(iii) of this section). Limitation to the maximum allowable cost established by the Board shall not apply in any case where a physician certifies in his own handwriting that in his medical judgment a specific brand is medically necessary for a particular patient. The form and procedure for the certification shall be prescribed by the State. An example of an acceptable certification would be the notation 'brand necessary.' A procedure for checking a box on a form will not constitute an acceptable certification. At the discretion of the State, the certification may be retained by the provider rather than submitted with the claim form with the understanding that it will be available for inspection by the State and by the Department of Health, Education, and Welfare."
The Department for Human Resources has adopted policy statements in order to implement the Kentucky Medical Assistance Act, KRS 205.510 - 205.600, and the Kentucky Medical Assistance Regulations, 904 KAR Chapter 1, and in order to qualify for federal medical assistance funds. The "Physician MAC Override" provision contained in the policy statement is taken almost word for word from 45 C.F.R. § 250.30(b)(2)(ii). This override was adopted by the Department in order to qualify its State's Medical Assistance Plan under Title XIX of the Social Security Act. A review of the "Physician MAC Override" provision indicates that a pharmacist participating in the medical assistance program can be reimbursed for the cost of a drug over and above the "MAC" price only if the physician certifies in his own handwriting that in his medical judgment the specific brand prescribed is medically necessary for the particular patient. It is apparent from the policy statement as well as from 45 C.F.R. 250.30(b) (2) (ii) that any notation indicating that there is to be no substitution, including "Brand Necessary" and "Do Not Substitute", is sufficient as long as it is in the handwriting of the physician.
45 C.F.R. 250(a)(8) provides that pharmacists who participate in a state approved plan are limited to those who accept the amounts paid under the medical assistance program as payment in full for the services rendered. It is our understanding from the Department for Human Resources that all participating pharmacists have agreed in writing that the medical assistance payments received from the Department shall constitute full payment for their services. This means that the pharmacist cannot recover the full cost of his services over and above the "MAC" price from the state unless the physician has certified in his own handwriting that there is to be no substitution.
KRS 217.822(1) requires a pharmacist to dispense for a brand name drug the lowest priced therapeutically equivalent drug listed by the Kentucky Drug Formulary, which he has in stock. No substitution is required when the physician indicates on the prescription that there is to be no substitution. As stated previously, KRS 217.822(2) does not require that the physician indicate this in his own handwriting. It may be noted in any manner of his choice including a check mark in a blank as long as it is done contemporaneously with issuing and writing the prescription. However, if the prescription involves a medical assistance patient, the pharmacist will not be able to recover any amount over and above the "MAC" price unless the physician indicates that there is to be no substitution in his own handwriting. In other words, where medical assistance patients are concerned, the physician is required to do more than is normally necessary when indicating that substitution is inappropriate. Not only must he indicate it, he must indicate it in his own handwriting.