Outpatient Prescription Drugs: Acquisition and Reimbursement Policies Under Select Federal Programs

Publication Date: August 1999

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

Varying reimbursement methods determine the payments for outpatient drugs supplied under different federal programs. The Veterans Health Care Act of 1992 limits the prices that drug manufacturers can charge the Department of Veterans Affairs (VA); several other government agencies, including the Department of Defense (DOD), are able to purchase pharmacy supplies through the VA supply system. The Medicaid program reimburses providers directly for covered pharmaceuticals, establishing upper payment limits on approved drugs and receiving rebates from manufacturers. The Medicare program provides limited coverage for outpatient drugs. For those drugs it covers, Medicare reimburses providers at the rate of 95% of the average wholesale price. This report discusses the reimbursement methods used to pay for outpatient prescription drugs by the VA, DOD, Medicaid, and Medicare. It will be updated as necessary.