Drug Pricing

Reimbursement of outpatient prescription drugs is based on the drug's Actual Acquisition Cost (AAC) according to the Covered Outpatient Final Rule of the Affordable Care Act of 2010.  Pharmacy providers must use the current Texas Drug Code Index as the reference for allowable package sizes of reimbursable legend and non-legend drugs and are reimbursed at AAC plus a reasonable dispensing fee. AAC is defined as an estimate of prices generally and is currently paid in the market by one of the following:

  1. Wholesale estimated acquisition cost (WEAC);
  2. Long term care pharmacy acquisition cost (LTCPAC); or
  3. Specialty pharmacy acquisition cost (SPAC)

The AAC is verifiable by invoice audit conducted by HHSC to include necessary supporting documentation verifying the final cost to the provider. The WEAC, LTCPAC, and SPAC prices are established using market or government sources, which include, but are not limited to:

  • Reported manufacturer pricing
  • First Databank
  • Redbook
  • Weighted Average Manufacturer Price as published by the Centers for Medicare & Medicaid Services (CMS)
  • National Average Drug Acquisition Cost (NADAC), as published by CMS; or
  • Gold Standard pricing service

Pharmacy providers participating in the 340B Drug Pricing Program must identify all outpatient pharmacy claims filled with 340B stock for 340B-eligible people. Refer to the 340B Resources section to learn more about billing requirements for eligible pharmacies.

This methodology applies to the pricing on all claims processed by HHSC as of June 1, 2016.  Retroactive claims are processed with the pricing on the date of service. The change is not related to and does not impact reimbursement rates associated with pharmacy reimbursement through Medicaid managed care.

NADAC pricing is generated by CMS and pricing disputes are directed to CMS. Refer to the Drug Pricing section for pricing contacts.