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regional pharmacies.

184. Omnicare's Medicaid-reimbursed servIces are provided under contractual

agreement through each state's Medicaid provider licensure program. In Illinois, for example,

Omnicare contractually agrees to provide pharmaceuticals to Illinois Medicaid patients in the

long-term care facilities it serves. In return, the Illinois Department of Healthcare and Family

Services ("IDHFS," formerly the Illinois Department of Public Aid), the Illinois state agency that

administers Medicaid, reimburses Omnicare at a statutorily-defined ratel , plus a small dispensing

fee, which is meant to provide Omnicare with a profit for providing services to Illinois Medicaid



In order to be eligible for Medicaid reimbursement, Illinois pharmacies (including

Omnicare's dispensing pharmacies) must complete an IDHFS application process and obtain a

provider number. Providers completing this application process must attest to their professional

licensure, their Drug Enforcement Administration identification numbers, and must agree to the

following provisions stated in the application, entitled "Agreement for Participation in the

Illinois Medical Assistance Program":


The provider agrees, on a continuing basis, to comply with applicable licensing standards as contained in the State laws or regulations.

  • *



3 Medicaid reimbursement rates are the lowest of the following five possible prices:

  • A.

    The average wholesale price minus 12 percent

  • B.

    The federal upper limit price

  • C.

    The state upper limit price in the Illinois Formulary for the Drug Selection Program

  • D.

    The average wholesale price where price is based on actual market wholesale price or

  • E.

    The wholesale acquisition cost plus 12 percent.

See, 891l. Adm. Code 140.445 (I). The state calculates the average wholesale price and wholesale acquisition costs based on its estimates of the price generally and currently paid by providers or as sold by a particular manufacturer. See 42 C.F.R. 442.301 (2001). See also, Rite Aid of Pennsylvania v. Houstoun, 171 F.3d 842,846 (3rd Cir. 1999) (Explanation of state Medicaid prescription pricing systems under federal regulations).


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