MedicaidCoverageHigh impact
Senior Services News Vol. 12, No. 01
New Jersey Medicaid·NJ · Pharmacy·Pharmacy
Effective date
Aug 1, 2009
We identified it
Jun 20, 2026
Summary
Effective August 1, 2009, the PAAD and Senior Gold prescription programs will no longer cover Medicare Part D-excluded drugs (except benzodiazepines and barbiturates), including erectile dysfunction treatments, cosmetic drugs, cough/cold products, and vitamins. Additionally, PAAD/SG will only provide wrap-around coverage for Medicare Part D formulary medications; beneficiaries must switch to formulary drugs or obtain a formulary exception. Drug reimbursement is now calculated as the lower of AWP minus 16% or the MAC price.
Action Required
By August 1, 2009: (1) Billing team must update pharmacy claim submission system to deny coverage for excluded drug categories (impotency drugs, cosmetic drugs including skin condition/obesity/anorexia/hair loss treatments, cough/cold products, and vitamins) for all PAAD and Senior Gold beneficiaries, with exception only for benzodiazepines and barbiturates. (2) Pharmacy staff must verify that all PAAD/SG beneficiaries are on Medicare Part D formulary medications before filling prescriptions; non-formulary drugs will only be covered if physician has obtained and documented a formulary exception for medical necessity prior to dispensing (no override coverage during appeal process). (3) Update reimbursement calculation in billing system to use lower of: AWP minus 16% volume discount OR Federal Funds Participation Upper Limit (MAC price) for all legend and non-legend drug ingredient costs. (4) Communicate these changes to all prescribing providers. Failure to implement will result in claim denials and potential overpayments.