DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations 
 
August 17, 2007                SMDL #07-012 
 
Dear State Medicaid Director: 
 
The purpose of this letter is to offer guidance to State Medicaid agencies on section 7002(b) of 
the U.S. Troop Readiness, Veterans Care, Katrina Recovery, and Iraq Accountability 
Appropriations Act of 2007, regarding use of tamper-resistant prescription pads, which was 
signed into law on May 25, 2007. 
 
Section 7002(b), which amends section 1903(i) of the Social Security Act (the Act) (42 U.S.C. 
section 1936b(i)) by adding new paragraph (23), states that payment shall not be made for . . . 
amounts expended for medical assistance for covered outpatient drugs (as defined in section 
1927(k)(2)) for which the prescription was executed in written (and non-electronic) form unless 
the prescription was executed on a tamper-resistant pad.  This provision becomes effective on 
October 1, 2007.  The tamper resistant pad requirement of section 7002(b) applies to all 
outpatient drugs, including over-the-counter drugs in States that reimburse for prescriptions for 
such items.  Section 1927(k)(3) of the Act provides exceptions to section 1927(k)(2) for drugs 
provided in nursing facilities, intermediate care facilities for the mentally retarded, and other 
specified institutional and clinical settings.  Such drugs in these settings (to the extent that they 
are not separately reimbursed) are exceptions to section 1927(k)(2), and, therefore, are not 
subject to the tamper-resistant pad requirement of section 7002(b).  Section 7002(b) is applicable 
regardless of whether Medicaid is the primary or secondary payor of the prescription being 
filled. 
 
The tamper-resistant pad requirement does not apply to refills of written prescriptions presented 
at a pharmacy before October 1, 2007.  In addition, the payment limitation does not apply to e-
prescriptions transmitted to the pharmacy, prescriptions faxed to the pharmacy, or prescriptions 
communicated to the pharmacy by telephone by a prescriber.  The Centers for Medicare & 
Medicaid Services (CMS) particularly encourages the use of e-prescriptions as an effective and 
efficient method of communicating prescriptions to pharmacists.  Please note, however, that 
Drug Enforcement Administration regulations regarding controlled substances may require a 
written prescription. 
 
Paragraph (23) of section 1903(i) is not included among the payment limitations in the last 
paragraph of the section that are applicable to items or services furnished and amounts 
expended by or through a managed care entity.  Therefore, the requirement for the use of a 
tamper-resistant prescription pad does not apply when a managed care entity pays for the 
prescription.    Page 2  State Medicaid Director 
 
 
To the extent permissible under State and Federal law and regulation, our guidance does not 
restrict emergency fills of non-controlled or controlled dangerous substances for which a 
prescriber provides the pharmacy with a verbal, faxed, electronic, or compliant written 
prescription within 72 hours after the date on which the prescription was filled. 
 
To be considered tamper resistant on October 1, 2007, a prescription pad must contain at least 
one of the following three characteristics: 
 
1)  one or more industry-recognized features designed to prevent unauthorized 
copying of a completed or blank prescription form; 
 
2)  one or more industry-recognized features designed to prevent the erasure or 
modification of information written on the prescription by the prescriber;   
 
3)  one or more industry-recognized features designed to prevent the use of 
counterfeit prescription forms. 
 
No later than October 1, 2008, to be considered tamper resistant, a prescription pad must contain 
all of the foregoing three characteristics.  Failure of a State to enforce the tamper-resistant pad 
requirement of section 7002(b) may result in the loss of Federal financial participation. 
 
States are free to exceed the above baseline standard as to what constitutes a tamper-resistant 
prescription pad.  States should make their own determination whether to allow pharmacists to 
accept an out-of-State prescription that meets the tamper-resistant requirements of another State.  
Several States have laws and regulations concerning mandatory, tamper-resistant prescription 
pad programs, which were in effect prior to the passage of section 7002(b).  CMS deems that the 
tamper-resistant prescription pad characteristics required by these States laws and regulations 
meet or exceed the baseline standard, as set forth above. 
 
The payment limitation set forth in section 1903(i)(23) of the Act does not impose additional 
requirements on States regarding retention of hard copy prescriptions.  States may follow current 
State and Federal laws and regulations for record retention. 
 
The CMS strongly supports State program integrity measures and wants States to be aware that 
both e-prescribing and use of tamper-resistant prescription pads may reduce instances of 
unauthorized, improperly altered, and counterfeit prescriptions.  If a State elects to purchase 
compliant prescription pads for Medicaid prescriptions and provide them to prescribers at no cost 
or at a discounted rate, the cost of the prescription pads is reimbursable as an administrative 
expense. 
 
States are not required to file a State plan amendment in connection with actions taken to comply 
with section 1903(i)(23).  It is up to each State to establish its own enforcement plan for ensuring 
compliance with the payment restrictions contained in section 1903(i)(23).   
 
 
 
     
Page 3  State Medicaid Director 
 
 
If you have any questions regarding this guidance, please contact Mr. David Frank, Director, 
Medicaid Integrity Group, at 410-786-8874.  
 
          Sincerely, 
 
/s/ 
 
  
          Dennis G. Smith  
          Director  
 
cc: 
 
CMS Regional Administrators 
 
 
CMS Associate Regional Administrators 
Division of Medicaid and Childrens Health 
 
Martha Roherty 
Director, Health Policy Unit 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Debra Miller 
Director for Health Policy 
Council of State Governments 
 
Christie Raniszewski Herrera 
Director, Health and Human Services Task Force 
American Legislative Exchange Council 
 
Jacalyn Bryan Carden  
Director of Policy and Programs 
Association of State and Territorial Health Officials