Optimizing The 340B Program

Promoting Integrity, Access, & ValueTo deliver clinically and cost-effective pharmacy services

This educational product created by:Health Resources and Services Administration | Office of Pharmacy Affairs

340B Peer-to-Peer Program

340B Program Integrity

The Medicaid Exclusion File and Avoiding Duplicate Discounts

Purpose of ActivityThe purpose of this module is to explain the purpose of the Medicaid Exclusion File and provide strategies on how states and covered entities can avoid duplicate discounts.

Topic Guide

› Describe the role of the Medicaid Exclusion File in preventing duplicate discounts

› Describe situations in which a duplicate discount might occur in error

› Identify the data entities provide for insertion in the Medicaid Exclusion File

› Explore how to use the Medicaid Exclusion File

340B Background

Established in 1992 statute (section 340B of the Public Health Service

Act)

Requires manufacturers to sell “covered

outpatient drugs” to certain “covered entities (CEs)” at greatly reduced

price

Includes 2 major prohibitions:

• Diversion to non-340B patients

• Duplicate discounting

Requires mechanism t ensure that entities

comply with duplicate discount prohibition

Duplicate Discount on 340B Drugs

AndPurchased with an up-front 340B discount

Credited with a back-end transaction Medicaid rebate

When does a duplicate discount occur?

When the same drug is:

Examples of Duplicate Discounts

Example 1: Take-home prescription

• Patient receives 340B medication (prescription from outpatient procedure)

• Medication is billed through the pharmacy’s billing system• National Drug Code (NDC) level data are transmitted to

state Medicaid agency• Medicaid agency submits NDC claim information to

manufacturer for rebate

Example 2: Provider-

administered

• Patient is administered medication (by outpatient procedure provider)

• Medication is billed through hospital or clinic billing system• NDC level data are transmitted to state Medicaid agency

through billing system• Medicaid submits NDC level claim for manufacturer rebate

Examples of Duplicate Discounts (Cont’d)

Example 3: Managed Care

Affordable Care Act

• Patient of Medicaid managed care organization (MCO) fills outpatient prescription at 340B pharmacy

• MCO submits NDC level data from pharmacy claims to Medicaid agency

• Medicaid agency submits data from these claims to manufacturers for rebates

MCO 340B Exemption

• Section 2501(c) amends section 1927(j)(1): “… certain covered outpatient drugs in this section are not subject to the rebate requirements … [if] subject to discounts under section 340B of the Public Health Service Act.”1

1. CMS. Letter re: medication prescription drug rebates. April 22, 2010. Available at: www.ncsl.org/documents/health/42210PPACADrug_Rebate_ SMD.pdf. Accessed November 22, 2011.

Medicaid Exclusion File

Mechanism

DRUG-PRICING PROGRAM340BCongress

Legislation

Must Create

Department of Health and Human Services

340B entities may:

purchase drugs at 340B prices

purchase drugs at non-340B prices (“off contract”) using a separate account

OR

Purchasing Drugs for Medicaid Patients

The Medicaid Exclusion File

Health Resources and Services AdministrationOffice of Pharmacy Affairs

Medicaid Exclusion FileMaintains

340B Entities & Their Associated Medicaid Provider Numbers National Provider Identifies (NPI)

Criteria for Listing in Medicaid Exclusion File

If both conditions are met, Medicaid provider number and NPI must be listed in Medicaid Exclusion File

Condition 2: Transmission of NDC level data to state Medicaid office

Condition 1: Purchase drugs at the 340B price

Billing Medicaid

340B entities must decide whether or not to use 340B drugs for Medicaid patients

YES, use 340B drugs for Medicaid

NO, don’t use 340B drugs for Medicaid

340B entities must decide how to bill Medicaid in a way that is consistent with their state’s Medicaid program

All-inclusive Rate

Managed Care Medicaid

Traditional Fee-for-Service Medicaid

Contract Pharmacy340B Entity DrugsBill to Ship to

Medicaid prescriptions filled using the contract pharmacy’s own non-340B inventory

Entity’s 340B-purchased drugs are not used to fill Medicaid prescriptions

No need to list pharmacy’s Medicaid number in OPA database

Medicaid Exclusion File & 340B Contract Pharmacies

http://opanet.hrsa.gov/opa/CERegister.aspx

340B EnrollmentForm

A 340B covered entity is required to indicate on the 340B Enrollment Form if it intends to bill Medicaid for Drugs purchased at 340B prices.

Where should CEs indicate the required Medicaid billing information?

Covered Entity Search

CE Decision to Not Use 340B DrugsCarve-Out

When a CE enrolls, its data are entered in the CE database.

If the entity is NOT using 340B-purchased drugs for their Medicaid fee-for-service patients, the form will indicate that the entity will not bill Medicaid for drugs purchased at 340B prices.

CE Data

Most contract pharmacies and Medicaid agencies do not “establish an arrangement to prevent duplicate discounting.”

Medicaid reimbursement formulas based on actual 340B cost may not provide margin sufficient to cover costs.

Most clinics and pharmacies are aware that the Medicaid anti-kickback statute is very broad and are wary of including Medicaid prescriptions in their contracts.

The Medicaid Exclusion File

Reasons why most 340B entities exclude Medicaid prescriptions from their contract pharmacy:

CE Decision to Use 340B DrugsCarve-In

If the entity is using 340B-purchased drugs for their Medicaid fee-for-service patients, the form must display the Medicaid number and state.

When a CE enrolls, its data are entered in the CE database.

CE Data

When a CE Has More Than One NPI

The OPA database is capable of handling entities that have more than 1 NPI and wish to bill different state Medicaid agencies in a different manner (e.g., carve-out in 1 state, and use 340B for another). On the registration form, the entity must specify that the NPI is listed in association with particular states.

When a CE enrolls, its data are entered in the CE database.

CE Data

Alternative Agreement With State

The CE must work with its state Medicaid agency and OPA to establish sufficient safeguards.

To the extent that a CE is either:

Unable to comply with standard methods discussed

for reporting NPI

Wishes to utilize an alternative method that

will also prevent a duplicate discount OR

Medication Exclusion File Data Extract

Medicaid Exclusion File Data

Go to http://opanet.hrsa.gov/opa/MedicaidExclusionFiles.aspx or the OPA’s home page and click on “Medicaid Exclusion Files”

It is ultimately the responsibility of the 340B participating entity to ensure accurate reporting of Medicaid billing of any 340B drugs to OPA and the state

Medicaid agency.

Work with the Medicaid agency(ies)

- 340B drugs identified - Rebates foregone

Medicaid provider number used to bill Medicaid for all

340B-purchased drugs(e.g., entity may not “pick

and choose”)

If the appropriate Medicaid billing number is not listed on the OPA database and 340B drugs are used to fill

Medicaid prescriptions, the entity should contact OPA immediately, so that the correct number can be

included on the OPA exclusion file database

The posted database information should be

correct at all times. Any changes to how an entity

bills Medicaid or inaccuracies in the Medicaid

Exclusion File must be reported to OPA

immediately

CE Responsibility for Avoiding Duplicate Discounts

Avoiding Duplicate Discounts

What can CEs and states do to avoid Duplicate discounts on 340B drugs?

CEs States Become knowledgeable about duplicate

discount prohibition by using HRSA and Prime Vendor Program (PVP) resources

Evaluate your Medicaid billing practices: are you using 340B medications in ANY Medicaid prescriptions?

Review your entry in the OPA database: does it correctly match your practices?

Become knowledgeable about duplicate discount prohibition by using HRSA and PVP resources

Have a knowledgeable 340B “go-to” person in the state Medicaid office who is available to communicate with 340B entities

Review the Medicaid Exclusion File If discrepancies are noted, contact the CE

for more information Provide clear direction to CEs about your

Medicaid 340B reimbursement policy and their responsibilities

Let OPA know if there are concerns or areas for improvement

Office of Inspector General (OIG) ReportJune 2011

Department of Health and Human Services

OIG surveyed 50 state and DC Medicaid

agencies about their policies and oversight

activities related to 340B-purchased

drugs

Findings • 25 states

have no written Medicaid 340B-reimbursement policy

• Over half developed alternatives to using the Medicaid Exclusion File

OIG Recommendations• Centers for

Medicare & Medicaid Services (CMS) should develop written Medicaid 340B policies

OIG Recommendations• HRSA, in

conjunction with CMS, should improve accuracy and utility of Medicaid Exclusion File

OIG. State Medicaid policies and oversight activities related to 340B-purchased drugs. June 2011. OEI 05-09-00321. Available at: http://oig.hhs.gov/oei/reports/oei-05-09-00321.pdf. Accessed November 22, 2011.

340B Resource Information

https://www.340bpvp.com/

http://www.hrsa.gov/opa/

http://www.hrsa.gov/publichealth/clinical/patientsafety/index.html

ApexusAnswers@340bpvp.com 1-888-340-2787

Health Resources and Services Administration

340B Prime Vendor Program Managed by Apexus

Health Resources and Services AdministrationOffice of Pharmacy Affairs

340B Peer-to-Peer Program

Thank you for viewing this 340B tutorial developed by :

You can view additional 340B educational products and tools specifically developed to assist 340B-participating entities create and maintain processes to ensure 340B

program integrity at:www.hrsa.gov/opa/peertopeer/