February 20, 2013—Providers that have decided to use 340B-discounted drugs for their Medicaid patients need to have a mechanism in place to let state Medicaid officials know whenever they are unable to purchase a drug at its 340B price, the Health Resources and Services Administration (HRSA) says in a recent guidance document.
The new notification requirement, announced earlier this month, enables states to seek Medicaid drug rebates that they are entitled to but otherwise would not know were available.[ms-protect-content id=”2799″] The 340B statute protects drug manufacturers from paying both an upfront 340B discount and a post-purchase Medicaid rebate on the same drug. When providers enroll in 340B, they must decide whether they will use 340B drugs for their Medicaid patients or not (whether they will carve in or carve out). Providers that carve in give HRSA their Medicaid billing numbers. HRSA posts those numbers online and instructs states not to include them in their Medicaid rebate requests to manufacturers.
The notification requirement covers scenarios such as when a hospital or health center cannot obtain enough of a drug at 340B pricing to meet its needs and must buy the balance at a non-340B price. The drugs bought at the non-340B price are subject to rebates.
The guidance document does not detail what kind of mechanism would satisfy the notification requirement. The National Council for Prescription Drug Programs has released claims processing standards that let providers flag claims as 340B and it is possible that they could be used to meet the requirement.
HRSA’s new guidance also states:
- Any changes to how a covered entity uses 340B drugs for its Medicaid patients will no longer be effective at the time they are made. Rather, changes a covered entity makes to its carve-in and carve-out status will be effective on a quarterly basis only. Covered entities may add or delete Medicaid billing numbers that appear in the agency’s Medicaid exclusion file by submitting HRSA’s online change request form.
- A covered entity may choose to carve in for certain sites and carve out for other sites, so long as each site has its own Medicaid billing number. Covered entities may not carve in and carve out under the same Medicaid billing number. This means, for example, that if a hospital and a clinic operate under the same Medicaid billing number and the hospital intends to carve in, but the clinic intends to carve out, the clinic would need to obtain a separate Medicaid billing number.
HRSA’s policy release did not address the issue of a covered entities’ obligation regarding Medicaid managed care claims.
The Affordable Care Act required managed care organizations (MCOs) to pay rebates to states for Medicaid managed care drugs. Although the law specifically exempted 340B drugs from this requirement, there has been much confusion at the state level about what role, if any, covered entities need to play in ensuring that rebates are not requested for 340B Medicaid MCO drugs.
Some states have been using HRSA’s Medicaid exclusion file to identify and exclude 340B claims from Medicaid managed care rebate requests. Covered entities argue that this use of the file is inappropriate and deprives them of the right to carve Medicaid fee for service in and Medicaid managed care out.[/ms-protect-content]