December 16, 2014—The database that the Health Resources and Services Administration maintains to protect drugmakers from paying both 340B discounts and Medicaid rebates on the same drugs applies only to Medicaid fee-for-service and not to Medicaid managed care claims, HRSA clarified yesterday in an updated 340B policy release. [ms-protect-content id=”2799″]
The 340B Medicaid Exclusion File’s purpose is “to help 340B covered entities, states, and manufacturers avoid duplicate discounts specific to” Medicaid fee-for-service, the document states. Elsewhere in it, HRSA says “this policy release only applies to Medicaid fee-for-service” and “does not apply to the prevention of duplicate discounts that may occur” under Medicaid managed care.
Hospitals, health centers, and other 340B providers have long argued that the exclusion file does not apply to Medicaid managed care. In the policy release, HRSA said it is working with the Centers for Medicare & Medicaid Services to issue guidance on that subject. HRSA also encourages 340B covered entities in the release to work with their states to develop strategies to prevent duplicate discounts with respect to Medicaid managed care.
HRSA’s new 340B policy release on the Medicaid exclusion file replaces one it issued in February 2013. That release did not specifically discuss 340B Medicaid managed care drugs.
The last policy release also did not specifically address preventing duplicate discounts in 340B contract pharmacy arrangements when Medicaid managed care is the payer. In the new release, HRSA observes that under its separate March 2010 multiple contract pharmacy guidance, “contract pharmacies are prohibited from using 340B drugs to dispense Medicaid prescriptions and must carve-out unless the covered entity, the contract pharmacy, and the State Medicaid agency have established an arrangement to prevent duplicate discounts. The covered entity must report any such arrangement to HRSA.”
Safety Net Hospitals for Pharmaceutical Access, which represents hospitals in the 340B program, says that, based on its reading of the new policy release, it believes that HRSA’s guidance on duplicate discounts, as expressed in both the new release and the March 2010 Federal Register notice, applies to Medicaid fee for service only.
HRSA notes in the new release that some states are already addressing managed care duplicate discounts. It cited methods including: identifying managed care patients using Bank Identification Numbers and/or Processor Control Numbers; and using National Council for Prescription Drug Programs codes to flag managed care claims at the retail level and UD modifiers to flag physician-administered drugs.
“HRSA encourages 340B covered entities to work with their state to develop strategies to prevent duplicate discounts on drugs reimbursed through MCOs,” the agency said. [/ms-protect-content]