April 29, 2016—States must require Medicaid managed care organizations to establish procedures to exclude utilization data for drugs subject to 340B drug discounts from the utilization reports submitted to states for purposes of collecting Medicaid drug rebates, the Centers for Medicare & Medicaid Services says in a new final regulation. States also can opt instead to require covered entities to submit 340B claims data directly to the state or its contractors so the claims can be scrubbed from rebate submissions, CMS said. [ms-protect-content id=”2799″]
CMS posted the final rule for public inspection on April 25 and will formally publish it in the Federal Register on May 6. States and managed care plans will have to comply with the rule beginning with contracts starting on or after July 1, 2017. CMS released the rule in proposed form in May 2015.
As proposed, the rule said only that states must contractually require MCOs to have procedures in place to exclude utilization data for drugs subject to 340B discounts from the utilization reports submitted to states to enable states to collect rebates. Several commenters asked CMS to permit states to have covered entities report claims data directly to the state or the state’s rebate contractor, bypassing the managed care plans, such as is currently done in at least two states. CMS agreed. In the final rule, it amended the relevant section to mandate that states require MCOs to have procedures in place to exclude utilization data for drugs subject to 340B discounts from the utilization reports submitted to states to enable them to collect rebates “when states do not require submission of Medicaid managed care drug claims data from covered entities directly.”
Several commenters asked CMS to standardize the systems and processes MCOs and states use to identify 340B claims but CMS declined to do so, saying “we do not believe it is appropriate for us to require states to use a particular process for identifying 340B drug claims.”
“Rather, we encourage the establishment of state-specific systems and/or procedures that are effective at excluding 340B drug claims and preventing duplicate discounts,” CMS said in the preamble to the final rule. “There are a number of mechanisms managed care plans can utilize to assist states with identifying 340B drug claims, such as requiring pharmacies to use predetermined standards or identifiers to submit claims for 340B-purchased drugs at the point of sale or utilization of a unique BIN/PCN/Group combination related to the plan’s Medicaid line of business.”
Elsewhere in the preamble, CMS said “when states contract with managed care plans, the contracts should include specific language addressing which tools managed care plans can use to exclude 340B purchased drugs from utilization, the responsibility the MCO has with resolving manufacturer disputes or rebate invoices derived from MCOs, state’s ability to access data and records related to the MCO’s exclusion of 340B purchased drugs from utilization reports, and any liability the MCO may face in cases of unresolved manufacturer disputes of rebate invoices derived from the MCO’s utilization.”
“We believe that all parties (states, managed care plans, covered entities and pharmacies) should ensure that Medicaid rebates are not paid on 340B drugs and should work together to establish a standard process to identify 340B claims that is collectively effective,” it said.
In February in its Medicaid covered outpatient drug final rule (aka final AMP rule), CMS separately addressed preventing the collection of Medicaid rebates on 340B Medicaid MCO drugs. “It is the states’ responsibility to ensure that procedures are in place with their MCOs to exclude utilization for drugs subject to 340B discounts and we will continue to work with states to ensure they comply with this requirement regarding the prevention of duplicate discounts on MCO drugs purchased through the 340B program,” CMS said. It also said states “have flexibility to use a variety of methods to prevent duplicate discounts. We will continue to monitor this issue and will provide additional guidance to states, if needed.”
The Health Resources and Services Administration in August 2015 also addressed the topic in its proposed 340B program omnibus guidance. It said it might make providers’ carve-in, carve-out decisions about using 340B drugs for Medicaid MCO patients available on an exclusion file, as it does regarding providers carve-in, carve out decisions concerning Medicaid fee for service.
HRSA also encouraged “covered entities, states, and Medicaid MCOs to work together to establish a process to identify 340B claims.”
“First, covered entities should have mechanisms in place to be able to identify MCO patients,” HRSA said. “Second, covered entities and states should continue to work together on various methods to prevent duplicate discounts on Medicaid MCO drugs. Currently, covered entities report using Bank Identification Numbers, Processor Control Numbers, and National Council for Prescription Drug Programs (NCPDP) codes, among other methods, to identify Medicaid MCO patients and 340B claims. In some cases, states may require covered entities to follow additional steps to prevent duplicate discounts, including use of certain modifiers and codes which identify individual claims as associated with 340B drugs and therefore not eligible for rebate. Such billing instructions are beyond the scope of the 340B Program.” [/ms-protect-content]