July 30, 2014—It is incumbent on the states and their Medicaid managed care contractors to ensure that drugmakers are protected against paying both a 340B discount and a Medicaid rebate on drugs provided to Medicaid managed care enrollees, a Centers for Medicare and Medicaid Services senior pharmacy official said earlier this month during a meeting of 340B stakeholders.[ms-protect-content id=”2799″]
Joseph Fine, acting pharmacy division director within CMS’s Center for Medicaid and CHIP Services, explained CMS’s position on the duty to prevent 340B duplicate discounts on Medicaid managed care claims during a July 16 session at the 340B Coalition annual conference in Washington, D.C.
Fine observed that Medicaid managed care is inherently a contractual matter between states and insurers. He said when CMS speaks with state Medicaid agencies, it tells them to put language in their contracts requiring managed care plans to identify 340B managed care drugs. There is no regulatory requirement that managed care plans must identify 340B managed care drugs, but states can contract it in, he said. That is the best CMS can do at this point, and the agency is very aware of it, he added.
By the time the Affordable Care Act became law in 2010, already 71 percent of Medicaid beneficiaries nationwide were enrolled in Medicaid managed care plans, up from 58 percent in 2001, according to CMS figures. ACA required drug manufacturers for the first time to give states rebates for Medicaid managed care drugs. The law, however, specifically excluded 340B drugs from this requirement. Neither CMS (which administers the Medicaid rebate program) or the Health Resources and Services Administration (which administers 340B) has issued guidance clarifying responsibility for preventing rebates from being collected on 340B Medicaid managed care drugs.
Current HRSA guidance on 340B duplicate discounts was designed for and applies to Medicaid fee-for-service claims only. When providers enroll in 340B, HRSA requires them to decide whether they will use 340B drugs for Medicaid FFS patients (carve in) or buy drugs for such patients outside of 340B (carve out). Providers that decide to carve in must give HRSA their Medicaid provider number or National Provider Identifier. HRSA lists these providers in an online Medicaid Exclusion File. States are supposed to use the file to identify which 340B claims to exclude from Medicaid FFS rebate requests. If an audit shows that an error in a provider’s information in the exclusion file resulted in a duplicate discount, the provider may be required to repay manufacturers.
In the absence of guidance from either CMS or HRSA about 340B Medicaid managed care duplicate discounts, some states have been treating providers that are not listed in the exclusion file as having decided to carve out both Medicaid FFS and Medicaid managed care when, in fact, the providers might be using 340B drugs for Medicaid managed care (a scenario that could give rise to a duplicate discount problem). Similarly, states might treat providers that are listed in the exclusion file as having decided to carve in both Medicaid FFS and Medicaid managed care when, in fact, the providers might not be using 340B drugs for Medicaid managed care (a scenario that could lead to the state not requesting a rebate to which it is entitled).
Meanwhile, some other states use their own lists instead of the HRSA file to exclude 340B claims from rebate requests. Illinois forbids providers from carving 340B drugs out of Medicaid FFS and managed care except in contract pharmacies, which can continue to use non-340B drugs for Medicaid patients.
During the 340B Coalition conference panel discussion, Fine said it is incumbent on states and managed care organizations to make sure that 340B claims are exempt from Medicaid managed care rebate requests. There is currently no federal oversight regarding 340B Medicaid managed care drugs, he said. CMS is working with the states to identify 340B managed care claims, Fine said, noting that when state Medicaid agencies submit state plan amendments to CMS for approval, CMS asks what is being done about 340B and has the state share its information with HRSA.[/ms-protect-content]