September 20, 2012—Twenty one of the 25 states that use managed care organizations (MCOs) to administer their Medicaid pharmacy benefit have procedures to exclude 340B claims from their Medicaid MCO drug rebate requests, a new report has found.
The report, by the U.S. Department of Health and Human Services Office of Inspector General (OIG), focuses primarily on what states are doing to collect rebates on Medicaid managed care drugs.[ms-protect-content id=”2799″] It found that 21 states use one of two safeguards against duplicate discounts on Medicaid MCO drugs: (1) They instruct MCOs to indicate if a claim was submitted by a 340B covered entity, or (2) they use the Office of Pharmacy Affairs’ (OPA) Medicaid exclusion file to determine whether a claim came from a 340B provider. The report did not indicate which states use which method.
The 21 states are: Arizona, California, Florida, Georgia, Hawaii, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New York, New Mexico, Oregon, Pennsylvania, South Carolina, Virginia, and Washington.
Four states—the District of Columbia, New Jersey, Ohio, and West Virginia— did not report having a method for excluding 340B claims.
Of the remaining states, 15 use the Medicaid fee-for-service (FFS) system to pay for Medicaid MCO drugs and 10 do not contract with Medicaid MCOs. One state did not respond to the OIG survey.
The Affordable Care Act (ACA) expanded the Medicaid rebate program to include managed care drugs but exempted 340B drugs from the expansion. The law, however, did not specify how states should exclude 340B claims from their Medicaid MCO rebate requests.
In general, 340B reimbursement is often favorable under Medicaid managed care and unfavorable under Medicaid FFS. As a result, safety-net providers have an incentive to carve their 340B drugs into Medicaid managed care and out of Medicaid FFS. OPA, however, has not given covered entities a way to indicate that they have different 340B drug purchase polices for Medicaid MCO and Medicaid FFS beneficiaries. Before ACA, it was clear that the OPA Medicaid exclusion file applied to FFS drugs only. Since ACA was enacted, no federal guidance has been released stating that the file applies to both FFS and MCO drugs. The OIG report indicates that some states are using the exclusion file for both categories of drugs, a situation that many covered entities might not be aware of.[/ms-protect-content]