by admin | October 21, 2011 7:39 pm
October 21, 2011—More than six months after submitting required paperwork to Washington, Vermont Medicaid officials are still waiting for the Centers for Medicare and Medicaid Services (CMS) to formally approve changes the state made in late March in the way it reimburses 340B providers’ drug costs. The state had expected a response by June 28 and the delay is raising questions about the policy’s fate.
Vermont Medicaid submitted the state plan amendment[1] (SPA 11-017) in late March after withdrawing an earlier version (SPA 10-011) that 340B providers strongly opposed. Under that version, Vermont would have required covered entities to bill their drugs at 340B acquisition cost while paying them a $10.20 dispensing fee. Providers argued that the $10.20 fee would have been inadequate, especially with respect to compounded and other physician-administered drugs, and that the plan essentially would have required them to give all their 340B savings to Vermont Medicaid. They also said the amendment would have saddled them with major technological and administrative burdens.
The new state plan amendment, which is effective retroactive to Jan. 1, still reimburses 340B providers at 340B acquisition cost but raises dispensing fees to between $30.00 and $60.00 for compounded drugs and to between $15.00 and $18.00 for uncompounded medications. Vermont Medicaid calculates where a dispensing fee for a particular claim falls within those ranges by comparing what the state paid under the 340B methodology against what it would have paid if the claim had not been 340B. These payments are intended to cover both retail and physician-administered 340B drugs.
According to the state’s implementation plan for the amendment, providers bill 340B drugs to Medicaid at their usual and customary rates but must submit information about their 340B claims to Medicaid monthly. The agency uses the information to reconcile point-of-sale and hospital claims and to prevent duplicate discounts by excluding 340B claims from rebate requests sent to pharmaceutical manufacturers.
The implementation plan also requires nonprofit 340B hospitals to sign an indigent care agreement. Under the agreement, a hospital must commit to providing a specific amount of indigent care and must report annually to the state its total amount of indigent care provided. Private nonprofit hospitals are already required to have indigent care contracts to qualify for 340 under federal law, but the terms of those contracts are generally left to states and local governments to negotiate with the hospitals. In this case it appears that the state wants to establish specific indigent care that target amounts and a reporting requirement for contracting hospitals.
During a webinar, Vermont Medicaid clarified that the amendment allows covered entities to decide whether to carve their 340B drugs in or out of Medicaid.
It is unclear whether the changes that Vermont Medicaid made to the amendment will be sufficient to encourage providers to carve-in their 340B drugs. Some note that the pharmacy overhead costs for certain oncology medications and other physician-administered drugs can exceed $100, which is well above the highest dispensing fee available under the amendment. It is also unclear how difficult and expensive it will be for providers to comply with the amendment’s requirements and what the consequences would be for inadvertent noncompliance.
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