A Review of Expectations to Prevent Duplicate Discount

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A Review of Expectations to Prevent Duplicate Discount

Carve-In Medicaid Entities:

At a minimum, list the NPI of the entity for each registered site on the HRSA database and subsequently the Medicaid exclusion file (MEF).  Covered entities (CEs) with multiple child sites will need to confirm the NPI number used for billing at each site as it might be different than the parent NPI.  In addition, Medicaid provider numbers (MPNs) for each site should also be listed, as suggested by a recent 340B Health Webinar on HRSA audit findings.  It is not clearly explained by HRSA if the NPI or MPN is preferred, therefore best practice is to place both numbers on the MEF.  Confirmation that the information is correct on the MEF should be reviewed quarterly and annually during recertification.

During a recent HRSA audit, the auditor asked that for each FFS claim sampled, the CE demonstrate that the NPI placed on the claim/UB04 matched the NPI listed on the database.  The auditor also asked that confirmation of discussion of the carve-in arrangement that occurred with the State DHS office be uploaded as data by the end of the audit.

In addition to following requirements for your state to prevent duplicate discount, you will need to ensure that the CE is not at risk of a duplicate discount for an out-of-state claim.  So, the next step is to determine if the billing office can create a list of all out-of-state billing numbers that are used.  In some cases, this is not a Medicaid provider number, but may be the entities NPI number.  In the event an NPI number is all that your entity uses to bill the outside state, covered entities should refer to state Medicaid agencies as to whether a Medicaid billing number is appropriate or other means of identifying Medicaid claims.  For that matter, best practice would be to have record of all communication with all state’s that the entity bills to determine the correct process to prevent duplicate discount.  Furthermore, it is a good idea for the 340B team to have access to billing information so that when self-auditing they can follow through on a claim to audit for an NPI/MPN, or even UD modifier match.  Some CEs have argued that even though an out of state payor is associated with a claim, the internal billing policy is to write off out-of-state claims and not seek reimbursement.  In this case, an argument of preventing duplicate discount can be made.  Apexus can provide entities with contacts at each state’s Medicaid office.  All exchanges of communication with state Medicaid offices should be saved as this information could be asked for during an audit.

A Review of Orphan Drugs and Carve-out Medicaid Entities:

In a carve-out situation, the challenge is that a CE could purchase an orphan drug on the 340B account (340B like pricing) and submit the claim to Medicaid.  Because the CE is carved out, its NPI/MPN would not be listed in the MEF.  For this reason, Medicaid could seek a rebate from the manufacturer on that claim.

This is a challenge for state Medicaid because these orphan drugs are covered outpatient drugs for other covered entity types and not covered outpatient drugs for the affordable care act (ACA) CE types, such as RRC, SCH, and CAH.  When the orphan drug is purchased by a CE subject to the Orphan Drug exclusion, it is not a covered outpatient drug, and hence should not be subject to a rebate for the state Medicaid.  Apexus has suggested that because each state establishes unique requirements for 340B use for Medicaid patients and some require carve-out, entities could consider entering into a discussion with the state Medicaid agency for a solution.

It is possible to consider the ‘340B like’ pricing on orphan drugs, simply a good price.  If Medicaid tries to seek a rebate on a non-COD, it seems more of a “them” problem.  However, after participating in recent HRSA audits where the auditor has asked for documentation of communication with the State, the safest bet would be to contact the State for a plan.

Another option would be to inform the Medicaid agency of the statutory orphan drug exclusion to ensure the state is aware.  Meaning, explain to the state that there are non-CODs out there that the CE may be purchasing these, including drugs that are non-COD because of the 340B statute itself.

On the flip side, the following Apexus FAQ is related to orphan drugs and carve in CEs.

FAQ ID: 2214:  Our rural hospital participates in the 340B program and carves-in Medicaid. How should we handle not being able to purchase orphan drugs at a 340B price, when we have stated we bill Medicaid for 340B drugs? Orphan drugs are not covered outpatient drugs for us as a 340B entity, but Medicaid still views them as a covered outpatient drug. Must we carve-out?
A:  Covered entities and states should work together in good faith to ensure duplicate discounts to do not occur.

From Turnkey’s tid bit on CEs subject to the Orphan Drug exclusion from the May newsletter, the following is a final consideration of orphan drugs and preventing duplicate discounts:

If your hospital is being offered a ‘340B like” price on non-CODs, consider taking advantage of the discount by purchasing the drug regardless of indication.  The risk would be in a manufacturer who did not intentionally offer the price, rather it was due to a contract load error, in which case they may ask for credit rebilling.  It is a good idea to reach out to manufacturers that are offering ‘340B like pricing’ to determine if the price was loaded to the wholesaler by mistake or if the manufacturer chose to extend a discounted price on drugs even if the entity is an ACA type hospital.

For ACA entities subject to the Orphan Drug Exclusion, orphan drugs will be excluded from HRSA audits.

As learned in the Apexus certificate module, CEs may consider removing orphan drug NDCs from HRSA/manufacturer 340B audit samples, as these are not covered outpatient drugs and would be outside the scope of the 340B program.

If these items are removed from audit samples, then they will not be at risk for testing for duplicate discount as well.

In summary, best practice would be to reach out to the state Medicaid agency for a plan to prevent duplicate discount while also confirming the pricing is voluntary from the manufacturer.  In the event of an audit, consider removing non-CODs from utilization data.

The following Apexus FAQs were used as reference and include detailed information for entities that carve-in:

FAQ ID: 1369:  Are all of a covered entity’s provider identifiers listed in the Medicaid Exclusion File?

FAQ ID: 2211: Must a covered entity submit its Medicaid provider number or NPI to HRSA for inclusion in the 340B Medicaid Exclusion File?
Jennifer Hagen, PharmD


About Author

Jennifer Hagen, PharmD, 340B ACE

Jennifer Hagen joined the Turnkey Pharmacy Solutions team in October of 2016. She has served in various pharmacy leadership positions including Director of Ambulatory Pharmacy Services for CentraCare Health for over 5 years. Dr. Hagen had operational responsibility for Infusion Pharmacy Services, the Health System’s four retail pharmacies, and was responsible for 340B compliance at St. Cloud Hospital, a 489 bed regional medical center. Jennifer has served as a HRSA peer-to-peer mentor for the past two years and has presented numerous times for 340B University and chaired round table events for 340B Health. Jennifer is a member of our 340B independent auditing team. Her perspective involves rural health program administration.

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