The Medicaid Challenge

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The Medicaid Challenge

It was great to see everyone at the 340B Coalition in San Diego last month. Thank you to everyone that stopped by Turnkey’s booth to say hello. We hope you had the chance to find out more about Turnkey’s affiliates, cutting-edge central supply chain service, Trulla, and the newly updated optimization service, Elevate.

The 340B Coalition agenda was loaded with great information and informative speakers. State Medicaid programs and their intersection with the 340B program continues to be a hot topic and there was much discussion about this complex issue at the Coalition.  As we all know, a drug that is purchased on the 340B program cannot also be subject to a rebate from the manufacturer to the State. Under the statute for fee-for-service Medicaid, the covered entity is held responsible for a duplicate discount and payback to the manufacturer if a duplicate discount occurs.

Whether you carve-in Medicaid or carve-out Medicaid, extra steps must be taken to ensure accurate information is being provided to the State, HRSA and drug manufacturers. When carving-in, finding and understanding 340B billing requirements for fee-for-service Medicaid can be challenging enough; however, when dealing with Medicaid Managed Care Organizations (MCO) things get really muddy. There is no mandated methodology for how States are notified of 340B claims. The States and Medicaid MCOs have flexibility to impose requirements for 340B claim identification and many States have implemented polices to require modifiers on Medicaid and Medicaid MCO claims (e.g., UD, SE, NCPDP modifiers 20, 08, 06) in order to identify 340B drug use. Medicaid MCOs have included billing requirements for 340B drugs in their contracts or provider manuals that covered entities are expected to follow. State Medicaid and Medicaid MCOs have been busy implementing duplicate discount policies and covered entities are facing more and more challenges in preventing duplicate discounts on Medicaid MCO claims particularly in contract pharmacy.

In the last Congressional session, the House Energy and Commerce Committee asked the GAO to conduct a study of 340B contract pharmacy oversight. In the GAO report issued in June 2018, one of the issues specified, was that HRSA does not do an assessment of Medicaid MCO duplicate discounts during their audits. GAO recommended that HRSA provide guidance to covered entities regarding Medicaid MCO duplicate discounts and begin auditing for Medicaid MCO duplicate discounts. HRSA stated they are working with CMS to figure out ways to address the issue and they encourage covered entities to work with manufacturers in good faith regarding MCO duplicate discounts compliance. HRSA also said that currently they cannot audit for Medicaid MCO duplicate discounts since there is no guidance; however, beginning April 1, 2018 HRSA did start issuing Areas for Improvement (AFI) findings if they identify a potential risk for a Medicaid MCO duplicate discount.

There are multiple challenges to identify Medicaid MCO claims. Many times, the BIN, PCN and Group numbers are the same for the insurance company’s Medicaid side and commercial side. States do not always keep their BIN, PCN and Group numbers updated. The tools available are not designed for Medicaid MCO. The covered entity may be doing everything possible to get it right; however, a duplicate discount may occur because the State makes an error. Some States are pushing back on dispute resolution processes with manufacturers stating that it is the covered entity’s responsibility to prevent duplicate discounts. 340B Medicaid billing compliance is challenging for all stakeholders, covered entities, States and manufacturers.

Companies working between the manufacturers and Medicaid State Agencies (e.g., Kalderos) review a list of claims and provide manufacturers with claims that appear to be duplicate discounts. Kalderos stated that they see integrity issues with the data they receive from the State to the manufacturer. Many States cannot provide the manufacturer with enough information to identify duplicate discounts; therefore, companies such as Kalderos work between the covered entity, State and drug manufacturer to identify duplicate discounts. According to studies done by Kalderos on behalf of manufacturers, on average 5% of claims provided from the State Medicaid Agencies to the drug manufacturers requesting rebates are incorrect. One would think that the obligation should be on the State when there is a dispute or duplicate discount on Medicaid MCO claims when the covered entity has correctly submitted a claim. However, there is a growing trend that when the manufacturer reaches out to the State with an issue the State is instructing the manufacturer to go back to the covered entity and seek repayment for the 340B discount and the State is not repaying the rebate.

So, what is a covered entity to do? As frustrating as it is, the covered entity must stay vigilant.

  1. The covered entity must keep up with State rules. If the covered entity treats Medicaid patients from other States, the covered entity must understand Medicaid billing requirements for 340B purchased drugs in all States in which they bill Medicaid.
  2. Understand Medicaid MCO 340B billing requirements for each Medicaid MCO the covered entity bills.
  3. Work with the covered entity’s billing department to identify any new Medicaid MCOs the covered entity has contracted with to ensure 340B drug billing requirements are followed.
  4. Confirm contract pharmacies are aware of any new Medicaid MCOs and the pharmacy is carving out each BIN, PCN and Group numbers for Medicaid fee-for-service and Medicaid MCOs.
  5. Ensure written 340B policies and procedures document the covered entity’s prevention of duplicate discounts for covered outpatient drugs reimbursed through Medicaid and Medicaid MCOs.
  6. Don’t forget to keep the Medicaid Exclusion File (MEF) up-to-date. The MEF is the communication tool that HRSA provides for the covered entity to communicate that they are providing 340B purchased drugs to Medicaid patients or identifying that they “carve-in” Medicaid. Regardless of State specific requirements, the MEF must be complete and accurate. The MEF is the source that HRSA uses to identify what entities are doing with their drugs. It is the source for manufacturers and other stakeholders to understand how the entity prevents duplicate discounts.


About Author

Tanya Frederick, 340B ACE

Tanya has more than 30-years of diverse healthcare experience including roles as Director of Government Assistance Programs, Director of a National 340B Compliance & Integrity Program, Director of Health Information, Director of Case Management and Privacy Officer. She has extensive experience with government programs and audits, regulatory requirements, process management and workflow analysis. Tanya provides onsite support for audits and has performed numerous 340B audits as well as supported clients through HRSA 340B audits. She has also served on multiple revenue cycle, data integrity and compliance committees and has been a speaker on various compliance and information governance topics at the local, state and national level.

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