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Understanding 340B and Medicaid Duplicate Discounts - Sentry Data Systems

CMS addresses 340B duplicate discounts

Under the provisions of the 340B law, pharmaceutical manufacturers are not required to offer a drug at the 340B discount rate to covered entities and pay rebates to state Medicaid programs for the same drug – it must be one or the other. This “prohibition” is one of the tenets of the 340B program. To avoid these “duplicate discounts,” individual state Medicaid programs set up guidelines that differ from state to state on how covered entities that choose to use 340B drugs for Medicaid patients must identify and separate the 340B drugs to avoid double-dipping on discounts.

To help overcome this challenge, the Office of Pharmacy Affairs (OPA) requires that—if a CE chooses to use 340B discounted drugs for its Medicaid patients—the entity must provide OPA with an identifying number(s) (National Provider Identification (NPI)/Medicaid Provider Number) to be added to the OPA Medicaid Exclusion File. This helps state Medicaid programs identify CEs using 340B drugs for Medicaid patients, and enables the program to carve those drugs out of the rebates. This OPA requirement includes covered entities that may bill multiple states, due to the fact that border state patients may see providers in a state other than the one in which they live. The challenge with OPA guidance is that the exclusion file was only designed for traditional or fee-for-service (FFS) Medicaid.

However, due to concerns about the accuracy of the Medicaid exclusion file or appropriate use related to Managed Medicaid, some states also require covered entities to use specific claims-level identifiers for 340B drugs, so that the Medicaid program can exclude them from its rebate requests.

Government focuses on Medicaid duplicate discounts

On January 8, CMS published an informational bulletin titled, “Best Practices for Avoiding 340B Duplicate Discounts in Medicaid.” As National Law Review reports, “The bulletin outlines seven regulatory strategies State Medicaid agencies may consider when developing policies for preventing the occurrence of duplicate discounts in Medicaid Fee-for-Services (FFS) and Medicaid Managed Care Organization (MCO) programs.”

National Law Review notes that “implementation of one or all of the best practices could substantially harm covered entities’ and contract pharmacies’ ability to provide care, as well as detrimentally affect patient access to medication and care.”

States including California and New York have begun using this approach, which has not been received well by covered entities and multiple other stakeholders concerned about the loss of savings to the covered entity and states. While historically we have seen a shift from traditional FFS Medicaid to Managed Care Organization (MCO)-led Medicaid, these states are reversing the course on 340B and returning to FFS-like models, thinking this will create savings for the state. However, the reality is that the states will be pushing money away from their state-run 340B covered entities and the state Medicaid program, actually growing the federal Medicaid program and losing savings to the state, according to the National Association of Community Health Centers (NACHC).

“We are extremely troubled by the inclusion of language that would allow states to limit the ability of some or all 340B hospitals and contract pharmacies to use 340B purchased drugs for Medicaid beneficiaries,” 340B Health president Maureen Testoni said in a statement. “Allowing such an opt-out would undermine the very purpose of 340B and potentially damage safety-net hospitals’ ability to care for patients with low incomes.”

Additionally, a report from the Government Accountability Office (GAO) released January 21 found that “poor oversight of the 340B Drug Discount Pricing Program and the Medicaid Drug Rebate Program may allow the discounts to be received twice for the same drug,” says Healthcare Dive.

“CMS does not track or review states’ procedures for preventing duplicate discounts, according to the report. Additionally, procedures that states use to exclude 340B drugs from Medicaid discounts are not always documented or effective at identifying these drugs,” Healthcare Dive notes.

How Sentry can help

Without a doubt, the biggest challenge and responsibility for covered entities participating in the 340B program is compliance, and Medicaid duplicate discounts are one of the biggest compliance risks. Hospitals and community health centers rely on the savings from 340B in order to continue serving vulnerable patients – many of whom are covered by Medicaid – and in some cases, just to keep their doors open. It is, therefore, crucial to have a solution that helps covered entities maintain compliance to avoid penalties, audit findings or being removed from the program.

Sentry’s Claims Manager Plus is an automated solution that helps eliminate guesswork and reduce human error when it comes to processing claims – particularly those in which clinicians at hospitals and health systems administer medication as part of the treatment plan. This includes reducing the possibility of claims being rejected because of Medicaid duplicate discounts.

Claims Manager Plus helps covered entities maintain compliance with regard to duplicate discounts by automatically flagging those drugs that were purchased on 340B and adding a modifier (according to individual state requirements), to help ensure that the 340B drugs are identified when billing Medicaid.

With the right software and the right experts in your corner, avoiding Medicaid duplicate discounts does not have to be difficult or take up excessive time and resources — in fact, the right technology can keep much-needed savings local to the covered entities. Sentry can make it simple for you. Contact us today to learn how you can DO MORE with Sentry.

CONTACT US now to learn more about Claims Manager Plus

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