Gavin Magaha, PharmD, MS

Health care providers participating in the 340B program are prohibited from contributing to duplicate discounts, or the scenario that exists when a manufacturer provides a discounted 340B price and a rebate to Medicaid for the same drug.

340B ceiling prices are calculated through use of the Medicaid unit rebate amount. Thus, when a manufacturer provides a rebate to Medicaid on a drug that has been sold to a covered entity at the 340B price, the manufacturer has essentially provided the rebate twice. The 

 details how 340B ceiling prices are calculated.

Duplicate discounts also can occur when a covered entity chooses to use 340B (carve in) for Medicaid patients and bills Medicaid.

 If a covered entity decides to carve in, it must have mechanisms, policies, and procedures in place to prevent duplicate discounts from occurring.

The Health Resources and Services Administration’s (HRSA) Office of Pharmacy Affairs (OPA) created the Medicaid Exclusion File (MEF) as a tool for stakeholders to use to prevent duplicate discounts from occurring for fee-for-service (FFS) Medicaid. The MEF lists covered entities that have chosen to use 340B drugs for their Medicaid patients or carve in by their respective Medicaid Provider Numbers and/or National Provider Identifiers. Covered entities must provide this information during the OPA’s 340B registration process and verify it annually during recertification. A covered entity may elect to change its carve in/out status at any time in a calendar quarter, but that change will not be effective until the start of the following quarter. The MEF can be used by manufacturers and states to identify claims from 340B-covered entities that contain drugs charges that should not be included in Medicaid rebate totals.

In addition to the MEF, states employ a variety of requirements to prevent duplicate discounts. Medicaid plans do not use a standard set of requirements for 340B-eligible medications between states, nor across retail or provider-administered drug settings. This is especially challenging for entities that treat Medicaid patients from different states. To alleviate some of this stress, the Centers for Medicare & Medicaid Services (CMS) published the Covered Outpatient Drug Final Rule requiring states to declare, if they had not already, how their Medicaid programs would reimburse retail claims under which 340B products were used.

In a retail pharmacy setting, covered entities may be required to submit information to Medicaid agencies during prescription claim adjudication using National Council for Prescription Drug Programs (NCPDP) standards. Information required in the claim may include any of the following:

Submission clarification code: 20. This code identifies the claim as a 340B eligible prescription.

340B actual acquisition or net cost. There may be variation between plans regarding the required NCPDP field used to submit 340B cost information.

In the provider-administered drug setting, claims may require a modifier. For example, some Medicaid agencies require a UD modifier on each Healthcare Common Procedure Coding System billing unit for drugs purchased at the 340B price.

 This modifier may be in addition to other modifiers required by CMS in patients who are Medicaid and Medicare beneficiaries.

 This information may be required for both FFS and managed care Medicaid organization (MCO) plans, depending upon the plan and state requirements. MCO and state plan requirements should also be reviewed regularly, because details may change.

If a possible duplicate discount occurs, covered entities should apply their standards for a material breach and follow their procedures within their policy. Regardless of material breach threshold, the covered entity is expected to resolve any discrepancies with the manufacturers.

Covered entities are responsible for maintaining accurate information on HRSA’s MEF and keeping auditable records. Covered entities that elect to carve in to Medicaid plans must have a detailed understanding of the MEF and any plan-specific Medicaid billing requirements for drugs purchased at a 340B price. Monitoring for potential duplicate discounts is also a critical component of the audit plan for covered entities. Covered entities that understand and audit for the variety of requirements can successfully position themselves to avoid duplicate discounts as part of the 340B Drug Pricing Program.

Christopher Loucks is the assistant director of pharmacy for supply chain at the University of Kansas Health System in Kansas City, Kansas.

Grayson K. Peek is the pharmacy manager for business development and integrity at Duke University Hospital in Durham, North Carolina.

Gavin Magaha is a manager of 340B education and compliance support at Apexus in Irving, Texas. 

Medicaid/duplicate discounts. Apexus website. 340bpvp.com/resource-center/faqs/medicaid--duplicate-discounts/. Accessed May 18, 2018.

Apexus. 340B Basics. 340B University: New Orleans, Louisiana. Presentation. December 6, 2015.

Health Resources and Services Administration. 340B OPAIS user guide for authorizing officials and primary contacts. 340bregistration.hrsa.gov/help/external/Resources/PDF%20User%20%20Guides/ExternalUserGuide.pdf?AspxAutoDetectCookieSupport=1. Accessed May 18, 2018.

Medicaid program; covered outpatient drugs. 

2016;81(20):5169-5357. Codified at 42 CFR §447.

Guidance documents. NCPDP website. ncpdp.org/Resources/Guidance-Documents. Accessed May 20, 2018.

Claims for drugs purchased through the 340B drug pricing program. ForwardHealth website. forwardhealth.wi.gov/WIPortal/Subsystem/KW/Print.aspx?ia=1&p=1&sa=48&s=4&c=13&nt=Claims%20for%20Drugs%20Purchased%20Through%20the%20340B%20Drug%20Pricing%20Program&adv=Y. Accessed May 22, 2018.

January 2018 Update of the Hospital Outpatient Prospective Payment System (OPPS). Medicare Learning Network. Centers for Medicare & Medicaid Services. MLN Matters Number: MM10417. Release Date: December 22, 2017.

Self-disclosure process. HRSA website. hrsa.gov/opa/self-disclosures/self-disclosure.html. Accessed May 20, 2018.

Gavin Magaha, PharmD, MS

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