Grayson K. Peek, PharmD, MS, BCPS

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.

Articles

340B Compliance: The Medicaid Exclusion File and Prevention of Duplicate Discounts

As drug prices continue to increase, affecting all areas of patient care in which medications are administered or dispensed, identifying avenues for reducing costs has become even more paramount. Entities covered by 340B, the federal drug discount program that serve a disproportionate share of underinsured and uninsured patients shoulder even more of this financial burden, which escalates the necessity to control drug expenses. The costs of medications paid by these entities, along with the potential costs associated with drug preparation, administration, and/or dispensing of the medications, often exceed reimbursement. Many 340B hospitals have worked to control their drug expenses through optimization of procurement practices, including examining purchases on wholesale acquisition cost (WAC) accounts to identify unnecessary spending. Although some WAC account purchases are necessary to maintain 340B program compliance, other purchases may end up on this account because of program maintenance issues, such as infrequent split billing maintenance, lost charges, and policies that do not clearly articulate products that fall outside the 340B program (ie, noncovered outpatient drugs).

340B hospitals subject to the group purchasing organization (GPO) prohibition typically have 3 separate accounts on which to purchase medications: 340B, GPO, and WAC. When using WAC as the comparator, 340B-priced drugs are typically discounted about 25% to 50% (

), and GPO-priced drugs are typically discounted about 15% to 20%. In many cases, the difference between the WAC price and the other price points is minimized by Apexus Prime Vendor Program (PVP) sub-WAC contracts. For this reason, a good strategy for a covered entity to use to review the impact of WAC purchasing may be to focus on the items with no PVP contract or on those in which there are unfavorable pricing differences between what is loaded to their GPO and their WAC accounts. This calculation (WAC account price minus GPO account price) is often referred to as the WAC premium. If operational considerations (mentioned below) are addressed, hospitals may begin to see their total WAC premiums decrease from baseline.

Covered entities using a virtual inventory or replenishment model are required to make their first purchases at WAC pricing to establish a neutral inventory before replenishment using non-WAC pricing can take place. These WAC-priced purchases are then dispensed to patients who are determined to be either 340B- or GPO-eligible. Once eligibility is determined, that dispensation is accumulated to a split billing software that will allow future replenishment purchases. Because of this requirement, a certain level of WAC exposure is expected to ensure compliance. However, a lack of proper management regarding this accumulation process can result in unnecessary WAC spending that would have otherwise resulted in 340B or GPO purchases.

A comprehensive approach to addressing and minimizing WAC exposure is through establishing a regularly convening WAC minimization work group. This group can include stakeholders from contracting, information technology, pharmacy, procurement, and the organization’s split billing vendor. The next step should be to determine which metrics to use for tracking progress. Although minimizing the WAC percentage is often mistakenly chosen as the defining measurement, it is even more valuable to focus on minimizing exposure to the WAC premium and its related missed 340B or GPO savings opportunity. Once the items with the greatest opportunities are identified, this work group will then focus on the operational causes of the WAC account spending.

Common causes of unnecessary WAC spending can include deficiencies in technology that support the virtual inventory model; lost charges; and unclear policies and procedures. Nearly all these causes are complicated and could require involvement from multiple departments to resolve. The 

illustrates examples of causes that could be identified and the departments that may be involved in implementing a resolution. For example, if a covered entity only accumulates what is administered to its patients, any drug waste will subsequently result in WAC exposure. Rectifying this issue could mean collaboration between nursing and pharmacy to implement initiatives to reduce drug waste. At 340Bpvp.com, Apexus offers a free tool that hospitals can use as a template to minimize WAC exposure.

A focused effort on minimizing WAC exposure while maintaining 340B program compliance is a strategic approach to mitigating the impact of increasing drug costs in this environment of decreasing reimbursements.

Grayson K. Peek, PharmD, MS, BCPS, is the manager of business development and integrity at Duke University Hospital Department of Pharmacy in Durham, NC. 

Halena Leah Marcelin, PharmD, MS, BCPS, is the 340B program manager for Memorial Healthcare System in Hollywood, FL. 

Minimizing WAC Exposure to Decrease Drug Expense in the Virtual Inventory Setting

The 340B Drug Pricing Program was enacted in 1992. Through this program, eligible health care providers, or covered entities, are able to purchase certain manufacturers’ covered outpatient drugs at discounted prices, with a program goal “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

 There are several primary components of 340B compliance, including accuracy of covered entity registration/recertification, and the prohibitions on diversion, duplicate discounts, and use of a group purchasing organization (GPO) or arrangement for certain hospital covered entities.

 Each compliance component may be best understood by specific covered entity stakeholders. Implementation of a 340B Oversight Committee (340B OC) creates a mechanism for content experts and stakeholders within an organization to discuss important program administration topics. This concept has been identified as a best practice by Apexus, the designated prime vendor for the program and various 340B stakeholder groups.

It is recommended that the 340B OC meet on a regular basis and involve a diverse group of covered entity stakeholders. An example list of 340B OC members is below. If unable to attend, an appropriate replacement attendee may be designated. It is important to note that different covered entities have varying levels of 340B dedicated and shared resources. Therefore, the composition of the 340B OC will vary based on organizational needs.

Chief executive officer Chief financial officer Chief pharmacy officer or director of pharmacy

Chief information technology officer and/or pharmacy informatics support

Manager(s) of pharmacy area(s) purchasing 340B-priced drugs

The 340B OC should be used to ensure the proper functioning and regulatory compliance of the covered entity. The committee may be charged with the following functions to accomplish this goal:

Setting the general direction for 340B drug purchasing and compliance framework

Establishing and maintaining policies and procedures

Maintaining a plan for self-audits and external audits

Reviewing reports, trends, and audit results

Reviewing regulatory and legislative updates

Providing compliance and oversight direction

Establishing corrective action plans, when necessary

Preparing for a Health Resources and Services Administration and/or manufacturer audit, when necessary

Preparing responses for manufacturer good-faith evaluations, when necessary

Determining self-disclosure appropriateness

Regular, scheduled meetings of the 340B OC may be supplemented by meetings of ad-hoc groups, including task forces or subcommittees. Task forces may focus on the operational impact of 340B regulations/policy changes or other areas, such as GPO exclusion compliance, material breach, contract pharmacy, etc. An example 340B OC organizational structure, with reporting relationships, is highlighted in the 

Figure. An Example 340B OC Organizational Structure

Establishing a mechanism for stakeholders to provide perspective and expertise during administration of the covered entity’s 340B program, through implementation of a 340B OC, is an effective method in the program administration process that can be used to ensure continued compliance.

Grayson K. Peek, PharmD, MS, BCPS, is the manager of business development and integrity at the Duke University Hospital (DUH) Department of Pharmacy in Durham, North Carolina. He completed the 2-year health-system pharmacy administration residency at DUH in conjunction with a master of science in health-system pharmacy administration at the University of North Carolina at Chapel Hill. Dr. Peek is a PharmD graduate of the University of Tennessee Health Science Center. Alexandra M. Williams, BA, CPHT, is the 340B program manager at the University of North Carolina Hospitals in Chapel Hill, North Carolina. She completed her undergraduate degree in biology and health sciences at Guilford College. She is a certified pharmacy technician and has been involved in a 340B-related role for more than 4 years. She serves as a member of the Apexus Education Advisory Council.

Health Resources and Services Administration. 340B Drug Pricing Program. hrsa.gov/opa/index.html. Updated May 2017. Accessed July 30, 2017.  

Health Resources and Services Administration. 340B Drug Pricing Program: program requirements. hrsa.gov/opa/programrequirements/index.html. Accessed July 30, 2017.

Health Resources and Services Administration. 340B Peer-to-Peer Program: 340B Compliance Improvement Guide. hrsa.gov/opa/educationalresources/compliance-improvement-guide.pdf. October 1, 2015:14-17. Accessed August 15, 2017.

Apexus. Sample 340B program policy and procedures manual: disproportionate share hospital (DSH). docs.340bpvp.com/documents/public/resourcecenter/DSH_PolicyManual.docx. 2016:21-22. Accessed July 30, 2017.

The 340B drug pricing program was enacted in 1992.

340B Oversight: Interdisciplinary Approach Ensures Continuous Compliance

The 340B program launched in 1992 to “stretch scarce fed- eral resources” in order for participating entities to increase accessibility to care (eg, medications, clinical services, etc) for patients.

 Since 2012, Health Resources & Services Administration (HRSA) has prioritized audits of covered entities as a part of its oversight of the program’s integrity. These audits have been ramping up, with the number of audits completed and the level of review increasing to what we see today.

For the past 5 years, based on HRSA audit findings posted on the HRSA website, the percentage of covered entities with at least 1 finding has averaged 73% (table 1

), with findings ranging from incorrect 340B database records to diversion to duplicated discount to group purchase organization (GPO) prohibition violations.

 These findings fall in line with violations of the 340B Program requirements (table 2

). With the commencement of the Bizzell Group as contracted auditors, it will be interesting to see how trends in audit findings transform over the next few years.

The 340B program launched in 1992 to “stretch scarce federal resources” in order for participating entities to increase accessibility to care (eg, medications, clinical services, etc) for patients. 


340B Audit: Building a Self-Audit Program

The 340b drug pricing program was enacted in 1992 with the goal of allowing eligible participants, or covered entities, “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” Through this program, covered entities are able to purchase certain manufacturers’ covered outpatient drugs at discounted prices, no greater than the 340B ceiling price.

 Each year, covered entities must recertify while attesting to their ability to remain compliant with 340B Program requirements.

 Due to this, program compliance should be at the forefront of all 340B activities for the covered entity. Organizations have begun to invest valuable resources to ensure continued program compliance through 340B focused consultants and 340B program managers (or similar roles). In order to promote compliance, these roles often focus on the provision of education to covered entity stakeholders.

The government agency charged with managing the 340B Drug Pricing Program is the Health Resources and Services Administration (HRSA). HRSA’s Office of Pharmacy Affairs (OPA) offers various educational resources to covered entities in their efforts to ensure program compliance.

 Covered entities are able to find information about Federal Register notices, policy releases, guidance, and program updates through the OPA’s online resources. The website contains information about registration, program requirements, and updates for complex issues such as contract pharmacy and the group purchasing organization (GPO) prohibition.

Another source for 340B Program education is Apexus, the HRSA prime vendor for the 340B Drug Pricing Program. In addition to negotiating significant discounts for certain drugs for Prime Vendor Program participants, Apexus provides a myriad of resources and educational opportunities to covered entities, offering practical and operational information about policy application. Resources include frequently asked questions (FAQs), tools that can act as templates for compliance cornerstones (e.g., auditing practices and policies/procedures), and contact information for the national 340B Apexus Answers call center.

 Apexus’ 340B UniversityTM provides on-site training sessions for program participants, typically in conjunction with other industry conferences. An online version of this training, known as 340B University OnDemandTM, is available to covered entity stakeholders who may be unable to attend in person. This online option offers the flexibility of completing modules focused on specific aspects of the 340B Program, while doing so at the stakeholder’s own pace.

Additionally, for those individuals directly involved with 340B Program operations, Apexus offers the “Advanced 340B Operations Certificate Program.” The certificate program provides specialized training to understand and overcome challenges in managing a compliant 340B Program.

The aforementioned resources are important for those in roles related to 340B and are trusted resources to help those individuals to create entity specific training and education. This could include development of learning modules and live educational sessions supplemented by an assessment to ensure competency.

 As a best practice, the covered entity’s education plan is typically documented within the appropriate policies and procedures, and records are maintained to ensure that all stakeholders have received sufficient training.

 Additionally, some entities extend this training to their contract pharmacy partners to ensure that all of the staff involved in the program are receiving the same quality of training as their own covered entity staff. In addition to receiving general education and training, further education may be tailored to meet the needs of the specific stakeholder’s work setting.

 The online table is a practical example of an education and training program tailored by work setting.

Ensuring that all stakeholders have received sufficient education and training will enhance your covered entity’s ability to remain compliant with 340B Program requirements and allow for more support for program related initiatives.

Grayson K. Peek is the Coordinator of 340B Administration and Revenue Management at Duke University Hospital in Durham, North Carolina. He completed the 2-year Health-System Pharmacy Administration Residency at Duke University Hospital in conjunction with a Master of Science in Health-System Pharmacy Administration at the University of North Carolina at Chapel Hill. Dr. Peek is a PharmD graduate of the University of Tennessee Health Science Center.

Alexandra M. Williams is the 340B Program Coordinator at University of North Carolina Hospitals in Chapel Hill, North Carolina. She completed her undergraduate degree in Biology & Health Sciences at Guilford College. She is a certified pharmacy technician and has been involved in a 340B related role for over 4 years. She currently serves as a member of the Apexus Education Advisory Council.

Health Resources and Services Administration. 340B drug pricing program omnibus guidance. 

Annual recertification. Health Resources and Services Administration website. hrsa.gov/opa/recertification/recertification.html. Accessed September 28, 2016.

340B Drug Pricing Program. Health Resources and Services Administration website. hrsa.gov/opa/index.html. Accessed September 28, 2016.

Office of Pharmacy Affairs update: August 2015. Health Resources and Services Administration website. hrsa.gov/opa/updates/2015/august.html. Accessed September 28, 2016.

FAQs. Health Resources and Services Administration website. hrsa.gov/opa/faqs/. Accessed September 28, 2016.

Education. Apexus website. apexus.com/solutions/education. Accessed September 28, 2016.

Apexus Advanced 340B Operations Certificate Program. Apexus website. apexus.com/solutions/education/apexus-advanced-340b-certificate-program. Accessed September 28, 2016.

Health Resources and Services Administration. 340B Peer-To-Peer Program: 340B Compliance Improvement Guide. 2015:14-17.

Apexus. Sample 340B Program Policy & Procedures Manual: Disproportionate Share Hospital (DSH). 2016:21-22. Download: 

https://docs.340bpvp.com/documents/public/resourcecenter/DSH_PolicyManual.docx

The 340b drug pricing program was enacted in 1992 with the goal of allowing eligible participants, or covered entities, “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”