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Quarterly Claims and Operations

340B Drug Pricing Program
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What is the 340B Drug Pricing Program?

The 340B Program enables covered entities to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.

Manufacturers participating in Medicaid, agree to provide outpatient drugs to covered entities at significantly reduced prices.

Eligible health care organizations/covered entities are defined in statute and include HRSA-supported health centers and look-alikes, Ryan White clinics and State AIDS Drug Assistance programs, Medicare/Medicaid Disproportionate Share Hospitals, children’s hospitals, and other safety net providers.

To participate in the 340B Program, eligible organizations/covered entities must register and be enrolled with the 340B program and comply with all 340B Program requirements. Once enrolled, covered entities are assigned a 340B identification number that vendors verify before allowing an organization to purchase 340B discounted drugs.

(Source: HRSA OPA)

Learn more about 340B glossary of terms here

Key Compliance Issues

Carve-in vs. Carve-out

To carve-out means a covered entity does not use 340B inventory on Medicaid recipients however they are using it for other lines of business such as commercial. Carve in means 340B inventory is used for a Medicaid line of business. A covered entity may carve-in for one line of Medicaid business and not another. In Indiana, covered entities with contract pharmacies must carve out for fee for service Medicaid. For managed care, covered entities should check their managed care contracts or reach out to their respective managed care contacts. In house pharmacies may carve in for fee for service Medicaid.

Pharmacy Type (Contract/In-house)

Medicaid Line of Business

Carve in or out?

Contract

Fee for Service

Mandatory Carve-Out

Contract

MCE

Contact individual MCE

In-house

Fee for Service

Optional Carve-in

In-house

MCE

Contact individual MCE

 

Duplicate Discount Prohibition

Examples of specific findings have included:

  • Contract pharmacy treating Medicaid patient dispense as 340B eligible due to incorrect PCN/BIN identifiers in its filters.
  • Contract pharmacy treating Medicaid patient dispense as 340B eligible due to patient type being incorrect in FQHC patient database.
  • FQHC billing Medicaid contrary to information included in Medicaid Exclusion File (e.g., stating that they carve out when registering, but then filling prescriptions for Medicaid patients with 340B drugs.)
  • Incorrect or incomplete NPI or Medicaid billing numbers

Potential strategies for avoiding these findings:

  • If your pharmacy is carving in for Medicaid fee-for-service patients, ensure that you are listed correctly on the Medicaid Exclusion File.
  • Include both your Medicaid Provider Numbers and NPI numbers in the Medicaid Exclusion File.
  • Include MPN/NPI in the Medicaid Exclusion File for all states that are billed and follow the state billing policies of all states that are billed by your entity (not just the one in which you are located.)
  • Do not use a contract pharmacy to dispense to Medicaid FFS patients, unless you have a written agreement with the pharmacy and the state Medicaid agency as to how duplicate discounts will be avoided.
  • Discuss your strategies for avoiding duplicate discounts in your Policies and Procedures. Do not throw away
    old Policy and Procedures manuals after updating, as you might be asked to produce the policies that were
    previously in effect.

(Source: NACHC 340B Manual, 2nd Edition)

 

Diversion

Diversion is a frequent OPA audit finding, especially in contract pharmacy settings. Often diversion is the result of improper matching of the entity’s patient data to the contract pharmacy’s dispensing records.

Examples of specific findings have included:

  • 340B drug dispensed at a contract or in-house pharmacy for a prescription written by an ineligible provider
  • 340B drug dispensed for a prescription written at an ineligible site.
  • 340B drug dispensed for a referral prescription for which the FQHC did not demonstrate that it retained responsibility for care.

Strategies for avoiding these findings:

  • Ensure that the “filters” or “tables” used in matching data files contain not only patient and drug information, but also eligible provider lists and encounter site locations.
  • Ensure that lists of eligible providers prescribing medications are kept current by updating at least monthly. If an outdated prescriber listing includes a provider who is no longer associated with the FQHC, the potential for diversion is increased. Be sure to archive monthly provider listings as the credentialing staff may only have a “live” version. This will assist in determining provider eligibility during audits.
  • Always include encounter site locations in the matching process. Except for eligible prescriptions generated from patient referrals and/or hospital discharge prescriptions (see Sections 7.B.2 and 7.B.5, respectively), only prescriptions written in 340B registered locations are eligible for 340B pricing. Sometimes a provider may work in more than one office location. Only prescriptions originating from eligible providers in sites registered on the OPA database are 340B eligible. For this reason, the location of service is important when matching data files.
  • Discuss your strategies for avoiding diversion in your Policies and Procedures. Do not throw away old Policy and Procedure manuals after updating, as you might be asked to produce the policies that were previously in effect.

(Source: NACHC 340B Manual, 2nd Edition)

 

Inadequate Oversight of Contract Pharmacies

Examples of specific findings have included:

  • Contract pharmacy was registered without having a written contract in place
  • Entity did not provide contract pharmacy oversight
  • 340B drug dispensed at a contract pharmacy for a prescription written at an ineligible site by an ineligible provider, not supported by responsibility of care
  • Contract pharmacy was billing Medicaid without notification to OPA
  • No documentation of oversight activities

Potential strategies for avoiding these findings:

  • Discuss your strategies for overseeing contract pharmacies in your Policies and Procedures. Do not throw away old Policy and Procedures manuals after updating, as you might be asked to produce the policies that were in effect at a point in the past.

(Source: NACHC 340B Manual, 2nd Edition)

 

Click here to access additional 340B resources

 

Contact Information

Drew Thomas 

Finance and Operation Program Director

DThomas@indianapca.org