340B and State Medicaid Agencies

1. Michol Bobb, CPhT
mbobb1@umbc.edu
Intern
Maryland Medicaid Pharmacy Program
May 2013

2.  To identify a way for State Medicaid
Agencies to recognize 340B priced claims in
order to avoid inappropriate rebate
processing

3.  340B is a Federal Discounted Drug Pricing Program that resulted
from the enactment of Public Law 102-585
1
(the Veterans Health
Care Act of 1992).
 This Act came about as a means of controling the prices that
specified government agencies
2
paid for purchasing
pharmaceuticals.
 The intent of this program is to expand access to affordable
medications in low income populations and help support the
operations of safety net organizations.
 The 340B price is a ceiling price set by drug manufactures that is
less than the Medicaid price of an eligible outpatient drug.

4.  Apexus: Responsible for negotiating prices
below the 340B ceiling price and improving
access to affordable medications through a
distribution network

5.  Helps to offset the federal and state costs for
most outpatient prescription drugs dispensed to
Medicaid patients.
 Requires drug manufacture’s to enter into a
national rebate agreement with the Secretary of
DHHS
4
(known as the Medicaid Drug Rebate
Agreement5
) in exchange for State Medicaid
coverage of the manufacture’s drugs.
 This agreement holds manufacture’s responsible
for paying a rebate each time one of their drugs
is dispensed to a Medicaid patient

6.  HRSA
6
: Regulator
 OPA
7
: Regulator
 Medicaid: Payer
 Contract Pharmacies: Providers

7.  A 340B patient is defined as:
◦ Someone who receives healthcare services from a
covered entity that maintains health records for the
patient.
◦ Someone who is prescribed medications that are for the
treatment of a received outpatient service at a covered
entity.
◦ Someone referred for care within a covered entity (from
a non-covered entity) becomes eligible as a 340B patient
if the continuum of care is within the 340B covered entity

8.  340B covered entities are organizations
(facilities/programs) that provide medical
services to the patient and are listed in the
340B Statute as eligible to purchase drugs
through the 340B Program and appear on
the Office of Pharmacy Affairs Database.

9.  Federally Qualified Health Centers (FQHC)
 Comprehensive Hemophilia Treatment Centers
 Ryan White Programs (Parts A, B, C, D)
8
 Sexually Transmitted Disease/Tuberculosis Programs
 Title X Family Planning Clinics
9
 Urban / 638 Tribal Programs
10
 Federally Qualified Health Center Look-Alikes (FQHC-LA)
 Disproportionate Share Hospitals (DSH)
 Children’s Hospitals
 Free Standing Cancer Hospitals
 Critical Access Hospitals
 Sole Community Hospitals
 Rural Referral Centers

10.  Contract pharmacies work with covered
entities to fill 340B prescriptions for 340B
eligible patients. The covered entity is
responsible for maintaining health records
for the patient and the pharmacy is
responsible for maintaining medication
records for the patient with access to the
patients health records.

11.  1. Hospital: The hospital must be eligible for 340B and registered with the 340B
program.
 2. Patient: Patient must be seen in an outpatient facility or service area which
is “integral” to the hospital (i.e., whose costs are listed on the reimbursable
section of the hospital’s latest Medicare Cost Report-records each institution's
total costs and charges associated with providing services to all patients).
 3. Provider: Patient must be seen by a provider who is employed
by, contracted by, or through other arrangements (such as a referral for
consultation). “Other arrangements” are applicable if the prescriptions captured
are “proximate in type and time” to the care patients receive at the hospital.
 4. Records of Care: The record of care and responsibility of care must reside
with the hospital
 5. Pharmacy: Patient must obtain their prescription at the hospital’s pharmacy
or from one of its 340B contracted pharmacies.

12.  Ship-to Bill-to Method: With contract
pharmacies, the 340B drugs get billed to the
covered entity and shipped to the pharmacy
address
 Virtual inventories: It is managed by software
from a third party company (Ex. SunRx). It
limits the risk of diversion because it accounts
for every 340B script that is filled.
 Replenishment Systems: Easier to maintain
when using a virtual inventory because the
third party automatically replenishes the
pharmacy’s stock without the actual pharmacy
needing to keep track of used medications

13.  Covered drugs:
◦ Outpatient Prescription drugs
◦ Over-the-counter drugs (accompanied by
prescription)
◦ Clinic administered drugs within eligible facilities
 Non-covered drugs:
◦ Vaccines
◦ In-patient drugs

14.  1. Use 2 McKesson accounts, use parenthesis around drug
name to identify 340B
 2. Use dual inventory system, created NRX13
system, use
asterisk around product name to identify 340B, use ship-to
bill-to
 3. Use electronic inventory, uses patients to identify
 4. Wrong contact person
 5. Uses CaptureRx

15.  6. Referred to another person in charge of CHAMP14
program
 7. Doesn't participate, 340B is to confusing
 8. Clinic does everything and replaces drugs used in
pharmacy
 9. (had a 340B contact person listed that was in charge of
multiple sites) Doesn’t participate in MD
 10. Two separate inventories and 2 separate accounts with
wholesaler

16.  11. One store participates, uses 3rd party to identify
340B scripts (would not disclose name of 3rd party)
 12. Told me to address any questions to the covered
entity, doesn’t know much about 340B
 13. Four 340B hospitals out of 10
 14. Mixed-use = carve in, retail = carve out, uses
replenishment model, uses virtual inventory system to
track usage (does not identify drugs at shelf level)
 15. Use ship-to bill-to, doesn’t use any inventory system

17.  16. One program in MD, virtual inventory
system, retail pharmacy contract, bill-to
ship-to replacement method
 * Results: HRSA website contained
inconsistencies with contact name, contact
number, and participating information

18.  Use Provider NPI
15
 Use HRSA Exclusion File: contact providers
to ensure participation
 Use an agency created exclusion file and
audit that against HRSA exclusion file
 Use NCPDP
16
Transaction Strings: basis of
cost and 340B indicator fields

19.  Monthly Claims Audit is required from 340B
pharmacies: monitors that discount is being
passed on to Medicaid
 340B providers have different ID numbers
 Dual inventory systems
 Avoiding Duplicate Discounts:
◦ Exclude all claims from entities on HRSA
exclusion file in rebate processing, encourage
providers to be all in or all out.

20.  Charge no more than actual acquisition cost
+ dispensing fee
 Use Usual and Customary pricing: to
identify 340B claims on invoices
 Pay dispensing fees up to $12.00
 *data was obtained from 42 states*17

21.  The 340B ceiling prices are calculated according to a formula
that is based on information generated in connection with the
Medicaid drug rebate program
 Manufacturers are required to report to the Centers for
Medicare & Medicaid Services (CMS) each quarter the average
manufacturer price (AMP) for each of their drugs
 CMS uses AMP and other data to calculate a unit rebate
amount (URA) that serves as a basis for the rebate amounts
paid by manufacturers
 The AMP and URA used in the 340B ceiling price formula are
based on the smallest dispensable unit of each drug
 The 340B ceiling price is based on these components and is
essentially equal to the AMP reduced by the URA

22.  The 340B ceiling prices per package are
calculated as follows:
◦ [(AMP) - (URA)] * drug’s package size

23.  Can’t identify by pharmacy: purchase 340B and
non 340B drugs
 Can’t identify by patient: they bring in the
prescription (unless entity fills all 340B scripts)
 Can’t identify by prescriber: may work at 340B
and non 340B entity
 Can’t identify by NDC
19
: 340B and non 340B
dugs have same NDC (some places put a
unique identifier in the NDC)

24.  Have provider differentiate 340B claims at time
of submission
 Split billing software to differentiate 340B claims
 Implementing audit forms
 *after verifying all information is accurate* -
Require all participating entities on the HRSA
exclusion file to purchase and bill all Medicaid
drugs under 340B pricing

25.  Include a line in the NCPDP transaction that
codifies a 340B claim
 Recommend that state Medicaid Agencies
come together and petition for HRSA to
release 340B prices

27. 1.Limitation on prices of drugs
2. US Department of Veterans Affairs: (Big 4) Department of Veterans Affairs, the
Department of Defense, Public Health Service/Indian Health Service, and the Coast
Guard. These government agencies receive special pricing discounts on pharmaceuticals
in accordance with public law 102-585.
3. Partnership between CMS, State Agencies, and participating drug manufactures
4. Department of Health and Human Services
5. Medicaid Drug Rebate Agreement: http://www.medicaid.gov/Medicaid-CHIP-Program-
Information/By-Topics/Benefits/Prescription-
Drugs/Downloads/ManufacturerContactForm.pdf
6. Health Resources and Services Administration
7. Office of Pharmacy Affairs
8. Ryan White Programs: http://www.hab.hrsa.gov/abouthab/aboutprogram.html
9. Title X Family Planning Clinic:
http://www.hrsa.gov/opa/eligibilityandregistration/specialtyclinics/familyplanning/index.
html
10. Urban/Tribal Programs:
http://www.hrsa.gov/opa/eligibilityandregistration/healthcenters/tribalurbanindian/inde
x.html
11. SunRx:
http://www.ihaonline.org/imis15/Images/IHAWebPageDocs/upcomingevent/handouts/a
m/wednesday/W3%20-
%20Improving%20Pharmaceutical%20Access,%20Understanding%20the%20340B%20
Program%20-%20David%20Hardman.pdf

28. 12. Health Resources and Services Administration
13. Electronic system created to manage 340B inventory
14. Maryland Child Abuse Providers at the University of Maryland
Children’s Hospital (Part of the University of Maryland Medical Center)
15. National Provider Identifier
16. National Council for Prescription Drug Programs
17. Nebraska, Ohio, New York, Minnesota, Washington, Alaska, Alabama,
Arizona, Arkansas, California, Connecticut, Delaware, Iowa, Louisiana,
Maine, Massachusetts, Mississippi, Montana, Illinois, Nevada, Oklahoma,
Missouri, New Hampshire, New Mexico, Oregon, Rhode Island, New
Jersey, South Carolina, South Dakota, North Dakota, Tennessee, Texas,
Utah, Colorado, Florida, Georgia, Michigan, Kentucky, Wisconsin, West
Virginia, Virginia, Pennsylvania
18. Office of the Inspector General, 2006
19. National Drug Code

29.  Apexus 340B University. (2013, April). 340B Glossary of Terms. Retrieved
April 26, 2013, from
https://docs.340bpvp.com/documents/public/resourcecenter/glossary.pdf
 Public Law 102-585. (2012, October 12). In United States Department of
Veterans Affairs. Retrieved April 26, 2013, from
http://www.fss.va.gov/faqs/publicLaw102585.asp
 Review of 340B Prices. (2006, July). In Office of the Inspector General.
Retrieved May 3, 2013, from http://oig.hhs.gov/oei/reports/oei-05-02-
00073.pdf
 HRSA FAQ :http://www.hrsa.gov/opa/faqs/
 340B Drug Pricing Program: http://www.hrsa.gov/opa/
 340B Prime Vendor Program: https://www.340bpvp.com/controller.html

30.  Office of Pharmacy Affairs (OPA)
Phone: 301-594-4353
Mailing Address: Office of Pharmacy Affairs, HRSA
5600 Fishers Lane
Parklawn Bldg, Room 10C-03
Rockville, Maryland 20857
Pharmacy Support Services Center: 1-800-628- 6297