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Federal 340B Drug Program States’ Medicaid Reporting and Management Challenges and Opportunities. J. Edward Gilmartin President | MACC 22 October 2013

Who is MACC?  Washington DC based not-for–profit formed in July  Co-founded by:  Edward Gilmartin (Former President of CaptureRx® -largest 340B administrator in the US.)  Honorable Billy Tauzin, (Former U.S. Congressman and Past President & CEO of PhRMA®)  1500 Safety Net Provider Sites in 42 States | 5.7 Million Patients | 20 Million Outpatient Encounters.

MACC Mission & Values.  Moderate voice for polarizing topic.  Against 340B expansion to include inpatient eligibility.  304B program should focus more on reducing largest cost to healthcare system – reducing hospital readmissions through medicine compliance and access.  Create a Standards Review Board comprised of pharma, bio, and patient advocate groups to build audited Certification Program.

340B Drug Program.  1992: Congress created the 340B Drug Discount Program to reduce outpatient prescription drug costs for safety net health care providers, enabling them to stretch scarce resources as far as possible, reaching more eligible patients and providing more comprehensive services.  Over 15,000 sites: non-profit safety net clinics and hospitals.  Approx. $7 Billion program (3% of U.S. Pharma sales)  For more Information:

340B Patients & Pharmacies.  Safety net providers may use 340B drugs on all their outpatients. (Medicaid*, commercial, Medicare, uninsured)  Safety net providers’ in-house pharmacies and contracted pharmacies fill 340B.  Contract pharmacies participate in stock replenishment with 340B and enhanced dispense fees.  Over 7,000 contract pharmacy sites today.  All major chains and independents participating.  HOWEVER, Medicaid claims are treated differently…

Avoiding Duplicative Discounting.  340B Law precludes the use of 340B Drugs on FFS Medicaid Claims (unless States forgo CMS Rebate on those claims)  Many States forgo CMS rebates, but require Safety net in-house pharmacies to submit 340B Cost.  Safety net contracted pharmacies exclude use of 340B for FFS Medicaid claims.  States use HRSA Medicaid Exclusion File or a modified State file to identify in-house pharmacies.  HOWEVER, ACA comes along…

Affordable Care Act.  Allows for CMS Drug Rebates on Medicaid Managed Care (MMC).  340B Clause – Unless 340B was purchased for claim.  Prior to ACA, Safety net providers used 340B drugs for MMC claims.  Huge Conversion by States to MMCs.  States taking CMS Rebates on MMCs.  BUT, different 340B policies by State…

States’ 340B Policies.  340B polices vary by State.  Most States want to keep the CMS Rebate and force safety net providers to either  Carve Out and not use 340B drugs for MMCs, OR  Submit 340B Cost to MMCs with NCPDP Basis of Cost Field of “08”. States forgo the CMS Rebate.  Some States allow safety net providers to use 340B so long as they identify the claim with MMCs.

Problems.  States are relying on their MMCs and PBMs to properly report and identify 340B claims.  MMCs and PBMs do not understand 340B! They have no way to support 340B cost submittal at POS.  No communication to safety net providers.  NCPDP D.0 POS Basis of Cost Code impractical, as all 340B is identified retrospectively for 340B contract pharmacies.  Pharmacies don’t want to take risk of identification and coding.  NCPDP Retrospective Submission Clarification Code issues.

MMC & Safety Net Partnerships.  Some States are allowing partnerships between MMCs and safety net providers. (California and Texas) Others States are looking at this concept.  States forgo all CMS rebate on 340B claims.  Shared savings from 340B between MMCs and safety net providers.

MMC & Safety Net Partnerships. Why?  States want to protect safety net providers.  Bringing MMCs together contractually with safety net providers assures:  Accurate reporting to avoid duplicative discounting. (retrospective offline processes)  Builds tighter relationship on the highest cost utilizers that are shared between MMCs and safety net providers.  340B funds can be used for  Medicine compliance activities controlling MMCs’ MLRs..  Total healthcare cost containment greater than CMS rebates forgone.

MACC Initiative 340B National Database on States Processing Requirements  National database of all States’ 340B processing requirements to enable effective reporting and avoid duplicate discounts from CMS rebates.  Carve-in/Carve-out, In-house/contract pharmacies, shared savings plans.  Directory of all BIN, Group and PCN Codes used for MMCs.