March 9, 2010 - Expanding 340B drug pricing to Medicaid disease-management programs is proving to be tough, Utah health department officials say, but they are not giving up.
In a late February report to the Utah Legislature, the state Department of Health describes the obstacles it has encountered implementing a 2008 law that could pave the way for extending Utah's much-discussed 340B program for hemophilia patients to other Medicaid beneficiaries with expensive-to-treat chronic diseases such as multiple sclerosis, cystic fibrosis, rheumatoid arthritis, hepatitis C, and Crohn's disease.
The state has saved millions of dollars since 2003 when it contracted with the University of Utah Health Sciences Center, a 340B participant, to provide 340B-discounted blood factor products and related services to Medicaid recipients with hemophilia statewide. National average 340B wholesale drug prices are about 25 percent lower than average wholesale Medicaid prices.
The 2008 law ordered the health department to study the feasibility and cost effectiveness of developing and implementing one or more disease-specific 340B pricing programs similar to the hemophilia disease-management program.
Duplicating the existing hemophilia program "is not a simple task," the department said in its Feb. 21 report. For example, the federal Centers for Medicare and Medicaid Services (CMS) is requiring the department to submit a separate, detailed Medicaid state plan amendment for each proposed disease state.
The department also says it has been time consuming to negotiate "freedom of choice" waivers with CMS that would restrict patients to a single 340B health care provider, an important condition for any effective disease-management program. The hemophilia disease-management program currently operates under a freedom of choice waiver negotiated for the Utah Managed Care Plan. That waiver expires in December 2011. The department notes it would take six to seven months to implement comparable 340B disease-management programs once CMS waivers are obtained.
The department adds that it has been hard to develop a provider reimbursement system that can save the state money through the use of 340B drugs and at the same time pay providers enough to keep them from leaving Medicaid. Providers are seeking an enhanced dispensing fee for participating in the proposed programs, but the department warns that "under the current economic climate in Utah, careful consideration must be given to any [such] changes." It also points out that any dispensing fee changes would require additional state Medicaid plan amendment changes and CMS approval.
Health Centers' 340B Participation Also Under Review
The 2008 law also ordered the department to work with the Association for Utah Community Health (AUCH), which represents Utah's federally qualified health centers (FQHCs), to identify those centers that do not have 340B drug pricing programs, help them establish such programs either on site or through contract pharmacies, and determine whether such centers could provide 340B drug price savings to Medicaid.
The health department reports that the 29 covered entities participating in AUCH already have pharmacies that bill Medicaid the acquisition cost of their 340B drugs plus a $5 co-pay, an arrangement that the department states "provid[es] a great benefit to their patients." However, the report states that pharmacy retailers under contract with FQHCs to serve 340B AUCH patients have said they intend to discontinue their participation in the program unless reimbursement issues – identified as the need for higher dispensing fees – are addressed.
The department also suggests that a recent legal settlement barring states from requiring 340B hospitals to provide them with National Drug Code (NDC) information on all outpatient clinic claims submitted for Medicaid reimbursement could complicate such hospitals' participation in the proposed new disease-management programs. The lack of reported NDC numbers, it says, would make it difficult to identify the specific drug products being administered as part of those efforts.