"Impossible" requirement will force many to forgo drug discounts, they say.
January 11, 2012—New York State's recent directive to pharmacies to flag all 340B claims billed to Medicaid managed care plans at the time the claims are filed is impossible to carry out and will prevent many pharmacies from accessing 340B drug discounts, state and national groups representing 340B providers have told state officials.
In recent testimony before the state Assembly Committee on Health and in a letter to the state Medicaid director, hospitals and health centers urged the state to withdraw the requirement and develop a replacement that would let pharmacies identify 340B claims billed to Medicaid managed care plans retrospectively. Absent such a change, they said, many New York 340B pharmacies will have little choice but to carve their Medicaid managed care business out of 340B and, contrary to the program's intent, forgo discounts on Medicaid managed care drugs. The result, they said, will be fewer services for needy patients.
James Donnelly, pharmacy services director of the Hudson Headwaters Health Network, told the committee during a December hearing that while he understands and supports the requirement's rationale—preventing rebates from being collected on already-discounted drugs—its consequences for 340B providers "are unintended and hurtful." Hudson Headwaters, an upstate New York federally qualified health center, provides 340B management services to other centers and hospitals in New York and nationally.
The claims identification requirement "is clogging sizeable revenue streams intended to benefit medically indigent patients," Donnelly said. Finding a remedy, he said, "is important ... to safety net providers and many thousands of New York's most vulnerable residents."
Safety Net Hospitals for Pharmaceutical Access (SNHPA), which represents 46 New York hospitals and more than 800 nationwide enrolled in 340B, also testified before the committee and wrote to state Medicaid Director Jason Helgerson urging that the requirement be revised.
New York is one of the first states to adopt such a policy in response to a provision in the federal Affordable Care Act (ACA) requiring states to collect rebates on Medicaid managed care drugs. Before health care reform, these drugs were exempt from rebate requirements. SNHPA expects more states will follow New York's lead because states now need a way to keep 340B discounts and Medicaid rebates from being paid on the same Medicaid managed care drugs.
Providers enrolled in 340B anticipated this duplicate discount challenge when ACA was still being debated and persuaded federal lawmakers to add language exempting 340B drugs from the new rebate requirement. Congress placed the responsibility for ensuring that Medicaid managed care rebates are not paid on 340B-discounted drugs "squarely" on state Medicaid agencies and not on 340B covered entities, SNHPA told the New York officials. The state's new reporting requirement, it said, is "impermissibly shifting the burden of compliance onto safety-net providers."
Under New York Medicaid's new policy, which it announced in September 2011, pharmacies enrolled in 340B must identify 340B claims by using the National Council for Prescription Drug Programs (NCPDP) value "09" when billing Medicaid managed care plans. SNHPA pointed out that, because most pharmacies do not know whether a claim relates to 340B at the time that it is processed, it is impossible for them to use the 09 value when initially submitting claims.
To comply with the policy, "their only option ... would be to reverse and resubmit each and every 340B claim," SNHPA said. Pharmacies would have to do this even for non-Medicaid-managed-care claims, SNHPA added, because they usually do not know whether a claim relates to a Medicaid or commercial plan. "This process would be so burdensome and expensive that 340B providers would effectively be forced to purchase their Medicaid managed care drugs outside the 340B program ... at higher non-340B prices," it said, resulting in "fewer services and other assistance for vulnerable patient populations."
"Almost Always Impossible"
"It is almost always impossible in practice to identify 340B transactions in the way the state is mandating," Donnelly affirmed. "Not only are we now excluding all Medicaid prescriptions from all our 340B program, we are also 'carving out' certain subsets of non-Medicaid prescriptions as well, all to avoid the possibility of double dipping."
Because 340B inventory management requirements prevent identification of 340B claims at point of sale, "any workable solution must involve a retrospective identification of 340B claims," SNHPA said. One option, it said, would be to require pharmacies to prepare spreadsheets identifying their 340B claims and to submit them on a regular basis to the state Medicaid agency or to managed care organizations. Another would be for the state to "create a clearinghouse into which 340B entities could enroll and submit claim specific information on their 340B claims within 90 days of the original transaction," it added.Donnelly said he and other 340B stakeholders in New York are trying to schedule a meeting with Assembly Health Committee Chairman Richard Gottfried to explain their concerns in more detail.