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A Possible Solution for Preventing Duplicate Discounts under 340B Program

There are not that many core requirements within the 340B Statute¹. For being on its face, what appears a fairly "simple" program, it is instead turning into a mighty complicated program. One of two main requirements is "no duplicate discounts."

A "duplicate discount" is when a prescription (or administration) of a 340B priced outpatient drug is also subject to a pharmaceutical manufacturer's rebate under a Medicaid program. Purchasing a drug at a discount under 340B and the claim also being subject to a rebate under a state Medicaid program would subject the manufacturer to "two" (duplicate) discounts. Filling a prescription and billing a managed Medicaid plan is allowed so long as the state is aware, so they withhold that prescription from their rebate submission to the manufacturer. The opinion of manufacturers these days is that there are "rampant" duplicate discounts being paid out².

Most 340B claims going through a contracted pharmacy are identified as "340B eligible" in a retrospective manner. This usually prevents addressing, at the time of dispensing, any designation as a "340B claim." Because of this, most 340B Covered Entities choose to block the "capture" of these claims and not replenish with 340B priced drugs. The main way to do this is by using the billing information on the claim, known as the "BIN Block" method. A BIN Block consists of a BIN (bank identification number), and a PCN (processor control number) and/or GRP (group designation). These values are attached and are transmitted on each claim record. Most BIN Block systems require a correct and accurate ("exact") match between the data in the BIN block system and the claims records to prevent the capture.

For how important the duplicate discount issue is within the 340B program, one would think more would be done to establish an efficient and accurate methodology?

The following are potential changes that could address the currently known challenges:

Access to the BIN Information

Currently, there is no central database known to the 340B Covered Entities or their administrators that contain all the Medicaid Plans' BIN combinations (as they currently exist or are modified over time.) CMS now requires Medicare Part D Plans to have "unique" BINS – why can't there be a mandate that all Medicaid Plans (FFS and MMCO) have – AND publish (e.g. make available on their websites on the landing page) – up-to-date BIN information? And require that the BIN’s be unique and dedicated solely to Medicaid plans? This would allow BIN Block systems to maintain the most up-to-date combinations which would efficiently and accurately block the capture and replenishment of unwanted Medicaid claims.

Contract Pharmacies

Contract Pharmacies do not always input the correct information in the available "BIN" "PCN" and "GRP" fields in conformance with the NCPDP standards for electronic claims transactions (transmissions.) Medicaid Plans should make it a contractual requirement that they will not get paid if they do not comply with this requirement – the right data in the right place each time. And if an error is identified that corrections must be made immediately, thus preventing any refills from being captured going forward.

Pharmacy Benefit Managers (PBMs)

Pharmacy Benefit Managers do not always reject a claim if it comes in with "incorrect" BIN information. No one wants a patient waiting at the pharmacy window for their prescriptions – but the Medicaid patient should also be required to present their card (which should have printed on it the complete BIN information) each time they have a prescription filled. Instead, if "enough" info is transmitted that leaves little to no doubt as to the identity of the patient, the claim is approved and paid by the PBM. The problem is further exacerbated when the incorrect info is transmitted and that is what the 340B Covered Entity (or its administrator) needs/uses to block the capture of Medicaid claims. This can be a classic case of, "garbage in, garbage out." Make it a contractual performance guarantee/accuracy requirement between the PBM and the Medicaid Plan, requiring the PBM to reject claims from pharmacies that do not come across with the correct information in the correct fields and thereby forcing the pharmacy to resubmit to get paid. It shouldn't take long to drive home the importance of complete and accurate information.

Today, there is no "one" solution that all vested parties have agreed to and/or can operationalize, despite a collective strong desire to prevent duplicate discounts. It is important for 340B Covered Entities to partner with a 340B Third-Party Administrator to assist with the blocking of capturing unwanted Medicaid claims. In addition, it is very important for 340B Covered Entities to leverage their relationships with their respective Medicaid agencies to ensure there is a flow of communication to regularly obtain the most up-to-date BIN information and then share that information with their 340B Administrators.

Hopefully with these changes, behaviors can be changed, duplicate discounts will be prevented and the 340B program can fulfill its intended purpose for the 340B safety net providers and support the prohibition against duplicate discounts. Who knew it could come down to 3 simple letters: B-I-N? If everyone does what is needed, then we can all get back and focus on providing healthcare to those that need it.

 

The content in this blog is for informational purposes only and is not intended to be used in place of regulatory guidance. The opinions and views expressed herein are those of the authors and do not necessarily reflect the official position or opinions of SUNRx or any regulatory authority. Furthermore, some content may contain copyrighted material, the use of which has not always been specifically authorized by the copyright owner, but which we believe constitutes a "fair use" of any such copyrighted material as provided for in Section 107 of the US Copyright Law. We are making the information herein available in our efforts to advance understanding of the 340B program and its offerings. These views are always subject to change, revision, and rethinking at any time and may not be held in perpetuity.

¹Sec. 340B of the Public Health Service Act (Pub. L. 102-585), as amended by the Patient Protection and Affordable Care Act (Pub. L. 111-148), Health Care and Education Reconciliation Act (Pub. L. 111-152) and Medicare and Medicaid Extenders Act of 2010 (Pub.L. 111-309)

²Maneuvers on the 340B Drug Pricing Program Battlefield: Duplicate Discounts and Contract Pharmacies (https://www.jdsupra.com/legalnews/maneuvers-on-the-340b-drug-pricing-32988/ ) November 12, 2021

Jackie Artinger

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Over the past five years, gateways (aka HUBs) have become more common and more intrinsic in the workflows and processes of 340B Contract Pharmacy programs. As the number of contracted pharmacies continue to increase as 340B Covered Entities (CEs) try to maximize their 340B savings, this has created a more complex scenario for pharmacies with multiple stores, working with several CEs and many 340B TPAs. These contracted pharmacies wanting to be good partners with their CEs and TPAs, need help to manage all the various 340B relationships. Often, CEs are confused and frustrated by the existence and additional fees related to these gateways, and why they exist. Our hope is that this blog will answer most frequently asked questions about gateways.

What is a gateway?

A gateway is a solution for the Chain Pharmacy to manage all 340B transactions on one centralized platform. Gateways (also known as HUBs) represent the Pharmacies’ interests, not the interests of the Covered Entities (CEs).

What are the benefits?

A gateway provides a benefit to Pharmacy Chains, not Covered Entities. Gateways provide the Pharmacy Chain a single platform to access all their 340B data. With the complexity that 340B brings, and ever-changing rules and regulations, gateways provide an avenue to manage a lot of those related 340B day-to-day tasks more efficiently.

How does it work?

A gateway works in traditional 340B fashion, working with the 340B Third-Party Administrators, Contract Pharmacies, Covered Entities, and Wholesalers. The gateway is set-up to receive claims related data on a daily data file from multiple sources; these are files that contain Pharmacy prescription data, Covered Entity claims data, and supply chain / replenishment data. After these files are ingested, some gates  scrub the files against preset Pharmacy parameters. To confirm eligibility, these parameters consist of Pharmacy NPI files, NDC exclusions, BIN blocks, duplicate claims, etc. After eligibility validation is successful, and a full package size has been met, a file is sent to the appropriate wholesaler to begin  the replenishment process as NDCs are purchased and shipped to the contracted pharmacy location. After a successful replenishment, 340B eligible NDC’s are prepared for invoicing to the CE.  

Why should Pharmacies consider using a gateway? 

When Pharmacies work with multiple 340B Third Party Administrators, with it comes multiple system logins, understanding the operations of each system, how each system operates differently, and limitations that come with each. No two 340B TPA systems are the same, each vary with availability of data, TPA workflows, reporting, etc. With a gateway solution, those operational processes, account logins, and other complications are limited, and the work related to 340B relationships become more efficient and manageable for the Pharmacy Chain. The Pharmacy Chain logs into one system, with a clear understanding of the unified reports and data analysis. Many of these gateway relationships also include an additional support resource to assist the Pharmacy Chain to more effectively management their 340B business.

How can Covered Entities effectively negotiate with a Pharmacy using a gateway?

First, CEs need to understand that not all gateways are the same or have the same philosophy. While in most cases, it is usually best that Covered Entities work with their TPA’s, which maintain relationships with all gateways, there may be exceptions. Most TPA’s are in the best position to represent their Covered Entity client’s position  in negotiating with gateways, which represent the Pharmacy Chains. There are exceptions as some TPAs don’t provide pharmacy support when contracting with pharmacies. As with any business, there is a cost to doing business. As pharmacies attempt to improve the efficiencies associated with their 340B book of business, their operating cost increase. In almost every scenario, this results in increased costs. If a CE’s 340B program represents a significant percentage of the contracted pharmacies 340B prescription claims, this may present an opportunity for negotiation. Any CE always has the right to reach out to the pharmacy directly to engage in a dialogue around their fees. This may be needed in some cases, but in any situation, the relationship between a CE and their contracted pharmacy is critical to the success of all parties, including their patients and community.

For any 340B program to deliver the appropriate value for which it was intended, all parties should work together and build a strong partnership. Understand that the pharmacy is trying to keep up with the demand on their business and derive value by utilizing a gateway. In many cases, the additional gateway fees are transparent, but some may not be. Some pharmacy chains simply increase their dispensing fees to account for the increased operational costs of the gateway. These gateways do improve the operational efficiencies of the 340B workflow and overall value to all parties and should be accepted as part of doing business.

Contact us for more information on 340B pharmacy gateways.for more information on 340B pharmacy gateways.

 

The content in this blog is for informational purposes only and is not intended to be used in place of regulatory guidance. The opinions and views expressed herein are those of the authors and do not necessarily reflect the official position or opinions of SUNRx or any regulatory authority. Furthermore, some content may contain copyrighted material, the use of which has not always been specifically authorized by the copyright owner, but which we believe constitutes a "fair use" of any such copyrighted material as provided for in Section 107 of the US Copyright Law. We are making the information herein available in our efforts to advance understanding of the 340B program and its offerings. These views are always subject to change, revision, and rethinking at any time and may not be held in perpetuity.

By Matt Gage