Models that Work: Managed Medicaid and 340B Covered Entities Partner to Prevent Duplicate Discounts in Oregon

Can 340B Drugs Be used for Medicaid Managed Care Organization (MCO) patients in a contract pharmacy, without creating duplicate discounts? A representative from a model in Oregon says YES.

Hewlett-Packard Enterprise (HPE) has partnered with the Coordinated Care Organizations (CCOs are sometimes referred to as MCOs), the Oregon State Medicaid program, CCO Pharmacy Benefit Management (PBM) organizations, and 340B covered entities to develop a solution allowing for contract pharmacy claims to be filled with 340B purchased drugs without creating a duplicate discount. This partnership has resulted in 340B providers’ ability to include 340B drug claims in their contract pharmacy arrangements for MCO clients. The State requires those covered entities to identify those claims to the State, using the State’s process, to ensure the claims are excluded from the Medicaid rebate process in order to prevent a duplicate discount.

How it works:

  • In order to use 340B drugs at a contract pharmacy, CCOs, their PBMs, 340B entities, or their 340B vendors must submit a claims file using the design layout described by the State, to identify MCO paid pharmacy claims filled with 340B drugs.

  • Each agency or provider submitting a 340B claims file must have a Trading partner ID and an EDI (electronic data interchange) mailbox set up with the State.

  • 340B claims files can be submitted as often as the agency or provider chooses, but all 340B claims must be identified and sent for each calendar quarter within 30 days after the end of that quarter.

For example, all 340B claims from January 1 to March 31 must be identified and submitted in the 340B claims file no later than April 30. The State rebate vendor will use the 340B claims files to match up the original paid encounter claims from the CCOs, flag the claim, and exclude that claim from the quarterly drug rebate process.

October 2016 Apexus Interview with Richard Holsapple, RPh – Pharmacy Services Manager at Hewlett Packard Enterprise:

  1. Apexus: How many 340B entities and contract pharmacies are currently utilizing the HPE technology for carving in Medicaid managed care prescription claims from contract pharmacies?

    • Holsapple: We know that there are at least 40 entities that are currently carving in MCO paid pharmacy claims from their contract pharmacies. Currently, we are receiving 340B claims files from three 340B vendors, two from the CCOs, and 5 directly from the covered entity.

  2. Apexus: Approximately how many 340B claims have been filled at contract pharmacies for MCO beneficiaries as a result of this innovative technology?

    • Holsapple: Since the introduction into our production environment in July 2015 to present, we have had 314,540 claims submitted for Medicaid rebate exclusion.

  3. Apexus: How does this solution ensure that duplicate discounts are not sought on 340B claims at a contract pharmacy?

    • Holsapple: The retroactive process of identifying claims included in an entity’s 340B contract pharmacy replenishment program allows us to identify and exclude 340B claims from Medicaid rebate requests.

  4. Apexus: Does this process rely on the Medicaid exclusion file, claim level identifiers (submission clarification codes) included when processing a prescription claim, or another method for identifying 340 B eligible prescription claims?

    • Holsapple: None of the traditional methods identified met the specific requirements for excluding 340B contract pharmacy claims from rebate requests. The retroactive file submitted to the State is the only way we are able to identify 340B claims that were MCO at contract pharmacies. HPE, in partnership with the State of Oregon, provides the full list of data components required in the retroactive file and makes it available on the website here:

  5. Apexus: Has this resulted in decreased spend, from an Oregon Medicaid or Oregon MCO/CCO perspective, as a result of utilizing 340B at contract pharmacies?

    • Holsapple: There has not been a noticeable decrease in expenditure for the State Medicaid program. This is because MCO does not require that the 340B cost be passed through to the CCO as they are for fee for service (FFS) Medicaid. The claim payments from the CCO have not changed on these claims. There is a reduction in the amount of Medicaid rebates the State is collecting. In this respect, the savings is being transferred from the State and Federal government (foregoing Medicaid rebates) to allow their 340B partners to retain the 340B discount.

  6. Apexus: Are all stakeholders satisfied with this model? Stakeholders include: Oregon State Medicaid, Oregon CCOs, manufacturers, 340 B covered entities, and contract pharmacies.

    • Holsapple: I can speak for all except the manufacturers. Yes, this has been a very well received process by all Oregon stakeholders. Given the shift in savings mentioned in the previous answer, the State is aware of the benefit of the 340B program and wants to support those programs. There is an understanding of the benefits that the 340B entities are providing through special care programs, increased staffing, serving indigent populations, and other ways that they use the savings. While sometimes difficult to quantify, there is a belief that the entities are using these savings to increase the health outcomes for Oregonians and decreasing overall healthcare costs over time.

  7. Apexus: Are more covered entities in Oregon expected to participate in this solution in the future?

    • Holsapple: Yes, we have several more 340B entities currently working on incorporating this solution so they too can carve in MCO claims in their 340B contract pharmacy program.

  8. Apexus: What has been the biggest barrier to implementation?

    • Holsapple: The biggest barrier in Oregon was related to the technological changes needed to create this model. The State had to incur cost to have the rebate vendor build this functionality into their system-both to process the 340B claims files to flag the encounters and to then exclude those claims from the quarterly rebate process. Entities wanting to participate have also had to build out the technical functionality in partnership with their 340B vendors to create the files. Entities should anticipate 30-90 days for development of the technical functionality and budget for these development costs in partnership with their 340B vendors.

  9. Apexus: What have you and HPE learned during the implementation process?

    • Holsapple: With any technical solution, testing is the key. We make sure to test with every entity or vendor submitting a file to make sure the layouts are correct, they are only sending Medicaid claims (not including any commercial claims), and that we are able to find a matching encounter claim in the system. Based upon our experience, we would anticipate that other states interested in implementing a solution similar to the one that was developed for Oregon would require 12 months from initiation of the project to implementation.