Identifying & resolving 340b duplicate discounts Kalderos
- 1. 1 Medicaid Billing and Reimbursement Identifying and Resolving Duplicate Discounts Steve Zielinski RPh Director Industry Relations Kalderos
- 2. 2 Statement of Conflicts of Interest Steve Zielinski has no actual or potential conflict of interest in relation to this presentation
- 3. Today’s Agenda • Manufacturers’ concerns with 340B duplicate discounts • How significant are issues within 340B • Why and how duplicate discounts can occur • Key takeaways for covered entities
- 4. CE Question True or False? Both Fee-for-Service and Managed Medicaid claims are subject to a Medicaid Rebate
- 5. Kalderos: What we do… At Kalderos, we develop technology solutions with a focus on simplifying the complex coordination of drug discount programs from exhaustive data services to intelligent reporting to issue resolution. We work with healthcare providers, drug manufacturers, payers, and government agencies alike to increase transparency and restore trust — enabling everyone to focus on improving the health of people. 600+ Covered Entities 47 States 150,000+ Medicaid Claims Reviewed with Covered Entities
- 6. Manufacturers have the right to audit claims data and, if issues are discovered, receive adjustments 42 U.S.C. § 1396r-8(b)(2)(B): State Provision of Information HRSA 2011 policy release: C) AUDITING.—A covered entity shall permit the Secretary and the manufacturer of a covered outpatient drug that is subject to an agreement under this subsection with the entity (acting in accordance with procedures established by the Secretary relating to the number, duration, and scope of audits) to audit at the Secretary’s or the manufacturer’s expense the records of the entity that directly pertain to the entity’s compliance with the requirements described in subparagraphs (A) or (B) with respect to drugs of the manufacturer. If manufacturers have concerns or specific issues with diversion and violations of duplicate discounts by covered entities, we encourage manufacturers, after attempting to resolve the matters directly with covered entities, to submit their audit plans to HRSA per the audit guidelines. https://www.hrsa.gov/sites/default/files/opa/programrequirements/policyreleases/manufactureraudit clarification112111.pdf
- 7. Manufacturers’ concerns with 340B duplicate discounts Kalderos works with covered entities to review claims and confirm if the covered entity dispensed a 340B drug or not. There are several reasons that manufacturers have been looking at the issue of 340B duplicate discounts: 1 Growth of the program including the increase in contract pharmacies 3 Significant value of discounts and growing evidence of issues within the program 2 Lack of effective oversight from government agencies 4 Harder to engage in dispute resolution once issues have been identified
- 8. 340B duplicate discount case study Data Drug-types examined Limitations Medicaid claims data for 46 states plus the District of Columbia relating rebate quarters 2015Q1 — 2018Q1 Innovator outpatient drugs, with a good mix of retail, specialty, and physician-administered products • Not all states provide the same features required to identify duplicate discounts • Most states do not provide attributes necessary for predicting if a contract pharmacy claim is a likely duplicate discount • States where data is missing required attributes are excluded from certain analyses
- 9. Methodology • Kalderos flagged certain covered entity or contract pharmacy claims as high-risk for duplicate discounts • Flagged claims were shared with covered entity and traced back to 340B eligibility information available to the covered entity • Claims missing unique identifiers but other evidence indicated the claims was a duplicate discount were disputed with the state 340B duplicate discount case study
- 10. 340B compared to other common issues The three main issues with medicaid claims: Duplicate Claims Quantity Issues 340B Duplicate Discounts 2% 2% 1% average across all manufacturers that we work with
- 11. The three main issues with Medicaid claims: Duplicate Claims Quantity Issues 340B Duplicate Discounts 2% 2% 4% One client with products experiencing high 340B and Medicaid utilization 340B compared to other common issues
- 12. Duplicate discount issues by state Percentage of Medicaid claims dispensed by a Covered Entities’ Pharmacy that are verified duplicate discounts (by state): California Texas Ohio All others 86% 74% 67% 56% Percentage of Medicaid claims dispensed by a Contract Pharmacy that are verified duplicate discounts (by state): 6% Things to note: • Contract pharmacies serve a broader population than covered entities, so fewer scripts would be considered 340B eligible • Many covered entities instruct contract pharmacies not to dispense 340B to Medicaid (carve-out) • While smaller portion of contract pharmacy's business is 340B, there are many times more contract pharmacies per state than covered entity pharmacies
- 13. Why and how duplicate discounts occur 1 2 3 4 A large portion of covered outpatient drugs are dispensed by covered entities or contract pharmacies. There is no standard for covered entities to help prevent duplicate discounts. There is no standard states use to help prevent duplicate discounts. Lack of clear guidance to covered entities on managed Medicaid and Fee-for-service rebates
- 14. Why and how duplicate discounts occur — for contract pharmacies • The most common cause of 340B duplicate discounts with contract pharmacies appears to be covered entities / contract pharmacies carving-out FFS Medicaid patients but carving-in managed Medicaid patients • If the covered entity has instructed their contract pharmacy / third party admin not to dispense 340B to managed Medicaid, identifying the managed Medicaid patient appears to be the greatest challenge • In one instance Kalderos met with leadership of major third-party administrator who told us that we would never find any duplicate discounts with their clients. Another case: duplicate discounts due to incomplete database of managed Medicaid plans in the state provided to CE’s.
- 15. Methods used by states to identify and exclude 340B claims There are three methods used by states to identify and exclude Medicaid claims subject to 340B discounts from claims the state believes are rebate eligible: Identify by CE and Pharmacy ID (NPI) Identify via claim flags Custom control • Medicaid Exclusion File • State-developed lists • Submission Clarification code ‘20’ • ‘UD’ Modifier • Oregon’s retroactive claims submission process
- 16. Issues with the Medicaid Exclusion File $2,500 $1,347,500 Example Findings from Ohio: Reliance on the Medicaid Exclusion File as only control misses significant duplicate discounts. Out of 2,139 confirmed duplicate discount transactions, 2,135 related to providers and pharmacies that were not listed in the Medicaid Exclusion File. These transactions would not have been identified using standard Medicaid claims scrubbing processes MEF Non-MEF
- 17. Issues with claim flags Flag-Type States (Example: CA, TX) Pharmacy ID States (Example: OH) • Requires covered entity to have complete list of Medicaid plans in state in order to identify transactions requiring flag — challenging for managed Medicaid • Limited time to retroactively add flags to claims • Flags do not always make it from entity to state Medicaid rebate team • General lack of understanding • Continue to rely on HRSA's Medicaid Exclusion File for managed Medicaid, even after HRSA Release 2014-1 made clear Medicaid Exclusion File not designed for managed Medicaid • State may not use Medicaid Exclusion File correctly, matching Medicaid transactions to incorrect MEF version
- 18. Issues with state level custom controls What is the Oregon solution: Issues with adopting this solution: • Custom application built by DXC • Contract pharmacy / 3rd party admin send claims file each quarter to DXC • DXC loads the claims files and excludes claims identified by contract pharmacy from Medicaid rebate process • Requires invoice processing vendor and MMIS* vendor to be same company • Requires state Medicaid agencies to pay for system changes (with outcome being fewer rebate dollars) • May require Federal government assistance with MMIS system changes • We have identified duplicate discounts that are still occurring *Medicaid management information system
- 19. More states are refusing to engage in 340B MDRP disputes Even though there has been progress in identifying 340B issues when they occur, more and more states are taking steps to make it harder for manufacturers to dispute rebates: States instituting new rules • 2015 Texas • 2016 California • 2017 New York • 2018 Ohio, Pennsylvania, Maryland, Minnesota, Louisiana, Wisconsin, and Washington
- 20. Key takeaways for covered entities • Awareness that both Fee-for- Service and Managed Medicaid claims are subject to a Medicaid Rebate • Claims data can and will become compromised • Obtain State(s) current 340B guidance on billing for covered outpatient drugs (retail & medical) • Valuable to maintain auditable records related to purchases, billing, and dispensations • HRSA encourages manufacturers and covered entities to work in good faith to resolve 340B Program compliance disputes
- 21. CE Question True or False? Both Fee-for-Service and Managed Medicaid claims are subject to a Medicaid Rebate
- 22. CE Question & Answer True or False? Both Fee-for-Service and Managed Medicaid claims are subject to a Medicaid Rebate Answer: True
- 23. Additional Questions? Steve Zielinski RPh Director of Industry Relations Kalderos 330 N Wabash Ave 23rd Floor Chicago, Il 60611 312-502-2692 szielinski@kalderos.com