To say the link between Medicaid and 340B is complicated would be an understatement. By federal law, a covered entity’s 340B program and Medicaid program get discounted drugs for patients with Medicaid, but only one entity can legally receive the discounted drug. This leads to, among other things, administrative stress because covered entities must ensure drug makers aren’t charged two discounts for one drug, otherwise known as duplicate discounts. Everyone from physicians to lawmakers seem to be weighing in on this issue.
In December 2022, Pennsylvania distributed a medical assistance bulletin effective Jan. 1, 2023, that seems to indicate the commonwealth will no longer offer Medicaid reimbursements for 340B drugs dispensed by contract pharmacies. Specifically, the bulletin states, “The MA [medical assistance] Program is unable to identify 340B-purchased drugs dispensed by contract pharmacies, therefore, contract pharmacies must dispense non-340B-purchased drugs to beneficiaries in the FFS and managed care delivery systems.”
Increased attention about the 340B program by media has also caused Congress and drug manufacturers to look closer at compliance. In fact, some drug makers and elected officials have alleged errors that covered entities and contract pharmacies have made documenting and identifying 340B covered drugs dispensed to Medicaid patients. That, in turn, has led to disputes. Disputes often attract renewed media attention and, potentially, the interest of HRSA auditors.
According to a U.S. Government Accounting Office analysis for the years 2012—2019, among the reasons for a lack of compliance with HRSA rules, failing to prohibit duplicate discounts ranks slightly behind diversion of 340B program drugs to ineligible patients and ineligibility of covered entities. During those years, the GAO says HRSA found 429 cases of duplicate discounts, 546 diversion-related issues, and 561 eligibility-related errors. Among the cases of duplicate discounts, 264 were caused by “inaccurate information on the Medicaid Exclusion File, or MEF.”
Finding duplicate discounts and related issues typically requires painstaking, manual work especially if a covered entity must comb through its internal audits and spreadsheets that document TPA data. Automating these processes with AI-enabled compliance software and other tools takes the burden off 340B program managers. A 340B program that has digitized and centralized its records (and supporting documents) with 340B audit software is better prepared for an audit of CE eligibility, diversion of 340B drugs, or duplicate discounts.