Medicaid
Exclusion Tutorial and Medicaid Exclusion
File Basics
Medicaid Exclusion Tutorial
The legislation that created the 340B
program1
required the Secretary of Health and Human
Services to set up a mechanism to ensure
that manufacturers did not pay a ”duplicate
discount” on a drug claim. A “duplicate
discount” would occur if an up-front
340B discount AND a back-end
transaction Medicaid rebate
were provided on the same drug. The mechanism
the Secretary established to comply with
the legislation’s mandate to prohibit
duplicate discounts is a part of the Office
of Pharmacy Affairs (OPA) database called
the Medicaid Exclusion File (58 Fed. Reg.
34058 (June 23, 1993) and 59 Fed. Reg.
25110 (May 13, 1994)).
The OPA is part of the federal government
and is tasked with administration of the
340B Program and the Medicaid Exclusion
File. The data from the Medicaid Exclusion
File is used by 340B stakeholders such
as State Medicaid Agencies and manufacturers,
to ensure that duplicate discounts are
not paid on the same drug claim. The Medicaid
Exclusion File lists the 340B entities
and their associated Medicaid provider
numbers and/or National Provider Identifiers
(NPI). The entities listed on the Exclusion
File have reported to OPA that they intend
to fill Medicaid prescriptions with 340B-purchased
drugs. The claims for these prescriptions
are not eligible for
manufacturer’s rebates (“duplicate
discounts”). The Medicaid agency
uses the Exclusion File to determine which
entities’ claims must be excluded
from rebate requests to manufacturers.
- How is the data gathered
for the Medicaid Exclusion File?
Upon enrollment into the 340B Program,
OPA collects two critical pieces of
information for entry into the Medicaid
Exclusion File:
- whether the entity intends to
fill Medicaid prescriptions with
340B-purchased drugs, and
- the entity’s Medicaid provider
number/NPI, if the 340B entity is
using 340B-purchased drugs for their
Medicaid patients’ prescriptions.
OPA will post the Medicaid provider
number/NPI of the covered entities
that use 340B drugs for Medicaid prescriptions
in the field “Medicaid Number”
on the covered entity’s database
file. If the entity is not using 340B-purchased
drugs for their Medicaid prescriptions,
typically called “carving out,”
this field should indicate “N/A.”
The Medicaid Exclusion File is used
by different stakeholders to prevent
duplicate discounts from occurring.
For example, a State Medicaid Agency
may use the File to obtain information
about which claims to exclude from
rebate requests, or a manufacturer
may use the File to verify that a
rebate should be paid on a claim originating
from a particular entity. The Exclusion
File is available through the Online
HRSA/OPA Database. To perform
a State-specific search for the entities
in a specific State that should have
their drug claims excluded from Medicaid
Rebate submissions, select the appropriate
State code and press the “Submit
Query” button.
As providers are issued NPIs, as
required by CMS, the OPA will be working
with States to replace the current
Medicaid Provider Number shown in
the Medicaid Exclusion File with the
corresponding NPI for that provider.
During the transition time, the Medicaid
Exclusion File will report both the
Medicaid Provider Number and the NPI.
This will provide stakeholders with
two options for identifying entities.
- What determines whether or
not an entity will be listed in the
Medicaid Exclusion File?
The decisions made by an entity regarding
the utilization of 340B-purchased drugs
to fill Medicaid prescriptions for their
patients will determine their inclusion
in/exclusion from the Medicaid Exclusion
File.
Entities are permitted to contract
with a pharmacy to provide dispensing
services for the entity’s 340B
drugs. In this arrangement the 340B
entity purchases the drugs, and the
drugs are usually shipped to the pharmacy
(the wholesaler bills the covered
entity and the wholesaler ships the
drugs to the contract pharmacy).
Generally, 340B entities do not include
Medicaid prescriptions as part of
the agreement with a contract pharmacy.
In this case, all of the prescriptions
from the entity are filled by the
contract pharmacy using 340B prices
except for the Medicaid
prescriptions. The Medicaid prescriptions
are filled by the (contract) pharmacy
or any other pharmacy where the patient
chooses to take the prescription,
using non-340B inventory. 340B purchased
drugs are not used to fill these Medicaid
prescriptions.
In this scenario, there is no reason
for OPA to have the Medicaid number/NPI
of the contract pharmacy in the OPA
database, since no Medicaid prescriptions
are filled using drugs purchased at
340B prices. Providing OPA with the
Medicaid number/NPI of the contract
pharmacy in this situation might cause
the Medicaid agency to unnecessarily
forego rebates on Medicaid claims
filled by this pharmacy.
There are a few reasons that most
340B entities exclude Medicaid prescriptions
from their contracts with contract
pharmacies:
- Contract pharmacies and
Medicaid agencies generally have
not “establish[ed] an arrangement
to prevent duplicate discounting.”
The contract pharmacy services guidelines
published in the Federal
Register, August 23, 1996
state in section C (1) (i): “Both
parties will not use drugs purchased
under section 340B to dispense Medicaid
prescriptions, unless the contract
pharmacy and the State Medicaid
agency have established an arrangement
to prevent duplicate discounting.”
- Clinics sometimes lose
money on Medicaid prescriptions
when they are filled with 340B purchased
drugs.
Clinics that bill Medicaid at cost
for drugs purchased under the 340B
program must bill at their 340B
acquisition cost. The dispensing
fee is often inadequate to cover
the true costs of dispensing. Therefore,
many 340B entities and contract
pharmacies prefer to exclude Medicaid
prescriptions from the 340B contract
pharmacy agreement.
- Most clinics and pharmacies
are aware that the Medicaid anti-kickback
statute is very broad, and are wary
of including Medicaid prescriptions
in their contracts.
The contract pharmacy services guidelines
published in the Federal
Register, August 23, 1996
state in section C (3): “In
negotiating and executing a contracted
pharmacy service agreement pursuant
to these guidelines, contractors
and covered entities should be aware
of and take into consideration the
provisions of the Medicare and Medicaid
anti-kickback statute, 42 U.S.C.
1320a-7b(b). This statute makes
it a felony for a person or entity
to knowingly and willfully offer,
pay, solicit, or receive remuneration
with the intent to induce, or in
return for the referral of, Medicare
or a State health care program business.”
Summary Questions
- What is the Medicaid Exclusion
File?
- It is a data tool on the Internet.
- It helps Medicaid agencies comply
with a specific 340B statutory provision:
that drugs purchased at 340B prices
must be excluded from Medicaid rebate
requests to drug manufacturers.
- For certain 340B entities, the
Medicaid Exclusion File lists the
340B entity name, and the entity’s
Medicaid provider number(s)/NPI.
- Why must Medicaid agencies
forego rebates on 340B purchased drugs?
- The 340B legislation prohibits
Medicaid agencies from collecting
rebates on drugs purchased at 340B
prices because this practice would
result in “duplicate discounts.”
- The “duplicate discount”
would occur if an up-front 340B
discount and back-end Medicaid
rebate were provided on
the same drug/drug claim.
- Which Medicaid Provider and
NPI numbers should our entity submit
to OPA?
- The entity should submit Medicaid
Provider and NPI numbers that are
associated with the parts of the
entity that dispense or administer
340B purchased drugs to Medicaid
patients. This is most often the
pharmacy’s Medicaid provider
number/NPI, but could also be the
clinic Medicaid provider number/NPI
or a combination of both, depending
upon the services at the clinic.
For more information, contact Pharmacy
Services Support Center (PSSC) at
1-800-628-6297.
- What if our entity uses 340B
for some Medicaid patients and not for
others? What Medicaid Provider Number
and NPI should we submit?
- It is the entity’s responsibility
to work with the Medicaid Agency
in each state to ensure that 340B
purchased drugs can be identified
by Medicaid Agencies and rebates
foregone.
- OPA requests that the information
in the Medicaid Exclusion File reflect
what is occurring at that entity
for ALL of its Medicaid patients.
The Medicaid Exclusion File is not
intended to support entities which
“pick and choose” how
they bill Medicaid on a case-by-case
basis. If the Medicaid Provider
number/NPI is listed in the Medicaid
Exclusion File that Medicaid provider
number should always be used to
bill Medicaid for 340B purchased
drugs.
- Why would 340B entities want
to exclude Medicaid prescriptions from
their contracts?
- Most contract pharmacies and
Medicaid agencies do not “establish
an arrangement to prevent duplicate
discounting.”
- Clinics sometimes lose money
on Medicaid prescriptions when they
are filled with 340B purchased drugs.
- Most clinics and pharmacies are
aware the Medicaid anti-kickback
statute is very broad, and are wary
of including Medicaid prescriptions
in their contracts.
Medicaid Exlusion File Basics
The 340B statute expressly prohibits
covered entities from billing to Medicaid
a drug purchased under 340B if a State
can also seek a rebate on that drug under
section 1927 of the Social Security Act
(a “duplicate discount”).
Pursuant to the statute, the Secretary
implemented the Medicaid Exclusion File
as the mechanism in place to prevent duplicate
discounts (58 Fed. Reg. 34058 (June 23,
1993) and 59 Fed. Reg. 25110 (May 13,
1994)). Accordingly, all covered entities
that use 340B and bill Medicaid MUST follow
these rules:
- If you plan to bill Medicaid for
any covered outpatient drugs purchased
under the 340B Drug Pricing Program,
you must provide to the Office of Pharmacy
Affairs (OPA) the Medicaid provider
number or National Provider Identification
(NPI) number used to bill Medicaid for
340B covered outpatient drugs. If the
appropriate Medicaid billing number
is not listed on the OPA database, and
you use 340B drugs to fill Medicaid
prescriptions, you should contact OPA
immediately to include the correct number
on the OPA exclusion file database.
- If you do not bill Medicaid for drugs
purchased under the 340B Drug Pricing
Program, you should not provide your
Medicaid provider number/NPI to the
OPA. The purchase by 340B covered entities
of Medicaid prescriptions outside of
the 340B Program is commonly referred
to as “carving out” Medicaid
prescriptions. If you “carve out”
Medicaid, but your Medicaid provider
number/NPI is listed on the OPA exclusion
file database you should contact OPA
to remove it immediately.
- At the outset, it is the decision
of the covered entity to decide whether
or not to use 340B purchased outpatient
drugs when billing Medicaid under a
particular Medicaid provider number/NPI,
however, the covered entity must be
consistent. If the covered entity decides
to bill to Medicaid for drugs purchased
under 340B with a Medicaid provider
number/NPI, then ALL drugs billed to
that number must be purchased under
340B and that Medicaid provider number/NPI
must be listed on the OPA exclusion
file database. If the covered entity
decides to purchase drugs from outside
the 340B program (i.e. “carve
out”) for their Medicaid prescriptions
then ALL drugs billed under their Medicaid
provider number/NPI must NOT be purchased
under 340B, and that Medicaid provider
number/NPI should not be listed on the
OPA exclusion file database.
- Any changes in billing Medicaid,
involving these rules must be reported
to OPA before implementation and it
is the entity’s responsibility
to ensure that the posted database information
is correct.
- Most covered entities will bill Medicaid
under their pharmacy’s Medicaid
provider number/NPI, while some may
bill Medicaid under the clinic’s
Medicaid provider number/NPI. Covered
entities should only provide their own
Medicaid provider numbers and not those
of contractors. If a covered entity
bills drugs purchased under 340B with
more than one Medicaid provider number/NPI,
it must provide all such numbers.
- To the extent that a covered entity
is unable to comply with the above or
wishes to utilize alternative methods
that also prevent duplicate discounts
they should work with their State Medicaid
Agencies and the OPA to establish sufficient
safeguards.
1Section
602 of Public Law 102-585
For additional assistance outside of
the tutorial, please direct your questions
to:
Pharmacy Services Support Center (PSSC)
at 1-800-628-6297
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