Over the past several years, the number of pharmacies participating as “Contract Pharmacies” for 340B Covered Entities has grown exponentially. Under the 340B program, Covered Entities – such as Federally Qualified Health Centers and Disproportionate Share Hospitals – are about to acquire drugs from manufacturers at extreme discounts from what is otherwise available in the marketplace. In turn, Covered Entities are able to “pass on” those savings to their patients through lower costs for medications, or, as contemplated by the 340B program itself, can seek reimbursement for 340B drugs in the normal course, and use those larger “margins” to subsidize other unfunded areas of their operations. A core tenet to being able to engage in the latter option is that Covered Entities (or their 340B Contract Pharmacies) are able to submit 340B claims to pharmacy benefits managers (PBMs) for reimbursement, and receive normal, market-rate reimbursements for those claims (i.e., be reimbursed at the same levels as other, non-340B claims).
At the same time, however, manufacturers have grown increasingly concerned about the risks of paying duplicate discounts on 340B claims – that is, offering a 340B discount on the acquisition cost to a Covered Entity, while also having to provide a rebate to a particular payor, such as a state Medicaid program or a commercial PBM. As a result, there has been much focus recently on how claims are identified as 340B claims, both as between the Covered Entity and the Contract Pharmacy, as well as between the dispensing pharmacy and the payor.
Under current NCPDP protocols, NCPDP allows for pharmacies to identify claims as having been acquired through the 340B program by using the Submission Clarification Code “20” in field 420-DK. This identifies to the payor that the claim being submitted is a 340B claim.
In the past several years, several payors sought to require pharmacies to submit 340B claims using the Submission Clarification Code “20.” In turn, many have sought to provide 340B-specific pricing, that is often a significant reduction off of what is normally paid to pharmacies (in essence, the PBM is usurping the 340B savings from the Covered Entity and Contract Pharmacy).
In the latest news in this vein, Express Scripts recently announced that, effective March 1st, it will begin requiring pharmacies to submit 340B claims using the Submission Clarification Code of 20. While the notice did not indicate that 340B-specific pricing will be applied, pharmacies should nonetheless take heed of this new notice and potential ramifications. Perhaps the most challenging aspect of this new requirement will be the ability of pharmacies to identify 340B claims at the time the claim is submitted. For many Contract Pharmacies, especially those serving as Contract Pharmacies for multiple Covered Entities, it may not be known or knowable at the time a claim is submitted whether it is a 340B eligible claim. Instead, third party administrators (TPAs) hired by the Covered Entity often reconcile the pharmacy’s claims, and retrospectively determine which claims are 340B claims. This often times does not happen for several weeks (or even months) after the claims are processed. In addition, pharmacies should be aware that there is no legal or regulatory requirement under the 340B statute or regulations requiring claims to be flagged in this manner.
How Frier Levitt Can Help
If you dispense 340B claims and have questions about these new identification and submission requirements, contact us today to speak with an attorney.
