Ohio Carve-Out Ban Failed; Other States Press On
by Admin | October 7, 2009 3:54 pm
October 7, 2009 – Some safety-net providers in Ohio drew a sigh of relief in July when learning that they could continue to exclude Medicaid drugs from the 340B program, a billing technique that protects a coveted revenue source for such providers.
Language in the Ohio fiscal 2010 state budget that would have required 340B-covered health care facilities to buy their Medicaid drugs through the 340B program and bill such drugs at actual acquisition cost – rather than “carving” them out from Medicaid – did not make it into the final version of the budget. The provision would only have applied to drugs above $20.October 7, 2009 – Some safety-net providers in Ohio drew a sigh of relief in July when learning that they could continue to exclude Medicaid drugs from the 340B program, a billing technique that protects a coveted revenue source for such providers.
But the movement to eliminate the carve-out option continues in other states, leaving many 340B providers that depend financially on the billing alternative on their toes.
California barred 340B providers from the carve-out on Oct. 1, which means facilities in that state must now bill their 340B drugs at actual acquisition cost.
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Ohio health centers sought solution In a different state initiatives to cut Medicaid drug costs, the Ohio Medicaid program plans to shift the pharmacy benefit in its managed-care benefits package to the fee-for-service system by Feb. 1, 2010. The Ohio Association of Community Health Centers pushed for an amendment that would have required the program to pay 340B entities a $12 dispensing fee for outpatient drugs with acquisition costs of $20 or more that, in turn, would be billed to Medicaid at 340B acquisition cost. Several other states have adopted such a shared savings arrangement, including Massachusetts, Louisiana and Florida. This would have offset losses for 340B providers resulting from the state carving out the pharmacy benefit from Medicaid managed care, creating a win-win situation for all parties involved, said Julie DiRossi-King, the association’s director of state government affairs. But the amendment did not make it into final legislation. The expectation is that a fee-for-service Medicaid pharmacy program will allow the state to collect larger rebates under the Medicaid rebate program than their managed care contractors can negotiate on their own with manufacturers. |
California just banned the Medicaid carve-out after including the prohibition in its recently enacted fiscal 2010 budget. And Utah Medicaid reportedly plans to notify 340B providers in the near future that it will do the same.
Why the carve-out?
The federal 340B and Medicaid laws both prohibit states from billing drug manufacturers for Medicaid rebates on drugs the companies already sold at 340B discounts. To mitigate the states’ loss of rebate revenue, 340B providers are required by most states to pass their discounts through to Medicaid by billing states at acquisition cost, or by adjusting their billing arrangements in other ways.
Federal policy, however, lets them exclude their Medicaid drugs from the 340B program to avoid billing restrictions that would otherwise apply. Under those circumstances, 340B providers purchase drugs for Medicaid patients outside the 340B program.
California carve-out disappeared Oct. 1
According to the August 2009 Medi-Cal Update, the California Medicaid carve-out prohibition applies only to drugs dispensed to fee-for-service Medicaid enrollees, and to enrollees in rebate-eligible county-organized health system plans.
The California Department of Health and Consumer Services will accept any reasonable calculation of actual acquisition cost, and covered providers can include shipping and handling charges incurred in connection with the purchase of 340B program drugs. This may offset some of the revenue losses they will suffer now that the carve-out option has been eliminated.
340B contract pharmacies will still be allowed to dispense non-340B drugs to Medi-Cal recipients, even if the beneficiary is also considered a patient of the covered entity with which they contract. The contract pharmacy can bill for such non-340B drugs at the normal Medi-Cal reimbursement rate of the lower of usual and customary, or average, wholesale price, minus 17 percent.
Source URL: https://340binformed.org/2009/10/ohio-carve-out-ban-failed-other-states-press-on/