Medicaid Billing and Reimbursement

Identifying and Resolving

Duplicate Discounts
Steve Zielinski RPh
Director Industry Relations
Kalderos

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 Statement of Conflicts of Interest

Steve Zielinski has no actual or potential conflict of interest in

relation to this presentation

2
 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
 CE Question

True or False?

Both Fee-for-Service and Managed Medicaid claims are subject

to a Medicaid Rebate
 Kalderos: What we do…

At Kalderos, we develop technology solutions

with a focus on simplifying the complex 600+
coordination of drug discount programs from
Covered Entities
exhaustive data services to intelligent reporting
to issue resolution.
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We work with healthcare providers, drug
manufacturers, payers, and government States
agencies alike to increase transparency and
restore trust — enabling everyone to focus on 150,000+
improving the health of people.
Medicaid Claims Reviewed
with Covered Entities
 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
 Manufacturers’ concerns with 340B
duplicate discounts

Kalderos works with covered 1 Growth of the program

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:
3 Significant value of discounts
including the increase in and growing evidence of
contract pharmacies issues within the program
2 Lack of effective oversight from
4 Harder to engage in dispute
government agencies resolution once issues have
been identified
 340B duplicate discount case study
Data
Medicaid claims data for 46
states plus the District of
Columbia relating rebate quarters
2015Q1 — 2018Q1
Drug-types examined
Innovator outpatient drugs, with a
good mix of retail, specialty, and
physician-administered products
Limitations
• 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
 340B duplicate discount case study

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 compared to other
common issues

The three main

issues with 340B Duplicate
medicaid claims: Duplicate Claims Quantity Issues Discounts

2% 2% 1%
average across all
manufacturers that we
work with
 340B compared to other
common issues

The three main

issues with 340B Duplicate
Medicaid claims: Duplicate Claims Quantity Issues Discounts

2% 2% 4%
One client with products
experiencing high 340B
and Medicaid utilization
 Duplicate discount issues by
state

Percentage of Medicaid California Texas Ohio All others

claims dispensed by a
Covered Entities’
Pharmacy that are verified 86% 74% 67% 56%
duplicate discounts (by
state):

Percentage of Medicaid Things to note:

claims dispensed by a
Contract Pharmacy that
are verified duplicate
discounts (by state):
6% • 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
 Why and how duplicate
discounts occur

1 2 3 4
A large portion of There is no standard There is no standard Lack of clear guidance
covered outpatient for covered entities to states use to help to covered entities on
drugs are dispensed help prevent duplicate prevent duplicate managed Medicaid
by covered entities or discounts. discounts. and Fee-for-service
contract pharmacies. rebates
 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.
 Methods used by states to
identify and exclude 340B claims

There are three Identify by CE and Identify via claim

Custom control
methods used by Pharmacy ID (NPI) flags
states to identify and
exclude Medicaid • Medicaid Exclusion • Submission • Oregon’s
claims subject to 340B File Clarification code retroactive claims
discounts from claims • State-developed ‘20’ submission
the state believes are lists • ‘UD’ Modifier process
rebate eligible:
 Issues with the Medicaid
Exclusion File

Example Findings from Ohio:

Reliance on the Medicaid Exclusion File as $1,347,500

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 $2,500

Medicaid claims scrubbing processes

MEF Non-MEF
 Issues with claim flags
Flag-Type States (Example: CA, TX)
• 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
Pharmacy ID States (Example: OH)
• 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
 Issues with state level custom controls
What is the Oregon 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
Issues with adopting this solution:
• 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
 More states are refusing to
engage in 340B MDRP disputes

States instituting new rules

Even though there
has been progress
in identifying 340B • 2015 Texas
issues when they • 2016 California
occur, more and
• 2017 New York
more states are
taking steps to • 2018 Ohio, Pennsylvania, Maryland, Minnesota, Louisiana,
make it harder for Wisconsin, and Washington
manufacturers to
dispute rebates:
 Key takeaways for covered entities

• Awareness that • Claims data can • Obtain State(s) • Valuable to • HRSA

both Fee-for- and will become current 340B maintain encourages
Service and compromised guidance on auditable records manufacturers
Managed billing for covered related to and covered
Medicaid claims outpatient drugs purchases, entities to work in
are subject to a (retail & medical) billing, and good faith to
Medicaid Rebate dispensations resolve 340B
Program
compliance
disputes
 CE Question

True or False?

Both Fee-for-Service and Managed Medicaid claims are subject

to a Medicaid Rebate
 CE Question & Answer

True or False?

Both Fee-for-Service and Managed Medicaid claims are subject

to a Medicaid Rebate

Answer: True
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