During Visante’s 340B Program Assessment and Integrity Audit Readiness Reviews, we often encounter a lack of understanding of the Medicaid Exclusion File (MEF). Covered entities often do not know what it is, what its purpose is, how it is utilized, and how it applies to them. With the annual Recertification Period now open, we thought this would be an appropriate time to revisit this extremely important 340B compliance element.
What is the Medicaid Exclusion File? Among the numerous requirements for participation in the 340B Program is the Duplicate Discount Prohibition.
42 USC 256b(a)(5)(A)(i) prohibits duplicate discounts; that is, manufacturers are not required to provide a discounted 340B price and a Medicaid drug rebate for the same drug. Covered entities (CEs) must have mechanisms in place to prevent duplicate discounts. The Office of Pharmacy Affairs (OPA) established the MEF to help support program integrity regarding the statutory prohibition of duplicate discounts. The Medicaid Exclusion File is maintained on the OPA website and contains the National Provider Identification (NPI) Number or Medicaid Provider Number of those entities which dispense 340B discounted drugs to a Medicaid patient and bill Medicaid. Covered entities that enroll in the 340B Program must determine whether they will use 340B drugs for their Medicaid patients (carve-in) or whether they will purchase drugs for their Medicaid patients through other mechanisms (carve-out).
Covered entities that desire to carve-in are required to provide HRSA their Medicaid Provider Number/NPI) at the time they enroll in the 340B Program. If a CE decides to bill to Medicaid for drugs purchased under 340B, then ALL drugs billed to that number must be purchased under 340B and that Medicaid Provider Number/NPI must be listed in the HRSA MEF.
What is the purpose of the Medicaid Exclusion File?
The MEF is the mechanism in place to prevent duplicate discounts. It is available to state Medicaid agencies to prevent duplicate discounts, as prohibited by statute. The file is updated quarterly. The states then use the file to identify those claims for 340B drugs and eliminate them from manufacturer rebate requests.
How is the Medicaid Exclusion File utilized?
Covered entities are expected to provide timely and accurate information to OPA for incorporation into the Medicaid Exclusion File. The MEF is used as follows:
1. Entities using 340B purchased drugs for Medicaid patients must inform OPA of their NPI/Medicaid Provider Number(s).
2. Medicaid Agencies use the Medicaid Exclusion File to identify the NPI or Medicaid Provider Number of the entities purchasing at 340B prices.
3. The state Medicaid Agency excludes from its rebate requests to manufacturers all claims associated with entities whose NPI/Medicaid Provider Number are listed in the Medicaid Exclusion File.
4. Manufacturers use the Medicaid Exclusion File to verify denial of rebate payment on claims associated with entities purchasing at 340B prices.
How does the Medicaid Exclusion File apply to Covered entities?
A duplicate discount, prohibited by 340B statute, occurs when manufacturers provide both a 340B discount on a drug AND pay a Medicaid rebate to the state on the same drug. A duplicate discount would occur if an up-front 340B discount and back-end Medicaid rebate were provided for the same drug/drug claim. 340B covered entities are prohibited from causing a duplicate discount to occur.
OPA makes it very clear that it is the Covered entity’s responsibility to:
1. Work with the Medicaid Agency in each state to ensure that duplicate discounts do not occur.
2. Ensure Medicaid billing information in the OPAs database is accurate. This includes submission of accurate information upon initial registration and updating OPA with any changes.
Exactly what does all this mean? As stated above, covered entities that desire to carve-in are required to provide HRSA their Medicaid Provider Number/NPI) at the time they enroll in the 340B Program. The state Medicaid agency then uses the MEF to identify 340B claims and remove them from requests to manufacturers for rebates.
As a covered entity, you submit ALL of your Medicaid billing and/or NPI numbers to the MEF. Therefore, you have met the requirement and have protected yourself against violation of the Duplicate Discount Prohibition. Correct?
MAYBE. Note the above statement, “It is available to state Medicaid agencies to prevent Duplicate discounts.” Does each state Medicaid agency actually use the MEF to prevent duplicate discounts? Are there other methods employed? Actually, all states do NOT use the MEF. Several states utilize their own “self-developed” methods such as a list of 340B covered entities. However, OPA makes it quite clear that covered entities that desire to carve in must submit ALL of their Medicaid and/or NPI billing numbers whether the state uses the MEF or not. OPA also makes it clear that it is the covered entity’s responsibility to ensure that duplicate discounts do not occur.
It is vital that covered entities understand that they are responsible for the accuracy of the information in the MEF. Covered entities are required to ensure that information in the MEF is accurate each quarter AND at the time of annual recertification.
If your state uses the MEF and if all of your required information listed is correct, you have fulfilled the requirements for preventing duplicate discounts and you are safe. Correct?
Unfortunately, the answer is MAYBE. States have differing requirements requiring what information should appear on claims to identify them as 340B claims. These may include methods such as the NCPDP Transaction Standards to identify an individual 340B purchased drug claim at the point of sale (POS) in a retail or clinic pharmacy (contract pharmacy), a UD Modifier for physician-administered claims, or other state specific methods as described in the state’s pharmacy provider/billing manual.
Keeping in mind that it is the covered entity’s responsibility to avoid duplicate discounts, what steps can a covered entity take to assure compliance?
1. Since covered entities desiring to carve-in Medicaid must list ALL of their Medicaid and/or NPI billing numbers on the MEF, be sure to routinely verify their accuracy. This should be part of the covered entity’s on-going 340B Compliance self-audit process.
2. Some covered entity sites may desire to carve in while others may desire to carve out. If an outpatient facility or sub-grantee/sub-contractor bills for 340B drugs under a different Medicaid provider number or NPI than the parent site, that information must be appropriately listed for each outpatient facility.
3. Communicate any changes to OPA by utilizing the on-line Change Request form.
4. Verify that the changes appear on both the OPA database and the MEF and that any billing changes are NOT made until after the active dates shown.
5. For those states that do NOT use the MEF, covered entities should communicate directly with their state Medicaid agency to be certain they are following that state’s procedures. The covered entity’s Policies and Procedures should include its method(s) for duplicate discount avoidance. Communications with the state Medicaid agency should be in writing and should be maintained as part of the covered entity’s on-going 340B Compliance Program.
The above information applies to Medicaid Fee-For-Service. The Centers for Medicare and Medicaid Services (CMS) now mandates that states collect rebates for Medicaid Managed Care Organization (MMCO) prescriptions that have not received 340B discounts. HRSA clarified this in HRSA Policy Release No. 2014‐1, Clarification on Use of the Medicaid Exclusion File, Dec. 12, 2014.
Medicaid Managed Care will be a topic of a future Visante Insider. Our 340B consulting and compliance team will continue to keep you updated on important topics. Stay tuned!