Kalderos describes how compromised data associated with MDRP affects inaccurate Pharma Mfr payments to States leading to overpayments and compliance issues with 340B Covered Entities
1. 1
Medicaid Billing and Reimbursement
Identifying and Resolving
Duplicate Discounts
Steve Zielinski RPh
Director Industry Relations
Kalderos
2. 2
Statement of Conflicts of Interest
Steve Zielinski has no actual or potential conflict of interest in
relation to this presentation
3. 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
4. CE Question
True or False?
Both Fee-for-Service and Managed Medicaid claims are subject
to a Medicaid Rebate
5. Kalderos: What we do…
At Kalderos, we develop technology solutions
with a focus on simplifying the complex
coordination of drug discount programs from
exhaustive data services to intelligent reporting
to issue resolution.
We work with healthcare providers, drug
manufacturers, payers, and government
agencies alike to increase transparency and
restore trust — enabling everyone to focus on
improving the health of people.
600+
Covered Entities
47
States
150,000+
Medicaid Claims Reviewed
with Covered Entities
6. 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
7. Manufacturers’ concerns with 340B
duplicate discounts
Kalderos works with covered
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:
1 Growth of the program
including the increase in
contract pharmacies
3 Significant value of discounts
and growing evidence of
issues within the program
2 Lack of effective oversight from
government agencies
4 Harder to engage in dispute
resolution once issues have
been identified
8. 340B duplicate discount case study
Data Drug-types examined Limitations
Medicaid claims data for 46
states plus the District of
Columbia relating rebate quarters
2015Q1 — 2018Q1
Innovator outpatient drugs, with a
good mix of retail, specialty, and
physician-administered products
• 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
9. 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 duplicate discount case study
10. 340B compared to other
common issues
The three main
issues with
medicaid claims: Duplicate Claims Quantity Issues
340B Duplicate
Discounts
2% 2% 1%
average across all
manufacturers that we
work with
11. The three main
issues with
Medicaid claims: Duplicate Claims Quantity Issues
340B Duplicate
Discounts
2% 2% 4%
One client with products
experiencing high 340B
and Medicaid utilization
340B compared to other
common issues
12. Duplicate discount issues by
state
Percentage of Medicaid
claims dispensed by a
Covered Entities’
Pharmacy that are verified
duplicate discounts (by
state):
California Texas Ohio All others
86% 74% 67% 56%
Percentage of Medicaid
claims dispensed by a
Contract Pharmacy that
are verified duplicate
discounts (by state):
6%
Things to note:
• 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
13. Why and how duplicate
discounts occur
1 2 3 4
A large portion of
covered outpatient
drugs are dispensed
by covered entities or
contract pharmacies.
There is no standard
for covered entities to
help prevent duplicate
discounts.
There is no standard
states use to help
prevent duplicate
discounts.
Lack of clear guidance
to covered entities on
managed Medicaid
and Fee-for-service
rebates
14. 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.
15. Methods used by states to
identify and exclude 340B claims
There are three
methods used by
states to identify and
exclude Medicaid
claims subject to 340B
discounts from claims
the state believes are
rebate eligible:
Identify by CE and
Pharmacy ID (NPI)
Identify via claim
flags
Custom control
• Medicaid Exclusion
File
• State-developed
lists
• Submission
Clarification code
‘20’
• ‘UD’ Modifier
• Oregon’s
retroactive claims
submission
process
16. Issues with the Medicaid
Exclusion File
$2,500
$1,347,500
Example Findings from Ohio:
Reliance on the Medicaid Exclusion File as
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
Medicaid claims scrubbing processes
MEF Non-MEF
17. Issues with claim flags
Flag-Type States (Example: CA, TX) Pharmacy ID States (Example: OH)
• 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
• 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
18. Issues with state level custom controls
What is the Oregon solution: Issues with adopting this 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
• 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
19. More states are refusing to
engage in 340B MDRP disputes
Even though there
has been progress
in identifying 340B
issues when they
occur, more and
more states are
taking steps to
make it harder for
manufacturers to
dispute rebates:
States instituting new rules
• 2015 Texas
• 2016 California
• 2017 New York
• 2018 Ohio, Pennsylvania, Maryland, Minnesota, Louisiana,
Wisconsin, and Washington
20. Key takeaways for covered entities
• Awareness that
both Fee-for-
Service and
Managed
Medicaid claims
are subject to a
Medicaid Rebate
• Claims data can
and will become
compromised
• Obtain State(s)
current 340B
guidance on
billing for covered
outpatient drugs
(retail & medical)
• Valuable to
maintain
auditable records
related to
purchases,
billing, and
dispensations
• HRSA
encourages
manufacturers
and covered
entities to work in
good faith to
resolve 340B
Program
compliance
disputes
21. CE Question
True or False?
Both Fee-for-Service and Managed Medicaid claims are subject
to a Medicaid Rebate
22. CE Question & Answer
True or False?
Both Fee-for-Service and Managed Medicaid claims are subject
to a Medicaid Rebate
Answer: True
23. 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