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What you need to know about adjudicating 340B claims

By David Hardman, Director, 340B Enterprise Strategy and Solutions, Jason Atlas, RPh, MBA, 340B ACE

Make sure your pharmacy meets PBM billing requirements for identifying 340B claims.

In an effort to accurately exclude 340B claims from commercial rebate collection, Pharmacy Benefit Managers (PBMs) are requiring mandatory identification of 340B dispenses. Let’s review a pharmacy’s billing requirements, (the different) claim identification approaches, potential PBM usage of data, and newly proposed state legislation to combat PBM efforts.

Pharmacy billing requirements and claim identification.

It’s the pharmacy’s responsibility to fulfill all 340B requirements in each PBM billing manual, whether negotiated directly or through a PSAO. Be sure to identify which PBMs introduced 340B requirements in their recent billing manual – as it is no longer acceptable to be unaware or fail to comply with the obligations. A pharmacy failing to meet the requirements in a billing manual may have a payment recouped by the PBM or even removed from the network indefinitely.

Additionally, the public 340B database OPAIS lists all participating Covered Entities (CE) and their registered Contract Pharmacies (CP), providing transparency to PBMs, manufacturers, and all other stakeholders who can now easily identify all active 340B CPs. As a result, this means hiding in plain sight is no longer an option. Recently, PBMs have proactively sent letters identifying 340B eligible claims filled at a pharmacy. They allow the pharmacy to dispute a claim but require evidence to support position.

PBMs initiated two different approaches for submitting 340B claim identification.

The primary method is the inclusion of a Submission Clarification Code (SCC) during the claim adjudication process (a 20 in the 420-DK field). Pharmacies may be familiar with this approach, which is commonly used for identifying 340B Managed Medicaid claims. A SCC requires a pharmacy to either identify a claim at time of adjudication or reverse and then resubmit a claim retrospectively once the dispense is determined to be 340B eligible. The risk of a reversal and resubmission is that the updated claim may be rejected, due to a change in the patient’s plan or the necessity to now obtain a prior authorization.

The other approach is an N1 transaction (information exchange), which can be submitted at a later time after original claim adjudication and acceptance. If a pharmacy is unable to identify a 340B claim at the time of adjudication, they may be required to submit an N1 transaction to the PBM within 10 days of identification. Customers around the country utilizing various pharmacy software systems have told us that not all pharmacy systems can support the new N1 format, leading to additional complexities in complying with PBM billing requirements.

Take-a-way: Be sure that your pharmacy evaluates all 340B captured claims, identify which claims are associated with PBM requirements, and then either reverse and resubmit the claim with the SCCs or transmit the N1 transaction. Also, confirm that your pharmacy software system can support N1 transactions.

What will PBMs do with claims identified as 340B?

To date, three PBMs have mandatory 340B billing requirements. Only one of the PBMs have a separate reimbursement schedule for claims identified as 340B dispenses. The other two PBMs require 340B claim identification, but neither have introduced a separate reimbursement schedule for 340B dispenses. This could change in the future, as the PBMs now have a clear path to use 340B claim data to reduce reimbursement.

PBMs can also use the data to accurately comply with manufacturer agreements that stipulate that 340B claims are not subject to commercial rebate eligibility. This is a driving force behind the current manufacturer 340B policies at contract pharmacies. Additionally, PBMs can provide visibility and ensure that managed Medicaid claims, once properly identified, are not subject to Medicaid Duplicate Discounts.

Take-a-way: Be sure to identify which PBMs maintain a separate 340B reimbursement schedule, then perform an evaluation of both the potential financial impact and ensure reconciliation with CE.

State efforts to introduce legislation addressing PBM requirements for 340B claim identification and separate reimbursement schedules.

Half of the country has either enacted or proposed laws that eliminate PBM two-tier pricing efforts, in which reimbursements are reduced on 340B claims. The laws vary by state and may also include language that eliminates the requirement for claim identification.

Under this measure, a health insurance issuer or pharmacy benefit manager may not:

  1. Reimburse a 340B entity for pharmacy-dispensed drugs at a rate lower than the rate paid for the same drug by national drug code number to pharmacies that are not 340B entities
  2. Assess a fee, chargeback, or adjustment upon a 340B entity that is not placed on a non-340B entity
  3. Exclude 340B entities from its network of participating pharmacies based on the fact that is not applied to non-340B entities
  4. Require a claim for a drug by national drug code number to include a modifier to identify that the drug is a 340B drug

*Excerpt from Mississippi SB 2894

To date, twenty-two state bills prevent discriminatory reimbursement on 340B claims and an additional eight bills with similar legislation are pending approval.

Take-a-way: The 340B Advisory Team recently launched a comprehensive state-by-state map that supplies all 340B and PBM related legislation. 340B Interactive Map

The impact of PBM requirements is unique to your pharmacy and patient population. Pharmacies may experience additional workload in complying with claim identification requirements which may result in a reduction in reimbursement. While states are introducing legislation to eliminate PBM requirements, in lieu of an enacted state bill, it is critical to evaluate how 340B claim identification will impact your pharmacy.

To learn more, contact the AmerisourceBergen 340B Advisory Services team.

About The Authors

David Hardman, Director, 340B Enterprise Strategy and Solutions
Director, 340B Enterprise Strategy and Solutions
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Jason Atlas, RPh, MBA, 340B ACE
Vice President, 340B Enterprise Strategy & Solutions
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