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 must have mechanisms in place to prevent duplicate discounts.

Upon enrollment in the 340B Program, a covered entity site must inform HRSA whether it will use 340B drugs for its Medicaid fee-for-service patients (carve-in), or whether it will purchase drugs for its Medicaid fee-for-service patients through other mechanisms (carve-out).

• A covered entity site (340B ID) that will carve-in Medicaid fee-for-service is required to list each Medicaid state it plans to bill and the corresponding billing number(s) it will list on the bill to state.  Billing number(s) may include the billing provider’s national provider identifier (NPI) only, the state assigned Medicaid number only, or both the NPI and state assigned Medicaid number. 
• A covered entity site (340B ID) should not list any Medicaid state for which the covered entity site will carve-out.
• The Medicaid billing information a covered entity site lists in the 340B OPAIS will be reflected on the HRSA Medicaid Exclusion File (MEF).

Covered entities are required to ensure that the information listed on the HRSA MEF is accurate. The MEF lists each covered entity site that has decided to carve-in for at least one Medicaid state.  The data on the HRSA MEF includes each Medicaid state the site will bill Medicaid fee-for-service, and the billing number(s) the covered entity will list on the bill to the state.

The data on the HRSA MEF applies to Medicaid fee-for-service only, and does not apply to Medicaid managed care organizations (MCO).

Key Points

• The “start date” is the first date that the entity began participating in the 340B Program. The date in the “term date” column is the effective date the entity is no longer participating in the 340B Program. These dates DO NOT relate to the covered entity’s MEF determination as carve in or carve out for Medicaid fee-for-service.
• The “Medicaid State” and “State” fields on the HRSA MEF represent the state that the covered entity site will bill for 340B drugs (Medicaid state), and the state jurisdiction where the covered entity is located (state).
• A covered entity may request a change to its listing on the MEF at any time; however, changes do not take effect until the 1st day of the following quarter and only if approved by OPA before the time it takes a quarterly snapshot of carve in/carve out decisions. Covered entities should time their 340B Medicaid billing practice to coincide with the first day of the quarter that reflects the new billing status. The 340B OPAIS takes a snapshot of carve in/out decisions at 12:01am ET on the 16th day of the month prior to the start of each quarter, irrespective of weekends or holidays. Covered entities are therefore encouraged to submit carve in/carve out decisions before HRSA takes its quarterly snapshot to provide sufficient time to process and approve the request. HRSA generally does not make retroactive changes to the quarterly HRSA MEF once it is published.  On a rare occasion, a technical system issue may warrant an immediate modification.  If retroactive changes are necessary, HRSA will communicate this to the 340B Program stakeholders.

Program Integrity

340B Drug Pricing Program covered entities must ensure program integrity and maintain accurate records documenting compliance with all 340B Program requirements.

Covered entities are subject to audit by manufacturers or the federal government. Failure to comply may make the 340B covered entity liable to manufacturers for refunds of discounts obtained.

Learn more: Program Integrity