To be in compliance with the Medicaid Covered Outpatient Drugs (COD) final rule, states that did not have CMS-approved 340B reimbursement policies must submit a State Plan Amendment (SPA) to detail how 340B covered entities will be reimbursed for drugs and drug device combinations.
In January, CMS approved the New Hampshire SPA (NH-17-0003) mandating that drugs acquired by 340B covered entities are not allowed to be billed to Medicaid (also called “carved-out”). (However, family planning providers are exempt from this billing prohibition because the state determined that it is more cost effective to allow family planning providers to bill 340B drugs.)
Given this SPA and the earlier DE SPA, CMS policy is to allow states to mandate 340B entities to carve-in or carve-out 340B drugs for Medicaid patients, allowing for exemptions or uniform provider choice. While eliminating the possibility of duplicate discounts between State’s Medicaid rebates and 340B drugs, a mandatory carve-out will limit the potential for cost saving from 340B drugs to covered entities with a large number of Medicaid patients and thereby decrease their ability to serve other indigent patients.
Thus this new policy is a win for drug manufacturers and a loss for 340B providers.