Utah lawmakers have passed and sent to the governor a bill that would forbid insurers or their PBMs from forcing federally qualified health centers to include modifiers on claims identifying drugs as being 340B purchased, Medicaid claims excepted.

Utah Might Soon Outflank Express Scripts’ New 340B Requirement

Pharmacy benefits manager Express Scripts’ (ESI) new pharmacy reporting requirement for reclassifying a previously submitted prescription drug claim as 340B-eligible “applies to the extent not prohibited by law,” the PBM says in an FAQ on its website.

ESI’s statement in the FAQ raises the possibility that states or Congress could pass laws that shield 340B covered entities from rules like ESI’s, which took effect March 1.

Utah is on the verge of enacting such a law. It is one of several states now considering bills to forbid pharmacy benefit managers from discriminating against 340B covered entities regarding reimbursements and other practices.

The Utah bill passed on March 5 forbids insurers or their PBMs from forcing federally qualified health centers to include modifiers on claims identifying drugs as being 340B purchased, Medicaid claims excepted. Gov. Spencer J. Cox (R) had not yet signed the bill, S.B. 140, as of this morning. The state Senate and House each passed the bill unanimously.

Cox’s predecessor, Gary Herbert (R), signed a similar PBM-focused bill in March 2020, applicable to all 340B covered entities and with the same 340B claims modifier prohibition. The reason for this year’s bill focused just on FQHCs is not known. Some believe is it was introduced in response to ESI’s requirement.

Several states have passed laws in recent years to stop private payers from reimbursing 340B entities less than other providers or imposing higher fees on them, including Ohio, Georgia, Oregon, West Virginia, Minnesota, South Dakota, Montana, and Rhode Island, according to the group Ryan White Clinics for 340B Access (RWC-340B). It is unclear, however, if any of the other states’ laws include 340B claims identification language like Utah’s.

ESI notified 340B covered entities by email on Feb. 24 that, effective March 1, to resubmit a claim determined post-adjudication to be 340B-eligible, the entities or their contract pharmacies will have to submit a National Council for Prescription Drug Programs (NCPDP) N1 transaction, with values in fields identifying the transaction as 340B-eligible. The N1 must be submitted within 10 days of the claim’s being identified as 340B-eligible.

Covered entities and their 340B inventory management consultants point out that NCPDP has said that, unless all trading partners support the process, using the N1 to reprocess claims as 340B-eligible claims “is not an effective solution.” Entities and consultants also say that entities’ 340B third party administrators, on the whole, are not equipped to resubmit a claim on a contract pharmacy’s behalf; and that contract pharmacies generally do not get information about when a claim is retroactively deemed qualified for 340B. To avoid jeopardizing their broader business relationships with ESI, contract pharmacies might simply decline to reverse and resubmit covered entities’ 340B-eligible claims—something that could cause entities significant financial losses in unrealized 340B savings on drugs.

In its FAQ about its 340B reporting requirement, ESI says it implemented it “in the spirit of greater transparency,” and that “it is not intended to lead to a change in reimbursements rates, network participation, or a pharmacy’s ability to service as a Contract Pharmacy for 340B Covered Entities.” The next two questions in the FAQ ask, “Does this change the pharmacy’s reimbursement?” (answer “No”) and “Does this change the pharmacy’s network participation?” (also “No”).

There is no third Q&A in the series, however, that asks and answers, “Does this change a pharmacy’s ability to serve as a Contract Pharmacy for 340B Covered Entities?”

In the FAQ, Express Scripts says it gave pharmacies advance notice about the requirement last August and again in January. Numerous 340B entities say they first learned about the requirement in ESI’s Feb. 24 email—six days before the requirement’s effective date.

In response to the question “Does this notice apply to all Express Scripts claims?” ESI answers, “Yes. This requirement applies to all Express Scripts claims unless prohibited by law.”

In response to “Does this notice only apply to certain types of pharmacies?” it answers “No.  This notice applies to all pharmacies in the Express Scripts network that process 340B claims unless prohibited by law.”

The FAQ asks “Is there a list of BIN/PCNs available so we can confirm compliance with this requirement for the impacted plans?” It answers “This requirement applies to all Express Scripts BINs and PCNs unless prohibited by law.” It also asks “Does the 340B reporting requirement only apply to Medicaid claims?” and answers “No. This requirement applies to all Express Scripts claims unless prohibited by law.”

The FAQ says pharmacies unable to meet the reporting requirement by the March 1 deadline should “reach out to your Express Scripts Network Account Director for further details.”

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