A topic we have covered in our client newsletter in the past, but is long overdue for a full discussion is 340B actual acquisition cost (AAC) requirements for fee-for-service (FFS) Medicaid billing in many states. In 340B audits we perform for clients, we review the AAC requirement and note if there is any risk. However, it is not something specifically looked at by HRSA, since the covered entity (CE) billing AAC does not impact if a Duplicate Discount occurred. To be clear, we are not talking about Duplicate Discount risk here, we are just talking about whether a CE billed an FFS Medicaid plan correctly.
You may be thinking, “if it is not a significant HRSA audit risk, then what is the big deal?” The short answer, is, Government Dollars. We don’t talk about it much, but the 340B program savings isn’t government dollars, it’s manufacturer discounts. Therefore, the legal and financial risks are smaller. When it comes to government dollars, there is the potential for a financial penalty and even legal penalties. Inappropriate billing of Medicaid and Medicare can raise Fraud, Waste, and Abuse concerns. Although this normally refers to egregious acts of commission, such as billing for services you did not actually provide, it is possible that accidental over billing could be considered a form of abuse. Typical fines are 1.5 times the issue/amount in question (e.g., overbilling in the case of charging incorrectly).
Back to 340B, we now have this interesting intersection of 340B and government dollars. This occurs when an FFS Medicaid plan requires a CE to bill at AAC. Many state’s FFS Medicaid plans require this today, and one of the more engaged (that is about the most positive term I can use) states is California. In the past year, California has been sending out self-audit letters for CEs to self-audit their AAC billing. This occurs primarily with the retail side of 340B; however, they have also sent self-audit letters to CEs for hospitals/clinic administered drugs. So far, we have not heard of penalties on top of the payback request, but it is possible. The time period they are using is December 2016 to current. California is using December 2016 because that is when the federal court’s temporary ban on the California AAC law was lifted. If you are in California, we strongly encourage you to plan on receiving a letter at some point in the near future.
Although most of the AAC requirements enforcement is in California, it is likely that states are seeing what California is doing, and noting the positive financial result. As such, more states might try to enforce AAC billing as well. Your assignment for the month is to check your state requirements and confirm you are billing correctly, and remember to check any other states you bill. Don’t just check to make sure you are billing the right dollar amount, also make sure you are billing with the correct NPI or Medicaid provider numbers, and modifiers if needed. If you are a Turnkey (SpendMend) client, ask us for help on identifying your state’s requirements if needed.