Case Study One: Duplicate Discount Project
CiiTA is frequently asked to develop and implement proof of concept pilot projects for clients who are just beginning to formalize their 340B management plans.
In this case study, the client came to CiiTA with a request for us to evaluate a set of hospitals for potential duplicate discounts. Their primary goal was to gain visibility into future duplicate discount mitigation, but they were also interested in recovery of historic duplicate discounts.
CiiTA suggested that they begin with a pilot project consisting of a three-state assessment of potential duplicate discounts followed by five Good Faith Inquiries. Based on the risk assessment results, CiiTA initiated five Good Faith Inquiries with the highest risk covered entities.
Of these, one declined to participate and one was found to have no duplicate discounts. The remaining three were found to have a significant number of duplicate discounts associated with their institution.
This project was an overwhelming success for the client. For an investment of $85,000 the manufacturer was able to realize a direct recovery of approximately $600,000 in historic duplicate discounts, with projected duplicate discount mitigation of more than three million dollars over the next five years.
Because CiiTA engaged with the participating entities with respect and in the spirit of objectivity, the participating entities continue to be satisfied customers of our client.
Case Study Two: State Processing Error
It is CiiTA’s firm belief 340B stakeholders are generally well-intentioned. However, it is very common for errors to occur within Medicaid claims processing, and manufacturers must maintain a constant vigilance against such errors by continuously reviewing their data and following up on anomalies.
In one case, CiiTA identified an anomaly related to Medicaid claims submitted through the pharmacies associated with a covered entity during a routine data
assessment. The client requested that we initiate a good faith inquiry with the entity on their behalf. The entity participated in the inquiry, and with the help of its contract pharmacy administrator, we were jointly able to determine that the state had inadvertently submitted a large number of the entity’s 340B-identified claims for Medicaid rebates, thereby inadvertently triggering duplicate discounts. These duplicate discounts totaled more than $275,000 for the two years reviewed. The recoveries represented a return of more than 18:1 for the manufacturer on the cost of the engagement.
It is important to note that all parties acted in the very best of faith, and that the issue was only discovered through CiiTA’s ongoing review of our client’s Medicaid rebate data.
Case Study Three: An Extreme Outlier
CiiTA has a five-year partnership with a client to monitor and mitigate their 340B duplicate discount risk on an ongoing basis. During a recent evaluation of purchasing and Medicaid rebate data, we flagged a covered entity as having a high risk of potential duplicate discounts. CiiTA and the client jointly initiated a good faith inquiry with the entity. We requested that the entity review a very large set of claims that appeared to have been potentially subject to duplicate discounts.
The entity reviewed the data set and was able to verify that the claims in question had been processed as 340B by their institution. They independently reached out to the state Medicaid agency in question, who agreed to work with them to resolve the issue. They found that the state was incorrectly seeking rebates on the contract pharmacy dispensed claims filled with 340B inventory. This triggered inadvertent duplicate discounts between the 340B Program and Medicaid.
The identified duplicate discounts in this case totaled more than $16 million over two years. While this case is obviously an outlier in terms of scope of findings, it indicates just how critical it is for manufacturers to carefully and routinely monitor rebate and sales data.
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CiiTA has, through extensive experience, developed a set of best practices to help guide you through the creation of your 340B strategy. Download our process document to facilitate the development of your strategy.