The 340B Drug Pricing Program requires drug manufacturers to provide outpatient drugs to eligible health care organizations or covered entities at significantly reduced prices. Federal law prohibits duplicate discounts, which means that manufacturers are not required to provide both a discounted 340B price and a Medicaid drug rebate for the same drug.
Covered entities must have procedures in place to prevent duplicate discounts.
340B covered entities are facilities eligible to purchase drugs through the 340B program. These entities appear on the Health Resources and Services Administration Office of Pharmacy Affairs Database.
340B contract pharmacies are pharmacies that have contracted with the 340B entities to provide pharmacy services to the covered entity’s patients, including the service of dispensing the entity-owned 340B drugs.
Bill MHCP directly for prescription drugs for fee-for-service (FFS) recipients; bill the managed care organization for prescription drugs for recipients enrolled in a managed care plan.
All covered entities that use 340B drugs and serve MHCP recipients enrolled through FFS or a managed care organization (MCO) must follow either these carve-in or carve-out procedures:
No implementation of changes can be made in carve-in or carve-out status without that change first being reflected in the HRSA Medicaid Exclusion File (MEF). Covered entities must ensure that information in the MEF is accurate each quarter and at the time of annual recertification.
MHCP assumes that all prescriptions for covered outpatient drugs dispensed by 340B entities choosing to carve Medicaid into the 340B operation are filled using 340B-procured medications.
340B entity pharmacies may submit claims to fee-for-service MHCP at their usual and customary rate. MHCP will pay the rates as shown in the table for 340B entity pharmacy claims.
MHCP Pharmacy 340B Claim Reimbursement Rates
Type of drug or supplies
MHCP Payment Rate
Generic drugs subject to state maximum allowable cost (SMAC)
SMAC plus $3.65 dispensing fee
Branded drugs, specialty drugs, and generic drugs not subject to SMAC
Wholesale acquisition cost (WAC) minus 40 percent, plus $3.65 dispensing fee
Items not considered “covered outpatient drugs” by the Centers for Medicare & Medicaid Services (CMS) (for example, diabetic testing supplies, OTC vitamins)
Regular MHCP pharmacy payment rate:
Some 340B entities are unable to purchase drugs designated as orphan drugs by the FDA through 340B when used for orphan indications. MHCP will pay the regular MHCP pharmacy payment rate for such cases. To initiate an orphan drug 340B price exemption, call the MHCP Provider Call Center at 651-431-2700 or 800-366-5411.
The following apply for FFS clinician-administered drugs:
340B Contract Pharmacies
Contract pharmacies may not submit claims to MHCP FFS or to managed care for 340B-procured medications. A 340B contract pharmacy must carve out MHCP FFS and managed care from its 340B operation. All contract pharmacies that use 340B drugs and bill to an MCO must carve out MHCP managed care prescriptions from the 340B program and purchase all drugs billed to MHCP managed care outside the 340B program.
Consult MHCP Managed Care Pharmacy Identification for help identifying MHCP managed care enrollees.
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