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GAO: Increased Oversight Needed to Prevent Duplicate Discounts

In a new report, the Government Accountability Office (GAO) called on the Centers for Medicare & Medicaid Services (CMS) and the Health Resources and Services Administration (HRSA) to provide additional oversight of the 340B and Medicaid drug rebate programs to avoid duplicate discounts.

Duplicate discounts occur when a 340B covered entity purchases a drug with a 340B discount and the state claims a Medicaid drug rebate on the same drug.

GAO found that state Medicaid programs did not always have written procedures to identify 340B drugs and prevent duplicate discounts. Even when states have written policies and procedures, GAO found that they were not always adequate to prevent duplicate discounts. Moreover, the report cited inadequate HRSA oversight of covered entities during audits for compliance with the duplicate discount prohibition. Finally, the report found deficiencies in HRSA’s efforts in preventing and repaying duplicate discounts in Medicaid managed care.

Based on these findings, the GAO made three recommendations:

  • CMS should ensure that state Medicaid programs have adequate, publicly available written policies and procedures that specify whether covered entities can use 340B drugs for Medicaid beneficiaries, how to identify 340B drugs, and how to exclude these drugs from Medicaid rebate requests;
  • HRSA should audit covered entities for compliance with state Medicaid programs’ duplicate discount policies; and
  • HRSA should require covered entities to work with manufacturers to repay duplicate discounts on Medicaid managed care claims.

CMS concurred with the first recommendation, but HRSA said it needs more regulatory authority to implement GAO’s other two recommendations. In January, CMS issued an information bulletin to state Medicaid directors on policy mechanisms for identifying and preventing duplicate discounts, which GAO references in its report.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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