by Apexus
An efficient and effective refund process is paramount in any industry—and 340B is no exception.
There are nearly 40,000 covered entity sites that participate in the 340B program and about 32,000 drugs. When a manufacturer changes a 340B price on a drug due to a true-up or restatement of a Medicaid price such as the best price, it is likely to trigger a refund to covered entities.
Manufacturers are required by CMS regulation to restate best price (BP) data within a three-year window for submission to the Medicaid Drug Rebate Program (MDRP). Some 340B refunds can be derived from purchases made several years earlier. The identification of the correct individuals to work with at each covered entity can be very difficult.
Why are 340B refunds common?
It’s a common misconception that all incorrect prices for 340B drugs are the result of manufacturer errors. Most price adjustments occur when manufacturers are conducting normal ongoing business processes.
The typical refund process and its challenges:
Let’s look at the challenges of the typical 340B refund process from a few different stakeholder perspectives.
Manufacturer:
Manufacturers are not typically staffed to handle projects like identifying and refunding money to covered entities. Once a manufacturer identifies the covered entities that purchased product at the incorrect price and calculates the subsequent dollar amount of their refund, the manufacturer has to determine how to implement the refund.
Many manufacturers have shared with us that they greatly underestimated the time and resources required to refund overcharges. Even the first step of contacting and handling subsequent communication with the affected covered entities can be extremely time-consuming.
The tax form requirements alone can strain their systems. Some manufacturers aren’t prepared to collect W-9s from affected covered entities, and many of them are also required to send a 1099 form at the end of the year.
Investigating who gets a refund and where a check should be sent, as well as tracking all this information is important but very time consuming. Some manufacturers set up vendor accounts in their accounts payable system in order to generate checks, which is inefficient, especially when the refund may involve only a few pennies. The administrative burden of printing hundreds of checks, mailing them out and maintaining auditable records is time-consuming and tedious.
Covered entities:
Covered entities face their own set of refund challenges. They are often informed of a possible refund when a manufacturer posts a notice on HRSA’s website indicating that a refund is available for purchases that occurred during a certain time period.
Upon seeing those notices, covered entities then need to produce a sales history report for the affected NDCs, and for the time period when these purchases were made at the incorrect price. Often, the timeframe of the refund is too long past for the covered entity to produce adequate sales reports for the manufacturer, so the covered entity has to contact its servicing pharmaceutical distributor to ask the distributor to pull the sales data from its archive system. Next, the covered entity has to send the manufacturer the qualifying purchase data to be validated by the manufacturer against historical chargebacks before the manufacturer can process a refund. After the covered entity sends its W-9, it must wait for the manufacturer to process the refund check.
Distributors:
Distributors, which really aren’t connected to these transactions, often become involved to facilitate the refund process. As mentioned earlier, if the covered entity doesn’t have the purchase data immediately available, the distributor is the first place the covered entity will turn to for help in getting purchase records. Because many of these refunds are based on purchases from several years earlier, the distributors must dig into their archived records to pull sales data for their customers that might have been affected by a recalculated 340B price and subsequent refund. Pulling these sales data can be very time-consuming for the distributor and may require retrieving data from archives stored at other locations.
The Apexus solution: “The Manufacturer Refund Service”
Clearly, stakeholders endure many inefficiencies to process a 340B refund. Manufacturers tell us they need an efficient, reliable, compliant, and economical method of processing refunds with covered entities participating in the 340B program.
“Best decision we made was to engage Apexus to provide MRS. This would’ve been a daunting task for our company and when we were informed of their services we were not sure what to expect. Apexus staff was professional, friendly, efficient and proactive. They did it all Overall, top notch service! I would definitely use them again.” – Government Pricing Programs Director
Apexus has developed the Manufacturer Refund Service (MRS) to simplify this process for everyone involved. How has our solution revolutionized the refund process for all parties involved? Here’s how we do it:
For manufacturers:
- Apexus performs a 340B eligibility check
- Apexus performs all requested data analysis for the manufacturer
- Apexus handles all communications with covered entities and distributors
- Apexus is responsible for collecting W-9 and 1099 forms
- Apexus sends detailed weekly project status reports
At the end of the project, Apexus provides an executive summary of the project along with a detailed report of all refund activity including due diligence steps to provide an auditable record of the manufacturer’s refund project.
For covered entities:
- Apexus validates 340B eligibility
- Apexus sends communications regarding the details of the refund
- Apexus executes a manufacturer refund through a credit to the current primary distributor ordering account
- Apexus creates a summary report on our secure website of all manufacturer refund activity for the participant
For distributors:
- Apexus creates a consistent, timely process for distributors when operationalizing refunds
The MRS program is an example of how the PVP is able to bring solutions to the marketplace based on stakeholder feedback and needs.
Talk to us at ASHP Midyear at the Apexus booth #507:
Meet our team and learn more about the Apexus MRS program. You can also reach us at 469.299.7325 via email at MRSinquiries@apexus.com.