Rebates are coming to 340B in the form of a limited pilot program starting in 2026. And yet, despite guidance outlining the parameters of the program from the Health Resources and Services Administration (HRSA), much about how the pilot will work for covered entities remains unclear.
The Craneware Group stands with healthcare safety net providers in firmly opposing 340B rebate models, and plans to submit our concerns to HRSA. We are committed to helping our customers work through the significant financial and operational challenges the pilot program will present.
That starts with being rebate ready: Our Sentrex contract pharmacy application already gathers all of the 11 data points HRSA will permit manufacturers to collect under the pilot. They can be exported into claims submissions for the 10 drugs covered by the rebate pilot model.
But beyond that lay many uncertainties. We’ll highlight a few of them here and outline some considerations for covered entities as they prepare for the Jan. 1 launch of the rebate pilot program. Stay tuned for a webinar or two where our expert team will outline some of the complexities and uncertainties in more depth.
Meanwhile, comments about the rebate pilot program are due to HRSA by Sept. 8, exactly one week before the deadline for manufacturers to apply to participate in the pilot program. HRSA is set to announce participating manufacturers by Oct. 15.
Unanswered rebate questions
HRSA is limiting the rebate pilot to the first 10 drugs capped under the Inflation Reduction Act’s Medicare Part D price negotiations program, which also starts Jan. 1. Yet the rebate program will apply not just to Medicare, but also to Medicaid and commercial payors.
HRSA is requiring manufacturers to grant rebates within 10 business days of data submission for qualifying claims up to 45 days from the dispense date. Drugmakers cannot deny claims based on concerns over diversion or Medicaid duplicate discounts, and manufacturers must bear the costs of operating the rebate pilot program.
But HRSA didn’t define the costs manufacturers must cover. Will they have to pay only for the costs of operating the data clearinghouse they use? What about the additional costs for hospitals of preparing claims submissions and time spent tracking and reconciliating? Or TPAs for developing new functionalities?
While these guidelines provide some clarity about the pilot program, many questions remain unanswered.
Varying rebate models?
Although it specifies the 11 essential data elements manufacturers can request, there is no assurance that HRSA will not approve a variety of rebate models that could require different configurations, which would obviously impose significant administrative burden and financial challenges on 340B entities. Included among them would be added costs for complying with the different models. How will the drugmakers cover these additional expenses?
Grounds for denials
Outside of de-duplication for the negotiated maximum fair price (MFP) or instances where another entity has already received a 340B rebate on the same claim, the guidance doesn’t specify what constitutes acceptable grounds for denials. HRSA only specifies rebate plans “should provide for rationale and specific documentation for reasons claims are denied.”
Presumably, manufacturers will still be able to deny rebates for violating their contract pharmacy restrictions.
Contract pharmacy policies and state laws
The 45-day grace period on claims that HRSA mandates may change the contract pharmacy policies of some manufacturers whose windows are shorter.
In addition, HRSA doesn’t say how the rebate model will work in the 21 states that have enacted laws prohibiting contract pharmacy restrictions. HRSA has no authority to intervene in state laws and is unlikely to urge manufacturers to abide by them. But some of those states may claim that the rebates conflict with their contract pharmacy access laws, which prohibit manufacturers from requiring data submissions in order to access 340B pricing. In fact, Vermont’s law specifically prohibits making 340B pricing available through rebates.
Much will depend on how the state laws are worded, and the issue is likely to spawn a new raft of lawsuits.
De-duplicating MFP and 340B
We still don’t know how manufacturers will handle de-duplicating maximum fair pricing and 340B rebates and should find out more this fall, as drugmakers submit proposals for how to effectuate the process. Since IRA price-inflation rebates are to be paid to the dispensing pharmacy, in cases where the 340B price is lower, the rebates may provide some incremental 340B savings to the covered entity to be used for acquiring drugs. It’s a highly complicated issue that likely won’t be easy to work through.
Considerations for covered entities
Here are some things covered entities should consider in preparing for the start of the rebate program.
- Engage legal and compliance teams early. Partner with your facility’s legal and compliance teams to interpret HRSA’s guidance and determine how manufacturer-specific definitions and requirements will affect the organization.
- Quantify the financial Impact. Model the potential revenue and cost implications under both the IRA-related rebate models and 340B rebate models.
- Evaluate patient assistance viability. Assess the feasibility of continuing, modifying, or replacing 340B-funded patient assistance programs and cash plans for drugs included in the models. Identify areas where program design may need to shift to maintain patient access.
- Ensure complete and accurate data. Confirm that all applicable patient encounter data is captured, submitted, and accessible in the application used to generate the required rebate dataset and support reconciliation.
- Prepare stakeholders for operational changes. Communicate both the financial implications and the increased administrative workload that may result from the rebate model.
- Advocate. Provide feedback to HRSA during the comment period, clearly outlining how the pilot program could affect your facilities, operations, and patient care.
- Collaborate with your TPA. Work closely with your third-party administrator to design and implement operational workflows that leverage technology for accuracy, efficiency, and compliance.
As always, reach out to The Craneware Group if you have questions or concerns.