340B Pharmacy Reimbursement

Fee-For-Service Medicaid, CSHCN, HTW, and KHC

On June 1, 2016, HHSC began basing the reimbursement methodology for calculating the ingredient cost of 340B drugs for pharmacy claims paid to the covered entities on the Wholesale Acquisition Cost (WAC). The information below identifies the drug categories and reimbursement methodologies.

Human Immunodeficiency Virus productsWAC minus 40 percent
Hemophilia productsWAC minus 32 percent
Brands and genericsWAC minus 57 percent

HHSC reimburses new drugs on the market less than six months from the date added to the formulary at WAC minus 23.1 percent. After the drug’s new-to-market date reaches six months, HHSC will base the reimbursement on one of the categories listed in the table above. This methodology is not all-inclusive, and HHSC may price some products manually.

Managed Care

Beginning Dec. 1, 2014, MCOs can create their own 340B reimbursement methodologies. Pharmacy providers should contact the client's specific MCO for details.

A covered entity using 340B purchased drugs in Medicaid managed care must contract with the MCO as a 340B pharmacy and accept the payment terms of their shared-savings model. A shared savings model is an alternative payment model in which providers agree to share a percentage of the net savings they receive to a defined client population. If the covered entity does not accept the terms of an MCO's shared savings model to reimburse 340B purchased drugs, then the covered entity may choose to contract with the MCO as a retail pharmacy.

If the covered entity contracts with an MCO as a retail pharmacy, the entity cannot use 340B purchased drugs.

MCOs may deny claims submitted with a value of "20" for pharmacies not contracted as a 340B pharmacy because the pharmacy should not have filled the claim with 340B purchased drugs. An MCO cannot require its network pharmacy to submit its actual acquisition cost on outpatient drugs and biological products purchased through the 340B program.

Refer to the 340B Resources section for more about 340B claims processing.