What does the Medicaid Carve-Out refer to?

The Medicaid Carve-Out refers specifically to the exclusion of Medicaid from 340B discounts. In the context of the 340B Drug Pricing Program, a carve-out allows certain drugs purchased under the 340B program to be excluded from what would typically be discounts provided to Medicaid. This means that when a covered entity participates in the 340B program, it may purchase drugs at reduced prices but may have certain drugs that are not eligible for Medicaid rebates. By carving out these drugs, the program allows for better management of costs and the potential for more targeted funding for resources without the constraints that might otherwise apply if Medicaid were involved in the discounting process.

This distinction is crucial for healthcare providers as it impacts how they manage pharmaceutical costs and revenue. Understanding the Medicaid Carve-Out is essential for entities balancing both their 340B program activities and their obligations to serve Medicaid patients effectively.