340B Drug Program Summary
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1 Summary Congress created section 340B of the Public Health Service Act in 1992 to allow eligible health care providers known as Covered Entities to stretch scarce Federal resources, reaching more patients and providing more comprehensive services. As part of the 340B Program, Congress required that pharmaceutical manufacturers provide discounts on covered outpatient prescription drugs to Covered Entities that serve high numbers of uninsured indigent patients. The 340B program is administered by the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA). 2 Summary cont. HRSA allows Covered Entities to dispense 340B drugs to their patients through in house pharmacies or through an outside pharmacy with which they contract. Starting in April 2010, HRSA, through sub regulatory guidance, began allowing Covered Entities to utilize multiple contract pharmacies in order to expand access to 340B drugs. Since 2010, there has been rapid growth in the number of contract pharmacies. On average, this growth has been 43% annually which has led to increased scrutiny by the OPA, Office of Inspector General (OIG) and certain Congressional leaders. 3 1
2 The 340B law prohibits Covered Entities from diverting 340B drugs to individuals who are not their patients; moreover, the drug discounts are only available to patients treated in the outpatient setting. Diversion The 340B law prohibits diversion which forbids Covered Entities from reselling or otherwise transferring discounted drugs purchased under 340B to anyone but their own patients, or from using 340B drugs in an inpatient setting. Drug diversion is a major concern of drug manufacturers. 4 Duplicate Discounts Duplicate discounts are not permitted; which protects drug manufacturers from having to give a 340B discount to Covered Entities and also paying a Medicaid rebate on that same drug purchased at a 340B discount. Covered Entities that elect to purchase covered outpatient drugs through the 340B program are required to inform HRSA at the time of enrollment that they will purchase and dispense 340B drugs to their Medicaid population. They should work with their Medicaid State agency to choose whether 340B drugs will be: 1) dispensed to Medicaid patients and billed to Medicaid at acquisition cost for those drugs, or 2) dispensed to those patients from their non 340B inventory and subsequently seek a higher Medicaid reimbursement. 5 Compliance with Program Prohibitions Duplicate Discounts Covered Entity is prohibited from accepting a discount for a drug that would also generate a Medicaid rebate to the State. Diversion Covered Entity shall not resell or otherwise transfer the drug to a person who is not a patient of the entity. GPO Exclusion DSH hospitals, children s hospitals, and freestanding cancer hospitals may not obtain covered outpatient drugs through a GPO or other group purchasing arrangement. Orphan Drugs Free standing cancer hospitals, rural referral centers, sole community hospitals, and critical access hospitals may not purchase selected rare disease drugs at 340B prices. 6 2
3 Drugs must be administered to a qualified patient: Covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual s health care; and Individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements such that responsibility for the care provided remains with the covered entity; and Individual receives health care service(s) from the covered entity which is consistent with the services(s) for which grant funding or federally qualified health center look alike status has been provided to the entity. Outpatient use only Drugs must be administered in a hospital point of service that would qualify as a reimbursable cost center on the Medicare cost report: Includes qualified outpatient facilities (e.g., physician clinics, surgery centers) 7 Person is not a patient of a covered entity if the only health care service the individual receives is the dispensing of a drug or drugs for subsequent self administration or administration in the home setting Examples of gray areas:» Covered Entity patient returns to the Covered Entity pharmacy to fill a prescription for conditions treated by outside health care providers» Outpatient initiatives by a Covered Entity (e.g., provision of care in mobile clinics, at prisons, etc.)» Treatment of services referred by the Covered Entity to an outside provider New guidance likely in the future: Government Accountability Office (GAO) has advocated for a new, more specific definition of a 340B patient 8 Covered entities may not receive a 340B discount for drugs that are subject to a Medicaid rebate: Providers required to inform HRSA (by providing their Medicaid billing number) at the time they enroll if they plan to purchase and dispense 340B drugs for their Medicaid patients and bill Medicaid Follow procedures established by State Medicaid agencies State Medicaid program may: Require Covered Entities to carve out Medicaid patients from 340B so the State can claim the rebate Allow Covered Entities to use 340B drugs for Medicaid patients, and reduce Medicaid payment to the Covered Entity Allow Covered Entities to use 340B drugs for Medicaid patients, and pay an increased dispensing fee 9 3
4 CMC CMC obtained third-party expert for 340B Compliance Program Assessment. Based on the assessment CMC engaged the third party expert to aid in the remediation, provide education and provide guidance on the improvements needed. 10 Designate compliance leadership Implement policies, procedures, and standards of conduct Conduct training and education Open effective lines of communication Conduct internal monitoring and auditing Focus of this presentation Enforce standards and discipline Respond timely to detected offenses and perform corrective action 11 CMC developed a formalized which includes: 340B Drug Purchasing Program Policy and Procedures 340B Compliance Program Manager job description outlining the specific duties and services to be performed 340B Compliance Committee meetings. CMC Corporate Compliance Department CMC Facilities leadership of the Pharmacy area CMC Corporate IT CMC Corporate PFS Patient Financial Services CMC Corporate HIM Health Information Management CMC Facility Departments as needed. 340B Issues management log 340B Education and commitment to conference, seminars, webinars and materials to keep current of regulatory changes. 340B Compliance Audit Program 12 4
5 Internal Plan Resolution, and Reporting Typically defined as activities performed on an on going basis, to measure and detect potential issues of non compliance as defined by policies, procedures, and standards. Performed by department personnel with direction from management who is responsible and accountable for the process and data being measured. Typically defined as activities performed on a scheduled basis to measure and detect observations of non compliance as defined by policies, procedures, and standards. Performed by third parties within or at the direction of the organization (e.g. other departments within the covered entity such as Internal Audit, Compliance, or contracted consultants). 13 Plan Area to Monitor/Audit 1. Patient Definition Areas to Monitor and Audit Policies and Procedures Eligible Provider 340B Pharmacy Claims 2. Covered Drug Definition Policies and Procedure 340B Pharmacy Claims 3. Duplicate Discounts 4. Exclusions a. GPO b. Orphan Drug How? 340B Pharmacy Claims Eligible Payer Pharmaceutical Inventory Orphan Drug Prohibition and Reporting Area to Monitor/Audit 5. Contract Pharmacy a. Patient Eligibility b. Contracting 6. Diversion B Registration & Recertification How? 340B Pharmacy Claims 340B Contract Pharmacy Contracts Pharmacy Claims OPA 340B Database and Recertification Cost Report 14 Internal Plan Components/Areas Plan and Reporting Policies and Procedures documented policies and procedures, including performing walk throughs, to validate 340B Program compliance is being followed Annually Covered entity Child sites 340B Internal Audit or OPA 340B Database and Recertification accuracy of pharmacy information to confirm correct registration with the OPA 340B database, and latest Recertification submission. Quarterly Covered entity Child sites Contract pharmacies 340B Internal Audit or $ Cost Report Cost Report information and validate 340B eligible locations can be mapped to appropriate line items Annually Covered entity Child sites 340B Internal Audit or 15 5
6 Internal Plan Components /Areas Plan Eligible Provider Eligible Payer 340B Pharmacy Claims accuracy of eligible provider list per facility to confirm proper designation. accepted payers to validate they are in alignment with Medicaid Carve in or Carve out status and applicable Medicaid billing. 340B pharmacy claims per facility to confirm compliance with 340B Program requirements. executed contracts with contract pharmacies and contract pharmacy 340B Contract administrators to confirm Pharmacy Contracts compliance with contract pharmacy contract elements Bi weekly Monthly Monthly Annually and Reporting Pharmacies Contract pharmacies Covered entity Child sites Contract pharmacies Administered/dispensed outpatient locations and pharmacies Contract pharmacies Contract pharmacies 340B Internal Audit or 340B Internal Audit or 340B Internal Audit or 340B Internal Audit or 16 Internal Plan Components/Areas and Plan Reversals of adjustments to confirm all submitted 340B reversals have been completed. Monthly and Reporting Contract Pharmacies 340B Internal Audit or Contracted External Audit Pharmaceutical Inventory of pharmaceutical purchases orders, invoices, and true ups. Scope includes split billing software and accumulators. Monthly Administered/dispen sed outpatient locations and pharmacies Contract Pharmacies 340B Internal Audit or Contracted External Audit Orphan Drug Prohibition (if applicable) 340B captured prescriptions, originating from the Covered Entity, from both pharmacy and contract pharmacy location(s) to confirm drug(s) are not dispensed as 340B for treating diagnosis related to the primary indication of the orphan drug (if applicable) Monthly Administered/dispen sed outpatient locations and pharmacies Contract Pharmacies 340B Internal Audit or Contracted External Audit 17 Internal Plan Components/Areas and Plan Common / Findings and Reporting Diversion to ineligible patients Lack of documented encounter / missing assessment notes Moon-Lighting and ineligible prescribers Filled date vs. written date Medicaid FFS processed inappropriately Lack of self-disclosure of known issues to HRSA\OPA / Findings/ Resolutions Quantify issue(s) Clearly defines the global impact of the actual findings on your program Internal Audit finding & resolution documentation Sample info Discovery Resolution Proactive steps Communicate to all applicable parties Compliance Officer/Committee Reporting Discoveries from & Entity eligibility issues Report to HRSA\OPA Stop purchasing Patient or covered drug eligibility issues Work with manufacturers to determine repayment steps 18 6
7 and Reporting and Plan Program Manager Job Description and Reporting Drug Purchasing Program Drug Purchasing Program Appendix 19 Creating Can Be Useful to Support 340B Compliance and Plan and Reporting 340B Metrics 20 Creating Can Be Useful to Support 340B Compliance Plan and Reporting 340B Issues and Action Items Register 21 7
8 Internal Plan Components/Areas Plan and Reporting 22 CMC ensures compliance with a with includes compliance quarterly monitoring of: Validation of Utilization Data Eligible Drug s Crosswalk Accuracy Provider Validation of Medicaid Billing GPO Exclusion 340B Drug Usage Contract Pharmacy 23 CMC now shows success: Comprehensive process with supporting documentation A centralized area for all facilities to pass information and questions and maintain documentation Compliance Initiatives implemented and maintained Internal Controls Compliance Education Compliance Focus of this presentation Independent Compliance Effectiveness Cost savings in the millions This was a team initiative Corporate CAECO, CEO, COO, CFO and Facilities CEO, CFO, Pharmacy (all levels), IT individuals, system vendors and engaged expert all made this a success. 24 8
9 Compliance Effectiveness As a best practice and in light of the heightened focus on 340B Drug Program, CMC demonstrates effectiveness and continues to improve in education and awareness of 340B Compliance Program. Management has appreciated the structure to the challenging and complex initiatives. Effective education and structure drives behavior. 25 Measure the effectiveness To help measure the effectiveness of the besides the daily, weekly and monthly interactions A quarterly random selected number of transactions are reviewed for compliance. A report is created and reported to Chief Audit, Ethics and Compliance Officer s Office on a quarterly basis for review. Independent Consultant verifications to industry. 26 Continuous Improvement The structured system for 340B processes and tracking was a yearlong process of implementation and although difficult at first with buy in it is now accepted and well utilized. Besides administration and documentation advantages, all levels have had added value of the structured process for an effective and efficient alternative for internal controls and meeting requirements timely. While setting up the initiative, committees, automated systems and placing appropriate jobs descriptions and individuals in those roles to deliver compliance requirements has been a successful first step in establishing our best practice, CMC looks forward to continually advancing. CMC believes continue enhancements in computer based processes, education, structure and self monitoring and auditing will continue to enhance internal controls for best practice. 27 9
10 ALWAYS LOOK TO THE FUTURE While setting up the initiative, committees, automated systems and placing appropriate jobs descriptions and individuals in those roles to deliver compliance requirements has been a successful first step in establishing our best practice, CMC looks forward to continually advancing. CMC believes continue enhancements in computer based processes, education, structure and self monitoring and auditing will continue to enhance internal controls for best practice. 28 CMC Process now shows success: Compliance initiatives implemented and maintained Comprehensive process of supporting documentation One area to house documents and track Internal Controls Compliance Compliance Effectiveness Consultant Validations Independent Audit 29 This was a team initiative engaged team Very persistent compliance officer Consultant Expertise Dedicated Corporate CEO, CCO and CFO asking the right questions Very supportive in house counsel Dedicated Facility CEO, COO and CFO Dedicated Departmental personnel 30 10
11 Documentation Samples included as Attachments Demonstrate the Attachment 1 - SAMPLE Drug Purchasing Program P&P Attachment 2 - SAMPLE Drug Purchasing Program Appendix A Program Summary Attachment 3 SAMPLE Sample 340 B Program Manager Job Description 31 Words of Advice OVER communicate the proposed process Meet with everyone that will listen even those that won t Who gets to vote? It s best for them, it s best for the process A non compliance champion Go slowly but keep moving Questions? Health Ethics Trust 33 11
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