Current Trends in the 340B Drug Pricing Program November 8, 2011
Housekeeping Welcome to our webinar on the HRSA s 340B Program Below are some webinar housekeeping items: Kick-off polling question. Please answer. Submit questions via the Q&A feature. Simply select the Q&A window, type your question into the dialog box, and click the Ask button. Please turn off all webcams. The slides will be available on the MCHC website following the webcast. Program Sponsorship: 1
Polling Question What is your current role within your organization? Pharmaceutical/ Supply Management Finance/ Administration Reimbursement Managed Care/ Contracting ti Billing Compliance 2
Event Description and Introduction Event description: Our panel discussion will outline the basics of HRSA s 340B program for certain providers. Alicia Faust, a Healthcare Director from McGladrey will be moderating the panel. We will provide information about the mechanics and opportunities associated with this important program. We will offer perspectives from the legal, l pharmacy (manufacturer), and provider communities. The presentation will demonstrate the relationship between the stakeholders and the implications for others with an interest in this cost management strategy that increases access to necessary medications. 3
Your Presenters Sandi Cosler System Director of Reimbursement Provena Health System ***** Ms. Cosler is the System Director of Reimbursement at Provena Health. She is responsible for various areas of third party reimbursement for six hospitals, specializing in Medicare and Medicaid reimbursement. Some areas of responsibility include cost report preparations, Medicare GME/IME, DSH and bad debt reviews/audits, wage index initiatives, and provider rate reviews. In 2009, she assisted Provena Health when two hospitals became 340b eligible entities. She is currently involved in various 340b initiatives within the health system. Prior to joining Provena Health, Ms. Cosler held a senior manager position with a national public accounting firm as well as worked for the fiscal intermediary. Ms. Cosler received a Bachelor of Business Administration Degree in Accounting from Loyola University i at Chicago. She is a member of the Healthcare Financial Management Association (HFMA) and currently serves on the Board of Directors. 4
Your Presenters Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions ***** Dr. Wong is Vice President, Pharmacy Practice for Pharmacy Healthcare Solutions, a consulting group that delivers comprehensive services support to health systems across the country. Doug has had many successful years of practice in the hospital and Health System practice sites. Prior to joining Pharmacy Healthcare Solutions, he was the Director of Pharmacy at Hahnemann University and The Medical College of Pennsylvania hospitals in Philadelphia where he provided leadership and oversight for pharmaceutical care operations. Doug also practiced at the University it of Massachusetts Medical Center for many years as Associate Director of Pharmacy and at UCLA Medical Center. He has a thorough knowledge and understanding of the 340b Drug Pricing Program, and is considered a subject matter knowledge expert. He has assisted many organizations with their implementation and compliance. 5
Your Presenters Harry C. Norsworthy, Rph Director of Clinical Pharmacy Services Aspen Healthcare Metrics ***** Harry has more than 25 years of experience in the pharmaceutical industry with a focus on Hospital Administration, medication safety, JCAHO readiness and pharmacy care delivery systems. Areas of Expertise Administrative Pharmacy Practice JCAHO Quality Improvement and Accreditation Inventory Management Strategies Pharmacy Operations Assessment GPO Contract Compliance Analysis 340B Enrollment/Implementation/Optimization Drug Expense Analysis and Reduction Implementation strategies of clinical protocols Group Purchase Organization Expertise System Director of Pharmacy Experience 20 + years experience in Administrative Pharmacy Practice Successful management and reduction of pharmacy related expenses Led multiple successful Pharmacy CQI and Accreditation efforts Developed and designed multiple clinical protocols for high cost pharmaceuticals. Pharmacy Resource Group leader for large Catholic Health System Healthcare Metrics 6
Your Presenters Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC ***** Ned is Chair of our Drug and Pharmacy Practice. He is also a member in our Healthcare Practice. He is a pharmacistattorney who combines both professions in the legal practice of medical device, drug and pharmacy law. Ned has been involved with legal issues relating to all segments of the drug supply chain, including manufacturers, wholesale distributors, third party logistics providers, retailers, as well as pharmacy benefit managers, health care payer issues, pharmacy technology companies, prescription management companies and physician practices. Other areas of representation ti include Medicare Part D matters, 340B issues, HIPAA compliance matters, prescription drug monitoring programs, drug diversion issues, drug pedigree and pharmacy compounding issues. In addition to his legal practice, Ned is a member of the Illinois State Board of Pharmacy and also writes a monthly legal/regulatory news column for the popular drug & pharmacy newsmagazine Drug Topics. 7
Overview of 340B Drug Pricing Program Alicia Faust Revenue Integrity Service Leader, McGladrey Section 340B Drug Pricing Program of the Public Health Service Act, Veterans Health Care Act of 1992 ( Public Law 102-585); also, the Affordable Care Act expanded eligibility for certain provider types - Administered by Office of Pharmacy Affairs (OPA) 340B Drug Pricing Program was developed to: - Reduce prescription drug prices to patients - Create some financial savings to providers - Allow providers to expand scope of services offered (based on savings) What is it? - 340B Drug Pricing Program provides eligible safety-net providers significant savings on the purchase of outpatient drugs 8
Overview of 340B Drug Pricing Program (Cont d) Alicia Faust Revenue Integrity Service Leader, McGladrey Approximately $6B in 340B drug purchases last year Manufacturers who participate in the Medicaid Drug Rebate Program must also participate in the 340B Drug Pricing Program OPA estimates average savings to eligible providers between 25-50% on outpatient drug purchases OPA does not regulate how savings attained through participation in this program are to be used 9
How does an organization qualify for 340B? 10
Organizations Eligible for the 340B Discount Sandi Cosler System Director of Reimbursement, Provena Health System A. Federally-qualified health center (as defined in section 1905(l)(2)(B) of the Social Security Act); this category includes: - FQHC look-alikes - Community health centers (Sec.330(e) Public Health Service Act) - Migrant health centers (Sec.330 (g) Public Health Service Act) - Health care for the homeless (Sec.330(h) Public Health Service Act) - Health centers for residents of public housing (Sec. 330(i) Public Health Service Act) - Office of tribal programs or urban Indian organizations (P.L. 93-638 and 25 USCS 1651) B. A family planning project receiving a grant or contract under Sec. 1001 PHSA (42 USCS 3001) C. An entity receiving a grant under subpart II of part C of Title XXVI of the Ryan White Care Act (RWCA) (relating to categorical grants for outpatient ti t early intervention ti services for HIV disease) - Early HIV Intervention Services Categorical Grants (Title III of the RWCA) 11
Organizations Eligible for the 340B Discount (cont d) Sandi Cosler System Director of Reimbursement, Provena Health System D. A state-operated AIDS Drug Assistance Program (ADAP) receiving financial assistance under the RWCA E. A black lung clinic receiving funds under Section 427(a) of the Black Lung Benefits Act (30 USCS 901) F. A comprehensive hemophilia diagnostic treatment center receiving a grant under section 501(a)(2) of the SSA G. A Native Hawaiian health center receiving funds under the Native Hawaiian Health Care Act of 1988 (42 USCS 11701) H. An urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act (25 USCS 1601) I. Any entity receiving assistance under title XXVI of the Social Security Act (other than a state or unit of local government or an entity described in subparagraph (D)), but only if the entity is certified by the Secretary 12
Organizations Eligible for the 340B Discount (cont d) Sandi Cosler System Director of Reimbursement, Provena Health System J. An entity receiving funds under section 318 (42 USCS 247c) (relating to treatment of sexually transmitted diseases) or section 317(j)(2) (42 USCS 247b(j)(2)) (relating to treatment of tuberculosis) through a state or unit of local government, but only if the entity is certified by the secretary K. A disproportionate share hospital as defined in section 1886(d)(1)(B)) of the SSA L. A children s hospital as defined in section 1886(d)(1)(B)(iii) of the SSA M. A critical access hospital as defined in Section 1820(c)(2) ) of the SSA N. A free standing cancer hospital as defined in as defined in Section 1820(c)(2) of the SSA O. Rural Referral Center as defined in as defined in Section 1886(d)(5)(c)(i) of SSA P. Sole Community Hospital as defined in as defined in Section 1886(d)(5)(c)(iii) of SSA 13
Organizations Eligible for the 340B discount (cont d) Sandi Cosler System Director of Reimbursement, Provena Health System Eligibility criteria for hospitals - Verifiable designations/valid Medicare provider number - A hospital must meet one of the following: Is a private non-profit hospital under contract with state or local government Is owned or operated by a unit of the state or local government Is a public or private non-profit corporation which is formally granted government powers by a unit of the state or local government 14
Organizations Eligible for the 340B Discount (cont d) Sandi Cosler System Director of Reimbursement, Provena Health System Eligibility criteria for hospitals continued - Eligible ibl DSH percentage DSH adjustment % - Select hospitals are excluded from Group Purchasing Organizations (GPO) - Outpatient clinics must be an integral part of the hospital Must be reimbursable on the Medicare cost report 15
Organizations Eligible for the 340B Discount (cont d) Sandi Cosler System Director of Reimbursement, Provena Health System New eligible entities as a result of health reform: - CAH, RRC, SCH, F/S cancer hospitals, children s hospitals - Children s hospitals were previously eligible under the Deficit Reduction Act of 2005 16
Organizations Eligible for the 340B Discount (cont d) Sandi Cosler System Director of Reimbursement, Provena Health System Non-Profit/Gov t DSH ADJUSTMENT Eligibleibl Hospital Contract t Percentage GPO Exclusion DSH hospital Yes 11.75% Yes *Critical access Yes No required % No hospital *Rural referral Yes 8% No center *Sole community Yes 8% No hospital *Free-standing cancer hospitals **Children s hospitals Yes 11.75% Yes Yes 11.75% Yes Source OPA website: http://www.hrsa.gov/opa 17
What happens if an organization loses its 340B status? 18
Lost of Eligibility for the 340B Program Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions 19
Lost of Eligibility for the 340B Program (cont d) Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions The undersigned represents and confirms that he/she is fully authorized to bind the covered entity and certifies that the contents of any statement made or reflected in this document are truthful and accurate; and that the hospital will comply with all requirements and restrictions of Section 340B of the Public Health Service Act and any accompanying regulations or guidelines including, but not limited to, the prohibition on duplicate discounts/rebates, and drug diversion. The undersigned further acknowledges the 340B Covered Entity s responsibility to contact OPA if the hospital s status in regard to any of these criteria changes and the hospital is no longer eligible to participate in the 340B program. 20
What is the definition of the typical 340B patient? 21
Covered Entity Patient Definition Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC 1996 Final guidance of a patient 2007 Proposed revisions i to definition iti 22
1996 Final Guidance Defines Patient of a Covered Entity Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual's health care The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual t or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or federally-qualified health center look-alike status has been provided to the entity; disproportionate p share hospitals are exempt from this requirement 23
2007 HRSA Revisions Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC In 2007, HRSA introduces revisions that would change the guidelines for qualified 340B patients 24
2007 HRSA Revisions Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC The covered entity has established responsibility for the outpatient health care services it provides to the individual The individual receives outpatient health care services that result in the use of, or a prescription for, 340B drugs as part of the diagnosis and treatment from a health care provider who is employed by the covered entity, or provides health care to patients of the covered entity under a valid, binding and enforceable contract 25
2007 HRSA Revisions (cont d) Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC The outpatient health care services the individual receives from the covered entity that result in the use of, or prescription for, 340B drugs are: - Part of a health care service or range of services for which grant funding or federally-qualified health center look-alike status has been provided to the covered entity; or - Provided by a disproportionate share hospital (DSH) or by a location that qualified as a provider-based facility within a DSH under 42 CFR 413.65 26
Explain the roles and responsibilities of suppliers and manufacturers in the 340B opportunity? 27
Role of Manufacturers and Distributors Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions Manufacturers are responsible for calculating and providing the 340B price on a quarterly basis. - Minimum discount is drug's Average Manufacturer Price (AMP), is 23.1% for brand name drugs (except clotting factor and drugs approved exclusively for pediatric use for which h the basic rebate is 17.1% 1% of AMP), - 13% discount for generic and over-the-counter drugs and are entitled to an additional discount if the price of the drug has increased faster than the rate of inflation. Manufacturers and wholesalers verify an entity s enrollment via the public database maintained on OPA/HRSA s website Wholesalers provide 340B prices to eligible entities through separate accounts 28
Are there any opportunities for inpatients under 340B? 29
GPO DSH Program Harry C. Norsworthy, Rph Director of Clinical Pharmacy Services Aspen Healthcare Metrics Voluntary Inpatient program 340B-DSH hospitals - Continuing to expand product list and discounts - >45 manufacturers participating today - Over 5,300 line items GPO may also provides assistance to its members in applying for the 340B program 30
340B (DSH Agreements) Harry C. Norsworthy, Rph Director of Clinical Pharmacy Services Aspen Healthcare Metrics Vendors are not required to provide pricing for DSH members for their inpatients GPO sends DSH eligible members a monthly update of products on the DSH contract and provides a price variance a when compared to acute care price On average, GPO DSH programs comprised of some 5,300 line items; note that the program does not at this time exclude any vendor offering; as a result, there are many dual source awards GPO usually sends a welcome letter to each new member that contains details about the GPO DSH program, as well as any LOC that vendors do not provide directly to a member 31
DSH Programs and LOCs Harry C. Norsworthy, Rph Director of Clinical Pharmacy Services Aspen Healthcare Metrics Agreements managed by the GPO Pi Pricing i loaded dto the GPO account Products may be used on IP/OP Over 5,000 products under agreement LOC programs - NEUPOGEN Enhanced DSH Program - AMBISOME Discount Program - CRESTOR DSH Inpatient Discount Program - SYMBICORT PROGRAM - DORIBAX 340B LIKE PROGRAM - LEVAQUIN 340B LIKE PROGRAM - AVELOX DSH PROGRAMS IV/Tabs 32
How does an organization track the savings/ Medicaid methodology? 33
Savings Tracking Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions Variable depending on methods employed to purchase 340B products Savings are tracked comparing what was actually paid to what would have been paid for each NDC product All activity is documented Save monthly purchase activity with documentation 34
Medicaid Requirements Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions Covered entities are generally free to bill and be reimbursed for 340B drugs without making any adjustments to their billing procedures, unless Medicaid is the payer Covered entities sometimes must bill Medicaid at reduced prices for 340B drugs The reason that covered entities must adjust their Medicaid billing gpractices is to protect manufacturers from the duplicate discount problem 35
Medicaid Requirements (Cont.) Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions Manufacturers are protected from paying a Medicaid rebate and giving a 340B discount on the same drug. To avoid the duplicate discount problem, the Secretary is directed to develop a mechanism that 340B providers and states can use to ensure compliance; alternatively covered entities should not seek Medicaid reimbursement for 340B drugs that are subject to Medicaid rebates. 36
Medicaid Requirements (Cont.) Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions HRSA guidelines allow covered entities to comply with the statute in different ways: - Bill Medicaid at acquisition cost plus the stateallowable dispensing fee and the state does not request a rebate. - Carve out Medicaid drugs from the 340B program and allow the state t to collect rebates. - Follow state guidelines for applicable billing limits. 37
Medicaid Requirements (Cont.) Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions 38
340B-Specific Billing and Payment Options Douglas Wong, Pharm.D Vice President, Pharmacy Practice Pharmacy Healthcare Solutions Source: Bill von Oehsen, SNHPA meeting 39
What are the roles and responsibilities of the contract t pharmacy arrangements as it relates to the 340B program? 40
Contract Pharmacy Arrangements Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC 2010 Final guidelines require written contracts Contracts must contain 12 essential elements Written certification required by covered entity 41
Compliance Ned Milenkovich Pharmacist-Attorney McDonald Hopkins LLC Responsibilities of the covered entity Violations Safeguard implementation 42
What are some of the challenges and/ or audit issues that t surface based on 340B? 43
What are some of the challenges and/ or audit issues that surface based on 340B? 44
Final Thoughts? 45
Questions and Answers Session 46
Webinar Conclusion and Sign Off This concludes our webinar on the HRSA s 340B Program. Thank you to our moderator and a special thank you to our panel of experts. We appreciate your participation. Also, thank you to our participants for listening today. We hope you received some information that will be of value to you and your organizations. Upcoming Events Program Sponsorship: 47
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