Structuring 340B Contract Pharmacy Arrangements: Meeting Legal and Regulatory Requirements

Transcription

1 Presenting a live 90-minute webinar with interactive Q&A Structuring 340B Contract Pharmacy Arrangements: Meeting Legal and Regulatory Requirements WEDNESDAY, MARCH 19, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Alan J. Arville, Member, Epstein Becker Green, Washington, D.C. Michael B. Glomb, Partner, Feldesman Tucker Leifer Fidell, Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

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4 340B Contract Pharmacy Arrangements March 19, 2014 Key Legal and Policy Requirements presented by: Michael B. Glomb, Partner of FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved.

5 Agenda 340B background and purpose 340B patient definition 340B and Medicaid Genesis of contract pharmacy model Current issues and future directions FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 5

6 340B Essentials Enacted in 1992 Section 340B of the Public Health Service Act (42 USC 256b). Applies only to covered outpatient drugs as defined in the Medicaid statute (Social Security Act, Section 1927(k)) Requires drug manufacturers to sell covered drugs to at a substantial discount (25% to 50% off the AWP, according to HRSA)(the ceiling price ) in order to have the drug covered under Medicaid 340B discount is computed based on Medicaid rebate formula: 23.1% (single source/innovator multiple source drugs) 17.1% (certain clotting factors and HHS-approved pediatric drugs) 13% (non-innovator multiple source drugs) Ceiling price = AMP minus Unit Rebate Amount (URA) Available only to certain types of organizations - Covered Entities (CE) - specified in the statute FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 6

7 340B Essentials - Covered Entities HRSA Grantees Comprehensive Hemophilia Treatment Centers Federally Qualified Health Centers Native Hawaiian Health Centers Tribal/Urban Indian Health Centers Ryan White Programs Title X Family Planning Clinics Hospitals Disproportionate Share Hospitals Critical Access Hospitals Rural Referral Centers Sole Community Hospitals Children s Hospitals Free Standing Cancer Hospitals STD, Black Lung, TB Clinics FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 7

8 340B Essentials Oversight by HRSA s Office of Pharmacy Affairs (OPA) Enrollment through OPA website ( Quarterly registration OPA maintains CE, manufacturer, contract pharmacy, and Medicaid exclusion databases 340B Prime Vendor (Apexus) negotiates sub-ceiling prices for 340B drugs ( FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 8

9 340B Essentials-Compliance Issues 340B drugs may be dispensed only to a patient of a CE and may not be resold i.e. diversion prohibited CE may not request payment under Medicaid for a 340B drug if that drug is subject to the payment of a rebate to a state Medicaid agency i.e. duplicate discounts prohibited FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 9

10 340B Eligible Patients Patient Definition (61 Fed. Reg (October 24, 1996)) CE has established a relationship with the individual, such that the CE maintains records of the individual s health care; and The individual receives health care services from a health care professional who is either employed by the CE or provides health care under contractual or other arrangements (e.g. referral for consultation) such that the responsibility for the care remains with the CE; and FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 10

11 340B Eligible Patients The individual receives a health care service or range of services from the CE 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. (DSH exception) An individual will not be considered a patient of the entity for purposes of 340B if the only health care service received by the individual from the CE is the dispensing of a drug or drugs for subsequent self administration or administration in the home. An individual registered in a state operated or funded AIDS drug purchasing assistance program is considered a patient FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 11

12 340B and Medicaid A covered entity shall not request payment under Medicaid for prescribed drugs with respect to a drug that is subject to 340B if the drug is subject to the payment of a rebate to the State. The Secretary of DHHS shall establish a mechanism to ensure that covered entities comply [with this provision] 42 USC 256b(a)(5)(A)(i)and(ii)) FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 12

13 340B and Medicaid The mechanism to prevent duplicate discounts: Relies on state-issued Medicaid provider number to identify prescriptions filled using drugs purchased at 340B price State does not claim manufacturer rebate on drugs reimbursed under CE s Medicaid provider number Implemented through HRSA s Medicaid Exclusion File FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 13

14 340B and Medicaid PPACA requires manufactures to pay rebates on Medicaid MCO drugs, except for 340B drugs No duplicate discount issue Medicaid agencies can claim rebate on non-340b drugs (raises reporting issues) No Federal guidance to date Some states are applying policies developed for fee-for-service reimbursement to MCOs FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 14

15 Genesis of Contract Pharmacy Arrangements Statute does not address contract pharmacies Many (if not most) non-hospital CEs did not have an in-house pharmacy, limiting benefit of 340B Program to CEs and patients In 1996, HRSA permitted CEs to contract with a commercial pharmacy to dispense 340B drugs to eligible patients, on limited basis (61 Fed Reg (August 23, 1996)) One contract pharmacy per delivery site No chain pharmacy arrangements No contract pharmacy if CE operated an in-house pharmacy More robust approaches allowed pursuant to an Alternative Methods Demonstration Project (AMDP) FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 15

16 Genesis of Contract Pharmacy Arrangements HRSA issued revised guidance in 2010 (75 Fed. Reg (March 5, 2010)) Allows contracting with multiple pharmacies, pharmacy chains, and/or operating an in-house pharmacy Applies to all contract pharmacy arrangements Guidance replaces all prior guidance AMDP still available for other arrangements, e.g. network delivery models Substantial emphasis on compliance in fact, not just on paper FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 16

17 HRSA Compliance Initiatives In response to GAO report and Congressional interest, OPA has begun: Annual re-certification of all CEs, including contract pharmacy arrangements Random and targeted compliance audits of CEs (diversion and duplicate discounts) Significant uptick in 340B purchases and/or large contract pharmacy networks attract audits. FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 17

18 HRSA Compliance Initiatives Many PPACA-mandated improvements, have yet to be implemented. Secure website for posting 340B price More detailed guidance on methodologies and options for billing Medicaid Dispute resolution process FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 18

19 Future Directions Proposed Mega-Reg covering patient definition, contract pharmacies, and hospital eligibility issues expected by June, 2014 Potential patient definition issues Specialty referrals Discharge prescriptions Off-premises services Contracted providers and volunteers Patient record maintenance Case management FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 19

20 Future Directions Potential contract pharmacy provisions Formalize current guidance as binding regulations? Revise requirements regarding oversight, audit? Limit number of contract pharmacies per covered entity? Return to one contract per delivery site model? Only 18% of covered entities use contract pharmacies ( small minority, according to HRSA) 75% of those use fewer than 5 contract pharmacy arrangements There is relatively recent (March, 2010) non-regulatory guidance on contract pharmacy arrangements FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 20

21 Future Directions Will HRSA/Congress attempt to restrict 340B access to uninsured patients only? Given the wide variety of relationships that covered entities have with the individuals served, does it make sense to continue to impose a patient definition that applies to all covered entities? FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 21

22 Contact Information Michael B. Glomb Feldesman Tucker Leifer Fidell LLP th Street, NW Washington, DC (202) FELDESMAN TUCKER LEIFER FIDELLLLP Feldesman Tucker Leifer Fidell LLP. All rights reserved. 22

23 Structuring 340B Contract Pharmacy Arrangements Alan J. Arville Epstein Becker Green March 19th, 2014

24 Agenda Contract Pharmacy Process Flow HRSA s Essential Elements February 2014 OIG Report HRSA Letter on Contract Pharmacy Oversight Operational and Financial Considerations 24

25 HRSA Notice on Contract Pharmacy Arrangements HRSA issues revised guidance in 2010 Allows contracting with multiple pharmacies (previous 1996 guidance only allowed one contract pharmacy per delivery site). Requires written agreement between CE and Contract Pharmacy. Contract must address HRSA s Essential Elements. CE is expected to conduct annual independent audits. CE retains ultimate responsibility for compliance. 25

26 Contract Pharmacy Process Flow Figure 1: Typical 340B Contract Pharmacy Process Flow Health Insurer PBM Covered Entity Rx Contract Pharmacy Rx 340B Admn Data / Process Money Inventory Whol e- saler 26

27 Contract Pharmacy Service Agreement What is the 340B Contract? Contract Pharmacy Services Agreement Vendor Services Agreement 27

28 HRSA s Essential Elements Ship to, Bill to Provisions Comprehensive Pharmacy Services Patient Choice 28

29 HRSA s Essential Elements Contract Pharmacy Reporting Quarterly billing statements, status reports of collections and receiving and dispensing records. Consider role of 340B Administrator. 29

30 HRSA s Essential Elements Tracking System/Verify Patient Eligibility The Covered Entity is ultimately responsible for 340B compliance. Medicaid Duplicate Discounts Prohibited 30

31 HRSA s Essential Elements Covered Entity Independent Audits HRSA and Manufacturer Audits Contract Available to OPA 31

32 2014 OIG Report on Contract Pharmacy Arrangements OIG interviewed 30 Covered Entities (15 community health centers and 15 DSHs) and 8 administrators. Inconsistent determinations of 340B eligibility. Difficulty identifying Medicaid MCO beneficiaries. Not all Covered Entities offered discounted 340B price to uninsured patients in contract pharmacy arrangements. Most covered entities did not conduct all of the oversight activities recommended by HRSA. OIG stated that the prohibition against duplicate discounts applies to MCO Medicaid. OIG acknowledged that neither the 340B statute nor HRSA guidance requires discounted 340B prices to the uninsured. 32

33 2014 HRSA Letter on Contract Pharmacy Oversight Issued on February 4 th, 2014 to 340B Covered Entities. Stresses Vigilant Oversight of contract pharmacy arrangements. Sets forth 5 contract pharmacy oversight requirements and links to resources. HRSA expects annual audits by an independent auditor. HRSA states that it will terminate contract pharmacy arrangements where the Covered Entity is exercising no oversight. 33

34 HRSA s 5 Requirements for Contract Pharmacy Oversight Conduct independent annual audits and/or adequate oversight mechanism Develop 340B Program policies Prevent diversion Prevent duplicate discounts by carving out Medicaid or establish alternative arrangement with state Medicaid agency Maintain accurate information in the HRSA 340B database 34

35 Operational and Financial Considerations Replenishment What is the timing and process? Periodic True-Up Discontinued NDCs Slow Moving Drugs Formulary All-in or are there carve-outs? 35

36 Operational and Financial Third Party Reimbursement and Co-Payments Dispensing Fees Considerations Should result in a win-win for both the contract pharmacy and the covered entity Reports from the covered entity and contract pharmacy 36

37 Operational and Financial Considerations Designation of Wholesaler Third-Party Payor Clawbacks Retroactive Classification Ability to Suspend Services 37

38 Contract Pharmacy Agreement Checklist Are all of HRSA s essential elements covered by the contract pharmacy services Agreement? Do the operational procedures set forth in the contract pharmacy services agreement accurately reflect the actual arrangement? Can the Covered Entity and Contract Pharmacy adopt the operational procedures with minimal impact on the organization s standard workflow and drug inventory management? What is the process for terminating the agreement? 38

39 Contract Pharmacy Agreement Checklist Are the Covered Entity s and Contract Pharmacy s responsibilities under the contract pharmacy services agreement appropriate? Do the Covered Entity, Contract Pharmacy and 340B Administrator have adequate skin in the game? Has the Covered Entity and Contract Pharmacy conducted any due diligence on the proposed 340B Administrator? Will the Contract Pharmacy, Covered Entity, and 340B Administrator establish a team with representatives from each party that will meet regularly to review various aspects of the contract pharmacy arrangement? 39

40 Apexus (340B Prime Vendor) (888) Resources: Where to Go for Help HRSA s Office of Pharmacy Affairs (OPA) Health Resources and Services Administration (HRSA) (800) Safety Net Hospitals for Pharmaceutical Access (SNHPA) (202)

41 For More Information Alan J. Arville Epstein Becker Green th Street, NW Washington, DC