340B: WHAT ATTORNEYS NEED TO KNOW TODAY, TOMORROW AND IN THE FUTURE. March 3, 2016 ABA Emerging Issues in Healthcare Conference San Diego, CA

Transcription

1 340B: WHAT ATTORNEYS NEED TO KNOW TODAY, TOMORROW AND IN THE FUTURE March 3, 2016 ABA Emerging Issues in Healthcare Conference San Diego, CA

2 2 Presentation Outline What you need to know Today 340B Program Overview What you need to know Tomorrow Current compliance obligations Enforcement actions 2015 Proposed guidance What you need to know in the Future Hot issues and 2016 outlook Action steps

3 3 What You Need to Know Today

4 4 340B Program Overview Statute Veterans Health Care act of Section 340B of the Public Health Service Act (42 U.S.C. 256b) Provides limited rulemaking authority Agency / Regulations Administered by the U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA), Office of Pharmacy Affairs (OPA) Program is administered via HRSA rulemaking and various forms of guidance documents (including guidance from the contracted technical assistance provider- Apexus) Primary Resources

5 5 340B Program Basics OPA State Purpose: The 340B Program enables covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. General Mandate: Drug manufacturers must participate the 340B Program in order to participate in Medicaid Basic Elements: 1) Covered Outpatient Drugs Drug manufacturers must provide rebates on covered outpatient drugs 2) Covered Entity Only for drugs dispense by a covered entity (or contract pharmacy) 3) Eligible Patients Only for dispensing to eligible patients of the covered entity

6 6 Covered Outpatient Drugs FDA-approved prescription drugs Over-the-counter (OTC) drugs written on a prescription Biological products that can be dispensed only by a prescription (other than vaccines) FDA-approved insulin

7 7 Covered Entities Hospitals Non-profit with formal governmental powers or a contract with state or local government OR be owned/operated by state or local government Must meet disproportionate share hospital payment thresholds Disproportionate Share Hospitals; Cancer; Children s - > 11.75% Rural Referral Centers and Sole Community Hospitals - 8% Critical Access Hospitals- no DSH percentage requirement Subject to restrictions on purchase of outpatient drugs through group purchasing arrangements and/or with orphan designation Federal Grantees/Programs Entity eligibility restricted to grant/program Does not extend to entire organization

8 8 Patient Current Definition 1) Covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual's health care; - and - 2) 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 (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity; - and - 3) 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 share hospitals are exempt from this requirement.

9 9 Patient Current Exclusion An individual will not be considered a patient of the covered entity if the only health care service received by the individual from the covered entity is the dispensing of a drug or drugs for subsequent self-administration or administration in the home setting. Exception: Individuals registered in a State-operated or funded AIDS Drug Assistance Program (ADAP) that receives Federal Ryan White funding ARE considered patients of the participant ADAP if so registered as eligible by the State program.

10 10 Patient Proposed Definition Receives a health care service at a facility or clinic site which is registered for the 340B Program and listed on the public 340B database. Receives a health care service provided by a covered entity provider who is either employed by the covered entity or who is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider. Receives a drug that is ordered or prescribed by the covered entity provider as a result of the service described in (2). Health care is consistent with scope of the Federal grant, project, designation, or contract Drug is ordered or prescribed pursuant to a health care service that is classified as outpatient. Patient records are accessible to the covered entity and demonstrate that the covered entity is responsible for care.

11 11 What You Need to Know Tomorrow

12 12 340B Compliance Primary Focus: No Diversion Transfer of 340B drugs to ineligible individuals or organizations No Duplicate Discounts 340B discount and Medicaid rebate on the same prescription/order Additional Considerations: Must maintain auditable records For certain hospitals Group purchasing prohibition Orphan drug exclusion

13 13 340B Enforcement HRSA Audits Covered entities and manufacturers Manufacturer Audits Manufacturer inquires Range of specificity Self-Disclosures

14 Proposed Guidance Covers most areas of covered entity and manufacturer compliance and enforcement Focus has been on proposed definition of patient Many significant (and unclear) changes, for example: Definition of covered outpatient drug Eligibility of off-site locations Diversion through accumulation Self-disclosure obligations

15 15 What You Need to Know in the Future

16 16 Hot Issues and 2016 Outlook Medicare Part B payment proposals Proposed and final guidance and regulations Audits Continued scrutiny of certain issues 340B revenues by covered entities Scope of contract pharmacy usage Possible legislative action

17 17 Medicare Part B Payment Proposals Multiple entities are reviewing and considering interplay of 340B pricing with Medicare Part B reimbursement rates OIG Report ( Methodology Amount saved by Part Amount retained by Covered Entities B (2013) (2013) 100% of ASP $162 million $1.11 billion Equally shared savings (in $638 million $638 million 2013, this would have been ASP minus 14.4%) Ceiling Price plus 6% of ASP $1.06 billion $211 million MedPAC Recommendation ( /meetingdetails/january-2016-public-meeting) Reduce Medicare Part B drug payments by 10% of ASP (~$300M in savings per MedPAC) Redistribute savings through uncompensated care pool based on Medicare cost report worksheet S-10 data

18 18 Proposed and Final Guidance/Regs HRSA is considering various impactful guidance documents and regulations These include: Final mega-guidance Proposed mega-guidance issued 8/28/15 80 Fed. Reg. 52,300 Final Manufacturer Civil Monetary Penalties Proposed rule issued 6/17/15 80 Fed. Reg. 34,583 Proposed Administrative Dispute Resolution Recent AMP Final Rule also impacts 340B pricing Edits to 42 C.F.R. Part 447

19 19 Audits Focus on drug diversion and duplicate discounts Ongoing HRSA audits Available by FY at: Increasing manufacturer audits and inquiries High variability by manufacturer, product portfolio, and reimbursement profile Interplay of contract auditors

20 20 Continued Scrutiny Covered entity 340B revenues Grassley Letter to NC hospitals on 340B revenues: Contract pharmacies Carolinas UNC Duke 2008 $12,970, $16,697,500 $33,087,329 $88,953, $16,910,956 $38,451,076 $109,700, $21,065,620 $52,580,763 $131,759, $65,391,050 $135,539,459 Over 5,000 covered entities using approximately 17,000 contract pharmacy locations

21 21 Possible Legislative Action Increased congressional interest in 340B Senator Grassley concerns Letters to HRSA and NC Hospitals (2013) Regarding covered entities usage of 340B revenues Letter to Walgreens (2013) Regarding 340B contract pharmacy business Letter to Senate requesting hearing (2015) Regarding GAO report on Part B pricing

22 22 Action Steps Closely follow relevant news sources for 340B developments Keep your ears to the ground Many compliance developments are communicated between covered entities OPA intends to produce a sentinel effect through audit findings Understand both compliance guidance and 340B program operations The devil really is in the details Providing meaningful guidance requires an intimate understanding of the facts Each 340B program is unique- do not make assumptions regarding operations or implementation

23 QUESTIONS? 23