This training will begin at 12:00pm ET. WebEx Technical Support: Or us at

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1 This training will begin at 12:00pm ET WebEx Technical Support: Or us at

2 Works with HIV/AIDS service organizations and community-based organizations to navigate the changing health care landscape Goals: Improve organizational sustainability and effectiveness for ASOs/CBOs Improve care along the HIV continuum (the treatment cascade) Methods Webinars, learning tools, issue briefs Individualized technical assistance for Ryan White-funded ASOs/CBOs

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4 The Fenway Institute Research, education, & health policy Fenway Health A federally qualified health center with 25,000 patients, about 10% of whom are living with HIV Ryan White Part C provider: Largest provider of HIV care in New England

5 AIDS United works to end the AIDS epidemic in the U.S. through strategic grant making, capacity building, policy advocacy, technical assistance, and formative research. (Aids United Homepage) ARCW is home to the ARCW Medical Center, which provides integrated care and services to more than 3,000 people living with HIV through its CMS approved Medical Home. ARCW has provided training and TA to ASOs in 22 states. (ARCW Homepage)

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10 Download copies of today s slides from our website: National HIV Center Homepage Today s presentation will also be archived and available to view on-demand within a week. For this archived webinar, as well as all of our previous webinars, please visit the webinar section of our website: National HIV Center Homepage

11 Greg Doggett

12 Greg Doggett, JD, CAE Counsel, Legal and Policy Affairs 340B Health Thursday, June 16, :00-2:00 PM EDT

13 This presentation is not to be construed or relied upon as legal advice.

14 Program Overview Key Program Requirements Audits & Recertification Legislative Developments Regulatory Developments Resources

15 340B Program Overview

16 Nonprofit association that represents over 1,200 hospitals in the 340B program all hospital types At the table since inception of program in 1992 The only advocacy organization focusing exclusively on 340B hospitals Provides technical assistance on 340B issues

17 Program created in 1992 to give safety-net providers discounts on outpatient drugs Administered by the Office of Pharmacy Affairs (OPA) within the Health Resources and Services Administration (HRSA) In order to have their drugs reimbursed by Medicaid and Medicare Part B, manufacturers must participate in the 340B program by entering a Pharmaceutical Pricing Agreement with the federal government Program purpose: To help eligible safety net providers stretch scarce Federal Resources as far as possible, reaching more eligible patients and providing more comprehensive services. Source: H.R. Rep. No (II), at 12 (1992).

18 Provide drugs or services for free or at reduced cost to patients who cannot afford them Drugs provided at market rates to insured patients, generating funds that providers use to improve and expand patient care

19 Ryan White HIV/AIDS Program Grantees Hospitals Disproportionate Share Hospitals Critical Access Hospitals Sole Community Hospitals Rural Referral Centers Freestanding Children s Hospitals Freestanding Cancer Hospitals

20 Health Centers Federally Qualified Health Centers (FQHC) FQHC Look-Alikes Native Hawaiian Health Centers Tribal/Urban Indian Health Centers Specialized Clinics Black Lung Clinics Hemophilia Treatment Centers Title X Family Planning Clinics Sexually Transmitted Disease Clinics Tuberculosis Clinics

21 According to the HRSA website, the 340B program covers the following 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); or FDA-approved insulin

22 Brand-name drugs (except clotting factor and drugs approved exclusively for pediatric use) Generally, 340B price is average manufacturer price (AMP) 23.1% of AMP AMP: The average price paid to manufacturers by wholesalers for drugs distributed to retail community pharmacies and retail community pharmacies that purchase drugs directly from manufacturers. Additional discount if best price is lower or price increased more quickly than rate of inflation Best price: The lowest price paid to a manufacturer for a brand name drug, taking into account rebates, chargebacks, discounts, or other pricing adjustments, excluding nominal prices

23 Generic drugs & prescription OTC drugs: AMP 13% of AMP October 2015: Congress passed legislation that will require manufacturers to provide greater discount if price of generic drug increased more quickly than rate of inflation Goes into effect January 1, 2017 Clotting factor and drugs approved exclusively for pediatric use: AMP 17.1% of AMP

24 Key Program Requirements

25 Key legal/compliance requirements for 340B program: 340B Eligibility Eligible Patients/Patient Definition (e.g., generally any insured or uninsured outpatients of provider) Medicaid & 340B/Duplicate Discount Prohibition Contract Pharmacy This presentation focuses on legal/compliance requirements as they exist today The mega-guidance, released by HRSA in August 2015, proposed significant changes to the types of patients that can use 340B, but has not been finalized Could substantially reduce the number of patients eligible to receive 340B drugs HRSA evaluates compliance through selective audits of covered entities (CEs) and annual recertification Policies and procedures in these program areas (and others) are critical!

26 Entities are not eligible for the program unless they register and are listed on the OPA database If there is a change in a Covered Entity (CE) s eligibility status, the CE has a responsibility to immediately notify OPA and should stop purchasing drugs through the 340B program CEs must recertify their eligibility every year and attest to ongoing compliance with key program requirements

27 Eligible Patients: Patients who are eligible to receive 340B drugs Diversion: Provision of 340B drugs to ineligible patients The 340B statute requires CEs to avoid committing diversion How does a CE avoid diversion? Create and follow policies and procedures that: Describe how you make sure 340B drugs are not given to ineligible patients More complicated for some providers than others If applicable, explain the circumstances under which a patient is 340Beligible when a script is written offsite (e.g., documenting referrals) Describe process for inventory management Describe how you conduct self-audits to ensure diversion is not occurring

28 HRSA s 1996 guidelines (61 Fed. Reg (Oct. 24, 1996)): The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual s care; and 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 or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity; and 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. Third part applies to HRSA grantees only and not to hospitals

29 HRSA s 1996 guidelines (cont d) 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 ADAP if so registered as eligible by the state program

30 Examples of Ineligible Patients Individual who receives prescription from CE s pharmacy, but does not receive any other health care service from the CE Individual who does not receive a health care service within the scope of the HRSA grant (other than perhaps dispensing of a drug for subsequent selfadministration or administration in the home setting) Failure to follow these rules could result in repayment to manufacturers

31 HRSA 1994 Covered Entity Guidelines: If individuals other than eligible patients receive drugs from CE or CE s pharmacy, must establish adequate safeguards to prevent diversion (e.g., separate purchasing accounts and dispensing records) CEs can keep 340B inventory physically separate or use a virtual inventory system Virtual inventory system considerations: Areas that provides services to both eligible and ineligible patients NDC-by-NDC replenishment

32 Initial Consideration: Whether CE will use 340B drugs for Medicaid patients A manufacturer that participates in the 340B program must also participate in the Medicaid drug rebate program The 340B law protects a manufacturer from having to pay a 340B discounts and Medicaid rebate on the same drug (i.e., duplicate discount ) Federal and state rules in place to protect manufacturers Factors to Consider Medicaid reimbursement for 340B drugs and non-340b drugs Size of CE s Medicaid population Any state billing requirements for 340B drugs (e.g., actual acquisition cost (AAC) billing, 340B claim identification)

33 Carving in versus carving out fee-for-service (FFS) Medicaid claims: Carving in use 340B drugs for Medicaid patients CE lists on OPA Medicaid Exclusion File Database all Medicaid billing numbers or National Provider Identifiers used by the entity to bill Medicaid for 340B drugs Carving out no 340B drugs for Medicaid patients Check box on OPA website indicating entity will not bill Medicaid for 340B drugs Multiple pharmacies and Medicaid billing numbers Where the same Medicaid billing number is used for multiple locations, the CE must either carve in or out for all of those locations Failure to follow these rules could result in repayment to manufacturers or the state

34 Medicaid Managed Care claims became subject to rebates under the Affordable Care Act in 2010 Centers for Medicare and Medicaid Services (CMS) published a proposed regulation in June 2015; final regulation published in May 2016 States must require Medicaid Managed Care organizations (MCOs) to identify and exclude 340B claims from utilization reports they submit to states Does not require a particular mechanism Granted provider groups request to permit a state to allow entities to submit 340B claims data directly to the state instead of MCOs Contracts between MCOs and states starting on or after July 1, 2017 must comply Entities may have already seen or may begin to see MCO agreements with 340B terms before July 1, 2017

35 Some states already require CEs to identify 340B Medicaid MCOs claims when billing or at some point afterwards Many states are silent 340B Health recommends checking your state s rules before using 340B for Medicaid MCO patients Department of Health and Human Services Office of Inspector General 2016 Work Plan: Looking at risk of manufacturers being subject to both a 340B discount and Medicaid rebate on an MCO claim and states prevention efforts

36 CMS published final rule on covered outpatient drugs ( Final AMP Rule ) in February 2016 Requires states to pay for FFS retail drugs based on AAC, plus a professional dispensing fee CMS comments on rule say: 340B rates can be based on 340B acquisition cost data or 340B ceiling prices States can look at costs associated with buying 340B drugs and are encouraged to look at 340B dispensing costs But CMS letter to states says payment should not exceed the 340B ceiling price

37 Impact of AAC rule States must include 340B rates in state plans and must submit plans to be in effect April 1, 2017 Existing 340B AAC billing policies may be consistent with the new rule States that pay the same rate for all drugs will need to revise plans States without written 340B policies will need to implement one Could provide clarity to 340B entities

38 A CE may enter into a contract pharmacy arrangement where the pharmacy dispenses 340B drugs to the entity s 340B-eligible patients The CE purchases 340B drugs, which are shipped to the contract pharmacy CEs bear the full responsibility for compliance with HRSA requirements to prevent diversion and duplicate discounts Tracking system to prevent diversion System to verify patient eligibility

39 CE must register contract pharmacies on OPA database Four quarterly registration periods Registration: Jan 1-15; April 1-15; July 1-15; Oct 1-15 Start Dates: April 1 July 1 Oct 1 Jan 1 CE s Authorizing Official (AO) will receive from HRSA to certify arrangement AO must certify arrangement within 15 calendar days from time the online registration request was submitted or arrangement will be deleted

40 CEs should establish policies and procedures in key 340B program areas before using 340B drugs! Policies and procedures are important! Allows for CEs to evaluate their use of the 340B program in key areas Increases the likelihood of preventing, identifying, and correcting mistakes or improper activity Evaluated by HRSA during program audits

41 Key Areas: Patient Definition & Diversion Duplicate Discounts & Medicaid Billing Inventory Management Contract Pharmacy (if applicable) Enrollment & Registration Oversight, Including Self-Audits

42 Audits & Recertification

43 340B statute permits HRSA and manufacturers to audit CEs September 2011 Government Accountability Office report recommended selective audits of CEs HRSA began CE audits in January 2012 HRSA chooses entities they believe most likely to be at risk Risk determination is based on volume of purchases, complexity of program administration, and use of contract pharmacies HRSA also conducts targeted audits based on allegations of 340B violations Heard from a covered entity that their audit was due to the failure of a manufacturer and a provider to agree on a policy issue As of April 27, 2016: 470 CE audits and 1 manufacturer audit

44 Pre-audit - notice and coordination call, data request (4 weeks or longer) Audit (1-3 days) Audit follow-up Final audit report (most entities are receiving this within 3 months) 30 days to challenge findings (4 months to receive HRSA response) If accepting findings, 60 days to submit corrective action plan (CAP) HRSA will post notice regarding violations on website No known plans by HRSA to ever remove notice No statute of limitations regarding repayment HRSA leaves it up to CE and manufacturer to determine terms of repayment, including time period Judicial review Since no known higher level of review within HRSA, CE probably would have to ask court to review audit findings if wanted to challenge them further Second audit for CEs that had repayment finding

45 All CEs must recertify annually As part of recertification, CE must certify that: Registration information in OPA database is complete accurate, and correct Meets eligibility requirements Will comply with all program requirements Maintains auditable records related to compliance with program requirements Any contract pharmacy arrangements will comply with program requirements and guidelines Will notify OPA regarding change in program eligibility or noncompliance May be liable to manufacturer for breach of program requirement and, depending upon circumstances, maybe be removed from the program

46 Legislative Developments

47 March 2015: House Energy & Commerce (E&C) Committee s Health Subcommittee held first Congressional hearing on 340B in a decade Both Democratic and Republican supporters of program Interest expressed in amending 340B law to give HRSA more regulatory authority and to add additional hospital reporting requirements

48 May 2015: Changes to 340B proposed only days before E&C Committee markup of 21 st Century Cures Bill Proposed changes were rejected after 340B provider community expressed concerns about provisions being problematic and imbalanced Members of Congress continue to raise concerns about 340B at health care hearings 340B likely to continue to generate questions from members of Congress, but, as of now, no hearing scheduled and no bill introduced

49 Regulatory Developments

50 HRSA proposed new guidance for 340B in August 2015 Addressed all major areas of the 340B program, including the definition of patient Some organizations representing HRSA grantees expressed concerns in comments on mega-guidance (340B Mega Guidance Concern Comments) Concerned about one-size-fits-all approach, especially for patient definition [E]ncourage[d] HRSA/OPA to establish policies that reflect grantees unique structures and purposes Public comment period closed in October 2015 Over 1,200 comments were submitted Recent HHS regulatory agenda predicts December 2016 release of final guidance, but no legal deadline

51 Regulations 340B ceiling price calculations and civil monetary penalties for manufacturers that knowingly and intentionally overcharge CEs Mandatory and binding dispute resolution process for CEs and manufacturers 340B ceiling price database

52 Resources

53 340B Health website (340B Health Homepage) 340B Coalition Conference 20 th Annual 340B Coalition Summer Conference July 11-13, 2016 Washington, DC 340B Summer Conference OPA website (HRSA OPA Site) Prime Vendor Program website (Prime Vendor Program Site 340B Drug Discount Video Explanation (340B Explanation Video)

54 Greg Doggett Counsel, Legal & Policy Affairs 340B Health