11/5/2015 A&A PERSPECTIVE. HFMA Region 9 Conference November 15, Tracy Young, CPA, Partner Brian Bell, Director
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1 340B MEGA GUIDANCE FROM AN A&A PERSPECTIVE HFMA Region 9 Conference November 15, 2015 Tracy Young, CPA, Partner Brian Bell, Director 1
2 MATERIAL COVERED TODAY The Health Resources and Services Administration (HRSA) has published the longawaited 340B Drug Pricing Program Omnibus Guidance, more commonly referred to as the Mega Guidance. This presentation will cover recommended changes & clarifications to a number of 340B Drug Pricing Program items, including the Group Purchasing Organization (GPO) Exclusion, patient definition & Medicaid Managed Care Organizations (MCO) MATERIAL COVERED TODAY This presentation has been designed to discuss certain proposed changes, as well as discuss areas where covered entities may see greatest impact to their 340B Drug Pricing Program (340B Program) This presentation will cover certain Accounting & Auditing issues related to the 340B program This presentation should not be relied upon as legal advice 2
3 QUESTION 1 Has your organization reviewed the Mega Guidance and analyzed how this may impact your 340B Drug Pricing Program? Yes No Unsure 340B started with Public Health Services Act Evolution of 340B Audit guidelines established. Patient definition clarified. Contract pharmacy process established HRSA guidance on contract pharmacies allowing multiple relationships. ACA expands eligibility to include five new entities HRSA begins audits & recertification process established Federal judge invalidates HRSA s orphan drug regulation Guidance on outpatient clinics released by HRSA Medicaid duplicate discount prohibition carve in/carve out On August 28, 2015, HRSA released 340B Omnibus Guidance (Mega Guidance) Orphan drug exclusion 2015 Future GPO prohibition guidance HRSA issues final rule on orphan drug exclusion Compliance Independent Audits Quarterly Auditable Records 6 // experience access 3
4 340B PROGRAM OVERVIEW PURPOSE Federally mandated drug pricing program Part of Public Health Service Act, section 340B & Medicaid rebate program Drug manufacturers must provide front end discounts on covered outpatient drugs purchased by covered entities Provides discounts on outpatient drugs purchased by safety net providers for eligible patients Intended to provide financial relief to facilities that provide care to medically underserved Average savings of 25 50% for eligible covered entities on outpatient drugs Purpose of savings Provide discounts on drugs to patients Expand services by provider to patients Provide services to more patients 8 // experience access 4
5 QUESTION 2 Has your entity undergone an HRSA or manufacturer audit? HRSA Manufacturer Both Unsure /340b drugpricing program omnibus guidance 5
6 TIMELINE & PROCESS August 28, 2015 Proposed guidance released by HRSA October 27, 2015 Comments on proposed guidance were due Mega Guidance is proposed guidance & not formal regulation. HRSA does not have formal rule making authority; however, HRSA can issue interpretation &guidance. Guidance is currently proposed & may never be final interpretation Advocates & opponents that submitted comments 340B Health Pharmaceutical Research and Manufacturers of America American Hospital Association Healthcare Financial Management Association BKD also submitted comments Covered entities should be preparing to evaluate impact when finalized GPO EXCLUSION CLARIFICATION For hospitals enrolled as DSH, children s hospital or freestanding cancer hospital This clarification extends GPO prohibition to any pharmacy owned or operated by a covered entity registered as a DSH entity If a covered entity purchases from GPO as a last resort & documents appropriately, covered entity will not be considered in violation of GPO exclusion Extremely important due to drug shortages Prime vendor program is not considered a GPO subject to this prohibition 6
7 PATIENT DEFINITION Service provided in a location not listed in 340B database is not considered an eligible location Ensuring child sites are registered will continue to be a critical compliance element An individual is not considered a covered patient of covered entity if his or her care is classified as inpatient & billed as inpatient Historically, a patient who was in emergency room, observation or other outpatient area & was later admitted as an inpatient was eligible for 340B drugs up to time of admission Prescription must be written or ordered while patient is classified as outpatient based on payor billing rules Prescriptions written as part of an inpatient stay (discharge prescriptions) often filled under meds to beds program or subsequently through contract pharmacy relationships are no longer considered 340B eligible dispensations PATIENT DEFINITION An individual who receives follow up care at a private practice (non covered entity) location is not eligible to receive 340B drugs Individuals must receive health care services from a provider either employed by or an independent contractor of covered entity such that covered entity may bill for services on behalf of provider Previously HRSA required that the provider be employed by, contracted with or had other arrangements with the covered entity Faculty practice arrangements & established residency, internship, locum tenens & volunteer health care provider programs are examples of covered entity provider relationships that would qualify Physician privileges or credentials at a covered entity are not sufficient to demonstrate an individual is a patient of the covered entity for 340B purposes Referral prescriptions will only be 340B eligible if eligible provider has written prescription Covered entity must maintain records of individual s health care Employees must qualify as an eligible patient & are not automatically 340B eligible due to employment with covered entity An individual would not be considered a patient of a covered entity whose only relationship to individual is dispensing or infusion of a drug. Dispensing of or infusion of a drug alone, without a covered entity provider to patient encounter, does not qualify an individual as a 340B eligible patient 7
8 QUESTION 3 Does your entity currently utilize contract pharmacy relationships? Yes more than five Yes less than five No Unsure MEDICAID & MEDICAID MANAGED CARE Covered entities are now able to make a determination for both Medicaid Fee for Service & Medicaid Managed Care Organizations when determining to carve in or carve out Medicaid Prevention of duplicate discounts remains requirement of covered entity Critical for covered entity to maintain dialogue with state Medicaid agencies to prevent duplicate discounts 8
9 CONTRACT PHARMACY ARRANGEMENTS HRSA defines a contract pharmacy as a pharmacy not covered by covered entity or child site Under contract pharmacy arrangements, both Medicaid FFS & Medicaid MCO dispensations will be excluded from 340B Drug Program unless a welldocumented plan from covered entity, managed care company & state Medicaid agency clearly states how duplicate discounts will be mitigated. t Plan must be submitted to & approved by HRSA INDEPENDENT AUDIT EXPECTATION Mega Guidance emphasizes continued importance & expectation of an annual independent audit being performed HRSA is proposing standards for audits & quarterly reviews of contract pharmacy arrangements to ensure compliance efforts result in Early identification of problems Implementation of corrections Corrective action plans Prevention of future compliance issues Maintain i auditable data for a period of not less than five years 9
10 INDEPENDENT AUDITS HRSA S VIEW HRSA believes covered entities that do not have regular reviews and audits completed of their contract pharmacy operations are at increased risk for compliance issues Annual audit of each location will provide covered entities with Regular opportunity to review & reconcile 340B patient eligibility information Prevent diversion Covered entity should compare 340B prescribing records with contract pharmacy s dispensing records on at least a quarterly basis to prevent Diversion Duplicate discounts Conducting these audits using an independent auditor will ensure pharmacy is following all 340B program requirements & provide covered entity with ability to timely report any violations, if applicable SEVEN KEY COMPLIANCE AREAS 10
11 RECENT DEVELOPMENTS Orphan drug ruling Bipartisan Budget Act of 2015 ACCOUNTING & AUDITING ISSUES WHAT ARE YOUR TOP RISKS RELATED TO 340B? Do you know what your top risks are? Do your risks include all your registered sites, contracting pharmacies, etc.? How do you plan to minimize these risks? How will these risks be identified? 11
12 ACCOUNTING & AUDITING ISSUES Have you experienced a HRSA audit or an independent external review of your participation in the program? Results? Is your internal audit department testing your 340B participation throughout the year? Results? Have you or HRSA determined that a payback to manufacturers is necessary? If so, what are the notification requirements? How to determine the accrual and for how long will this accrual remain on the books? RECOMMENDATIONS Understand how these proposed changes may impact your 340B Program Make certain to have up to date & robust policies & procedures Form a 340B compliance committee that meets several times a year Include CEO, CFO, CNO, pharmacy, IT, medical records Perform audits & compliance reviews regularly l Understand your 340B Program benefits & how those benefits are used by your covered entity 12
13 ADDITIONAL RESOURCES QUESTIONS? 13
14 THANK YOU! FOR MORE INFORMATION Tracy Young, CPA Brian Bell Partner Director
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