1/16/2014. David Pointer President, SolutionsRx

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1 David Pointer President, SolutionsRx

2 340B Program Overview Physician-Administered Drugs Contract Pharmacies 340B Compliance Expanding 340B Utilization 2

3 Federally mandated drug discount program Part of the Public Health Service Act, Section 340B, and Medicaid Rebate Program Drug manufacturers must provide front-end discounts on covered outpatient drugs purchased by specified government-supported facilities, called "covered entities," that serve the nation's most vulnerable patients Intended to provide financial relief to those facilities that provide care to the medically underserved Eligible Entities Disproportionate Share Hospitals DSH > 11.75% Federally Qualified Health Centers (FQHC) Hemophilia Treatment Centers Ryan White Programs (HIV Clinics) Title X Family Planning Clinics Critical Access Hospitals Rural Referral Centers (DSH > 8.0%) Children s Hospitals Sole Community Hospitals (DSH > 8.0%) 3

4 The covered entity has established a relationship with the individual and 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 contract or other arrangements Employees of 340B Entities Only eligible if they meet patient criteria No automatic eligibility for Covered Entity employees under selfinsured health plan HRSA: An employer relationship or insurer relationship is not a consideration in determining whether the patient is eligible for 340B drugs. 340B discounted price is based on the Medicaid rebate formula, but the discount is built into the manufacturer's or wholesaler's selling price rather than paid as a postpurchase rebate. 4

5 Covered: Outpatient prescription drugs provided to patients of the covered entity in eligible outpatient areas (e.g. RHCs, provider-based clinics, outpatient departments) Excluded: Drugs given to the patient in inpatient care settings or ineligible clinics (e.g. fee-for-service clinics) Vaccines 5

6 Major Issues Inpatient/Outpatient GPO Exclusion Applies to DSH hospitals, children s hospitals and freestanding cancer hospitals Does not apply to many others (e.g., CAH, Sole Community Hospitals) Medicaid In general, must either carve out Medicaid or bill State actual acquisition cost plus reasonable dispensing fee. Every state is different Virtual replenishment (or split-billing) software Attempts to automate purchasing between 340B, GPO and WAC accounts Many operational issues February 7, 2013: HRSA issues Policy Release to clarify that certain hospitals (DSH, Children s and free-standing cancer) cannot buy covered outpatient drugs at GPO pricing Must buy at 340B or WAC pricing, even if drug unavailable Later extended deadline to August 7, 2013 Multi-Hospital systems A negotiated lower drug price for hospital system that includes 340B hospitals is a GPO price for purpose of GPO Exclusion 6

7 Bundled Drug Issue: Are items such as IV solutions, anesthesia gas or contrast media covered outpatient drugs for purposes of 340B? Confusion arises from limiting definition in original statute Makes unclear whether to buy these at 340B, GPO or WAC pricing Manufacturer position: [I]f a covered drug is included in the per diem rate (i.e., bundled with other payments in an all-inclusive pre-visit or encounter rate), it will not be included in the Section 340B program. Baxter letter dated June 14, 2013 (quoting May 1994 Federal Register Notice). Pro-340B view: Entities that include pharmacy in their all-inclusive rates may accept drug discounts. (58 Federal Register 34058, June 23, 1993) HRSA/Apexus view: The keys here are that the entity determines its policy, documents it, and keeps auditable records that their practice matches their policy. (Apexus dated June 21, 2013) Opting out of GPO Exclusion for certain clinic sites Can do if: Different physical address; Clinic is not registered on 340B database; Clinic purchases drugs using separate pharmacy wholesale account, and; Hospital maintains auditable records showing no diversion of GPO-acquired drugs. 7

8 Prior to April 5, 2010: Covered Entities were limited to one pharmacy per site and covered entities could either operate an inhouse pharmacy or contract with only one external pharmacy. After April 5, 2010: March 5, 2010, the OPA published a Federal Register Notice (75 FR 10272) to finalize guidelines permitting a covered entity to use more than one pharmacy New guidelines effective April 5, 2010 incorporate multiple pharmacies as a standard option for 340B covered entities May also contract with mail order pharmacies 8

9 Date DSH January January 2011 < 25 January 2012 < 200 January 2013 < 1,000 9

10 Patient Covered Entity 1 2 Pharmacy dispenses medication to Patient Pharmacy bills Carrier for appropriate covered amounts Pharmacy Carrier remits payment of appropriate covered amounts to Pharmacy Pharmacy remits proceeds to Covered Entity, less agreed upon transaction fees At end of period, Pharmacy analyzes 340B dispense totals to define replenishment order Order is placed with Wholesaler to replenish dispensed drugs Wholesaler bills Covered Entity for ordered drugs at 340B prices Covered Entity pays Wholesaler for ordered drugs Carrier Wholesaler 9 Wholesaler ships drugs ordered on behalf of Covered Entity to Pharmacy Eligible covered entities must notify the OPA of intent to participate in the 340B Program and of any contract pharmacy relationships The process and type of information that must be submitted differs based upon the type of entity seeking to participate Covered entities must register with OPA during certain registration periods Once the OPA receives, verifies and processes the registration information, the covered entity is eligible to purchase pharmaceuticals at the 340B price commencing at the start of the next calendar quarter Registration Window Effective Date January 1-15 April 1 April 1-15 July 1 July 1-15 October 1 October 1-15 January 1 10

11 Prohibition on duplicate discounts Prohibition on resale/diversion Prohibition on obtaining a 340B discount on a drug purchased through a group purchasing organization (GPO) Does not apply to CAHs, Rural Referral Centers or Sole Community Hospitals 11

12 State Medicaid programs receive rebates on drugs purchased for Medicaid patients Drugs purchased through the 340B Program may not be subject to both a 340B discount and a Medicaid rebate Covered Entity is prohibited from requesting payment from Medicaid for a drug purchased with a 340B discount if the drug is also subject to a Medicaid rebate In states that allow it, covered entity may bill Medicaid for 340B outpatient drugs used for Medicaid patients, but may only bill the 340B drugs at the acquisition price plus a dispensing fee established by the state Medicaid agency Covered entities may not provide medications purchased under the 340B Program to persons who are not considered patients of the covered entity The term patient is not defined in Section 340B HRSA published guidelines regarding the definition of a patient in October 1996 Need new patient definition Common problems: Distribution to persons in ineligible settings Employees 12

13 HRSA is engaging in systematic audits of all 340B entities Announced in March 5, 2012 Program Notice Both random and targeted Audit-results delayed Currently have results from 49 audits (as of 11/4/13) Findings: No adverse findings 18 Duplicate discounts 18 Diversion 15 Incorrect database record 15 Common Internal Audit Issues: Accuracy of Registration with HRSA Particularly child sites Accuracy of data feed to split-billing software Appropriate location Appropriate drugs Does it consistently capture 11-digit NDC? Generic drugs Appropriate quantity Multiplier issues Infusion drugs Medicaid billing issues GPO billing issue 13

14 Contract pharmacy networks Specialty pharmacies Mail-order specialty pharmacies may be contract pharmacies Discharge script programs HRSA: 340B drugs can be used for discharge prescriptions to the extent that the drugs are for outpatient use. Hospital-owned retail pharmacies Consider potential GPO/WAC impact 14

15 David B. Pointer President (417)

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