Transcript Recommending a Strategy

2015 H FM A
A nnual U pdate
January 30, 2015
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340B Drug
Pricing Program
Vicki Mueller, CPA
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Outline
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340B Drug Pricing Program Overview
340B Pricing
340B Eligibility
340B Program in Operation
340B Contract Pharmacy
340B Regulatory Requirements and Compliance
Audit Procedures and Questions to Ask
Questions
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340B Dr ug Pricing
P r o g r a m O ve r v i e w
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340B Drug Pricing Program Overview
• The 340B Drug Pricing Program (“340B” or the “Program”) is a federal
program that requires drug manufacturers participating in the Medicaid
drug rebate program to provide outpatient drugs to enrolled “covered
entities” at or below the statutorily defined ceiling price.
• The Program is administered by the Office of Pharmacy Affairs (OPA).
• OPA and drug manufacturers have the right to conduct compliance audits
of participating facilities. A clear audit trail must be created to remain in
compliance with the regulations of the program.
• To be eligible for 340B drugs:
− Patient must be an outpatient
− Treated at a covered entity
− Prescribed by an eligible provider
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340B Drug Pricing Program Overview
Covered Entities
• Critical access hospitals (CAHs)
• Disproportionate share hospitals (DSHs) with a DSH adjustment factor of
greater than 11.75%
• Sole community hospitals (SCHs) with a DSH adjustment factor of 8% or
greater
• Children’s hospitals
• Ryan White HIV/AIDS programs
• Federally qualified health centers
Eligible Providers
• Employed providers
• Contracted providers
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340B Drug Pricing Program Overview
Intent of the 340B Program
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340B Drug Pricing Program Overview
Enrollment Procedure
• http://www.hrsa.gov/opa/updates/hospitalregistrationoverview.html
• Click on “Hospital Registration Instructions”
− http://www.hrsa.gov/opa/files/hospitalreginfo.pdf
• Enrollment Deadlines
Register
January 1-15
April 1-15
July 1-15
October 1-15
Start Date
April 1
July 1
October 1
January 1
• Recertification is required annually after enrollment into the Program to
remain in the Program.
• Entities must notify OPA whenever there is a change in their eligibility.
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340B Pricing
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340B Pricing
A typical 340B hospital can expect to save approximately 25% off of the cost
of drugs used for outpatient services.
• Savings are typically greatest for high-cost brand name drugs
− Some drugs have savings approaching 95%+
− Hospitals with large amounts of oncology, dialysis, or specialty
pharmaceutical usage could save more through 340B unless using
Orphan drugs.
Drug Name
Est. GPO Cost
Est. 340B Cost
Neulasta 6mg/0.6mL
$2,520
$1,810
Gemzar 1GM VL 50mL
$720
$0.01
Lovenox 40mg PFS
$180
$140
Humalog 10mL
$45
$0.10
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340B Pricing
100.0%
80.0%
60.5%
51.7%
49.0%
47.9%
34.6%
nt
r
co
A
V
F
B
ig
Fr
ee
ac
t
P
ou
r:
FC
34
0B
S
FS
eb
at
e
M
ed
ic
ai
d
R
A
A
M
P
0.0%
W
P
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Data derived from Prescription Drugs: Expanding Access to Federal Prices Could Cause Other Price Changes, U.S. General Accounting Office,
GAO/HEHS-00-118, August 2000 and How the Medicaid Rebate on Prescription Drugs Affects Pricing in the Pharmaceutical Market, Congressional Budget Office
Papers, January 1996.
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340B Eligibility
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340B Eligibility
The Medicare Cost Report plays a critical role in determining 340B
eligibility and cost savings.
Eligibility – For non-CAH hospitals, Worksheet E, Part A identifies the
DSH adjustment factor. Hospitals must demonstrate a DSH adjustment
factor of greater than 11.75% for DSH hospitals or greater than 8% for
SCH and RRC hospitals.
Qualified Locations – Once enrolled, 340B drugs can only be used in
reimbursable outpatient cost centers as determined by Worksheets A
and C, lines 50 to 118. Retail pharmacy prescriptions are qualified for
340B if they relate to care provided to an outpatient in a reimbursable
cost center on Worksheets A and C, lines 50 to 118.
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340B Patient Definition
An individual is a “patient” of a covered entity and eligible for 340B
drugs only if:
• The covered entity has established a relationship with the individual, such
that the covered entity 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 contractual or other arrangements (e.g., referral for
consultation) such that responsibility for the care provided remains with
the covered entity.
• 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
covered entity is the dispensing of a drug or drugs for subsequent selfadministration or administration in the home setting.
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340B Patient Definition (in plain English)
In order for a patient to be eligible for 340B in a hospital setting, they
must:
• Be an outpatient at the time the drug is administered.
• Receive the drug in a reimbursable cost center on Worksheet A and C,
lines 50 to 118.
• Receive the care from an employed or contracted clinician.
• Have a record at the hospital of the care provided.
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340B Patient Definition (in plain English)
In order for a patient to be eligible for 340B in a retail pharmacy setting,
they must:
• Have received outpatient care from the hospital in a reimbursable cost
center on Worksheets A and C, lines 50 to 118.
• The drug must be related to the care provided by the hospital
(responsibility for the care).
• Receive the care from an employed or contracted clinician.
• Have a record at the hospital of the care provided.
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340B Pr og r am in Oper ation
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340B Program in Operation
• Hospital must file application for 340B status with the OPA
• Separate 340B account(s) is established with existing drug wholesaler
− Purchasing system remains the same
− New account contains 340B prices
• Hospital Pharmacy department purchases eligible drugs on 340B account
and all other drugs on GPO account, except for DSH hospitals
• Wholesaler delivers drugs from both purchase orders
• Drugs purchased direct from a manufacturer can be obtained at 340B
prices
• No need for separate inventory if tracking system is in place
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340B Virtual Inventory Process
Patient receives a drug as
part of an outpatient service
at 340B hospital
340B drugs are placed into
inventory and can be used for
any patient
Information system is queried
for outpatient drug charges
Wholesaler ships drugs to
hospital
Patient charges are converted from
charge code units to package equivalent
amounts and associated with NDC
dispensed
Eligible drugs are ordered on
the 340B account
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340B Contr act Phar macy
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340B Contract Pharmacy
Benefits of a Contract Retail Pharmacy
• Prescriptions are filled in the usual manner
− 340B use is invisible to the customer
• Reimbursement is unaffected for non-Medicaid prescriptions
− Medicaid is subject to rebate/duplicate discount limitations or carve-out
for 340B inventory only
• Cost savings can be achieved for all qualified patients
− 340B savings can average 30% – 40%
• Cost savings is realized and revenue is received by the hospital without
any significant investments in personnel, equipment, or infrastructure
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340B Contract Pharmacy
Operationalizing a 340B Contract Pharmacy
• 340B in this type of pharmacy requires a two-part test on all prescriptions:
•
•
− Did the customer in the pharmacy receive an outpatient health service
from the 340B covered entity within a preceding period of time?
~ (Defined as a reasonable length of time determined by the Hospital,
commonly used is “within the last 12 months”)
− Was the health service proximal to the prescription filled?
~ (i.e., a hospital chest pain patient filling a blood pressure medication
would be deemed qualified whereas, the same patient filling a
prescription for a skin rash would not because the prescription isn’t
proximal to the service provided by the 340B hospital)
340B inventory must be invoiced to the enrolled hospital
Revenue pass-through and dispensing fees must be calculated, tracked,
and paid per the contract terms
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Retail Pharmacy Inventory Process
A prescription is
written for the patient
at discharge
A patient is
discharged
from the 340B
hospital after
receiving a
qualified
service
The patient sends the
prescription to the
contracted pharmacy
Revenue from
340B qualified
prescriptions less a
dispensing fee is passed
through to the hospital
The pharmacy fills
the prescription from
inventory on hand.
Billing and collection
occurs. The claim is
tested for 340B
eligibility.
Replacement inventory
for the qualified
prescriptions are
ordered on a 340B
account billed to the
hospital
The hospital pays all
invoices for 340B
inventory
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Example Prescription
Contracted Pharmacy Structure:
Stand-alone Pharmacy:
Prescription reimbursement
Less pharmacy’s ingredient cost
Pharmacy margin
Hospital revenue
Less hospital’s ingredient cost
Hospital margin
$ 50
(41)
$ 9
$ 0
0
$ 0
Prescription reimbursement
$ 50
Less revenue passed to hospital
(50)
Less pharmacy’s ingredient cost
0
Dispensing fee received
14
Pharmacy margin
$ 14
Hospital revenue ($50 less $14)
$ 36
Less hospital’s 340B ingredient cost
Hospital margin
(26)
$ 10
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3 4 0 B Re g u l a t o r y
Requir ements and
Compliance
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340B Regulatory Requirements and Compliance
• All 340B enrolled entities are entitled to utilize 340B in outpatient care areas
that appear on the Medicare Cost Report as reimbursable cost centers
(lines 50 to 118) and at all contract pharmacies.
• All enrolled entities are further permitted to utilize contract pharmacies,
which act as the covered entity’s agent in the dispensing of 340B drugs.
− The contract pharmacy agreement must:
~ Identify the specific pharmacies (physical addresses) covered by the contract
~ Incorporate a “bill-to-ship-to” arrangement where the covered entity retains
responsibility for payment for 340B inventory
~ Clearly define the fee structure and avoid paying the contracted pharmacy on
the basis of individual patient profitability
~ Hold both parties responsible and liable for any noncompliance with 340B
regulations
See Federal Register Vol. 61, No. 165, 8/23/96, Pg. 43549 – 43556
Vol. 75, No. 43, 3/5/10, Pg. 10272 - 10279
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340B Regulatory Requirements and Compliance
Audit Trail
All participating hospitals MUST maintain an audit trail for
ALL 340B purchases.
All 340B enrolled entities
Data required for the audit trail includes:
agree to be subject to
• Policies and procedures
audits at the time they
• 340B purchase history
join the program. Audits
can be requested by OPA
• GPO purchase history
AND by pharmaceutical
• List of eligible points of service
manufacturers.
• DSH adjustment factor calculation
• CDM to 11-digit NDC Crosswalk
• Specifications used to define outpatient utilization query
• Patient billing records including patient classification (IP/OP)
• Wholesale average cost (WAC) purchase history (DSH hospitals)
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340B Regulatory Requirements and Compliance
Official Sources of Information:
• HRSA – http://www.hrsa.gov/opa/index.html
• APEXUS – https://www.340bpvp.com/resource-center/
The Department of Health and Human Services (HHS) was working on a
Mega Regulation to govern the 340B Program – proposed regulations were
withdrawn in November
HRSA, within HHS, plans to propose guidance for notice and comment in
2015 that will address key 340B Program policy issues (i.e., definition of
eligible patient, hospital eligibility criteria, etc.)
HRSA also plans to propose regulations related to the following specific 340B
Program issues: civil monetary penalties for manufacturers, how the ceiling
prices of 340B drugs are calculated, and dispute resolution
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340B Regulatory Requirements and Compliance
Top 10 Pitfalls of Participating in the 340B Program
1. Poor tracking of activity, eligible patients, qualified providers, etc.
2. Incomplete, inaccurate database
3. Lack of contract pharmacy oversight
4. Having too many contract pharmacies
5. Poor audit trail
6. Ineligible patients receiving 340B drugs
7. Use of a third-party administrator without deference to compliance
8. Failure to register all “child” sites
9. Medicaid election to exclude 340B for Medicaid patients
10. Overlooked 340B opportunities
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Questions to Ask
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Questions to Ask
1. Who is charged with oversight of the 340B Program?
2. Are policies in place regarding the 340B Program to address the following?
3. Are 340B Program drugs being used only at internal pharmacy or are contract pharmacies
being utilized?
4. Did the covered entity complete the recertification?
5. Are the appropriate child sites registered?
6. What procedures are being performed internally to verify the 340B Program is working
appropriately and complying with regulations?
7. Have you had an external compliance review of your 340B Program?
8. Is your 340B Program profitable?
9. What are your 340B savings being used for?
10. What software is being used to monitor the 340B Program?
~ Who is responsible for maintaining the criteria in the software program?
~ How often is it reviewed?
11. Has your facility elected to exclude Medicaid transactions from 340B-qualifying activity?
~ Are procedures in place to ensure no duplicate discounts are being received?
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Contact Information
Vicki Mueller, CPA
Manager, Health Care Practice
469 Security Boulevard, Green Bay, WI 54313
920.662.2890
[email protected]
www.wipfli.com/healthcare
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www.wipfli.com/healthcare
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