Transcript Slides from Jan. 3, 2016 webinar on Hot Topics

America’s Voice for Community
Health Care
The National Association of Community Health
Centers (NACHC) represents Community and
Migrant Health Centers, as well as Health Care for
the Homeless and Public Housing Primary Care
Programs and other community-based health centers.
Founded in 1971, NACHC is a nonprofit advocacy
organization providing education, training and
technical assistance to health centers in support of
their mission to provide quality health care to
medically underserved populations.
The NACHC Mission
To promote the provision of high
quality, comprehensive and affordable
health care that is coordinated,
culturally and linguistically competent,
and community directed for all
medically underserved populations.
For further information about NACHC and
America’s Health Centers
Visit us at www.nachc.com
NACHC 340B Webinar Series
Part 3: Recent Developments
Cynthia (Cindy) R. DuPree
Partner, Draffin & Tucker, LLP
February 3, 2016
Some information presented in this webinar is based
on NACHC comments related to the proposed
guidance. (Letter to the Office of Pharmacy Affairs,
Health Resources and Services Administration dated
October 27, 2015)
Today’s Topics
• Draft 340B Mega-Guidance - Colleen
• 340B & Medicaid – Colleen & Kersten
o Key Issues
o Recent Developments in FFS and managed
care
• Overview of Compliance Issues - Cindy
Draft 340B “Mega-Guidance”
Draft “Mega-Guidance”
• Published by HRSA last August.
• Very unclear how “enforceable” it is
– Not a regulation; not final; will be challenged
in court if finalized.
•Still, still has useful info on how HRSA
would like the program to operate
- Health Centers are well-advised to pay
attention to many of the proposals
NACHC Comments
• Available at www.nachc.org/regulatory
• Based on extensive input from 340B
Workgroup, PCAs.
• Also submitted joint comments with
other provider types
– One set with other HRSA grantees
– Smaller set with coalition of all providers
Mega-Guidance: The Big Picture
• Restated Congressional intent
• Proposed some clarity in important areas
–e.g., record retention, limited distribution
networks, contract pharmacies
• But took a “one-size-fits-all” approach to
all types of covered entities
- Appeared to be written from hospital
perspective
Definition of “Eligible Patient”
• NACHC’s primary area of concern
• Defined eligibility on a script-by-script
basis, not a patient-by-patient basis.
• Said that FQHC patients can’t get 340B
Rx for scripts:
–Provided by a specialist/ referral
–Written at time of hospital discharge
Concerns about “Patient Definition”, #1
NACHC’s formal comments stressed the
negative impacts of this proposal:
• On our patients’ health
– 23.4% of adults with chronic illnesses report “taking less
medication than prescribed, or none at all, due to costs.
– FQHC patients are disproportionately at risk - minority,
uninsured, children, multiple medical conditions
• On patients’ finances
• On FQHCs’ clinical outcomes
Concerns about “Patient Definition”, #2
Negative impact on FQHCs’ finances,
due to:
• lower 340B revenues
• higher spending on discounts
• lower quality outcomes, leading to
lower reimbursement
• higher operational costs, due to
need to keep “separate” inventories
Concerns about “Patient Definition”, #3
• Contrary to the goals of:
– the 340B statute
– Congressional intent behind 340B
– the Health Center program (emphasis
on PCMH, case management)
– lowering hospital readmissions
NACHC’s Recommendation
• Create a “patient definition” that
reflects the unique structure of the
Health Center program.
– Use the UDS definition of Health Center
patient
•General concerns – including onesize-fits-all not fitting – were echoed
by other HRSA grantee groups.
Mega-Guidance: Contract Pharmacies
• Did not limit the number of contract
pharmacies
• New expectations for oversight:
• Annual audit of each location using an
independent auditor, and
• Quarterly review of FQHC’s 340B
prescribing records with the contract
pharmacy’s 340B dispensing records
Mega-Guidance: Compliance
• HRSA repeatedly states that the FQHC
is fully responsible for ensuring
compliance with all program rules –
including at contract pharmacy sites.
• “Auditable records”
– must be kept at least 5 years
– term is not defined.
Mega-Guidance: Some Other Issues
• Access to 340B pricing under Limited
Distribution Networks
• Rules around manufacturer audits of
FQHCs
• Intersection of 340B and Medicaid
managed care (see next section)
Next Steps for the draft Mega-Guidance?
• Not clear. HRSA received over 800
comments (many from FQHCs.)
• May not be finalized during this
Administration.
• If finalized, expect
lots of lawsuits.
QUESTIONS
ON THE
DRAFT MEGA-GUIDANCE?
340B and Medicaid
Key Issues under Medicaid
#1 of 3
#1. Avoiding duplicate discounts
• Duplicate discount = when a
manufacturer is asked to give both a
340B price and a Medicaid rebate on
the same unit of drug
Avoiding Duplicate Discounts
• There are various ways to do this.
• One option is to “carve-out” Medicaid
– Means you keep Medicaid patients outside
of your 340B program, so they do not receive
340B drugs.
• Other options entail careful tracking/
reporting of which Rx were filled with
340B Rx.
Key Issues under Medicaid:
#2 & #3
#2. Who gets the (single) discount?
– The Health Center (or other covered entity?)
– The State Medicaid Agency? or
– The Managed Care Organization (MCO)?
#3. Which discount are they getting?
- Typically, the final price is slightly lower
under 340B pricing than under Medicaid
rebate
Different answers for
FFS vs Managed Care
• Answers to #2 & #3 vary depending on
whether fee-for-service or managed
care.
• Under fee-for-service, answers are
fairly clear.
• Under managed care, there is
currently much uncertainty (&
activity)
Medicaid Fee-for-Service & 340B
• CMS issued clear guidance late last month.
- See Final Rule on Medicaid Covered Outpatient Drugs at
www.nachc.org/regulatory
• The State Medicaid Agency gets the benefit of
the 340B price.
– State must pay 340B providers only their
Actual Acquisition Cost (AAC) plus a
dispensing fee.
– If FQHCs can negotiate prices below 340B
ceiling price, State can choose to let them
keep the difference.
Medicaid Managed Care
Medicaid Managed Care
• ACA expanded Medicaid Drug Discount
program to Medicaid MCO patients
• Cannot have duplicate discounts
• No further regulation clarifying interaction
with 340B policy and practice
• States and MCOs have stepped in with
own requirements
• Managed care rule expected Summer 2016
Current Policy Options Under
Medicaid Managed Care
Example Prescription
Full rate = $10 / 340B rate = $5
Carve-In?
Option
(Use 340B
drug for MCO
patients)
Cost to
FQHC for
340B Drug
Reimbursement
to FQHC for
340B drug
FQHC
Proceeds
Savings to
State/MCO
(Reimbursement
less cost)
(Full rate less
reimbursement)
1
Yes
340B rate
($5)
Full rate
($10)
$5
$0
2
Yes
340B rate
($5)
Medicaid
discount rate
($7)
$2
$3
3A
Yes
340B rate
($5)
340B rate
($5)
$0
$5
3B
No
Full rate
($10)
Full rate
($10)
$0
$3
QUESTIONS
ON
MEDICAID AND 340B?
Compliance Expectations
Audits are underway!
• HRSA is continuing to increase its audit
activity of the 340B Program.
• Pressure is coming from all sides.
HRSA 340B Audits
Audits Reported as of December 31, 2015
152
98
94
51
2012
2013
2014
2015
2015 HRSA Audits
Shaded areas
represent states
with HRSA audits.
Over 10 audits
5 – 10 audits
3 – 4 audits
1 – 2 audits
CHC audits – 2014 & 2015
Shaded areas
represent states
with HRSA audits.
Entity Audits Completed
as of December 31, 2015
Other 30
Other 6
CHC 13
CHC 14
Hospitals
108
2015
Hospitals
79
2014
HRSA Audit Findings - 2014
2014 - CHC adverse findings are higher than average.
80%
85%
20%
15%
2014-ALL
2014-CHC
No adverse
Adverse
HRSA Audit Findings - 2015
2015 - CHC adverse findings are higher than average.
76%
79%
24%
21%
2015-ALL
2015-CHC
No adverse
Adverse
CHCs with Adverse Findings
as of December 31, 2015
No contract pharmacy oversight
29%
Percentage of CHCs
audited with the type
Duplicate discounts
Diversion
36%
21%
Incorrect 340B database record
38%
39%
64%
2015
2014
85%
Let’s review further
Incorrect 340B database record
• 2015 HRSA audit findings
–Incorrect address entries
–Incorrect contact information for Authorizing
Official
–Offsite outpatient facilities not listed
–Registered a contract pharmacy without a
contract in place
–Incorrect entry for Primary Contact
Diversion
• 2015 HRSA audit findings
–340B drugs dispensed for prescriptions originating
from ineligible sites
–340B drug dispensed at a contract pharmacy for a
prescription written at an ineligible site
–340B drug dispensed at a contract pharmacy for a
prescription written by an ineligible provider
–340B drug dispensed to an inpatient
–340B drug dispensed for prescription not supported by
responsibility of care
–340B drugs were not properly accumulated
Duplicate discount
• 2015 HRSA audit findings
–Inaccurate or incomplete information in the Medicaid
Exclusion file
–Medicaid billing numbers and NPI numbers were
incorrect on the Medicaid Exclusion file
–Entity was billing Medicaid contrary to information
included in the Medicaid Exclusion file
Oversight of contract pharmacies
• 2015 HRSA audit findings
–No oversight by covered entity of contract
pharmacy 340B operations
Actual Findings
Incorrect 340B database record
• Contract pharmacy is not registered
correctly
Contracted Pharmacy Service Agreement
This agreement is entered into by and between Parent FQHC at 123
Rural Road, Anytown, TX. and Local Pharmacy, whose principal place
of business is located at 456 Main Street, Anytown, TX.
CH99999C
Local Pharmacy
FQHC Child Site
456 Main Street
Anytown
TX
1/1/2014
Registered in the name of one child site, rather than the parent.
Does it matter?
Thank you for contacting Apexus Answers, if a contract pharmacy is
registered under one specific child site, then only patients from that
one child site can get 340B drugs from the registered contract
pharmacy. However if the contract pharmacy is registered under
the parent site then all entities in a parent/child relationship may use
those contract pharmacies as long as that wording is in the contract.
Please see the FAQ below:
Incorrect 340B database record
• All eligible locations are not listed in the
contract.
Only 3 of the 5 eligible child
site locations are listed in the
contract.
Contract pharmacy is
registered under the parent
entity.
Incorrect 340B database record
• Contract was not executed before the
pharmacy registration date in the OPA
database.
FQHC Parent
CH99999
Local Pharmacy
456 Main Street
Anytown
TX
1/1/2014
Incorrect 340B database record
• Often covered entities are unable to
locate copy of contract signed by both
parties.
Incorrect 340B database record
• Contract pharmacy address is incorrect
in OPA database.
FQHC Parent
CH99999
Local Pharmacy
P.O. Box 1110
Anytown
TX
1/1/2014
The address for the pharmacy in the HRSA database is a P.O. Box while
the contract states a street address. The actual “ship-to” address should
be listed on the database.
Individual Dispense Testing
• Prescriptions were generated in
ineligible locations.
Discharge prescriptions were
provided to patients while in the
hospital.
Hospital services are non-FQHC
services.
Dr. John Doe
OPA Finding :
Diversion – 340B drug dispensed at contract pharmacy
for prescription originating from ineligible site.
Individual Dispense Testing
• Prescriptions were generated in
ineligible locations.
Physicians were moonlighting in
other locations which were not
affiliated with the covered entity.
OPA Finding :
Diversion – 340B drug dispensed at contract pharmacy
for prescription originating from ineligible site.
Individual Dispense Testing
• Unable to locate support in FQHC
medical record for 340B replenishment
drugs purchased by contract pharmacy
•
•
•
•
•
Obtained listing of invoices for period
Selected invoice sample
Selected NDC from invoice in sample
Obtained dispense records to support NDC
purchased
Traced patient dispense support to medical
record documentation
OPA Finding:
Diversion – 340B drugs dispensed at contract pharmacy
for prescription not supported by responsibility of care.
Policies and Procedures
Common oversights
• Updates to manual
• Location of pertinent files
• Contract pharmacy information
• Training methods, frequency, responsibility
• Enrollment
• Re-certifications
• Self-auditing
• Use of savings
Recommendations
Pharmacy Contracts
Pharmacy contracts
Pharmacy contracts
• Additional information for review
–Signatures
–Dates prior to registration
–Addresses
–Locations
–Duplicate discounts
–Diversion
–Freedom of choice
Pharmacy contracts
• Additional information for review
–Definition of 340B covered drug
–Eligibility and adjudication
–Tracking and accumulations
–Pricing to patients
–Discounts/sliding fees
–Transaction fees
–Processor fees
–Medicaid
Pharmacy contracts
• Additional information for review
–Slow moving drugs
–Voids, mistakes, errors
–Reporting to covered entity
–Updates to filters (prescribers and locations)
–Replenishment of inventory
–Flow of money (Collections and expenses)
–Audits of records
Self-audits
Audits of records
Self-audits
Supplier
Invoice
• Start here to insure that all 340B purchases
are included in the population for the
sampling.
Drug
NDC
• Select specific drugs from the sample invoices
for verification of supporting dispenses.
Matching
Dispense
• Using dispense records, identify
patient(s) that received the drugs which
were directly purchased/replenished.
Patient
record
•
Trace dispense to patient
records to verify eligible visit,
eligible location, and eligible
prescriber to support drug
dispensed.
Independent audits
• Should be performed annually
• Should be performed by an independent
party
–Not the covered entity staff
• This is self-auditing
–Not the contract pharmacy or processer staff
• “Fox guarding the hen house”
Independent = “no skin in the game”
Want to learn more?
NACHC Information
• NACHC website guidance
• Upcoming webinar
2/10 – Compliance/Self-audits
Focus on:
Policies and procedures
External audits
Internal audits
Audit tools
For more information or questions:
Cindy DuPree
Draffin & Tucker, LLP
Atlanta, Georgia
[email protected]
NACHC and America’s Health Centers
www.nachc.com