The Pharmacy 340B Drug Discount Program- Overview and Emerging Issues

Transcription

1 The Pharmacy Drug Discunt Prgram- Overview and Emerging Issues Barbara Straub Williams Principal Pwers Pyles Sutter & Verville PC Matthew Vgelien Directr Hurn Healthcare - Overview and Emerging Issues Discussin Outline Tpics fr Discussin: Overview f the Prgram (The Basics): Histry/Purpse/Benefits Applicable Statute & Other Legal Authrities Gvernment Agency/Oversight Recent Prgram Develpments Prgram Eligibility-Cvered Entities & Registratin Prcess Discunts & Savings-Amunts and Hw t Obtain Prime Vendr Prgram Drug Inventry Issues Prgram Cmpliance Requirements: Fur Principle Restrictins Related Cmpliance Issues Cntract Pharmacy Arrangements Operatinal Cmpliance & Internal Audit Strategies Prgram Resurces 2 1

2 - Overview and Emerging Issues Objectives Prvide an verview f the Prgram and cmpliance requirements Highlight healthcare refrm changes and ther recent develpments related t the Prgram Examine key Prgram cmpliance requirements and challenges Discuss new audit expectatins fr cvered entities Share peratinal suggestins fr reducing the risk f nncmpliance and meeting the gvernment s expectatins fr cntrls, dcumentatin, and audits, including recmmendatins fr integrating issues int cvered entities cmpliance and internal audit functins 3 - Overview and Emerging Issues Overview-Histry/Purpse/Benefits Histry/Purpse: Implemented by Cngress in 1992 thrugh enactment f Public Law Sectin 602. Statutrily requires pharmaceutical manufacturers t prvide utpatient drugs t certain qualified cvered entities at reduced pricing. In plain language, participatin in the prgram prvides varius safety net prviders with access t significant pricing discunts n cvered utpatient drugs. 4 2

3 - Overview and Emerging Issues Overview- Histry/Purpse/Benefits (Cnt d) Benefits: Prvide vulnerable patient ppulatins with imprved access t pharmaceuticals necessary fr their cntinuum f quality care. Cvered entity prviders achieve cst savings n utpatient drug purchases. The Health Resurces and Services Administratin (HRSA) estimates that participatin in the prgram results in savings f apprximately 20% t 50%. 5 - Overview and Emerging Issues Overview-Statute & Other Legal Authrities Sectin f the Public Health Service Act (42 U.S.C. 256b) requires pharmaceutical manufacturers t enter int an agreement with the Department f Health and Human Services (HHS) t prvide discunts n cvered utpatient drugs purchased by certain prviders called cvered entities that serve the natin s vulnerable patient ppulatins as a cnditin f receiving reimbursement frm Medicaid and Medicare Part B. Prgram guidance is issued thrugh Federal Register Ntices, Plicy Releases, and FAQs. 6 3

4 - Overview and Emerging Issues Overview-Statute & Other Legal Authrities (Cnt d) Over the years, the gvernment has released numerus Federal Register ntices including guidelines relevant t the Prgram. Key Federal Register Ntices related t the Prgram*: * This diagram is nt representative f all federal ntices/regulatins. Ntices can be fund n the HRSA website at Overview and Emerging Issues Overview-Gvernment Agency/Oversight The Office f Pharmacy Affairs (OPA) within HRSA is respnsible fr administratin and versight f the Prgram. HRSA issues guidance related t the Prgram and has the authrity t cnduct audits and exclude cvered entities frm participatin in the Prgram. The OPA describes its three primary functins: Administratin f the Drug Pricing Prgram; Develpment f innvative pharmacy services mdels and technical assistance; and Service as a federal resurce abut pharmacy. 8 4

5 - Overview and Emerging Issues Recent Prgram Develpments The Patient Prtectin and Affrdable Care Act ( PPACA r Healthcare Refrm ), signed March 23, 2010, implemented the mst significant changes t the Prgram since Healthcare Refrm changes t : Impact all stakehlders (cvered entities, manufacturers, versight agencies); Added fur (4) new eligible entity types, effective January 1, 2010: 1. Free-standing children s hspitals 2. Free-standing cancer hspitals 3. Critical access hspitals 4. Sle cmmunity hspitals and rural referral centers; 9 - Overview and Emerging Issues Recent Prgram Develpments (Cnt d) Excluded use f rphan drugs under by newly-eligible entities and children s hspitals (mre n this); Specify that all new hspitals (like existing hspitals) must either be publicly wned r be a private nnprfit cntracting with a state r lcal gvernment t prvide indigent care; Increased Medicaid rebate percentages-expected t yield deeper discunts; Extended t the inpatient setting fr all f 7 days-the Budget Recnciliatin Bill, signed March 30, 2010, limited t utpatient drugs; and Added new integrity prvisins: Gvernment must make ceiling prices available. HHS must develp new cntrls and versight requirements. HHS must issue guidance n Medicaid billing requirements fr cvered entities. New fines and penalties. Annual recertificatin f database infrmatin. 10 5

6 - Overview and Emerging Issues Recent Prgram Develpments (Cnt d) Other Recent Develpments: In March 2010, HRSA published a Final Ntice f guidelines related t the utilizatin f cntract pharmacy services (75 FR 43, March 5, 2010), including permissin fr cvered entities t use multiple pharmacy arrangements. Gvernment Accuntability Office (GAO) Reprt - Drug Pricing-Manufacturer Discunts in the Prgram Offer Benefits, but Federal Oversight Needs Imprvement, Sept (Rpt. N. GAO ): Findings suggest that mre versight is needed, specifically by HRSA/OPA. Significant grwth f the Prgram has led t increased use f cntract pharmacy services and crrespnding cmpliance and prtcls requirements (r lack f). Key recmmendatins included the fllwing: Cnduct selective audits f cvered entities with respect t all prgram requirements; Finalize new and/r revised guidance n the patient definitin; Further specify nndiscriminatin plicy fr cases in which drug distributin is restricted and require reviews f manufacturers plans t restrict distributin f drugs at prices; and Issue guidance t further specify the criteria that hspitals that are nt publicly wned r perated must meet t be eligible fr Overview and Emerging Issues Recent Prgram Develpments (Cnt d) Other Recent Develpments: OPA audited cvered entities fr first time in 2012 AUDITING (42 USC 256b(a)(5)(C))-A cvered entity shall permit the Secretary and the manufacturer f a cvered utpatient drug that is subject t an agreement under this subsectin with the entity (acting in accrdance with prcedures established by the Secretary relating t the number, duratin, and scpe f audits) t audit at the Secretary s r the manufacturer s expense the recrds f the entity that directly pertain t the entity s cmpliance with the requirements described in subparagraphs (A) r (B) with respect t drugs f the manufacturer. Results f 18 cvered entity audits perfrmed during FY 2012 are available n the HRSA/OPA website (current as f February 8, 2013). Adverse findings were indicated fr 2 (r 11%) f the 18 audits. ( Reprts f manufacturer audits fr first time in 2013 Three new/revised Plicy Releases issued by HRSA during February, 2013: 02/07/13-Statutry Prhibitin n Grup Purchasing Organizatin Participatin (2013-1) 02/07/13-Clarificatin n Use f the Medicaid Exclusin File (2013-2) 02/08/13-Clarificatin f HRSA Audits f Cvered Entities ( )-replaced

7 - Overview and Emerging Issues Prgram Eligibility-Cvered Entities There are currently ver 20,000 cvered entities and affiliated child sites (OPA cvered entities database at Figure 1 belw shws grwth frm Only nnprfit health care rganizatins that have certain Federal designatins r receive funding frm specific Federal prgrams are eligible rganizatins. Eligible cvered entities currently include Disprprtinate Share Hspitals (DSH) meeting specific criteria and fifteen (15) ther categries f prviders Overview and Emerging Issues Prgram Eligibility-Cvered Entities (Cnt d) Hspital Criteria: The definitin f cvered entities includes six (6) categries f hspitals (sme f which must meet specific eligibility requirements): 1. Acute care DSH hspitals; 2. Children s Hspitals; 3. Cancer Hspitals exempt frm IPPS; 4. Sle Cmmunity Hspitals (SCHs); 5. Rural Referral Centers (RRCs); and 6. Critical Access Hspitals (CAHs). Hspitals in each f the categries must be: (1) nn-prfit, (2) wned r perated by r under cntract with state r lcal gvernments, and (3) with the exceptin f CAHs, have Medicare DSH payment percentages abve 11.75% (acute care, children s and cancer) r at r abve 8% (SCHs and RRCs). Nte-DSH payment percentage is different than the DSH patient percentage: DSH patient % f.2733 results in DSH payment % > 11.75% DSH patient % f.2277 results in DSH payment percentage 8% 14 7

8 - Overview and Emerging Issues Prgram Eligibility-Cvered Entities (Cnt d) Nn-Hspital Entities: In additin t hspital categries, and including newly eligible entities added thrugh PPACA, ther qualifying cvered entity prvider categries include*: Federally Qualified Health Centers (FQHCs)-Cmmunity Health Centers, Migrant Health Centers, Health Care fr the Hmeless, and Health Centers fr Residents f Public Husing Federally Qualified Health Center Lk-Alikes -Cmmunity-based health care prviders that meet requirements f HRSA Health Center Prgram (HCP), but d nt receive HCP funding Native Hawaiian Health Centers Tribal/Urban Health Centers Ryan White HIV/AIDS Prgram Grantees (Parts A, B, and C grantees (ther than State and lcal gvernments)) Black Lung Clinics Cmprehensive Hemphilia Diagnstic Treatment Centers Title X Family Planning Clinics Sexually Transmitted Disease Clinics Tuberculsis Clinics *Specific eligibility criteria fr each entity categry can be fund at Overview and Emerging Issues Prgram Eligibility-Registratin Facilities that meet the criteria f a cvered entity apply t participate in the Prgram by cmpleting the nline registratin prcess during the first tw weeks f the calendar quarter (e.g., January 1-15) fr an effective date n the 1 st f the next calendar quarter (e.g., April 1). Hspitals must register all ff-site utpatient clinics that participate. HRSA defines ff-site as utside the fur walls f the hspital: Off-site clinic must appear n the hspital s asfiled cst reprt t register, which means that nly prvider-based clinics may register fr the Prgram (freestanding clinics wned by hspital are nt eligible). Cst reprt requirement can lead t lng delays fr registratin f ff-site clinics. * Registratin frms and related instructins are available fr each eligible cvered entity type n the HRSA/OPA website tin/index.html 16 8

9 - Overview and Emerging Issues Discunts & Savings-Amunts The drug discunt is the average manufacturer price (AMP) reduced by a minimum rebate percentage f: 23.1 percent fr mst brand name prescriptin drugs; 17.1 percent fr brand name pediatric drugs and cltting factr; and 13 percent fr generic and ver-the-cunter drugs. Manufacturers must ffer even greater discunts n brand name drugs if the manufacturer s best price fr a drug is lwer than AMP minus 23.1 percent fr that drug and/r the price f the drug has increased mre quickly than the rate f inflatin. (This is als true fr innvatr, multi-surce drugs, i.e., brand name drugs that have generic cmpetitin.) Cvered entities are free t negtiate discunts that are lwer than the maximum allwable statutry price. prices fr brand name drugs are, n average, 51 percent* f average whlesale prices, accrding t a reprt released by the Cngressinal Budget Office. Anther gvernment study fund prices t be 27 percent* lwer than prices available t grup purchasing rganizatins. * Nte that these estimates were determined befre manufacturers were required t adjust their AMP and minimum rebate percentage calculatins as a result f the ACA Overview and Emerging Issues Discunts & Savings-Hw t Obtain Upn registratin, a cvered entity shuld cntact its whlesaler t set up its accunt and t request a price list. The entity als may request a pricing file frm a manufacturer. Manufacturers shuld check the OPA website each quarter t identify the prviders that are participating in the prgram. The manufacturer may nt charge mre than the ceiling price t thse entities regardless f whether the cvered entity purchases pharmaceuticals thrugh a whlesaler r directly frm the manufacturer. If a cvered entity suspects that it is nt receiving the price fr a given utpatient drug (pricing issue), it shuld immediately ntify the whlesaler r manufacturer. The entity shuld nt cntact OPA regarding a ptential pricing issue withut first trying t reslve the issue by wrking directly with the whlesaler and manufacturer. In many cases, the absence f a price is the result f human errr and is reslved when the mistake is identified and brught t the whlesaler r manufacturer s attentin. 18 9

10 - Overview and Emerging Issues Prime Vendr Prgram The statute mandated the creatin f a Prime Vendr Prgram (PVP) t negtiate sub- pricing n drugs. The PVP acts as a grup purchasing rganizatin (GPO). The current PVP cntract is with Apexus. A cvered entity des nt have t jin PVP in rder t participate in the prgram and may negtiate sub-ceiling discunts n its wn. T learn mre abut PVP, g t Overview and Emerging Issues Drug Inventry Issues Because the prgram is fr utpatient drugs nly, Cvered Entities must have inventry cntrls t ensure that drugs are nt dispensed t inpatients. Cvered Entities may maintain a physically separate inventry r, mre cmmnly, use a replenishment system under which drugs dispensed t a eligible patient are replaced with a drug. OPA requires that there be an exact match between the drug used and the replenished drug using the Natinal Drug Cde (r NDC, which is issued by the FDA and specifies drug identity, package size and manufacturer). Cvered Entities may request HRSA apprval fr an Alternative Methd Demnstratin Prjects (AMDP) t implement a different inventry management system

11 - Overview and Emerging Issues Prgram Cmpliance Requirements 1. Anti-Diversin/ Patient Eligibility 2. Duplicate Discunt ( Duble-Dipping ) Prhibitin 3. Grup Purchasing Organizatin (GPO) Restrictin 4. Orphan Drug Restrictin 1. Anti-Diversin and Patient Eligibility Cmpliance prescriptins must be prescribed by eligible prviders fr qualified patients, and prduct must nt be diverted t nn-qualifying patients. Must have a cmplete audit trail frm purchase t pick-up by the patient (dispensing). 3. Grup Purchase Organizatin Restrictin Statutry prhibitin against btaining cvered utpatient drugs thrugh a GPO fr certain cvered entities. 2. Duplicate Discunt ( Duble- Dipping ) Prhibitin Purpse is t prevent bth discunt and Medicaid rebate n the same drug. Must reprt utpatient pharmacy Medicaid prvider number(s) t prevent rebate duble-dipping. 4. Orphan Drug Restrictin Certain hspitals (SCHs, RRCs and Cancer Hspitals) may nt use pricing fr rphan drugs Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) Anti-Diversin : The anti-diversin requirements f the prgram prhibit the resale r transfer (e.g., dispensing) f utpatient drugs t individuals wh are nt cnsidered patients f the cvered entity. Prgram regulatins define the three basic categries f prhibited diversin as diversin t: Nn-patients f the cvered entity; Ineligible facilities within the same facility; and Excluded services f the cvered entity. * Physically separate drug inventries nt required, but cvered entities must maintain separate (inpatient and utpatient) purchasing and dispensing tracking systems and track by Natinal Drug Cde (NDC) t prvide a clear audit trail. Other ptential diversin risk areas (Cvered entities must als cnsider security and theft risks). * 58 FR 248, December 29,

12 - Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) Patient Eligibility: It is illegal fr cvered entities t sell medicatins purchased under the Prgram t persns wh are nt cnsidered patients f the cvered entity. Definitin f patient : HRSA Final Ntice (61 Fed. Reg. 55,156, 55,157 (Octber 24, 1996) An individual is a patient f a cvered entity nly if three specific criteria are met: 1. Patient relatinship ( eligible patient )-The cvered entity maintains recrds f the individual s health care ( maintenance-f-recrd r recrd maintenance test). 2. Prvider relatinship ( eligible prvider )-The individual must be under the care f a physician r ther health care prfessinal wh is emplyed by, under cntract with, r in a referral relatinship t the cvered entity such that respnsibility fr the individual s care remains with the cvered entity ( prfessinal care test ). 3. Qualified health care service/range f services-the individual must receive a range f health care services that are cnsistent with the services fr which grant funding r FQHC lk-alike status has been prvided t the cvered entity. (This requirement is nt applicable t hspitals.) 23 - Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) Patient Eligibility (Cnt d): The definitin f patient is different fr and Medicare. The definitin includes individuals wh have a prescriptin written at a cvered entity t be filled at a retail pharmacy. HRSA issued a prpsed clarificatin t the definitin f patient in 2007 but OMB annunced that HRSA withdrew the prpsed clarificatin and will publish a new prpsed patient definitin

13 - Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) Duplicate Discunt ( Duble-Dipping ) Prhibitin: Drug manufacturers are required t give rebates n drugs reimbursed under State Medicaid prgrams, either FFS r managed care, but are prtected frm giving a bth a discunt and a Medicaid rebate n the same drug. Cvered entities may elect t use drugs fr Medicaid patients ( carve-in ) r may elect nt t use fr Medicaid patients ( carve-ut ). Medicaid prgrams submit fr rebates n carve-ut drugs, but frg rebates fr entities that carve-in. Cvered entities must ntify OPA f their electin and OPA maintains and exclusin file that State Medicaid agencies may use t determine if an entity has carved-in. Infrmatin n a cvered entity s carve-in r carve-ut ptin must be accurate. The cvered entity bears the liability if a duplicate discunt is paid n a FFS drug. HRSA issued a Prgram Ntice n 02/07/13- Clarificatin n Use f Medicaid Exclusin File Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) GPO Restrictin: Certain hspitals (acute care with DSH > 11.75%, children s and cancer) may nt purchase any cvered utpatient drugs thrugh a GPO. Inpatient drugs may be purchased thrugh a GPO. Hspitals may purchase utpatient drugs thrugh the Prime Vendr Prgram (Apexus). HRSA issued a Prgram Ntice n 02/07/13 - Statutry Prhibitin n Grup Purchasing Organizatin Participatin. This guidance states: Vilatins f the GPO restrictin will result in terminatin frm the prgram. Prvider-based departments f a hspital may elect nt t participate in if they meet fur requirements: Are lcated at a different physical address than the parent; Are nt registered n the OPA database as participating in the Prgram; Purchase drugs thrugh a separate pharmacy whlesaler accunt than the participating parent; and The hspital maintains recrds demnstrating that any cvered utpatient drugs purchased thrugh the GPO at these sites are nt utilized r therwise transferred t the parent hspital r any utpatient facilities registered n the OPA database. Detailed instructins regarding inventry replenishment mdels. Hspitals have until 04/07/2013 t cmply

14 - Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) Orphan Drug Restrictin: Certain hspitals (SCHs, RRCs and cancer) may nt use pricing fr rphan drugs. HRSA issued prpsed guidance in May 2011 t implement rphan drug exclusin. Prpsed that rphan drug restrictin nly "t uses fr the rare disease r cnditin fr which the rphan drug was designated. Final regulatins currently at OMB fr release Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) Related Cmpliance Issues: Medicaid Billing: There are n federal statutes r regulatins that dictate the amunt that state Medicaid prgrams may reimburse fr drugs, althugh fficials in sme state Medicaid prgrams mistakenly believe that federal guidance requires cvered entities t bill fr drugs at actual acquisitin cst (AAC), particularly with respect t retail pharmacy drugs. Sme States have explicit requirements t bill at AAC fr drugs, usually fr retail pharmacy drugs, s that the State can get the benefit f the discunt. Cvered entities need t be aware f any special Medicaid billing requirements fr. Prgram Incme Requirements: Fr nn-hspital cvered entities, all savings are cnsidered prgram incme fr purpses f the grant and fr Grantees

15 - Overview and Emerging Issues Prgram Cmpliance Requirements (Cnt d) Cntract Pharmacy Arrangements: Cvered entities may cntract with retail pharmacies t dispense drugs t the cvered entity's patients. Cvered entities purchases the drugs, and manufacturers and whlesalers bill the cvered entities, but ship the drugs directly t the cntract pharmacy. A cntractr must prvide the cvered entity quarterly financial statements, a detailed status reprt f cllectins, and a summary f receiving and dispensing recrds. The cntractr als must establish and maintain a tracking system t prevent diversin f drugs t individuals wh are nt patients f the cvered entity. Cvered entities are expected t have an independent audit f the cntract pharmacy perfrmed at least annually, t mnitr pharmacy cmpliance and t self-reprt any instance f nncmpliance t HRSA Overview and Emerging Issues Operatinal Cmpliance & Internal Audit Strategies The cmplexity f pharmacy peratins and lack f fcus n cmpliance and internal audit can result in breakdwns leading t financial cnsequences, undesired negative attentin, r even lss f cvered entity status (HRSA has authrity t exclude cvered entities). cvered entities shuld have plicies and prcedures, cntrls, and auditing and mnitring methdlgies in place t ensure cmpliance with regulatry requirements. Cmpliance shuld nt be siled in Pharmacy and requires cllabratin and crdinated effrts between varius departments f the rganizatin: Cmpliance Internal Audit Pharmacy Physician Services Infrmatin Technlgy Medical Recrds 30 15

16 - Overview and Emerging Issues Operatinal Cmpliance & Internal Audit Strategies (Cnt d) Key cmpliance assessment and internal audit steps fr evaluating and auditing cmpliance: Prescriptin-Level Testing-Perfrm initial and rutine audits t test cmpliance with requirements Review Overall Cntrls, Dcumentatin and Prcedures- Interview pharmacy leadership and staff t gauge their understanding f Prgram cmpliance requirements and evaluate verall cntrls and prcesses related t the rganizatin s participatin in the prgram; Obtain and review any existing plicies and prcedures; Cnduct site reviews at cvered entity utpatient pharmacies Overview and Emerging Issues Operatinal Cmpliance & Internal Audit Strategies (Cnt d) Inventry Cntrl Testing -Perfrm a prcess and cntrls review and prescriptin-level testing t (1) evaluate the pharmacy s inventry tracking capabilities and accuntability fr inventry and (2) cmpare purchasing/invicing t utilizatin. Medicaid Duble-Dipping Prhibitin-Cnfirm that each f the rganizatin s pharmacies fr which inventry is purchased and dispensed are included in the OPA s Medicaid Exclusin Files

17 - Overview and Emerging Issues Prgram Resurces Health Resurces and Services Administratin (HRSA)- Office f Pharmacy Affairs (OPA) Safety Stakehlder Net Hspitals Interviews fr Pharmaceutical Access St. Luke s Hspital (SNHPA) Dcument/Data Request Facilities Allentwn Drug Gap Discunt Analysis and Mnitr (SNHPA news service Bethlehem re: Benchmarking (Industry Prgram) Miners Memrial Guidance and Best Quakertwn Practices) Riverside Assessment Reprt and Primary/Urgent Care? Prime Implementatin Vendr Prgram Plan (PVP) Hme Care/Hspice? 33 Questins? CONTACT INFORMATION: Barbara Straub Williams Pwers Pyles Sutter & Verville PC P: E: barbara.williams@ppsv.cm Matthew Vgelien Hurn Healthcare P: E: mvgelien@hurncnsultinggrup.cm 34 17