340B Compliance: I sure wish I d known that!
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1 340B Compliance: I sure wish I d known that! Aaron K. Lott Pharm. D. Executive Director of Pharmacy Services June 2015
2 Disclosures The presenter has no significant financial or commercial interests to disclose in relation to this presentation. He is a consultant to Health Enterprises Pharmacy Services. The planning staff has no significant financial relationships of commercial interests to disclose in relation to this presentation. 2
3 Learning Objectives List the three key compliance areas within the 340B drug discount program Describe specific approaches to maintain compliance with the 340B program Identify potential pitfalls in management of the 340B program, especially with regard to 340B split-billing software programs Discuss files that have severe compliance implications if incorrect Describe the most effective ways to discover and avoid hidden compliance threats 3
4 340B Program How many here are considering participating in the program? How many currently implementing? How many currently participating? ohow long 1 to 2 years o3 to 4 years o5+ years 4
5 340B Program Background 340B added to the Public Health Services Act Duplicate discount and manufacturer audit guidelines established. Patient definition clarified. Contract pharmacy process established. HRSA allows for multiple CP relationships per CE. ACA mandates new guidelines to improve 340B program integrity. ACA expands eligibility to include CAH, RRC, SCH, PED, CAN HRSA audits begin OIG findings CE not using independent auditors. OPA funding doubled Federal Judge invalidates HRSA s rule-making authority HRSA/OPA issues guidance on outpatient clinics 5// experience access Medicaid duplicate discount prohibition clarified carve-in and carve-out requirements. Orphan drug exclusion introduced. GPO prohibition clarified. HRSA issues final orphan drug exclusion ruling.
6 340B Program Basics Benefits -Drug cost savings -Access to affordable medications -Better quality of life -Improved clinical outcomes through access to services patient covered entities 340B community -Mission fulfillment -Outcome optimization -Care for all community members -Local access to medical services 6
7 340B Program Basics Steps for Enrollment o Determine eligibility ( o Complete appropriate forms o Register during quarterly open enrollment periods» Register Start Date» January 1-15 April 1» April 1-15 July 1» July 1-15 October 1» October 1-15 January 1 o OPA verifies registration data and eligibility o Await decision from OPA 7
8 340B Program Basics Which Hospitals are Eligible? o Children s Hospitals o Critical Access Hospitals o Disproportionate Share Hospitals o Free Standing Cancer Hospitals o Rural Referral Centers o Sole Community Hospitals 8
9 340B Program Basics REVIEW MEDICARE COST REPORT INFORMATION HRSA 9
10 340B Program Basics Registration of child sites/clinics require additional documentation. oworksheet A identify the cost center line(s) that reflect the clinic(s) being registered oworksheet C identify the cost center line(s) that reflect the clinic(s) being registered oworking trial balance - identify the specific costs and revenue of the clinic(s) being registered 10
11 340B Program Basics Sample Trail and Balance 11
12 340B Program Basics HRSA Says You Must Keep 340B database information accurate and up to date. Register new outpatient facilities and contract pharmacies as they are added. Recertify eligibility every year. Prevent duplicate discounts. Manufacturers are prohibited from providing a discounted 340B price and a Medicaid drug rebate for the same drug. Covered entities must accurately report how they bill Medicaid drugs on the Medicaid Exclusion File. Prevent diversion to ineligible patients. Covered entities must not resell or otherwise transfer 340B drugs to ineligible patients. 12
13 340B Program Basics HRSA Says You Must cont. Prepare for program audits Maintain auditable records documenting compliance with 340B Program requirements. Covered entities are subject to audit by manufacturers as well as the state and federal government. Any covered entity that fails to comply with 340B Program requirements may be liable to manufacturers for refunds of the discounts obtained. Disproportionate Share Hospitals, freestanding cancer hospitals and children's hospital must also refrain from participating in a group purchasing organization for covered outpatient drugs. 13
14 340B Program Basics Patient Eligibility Criteria o A patient must be seen in an eligible location for the Covered Entity. 1.Is there a documented visit at the CE? 2.Is the location the patient was seen at on the hospital s Medicare cost report? 3.Is this location above the line on that cost report (reimbursable)? o The CE must own the record for the care provided. 1.Does the CE own this record or not? 2.Is the record partly owned through a joint venture? o The responsibility for care provided must remain with the CE. 1. In the event of a lawsuit related to the care and prescriptions written, would the CE be the primary liable party? o Care must be provided by an eligible provider. 1. Is the physician who wrote the prescription contracted, employed, or affiliated with the CE? 2. If the physician does not work exclusively for the covered entity, can the prescription be absolutely assumed to have been written at a 340B eligible location? 14
15 340B Program Basics Assess Program Potential obase only off of eligible patients and prescribers ohave potential software vendor heat map CP opportunity 1. Should provide total savings after fees 2. Only provide eligible physician DEA s and NPI ocan perform own ROI on outpatient/mixed use 15
16 340B Program Basics Outpatient Mixed Use Drug X 500 mg Vial given to Outpatient at Hospital -1 Vial added to 340B accumulation total. Package Size = 10 Vials If this process occurs 10 times and full Package Size is reached Hospital has enough product accumulated to buy on 340B contract. Hospital Purchase 10 Vials of Drug X on 340B account. Reduced price $ per package of B Accumulation Starts over for this drug. Cost is $3,500 per package of
17 340B Program Basics Mixed Use Software (Split-billing) Purchase Order Drug is used in inpatient and outpatient locations. 340B Software Determines how much product to order from each account. Perpetually tracks usage against purchases. Determines patient eligibility. Provides monitoring reports. Wholesaler Accounts Medicaid (WAC) GPO 340B 17
18 340B Program Basics Contract Pharmacy Patient is determined to be a patient of the hospital. Prescription determined to have been written by physician of the hospital. Prescription originated at a registered Hospital location. Patient Fills Rx at Contract Pharmacy Contract Pharmacy Bills Insurance Amount of $ is paid to pharmacy for #30, Drug Y Tablets. Contract Pharmacy agrees to accept $20 dispensing fee from Hospital. Contract Pharmacy pays Hospital $ Contract Pharmacy places order on Hospitals 340B Wholesaler account to Replenish #30, Drug Y 10 mg Tablets. Cost at 340B pricing is $50.00 Total revenue returned to hospital is $ for the transaction. Hospital Reimbursed by Contract Pharmacy 18
19 340B Basics Contract Pharmacy Software Prescription Claim Processed at Contract Pharmacy Patient demographic data and drug data sent to 3 rd party switch. 340B Software Receives switch data. Determines patient relationships to covered entity. Determines eligible provider. Perpetually tracks opportunity for replenishing stock for the retail pharmacy. Provides financial transaction framework for reimbursing contract pharmacy and CE. 19
20 340B Program Basics Choosing a Software Vendor ocontract Pharmacy and/or Mixed Use ofee Structure ocontract Pharmacy Relationships owholesaler Relationships oask for references from vendor oask for references from peers 20
21 340B Program Basics Implementation oconfirm members who will sit on the 340B taskforce ocreate an implementation project plan obe realistic when assessing availability of key dept. personnel odo not request minor changes in large corporation agreements omeet weekly oidentify items that can be addressed simultaneously obe prepared for set backs ohave an independent audit no later than 4 months completion ovalidate data extraction files 21
22 340B Program Compliance What are three key compliance areas within the 340B drug discount program? 22
23 340B Program Compliance Key Compliance Areas Diversion Recertification Contract Pharmacy Registration Eligibility Duplicate Discounts 23
24 340B Program Compliance Vendor Data Spec Files and Data Feed Challenges ousually requires multiple departments with in multiple organizations to build o Vendor only verifies files and reports are usable oonly way to validate initial files is to audit ofiles need to be maintained once built 24
25 340B Program Compliance Identify potential pitfalls in management of the 340B program, especially with regard to 340B split-billing software programs 25
26 340B Program Compliance Myths o My vendor manages my 340B program o My vendor is auditing my program o Vendor software is enough to ensure I am compliant with 340B 1. Vendor software is only as good as the data it is fed 2. Vendor software can be setup incorrectly. 3. Vendors have a tendency to be aggressive with eligibility accumulations. 4. Vendor software accumulator settings should be reviewed to ensure proper quantities are being accumulated. o My local pharmacist understands 340B and are not diverting drugs. 1. Your local pharmacist may be diverting drugs unknowingly. 2. Your local pharmacist puts a lot of faith in the Vendor software. ~Ultimate responsibility lies with the Covered Entity 26
27 340B Program Compliance Describe specific approaches to maintain compliance with the 340B program? 27
28 340B Program Compliance Approach to maintaining a compliant program o Designate a Compliance Officer and 340B Coordinator o Prior to go-live have written Policies, Procedures and Audit Action Plan o Provide Training and Continuous Education o Complete Self-Assessments for Program Compliance o Retain an Independent Auditor to assess compliance 28
29 340B Program Compliance Discovery and Avoidance of Compliance Threats ovalidate initial data extracts oself-audit oknow your software application ocreate a 340B taskforce and meet regularly ohave an independent audit annually oensure policies and procedures are operational oallocate correct amount of resources for oversight 29
30 340B Program Compliance Consequences of Not Complying Repayment of discount to manufacturer Suspension from 340B program Possible Civil Monetary Penalties for knowing and intentional violations Potentially false claim liability (ripe for qui tam actions?) Changing landscape of enforcement and audit 30
31 340B Program Audits HRSA Manufacturer State Medicaid Organizations 31
32 340B Program Audits 32
33 340B Program Audits HRSA Audit Pre-Audit Onsite Audit Post Audit Notice and Hearing 33
34 340B Program Audits Pre-Audit Onsite Audit Post Audit Notice and Hearing Letter as Notice of Audit and How to Prepare Introductory teleconference with HRSA to discuss details and information needed for the audit. Entrance conference with key covered entity management to discuss expectations for the onsite audit. 34
35 340B Program Audits Pre-Audit Onsite Audit Post Audit Notice and Hearing 35 Auditor Selects Specific Data and Internal Controls (Polices etc.) for review. Audit procedures include, at a minimum: P & P and how they are executed; Verification of eligibility, including GPO and outpatient clinic eligibility; Verification of internal controls to prevent diversion and duplicate discounts, including how the covered entity defines whether a patient is considered inpatient or outpatient, HRSA Medicaid Exclusion File designations, and accuracy of covered entity s 340B database record; Review of 340B Program compliance at covered entity, outpatient or associated facilities, and contract pharmacies; and Testing of 340B drug transaction records on a sample basis. HRSA regional auditors conduct an exit interview, sharing areas of concern and preliminary findings. Any preliminary determinations made at this time are not considered
36 340B Program Audits Pre-Audit Onsite Audit Post Audit Notice and Hearing HRSA regional auditors forward preliminary findings to OPA for review. OPA reviews the preliminary findings, drafts a Final Report and issues the report to the covered entity, with a request for a corrective action plan (CAP), if applicable. 36
37 340B Program Audits Pre-Audit Onsite Audit Post Audit Notice and Hearing After HRSA issues a Final Report, the covered entity has 30 calendar days from the date of the HRSA Final Report to review findings noted in the HRSA Final Report, and to review HRSA s request for a CAP related to the findings noted. If a covered entity agrees with the Final Report, a covered entity must submit a CAP to HRSA within 60 calendar days for HRSA s approval. If a covered entity disagrees with the Final Report, it shall notify HRSA in writing within 30 calendar days with appropriate supporting documentation of the covered entity s disagreement. OPA reviews the covered entity s response and, if appropriate, may reissue the Final Report if changes are made based on documentation submitted. If an entity fails to submit a CAP, it may be removed from the 340B Program. Once an audit report is finalized by OPA, the findings and any associated corrective action will be summarized on the OPA public website. In addition, once HRSA reviews and approves a CAP, the covered entity will be required to provide HRSA a public letter that outlines the findings involving diversion and/or duplicate discounts, states that repayment may be necessary, and provides a contact person for any questions that may arise. This letter will be posted on the HRSA website under the CAP column in the audit findings table. HRSA closes out the audit once the covered entity attests that all repayment is resolved (if necessary) and that the CAP has been fully implemented. Covered entities whose findings involve repayment will be subject to audit in a year. 37
38 340B Program Audits Preparation o Reference your audit action plan 1. An audit action plan should be outlined in your P&P s 2. Complete with responsibilities for committee members 3. Who is communicating needs and coordinating tasks 4. Who will be present on the initial call 5. Who will be available to the auditor while they are on-site etc. o Gather and reference all 340B policy and procedures o Gather all copies of independent audits performed o Gather all contract pharmacy agreements (make sure fully executed) o Revisit your P&P s if it has been awhile to make certain it is up to date with all processes outlined. o Make sure all tasks specified in your P&P s have been performed and documented o The authorizing official should keep a file that has all 340B contracts with pharmacies and 3rd party vendors along with all the supporting documentation used to register the covered entity and any clinics child sites. 38
39 340B Program Independent Audits Pricing o CAH average $12,000 o Mid size SCH/RRC average $18,000 o Large DSH average $30,000 Understand the scope of the audit Plan in advance Ask if they implementation experience Ask if they are knowledgeable on your HIS and 340B software Ask for references Make sure the audit goes beyond a traditional mock HRSA audit 39
40 340B Program Regulation Updates MEGA Guidance Update 40
41 Executive Summary Areas of the 340B Program Discussed oprogram basics ocompliance challenges odifferent types of audits 41
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