October 27, Krista Pedley, Director Office of Pharmacy Affairs Health Resources and Services Administration.

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1 th Street, N.W., Suite 950 Washington, DC Tel Fax John Lovelace, Chairman Margaret A. Murray, Chief Executive Officer October 27, 2015 Krista Pedley, Director Office of Pharmacy Affairs Health Resources and Services Administration Re: RIN 0906 AB08 Submitted via Dear Ms. Pedley, The Association for Community Affiliated Plans (ACAP) thanks you for the opportunity to comment on proposed guidance published August 28, 2015 called 340B Drug Pricing Program Omnibus Guidance. ACAP recognizes and supports the importance of the 340b program in providing individuals served by Safety Net providers with meaningful access to needed drugs. ACAP is an association of 60 nonprofit and community-based Safety Net Health Plans (SNHPs) located in 24 states. Our member plans provide coverage to approximately 15 million individuals enrolled in Medicaid, the Children s Health Insurance Program (CHIP), Medicare Special Needs Plans for dually-eligible individuals, and Qualified Health Plans through the Marketplaces. Nationally, ACAP plans serve roughly one-third of all Medicaid managed care enrollees, including around one-third of all enrollees in the Medicaid-Medicare demonstrations. ACAP plans are committed members of their communities, partnering with states to improve the health and well-being of their members who rely upon the Medicaid and CHIP programs. ACAP feels very strongly that without mandated use of indicators demonstrating which drugs are purchased under the 340B program, this program cannot operate properly and without substantial error in a managed care environment; our comments reflect this view. In addition, ACAP respectfully submits comments on several other issues related to 340B Drug Pricing Program Omnibus Guidance. These are summarized here, and further explained below. 1. Managed Care and 340B. ACAP recommends HRSA reconsider allowing covered entities to switch on a quarterly basis which MCOs are carved in and carved out. At a minimum, HRSA must maintain up-to-date and accurate information on a covered entity s current carve-in and carve-out decisions in the OPA 340B database. ACAP strongly urges HHS to mandate use of the 340B indicator on the NCPDP transaction set or a modifier on the physician claim/837p transaction set. o MCOs should be allowed to contractually require 340B covered entities to utilize this indicator on the NCDPD transaction set or the modifier on

2 the 837p; MCOs should not be penalized for not excluding claims that fail to include the indicator or modifier. o Our recommendation to require the 340B indicator on the NCPDP transaction should apply to all 340B transactions between a covered entity and contract pharmacy as well. ACAP recommends that HRSA mandate that information be collected and made publicly available regarding which 340B covered entities are in compliance with 340B regulations. ACAP also asks HRSA to require covered entities to sign agreements with the MCOs with which they work; these agreements should be shared with states and made available in the OPA 340B database. ACAP asks HRSA to require all covered entities to sign agreements with contract pharmacies. These agreements should be shared with states and made available in the OPA 340B database. ACAP also asks HRSA to include in the OPA 340B database information on covered entities in the OPA 340B database should include whether the covered entity operates an in-house pharmacy. 2. Definition of Eligible Individual. ACAP supports the proposal to allow individuals who are prescribed drugs during telehealth encounters to benefit from 340B. 3. Prohibition on Using 340B for Drugs That are Part of Bundled Payments. ACAP urges HRSA to remove the exclusion from 340B for drugs included in bundled payments. At a minimum, HRSA should allow 340B pricing for drugs included in bundled payment arrangements when plans can provide specific drug data. ACAP seeks clarification from HRSA that PPS is not considered a bundled payment for the purpose of this guidance. Our comments are explained in more depth below. 1. Managed Care and 340B. The preamble to Part D Covered Entity Requirements, Prohibition of Duplicate Discounts indicates that a covered entity may make a different determination regarding carving Medicaid enrollees in or out not only for Medicaid managed carve versus FFS, but also by individual covered entity sites and by MCO; HRSA proposes to allow covered entities to change these determinations quarterly. HRSA 2

3 further proposes to explore allowing covered entities to use an even more nuanced approach to purchasing in the future. According to statute, Medicaid MCOs must avoid duplicating 340B and drug rebate discounts, yet currently there is no standard or required method for MCOs to learn which drugs are provided by covered entities under the 340B program. HHS states that it encourages covered entities, states and MCOs to work together to establish a process to identify 340B, but we find this approach to be woefully inadequate. Such an approach has not worked effectively to date, and adding additional levels of complexity to the application of 340B to sites and MCOs will only exacerbate the propensity for substantial error and non-compliance. As such, ACAP has grave concerns regarding the policies described in this Part, and recommends HRSA reconsider the flexibility it proposes to give to covered entities regarding carve-in and carve-out determinations. At the very least, to make such a confusing system work, HRSA must maintain up-to-date and accurate information on a covered entity s current carve-in and carve-out decisions in the OPA 340B database. Under the law, plans must ensure that 340B claims are identified and excluded from the pharmacy utilization data reported for the purposes of claiming drug rebates. The only way that plans can ensure that the 340B claims are identified is if the use of the indicator on the NCPDP transaction set or a modifier on the physician claim/837p transaction set is mandated. ACAP strongly urges HHS to take action ensure that this mandate is adopted. Furthermore, we believe that final regulations should make clear that MCOs have the right to contractually require that 340B covered entities utilize this indicator on the NCDPD transaction set or the modifier on the 837p, and that MCOs will not be penalized for not excluding claims that fail to include the indicator or modifier. In general, ACAP plans have found the lack of additional information regarding the 340B Program to be problematic. For the sake of clarity and compliance, ACAP recommends that HRSA mandate that information be collected and made publicly available regarding which 340B covered entities are in compliance with 340B regulations. ACAP also asks HRSA to require covered entities to sign agreements with the MCOs with which they work; these agreements should be shared with states and made available in the OPA 340B database. ACAP agrees with HRSA that contract pharmacies present a heightened risk for duplicate discounts. However, we discourage HRSA from relying on an assumption that contract pharmacies will not dispense 340B drugs to Medicaid patients. Instead, we feel as though our recommendation to require the 340B indicator on the NCPDP transaction should apply to all 340B transactions between a covered entity and contract pharmacy as well. ACAP further recommends that HRSA mandate that additional information 3

4 regarding pharmacies be both collected and made transparent and available to all stakeholders by way of the OPA 340B database. These include the following: Covered entities should sign agreements with contract pharmacies. These agreements should be shared with states and made available in the OPA 340B database. Information on covered entities in the OPA 340B database should include whether the covered entity operates an in-house pharmacy. 2. Definition of Eligible Individual. Part C Individuals Eligible to Receive 340B Drugs explains that current guidance, issued in 1996, applies a three-part test for determining whether an individual is a patient who is allowed to receive 340B drugs. This proposed rule describes a new test with six parts; with the additions, HRSA attempts to add clarity to the eligibility requirements to ensure that only those individuals for whom the law intended to benefit receive 340B drugs. ACAP understands the reasoning behind the increased complexity, but also recognizes that this will increase burden on program stakeholders, primarily covered entities. ACAP would like to comment on one aspect of these changes. A number of ACAP plans have implemented telehealth programs to increase access to services for their enrollee populations, particularly those who live in rural or otherwise underserved areas. As such, ACAP supports the proposal to allow individuals who are prescribed drugs during telehealth encounters to benefit from 340B, as this will support efforts by plans to ensure accessible, quality care for Medicaid enrollees. 3. Prohibition on Using 340B for Drugs That are Part of Bundled Payments. In Part B Drugs Eligible for Purchase Under the 340B Program, the proposed rule indicates that only drugs bundled for and receiving such bundled reimbursement under Title XIX described in section 1927(k)(3) will be considered excluded from the definition of covered outpatient drug. The proposed rule clarifies that if a covered drug is billed and paid for as a separate line item as an outpatient drug in a cost basis billing system, this drug will be included in the program. Many Medicaid health plans are at the forefront of value-based purchasing efforts to improve the cost-efficiency and quality of the care they manage for lower-income health care consumers. As such, these efforts may be stymied as a result of this prohibition; such a result would run counter to current trends to reduce costs while enhancing quality of care. In addition, many plans using bundled payments are able to collect data on a service-level basis. In these cases, specific data related to drugs 4

5 included in the bundle is available. For these reasons, ACAP urges HRSA to remove this prohibition altogether. At a minimum, HRSA should allow 340B pricing for drugs included in bundled payment arrangements when plans can provide specific drug data. Also, prospective payment systems (PPS) play an important role in Medicaid for health plans, both for payment to Federally-Qualified Health Centers (FQHCs) and other providers. The discussion of bundled payments in the proposed rule does not mention PPS, which for FQHCs includes various health care services, such as behavioral health services, pharmacy, X-ray, labs, dental services, and other care. ACAP seeks clarification from HRSA that PPS is not considered a bundled payment for the purpose of this guidance. ACAP thanks you for the opportunity to share our comments on this proposed regulation. If you have any additional questions or comments, please do not hesitate to contact Jenny Babcock ( or jbabcock@communityplans.net). Sincerely, Margaret A. Murray Chief Executive Officer 5