340B Drug Program Compliance: Focus on Disproportionate Hospitals

Transcription

1 340B Drug Program Compliance: Focus on Disproportionate Hospitals Part I: 340B Drug Program Compliance Basics January 22,

2 Faculty Stephen J. Weiser, JD, LLM Director

3 Today s Agenda: Part I: 340B Compliance Basics The Medicaid Drug Rebate Program 340B of the Social Security Act: The Basics of the 340B Program What Entities are Eligible to Participate in the 340B Program Disproportionate Share Hospital Registration and the Medicaid Exclusion File Establishment of Off-Site 340B entities or Child Sites Eligible Patients Who May Receive 340B Drugs Program Prohibitions (including Duplicate Discounts, Diversion and Group Purchasing Organization Prohibition) Options for In-House and Retail Pharmacy Arrangements Recertification Basics 3

4 Next Session: Part II: Pharmacy Operations and the DSH When: January 29, 2014 Agenda Dispensing and Administration of 340B Drugs Elements of a Retail Pharmacy Contract Mixed Use Setting and Inventory Control Compliance Definition of Covered Outpatient Drugs and the GPO Prohibition 4

5 Part III: Audits by the Office of Pharmacy Affairs and Manufacturers: Focus on Diversion, Duplicate Discounts and GPO Prohibition When: February 5, 2014 Recertification Agenda Relationships with Physicians and Other Arrangements Challenges in compliance with the GPO Prohibition Administration and Dispensing to Outpatients vs. Inpatients When 340B Compliance impacts compliance with Tax Exempt Status and Fraud and Abuse Issues? 5

6 Questions During the session, please general questions to: We will do our best to address all of your questions within the allotted time. 6

7 Today s Approach Let s start from the very beginning! 7

8 Today s Approach A very good place to start requires an explanation of: The Medicaid Drug Rebate Program 8

9 Medicaid Drug Rebate Program: Background The Medicaid Drug Rebate Program is a partnership between CMS, State Medicaid Agencies, and participating drug manufacturers that helps to offset the Federal and State costs of most outpatient prescription drugs dispensed to Medicaid patients. The program requires a drug manufacturer to enter into, and have in effect, a national rebate agreement with the Secretary of the Department of Health and Human Services (HHS) in exchange for State Medicaid coverage of most of the manufacturer s drugs. (42 U.S.C. 1396r 8) 9

10 Medicaid Drug Rebate Program: Background Drugs covered by the Medicaid Drug Rebate Program include only: Covered Outpatient Drugs 1927(k) (2) of the Social Security Act (SSA) which include: 1. approved prescription drug by the Food and Drug Administration (FDA) 2. an over-the-counter (OTC) drug that is written on a prescription 3. a biological product that can be dispensed only by a prescription (other than a vaccine) 4. FDA-approved insulin. 10

11 Medicaid Drug Rebate Program: Background Limitation on Definition of Covered Outpatient Drug 1927(k) (3) also provides a limiting definition which provides, in part, that the term covered outpatient drug does not include any drug, biological product, or insulin provided as part of, or as incident to and in the same setting as outpatient hospital services (and for which payment may be made under this title as part of payment for the following and not as direct reimbursement for the drug). (emphasis added). 11

12 Medicaid Drug Rebate Program: Background Limitation on Definition of Covered Outpatient Drug (continued) More simply stated, the term covered outpatient drugs does not include drugs provided in the outpatient departments and for which Medicare, Medicaid, and other governmental third party payers subject to the SSA, reimburse on the basis of a bundled payment or flat fee, or pursuant to the prospective payment system (PPS) or a Ambulatory Procedures Listing (APL), or similar payment system. 12

13 Medicaid Drug Rebate Program: Background Limitation on Definition of Covered Outpatient Drug (continued) In addition to outpatient departments, limitation also applies to incident to services provided in: Inpatient hospital services. Hospice services. Dental services, except that drugs for which the State plan authorizes direct reimbursement to the dispensing dentist are covered outpatient drugs. Physicians services. Nursing facility services and services provided by an intermediate care facility for the mentally retarded. Other laboratory and x-ray services. Renal dialysis. 13

14 Affordable Care Act (ACA) Amendments to The Medicaid Drug Rebate Program increases the minimum Medicaid rebate percentages increased ʺadditional rebatesʺ for new formulations of brand name drugs the establishment of a maximum rebate amount, the extension of Medicaid rebates to Medicaid managed care organization utilization. amends the definition of ʺaverage manufacturer price,ʺ as it applies to Medicaid rebate and 340B Drug Programs. (See ACA 2501) 14

15 Rebates for Medicaid Managed Care Organization (MCO) Utilization. The Medicaid rebate statute historically exempted from Medicaid rebate requirements utilization dispensed through Medicaid MCOs. ACA 2501(c) requires manufacturers that participate in the drug rebate program to pay rebates for drugs dispensed to individuals enrolled with a Medicaid MCO if the MCO is responsible for coverage of such drugs, effective March 23,

16 Impact of Medicaid Rebate Program on State Medicaid Programs To facilitate the collection of these rebates, States must include utilization data reported by each Medicaid MCO to the States when requesting quarterly rebates from manufacturers as well as in their quarterly utilization reports to the Centers for Medicare & Medicaid Services. 16

17 Coordination of Medicaid Drug Rebate and the 340B Drug Discount Program ACA 2501(c) also made a conforming amendment to section 1927(j)(1) of the Act to specify that certain covered outpatient drugs are not subject to the rebate requirements only if such drugs are both dispensed by health maintenance organizations, including Medicaid MCOs that contract under section 1903(m), and subject to discounts under section 340B of the Public Health Service Act. 17

18 The 340B Drug Program: Background The 340B Program resulted from enactment of Public Law , the Veterans Health Care Act of 1992, which is codified as Section 340B of the Public Health Service Act. The 340B Program is managed by the HRSA Office of Pharmacy Affairs ( OPA ). Section 340B limits the cost of covered outpatient drugs to certain federal grantees, federally-qualified health center lookalikes and qualified hospitals. Participation in the 340B Program may result in significant savings for participating providers, estimated to be 20% 50% on the cost of pharmaceuticals for those safety-net providers. The purpose of the 340B Program is to enable those entities to stretch scarce resources, thereby reaching more eligible patients and providing more comprehensive services. 18

19 340B Drug Program Requirements Where do you find the law? Section 340B of the Public Health Service Act (42 U.S.C. 1396r 8) Federal Register Notices Policy Releases Manufacturer Notices Forms Reports You may find published guidelines and requirements at: Note: Neither HHS nor HRSA have adopted regulations through the regulatory policy required by the Federal Administrative Procedure Act. 19

20 Key 340B Administrators Department of Health and Human Services Health Resources Services Administration (HRSA) (is the primary Federal agency for improving access to health care services for people who are uninsured, isolated or medically vulnerable.) Office of Pharmacy Affairs (OPA) (a division of HRSA OPA administers the 340b program, which provides drug discounts to certain federal grantees, and the Pharmacy Support Services Center.) Apexus, Inc.: The 340B Prime Vendor Program (PVP) (HRSA contractor) 20

21 The 340B Drug Program: Background Acquisition cost billing for 340B claims, in fee-forservice ( FFS ) and managed care, is not required by federal law, by HRSA, nor by CMS, but instead is a State-specific decision that may be reflected in State statute, the Medicaid State Plan, State contracts with MMCOs, and/or MMCO provider agreements and manuals. In other words, to the extent permitted by State law, managed care contracts, or other agreements with third party payers, Covered Entities may charge beneficiaries actual charges rather then the 340B drugs actual acquisition cost ( AAC ) 21

22 Covered Entities Who is eligible for the 340B Program discount : Health Centers Hospitals Federally Qualified Health Centers Federally Qualified Health Center Look-Alikes Native Hawaiian Health Centers Tribal / Urban Indian Health Centers Ryan HIV/AIDS Program Grantees Ryan White HIV/AIDS Program Grantees Children s Hospitals Critical Access Hospitals Disproportionate Share Hospitals* Free Standing Cancer Hospitals Rural Referral Centers Sole Community Hospitals *The focus of the Aegis Webinar Series 22

23 Covered Entities Who is eligible for the 340B Program discount: 340B Covered Entities also include: Black Lung Clinics Comprehensive Hemophilia Diagnostic Treatment Centers Title X Family Planning Clinics Sexually Transmitted Disease Clinics Tuberculosis Clinics Specialized Clinics For a complete list and describing of eligible organizations link to: 23

24 Disproportionate Share Hospitals (DSH) Disproportionate Share Hospitals serve a significantly disproportionate number of lowincome patients and receive payments from the Centers for Medicaid and Medicare Services to cover the costs of providing care to uninsured patients. Disproportionate share hospitals are defined in Section 1886(d)(1)(B) of the Social Security Act. For more information, see the disproportionate share hospitals fact sheet at: MLN/MLNProducts/Downloads/Disproportionate_Share_Hospital.pdf 24

25 DSH Eligibility To be eligible to participate in the 340B Drug Pricing Program, DSHs must meet the requirements of 42 USC 256b(a)(4)(L). 42 U.S.C. 256b(a)(4)(L)(iii) states that, in order to participate in the 340B Program, disproportionate share hospitals, children s hospitals, and free-standing cancer hospitals may not obtain covered outpatient drugs through a group purchasing organization or other group purchasing arrangement. DSHs may also register their outpatient clinics (also referred to as child sites ). 25

26 Eligibility of outpatient facilities or Child Sites as 340B Participants Only outpatient facilities that are an integral and reimbursable part of the DSH may qualify as a child site. The outpatient facility must be included as a reimbursable part of the most recently filed cost report of the hospital, OPA requires the submission of the following documentation. To register a child site, the DSH must file with registration the following: Worksheet A and C from the most recently filed cost report. Provide supplemental documentation if the clinics are bundled on the worksheet (e.g., working trial balance); Worksheet S-2 from the most recently filed cost report for sites with a different Medicare number from the main hospital; and Worksheet E, part A, from the most recently filed cost report for hospitals with a DSH adjustment percentage requirement. In addition, in cases where the name of the facility is not the same as the cost reporting listing, documentation that shows the outpatient facility was filed with the most recent cost report is required. 26

27 Hospital Outpatient Clinics on the DSH s Premises. Outpatient clinics/departments within the four walls of the registered 340B parent hospital do not need to also register/enroll into the 340B Program. However, the covered entity remains responsible for demonstrating that those outpatient clinics/departments within the four walls of the parent hospital are only using 340B discounted drugs for eligible outpatients, meet all 340B Program requirements, and maintain auditable records. 27

28 Registration Requirements All sites that use 340B drugs must be listed on the 340B database. In order for non-hospital health care delivery sites to purchase 340B drugs or provide 340B drugs to their patients, they must first be authorized through the (non-hospital) covered entity s grant and listed on the 340B database. Clinics located off-site of the parent covered entity, regardless of whether those clinics are in the same building, must register with OPA as outpatient facilities of the parent 340B covered entity if the covered entity purchases or provides 340B drugs to patients of those facilities. For details on DSH registration requirements: 28

29 The Medicaid Exclusion File The HRSA Medicaid Exclusion File is a mechanism created by HRSA which helps state Medicaid agencies comply with a specific 340B statutory provision: that drugs purchased at 340B prices must be excluded from Medicaid rebate requests to drug manufacturers. In many States, Covered entities can choose whether they will use 340B drugs for their Medicaid patients. If they choose to do so, they must provide the Office of Pharmacy Affairs (OPA) with their pharmacy Medicaid Provider number, which is placed in the HRSA Medicaid Exclusion File. Illinois requires (1) mandatory participation of all eligible entities in 340B program and (2) mandatory carve in. Other States also follow such a requirement. 29

30 The Medicaid Exclusion File OPA makes the HRSA Medicaid Exclusion File available to state Medicaid agencies and manufacturers so that the state does not request a Medicaid rebate from a manufacturer for the already discounted 340B drugs. If an outpatient facility or sub-grantee/subcontractor bills under a different Medicaid Provider Number or NPI than the parent site, those need to be appropriately listed with the sites. 30

31 The 340B Drug Program: Eligible Patients 340B Eligible Patients are defined as: the Covered Entity has established a relationship with the individual, such that the Covered Entity maintains records of the individual's health care; and 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; and 31

32 The 340B Drug Program: Eligible Patients the individual receives a health care service or range of services from the Covered Entity which is consistent with the service or range of services for which grant funding or Federally-qualified health center look-alike status has been provided to the Covered Entity. Disproportionate share hospitals are exempt from this requirement. See: Definition of Patient at 32

33 340B Drug Program Statutory Prohibitions 1. Prevent diversion to ineligible patients. Covered entities must not resell or otherwise transfer 340B drugs to ineligible patients; 2. Prevent duplicate discounts. 42 USC 256b(a)(5)(A)(i) prohibits duplicate discounts; that is, manufacturers are not required to provide 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; 3. Not participate in a GPO for covered outpatient drugs. (This requirement only applies to disproportionate share hospitals, free standing cancer hospitals, and children s hospitals.) 33

34 Other 340B Requirements Maintain auditable records documenting compliance with 340B Program requirements. Covered entities are subject to audit by manufacturers or the federal government. Any covered entity that fails to comply with 340B Program requirements may be liable to manufacturers for refunds of the discounts obtained; To prevent duplicate discounts keep 340B Medicaid database information accurate and up to date. Notify OPA of all changes including registration of new outpatient facilities and contract pharmacies 340B Entities must conform with OPA Contract Pharmacy Requirements. 34

35 Pharmacy Implementation Other than requirements for retail pharmacy contracts, HRSA does not specify the manner in which a DSH provides pharmacy services to 340B eligible patients. Most covered entities choose one or more of the following options: In-House Pharmacy, in which the covered entity owns drugs, pharmacy and license; purchases drugs; is fiscally responsible for the pharmacy; and pays pharmacy staff. Contract Pharmacy Services, in which the covered entity owns drugs; purchases drugs; pays (or arranges for patients to pay) dispensing fees to one or more contract pharmacies; and contracts with pharmacy to provide pharmacy services. Provider/In-House Dispensing, in which the covered entity owns drugs; employs providers licensed in the state to dispense; holds a license for dispensing for the participating providers; and is fiscally responsible for operating and dispensing costs. 35

36 Pharmacy Implementation (Continued) Alternative Methods Demonstration Project, in which HRSA Office of Pharmacy Affairs approves a model proposed by the covered entity, such as a network of 340B covered entities. 36

37 Other 340B Requirements Retail Pharmacy Contracts 340B Entities must conform with OPA Contract Pharmacy Requirements in guidance published by HRSA Notice Regarding 340B Drug Pricing Program Contract Pharmacy Services* (To be discussed in detail in Part II!) * gisternotices/contractpharmacyservices pdf 37

38 340B Drugs and Medicaid Managed Care Organizations ACA added Medicaid managed care drug claims to the mandatory Medicaid drug rebate program, following the longstanding rebate provision in fee-for-service (FFS) Medicaid. States are required to collect the rebates based on utilization data provided by Medicaid managed care organizations (Medicaid MCOs). (To be discussed in Session 3 if anyone has further questions on this topic.) 38

39 340 B Recertification 340B covered entities are required to annually recertify their eligibility to participate in the 340B Drug Pricing Program and continue purchasing covered outpatient drugs at discounted 340B prices. Prior to the recertification deadline for each covered entity type, the 340B Program sends advanced notifications with preliminary information about the recertification process to the following contacts: Primary Contact Authorizing Official (Only the Authorizing Official will receive a username and password) It is the covered entity s responsibility to ensure that the contacts listed in the 340B database are accurate at all times to receive all notifications. The Authorizing Official will be required to log into the 340B database, update information as needed, and attest to the covered entity s compliance with 340B Program requirements. 39

40 340 B Annual Recertification DSH must certify to the following: 1. All information listed in the 340B program database for that covered entity is complete, accurate, and correct 2. The covered entity meets all 340B program eligibility requirements, including (if applicable) the statutory prohibition and HRSA Policy Release guidance on GPO purchasing 3. The covered entity is complying with all requirements and restrictions of the 340B program statute and any accompanying regulations or guidelines including, but not limited to, the prohibition against duplicate discounts/rebates under Medicaid, and the prohibition against transferring drugs purchased under the 340B program to anyone other than a patient of the entity 4. The covered entity maintains auditable records demonstrating compliance with 340B program requirements 40

41 340 B Annual Recertification (cont.) DSH must certify to the following: 5. The covered entity has systems/mechanisms in place to reasonably ensure ongoing compliance with 340B program requirements 6. If the covered entity uses contract pharmacy services, that the contract pharmacy arrangement is performed in accordance with the HRSA Office of Pharmacy Affairs (OPA) requirements and guidelines including, but not limited to, that the hospital obtains sufficient information from the contractor to ensure compliance with applicable policy and legal requirements, and the hospital has utilized an appropriate methodology to ensure compliance (e.g., through an independent audit or other mechanism) 7. The covered entity acknowledges that if there is a breach of 340B program requirements, the covered entity may be liable to the manufacturer of the applicable covered outpatient drug and, depending on the circumstances, may be subject to the payment of interest and/or removal from the list of eligible 340B entities. (numbered as 8 in HRSA recertification form.) 41

42 340 B Annual Recertification( cont.) DSH must certify to the following: 8. The covered entity acknowledges its responsibility to contact OPA as soon as reasonably possible if there is any material change in 340B program eligibility and/or a material breach by the covered entity of any of the foregoing. (numbered as 7 in HRSA recertification form) APEXUS FAQ ID: 1665 Q: How does HRSA define the term "material breach" that is used in the recertification statements? (Ref: "the covered entity acknowledges its responsibility to contact OPA as soon as reasonably possible if there is any...material breach by the covered entity of any of the foregoing.") A: The term material breach in this context refers to an instance of non-compliance with any of the 340B Program requirements. 42

43 Questions? 43

44 Next Session: Part II: Pharmacy Operations and the DSH When: January 29, 2014, Noon CST Dispensing and Administration of 340B Drugs Elements of a Retail Pharmacy Contract Mixed Use Setting and Inventory Control Compliance Definition of Covered Outpatient Drugs and the GPO Prohibition 44