Report to the Health and Human Services Interim Committee and Social Services Appropriations Subcommittee

Transcription

1 Reprt t the Health and Human Services Interim Cmmittee and Scial Services Apprpriatins Subcmmittee Expansin f 340B Drug Pricing Prgrams Vlume 18 Prepared by the Divisin f Medicaid and Health Financing August 21, 2012

2 Table f Cntents H.B. 74 Expansin f State Medicaid 340B Drug pricing prgram 1 Feasibility f Additinal Disease Management Prgrams 1 Senate Bill 180 in the 2011 Utah Legislative General Sessin 2 Ptential Cst Savings 3 Necessary Amendments and Waivers 4 Prjected implementatin f 340B prgrams 4 Fill-and-Bill and Buy-and-Bill at 340B Pricing 4 Disease Management 5 Assciatin fr Utah Cmmunity Health 5 i

3 H.B. 74 Expansin f State Medicaid 340B Drug pricing prgram The 2008 Legislature directed the State Medicaid agency t expand prgram use f savings under the 340B drug pricing prgram. Specifically, the Department f Health shall determine: The feasibility f develping and implementing ne r mre 340B pricing prgrams fr a specific disease, similar t the hemphilia disease management prgram; Whether the 340B prgram results in greater savings fr the department than ther drug management prgrams fr the particular disease. The Department shall reprt regarding: Ptential cst savings t the Medicaid prgram frm the expansin f use f the 340B prgram; Amendments and waivers necessary t implement increased use f 340B pricing; Prjected implementatin f 340B pricing prgrams; The Department shall wrk with the Assciatin fr Utah Cmmunity Health t identify and assist cmmunity clinics that d nt have 340B drug pricing prgrams t determine whether: Patients f the Cmmunity Health Center wuld benefit frm establishing a 340B drug pricing prgram n site r thrugh a cntract pharmacy; The Cmmunity Health Center can prvide 340B drug price savings t the Health Center s Medicaid patients Previus versins f this reprt have prvided explanatins and descriptins f prgram requirements, limitatins, expectatins, and bstacles. Attentin shuld be directed t these earlier versins fr infrmatin cncerning thse details. This versin will fcus n prgress since the previus reprt. Feasibility f Additinal Disease Management Prgrams Designing a disease management prgram and securing apprval frm the Centers fr Medicare and Medicaid Services (CMS) presents challenges. Prgram staff submitted a final draft State Plan Amendment (SPA) t the Denver Reginal CMS ffice in May f 2010 fr review. The SPA included six disease states: hemphilia, multiple sclersis, cystic fibrsis, rheumatid arthritis, hepatitis C, and Crhn s disease. That draft was reviewed by CMS in bth the Reginal and the Central CMS ffices and received a tentative apprval. With the passage f Health Care Refrm, CMS expressed sme uncertainty surrunding the best methd fr implementing an expanded disease management prgram. At varius pints in the past, CMS separately asked that the State cnsider: Medical Hmes prvisins cntained in the legislatin as a vehicle fr implementing the prpsed disease management prgram, implementing slely thrugh a State Plan amendment, 1

4 eliminating the need fr a1915(b)(4) Waiver, giving enhanced attentin t the cst effectiveness requirements f a waiver, altering the need fr a request fr prpsal, and cnsulting with the Indian tribes prir t apprval being granted. Fllwing additinal discussins between the state and CMS, CMS determined that many f its suggestins were nt feasible. CMS prvided the state with a request fr additinal infrmatin and ultimately decided that three prcesses are needed alng with tribal cnsultatin: 1. A request fr prpsal (RFP), 2. A 1915(B)(4) Waiver, and 3. The cst effectiveness prtin f the waiver. CMS des nt have a template fr this waiver type as they have never apprved ne like this befre. The template prvided needs t be extensively adapted t this situatin and CMS has t cllabrate n that requirement. While fllw-up with CMS has ccurred almst quarterly since that submissin, practical implementatin and further pursuit f this SPA has declined as a result f ther Medicaid pharmacy pririties (e.g., ACO s) that have a direct impact n this initiative. Senate Bill 180 in the 2011 Utah Legislative General Sessin With the passage f Senate Bill 180 in the 2011 Utah Legislative General Sessin, Medicaid prepared and submitted an 1115 Waiver applicatin t CMS which, if apprved, will cnvert the existing managed care mdel t ne f Accuntable Care Organizatins (ACOs). The ACOs are anticipated t include mst pharmacy services. ACOs will perate in the fur Wasatch Frnt cunties. Individuals in rural areas will cntinue t be served under the fee-fr-service mdel. Mental health therapeutic classes f drugs (e.g., atypical anti-psychtics, psychtrpic drugs) have been excluded frm the waiver request and subsequent ACO management. Varius cmpnents fr handling the pharmacy benefit prtin f the ACO mdel have been discussed with the ACOs as well as CMS. Aspects relating t claims prcessing, data transfer, and Medicaid regulatin cmpliance must be cnfigured. Accmmdatin f the Mental Health benefit presents challenges fr the ACOs, Medicaid, and future 340B drug prgram parameters. Fr example, sme ACOs desire t use 340B acquired drugs fr their pharmacy benefit. A mental health carve-ut means that utilizatin tracking has t be separate fr thse drugs that are prvided as 340B, thse that are nt prvided as 340B, and thse that are nt prvided thugh the ACOs. The Deficit Reductin Act f 2005 requires Medicaid t cllect rebates n physician administered drugs even when prvided under Managed Care Organizatins. The Affrdable Care Act f 2010 requires Medicaid t cllect rebates n all pharmaceuticals prvided under Managed Care Organizatins. In the future, prviding Medicaid pharmaceutical care thrugh an ACO mdel alng the Wasatch Frnt wuld greatly reduce the ppulatin base fr expansin f 340B drug pricing prgrams under fee-fr- 2

5 service. In all cases, Medicaid is still required t track and reprt utilizatin t ensure that required rebates are cllected. Cnsequently, new ACOs will have mandatry utilizatin reprting requirements. The feasibility f expanding disease management int ther disease states will be greatly reduced if clients alng the Wasatch frnt becme part f an ACO in the future. This may impact the willingness f 340B prviders t bid fr ther disease management prgrams (lacking ecnmies f vlume). The state has been wrking with CMS t btain apprval f the 1115 Waiver request titled Utah Medicaid Payment and Service Delivery Refrm. CMS denied the riginal 1115 Waiver applicatin, but said that prtins f the initial submissin culd be dne thrugh a 1915(b) Waiver as a Managed Care Organizatin. The state is wrking thrugh changes t the 1915(b) Waiver fr the physical health prtin f the business and Medicaid staff are als wrking with CMS n a separate 1915(b) Waiver fr disease management. Ptential Cst Savings The 340B Drug Pricing Prgram resulted frm enactment f Public Law , the Veterans Health Care Act f 1992, which is cdified as Sectin 340B f the Public Health Service Act. Sectin 340B limits the cst f cvered utpatient drugs t certain federal grantees, federally-qualified health center lk-alikes and qualified disprprtinate share hspitals. Significant savings n pharmaceuticals may be seen by thse prvider entities that participate in this prgram. The 340B prgram is perated under the jurisdictin f the Office f Pharmacy Affairs (OPA). A cmpnent f the Health Resurces and Services Administratin (HRSA), f the U.S. Department f Health and Human Services (HHS), the Office f Pharmacy Affairs has three primary functins: 1. Administratin f the 340B Drug Pricing Prgram, thrugh which certain federally funded grantees and ther safety net health care prviders may purchase prescriptin medicatin at significantly reduced prices. 2. Develpment f innvative pharmacy services mdels and technical assistance, and 3. Service as a federal resurce abut pharmacy. In all f its activities, OPA emphasizes the imprtance f cmprehensive pharmacy services being an integral part f primary health care. Cmprehensive pharmacy services include: patient access t affrdable pharmaceuticals, applicatin f "best practices" efficient pharmacy management, and the applicatin f systems that imprve patient utcmes thrugh safe and effective medicatin use. The interest that HRSA (a sister agency t CMS under HHS) maintains in Medicaid 340B prgrams stems frm the fact that all parties invlved must take strict measures t ensure that drug manufacturers are nt expsed t a duble rebate and that 340B purchased drugs are nt prvided t patients wh d nt qualify as a patient f the 340B participating facility (nte: the simple act f filling a prescriptin at a 340B facility is nt sufficient t establish that relatinship). Medicaid drug expenditures are entitled t a manufacturers rebate back t Medicaid. Drugs reimbursed t a 340B cvered prvider entity under the OPA prgram are prhibited frm being subject t any rebate. 3

6 All savings t Medicaid frm implementing a 340B based prgram cme entirely frm the prviders. Additinal revenues frm the 340B prgram were intended t help 340B prviders ffset lsses resulting frm the high vlumes f discunted and free medical services prvided t the uninsured and underinsured, which vlumes qualify them fr participatin in the prgram. A change requiring 340B prviders t fill prescriptins and bill Medicaid at 340B cst pricing requires prviders t share all f their savings with Medicaid and wuld essentially eliminate that revenue, thus discuraging prvider participatin. Therefre, it becmes imprtant t find a means t maintain prvider interest. 340B pricing infrmatin is nt accessible directly t Medicaid, as this infrmatin is cnsidered prprietary. Cst savings were riginally calculated based n estimated 340B prices. Bill Vn Oehsn, president and general cunsel f The 340B Calitin, a natinal rganizatin f safety net Disprprtinate Share Hspitals (DSH) based in Washingtn D.C. maintains that 340B prices are n average AWP (Average Whlesale Price) minus 49 percent. The actual price varies by drug prduct. There is little questin that ptential cst savings exist. Thse savings are nt always easily calculated given the cnstraints f the system, such as 340B requirements, CMS apprvals, and availability f willing cntractrs. Medicaid delayed revising savings calculatins pending the utcme f CMS review f the 1115 Waiver applicatin, and cntinues t d s as negtiatins fr the 1915(b) ACO waiver are undertaken. Necessary Amendments and Waivers There are several distinct cmpnents fr the 340B prgram. The medical cmpnent pertains t pharmaceutical services prvided in a physician s ffice setting (e.g., hspital clinics, cmmunity clinics). The pint-f-sale (POS) cmpnent pertains t prescriptins btained thrugh a pharmacy. A third cmpnent, referred t as disease management, is administered thrugh a POS setting with sme medical services als prvided. In previus reprts, the Divisin has addressed the third cmpnent, expansin f the current 340B Disease Management prgram, which includes the management f additinal disease states. As reprted under the sectin addressing feasibility, the Divisin, has, in the past, invlved itself in negtiatins with CMS t finalize a SPA, waiver, and RFP fr disease management. The Divisin included the disease management expansin prgram as part f the riginal 1115 Waiver request titled Utah Medicaid Payment and Service Delivery Refrm. The value f a Medicaid disease management prgram with an ACO mdel running in the state will be limited t the nn-aco catchment areas f the state. Pursuit f disease management under remaining fee-fr-service cntracts is being revisited, especially since the serviceable ppulatins are lcated in sparsely ppulated rural cunties. Prjected implementatin f 340B prgrams Fill-and-Bill and Buy-and-Bill at 340B Pricing Previus reprts have detailed the pprtunities and bstacles fr implementing fill-and-bill and buyand-bill arrangements with prviders (please refer t previus reprts fr mre detail). 4

7 Negtiatins with hspital prviders and ther 340B cvered entities cntinue in hpes f btaining additinal savings. Althugh the net gain is less than a full 340B discunt, the net result will be additinal savings t the Medicaid prgram and preserving interest in the prgram by the participating 340B prviders. T aid in this prcess, Utah Medicaid cmmissined a dispensing fee survey. The survey will prvide Medicaid with the infrmatin necessary t establish a specific 340B dispensing fee. Dispensing fee differentials are likely t be identified, and the state plans t submit a State Plan Amendment t CMS fr apprval f any new prpsed dispensing fees. Since the Nvember 2011 reprt, the State has secured a vendr and the survey is underway and anticipated t be cmpleted in the near future. With infrmatin frm the dispensing fee survey, Medicaid will begin negtiatins with 340B entities in rder t have the pharmacy 340B prviders fill-and-bill at 340B pricing. Medicaid wuld put an edit in the claims payment system t ensure thse prviders are billing at 340B csts and that thse claims are nt included in the rebate invicing prgram. Disease Management The prcess thrugh which Freedm f Chice Waivers are apprved by CMS has prven t be lengthy. Such was the case with the riginal hemphilia prgram. Given the pace f the CMS apprval prcess, the effrts required t submit a 1915(b) Waiver applicatin, and resulting changes t the disease management mdel presented by the ACO waiver (e.g., smaller ppulatin base), it is difficult t estimate a cmpletin date fr expansin f the disease management prgram. Assciatin fr Utah Cmmunity Health The Assciatin fr Utah Cmmunity Health (AUCH) is an rganizatin f 340B qualifying cmmunity health centers, federally qualified health centers, and family planning clinics. There are 29 cvered entities in the AUCH rganizatin. AUCH pharmacies charge 340B clients the cst f the 340B drugs plus a five dllar c-pay, prviding a great benefit t their patients. Medicaid patients f the 340B AUCH prviders d nt use the 340B prgram and, in fact, are sensitive as t whether 340B purchased drugs are used since using 340B drugs wuld change their c-pay (Traditinal Medicaid clients may nt pay cpays greater than three dllars). A 340B cvered entity by definitin buys 340B drugs fr use in the facility. All cvered entities prvide 340B purchased medicatins, at least in the physicians ffices, whether r nt pharmacy services are available nsite r thrugh a cntracted pharmacy. Mst AUCH members have nsite pharmacies r have a cntracted pharmacy. Presently, cvered entities can elect whether r nt they will chse t filland-bill with 340B purchased drugs fr their Medicaid patients. T date, tw have elected t d s. Past negtiatins with the AUCH rganizatin fcused n methds t make btaining medicatins attractive fr the Medicaid client while maintaining the revenue fr the cvered entity. Similar t ther 340B prviders, as stated previusly, the cntracted pharmacy retailers prviding services t 340B AUCH clients have als viced discntent with participatin unless reimbursement issues (e.g., higher dispensing 5

8 fees r c-pays) are addressed. Results frm the dispensing fee survey shuld help reslve thse cncerns. A cst settlement apprach has nt been discussed with the AUCH rganizatin since crdinatin f the required prgramming amng the cvered entity, the cntracted pharmacy, and the Medicaid agency is beynd the scpe f their systems and resurces at this time. AUCH has indicated t Medicaid that its rganizatin f cvered entities will, hwever, wrk twards fill-and-bill participatin pending satisfactry reslutin f reimbursement issues such as an increase in the current dispensing fee. 6