Structuring 340B Contract Pharmacy Arrangements: Meeting Legal and Regulatory Requirements

Transcription

1 Presenting a live 90-minute webinar with interactive Q&A Structuring 340B Contract Pharmacy Arrangements: Meeting Legal and Regulatory Requirements THURSDAY, JUNE 4, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Alan J. Arville, Member, Epstein Becker Green, Washington, D.C. Michael B. Glomb, Partner, Feldesman Tucker Leifer Fidell, Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

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7 340B BACKGROUND Enacted in 1992 Section 340B of the Public Health Service Act (42 USC 256b). Applies only to covered outpatient drugs as defined in the Medicaid statute (Social Security Act, Section 1927(k)) Requires drug manufacturers to sell covered drugs to covered entities at a substantial discount (25% to 50% off the AWP, according to HRSA)(the ceiling price ) in order to have the drug covered under Medicaid 340B discount is computed based on Medicaid rebate formula: 23.1% (single source/innovator multiple source drugs) 17.1% (certain clotting factors and HHS-approved pediatric drugs) 13% (non-innovator multiple source drugs) Ceiling price = AMP minus Unit Rebate Amount (URA) Available only to certain types of organizations - Covered Entities (CE) - specified in the statute 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 7

8 340B COVERED ENTITIES HRSA Grantees Comprehensive Hemophilia Treatment Centers Federally Qualified Health Centers Native Hawaiian Health Centers Tribal/Urban Indian Health Centers Ryan White Programs Title X Family Planning Clinics Hospitals Disproportionate Share Hospitals Critical Access Hospitals Rural Referral Centers Sole Community Hospitals Children s Hospitals Free Standing Cancer Hospitals STD, Black Lung, TB Clinics 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 8

9 340B BACKGROUND Oversight by HRSA s Office of Pharmacy Affairs (OPA) Enrollment required through OPA website ( Quarterly registration OPA maintains CE, manufacturer, contract pharmacy, and Medicaid exclusion databases 340B Prime Vendor (Apexus) negotiates subceiling prices for 340B drugs ( Feldesman Tucker Leifer Fidell LLP. All rights reserved. 9

10 HISTORY OF CONTRACT PHARMACY ARRANGEMENTS Statute does not address contract pharmacies Many (if not most) non-hospital CEs did not have an in-house pharmacy, limiting benefit of 340B Program to CEs and patients In 1996, HRSA permitted CEs to contract with a commercial pharmacy to dispense 340B drugs to eligible patients, but on a limited basis (61 Fed Reg (August 23, 1996)) One contract pharmacy per delivery site No chain pharmacy arrangements No contract pharmacy if CE operated an in-house pharmacy 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 10

11 HISTORY OF CONTRACT PHARMACY ARRANGEMENTS HRSA issued revised guidance in 2010 (75 Fed. Reg (March 5, 2010)) Allows contracting with multiple pharmacies, pharmacy chains, and/or operating an in-house pharmacy Applies to all contract pharmacy arrangements Guidance replaces all prior guidance Substantial emphasis on compliance in fact, not just on paper 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 11

12 340B COMPLIANCE ISSUES 340B drugs may be dispensed only to a patient of a CE and may not be resold i.e. diversion prohibited CE may not request payment under Medicaid for a 340B drug if that drug is subject to the payment of a rebate to a state Medicaid agency i.e. duplicate discounts prohibited (manufacturer paying a rebate on a 340B discounted drug) 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 12

13 340B ELIGIBLE PATIENTS Patient Definition (61 Fed. Reg (October 24, 1996)) CE has established a relationship with the individual, such that the CE 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 CE or provides health care under contractual or other arrangements (e.g. referral for consultation) such that the responsibility for the care remains with the CE; and 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 13

14 340B ELIGIBLE PATIENTS The individual receives a health care service or range of services from the CE 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 entity. (DSH exception) An individual will not be considered a patient of the entity for purposes of 340B if the only health care service received by the individual from the CE is the dispensing of a drug or drugs for subsequent self-administration or administration in the home. An individual registered in a state operated or funded AIDS drug purchasing assistance program is considered a patient 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 14

15 340B AND MEDICAID A covered entity shall not request payment under Medicaid for prescribed drugs with respect to a drug that is subject to 340B if the drug is subject to the payment of a rebate to the State. (emphasis added) The Secretary of DHHS shall establish a mechanism to ensure that covered entities comply [with this provision] 42 USC 256b(a)(5)(A)(i)and(ii)) 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 15

16 340B AND MEDICAID The mechanism to prevent duplicate discounts: Relies on state-issued Medicaid provider number to identify prescriptions filled using drugs purchased at 340B price State does not claim manufacturer rebate on drugs reimbursed under CE s Medicaid provider number Implemented through HRSA s Medicaid Exclusion File Dispensing to Medicaid fee-for-service beneficiary through contract pharmacy is prohibited unless there is an arrangement with the State to prevent duplicate discounts 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved.

17 340B AND MEDICAID ACA requires manufacturers to pay rebates on Medicaid MCO drugs, except for 340B drugs No billing/duplicate discount issue per se Medicaid agencies can claim rebate on non-340b drugs MCOs responsible for reporting to State for rebate purposes State implementation is uneven Some apply policies developed for fee-for-service reimbursement to MCOs Some prohibit or otherwise frustrate dispensing of 340B drugs by contract pharmacies to MCO beneficiaries No Federal guidance to date 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 17

18 HRSA COMPLIANCE INITIATIVES Annual re-certification of all CEs, including contract pharmacy arrangements Random and targeted compliance audits of CEs (diversion and duplicate discounts) Significant uptick in 340B purchases and/or large contract pharmacy networks attract audit Common audit findings Contract pharmacy/site not registered Incorrect address of contract pharmacy No underlying contract Guidance/regulations? 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. 18

19 CONTACT INFORMATION Michael B. Glomb Feldesman Tucker Leifer Fidell LLP th Street, NW Washington, DC (202)

21 Disclaimer This presentation has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. 21

22 Agenda 1. HRSA Guidelines and OPA Registration 2. HRSA s Essential Elements 3. Contract Pharmacy Work Flow OIG Report HRSA Letter on Contract Pharmacy Oversight 6. Common Audit Pitfalls 7. Health Care Regulatory Issues 8. Operational and Financial Considerations 9. Contract Pharmacy Checklist 10.Contract Pharmacy Landscape 22 22

23 HRSA Notice on Contract Pharmacy and OPA Registration Process March 5, 2010, HRSA Issued New Contract Pharmacy Guidelines Allows contracting with multiple pharmacies o previous 1996 guidance only allowed one contract pharmacy per delivery site Requires written agreement between CE and Contract Pharmacy. Contract must address HRSA s Essential Elements. CE is expected to conduct annual independent audits. CE retains ultimate responsibility for compliance. OPA requires Contract Pharmacies to be registered during the first 15 days of each calendar quarter (i.e., January 1 to 15) for a start date on the first day of the next calendar quart (i.e., April 1). 23

24 HRSA Essential Elements Contract Pharmacy Reporting Tracking System/Verify Patient Eligibility Medicaid Duplicate Discounts Prohibited Patient Choice Essential Elements HRSA and Manufacturer Audits Comprehensive Pharmacy Services Ship to, Bill to Provisions Covered Entity Must Maintain Auditable Records 24

25 Typical 340B Contract Pharmacy Process Flow Health Insurer PBM Covered Entity Rx Contract Pharmacy Claims Data 340B Admin. Data / Process Money Inventory Wholesaler 25

26 2014 OIG Report on Contract Pharmacy Arrangements OIG interviewed 30 Covered Entities (15 community health centers and 15 DSHs) and 8 administrators. Inconsistent determinations of 340B eligibility. Difficulty identifying Medicaid MCO beneficiaries. Not all Covered Entities offered discounted 340B price to uninsured patients in contract pharmacy arrangements. Most covered entities did not conduct all of the oversight activities recommended by HRSA. HRSA has not specified whether Covered Entities must prevent duplicate discounts for 340B drugs reimbursed by Medcaid MCOs. OIG acknowledged that neither the 340B statute nor HRSA guidance requires discounted 340B prices to the uninsured. OIG is working on new report to assess risk of Medicaid MCO duplicate discounts. 26

27 2014 HRSA Letter on Contract Pharmacy Oversight Issued on February 4 th, 2014 to 340B Covered Entities. Stresses Vigilant Oversight of contract pharmacy arrangements. Sets forth 5 contract pharmacy oversight requirements and links to resources. Conduct independent annual audits and/or adequate oversight mechanism Develop 340B Program policies Prevent diversion and duplicate discounts Maintain accurate information in the HRSA 340B database HRSA states that it will terminate contract pharmacy arrangements where the Covered Entity is exercising no oversight. 27

28 Common Contract Pharmacy Audit Pitfalls Diversion: 340B drugs dispensed at contract pharmacies for prescriptions written at ineligible sites, not supported by responsibility for care. Duplicate Discounts: Billing Medicaid without alternative arrangement with State Medicaid agency and notifying HRSA. Inaccurate Registration: Contract pharmacy is not registered or inaccurate information registered. Terminated Contract Pharmacy: Terminated contract pharmacy agreements not terminated from the 340B database; contract pharmacy not utilized. No Executed Contract: Registered contract pharmacy without executed contract in place. 28

29 Health Regulatory Issues Anti-Kickback Law Prohibits the exchange (or offer to exchange) of anything of value, in an effort to induce (or reward) the referral of federal health care program business (e.g., Medicare and Medicaid patients) Federal and State Privacy Drug Supply Chain Security Act (Track and Trace) Change of Law Provision 29

30 Operational and Financial Considerations Replenishment What is the timing and process? Periodic True-Up Discontinued NDCs Slow Moving Drugs Formulary All-in or are there carve-outs? 30

31 Operational and Financial Considerations Third Party Reimbursement and Co-Payments Dispensing Fees Reports from the covered entity and contract pharmacy Designation of Wholesaler Third-Party Payor Clawbacks Retroactive Classification 31

32 Contract Pharmacy Checklist 1. Is the contract pharmacy arrangement accurately registered on the HRSA website? 2. Does the Covered Entity have written policies and procedures on contract pharmacy? Are the policies followed? Do they need to be updated? 3. Is the Covered Entity carving-out Medicaid? FFS and MCO? 4. Is the Covered Entity s process for determining patient eligibility adequate? 5. Does the Covered Entity exercise oversight over the contract pharmacy arrangement? Is an external audit needed? 6. Has the written contract between the Covered Entity and the pharmacy been fully executed by both parties (Pre-Qualification Question for Registration)? 7. Are all of HRSA s essential elements covered by the contract pharmacy services agreement? 32

33 Contract Pharmacy Checklist 8. Do the operational procedures set forth in the contract pharmacy services agreement accurately reflect the actual arrangement? 9. Are the Covered Entity s and Contract Pharmacy s responsibilities under the contract pharmacy services agreement appropriate? 10. Do the Covered Entity, Contract Pharmacy and 340B Administrator have adequate skin in the game? 11. Is the compensation arrangement under the contract pharmacy arrangement compliant with fraud and abuse laws? 12. Do the Covered Entity and contract pharmacy have business associate agreements with the 340B Administrator? 13. What are the optics of the contract pharmacy agreement? 33

34 Contract Pharmacy Landscape House Energy and Commerce Committee Discussion Draft Certain members of House Energy and Commerce Health Subcommittee have expressed interest in 340B Reform Concerns include lack of clarity surrounding patient eligibility definition, lack of transparency on how hospital-based covered entities use 340B savings, and HRSA s limited authority to issue regulations and enforce 340B Program requirements. The E&C Committee just recently considered a discussion draft to include in its 21 st Century Cures legislation to reform the 340B Program. The Discussion Draft would have imposed several new requirements on 340B covered entities including a new user fee, obligations for high volume Covered Entities to conduct independent audits; and new reporting requirements for hospital-based Covered Entities (including an annual report describe use of 340B savings and number of drugs dispensed at contract pharmacies). 34

35 Contract Pharmacy Landscape House Energy and Commerce Committee Discussion Draft The Discussion Draft set forth both existing requirements and what would have been new onerous obligations on 340B contract pharmacy arrangements: Have a contractual agreement in place with each contract pharmacy; Register the contract pharmacy agreement and the contract pharmacy s distance from the covered entity with HRSA; Ensure compliance of each contract pharmacy agreement with the requirements to prevent drug diversion and duplicate discounts; Develop a mechanism to track the income of the patients of the covered entity and the amount such patients pay to receive covered outpatient drugs from the contract pharmacy; Maintain and ensure that each contract pharmacy maintains auditable records; Develop a process and conduct review of prescribing and dispensing records to identify irregularities; and Provide annual audits of the contract pharmacy to be conducted by an independent auditor. 35

36 Contract Pharmacy Landscape House Energy and Commerce Committee Discussion Draft The Discussion Draft would have substantially expanded HRSA s authority over the 340B Program Authority to establish limits on what the uninsured pay for 340B drugs. New penalties on Covered Entities for non-compliance. Authority to issue regulations. 36

37 Contract Pharmacy Landscape HRSA Mega Guidance HRSA Proposed Mega Guidance On May 6, 2015, HRSA submitted 340B Program Omnibus Guidelines to the Office of Management and Budget (OMB) for review. OMB review typically takes around 90 days. The comprehensive guidance is expected to cover (among other things) hospital eligibility, contract pharmacies, annual covered entity recertification, audits, Medicaid fee-for-service and managed care duplicate discounts, manufacturer limited distribution plans, manufacturer refunds and credits to covered entities. The guidance will likely address findings and recommendations set forth in the 2011 GAO report titled Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvements and the 2014 OIG report Contract Pharmacy Arrangements in the 340B Program. 37

38 Contract Pharmacy Landscape Third Party Billing and Reimbursement Government Programs Certain State Medicaid programs require Covered Entities to bill Medicaid at acquisition cost for 340B purchased drugs. MedPAC and OIG are reviewing Medicare Part B spending in connection with the 340B program. State AIDS Drug Assistance Programs (though categorically a Covered Entity) have different policies for claiming 340B rebates, which may prevent Ryan White Clinics and certain health centers from receiving 340B savings. 38

39 Contract Pharmacy Landscape Third-Party Billing and Reimbursement Private Payers Lower reimbursement for 340B contract pharmacy transactions and/or requiring identification of 340B transactions. o Are pharmacies and PSAOs reviewing their participating pharmacy agreements? 340B contract pharmacy networks. Direct and Indirect Remuneration (DIR). 39

40 Resources Seeking Help Apexus (340B Prime Vendor) (888) HRSA s Office of Pharmacy Affairs (OPA) Health Resources and Services Administration (HRSA) (800) B Health (formerly SNHPA) 40

41 Presented by Alan J. Arville Member of the Firm