Recent Develpments in 340B Drug Discunt Prgram Brad Brthertn Partner BKD 340B Drug Prgram Leader bbrthertn@bkd.cm Michael Earls Manager BKD East Regin 340B Drug Prgram Leader mearls@bkd.cm August 29, 2013 T Receive CPE Credit Participate in entire webinar Answer plls when they are prvided If yu are viewing this webinar in a grup Cmplete grup attendance frm with Title & date f live webinar Yur cmpany name Yur printed name, signature & email address All grup attendance sheets must be submitted t training@bkd.cm within 24 hurs f live webinar Answer plls when they are prvided If all eligibility requirements are met, each participant will be emailed their CPE certificates within 15 business days f live webinar 2 1
Materials Cvered in Tday s Webcast 340B Prgram Refresher Hspital-Cvered Entities Changes t Orphan Drug Rule Recertificatin Prcess Cmpliance Trends Preparatin fr Audits 340B Ht Tpics 340B Cmpliance Summary 3 340B Prgram Refresher Histry Established by sectin 602 f Veterans Health Care Act f 1992 Cdified as sectin 340B f Public Health Service Act (PHSA) Sectin 340B instructs Department f Health and Human Services (HHS) t enter int agreements with drug manufacturers f cvered utpatient drugs Administered by Office f Pharmacy Affairs (OPA) in Health Resurces Services Administratin (HRSA) 4 2
340B Prgram Refresher Histry Prvides discunts n utpatient drugs purchased by safety net prviders fr eligible patients Average savings f 25-50% fr eligible cvered entities n utpatient drugs Savings can be used t Prvide discunts n drugs t patients Expand services by prvider t patients Prvide services t mre patients 5 340B Prgram Refresher Hspital- Cvered Entities Traditinal methd Hspital DSH percent exceeding 11.75% payment add-n Updated SSI percentages may affect DSH qualifying percent Annual recertificatin f DSH percent nw required mid-august Nt-fr-prfit (NFP) entity with cntract with lcal gvernment t care fr indigent Agree als nt t use GPO fr utpatient drugs 6 3
340B Prgram Refresher Cntract Pharmacy Arrangements Retail pharmacies cntracted fr Bill T - Ship T arrangement Multiple cntract pharmacy guidelines went int effect n April 5, 2010 Significant pprtunity t expand Rx access New cmpliance challenges, including expectatin f annual independent audits Cvered entities remain respnsible fr 340B cmpliance fr cntract pharmacy transactins 7 340B Prgram Refresher Hspital Cvered Entities PPACA revisins All NFP/gvernmental critical access hspitals (CAH) are eligible Sle cmmunity hspitals (SCH) & rural referral centers (RRC) are eligible if DSH percent exceeds 8% 8 4
Recent Changes t Orphan Drug Rules Orphan drug rule is applicable t cvered entities participating as SCH, RRC, CAH & free-standing cancer hspitals Since 2010, these types f cvered entities have been unable t purchase rphan drugs at 340B price, regardless f illness the drug was prescribed t treat Orphan drugs are defined by sectin 526 f Federal Fd, Drug, and Csmetic Act fr rare disease r cnditin 9 Recent Changes t Orphan Drug Rules July 23, 2013, Health Resurces Services Administratin (HRSA) published lng-awaited final regulatins n rphan drugs Based upn issuance f final regulatins, the fllwing changes ccur Octber 1, 2013 Cvered entities registered as SCH, RRC, CAH & freestanding cancer hspitals will be eligible t receive 340B pricing n rphan drugs where the rphan drugs are nt used t treat a rare disease referred t as an rphan illness 10 5
Recent Changes t Orphan Drug Rules Based upn issuance f final regulatins, the fllwing changes ccur Octber 1, 2013: Anticipated this will result in additinal savings fr sme cvered entities HRSA makes it clear cvered entity has respnsibility t maintain auditable recrds that demnstrate cmpliance with terms f rphan drug exclusin requirements This rule is expected t cntinue t prtect financial incentives fr manufacturing drugs designated as rphan drugs 11 Recent Changes t Orphan Drug Rules Ptential cncerns r issues if 340B-cvered entity uses rphan drugs within 340B-eligible patients Develpment f auditable tracking system Hw t ensure prescriptins filled at cvered entity s retail pharmacy r thrugh cntract pharmacy were nt related t treatment f the rare disease (is an eligible dispensatin) 12 6
2013 Recertificatin Prcess Recertificatin prcess is currently under way!! Emails were sent t authrizing fficials & primary cntacts in early August Recertificatin prcess fr all hspital types started August 19, 2013, & is required t be cmpleted by September 13, 2013, r cvered entities will be remved frm the prgram There have been sme changes t recertificatin prcess authrizing fficials shuld be aware f 13 2013 Recertificatin Prcess Authrizing fficial must attest t the fllwing eight statements As an Authrized Official, I acknwledge the 340B cvered entity s respnsibility t abide by & further certify n behalf f the cvered entity that: 1. all infrmatin listed n the 340B Prgram database fr the cvered entity is cmplete, accurate, and crrect; cntinued n next slide 14 7
2013 Recertificatin Prcess 15 2. the cvered entity meets all 340B Prgram eligibility requirements, including sectin 340B(a)(4)(L)(iii) if applicable the Grup Purchasing Organizatin prhibitin which ensures that the cvered entity des nt btain cvered utpatient drugs thrugh a grup purchasing rganizatin r ther grup purchasing arrangement; 3. the cvered entity is cmplying with all requirements and restrictins f Sectin 340B f the Public Health Service Act and any accmpanying regulatins r guidelines, including, but nt limited t, the prhibitin against duplicate discunts/rebates under Medicaid and the prhibitin against transferring drugs purchased under 340B t anyne ther than a patient f the entity; cntinued n next slide 2013 Recertificatin Prcess 4. the cvered entity maintains auditable recrds demnstrating cmpliance with the requirements described in paragraph (3) abve; 5. the cvered entity has systems/mechanisms in place t ensure nging cmpliance with the requirements described in (3) abve; 6. if the cvered entity uses cntract pharmacy services, that the cntract pharmacy arrangement is being perfrmed in accrdance with OPA requirements and guidelines, including, but nt limited t, that the cvered entity btains sufficient infrmatin frm the cntractr t ensure cmpliance with applicable plicy and legal requirements and the entity has utilized an apprpriate methdlgy t ensure cmpliance (e.g., thrugh an independent audit r ther mechanism); cntinued n next slide 16 8
2013 Recertificatin Prcess 7. the cvered entity acknwledges its respnsibility t cntact OPA as sn as reasnably pssible if there is any material change in 340B eligibility and/r material breach by the cvered entity f any f the freging; and 8. the cvered entity acknwledges that if there is a breach f the requirements described in paragraph (3) that the cvered entity may be liable t the manufacturer f the cvered utpatient drug that is the subject f the vilatin, and depending upn the circumstances, may be subject t the payment f interest and/r remval frm the list f eligible 340B entities. This is a new requirement Authrizing Officials must attest t! Are yu ready? 17 Cmpliance Trends Brief histry 18 March 2010 PPACA requires GAO study n use & versight f 340B prgram September 2011 GAO issues reprt Cvered entities are effectively using the prgram Oversight is lacking Need fr clearer guidance evident (specifically regarding definitin f patient) Still pending HRSA is currently drafting mnibus 340B rule June 2014? 9
Cmpliance Trends Brief histry (cntinued) Octber 2011 HRSA OPA issues respnse t Senatr Grassley s cncerns, which are similar t GAO reprt Indicates selected audits will begin in 2012 March 2012 Plicy release describing audits Expansin f cvered entities & appeal f cntract pharmacy ptin have created additinal attentin t this prgram 19 Cmpliance Trends 51 audits cmpleted in 2012 by HRSA 34 nw publicly available & final 150 audits planned fr 2013 (budget cuts culd have an impact) T date, minimal drug manufacturer audits have ccurred, but mre are expected 20 10
Cmpliance Trends Cmmn findings frm HRSA reviews include Incrrect database infrmatin Diversin* Duplicate discunts* *Cmpliance with these requirements remains hspital s bligatin even in cntract pharmacy arrangement Expectatin f Crrective Actin Plan fr Findings When diversin & duplicate discunt findings ccur, timelines & reslutin prcesses are required 21 Cmpliance Trends Diversin Diversin 22 340B drugs given t individuals nt meeting specific utpatient criteria Drugs relate t services fr inpatients r in NRCC areas f hspital Prhibits resale r transfer f drugs purchased at 340B t persn wh is nt a patient f cvered entity Fcus n defining patient & cvered entity Mst recent defini n f pa ent 1996 Wh is cvered entity? Medicare cst reprt test & where services are prvided Where finance & pharmacy peratins meet 11
Cmpliance Trends Duplicate Discunts Duplicate discunts recent prgram ntice 340B laws prhibit applicatin f bth 340B price discunt (frnt end) & payment f pharmacy rebate t state Medicaid (back end) n same drug claim General ptins fr cvered entities Carve-ut Medicaid frm 340B drug purchases (GPO exclusin needs cnsidered) Carve-in Medicaid Requires verifying Medicaid exclusin file is accurate What abut Medicaid managed care r ther state prgrams with Title XIX funding? 23 Cmpliance Trends Duplicate Discunts Medicaid duplicate discunt Sme states have been slw t establish & cmmunicate Medicaid billing requirements & ptential mdifiers Transitin t Medicaid managed care has created cnfusin Cntract pharmacies shuld nt Carve-in unless arrangement with state Medicaid exists Recmmendatin Engage in nging dialgue with Medicaid pharmacy directrs f the states where yu file claims a win-win Slutin may be available Respnsibility fr aviding duplicate discunts is n the cvered entity 24 12
Cmpliance Trends Cnsequences f nncmpliance Repayment f discunt Suspensin frm 340B prgram Pssible CMPs fr knwing & intentinal vilatins Ptentially false claim liability (ripe fr qui tam actins?) Changing landscape f enfrcement & audit 25 Preparatin fr Audits Based n cmmn findings frm HRSA audits, being prepared is critical Perfrmance f internal review prcedures thrughut the year is critical (there are sample audit guides available, including frm APEXUS) Is an internal review enugh? Cvered entities shuld cnsider independent mck reviews perfrmed by independent third party New cmpliance challenges, including expectatin f annual independent audits, especially surrunding cntract pharmacy relatinships 26 13
Preparatin fr Audits Example prcedures t perfrm internally 27 Gather all plicies & prcedures related t 340B Obtain data plicies fr any vendr sftware Obtain cpies f all 340B cntracts with pharmacies and/r ther 340B service prviders Obtain all Medicaid ID numbers, prvider numbers & NPIs fr all entity sites billing Medicaid (including Medicaid managed care) fr 340B drugs & pint f cntact with State Medicaid agency (culd represent multiple states & MD cntracts) Preparatin fr Audits Example prcedures t perfrm internally Obtain ppulatin f all 340B dispensatins fr a specified perid f time (typically six mnths) & select samples based n high-cst drugs & Medicaid transactins Additinal prcedures shuld be develped arund cntract pharmacy relatinships Wh internally shuld perfrm this self-mnitring? Is internal review enugh based n expectatin f independent audits? 28 14
Preparatin fr Audits Other cmpliance cnsideratins GPO exclusin Imprtant recent prgram ntice Cvered entities are prhibited frm using GPO fr OP-cvered drugs (are there exceptins?) Nncmpliance means yu cannt be in 340B prgram Cherry picking 340B price is nt always best, but OPA expects that yu use 340B price fr all OP drugs Capture crrect NDC fr OP drug used 29 340B Ht Tpics GPO Exclusin (if applicable) Required cmpliance n August 7 (n extensins) Hw d sme multiuse items fit int this prgram? Cntrast media Anesthesia gases Other GPO is a criteria f verall participatin in prgram 30 15
340B Ht Tpics Manufacturer audits & cmmunicatin increasing Respnd timely t manufacturer requests t reslve questins withut their need t request OPA fr apprval fr full audit Manufacturers are perfrming increasing analytics n data t identify utliers in drug purchasing Sme initial fcus has been seen n duplicate discunt issues Manufacturers have access t sme Medicaid claims level data 31 340B Ht Tpics Health care refrm & ACA impact? Changes t Medicare DSH frmula have been prpsed hw will this impact 340B? What will cngressinal appetite be fr 340B if insurance expansin is realized as intended? Cautin regarding prjectins fr this prgram int the future is recmmended Biggest issue at Cngress fr health care seems t be SGF - Dc Fix needed again this year unlikely t see significant 340B legislatin intrduced this cming sessin 32 16
340B Ht Tpics Cngressinal intent f the prgram Debated by sme members f Cngress Several hspitals have been challenged t respnd n use f funds generated frm prgram savings Mnitring this issue in Cngress is imprtant Develping methd f tracking 340B savings & dcumenting hw thse funds are used fr indigent & underserved patients is current best practice 33 340B Ht Tpics 340B Cmpliance Plan fr Outpatient, Mixed-Use & Cntract Pharmacy prgrams Demnstrates gd-faith cmmitment t cmpliance Increases likelihd f identifying & crrecting mistakes Includes multiple aspects f the prgram & prcess fr respnding t cncerns identified Recnsideratin f prvider-based physicians Eligible t extend 340B savings t prvider-based physicians 34 17
340B Cmpliance Summary 340B prgram & related multiple cntract pharmacy relatinships can be very beneficial but cmplicated t ensure cmpliance Cmpliance risks are a reality t be mnitred clsely Regardless f 340B prgram administratr selected, make sure hspital is cmfrtable with definitins & plicies applied t prgram 35 Brad Brthertn Partner bbrthertn@bkd.cm 417.865.8701 Michael Earls Manager mearls@bkd.cm 260.460.4068 18
Cntinuing Prfessinal Educatin (CPE) Credits BKD, LLP is registered with the Natinal Assciatin f State Bards f Accuntancy (NASBA) as a spnsr f cntinuing prfessinal educatin n the Natinal Registry f CPE Spnsrs. State bards f accuntancy have final authrity n the acceptance f individual curses fr CPE credit. Cmplaints regarding registered spnsrs may be submitted t the Natinal Registry f CPE Spnsrs thrugh its website: www.learningmarket.rg. The infrmatin in BKD webinars is presented by BKD prfessinals, but applying specific infrmatin t yur situatin requires careful cnsideratin f facts & circumstances. Cnsult yur BKD advisr befre acting n any matters cvered in these webinars. 37 CPE Credit Up t 1 CPE credit will be awarded upn verificatin f participant attendance; hwever, credits may vary depending n state guidelines Fr questins, cncerns r cmments regarding CPE credit, please email the BKD Learning & Develpment Department at training@bkd.cm 38 19