The 3 Keys to Success in Your 340B Program Rob Nahoopii, PharmD, MS, BCPS CEO Turnkey Pharmacy Solutions A 340B Management Company
Objectives Provide a description and overview of the 340B program Discuss key 1: Operationalize savings for covered outpatient drugs administered in the hospital Discuss key 2: Implement Contract Pharmacy opportunity and maintain relationships Discuss key 3: Resourcing a 340B compliance program to ensure your facilities ongoing participation
340B Program: Overview Purpose of the 340B Program A federal program that allows eligible covered entities to stretch financial resources, reach more patients in need, and provide them more comprehensive services.
340B Program: Overview How it Works 340B legislation requires manufacturers who want Medicaid reimbursement for their drugs to enter into pricing agreements in the 340B program. Under this agreement, manufacturers must provide discounted prices to defined covered entities. Discounted prices are only for outpatient drugs (not inpatient) Covered outpatient drugs must be for a patient of the Covered Entity (e.g., hospital) Results in significant savings to Covered Entities (20%-50%)
340B Program: Overview Covered Entity (CE): Facilities and programs eligible to purchase discounted drugs through the 340B Program Must meet specific criteria: Owned or operated by state or local government (may also be a not-for-profit with a contract with the state) If applicable, meet the minimum disproportionate share (DSH) percentage Some CEs must commit to not purchase outpatient drugs with GPO contracts Some CEs must commit to not purchase Orphan drugs under 340B pricing for approved Orphan indication(s)
340B Program: Overview Types of Covered Entities: Hospitals: Disproportionate Share Hospital (DSH) Children s Hospital (PED) Critical Access Hospital (CAH) Free Standing Cancer Hospital (CAN) Rural Referral Center (RRC) Sole Community Hospital (SCH)
340B Program: Overview For some of the hospital classifications, a certain percentage of DSH is required to be eligible to participate in the 340B program. DSH, PED, and CAN hospitals: 11.75% SCH and RRC Hospitals: 8% CAH: no DSH % requirement The annual hospital Medicare Cost Report DSH percentage is the official calculation used for this determination.
340B Program: Overview Types of covered entities continued: There are also many different clinics that qualify for 340B program discounts. For more information and links to the other clinic type covered entities, see: http://www.340bprogram.org/who-qualifies-for-340b/
340B Program: Overview It is the Covered Entity's responsibility to ensure that all aspects of 340B program use complies with all requirements of the program, as required by HRSA Covered entities obtain savings through outpatient administered medications at their site, and can option to create additional savings through outpatient prescriptions via in-house outpatient pharmacies or contract pharmacy arrangements The decision to use contract pharmacy arrangements to further maximize the 340B program is the decision of the covered entity
Savings on Administered Drugs Drugs administered to qualified outpatients of the covered entity may purchase those drugs at the 340B price! How? Once enrolled in the program, you can set-up a separate drug wholesaler account that will be loaded with 340B pricing. Key: Make sure you register with Apexus for additional savings. The key is to know which patients are qualified outpatients, then which medications are qualified outpatient drugs.
Savings on Administered Drugs Patient determination: Must be an outpatient (yes, observation patients count). Medicaid? It depends on how you enrolled, you must choose to carve-in or carve-out (for carve-in, you must work with your state Medicaid on how to make them whole on their rebates). Qualified clinic or area: The patient must be seen in an area that is reimbursable on the Medicare Cost Report under Worksheet A (typically lines 50 to 118).
Savings on Administered Drugs Depending on your enrollment type, you may be subject to the GPO Exclusion or Orphan Drug Exclusion. GPO Exclusion: You are not allowed to purchase drugs for outpatients under a GPO contract (this includes Medicaid if you carved out and an in-house outpatient pharmacy) You must by these drugs on 340B or WAC. Orphan Drug Exclusion: You are not allowed to buy Orphan Drugs under 340B if they are being used for the Orphan indication they were approved for.
Savings on Administered Drugs How do you identify these patients and drugs? In larger hospitals this is done through what is termed, triple-split billing systems. They are pricy and for many smaller hospitals not cost effective (e.g., if you save $15,000 and spend $10,000 on software and a lot of man hours maintaining the system). Smaller hospitals that are not subject to the GPO Exclusion often decide not to go after these savings, or pick a few drugs they track and purchase. Some also outsource this to 340B management groups that can do this as part of a 340B management solution. Key: Know what your type of covered entity is required to comply with, and ensure your processes are set-up to meet the requirement.
Compliant 340B In Mixed-Use Areas Mixed-Use Inventory Drug Order Drug Administration Accumulator GPO Non- GPO/WAC 340B
How the 340B Program Works
340B Contract Pharmacy Contract Pharmacy: A retail/community pharmacy that contracts with a covered entity to fill prescriptions for covered entity patients using the covered entity's 340B medications (and therefore pricing discount). The contract pharmacy will negotiate a higher per script fee (above their average margin per script) for their role in the process. Up until April 5 th, 2010, covered entities could only have one contract pharmacy. Most sites used their in-house outpatient pharmacy and simply missed out on the opportunity to save with prescriptions going to other pharmacies. As of the date above there is no limit!
340B Contract Pharmacy How do you obtain contract pharmacy savings? Typically, you work with a third party administrator (TPA). The TPA will: Analyze the data behind the scenes to match up prescription data at the retail pharmacy with hospital/clinic data to identify covered entity (CE) patients. Determine if the prescription is profitable to the CE. Complete the steps to purchase drugs and send to the pharmacy and savings to the CE. Some larger CEs with in-house pharmacies will manually identify patients and prescriptions and process them as 340B (very time consuming and cumbersome). Some examples:
340B Contract Pharmacy How it works: ORDER APPROVED AND PAID FOR BY COVERED ENTITY COVERED ENTITY SAVINGS USED TO EXPAND COVERED ENTITY S SCARCE RESOURCES SHIP TO, BILL TO ARRANGEMENT WHOLESALER ELIGIBLE PATIENT VENDOR 340B RECAPTURE SERVICES DROP SHIPPED TO RX DISPENSED TO ELIGIBLE PATIENT FOR RX DISPENSE FEE SAVINGS AFTER RX DISPENSE FEE
340B Contract Pharmacy Example: Example: Drug X Drug X ORDER APPROVED 340B Acquisition AND PAID Cost...$40.00 FOR BY Non-340B Cost...$85.00 COVERED ENTITY COVERED ENTITY 340B Eligible Patients: Contract Pharmacy Collects: Co-Pay.$10.00 3 rd Party Payment..$90.00 Total.$100.00 WHOLSALER / MFR. Distribution: Contract Pharmacy Dispense Fee..$20.00 Vendor and/or Switch Fees..$5.00 340B Acquisition Cost...$40.00 Net Savings to Covered Entity.$35.00 Total...$100.00 DROP SHIPPED TO RX ELIGIBLE PATIENT
340B Contract Pharmacy Contract Pharmacy Keys to Success Identify a vendor that can meet your needs for your ideal Contract Pharmacy arrangement Be part of the discussion with the retail pharmacy Consider a 3-month look back to ensure the dispensing fee is appropriate Conduct monthly audits and have an audit action plan for identified deficiencies Expanded access for vulnerable patients is part of the reason you are doing it
Questions
340B Program Compliance The 340B Program can provide your hospital/clinic with significant savings, however, to ensure you are meeting all the program requirements you must resource compliance initiatives in your program. In many 340B national trainings, OPA and Apexus have stated the need for formalized compliance programs that include ongoing auditing and thorough policy and procedures.
340B Program Compliance Policies and Procedures: A Must Have! In fact, one of the first things you will be asked for in an OPA audit is your policy and procedures. Include: The requirements your type of covered entity must follow and information on how you meet these requirements (e.g., Duplicate Discount, Diversion, GPO Exclusion, Orphan Drug Exclusion, provider determination), how you deal with direct purchases versus purchases going through triple split, etc. Robust set of definitions, which include how you define covered outpatient drugs, outpatients, infusion center patients, etc.
340B Program Compliance Compliance Plan Your compliance plan is who, what, and how you will conduct compliance of your 340B program. Outlines the team and individual members that oversee and conduct compliance activities. It details what the process is in the event of an irregularity. It determines how much education which staff should have training around 340B in their respective roles. In conjunction with policies and procedures, the compliance plan determines what goes into the Audit Guide(s)
340B Program Compliance Audit Guides These are the actual detailed instructions of what to audit daily, weekly, monthly, quarterly, or annually. Provide step-by-step instruction on how and what to audit, and provides the forms for documentation of the auditing activity. These should be kept electronically or physically, and any irregularities reported to the compliance team for follow-up.
340B Program Compliance Compliance Keys for success: Kind of Like I Love Lucy Have a (compliance) Plan! Provide resources to carry out plan (e.g., hire staff or provide staff hours for on going compliance, outsource parts of compliance to competent contractors). Don t just stop at a policy and procedure, formalize your compliance plan and team and create specific audit guides to direct activities and to hold staff accountable. Have an external audit annually (e.g., health-system internal audit staff, outsourced to external company with expertise)
Leveraging 340B for Your Patients Program Intent, reach more patients in need, and provide them more comprehensive services. If you are currently enrolled in the 340B Program or are considering it, make a conscious decision and formulate a plan as to how you will achieve the program intent. Financial Assistance/Charity Care Program Added Service (e.g., diabetes, COPD, anticoagulation)
Leveraging 340B for Your Patients Utah Valley Example: Take up to 50% of contract pharmacy revenue to create a prescription voucher program Vouchers filled at own or contract pharmacy (increased volume and increased 340B capture, and foot traffic to pharmacies) Use eligibility counselors or other trained staff to identify patients in need May use a full charity or tiered charity model Work with current charity process to allow for increased charity care
Summary The 340B Program is complicated, but is worth the time and effort. Covered entities can save a significant amount on their prescriptions that leave the hospital, and these savings can be used to expand or implement financial assistance programs for your patients. It is difficult and time consuming to navigate the 340B program, ensure you are providing adequate resources to manage the program compliance as well as processes that provide savings.
Questions? Learn more about 340B at 340bprogram.org You can find us at turnkeyrxsolutions.com