340B Compliance & Risk Assessment Kathe Hoots 0
340B Program Background Congress implemented the 340B Drug Pricing Program via the Veterans Health Care Act Statutorily requires pharmaceutical manufacturers to provide outpatient drugs to certain qualified covered entities (QCEs) at reduced pricing. Any manufacturer that participates in Medicaid must also be part of the 340B program. Allows QCEs to receive drugs at heavily discounted prices. Improves access for vulnerable populations by reducing the cost of pharmaceuticals necessary for quality health care. 1
340B Program Background Patient Protection and Affordable Health Care Act (PPACA) created significant changes: Added 4 entity types that may qualify for program Excluded orphan drugs for the newly eligible entities (except Children s per the Medicare and Medicaid Extenders Act of 2010) Increased Medicaid rebate percentages Added program integrity provisions (i.e. pricing, fines/penalties, Medicaid billing, annual recertification) Uncapped QCEs ability to contract with retail pharmacies Allowed for virtual inventories versus physical 2
340B Program Background The US Department of Health and Human Services Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) is responsible for the program. HRSA promulgates the federal regulations regarding the program and has the right to exclude entities from participation. 3
Covered Entity & Patient Eligibility Inventory & Controls Medicaid Pricing Requirements Medicaid Cost Rebate Verification (Double Dipping) Contract Pharmacy Arrangements 4
Covered Entity & Patient Eligibility Illegal to sell 340B discounted drugs to persons not considered to be patients of a QCE HRSA s Current Definition: An individual is considered a patient of a covered entity (with the exception of State operated or funded AIDS drug assistance programs) only if: 1. the covered entity has established a relationship with the individual, which includes maintaining records of the individual s health care; 2. 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 individual s care remains with the covered entity; 3. the individual receives a health care service or range of services for which grant funding or federally-qualified health center look-alike status has been provided. (Disproportionate share hospitals are exempt from this requirement.) 5
Covered Entity & Patient Eligibility Proposed Clarification- HRSA Notice (72 FR 8 January 12, 2007): 1. The covered entity has established responsibility for the outpatient health care services it provides to the individual, such that the covered entity maintains ownership, control, maintenance, and possession of records of the individual's health care, including records that appropriately document health care services that result in the use of, or prescription for, 340B drugs; 2. The individual receives outpatient health care services that result in the use of, or a prescription for, 340B drugs as part of the diagnosis and treatment from a health care provider who is employed by the covered entity, or provides health care to patients of the covered entity under a valid, binding, and enforceable contract. If the individual received health care services from a health care provider employed by or under contract with the covered entity, then the individual may be referred for follow-up care for the same condition by that health care provider, to an outside health care provider and still remain a patient of the covered entity for purposes of this guidance, so long as ongoing responsibility for the outpatient health care service that results in the use of (or prescription for) 340B drugs, remains with the covered entity; and 6
Covered Entity & Patient Eligibility Proposed Clarification- HRSA Notice (72 FR 8 January 12, 2007) continued: 3. The outpatient health care services the individual receives from the covered entity that result in the use of, or prescription for, 340B drugs are: a) Part of a health care service or range of services for which grant funding or Federally-Qualified Health Center look-alike status has been provided to the covered entity; or b) Provided by a Disproportionate Share Hospital (DSH) or by a location that qualified as a provider-based facility within a DSH under 42 CFR 413.65. If the individual received care from such DSH or qualifying provider-based facility, then the individual may be referred for follow-up care for the same condition by such a health care provider to an outside health care provider and still remain a patient of the covered entity for purposes of this rule, so long as the covered entity (either the DSH or a qualified provider-based facility) retains ongoing responsibility for the outpatient health care service that results in the use of (or prescription for) 340B drugs. To demonstrate the necessary retention of ongoing responsibility for the health care it is expected that, at a minimum, the covered entity will provide health care to the individual in the DSH or the qualified provider-based facility of the DSH within 12 months after the time of referral. 7
Inventory & Controls Anti- Diversion requirements prohibit the resale or transfer of 340B outpatient discounted drugs to individuals not considered patients of the covered entity (i.e., non patients and inpatients). Includes ineligible facilities and excluded services within the covered entity. Must consider: 1) Mixed use settings 2) Covered and non covered entities within same facility 3) Employees 4) Inventory tracking systems and audit trails 5) Security and theft risks 8
Medicaid Pricing General: QCEs cannot bill Medicaid more than acquisition cost plus a reasonable dispensing fee. Exceptions are Medicaid capitated managed care plans and above cost arrangements with state Medicaid agency. Fees and billing formulas vary state by state. 9
Medicaid Cost Rebates/Double Dipping Occurs when a state seeks a Medicaid rebate on the same drug a manufacturer sold to a QCE at a discounted price under the 340B program. Double Dipping Prohibition puts onus on the QCE and the state to ensure this does not happen when drugs are dispensed to Medicaid recipients. OPA Medicaid Exclusion files - QCE must include provider numbers if they are billing Medicaid (carve in) and the state must check file prior to applying for rebates. 10
Contract Pharmacy Arrangements 75 FR 43 March 2010- Final Notice of guidelines related to QCEs use of multiple pharmacy arrangements. QCE has the primary responsibility and accountability for compliance with all 340B program requirements. The covered entity must have fully auditable records that demonstrate compliance with all program requirements All covered entities are required to maintain auditable records and it is the expectation of HRSA that most covered entities will utilize independent audits as part of fulfilling their ongoing obligation of ensuring compliance. Written contracts are required and should address compliance elements (12 essential elements and suggested provisions provided by HRSA). Certification required. 11
340B Compliance Checks Prescription Level Testing to assess entity and patient eligibility, inventory controls, and Medicaid pricing requirements. Written Policies and Procedures to document how the QCE handles 340B drugs and the controls in place to ensure they remain compliant. Inventory Control Sampling to verify management of 340B discounted drugs and their distribution. Medicaid Exclusion Files- check that all Medicaid provider numbers are listed when QCE is billing Medicaid. All offsite facilities must be registered with HRSA if they purchase or provide 340B drugs (child sites). Ensure Orphan drugs excluded if CAH,SCH or RRC. 12
340B Final Thoughts Stay apprised of regulatory changes and follow the updates related to the definition of a patient and how outpatient may be defined. Compliance will ensure your entity does not lose covered status and remains in the 340B program. Understand the dollars involved so you allocate resources appropriately. Make the 340B program a team effort by including all relevant personnel, not just Pharmacy. Examples include Medical Records, Physician Credentialing, and Information Systems. Train all those involved so they understand the program, are aware of the policies and procedures, and feel comfortable to share concerns related to the handling or distribution of these drugs. 13