Current Trends in the 340B Drug Pricing...

Current Trends in the 340B Drug Pricing Program

N b 8 2011

Current Trends in the 340B Drug Pricing Program

November 8, 2011

Housekeeping

Welcome to our webinar on the HRSA’s 340B Program

Below are some webinar housekeeping items: Kick off polling question Please answer Kick-off polling question. Please answer. Submit questions via the Q&A feature. Simply select

the Q&A window, type your question into the dialog box, and click the “Ask” button.,

Please turn off all webcams. The slides will be available on the MCHC website

following the webcast.

Program Sponsorship:

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Polling Question

What is your current role within your organization?organization?

Pharmaceutical/ Supply ManagementFinance/ Administration Finance/ Administration

ReimbursementM d C / C t ti Managed Care/ Contracting

Billing Compliance

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Event Description and Introduction

Event description:Our panel discussion will outline the basics of HRSA’s 340B program for certain providers340B program for certain providers.

Alicia Faust, a Healthcare Director from McGladrey will be moderating the panelbe moderating the panel.

We will provide information about the mechanics and opportunities associated with this important program. We

ill ff ti f th l l hwill offer perspectives from the legal, pharmacy (manufacturer), and provider communities. The presentation will demonstrate the relationship between the stakeholders and the implications for others with an pinterest in this cost management strategy that increases access to necessary medications.

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Your Presenters

Sandi CoslerSystem Director of ReimbursementProvena Health System**********Ms. Cosler is the System Director of Reimbursement at Provena Health. She is responsible for various areas of third party reimbursement for six hospitals, specializing in Medicare and Medicaid reimbursement. Some areas of responsibility include cost report preparations Medicareresponsibility include cost report preparations, Medicare GME/IME, DSH and bad debt reviews/audits, wage index initiatives, and provider rate reviews. In 2009, she assisted Provena Health when two hospitals became 340b eligible entities. She is currently involved in various 340b initiatives within the health system.within the health system.

Prior to joining Provena Health, Ms. Cosler held a senior manager position with a national public accounting firm as well as worked for the fiscal intermediary. Ms. Cosler received a Bachelor of Business Administration Degree in A i f L l U i i Chi Sh iAccounting from Loyola University at Chicago. She is a member of the Healthcare Financial Management Association (HFMA) and currently serves on the Board of Directors.

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Your Presenters

Douglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions*****Dr. Wong is Vice President, Pharmacy Practice for Pharmacy Healthcare Solutions, a consulting group that delivers comprehensive services support to health systems across the country. Doug has had many successful years of practice in the hospital and Health System practice sites. p p y pPrior to joining Pharmacy Healthcare Solutions, he was the Director of Pharmacy at Hahnemann University and The Medical College of Pennsylvania hospitals in Philadelphia where he provided leadership and oversight for pharmaceutical care operations. Doug also practiced at the U i it f M h tt M di l C t fUniversity of Massachusetts Medical Center for many years as Associate Director of Pharmacy and at UCLA Medical Center. He has a thorough knowledge and understanding of the 340b Drug Pricing Program, and is considered a subject matter knowledge expert. He has assisted many organizations with their implementation and complianceorganizations with their implementation and compliance.

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Your Presenters

Harry C. Norsworthy, RphDirector of Clinical Pharmacy ServicesAspen Healthcare Metrics*****Harry has more than 25 years of experience in the pharmaceutical industry with aHarry has more than 25 years of experience in the pharmaceutical industry with a focus on Hospital Administration, medication safety, JCAHO readiness and pharmacy care delivery systems.

Areas of Expertise

• Administrative Pharmacy Practice• JCAHO Quality Improvement and Accreditation

S• Inventory Management Strategies• Pharmacy Operations Assessment • GPO Contract Compliance Analysis• 340B Enrollment/Implementation/Optimization• Drug Expense Analysis and Reduction• Implementation strategies of clinical protocols• Group Purchase Organization Expertise• System Director of Pharmacy• System Director of Pharmacy

Experience

• 20 + years experience in Administrative Pharmacy Practice• Successful management and reduction of pharmacy related expenses• Led multiple successful Pharmacy CQI and Accreditation efforts• Developed and designed multiple clinical protocols for high cost pharmaceuticals Developed and designed multiple clinical protocols for high cost pharmaceuticals.• Pharmacy Resource Group leader for large Catholic Health SystemHealthcare Metrics

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Your Presenters

Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLC*****Ned is Chair of our Drug and Pharmacy Practice. He is also a member in our Healthcare Practice. He is a pharmacist-attorney who combines both professions in the legal practice of medical device, drug and pharmacy law. Ned has been involved with legal issues relating to all segments of the drug g g g gsupply chain, including manufacturers, wholesale distributors, third party logistics providers, retailers, as well as pharmacy benefit managers, health care payer issues, pharmacy technology companies, prescription management companies and physician practices. Other areas of

t ti i l d M di P t D tt 340Brepresentation include Medicare Part D matters, 340B issues, HIPAA compliance matters, prescription drug monitoring programs, drug diversion issues, drug pedigree and pharmacy compounding issues. In addition to his legal practice, Ned is a member of the Illinois State Board of Pharmacy and also writes a monthly legal/regulatory newsPharmacy and also writes a monthly legal/regulatory news column for the popular drug & pharmacy newsmagazine Drug Topics.

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Overview of 340B Drug Pricing Program Alicia FaustRevenue Integrity Service Leader,McGladrey

Section 340B Drug Pricing Program of the Public Health Service Act, Veterans Health Care Act of 1992 ( Public Law 102 585); also the Affordable Care Act expandedLaw 102-585); also, the Affordable Care Act expanded eligibility for certain provider types- Administered by Office of Pharmacy Affairs (OPA)

340B Drug Pricing Program was developed to:- Reduce prescription drug prices to patients- Create some financial savings to providersg p- Allow providers to expand scope of services offered (based

on savings)

Wh t i it? What is it?- 340B Drug Pricing Program provides eligible safety-net

providers significant savings on the purchase of outpatient drugsg

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Overview of 340B Drug Pricing Program (Cont’d)Alicia FaustRevenue Integrity Service Leader,McGladrey

Approximately $6B in 340B drug purchases last year

Manufacturers who participate in the Medicaid Drug Rebate Program must also participate in the 340B Drug Pricing ProgramDrug Pricing Program

OPA estimates average savings to eligible providers g g gbetween 25-50% on outpatient drug purchases

OPA does not regulate how savings attained OPA does not regulate how savings attained through participation in this program are to be used

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How does an organization qualify for 340B?

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Organizations Eligible for the 340B Discount

Sandi CoslerSystem Director of Reimbursement, Provena Health System

A. Federally-qualified health center (as defined in section 1905(l)(2)(B) of the Social Security Act); this category includes: - FQHC look alikes- FQHC look-alikes - Community health centers (Sec.330(e) Public Health Service Act) - Migrant health centers (Sec.330 (g) Public Health Service Act) - Health care for the homeless (Sec.330(h) Public Health Service Act)

H lth t f id t f bli h i (S 330(i) P bli- Health centers for residents of public housing (Sec. 330(i) Public Health Service Act)

- Office of tribal programs or urban Indian organizations (P.L. 93-638 and 25 USCS §1651)

B A family planning project receiving a grant or contractB. A family planning project receiving a grant or contract under Sec. 1001 PHSA (42 USCS§3001)

C. An entity receiving a grant under subpart II of part C of Title XXVI of the Ryan White Care Act (RWCA) (relating to

t i l t f t ti t l i t ti i fcategorical grants for outpatient early intervention services for HIV disease) - Early HIV Intervention Services Categorical Grants (Title III of the RWCA)

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Organizations Eligible for the 340B Discount (cont’d)

Sandi CoslerSystem Director of Reimbursement, Provena Health System( )

D. A state-operated AIDS Drug Assistance Program (ADAP) receiving financial assistance under the RWCA

E. A black lung clinic receiving funds under Section 427(a) of the Black Lung Benefits Act (30 USCS§901)

F. A comprehensive hemophilia diagnostic treatment center p p greceiving a grant under section 501(a)(2) of the SSA

G. A Native Hawaiian health center receiving funds under the Native Hawaiian Health Care Act of 1988 (42 USCS§11701) ( § )

H. An urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act (25 USCS§1601)

I. Any entity receiving assistance under title XXVI of theI. Any entity receiving assistance under title XXVI of the Social Security Act (other than a state or unit of local government or an entity described in subparagraph (D)), but only if the entity is certified by the Secretary y y y y

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J. An entity receiving funds under section 318 (42 USCS §247c) (relating to treatment of sexually transmitted diseases) or section 317(j)(2) (42 USCS§247b(j)(2)) (relating toor section 317(j)(2) (42 USCS§247b(j)(2)) (relating to treatment of tuberculosis) through a state or unit of local government, but only if the entity is certified by the secretary

K. A disproportionate share hospital as defined in section 1886(d)(1)(B)) of the SSA1886(d)(1)(B)) of the SSA

L. A children’s hospital as defined in section 1886(d)(1)(B)(iii) of the SSA

M. A critical access hospital as defined in Section 1820(c)(2) of p ( )( )the SSA

N. A free standing cancer hospital as defined in as defined in Section 1820(c)(2) of the SSA

O Rural Referral Center as defined in as defined in SectionO. Rural Referral Center as defined in as defined in Section 1886(d)(5)(c)(i) of SSA

P. Sole Community Hospital as defined in as defined in Section 1886(d)(5)(c)(iii) of SSA

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Organizations Eligible for the 340B discount (cont’d)


Eligibility criteria for hospitalsV ifi bl d i ti / lid M di id- Verifiable designations/valid Medicare provider number

- A hospital must meet one of the following:p g• Is a private non-profit hospital under contract with state

or local government• Is owned or operated by a unit of the state or localIs owned or operated by a unit of the state or local

government• Is a public or private non-profit corporation which is

formally granted government powers by a unit of theformally granted government powers by a unit of the state or local government

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Eligibility criteria for hospitals – continuedEli ibl DSH t- Eligible DSH percentage• DSH adjustment %

- Select hospitals are excluded from Group p pPurchasing Organizations (GPO)

- Outpatient clinics must be an integral part of the h it lhospital • Must be reimbursable on the Medicare cost report

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New eligible entities as a result of health reform:reform:- CAH, RRC, SCH, F/S cancer hospitals,

children’s hospitalsp- Children’s hospitals were previously eligible

under the Deficit Reduction Act of 2005

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Eli ibl H it lNon-Profit/Gov’t C t t

DSH ADJUSTMENT P t GPO E l iEligible Hospital Contract Percentage GPO Exclusion

DSH hospital Yes 11.75% Yes

*Critical access hospital

Yes No required % Nohospital*Rural referralcenter

Yes 8% No

*Sole community Yes 8% NoSole community hospital

Yes 8% No

*Free-standing cancer hospitals

Yes 11.75% Yes

**Children’s hospitals

Yes 11.75% Yes

Source OPA website: http://www.hrsa.gov/OPAp g

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What happens if an organization loses its 340B status?

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Lost of Eligibility for the 340B ProgramDouglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions

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Lost of Eligibility for the 340B Program (cont’d)

Douglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions

The undersigned represents and confirms that he/she is fully authorized to bind thecovered entity and certifies that the contents of any statement made or reflected inthis document are truthful and accurate; and that the hospital will comply with allthis document are truthful and accurate; and that the hospital will comply with allrequirements and restrictions of Section 340B of the Public Health Service Act andany accompanying regulations or guidelines including, but not limited to, theprohibition on duplicate discounts/rebates, and drug diversion. The undersignedf rther ackno ledges the 340B Co ered Entit ’s responsibilit to contact OPA if thefurther acknowledges the 340B Covered Entity’s responsibility to contact OPA if thehospital’s status in regard to any of these criteria changes and the hospital is nolonger eligible to participate in the 340B program.

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What is the definition of the typical 340B patient?

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Covered Entity “Patient” Definition Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLC

1996 – Final guidance of a “patient” 2007 P d i i t d fi iti 2007 – Proposed revisions to definition

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1996 Final Guidance Defines “Patient” of a Covered Entity

Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLCPatient of a Covered Entity

The covered entity has established a relationship with the individual such that the covered entity maintains records ofthe individual, such that the covered entity maintains records of the individual's health care

The individual receives health care services from a health care professional who is either employed by the covered entity or

id h lth d t t l th t (provides health care under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity

The individual receives a health care service or range of services gfrom the covered entity 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; disproportionate share hospitals are exempt from this requirementp p p p q

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2007 HRSA Revisions Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLC

In 2007, HRSA introduces revisions that would change the guidelines for qualifiedwould change the guidelines for qualified 340B patients

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2007 HRSA Revisions Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLC

The covered entity has established responsibility for the outpatient health care services it provides to the p pindividual

The individual receives outpatient health care services that result in the use of or a prescriptionservices 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 healthemployed by the covered entity, or provides health care to patients of the covered entity under a valid, binding and enforceable contract

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2007 HRSA Revisions (cont’d) Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLC

The outpatient health care services the individual receives from the covered entity that result in the yuse of, or prescription for, 340B drugs are:- 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

- 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 65DSH under 42 CFR 413.65

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Explain the roles and responsibilities of suppliers and manufacturers in the 340B opportunity?manufacturers in the 340B opportunity?

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Role of Manufacturers and DistributorsDouglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions

Manufacturers are responsible for calculating and providing the 340B price on a quarterly basis. p g p q y- Minimum discount is drug's Average Manufacturer Price

(AMP), is 23.1% for brand name drugs (except clotting factor and drugs approved exclusively for pediatric use for

hi h th b i b t i 17 1% f AMP)which the basic rebate is 17.1% of AMP), - 13% discount for generic and over-the-counter drugs and

are entitled to an additional discount if the price of the drug has increased faster than the rate of inflationhas increased faster than the rate of inflation.

Manufacturers and wholesalers verify an entity’s enrollment via the public database maintained on OPA/HRSA’s websiteOPA/HRSAs website

Wholesalers provide 340B prices to eligible entities through separate accounts

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Are there any opportunities for inpatients under 340B?

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GPO DSH Program Harry C. Norsworthy, RphDirector of Clinical Pharmacy ServicesAspen Healthcare Metrics

Voluntary Inpatient program 340B DSH h it l 340B-DSH hospitals

- Continuing to expand product list and discountsdiscounts

- >45 manufacturers participating today - Over 5,300 line items ,

GPO may also provides assistance to its members in applying for the 340B program

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340B (DSH Agreements) Harry C. Norsworthy, RphDirector of Clinical Pharmacy ServicesAspen Healthcare Metrics

Vendors are not required to provide pricing for DSH members for their inpatientsmembers for their inpatients

GPO sends DSH eligible members a monthly update of products on the DSH contract and provides a price variance when compared to acute care pricea a ce e co pa ed to acute ca e p ce

On average, GPO DSH programs comprised of some 5,300 line items; note that the program does not at this time exclude any vendor offering; as a result, there are y g; ,many dual source awards

GPO usually sends a welcome letter to each new member that contains details about the GPO DSH program, as well as any LOC that vendors do not provide directly to a member

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DSH Programs and LOCs Harry C. Norsworthy, RphDirector of Clinical Pharmacy ServicesAspen Healthcare Metrics

Agreements managed by the GPO P i i l d d t th GPO t Pricing loaded to the GPO account Products may be used on IP/OP Over 5 000 products under agreementOver 5,000 products under agreement LOC programs

- NEUPOGEN Enhanced DSH Program - AMBISOME Discount Program - CRESTOR DSH Inpatient Discount Program- SYMBICORT PROGRAM - DORIBAX – 340B LIKE PROGRAM- LEVAQUIN – 340B LIKE PROGRAM- AVELOX DSH PROGRAMS IV/Tabs

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How does an organization track the savings/ Medicaid methodology?methodology?

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Savings TrackingDouglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions

Variable depending on methods employed to purchase 340B productspurchase 340B products

Savings are tracked comparing what was actually paid to what would have been paidactually paid to what would have been paid for each NDC product

All activity is documentedAll activity is documented Save monthly purchase activity with

documentationdocumentation

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Medicaid Requirements Douglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions

Covered entities are generally free to bill and be reimbursed for 340B drugs withoutbe reimbursed for 340B drugs without making any adjustments to their billing procedures, unless Medicaid is the payerprocedures, unless Medicaid is the payer

Covered entities sometimes must bill Medicaid at reduced prices for 340B drugs p g

The reason that covered entities must adjust their Medicaid billing practices is to protect g p pmanufacturers from the duplicate discount problem

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Medicaid Requirements (Cont.)Douglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions

Manufacturers are protected from paying a Medicaid rebate and giving a 340B discountMedicaid rebate and giving a 340B discount on the same drug.

To avoid the duplicate discount problem theTo avoid the duplicate discount problem, the Secretary is directed to develop a mechanism that 340B providers and states pcan use to ensure compliance; alternatively covered entities should not seek Medicaid reimbursement for 340B drugs that are subject to Medicaid rebates.

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HRSA guidelines allow covered entities to comply with the statute in different ways:comply with the statute in different ways:- Bill Medicaid at “acquisition cost” plus the state-

allowable dispensing fee and the state does not p grequest a rebate.

- “Carve out” Medicaid drugs from the 340B d ll th t t t ll t b tprogram and allow the state to collect rebates.

- Follow state guidelines for applicable billing limits.

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340B-Specific Billing and Payment OptionsDouglas Wong, Pharm.DVice President, Pharmacy PracticePharmacy Healthcare Solutions

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Source: Bill von Oehsen, SNHPA meeting

What are the roles and responsibilities of the t t h t it l tcontract pharmacy arrangements as it relates

to the 340B program?

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Contract Pharmacy Arrangements Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLC

2010 Fi l id li i itt 2010 Final guidelines require written contracts

Contracts m st contain 12 essential Contracts must contain 12 essential elements

Written certification required by covered Written certification required by covered entity

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Compliance Ned MilenkovichPharmacist-AttorneyMcDonald Hopkins LLC

R ibiliti f th d tit Responsibilities of the covered entity Violations Safeguard implementation

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What are some of the challenges and/ or audit i th t f b d 340B?issues that surface based on 340B?

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What are some of the challenges and/ or audit issues that surface based on 340B?

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Final Thoughts?

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Questions and Answers Session

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Webinar Conclusion and Sign Off

This concludes our webinar on the HRSA’s 340B Program.

Thank you to our moderator and a special thank you to our panel of experts. We appreciate your participationparticipation.

Also, thank you to our participants for listening today. We hope you received some information that will beWe hope you received some information that will be of value to you and your organizations.

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