This training will begin at 12:00pm ET WebEx Technical Support: - - PowerPoint PPT Presentation

This training will begin at 12:00pm ET WebEx Technical Support: 1-866-229-3239 Or e-mail us at nationalhivcenter@fenwayhealth.org

• Works with HIV/AIDS service organizations and

community-based organizations to navigate the changing health care landscape

• Goals:
• Improve organizational sustainability and effectiveness for

ASOs/CBOs

• Improve care along the HIV continuum (the treatment

cascade)

• Methods
• Webinars, learning tools, issue briefs
• Individualized technical assistance for Ryan White-funded

ASOs/CBOs

The Fenway In Institute

• Research, education, &

health policy Fenway Health

• A federally qualified

health center with 25,000 patients, about 10% of whom are living with HIV

• Ryan White Part C

provider: Largest provider

• f HIV care in New

England

AIDS United works to end the AIDS epidemic in the U.S. through strategic grant making, capacity building, policy advocacy, technical assistance, and formative research. (Aids United Homepage) ARCW is home to the ARCW Medical Center, which provides integrated care and services to more than 3,000 people living with HIV through its CMS approved Medical Home. ARCW has provided training and TA to ASOs in 22 states. (ARCW Homepage)

Conta tact t us with ith any y questi tions about th the Cente ter

• r to get added to our maili

iling lis list!  617.927.6028  nationalhivcenter@fenwayhealth.org  www.nationalhivcenter.org

• Please call WebEx Technical Support:
• 1-866-229-3239
• You can also contact the webinar host, using

the Q&A panel in the right hand part of your

• screen. To see the panel, you may need to

expand the panel by clicking on the small triangle next to “Q&A”

• Alternatively, e-mail us at

nationalhivcenter@fenwayhealth.org

• Check if your computer speakers are muted
• If you are unable to listen through your

computer speakers:

• Click on the “Info” tab at the top of the screen
• Pick up your telephone, and dial the phone

number and access code.

• When the webinar concludes, an evaluation

will automatically open for you to complete

• We very much appreciate receiving feedback

from all participants

• Your feedback will help inform our program

and plan our upcoming webinar curriculum

• Download copies of today’s slides from our

website: National HIV Center Homepage

• Today’s presentation will also be archived and

available to view on-demand within a week.

• For this archived webinar, as well as all of our

previous webinars, please visit the webinar section of our website: National HIV Center Homepage

Gr Greg Do Doggett

Greg g Doggett, JD JD, , CAE Counsel, Legal and Poli licy Affair irs 340B Health th Th Thursday, Ju June 16, , 2016 1:0 :00 - 2:0 :00 PM EDT

This presentation is not to be construed or relied upon as legal advice.

• Program Overview
• Key Program Requirements
• Audits & Recertification
• Legislative Developments
• Regulatory Developments
• Resources

340B Program Overview

• Nonprofit association that represents over 1,200

hospitals in the 340B program – all hospital types

• At the table since inception of program in 1992
• The only advocacy organization focusing exclusively
• n 340B hospitals
• Provides technical assistance on 340B issues

• Program created in 1992 to give safety-net providers

discounts on outpatient drugs

• Administered by the Office of Pharmacy Affairs (OPA) within

the Health Resources and Services Administration (HRSA)

• In order to have their drugs reimbursed by Medicaid and

Medicare Part B, manufacturers must participate in the 340B program by entering a Pharmaceutical Pricing Agreement with the federal government

• Program purpose: To help eligible safety net providers

“stretch scarce Federal Resources as far as possible, reaching more eligible patients and providing more comprehensive services.”

• Source: H.R. Rep. No. 102-384(II), at 12 (1992).

• Provide drugs or services for free or at

reduced cost to patients who cannot afford them

• Drugs provided at market rates to insured

patients, generating funds that providers use to improve and expand patient care

• Ryan Whit

ite HIV IV/AIDS Program Grantees

• Hosp

spit itals ls

• Disproportionate Share Hospitals
• Critical Access Hospitals
• Sole Community Hospitals
• Rural Referral Centers
• Freestanding Children’s Hospitals
• Freestanding Cancer Hospitals

• Hea

ealt lth Cen enters

• Federally Qualified Health Centers (FQHC)
• FQHC Look-Alikes
• Native Hawaiian Health Centers
• Tribal/Urban Indian Health Centers
• Spe

pecializ ized Clin inics

• Black Lung Clinics
• Hemophilia Treatment Centers
• Title X Family Planning Clinics
• Sexually Transmitted Disease Clinics
• Tuberculosis Clinics

• According to the HRSA website, the 340B

program covers the following outpatient drugs:

• FDA-approved prescription drugs;
• Over-the-counter (OTC) drugs written on a

prescription;

• Biological products that can be dispensed only by a

prescription (other than vaccines); or

• FDA-approved insulin

• Brand-name drugs (except clotting factor and drugs

approved exclusively for pediatric use)

• Generally, 340B price is average manufacturer price (AMP)

– 23.1% of AMP

• AMP: The average price paid to manufacturers by

wholesalers for drugs distributed to retail community pharmacies and retail community pharmacies that purchase drugs directly from manufacturers.

• Additional discount if best price is lower or price increased

more quickly than rate of inflation

• Best price: The lowest price paid to a manufacturer for a brand

name drug, taking into account rebates, chargebacks, discounts, or

• ther pricing adjustments, excluding nominal prices

• Generic drugs & prescription OTC drugs: AMP

– 13% of AMP

• October 2015: Congress passed legislation that will

require manufacturers to provide greater discount if price of generic drug increased more quickly than rate of inflation

• Goes into effect January 1, 2017
• Clotting factor and drugs approved exclusively

for pediatric use: AMP – 17.1% of AMP

Key Program Requirements

• Key legal/compliance requirements for 340B program:
• 340B Eligibility
• Eligible Patients/Patient Definition (e.g., generally any insured or uninsured
• utpatients of provider)
• Medicaid & 340B/Duplicate Discount Prohibition
• Contract Pharmacy
• This presentation focuses on legal/compliance requirements as they exist

today

• The mega-guidance, released by HRSA in August 2015, proposed significant

changes to the types of patients that can use 340B, but has not been finalized

• Could substantially reduce the number of patients eligible to receive 340B drugs
• HRSA evaluates compliance through selective audits of covered entities

(CEs) and annual recertification

• Policies and procedures in these program areas (and others) are critical!

• Entities are not eligible for the program unless

they register and are listed on the OPA database

• If there is a change in a Covered Entity (CE)’s

eligibility status, the CE has a responsibility to immediately notify OPA and should stop purchasing drugs through the 340B program

• CEs must recertify their eligibility every year and

attest to ongoing compliance with key program requirements

• Eligible Patients: Patients who are eligible to receive 340B drugs
• Diversion: Provision of 340B drugs to ineligible patients
• The 340B statute requires CEs to avoid committing diversion
• How does a CE avoid diversion? Create and follow policies and

procedures that:

• Describe how you make sure 340B drugs are not given to ineligible

patients

• More complicated for some providers than others
• If applicable, explain the circumstances under which a patient is 340B-

eligible when a script is written offsite (e.g., documenting referrals)

• Describe process for inventory management
• Describe how you conduct self-audits to ensure diversion is not occurring

• HRSA’s 1996 guidelines (61 Fed. Reg. 55156 (Oct. 24, 1996)):
• The covered entity has established a relationship with the individual,

such that the covered entity maintains records of the individual’s care; and

• 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 care provided remains with the covered entity; and

• The individual receives a health care service or range of services from

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.

• Third part applies to HRSA grantees only and not to hospitals

• HRSA’s 1996 guidelines (cont’d)
• An individual will not
• t be considered a patient of the

covered entity if the only health care service received by the individual from the covered entity is the dispensing of a drug or drugs for subsequent self-administration or administration in the home setting

• Exception: Individuals registered in a state operated or

funded AIDS Drug Assistance Program (ADAP) that receives Federal Ryan White Funding ar are considered patients of the ADAP if so registered as eligible by the state program

• Examples of Ineligible Patients
• Individual who receives prescription from CE’s

pharmacy, but does not receive any other health care service from the CE

• Individual who does not receive a health care service

within the scope of the HRSA grant (other than perhaps dispensing of a drug for subsequent self- administration or administration in the home setting)

• Failure to follow these rules could result in repayment to

manufacturers

• HRSA 1994 Covered Entity Guidelines: If individuals other

than eligible patients receive drugs from CE or CE’s pharmacy, must establish adequate safeguards to prevent diversion (e.g., separate purchasing accounts and dispensing records)

• CEs can keep 340B inventory physically separate or use a

virtual inventory system

• Virtual inventory system considerations:
• Areas that provides services to both eligible and

ineligible patients

• NDC-by-NDC replenishment

• Initial Consideration: Whether CE will use 340B drugs for Medicaid patients
• A manufacturer that participates in the 340B program must also participate

in the Medicaid drug rebate program

• The 340B law protects a manufacturer from having to pay a 340B discounts

and Medicaid rebate on the same drug (i.e., “duplicate discount”)

• Federal and state rules in place to protect manufacturers
• Factors to Consider
• Medicaid reimbursement for 340B drugs and non-340B drugs
• Size of CE’s Medicaid population
• Any state billing requirements for 340B drugs (e.g., actual acquisition

cost (AAC) billing, 340B claim identification)

• Carving in versus carving out fee-for-service (FFS) Medicaid claims:
• “Carving in” – use 340B drugs for Medicaid patients
• CE lists on OPA Medicaid Exclusion File Database all Medicaid billing

numbers or National Provider Identifiers used by the entity to bill Medicaid for 340B drugs

• “Carving out” – no 340B drugs for Medicaid patients
• Check box on OPA website indicating entity will not bill Medicaid for

340B drugs

• Multiple pharmacies and Medicaid billing numbers
• Where the same Medicaid billing number is used for multiple

locations, the CE must either carve in or out for all of those locations

• Failure to follow these rules could result in repayment to manufacturers
• r the state

• Medicaid Managed Care claims became subject to rebates under the Affordable

Care Act in 2010

• Centers for Medicare and Medicaid Services (CMS) published a proposed

regulation in June 2015; final regulation published in May 2016

• States must require Medicaid Managed Care organizations (MCOs) to

identify and exclude 340B claims from utilization reports they submit to states

• Does not require a particular mechanism
• Granted provider groups’ request to permit a state to allow entities to

submit 340B claims data directly to the state instead of MCOs

• Contracts between MCOs and states starting on or after July 1, 2017 must

comply

• Entities may have already seen or may begin to see MCO agreements with

340B terms before July 1, 2017

• Some states already require CEs to identify 340B Medicaid

MCOs claims when billing or at some point afterwards

• Many states are silent
• 340B Health recommends checking your state’s rules

before using 340B for Medicaid MCO patients

• Department of Health and Human Services Office of

Inspector General 2016 Work Plan: Looking at risk of manufacturers being subject to both a 340B discount and Medicaid rebate on an MCO claim and states’ prevention efforts

• CMS published final rule on covered outpatient drugs (“Final

AMP Rule”) in February 2016

• Requires states to pay for FFS retail drugs based on AAC,

plus a professional dispensing fee

• CMS comments on rule say:
• 340B rates can be based on 340B acquisition cost data or

340B ceiling prices

• States can look at costs associated with buying 340B

drugs and are encouraged to look at 340B dispensing costs

• But CMS letter to states says payment should not exceed the

340B ceiling price

• Impact of AAC rule
• States must include 340B rates in state plans and

must submit plans to be in effect April 1, 2017

• Existing 340B AAC billing policies may be consistent

with the new rule

• States that pay the same rate for all drugs will need

to revise plans

• States without written 340B policies will need to

implement one

• Could provide clarity to 340B entities

• A CE may enter into a contract pharmacy

arrangement where the pharmacy dispenses 340B drugs to the entity’s 340B-eligible patients

• The CE purchases 340B drugs, which are shipped to

the contract pharmacy

• CEs bear the full responsibility for compliance with

HRSA requirements to prevent diversion and duplicate discounts

• Tracking system to prevent diversion
• System to verify patient eligibility

• CE must register contract pharmacies on OPA database
• Four quarterly registration periods
• Registration: Jan 1-15; April 1-15; July 1-15; Oct 1-15
• Start Dates: April 1

July 1 Oct 1 Jan 1

• CE’s Authorizing Official (AO) will receive email from HRSA to

certify arrangement

• AO must certify arrangement within 15 calendar days

s from time the online registration request was submitted or arrangement will be deleted

• CEs should establish policies and procedures in

key 340B program areas before using 340B drugs!

• Policies and procedures are important!
• Allows for CEs to evaluate their use of the 340B

program in key areas

• Increases the likelihood of preventing, identifying,

and correcting mistakes or improper activity

• Evaluated by HRSA during program audits

• Key Areas:
• Patient Definition & Diversion
• Duplicate Discounts & Medicaid Billing
• Inventory Management
• Contract Pharmacy (if applicable)
• Enrollment & Registration
• Oversight, Including Self-Audits

Audits & Recertification

• 340B statute permits HRSA and manufacturers to audit CEs
• September 2011 Government Accountability Office report recommended

selective audits of CEs

• HRSA began CE audits in January 2012
• HRSA chooses entities they believe most likely to be at risk
• Risk determination is based on volume of purchases, complexity of

program administration, and use of contract pharmacies

• HRSA also conducts “targeted” audits based on allegations of 340B

violations

• Heard from a covered entity that their audit was due to the failure of a manufacturer

and a provider to agree on a policy issue

• As of April 27, 2016: 470 CE audits and 1 manufacturer audit

• Pre-audit - notice and coordination call, data request (4 weeks or longer)
• Audit (1-3 days)
• Audit follow-up
• Final audit report (most entities are receiving this within 3 months)
• 30 days to challenge findings (4 months to receive HRSA response)
• If accepting findings, 60 days to submit corrective action plan (CAP)
• HRSA will post notice regarding violations on website
• No known plans by HRSA to ever remove notice
• No statute of limitations regarding repayment
• HRSA leaves it up to CE and manufacturer to determine terms of repayment,

including time period

• Judicial review
• Since no known higher level of review within HRSA, CE probably would have to

ask court to review audit findings if wanted to challenge them further

• Second audit for CEs that had repayment finding

• All CEs must recertify annually
• As part of recertification, CE must certify that:
• Registration information in OPA database is complete accurate, and correct
• Meets eligibility requirements
• Will comply with all program requirements
• Maintains auditable records related to compliance with program requirements
• Any contract pharmacy arrangements will comply with program requirements

and guidelines

• Will notify OPA regarding change in program eligibility or noncompliance
• May be liable to manufacturer for breach of program requirement and,

depending upon circumstances, maybe be removed from the program

Legislative Developments

• March 2015: House Energy & Commerce (E&C)

Committee’s Health Subcommittee held first Congressional hearing on 340B in a decade

• Both Democratic and Republican supporters of

program

• Interest expressed in amending 340B law to

give HRSA more regulatory authority and to add additional hospital reporting requirements

• May 2015: Changes to 340B proposed only days before

E&C Committee markup of 21st Century Cures Bill

• Proposed changes were rejected after 340B provider

community expressed concerns about provisions being problematic and imbalanced

• Members of Congress continue to raise concerns about

340B at health care hearings

• 340B likely to continue to generate questions from

members of Congress, but, as of now, no hearing scheduled and no bill introduced

Regulatory Developments

• HRSA proposed new guidance for 340B in August 2015
• Addressed all major areas of the 340B program, including the definition of patient
• Some organizations representing HRSA grantees expressed concerns in comments
• n mega-guidance (340B Mega Guidance Concern Comments)
• Concerned about “one-size-fits-all” approach, especially for patient definition
• “[E]ncourage[d] HRSA/OPA to establish policies that reflect grantees’ unique

structures and purposes”

• Public comment period closed in October 2015
• Over 1,200 comments were submitted
• Recent HHS regulatory agenda predicts December 2016 release of final guidance,

but no legal deadline

• Regulations
• 340B ceiling price calculations and civil

monetary penalties for manufacturers that knowingly and intentionally overcharge CEs

• Mandatory and binding dispute resolution

process for CEs and manufacturers

• 340B ceiling price database

Resources

• 340B Health website (340B Health Homepage)
• 340B Coalition Conference
• 20th Annual 340B Coalition Summer Conference
• July 11-13, 2016
• Washington, DC
• 340B Summer Conference
• OPA website (HRSA OPA Site)
• Prime Vendor Program website (Prime Vendor Program Site
• 340B Drug Discount Video Explanation (340B Explanation

Video)

Greg Doggett Counsel, Legal & Policy Affairs 340B Health greg.doggett@340bhealth.org 202-552-5859