340B Compliance and Enforcement - Kathe Hoots

340B COMPLIANCE AND ENFORCEMENT
GHA
OCTOBER 23, 2014
Kathe Hoots – Director
340B Compliance Background
• Patient Protection and Affordable Health Care Act (PPACA,
March 2010) created significant changes:
– Added 4 entity types that may qualify for program (CAH, RRC, SCH,
and Freestanding Cancer Centers)
– Excluded orphan drugs for the newly eligible entities (except
Children’s per the Medicare and Medicaid Extenders Act of 2010)
– Increased Medicaid rebate percentages (deeper discounts)
– Added program integrity provisions (i.e. pricing, fines/penalties,
control/oversight, Medicaid billing, annual recertification)
– Uncapped Qualified Covered Entities(QCEs) ability to contract with
retail pharmacies
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340B Program- Latest in Political Arena
• No “Mega” Rule
– Continued interest from Congress
– Allegations: utilization, stockpiling, altering clinical pathways,
overcharging, use of contract pharmacies, stretching patient definitions
• Health Affairs October 2014 Article: The 340B Drug
Discount Program: Hospitals Generate Profits By
Expanding To Reach More Affluent Communities
• Orphan Drug Rule
- limits prohibition to uses for rare disease/condition
- PhRMA challenges again in 2014
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How To Tell You’re Not Mom’s Favorite
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340B Key Compliance Issues
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340B Recertification
Covered Entity & Patient Eligibility
Inventory & Controls
GPO Prohibition
Medicaid Pricing Requirements
Medicaid Cost Rebate Verification (Double Dipping)
Contract Pharmacy Arrangements
340B Audits
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340 Key Compliance Issues Recertification
• In Spring 2012, HRSA began requiring Covered
Entities to:
• Update information in HRSA’s Covered Entity database
• Recertify compliance with 340B program rules
• 8 statements- cannot pick and chose, must attest to all or
nothing.
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340 Key Compliance Issues Recertification
• During the recertification that occurred in May 2012, the
Authorizing Official attested to the following:
1.
2.
All information listed on the 340B program database for that Covered
Entity is complete, accurate, and correct;
Covered entity meets all 340B program eligibility requirements
including (if applicable) section 340B(a)(4)(l)(iii) and the Statutory
Prohibition on Group Purchasing Organization Participation Policy
Release 2013-1, which ensures that the covered entity hospital does
not obtain covered outpatient drugs through a GPO or other group
purchasing arrangement;
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340 Key Compliance Issues Recertification
3. Covered entity will comply with all requirements and
restrictions
of Section 340B of the Public Health Service Act and any accompanying
regulations or guidelines
including but not limited to prohibition
against supplicate discounts/rebates under Medicaid, the prohibition
against
transferring drugs purchased under 340B to anyone other
than a patient of the entity and the exclusion of orphan drugs for
critical access hospitals, freestanding cancer
hospitals, sole
community hospitals and rural referral
centers;
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340B Key Compliance Issues Recertification
4.
5.
6.
Covered entity maintains auditable records demonstrating
compliance with the requirements described above;
Covered entity has systems/mechanisms in place to ensure ongoing
compliance with the requirements described above;
If covered entity uses contract pharmacy services, that the contract
pharmacy arrangement is being performed in accordance with OPA
requirements and guidelines including but not limited to, that the
covered entity obtains sufficient information from contractor to ensure
compliance with applicable policy and legal requirements and the
hospital has utilized an appropriate methodology to ensure
compliance (e.g., through independent audit or other mechanism);
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340B Key Compliance Issues Recertification
7.
8.
Covered Entity acknowledges its responsibility to contact OPA as
soon as reasonably possible if there is any material change in 340B
eligibility and or material breach by the Covered Entity on any of the
foregoing; and
Covered Entity acknowledges that if there is a breach of the
requirements as described above that the covered entity may be
liable to the manufacturers of the covered outpatient drug that is the
subject of the violation and depending upon the circumstances, may
be subject to the payment of interest and/or removal from the list of
eligible 340B entities.
• 2013, HRSA updated the above statements:
• No longer retrospective/ contemporaneous
• Still lacks clarity in certain areas
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340B Key Compliance Issues
Covered Entity and Patient Eligibility
– Illegal to sell 340B discounted drugs to persons not considered to be
patients of a QCE
– Covered Entities:
1. Nonprofit health care organizations with certain Federal
designations or funding
2. Currently include Disproportionate Share Hospitals (DSH)
meeting certain criteria and 15 other categories of providers
3. Hospitals must be (a) nonprofit, (b) owned, operated or under
contract with state/local government and (c) except CAHs have
DSH payment percentage above 11.75% or 8% for SCHs and
RRCs
4. Entity Type is important- do you know how your facility is
registered?
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340B Key Compliance Issues
Covered Entity and Patient Eligibility
– HRSA’s Current Definition of Eligible Patient: 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.)
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340B Key Compliance Issues
Covered Entity and 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
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340B Key Compliance Issues
Covered Entity and Patient Eligibility
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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 FederallyQualified 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.
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“Mega Rule”?
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340B Key Compliance Issues
Inventory and 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).
– Must consider:
1) Mixed use settings- definition of OP
2) Covered and non covered entities within same facility
3) Employees
4) Inventory tracking systems and audit trails
a) NDC to NDC
b) Returns/Transfers
5) Security and theft risks
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340B Key Compliance Issues
Inventory and Controls - Applicable FAQs
• Do I have to maintain a separate inventory of drugs
purchased under Section 340B to show that there is no
diversion?
No, but 340B participants are encouraged, but not required,
to keep separate purchasing and dispensing records.
• If I dispense a manufacturer’s generic product to a 340B
eligible patient, can I restock my inventory with a generic
equivalent from another manufacturer?
No, retrospective inventory replenishment within the 340B
Program must be NDC specific.
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340B Key Compliance Issues
Inventory and Controls - Applicable FAQs
• May my hospital use 340B-priced drugs in mixed-use settings
where both inpatients and outpatients are treated? If so,
what if my hospital cannot track which drugs are used for
inpatients and which ones are used for outpatients?
If your hospital is unable to implement an effective
tracking system, it should not use the 340B program
in that setting.
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340B Key Compliance Issues
Inventory and Controls - Applicable FAQs
• If my hospital cannot track utilization of 340B-priced drugs on
a drug-by-drug basis, may it rely on historical utilization data
or other means fro meeting 340B tracking requirements?
Your hospital may rely on an alternative tracking system if it
submits a written request to the OPA. The alternative
tracking system cannot be used until it has been approved by
OPA. OPA may consult with the Office of the Inspector
General in evaluating the proposal.
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340B Key Compliance Issues
Inventory and Controls – Key Considerations
• Inventory management options:
– Physical separation
– Virtual separation
• Rely on vendors for split-billing software
• Rely on in-house system
• Accuracy of inventory management systems will be tested
during audits
– Establish written policies and procedures
– Validate that policies and procedures are effective
– Conduct self-audits
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340B Key Compliance Issues
GPO Prohibition
• DSH, children’s and cancer hospitals prohibited from
obtaining covered outpatient drugs through group purchasing
organization (GPOs) or other group purchasing arrangements
• Prohibition against the participation in GPO arrangements
does not apply to critical access hospitals, rural referral
centers, or sole community hospitals
• Provider- based departments of QCE may elect NOT to
participate in 340B if four requirements met:
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Different physical address than parent
Not registered as participating in program on OPA web
Purchase drugs through separate wholesaler account than parent
Maintains records demonstrating OP drugs purchased through GPO at
these sites or not utilized or transferred to parent or registered OP
facilities.
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340B Key Compliance Issues
GPO Prohibition
• February 7, 2013, HRSA issued policy statement entitled
Statutory Prohibition Group Purchasing Organization
– At first glance, sanctions appear to be problematic
– Covered Entities found in violation will be considered ineligible and
immediately removed from 340B Program
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340B Key Compliance Issues
GPO Prohibition
• February 8, 2013, HRSA updated its Frequently Asked
Questions to include the following:
– HRSA will allow covered entities 60 days after the publication of the
GPO policy release to make certain their drug replenishment practices
comply with GPO policy
– HRSA will not remove covered entity from 340B program for using
GPO replenishment model until after April 7, 2013.
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340B Key Compliance Issues
GPO Prohibition
• April 2013 - HRSA updated its Frequently Asked Questions to
include the following:
– HRSA is extending deadline to August 7, 2013 for those entities that
are not able to comply with the initial April 7, 2013 deadline. No
additional extensions will be granted beyond the August 7 date.
– During the extension, HRSA expects that covered entities will comply
with the GPO Prohibition as soon as possible prior to the August 7
deadline. Any evidence of deliberate delay could result in immediate
removal from the 340B Program.
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340B Key Compliance Issues
GPO Prohibition
• April 2013 - HRSA updated its Frequently Asked Questions to
include the following:
– If covered entity is not compliant by August 7, then it must notify HRSA
immediately and will be terminated from program.
• May reapply during quarterly registration period once it meets
requirements and can attest to such during enrollment process.
– During regular annual recertification process, covered entity must
attest that it is in compliance with all 340B program requirements,
included GPO Prohibition.
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340B Key Compliance Issues
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.
– Covered entity bears liability if duplicate discount paid on a Medicaid
fee for service (FFS) drug.
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340B Key Compliance Issues
Medicaid Pricing
• Pharmacies/ Self Administered Drugs
– Most states typically Acquisition Cost + a set dispensing fee.
– Fees and billing formulas vary state by state.
– No federal statutes or regulations dictating amount state to
be reimbursed.
– Understand your state’s policies and practices.
– Contract Pharmacies can be problematic.
– Why carve out?
• Dispensing fee not enough incentive
• Wary of doing wrong
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340B Key Compliance Issues
Medicaid Cost Rebates/Double Dipping
– Hospitals/Physician Administered Drugs:
• Most states- have option to carve in or carve out.
• May have to include NDC in claim for state to seek rebate
• Communicate with State Medicaid Office to determine
requirements.
• Medicaid Managed Care is often handled differently than traditional
fee for service.
• States can seek a full rebate as long as the pay at least 1 cent on a
claim.
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340B Key Compliance Issues
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.
– 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.
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Sometimes When You Are Angry At Someone,
It Helps To Sit Down And Think About The Problem
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340B Audits
• Both HRSA and manufactures are authorized to perform
audits. State Medicaid can also audit to see if following 340B
policy.
• HRSA began audits in January 2012
• Manufacture Audits are limited to diversion and duplicate
discount violations
• Audits are both randomly selected and targeted at risk
factors. Manufacturer audits typically center around
suspicious activity.
• Random selection process is weighted toward hospitals
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340B Government Audits
• 51 audits in 2013 – expected to increase to 300 in 2013
• 16 of the 18 audits completed to date found no violations.
• 2 audits required corrective action related to entries in the
340B covered entity database.
• Some believe other audits revealed significant violations.
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340B Government Audits
Lessons Learned
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Hospitals must have 340B policies and procedures
Self audits are highly recommended to test compliance
All areas of covered entity are involved in 340B compliance
Data requests are significant
Focus includes Patient Eligibility, Anti-Diversion, Medicaid
Pricing, Medicaid Rebates/Double Dipping, GPO Prohibition,
Provider/Physician Eligibility, Inventory Management
Systems, etc.
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Manufacturer Oversight and Audits
• Manufactures are increasing their oversight of 340B entities
• There is an increase in the number of letters from
manufacturers to 340B entities questioning use of 340B
– Could services as a precursor to an audit
– Covered entities should respond to manufacturer requests within
requested timelines
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340B Audits – Potential Penalties
• Corrective Action – fixing the problem going forward.
• Repay manufacturer the340B discount.
• If violation is “knowing and intentional,” covered entity also
pays interest.
• If violation is also “systemic and egregious,” covered entity is
removed from 340B program and banned from re-entry for a
reasonable period.
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340B Compliance Checks
• Prescription & Patient Level Testing
• Written Policies and Procedures
• Sampling to verify management of 340B discounted drugs, their
purchase and distribution.
• NDC to NDC matching applied.
• GPO prohibition on outpatient drugs
• 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). Understand cost reporting.
• Ensure Orphan drugs excluded if CAH,SCH or RRC.
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340B Final Thoughts
• Stay apprised of regulatory changes, updates, and government scrutiny.
GPO exclusion and patient eligibility are hot buttons.
• Compliance will ensure your entity does not lose covered status and
remains in the 340B program. Any self disclosures required? Do you
understand the dollars involved? Are you ready to attest at annual
recertification?
• 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.
• Pay special attention to mixed-use settings where inpatients and
outpatients receive drugs. Understand how your reports and software
work. What do you have to lose in program saving? Be audit ready.
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QUESTIONS????
Kathe Hoots
828-393-1059
[email protected]
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