HRSA340BDRUGPRICINGPROGRAM:THECOMMUNITYHEALTHCENTERPROSPECTIVENOVEMBER9,2016MichaelR.Earls,CPABKD,LLPDirector

• Thispresentationhasbeendesignedtodiscusscomplianceneeds,proposedchangesandbestpracticesforcoveredentitiesinthe340BDrugPricingProgram

• Thispresentationshouldnotberelieduponaslegaladvice

MATERIALCOVEREDTODAY

• OverviewofBKD• 340BDrugPricingProgramOverview• ComplianceConsiderations

§ Registration§ Recertification§ Diversion§ DuplicateDiscounts§ ContractPharmacyArrangements

• IndependentAuditExpectation• HRSASiteVisitsand340BAudits• MegaGuidance• Questions

AGENDA

• Operatein15stateswith35offices,workwithFQHCsalloverthecounty

• 11th LargestCPAfirminthecountry• BKDworkswithapproximately250ofthe1,400fundedCommunityHealthCenterClientsintheUS

§ Audit/Tax§ ReimbursementStrategies

§ 340BAgreedUponProceduresEngagements&Consulting

OVERVIEWOFBKDFQHCEXPERTISE

§ MedicaidPPS§ FeeScheduleDevelopment

§ Financial&GrantsManagementConsulting

§ CostReporting§ Coding&Billing§ OperationsManagement

§ StrategicPositioning

• Federallymandateddrugpricingprogram• PartofPublicHealthServiceAct,section340B&Medicaidrebateprogram

§ Drugmanufacturersmustprovidefront-enddiscountsoncoveredoutpatientdrugspurchasedbycoveredentities

• Providesdiscountsonoutpatientdrugspurchasedby“safetynet”providersforeligiblepatients§ Intendedtoprovidefinancialrelieftofacilitiesthatprovidecaretomedically

underserved• Averagesavingsof25- 50%foreligiblecoveredentitiesonoutpatient

drugs• Purposeofsavings

340BPROGRAMOVERVIEW

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1994 19961992 2000 2010 2011 2012 2013

340BwasstartedwiththePublic

HealthServicesAct

Guidanceonoutpatient

clinicsreleasedbyHRSA

Auditguidelinesestablished.

Patientdefinitionclarified.Contractpharmacyprocess

established.

MedicaidduplicatediscountprohibitionCarve-in/Carve-out

HRSAguidanceoncontractpharmaciesallowingmultiple

relationships.ACAexpandseligibilitytoinclude5newentities

Orphandrugexclusion

HRSAbeginsauditsandRecertificationprocess

established

GPOprohibitionguidance

HRSAissuesfinalruleonorphandrugexclusion

2014

FederaljudgeinvalidatesHRSA’s

orphandrugregulation

OnAugust28,2015,HRSA

released340BOmnibusGuidance(MegaGuidance)

THEEVOLUTIONOF340B

2015 Future• Compliance• IndependentAudits– Quarterly• AuditableRecords

340BPROGRAMCOMPLIANCE– FQHC’S

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Eligibility

Registration

Diversion

DuplicateDiscounts

ContractPharmacy

GroupPurchasingOrganization

OrphanDrugs

COMPLIANCE– REGISTRATION

• Registration– CoveredentitymustregisterwithHRSA– Eacheligibleentitylocationthatplanstouse340Bdrugs(clinicoroffsiteoutpatientdepartment)mustbeseparatelyregistered

– Informationshouldbecollectedbytheauthorizingofficialduringtheannualrecertificationprocess

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COMPLIANCE– REGISTRATION

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RecertificationprocessforallcoveredentitytypesisrequiredannuallyorcoveredentitywillberemovedfromtheProgramAuthorizingofficialmustattesttoeight statements

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COMPLIANCE– RECERTIFICATIONPROCESS1. All informationlistedonthe340BProgramdatabaseforthe

coveredentityiscomplete,accurate&correct;2. Thecoveredentitymeetsall 340BProgrameligibility

requirements…3. Thecoveredentityiscomplyingwithall requirements&

restrictionsofSection340BofthePublicHealthServiceAct…

ISYOURAUTHORIZINGOFFICIALREADYTOATTESTTOTHESE3QUESTIONS?

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COMPLIANCE– DIVERSION• Diversion– Drugscanonlybeusedonanoutpatientbasisforcovered

entity’spatientsasdefinedbyHRSA– Useforotherindividualsconstitutesprohibiteddiversion– Focusondefining“patient”&“coveredentity”

• Whatis“coveredentity”?– Whereservicesareprovided– Physiciansmustbeemployedorunderacontractualor

otherarrangement– Entityshouldhavealistingofapproved340Bphysicians

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COMPLIANCE– DUPLICATEDISCOUNTS• Duplicatediscounts– 340Blawsprohibitapplicationofboth340Bpricediscount

(frontend)andpaymentofpharmacyrebatetostateMedicaid(backend)onsamedrugclaim

– Generaloptionsforcoveredentities• Carve-out Medicaid- from340Bdrugpurchases• Carve-in Medicaid- requiresverifyingMedicaidexclusion

fileisaccurate– Medicaidmanagedcare

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COMPLIANCE– DUPLICATEDISCOUNTS• Medicaidduplicatediscount– SomestateshavebeenslowtoestablishandcommunicateMedicaidbillingrequirementsandpotentialmodifiers

– TransitiontoMedicaidmanagedcarehascreatedconfusion– Contractpharmaciesshouldnot“Carve-in”unlessarrangementwithstateMedicaidexists

– Recommendation– EngageinongoingdialoguewithMedicaidpharmacydirectorsofthestateswhereyoufileclaims―a“win-win”solutionmaybeavailable

THERESPONSIBILITYFORAVOIDINGDUPLICATEDISCOUNTSISONTHECOVEREDENTITY!!

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COMPLIANCE– CONTRACTPHARMACY• ContractPharmacy– HRSAallowsproviderstoenterinto

arrangementswithmultiplecontractpharmaciestodispense340Bdrugstoqualifyingpatientsofproviders

– Coveredentityisresponsibleforcompliance&mustmonitorcontractpharmacies

– HRSArecommendsindependentaudits

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COMPLIANCE– CONTRACTPHARMACY• OIGonContractPharmacyArrangementsinthe340BProgram– February2014– MemorandumReport:

ContractPharmacyArrangementsin340BProgram,OEI-05-013-00431– Reportstatedthatit“createscomplications”inpreventingdiversion&

duplicatediscounts– Reportnotedthatsomecoveredentitiesdonot:

1. Offer340Bdiscountstouninsuredpatientsattheircontractedpharmacies1. Whatistherequirement?

2. Providesufficientoversight ofcontractpharmacies3. Manydonotengageoutsideindependentauditors toreviewthem

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COMPLIANCE- CONTRACTPHARMACY

• HRSAdefinesacontractpharmacyasapharmacythatisnotcoveredbythecoveredentityorchildsite

• Undercontractpharmacyarrangements,bothMedicaidFFSandMedicaidMCOdispensationswillbeexcludedfromthe340BDrugProgramunlessawell-documentedplanfromthecoveredentity,managedcarecompanyandstateMedicaidagencyclearlystateshowduplicatediscountswillbemitigated.TheplanmustbesubmittedtoandapprovedbyHRSA.

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INDEPENDENTAUDITEXPECTATION

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• MegaGuidanceemphasizesthecontinuedimportanceandexpectation ofanannualindependentauditbeingperform

• HRSAisproposingstandardsforauditsandquarterlyreviewsofcontractpharmacyarrangementstoensurethatcomplianceeffortsresultin– Earlyidentificationofproblems– Implementationofcorrections– Correctiveactionplans– Preventionoffuturecomplianceissues

• Maintainauditabledataforaperiodofnotlessthan5years

INDEPENDENTAUDITS– HRSA’SVIEW• HRSAbelievesthatcoveredentitiesthatdonotregularlyreviewandaudit

contractpharmacyoperationsareatincreasedriskforcomplianceissues• Annualauditofeachlocationwillprovidecoveredentities:

– Regularopportunitytoreviewandreconcile340Bpatienteligibilityinformation

– Preventdiversion• Coveredentityshouldcompare340Bprescribingrecordswithcontract

pharmacy’sdispensingrecordsatleastonaquarterlybasistoprevent:– Diversion– Duplicatediscounts

• Conductingtheseauditsusinganindependentauditorwillensurethepharmacyisfollowingall340Bprogramrequirementsandprovidethecoveredentitywithabilitytotimelyreportanyviolationsifapplicable

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INDEPENDENTAUDIT– AGREEDUPONPROCEDURES• Wewillcompareeligible340BlocationsaslistedontheHRSAOfficeof

PharmacyAffairsdatabasetoalistingofsitesutilizingCoveredEntity’s340Bprogram providedbytheHealthCenterandnotewhetherthereareanydifferences.Wewillalsoagreeeach340BsitetoalistingofsiteswithinscopeoftheHRSANoticeofGrantAward.

• Wewillobtainlistsofpatientsreceiving340BeligibledrugsduringtheperiodfromJanuary1,20xxtoDecember31,20xx.WewillselectXXpatientsfromthelistsandagreethemtothemedicalrecordattheHealthCenter.

• Wewillobtainthemedicalrecordsofthepatientsselectedinitem#2andagreetheservicesthatwereprovidedtothepatienttothescopeofeligibleservices forwhichfundingwasawardedtotheHealthCenter.

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• Fromthepatient'smedicalrecordsviewedinitem#3above,wewillcomparetheprescribingphysiciantothelistofeligibleemployedorcontractedproviders determinedbytheHealthCenter'spoliciesandproceduresrelatedtothe340BDrugPricingProgram.

• WewillobtainalistingofallcontractpharmacylocationsfortheHealthCenterandagreethelocationofeachcontractpharmacytotheapprovedlocationlistmaintainedontheHRSAOfficeofPharmacyAffairswebsite.

• WewillobtaintheHealthCenter’sfinancialclassrecordsforthepatientsselectedinitem#2todetermineifthepatientaccountswerebilledtoMedicaidorMedicaidManagedCareorganizations.

• IfMedicaidorMedicaidManagedCarewasbilledinitem#6,wewillcomparetheamountbilledforpharmacyclaimstoinstructionsreceivedfromMedicaidforpropertreatmentforavoidanceofaduplicatediscount.

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INDEPENDENTAUDIT– AGREEDUPONPROCEDURES

• WewillobtaintheHealthCenter’spolicyandproceduresdocumentationforthe340BDrugPricingProgramandcomparethemedicalrecordsofthepatientsselectedinitem#2tothedefinitionofcoveredpatientseligibleforparticipationinthe340BprogramasoutlinedintheHealthCenter’spolicyandproceduresdocumentationandreportpatientsthatdonotmeetthestatedeligibilitycriteria.

• WewillclericallytestfourmonthlyreconciliationreportsforamountsowedtotheHealthCenterandamountsowedtotheContractPharmacy.

• WewillagreethereimbursementreceivedforthepatientsselectedinItem#2(contractarrangementpatientsonly)toremittanceadvicesandcashreceiptslistingsandagreethistotaltotheamountremittedtotheHealthCenterfromtheContractPharmacy.

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INDEPENDENTAUDIT– AGREEDUPONPROCEDURES

• Wewillselect20individualdrugsfromadetailedlistingofreplenishments,andreportitemsthatareincludedinthedetailinexcessofquantitiesincludedindispensingreports.

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INDEPENDENTAUDIT– AGREEDUPONPROCEDURES

COMPLIANCE– CONSEQUENCESOFNOTCOMPLYING

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Repaymentofdiscountto

manufacturer

Removalfrom

340BProgram

PossibleCivilMonetaryPenalties

forknowing&intentionalviolations

Potentiallyfalseclaimliability

(ripeforquitamactions?)

COMPLIANCE– HRSAAUDITS2015ANDBEYOND

• Auditsinitiallyhadacollaborative/educationaltonebutthetonehaschangedwhenHRSAbeganinstitutingpunitivepenaltiestoensurecompliance

• $6millioninnewfundingforprogramintegrityeffortsapprovedaspartofthe2014Omnibusspendingbill

• OPAexpectstoperformtwiceasmanyauditsinFY2015asitdidinFY2014• HRSAwillcontinuetofocusoncontractpharmacyarrangements,diversion,

duplicatediscountsand340Bdatabaserecords

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•86nowpubliclyavailable&final•46havepublicletterstomanufacturers•23hadnoadversefindings

2015audits

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Source:ReviewofPublishedAuditResultsonHRSAwebsite

0% 10% 20% 30% 40% 50%

IncorrectDatabaseRecords

BillingContrarytotheMedicaidExclusionFile

DrugsDispensedtoIneligibleIndividuals

ContractPharmacyOversight

46%

26%

45%

5%

2012Through 2015PublishedAuditResults

• Whyiscontractpharmacyoversightnon-compliancesolow?

HRSASITEVISITPREPARATION• Bepreparedtoshareyourorganization’s340Bpolicies,procedures,andotherrelated

documentsinordertodocumenttheyaddressthefollowing:A. PatientDefinition

• Individualsprovidedaccessto340Bdrugspurchasedbythecoveredentityhaveanestablishedrelationshipwiththepatientasdocumentedbythecoveredentitiesmaintainingrecordsofthatindividualshealthcare.

• Individualsprovidedaccessto340Bdrugspurchasedbythecoveredentityhavereceivedhealthcareservicesfromahealthcareprofessionalwhoiseitheremployedbythecoveredentityorundercontractualorotherarrangements(e.g.,referralforconsultation)suchthatresponsibilityforcareprovidedremainswiththecoveredentity;i.e.,340Bprescriptionsareonlymadeavailablethatreceiveservicesthatareeitherprovideddirectlybythecoveredentity/orthroughformalwrittenreferralarrangements.

• 340Bdrugspurchased/dispensedbythecoveredentitytosuchindividualsareconsistentwiththeserviceorrangeofservicesforwhichgrantfundingwasapproved.

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B. DuplicateDiscount• ThecoveredentityhastheabilitytopreventduplicatediscountsforpatientscoveredunderMedicaidandwhoreceivea340Bdrug.

C. ContractPharmacyIfthecoveredentitydispenses340Bdrugstopatientsthroughacontractpharmacyservicesmodelthecoveredentityshouldbepreparedtoprovidethefollowing:

• Thewrittencontractbetweenthecoveredentityandthecontractpharmacy.

• Policies,procedures,and/orotherdocumentsastohowthecontractpharmacywillpreventdiversion.

• Policies,proceduresand/orotherdocumentsastohowthecontractpharmacywillpreventduplicatediscounts.

• Howthecoveredentityprovidesoversight(e.g.,annualauditorothermechanism)ofthe340Bdrugsdispensedbythecontractpharmacy. 28 //

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HRSASITEVISITPREPARATION

MEGAGUIDANCE- TIMELINE• August28,2015– ProposedguidancereleasedbyHRSA

• October27,2015– Commentsonproposedguidanceweredue§ 1000+commentssubmitted§ MegaGuidanceisproposedguidance&notformalregulation.HRSAdoesnothaveformalrule-makingauthority;however,HRSAcanissueinterpretation&guidance.Guidanceiscurrentlyproposed&mayneverbefinalinterpretation

• December2016– Finalguidanceisexpectedtobepublished

• Coveredentitiesshouldchallengecurrentprocessandbepreparingforimpactif/whenfinalguidanceisfinalized

• Current– 3prongtest§ Thecoveredentitymusthaveanestablishedrelationshipwiththeindividual,maintainingrecordsoftheindividual’shealthcare

§ Theindividualmustreceivehealthcareservicesfromproviderswhoeitherareemployedbythecoveredentityormaintaincontractualorotherarrangements(e.g.,referralforconsultation)suchthatthecoveredentityisresponsibleforthecareprovided

§ Thehealthcareservicesthattheindividualreceivesfromthecoveredentityareconsistentwiththeservicesforwhichtheentityhasreceivedgrantfundingorfederallyqualifiedhealthcenterlook-alikestatus.Disproportionatesharehospitalsareexemptfromthisrequirement

MEGAGUIDANCE– PATIENTDEFINITION

• Proposed– 6prongtest§ Servicesmustbeprovidedatafacilitythatisbothregisteredforthe340Bprogramand

listedonthepublic340Bdatabase.• Ensuringchildsitesareregisteredwillbeacriticalcomplianceelement

§ Theindividual’shealthcareisconsistentwiththescopeofthefederalgrant,project,designation,orcontract.

§ Thecoveredentityhasaccesstotheindividual’spatientrecords,whichshowthatthecoveredentityisresponsibleforcare.

§ Servicesmustcomefromaproviderwhoiseitheremployedbyacoveredentityorisanindependentcontractorforthecoveredentity,whichmaybillforservicesonbehalfoftheprovider.• Referralprescriptionswillonlybe340Beligibleifeligibleproviderhaswritten

prescription§ Thedrugthattheindividualreceivesmustbeorderedorprescribedbythecovered

entityproviderasaresultoftheservicealreadydescribed.§ Thedrugisorderedorprescribedbasedonahealthcareserviceclassifiedasoutpatient.

• HistoricallyapatientwhowasinERorobservationandlateradmittedasaninpatientwaseligiblefor340Bdrugsuptotimeofadmission

• Prescriptionmustbewrittenororderedwhilepatientisclassifiedasoutpatientbasedonpayerbillingrules

MEGAGUIDANCE– PATIENTDEFINITION

• Dischargeprescriptionsfromaninpatientstaywillnolongerbeconsidered340Beligibledispensations.

• Onlydrugsbilledaspartofanoutpatientvisitwillbe340Beligible• Thesedischargeprescriptionsareoftenfilledundermeds-to-beds

programorsubsequentlythroughcontractpharmacyrelationships• Commonforpatientswhocannotaffordtheirmedicationsto

receiveitviaacharitycareprocessatdischarge• CMShasrecognizedtheimportanceofmedicationadherenceand

teachingatdischargeandincludeitaspartofCoreMeasuresofSuccess

• HRSAAuditFindings§ Prohibiting340Bforcertaininpatientdischargeprescriptions

MEGAGUIDANCE– INPATIENTDISCHARGEPRESCRIPTIONS

• Anindividualwouldnotbeconsideredapatientofacoveredentitywhoseonlyrelationshiptoindividualisdispensingorinfusionofadrug

• Dispensingoforinfusionofadrugalone,withoutacoveredentityprovider-to-patientencounter,doesnotqualifyanindividualasa340B-eligiblepatient

• Ifcoveredentityhasaninfusioncenterthatservicespatientsthatdonothavewrittenordersfromqualifiedlocations,thentheimpactoftheproposedguidancewillhaveanimpacton340Bsavings

MEGAGUIDANCE– INFUSIONSERVICES

MEGAGUIDANCE- MEDICAID&MEDICAIDMANAGEDCARE• CoveredentitiesarenowabletomakeadeterminationforbothMedicaid

FeeforService&MedicaidManagedCareOrganizationswhendeterminingtocarveinorcarveoutMedicaid

• Preventionofduplicatediscountsremainsrequirementofcoveredentity• UndercontractpharmacyarrangementsbothMedicaidFFSandMedicaid

MCOdispensationswillbeexcludedfrom340BDrugPricingProgram• CoveredentitiesshouldhavemechanismsinplacetoidentifyMedicaid

MCOpatients• Urgescoveredentities,stateMedicaidprogramsandMedicaidMCOsto

worktogetheronaprocesstoidentify340Bclaims• Alternatemechanismstosupplementthe340BMedicaidExclusionFile• CriticalforcoveredentitytomaintaindialoguewithstateMedicaid

agenciestopreventduplicatediscounts

RESOURCES

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Resource Description

HRSAOPA HRSAOfficeofPharmacyAffairshomepagehttp://www.hrsa.gov/opa/index.html

About340BProgramAuditsofCoveredEntity

HRSAProgramIntegrityPagehttp://www.hrsa.gov/opa/programintegrity/auditscopeandprocess.html

PolicyReleases HRSAPolicyreleasesregardingthe340BDrugPricingProgramhttp://www.hrsa.gov/opa/programrequirements/policyreleases/index.html

OPAFAQs HRSAOfficeofPharmacyAffairsFrequentlyAskedQuestions(FAQs)http://www.hrsa.gov/opa/faqs/index.html

HRSA340BPeer-to-PeerWebinars

Registerforupcoming340BPeer-to-PeerWebinarsandlistentopastwebinarshttp://www.hrsa.gov/opa/peertopeer/webinars.html

340BPrimeVendorProgram

CallCenter Phone:1-888-340-2787ApexusAnswers@340bpvp.comWeb:www.340bpvp.com

340BPrimeVendorProgramFAQs

PrimeVendorProgramFrequentlyAskedQuestions(FAQs)https://www.340bpvp.com/resource-center/faqs/

QUESTIONS?

FORMOREINFORMATION

THANKYOU!MichaelR.Earls,CPADirector260.460.4068mearls@bkd.com