Author Archives: Rob Nahoopii, PharmD, MS, 340B ACE

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340B Mega-Guidance – Now What?

Our Top Three Concerns with the 340B Mega Guidance

340B Mega Guidance Comments NeededOver the last month, many of our clients have been asking for input on the 340B Mega-Guidance (officially titled: 340B Drug Pricing Program Omnibus Guidance). We have also been onsite conducting external 340B audits and are already assessing the impact of the Mega-Guidance if it is finalized in its current form (which has some significant consequences). In case you have been hiding under a rock, here is a link to the official document: 340B Drug Pricing Program Omnibus Guidance.

For focus, we are going to address the three (3) areas of the 340B Mega Guidance that we feel will have the most impact. We strongly recommend all affected parties provide comments to HRSA on how this would impact your covered entity. (We will cover additional areas in the next post)

1) Covered Outpatient Drug Two-Part Limiting Definition Test (pg. 22): This one is tough! The primary focus is concerned around bundled drugs being non-covered outpatient drugs. What is interesting is that it focuses on Medicaid reimbursement, and only mentions other third party payors as part of a contrasting statement at the bottom of page 22.

The two-part limiting definition states that a drug is a non-covered outpatient drug and not eligible for 340B pricing if it is 1) “provided as part of, or incident to and in the same setting as the services listed in section 1927(k)(3),” which are just about every outpatient area you can think of; and 2) the drug can be paid by Medicaid as part of the service “and not as direct reimbursement for the drug.”

The guidance then states that this limiting definition to exclude drugs from 340B purchasing does not apply when “a drug is provided as part of a hospital outpatient service which is billed to any other third party [not Medicaid] or directly billed to Medicaid.

It seems clear in the preceding wording that the definition is based on Medicaid reimbursement. However, the exclusion states how Medicaid is billed. We definitely need some clarification on which one it is. We feel that basing it on reimbursement is very difficult as every state Medicaid can have different formularies for what is separately reimbursed. Covered entities may attempt to bill separately and that is how drugs have accumulated up to this point. We are also concerned if it is solely based on reimbursement that ACO/Medical Home models (i.e., capitated patient payment systems) could fall into a “bundled payment system” and all drugs administered to patients in these service models would be non-covered outpatient drugs. This would adversely incentivize covered entities to not enter into ACO or ACO like agreements. Also, think about CAH hospitals and how they are cost-based reimbursed by CMS. Would these drugs also not count since there is no direct reimbursement for the drug, rather a percentage reimbursement based on actual cost? This would result in a negative impact on CMS as they are paying for care based on actual cost. Finally, how do we even accumulate on a model that requires us to know the ultimate reimbursement of a patient? It is very tough indeed.

Please think about the impact on your covered entity and provide comments as appropriate.

2) Infusion Services Orders Need to Be Written from a Qualified Location and Provider (pg. 26): “The dispensing of or infusion of a drug alone, without a covered entity provider-to-patient encounter, does not qualify an individual as a patient for purposes of the 340B Program.” This one is pretty straight forward. If the order for the infusion services drug was not written from a qualified location by a qualified provider for a qualified patient, then you cannot use 340B. In fact, if you are subject to the GPO Prohibition, you need to use WAC. Ouch!

I think back to my DSH hospital. We had agreements with our providers (e.g., oncology clinic providers), but they were technically a different business unit of our parent organization, and therefore not a qualified child site or location. We felt that our infusion service visit was the qualified visit as we provided care and had at least in part joint responsibility of care for that infusion. If the patient coded, it was our infusion clinic that provided the care for that patient. This scenario is clearly not going to be okay with the current language. The hard part is that this infusion center is where we provided charity care and took insurance plans that many providers were unwilling to take due to reimbursement issues. To have to buy these drugs on WAC is a significant concern.

If your site has an infusion center that services patients that do not have orders written from qualified locations, you may want to assess the impact on your program and share your perspective with HRSA.

3) Outpatient versus Inpatient Status for Qualification (pg. 27): “… an individual cannot be considered a patient of the entity furnishing outpatient drugs if his or her care is classified as inpatient.” It also states that “An individual is considered a [qualified 340B] patient if his or her health care service is billed as outpatient to the patient’s insurance or third party payor.”

This is the section that many people are interpreting that patients who discharge from the hospital as inpatients could not have their drugs filled as 340B. The other interpretation is that accumulation systems need to accumulate based on how a drug is billed, or more accurately, how it is reimbursed by payors. Once again, like the non-covered outpatient drug issue, we don’t always know when we are dispensing the drug what the insurance status will be. We know what the patient’s status is at the time the drug is being dispensed.

An interesting test is this: If a covered entity were to use a physically separate inventory (i.e., 340B, GPO, and WAC if it is a DSH), the pharmacy technician would fill the patient’s order using a specific inventory based on the patient’s status at that exact point in time. They would not be factoring in Medicare’s 72 hour rule or a two-midnight rule, as they don’t have a crystal ball to know if the patient is going to be admitted as inpatient or not.

The discharge prescription part is really concerning. At my previous hospital, we were attempting to identify patients at high risk of medication non-compliance and providing a financial support process for their discharge medications. CMS has recognized the importance of medication adherence and teaching at discharge as well, and now include it as part of their “Core Measures” for success. Many hospitals have instituted a discharge prescription program to ensure patients leave the hospital with all of their needed medications. For GPO Prohibition hospitals, they would now need to buy their inpatient discharge medications at WAC. Once again, adversely incentivizing hospitals to create such programs that have a significant impact on readmissions to the hospital (a significant cost for healthcare as a whole).

Please assess how this may impact your covered entity, and provide comments as appropriate.

There are other areas of concern, and some areas we feel are positive (e.g., GPO Prohibition exemptions). We will continue the discussion, but wanted to start with these three first. Please provide your comments to HRSA, and please remember that the deadline is October 27th, 2015. Below are the information and ways on how to submit comments:

You may submit comments, identified by the Regulatory Information Number (RIN) 0906-AB08, by any of the following methods. Please submit your comments in only one of these ways to minimize the receipt of duplicate submissions. The first is the preferred method.

Federal eRulemaking Portal: Follow instructions for submitting comments. This is the preferred method for the submission of comments.

Email: Include RIN 0906-AB08 in the subject line of the message.

Mail: Krista Pedley, Director, Office of Pharmacy Affairs (OPA), Health Resources and Services Administration (HRSA), 5600 Fishers Lane, Mail Stop 08W05A, Rockville, Maryland 20857.

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340B Mega Guidance & Coalition Notes

The Wait is Over

340B Mega Guidance340B Mega Guidance: Well played by the government. We had some news about delays and later than September, and BOOM, 340B Omnibus Guidance is published in August (love it). First, if you did not already see it or know it came out, the 340B Mega Guidance is out for comment and you can read the 90 page document here: My preference is to click on the pdf link to the right on the page and get the pdf. If this link stops working and you want the pdf, contact us and we will send you the copy.

We are currently digesting all of the document and determining impact to covered entities based on our experience with HRSA 340B audits and our own external audits we have conducted. Our plan is to get a more detailed analysis out early next week for your reading pleasure. My initial read through highlighted the following critical changes/clarifications:
– Patient Definition and the providers and location is much stronger, tight contract pharmacy filtering is needed.
– Inpatient hospital discharge prescriptions may not count (this will likely have some significant comments).
– Morford Letter language regarding follow-up care is officially dead.
– Infusion Services orders written externally (i.e., non-qualified area) are likely an issue.
– Non-covered outpatient drug language may require a re-look at purchasing of products and how they are billed and reimbursed.
– Responsibility for care is “medical” and not financial, so anyone doing the employee is a patient approach for 340B needs to really consider if they meet the new enhanced patient definition.
– MCO Medicaid officially mentioned as part of Duplicate Discount.
– One other article already written mentioned contract pharmacy entirely could be an issue, but I did not read it that way. We will follow-up on this.

More to come as we analyze it!

340B Conference Notes:

Wow, I feel like a slacker for taking so long on these. It has been on my to do list, but client work had to come first (did I mention I am almost a diamond for frequent flyer status for the year, and I don’t always fly that airline). So, this is not a detailed analysis of every session, rather the key points and learning I gleaned that I feel are important for covered entities.

HRSA Audit numbers: as of the conference, 135 audits conducted FY2015, on track for the 200 audit goal (I’ll say so, our team has been on site for 6 this year). Since 2012, this makes 363 audits by HRSA. This includes over 4000 child sites and over 9000 contract pharmacies. Once again, complexity (many child sites) and many contract pharmacies increase your risk of an audit.

Track & Trace: HRSA has had regular meetings with FDA. No resolution at conference time on how Track & Trace and contract pharmacy will sit with the FDA. It is currently not an exemption. My colleague wrote an article based on Gregg Dodgett, 340B Health, and Jason Atlas, Apexus, presentation at the conference. You can find it here: Bottom line is you should plan on having a mechanism to get the right Track & Trace documents to your contract pharmacy(ies). We partnered with Drug Track IQ to make sure we had a solution available for our clients. Check it out if you are still not sure what to do (there is a free white paper on what you need to do). The FDA enforcement of dispensers starts on November 1st, 2015.

Apexus 340B by the numbers: I really like Chris Hatwig’s myth buster numbers. Regarding the exponential growth of covered entities in the recent years, he said that it is due the child site enrollment and that the actual number of DSH hospitals have actually decreased. In fact, I believe the specificity of what to enroll as a child site that HRSA has expected has more to do with the increase than anything else. If you remember, some sites with child site hospitals would just enroll the hospital as a child site. Today, you enroll every single department, service line, cost center on your cost report that is visible if it has a different physical address compared to the parent entity (if it administers 340B drugs or writes prescriptions that are captured as 340B). So each child site hospital now has numerous separate child listings. Definitely could be the cause for the apparent increase in registrations.

Another myth:Total 340B spend – We know that a lot is made about the growth in the 340B program, however, it is still only 1.5 to 3% of total purchases. So, it may seem like huge growth, but percentage wise as compared to the total drug spend, it is still a small fraction of drug purchases.

To not go too long on this post (sorry, you might be thinking it is too late for that), other hot topic areas covered are manufacturer pay back, self reporting, and auditable records. We will cover in a future post. Next will be our concerns with the Mega Guidance. Stay compliant my friends! -Rob Nahoopii

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340B Coalition Day 1 of 3 & Update

Pre-Conference Work Shop

340B Conference in DCQuick Update on Turnkey Pharmacy Solutions: Wow, I cannot believe it is conference time already. We intended to get a few more blog articles out before now, but work got in the way (I hate it when that happens). This is a good thing, since it means we are onsite with covered entities and gaining more and more experience to share (as long as we get to the sharing part). We have been onsite for 5 HRSA audits in the last few months as well as many 340B independent audits. We actually have plans to share what we are seeing, both best practice and compliance concerns. We are going to share this in the next few months, and are deciding the best way to do this (maybe a free Webinar). With Rich Bucher being full-time and adding Roxanne Nevarez to our auditing team full-time, we are at a good place for supporting more clients and are now at this conference with a booth (and hopefully I do not have another 8-week stretch of travel, which I must thank my wife for putting up with me for that period of time).

Before I get into some highlights, I must send some love to 340B Health (a.k.a., SNHPA – still getting used to the name change). They put a lot of time and effort into making this conference both educational and a great venue to attend. My highlights below are simply that, some keys I pulled out to share. There is so much more content and tracks for education, I am covering a small fraction of the content in our blog. I know travel budgets are tough, but strongly recommend you attend one or both of the 340B Coalition meetings in the future (plus we hand out really awesome Utah mint truffle chocolates at our booth).

Pre-Conference – Implementing Effective Compliance Plans:

Started with Kevin Jones (he and I were both pharmacy directors of 340B hospitals at the same time at Intermountain Healthcare). Kevin shared what he does from his new role as the 340B Program Director. They have a robust compliance plan, and here is the biggest key I took away: Education is key and they do a quarterly education (off-site location and runs about 6 hours) training. We started this when I was still there, and it provides education on key updates and for new staff supporting the program to learn quickly what they need to know. Great idea!

Next was Shaun Phillips from Bronson Battle Creek Hospital. Love this guy, he was awesome. Shared details about their program and what they do for compliance. Shaun highlighted the need to have a dedicated 340B Analyst to support their program. He also noted the difficulty in finding the right person: Pharmacists are expensive, wanted some pharmacy knowledge, accounting background, and some general idea about 340B at minimum. They finally found the right person and as luck would have it, received their HRSA audit letter. That is baptism by fire! Shaun is right though, you need a dedicated resource for most medium to large covered entity sites (partial resource if you are smaller).

Last was Cynthia Williams from Riverside Health System. She hit on another key topic that is related to split-billing software maintenance. This is a key for us as well. If you are new to the program, do not underestimate the time and resource it will take to maintain a split billing software system. Cynthia also added a 340B Analyst, and stated “this should be a no brainer.” However, when your system is doing a RIF (reduction in force) it is still a tough ask! Cynthia educated CFO and COO on program complexity, growth, and financial impact. She used resources with 340B Health and Apexus as well. They ultimately hired a pharmacy technician buyer with significant 340B experience. Nice work Cynthia!

All three speakers mentioned having a 340B Oversight committee – we feel this is a Best Practice for all covered entity organizations. This committee should have C-Suite leadership and pharmacy, finance, and IT support as well. Also good to add compliance and legal when needed. We recommend meeting quarterly.

Okay, that was the pre-conference workshop for us. More to come on when we officially start the conference this afternoon. Aloha, -Rob

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340B Update – What Has the First 3 Months of 2015 Brought us!

US Congress 340B HearingIt appears that 2015 went off with a bang for the 340B Program. Here are some notes from 340B University, 340B Coalition Conference, the March U.S. Congress 340B Hearing, and our own experience conducting 340B audits in the field and working with covered entities.

340B Audits: We are aware of seven (7) covered entities who are going through a HRSA 340B audit in the next month or just completed one in the last month. Definitely feels like an increase from the past year. We learned at 340B University and Coalition Conference that although HRSA planned on closer to 400 covered entity audits in 2015, the number has been reduced to 200. At least one note we have says 33 audits occurred in January. At that rate, 200 definitely looks possible, but I suppose keeping up with 33 audits a month is a lot of work. Take home message: Semper Paratus – Always Ready! We must keep our 340B programs in a state of constant readiness. If you don’t know how, then ask. Plausible deniability will not work in a HRSA audit (translated – saying you didn’t know you had to do that will still result in a finding).

Mega Guidance: The substitute for the Mega Regulation will be guidance. Commander Pedley has confirmed that this will be released in June (of this year for you smart alecks). It will be released for comment, so please be prepared to read it and provide comment as needed. Update: I have not seen the formal notice, but there may be a delay in the Mega Guidance.

HRSA IT Updates: You likely have seen additional enhancements to the HRSA database. I like them (thanks HRSA). For 340B pricing transparency, HRSA is adding 340B pricing by the end of 2015. Currently, you can see 340B pricing if you are a registered covered entity with Apexus through your login. However, this is information provided by wholesalers, and is the best thing we currently have. Actual 340B ceiling pricing from HRSA will help us confirm we have the right pricing loaded with our wholesalers.

340B U – Utah Representing: I have to just throw it out there. I had a lot of fun at this last 340B University (just prior to the Winter Conference in SF). We had Kevin Jones (a.k.a., K-Jo), Intermountain Healthcare 340B Program Director (previous DOP at Primary Children’s Medical Center). We also had our Peer-to-Peer colleague and pharmacy Director, Donovan Smith (a.k.a., D-Smitty). For the record, I just made those nicknames up. The three of us are from Utah and it was great. If you have not been to a 340B University in the last year, I recommend you check the Apexus website for the next 340B University near you. We provide a lot of real world examples and pearls that you can implement at your covered entity. Plus, there is a ton of networking opportunity, which is also true of the Coalition meeting as well.

340B Hearing by Energy and Commerce Committee: I thought the hearing went well. Commander Pedley, OPA Director, and Diana Espinosa, Deputy Director of HRSA, spoke well and I definitely think they have the support of congress to obtain some rule making authority if they seek it through legislation, especially around patient definition. I also have a new favorite congress person. The congresswoman from Florida, Kathy Castor, 14th District, was great. You can tell she gets the importance of the 340B Program by her statement, “the 340B program saves lives.” Amen sister! If she is reading this, Thank You. There is of course some work to be done on compliance and potentially changes to some parts of the program, but I think we all knew that already.

Secret Sauce: If you are still reading, then I want to thank you with a pearl from our compliance programs and audits. If you have contract pharmacy, then you should regularly (annually) check to ensure your contract pharmacy agreements (CPAs) include all of the contract pharmacies listed on your OPA database record. This is often reviewed by HRSA auditors, and changes by the contract pharmacy chains may not be accompanied by an addendum. For instance, you may have a chain of contract pharmacies that has added central fill stores. These are registered and your AO approves them. You need to ensure a CPA addendum adds these stores to your contract.

I hope you have enjoyed this one, and remember . . . Semper Paratus!

Aloha, -Rob

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2016 HHS Budget – 340B Impact

2016 HHS Budget

340B HHS Budget 2016The 2016 Department of Health and Human Services (HHS) budget has been submitted to President Obama. HHS invests in scientific research, health care, disease prevention, early education, social services, and children’s well-being, to support healthier families, stronger communities, economic opportunity, and a thriving America. HRSA (and the 340B Program) fall into this category.

340B Drug Pricing Program: The Budget provides $17 million in budget authority for the 340B Drug Pricing Program, which represents an increase of $7 million above FY 2015. In addition, it proposes a new user fee totaling $7.5 million as a long-term financing strategy to support the program’s activities. These fees represent 0.1 percent of each purchase of 340B drugs from entities participating in the 340B Program to pay for the operating costs of the program. These fees will be collected by the Secretary based on sales data that shall be submitted by drug manufacturers and shall be credited to this account, to remain available until expended.

In recent years, HRSA has significantly increased its commitment to program integrity and compliance (covered entities should plan on being audited very soon!). As additional covered entities and associated sites join the 340B Program, HRSA has nearly doubled its program audits, instituted annual recertification for all entities, and increased its proactive education and technical assistance. Nearly 26,000 covered entities across the country currently participate in the 340B Program. It is estimated that covered entities participating in the 340B Program spend an estimated $7.5 billion on covered outpatient drugs.

See the full articles here:
Fiscal Year 2016 – Budget In Brief
Budget Justifications 2016

As always, please let us know if you have any questions or need some help with your 340B Program. Also, if you are interested in having your covered entity site receive a full independent audit of your 340B operations, come see us at Turnkey Pharmacy Solutions.

Richard Iverson, PMP

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340B Update October 2014 “Know Your Medicare Cost Report”

Medicare Cost Report

340B Medicare Cost ReportIn this month’s article we will focus on the Medicare Cost Report and provide some updates for the 340B program.

Well, it is October and we are still awaiting the arrival of the 340B Mega Reg. In a way, it almost feels like an upcoming dentist visit.

– At first, you sort of dread it and prefer it not happen at all.
– Then, the waiting becomes painful (more painful then just getting it done).
– Until, you simply hope it gets here soon so you can get it over with.

I think knowing is better than the agony of anticipation. For the love of all that is holy, I hope OPA receives the green light to relieve us of our suffering soon. . . I JUST WANT TO KNOW!!!

In a more recent news update, it appears that PhRMA has decided to go ahead and file a follow-up law suit on the Orphan Drug clarification. It will be interesting to see how this one plays out. We still have some manufacturers that have not provided Orphan pricing to ACA covered entities (i.e., CAH, SCH, RRC, CAN covered entity types). There is also some discussion around the idea that these manufacturers may have to pay back covered entities that could have bought drug at 340B, but were not extended the 340B price. Hopefully we can get some clear decisions on this so that this does not drag out too much longer.

We do need to offer congratulations to Apexus for being awarded the OPA contract through 2019. I personally feel they provide a great service and Apexus Answers is a great resource for all involved in the 340B program. Also, the Apexus 340B University is the best training for those involved in the 340B program (and for the record, the 340B Basics for Hospitals in San Diego at NACHC this past August had the best all around survey score, EVER! . . . Who did that one again?). Glad to have you around for years to come!

Focus for this article: Medicare Cost Report (Caveat: for clinic covered entity types, you will need to review your scope of services. Some of the same information applies related to departments and service lines.)

Do you know your Medicare Cost Report? More than ever, if you are in a leadership role with your 340B program, you need to become knowledgeable about your Medicare Cost Report and the associated Trial and Balance Sheet. Why?

– It is the source of truth for what qualifies for 340B in your hospital.
– For qualified areas with a different physical address, they need to be registered as Child Sites.
– For Child Sites, all departments and service lines identified on the Trial Balance need to be registered separately.

This is a level of detail that recent HRSA audits have focused on. If you have a child site that is a hospital for instance, every department and service line visible on the Cost Report and Trial Balance that either administers 340B drugs or writes a prescription that could be filled as 340B need to be registered as a separate Child Site.

Here is a good FAQ from Apexus FAQs on this subject:
FAQ ID: 1975
Last Modified: 03/18/2014
Q: How do I know if an off-site outpatient facility is eligible for 340B as a child site and should be added to the 340B database?
A: Off-site outpatient facilities are eligible child sites of a 340B covered entity in the following circumstances: (1) The outpatient facility is listed as a reimbursable facility on a 340B hospital covered entity’s most recently filed Medicare cost report. If the facility is a free-standing clinic of the hospital that submits its own cost reports using a different Medicare number (not under the covered entity’s Medicare provider number), then it would NOT be eligible. (2) The facility is included in a non-hospital covered entity’s scope of grant or part of the scope of services. An off-site outpatient facility meeting one of these criteria must register and be listed on the 340B database before it can access 340B drugs for eligible patients.
For hospitals, all clinics located off-site of the parent hospital, regardless of whether those clinics are in the same building, must register as child sites of the parent 340B-eligible hospital if the covered entity purchases and/or provides 340B drugs to patients of those facilities. For example, if the off-site outpatient facility is a hospital, all clinics/departments within that off-site location that plan to purchase and-or provide 340B drugs to its patient must register as a child site.
Outpatient clinics/departments within the four walls of the 340B parent hospital do not need to also register for the 340B Program. However, the covered entity remains responsible for demonstrating that those outpatient clinics/departments within the four walls of the parent hospital are only using 340B drugs for eligible outpatients and meet all 340B Program requirements, as demonstrated through auditable records.

Between now and the end of the year, determine if your covered entity site needs additional child site locations enrolled. This is one of those better safe than sorry, so register it if has a different address and can be seen as a separate department or service line.

As always, please let us know if you have any questions or need some help. Also, if you are interested in having your covered entity site receive a full independent audit of your 340B operations, come see us at Turnkey Pharmacy Solutions.

Thank you and Aloha, -Rob Nahoopii

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340B Program Updates August 2014

340B Updates

340B Mega RegWe are finding our groove at Turnkey Pharmacy Solutions and rededicating time to providing timely and relevant content to the 340B community here at the 340B Program Blog. I have heard from many people at the 340B Coalition Conference and at 340B University that you actually read it and like it! That was awesome to hear, thank you! Please read through and respond to the request at the end, it will benefit everyone.

In this article, you will learn about our takeaways from our latest independent audits we performed and a recent 340B University. This includes some Mega-Reg fun, Medicaid and Medicaid Managed Care, new registration changes, Orphan Drugs, and an important compliance tip on 340B contract pharmacy compliance.

Mega-Reg: Well, we are coming to the end of August and we still do not have a visual on those highly anticipated Mega-Regs. Do you remember the Disney classic Lion King? Toward the beginning of the movie, the three hyenas are talking about Mufasa (the current lion king, Simba’s dad) and the hyena voiced by Whoopi Goldberg hears Mufasa’s name and shudders and says that name has so much power, just hearing it makes her shiver, and of course she says “say it again!” That is how I feel about the mega-reg. Just the name alone conjures of emotion (some of it is fear, some excitement). I know our colleagues at OPA are just as anxious as we are, and want to get it out for review. However, they have likely learned a lot from the Orphan Drug push back and court decision, which is likely the cause for the delay. Appropriately presenting the Mega-Reg (…shiver…) is critical for its success. Mega-Reg, Mega-Reg, Mega-Reg!!! (can you feel it!)

Medicaid and Medicaid Managed Care: We are definitely seeing a lot more managed care Medicaid groups working with their corresponding state Medicaid agencies to obtain the Medicaid rebate (which is ultimately done by state Medicaid). If you are carving in (or carving out), make sure you know what your state Medicaid is doing in relation to managed care Medicaid, what to do if they are paying secondary, and if your managed care Medicaid has any billing requirements. Also ensure that both your hospital/clinic administered drugs AND contract pharmacy/in-house arrangements are properly dealing with Medicaid (or excluding it as needed). This is a focus for HRSA, so make sure you are getting it right!

Recertification and New Registration: As a reminder, make sure you recertify by September 10th (hospitals). For CAHs, it is pretty easy and fast. Other hospital types, you will need your DSH calculation on your most recently filed cost report. If you are newly registering, please note that OPA now has your recently filed cost report loaded for child site selection; however, if you do not see your child site, then you will need to manually add it. One major change to new registration is the requirement for the government person attesting to your relationship or status now having to approve of this relationship via email. If this is not done in the specified time, you will not be enrolled in the program. We heard that the recent July enrollment had 75 covered entities that were initially not enrolled, they re-opened the program to allow for more time and all but 5 made it. They may not be so generous next time, so make sure your government person knows they need to respond to the email from HRSA when it comes.

Orphan Drugs: It appears some of the 11 drug companies are still holding out for legal clarification before they return pricing on orphan drugs for CAH, SCH, and RRC hospital covered entity types (i.e., those subject to the Orphan Drug Exclusion). Some have returned pricing (Thank You). Our critical access hospitals can really use the help when they use these orphan drugs for their non-orphan indications. One compliance recommendation: regardless of your split billing vendor or if you use a manual process. Whenever you identify a qualified orphan drug (i.e., used on an outpatient for the non-orphan indication and duplicate discount is prevented) then track this patient and drug administration on a spreadsheet with the indication. For recurring patients, you can simply list the administration for tracking since you already have the indication. This is then readily retrievable in the event of a HRSA audit and a good check for you to know you have confirmed indications.

Contract Pharmacy Compliance Tip: Pay careful attention to your patient encounter data you are sending to your vendor. We always recommend removing patient visits that never generate prescriptions (even if they technically qualify). These areas include lab, imaging, IV infusion, physical therapy, etc. You could also send all the data to your vendor and have them exclude areas if that is an option. It should also go without saying that you need to exclude non-qualifying areas (i.e., non-reimbursable areas of your cost report). Check this feed at least annually to ensure nothing has changed or been added to, . . . Stuff Happens!

Request From Us: For future articles, we will definitely continue to write on what’s hot and in the news for 340B; however, we also know that those of you on the front line are dealing with different issues. Please send us your questions and issues you are having and we will respond to them in future articles. You can send us your questions and issues by emailing them to

Aloha, -Rob

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340B Compliance – The Higher Standard

TetonsI am sitting just outside of my Cabin at the base of the Teton Mountain range on the Wyoming/Idaho border (I just took the picture to the left from my porch). It is my time for recharging and evaluating goals. I am also reading “A Higher Standard of Leadership” by Keshavan Nair, and am finding some universal truths that apply to our 340B Program. I will share some of these thoughts and of course discuss the 340B Program in the following article.

As for the Turnkey Pharmacy Solutions team, we have been crazy busy supporting existing clients and completing at least one audit a week for the past five weeks. We were able to visit some great covered entity sites that are truly engaged, and who are endeavoring to have a compliant 340B Program. We are also preparing for the DC 340B Coalition Conference next week, where we have a booth and Rich Bucher, from our team, is speaking at the conference. Stop by and say hello if you are there.

340B Updates: We are still waiting to see the ultimate outcome of the Orphan Drug clarification as we have not seen all pricing return to CAH wholesaler accounts since the OPA clarification a few weeks ago. Mega-Reg (Mega-Clarification) is still in the air and maybe we will learn something at the conference. It was during last year’s conference (or near it anyway) that the non-covered outpatient drug clarification around bundled drugs was brought to light, and we are hopeful more clarifications will come soon. The one thing we know for certain is that recertification is coming for hospitals in August, AOs should get notice around August 1st and have August 6th through September 10th to complete the recertification. If you are in Washington, an update came from one of the Washington state hospital organizations that stated July 15th is the deadline, but that is the deadline for this quarter’s enrollments and not recertification.

So, what is the universal truth that the beautiful Teton Range and my current reading inspired? A Single Standard of Conduct through living absolute values. By absolute values, I mean things like truth, honesty, and integrity. These are values that can bring order to chaos (the 340B Program can feel chaotic at times). If we espouse to have a compliant 340B Program or to help clients have a 340B Program, or if we are a manufacturer and simply want our customers to have a compliant 340B Program, then the heart of the matter (from my perspective and experience working with covered entities) is to find a way back to your absolute values.

Using truth, honesty, and integrity as core absolute values with the 340B Program, we will appropriately resource compliance activities and make the time to ensure we are doing things right. We will apply the current patient definition in a manner that we can honestly say and feel we are compliant and not stretching the rules to meet our needs (is what we are doing pass the sniff test?). We will develop processes that safe guard against diversion and duplicate discount. As vendors we will support our clients and help them with their compliance activities. As manufacturers we will work with covered entities for appropriate use of the 340B Program, and as consultants we will provide honest and accurate information to help our clients make the best decisions possible.

“We must be on guard against ideology, tradition, and organizational goals masquerading as absolute values. These Pseudo-absolute values include . . . capitalism, free markets, and organizational survival. When we turn these into absolute values, we may sacrifice what is fundamental at the altar for what is expedient.” – Nair

I think Nair makes a great point about how easy it is to substitute our company’s goals or values for an absolute value. If I may I ask, take a look at how your company is currently managing your 340B Program or dealing with covered entities and determine if you are living by absolute or pseudo-absolute values. If it is the later, it is time for a change. The program is too important in the current healthcare landscape, we still have numerous patients without insurance that need non-profits and government institutions to cover their needs. I have also seen underinsured go from poor medication compliance due to cost to improved compliance with chronic medical conditions directly due to the 340B Program (e.g., diabetes, COPD). The 340B Program has been critical for many organizations to continue to provide the level of needed care, or in some cases to simply keep the doors open. I have seen this first hand and believe this to be true, but it gives us no excuse to not manage the 340B Program in a compliant manner. We must strive for the higher standard based on our absolute values in order to consistently do the right thing not only for covered entity organizations, but for our patients.

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340B Orphan Update and Catching Up

Recentish (it may be a word) Updates in the 340B World

340B Orphan Drug Judge***Orphan Update*** – On May 23rd, 2014, a District of Columbia Judge, Rudolph Contreras, ruled that HHS does not have rule making authority to direct how the Orphan Drug Exclusion statute is applied in applicable hospitals (i.e., CAH, SCH, RRC, and CAN type covered entities). He did feel it was a reasonable way to administer the statute (allow use for non-Orphan indications); however, without rule making authority HHS cannot create the rule. This is a result of a lawsuit from drug manufacturers, and we will likely see the 340B pricing be removed from affected covered entities in the near future.

340B Compliance Tip of the Month: Take a look at your crediting process for drugs to ensure that credits cross to your hospital accumulator. Some systems credit in a billing system and not the EMR where the data is pulled. Related to this is how patient own meds, white bagged meds (when patients need to use a specialty wholesaler for high cost drugs and they are shipped to you or the patient), or Patient Assistance Programs (PAP) are treated in the system as far as accumulation.

Well, it has been a lot of busy weeks since the Winter 340B Coalition Conference. Of course this is evidenced by the fact I have not wrote up the highlights from the last day of the conference. My goal is to do that and share some highlights from a recent 340B University I had the opportunity to provide a presentation for and to attend.

A quick update on us, I am excited to announce that Rich Iverson is full-time with Turnkey Pharmacy Solutions, our 340B services and consulting company. This is great because I have been busier than I want to be. In the last two months we have provided onsite HRSA audit support for a DSH hospital, an external 340B audit for two DSH hospital, external 340B audits for eight CAH hospitals, and presented at 340B University on contract pharmacy, mixed-use setting, covered entity perspective of HRSA and Manufacturer audits. Plus, coordinating efforts for the rest of our work that needed to be completed. Of course, starting with this article I am writing on the plane ride home from an audit. (By the way, unless you receive upgrades for being a frequent flyer, go for the plane seat rows for the second emergency aisle. They are longer and the seat in front of you can’t recline, while your seat can).

I reviewed my notes from the last day of the coalition conference. I must say, it is easier to write the article right after you hear the presentations. The key items I felt were important were the great discussion on legislative changes to congress, 340Bair, and a recap of legislative action for 2013.

For congress changes, I will not go through the details, but there are a significant amount of people retiring or leaving office for other reasons that could change some of the key players for and against the 340B program. The take home message is to a) come to the DC conference in July and interact with your senate and house representatives from your state and b) to prepare a message for why the 340B program is important for your hospital and clinic and what it does for vulnerable patients with need in your community. Of course, this means you need to have some things you are doing. As I travel around the country and work with various covered entities (typically providing 340B independent audits) I get to hear a lot of neat things people are doing to take care of their patients with 340B savings. The hard one to measure and determine impact are sites that would be in the red financially without 340B savings. I personally know for a fact of a couple of small facilities that would have closed down without 340B savings. When I think of access for patients in that community, especially elderly and those with disabilities, this truly becomes an access and service issue.

340BAir and other Con or Pro 340B groups (like 340BFacts), are all part of the reality of where the 340B program is today. I don’t think we should judge either group to harshly (depending on what side of the aisle you sit). I personally feel the reality is somewhere in the middle. The 340B program does in fact provide critical support for many patients in need and in many cases, meets a gap that is difficult to cover in the absence of the 340B savings for the covered entity. At the same time, compliance of the program is not where it needs to be. HRSA’s efforts have been huge at improving compliance, and I am grateful for the additional funding going to HRSA to help out with compliance oversight in the program (both covered entity and manufacturer). Note to covered entities: self-audit your program regularly and be an active participant in oversight of your vendors and the output of your vendor solutions. Note to manufacturers: We need to do a better job of protecting you from 340B diversion and managed care duplicate discounts (not Medicaid, well, we need to protect from Medicaid too, but I am talking about rebates to insurers other than Medicaid).

340B University (March) – Commander Pedley was there, and no she did not give us any hints on the Mega Regulation (for the record, Chris Hatwig tried his best and she was a rock at not providing anything). She did confirm that the current plan is still to release the draft for comment in June. I believe we will have 60-days to respond, so be ready as this happens over July and the busy vacation summer season. One item that was new to me at the University session was that there is an additional option for OPA that is coming regarding compliance. There will likely be user fines for non-compliance. No details on how much or how this works, but we can add that to the options of terminating the covered entity, terminating the contract pharmacy(ies), and paying back savings. Although it is possible to have criminal penalties too, it is still highly unlikely and was not mentioned.

Whew, I really need to break these up into more articles. I hope to add a compliance tip every month, so stay tuned; and let me know if you have a good one to share.

Two Side notes:

1) I am presenting at 340B University at ASHP Summer Meeting and a CE on 340B on Monday. If you are at either event, let me know if you have any specific questions and I will be more than happy to help.

2)W e have a booth at the DC 340B Coalition Conference, so if you are going, please stop by and say hello.

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340B Coalition Conference Highlights Day 1

340B ConferenceBefore we get to the highlights, I need to address one thing we always strongly recommend to covered entities we partner with.

For key leadership staff, you should attend a 340B Coalition meeting OR 340B University meeting annually.

I even recommend one of each if you can swing it. The two meetings cover 340B from slightly different angles (similar, but different . . . I may need to cover this in a separate article). Currently listening to Bill von Oehsen and he just mentioned the need for attending one of these educational sessions annually. The reason I bring this up is that I do not want anyone to substitute formal education by using our Blog or reading the Apexus or SNHPA website for their sole means of 340B education. Okay, on to the highlights!

Legislative: The biggest update is the increase in funding for OPA (well, technically HRSA for 340B, but that means OPA). This brings OPA’s budget to $10.2 million, which is an increase of $5.76 million. Commander Pedley has to present to congress in March on how this money will be used for compliance and integrity. We did hear that some of this will be used for manufacturer auditing as well.

What is on the Horizon for 2014 (We know about most of these, but it is a fun list):
-Orphan Law suit (regarding the recent clarification that stated if the Orphan Drug was used for a non-Orphan indication, then it could be purchased at 340B).
-AMP Regulation due out in May: Defines AMP and may impact Medicaid Rebates.
-1st Manufacturer HRSA audit.
-And we can’t forget, 340B Regulations to be proposed this summer.

The “Real” Numbers on Contract Pharmacy:
-Percentage of Covered Entities with contract pharmacy = 18%
-Covered Entities using Contract Pharmacy that have less than 5 contract pharmacies = 75%
From my personal experience, we also have many contract pharmacies listed that are not being used. They were either set-up and not started OR a large retail chain added many stores and then looks to see which stores have volume (and of course have not removed the extraneous stores yet).

Contract Pharmacy Diversion: I did hear for the first time that besides a covered entity being removed from the program AND potential payback of all 340B savings, a contract pharmacy diversion could result in the contract pharmacy being removed for the covered entity, but the covered entity could stay enrolled. That was new to me and makes sense.

Medicaid (Correction): During some FAQs, someone kept pushing for a response as to if Medicaid Rebates were Fee-for-service (State) Medicaid only or Managed Care Medicaid too. Initially the response was it depends (which I feel is the right answer). They kept pushing and eventually got a Yes, State Medicaid only. I want to clarify, this is technically correct. However, in some states, State Medicaid picks up the info from Managed Care Medicaid and seeks a rebate. The reason the answer is correct is that it is State Medicaid only that can seek the rebate (that too could change of course); however, they are collecting Managed Care Medicaid claims for rebates as well. Take home message: You need to ask (yes, that means call… on the phone) each Managed Care Medicaid and State Medicaid what they are doing regarding rebates, and even if they say no initially (that is regarding the Managed Care portion), make sure you are notified if they change their practice.

Apexus: Big Chris (If you haven’t met Chris Hatwig from Apexus, he’s like 8’6″ or something, and I usually only make jokes with him if I don’t have to see him for months), shared a lot of tools on the Apexus website. A) if you are a CE and not registered with Apexus, then register! It is one of those no brainers (free and provides a lot of benefit) in life that rarely exist. B) The one item I want GPO Prohibition sites to go look for is the “Minimize WAC Exposure Tool” that provides 10 things you can do to minimize your WAC impact. In my recent role as a DSH pharmacy director, the WAC impact was about $70K/month and in May it was $100K (we turned on triple split with WAC on in April 2013 to meet the first deadline).

Okay, I don’t want to get too long. We’ll cover day 2 next (still going right now as I write this, good discussion on self-reporting). The picture above is Rich B, Rich I, and me at our Turnkey Pharmacy Solutions booth. Thank you to everyone who stopped by, we have had an awesome time meeting people from all over the country. There are a lot of people trying to do the right thing, and if we can help you with compliance or just to answer some quick questions, we are here for you. -Aloha, and I hope I see many of you at a 340B University or the July 340B Coalition Conference in Washington DC.