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

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340B Program October Update

So what is going on in the world of 340B?

340B Program UpdateI hope you are ready for some serious 340B in the trenches discussion, because I have been so busy with my recent transition (I’ll tell you more later), that I need to get some stuff off of my chest. In this article, we will discuss some of the recent headline sin (<---this is a typo, but thought it actually makes sense and should just leave it in) the 340B world, how the Orphan Drug Exclusion is playing out, what - No OPA in the middle of open enrollment, Baxter's second letter, and my favorite - GPO Exclusion is making PhRMA more money!
Job Change: I am happy to announce my retirement from the world of Director of Pharmacy at a 400-bed DSH site (not an actual retirement as I am not 55 yet, but I am running with that tag line). I have come to the final realization that I can not continue to help manage my health-system’s 340B program, be editor for the 340B Program Blog, and be the CEO of Turnkey Pharmacy Solutions (our 340B management company) while being a full-time pharmacy director. I believe my wife stated it best when I proclaimed this realization and she said, and I quote (hard to get her sarcasm right, but trust me, it is there) “Really! you can’t be good at everything, at the same time!” I am pretty sure too many late nights and failure to carry my load of the household duties has somewhat jaded her to the cause, but I aim to make amends (although, me setting up shop in a home office and being around during the day may not have been a step in the right direction). In any case, although I continue to help support my health-system’s 340B program and our other hospitals we help manage, I am officially full-time in the 340B space. We have been setting up quite a few external audits for various 340B covered entity types. If you are interested, let me know.

Headlines: We are going to cover most of the headlines that have recently come out in the next few sections. One key one that may have been overlooked is that HRSA did post the results of 8 more audits, you can find them here. I will be breaking these down in a future (but soon) article. The one thing I keep looking for is the sanctions, and they still say “to be determined.” Quite a few issues surrounding Contract pharmacy false positives and billing Medicaid when the covered entity elected to carve out. Another note worthy headline is that Apexus has updated their FAQs so you can now search them (versus perusing the hyperlinked pdf’s trying to find what you are looking for). You can find the FAQ page at Apexus here.

Orphan Drug Exclusion: Well, it is here. As of October 1st, 2013 CAH/SCH/RRC covered entity types can officially purchase Orphan Drugs that are used on eligible patients for an indication other than the orphan drug indication(s). If you thought our PhRMA colleagues were going to go away quietly in the night, it is not so (you didn’t really think that did you?). Senator Hatch (R-UT) expressed his disappointment for the HRSA ruling on Orphan Drugs and recently PhRMA has requested the Washington DC federal district court to block the HRSA ruling on 340B purchases of orphan drugs. On the other side of the coin, SNHPA is wondering why the Orphan Drug Exclusion is even there in the first place and is hoping to repeal it. Although I wonder the same thing, I tend to like this middle of the road approach.

No Money, No . . . Federal Government: This one fascinates me quite a bit. The whole lack of appropriations and current furloughs of federal employees and staff of course goes much wider than HRSA and OPA. But, this is not a social commentary blog (okay, well, it isn’t usually anyway), so I will keep it confined to the 340B Program. We are in the middle of open enrollment and we all get the email that in summary says, “we were sent home, the website is up, I hope it doesn’t break, good luck and we’ll see you when they let us come back to work!” I have mentioned it before, the OPA staff do a pretty dang good job, and I am sorry they have to go through this. Dear OPA, we hope you come back soon!

Baxter’s second letter: I change my mind, I don’t want to talk about Baxter’s second letter. I am having fun summing things up, so here is what the jest of the second letter is, “okay, so we were told our first letter was wrong, we don’t get to tell everyone that most of our drugs are non-covered outpatient drugs just because somewhere in the world somebody did a bundle payment on it, but we think it was just our title that was off, so we changed it, and in general we still think we are right.” So, if you are Baxter and reading this, give me a call, I think I can help you here. No, seriously, I have met with a lot of the Baxter people, and they are great, I just think the letters were interesting.

GPO Exclusion – Money Maker for PhRMA: I can’t believe this hasn’t been talked about more. I really need to do a separate article on it, and probably will, but had to save the best for last here. Let’s call a spade and spade. PhRMA dislikes the 340B program because it decreases revenue for them. Well, the GPO clarification that specifically stated how a retrospective split billing system should work in hospitals was a boon to PhRMA. I have talked with many pharmacy directors, and DSH hospital after DSH hospital is reporting an increase in pharmacy spend of hundreds of thousands due to the WAC account (in some cases, six-figure expense increase every month). I’ve discussed some of the details why in a previous article, but I thought I would be able to get this down at my facility and have come to the realization we will always have some WAC purchases and it will not ever be a small amount of money. I know we all try and play well in the sandbox, but let’s go ahead and call this one a win for PhRMA and a loss for hospitals taking care of patients. There are some things that each DSH needs to do to limit the WAC purchases and a lot has to do with your NDC monitoring (which is good for both expenses and compliance). I have some ideas on this, email me if you are interested.

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340B Program June Update – Grassley, Sequester, GPO Exclusion, HgA1c

Senator Grassley statement, sequester impact on OPA, GPO Exclusion clarification marches on, and HgA1C improvement is statistically significant!

340B Did You KnowThe above list has one thing in common . . . 340B. Some of the items are not so good, while at least one is fantastic (in my view). Before we get into the topics for this month’s article, I did want to reach out and see if any of you were able to attend 340B University earlier this month at ASHP SM? I had the opportunity to present “Mixed-Use Settings” and want to hear your input on how I did and what you would like to learn more about. I know I have said it before, but you NEED to attend 340B University at least annually. If you have staff that are critical for your 340B compliance, then they too need to attend 340B University at least annually. We have made it part of our Policy that this needs to take place. In any case, it was great to participate at 340B University and hear a lot of questions and network with a lot of other sites to learn about what they have been doing and what they are struggling with.

Senator Grassley (R-Iowa): I want to start off by saying that I believe the senator has good intentions. He has taken a very strong stance on the 340B program that involves the concept that hospitals are “making sizeable profits at the expense of Medicare, Medicaid, and private health insurance.” SNHPA has in turn responded to the statement by explaining why this is not necessarily the case. I tend to have an opinion (don’t we all have one?) somewhere in the middle. There is potential for impact on insurers (government and private) with the 340B program, and we as covered entities need to ensure we are conscious of this and ensure that we are mitigating any potential issues. One thing I find to be true as we continue to use some of our savings to favorably impact patient care is that through 340B savings and leveraging 340B pricing, we can show positive impact to healthcare in general. At the end of this article I will share some preliminary data presented at a recent pharmacy residency conference related to improving HgA1C in diabetes patients through a 340B voucher program implemented at my DSH facility.

The sequester impact on the OPA is not a small one. The once planned 200 to 400 audits from OPA for 2013 is likely less than 100 now. Our colleagues at OPA are under tremendous pressure to certify, recertify, and audit the covered entity sites in the 340B program. Losing resources to achieve this task did not help. Time will tell if the resources will be replaced and the OPA is appropriately resourced to meet their goals and objectives. I do have to say thank you to the OPA staff, I know the two weeks of open enrollment are extremely busy, and we had a couple of sites and enrollments to complete and they were very helpful in ensuring it was all done correctly.

GPO Exclusion clarification marches on! Well, we are in June and the absolute drop deadline for the GPO Exclusion clarification about triple-split for mixed use areas is on August 7th (2013, just in case you were hoping for a different year). I have said it before and will say it again (although some may call it blaspheme). . . I think the GPO Exclusion clarification is a good thing. Seriously, I do, but it still makes it time intensive and a bummer that I saw a spike in GPO/WAC purchases by $100K in April/May. It does help us (is force us a better word) become more compliant, which is exactly what we all should be doing. The reason I saw a spike in purchase is because I did not have any GPO accumulations for the first bunch of orders, which means you will have WAC/Non-GPO purchases. However, providing you do not shift products around (buy different NDCs), this should shift back down to a lower impact over time. It has also provided me the opportunity (I am sure I can come up with other wording here as well) to look deep into our charge practice to ensure we are billing everything we administer to patients. I know this sounds like a no brainer, but in a DRG type setting you sometimes do not scrutinize billing practices as much as you ought to. I am sure we will discuss this further in future articles.

HgA1c: Okay, now for the fun part. My pharmacy resident presented at Western States pharmacy residency conference some data about our 340B voucher program for patients in our diabetes clinic that could not afford their insulin. For some time we have had many anecdotal stories about the patients we have helped, and it is motivating to hear the positive impact the program has had on our patient’s lives. It is even better now to tie data to it. We saw many patients with pre-HgA1c values that were double digit drop to 7’s and 8’s (for non-clinical folk, that is a good thing). HgA1c represents how controlled your blood sugars have been over the past few months. Scores in the double-digit range for long periods of time will often result in kidney failure, cardiovascular complications, and other macro/micro vascular disease progression. In other words, it is catastrophic for healthcare costs (think of the cost to our healthcare system for kindey failure, amputations, blindness, cardiovascular disease . . . we are talking about some of the highest drivers of healthcare cost) and the patient (these are life changing diabetes related conditions that not only decrease life expectancy, but drastically decrease quality of life). The beautiful part from a research standpoint is that we showed a statistical difference in HgA1c for our small patient population (we needed to have pre and post scores in this short study period). It is likely that we were under powered in the study and still had statistical difference (that is saying something right there). We continue to look for ways to leverage our 340B savings for our vulnerable patients. I strongly encourage you to do the same.

This was a long one, and if you made it this far, I thank you for staying with us. Aloha, -Rob

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340B GPO Compliance Update

Updated deadline from OPA on 340B GPO Compliance

340B UpdateBelow is the updated FAQ from Apexus/OPA on the extension of the 340B GPO Compliance deadline for going to triple split accumulators for affected 340B covered entities (i.e., DSH, CAN, PED). Please take note of the bolded section (I bolded it for the record) in the answer. This does not mean you should hold off on going to triple split until closer to August 7th so you can avoid the WAC expense hit, the expectation is that you move to compliance as soon as you can.

Q: When does HRSA consider covered entities in violation of the GPO prohibition (UPDATED)?

A: HRSA published Policy Release 2013-1 on February 7, 2013 to clarify its policy regarding this 340B Program statutory prohibition. HRSA initially allowed covered entities 60 days after the publication of the GPO policy release (until April 7, 2013) to make certain their drug replenishment practices comply with the GPO policy release. Based on a large number of covered entities providing comments that this deadline could not be met due to the work required to implement the needed changes, HRSA is extending the deadline to August 7, 2013 for those entities that are not able to comply with the initial April 7 deadline. No additional extensions will be granted beyond the August 7 date.

During this extension, HRSA expects that covered entities will comply with the GPO Prohibition as soon as possible prior to the August 7 deadline. HRSA reviews and follows-up on all allegations regarding non-compliance and has the ability to audit a covered entity. In such cases, covered entities should be able to demonstrate that they made their best effort to be in compliance as soon as they were able to do so and should have a legitimate reason for any delay. Any evidence of deliberate delay could result in immediate removal from the 340B Program.

If a covered entity is unable to be in compliance by August 7, the covered entity must immediately notify HRSA, and will be terminated from the program. The covered entity may reapply during the next quarterly registration period (October 1 – 15) once it determines that it is in compliance with all 340B Program requirements and can attest to such during the enrollment process. If after August 7, HRSA determines that a covered entity still participating in the program is not in compliance with the GPO prohibition, HRSA will terminate such entity from the 340B Program.

In addition, HRSA will be conducting annual recertification of hospitals after the August 7 deadline as part of the regular annual recertification process. At that time, all participating 340B hospitals must attest that they are in compliance with all 340B program requirements, including compliance with the GPO prohibition as detailed in Policy Release 2013-1.

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340B GPO Comliance Risk Points

GPO Compliance change is in full effect on April 7th!

340B GPO ExclusionThe new GPO compliance clarification from HRSA has caused quite a stir among DSH, PED, and CAN 340B hospitals. I have a feeling this will not be the last 340B program clarification from HRSA we will see this year. The more and more we get into the details of our 340B programs, I must admit that the triple split is the best way to ensure GPO compliance. This of course does not make it any less painful. Partly because we know we will see an increase in expense for the drugs we buy on WAC/non-GPO prior to having an accumulation, even when they are used in a qualifying 340B outpatient or an inpatient. Here are some items we are looking at to ensure we are a) not violating the GPO exclusion, b) not violating the 340b diversion prohibition, or c) buying the drug all on WAC/non-GPO and getting wrecked on expenses.

Anesthesia gases: This of course depends on how you handle anesthesia gases. In many facilities, they are bundled into the anesthesia charge. This is fine, but if it is bundled into a charge code somewhere, then you will have a heck of a time trying to accumulate it through billed doses. For our DSH and PED sites we have two options, one is to buy all of it on WAC (it is making me tear up already) OR you can look at the way your anesthesiologists document anesthesia gas use and identify a mechanism to manually (yes I said it, manually!!!) track anesthesia gas use. Now this gets really tricky. Our documentation shows which anesthesia gas is used and total minutes used. It doesn’t factor in flow rates. In our extra conservative nature, and a process we feel is defensible during an OPA audit, we are going to conservatively figure in a low-end flow rate and translate minutes to bottles for qualified outpatients and inpatients. Then, manually adjust the 340B/PHS and GPO accumulators. If your accumulator has a note section for manual changes, annotate where these data can be found in case you need to find it during a 340B audit. Make sure you keep this documentation accessible electronically or via paper. If your system does not let you track reasons for manual adjustments, then create a separate spreadsheet and track the changes as above. This will be true for any manual adjustments. In the end, you will likely have some GPO purchases, some 340B purchases, and some WAC/non-GPO purchases (we are calling these WAC purchases the “fudge factor” or “insurance,” since you cannot perfectly know the exact gas use, if you are conservative you will likely have some volume not accumulated and therefore purchased on WAC). To be fair, some sites have better anesthesia machines that can actually track flow rates and volume AND can retrieve these data. If you are fortunate enough to have access to these data, then use it for your accumulation. As you may have already guessed, this risk point is not specific to anesthesia gases. You should look for all areas in your hospital or clinic where you bundle medication into another charge and identify how you are going to safely identify the doses used on inpatient versus qualified outpatient.

Missed billing: It is now more important than ever to ensure you do not miss billing opportunity. I don’t know about you, but in my hospital we need to focus on FTEs and RVUs can volume adjust up FTEs. So, ensuring we bill for everything we send is important for FTEs, RVUs, and revenue (I apologize if these acronyms are new to you, FTEs are full-time equivalents or one-full-time employee; an RVU is a relative value unit and is different for departments, in pharmacy it is typically a drug dose billed and different drugs or routes have different RVU values). This has always been true, the RVU and revenue issue. With the new triple split and 340B GPO Compliance though, we can now add expense to the mix. If you do not bill for something, you will likely also miss the accumulation. This means you are buying it on WAC and missing out on either the 340B or GPO savings. Because of this, my new pharmacy student is fortunate enough to have a project at looking at how we can fix this for ED, L&D, and OR areas (because they do not nurse chart doses in these areas the billing is different and therefore at higher risk of missed billing). This is another reason I feel the 340B GPO Compliance clarification makes sense. With the old method, we would have been violating the GPO exclusion if we did not purchase the outpatient medications on 340B.

Insulin: My health-system is okay here, but I just saw a recent post on this subject. If you use multi-dose vial insulin on multiple patients, you will need to review how you are billing for this and if it appropriately accumulates the correct amount of purchase/used drug. My health-system uses the 3 mL vial or insulin pen (the pen has its own issues from ISMP recommendations, but we will not discuss that now). We use a full vial or pen on each patient and do not share the vial or pen. This creates cleaner billing and accumulation processes. However, this is something to think about for all items you may use on multiple patients. For instance, lidocaine for PICC starts or peripheral line starts. I almost recommend just buying it on WAC, but if you want to maximize your savings (or at least decrease your exposure to WAC pricing), then you could determine the locations where it is always inpatient or always qualified outpatient and manually add those to your accumulator as outlined in the anesthesia gases section. For mixed use areas, you will want to purchase on WAC to ensure you are compliant or develop a process to correctly identify the correct accumulation (I just don’t know if this will be worth it).

I hope this has given you stuff to think about. I have only shared some of the projects we have been working on to be compliant with the GPO Exclusion, 340B Diversion, and to minimize our exposure to increased expense due to WAC purchasing. If you have any ideas or projects you have been working on, please add a comment and share. The best way to learn is for all of us on the front line to engage in the discussion. Also, if you need help in these areas or would like to discuss the possibility of our team conducting an external audit for your site (for both compliance and optimization), let me know. Best of luck in your 340B Compliance Journey. -Rob

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340B Contract Compliance and Full Auditing Support

ST Health Logo

One additional company that can help you with your contract compliance and 340B auditing needs!

340B Compliance and Audits are hot topics these days in the 340B community. It feels like you can’t say 340B and have someone who knows anything about it cringe just a little. In fairness, this is not all bad; the 340B program was in need of more rigorous oversight, and now we have it.

So where do we go from here? Well, in my opinion, we step up to the plate and get to 340B Nirvana (i.e., 100% compliance or as dang close as we can get). We have discussed audits and GPO compliance in recent articles, and now I want to discuss two additional opportunities that will help get you to the next level. One is around a 100% line-item, per prescription audit (yes, 100% review), and the other is on ensuring your savings are being optimized. Let’s start with the auditing, since that is likely most important at the moment.

Our sister consulting company, Turnkey Pharmacy Solutions, does provide auditing support/management for your entire 340B program; however, it does not include a 100% prescription review. This is massively time consuming and resource intensive, but we found a company that is actually doing it, S/T Health Group Consulting. I have had multiple meetings and discussions with their president and vice president (Richard Tulio and Mickey Shivitz). Their service is called “TruDat Contract Rx Audit Services” and it is one of the most thorough audits you can have of your contract pharmacy system and processes. It will look at an entire year’s worth of prescriptions and ensure that each and every single prescription was in fact for a qualified covered entity patient. You will not have to hope that your random (sample) audits are sufficient and are capturing any 340B diversion, you will know if your process is 100% accurate.

The Office of Pharmacy Affairs (OPA) has strongly recommended an annual external audit. I believe that adding S/T Health’s TruDat service is something you should consider adding. My thought is that if you are ever audited by HRSA or a manufacturer and are asked if you are auditing your contract pharmacy patients and you pull out your 100% prescription audit, then you will be in good shape. Of course, if the audit shows you are not 100%, you can then work on your audit action plan and figure out how to get there. Let’s be honest, if you are audited by the OPA, they will likely find issues, and you do not want the OPA to be the one to point this out. S/T Health also offers a “TruDat Mixed Use Accumulator audit as well. Can you be sure that your accumulator is doing all as advertised? With this service you will know.

The interesting thing about S/T Health is that I did not find them through their TruDat service, I was actually looking at contract price compliance, especially with new sites in my health-system going live with 340B and we had recently changed wholesalers. We have a GPO (I know, it is a bad word in 340B but we have to buy drugs for our inpatients), GPO-like health-system contracts, and PHS pricing. We found out that S/T Health could do a complete contract price compliance review (also very resource intensive). The pricing model was a nice one too; they get paid on a percentage of what they recover for you (i.e., contingency). They go through your purchases over a selected period of time and contracts that should be loaded and look for contract load errors. They then work with the wholesaler on the credit/rebill and only get paid on what they recover for you. This service is called “Contract Price Verification.” It is a no-risk service (since payment is contingency based) and I recommend giving it a try.

I’ll be honest, these guys have a bunch of other services that I am looking at as well, (e.g., NDC Monitoring, Charge Master Accuracy, and another contingency based financial operations accounts payable audits), but I am fond of the “Contract Compliance and Optimization” service. They will comb through either your GPO and your PHS/340B purchases and review what would have been a better purchase option. You get to review the list, and for the ones you want to purchase (but the wholesaler is not stocking because nobody is ordering), they will request with the wholesaler to move your purchasing volume and history to the new, lower cost drug.

I hope this has been helpful for you. Our goal is to always provide you with our frontline experience and knowledge. We are showcasing S/T Health, because we believe they have a good service line that can help all of us not only be more 340B compliant, but also more efficient with your pharmacy operations. They are also a preferred provider with an Apexus 340BPVP Agreement for most services I have mentioned.

If you want to learn more about S/T Health Group Consulting, Inc, you can visit them at:

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340B GPO Exclusion – The Clock is Ticking!

OPA Policy Release on the GPO Exclusion

340B Panic ModeThis is for Disproportionate Share Hospitals (DSH), Pediatric Hospitals (PED), and Cancer Hospitals (CAN). If you are a CAH, SCH, or RRC you can read the rest of this for fun since you are not subject to the GPO Exclusion.

The OPA sent out the policy communication regarding the GPO Exclusion and the Split Billing software practice on February 7th. Here is a link to the information: 2013-1 Statutory Prohibition on Group Purchasing Organization Participation (PDF – 227 KB) 02/07/2013.

If you read it (and I strongly recommend you do), you will likely have a biologic response resembling “fight or flight” with accompanying symptoms such as diaphoresis, hypertension, tachycardia, constipation . . . I know I did!

If you are still learning about the program, the reason for this response is due to the fact many DSH/PED/CAN hospitals are using the split billing process where you replenish with 340B drug. This is most often done through some vendor that can provide tracking and auditable records. However, the feeling is that because of the replenishment process, it did not matter what the original drug was purchased with (GPO or non-GPO contract) because it was being replenished with 340B and therefore reconciling the whole process. It is very clear now that this is not okay. To be fair, we discussed this on our October article, and I have been hearing about it since last April from Apexus that this might happen.

So what now? First, we did a lot of investigation and asking questions on the day after the OPA Policy Release came out and it sounds like we have 60 days from February 7th to fix the split billing software issue. Here is the quoted reference currently listed in the Apexus Answers (Thank you OPA for giving us 60 days, I have officially taken a step back from the ledge and my body functions have begun to return to normal, but not quite all the way).

HRSA recognizes there has been confusion about the 340B Program policy specific to the GPO prohibition and use of a GPO to replenish 340B drugs, particularly as the marketplace has changed. HRSA published Policy Release 2013-1 on February 7, 2013 to clarify policy regarding this statutory prohibition which can be found at Given this confusion specific to replenishment, HRSA will allow covered entities 60 days until after the publication of the GPO policy release to make certain their drug replenishment practices comply with the GPO policy release. Further, HRSA will not remove covered entities from the 340B Program for using a GPO replenishment model (as described in Policy Release 2013-1) until after the 60 days or after April 7, 2013. For all other violations of the GPO prohibition, if HRSA determines that a violation has occurred, HRSA will apply the sanctions as described in the GPO policy release.

Now it is time to get to work. The only real solution that I can see for my 400 bed hospital, The Triple Split!!! Here is how you do it: Have your wholesaler set you up a non-GPO account (this should not have GPO contracts AND if you are a health-system where you have two or more hospitals that have contracts, these too are considered GPO like and should not be included in your non-GPO wholesaler account). Then see if your current split billing vendor can split to two separate accounts and take two different data feeds. You will then create an inpatient billed drug data feed (similar to your 340B patients outpatient data feed). If your vendor can’t then find one that does. You will then place all purchases on the non-GPO account, then split bill to see if accumulated credits exist in your 340B and GPO account, potentially creating 3 separate orders from one. Awesome right! If you can’t get this done in the 60 days, then at minimum add your non-GPO account and place all orders on that and split bill to the 340B account. You will lose all GPO opportunity until you have the triple split figured out, but you will have met the GPO exclusion regarding the split billing software issue.

There you have it, Bucher would have me remind you that this is an example of what you can do and not professional advice. If you want more direct support for helping you get to compliance, please contact us. However, you should be able to figure it out from the above description.

Best of luck, -Rob

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Ninth Annual 340B Coalition Winter Conference

Bucher – Representing and Some Minimal Updates

Bucher SpeakingI need to start off with a disclaimer (that sure seems like something Rich Bucher would say, I have been hanging around him and his lawyerness is rubbing off), in the past we have reported a ton of information from the 340B Coalition Conference. We did this in the spirit of this blog, which is to share what we learn about the 340B program. However, the 340B Coalition Conference is a critical conference (both Winter and Summer) that all Covered Entities should send at least one member on staff to the conference (or have a 340B business relationship with an entity that sends their staff to the conference). Our concern is that providing a ton of detail may lead some to feel they can read the cliff notes version and be in good shape. Unfortunately, there is too much to learn and what we are learning may be different from what you need to learn (I call it Just In Time Learning, learning what you need to know at the right time). In addition to focusing on topics germane to you (there are many breakout sessions and we can only get to some of them, no cloning yet), the Q & A is very important for obtaining answers to your questions, and the networking/vendor relations is one of the best opportunities you’ll have (hey, you could meet us there!). Having said all that, we still want to share our presentations (Bucher and I both spoke), and some critical “Holy Crap” moments.

Rich Bucher (see picture) spoke with Maureen Testoni (General Council, SNHPA) and Dianna Pimlott (PeaceHealth) on “Making a 340B Compliance Plan Work.” Bucher did awesome and as Rich Iverson and I tried to get out of there after the session, there were so many people going up to ask questions we had to leave him there. (there is a saying, “Never Leave a Man Behind,” but we did!)

One thing that Bucher mentioned came from my hospital, and is worth sharing (so this is much more detail than the conference). If you are auditing your site for hospital based outpatient administered drugs and focusing on split-billing processes, you need to make sure you are also adding audit processes for your direct purchase items (items that need to be purchased directly from a manufacturer or other source that is not your main wholesaler). For the record, we did not have any diversion or GPO exclusion issues, but when we developed our auditing guide, we focused heavily on auditing the split billing software and process (likely making assumptions that we manually track direct purchases through the split billing software). However, as we looked at purchases and high dollar drugs we noticed that our direct purchases were not falling under the scrutiny of the current audit plan. Now, we do a monthly review of all direct purchases to make sure they are properly purchased under the correct accounts with the correct amounts. I have a monthly meeting with my buyer to make sure nothing is falling through the cracks and to share the data so she knows where we are on manual accumulations.

Rob presenting at the 340B program ConferenceI spoke on Leveraging 340B Savings for Our Patients. I shared stories of our patients that have benefited from voucher programs, the Synagis Clinic, and the Pertussis Clinic. I need to write a separate article on this subject again, but the general theme of the presentation is that we need be actively looking for ways we can increase access or expand charity care. This can be more than providing more charity care to patients in need (i.e., voucher/charity care programs), we can also create new services that do not exist to provide access to care that patients do not currently have. The Synagis clinic is an example of a situation where some vulnerable patients (NICU Baby graduates) do not have access to a potentially life saving medication if they were infected with RSV. We helped solve this situation by creating a clinic and justifying it with 340B savings. I can get on my soap box all day long, but the key message is to look for access issues for your patients. One site talked about how their Hep C patients didn’t have a clinic and this condition was being under served. They used 340B savings to help cover some needed costs for the clinic which allowed for expansion and better coverage for these patients (also a vulnerable group). What about decisions related to obtaining medications for patients that you know you will never be reimbursed? Instead of writing it off, you actively decide to use 340B savings and provide that medication on a charity care basis. This happened recently with us and a medication regimen that will cost us $50,000. It is potentially life savings, and having a process to deal with this proactively is the right way to handle it.

That is all for now. Bucher is planning a very good post on audits and auditing in the next week I have seen a draft and it is pretty good). If you have any questions or would like to know if something was specifically brought up at the conference, leave us a comment and we will respond. Thank you, -Rob

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340B University – ASHP Midyear pt 2

More 340B Program Updates

340B UniversityBefore I continue my Cliff Notes of 340B University, I want to let you know that things are getting very exciting for us. Too exciting I think, I have almost no free time left. We have been busy at work with my regular job and ensuring my hospital and sister hospitals are fully compliant with the 340B program, we have been engaging several clients in enrolling them into the 340B program (primarily Critical Access Hospitals that can benefit from our experience), preparing to present at the 340B Winter Coalition Conference in San Francisco, planning our next business trip to Washington to visit clients and potential clients, planning for for NWCAH conference (our first experience doing a vendor booth), and of course making time for our families. Like I said, probably too exciting. On top of that, I need to get these notes out because we just listened to the SNHPA 340B Self Audits Webinar this past week, and they shared some really good information AND the 340B Coalition Winter Conference is in two-weeks.

All right, picking up where we left off from 340B University Notes part 1 . . .

Gary Horne and Fern Aviles were our next speakers: There focus was on Contract Pharmacy and Mixed Use Settings. An interesting topic that we heard at 340B University and on the recent SNHPA webinar was on educating your C-Suite (e.g., CEO, CFO, CNO, COO, CMO) on the need for resources in order to maintain compliance with the 340B program. I believe this should be a combination of staff FTE you hire as well as outsourcing to experts and experienced professionals. This is something we are actively working on in our health-system and I will share more in the future as we engage in vendors who provide solid outsourcing 340B Program support. Medicare Cost Report review, if you are not doing it you should. If you do not know what to look for, then oh crap! No, seriously, if you have never reviewed your Medicare Cost Report and this sounds like french (no offense to my french friends), then go back to part one of this two-post series and reread my section from Katheryne. If you still need help, then email me, but do not blow it off and hope you never get audited. This would be easy low hanging fruit in an audit, so make sure you are registered correctly. Why is this important? For accumulation files and contract pharmacy patient data, you must be able to exclude areas that are not eligible. You cannot simply take ALL non-inpatients and accumulate.

Katheryne part 2 (a lot of part 2’s going on): 340B Policy and Compliance. Can you use 340B drugs to fill employee prescriptions? Only if they meet the definition of a patient. In other words, you do not treat employees any differently then you do regular patients. If they are seeing in your facility then they count as patients. Medicaid!!! If you are enrolled in the 340B program, you must know what your Medicaid AND Medicaid managed care groups are doing. When and where are they seeking rebates, on hospital administered outpatient drugs? In an OPA audit, there will be a discussion with Medicaid to ensure the Duplicate Discount prohibition is not being violated, so make the communication now and ensure you know what is happening. NDC changes, if a company is bought and changes the NDC, you should not (or cannot, but hey, I am not the OPA so I am not going to tell you what to do) shift your accumulation to the new NDC. If a company changes their NDCs for another reason (I wish I could give you a good reason), you can shift your accumulation; however, keep a good record of it.

Audits: Cdr Pedley – if you are being audited, you will be contacted by a regional HRSA staff member. You will receive a document outlining pre-work. You will get an exit interview (kind of like The Joint Commission). If you are a GPO exclusion hospital type (i.e., DSH, CAN, PED), plan on the question; “How do you purchase drugs for an outpatient who is not an eligible 340B patient.” One good example is if you are carving out Medicaid, how are you buying drug for your patients who are outpatient and Medicaid? Things that make you go hmmmmm. How far back do audits go? Six months, unless a violation is found, then they can go back further (I would guess they can go back to your enrollment date).

Jason Atlas, Denver Health DOP, shared his audit experience: Audit was 9 months ago and clean bill of health was given 3 months ago (for those slower at math, that is a 6 month stretch). Audit lasted 3-days. Fifty random records tracked back from encounter to dispense. Blanca Rivera, University of Miami Medical Center DOP, also shared her audit experience: She stated the importance of thoroughly educating staff on necessary 340B issues. Recommended a 340B issues log to track all internal findings and fixes. For IDNs (like my own), the other sites were asked about during an audit (I am not sure how detailed this was, but this does increase your audit odds if you have multiple separate 340B program sites in a system). She also said to know how handling of non-pharmacy 340B procurement is done (e.g., materials management).

I will end on what I thought was only sort of funny. Ed McAdams, Contract Administrator Director from Daiichi Sankyo, stated that a manufacturer audit should not be thought of as an audit, rather “a hug.” Can I just say, this is a hug I do not want! As a reminder, if you do receive a letter or are contacted by a drug manufacturer, work with them as best as you can to resolve the issue they are bringing forward. This is the best course of action, and of course the worse thing you can do is ignore it (no wait, I can think of worse, but don’t do those things either).

I must reiterate that these are my notes and are only as accurate as I recorded them. In any case, this is not professional advice, rather our way of sharing what we learn through the experiences we are fortunate to have. As always, I wish you the best of luck in your 340B “compliant” journey. -Rob

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340B University – ASHP Midyear pt 1

340B University Updates

340B UDecember has been a busy month (not just because of Christmas). I attended the ASHP Midyear Clinical Meeting and 340B University and also presented there. It was a lot of fun and I just got some presenter feedback today that was great, “You ROCKED the 340B U speaker list—people loved you, thought you were hilarious, and one person even wrote: “Bring that guy from UT to every event–he woke us all up!” Thank you—you were a big hit!” – That made me feel really good. So what did you miss if you were not there . . . A lot!!!, but fortunately you come to this blog and get the Cliff Notes version, and I will not let you down. We have also been up to Washington state doing some 340B consulting and visiting hospitals to see if we can help implement and manage their 340B programs. So it has been a little hectic, but with the holidays nearly over, we are ready to get back to it. I have copious amounts of notes from 340B University, so I will split it up into two posts for easier digestion.

Although I received good feedback, I was more entertainment (my topic was how to get the most out of the Prime Vendor Website). The best information came from our OPA Director, Krista Pedley, and Katheryne Richardson, Apexus Policy Advisor. They were my two favorite speakers and provided some can’t miss information that I will try and do justice in the next two paragraphs.

Commander (Cdr) Pedley’s 1st talk: She focused on Accountability, Responsibility, and Compliance. In general, the Director of OPA starting with “Accountability” is an ominous proposition. She confirmed that 51 audits were done in 2012 and nine have been finalized. The selection process will be the same for 2013; however, there will be much more auditing (I tried to get a specific number, but OPA does not have one. My guess based on what I did hear is closer to 200 audits). In fact, one reason for the quarterly enrollment change is to allow the OPA staff more time to conduct audits the OPA did not receive any extra funding or staff to conduct more audits, and I have to give kudos to the OPA and Cdr Pedley for doing the best they can given their financial constraints. Of the 51 audits in 2012, 45 were random (with risk stratification: length in program, multiple contract pharmacy, complexity) and 6 were targeted. The finalized audits will be made available in a summary format (no timeline). A133 Audits – Although 340B is not considered federal funds, if you are subject to A133 audits, 340B compliance questions have been added to the audit (this was a question I had from a client and it is good to have solid clarification on it. Also, if you have no idea what an A133 government audit is, then you are probably not subject to it). One final item from Cdr Pedley was on manufacturer audits. Manufacturer’s need reasonable cause to audit, so if you receive communication from a manufacturer questioning possible 340B drug diversion, then DO NOT ignore it. A non-response can be considered reasonable cause. I have had one of these come to me for a mixed use IV drug. The company was questioning the amount of 340B purchases as being too high compared to national average. The claim was that I had bought 20% of this drug on 340B, and nationally it is closer to 10%. When I looked at my actual patient utilization and purchases, both were closer to 12% (so they matched and I was not diverting). I sent this data back to the manufacturer and did not hear anything back (it would have been nice to get an email or letter back saying, thank you for the follow-up, you are good).

Katheryne’s talk: She provided some great data, and I am a big fan of data. Currently, there are about $6.5 billion/year in 340B drug purchases (not savings, but purchases). If AWP (Average Wholesale Price OR Ain’t What’s Paid) is 100% cost, then GPO is 66% of cost, Medicaid with Rebate is 64% of cost, and 340B is 51% of cost. This is a great comparison to show savings in the 340B program. She talked some on the Medicare Cost Report and the Worksheets you need to look at. Worksheet E, Part A, 4.03 is you official DSH percentage. Worksheet A is the official list of clinics. Typically the reimbursable clinics are in lines 50 to 118. From my experience, some of these lines are summed cost centers and you will need to get the breakdown to verify specific clinics, this breakdown is also called the Trial Balance Sheet. When registering off-site clinics (defined by having a different address than your hospital), you need to find them on the Medicare Cost Report or Trial balance Sheet in the reimbursable section. For reference, you will likely have some clinics listed in the non-reimbursable section (typically higher numbers 190 and above), and these do not qualify. If you need help with this, please let us know. The last topic that Katheryne covered was the rules around 340B. She explained very well the hierarchy of rules from highest to lowest: Statute-Regulations-Guidelines (like the pirate code)-Policy Release. You can pretty much count on Statute and regulations as the must do rules. We heard at the conference that OPA will be coming out with more Regulations in 2013 (compared to policy releases). I think this will be great for Accountability. As a pharmacy director, I firmly believe that people who clearly know the expectations (e.g., regulations), the greater likelihood people will meet the expectation(s). If they do not, then they can be held accountable.

In Part 2 of this article series, I will finish up with highlights from the rest of the talks at 340B University, which includes Cdr Pedley’s second talk on audits and two pharmacy directors who have gone through audits.

Aloha, -Rob

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340B Contract Pharmacy Vendor Software

Who did we choose for our Contract Pharmacy Vendor?

We have received numerous questions about who we chose for our 340B contract pharmacy vendor. To get to the point, it was American Health Care. We looked at about ten different companies that have contract pharmacy software solutions and decided to have initial conversations or demonstrations with seven. We evaluated numerous aspects of what we felt were important in a vendor solution. We want to take you through our process to help you better understand how we came to our decision. Although we strongly recommend American Health Care to anyone, you need to evaluate your needs and determine the right decision for your situation. You may have some other factors affecting your decision (e.g., existing contracts with certain companies). Let’s break down each factor:

How will the contract pharmacy vendor address patient identification?
There are various models for how vendor software or a contract pharmacy can determine covered entity patients. The ideal process we want to see is one that is not cumbersome for the contract pharmacy, and ideally a back-end process that has almost no impact on throughput for a retail pharmacy’s operation. Many of the vendors had an accumulation model on the back-end that looks at data provided by the contract pharmacy or even better, collected at the PBM switch during adjudication. American Health Care utilizes a back-end, behind-the-scenes model that is low impact on the contract pharmacy. They also utilize a PBM switch data model, which is advantageous for the qualified entity.

What kind of client base does the contract pharmacy vendor have?
Many of the vendors we reviewed have gone through contract pharmacy implementations and have existing client bases. With an experienced vendor you can expect to see some best practices and more efficient implementation, both are great to have when beginning contract pharmacy. American Health Care has an extensive client base resulting in a turnkey 340B Solution with a streamlined implementation process.

Does the contract pharmacy vendor have existing contracts with retail pharmacies in our hospital areas?
A vendor who already has existing chain pharmacy stores and existing clients will provide quick implementation of the pharmacies already contracted. This is preferred over a vendor that must negotiate contracts with every retail pharmacy you are interested in. American Health Care already has contracts with key recognized regional and national chains, and a few others that were not in our immediate area. This has allowed for quick implementation of those stores.

What is the impact on retail pharmacy?
As mentioned in the patient identification section, you do not want to cause additional workload on the retail pharmacy. This will lead to dissatisfaction by staff and leadership, which can ultimately harm the business relationship. Look for low to no impact vendor options. Because of the switch data model and American Health Care’s 340B process, the impact on the retail pharmacy workflow is very low.

What should I be paying for 340B Services?
Although listed here in the middle, this is very important. You want to get as many of the criteria on this list as you can, but you cannot pay $10/script for it. It will carve into your savings and make it so that fewer scripts will qualify. One major cost factor We recommend running away from, if a vendor includes it, is charges for non-qualifying 340B scripts. This means that you could end up in a potentially negative value for a pharmacy and this is not the intent of the program. We chose to only work with vendors who charge for qualifying claims only. American Health Care is a charge-for-qualifying claims only vendor, and has one of the lowest costs per script in the industry. We liked both of these factors.

Should I consider vendors with an exclusivity contract requirement?
Some vendors will ask for exclusivity for you to work with them. We recommend always asking for this to be removed. There are at least two retail pharmacy chains (Walgreen’s and Rite Aid) that have created their own solutions. So an exclusivity agreement would prevent you from contracting with these chains.

Charity care opportunity if needed:
Because you may not have an in-house retail pharmacy to run your charity prescriptions through, it is valuable to work with a vendor that has charity care process opportunity available. For our large hospitals, we have our own in-house pharmacies, but our smaller hospitals do not. This will be a great feature to include in our charity care program for the small hospitals. American Health Care has several options available to expand access to affordable medications to low-income or uninsured patients.

What kind of Customer Services does the selected contract pharmacy vendor have to offer?
We find this very important. A vendor partner who provides excellent customer service will ensure that your contract pharmacies will feel supported when they have questions or concerns. From our experience, this is one of American Health Care’s strong suits.

What is the selected contract pharmacy vendor’s focus?
Some of the vendors we reviewed had a broad range of focus for their products and services. We preferred to see a company that focused or even specialized in 340B as at least one of their major core business strategies. American Health Care has established themselves as a premier vendor of 340B services with a nationwide hospital and health center client base.

What additional opportunities are available through American Health Care?
Even though we prefer to see 340B as a focus for the vendor, we also want to see related services that we could add on at later dates. With American Health Care, we really like the fact that they focused on the Population Health Management idea (related to the Ashville Project). If we are able to get the point where we can look at population health management, we could pilot a project with their model. This is key as we get into the Accountable Care Organization models and as we identify ways we can save employers money on their employed population.

The list we just presented were the criteria we looked for in contract pharmacy vendors during our research phase. If you are a covered entity, you will also need to determine what factors are most important for you. We feel good about recommending American Healthcare as a potential vendor for your contract pharmacy services and at minimum recommend including them in your evaluation. If you are interested in learning more, you can visit their site: American Health Care or you can contact Victoria at 1-800-872-8276 ext. 2824 or

If you would like assistance with your contract pharmacy implementation, you can contact us at Turnkey Pharmacy Solutions.