Go Ahead, Have Your Cake and Eat it Too!

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Go Ahead, Have Your Cake and Eat it Too!

Written By Chelsea Violette and Matt Parker

Compliance is the foundation of a successful 340B program and, rightfully so, is the primary focus for most 340B covered entities. Often, this focus consumes most available staff and resources, leaving terms like optimization and augmentation not only feeling nebulous and out of reach, but also as though focusing on optimization compromises or puts compliant processes at risk. What many don’t realize is that compliance and optimization are not opposing forces, but rather companions that work in a symbiotic relationship; you can indeed have a compliant 340B program and ensure you are capturing all potential savings available to you!  When a 340B program is operating as it should, it is more likely to be operating compliantly and in a manner that optimizes savings to the organization. Conveniently, much of the information that is used to assess compliance of a 340B program can be used to identify missed opportunities, making it even easier to have your cake and eat it too. Commonly over-looked opportunities that may be buried in compliance analyses include improper wholesaler pricing, NDC and/or CDM mapping, drug waste management, and retail pharmacy prescription capture.

Let’s take a deeper dive into some of these areas; maybe you’ll find something new to investigate for your organization!

What is a Price Parity Analysis? An analysis of prices paid for a given pharmaceutical across multiple accounts of the same account type (GPO, 340B, even WAC) and within the same class of trade (COT), over a specified period of time. The intent of the analysis is to ensure that all invoices for a given pharmaceutical are the same when purchased on the same account type within the same class of trade. This can be helpful for both 340B covered entities and non-340B organizations.

What is a Price Spike Analysis? An analysis of prices paid for a given pharmaceutical within a single account type over a specified period of time. This is also helpful for both 340B covered entities and non-340B organizations.

What is a Utilization and Purchase Analysis? An analysis of 340B (and GPO when applicable) eligible drug administrations and corresponding purchases across 340B, GPO, and WAC accounts. Anomalies can represent opportunities such as un- or mis-mapped accumulator settings, inaccurate accumulator multipliers, missing utilization data, untapped orphan drug voluntary 340B-like pricing, incorrect contract loads, missing waste documentation, and improper manual purchasing practices.

Why are these analytical tools important? Due the complexity of pharmaceutical pricing and the size and process of data exchange between manufacturers and wholesalers pricing errors can occur. These errors may go unnoticed and impact the bottom-line performance of your pharmacy if internal controls are not in place to identify pricing discrepancies.

Who should be performing these analyses? We recommend that anyone who is purchasing pharmaceuticals from a wholesale distributor or third-party trading partner have a process in place to verify the prices paid on every invoice. If you have a network of pharmacies (ie Health System or IDN) with multiple accounts with the same account type and class of trade a Price Parity Analysis is the analytic of choice, otherwise, a Price Spike Analysis is appropriate when only a single account is available.

We also recommend that anyone managing a 340B program in a fashion where both 340B and non-340B drugs are purchased review their purchasing patterns, in light of their utilization records, to ensure they are not purchasing any 340B drugs without supporting utilization documentation and that they are not purchasing any drugs on a non-340B account unnecessarily.

When should these analyses be performed? Timing is key. For pricing analyses, our experience is that the older a pricing error is, the less likely you will be able to have the price corrected. In a perfect world every invoice would be verified in real time, however, that’s not really feasible for most pharmacies. We recommend that all prices paid be verified as part of a monthly review at minimum.

Analyses of utilizations and purchases are a little more entity-specific and are likely to look different depending on the type and size of the entity and the inventory mechanism used. A large DSH or RRC hospital using a TPA to manage a virtual inventory may need to conduct this analysis monthly, while a smaller CAH or a grantee site may only need to conduct an analysis quarterly to capture any opportunity from pricing or clinical practice changes.

Now go eat your cake and make sure you’re capturing all of the 340B savings you are entitled to! If you’d like help looking for these opportunities, let us know and one of our optimization strategists would be happy to take a deeper dive into your data. You can also join us for our next webinar, Road Map to HRSA Audit Readiness Series: Time for a Tune Up: Making the Most of Your 340B Program on December 14th from 3:00 – 4:00 EST. Click here to register!


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DSH Risk, Advocate, and Hope it is not needed, Steps to Terminate

 “One-Fourth of 340B DSH Hospitals at Risk of Losing Eligibility Due to Pandemic, Analysis Finds.” This is a shocking headline that recently caught my eye as I was perusing the 340B Report. The article further goes on to explain that an analysis of hospital Medicare cost reports for 2019 and 2020 show that about one out of 10 current 340B sole community hospitals (SCHs) and rural referral centers (RRCs) also are at risk. This is primarily due to COVID-19 pandemic-related changes in patient mix. The DSH calculation is based on inpatient days and for many months during the worst of the pandemic, hospitals had to reduce inpatient admissions. With too few Medicaid or Medicare beneficiaries as inpatients, the DSH calculations could fall below the required 11.75% for DSH, PED, or CAN hospitals, or 8% for SCH or RRC.

Bipartisan legislation has been introduced to protect hospitals from losing their eligibility for the 340B program based on shifts in patient case mix due to the public health emergency.

A group of senators led by Sen. John Thune (R-S.D.) on March 16 introduced S. 773, a bill that would prevent 340B hospitals from losing access to drug discounts if their DSH adjustment percentage drops below the statutory minimum because of COVID-related patient mix changes. The legislation would provide this eligibility protection throughout the public health emergency.

A group of House members led by Rep. Doris Matsui (D-Calif.) on May 13 introduced H.R. 3203, a bill similar to the Senate measure but with expanded eligibility protections. The House bill also applies to: DSH hospitals that enrolled in 340B after the COVID public health emergency began; DSH hospitals that already lost eligibility for the program; and DSH hospitals that had to change their 340B registration status to sole community hospital (SCH) or rural referral center (RRC) to stay in the 340B program.

340B Health summarizes that it supports both measures which, protect hospitals from losing access to 340B discounts during any period for which a hospital’s eligibility is based on a DSH adjustment percentage that was affected by the COVID-19 public health emergency. 340B Health, echoed by Turnkey SpendMend Pharmacy, urges advocacy by contacting your lawmakers. 340B Health has posted an email template that will prepare and send messages to your senators and House member asking for their support. If one of your lawmakers already has cosponsored the legislation, the template will prepare and send a thank-you note to that member of Congress. email template

According to the 340B Report writer Tom Mirga, the legislation’s odds of enactment (mentioned above) are slim unless attached to a higher-profile, must pass bill. So, the risk of 340B Program termination is real, get your voice heard and advocate.

For a few some of you who may already be in the planning stages of 340B Program termination, below are a few things to consider.

Straight from HRSA.gov/OPA/FAQs
Q: If an entity learns it may no longer be 340B eligible, must it notify HRSA?
A: Yes, it is the covered entity’s responsibility to notify the HRSA Office of Pharmacy Affairs immediately if the entity learns it may no longer be 340B eligible.

From Apexus: HRSA FAQ ID: 1373
Last Modified: 05/28/2020

Q:  What actions does HRSA expect an entity to take if it loses 340B Program eligibility?

A:  Covered entities should stop purchasing 340B drugs immediately upon losing eligibility. The entity must complete a termination request on 340B OPAIS and answer the following three questions:
1) The date the entity became ineligible; 2) The circumstances surrounding the loss of eligibility; 3) The last date 340B drugs were purchased. Covered entities should work with the manufacturer to determine the most appropriate method for handling. There may be several options for handling the drug inventory once eligibility is lost. These options will depend upon the specific circumstances but may include transferring the inventory to an associated covered entity site/pharmacy that is still 340B registered, credit/rebill, return, or destruction according to state law. Covered entities should keep auditable records and ensure the process is transparent to manufacturers and wholesalers.

Some Additional Turnkey Spend Mend Pharmacy TidBits to Know When DSH% Drops Below Required Amount:

  • Termination date is the date the MCR is filed with an ineligible DSH%.
  • Notify HRSA in the form of immediate termination on OPAIS.  FAQ 1373 had previously suggested notification in writing, however, this is no longer the case.
  • Notify Wholesaler to put a stop on 340B and WAC accounts. Begin purchasing on the GPO account only. If not subject to GPO prohibition, put a stop on 340B accounts
  • Notify Split Billing vendor (TPA) of termination.  Ask that orders be no longer split.  Begin process of reversal/reclassification which would be best to be done within 60 days post filed cost report (date when DSH dropped) and the time allowed for reclassification.
  • Consider having the IS team stop data transfer to TPA but verify with TPA first.
  • Set up meeting with consultant to discuss accumulator action if needed. (For all 340B Universes)
  • Notify contract pharmacies of termination
  • Notify State(s) of Termination if Carve-In as NPI’s won’t fall off MEF until the following quarter.
  • Work with Revenue Cycle/Business Office to remove all 340B reimbursement modifiers from billing (including Medicaid and Medicare Part B) effective on the MCR file date.

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Making Sure Your Clean Site Is Clean

Similar to the often used phrase “be sure this is included in your policy and procedures”, auditors get the same satisfaction by telling folks that “this needs to be included as part of your routine self-auditing”. It is easy to assume clean sites don’t need much attention in this area because of their very nature – they are a clean site (340B only with physical 340B inventory) and all covered outpatient drugs within them are considered eligible for 340B. While this set-up can seem much more straight forward than managing a mixed-use location, its simplicity should not be construed as a ‘set it and forget it’ type situation; proper oversight and auditing practices are still essential to ensuring a compliant 340B Program, even in a clean site. I would like to share a few considerations to set your clean site up for success.

The first consideration is to make sure you are treating your clean site like any other area of your program where medications are administered to patients. That means you need to make sure you have proper documentation supporting the administration of the medication. A monthly review of clean site transactions is critical to make sure documentation is readily available and diversion risk is mitigated. These records should include a documented order, documented administration, and documentation supporting the medication was administered at an eligible location per your Medicare Cost Report or scope of grant. This first step is important because without these records, we can’t pass GO. The expectation of auditable records goes beyond a simple “administered on 1/1/21 at 14:40 in the Raney Clinic and verbal order by Dr. Nate”. You need to be able to produce utilization data (e.g., what was administered or wasted/expired) and purchase data. Anytime a 340B product moves, you should be able to account for its final destination in the utilization data. This process isn’t the same for everyone. For example, some sites may rely on patient-specific medication administration records for utilization data, while others may rely on detailed inventory records, or even accumulation records so long as they are used solely to track charged medications and not for purchasing.   As the old adage goes, “When you have seen one 340B Program, you have seen only one 340B Program.” No two programs are the same and as long as you are able to produce comprehensive auditable records, your way is the right way.

Moving right along into another self-audit consideration, and arguably one that isn’t done as often as it should, is an inventory reconciliation audit of your clean site. Reviewing utilization and purchase data to ensure what is on the shelf is what is expected by taking total purchases minus other variances in inventory (administrations, waste, expired, etc.) and reviewing inventory on hand. Basically, such a review mitigates the risk of diversion. This is why it is important to ALWAYS document medication waste and expired medications to ensure you can track and trace all 340B physical inventory. Regular self-auditing (e.g., quarterly) of a reasonable number of individual medication utilization records (e.g., 5 drugs) should be completed for internal use to ensure that clean site 340B purchases are consistent with utilization in light of current inventory on hand. The completion of these audits should be documented for internal use, issue identification, and reconciliation, while a blank audit log table showing the headers/elements reviewed can be provided during an external audit (if warranted). An example of the process is demonstrated in the sample audit log table below.

Moral of the story? Get as excited as auditors do when self-auditing is mentioned. It will not only set your covered entity up for success but will also make you good stewards of the 340B Program and, if you are like me, come with the added bonus of allowing you to sleep better knowing your program is as compliant as you can make it!



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340B Contract Pharmacy Pricing Battle – It’s Plain For All To See!

If you are in the 340B space, then it is likely you are well aware of the 340B contract pharmacy pricing battle occurring between 6 manufacturers and HHS. Let’s do a quick update of how we got here and the recent monumental shift from HHS that is giving covered entities much needed hope.

It all started when Eli Lilly (Lilly) announced it would no longer be providing 340B pricing for Cialis at contract pharmacies starting July 1st, 2020. At the time, HHS did not respond to this deviation and Lilly eventually decided to remove pricing for the rest of its drugs in the contract pharmacy space. Following Lilly’s lead, within a few months was Astra Zeneca, Sanofi, Novartis, United Therapeutics, and by January 1st, 2021 we also lost pricing from Novo Nordisk. There are various differences between how the manufacturers rolled out their 340B pricing removal, as some allowed pricing if the covered entity (CE) signed up for the ESP program and Novartis has an interesting 40-mile rule. Many of these manufacturers also allow for a single contract pharmacy if no in-house retail pharmacies exist for the CE. In the end, the loss of pricing by these manufacturers caused a significant 340B savings loss for many covered entities. In the case of some of our smaller CEs (e.g., FQHCs, CAHs) for instance, the savings loss has impacted much needed savings to continue their mission to serve patients in a most critical time with Covid. I think HHS’s lead attorney, Robert Charrow, said it best, when he told Lilly “. . . the timing of your pricing changes is, at the very least, insensitive to the recent state of the economy.”

I won’t rehash all of the history, but want to catch up to where we are today. On May 17th, 2021, HHS sent all 6 manufacturers letters that essentially stated they have until June 1st, 2021 to “. . .provide an update on its plan to restart selling, without restriction, covered outpatient drugs at the 340B price to covered entities . . .” The letters from HHS Acting Administrator, Diana Espinosa, lays out the 340B statute sections being violated and indicated that HHS has determined the manufacturer actions to have resulted in overcharges in direct violation of the 340B statute. Another interesting point is that HHS is no longer stating that CEs need to use the administrative dispute resolution (ADR) process. Instead, HHS plans to utilize civil monetary penalties (CMPs) to enforce 340B statute overcharge violations. The CMPs could be up to $5,883 for each instance of overcharging, which is in addition to repayment to the CE. This is a critical shift for CEs as HHS had previously stated CEs had a mechanism to report and deal with overcharges through the ADR process. You can find copies of each letter on HRSA’s website at:  https://www.hrsa.gov/opa/program-integrity/index.html.

So yay! But not so fast, we knew it would not be that easy. Although we do give HHS credit for the attempt. We are aware of 3 lawsuits from Eli Lilly, Astra Zeneca, and Novartis. Sanofi has also sent a 30-page defense to HRSA stating the previous lawsuit’s judicial process should be allowed to playout. Eli Lilly received an extension to June 10th to reply to HHS, and has a hearing scheduled for June 17th, 2021, and HRSA granted an extension to Astra Zeneca to June 10th as well. Novartis is challenging the accuracy of the HHS letter as they claim the 40-mile rule does not limit the number of pharmacies. Astra Zeneca’s response from the US District Court judge in Delaware is the most concerning. As he has already stated he is deciding on whether to rule that HHS’ conclusion on 340B pricing in contract pharmacies may be one of various interpretations that can be made, and therefore not the only possible conclusion. This seems to have kept the door open (albeit just a crack).

Where do we think this will go? Well, the crystal ball is broken right now, but we have hope. This hope comes in the form of the “plain language of the statute.” As we learned when HHS attempted to publish a rule regarding orphan drug 340B use for impacted covered entities, they initially lost a legal challenge due to not having rule making authority regarding this part of the 340B program. HHS then published a Rule Clarification, which it can do, but they lost this legal challenge as well. The reason being that the plain language of the 340B statute does not agree with the HHS Rule Clarification that the impacted CEs could buy orphans at 340B if they were for a non-orphan indication. You see, the plain language does not mention anything about an exclusion for non-orphan indications. Let’s now look at the contract pharmacy clarification HHS put out in 2010 regarding the ability for a CE to not be limited to a single contract pharmacy. The clarification came because nothing in the 340B statute limits CEs to 1 contract pharmacy. We now have manufacturers wanting to interpret the 340B statute to mean the single contract pharmacy scenario that HHS had in place prior to the 2010 clarification. However, the 340B statute simply states that manufacturers “shall. . .offer each covered entity covered outpatient drugs for purchase at or below the applicable ceiling price if such drug is made available to any other purchaser at any price.” It is plain for all to see (you see what I did there), that the manufacturers are now on the wrong side of the plain language of the 340B statute, and this is what gives us hope.

Update: Form the time of writing to publishing, we have had significant updates on this subject. First, in the Astra Zeneca lawsuit, a Delaware U.S. Chief District Judge determined that the 340B statute is silent regarding contract pharmacies, and therefore there could be multiple interpretations. As a result, HHS withdrew the December 2020 legal advisory opinion (AO) regarding contract pharmacy and 340B pricing on 6/18/2021. HHS has left in place the six letters submitted to manufacturers on 5/17/2021. It appears the 340B statute language may be too plain. As it stands, the battle lines are drawn, and we will see how this one turns out.


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Referral Capture: Finding Additional Savings in Your 340B Program

Referral capture in the 340B world is not a new concept. What it requires is a Holmes and Watson investigative spirit, time, and most importantly…an eye focused to Compliance.

In the 340B world, we live and die by the 340B patient definition.  HRSA has given very specific guidelines that qualify a 340B prescription. First, the drug must be a covered outpatient drug. Second, the covered entity must have a relationship with the patient that is clearly documented in the health record. Third, the individual must have received care from a health care professional employed or under a contract or other arrangement (referral). Fourth, that the covered entity remains responsible for their care with respect to the drug. HRSA has made it clear that an individual will not be considered a patient of a covered entity if the only health care service received by the individual from the covered entity is the dispensing of a drug or drugs for subsequent self-administration or administration in the home setting.

A referral capture is looking for a way to tie a visit with a non-qualified referred provider to a qualified provider visit.  This referred provider may not work in the parent or child sites/associated sites of the entity.  However, if we can ‘close the loop’ on the documentation between the referred provider and the covered entity, you may be able to claim those prescriptions as eligible. These types of relationships are especially advantageous in facilities that have primary care services and a referral documentation process.

In order to have a compliant program, which is key here, you must make sure you can support any referral claim with documentation. It may seem easy to capture a referral once and rely on the patient or referred provider to be associated with an eligible claim every time, but unfortunately it does not work this way.

A great way to dip your toes into the referral pool is to work with your third-party 340B vendor to see if they can provide you with a list of prescriptions that did not qualify based on your established eligibility criteria.  You can then review the medical record for any patients with whom your entity has an established relationship to determine if the following elements are present:

  • A referral out from the patient’s primary care provider. 
  • A note back from the specialist, including a date, the provider the patient saw, and the medication prescribed.
    • This provider should match the fill from the entity’s contract pharmacy.
  • The medication is on the patient medication list in the entity’s health record. 

There you have it; a closed loop!

Unfortunately, this review process can be quite labor intensive. Members of the entity’s 340B team can dedicate time each week or month to research potential claims and manually qualify them, but what do you do if you are a small facility, or don’t have 340B staff resources available to research the claims appropriately? SpendMend Pharmacy is here to help! One of our newest service lines is 340B retail referral capture. Reach out to your auditor or our Leadership team to discuss this potential opportunity for your site at contact@spendmend.com. SpendMend Pharmacy has developed this program based on our HRSA audit experience, so you can feel confident that it will be compliant. It is our specialty!


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HIN What?

Many of you have been following and evaluating your options as multiple manufacturers have restricted contract pharmacy pricing for CEs.  You probably also received our email communication in February describing a few exception opportunities that exist for AstraZeneca, Eli Lilly, Novo Nordisk, and Sanofi, if you do not have an inhouse pharmacy.  If you did not receive that communication, please reach out to one of our team members and we can get you that communication.  To take advantage of a few of these exceptions, you must be familiar with a Health Industry Number (HIN).  This blog is meant to provide some insight into this number and how it is important to CEs trying to get 340B pricing.

What is a HIN?  According to HIBCC, a “HIN is a unique and standardized identifier that enumerates hospitals, providers, suppliers, and all other partners doing business in the supply chain.” 

Who assigns a HIN? They are assigned through the Health Industry Business Communications Council (HIBCC).  https://www.hibcc.org/about-hibcc/

Where can I learn more about HINs and 340B? Apexus has a great video highlighting what a HIN is and why it is important in 340B? https://vimeo.com/393312657

I don’t have time for an 8-minute video, can you summarize?  HINs correspond to the location where a hospital has drugs delivered.  Therefore, a contract pharmacy account that gets drugs shipped to a pharmacy offsite from a hospital will have a different HIN.  A hospital HIN will have different suffixes depending on various factors. 

Surely someone, somewhere already has a HIN established, right? This could be the case.  Both AmerisourceBergen and Cardinal establish a HIN for every 340B contract pharmacy account, so contact your rep for the number.  McKesson does not create a HIN.  If you use another wholesaler, you should contact your account rep a to see if a HIN was signed up for your contract pharmacy accounts.  If your wholesaler does not have a HIN on your contract pharmacy account, then you most likely will need to apply for a new HIN.

Where do I go to get a HIN? For a $100, you can go here and get a HIN specifically for your hospital and contract pharmacy. https://www.hibcc.org/hin-system/apply-for-a-hin/ 

Wait, I need more than one HIN? Maybe.  You will need a HIN for each contract pharmacy you intend to use to establish a 340B pricing with the 4 manufacturers above.  If you are going to ship these drugs to multiple “ship to” addresses, you will need more than one HIN.

I just paid for a HIN, now what? HIBCC advertises it can take up to 5 business days to receive your HIN and our experience is that they are pretty good about exceeding that expectation.  Once you have your HIN, you need to use it in multiple ways.

AstraZeneca and Novo Nordisk: You will need the HIN to fill out their form to get access to 340B pricing for one contract pharmacy location.

Sanofi: You will need to sign up at www.340besp.com. Note: you do not have to submit data to sign up one contract pharmacy.  When following the prompts for Sanofi, you will need to select the contract pharmacy location you want to be eligible.  Most likely it will not have your new HIN. In that case, you need to submit the following information to: support@340besp.com and include this information:

  1. Their 340B ESP ID #
  2. Their designated pharmacy name
  3. Pharmacy address (actual physical location)
  4. Their Health Industry Number “HIN”

Now what? Once you have a HIN established and you have submitted the appropriate form to one of the manufacturers listed above, you will need to follow any subsequent questions they may have.  Once approved, you should validate that you have 340B pricing for that specific location and wholesaler account.  You do need to renew your HIN annually for $50. 

As always, don’t hesitate to reach out to myself or one of our all-star 340B experts.


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340B and Fee-For-Service Medicaid AAC Requirements

A topic we have covered in our client newsletter in the past, but is long overdue for a full discussion is 340B actual acquisition cost (AAC) requirements for fee-for-service (FFS) Medicaid billing in many states. In 340B audits we perform for clients, we review the AAC requirement and note if there is any risk. However, it is not something specifically looked at by HRSA, since the covered entity (CE) billing AAC does not impact if a Duplicate Discount occurred. To be clear, we are not talking about Duplicate Discount risk here, we are just talking about whether a CE billed an FFS Medicaid plan correctly.

You may be thinking, “if it is not a significant HRSA audit risk, then what is the big deal?” The short answer, is, Government Dollars. We don’t talk about it much, but the 340B program savings isn’t government dollars, it’s manufacturer discounts. Therefore, the legal and financial risks are smaller. When it comes to government dollars, there is the potential for a financial penalty and even legal penalties. Inappropriate billing of Medicaid and Medicare can raise Fraud, Waste, and Abuse concerns. Although this normally refers to egregious acts of commission, such as billing for services you did not actually provide, it is possible that accidental over billing could be considered a form of abuse. Typical fines are 1.5 times the issue/amount in question (e.g., overbilling in the case of charging incorrectly).

Back to 340B, we now have this interesting intersection of 340B and government dollars. This occurs when an FFS Medicaid plan requires a CE to bill at AAC. Many state’s FFS Medicaid plans require this today, and one of the more engaged (that is about the most positive term I can use) states is California. In the past year, California has been sending out self-audit letters for CEs to self-audit their AAC billing. This occurs primarily with the retail side of 340B; however, they have also sent self-audit letters to CEs for hospitals/clinic administered drugs. So far, we have not heard of penalties on top of the payback request, but it is possible. The time period they are using is December 2016 to current. California is using December 2016 because that is when the federal court’s temporary ban on the California AAC law was lifted. If you are in California, we strongly encourage you to plan on receiving a letter at some point in the near future.

Although most of the AAC enforcement is in California, it is likely that states are seeing what California is doing, and noting the positive financial result. As such, more states might try to enforce AAC billing as well. Your assignment for the month is to check your state requirements and confirm you are billing correctly, and remember to check any other states you bill. Don’t just check to make sure you are billing the right dollar amount, also make sure you are billing with the correct NPI or Medicaid provider numbers, and modifiers if needed. If you are a Turnkey (SpendMend) client, ask us for help on identifying your state’s requirements if needed.      


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Recent HRSA Audit Trends: Supporting Documentation for Eligible Providers

Historically, HRSA auditors have requested a list of eligible providers from covered entities during HRSA audits. Recently, however, HRSA auditors have been requesting that covered entities upload documents demonstrating that, for each audited utilization record, the prescriber was (at the time the medication was administered or prescription written) employed by, under contract with, or had some other type of arrangement/relationship with the hospital such that responsibility for the clinical care provided to the patient remained with the covered entity. HRSA FAQ 1442 further explains that non-covered entity providers solely with admitting privileges at a covered entity hospital are insufficient to demonstrate that any person treated by that provider is a patient of the covered entity, for 340B Program purposes.

We often hear; the provider is credentialed or has privileges, but what does that really mean? Credentialing is the process of obtaining, verifying, and assessing the qualification of a provider to provide care or services for a health care organization. Credentialing documents include evidence of licensure, education, training, and experience. A privilege is defined as an advantage, right, or benefit that is not available to everyone. For providers, the act of being privileged is the process whereby a specific scope and clinical service of patient care is authorized for a healthcare practitioner by a health care organization, based on evaluation of the individual’s credentials and performance.

Back to the question at hand, what have HRSA auditors been requesting to demonstrate provider eligibility? The answer may depend on the type of provider.

Employed or Contracted Providers – Hospital or Clinic Administered and Retail Prescriptions

  • If the provider is employed by the covered entity, an auditor would expect to see confirmation of employment of the provider by the covered entity. This could be the cover or signed page of a provider contract, a checklist of privileges granted to the provider, a screenshot of the internal Medical Staffing Office platform, or other such document.
  • For residents (often an area of challenge for entities and focus for auditors), requested documentation may include a signed contract between the covered entity and the resident, or with a college/educational institution that allows residents to practice at the covered entity and is accompanied by a list of past and current residents. 
  • For health care providers who may not be directly employed with the hospital to provide services, an auditor may expect to see a signed collaborative practice agreement to provide services to patients whereby the care of the patient remains with the hospital. For contracted services, such as for the emergency department, a HRSA auditor may request a signed document with the contracted entity to provide services and a list of providers that fall under the contracted services agreement.
  • For providers with “privileges,” HRSA will expect to see a signed agreement that shows the scope of privileges and preferably documentation or confirmation from the covered entity that the responsibility for care of the patient remains with the covered entity and the providers privileges are not merely admitting privileges.

For each of these supporting documents, auditors have requested that they indicate start dates and, when possible or appropriate, duration of the agreement or granted privileges. Eligible provider lists are also requested to indicate start and term dates for providers.

Healthcare Professionals – Hospital and Clinic Administered Drugs

While supporting documentation to demonstrate responsibility of care may seem more straight forward for providers employed by or contracted with the covered entity, it can leave a bit of gray area for orders written by outside providers. For hospital or clinic administered drugs that are administered as a result of an order from an outside provider, most often observed in the infusion setting, many entities qualify drugs as 340B eligible under their healthcare professional definition. In doing so, they assert their responsibility of care through patient assessment and care related to the administration delivered by members of the entity healthcare team, such as nurses. As HRSA auditors have become more familiar with this practice, they have begun requesting documentation in the medical record to substantiate care beyond the simple administration of the drug, such  as vital signs or clinic notes stating the patient was evaluated for appropriateness of receiving the drug and that it was well tolerated (or that the patient had a reaction and was treated accordingly). In these instances, HRSA auditors have further validated the inclusion of this definition in the entity’s policy and requested documentation that the healthcare professional providing patient care is employed by the entity and was working that day. This may include a contract, privileging documentation, and/or a timecard.

Referrals – Retail Prescriptions

In scenarios in which covered entities have captured retail prescriptions as a result of a referral arrangement, HRSA auditors have requested copies or screen shots of the referrals in the course of the audit and for them to be uploaded to the NIH portal subsequent to the audit. While obtaining documentation back from the referral provider remains a best practice to demonstrate continued responsibility of care, this has not been requested in recent audits, and documentation of the medication in the patient’s medication list with the covered entity has been sufficient.

Preparing for HRSA Audit Success

The key to supporting documents is that they demonstrate that care for the patient by the provider remains with the covered entity at the time the medication was administered, or the prescription was written. Covered entities should consider all aspects of patient definition to use 340B drugs. It is also important to include entity management of provider privileges in policies and procedures.

Unfortunately, these documents are not always found in one location, with one person, or even within the same department. Start checking for these documents during your monthly self-audits, understand each provider type and the documents needed, and lastly, know who would be your point person for each type of provider to obtain the necessary documents and establish a working relationship with them so that you’re both prepared when your number is up for a HRSA audit.

Article written in collaboration with Chelsea Magee, Turnkey Pharmacy Lead Auditor.


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CMS Most Favored Nation Drug Payment Model – What You Need to Know

The end of 2020 is upon us, for better or worse, and the healthcare industry as a whole is envisioning a brighter 2021 ahead of us, especially with the availability of two new COVID-19 vaccines that could signal an end to the pandemic.  But we want to make sure our hospital 340B covered entities are aware of another important change, beginning with the new year – the CMS Most Favored Nation drug payment model, which was published as an interim final rule on November 27th. It has taken some time to fully understand its impact, below is what we believe you need to know…

What is it? 

The MFN model is a revised Medicare Part B reimbursement methodology for certain high-cost drugs that will reduce payments to most hospitals and physician offices. 

When does it go in effect?

The first wave of changes was initially scheduled to go into effect on January 1, 2021.  However, on December 23rd, the U.S. District Court for the District of Maryland issued a temporary restraining order, delaying implementation for 14 days, i.e. January 6, 2021.  Additional elements of the MFN model will be phased in over the next 7 years.  There has been a fair amount of speculation that this rule will be suspended or eliminated altogether by the incoming Biden Administration, and a number of legal challenges to the rule have been initiated, but for now, hospitals will need to plan on executing operational changes to comply with the rule on January 6.

Which 340B hospitals will be impacted?

The MFN model is mandatory for disproportionate share hospitals (DSHs), rural referral centers (RRCs) and sole community hospitals (SCHs).   Critical access hospitals (CAHs), PPS-exempt cancer hospitals and free-standing children’s hospitals are excluded, and should not be impacted, at least for now.

What drugs are included?

The MFN model identifies 50 high-cost drugs and biologicals (including some biosimilars), outlined in Table 2 of the rule.  The list primarily consists of specialty injection drugs and other agents commonly administered in infusion centers.  Keep in mind that the list is fluid, as CMS intends to add and remove drugs on an annual basis, selecting the “top 50” drugs by total allowed drug charges from the prior year’s Medicare Part B claims.  Also, some drug categories are presently excluded from the MFN model, including oral drugs, intravenous immune globulin products and medications with an Emergency Use Authorization or FDA-approval for treatment of COVID-19, among others.  CMS is gathering feedback on whether other categories, like blood products and gene/cell therapies should be included or excluded from the model.

How is reimbursement defined in this new model?

The MFN drug payment amount will be calculated using a phased-in formula based on a ratio the “MFN price” and the manufacturer’s reported average sales price (ASP), along with a per-dose add on payment. 

  • The “MFN price” will be determined by the lowest adjusted international price for the drug (more specific details on the price definition can be found in section III.E of the rule). 
  • The add-on payment for Q1 2021 is $148.73 per dose of qualifying MFN drug. 
  • Importation Action!  Note that you must bill for the add-on payment separately on the claim form by using a new HCPCS code – M1145, and setting the “units” for this line to equal the number of MFN drug doses administered for the encounter (more specific details on the claims processing of the MFN model can be found in section III.G of the rule).

What will this mean to my reimbursement in 2021 and beyond?

It depends on your covered entity type.  In 2021, DSH, RRC and non-rural SCH covered entities will see reimbursement similar to their current ASP – 22.5%, and in fact, may see slightly higher revenue for these drugs due to the add-on payment.  However, MFN model drugs that have pass-through status will generate lower reimbursement this coming year.  Rural SCH covered entities unfortunately will see a decrease in revenue (340B Health has estimated up to a 16% reduction on the MFN model drugs), as they move away from a rate of ASP +6% to the MFN model. 

After 2021, the ratio of the MFN drug payment amount leans more to the MFN price and away from the ASP price, so reimbursement for all participating providers is going to be decreased, despite the continuation of add-on payments and inflation adjustments.  HHS has provided estimates on payment reductions ranging from up to 3% to as high as 60% once the MFN model is fully implemented.

Is this thing going to stick?

Many experts in health policy are saying probably not, but we’re not sure.  Many are anticipating that the incoming Biden Administration will thoroughly scrutinize, modify or even altogether abandon the rule, and there is an open comment period through January 26, 2021, for stakeholders to submit feedback on the rule.  Numerous organizations, representing both providers as well as pharmaceutical manufacturers, have expressed opposition to the model, and lawsuits have already been filed to halt implementation. However, barring any type of success in delaying or enjoining the rule here in tail end of December, providers should be prepared for the MFN model to begin January 6.

What should I do right now to prepare?

            A few things:

  1. Communicate – Talk with your billing/revenue cycle departments to make sure they are aware of the need to update their claims processing procedures for the MFN model beginning January 6, 2021.
  2. Analyze – Work with your finance teams to analyze the budget impact this could yield for your organization in 2021.  Remember that DSH, RRC and non-rural SCH covered entities will probably not see a negative impact next year (except for those pass-through drugs), but rural SCH entities will see a dip in reimbursement.
  3. Comment – Consider submitting comments to CMS on the rule.  340B Health members should be on the lookout for a template to submit comments soon. 

As always, reach out to us if you have any questions about the MFN model, we are always glad to help our clients navigate complicate changes to their 340B programs!


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Don’t Miss Out On These Resources

The 340B Program is complicated. It’s intimidating, and let’s be honest, at times downright confusing, for newcomers and veterans alike. Those of us in the 340B world know that managing a successful 340B Program requires the juggling of what feels like a million things at once. Between keeping up with state Medicaid requirements, HRSA audit preparation, multiple third-party administrators, NDC crosswalks and formularies, OPAIS registrations, and beyond, it is easy to feel overwhelmed. 

That’s why we at Turnkey are committed to trying our very best to make your lives just a tiny bit easier. Today, we’re doing that by providing a list of some of the best resources in the industry (besides us of course). We encourage you to take advantage of all of these wonderful resources so that you can take your 340B Program to the next level. 

  1. HRSA (free):
    1. 340B Drug Pricing Program
    2. HRSA Program Integrity Page (aka audit results)
  2. Apexus:
    1. Free Resources:
      • 340B University on Demand”: 340B modules which are recommended for staff working closely with the 340B Program.
      • Apexus Universities (live and virtual sessions) focused on hot topics and 340B basics.
      • Apexus Answers: Email, Phone, or Chat with an Apexus staff member about any 340B questions you have.
      • HRSA FAQs, published by Apexus.
    2. Paid Resources:
  3. NACHC (for grantees):
    1. Free Resources:
      • NACHC 340B Website and Office Hours: Grantee related news and resources can be found on the NACHC website. Office hours occur on the 3rd Thursday of the month, covering hot topics with Q&A and expert speakers.
      • Noddlepod: A forum exclusively for covered entities. A great way to keep a pulse on the 340B Program and share with peers. Noddlepod can be accessed by emailing Colleen Meiman.
    2. Paid Resources:
      1. National Association of Community Health Centers (NACHC) released an updated edition (2018) of their 340B Manual for FQHCs
  4. 340B Health (for hospitals):
    1. Free Resources:
      • 340B Exchange: A forum for covered entities to discuss hot topics, get feedback from peers, and keep up to date with industry developments.
  5. 340B Report: Resource for breaking news about 340B. Previously free, will be subscription based starting in 2021.  
  6. 340B Coalition:
    • 340B Coalition Conference (paid): There is a 340B Coalition in the winter (San Diego) and summer (Washington D.C.). These conferences are great places to network with peers, meet various vendors in the 340B industry, stay up to date with industry developments, and attend exclusive entity specific breakout sessions.