Implementing a System-wide
340B Program
An Overview Steve Pitzer
System Executive, Supply Chain Management CHRISTUS Health
Sam Colletti, RPh
Director of Enterprise Accounts- CHRISTUS Health Broadlane
Objectives
• CHRISTUS Supply Chain Management • Review of 340B Program
• CHRISTUS Implementation of a System-Wide 340B Program
– Indentifying appropriate Staff, Departments, resources – Identify challenges and prohibitions to facilities
– Tracking results
• Update of Current Legislative Activity and Implications to Eligible Healthcare Facilities
CHRISTUS Health Supply Chain
in Collaboration with
Broadlane and Supplier Partnerships
Steve Pitzer, System Director Supply Chain Management
Confidential – Not For Distribution
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■ 1999 two historic Catholic charities formed CHRISTUS Health:
• Sisters of Charity Health Care System • Incarnate Word Health System
■ Mission: To extend the healing ministry of Jesus Christ
• Top 10 Catholic health system in U.S. • 43 hospitals / 16 long-term acute care
facilities across 8 states and Mexico • Net patient revenues exceeding $2.6
billion
• Charity Care Community Benefit 2.8
million
• Assets totaling more than $4.3 billion • Supplies, Purchased Services, and
Energy $957million
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Supply Chain Collaboration
Quality & Safety
•Savings = Savings •RASMUS
Information Management
•Ð variability = Ï predictable outcomes •Waste leads to risk
MD’s and stakeholders
•Listen and educate
•High value vs. Low impact •Multi-disciplinary
•Educational
Clinical & Non-Clinical Committees
•Pharmacy & Nursing •Flexible
•Multi-disciplinary
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Inclusive approach has driven performance improvements
■ Collaboration and input from key corporate
stakeholders results in less variability through system standards,
formulary development, and increased compliance
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Supply Expense as a % of Total Operating Revenue
Fiscal Year % of Total Operating Revenue 2002 17.06% 2003 17.86% 2004 18.67% 2005 17.99% 2006 17.33% 2007 17.88% 2008 17.28%
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Adding to Community Benefit
■ Managing Resources is a cornerstone of providing
community benefit
■ CHRISTUS examines every piece of the supply chain for
opportunities
■ Pharmacy
• Indigent drug recovery program from manufacturers
• 340B Program
Implementing a System-wide
340B Program
Sam Colletti, RPh
Director of Enterprise Accounts- CHRISTUS Health Broadlane
340B Drug Pricing Program
■The initial barriers to hospital pharmacy
Awareness
Fear of Federal Audits and Regulation
■ Program created in 1992
■Provides discounts on outpatient drugs to
various “covered entities”
■Manufacturers that participate in Medicaid
must sign an agreement to participate in 340B
Drug Pricing Program
340B Covered Entities
HRSA Grantees – CHC, HTC, RW
CDC Grantees – STD, TB
Family Planning Clinics
Urban 638 Tribal Programs
Federally Qualified Health Center
(FQHC) Look-A-likes
Disproportionate Share Hospitals
Produced By: North Carolina Rural Health Research and Policy Analysis Center, Cecil G. Sheps Center for Health Services Research, University of North Carolina at Chapel Hill.
PPS Hospitals* with a Disproportionate Patient Percentage Ratio Greater than 27.32 and Core Based Statistical Areas (CBSAs), 2004
Hospitals by Type of Control (# of Hospitals) For Profit (79) Government (175) Non-profit (193) Metropolitan Status (# of Counties) Metropolitan (1090) Micropolitan (690) Neither (1361) Sources: US Census Bureau, 2003; CMS Provider Specific File, 2004; CMS OSCAR File, 2003.
Alaska and Hawaii not to scale
*Note: Only hospitals outside of metropolitan counties are included. Hospitals are mapped to the ZIP code centroid.
RURAL DSH HOSPITALS
Additional Eligibility Requirements
• In addition to meeting the 340B DSH
Adjustment Percentage requirement
(>11.75%), a rural hospital…
– Must be a public hospital owned or operated by a unit of State or local government OR
– Must be a private, non-profit hospital under contract with a State or local government to provide health care
services to low income individuals not eligible for Medicare or Medicaid
– Must not purchase outpatient drugs through a Group
Purchasing Organization Applies to covered patients only. Facility
Why Participate in 340B?
■ Cost savings of 20%-50% on outpatient drug purchases
■ Option to purchase outpatient drugs below 340B
prices through participation in the 340B Prime Vendor Program (PVP)
■ Option to negotiate reduced prices for inpatient drugs
(Current healthcare legislation pending.)
■ Pricing typically 20-25% below negotiated GPO prices. Oncology drugs often 30-40% below GPO prices.
What Drugs Are Covered ?
Covered drugs:
• Outpatient Prescription drugs (includes hospital outpatient areas such as ER, OP OR, cancer
centers, infusion centers, etc.)
• Over-the-counter drugs (if accompanied by a written prescription)
Non-covered drugs:
• Vaccines
• Drugs given to the patient in inpatient care settings (limited exception pricing offered by manufacturers through the prime vendor program.)
Estimated Prices For Selected Public
Purchasers, as % Average Wholesale Price
Stephen Schondelmeyer, PRIME Institute, University of Minnesota (2001)
100.0% 80.0% 67.9% 60.5% 51.7% 49.0% 47.9% 34.6% 0% 20% 40% 60% 80% 100% AWP AMP Medicaid (Min.) Medicaid Net FSS 340B FCP VA Contract
Savings may be used to:
■ serve more patients
■ expand formulary
■ expand services
Contact hospital’s Finance Dept. to obtain
Disproportionate Share Adjustment Percentage
If >11.75% (based on most recent cost reporting period)
If < 11.75% STOP HERE! Ineligible for 340B Download 340B registration forms 340 Program Enrollment Letter Certification of contract with state/local
government Certification of non-participation in GPO PRIVATE NON-PROFIT HOSPITALS PUBLIC HOSPITALS Supporting documentation: Verify state/local Government owned/operated
Submit all forms to:
HRSA/HSB/OPA Mail Stop 10C-03 5600 Fishers Lane Rockville, MD 20857
Technical Assistance (Key web sites)
• HRSA Office of Pharmacy Affairs
– ‘www.hrsa.gov/opa
• 340B Prime Vendor Program
– ’www.340bpvp.com
• Safety Net for DSH ( Advocacy Organization)
– ‘www.safetynetrx.org
CHRISTUS
Implementing a System-Wide
340B Program as a Strategic
CHRISTUS
• Pre-2000
– Initially each facility/region attempted to qualify independently at the direction of the finance department.
– Only 3/19 facilities had attempted to qualify.
– No acknowledgement of the supply chain opportunity.
• Project Initiation
– After identifying the need for a centralized group effort directed by pharmacy instead of finance the group qualified 15/19 facilities. Two facilities subsequently lost qualification due to patient mix for several quarters after recent hurricanes.
– With requalification and acquisitions CHRISTUS now has 19/24 facilities qualified.
340B Facility Assessment and Enrollment
Business Case:
• Currently CHRISTUS facilities either qualify or have high potential for DSH enrollment.
• Based on Broadlane's support and assistance, attempts to enroll the following CHRISTUS facilities will
provide cost effective opportunities for the pharmacy programs. Only 3/18 facilities are enrolled at initial evaluation.
Benefit Analysis:
Implementation Timeline / Milestones / Next Steps:
• All potential facilities(15/19) have qualified as of March 31,2007 .
• Only CHRISTUS St John’s, CHRISTUS St Catherine’s, CHRISTUS St Patrick’s, and CHRISTUS St Michael’s do not have sufficient indigent care to qualify at this time.
• 19/22 potential facilities are qualified as of June 2009.
Potential Barriers to Implementation & Recommended Solution • Addition of web based software needed for program management . • Overly conservative financial calculations by finance departments.
• Low level of understanding of the federal program by facilities and the potential impact • Staff training needs
• Financial, clinical, pharmacy data interface requirements.
Owners: Sam Colletti, BL Pharmacy SLD, Steve Pitzer, CHRISTUS Executive Sponsor
Contract/Initiative Description Contract Strategy Effective Date Annualized Outpatient Spend Projected Impact of 340B Program Annualized Increase / (Decrease) to spend
340B Enrollment Support Achieve best outpatient pricing scenario
Involvement
■ CHRISTUS Departments
– Pharmacy, Finance, IT, Social Services, Business Office, Outpatient Services, Corporate Compliance, Corporate Supply Chain Executive
■ Outside Groups
GPO( Broadlane)
Wholesaler ( McKesson, PHS)
■ Organizations/ Advocacy
SNAPHA( Safety Net for Pharmaceutical Access) 340B Prime Vendor Program
Management and Support Tools
• CHRISTUS currently has enrolled the entire IDN in SNAPHA, an advocacy group for 340B hospitals
which provides assistance in managing the program, legal services, and lobbying efforts.
• CHRISTUS currently utilizes a single program management software solution provided by their
wholesaler to provide virtual inventory management, product ordering and audit trails at each 340B
qualified facility.
• CHRISTUS initially added additional consultants with specific expertise in 340b program development.
• Monitoring and coordination of efforts by GPO
CHRISTUS Health
Current State
• 19/24(80%) potential DSH entities qualified • 3 entities pending evaluation
• 2 will not qualify due to local demographics. • System Total Drug Spend= $128,000,000
• System Outpatient Spend (DSH eligible) = $37,000,000
• FY09 Annual Savings under DSH = $9,500,000
Previous State
• 3/19(16%) potential DSH entities qualified • No local or system evaluation
Results
• Change from 16% of all facilities participating in the program to 80% of all facilities.
• System wide standard for management of the
program and compliance with federal regulations. • Significant Improvement in profitability of outpatient
infusion and oncology services across the system.
• Significant increase in Community Outreach services without degrading business models.