Mega Guidance Is Here!
David Pointer has no actual or potential conflict of
Introduction
Where are we today?
◦ Brief Overview of HRSA Audit Findings
Where are we going?
◦ Mega-Guidance
340B Program is administered by Health Resources and Service Administration (HRSA)
Drug manufacturers who participate in Medicaid/Medicare are required to supply covered outpatient drugs to covered entities at discounted prices
◦ Program funded by manufacturers, not Medicare or taxpayers The intent of the 340B program is to stretch scarce federal
resources to reach a greater number of eligible patients and provide comprehensive services.
340B Program began in 1992, contract pharmacies became eligible in 1996, DSH expansion occurred in 2003, children’s hospitals were added in 2006 and critical access hospitals were included in 2010. 340B Volume by Type** 340B Volume by Type** 340B Volume by Type** 340B Volume by Type** Pre 2004 DSH 31% Post 2004 DSH 50% HIV 5% SCH 2% CAH 2% Other 10% 340B Purchase 340B Purchase 340B Purchase
340B Purchase Volume (Billion)*Volume (Billion)*Volume (Billion)*Volume (Billion)*
2005 $2.4
2010 $5.3
2013 $7.1
Projected 2019 $16
2012 20122012 2012 2013201320132013 2014 2014 2014 2014 2015201520152015 No findings 42% 21% 19% 26% Findings 58% 79% 81% 74% Repayment 45% 63% 65% 57% State repaid 3% 1% Per 340B Health 2012 2012 2012 2012 2013201320132013 2014 2014 2014 2014 2015201520152015 Diversion 33% 58% 60% 42% Duplicate discount 30% 21% 21% 20% Inaccurate database 24% 49% 47% 44%
Contract pharmacy oversight 4% 5% 3%
GPO 1% 11% 6%
Inauditable records 1%
Non-reimbursable site 1% 1%
DSH % 1%
Inaccurate Medicaid Exclusion File 2%
Orphan drug violation 5%
May 6, 2015
◦ HRSA submits Mega-Guidance to the Office of Management and Budget (OMB)
August 28, 2015
◦ Proposed Mega-Guidance is released in Federal Register
October 27, 2015
◦ Deadline to submit comments on proposed guidance ends (60 days)
Unknown
Mega-Guidance Purpose
◦ Provide increased clarity for stakeholders and strengthen HRSA’s ability to administer the program effectively
Guidance vs. Rulemaking
Proposed vs. Finalized
No scripts/orders written outside hospital or child sites
◦ Infusion orders
◦ Referrals, follow-up care, affiliated clinics, non-reimbursable hospital clinics, providers treating patients outside the hospital No 340B for scripts/orders written by providers who are not
employees or independent contractors where hospital bills for professional fees
New focus on payer status of patient
◦ No discharge scripts
◦ No drugs given to outpatients later billed as part of inpatient stay No 340B for Medicaid bundled drugs
Patient eligibility
Covered entity eligibility
Covered outpatient drug definition/eligibility
Covered entity responsibility
Contract pharmacy
Internal and external audits
GPO Prohibition
Existing requirements for hospitals
◦ The covered entity has established a relationship with the individual, such that the covered entity maintains recordsmaintains recordsmaintains recordsmaintains records of the individual’s health care; and
◦ The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care responsibility for the care responsibility for the care responsibility for the care provided remains with the covered entity
provided remains with the covered entityprovided remains with the covered entity provided remains with the covered entity
◦ An individual will not be considered a “patient” of the covered entity for purposes of 340B if the only health care service received by the individual from the covered entity is the dispensing of a drug or drugs for subsequent selfsubsequent selfsubsequent selfsubsequent self----administration or administration or administration or administration or
administration in the home setting. administration in the home setting.administration in the home setting. administration in the home setting.
◦ (61 Fed. Reg. 55156 (October 24, 1996))
1. The individual receives a health care service at a facility or clinic site
which is registered for the 340B Program and listed on the public 340B database
2. The individual receives a health care service provided by a covered
entity provider who is either employed by the covered entity or who is an independent contractor for the covered entity such that the covered entity may bill for services on behalf of the provider
3. An individual receives a drug that is ordered or prescribed by the
covered entity provider as a result of the service described in (2)
4. The individual’s health care is consistent with the scope of the
Federal grant, project, designation or contract
5. The individual’s drug is ordered or prescribed pursuant to a health
care service that is classified as outpatient
6. The individual’s patient records are accessible to the covered entity
and demonstrate that the covered entity is responsible for care
Proposed guidance:
◦ For 340B to be used, script/order must be written as a result of a healthcare service billed as outpatient
Observations:
◦ Negates discharge scripts
◦ No 340B for drugs billed as an inpatient service, even though the patient was an outpatient at the time the drug was
dispensed/administered (e.g., Medicare 72-hour rule)
Proposed guidance would prohibit use of 340B to fill scripts/orders written outside the hospital
Patient eligible for 340B on a script-by-script basis instead of a patient-by-patient basis
May not impact all facilities
Proposed guidance:
◦ Order must be written as a result of services provided in the hospital or a child site to be filled with 340B drugs
◦ “Mere” infusion of drug not enough Observations:
◦ Hospitals have overturned audit findings by showing that even though an order was written outside the hospital, administration of the order at the hospital or a registered clinic qualified as an actual health care service for 340B purposes
Proposed guidance:
◦ No 340B for referrals, follow-up care or care in unregistered “affiliated clinics”
Observations:
◦ HRSA audits have allowed in limited situations
◦ Difficult to document
◦ May not significantly impact many facilities
Proposed guidance:
◦ No 340B for scripts/orders written outside registered hospital and child sites
Observations:
◦ May impact treatment at: Nursing homes
Correctional facilities Indigent clinics School clinics
The legal argument:
◦ Hospitals using a self-insured plan are responsible for care given to employees covered by plan
◦ HRSA audits have said this relationship is not sufficient for 340B use; not recommended currently
Proposed guidance would unequivocally prohibit this
Current: Employed, contracted or under other arrangement Proposed:
◦ Either employed by, or an independent contractor for, the hospital
◦ Such that the covered entity may bill for services on behalf of the provider
Note:
◦ “Simply having privileges or credentials is not sufficient”
◦ Is more required than provider being on premises of hospital? Creates operational burdens to track and distinguish
◦ Interpreting “may bill for services on behalf of the provider” Hospital does bill or could bill?
Current: A drug is eligible for 340B if it is a “covered outpatient drug,” as defined in section 1927(k) of the Social Security Act
Proposed guidance: For the 340B program, a drug will not be considered a covered outpatient drug if the drug:
◦ (1) is “provided as part of, or as incident to and in the same setting as” the following services: inpatient hospital services; hospice services; dental services, except that drugs for which the State plan authorizes direct reimbursement to the dispensing dentist are covered outpatient drugs; physicians’ services; outpatient hospital services; nursing facility services and services provided by an intermediate care facility for the mental retarded; other laboratory and x-ray services; and renal dialysis; and
◦ (2) receives a bundled payment by Medicaid and does not receive direct reimbursement for the drug.
Not entirely clear what is intended:
◦ Different than current bundled drug policy
Proposed guidance:
◦ A hospital must notify HRSA if it is no longer eligible or has violated a 340B program requirement
Implications:
◦ No materiality standard
Current statement used in recertification: Entities must contact HRSA if there is any “material” change in 340B eligibility and/or “material breach” of key program requirements
◦ Most hospitals currently correct minor errors without notifying HRSA
◦ This could be a regular notification for many facilities
GPO prohibition only applies to DSH and free-standing children’s and cancer hospitals
Does not apply to CAH, RRC or SCH Proposed guidance lists three exceptions:
1. GPO could be used in clinics that: Have a different physical address Are not registered in 340B
Ensure GPO drugs are never provided to outpatients at hospital or child sites
Purchase drugs through a wholesale account separate from parent entity 2. GPO could be used for drugs given to an inpatient when insurer
subsequently classifies as an outpatient
3. GPO could be used when 340B and WAC pricing are unavailable Hospitals may use remaining GPO drugs after start date in
Proposed guidance continues to prohibit GPO use for ineligible outpatients
Would also prohibit GPO use for drugs that are difficult to track (e.g., IV solutions, contrast media, anesthesia) unless paid in bundled manner by Medicaid
FAQ allowed hospitals to interpret the definition of covered outpatient to decide if “bundled drugs” meet this definition, and if not, “a GPO may be used for drugs that are not covered outpatient drugs.”
Some hospitals have identified certain drugs they believe are outside of 340B based on this FAQ
Would need to use WAC for such drugs if hospital can’t track 340B and GPO use
Proposed guidance:
◦ All child sites must be listed in the contract
◦ Only covered entities may register contract pharmacies
◦ Makes clear that CEs are responsible for contract pharmacy oversight and preventing diversion and duplicate discounts
◦ CEs must conduct annual independent audits
◦ CE must conduct a quarterly review of each contract pharmacy location (e.g., comparing CE’s prescribing records with pharmacy’s dispensing records)
◦ CE must notify HRSA of any noncompliance found during a quarterly review or annual independent audit
Proposed guidance:
◦ CE cannot use contract pharmacy to dispense 340B drugs to Medicaid FFS or MCO patients without HRSA-approved written agreement with state or MCO
Seeking alternatives to filed cost report test
◦ Could greatly shorten timeline for new child sites GPO Prohibition
◦ Confirms ability to exclude some off-site locations from 340B (and GPO prohibition)
◦ Confirms ability to use existing GPO inventory
Allows different carve-in and carve-out decisions for Medicaid fee-for-service and Medicaid managed care
Consideration of permitting CEs to use 340B only if appropriate for service delivery (e.g., could use non-340B account if more appropriate for a specific service, instead of carving-in or carving-out by Medicaid billing number)
Does clarify some existing rules Tightened audit standards
