America’s Voice For Community - NACHC

America’s Voice for CommunityHealth CareThe National Association of Community HealthCenters (NACHC) represents Community andMigrant Health Centers, as well as Health Care forthe Homeless and Public Housing Primary CarePrograms and other community-based health centers.Founded in 1971, NACHC is a nonprofit advocacyorganization providing education, training andtechnical assistance to health centers in support oftheir mission to provide quality health care tomedically underserved populations.

The NACHC MissionTo promote the provision of highquality, comprehensive and affordablehealth care that is coordinated,culturally and linguistically competent,and community directed for allmedically underserved populations.

For further information about NACHC andAmerica’s Health CentersVisit us at www.nachc.com

NACHC 340B Webinar SeriesPart 1: Basics of the 340BDrug Pricing ProgramCynthia (Cindy) R. DuPreePartner, Draffin & Tucker, LLPJanuary 20, 2016

This is the first in a series of four webinars. Today we willfocus on 340B Basics. Due to the number of callers, and thecomplexity of the 340B Program, please limit questions to thematerial covered in today’s webinar.We will compile all unanswered questions from today’swebinar and respond to them as soon as possible.

What is the 340B Drug Program?

340B Program Program that allows certain entities tobuy drugs at discounted prices Savings from lower drug costs can thenbe used to expand FQHC services orreduce charges to patients

Medicaid Drug Rebate Program - 1990Required drug manufacturers to havea rebate agreement with thegovernment in order for their drugs tobe covered under Medicaid

Although drug manufacturers offered therebates, provider costs for otherdiscounted drugs rose dramatically.

340B Drug Program - 1992Congress then created the 340BDrug Program to protect certainclinics and hospitals (known ascovered entities) from significantdrug price increases.

340B Drug Program - 1992A second agreement was signed by thedrug manufacturers which limited theamount that could be charged to coveredentities for drugs.This is known as the “ceiling price”.

Ceiling price calculation

Ceiling price calculationAverage Manufacturer Price (AMP) Unit price, net of discounts, that distributors payfor the retail community pharmacies

Ceiling price calculationUnit Rebate Amount (URA) Percentage discount allowed off of the AMP Calculated by the Centers for Medicare andMedicaid Services Based on drug classesBrandGenericClotting FactorExclusively Pediatric23.1%13.0%17.1%17.1%

Ceiling price calculationAverage manufacturer priceminus: Unit rebate amount* (Brand)340B ceiling price for one pill*BrandGenericClotting FactorExclusively Pediatric 1.00.23 .7723.1%13.0%17.1%17.1%Calculation example does not consider other factors such as best price,consumer price index and base line AMPs.

Ceiling price calculationHRSA (Health Resources ServicesAdministration) calculates the ceiling priceseach quarter.

Verification of ceiling price

What’s the benefit? The FQHC benefits by saving thedifference between the usual drug costand the 340B cost. (340B savings) Many insurers will continue to pay theFQHC the normal reimbursement ratefor the drug, regardless of the 340Breduced cost.

Why do FQHCs participate? 340B savings enable the covered entitiesto provide increased services to patients. FQHCs can offer lower prescription costs.According to a NACHC study, FQHC’s drug costs couldincrease by a minimum of 41% if 340B pricing was not used.

Prime Vendor Program By participating in the 340B PrimeVendor Program, covered entities cansave more on the cost of drugs. The PVP can negotiate prices evenlower than the ceiling price. (subceiling prices)

How can 340b savings be used?

Intent of ProgramTo permit covered entities “to stretchscarce Federal resources as far aspossible, reaching more eligible*patients and providing morecomprehensive services.”H.R. Rep. No. 102-384(II), at 12 (1992)*340B patient eligibility criteria does not require that the patient isindigent or qualifies for a sliding fee scale discount.

Use of 340B savings? Law does not specify further.Savings may be passed on to thepatient. Drug Discount Cards Sliding Fees Savings may go into operations toexpand programs and services.

FQHCsAre statutorily required to invest allrevenues, including 340B, into activities thatare approved under their HRSA/Bureau ofPrimary Health Care Scope of Project andadvance their charitable mission.

Document use of 340B savingsPolicies and procedures shoulddiscuss use of the savings and howsuch use supports intent of Program. Are savings passed directly topatients? Are savings used in programs tobenefit the low-income andunderserved populations?

Who can participate in the 340BProgram?

Covered entitiesA non-profit healthcare organization, thatmeets certain Federal designations, orreceives specific types of Federal fundingmay participate.FQHCs and FQHC look-alikes are botheligible.

How does the Program work?

340B process flowRegister inOPADatabaseDistribute to340B eligiblepatientsBill to patientObtainapproval fromHRSAPlace r/supplierPurchasediscounteddrugsUse 340Bsavings

COMPLIANCE ISSUES!Register inOPADatabaseDistribute to340B eligiblepatientsBill to patientObtainapproval fromHRSAPlace r/supplierPurchasediscounteddrugsUse 340Bsavings

How do you register?

Where to ult

Quarterly registration “windows”Registration PeriodEffective DateJanuary 1 - 15April 1April 1 - 15July 1July 1 - 15October 1October 1 - 15January 1

Information needed

Parent and child sites The main FQHC site is the “parent”. Delivery sites at different physicaladdresses from parent are known as“child sites”. Each site must be separatelyregistered.ParentChildChildChild

Attestation

More registration lic/CE7RegisterCE.pdf

What is recertification?

Why recertify annually? Opportunity to review and update OPAdatabase Re-attest to compliance No recertification .no participation!

When to recertify?FQHCs usually recertify in February.

More recertification informationhttps://opanet.hrsa.gov/opa mod/manuals/Public/CERecertify.pdf

What drugs canbe discounted under 340B?

Covered 340B drugsNo vaccines!

Who is an eligible patient?

Current definition61 Fed. Reg. 55156, October 24, 1996

Multiple hurdlesProviderPrescriberEncounter type andlocationOnce a “patient”, always a “patient”?What if prescriber leaves practice?How many refills are eligible?What about referrals?Is there a need for underlying diagnosis tobe treated during encounter?

Employees & 340BEmployees must meet the qualifyingpatient definition, same as any otherpatient.Source: Apexus FAQ

How are 340b drugs distributedto patients?

Drug delivery modelsContractIn-house

How do youtrack 340B inventory?

Types of 340B inventory systemsPhysically separateVirtual model

Types of inventory systemsPhysically separate Often used for in-house pharmacies.One inventory can be used if all patients are 340Beligible.Two inventories will be needed, separate 340B and non340B, if some patients are ineligible for 340B program.Patient eligibility is determined at time of drug dispenseor administration.

Physical inventoryPre-purchased inventory model(physical inventory)340BNon-340BCovered entity patientsOther patients

Types of inventory systemsVirtual model Used mostly in contract pharmacy arrangements.340B and non-340B inventory is commingled.Patient eligibility is retrospectively determined.Tracking software will be needed.

Virtual inventory trackingIn a virtual, commingled inventory,drugs are designated 340B after thedrug is purchased and dispensed. Tracking system will be necessary. Must be tracked and replenished byNational Drug Code (NDC) number

NDC matching is requiredNational Drug Code – 11 digit numberFirst 5 digits manufacturerNext 4 digits drug productFinal 2 digits package size

Why is NDC matching important?National Drug Code – 11 digit numberFirst 5 digits manufacturerNext 4 digits drug productFinal 2 digits package sizeA manufacturer does not want to give a rebateto the State, or a discount on replenishment, ifthe drug dispensed was not purchased from thatmanufacturer.

What is acontract pharmacy?

Covered entities that participate in theProgram may contract with retailpharmacies to dispense 340B drugs ontheir behalf.

Pros and cons - contract pharmacy Provides alternative Reduces amount ofif no in-house340B savingspharmacy is Requires trackingavailablesoftware Increases patient Increasesaccess tocompliancemedicationsconcerns Eliminates cost ofoperating in-housepharmacy

The OIG issued aMemorandumReport: ContractPharmacyArrangements inthe 340B Programon February 4,2014.

340B and Medicaid

Who gets the 340B savings onMedicaid patients?Carve-in– Dispense 340Bpurchased drugsto Medicaidpatients– Bill MedicaidprogramMust following individualState’s billing rules for340B drugsExample:(Acquisition cost processingfee)Carve-out– Does not dispense340B-purchaseddrugs to Medicaidpatients– State billsmanufacturer forrebate amount

Medicaid Exclusion spx

HRSA ClarificationMedicaid managedcare patients areconsidered Medicaidpatients.Entities must haveseparate Medicaidnumbers if some sitescarve-in and somecarve-out or are nototherwise 340Beligible policyreleases/clarificationmedicaidexclusion.pdf

What and whereare the 340B rules?

Program Guidance

Want to learn more?

NACHC Information NACHC website guidance Upcoming webinars1/27 – Contract Pharmacy2/03 – Recent Developments2/10 – Compliance/Self-audits

For more information or questions:Cindy DuPreeDraffin & Tucker, LLPAtlanta, Georgiacdupree@draffin-tucker.comNACHC and America’s Health Centerswww.nachc.com

Jan 20, 2016 · Types of inventory systems Physically separate Often used for in-house pharmacies. One inventory can be used if all patients are 340B eligible. Two inventories will be needed, separate 340B and non-340B, if some patients are ineligible for 340B program. Patient eligibility