Transcript Slide 1
340B: An Overview
Overview
340B and Drug Pricing DSH Hospital Inpatient Drug Discounts Medicaid & 340B Application of Patient Definition to 340B Hospitals Contract Pharmacies Supply Chain Dynamics Additional 340B Resources
Creation of the 340B Program
340B DRUG PRICING PROGRAM Drug Manufacturers Outpatient Drugs
Source: HRSA Presentation on 340B
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Intent of the 340B Program
Safety net providers 340B Eligible Entities SAVINGS
Improve financial stability Stretch dollars to serve vulnerable patients
Patients
The 340B Price
340B DRUG PRICING PROGRAM 25-50% of the average wholesale price The 340B price is actually a “ceiling” price Can offer sub-ceiling prices Drug Manufacturers
Source: HRSA Presentation on 340B
The 340B Price
340B DRUG PRICING PROGRAM 25-50% of the average wholesale price The 340B price is actually a “ceiling” price Drug Manufacturers Centers for Medicare and Medicaid Services
Source: HRSA Presentation on 340B
OFFICE OF PHARMACY AFFAIRS
340B Overview – What is it?
Program established by Congress in 1992 Requires pharmaceutical manufacturers that contract with the Medicaid program to provide discounts on outpatient drugs purchased by “covered entities,” Generally, designated safety net providers that receive government funds Program “named” by section of the Public Health Service Act Original statute also amended the Medicaid statute, Section 1927 of the Social Security Act
340B Overview
“ Covered entities” include Federally-qualified health centers (FQHCs) and “look-alikes” Public and non-profit DSH hospitals that have indigent care contracts with state/local governments DRA added Children’s Hospitals Ryan White CARE Act grantees Title X Family Planning/STD clinics TB and Black Lung Clinics Urban Indian clinics Homeless clinics Others
340B Overview
340B Program administered by the Office of Pharmacy Affairs (OPA) in the Health Resources and Services Administration (HRSA) Qualified providers must apply for 340B status.
Providers are expected to purchase all of their outpatient drugs through a 340B program, but can ‘carve out’ Medicaid.
340B Discounts and Pricing
340B “ceiling” price = rough Medicaid “net” price (or AMP – mandatory rebate amount under SSA §1927(c)) Impact of Medicare Part D best price exemption Impact of DRA Medicaid pricing changes Covered entities can negotiate prices lower than the “ceiling” price on their own or through a statutorily chartered “Prime Vendor” program Actual 340B prices may be significantly lower than Medicaid “net” price
340B Offers Savings/Revenues for Safety Net Providers
340B law does not require covered entities to provide their discounts to patients or 3 rd party purchasers
Covered entities that provide free or reduced price/sliding scale drugs to indigent or low income patients can
save
money by using 340B drugs Covered entities that bill patients, commercial insurance,or government payers for patients’ drugs can
make
money by using 340B drugs Medicaid reimbursement is a challenge, however
DSH Inpatient Drug Prices
340B only covers outpatient drugs. Thus, inpatient and outpatient drugs must be segregated within the covered entities. As you will see Medicaid drugs need to identified also in DSH hospitals.
As a result of Section 1002 of the Medicare Modernization Act (MMA), manufacturers may offer 340B hospitals deep discounts on inpatient drugs without adversely affecting the companies’ “best price” used to calculate their Medicaid rebates and 340B prices
Medicaid Billing Requirements
Covered entities must change how they bill 340B drugs to Medicaid to avoid duplication. This is a big problem.
The rationale for covered entities adjusting their Medicaid billing practices is the need to protect manufacturers from a ‘double dipping’ problem. They must bill at invoice price to avoid duplication.
Medicaid billing procedures do not have to be followed if the 340B drugs are billed to a Medicaid managed care organization or are billed and paid by Medicaid as part of a capitated or bundled rate.
340B and Medicaid
State may elect to forgo Medicaid rebate and reimburse for 340B drug at 340B acquisition cost plus, dispensing fee/admin fee State must evaluate potential for budget savings Weigh difficulty of pursuing rebates on the back end; value of supplemental rebates; state’s up-front reimbursement rate, etc.
E.g., Massachusetts States may also treat 340B rules differently from what is expected under national statutes. This has caused confusion all across the nation.
HRSA’s Definition Of A Patient
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The covered entity has established a relationship with the individual, such that the covered entity maintains 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 provided remains with the covered entity; and The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or federally-qualified health center look-alike status has been provided to the entity.
Application to 340B Hospitals
This is vague and hard to understand. It can be interpreted a number of ways. Receipt of care outside the hospital does not disqualify the patient if the individual’s care is initiated at the hospital and there is a proximate relationship between the off-site care and the care provided by the hospital. BUT, transfer of discounted drugs to non-patients may violate both the 340B definition of patient and the Prescription Drug Marketing Act
Contract Pharmacies
HRSA recognized the difficulties facing 340B covered entities that lack in-house pharmacies In 1996, HRSA issued guidelines approving the use of contract pharmacies to dispense 340B drugs and requiring manufacturers to offer 340B pricing on drugs dispensed by contract pharmacies Patients may choose to obtain drugs from any pharmacy, not just the contract pharmacy The covered entity must use a “ship to/bill to” arrangement so that drugs are purchased by the covered entity but sent to the contract pharmacy The covered entity is responsible for the contract pharmacy’s compliance with 340B requirements
340B and Medicare HOPPS Reimbursement
Does 340B influence HOPPS payment for drugs?
Not part of the calculation of ASP.
Is part of the claims data used to check the reality of ASP plus or minus in hospital outpatient departments.
CMS wants to pay 340B hospitals less for drugs than other hospitals.
ACCC opposes this.
Issues to Ponder
Regulation to stop differing state interpretations of the laws.
Enforcement of anti-diversion rules in terms of the patient definition.
More Medicare hospital outpatient rate debates.
Better definition of “patient”?
Guidance on use of contract pharmacies?
Inpatient 340B?
OVERALL: Tensions between program expansion and heightened attention to program integrity issues and causes friction between Providers Manufacturers Regulators
Additional 340B Resources
OPA Website
ww.hrsa.gov/opa
340B Prime Vendor Program
(888) 340-BPVP or (888) 340-2787 www.340bpvp.com
Pharmacy Services Support Center
1-800-628-6297 or www.pssc.aphanet.org