Transcript 340B

340B Program Perspectives
Presented by:
David Tamayo, MBA
MedImpact Healthcare Systems, Inc
Agenda

CAH Qualification for Participation in 340B Program

340B Overview

The Benefits of Participation in the 340B Program

Current Program Concerns

Optimizing 340B From A Program and Financial Standpoint

Q&A
Critical Access Hospital Qualification
Requirements for 340B
Requirement
Reference
1
Meet the definition of CAH in SSA
Section 1820(c)(2) of
the SSA
2
CAH must provide CMS a Medicare Provider number
3
a)
b)
c)
4
Owned or operated by a unit of State or Local government
… OR
public or private non-profit corporation which is formally
granted governmental powers by a unit of State or local
government … OR
is a private non-profit hospital which has a contract with a
State or local government to provide health care services
to low income individuals who are not entitled to benefits
under title XVIII of the Social Security Act or eligible for
assistance under the State plan under the title
CAHs that want to use 340B drugs for their outpatient clinics
must certify they are an integral part of the hospital and be
reimbursable on the Medicare cost report.
Section 1886(d)(1)(B))
of the SSA
340B Overview
 What is the 340B Program?
 A federal drug discount program resulting from the enactment of
Public Law 102-585, of the Veteran’s Health Care Act, which is
codified as Section 340B of the Public Health Services Act
 Created in 1992 to expand access to affordable medications to
low income populations and support the operations of healthcare
safety net organizations.
 Pharmaceutical manufacturers whose drugs are covered by
Medicaid are required to sell drugs to covered entities at 340B
discounts.
340B Overview
 What is the 340B Program?
 Primary Goals
 Provide Drug discounts that limit the cost of covered outpatient
drugs
 Enable a qualified entity to attain greater financial stability
 Benefits in Participating
 Access to 340B ceiling pricing
 Improve financial stability
 Better serve vulnerable patients
 Decrease burden upon taxpayers
340B Overview
 Program Patient Eligibility Requirements
 The Covered Entity must be a qualified entity and registered with OPA
to participate in the 340B program.
 The Covered Entity must have a record of the patient’s care and a
relationship with the patient.
 The Hospital Department – Medical Clinic where the patient is treated,
must be reflected on the Medicare Cost Report.
 The Physician – Provider must be employed by, contracted by, or
referred by the Covered Entity.
 The Patient must fill the qualified prescription at an affiliated contract
pharmacy
All Covered Entity patients are eligible
regardless of payor type or income level
340B Overview: Key References
Topic
OPA/HRSA Reference
SNHPA Reference
Patient Definition
http://www.hrsa.gov/opa/patientdefinitio
n.htm
http://www.hrsa.gov/opa/patientdefinition
.htm
Own Use
http://www.hrsa.gov/opa/frn011207va.ht
m
(see example #4)
http://www.hrsa.gov/opa/frn011207va.ht
m
(see example #3)
http://edocket.access.gpo.gov/2010/pdf/
2010-4755.pdf
(see Section C, page 10277)
http://www.hrsa.gov/opa/contractedmod
el.htm
http://www.hrsa.gov/opa/dsh.htm
Prime Vendor Response:
https://www.340bpvp.com/public/faq/faq_
general.asp#Q18
http://www.phpcrx.org/public/documents/
pdfs/key_pharm_terms.pdf
(see “Provider Based Regulations”)
http://www.phpcrx.org/public/documents/
pdfs/key_pharm_terms.pdf
(see “Contract Pharmacy”)
http://www.hrsa.gov/opa/glossary.htm
http://www.phpcrx.org/public/documents/
word/key_pharm_terms.doc
http://edocket.access.gpo.gov/2010/pdf/20104755.pdf 1st column page 10273
Provider Based
Designation
Contract Pharmacy
Hospital Participation
Criteria
PBM
Diversion
http://edocket.access.gpo.gov/2010/pdf/20104755.pdf 1st column page 10273
Duplicate Discounts
http://www.hrsa.gov/opa/medicaidexcl
usion.htm
http://www.phpcrx.org/public/340b_eligib
ility.cfm
http://www.hrsa.gov/opa/medicaidexcl usion.htm
340B Overview
 Program Prohibitions:
 Diversion
 340B drugs provided to individuals who are not patients
 340B drug dispensed in an area of a larger facility that is an integral
part of the eligible and participating entity (e.g. an inpatient service,
a non-covered clinic)
 Duplicate Discounts
 Accessing the 340B Discount + Medicaid Rebate on same drug
prescription
 Covered Entities must report Medicaid billing status
 Inpatient Dispensing
 Inpatients are not qualified to receive 340B eligible drugs
Benefits of Participating in 340B Program




Access to 340B Ceiling Price
Access to participation in the Prime Vendor Program
Generate both savings and revenue
Can elect to subsidize indigent programs using 340B
revenue
 Low risk and very low cost if you pick the correct
340B administrator/partner
Benefits of Participating in 340B Program
35% additional
discount
between retail
and 340B
Benefits of Participating in 340B Program
20% additional
discount
between GPO
and 340B
Current Program Concerns
 State Medicaid Programs
 Double dipping prohibited
 States are taking an approach to 340B that may not allow covered
entities to generate margins between the contracted Medicaid pharmacy
rates and the 340B drug acquisition price
 Some State Medicaid programs are only reimbursing 340B drugs at the
340B acquisition price plus an enhanced fill fee
 Number of Covered Entities
 Limited to non-profit contracted to provide indigent care with local or
state government
 Many more covered entities realize the potential impact of 340B
Current Program Concerns
 Definition of Patient
 See the Federal Register Notice titled Final Notice Regarding Section 602 of the
Veterans Health Care Act of 1992 Patient and Entity Eligibility ( Definition of a
Patient). (Vol. 61, No.201, pp 55156-55158, October 24, 1996)
 Has a relationship been established with the individual patient by maintaining records of
the individual patient’s health care?
 Are the services provided from providers that you employ, contract or refer to, and does
the responsibility for care reside with your organization?
 Does the individual patient receive health services consistent with the range of services
for which you receive funding?
 Does the individual fill their prescription at an affiliated contract pharmacy?
 Are Employees Eligible for 340B
 See definition of patient
 Take the more conservative approach
 Future Audits
 How are your reporting patient discharges?
 Diversion
 Data accessibility and how eligibility is determined
Questions to Ask Potential 340B Partners
 How many 340b customers are currently
participating in your program?
 How long has the solution employed the 1:many covered entity
to contract pharmacy model?
 Who sets-up the wholesaler?
 Recommendation: Let your 340B administrator / partner set-up
your 340B wholesaler for you….why?
 Who contracts and sets-up the 340B contract
pharmacy network?
Questions to Ask Potential 340B Partners
 Fees (dispensing, transactional)?
 Fixed
 Percent of Margin
 Combination
 Are admin fees applicable to ALL 340B 3rd party claims
 “Own” contract pharmacy network fees
 “Agnostic” contract pharmacy network fees
 Are fees different for indigent/cash pay patients?
 Other fees to watch for
Questions to Ask Potential 340B Partners
 Do you offer a turn-key solution? Solution should include:
 Automated eligibility determination
 Pharmacy network development, contracting, management, and training
 Can optimize use of internal out-patient pharmacy
 Can enhance capture of 340B eligible pharmacies lost to the
community pharmacies
 Claims adjudication using lesser-of methodology
 “Own Use” follows patient eligibility criteria
 References of hospitals that are already operational
 References of hospitals currently undergoing implementation
 Acceptance to start program implementation with an LOI instead of a
contract. Reason, it will take a minimum of 60 to 120 days to implement
an eligible hospital
Questions to Ask Potential 340B Partners
 Can you provide an implementation timeline that:
 Identifies all implementation tasks, and projected dates of completion
 Has signature lines for each party to sign-off in agreement that tasks for
both parties have been completed every two weeks
 That is summarized monthly and sent to the CEO
 Can sample reports be provided that illustrate:
 Net amounts due the covered entity, less all fees broken out by
dispensing pharmacy, program administrator, and wholesaler
 Virtual inventory and replenishment actions
 Cost of 340B drugs dispensed, and projected wholesale cost of
replenishment
 Can the reporting system generate “on-demand” reports, as
frequently as necessary?
 How frequently is data updated?
Questions to Ask Potential 340B Partners
 Can you provide more than just one or two retail chain
pharmacies that will work with you simultaneously?
 Especially important to ask when you are in an urban setting
 Do you contract and work with independent pharmacies?
 Can you provide evidence that you work with independent pharmacies
currently?
 Not all independents act in your best interest
 Outline the steps the 340B Partner will use to help resolve conflict
 Provide options of what has worked, and what has not, and do you have
references from independent pharmacies that work with you
 What is your philosophy in developing a 340B contract
pharmacy network, and what are they key factors that guide
that philosophy?
 What are the key assumptions you make when developing a
revenue pro forma (savings and revenue)?
Optimizing Your Program
 Selecting the contract retail pharmacy, factors to
consider:
 Patient population by zip code
 Current relationship with hospital
 340B 3rd party dispensing fee
 Training requirements
 Willingness to work with selected administrator
Optimizing Your Program: Revenue From A
Conservative Pro Forma Perspective
Type of Covered
Entity
Projected Weekly
Actual Weekly
CAH
$1,100
$2,350
$57,200
$122,200
Annual Projection
Annual Projection
$1,665
$3,780
$86,580
$196,560
Annual Projection
Annual Projection
CAH
Provider based
Questions
Thank You