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115th Annual Convention
Date: Monday, October 14, 2013 Time: 4:00 p.m. – 5:30 p.m. Location: The Walt Disney World Swan and Dolphin Resort, Southern Hemisphere Salon 3 Title: 340B Contracting Essentials and Best Practices
ACPE # 207-000-13-118-L04-P 0.15 CEUs ACPE # 207-000-13-118-L04-T Activity Type: Knowledge-based Speaker: Alan Arville, Epstein Becker Green Robert Judge, Director of Hospital Sales, Catamaran Pharmacist Learning Objectives: Upon completion of this activity, participants will be able to: 1. List and discuss the most important elements of a 340B contract. 2. Discuss how to breakdown your 340B contracts to establish policies and procedures for contract
implementation. 3. Describe the clauses that can cost your pharmacy the most money and how to make sure you are properly
covered by your contract. Technician Learning Objectives: Upon completion of this activity, participants will be able to: 1. List and discuss the most important elements of a 340B contract. 2. Discuss how to breakdown your 340B contracts to establish policies and procedures for contract
implementation. 3. Describe the clauses that can cost your pharmacy the most money and how to make sure you are properly
covered by your contract. Disclosures: Alan Arville declares no conflicts of interest or financial interest in any product or service mentioned in this program, including grants, employment, gifts, stock holdings, and honoraria. Robert Judge declares no conflicts of interest or financial interest in any product or service mentioned in this program, including grants, employment, gifts, stock holdings, and honoraria. NCPA’s education staff declares no conflicts of interest or financial interest in any product or service mentioned in this program, including grants, employment, gifts, stock holdings, and honoraria.
NCPA is accredited by the Accreditation Council for Pharmacy Education as a provider of continuing pharmacy education. This program is accredited by NCPA for 0.15 CEUs (1.5 contact hours) of continuing education credit.
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A Pharmacy’s Guide to 340B Contract Pharmacy Services
Best PracticesAlan J. Arville
Epstein Becker Green
Robert JudgeCatamaran
October 16, 2013
Disclosures
• Alan Arville declares no conflicts of interest or financial interest in any product or service mentioned in this program, including grants, employment, gifts, stock holdings and honoraria.
• Robert Judge declares no conflicts of interest or financial interest in any product or service mentioned in this program, including grants, employment, gifts, stock holdings and honoraria.
Learning Objectives
1. List and discuss the most important elements of a 340B contract.
2. Discuss how to breakdown your 340B contracts to establish policies and procedures for contract implementation.
3. Describe the clauses that can cost your pharmacy the most money and how to make sure you are properly covered by your contract.
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Agenda
• 340B Program Overview
• Contract Pharmacies and Administrators
• Contract Pharmacy Services Agreements
• Contract Pharmacy Best Practices
Introduction to the 340B program
340B Background
Established in 1992 statute
(Section 340B of the Public
Health Services Act)
Requires manufacturers
to sell “covered outpatient drugs” to certain
“covered entities” at
greatly reduced price
Includes 2 major
prohibitions:• Diversion to
non-340B patients
• Duplicate discounting
Requires mechanism to ensure that
entities comply with duplicate
discount prohibition
Administered by HRSA’s Office of Pharmacy Affairs
340B Prohibitions and Requirements
Duplicate Discounts
Diversion
Exclusions
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Intent of the 340B Program
1. HR Rep No. 102–384, pt 2, at 12 (1992).
Stretch scarce federal resources1
Reach more eligible patients1
Provide more comprehensive
services1
Expand services offered to patients
Provide services to
more patients
Reduce price of pharmaceuticals for patients
340B Pricing
340B Basics - Pricing
NetworkPrice
340BPrice
Average savings: 35‐40%
AWP
Network Reimbursement
340B Program Cost
340B Discount
9
340B Overview – Who is Eligible?
www.hrsa.gov/opa/dsh.htm
9
DSH (Disproportionate Share Hospitals) – Hospitals with a DSH adjustment > 11.75% ~2,300 today
Affordable Care Act of 2010 added nearly 3,000 additional Covered Entities Children’s Hospitals Critical Access Hospitals Free Standing Cancer Hospitals
Rural Referral Centers Sole Community Hospitals
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10
What Qualifies a Rx for 340B Prices?
Eligibility is a function of the relationship between a Covered Entity, Prescriber, Patient and Pharmacy
To qualify for 340B pricing, a prescription must meet the following criteria: Written for a patient with a care-based relationship with the Covered Entity
The Covered Entity maintains records of the individual's health care
Care is provided by a health care professional who is either employed by the Covered Entityor provides health care under contractual or other arrangements (e.g. referral for consultation)
Key is that responsibility for the care provided remains with the Covered Entity: Pharmacy-only care does not qualify for 340B
Final Notice Regarding Section 602 of the Veterans Health Care Act of 1992 Patient and Entity Eligibility 340B‐Qualified
11
What Requirements Are Placed on 340B Covered Entity ?
Available only to individuals who meet the 340B patient definition
Prohibition against diversion, resale or transfer
Prohibition against “Double Dipping” on Medicaid rebates
GPO exclusion (for certain Covered Entity types)
Orphan Drug exclusion (for certain Covered Entity types)
Audits and record keeping
12
340B Program – Getting Drugs to Patients
340B Statute allows a variety of ways to dispense medications
340B Eligible
Entity
ContractPharmacy
Tele‐Pharmacy
Provider Dispensing
FacilityPurchasing
Clinic Administered Meds(no dispensing pharmacy)
In‐HousePharmacy
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13
340B Contract Pharmacy Models
Multi-pharmacy networks allowed since March, 2010
Regulatory change increased: Opportunity Participation Complexity
Regulatory guidelines may differ, especially at the state level
14
16,649
* Year as of October 1 each year
Growth of 340B Contract Pharmacies
HRSA Office of Pharmacy Affairs, July 2013
Principal 340B Pharmacy Arrangement
15
Responsibilities of a 340B Contract Pharmacy
Execute a formal agreement between pharmacy and Covered Entity whereby: Pharmacy uses its inventory to fill Rxs for 340B eligible patients
Covered Entity replenishes pharmacy inventory using 340B program costs
Pharmacy receives a dispense fee from Covered Entity for services
Contract Pharmacy should: Be “inventory neutral”
Remit amounts collected from payers and patients for paid claims to Covered Entity
Follow Covered Entity practices to prevent diversion and double dipping on Medicaid rebates
Receive a dispense fee for services provided
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16
Contract Pharmacy Model - Pros & Cons
Pros Cons
• Easy to start• Capture first fills & refills
• Lower operating costs• Increased patient access
• Potential for greater savings/revenue capture
• Administrative overhead
• Federal oversight• Contract negotiation• Responsibility for pharmacy compliance with 340B
• True‐up exposure
17
340B Contract Pharmacy Administrators
Increasingly, Contract Pharmacy relationships are managed through 340B Administrators
Integrate participation of key stakeholders
Relieve Covered Entity of the administrative burdens related to 340B program Enable Covered Entity to focus on its core mission as a healthcare
provider
• Covered Entity: enrollment in 340B programs; outreach initiatives to increase participation
• Patients: pharmacy fulfillment that offer patients access to 340B priced medication
• Pharmacy: adjudication, reimbursement and inventory replenishment to participate in program
18
340B Contract Pharmacy Administrators
• AHC• CaptureRx• PSG
• RxStrategies• SunRx• Wellpartner
Admini-strator
• Walgreens• Coordinated Care Network• RiteAid
Chain & Community Pharmacies
• Sentry Data Services• MacroHelix• Talyst
Split Billing Software
Companies
340B Covered Entities
Examples
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340B AdministratorResponsibilities
Generally utilize a post adjudication system Ensure that prescriptions & patients meet 340B requirements
Prevent “Double Dipping” on Medicaid rebates and “Diversion” of 340B inventory to non-qualified patients
Replenishment administration Track and accumulate dispensed inventory: Use Contract Pharmacy’s
inventory for first fill; Covered Entity replenishes inventory after dispensing is complete
Provide detailed reporting at transaction level (claim, practitioner and claim detail)
Financial management Bill to/ ship to program management
20
340B Contract Pharmacy Process
21
Contract Pharmacy – Pharmacy Replenishment
PBM
$
$ $
Order
Replenishment Order
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22
Contract Pharmacy Service Agreement
• HRSA issues revised guidance in 2010• Allows contracting with multiple pharmacies
(previous 1996 guidance only allowed one contract pharmacy per delivery site).
• Requires written agreement between CE and Contract Pharmacy.
• Contract must address HRSA’s “Essential Elements.”
• CE must conduct annual independent audits.• CE retains ultimate responsibility for
compliance.
23
Contract Pharmacy Service Agreement
• What is the 340B Contract?• Contract Pharmacy Services Agreement• Vendor Services Agreement
24
HRSA’s Essential Elements
• Ship to, Bill to Provisions• Comprehensive Pharmacy Services• Patient Choice
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HRSA’s Essential Elements
• Other Services• Compliance with Law• Contract Pharmacy Reporting
Quarterly billing statements,
status reports of collections and receiving and dispensing records.
Consider role of 340B Processor.
26
HRSA’s Essential Elements
• Tracking System/Verify Patient Eligibility The Covered Entity is “ultimately responsible” for 340B
compliance.
• Medicaid Duplicate Discounts Prohibited
27
HRSA’s Essential Elements
• Covered Entity Independent Audits• HRSA and Manufacturer Audits• Contract Available to OPA
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Key Legal Compliance Concerns
• Contract Pharmacy Compliance Concerns• Diversion• Duplicate Discounts – CE’s contract pharmacy may not
dispense drugs purchased at 340B price to Medicaid FFSpatients unless the contract pharmacy has established “an arrangement” to prevent duplicate discounts
• Orphan Drugs
29
Key Legal Compliance Concerns
• Anti-Kickback Law Prohibits the exchange (or offer to exchange) of anything of
value, in an effort to induce (or reward) the referral of federal health care program business (e.g., Medicare and Medicaid patients)
• Federal and State Privacy• Change of Law
30
Operational and Financial Considerations
• Replenishment• What is the timing and process?
• Periodic “True-Up”• Discontinued NDCs• Slow Moving Drugs
• Formulary• All-in or are there
carve-outs?
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31
Operational and Financial Considerations
• Third Party Reimbursement and Co-Payments• Dispensing Fees
• Should result in a “win-win” for both the contract pharmacy and the Covered Entity
• Reports from the Covered Entity
32
Contract Pharmacy Agreement Checklist
Are all of HRSA’s essential elements covered by the contract pharmacy services Agreement?
Do the operational procedures set forth in the contract pharmacy services agreement accurately reflect the actual arrangement?
Can the contract pharmacy adopt the operational procedures with minimal impact on the pharmacy’s standard workflow and drug inventory management?
33
Operational and Financial Considerations
• Designation of Wholesaler• Third-Party Payor Clawbacks• Retroactive Classification• Ability to Suspend Services
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34
Common Pitfalls and Challenges
Successful Contract Pharmacy arrangements depend on Open lines of communication: e.g., periodic
checkpoints, meetings and phone calls among participants
Clear escalation process to address problems Clear understanding of program operations Collaboration to ensure win-win program
Common pitfalls: Not understanding cost of doing business Lack of financial and accounting systems to support
340B program Not tracking inventory accumulation and
replenishment Not understanding criteria used to “carve-in” 340B
eligible claims, inability to access data used to establish eligibility and carve-in
35
Contract Pharmacy Agreement Checklist
Are the contract pharmacy’s responsibilities under the contract pharmacy services agreement appropriate (e.g., the contract pharmacy should not be responsible for preventing diversion if it is “blind” as to which patients are 340B eligible)?
Has the contract pharmacy conducted any due diligence on the proposed 340B Administrator? Does the 340B Administrator have a reputation for dealing with contract pharmacies fairly and providing good customer service?
Will the contract pharmacy, Covered Entity, and 340B Administrator establish a team with representatives from each party that will meet regularly to review various aspects of the contract pharmacy arrangement?
Contract Pharmacy Best Practices
• Conveniently located and have operating hours that are convenient to Covered Entity.
• Employees who can communicate in patient’s preferred language• Ability to distribute drug information in patient languages
Location&
Capability
• Have sufficient inventory of drugs used by the Covered Entity • Maintain sufficient supply of over-the-counter (OTC) drugs and
medical supplies • Possess the ability to order special items on request
Inventory
• Possess ability to participate in the various insurance plans of the Covered Entity’s patients
• Be able to carve-out certain claims from third party payornetworks as directed by the Covered Entity
3rd Party payor
networks
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Contract Pharmacy Best Practices
• Participate in Covered Entity patient education guidelines• Have the ability to share medication compliance information • Be properly staffed to provide these services, if required
Care management
initiatives
• Comply with all Covered Entity policies and procedures related to their 340B program.
• Ensure no diversion of drugs bought by the Covered Entity• Work with Medicaid to remove potential duplicate discount/rebates
Program compliance
• Regularly schedule meetings between contract pharmacy(ies) and Covered Entity management
• Continuously seek to improve continuity of care as it relates to Covered Entity and patient access to the 340B program
Coordination
Contract PharmacyCritical Success Items
Cost toDispense
Compensation
Know 3rd
Party PayorAgreements
VirtualReplenishment
WorkingCapital
True-uptiming &
rate
Impact on WholesalerAgreements
New patientsv. existing patients
PBM audit protection
NCPDP 340B Flag
Requirement
39
Resources: Where to Go for Help
Apexus (340B Prime Vendor)[email protected](888)340-2787
HRSA’s Office of Pharmacy Affairs (OPA)http://www.hrsa.gov/opa
Health Resources and Services Administration (HRSA)http://www.hrsa.gov (800) 628-6297
Safety Net Hospitals for Pharmaceutical Access (SNHPA)http://www.safetynetrx.org/(202) 552-5850
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Thank You!
For More InformationAlan J. Arville
Epstein Becker Green
1227 25th Street, NW
Washington, DC 20037
202.861.1805
Robert Judge
Catamaran
1600 McConnor Parkway
Schaumburg, IL 60173‐6801
(971)302‐7140