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) Owned or operated by a unit of State or Local government … OR

b) public or private non-profit corporation which is formally granted governmental powers by a unit of State or local government … OR

c) 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

Section 1886(d)(1)(B)) of the SSA

4 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.

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 eligibleregardless of payor type or income level

340B Overview: Key References

Topic

OPA/HRSA Reference SNHPA Reference

Patient Definition http://www.hrsa.gov/opa/patientdefinition.htm

http://www.hrsa.gov/opa/patientdefinition.htm

Own Use http://www.hrsa.gov/opa/frn011207va.htm (see example #4)

Prime Vendor Response: https://www.340bpvp.com/public/faq/faq_general.asp#Q18

Provider Based Designation

http://www.hrsa.gov/opa/frn011207va.htm (see example #3)

http://www.phpcrx.org/public/documents/pdfs/key_pharm_terms.pdf (see “Provider Based Regulations”)

Contract Pharmacy http://edocket.access.gpo.gov/2010/pdf/2010-4755.pdf (see Section C, page 10277) http://www.hrsa.gov/opa/contractedmodel.htm

http://www.phpcrx.org/public/documents/pdfs/key_pharm_terms.pdf (see “Contract Pharmacy”)

Hospital Participation Criteria

http://www.hrsa.gov/opa/dsh.htm http://www.phpcrx.org/public/340b_eligibility.cfm

PBM http://www.hrsa.gov/opa/glossary.htm http://www.phpcrx.org/public/documents/word/key_pharm_terms.doc

Diversion http://edocket.access.gpo.gov/2010/pdf/2010-4755.pdf 1st column page 10273

http://edocket.access.gpo.gov/2010/pdf/2010-4755.pdf 1st column page 10273

Duplicate Discounts http://www.hrsa.gov/opa/medicaidexcl usion.htm

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% additionaldiscount

between retailand 340B

Benefits of Participating in 340B Program

20% additionaldiscount

between GPOand 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 Annual Projection

$122,200Annual Projection

CAHProvider based

$1,665 $3,780

$86,580 Annual Projection

$196,560 Annual Projection

Questions

Thank You