CPAs and ADVISORS...Approximately 950 CPAs Serving clients for 90+ years $450 million in revenues...
Transcript of CPAs and ADVISORS...Approximately 950 CPAs Serving clients for 90+ years $450 million in revenues...
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CPAs and ADVISORS
340B PROGRAM OVERVIEW AND COMPLIANCE ENVIRONMENT
MICHAEL R. EARLS, CPADIRECTOR
BKD, LLP BREADTH & DEPTH OF RESOURCES
National CPA & advisory firm
Approximately 2,250 total personnel
Approximately 260 partners
Approximately 950 CPAs
Serving clients for 90+ years
$450 million in revenues
Health care is BKD’s largest industry
3,200+ health care provider clients nationwide, with 275 CPAs serving those health care providers
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MATERIALS COVERED TODAY
340B Program Evolution, Purpose & Benefits
HRSA & Manufacturer Audits
Compliance Environment
340B: Seven Key Compliance Areas
Preparation for Audits & Findings
340B Program Challenges
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THE EVOLUTION OF 340B
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340B was started with the Public
Health Services Act
Guidance on outpatient
clinics released by
HRSA
Audit guidelines established.
Patient definition clarified.
Contract pharmacy process established.
Medicaid duplicate discount
prohibition
HRSA guidance on contract pharmacies allowing
multiple relationships.ACA expands eligibility to
include 5 new entities
Orphan drug
exclusion
HRSA begins audits
GPO prohibition guidance
HRSA issues final rule on orphan drug
exclusion
1992 1994 1996 2000 2010 2011 2012 2013 2014
Orphan Drug final rule vacated, HRSA issues Interpretive
rule & PhRMA files suit again
340B PROGRAM OVERVIEW – PURPOSE
Provides discounts on outpatient drugs purchased by “safety net” providers for eligible patients
Average savings of 25 - 50% for eligible covered entities on outpatient drugs
Savings can be used to:
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Provide discounts on
drugs to patients
Expand services by provider to
patients
Provide services to more patients
THE BENEFITS OF 340B
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-Access to affordable medications
-Better quality of life
-Improved clinical outcomes through access to services
-Drug cost savings
-Mission fulfillment
-Outcome optimization
-Care for all community members
-Local access to medical services
-Jobs
340B
Patient
Covered Entities
Community
340B PROGRAM – COVERED ENTITIES
Health Centers
Federally qualified health centers
Federally qualified health center look-alikes
Ryan White HIV/AIDS Program grantees
Comprehensive Hemophilia Diagnostic Treatment Centers
Title X Family Planning clinics
Sexually transmitted disease clinics
Disproportionate Share/Critical Access Hospital,
Sole Community Hospital, Rural Referral Center,
Children’s Hospital, Free Standing Cancer Hospital
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ELIGIBILITY AFTER ACA (AFFORDABLE CARE ACT)
The Patient Protection and Affordable Care Act (PPACA or ACA) changed eligibility and the 340B Program reach:
Office of Pharmacy Affairs (OPA) can address discrepancies in pricing
Larger 340B discounts through increased Medicaid rebate percentages
New integrity provisions for both manufacturers and covered entities
Increased price transparency, new dispute resolution processes and civil penalties for diversion.
Several new entities now eligible:
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Disproportionate Share Hospitals
Pediatric Hospitals
Cancer CentersCritical Access
HospitalsRural Referral
Centers
Sole Community
Hospitals
340B PROGRAM – CONTRACT PHARMACY ARRANGEMENTS
Retail pharmacies contracted for “Bill To - Ship To” arrangement
Multiple contract pharmacy guidelines went into effect April 5, 2010
Significant opportunity to expand Rx access
New compliance challenges, including “expectation of” annual independent audits
Covered entities remain responsible for 340Bcompliance for contract pharmacy transactions
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HRSA and Manufacturer Compliance
Activities
340B CONTINUUM
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EDUCATION
1992
EXPANSION
2000
COMPLIANCE
2015
COMPLIANCE ENVIRONMENT – HRSA AUDITS: 275+ COMPLETED
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•All 51 now publicly available & final•26 have public letters to manufacturers•Only 18 had no adverse findings
2012 –51 audits
• 75 now publicly available
• 44 have sanctions of repayment to manufacturers
• Only 21 had no adverse findings
2013 –94 audits
• 18 now publicly available
• 7 have sanctions of repayments to manufacturers
• Only 9 had no adverse findings
2014 –99 audits
0% 10% 20% 30% 40% 50%
Incorrect Database Records
Billing Contrary to the Medicaid Exclusion File
Dispensed Drugs to Ineligible Individuals
Contract Pharmacy Oversight
41%
39%
24%
2%
Audit Results for Non-Hospitals – Through 2014 Audit Results
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Source: Review of Published Audit Results on HRSA website
COMPLIANCE HRSA – AUDIT RESPONSES
Covered Entities: Agree with findings & implement corrective action planChallenge findings
Challenge findings successfullyAddress in the preliminary reportIn final report – implement corrective action plan
Expectation of Corrective Action PlanWhen diversion & duplicate discount findings occur – entity required to specify timelines & resolution processes
No final judicial reviews have been made public
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Manufacturer Audits
MANUFACTURER AUDITS
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Manufacturer Audit Guidelines
May only conduct after showing of
“reasonable cause”
Manufacturer inquiries to covered
entity may help support
“reasonable cause”
Important for covered entities to respond to
manufacturer inquiries, failure to
respond could result in audit
Details are not publicly available
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Compliance Environment
COMPLIANCE ENVIRONMENT – BRIEF HISTORY
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March 2010
PPACA requires GAO study on use & oversight of 340B Program
September 2011
GAO issues report, oversight is lacking
Covered entities are effectively using the Program
Need for clearer guidance evident (specifically regarding definition of patient)
October 2011
HRSA OPA issues response to Senator Grassley’s concerns, similar to GAO report - indicates audits will begin in 2012
March 2012
Policy release describing audits
Expansion of covered entities & appeal of contract pharmacy grows attention to the Program
COMPLIANCE ENVIRONMENT – BRIEF HISTORY
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September 2012
Senator Grassley letter to Duke University Health System questioning use of savings from 340B Program
February 2014
OIG report over Contract Pharmacy Arrangements
June 2014
HRSA announces $6 Million investment in integrity initiatives
July 2014
HRSA issues interpretive rule for Orphan Drug Exclusion
October 2014
HRSA Grantee site visits will inquire about compliance
February 2015
Mega-Guidance is expected in June 2015
SEVEN ELEMENTS OF AN EFFECTIVE COMPLIANCE PROGRAM
1. Developing written Policies & Procedures
2. Designating a Compliance Officer & Committee
3. Conducting Effective Training
4. Developing Effective Lines of Communication
5. Enforcing Standards through well publicized Disciplinary Guidelines
6. Performing audits & monitoring risk areas
7. Responding to detected offenses & developing Corrective Action Initiatives
Sources: OIG Hospital Compliance Guide – February 13, 1998
OIG Supplemental Compliance Guidance- January 31, 2005
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SEVEN KEY COMPLIANCE AREAS
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Eligibility
Registration
Diversion
Duplicate
Discounts
Contract
Pharmacy
Group
Purchasing
Organization
Orphan
Drugs
WHAT ARE YOUR TOP RISKS RELATED TO 340B?
Do you know what your top risks are?
Do your risks include all your registered sites, contracting pharmacies, etc.?
How do you plan to minimize these risks?
How will these risks be identified?
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COMPLIANCE – ELIGIBILITY
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Automatic Eligibility
• Owned and operated by state or local government
• Formally granted governmental powers
• Or a private (non-profit hospital) under contract with state or local government
• Health centers & specialized clinics
• A critical access hospital
Disproportionate share hospital -meeting a DSH percentage
• 8% if sole community or rural referral center
• 11.75% for all other hospitals, including free-standing children’s hospitals & cancer hospitals
COMPLIANCE – REGISTRATION
Registration
Covered entity must register with HRSA
Each eligible entity location that plans to use 340B drugs (clinic or offsite outpatient department) must be separately registered
Information should be collected by the authorizing official during the annual recertification process
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COMPLIANCE – REGISTRATION
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Recertification process for all covered entity types is required annually or covered entity will be removed from the Program
Authorizing official must attest to eight statements
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COMPLIANCE – RECERTIFICATION PROCESS
1. All information listed on the 340B Program database for the covered entity is complete, accurate & correct;
2. The covered entity meets all 340B Program eligibility requirements…
3. The covered entity is complying with all requirements & restrictions of Section 340B of the Public Health Service Act…
IS YOUR AUTHORIZING OFFICIAL READY TO ATTEST TO THESE 3 QEUSTIONS?
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COMPLIANCE – DIVERSION
Diversion
Drugs can only be used on an outpatient basis for covered entity’s patients as defined by HRSA
Use for other individuals constitutes prohibited diversion
Focus on defining “patient” & “covered entity”
What is “covered entity”?Where services are provided
Physicians must be employed or under a contractual or other arrangement
Entity should have a listing of approved 340B physicians
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COMPLIANCE – DIVERSION
Most recent definition of “patient”―1996
Other areas of Diversion
340B drugs given to patients not meeting criteria for health center status
Prohibits resale or transfer of drugs purchased at 340B to person who is not a patient of covered entity
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Entity must maintain responsibility for
individuals care via relationship with
health professional
Must maintain patient health care
records
COMPLIANCE – DUPLICATE DISCOUNTS
Duplicate discounts
340B laws prohibit application of both 340B price discount (front end) and payment of pharmacy rebate to state Medicaid (back end) on same drug claim
General options for covered entities
Carve-out Medicaid - from 340B drug purchases
Carve-in Medicaid - requires verifying Medicaid exclusion file is accurate
What about Medicaid managed care or other state programs with Title XIX funding?
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COMPLIANCE – DUPLICATE DISCOUNTS
Medicaid duplicate discount
Some states have been slow to establish and communicate Medicaid billing requirements and potential modifiers
Transition to Medicaid managed care has created confusion
Contract pharmacies should not “Carve-in” unless arrangement with state Medicaid exists
Recommendation – Engage in ongoing dialogue with Medicaid pharmacy directors of the states where you file claims―a “win-win” solution may be available
THE RESPONSIBILITY FOR AVOIDING DUPLICATE DISCOUNTS IS ON THE COVERED ENTITY!!
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COMPLIANCE – CONTRACT PHARMACY
Contract Pharmacy
HRSA allows providers to enter into
arrangements with multiple contract
pharmacies to dispense 340B drugs to
qualifying patients of providers
Covered entity is responsible for compliance &
must monitor contract pharmacies
HRSA recommends independent audits
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COMPLIANCE REPORT – CONTRACT PHARMACY
OIG on Contract Pharmacy Arrangements in the 340B Program
February 2014 – Memorandum Report:
Contract Pharmacy Arrangements in 340B Program, OEI-05-013-00431
Report stated that it “creates complications” in preventing diversion &
duplicate discounts
Report noted that some covered entities do not:
1. Offer 340B discounts to uninsured patients at their
contracted pharmacies
2. Provide sufficient oversight of contract pharmacies
3. Many do not engage outside independent auditors to review them
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A Closer Look at OIG Report and Contract Pharmacy
Complications
SCENARIO 1: NONEXCLUSIVE PHYSICIAN
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A physician practices part time at a covered entity, but also has a private practice. The
physician first sees an individual at the covered entity. On a separate occasion, the
physician sees the same individual at the private practice & writes a prescription for
the individual. The individual fills the prescription at the covered entity's contract
pharmacy.
SCENARIO 2: TIME LIMIT AFTER PATIENT’S VISIT
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A physician sees an individual at a covered entity & writes a prescription for the
individual. Four months after filling the original prescription, the individual refills the prescription at the covered entity's contract pharmacy. The individual is not seen at the
covered entity during those 4 months.
SCENARIO 3: PRESCRIPTION FROM A REFERRED PHYSICIAN
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A physician sees an individual at a covered entity & refers the individual to a specialist
who is not affiliated with the covered entity. The specialist writes a prescription for the
individual, & the individual fills the prescription at the covered entity's
contract pharmacy.
SCENARIO 4: MATCHING PRESCRIPTION TO CLINICAL INFORMATION
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A physician sees an individual at a covered entity for chest pain & writes the individual a prescription for a blood pressure medication (related to the chest pain). During that visit,
the physician also writes the individual a prescription for a sleep medication (related
to a previously diagnosed condition).
OIG interviewed 30 covered entities and eight administrators with 199 unique contract pharmacies relationships
For each scenario there was not a clear consensus of the proper handling
How do you define your provider list?
Do you have a time restriction?
Do you match to clinical information?
How do you handle referrals?
Do you have visiting specialists?
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RISK ASSESSMENT STRATEGIES
Frame of Mind
Take off the gloves & be brutally honest
Be open minded
Make any issue, area or department fair game
Rules of Engagement
“Brainstorm” vs. “Brainstrain”
Don’t debate the issue
Look at “who”, “what”, “when” & “where” & forget the “why”
Don’t rank the issues at this time
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COMPLIANCE – CONSEQUENCES OF NOT COMPLYING
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Repayment of discount to
manufacturer
Suspension from
340B Program
Possible Civil Monetary Penalties
for knowing & intentional violations
Potentially false claim liability
(ripe for qui tam actions?)
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Audit Preparation and Findings
HRSA – AUDIT PROCESS
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Audit noticeCoordination
callData request Audit fieldwork
Exit conference Follow upPreliminary
reportFinal Report
Final determination
by HRSAJudicial review
PREPARATION FOR AUDITS
Based on common findings from HRSA audits, being prepared
is critical
Recommended to perform internal review procedures throughout
the year (there are sample audit guides available, including from
APEXUS)
Is an internal review enough? Covered entities should consider
independent mock reviews performed by independent third party
New compliance challenges, including “expectation of” annual
independent audits, especially surrounding contract pharmacy
relationships
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PREPARATION FOR AUDITS – EXAMPLE OF INTERNAL PROCEDURE
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• Finance, Pharmacy Director, Purchasing Coordinator & Administration
Interview personnel involved in 340B
Program processes and procedures
• Obtain data policies for any vendor software
• Obtain copies of all 340B contracts with pharmacies &/or other 340B service providers
Gather all policies and procedures related to 340B
PREPARATION FOR AUDITS – EXAMPLE OF INTERNAL PROCEDURE
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• Medicaid (including Medicaid managed care) for 340B drugs
• Point of contact with State Medicaid agency
• Could represent multiple states and Medicaid contracts
Obtain all Medicaid ID numbers, provider
numbers & NPIs for all entity sites billing
• Review National Drug Code (NDC) used for OP drugs
Review decision for purchasing orphan drugs
& verify accuracy on 340B database
• Select sample based on high-cost drugs, Medicaid transactions & Orphan drugs
• Include each 340B service area (main pharmacy, outpatient clinics, contract pharmacy, retail pharmacy, etc.)
Obtain population of all 340B dispensations for a specified period of time
(typically six months)
PREPARATION FOR AUDITS – EXAMPLE OF INTERNAL PROCEDURE
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• Review of GPO purchases & exclusion of 340B drugs if applicable
Inventory disposition reconciliation from beginning of sample time frame to end
of sample time frame
• Additional procedures should be developed around contract pharmacy relationships
Contract Pharmacy
• Who internally should perform this self-monitoring?
• Is internal review enough based on expectation of independent audits?
Internal Reviews
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340B Compliance Issues Found During
BKD Reviews
BKD REVIEW FINDINGS
Overall similar to HRSA audit findings
Contract Pharmacy
Diversion
Duplicate Discounts
Registration
Program Compliance
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BKD & HRSA AUDIT FINDINGS
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• Pharmacy incorrectly registered as child site entity was shipping 340B drugs to a pharmacy not listed on the 340B database
• Registered contact pharmacies without written contract in place
Contract Pharmacy
• 340B drugs dispensed to inpatients
• 340B drugs dispensed for prescriptions written at ineligible sites
• 340B drugs dispensed for prescription written at ineligible site by ineligible provider
• 340B drugs dispensed to non-patient at contract pharmacy
Diversion
BKD & HRSA AUDIT FINDINGS (CONT’D)
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• 340B drugs dispensed to Medicaid patients by contract pharmacy, absent arrangement to prevent duplicate discounts
• Entity billed Medicaid for a patient at a contract pharmacy contrary to information contained in the Medicaid Exclusion File
• Entity was billing Medicaid contrary to information included in the Medicaid Exclusion File
Duplicate Discounts
BKD & HRSA AUDIT FINDINGS (CONT’D)
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• Incorrect entries for primary location & contact information
• Closed outpatient facilities remained registered on the 340B database
• Incorrect name listed for an outpatient facility
• Outpatient facility of the hospital was not listed on the 340B database
• Entity was using a contract pharmacy not listed on the 340B database even though there was a written contract in place.
• Incorrect 340B database record – Incorrect authorizing official
Registration
BKD & HRSA AUDIT FINDINGS (CONT’D)
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• Internal monitoring & audit procedures for 340B Program are not completed or followed
• Inadequate documentation from contract pharmacy to produce a report detailing dispensations to agree with the contract pharmacy accumulator
• Listing of eligible providers provided to contract pharmacy included all medical professionals who have credentials with the hospital rather than those with contracts
• Physicians not included on the listing of approved 340B physicians employed, under contractual or other arrangement
Compliance
340B PROGRAM CHALLENGES – EXTERNAL INFLUENCES
Congressional intent of the ProgramDebated by some members of Congress
Several hospitals have been challenged to respond on use of funds generated from Program savings
Monitoring this issue in Congress is important
Will Medicare want a part of savings?
Several groups are lobbying to limit providers eligible for the Program
Drug manufacturers
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340B PROGRAM CHALLENGES – INTERNAL RESPONSES
Strategy: 340B Compliance Plan for Outpatient, Mixed-Use & Contract Pharmacy programs
Demonstrates good-faith commitment to compliance
Increases likelihood of identifying & correcting mistakes
Includes multiple aspects of the Program & process for responding to concerns identified
Strategy: Reconsideration of provider-based physicians
Eligible to extend 340B savings to provider-based physicians
Strategy: Publicize benefits as a result of your 340B Program
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340B COMPLIANCE SUMMARY
Compliance risks are a reality to be monitored closely
340B Program & related multiple contract pharmacy
relationships can be very beneficial but complicated
to ensure compliance
Regardless of 340B Program administrator selected,
make sure covered entity is comfortable with definitions &
policies applied to Program
Critical to stay abreast of communications
Mega-guidance to come
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RESOURCES
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Resource Description
HRSA OPA HRSA Office of Pharmacy Affairs homepage http://www.hrsa.gov/opa/index.html
About 340B Program Audits of Covered Entity
HRSA Program Integrity Page http://www.hrsa.gov/opa/programintegrity/auditscopeandprocess.html
Policy Releases HRSA Policy releases regarding the 340B Drug Pricing Program http://www.hrsa.gov/opa/programrequirements/policyreleases/index.html
OPA FAQs HRSA Office of Pharmacy Affairs Frequently Asked Questions (FAQs) http://www.hrsa.gov/opa/faqs/index.html
HRSA 340B Peer-to-Peer Webinars
Register for upcoming 340B Peer-to-Peer Webinars and listen to past webinars http://www.hrsa.gov/opa/peertopeer/webinars.html
340B Prime Vendor Program
Call Center Phone: 1-888-340-2787 [email protected] Web: www.340bpvp.com
340B Prime Vendor Program FAQs
Prime Vendor Program Frequently Asked Questions (FAQs) https://www.340bpvp.com/resource-center/faqs/
THANK YOU
FOR MORE INFORMATION // For a complete list of our offices and
subsidiaries, visit bkd.com or contact:
Michael R. Earls // [email protected] // 260.460.4068