Download - HRSA 340B Mega-Guidance
Presented by
HRSA 340B Mega-GuidanceHow We Got Here + What's Next
Disclaimer
The information contained in this presentation is forinformational purposes only. It should not be construed orrelied upon as legal advice.
101: Acronyms and Relationships
HRSAHealth Resources and Services Administration
Responsible for oversight of the 340B Program
OPAOffice of Pharmacy AffairsDepartment within HRSA
Responsible for administration of the 340B Program
OMBOffice of Management and BudgetAssists in the preparation of the federal budget and supervisesbudget administration in executive branch agencies
Responsible to review and approve HRSA mega-guidance draft
101: Legislative Rules
Non-Legislative Rules
Statutory laws enacted by Congress don't often include enough detailed guidance to carry out thelaw. Therefore government agencies issue "rules" to provide this clarity. HRSA's explicit authoritythrough the law to enact legislative rules as opposed to non-legislative rules has been an ongoingdebate.
What's the difference?
Interprets statute and indicatesenforcement directions
Not binding on courts but difficultto challenge
Legislative Rules
May create new rights and/orobligations
Binding and very difficult tooverturn via a court challenge
101: HRSA Explicit Authority
So what explicit authority does HRSA have to enact legislative rules withregard to the 340B program? Until the enactment of the Affordable Care Act(ACA) in 2013 the answer was none. However, with the ACA HRSA wasprovided with the explicit authority to implement three new provisions.
Establish anadministrative disputeprocess for claims bymanufacturers andcovered entities
Issuance of preciselydefined standards ofmethodology forcalculating ceiling prices
Establish standards for theimposition of monetary civilsanctions applicable toparticipating manufacturers
HRSA still has considerable authority over the 340B program through theissuance of non-legislative rules. They are enforcing these rules throughsteadily increasing auditing of hospital covered entities.
HRSA publishesOrphan DrugRegulation,expanding use of340B program fororphan drugs
Jul 2013
PhRMA files lawsuitagainst OrphanDrug Regulationciting HRSA's lackof authority
Sep 2013
HRSA announces itwill release formalstatutory rules -referred to as the"mega-reg"
Jan 2014
Federal judge voidsOrphan Drug regciting HRSA's lackof authority to issuelegislative rules
May 2014
HRSA changescourse announcing aforthcoming "mega-guidance" ratherthan legislative rules
Nov 2014
HRSA submitsmega-guidance toOMB for review
May 2015
The "mega-guidance" actually began as a "mega-reg." The difference? The "mega-reg" HRSAannounced in January 2014 was to be a series of legislative rules. HRSA later changed course and inNovember announced they would issue a series of non-legislative rules with legislative rules only in theareas where they have explicit authority through the ACA.
Mega-Guidance History
HRSA stands byOrphan Druginterpretation;PhRMA files briefasking judge toinvalidate rule
Jun 2014
Judge enters finaljudgement denyingPhRMA's request toinvalidate rule;HRSA continues toaudit based onthe regulation
Aug 2014
Now that HRSA has submitted themega-guidance to the OMB, whathappens next?
What's Next?
May 6, 2015HRSA submittedmega-guidanceto OMB
The OMB now has90 days to reviewthe mega-guidanceand will ask for moretime or...
90 DaysOPTION
01Reject the guidance andreturn to HRSA forrevision
OPTION
02Approve guidance andsend to the FederalRegister
Process Restarts
60DAYS
Guidance is madepublic and open for
comment for 60 days
HRSA will reviewcomments and
revise theguidance
OPTION
01Make minor changes
OPTION
02Process Restarts
Make major changes
Final Published
Through previous guidance, current audit practices and other HRSA communications manyindustry experts believe the following categories are likely to be addressed in the mega-guidance. This is not for certain but informed predictions.
Expected Guidance
Hospital eligibility for private hospitals
Types of patients that can use 340B drugs
Use of 340B prior to admission
Qualifying prescriptions
Patient definition
Physician administered drugs
Medicaid
Contract pharmacies
Reporting and record keeping requirements
The following slides will provide and overview of each of the above bullets.
Currently private hospitals must have a "contract with a State or local government toprovide health care services to low income individuals who are not entitled to benefitsunder [Medicare] or eligible for assistance under [Medicaid]" in order to be eligible forthe 340B program.
The mega-guidance may propose a specific amount of care provided under thesecontracts in order to qualify as a 340B entity.
Eligibility for Private Hospitals
If you are a private hospital qualifying for 340Bthrough this provision, consider doing the following:
Review current contracts, identify any measures ofamount of care required to be providedEvaluate amount of charity care, bad debt, financialassistance provided compared to revenue and anycontractual obligations
The 340B program only applies to outpatients. However, it's not uncommon for anoutpatient to transition to inpatient care. In that scenario 340B drugs can be used for apatient up until the time of admission. Additional stipulations and/or clarification aroundthe eligibility of these patients is likely in the mega-guidance. Potential changes couldbe the following:
Use of 340B Prior to Admission
Drugs administered to an outpatient but billed as a portion of an inpatientservice per the payer's billing rule may be excluded (i.e. Medicare 72-hourrule, observation days)
Only drugs used for a service that is billed as outpatient may qualify
Estimate financial impact on your hospital of eliminatingthese drugs from the 340B program. Evaluate ability ofcurrent billing system and operational processes toisolate these scenarios
Today discharge prescriptions written in connection with an inpatient stay are eligible for340B pricing when they are billed and used on an outpatient basis.
A potential change may be that only drugs written in connection with an outpatientservice can be included.
Also, the mega-guidance may require qualifying drugs to be both separately billed andseparately paid. For example, a flu vaccine bundled with an office visit may no longerqualify.
Qualifying Prescriptions
Under the current 340B program, patients who qualify for the program must meet all ofthe following criteria:
Patient Definition: Current Guidance
Source: healthaffairs.org
The covered entity has anestablished relationshipwith the individual andmaintains medical recordsof the individual's care
Individual receives healthcare services from aprovider that is eitheremployed or contractedwith the covered entity orreferred through thecovered entity; howeverthe covered entitymaintains responsibility forthe care
The individual receives ahealth care service that isconsistent with the servicesfor which grant funding orfederally qualified healthcenter look-alike status hasbeen provided to the entity(Not applicable todisproportionate-sharehospitals)
What patients qualify for 340B drugs is another likely area for clarification and change.Currently 340B drug pricing can be utilized for a prescription written during a visit to aparticipating hospital or registered offsite location. Additionally, prescriptions written inconnection with documented referrals qualify.
Patient Definition
It may no longer be enough for a hospital to be a part of the continuumof care but rather must be responsible for the care relating to theprescription.
Previously proposed language added the requirement the patient musthave an in-person clinical or medical visit and receive a prescription asa result of that visit from a 340B covered entity.
The "Morford letter" stated 340B drugs could be used for drugs prescribedoutside of a covered entity but proximate in type and time to a qualifyingencounter. HRSA has stated this was not a guidance but in response to aspecific situation. HRSA is enforcing this stance through audits.
If a patient receives an order for a physician-administered drug from a non-qualifyinghospital but the drug is administered by a 340B entity the covered entity can utilize340B drugs for this service.
Under the mega-guidance 340B pricing could potentially be limited to only drugsordered by a provider of a 340B entity.
Physician Administered Drugs
States are prohibited from receiving rebates on 340B Medicaid managed care drugs.However, the methodology for states to identify these drugs is unclear.
A potential new requirements may be to require hospitals to identify retail 340BMedicaid managed care drugs at point of service. This could potentially be required byusing the NCPDP standard or a claim modifier. HRSA may be required to share 340Bceiling pricing with state Medicaid agencies.
The identification of 340B drugs at point of service could be challenging for contractpharmacies utilizing virtual inventory.
Medicaid Managed Care
HRSA initially allowed the use of a single contract pharmacy for the distribution of 340Bdrugs in 1996 for covered entities without an on-site pharmacy. In 2010 HRSA issuednew guidance that removed the requirement stipulating the covered entity did not havean on-site pharmacy and made allowance for more than one contract pharmacy. Sincethen, the number of contract pharmacies has grown significantly.
Potential changes to the use of contract pharmacies may be:
Contract Pharmacy
Requirement for the covered entity to conduct an annual, independentaudit of each contract pharmacy. HRSA has communicated a contractpharmacy audit is expected although there are no rules today.
Potential limit on the number of contract pharmacies and/or thedistance of the pharmacy from the covered entity
Requirement that the contract pharmacy provide the drug at adiscounted price to the uninsured patient
Potentially require contract pharmacies track the income and amountpaid by the patient for 340B drugs
The mega-guidance could require hospitals to report on how they are utilizing their340B savings.
Additional reports could also include:
Reporting Requirements
Payer mix
Aggregate reimbursement received for 340B drugs
Aggregate amount spent on 340B drugs
How duplicate discounts are prevented
Number of outpatient drugs dispensed through contract pharmacy
Amount and/or percentage of uncompensated care provided
Name of any third-party vendors
Again, what will be covered in the mega-guidance is uncertain. The following are a fewmore areas where HRSA may issue proposed guidance:
Additional Potential Guidance
Program intent
Enforcement/Audits
User fees
HRSA's regulatory authority
Correctional facility eligibility
Manufacturer requirements
Uninsured patients
We are still months, possibly years from the finalization of the HRSA mega-guidance. The current draft submitted to the OMB on May 6, 2015 will be made public onceapproved. The 90-day review period ends in early August although it's possible theOMB may approve and publish in advance or after that deadline.
Participating hospitals should remain very committed to compliance to the existingrules. Enforcement through HRSA audits of the new rules will not apply to claimsoccurring prior to the finalization date. However, hospitals should begin evaluatingsystem capabilities and processes that would be impacted by the mega-guidance assoon as possible.
Conclusion
PSG has a 20-year legacy of offering products and services to hospitalsacross the country.
We offer highly compliant, customized 340B solutions for: - Contract pharmacy - Split-billing - Uninsured patient programs.
About PSG
800.687.4404www.psg340b.com