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PARTNERSHIP HEALTHPLAN OF CALIFORNIA

340B ADVISORY COMMITTEE ~ MEETING NOTICE

Members: Darcie Antle (Interim Chair)

Roger Clarkson

Viola Lujan

Kathryn Powell

Amir Khoyi, PharmD

C. Dean Germano

Julie Johnston

PHC Staff: Elizabeth Gibboney, CEO Michelle Rollins, Associate Director of Regulatory Affairs

Robert L. Moore, MD, MPH, CMO Gary Louie, PharmD, Pharmacy Services Director

Patti McFarland, CFO Dina Haynes, CPhT, Associate Director, Pharmacy Operations

Margaret Kisliuk, Northern Executive Director Dawn R. Cook, Pharmacy Services Program Manager

cc: Sonja Bjork, COO, PHC

FROM: Dawn R. Cook

DATE: February 24, 2016 (updated)

SUBJECT: 340B ADVISORY COMMITTEE MEETING The 340B Advisory Committee will meet as follows and will continue to meet once per calendar quarter. Please review

the Meeting Agenda and attached packet, as discussion time is limited.

DATE: Thursday, February 25, 2016 TIME: 2:00 p.m. – 3:30 p.m.

LOCATIONS: Video Conferencing

Partnership HealthPlan of CA

Solano Conference Room

4665 Business Center Drive

(Please Park in Front of Bldg.

Ask the receptionist to call Dawn R. Cook)

Fairfield, CA 94534

PHC Redding Office

(Ask for Susie)

3688 Avtech Parkway

Redding, CA 96002

PHC Santa Rosa Office

(Ask for Sheila)

495 Tesconi Circle

Santa Rosa, CA 95401

Please contact Dawn R. Cook at (707) 419-7979 or e-mail [email protected] if you are unable to attend.

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mailto:[email protected]

REGULAR MEETING OF

PARTNERSHIP HEALTHPLAN OF CALIFORNIA’S

340B ADVISORY COMMITTEE - MEETING AGENDA

Date: February 25, 2016 Time: 2 p.m. – 3:30 p.m. Location: PHC

PUBLIC COMMENTS Speaker 2 minutes

Speaker 2 minutes

Welcome / Introductions

Topic Lead Page # Time

I. Opening Comments Chair 2:04 pm

II. Approval of Minutes Chair 3-8 2:10 pm

III. Standing Agenda Items

1. Partnership HealthPlan of California (PHC) 340B Compliance

Program Update Dawn R. Cook 11-15 2:15 pm

IV. Old Business

1. Mega-Guidance Update Dawn R. Cook 16 2:22 pm

2. Finance Committee Review of Proposed Changes to 340B Compliance

Program Dawn R. Cook 17 2:25 pm

V. New Business

1. New Contract between PHC and 340B Clearinghouse (CaptureRx) –

ACTION ITEM

Robert L. Moore,

MD, MPH and

Dawn R. Cook

18 2:30 pm

2.

Overview of Proposed Changes to the 340B Pharmaceutical Program

Agreement(s) with 340B Participating Entities for 340B Compliance

Program – ACTION ITEM

Dawn R. Cook 19 2:57 pm

3. Pharma/State Rebates Robert L. Moore,

MD, MPH 20 3:25 pm

VI. Additional Items

1. Highlights of New Contract between PHC and 340B Clearinghouse

(CaptureRx) and Talking Points - Attachment Dawn R. Cook 24-25 N/A

2. Outline of Proposed Changes to the 340B Pharmaceutical Program

Agreement(s) and Talking Points - Attachment Dawn R. Cook 26-27 N/A

VII. Adjournment

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Minutes of the PHC 340B Advisory Committee Meeting dated November 18, 2015 Page 1 of 6

PARTNERSHIP HEALTHPLAN OF CALIFORNIA (PHC)

Minutes of the Meeting

PHC 340B Advisory Committee held at PHC Fairfield Office

4665 Business Center Drive, Fairfield, California 94534

Napa/Solano Room

November 18, 2015 – 12:00 to 1:30 p.m.

Commissioners Present / via Video Conference (VC):

Darcie Antle (Interim Chair); Viola Lujan; C. Dean Germano; Julie Johnston

PHC Staff Present:

Elizabeth Gibboney, CEO, Patti McFarland, CFO, Robert Moore, MD, MPH, CMO, Michelle Rollins, Gary Louie, PharmD,

Dina Haynes, CPhT, and Dawn R. Cook

Guests Present:

Lynn Bramwell (COO, CommuniCare Health Centers), Robin Affirme (CEO, CommuniCare Health Centers), Dolly Davar

(Pharmacy Manager, La Clinica De La Raza), Ed Sherman (Consulting Pharmacist, Community Medical Centers)

PUBLIC COMMENTS

None presented.

WELCOME/INTRODUCTION

Brief introductions were made.

AGENDA ITEM I – OPENING COMMENTS

None presented.

AGENDA ITEM II – APPROVAL OF MINUTES

The minutes from the 340B Advisory Committee Meeting on August 24, 2015 were approved.

AGENDA ITEM III – STANDING AGENDA ITEMS

PHC 340B Compliance Program Update—General Update:

Ms. Cook noted that as of 11/17/15, we have had 58 sites (14 entities) that have been on-boarded.

PHC is very close to piloting a program with entities using a non-CaptureRx Third Party Administrator (TPA) for their 340B

Program. All current 340B Participating Entities in the 340B Compliance Program use CaptureRx as their TPA.

With the Encounter Data Capture and Transmission (EDCT) changes completed, PHC submitted all the 34B Claims data from

November 2014 through May 2015 to the State in the new format, which was a state-wide requirement.

Invoices have successfully been sent to 10 of the 340B Participating Entities (henceforth referred to as “Entities”) that use the

Contract Pharmacy Agreement on a monthly basis. To date, 10 of the 340B Participating Entities are making monthly wire

transfers to the 340BX Trust Account based on the respective monthly invoice received.

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340B Quality Improvement Program (QIP) and Quality Withhold Repayments:

Ms. Cook noted PHC received the annual reports for the six (6) original 340B Entities that piloted the 340B Compliance

Program with Contract Pharmacies. The reports were reviewed by Dr. Moore. Once again, all entities received a 100 percent

per Dr. Moore’s review, and therefore received 100 percent of their 340B Quality Withhold.

The 340B QIP Quality Withhold Repayment checks were mailed on 11/1215. The total 340B QIP Quality Withhold repaid to

10 of the 340B Participating Entities for that quarter was $418,275.75.

Financial Summary:

Ms. Cook reviewed the financial information regarding the quarter from 4/1/15 to 6/30/15, as well as the financial information

from the beginning of the program, 6/1/14 to 6/30/15. For the 4/1/15 to 6/30/15, the Entity Savings were equal to

$1,259,419.39, the 340B Quality Withhold totaled $418,275.75, all of which was repaid to the 340B Participating Entitles, and

the 340B Compliance Fees totaled $79,258.50. With regard to the year-to-date, 6/1/14 to 6/30/15, the Entity Savings totaled

$4,786,228.71, the 340B Quality Withhold totaled $1,567,254.19 (all of which was repaid as all 340B Participating Entities

scored 1005), and the 340B Compliance Fees totaled $253,098.00.

Mr. Germano questioned why the newer Entities had such small figures. Ms. Cook provided clarification with regard to those

entities stating the first claims for those four (4) Entities were from May 2015. So, those four (4) Entities were smaller, but

they also happened to join the program later, so there were fewer claims reported.

Ms. Cook explained that COGS stood for Cost of Goods and Services. In response to a comment from Mr. Germano noting

the 340B Compliance Fee was pretty much a fixed fee divided by the number of participants with a multiple of the volume and

activity, Ms. Cook clarified that it was a per paid prescription claim. Mr. Germano asked if there was a maximum. Ms. Cook

clarified that there was a maximum amount for fees paid to CaptureRx, not the entities fees. Dr. Moore explained that PHC

had a clause that there would be a reevaluation of the 340B Compliance Fee depending on the number of Entities on-boarded

because PHC was not trying to make any extra money, but just trying to cover costs.

Ms. Cook reviewed the last slide which was the overall financial summary for the 340B Compliance Program to date. The

Entity Savings was $6,000,537.01. Mr. Germano pointed out $6 million is a significant dollar value and helped fill holes in

their budget. Ms. Cook noted the intent was to always get the savings back to the entities.

340B Compliance/Contracting Update:

As of 11/18/15, there were 273 340B Covered Entities (sites) within PHC’s 14 county service area that were eligible to

participate in the 340B Program. Of those sites, 58 had signed an Agreement with PHC, with 12 Contract Pharmacy

Agreements (43 sites) and 2 In-House Pharmacy Agreement (15 sites). There were 124 sites planning to sign an Agreement

with PHC, which would equate to 18 Contract Pharmacy Agreements and 10 In-House Pharmacy Agreements. This

information is based on Ms. Cook’s interactions with the 340B Covered Entities since April 2014. There were 22 sites refusing

to sign an Agreement with PHC, but PHC can touch base with them again after the outcome of the Mega-Guidance is known.

There were 56 sites that indicated they would not bill PHC for 340B medications in the future; these entities have never seen

the Agreements. There were three (3) sites that never responded to any communication from PHC. Of the sites planning to

sign an Agreement with PHC, the self-reported pharmacy arrangements were as follows: 43 Contract, 15 In-House, and 66

Both.

Ms. Johnston asked who the entity was with the non-Capture Rx TPA that PHC was working with on a pilot. Ms. Cook noted

it was County of Solano, with whom she was working to bring on-board for 1/1/16.

AGENDA ITEM IV – OLD BUSINESS

Update on 340B Covered Entities using Walgreens Pharmacies:

Per a question brought up by Ms. Lujan at the 11/18/15 meeting, Ms. Cook pulled the numbers and looked at all of the sites

whether or not they have shown interest in PHC’s 340B Compliance Program. She double checked the 273 sites to see how

many of them used Walgreens as a contract Pharmacy. She broke it down by interest in our program and then who is and is not

using Walgreens. Overall, from the 273, 133 sites use Walgreens and 140 do not, so it’s pretty close to 50/50, so that’s a large

number. This was in relation to the fact that Walgreens is unwilling to provide information directly to the 340BX

Clearinghouse per the file specs currently being used, which is what we would then use to reclassify their claims and flag them.

Ms. Johnston noted that with Ms. Davar’s help, she thought that they had Walgreens data that 340BX Clearinghouse would be

able to use for PHC. Ms. Cook asked if the data would come from the entity versus Walgreens, which was verified by Ms.

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Johnston. Ms. Johnston noted the data in question would be available to all entities that use Walgreens on their portal. Ms.

Davar noted the data was there already. Ms. Haynes noted that Walgreens did not want to have any further communication

with PHC until the final Mega-Guidance was published. Ms. Lujan noted it was significant that half of the entities were

working with Walgreens, so there needs to be a way to deal with those claims, since it affects so many entities. Ms. Cook

reminded the group that when PHC previously looked at Walgreens claims, nothing was flagged appropriately, so receipt of

this information was crucial. There was a concern over the fact that medications were being purchased via the 340B Program,

however, they weren’t being processed as 340B, and so there was the duplicate discount. Ms. Johnston stated Walgreens

doesn’t know which medications are 340B until they go through their TPA loop, which was secondary. Any data from

Walgreens would still need to be reclassified retroactively. Ms. Cook verified that was correct, as that is the current set-up

with 340BX Clearinghouse. Ms. Davar stated that once they have the data, they would give it to PHC, but it needed to be

tested.

Mega-Guidance Update:

Ms. Cook noted that HRSA submitted the 340B Drug Pricing Program Omnibus Guidance (Mega-Guidance) to the Office of

Management and Budget (OMB) on 5/16/15. The OMB had 90 days to review the Mega-Guidance. The Mega-Guidance was

published to the Federal Register on 8/25/15 for public comment. The due date for public submission of comments was

10/27/15. PHC’s 340B Team submitted its response and submitted it on 10/27/15. We will now wait and see what comes

about following review of those submissions. A copy of the submission letter was provided to the committee members.

Ms. Cook discussed highlights from the proposed Mega-Guidance. Managed Care Organizations (MCOs) can allow providers

to participate in the 340B Program and prescribe 340B medications. It was noted that the 340B Covered Entities had to work

with the MCOs to ensure there were no duplicate discounts. The MCOs have a responsibility to establish a mechanism by

which the claims data is submitted to the State and clearly identifies 340B claims. Nothing in the Mega-Guidance indicated the

MCOs have any right to any portion of the 340B Savings an entity might receive, a stance PHC had already taken.

Per a question Ms. Lujan, Dr. Moore noted PHC is on the right track with the 340B Compliance Program based on the

proposed Mega-Guidance, so we no longer have to be prepared to provide a reason for why the State should allow the entities

to get the 340B Savings. Mr. Germano noted another concern for PHC was a possible shift the mixed of medications from

generic to more brand names, but that had not happened per the baseline over this year. Dr. Moore verified that was correct.

AGENDA ITEM V – NEW BUSINESS

340B QIP Measures Review:

The group discussed the fact that the PHC 340B team is recommending thee elimination of the 340B QIP from the 340B

Compliance Program.

The details of the 340B QIP Measures were provided in a separate document. Dr. Moore had reviewed the measures and felt

they were good proposals. Dr. Moore recommended approval for the proposals from CommuniCare Health Centers.

ACTION ITEM: The committee entertained a motion to approve the 340B QIP Measures presented. The motion

was passed.

High Level Review of 340B Participating Entities’ Annual Reports:

Ms. Cook noted that when the 340B QIP was created, it was set-up so as not to require a lot of feedback. There is no penalty

for not meeting measures. PHC simply requires that the entities report on challenges or issues they face, whether or not they

met their goals, or if any changes needed to be made to the proposed measure. All entities will continue to work on the original

measures proposed with some increases in percentage goals.

Dr. Moore noted he was very impressed with the quality of work that was done by the quality teams and all the Entities, and in

particular, the synchrony with the safe use of opioid initiatives. We had three of our four largest health centers were in this

cohort, and opioid use had decreased roughly 50 percent in two years. There were a lot of things going on simultaneously, but

when he looked at the metrics and interventions they made, he thought the 340B QIP was a contributory factor.

Mr. Germano stated people had perceived doing these quality objectives as not always being in their best interests. He thought

all parties should remember that Congress was the next level where this was scrutinized and Entities had to think about better

demonstrating the use of these dollars in terms of patient care and improvement in the care of our patients. He felt the Entities

needed to do a better job of accounting for where their 340B Savings dollars were spent.

Ms. Lujan asked if PHC took steps to ensure Entities were meeting their goals moving forward. Dr. Moore stated that when

you set a goal, if you know that someone can hold you accountable to meeting that goal, you can set that goal real low, but that

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didn’t encourage setting stretch goals. PHC wanted Entities to set a stretch goal and let them decide what it was. As long they

measured their results, it was good. The thing that was not acceptable was to set a goal and not even measure how you did.

ACTION ITEM: The committee entertained a motion to approve all the quarterly/annual 340B QIP reports

presented. The motion was passed.

Overall 340B Compliance Program Evaluation and Review of Recommended Changes to the Program:

Dr. Moore noted we had lots of input from many sources on the 340B Compliance Program. Given the Mega-Guidance which

really helped us feel a little more confident about the path of the program, we had some internal meetings and formulated four

recommendations.

The first recommendation was that PHC wanted to explore alternatives for 340B claim reclassification apart from 340BX

Clearinghouse that was overseen by CaptureRx. There were a couple of factors to this. If something were to happen to that

system and there was no backup, all Entities relying on this for income would suddenly be left in the lurch. The second factor

was the challenges on-boarding non-CaptureRx entities. PHC’s initial two (2) year agreement with them had a non-compete

clause. The two (2) year timeframe was almost up, so PHC wanted to change that clause during negotiations with them. Other

options besides CaptureRx would include using another company in the same capacity, Entities could find someone to

complete the reclassification and provide a final file to PHC, or PHC could build an internal system. PHC looked into building

it ourselves, but this would be a lower priority use of IT resources compared to other projects.

The second recommendation was elimination of the 340B QIP and 340B PQP. This piece was the single biggest cost for PHC,

so elimination would save money for the Entities. The proposed Mega-Guidance states the Entities can participate in the 340B

Program with an MCO, so PHC’s quality check is not needed. As Mr. Germano pointed out, it’s good to know where the

money is going, but PHC would leave it to the entities to demonstrate that they were using the money for good purposes.

The third recommendation was to change the 340B Compliance Fee schedule with reduced fees. As more and more 340B

Covered Entities sign up, we can reduce fees as PHC costs were fixed. Another reason was that if the 340B QIP was

eliminated, a huge amount of Ms. Cook’s time would be freed up and so she could do other things.

There was an issue that had arisen in our in-house pharmacy programs. An example was In-House Pharmacy A stated every

one of its claims was 340B and would be flagged appropriately. PHC received the claims and only half were flagged

appropriately. PHC then spent large amounts of effort and time fixing that issue. PHC realized that when someone had to fix

the claim, and spend time, effort, and IT resources to fix them, then maybe that’s where the charge was. If the claims came

through perfectly, they just need to be put into the system and processed, and there would be no charge, which would

incentivize Entities to do it right. At this point, that is not built into the program.

The fourth recommendation was to create a single agreement that would cover all pharmacy arrangements and means by which

claims were submitted as 340B. There would be a simplified agreement which would covered all entities.

Dr. Moore noted PHC went through a lot of options about the generic prescription rate and it ranged all over the place, but in

the end our recommendation is to stick with the current system. No one had been penalized thus far nor did we expect them to

be, but it was nice to have that psychological trigger out there.

In response to a question from Ms. Affirme, Dr. Moore noted for those who signed up for the 340B Compliance Program, the

penalty for dropping below the generic prescription rate doubled from the Primary Care Provider (PCP) QIP, so instead of 10%

at risk, it was 20%. It was far less than the dollar amount that entities would make and PHC would lose if it went above, but

it’s some balancing measure. Dr. Louie noted PHC set the rate at 85%, which was a reachable goal. Dr. Louie and Ms.

Haynes looked at all the entities, and they were at an average of about 88% with the northern counties at almost an 89%. It

would be tough to not reach the 85%. Discussion was held regarding the effect of specialty drugs. Dr. Louie stated there were

challenges that are faced with specialty drugs. PHC has a very robust formulary treatment authorization request (TAR) review

process and again those review processes were predicated on the fact that there was medical necessity, so if the trending or

medical need was evident, those changes would occur and be reflected in the formulary.

In response to a request from Ms. Lujan, Dr. Moore discussed that the pharmaceutical generic prescription rate goal would

become the key goal related to Pharmacy. Ms. Affirme noted concern as there were months when they would random changes.

Dr. Moore noted the PCP QIP looks at a year, and even with current specialty pharmacy costs going up, because usually it’s a

small number of patients with super expensive drugs, PHC’s review is on a per drug basis, the percentage. PHC is not looking

at the cost.

There was discussion regarding the generic prescription rate penalty of 10% for the PCP QIP versus the 20% for the 340B

Compliance Program. Dr. Moore stated those entities not signed on were at risk of being out of compliance and being asked to

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repay the pharmaceutical companies. Ms. Johnston noted that those entities would not be at risk if they were carving out the

PHC claims.

Per a comment from Mr. Germano, discussion was held regarding whether all specialty medications were part of the 340B

program. Dr. Louie stated that no, they were not, per PHC and the State. Dr. Moore noted there was another little factor to

keep in mind that it gets into the politics. The State was getting ready to impose a statewide formulary on use which was very

high in brand name medications that were very expensive that would have been very negative. This would basically have

taken away the ability of all the health plans to do any formulary management. The reason the State wanted to do it was that

they wanted to claim the rebates. When the State takes the money, it doesn’t put it back in the health budget, but puts it in the

general fund so they use it for roads and schools and so on. Because drugs like hepatitis C drugs were so lucrative for the

State, when they got their rebate, they dropped that proposal.

Ms. Antle asked if we need a motion to approve these recommendations.

Ms. Lujan wanted to take them one by one prior to approval to discuss the additional information.

Dr. Moore noted that it was our idea to have the committee propose the general principles because until we get into detailed

negotiations, we don’t know the first recommendation would look like. We would not ask the committee to try and figure out

what to approve, so we wanted a general principle, which was to have the option to look for multiple methods of

reclassification, not just CaptureRx.

Ms. Haynes pointed out that all the additional detail was provided in the attachment sent for the meeting. The outline provided

the premise of the main points of the recommendations we would negotiate within our contractual arrangement that we have

with CaptureRx. Ms. Cook once again noted there was an exclusivity clause that meant anything to do with the reclassification

of the 340B claims had to go through 340BX Clearinghouse, and as we’ve discussed many times, it was an issue.

In response to a question from Ms. Davar, Ms. Haynes stated Walgreens had declined any meetings until the final ruling and

publishing of the final result of the Mega-Guidance. Ms. Davar stated that Walgreens had informed her that they would be

ready to speak when PHC was ready, and she could follow-up on that with Walgreens. Dr. Moore noted we had received

mixed messages from Walgreens with the final message being that they want to wait for the final publishing of the Mega-

Guidance. In response to a question from Mr. Sherman, Dr. Moore stated we would be looking at ways Walgreens could share

data with PHC for the 340B Compliance Program.

Ms. Antle asked Dr. Moore if we wanted to move to approval these recommendations as general principles. Dr. Moore stated

we phrased them to be general because that was what the Board does. The recommendation to the Board was to allow for

multiple clearinghouse options, the elimination of the 340B QIP, creation of a new fee structure with reduced fees, and having

one all-inclusive agreement.

Based on Ms. Lujan’s concerns, the committee had further discussion regarding the four recommendations. Dr. Moore once

again stated that we were presenting high level, general principles as the details would be discussed during negotiations.

Ms. Cook stated that the whole point of this review was that the committee had to approve these recommendations before the

team could even present them to the Board. If the committee did not approve the recommended general principles, they would

not be presented to the Board, and PHC would be unable to start any negotiation with 340BX Clearinghouse, which was why

we are leaving it high-level. Dr. Moore noted that we would still be looking at per paid 340B prescription fee, but only for

those claims that were not fixed and need to be reclassified.

Ms. Cook noted that with regard to the first recommendation, the point was we were trying to avoid exclusivity with any entity.

ACTION ITEM: The committee entertained a motion to approve all recommendations for general principles to

present to the Finance Committee and the Board. The motion was passed.

AGENDA ITEM VI – ADDITIONAL ITEMS

Documents:

The following documents were made available to the committee for review prior to commencement of the meeting:

Mega Guidance Response Letter

Outline of 340B QIP Measures that were ready for review

Recommended Changes and Related Feedback – 340B Compliance Program

Additional comments:

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Ms. Cook noted that PHC would be meeting with 340BX Clearinghouse on 12/10/15 at which time 340BX Clearinghouse

would present their new program. The program was vetted through HRSA, and they would like to present it. PHC would do

its best to touch base on our Letter of Intent which was sent to 340BX Clearinghouse, along with the Termination Letter. The

current contract would be terminated as of 1/31/16. Current agreements with 340B Participating Entities would be terminated

and replaced with new agreements.

Ms. Lujan wanted to acknowledge the work of PHC on a very complex issue, as well as PHC’s openness to listen to the health

centers.

Mr. Sherman stated he still saw some issues with the program, but it was looking much better.

AGENDA ITEM V1I – ADJOURNMENT

Meeting Adjourned: 1:30 pm

Respectfully submitted: Dawn R. Cook

The foregoing minutes were APPROVED AS PRESENTED on:

________________________________________________ ______________________

Darcie Antle, Interim Committee Chairman Date

The foregoing minutes were APPROVED WITH MODIFICATION on:

_________________________________________________ ______________________

Darcie Antle, Interim Committee Chairman Date

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PARTNERSHIP HEALTHPLAN OF CALIFORNIA

PHC 340B Advisory Committee Meeting2-25-16

9

Agenda

• 340B Compliance Program Update• General Update• 340B Quality Improvement Program (QIP) and Quality Withhold Repayments• Financial Summary• 340B Compliance/Contracting Update

• Mega‐Guidance Update

• Finance Committee Review of Proposed Changes to the 340B Compliance Program

• New Contract between PHC and 340B Clearinghouse (CaptureRx) – ACTION ITEM

• Proposed Changes to the 340B Pharmaceutical Program Agreement(s) with 340B Participating Entities for 340B Compliance Program – ACTION ITEM

• Pharma/State Rebates

10

340B Compliance Program – General Update

As of 2/24/16, 58 sites (14 entities) have been on‐boarded.

A pilot program with entities using non‐CaptureRx 340B Administrators has been put on hold during the negotiations between PHC and 340B Clearinghouse (CaptureRx) for a new agreement.

PHC has begun work on a new consolidated 340B Pharmaceutical Program Agreement for the 340B Compliance Program.

Invoices are being successfully sent to 11 340B Participating Entities on a monthly basis.

To date, there are 11 340B Participating Entities making monthly wire transfers to the 340BX Trust Account based on the invoice received for that month.

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340B QIP: Quarterly Reporting and Quality Withhold Repayments

The 340B Quality Improvement Program (QIP) Quarterly Reports for Calendar Quarter 7/1/15 to 9/30/15 were received for the 11 340B Participating Entities.

All 340B QIP Quarterly Reports for Calendar Quarter 7/1/15 to 9/30/15 were reviewed by Dr. Moore. The 11 340B Participating Entities that submitted reports received a score of 100% and received 100% of their 340B QIP Quality Withhold funds.

The 340B QIP Quality Withhold Repayment checks were mailed on 2/12/16.

The total 340B QIP Quality Withhold being repaid to 11 340B Participating Entities for Calendar Quarter 7/1/15 to 9/30/15 totaled $409,055.48.

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Financial Summary

Financial summary for 7/1/15 to 9/30/15

13

Financial Summary

Overall financial summary for the 340B Compliance Program Last repayment quarter ‐ 7/1/15 to 9/30/15

340B Compliance Program to date ‐ 6/1/14 to 12/31/15

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340B Compliance/Contracting Update

281 340B Covered Entities (Sites) within PHC’s 14 county service area# of Sites Compliance/Contracting Status # of Actual Agreements

63 Sites that have signed an Agreement with PHC12 Contract (45 sites)

2 In‐House (18 sites)

132 Sites that have shown interest in PHC’s 340B Compliance Program and signing an Agreement

18 Contract*

10 In‐House*

22 Sites refusing to sign an Agreement with PHC 2 In‐House

56 Sites reporting they will not bill PHC in the future N/A

3 Sites who have not responded N/A

Sites Planning to Sign an Agreement

# of Sites Type of Pharmacy Arrangement (self‐reported)

79 Contract

15 In‐House

38 Both

*This is based on the assumption that certain sites will be lumped together under single agreements. 15

Mega‐Guidance

The 340B Drug Pricing Program Omnibus Guidance (“Mega‐Guidance”) was published in the Federal Register on 8/28/15 for public comment. The due date for submission of comments was 10/27/15.

PHC’s response to the proposed Mega‐Guidance was submitted to HRSA on 10/27/15.

Though there has been some discussion of the final guidance being released in September 2016, there is no official deadline for HRSA to complete their review of the public comments and publish the final guidance.

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Finance Committee Review of Proposed Changes to the 340B Compliance Program

On 11/18/15, the 340B Advisory Committee approved all four (4) recommendations for general principles to present to PHC’s Finance Committee.

On 1/20/16, the list of recommendations were presented and reviewed by PHC’s Finance Committee, along with the current list of official members of the 340B Advisory Committee.

The Finance Committee approved all four (4) recommendations for changes related to the 340B Compliance Program.

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New Contract between PHC and 340B Clearinghouse (CaptureRx) – ACTION ITEM

Exclusivity language now allows for PHC to enter into discussion with non‐340BX Clearinghouse organizations that may provide 340BX Clearinghouse related services.

Invoicing will be changed to reflect elimination of the 340B Quality Withhold, as well as the new payment breakdown of 340BX Compliance Fees and PHC Compliance Fees.

The 340B Compliance Fees will be lowered from $4.50 to $2.75 per paid 340B prescription claim.

340BX Clearinghouse will reclassify 340B claims from In‐House Pharmacies on an as needed basis.

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Proposed Changes to the 340B Pharmaceutical Program Agreement(s) with 340B Participating Entities for 340B Compliance Program – ACTION ITEM

PHC will create a single, non‐negotiable, all‐inclusive agreement versus the two agreement versions currently being use. One agreement will ensure consistency across the program.

PHC will eliminate the 340B Quality Improvement Program (QIP) and 340B Pharmacy Quality Program (PQP) from the 340B Compliance Program.

PHC will have a new 340B Compliance Fee Structure including a 340B Compliance Fee of $2.75 per paid 340B prescription for any claim reclassified by 340BX Clearinghouse, including 340B claims tied to In‐House Pharmacies.

Reporting and auditing of In‐House Pharmacy 340B Claims and Physician Administered Drug (PAD) 340B Claims.

Inclusion of pharmacy list(s), contract and in‐house pharmacies.

340B Participating Entities will report all changes to their 340B Programs to PHC.

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Pharma/State Rebates

The Medi‐Cal Drug Rebate Branch at DHCS is reaching out to PHC asking for help resolving some of the disputes they are having with drug manufacturers who reimburse them on certain eligible drugs. It appears they are trying to verify whether they have the correct units or combination of drug and HCPCS codes for some of the claims.

The pharmaceutical companies may have enough data to track down 340B medications that were not labeled properly for the State to avoid claiming rebates to dispute as duplicate discounts

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Date for the next 340B Advisory Committee Meeting is TBD.

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Questions?

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Thank You

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The items listed below represent some of the updates/changes in the new contract between PHC

and 340B Clearinghouse, as well as some of the talking points related to each.

1. Update/Change: The original contract between PHC and 340BX Clearinghouse included an

exclusivity clause which made it a breach of contract for PHC to discuss or meet with any

non-340BX Clearinghouse regarding services covered by that original agreement. The new

contract allows for PHC to enter into discussions with other 340B third party administrators

regarding services provided by 340BX Clearinghouse and outlined in the contract.

Talking Point: PHC will continue to work with 340BX Clearinghouse for its 340B

Compliance Program.

However, PHC wanted to be ensure there was language in the contract that would allow for

exploring other options for reclassification services should it be determined that the

relationship between PHC and 340BX Clearinghouse needs to be terminated.

2. Update/Change: Invoicing provided by 340BX Clearinghouse will no longer include a

340B Quality Withhold as the 340B Quality Improvement Program (QIP) portion of the

340B Compliance Program is being discontinued. The new invoices will include the

breakdown of the 340BX Compliance Fees and PHC 340B Compliance Fees, as well as

claim counts. All other information previously provided on the invoices will no longer be

included.

Talking Point: The 340B QIP has proven to be a burden for the 340B Participating Entities,

as well as a deterrent for other 340B Covered Entities to join the program. Although the

340B Participating Entities have shown enthusiasm for the measures they have put into place,

most 340B Covered Entities approached feel the 340B QIP is a redundant program given the

other programs with which they participate for PHC.

With the discontinuation of the 340B QIP, the invoices will be simplified, but will continue

to be provided by 340BX Clearinghouse with some oversight by PHC’s Pharmacy Services

Program Manager.

3. Update/Change: The 340B Compliance Fee of $4.50 per paid 340B prescription claims will

be lowered to $2.75 per paid 340B prescription claim.

Talking Point: The 340B Compliance Fee has been one of the biggest hurdles with regard

to on-boarding 340B Covered Entities to the 340B Compliance Fee. PHC and 340BX

Clearinghouse each respectively provided financial analysis of possible options including a

per contract pharmacy fee to per entity site fee to the per 340B prescription claim fee.

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Considerations for this portion of the negotiation included 340BX Clearinghouse’s costs,

PHC’s minimal administrative costs, and finding a fee that smaller 340B Covered Entities

might be able to accommodate. The $2.75 compliance fee will be split between PHC and

340BX Clearinghouse with $0.25 going to PHC and $2.50 going to 340B Clearinghouse per

paid 340B prescription claim. This $1.75 per paid 340B prescription claim fee reduction

claims represents 39% fee reduction.

4. Update/Change: The new contract includes a provision for reclassification of In-House

Pharmacy 340B Claims on an as needed basis with a 340B Compliance Fee of $2.75 paid

340B prescription claims reclassified.

Talking Point: PHC’s 340B Compliance Program currently involves two (2) agreement

types, one for 340B Participating Entities using Contract Pharmacies and another for 340B

Participating Entities using In-House Pharmacies. PHC has had issues with one of the 340B

Participating Entities currently under an In-House Pharmacy agreement, wherein not all of

their claims were flagged appropriately as 340B at the point-of-sale, though all medications

were to be 340B. This situation created a huge project for PHC as they attempted to assist

the entity in correcting the claims.

The 340B Compliance Program is being restructured so that all 340B Participating Entities

fall under one all-inclusive agreement. As part of this agreement, 340B Participating Entities

using In-House Pharmacies will provide PHC will a file listing all 340B claims on a quarterly

basis. There will be no compliance fee for any paid 340B prescription claim flagged

appropriately. For any claims found to not be flagged appropriately, the data will be sent to

340BX Clearinghouse for reclassification for a 340B Compliance Fee of $2.75 per paid 340B

prescription claim.

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The items listed below represent the proposed updated/changes to the current 340B

Pharmaceutical Program Agreement(s), as well as talking points related to each.

1. Update/Change: PHC will use a single all-inclusive agreement for all 340B Participating

Entities that will cover all pharmacy arrangements.

Talking Points(s): PHC would like to create a single agreement that ensures consistency

across the 340B Compliance Program. The single agreement will cover all pharmacy

arrangements so that each 340B Participating Entity understand their responsibility regarding

compliance in all areas. PHC will no longer negotiate any special agreements with

individual entities.

2. Update/Change: PHC will eliminate the 340B Quality Improvement Program (QIP) and

340B Pharmacy Quality Program (PQP) from the 340B Compliance Program.

Talking Points(s): The 340B QIP has proven to be a burden for the 340B Participating

Entities, as well as a deterrent for other 340B Covered Entities to join the program. Although

the 340B Participating Entities have shown enthusiasm for the measures they have put into

place, most 340B Covered Entities approached to join the 340B Compliance Program have

felt the 340B QIP is a redundant program given the other programs with which they

participate for PHC.

With the elimination of the 340B QIP, there will no longer be a 340B Quality Withhold,

which was another piece that most entities were felt was unnecessary.

3. Update/Change: PHC will have a new 340B Compliance Fee Structure including a 340B

Compliance Fee of $2.75 per paid 340B prescription for any claim reclassified by 340BX

Clearinghouse, including 340B claims tied to In-House Pharmacies.

Talking Points(s): The 340B Compliance Fee has been one to the biggest concerns voiced

by those 340B Covered Entities approached by PHC to join the 340B Compliance Program.

PHC and 340BX Clearinghouse have agreed on a 340B Compliance Fee of $2.75 per paid

340B prescription claim. PHC has had issues with one of the 340B Participating Entities

currently under an In-House Pharmacy agreement, wherein not all of their claims were

flagged appropriately as 340B at the point-of-sale, though all medications were to be 340B.

As such, this fee will be applied to any In-House Pharmacy claims found to not be flagged

appropriately that are sent to 340BX Clearinghouse for reclassification.

4. Update/Change: Reporting and auditing of In-House Pharmacy 340B Claims and

Physician-Administered Drug (PAD) 340B Claims.

Talking Points(s): The current agreements provide a very non-specific guideline for

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reporting claims generated by In-House Pharmacies and In-House Dispensaries. The current

340B Participating Entities have had trouble with the reporting all claims on a quarterly

basis. The template and instructions have put the burden on PHC, when it should fall to the

340B Participating Entity to ensure they are flagging all of the In-House Pharmacies (usually

point-of-sale or POS) 340B claims and PAD 340B claims.

With regard to the In-House Pharmacy 340B claims, 340B Participating Entities will provide

PHC with a list of their 340B claims on a quarterly basis. That data will be audited to ensure

it matches the information reported to the Pharmacy Benefits Manager (PBM), MedImpact.

For any claims noted to be missing the appropriate flag, the data will be sent to 340BX

Clearinghouse for reclassification. Each paid 340B prescription claim reclassified by 340BX

Clearinghouse is subject to the 340B Compliance fee of $2.75 per paid 340B prescription fee.

With regard to the PAD 340B claims, PHC will now require that the 340B Participating

Entities submit a list of all PAC 340B claims on a quarterly basis. PHC will compare this

data to the claims data submitted to our Claims Department. If it is determined that a claim

was not flagged appropriately with the UD modifier, the 340B Participating Entity will be

required to pay a 340B Compliance Fee (TBD) for correction by PHC’s Claims Department.

5. Update/Change: PHC will now include a list of all pharmacies tied to a 340B Participating

Entity including all Contract Pharmacies and In-House Pharmacies.

Talking Points(s): As part of the on-boarding process, PHC will require all 340B

Participating Entities to provide a list of all its Contract Pharmacies, and if applicable all In-

House Pharmacies, which will be included in the agreement. This change will insure 340B

Participating Entities are following the definitions of Contract versus In-House Pharmacy

currently outlined in the agreement(s), as PHC can compare the data to the Office of

Pharmacy Affairs (OPA) 340B Database.

6. Update/Change: The 340B Participating Entities will be required to report any changes to

their 340B Programs to PHC including the addition of new child sites, the addition of new

contract pharmacies, the addition on any in-house pharmacies, the termination of any sites,

the termination of any contract pharmacies, and the closure(s) of any in-house pharmacy(ies).

Talking Points(s): PHC will now require that the 340B Participating Entities be held

responsible for reporting any changes to their 340B Programs to PHC. Currently, it has

fallen upon the Pharmacy Services Program Manager to review the OPA 340B Database on a

quarterly basis to identify any new or terminated sites in the 340B Program, but that process

does not include reporting on pharmacies. PHC feels it is important that the 340B

Participating Entities take on this piece as it reinforces their role as the party responsible for

compliance.

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