340b compliance in an era of increased oversight · over 800 hospitals and health systems enrolled...
TRANSCRIPT
340B Compliance in an Era of Increased Oversight
Bill von Oehsen Maureen Testoni President/General Counsel Assistant General Counsel
Wednesday, January 25, 20121:00-2:30 PM (Eastern Time)
Phone: (800) 895-0231Participant Code: 31865
Agenda
About SNHPA Current challenges to 340B in Washington Overview of the current 340B compliance landscape:
oversight, auditing and enforcement Upcoming compliance initiatives: recertification and
audits Recertification details Background on audit process and requirements How to prepare for recertification and audits Potential penalties Special considerations for corporate partners SNHPA membership and upcoming events
SNHPA 2 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Who is SNHPA?
Non-profit organization representing and supporting
over 800 hospitals and health systems enrolled in 340B
Took lead role in including hospitals in the 340B law
Independent from both the government and the drug
industry
Advocates on drug pricing and other pharmacy matters
affecting safety-net providers
Educates members and 32 corporate partners on 340B
policy developments in Congress and regulatory
agencies
SNHPA 3 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Threats to 340B Are Real
Some key lawmakers believe program should be
scaled back
Some are convinced the program should only apply
to indigent patients
Legislation requiring providers to bill all payers at
acquisition cost is possible
Drug shortage legislation could give manufacturers
“holiday” from 340B pricing
Third party payers singling out 340B pharmacies
for reductionsSNHPA 4 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
What You Can Do To Help
Get involved in the political process Join us or bring your government relations
representative to Washington for a meeting for corporate partners
First meeting: March 19, 11:30 AM – 2:00 PM at SNHPA (more details to come)
Join/renew membership in the Alliance to Protect 340B
SNHPA 5 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Alliance to Protect 340B
Special initiative launched in 2007 to address: Overly restrictive narrowing of patient definition Fair Medicaid billing/reimbursement
Expanded focus: Reimbursement reductions by third party payers
Significant progress so far – but more work is needed! Over 50 SNHPA member hospitals and corporate
partners have joined We need your help and our hospital members will
appreciate your commitment! For more details, click here or contact Anna Mangum at
[email protected] or (202) 552-5863
SNHPA 6 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Events Leading to Increased Oversight – GAO Report
Requested by lawmakers who wanted to block expansion or sunset program altogether
Findings suggest more oversight is needed: Program has grown significantly -- nearly 1/3 of all
U.S. hospitals enrolled and drug manufacturers question whether all these hospitals deserve 340B pricing
Increased use by hospitals and contract pharmacies, which increases diversion risk
Too much reliance on self-policing Integrity provisions in health reform are helpful, but
HRSA needs to improve oversightSNHPA 7 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
GAO Report:Recommendations
Four recommendations to HRSA: Conduct selective audits of covered entities to deter
potential diversion Finalize new, more specific guidance on the
definition of a 340B patient; Further specify its 340B nondiscrimination policy for
cases in which drug distribution is restricted and require reviews of manufacturers’ plans to restrict distribution of drugs at 340B prices;
Issue guidance to further specify the criteria that hospitals that are not publicly owned or operated must meet to be eligible for 340B
SNHPA 8 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Congressional Response
Letter from Sen. Grassley (R-IA), Sen. Hatch (R-UT), and Rep. Upton (R-MI) to HRSA requesting “detailed accounting” of its oversight of 340B:
Asked HRSA to answer nine detailed questions
Notes doubling of program in the past decade and says “it is critical that HRSA provides diligent oversight of both the program and its participants.”
To see the letter, go to http://grassley.senate.gov/news/upload/9-22-11-Upton-Hatch-Grassley-letter-to-Wakefield.pdf
SNHPA 9 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Congressional Response (cont’d)
HRSA tells the lawmakers that it plans to: Recertify all covered entities Audit select covered entities beginning in early
2012 Encourage manufacturers to audit covered
entities Senator Grassley blasts HRSA for inadequate
oversight and directs HRSA “to get a handle” on the program
SNHPA 10 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Recertification
Health reform requires HRSA to recertify all covered entities
HRSA notified hospitals this month that they must review and update their contact information
Hospital recertification process to begin April 1, 2012; annually thereafter
SNHPA 11 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Recertification (cont’d)
Applies to hospitals that entered program prior to April 1, 2011
HRSA sending notices to Authorizing Official and Primary Contact advising them to ensure accuracy of information on 340B website
Changes to information must be submitted no later than March 1 ensure processing prior to April 1
HRSA to release more information on process over next two months
Very important that your clients respond to recertification notices – hospitals can become disqualified if they do not recertify!
SNHPA 12 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Recertification (cont’d)
HRSA said it will issue “policy letter” on hospital criteria for 340B eligibility
Contact information regarding recertification questions: Pharmacy Services Support Center (PSSC)
Help Line: (202) 449-9473 HRSA: [email protected]
SNHPA 13 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Preparing for Recertification
Check hospital’s enrollment information on OPA’s website to ensure accuracy, especially of Authorizing Official and Primary Contact, including phone and e-mail information, Medicaid exclusion information, and ship to/bill to information
Make sure hospital’s locations are enrolled and appear on OPA website, especially locations to which drugs are shipped.
Remove locations that are no longer open or eligible to participate
SNHPA 14 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits
Both HRSA and manufacturers are authorized to perform audits
HRSA audits began this month Per HRSA letter to targeted hospital, audits to cover:
Eligibility of covered entity to participate Whether 340B drugs have been diverted to nonpatients Whether there are proper controls in place to
prevent/detect diversion and duplicate discounts Hospital is responsible for compliance status of itself and its
contract pharmacies Special compliance requirements apply to contract
pharmacy arrangements
SNHPA 15 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits: Diversion
Controlling HRSA guidelines: 1996 guidance on the definition of patient (61
Fed. Reg. 55156); and 1994 guidance on outpatient clinics (59 Fed.
Reg. 47884) These guidelines are broad and subject to
various interpretations Office of Pharmacy Affairs (OPA) has taken
increasingly narrow positions on guidelines, especially regarding patient definition
SNHPA 16 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits: Diversion (cont’d)
SNHPA’s Principles to Prevent Diversion are based on HRSA guidance, e.g., Morford Letter
OPA has retreated from guidance underlying SNHPA’s Principles. Examples: Prescriber must be employed by or under contract with
hospital Site of care must be in a hospital facility
These interpretations are primarily communicated via PSSC’s technical assistance program
Although interpretations are reflected in HRSA’s 2007 proposed changes to patient definition (72 Fed. Reg. 1543), HRSA plans to withdraw the changes
SNHPA 17 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits: Duplicate Discounts
Controlling HRSA guidelines: 1993 guidance on preventing duplicate discounts (58
Fed. Reg. 30458); and 2000 guidance clarifying duplicate discount billing
requirement (65 Fed. Reg. 13983) Requires covered entities to submit to HRSA the
Medicaid provider numbers of their entities and clinics that will not use 340B (i.e., those that “carve-out” ) Must inform HRSA of changes in hospital’s policy May also look at whether covered entity is billing
Medicaid appropriate rate, e.g., actual acquisition cost (AAC) in states that require AAC
SNHPA 18 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits: Contract Pharmacy
Controlling HRSA guidelines: 2010 guidance on contract pharmacy arrangements
(75 Fed. Reg. 10272) Requires:
Written contract “bill to, ship to” arrangement Specific compliance elements, such as maintenance
of tracking system by contract pharmacy to prevent diversion
Covered entity is ultimately responsible for ensuring diversion and duplicate discounts requirements are followed
SNHPA 19 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits: Contract Pharmacy
HRSA recommends: Quarterly comparison of patient prescriptions to
dispensing records by contract pharmacy Independent audit by covered entity annually Bi-annual comparison of 340B drug purchasing
and dispensing records by contract pharmacy Make sure covered entity takes ownership of
patient verification process and that process will stand up to scrutiny
SNHPA 20 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits: Potential Penalties
Repay manufacturer the 340B discount If diversion violation is “knowing and intentional,”
covered entity also pays interest If diversion violation is “systemic and egregious,”
covered entity is removed from 340B program and banned from re-entry for a reasonable period
To date, HRSA has issued cease-and-desist letters before applying penalties and let manufacturers take lead in seeking recoupment of discounts
Termination of covered entity from program has been limited to only two cases and entity’s 340B status was questionable to begin with
SNHPA 21 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits by OPA
Audits to be both random and targeted at suspected violators
We are aware of a test audit conducted on least one hospital and were told there were such audits of at least 3 other covered entities
Initial audits began January 2012 HRSA expects to take 2 to 3 months to
complete ground work and publish final written report for each covered entity
SNHPA 22 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits by OPA (cont’d)
Audit protocols were to be released to the public; SNHPA has contacted HRSA to inquire if they are available
Audit plan to be sent to targeted entities Pre-audit interview to take place prior to audit Please let us know if you know of a hospital
that is scheduled to be audited or has been audited!
SNHPA 23 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audit by OPA (cont’d)
Office of Regional Operations (ORO) will take the lead in conducting audits ORO located in all 10 HRSA regions Both CPAs and pharmacists on staff Key contact: Thomas Pettin, [email protected]
SNHPA 24 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Areas to be Reviewed
Review of: policies and procedures eligibility of hospital centers that use 340B
drugs relationship of physicians who write 340B
prescriptions inventory and past purchases contracts
Test a sample of prescriptions for compliance
SNHPA 25 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audits by Manufacturers
Controlling HRSA guidance: 61 Fed. Reg. 65406 Confirmed in recent “Program Notice”, release No. 2011-3
Manufacturer informs covered entity in writing of violation of law Must have reasonable cause Can be based on changes to ordering patterns or patient
complaints Parties have 30 days to resolve in good faith Manufacturer must file audit work plan with HRSA at
least 45 days before audit Must inform covered entity at least 15 days before audit
takes place
SNHPA 26 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audit Process
Neither HRSA nor manufacturers are subject to a limit on amount of time for audit
Oral briefing by manufacturer or government at end of audit
Written report by manufacturer or government at end of auditReport will be shared with OIGUnclear whether it will be publicly available
SNHPA 27 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audit Process (cont’d)
Covered entity has 30 days to respond: Steps it will take to address findings, or Rationale for disagreement with findings
Covered entity may challenge findings using voluntary dispute resolution procedures Mandatory dispute resolution procedures under
PPACA? Hearing by HRSA prior to determining penalty Covered entity has right to appeal HRSA decision
to federal court per Administrative Procedure Act
SNHPA 28 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audit Protections for Covered Entities
Government bound by Government Auditing Standards
Manufacturer bound by Government Auditing Standards and standards in 1996 guidance
Government will follow 1996 guidance (61 Fed Reg. 65406) regarding scope of audits and auditing protocols
Manufacturers must use an independent public accountant
Covered entities may be subject to only 1 audit at a time
Audit period can be no more than one year
SNHPA 29 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audit Protections for Covered Entities (cont’d)
Manufacturers must continue to provide 340B discounts during audit
Records that may be reviewed are limited to covered entity records and records of organizations that work with covered entities to buy, dispense, and obtain Medicaid reimbursement for outpatient drugs that directly pertain to potential 340B violations Ensure that HIPAA privacy rule is followed
regarding records shared with manufacturers
SNHPA 30 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Preparing for Audits: Diversion
Depending on your relationship with the covered entity, you may play a critical role in helping them to comply with 340B requirements
Audit the procedures and reports you use when working with covered entities
Reports are only as good as the information that goes into them How are your reports populated? Example: covered entity found that virtual
inventory was initially populated with both inpatient and outpatient data
SNHPA 31 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Audit Steps: Duplicate Discounts
Determine whether covered entity provided its Medicaid number to OPA and whether it bills Medicaid at AAC Since HRSA stopped requiring AAC billing in
2000, your state may no longer require AAC billing
Test to make sure hospital is billing in accordance with state requirements
If carving out, test that claims are appropriately captured and billed
SNHPA 32 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Importance of Maintaining Documentation
Examples of documentation that should be maintained: Pharmacy dispensing records, including NDC of
drug dispensed and quantity of drug dispensed Hospital billing records, including location of
service rendered Wholesaler purchasing records, including 340B
purchased records to support dispensing history If unsure of applicable requirements or whether
it meets requirements, document efforts to clarify same
SNHPA 33 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Working with Auditors
Covered entity should coordinate with its legal counsel and compliance officer when it is first notified of audit
One person should be designated to be responsible for working with auditors, coordinating document review, and/or access to employees
A specific location should be designated for auditors to use every day as their work area
Covered entity should know the name of the individual in charge of the audit and all other individuals who will be working in its facility
SNHPA 34 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Working with Auditors
If you are involved in an audit: Maintain your own record of auditors’
questions, documents reviewed, etc. Coordinate closely with the covered entity Cooperate
SNHPA 35 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Special Considerations for Corporate Partners
Growing scrutiny of 340B means hospitals and corporate partners need to emphasize their commitment to patient care and access
In marketing and other communications about 340B, exercise caution in making claims and statements about cost-savings and revenue generation New SNHPA Corporate Partner Compendium: some
submissions need to be revised to reflect this sensitivity
Use care in marketing material and customer interactions at 340B Winter Conference and other venues
SNHPA 36 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Special Considerations for Corporate Partners (cont’d)
In communications, avoid phrases such as: Increasing profits Revenue enhancement Boost your bottom line Expand 340B to more populations
Check your website to make sure it is not contributing to the 340B “optics problem”
SNHPA 37 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Upcoming Events (cont’d)
8th Annual 340B Coalition Conference
Co-Hosted by ApexusHotel del Coronado
San Diego, CA
Feb. 29 – Mar. 2, 2012www.340Bwinterconference.org
Great exhibiting/networking opportunities!
SNHPA 38 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Upcoming Events (cont’d)
Baltimore RoundtableMercy Medical Center
March 6, 2012
11:30 AM-2:30 PM
Stay tuned for details!
SNHPA 39 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Upcoming Events (cont’d)
16th Annual 340B Coalition ConferenceCo-Hosted by Apexus
July 9-11, 2012Omni Shoreham Hotel
Washington, D.C.www.340bcoalition.org
SNHPA 40 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Contacts
Bill von OehsenPresident/General Counsel(202) [email protected]
Ted SlafskyExecutive Director(202) [email protected]
Kara StencelDirector, Government Relations(202) [email protected]
Maureen TestoniAssistant General Counsel(202) [email protected]
Fred MoxleyManager, Event Planning(202) [email protected]
SNHPA 41 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
SNHPA’s New Home
1101 15th Street, NW
Suite 910
Washington, DC 20005
Phone: 202-552-5850
Fax: 202-552-5868
www.snhpa.org
SNHPA 42 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org
Question & Answer Session
To ask a question via your telephone, press *1 to connect to the operator and be put in the queue
To ask a written question, click on the Q&A button at the top left of your screen
The presentation is available for download by clicking on the handouts button ( ) at the top right of your screen
SNHPA 43 Bill von Oehsen and Maureen Testoni(202) 552-5850 www.snhpa.org