340B Update October 2014 “Know Your Medicare Cost Report”

Medicare Cost Report

340B Medicare Cost ReportIn this month’s article we will focus on the Medicare Cost Report and provide some updates for the 340B program.

Well, it is October and we are still awaiting the arrival of the 340B Mega Reg. In a way, it almost feels like an upcoming dentist visit.

– At first, you sort of dread it and prefer it not happen at all.
– Then, the waiting becomes painful (more painful then just getting it done).
– Until, you simply hope it gets here soon so you can get it over with.

I think knowing is better than the agony of anticipation. For the love of all that is holy, I hope OPA receives the green light to relieve us of our suffering soon. . . I JUST WANT TO KNOW!!!

In a more recent news update, it appears that PhRMA has decided to go ahead and file a follow-up law suit on the Orphan Drug clarification. It will be interesting to see how this one plays out. We still have some manufacturers that have not provided Orphan pricing to ACA covered entities (i.e., CAH, SCH, RRC, CAN covered entity types). There is also some discussion around the idea that these manufacturers may have to pay back covered entities that could have bought drug at 340B, but were not extended the 340B price. Hopefully we can get some clear decisions on this so that this does not drag out too much longer.

We do need to offer congratulations to Apexus for being awarded the OPA contract through 2019. I personally feel they provide a great service and Apexus Answers is a great resource for all involved in the 340B program. Also, the Apexus 340B University is the best training for those involved in the 340B program (and for the record, the 340B Basics for Hospitals in San Diego at NACHC this past August had the best all around survey score, EVER! . . . Who did that one again?). Glad to have you around for years to come!

Focus for this article: Medicare Cost Report (Caveat: for clinic covered entity types, you will need to review your scope of services. Some of the same information applies related to departments and service lines.)

Do you know your Medicare Cost Report? More than ever, if you are in a leadership role with your 340B program, you need to become knowledgeable about your Medicare Cost Report and the associated Trial and Balance Sheet. Why?

– It is the source of truth for what qualifies for 340B in your hospital.
– For qualified areas with a different physical address, they need to be registered as Child Sites.
– For Child Sites, all departments and service lines identified on the Trial Balance need to be registered separately.

This is a level of detail that recent HRSA audits have focused on. If you have a child site that is a hospital for instance, every department and service line visible on the Cost Report and Trial Balance that either administers 340B drugs or writes a prescription that could be filled as 340B need to be registered as a separate Child Site.

Here is a good FAQ from Apexus FAQs on this subject:
FAQ ID: 1975
Last Modified: 03/18/2014
Q: How do I know if an off-site outpatient facility is eligible for 340B as a child site and should be added to the 340B database?
A: Off-site outpatient facilities are eligible child sites of a 340B covered entity in the following circumstances: (1) The outpatient facility is listed as a reimbursable facility on a 340B hospital covered entity’s most recently filed Medicare cost report. If the facility is a free-standing clinic of the hospital that submits its own cost reports using a different Medicare number (not under the covered entity’s Medicare provider number), then it would NOT be eligible. (2) The facility is included in a non-hospital covered entity’s scope of grant or part of the scope of services. An off-site outpatient facility meeting one of these criteria must register and be listed on the 340B database before it can access 340B drugs for eligible patients.
For hospitals, all clinics located off-site of the parent hospital, regardless of whether those clinics are in the same building, must register as child sites of the parent 340B-eligible hospital if the covered entity purchases and/or provides 340B drugs to patients of those facilities. For example, if the off-site outpatient facility is a hospital, all clinics/departments within that off-site location that plan to purchase and-or provide 340B drugs to its patient must register as a child site.
Outpatient clinics/departments within the four walls of the 340B parent hospital do not need to also register for the 340B Program. However, the covered entity remains responsible for demonstrating that those outpatient clinics/departments within the four walls of the parent hospital are only using 340B drugs for eligible outpatients and meet all 340B Program requirements, as demonstrated through auditable records.

Between now and the end of the year, determine if your covered entity site needs additional child site locations enrolled. This is one of those better safe than sorry, so register it if has a different address and can be seen as a separate department or service line.

As always, please let us know if you have any questions or need some help. Also, if you are interested in having your covered entity site receive a full independent audit of your 340B operations, come see us at Turnkey Pharmacy Solutions.

Thank you and Aloha, -Rob Nahoopii

340B Program Updates August 2014

340B Updates

340B Mega RegWe are finding our groove at Turnkey Pharmacy Solutions and rededicating time to providing timely and relevant content to the 340B community here at the 340B Program Blog. I have heard from many people at the 340B Coalition Conference and at 340B University that you actually read it and like it! That was awesome to hear, thank you! Please read through and respond to the request at the end, it will benefit everyone.

In this article, you will learn about our takeaways from our latest independent audits we performed and a recent 340B University. This includes some Mega-Reg fun, Medicaid and Medicaid Managed Care, new registration changes, Orphan Drugs, and an important compliance tip on 340B contract pharmacy compliance.

Mega-Reg: Well, we are coming to the end of August and we still do not have a visual on those highly anticipated Mega-Regs. Do you remember the Disney classic Lion King? Toward the beginning of the movie, the three hyenas are talking about Mufasa (the current lion king, Simba’s dad) and the hyena voiced by Whoopi Goldberg hears Mufasa’s name and shudders and says that name has so much power, just hearing it makes her shiver, and of course she says “say it again!” That is how I feel about the mega-reg. Just the name alone conjures of emotion (some of it is fear, some excitement). I know our colleagues at OPA are just as anxious as we are, and want to get it out for review. However, they have likely learned a lot from the Orphan Drug push back and court decision, which is likely the cause for the delay. Appropriately presenting the Mega-Reg (…shiver…) is critical for its success. Mega-Reg, Mega-Reg, Mega-Reg!!! (can you feel it!)

Medicaid and Medicaid Managed Care: We are definitely seeing a lot more managed care Medicaid groups working with their corresponding state Medicaid agencies to obtain the Medicaid rebate (which is ultimately done by state Medicaid). If you are carving in (or carving out), make sure you know what your state Medicaid is doing in relation to managed care Medicaid, what to do if they are paying secondary, and if your managed care Medicaid has any billing requirements. Also ensure that both your hospital/clinic administered drugs AND contract pharmacy/in-house arrangements are properly dealing with Medicaid (or excluding it as needed). This is a focus for HRSA, so make sure you are getting it right!

Recertification and New Registration: As a reminder, make sure you recertify by September 10th (hospitals). For CAHs, it is pretty easy and fast. Other hospital types, you will need your DSH calculation on your most recently filed cost report. If you are newly registering, please note that OPA now has your recently filed cost report loaded for child site selection; however, if you do not see your child site, then you will need to manually add it. One major change to new registration is the requirement for the government person attesting to your relationship or status now having to approve of this relationship via email. If this is not done in the specified time, you will not be enrolled in the program. We heard that the recent July enrollment had 75 covered entities that were initially not enrolled, they re-opened the program to allow for more time and all but 5 made it. They may not be so generous next time, so make sure your government person knows they need to respond to the email from HRSA when it comes.

Orphan Drugs: It appears some of the 11 drug companies are still holding out for legal clarification before they return pricing on orphan drugs for CAH, SCH, and RRC hospital covered entity types (i.e., those subject to the Orphan Drug Exclusion). Some have returned pricing (Thank You). Our critical access hospitals can really use the help when they use these orphan drugs for their non-orphan indications. One compliance recommendation: regardless of your split billing vendor or if you use a manual process. Whenever you identify a qualified orphan drug (i.e., used on an outpatient for the non-orphan indication and duplicate discount is prevented) then track this patient and drug administration on a spreadsheet with the indication. For recurring patients, you can simply list the administration for tracking since you already have the indication. This is then readily retrievable in the event of a HRSA audit and a good check for you to know you have confirmed indications.

Contract Pharmacy Compliance Tip: Pay careful attention to your patient encounter data you are sending to your vendor. We always recommend removing patient visits that never generate prescriptions (even if they technically qualify). These areas include lab, imaging, IV infusion, physical therapy, etc. You could also send all the data to your vendor and have them exclude areas if that is an option. It should also go without saying that you need to exclude non-qualifying areas (i.e., non-reimbursable areas of your cost report). Check this feed at least annually to ensure nothing has changed or been added to, . . . Stuff Happens!

Request From Us: For future articles, we will definitely continue to write on what’s hot and in the news for 340B; however, we also know that those of you on the front line are dealing with different issues. Please send us your questions and issues you are having and we will respond to them in future articles. You can send us your questions and issues by emailing them to contact@turnkeyrxsol.com.

Aloha, -Rob


Orphan Drug Interpretive Rule

340B Orphan Drug Sign
SUMMARY: Effective July 21, 2014, Health and Human Services (HHS) has issued an “Interpretive Rule” regarding section 340B(e) of the Public Health Service Act (PHSA), “Exclusion of Orphan Drugs for Certain Covered Entities.” This new section of 340B law was added when Section 7101 of the Affordable Care Act added several new categories of eligibility for 340B Program participants, allowing them to have access to 340B drug pricing. Several new entities have benefited from this, including Critical Access Hospitals, Sole Community Hospitals, and Rural Referral Centers, among others.

EXCLUSION OF ORPHAN DRUGS FOR CERTAIN COVERED ENTITIES: For these covered entities, the term ‘covered outpatient drug’ shall not include a drug designated by the Secretary under section 526 of the Federal Food, Drug, and Cosmetic Act for a rare disease or condition.

As a reminder, this Rule was vacated by U.S. District Court for the District of Columbia on May 23, 2014, on the grounds that HHS does not have the authority to issue the Rule as a substantive rule.

INTERPRETIVE RULE: HHS interprets section 340B(e) of the Public Health Service Act as excluding drugs with an orphan designation only when those drugs are transferred, prescribed, sold, or otherwise used for the rare condition or disease for which the drug was designated under section 526 of the Federal Food, Drug, and Cosmetic Act (FFDCA).

WHAT’S NEXT?: Now that this issue has settled down (hopefully), will manufactures add 340B pricing back as quickly as they took it away? Some have already. Our team has seen first-hand how important these savings are to the covered entities that we support.

At the 340B Coalition Conference last week, OPA Leadership admitted that the Orphan Drug issue has taken a front seat, and has delayed the Mega-Reg ruling. We are hopeful that this will be coming in the very near future.

See links to the HRSA Website regarding the ruling.

Federal Register Notice: Availability of Interpretive Rule

Interpretive Rule: Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B Program

As usual, if you have any questions regarding the 340B program, please reach out to our team at Turnkey Pharmacy Solutions. We are here to help!

-Rich Iverson

340B Compliance – The Higher Standard

TetonsI am sitting just outside of my Cabin at the base of the Teton Mountain range on the Wyoming/Idaho border (I just took the picture to the left from my porch). It is my time for recharging and evaluating goals. I am also reading “A Higher Standard of Leadership” by Keshavan Nair, and am finding some universal truths that apply to our 340B Program. I will share some of these thoughts and of course discuss the 340B Program in the following article.

As for the Turnkey Pharmacy Solutions team, we have been crazy busy supporting existing clients and completing at least one audit a week for the past five weeks. We were able to visit some great covered entity sites that are truly engaged, and who are endeavoring to have a compliant 340B Program. We are also preparing for the DC 340B Coalition Conference next week, where we have a booth and Rich Bucher, from our team, is speaking at the conference. Stop by and say hello if you are there.

340B Updates: We are still waiting to see the ultimate outcome of the Orphan Drug clarification as we have not seen all pricing return to CAH wholesaler accounts since the OPA clarification a few weeks ago. Mega-Reg (Mega-Clarification) is still in the air and maybe we will learn something at the conference. It was during last year’s conference (or near it anyway) that the non-covered outpatient drug clarification around bundled drugs was brought to light, and we are hopeful more clarifications will come soon. The one thing we know for certain is that recertification is coming for hospitals in August, AOs should get notice around August 1st and have August 6th through September 10th to complete the recertification. If you are in Washington, an update came from one of the Washington state hospital organizations that stated July 15th is the deadline, but that is the deadline for this quarter’s enrollments and not recertification.

So, what is the universal truth that the beautiful Teton Range and my current reading inspired? A Single Standard of Conduct through living absolute values. By absolute values, I mean things like truth, honesty, and integrity. These are values that can bring order to chaos (the 340B Program can feel chaotic at times). If we espouse to have a compliant 340B Program or to help clients have a 340B Program, or if we are a manufacturer and simply want our customers to have a compliant 340B Program, then the heart of the matter (from my perspective and experience working with covered entities) is to find a way back to your absolute values.

Using truth, honesty, and integrity as core absolute values with the 340B Program, we will appropriately resource compliance activities and make the time to ensure we are doing things right. We will apply the current patient definition in a manner that we can honestly say and feel we are compliant and not stretching the rules to meet our needs (is what we are doing pass the sniff test?). We will develop processes that safe guard against diversion and duplicate discount. As vendors we will support our clients and help them with their compliance activities. As manufacturers we will work with covered entities for appropriate use of the 340B Program, and as consultants we will provide honest and accurate information to help our clients make the best decisions possible.

“We must be on guard against ideology, tradition, and organizational goals masquerading as absolute values. These Pseudo-absolute values include . . . capitalism, free markets, and organizational survival. When we turn these into absolute values, we may sacrifice what is fundamental at the altar for what is expedient.” – Nair

I think Nair makes a great point about how easy it is to substitute our company’s goals or values for an absolute value. If I may I ask, take a look at how your company is currently managing your 340B Program or dealing with covered entities and determine if you are living by absolute or pseudo-absolute values. If it is the later, it is time for a change. The program is too important in the current healthcare landscape, we still have numerous patients without insurance that need non-profits and government institutions to cover their needs. I have also seen underinsured go from poor medication compliance due to cost to improved compliance with chronic medical conditions directly due to the 340B Program (e.g., diabetes, COPD). The 340B Program has been critical for many organizations to continue to provide the level of needed care, or in some cases to simply keep the doors open. I have seen this first hand and believe this to be true, but it gives us no excuse to not manage the 340B Program in a compliant manner. We must strive for the higher standard based on our absolute values in order to consistently do the right thing not only for covered entity organizations, but for our patients.

340B Orphan Update and Catching Up

Recentish (it may be a word) Updates in the 340B World

340B Orphan Drug Judge***Orphan Update*** – On May 23rd, 2014, a District of Columbia Judge, Rudolph Contreras, ruled that HHS does not have rule making authority to direct how the Orphan Drug Exclusion statute is applied in applicable hospitals (i.e., CAH, SCH, RRC, and CAN type covered entities). He did feel it was a reasonable way to administer the statute (allow use for non-Orphan indications); however, without rule making authority HHS cannot create the rule. This is a result of a lawsuit from drug manufacturers, and we will likely see the 340B pricing be removed from affected covered entities in the near future.

340B Compliance Tip of the Month: Take a look at your crediting process for drugs to ensure that credits cross to your hospital accumulator. Some systems credit in a billing system and not the EMR where the data is pulled. Related to this is how patient own meds, white bagged meds (when patients need to use a specialty wholesaler for high cost drugs and they are shipped to you or the patient), or Patient Assistance Programs (PAP) are treated in the system as far as accumulation.

Well, it has been a lot of busy weeks since the Winter 340B Coalition Conference. Of course this is evidenced by the fact I have not wrote up the highlights from the last day of the conference. My goal is to do that and share some highlights from a recent 340B University I had the opportunity to provide a presentation for and to attend.

A quick update on us, I am excited to announce that Rich Iverson is full-time with Turnkey Pharmacy Solutions, our 340B services and consulting company. This is great because I have been busier than I want to be. In the last two months we have provided onsite HRSA audit support for a DSH hospital, an external 340B audit for two DSH hospital, external 340B audits for eight CAH hospitals, and presented at 340B University on contract pharmacy, mixed-use setting, covered entity perspective of HRSA and Manufacturer audits. Plus, coordinating efforts for the rest of our work that needed to be completed. Of course, starting with this article I am writing on the plane ride home from an audit. (By the way, unless you receive upgrades for being a frequent flyer, go for the plane seat rows for the second emergency aisle. They are longer and the seat in front of you can’t recline, while your seat can).

I reviewed my notes from the last day of the coalition conference. I must say, it is easier to write the article right after you hear the presentations. The key items I felt were important were the great discussion on legislative changes to congress, 340Bair, and a recap of legislative action for 2013.

For congress changes, I will not go through the details, but there are a significant amount of people retiring or leaving office for other reasons that could change some of the key players for and against the 340B program. The take home message is to a) come to the DC conference in July and interact with your senate and house representatives from your state and b) to prepare a message for why the 340B program is important for your hospital and clinic and what it does for vulnerable patients with need in your community. Of course, this means you need to have some things you are doing. As I travel around the country and work with various covered entities (typically providing 340B independent audits) I get to hear a lot of neat things people are doing to take care of their patients with 340B savings. The hard one to measure and determine impact are sites that would be in the red financially without 340B savings. I personally know for a fact of a couple of small facilities that would have closed down without 340B savings. When I think of access for patients in that community, especially elderly and those with disabilities, this truly becomes an access and service issue.

340BAir and other Con or Pro 340B groups (like 340BFacts), are all part of the reality of where the 340B program is today. I don’t think we should judge either group to harshly (depending on what side of the aisle you sit). I personally feel the reality is somewhere in the middle. The 340B program does in fact provide critical support for many patients in need and in many cases, meets a gap that is difficult to cover in the absence of the 340B savings for the covered entity. At the same time, compliance of the program is not where it needs to be. HRSA’s efforts have been huge at improving compliance, and I am grateful for the additional funding going to HRSA to help out with compliance oversight in the program (both covered entity and manufacturer). Note to covered entities: self-audit your program regularly and be an active participant in oversight of your vendors and the output of your vendor solutions. Note to manufacturers: We need to do a better job of protecting you from 340B diversion and managed care duplicate discounts (not Medicaid, well, we need to protect from Medicaid too, but I am talking about rebates to insurers other than Medicaid).

340B University (March) – Commander Pedley was there, and no she did not give us any hints on the Mega Regulation (for the record, Chris Hatwig tried his best and she was a rock at not providing anything). She did confirm that the current plan is still to release the draft for comment in June. I believe we will have 60-days to respond, so be ready as this happens over July and the busy vacation summer season. One item that was new to me at the University session was that there is an additional option for OPA that is coming regarding compliance. There will likely be user fines for non-compliance. No details on how much or how this works, but we can add that to the options of terminating the covered entity, terminating the contract pharmacy(ies), and paying back savings. Although it is possible to have criminal penalties too, it is still highly unlikely and was not mentioned.

Whew, I really need to break these up into more articles. I hope to add a compliance tip every month, so stay tuned; and let me know if you have a good one to share.

Two Side notes:

1) I am presenting at 340B University at ASHP Summer Meeting and a CE on 340B on Monday. If you are at either event, let me know if you have any specific questions and I will be more than happy to help.

2)W e have a booth at the DC 340B Coalition Conference, so if you are going, please stop by and say hello.

340B Coalition Conference Highlights Day 1

340B ConferenceBefore we get to the highlights, I need to address one thing we always strongly recommend to covered entities we partner with.

For key leadership staff, you should attend a 340B Coalition meeting OR 340B University meeting annually.

I even recommend one of each if you can swing it. The two meetings cover 340B from slightly different angles (similar, but different . . . I may need to cover this in a separate article). Currently listening to Bill von Oehsen and he just mentioned the need for attending one of these educational sessions annually. The reason I bring this up is that I do not want anyone to substitute formal education by using our Blog or reading the Apexus or SNHPA website for their sole means of 340B education. Okay, on to the highlights!

Legislative: The biggest update is the increase in funding for OPA (well, technically HRSA for 340B, but that means OPA). This brings OPA’s budget to $10.2 million, which is an increase of $5.76 million. Commander Pedley has to present to congress in March on how this money will be used for compliance and integrity. We did hear that some of this will be used for manufacturer auditing as well.

What is on the Horizon for 2014 (We know about most of these, but it is a fun list):
-Orphan Law suit (regarding the recent clarification that stated if the Orphan Drug was used for a non-Orphan indication, then it could be purchased at 340B).
-AMP Regulation due out in May: Defines AMP and may impact Medicaid Rebates.
-1st Manufacturer HRSA audit.
-And we can’t forget, 340B Regulations to be proposed this summer.

The “Real” Numbers on Contract Pharmacy:
-Percentage of Covered Entities with contract pharmacy = 18%
-Covered Entities using Contract Pharmacy that have less than 5 contract pharmacies = 75%
From my personal experience, we also have many contract pharmacies listed that are not being used. They were either set-up and not started OR a large retail chain added many stores and then looks to see which stores have volume (and of course have not removed the extraneous stores yet).

Contract Pharmacy Diversion: I did hear for the first time that besides a covered entity being removed from the program AND potential payback of all 340B savings, a contract pharmacy diversion could result in the contract pharmacy being removed for the covered entity, but the covered entity could stay enrolled. That was new to me and makes sense.

Medicaid (Correction): During some FAQs, someone kept pushing for a response as to if Medicaid Rebates were Fee-for-service (State) Medicaid only or Managed Care Medicaid too. Initially the response was it depends (which I feel is the right answer). They kept pushing and eventually got a Yes, State Medicaid only. I want to clarify, this is technically correct. However, in some states, State Medicaid picks up the info from Managed Care Medicaid and seeks a rebate. The reason the answer is correct is that it is State Medicaid only that can seek the rebate (that too could change of course); however, they are collecting Managed Care Medicaid claims for rebates as well. Take home message: You need to ask (yes, that means call… on the phone) each Managed Care Medicaid and State Medicaid what they are doing regarding rebates, and even if they say no initially (that is regarding the Managed Care portion), make sure you are notified if they change their practice.

Apexus: Big Chris (If you haven’t met Chris Hatwig from Apexus, he’s like 8’6″ or something, and I usually only make jokes with him if I don’t have to see him for months), shared a lot of tools on the Apexus website. A) if you are a CE and not registered with Apexus, then register! It is one of those no brainers (free and provides a lot of benefit) in life that rarely exist. B) The one item I want GPO Prohibition sites to go look for is the “Minimize WAC Exposure Tool” that provides 10 things you can do to minimize your WAC impact. In my recent role as a DSH pharmacy director, the WAC impact was about $70K/month and in May it was $100K (we turned on triple split with WAC on in April 2013 to meet the first deadline).

Okay, I don’t want to get too long. We’ll cover day 2 next (still going right now as I write this, good discussion on self-reporting). The picture above is Rich B, Rich I, and me at our Turnkey Pharmacy Solutions booth. Thank you to everyone who stopped by, we have had an awesome time meeting people from all over the country. There are a lot of people trying to do the right thing, and if we can help you with compliance or just to answer some quick questions, we are here for you. -Aloha, and I hope I see many of you at a 340B University or the July 340B Coalition Conference in Washington DC.

The Four Keys to 340B Contract Pharmacy Compliance

340B pharmacistI feel like I am beating a dead horse here, but experience is the best teacher and a lot of recent experience at various covered entity sites tells me the horse can take it! (it is dead after all)

If you currently have or are considering 340B contract pharmacy or in-house pharmacy, then please read on. If you are not, then I recommend you read on anyway just in case you change your mind.

Key 1: The provider list. Make sure you think about which providers actually write prescriptions from your QUALIFIED covered entity areas. Also, make sure you know your providers that practice only in your covered entity areas versus the providers that see patients outside of the hospital in addition to patients in the hospital (or clinic).

Key 2: The encounter feed: Just because an area of your hospital or clinic qualifies for 340B doesn’t mean you should always send the encounter data. Like the provider list, review the encounter data for encounters that can actually generate a prescription. No lab or imaging only patients!

Key 3: Eligible window: What the heck is that you ask? It is the window of time after an encounter that you allow the third party vendor to qualify a prescription as 340B. I have seen lots of permutations and the key is to make the window as small as possible without missing out on too many eligible 340B prescriptions. Depending on your vendor, you may also be able to set different eligibility windows by provider.

Key 4: Audit, Audit, and … Audit: You should be auditing monthly for both compliance with 340B diversion regarding contract pharmacy scripts AND compliance with your policies and procedures. You should also have a detailed external audit at least annually to ensure the wheels haven’t come off the bus. From experience, this should be someone different than the person completing the monthly audits.

At the end of the day, you as the covered entity are fully responsible for compliance of your 340B program. So you need to own it. You can do this in contract pharmacy by directing your third party vendor to the process and criteria that you feel will provide a high degree of compliance for your hospital or clinic’s situation. Although third party vendors mean well and may provide some guidance, ultimately it is the covered entity that knows their situation the best.

Do you need help? We have tried to share our guidance in this article, but if you need more detailed support and consulting, let us know at Turnkey Pharmacy Solutions. Best of luck, -Rob

340B Audits – HRSA and Your Own

340B Audit Preparation Is the KEY!

340B AuditOctober and November have been busy for us because of 340B Audits. We are assisting four (4) hospitals with 340B HRSA Audit preparation (yes, they all received HRSA letters early in November). HRSA is officially back to work, mandatory vacation is over, and it sure feels like a little catching up is being done, or at least a solid attempt to get another group of audits done by years end. This was also in addition to the three external requested audits we completed in October.

This experience has provided a lot of insight as to where you should be focusing your 340B compliance efforts:

#1: If you do not have an internal compliance plan, get one! Of course, you should start with your comprehensive policies and procedures and build your compliance plan and audit guides from there. Apexus has some sample policy and procedures you can find on their website, and if you prefer a more turnkey set with recommended auditing guides, you can check out: Turnkey Pharmacy Solutions’ Policies, Procedures, and Auditing Guides.

#2: Resource Compliance: In too many cases, we have seen where staffing and budgetary pressures have led to hospitals and clinics under-resourcing staffing for 340B compliance processes. If you can, add some staff to do this OR consider outsourcing if adding staff is either not an option or too hard to recruit. If you do hire staff, you must get them to a 340B University or 340B Coalition meeting as soon as possible, AND make sure they go back to one of those meetings at least annually.

#3: If you are doing 340B Contract Pharmacy, make sure you are checking for false positives and potential changes in your patient identification process that could lead to diversion. Take careful consideration of your provider list (i.e., if you are including providers that practice in and out of your covered entity, then what measures are you taking to prevent false positives). Does your third party vendor offer some additional prescription identification measures to decrease the risk of false positives (e.g., diagnosis bridge, encounter provider-script provider match, shorter claim period for non-fully employed docs).

#4: Staff Education: At a hospital/clinic level, it is critical that your staff know the implications of purchasing and providing drugs to other hospitals and clinics. It is too easy for staff who are unaware of specific purchasing needs to know how to obtain drugs in an emergent situation and to do it correctly 100% of the time with out proper education. If you are a GPO Exclusion site, does your staff know that they cannot simply buy drug from another pharmacy if the drug they are buying could be used for an outpatient or observation patient? When needing to sell drug to another pharmacy, they must make sure it is not a 340B drug AND if you are a GPO Exclusion site, it needs to be at WAC pricing (since that is what you will pay to replace it).

#5: For hospital administered 340B drugs, direct order purchases and other purchasing can cause significant issues. More for GPO Compliance sites, but whenever you are going away from your triple-split system, there is a risk of 340B non-compliance. These processes deserve a close review and formal written processes that are consistently followed to ensure compliance.

I have a few more, but those are some definite highlights. The take home message is that you need to dedicate time and resources to ensuring your site is 340B audit ready, . . . TODAY! The time to get 340B compliance ready is not after you receive your HRSA audit letter. If you are in need of some guidance or help, please email me at rnahoopii@turnkeyrxsol.com and we can get you started on the right path.

340B Program October Update

So what is going on in the world of 340B?

340B Program UpdateI hope you are ready for some serious 340B in the trenches discussion, because I have been so busy with my recent transition (I’ll tell you more later), that I need to get some stuff off of my chest. In this article, we will discuss some of the recent headline sin (<---this is a typo, but thought it actually makes sense and should just leave it in) the 340B world, how the Orphan Drug Exclusion is playing out, what - No OPA in the middle of open enrollment, Baxter's second letter, and my favorite - GPO Exclusion is making PhRMA more money!
Job Change: I am happy to announce my retirement from the world of Director of Pharmacy at a 400-bed DSH site (not an actual retirement as I am not 55 yet, but I am running with that tag line). I have come to the final realization that I can not continue to help manage my health-system’s 340B program, be editor for the 340B Program Blog, and be the CEO of Turnkey Pharmacy Solutions (our 340B management company) while being a full-time pharmacy director. I believe my wife stated it best when I proclaimed this realization and she said, and I quote (hard to get her sarcasm right, but trust me, it is there) “Really! you can’t be good at everything, at the same time!” I am pretty sure too many late nights and failure to carry my load of the household duties has somewhat jaded her to the cause, but I aim to make amends (although, me setting up shop in a home office and being around during the day may not have been a step in the right direction). In any case, although I continue to help support my health-system’s 340B program and our other hospitals we help manage, I am officially full-time in the 340B space. We have been setting up quite a few external audits for various 340B covered entity types. If you are interested, let me know.

Headlines: We are going to cover most of the headlines that have recently come out in the next few sections. One key one that may have been overlooked is that HRSA did post the results of 8 more audits, you can find them here. I will be breaking these down in a future (but soon) article. The one thing I keep looking for is the sanctions, and they still say “to be determined.” Quite a few issues surrounding Contract pharmacy false positives and billing Medicaid when the covered entity elected to carve out. Another note worthy headline is that Apexus has updated their FAQs so you can now search them (versus perusing the hyperlinked pdf’s trying to find what you are looking for). You can find the FAQ page at Apexus here.

Orphan Drug Exclusion: Well, it is here. As of October 1st, 2013 CAH/SCH/RRC covered entity types can officially purchase Orphan Drugs that are used on eligible patients for an indication other than the orphan drug indication(s). If you thought our PhRMA colleagues were going to go away quietly in the night, it is not so (you didn’t really think that did you?). Senator Hatch (R-UT) expressed his disappointment for the HRSA ruling on Orphan Drugs and recently PhRMA has requested the Washington DC federal district court to block the HRSA ruling on 340B purchases of orphan drugs. On the other side of the coin, SNHPA is wondering why the Orphan Drug Exclusion is even there in the first place and is hoping to repeal it. Although I wonder the same thing, I tend to like this middle of the road approach.

No Money, No . . . Federal Government: This one fascinates me quite a bit. The whole lack of appropriations and current furloughs of federal employees and staff of course goes much wider than HRSA and OPA. But, this is not a social commentary blog (okay, well, it isn’t usually anyway), so I will keep it confined to the 340B Program. We are in the middle of open enrollment and we all get the email that in summary says, “we were sent home, the website is up, I hope it doesn’t break, good luck and we’ll see you when they let us come back to work!” I have mentioned it before, the OPA staff do a pretty dang good job, and I am sorry they have to go through this. Dear OPA, we hope you come back soon!

Baxter’s second letter: I change my mind, I don’t want to talk about Baxter’s second letter. I am having fun summing things up, so here is what the jest of the second letter is, “okay, so we were told our first letter was wrong, we don’t get to tell everyone that most of our drugs are non-covered outpatient drugs just because somewhere in the world somebody did a bundle payment on it, but we think it was just our title that was off, so we changed it, and in general we still think we are right.” So, if you are Baxter and reading this, give me a call, I think I can help you here. No, seriously, I have met with a lot of the Baxter people, and they are great, I just think the letters were interesting.

GPO Exclusion – Money Maker for PhRMA: I can’t believe this hasn’t been talked about more. I really need to do a separate article on it, and probably will, but had to save the best for last here. Let’s call a spade and spade. PhRMA dislikes the 340B program because it decreases revenue for them. Well, the GPO clarification that specifically stated how a retrospective split billing system should work in hospitals was a boon to PhRMA. I have talked with many pharmacy directors, and DSH hospital after DSH hospital is reporting an increase in pharmacy spend of hundreds of thousands due to the WAC account (in some cases, six-figure expense increase every month). I’ve discussed some of the details why in a previous article, but I thought I would be able to get this down at my facility and have come to the realization we will always have some WAC purchases and it will not ever be a small amount of money. I know we all try and play well in the sandbox, but let’s go ahead and call this one a win for PhRMA and a loss for hospitals taking care of patients. There are some things that each DSH needs to do to limit the WAC purchases and a lot has to do with your NDC monitoring (which is good for both expenses and compliance). I have some ideas on this, email me if you are interested.


The US Health Resources and Services Administration (HRSA) has finally posted the final rule defining the orphan drug exclusion from the 340B program.

340B UpdateAs you may know, Section 7101 of the Affordable Care Act allowed Critical Access Hospitals, Sole Community Hospitals, and Rural Referral Centers to participate in the 340B drug pricing program. However, the very same legislation carved out Orphan Drugs, meaning they cannot be purchased at a 340B price. Since that legislation, there has not been clarity on how the Orphan Drug exclusion should be interpreted. Some think the Orphan Drugs should be excluded for all indications, while some feel that they should only be excluded for the Orphan Drug indications. This week, HRSA’s final ruling states that the exclusion only applies to the condition or rare disease for which the Orphan Drug was designated.

The ruling is good news for the covered entities looking to expand their savings opportunities; however, these sites will need a robust system to track the orphan drug and the patient’s disease or condition.

For example, Remicade can now be purchased on the 340B program for non-orphan drug indications. The orphan drug indications for Remicade are for Crohn’s disease and pediatric ulcerative colitis (UC). All other indications and disease states qualify for the 340B drug purchase.

You can read the entire ruling here: https://www.federalregister.gov/articles/2013/07/23/2013-17547/exclusion-of-orphan-drugs-for-certain-covered-entities-under-340b-program