The 340b Drug Pricing Program And Medicaid Drug Rebate -Books Pdf

The 340B Drug Pricing Program and Medicaid Drug Rebate
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Amounts collected under the federal rebate program are shared by the federal government and states. based on the state s current federal medical assistance percentage FMAP The rebates collected by the. state are reported as an offset to drug spending on the CMS 64 quarterly expense report used to determine. the federal and state share of Medicaid spending, Medicaid drug rebates are calculated based on average manufacturer price AMP AMP is defined as the. average price paid to the manufacturer for the drug in the US by wholesalers for drugs distributed to retail. community pharmacies and by retail community pharmacies that purchase drugs directly from the. manufacturer 1927 k 1 of the Act The Centers for Medicare Medicaid Services CMS calculates a. unit rebate amount URA for each drug based on the established formula for that type of drug and. provides this URA to each state 3 The state then multiplies the URA by the number of units that it paid for. that drug during the rebate period and submits a rebate invoice to the drug manufacturer 4 The state. collects the rebate dollars from the manufacturer and reports the rebate amount as an offset to the drug. expenditures on the CMS 64 There are separate rebate formulas for single source and innovator multiple. source drugs i e brand name drugs versus non innovator multiple source i e generic drugs 5. The 340B Program in Brief, The Veterans Health Care Act of 1992 authorized the 340B Discount Drug Pricing Program which derives. its name from Section 340B of the PHSA The law is intended to help participating providers stretch. scarce federal resources Committee on Energy and Commerce 1992 Administered by the Health. Resources Services Administration HRSA the program requires drug manufacturers to sell drugs to. certain safety net providers known as covered entities at a reduced price known as the ceiling price The. ceiling price is the drug s AMP minus the URA the same process used to determine a drug s rebate. obligation under Medicaid The law also established the Prime Vendor Program PVP to negotiate. additional discounts from manufacturers known as subceiling prices establish distribution networks for. drugs and provide other support services Apexus 2018. Participation in 340B is optional for covered entities If a covered entity chooses to participate it must. follow certain program requirements including dispensing 340B drugs solely to its own patients. Dispensing 340B drugs to other patients is known as diversion Manufacturers are not required to pay. rebates under the Medicaid Drug Rebate Program on drugs purchased under 340B In other words if a. covered entity dispenses a 340B drug to a Medicaid beneficiary the state should not invoice the. manufacturer for a rebate on that drug Notably covered entities are not required to use 340B drugs only. for low income or uninsured individuals and not all covered entities are required to pass along the savings. from 340B drugs to patients Conti and Bach 2013,Covered entities. Covered entities are defined in statute and generally consist of federally funded clinics and hospitals that. furnish care to a large number of underserved or vulnerable individuals including Medicaid beneficiaries. Examples of covered entities include clinics that receive federal grants to provide specific services treat. specific populations or treat specific diseases hospitals that meet certain statutory criteria and hospitals. that have a large Medicare disproportionate share hospital DSH adjustment percentage 340B a 4 of. the PHSA The Patient Protection and Affordable Care Act ACA P L 111 148 as amended added four. types of hospitals and one type of health center to the list of eligible covered entities 6. To participate in the program eligible providers must register with HRSA certify their eligibility annually. maintain records for auditing by manufacturers or the Secretary of HHS take steps to prevent duplicate. discounts and ensure that drugs purchased under 340B are not diverted 340B a 5 of the PHSA. A covered entity may have several affiliated sites known as child sites eligible to participate in 340B Bach. and Conti 2014 HRSA 2017b Covered entities may also enter into arrangements with retail pharmacies to. dispense 340B drugs on behalf of the covered entity known as contract pharmacies OIG 2014a. Medicaid and 340B, The primary issue state Medicaid programs face with regard to 340B is preventing duplicate discounts. NAMD 2015 States and covered entities use a variety of methods to identify whether a 340B drug was. used for a Medicaid beneficiary although weaknesses in these systems remain Moreover extending. rebates to Medicaid managed care which is the primary mechanism of delivery of health care services to. Medicaid patients and the growth in contract pharmacies has complicated this task. The Medicaid exclusion file, HRSA maintains a list of covered entities that use 340B drugs for beneficiaries in Medicaid fee for service.
FFS known as the Medicaid exclusion file MEF to assist states in determining whether a 340B drug. was dispensed to a Medicaid beneficiary Upon registering with HRSA a covered entity must notify the. agency if it intends to use or carve in 340B drugs for Medicaid beneficiaries That decision must apply to. all the Medicaid FFS beneficiaries the entity serves HRSA 2014 HRSA lists these covered entities on the. MEF and states exclude claims from providers on the MEF from their rebate invoices OIG 2016. States have raised concerns that the MEF can be inaccurate or outdated and that it does not allow for. flexibility when a covered entity that usually carves in to 340B needs to use non 340B drugs for example. in the event of a drug shortage NAMD 2015 OIG 2014b States have also expressed concern about the. functionality of the MEF particularly the difficulty in identifying which covered entities have changed. decisions to carve in or carve out and when the covered entity made such a decision NAMD 2015. In addition the MEF does not apply to drugs dispensed by contract pharmacies or to drugs paid for by. Medicaid managed care both of which have expanded significantly over the past decade Gottlieb 2017. NAMD 2015 OIG 2014a HRSA guidance states that the MEF is limited to preventing duplicate discounts. in Medicaid fee for service HRSA 2014 HRSA guidance also states that contract pharmacies should not. dispense 340B drugs to Medicaid beneficiaries unless the covered entity contract pharmacy and state. establish an arrangement to prevent duplicate discounts and notify HRSA of the arrangement HRSA. 2010 Covered entities are generally allowed to make different decisions regarding use of 340B drugs for. beneficiaries in Medicaid FFS and those in managed care Accordingly states cannot rely on the MEF to. exclude 340B drugs in Medicaid managed care OIG 2016 Nonetheless 17 states reported that they relied. solely on the MEF to prevent duplicate discounts for drugs paid for through Medicaid managed care OIG. Some states create their own provider exclusion lists that indicate which covered entities use 340B drugs. for FFS beneficiaries and managed care enrollees OIG 2016 Other states require that covered entities. make the same decision on the use of 340B drugs for both FFS and managed care populations OIG 2016. Covered entities may decide to use a different national provider identifier NPI or Medicaid billing number. for 340B and non 340B claims OIG 2016 This would allow the state to use a provider level exclusion file. to identify 340B claims while affording covered entities the flexibility to decide to use 340B drugs for some. Medicaid beneficiaries and not others OIG 2016 However obtaining separate NPIs can be complicated. for contract pharmacies and they rarely do this OIG 2016 NAMD 2015 Furthermore in order to use the. correct NPI a provider must know whether the individual is eligible for 340B at the time it submits the. claim information that may not be available to a contract pharmacy until later. In addition to provider exclusion lists a state can use claim level methods to identify and exclude 340B. drugs from its rebate invoice Under this approach a covered entity indicates on the claim whether the. drug was purchased under 340B or not OIG 2016 This approach is more flexible than the provider level. method because covered entities can use 340B drugs for some Medicaid beneficiaries e g those in FFS. and non 340B drugs for others e g managed care enrollees Furthermore claim level methods allow. providers that generally use 340B drugs for Medicaid to indicate individual instances when they did not do. so for example if the provider ran out of a particular 340B drug and had to substitute a drug from general. inventory that could be indicated on the claim OIG 2016. Contract pharmacies and 340B administrators, Claim level identifiers may not work in all scenarios In order for a covered entity to use claim level. identifiers it must know at the time it files the claim whether it used a 340B drug for a particular patient. As noted above contract pharmacies may not have this information A contract pharmacy will generally. dispense a drug from its regular inventory and bill the claim as a non 340B drug The covered entity will. then retroactively identify which claims were eligible for 340B and purchase a corresponding number of. drugs at the 340B ceiling price to replenish the contract pharmacy s inventory OIG 2014a. The process of determining whether a claim was eligible for a 340B drug retroactively can be complex. Generally a covered entity will hire a 340B administrator to perform the retroactive identification of eligible. claims OIG 2014a However the HHS Office of the Inspector General OIG found that covered entities. and 340B administrators use different methods to identify 340B prescriptions with inconsistent results. Different identification methods resulted in the same prescription being categorized differently by different. covered entities and administrators even when presented with the same fact patterns raising the. possibility that a 340B drug may be diverted to an ineligible patient OIG 2014a Properly identifying which. claims are eligible for 340B drugs is a challenge for covered entities in general and is not limited to. Once a claim is identified as being eligible for 340B retroactively adding 340B identifiers to the claim can. increase the administrative burden on covered entities and state Medicaid agencies Changing the status. on a claim may require the pharmacy to reverse and resubmit the claim which may occur after state. deadlines for filing claims have passed OIG 2016 NAMD 2015 Some states instruct contract pharmacies. to submit spreadsheets that identify all claims subsequently determined to be for 340B eligible. prescriptions OIG 2016 State staff must then remove these claims from the state s rebate invoice or. adjust previous quarters rebate invoices as necessary OIG 2016. Administrators have also reported problems identifying whether individuals enrolled in managed care are. Medicaid beneficiaries which can complicate state efforts to prevent duplicate discounts OIG 2014a. Administrators will typically use an insurer s bank identification number and processor control number. BIN PCN to determine if the plan is a Medicaid managed care plan OIG 2014a However not all states. have a list of all their Medicaid managed care BIN PCNs and some plans may use the same BIN PCN for. Medicaid and private insurance plans OIG 2014a,Other approaches. Due to the complexity in identifying 340B claims in contract pharmacies some covered entities do not. dispense 340B drugs to Medicaid beneficiaries through their contract pharmacies OIG 2014a In 2016. Delaware submitted a state plan amendment SPA that took this approach further and proposed to. prohibit all covered entities from using 340B drugs for Medicaid beneficiaries DMMA 2016 Several 340B. covered entities and their parent organizations opposed this action NACHC THA PPFA et al 2016 The. SPA was eventually amended and approved to require covered entities to notify the state if they use 340B. drugs for Medicaid beneficiaries similar to the MEF but at a state level CMS 2016a. Other Issues Related to 340B, Policymakers have raised a number of other issues about 340B outside of its interaction with Medicaid. which generally relate to covered entities ability to generate revenue from the program and the proper. level of oversight Some of these issues affect Medicaid to a lesser degree than other payers. Revenue enhancing activities, Covered entities can generate revenue by purchasing drugs at the discounted 340B price while charging. insurers and patients a non discounted rate Conti and Bach 2014 The difference between the discounted. purchase price and higher payment rates is referred to as the spread McCaughan 2017 8 Some covered. entities e g federally qualified health centers are required to reinvest 340B revenue in services NACHC. 2015 Other covered entities e g hospitals are not limited in how they use their 340B revenue Bach and. Conti 2014, The ability of 340B covered entities to generate revenue from the program without passing along the.
discount to low income or uninsured individuals has led some observers to conclude that 340B has moved. away from its original mission of serving at risk populations and has become a funding stream for some. providers Bach and Conti 2014 Alternatively some covered entities take the position that the original. intent of the law was for covered entities to use 340B to generate revenue to support general operations. which ultimately benefits patients Pollack 2013, Covered entities can enhance the revenue they generate from 340B through a variety of tactics such as. focusing on outpatient settings or expanding into more affluent communities For example one study. showed that patients who live in an area with a 340B hospital are more likely to receive cancer treatment in. the hospital s outpatient setting where they would be able to receive 340B drugs rather than a doctor s. office Jung Xu and Kalindindi 2018 Another study found that 340B hospitals have begun to purchase. affiliated sites located in more affluent communities Patients that visit these affiliated sites are more. likely to have insurance with higher payment rates allowing hospitals to generate greater revenue through. spread pricing Conti and Bach 2014, In response to these revenue enhancing tactics in 2017 CMS reduced Medicare drug payments to 340B. hospitals by nearly 30 percent CMS 2017 CMS cited reports from the Government Accountability Office. the OIG and the Medicare Payment Advisory Commission that showed spending on certain drugs was. higher and grew faster at 340B hospitals than non 340B hospitals CMS 2017 However Medicaid is. affected less by spread pricing because payment for outpatient prescription drugs is based on the cost at. which the provider purchased the drug The Medicaid Covered Outpatient Drugs final rule with comment. requires state Medicaid programs to reimburse retail community pharmacies at their actual acquisition. cost AAC of the covered outpatient drug For covered entities that carve in to 340B the AAC would. generally be the 340B ceiling price There is some potential for spread pricing in Medicaid if a covered. entity purchases drugs at subceiling prices but the magnitude of the spread would be less than it would. be for payers that do not reimburse based on acquisition cost CMS 2016b 9. Concerns about oversight, A second concern about 340B has been whether the program has become too large for HRSA to effectively. oversee Committee on Energy and Commerce 2017 The number of covered entities participating in 340B. grew from 3 200 in 2011 to 12 148 by October 2016 GAO 2011 Committee on Energy and Commerce. 2017 The number of contract pharmacies have expanded rapidly as well reaching 19 868 unique. locations as of July 2017 compared to fewer than 3 000 locations in 2010 Fein 2017a In 2016 340B. purchases by hospitals increased to more than 50 percent of their total drug expenditures during a period. when uncompensated care was generally on the decline Fein 2017b. HRSA s administrative capacity to oversee 340B has not grown commensurate with growth in 340B The. HRSA Office of Pharmacy Affairs OPA which oversees 340B has 22 full time equivalent employees and. conducts 200 covered entity audits annually HRSA 2017a HRSA began auditing covered entities in fiscal. year 2012 when it conducted 51 audits Since 2012 HRSA has audited no more than 200 covered entities. annually Committee on Energy and Commerce 2017 The growth in 340B participation along with the. limited number of audits have led some to question whether HRSA is providing adequate oversight of the. program Committee on Energy and Commerce 2017 The size and scope of the program may also. complicate state efforts to prevent duplicate discounts and ensure proper rebates are collected HRSA. proposed comprehensive guidance to address some of these complexities but this guidance was never. finalized and was withdrawn in January 2017, In addition to a Medicaid drug rebate agreement drug manufacturers must also enter into an agreement that meets the. requirements of Section 340B of the Public Health Service Act and a master agreement with the Secretary of Veterans. Affairs as a condition for Medicaid coverage A drug not covered under a rebate agreement may be eligible for federal. funding in limited circumstances if the state has determined that the drug is essential to the health of its beneficiaries. A medically accepted indication means any use for a covered outpatient drug that is approved under the Federal Food. Drug and Cosmetic Act P L 75 717 or the use of which is supported by one or more citations included or approved for. inclusion in one of the following three compendia American Hospital Formulary Service Drug Information United States. Pharmacopeia Drug Information or the DRUGDEX Information System. The rebate amount for brand drugs has two components a basic rebate amount and an additional inflationary component. The basic rebate amount is calculated as the greater of 23 1 percent of AMP or AMP minus best price For blood clotting. factor drugs and drugs approved by the FDA exclusively for pediatric indications the minimum rebate percentage is 17 1. percent of AMP instead of 23 1 percent of AMP An additional rebate based on an inflationary component is added if the. increase in a drug s AMP exceeds the increase in the Consumer Price Index for All Urban Consumers CPI U over time. The basic rebate amount for generic drugs is calculated as 13 percent of AMP There is no best price provision The. Bipartisan Budget Act of 2015 P L 114 74 added the inflationary rebate to generic drugs which went into effect in the. quarter starting January 1 2017, While CMS calculates the URA to assist states in developing the rebate invoice the manufacturer remains responsible for.
the correct calculation of the URA, Generally an innovator or brand drug is a drug produced or distributed under a new drug application approved by the. Food and Drug Administration FDA Single source drugs are innovator drugs manufactured by only one company and. innovator multiple source drugs are innovator drugs that now have at least one generic equivalent available Non innovator. multiple source or generic drugs are multiple source drugs that are not innovator drugs Generally these are drugs that. have been approved under an abbreviated new drug application by the FDA. Eligible covered entities include the following federally qualified health centers federally qualified health center look alikes. native Hawaiian health centers tribal urban Indian health centers Ryan White HIV AIDS Program grantees children s. hospitals critical access hospitals disproportionate share hospitals freestanding cancer hospitals rural referral centers. sole community hospitals black lung clinics comprehensive hemophilia diagnostic treatment centers Title X family. planning clinics sexually transmitted disease clinics and tuberculosis clinics. Subsequent to HRSA s 2014 guidance OIG followed up with the surveyed states and found that 15 of the 17 states. continued to rely solely on the MEF to prevent duplicate discounts in managed care OIG 2016. In some instances there may be practical reasons that covered entities do not pass along 340B discounts to their patients. Contract pharmacies in particular may have difficulty determining at the point of sale whether an individual is eligible for a. CMS explained in the final rule that it would not require state AAC methodology to reflect subceiling prices for 340B. covered entities because this information may be difficult to obtain CMS 2016b. References, 340B Coalition 2018 Myths and facts http 340bcoalition org resources. Apexus 2018 About the PVP https www 340bpvp com about. Centers for Medicare Medicaid Services CMS U S Department of Health and Human Services 2017 Medicare Program. Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting. Programs Final rule with comment period Federal Register 82 no 239 December 14 59216 59497. Centers for Medicare Medicaid Services CMS U S Department of Health and Human Services 2016a Attachment to the. Delaware State Plan October 13 2016 Philadelphia PA CMS https www medicaid gov State resource center Medicaid. State Plan Amendments Downloads DE DE 16 001 pdf, Centers for Medicare Medicaid Services CMS U S Department of Health and Human Services 2016b Medicaid Program. Covered Outpatient Drugs Final rule with comment period Federal Register 81 no 20 February 1 5170 5357. Committee on Energy and Commerce U S House of Representatives 2017 Memo from Committee Majority Staff to. Members of the Subcommittee on Oversight and Investigations regarding Hearing entitled Examining HRSA s Oversight of. the 340B Drug Pricing Program July 14 2017 http docs house gov meetings IF IF02 20170718 106269 HHRG 115. IF02 20170718 SD002 pdf, Committee on Energy and Commerce U S House of Representatives 1992 Medicaid and Department of Veterans Affairs. Drug Rebate Amendments of 1992 House Report 102 384 Part 2. Conti R and P Bach 2014 The 340B Drug Discount Program hospitals generate profits by expanding to reach more. affluent communities Health Affairs 33 no 10 1786 1792. Conti R and P Bach 2013 Cost consequences of the 340B drug discount program Journal of the American Medical. Association 309 no 19 1995 1996, Division of Medicaid and Medical Assistance DMMA Delaware Department of Health and Social Services 2016.
Pharmaceutical Services Reimbursement 340B Drug Products February 1 2016 DE DMMA. http regulations delaware gov register february2016 final 19 20DE 20Reg 20748 2002 01 16 pdf. Fein A 2017a The booming 340B contract pharmacy profits of Walgreens CVS Rite Aid and Walmart Drug Channels July. 11 http www drugchannels net 2017 07 the booming 340b contract pharmacy html. Fein A 2017b 340B Purchases were more than half of the hospital market in 2016 Drug Channels May 19. http www drugchannels net 2017 05 340b purchases were more than half of html. Gottlieb A 2017 The complicated state of Medicaid in the United States stability amidst considerable future uncertainty London. UK PwC https www pwc com us en health industries health services assets the complicated state of medicaid pdf. Health Resources Services Administration HRSA U S Department of Health and Human Services 2017a Fiscal Year 2018. justification of estimates for Appropriations Committees. https www hrsa gov sites default files hrsa about budget budget justification 2018 pdf. Health Resources and Services Administration HRSA U S Department of Health and Human Services 2017b 340B hot. topics Washington DC April 2017 https www hrsa gov opa updates august 2014 html. Health Resources and Services Administration HRSA U S Department of Health and Human Services 2014 340B Drug. Pricing Program notice clarification on the use of the Medicaid exclusion file Release no 2014 1 Washington DC. December 12 2014 https www hrsa gov sites default files opa programrequirements policyreleases clarification. medicaid exclusion pdf, Health Resources and Services Administration HRSA U S Department of Health and Human Services 2010 Notice. Regarding 340B Drug Pricing Program Contract Pharmacy Services Final notice Federal Register 75 no 43 March 5. 10272 10279, Jung J W Xu and Y Kalidindi 2018 Impact of the 340B Drug Pricing Program on cancer cite and spending in medicare. Health Services Research January 22 2018, McCaughan M 2017 Health Policy Brief The 340B Drug Discount Program Health Affairs September 14 2017. https www healthaffairs org do 10 1377 hpb20171024 663441 listitem healthpolicybrief 175 pdf. National Association of Community Health Centers NACHC 2015 Letter from Colleen P Meiman to Captain Krista Pedley. regarding 340B Drug Pricing Program omnibus guidance Federal Register Vol 80 No 167 52300 August 28 2015. October 27 2015 http www nachc org wp content uploads 2015 10 10 27 15 340B Mega Guidance NACHC Comments. National Association of Community Health Centers NACHC The Hemophilia Alliance THA Planned Parenthood. Federation of America PPFA et al 2016 Letter to Victoria Wachino regarding Delaware Medicaid State Plan Amendment. CMS guidance to states on implementation of Covered Outpatient Drug Final Regulation provisions related to Medicaid. reimbursement of 340B drugs April 7 2016 http www rwc340b org wp content uploads 2017 03 Joint Letter to CMS. Re DE Medicaid SPA Letter to Sts about Final COD Reg Final 4 7 16 D0659801 pdf. National Association of Medicaid Directors NAMD 2015 Medicaid and the 340B program alignment and modernization. opportunities Washington DC NAMD http medicaiddirectors org wp. content uploads 2015 07 namd 340b modernization alignment opportunities may2015 pdf. Office of the Inspector General OIG U S Department of Health and Human Services 2016 State efforts to exclude 340B. drugs from Medicaid managed care rebates Report no OEI 05 14 00430 Washington DC OIG. https oig hhs gov oei reports oei 05 14 00430 pdf, Office of the Inspector General OIG U S Department of Health and Human Services 2014a Memo from Stuart Wright to. Mary Wakefield regarding contract pharmacy arrangements in the 340B Program OEI 05 13 0043 February 4 2014. https oig hhs gov oei reports oei 05 13 00431 pdf, Office of the Inspector General OIG U S Department of Health and Human Services 2014b Medicaid drug rebate dispute.
resolution could be improved Report no OEI 05 11 00580 Washington DC OIG https oig hhs gov oei reports oei 05 11. Pollack A 2013 Dispute develops over discount drug program The New York Times February 12. U S Government Accountability Office GAO 2011 Manufacturer discounts in the 340B program offer benefits but federal. oversight needs improvement Report no GAO 11 836 Washington DC GAO https www gao gov assets 330 323702 pdf.

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