340B Compliance Program...Implement policies, procedures, and standards of conduct Conduct training and education Open effective lines of communication Conduct internal monitoring

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340B Compliance Program

340B Drug Program Summary

Congress created section 340B of the Public Health Service Act in 1992 to allow eligible health care providers known as Covered Entities to stretch scarce Federal resources, reaching more patients and providing more comprehensive services. As part of the 340B Program, Congress required that pharmaceutical manufacturers provide discounts on covered outpatient prescription drugs to Covered Entities that serve high numbers of uninsured indigent patients.

The 340B program is administered by the Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA).

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340B Drug Program Summary – cont.

HRSA allows Covered Entities to dispense 340B drugs to their patients through in‐house pharmacies or through an outside pharmacy with which they contract. Starting in April 2010, HRSA, through sub‐regulatory guidance, began allowing Covered Entities to utilize multiple contract pharmacies in order to expand access to 340B drugs. Since 2010, there has been rapid growth in the number of contract pharmacies. On average, this growth has been 43% annually which has led to increased scrutiny by the OPA, Office of Inspector General (OIG) and certain Congressional leaders.

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340B Drug Program

The 340B law prohibits Covered Entities from diverting 340B drugs to individuals who are not their patients; moreover, the drug discounts are only available to patients treated in the outpatient setting.

Diversion ‐ The 340B law prohibits “diversion” which forbids Covered Entities from reselling or otherwise transferring discounted drugs purchased under 340B to anyone but their own patients, or from using 340B drugs in an inpatient setting. Drug diversion is a major concern of drug manufacturers.

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340B Drug Program

Duplicate Discounts “Duplicate discounts” are not permitted; which protects drug manufacturers from having to give a 340B discount to Covered Entities and also paying a Medicaid rebate on that same drug purchased at a 340B discount. Covered Entities that elect to purchase covered outpatient drugs through the 340B program are required to inform HRSA at the time of enrollment that they will purchase and dispense 340B drugs to their Medicaid population. They should work with their Medicaid State agency to choose whether 340B drugs will be:

1) dispensed to Medicaid patients and billed to Medicaid at acquisition cost for those drugs, or

2) dispensed to those patients from their non‐340Binventory and subsequently seek a higher Medicaid reimbursement.

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340B Drug Program

Compliance with Program Prohibitions

Duplicate Discounts – Covered Entity is prohibited from accepting a discount for a drug that would also generate a Medicaid rebate to the State.

Diversion – Covered Entity shall not resell or otherwise transfer the drug to a person who is not a patient of the entity.

GPO Exclusion ‐ DSH hospitals, children’s hospitals, and free‐standing cancer hospitals may not obtain covered outpatient drugs through a GPO or other group purchasing arrangement.

Orphan Drugs Free‐standing cancer hospitals, rural referral centers, sole community hospitals, and critical access hospitals may not purchase selected rare disease drugs at 340B prices.

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340B Drug Program

Drugs must be administered to a qualified patient: Covered entity has established a relationship with the individual, such

that the covered entity maintains records of the individual’s health care; and

Individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements such that responsibility for the care provided remains with the covered entity; and

Individual receives health care service(s) from the covered entity which is consistent with the services(s) for which grant funding or federally‐qualified health center look‐alike status has been provided to the entity.

Outpatient use only Drugs must be administered in a hospital point of service that would

qualify as a “reimbursable cost center” on the Medicare cost report: Includes qualified outpatient facilities (e.g., physician clinics, surgery

centers)

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340B Drug Program

Person is not a “patient” of a covered entity if the only health care service the individual receives is the dispensing of a drug or drugs for subsequent self‐administration or administration in the home setting

Examples of gray areas:

» Covered Entity patient returns to the Covered Entity pharmacy to fill a prescription for conditions treated by outside health care providers

» Outpatient initiatives by a Covered Entity (e.g., provision of care in mobile clinics, at prisons, etc.)

» Treatment of services referred by the Covered Entity to an outside provider

New guidance likely in the future:

Government Accountability Office (GAO) has advocated for a “new, more specific definition of a 340B patient”

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340B Drug Program

Covered entities may not receive a 340B discount for drugs that are subject to a Medicaid rebate:

Providers required to inform HRSA (by providing their Medicaid billing number) at the time they enroll if they plan to purchase and dispense 340B drugs for their Medicaid patients and bill Medicaid

Follow procedures established by State Medicaid agencies

State Medicaid program may:

Require Covered Entities to carve out Medicaid patients from 340B so the State can claim the rebate

Allow Covered Entities to use 340B drugs for Medicaid patients, and reduce Medicaid payment to the Covered Entity

Allow Covered Entities to use 340B drugs for Medicaid patients, and pay an increased dispensing fee

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CMC 340B Compliance Program

CMC obtained third-party expert for 340B Compliance Program Assessment. Based on the assessment CMC engaged the third party expert to aid in the remediation, provide education and provide guidance on the improvements needed.

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Designate compliance leadership

Implement policies, procedures, and standards of conduct

Conduct training and education

Open effective lines of communication

Conduct internal monitoring and auditing

Enforce standards and discipline

Respond timely to detected offenses and perform corrective

action

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Focus of this presentation


CMC developed a formalized 340B Compliance Program which includes: 340B Drug Purchasing Program Policy and Procedures 340B Compliance Monitoring Program 340B Compliance Program Manager ‐ job description outlining the specific

duties and services to be performed 340B Compliance Committee meetings.

CMC Corporate Compliance Department CMC Facilities leadership of the Pharmacy area CMC Corporate IT CMC Corporate PFS – Patient Financial Services CMC Corporate HIM – Health Information Management CMC Facility Departments as needed.

340B Issues management log 340B Education and commitment to conference, seminars, webinars and

materials to keep current of regulatory changes. 340B Compliance Audit Program

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Internal Monitoring and Auditing

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Overview of a

Monitoring and

Auditing Plan

Example of Monitoring and

Auditing Activities

Findings, Resolution,

and Reporting

Helpful

Tools

MonitoringMonitoring

AuditingAuditing

Typically defined as activities performed on an on‐going basis, to measure and detect potential issues of non‐compliance as defined by policies, procedures, and standards.

Performed by department personnel with direction from management who is responsible and accountable for the process and data being measured.

Typically defined as activities performed on a scheduled basis to measure and detect observations of non‐compliance as defined by policies, procedures, and standards. Performed by third parties within or at the direction of the organization (e.g. other departments within the covered entity such as Internal Audit, Compliance, or contracted consultants).

Areas to Monitor and Audit

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Overview of a

Monitoring and

Auditing Plan

Example of

Monitoring and

Auditing

Activities

Findings,

Resolutions,

and Reporting

Helpful

Tools

Area to Monitor/Audit

1. Patient DefinitionPolicies and Procedures Review

Eligible Provider Review

340B Pharmacy Claims Review

5. Contract Pharmacy

a. Patient Eligibility

b. Contracting


340B Contract Pharmacy Contracts Review

2. Covered Drug Definition Policies and Procedure Review


6. DiversionPharmacy Claims Review

3. Duplicate Discounts340B Pharmacy Claims Review

Eligible Payer Review

7. 340B Registration & Recertification

OPA 340B Database and Recertification Review

Cost Report Review

4. Exclusions

a. GPO

b. Orphan Drug

Pharmaceutical Inventory Review

Orphan Drug Prohibition Review

Area to Monitor/AuditHow? How?

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Example of Internal Monitoring and Auditing Plan Components/Areas

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Overview of a

Monitoring and

Auditing Plan

Example of

Monitoring and

Auditing Activities

Findings,

Resolutions,

and Reporting

Helpful

Tools

Policies and Procedures Review

Review documented policies and procedures, including performing walk‐throughs, to validate 340B Program compliance is being followed

Monitoring ‐ Annually

Covered entity

Child sites

Monitoring ‐ 340B Compliance Team

Auditing – Internal Audit or Contracted External Audit

OPA 340B

Database and

Recertification

Review

Review accuracy of pharmacy information to confirm correct registration with the OPA 340B database, and latest Recertification submission.

Monitoring ‐ Quarterly

Covered entity

Child sites

Contract pharmacies



Cost Report Review

Review Cost Report information and validate 340B‐eligible locations can be mapped to appropriate line items


Covered entity

Child sites



$

Example of Internal Monitoring and Auditing Plan Components /Areas

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Overview of a

Monitoring and

Auditing Plan

Example of

Monitoring and

Auditing

Activities

Findings,

Resolutions,

and Reporting

Helpful

Tools

Eligible Provider Review

Review accuracy of eligible provider list per facility to confirm proper designation.

Monitoring ‐ Bi‐weekly

Pharmacies

Contract pharmacies



Eligible Payer Review

Review accepted payers to validate they are in alignment with Medicaid “Carve‐in” or “Carve‐out” status and applicable Medicaid billing.

Monitoring ‐Monthly

Covered entity

Child sites

Contract pharmacies




Review 340B pharmacy claims per facility to confirm compliance with 340B Program requirements.


Administered/dispensed outpatient locations and pharmacies

Contract pharmacies



340B Contract Pharmacy Contracts

Review

Review executed contracts with contract pharmacies and contract pharmacy administrators to confirmcompliance with contract pharmacy contract elements


Contract pharmacies Monitoring ‐ 340B Compliance Team


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Overview of a Monitoring

and Auditing Plan


Auditing Activities

Findings, Resolutions,

and Reporting

Helpful Tools

Reversals Review

Review of adjustments to confirm all submitted 340B reversals have been completed.

Monitoring ‐Monthly Contract Pharmacies



Pharmaceutical Inventory Review

Review of pharmaceutical purchases orders, invoices, and true‐ups. Scope includes split billing software and accumulators.



Contract Pharmacies



Orphan Drug Prohibition Review

(if applicable)

Review 340B captured prescriptions, originating from the Covered Entity, from both pharmacy and contract pharmacy location(s) to confirm drug(s) are not dispensed as 340B for treating diagnosis related to the primary indication of the orphan drug (if applicable)



Contract Pharmacies




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and Auditing Plan


Auditing Activities


and Reporting

Helpful Tools

Common Monitoring/Auditing Findings

Common Monitoring/Auditing Findings

Diversion to ineligible patients Lack of documented encounter / missing assessment notes “Moon-Lighting” and ineligible prescribers Filled date vs. written date

Medicaid FFS processed inappropriately Lack of self-disclosure of known issues to HRSA\OPA

Monitoring / Auditing Findings/Resolutions

Monitoring / Auditing Findings/Resolutions

Quantify issue(s) Clearly defines the global impact of the actual findings on your program

Internal Audit finding & resolution documentation Sample info Discovery Resolution Proactive steps

Communicate to all applicable parties Compliance Officer/Committee

Reporting Discoveries from Monitoring &

Auditing

Reporting Discoveries from Monitoring &

Auditing

Entity eligibility issues

Report to HRSA\OPA

Stop purchasing

Patient or covered drug eligibility issues

Work with manufacturers to determine repayment steps

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Findings, Resolutions, and Reporting

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and Auditing Plan


Auditing Activities


and Reporting

Helpful Tools

Program Manager Job Description Drug Purchasing Program

Drug Purchasing Program Appendix

Creating Tools Can Be Useful to Support 340B Compliance

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and Auditing Plan


Auditing Activities


and Reporting

Helpful Tools

340B Monitoring Metrics

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Creating Tools Can Be Useful to Support 340B Compliance

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Overview of a

Monitoring and

Auditing Plan

Example of

Monitoring and

Auditing

Activities

Findings,

Resolutions,

and

Reporting

Helpful

Tools

340B Issues and Action Items Register


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Overview of a

Monitoring and

Auditing Plan

Example of

Monitoring and

Auditing

Activities

Findings,

Resolutions,

and Reporting

Helpful Tools

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CMC ensures compliance with a 340B Compliance Program with includes compliance quarterly monitoring of:

Validation of Utilization Data

Eligible Drug Reviews

Crosswalk Accuracy Review

Provider Validation

Review of Medicaid Billing

GPO Exclusion Review

340B Drug Usage

Contract Pharmacy

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340B Compliance ProgramCMC 340B Compliance Program now shows success: Comprehensive process with supporting documentation A centralized area for all facilities to pass information and questions

and maintain documentation Compliance Initiatives implemented and maintained – Internal

Controls Compliance Education Compliance Monitoring Independent Auditing

Compliance Effectiveness

Cost savings in the millions

This was a team initiative ‐ Corporate CAECO, CEO, COO, CFO and Facilities CEO, CFO, Pharmacy (all levels), IT individuals, system vendors and engaged expert all made this a success.

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Focus of this presentation

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As a best practice and in light of the heightened focus on 340B Drug Program, CMC demonstrates effectiveness and continues to improve in education and awareness of 340B Compliance Program. Management has appreciated the structure to the challenging and complex initiatives. Effective education and structure drives behavior.

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340B Compliance ProgramMeasure the effectiveness

To help measure the effectiveness of the 340B Compliance Program besides the daily, weekly and monthly interactions – A quarterly – random selected number of transactions are reviewed for compliance. A report is created and reported to Chief Audit, Ethics and Compliance Officer’s Office on a quarterly basis for review.

Independent Consultant ‐ verifications to industry.

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Continuous Improvement The structured system for 340B processes and tracking was a year‐

long process of implementation and although difficult at first with buy‐in it is now accepted and well utilized. Besides administration and documentation advantages, all levels have had added value of the structured process for an effective and efficient alternative for internal controls and meeting requirements timely.

While setting up the initiative, committees, automated systems and placing appropriate jobs descriptions and individuals in those roles to deliver compliance requirements has been a successful first step in establishing our best practice, CMC looks forward to continually advancing.

CMC believes continue enhancements in computer‐based processes, education, structure and self‐monitoring and auditing will continue to enhance internal controls for best practice.

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ALWAYS LOOK TO THE FUTURE

While setting up the initiative, committees, automated systems and placing appropriate jobs descriptions and individuals in those roles to deliver compliance requirements has been a successful first step in establishing our best practice, CMC looks forward to continually advancing.

CMC believes continue enhancements in computer‐based processes, education, structure and self‐monitoring and auditing will continue to enhance internal controls for best practice.

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CMC 340B Compliance Program Process now shows success:

Compliance initiatives implemented and maintained

Comprehensive process of supporting documentation

One area to house documents and track

Internal Controls

Compliance Monitoring


Consultant Validations – Independent Audit

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This was a team initiative ‐ engaged team

Very persistent compliance officer

Consultant Expertise

Dedicated Corporate CEO, CCO and CFO asking the right

questions

Very supportive in‐house counsel

Dedicated Facility CEO, COO and CFO

Dedicated Departmental personnel

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Documentation – Samples included as Attachments Demonstrate the 340B Compliance Program

Attachment 1 - SAMPLE – Drug Purchasing Program P&P

Attachment 2 - SAMPLE – Drug Purchasing Program Appendix A – Monitoring Program Summary

Attachment 3 – SAMPLE – Sample 340 B Program Manager Job Description

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Words of Advice

OVER communicate the “proposed” process

Meet with everyone that will listen—even those that won’t

Who gets to vote?

It’s best for them, it’s best for the process

A non‐compliance champion

Go slowly but keep moving

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Questions?

33Health Ethics Trust

Documents

340B Compliance Program...Implement policies, procedures, and standards of conduct Conduct training and education Open effective lines of communication Conduct internal monitoring