The Department of Health and Human Services Office of Inspector General (OIG) Work Plan for Fiscal Year (FY) 2016 has been released. A majority of the 340B Program focus areas were pointed out by Ann Maxwell, OIG Assistant Inspector General for Evaluation and Inspections, at the July 340B Coalition in Washington D.C. Maxwell’s presentation was on the “Government Watchdog’s Perspective” and anticipated that many of the studies that are mentioned in the Work Plan would be out in FY 2016.
The OIG continues to explore what shared savings might look like if Medicare and its beneficiaries shared in the cost savings resulting from 340B pricing discounts. They also plan on reviewing the amount that average sales price based payments exceed 340B prices. The Work Plan noted,
“Previous OIG work found that some Medicare payments to providers for 340B-purchased drugs substantially exceeded the providers’ costs. Under the 340B Program design and Part B payment rules, the difference between what Medicare pays and what it costs to acquire the drugs is fully retained by the participating 340B entities, allowing them to stretch scarce Federal dollars”.
Some legislators believe that Medicare and its beneficiaries should be able to share in the 340B savings.
Another area of focus for the OIG is drug manufacturers’ compliance with average manufacturer price (AMP) reporting requirements. In a previous OIG review, more than half of drug manufacturers failed to comply with the requirements in at least one quarter. The 340B ceiling price is calculated by subtracting the Medicaid unit rebate amount (URA) from the AMP. The OIG will be reviewing actions that CMS has taken to improve manufacturer compliance with the reporting requirements.
The Work Plan went on to discuss the State's collection of rebates on physician-administered drugs. At the 340B Coalition, Maxwell revealed the OIG had audits going on in 23 states to see if they are collecting rebates on physician-administered drugs. The OIG is evaluating how States’ collect national drug code information on claims for physician-administered drugs and reviewing their processes for billing and collecting rebates. States are required to collect rebates on covered outpatient drugs administered by physicians to be eligible for matching federal funds.
As stated in the Work Plan, the OIG will be investigating to see if States are collecting prescription drug rebates for Medicaid Managed Care and will be reviewing if States are correctly identifying and reporting the Federal share of rebate collections. In 2010, the Affordable Care Act (ACA) expanded the rebate requirement to include drugs dispensed to Medicaid Managed Care members. ACA also increased the Medicaid drug rebates for Medicaid outpatient drugs requiring that additional rebate amounts be given to the Federal Government not the States.
Other drug reviews will include the analysis of generic drug and specialty drug pricing. The OIG will be assessing generic price increases compared to the consumer price index to determine if there would be potential savings by requiring an inflation-based additional rebate for generic drugs similar to provisions in place for brand name drugs. They will also be reviewing how State Medicaid agencies define specialty drugs, how much they pay for specialty drugs, how States determine payment methodologies and the difference in reimbursement amounts from State to State.
The OIG continues to keep an emphasis on preventing duplicate discounts for 340B purchased drugs and they intend to assess the risk of 340B purchased drugs paid through Medicaid Managed Care Organizations. The Work Plan notes that,
“existing tools and processes used to prevent duplicate discounts in fee-for-service Medicaid may not be sufficient for drugs paid through Medicaid Managed Care Organizations”.
In July, Maxwell revealed that the OIG will continue to keep the 340B Program on their “radar” and it seems to be reflected in the FY 2016 OIG Work Plan. We will post updates on the work plan status as we learn about them. Be sure not to miss those updates by subscribing to our blog.
