Southwest Consulting Associates Blog

We enjoyed visiting with our clients and meeting new friends at the 340B Winter Coalition in San Diego a few weeks ago. This 340B Coalition had a record attendance exhibiting the growing attention and focus on the 340B Program.  Captain Krista Pedley, Director of Health Resources and Services Administration, Office of Pharmacy Affairs gave an update at the winter 340B Coalition recapping 2015 and focusing on HRSA’s 2016 goals.  Topics included:

In February, HRSA posted a manufacturer refund notice for 340B covered entities to its website regarding Amgen USA, Inc. (Amgen) and 340B pricing for multiple products using NDC labeler codes 55513 and 58406. This includes Aranesp, Sensipar, Epogen, Neulasta, Neupogen, NPlate, Prolia, Vectibix and Enbrel. According to the notice, Amgen has made an adjustment to the 340B ceiling prices for the aforementioned National Drug Codes (NDCs) and as a result, a 340B covered entity may be eligible for a credit. Please see the manufacturer notice HERE for eligible NDCs and drug purchase timeframes as they include multiple products and timeframes ranging from Q4 2006 to Q1 2015.

HRSA audits continue to focus on covered entities providing appropriate oversight of their contract pharmacy arrangements.  The Office of Pharmacy Affairs issued Program Updates in 2014 and 2015 stating that, “vigilant oversight [of the contract pharmacy] is critical”. One measure of vigilant oversight expected by HRSA are annual audits performed by an independent entity.  In addition to annual audits, the proposed Mega-Guidance introduced (as a separate compliance mechanism) that covered entities should be conducting quarterly audits of their contract pharmacy.  Before the proposed Mega-Guidance, HRSA’s expectation was that covered entities perform oversight through periodic review of transactions at its contract pharmacies.  The proposed Mega-Guidance defined periodic review as at least quarterly.

One of the highest compliance risk areas of the 340B Drug Pricing Program is contract pharmacy. However, the return can be great and with the proper processes and monitoring in place, I would encourage you to look hard at this opportunity. Not only do contract pharmacies allow you to increase or continue patient services in a covered entity to benefit patients, but they can also help to expand your reach to support the underserved populations in your community. Contract pharmacy arrangements support the intent of the 340B Program as much as any other portion of the 340B Program.

The covered entity is responsible for ensuring compliance of their contract pharmacy arrangements with all 340B Program requirements to prevent diversion and duplicate discounts (75 Fed. Reg. 10272, March 5, 2010). If the covered entity is not providing contract pharmacy oversight, it is considered a violation of the program requirements. The covered entity will be required to terminate the contract pharmacy arrangement and provide repayment to the drug manufacturer.

In a January 11, 2016 letter to the Medicare Payment Advisory Commission (MedPAC), the American Hospital Association (AHA) again addressed the issue of using cost report worksheet S-10 to distribute uncompensated care (UC) pool dollars and recommended that the change be phased in over three years.  

AHA stated that S-10 data has the potential “to serve as a more exact measure of the treatment costs of uninsured patients” if the data is reported accurately and consistently. AHA called for the revision of the cost report S-10 worksheet and improvement in its reporting instructions. AHA further called for “extensive” education for all stakeholders in advance of, or in conjunction with the use of the S-10 UC cost data. A copy of the letter is available 

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.

In October, The Department of Health and Human Services Office of Inspector General (OIG) issued a policy statement to explain specific conditions when hospitals can discount or waive fees owed by Medicare beneficiaries for self-administered drugs received in outpatient settings without being subject to federal anti-kickback sanctions. This applies to self-administered drugs that are not covered by Medicare Part B, including drugs that may be covered under Medicare Part D.

Southwest Consulting Associates (SCA) hosted a webinar in October which focused on recent audit findings relating to 340B audits conducted by HRSA as well as 340B external audits conducted by SCA. More specifically, SCA touched on areas HRSA is reviewing during an audit, what is being found, as well as provided some best practices that could be used in the management of a covered entity's 340B program.  In this blog, we will share the most important takeaways regarding both HRSA audits and suggested best practices.

As of October 1, 2015, HRSA had posted the results of 103 covered entity audits to its website. According to the 2015 workplan and presentations at both the Winter and Summer 340B Coalitions, HRSA announced that they planned on performing at least 200 340B audits by the end of 2015. According to Apexus, HRSA did in fact complete 200 audits in 2015.  HRSA’s fiscal year has come to a close and although not all of the audit results have been published, Southwest Consulting Associates (SCA) has analyzed what is available to establish trends in the findings.  

The 340B Drug Pricing Program Omnibus Guidance (Mega-Guidance) was published for public comment August 28, 2015.  You can find it HERE.  Part B beginning on page 21 reviews drugs eligible for purchase under 340B or covered outpatient drugs.  While this section only makes up 2 pages of the 90-page guidance, the subject matter can have an extensive impact on 340B covered entities.