© 2014 sunrx, inc. all rights reserved. ncha and sunrx megaguidance overview october 19, 2015 1

© 2014 SUNRx, Inc. All rights reserved.1

NCHA and SUNRx MegaGuidance Overview

October 19, 2015


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340B: MegaGuidance OverviewFor NCHA Hospitals

Presented By:Brian Ward, R.Ph.,Vice President Regulatory Affairs and ComplianceSUNRx, LLC


Agenda

•Overview of the 340B program•Key Regulations•MegaGuidance•Other Regulatory Activities


What is 340B?

•340B is a federal program that allows qualified entities (“340B Covered Entities (CE)”) to:– Purchase “outpatient” pharmaceutical products at

a substantial discount—25% to 50% discount– Create savings for safety net organizations to

provide more comprehensive care – Can be used for ALL entity patients– Can utilize either in-house or contract pharmacies


What Hospitals are Eligible?

Hospitals DSH Adjustment %

Disproportionate Share Hospitals (DSH)

11.75%

Critical Access Hospitals (CAH)* No DSH % Requirement

Rural Referral Centers (RRC)* 8%

Sole Community Hospitals (SCH)* 8%

Children’s Hospitals 11.75%

* Rural Hospitals added in 2010 as part of the Affordable Care Act


Key Regulations—Diversion

Diversion• 340B may only be used for “Entity Patients”•Diversion—Using 340B drugs for non-

qualified purposes, such as: – Inpatients– Prescriptions written at non-cost

reported (non-registered) facilities– Prescriptions from non-documented

referrals


Key Regulations—Duplicate Discounts

Entities must protect manufacturers from “Duplicate Discounts”

A payment of both a Medicaid rebate and a 340B discount on the same claim constitutes a “duplicate discount”

Duplicate Discounts


Entity Specific Prohibitions

GPO Prohibition (DSH and Children’s Hospitals)– Entity MAY NOT USE GPO drugs for any outpatient– Must have a tracking system (Split Billing) – Three account types:

• GPO Drugs (inpatient)• 340B (340B eligible outpatients)• WAC (non-340B eligible outpatients)

Orphan Drug Prohibition (CAH, SCH, RRC)May not use 340B for orphan drugs for the original Orphan DiagnosisEntity may opt-in/opt-out to using 340B for orphan drugs

Just in:10/15/15—PhRMA challenged HRSA’s Orphan interpretation and won

Entities can no longer use 340B for Orphan Drugs—for any diagnosis


HRSA MegaGuidance

Mega-Guidance

Announcedby HRSA

Jan 2015 Oct 27th

MegaGuidanceReleased(60 day

Comments)

Dec 2015

CommentPeriod Ends

Finalize Guidance

2016

BeginImplementation

August 27th

SubmittedTo OMB

(up to 90 d)

May 2015

Expected to take up to a year to finalizeHRSA may finalize incrementally

August 27, 2015--HRSA released its long awaited MegaGuidance—clarifying the 340B regulations


• An individual establishes a relationship with the Covered Entity (i.e., visits to a qualified/registered facility) Facility Requirement

• The Covered Entity maintains the records of the individual’s health care Record Requirement

• The patient is seen by a health care professional who is employed, contracted, or through other arrangements (such as a referral for consultation), such that the “responsibility for care” remains with the entity Provider/Responsibility for Care Requirement

Six elements under HRSA’s Proposed MegaGuidance

Today’s Three Patients Eligibility Requirements


New MegaGuidance– Patient Eligibility • The individual receives a health care service at a facility or clinic site which

is registered for the 340B program and listed on the 340B database; Facility Requirement (current—but clarified)

• The individual receives a health care service provided by a CE provider who is either employed by the CE or who is an independent contractor for the CE, such that the covered entity may bill for services on behalf of the provider as a result of the service described above; Privileges or credentials with a 340B hospital would no longer be “sufficient to demonstrate that an individual treated by that privileged provider is a patient of the covered entity for 340B program purposes.” Provider Requirement (new—excludes referrals and privileged providers, concern with ER services)

• The individual’s patient records are accessible to the CE and demonstrate that the CE is responsible for care. Record Requirement (current—but clarified)


New MegaGuidance—Patient Eligibility• The individual’s health care is consistent with scope of the CE’s federal

grant, project, designation, or contract; Scope Requirement (applicable to grantees only)

• The individual receives a drug that is ordered or prescribed by the CE provider; Drug Requirement (new—limits patient eligibility to prescribing visits only)

• The individual’s drug is ordered or prescribed pursuant to a health care service that is classified as outpatient; Outpatient Requirement (current—but limits discharges, patient admissions)


Proposed MegaGuidance—Significant ElementsPatient Eligibility

• Disallows all prescriptions from private practices, even if follow-on or

referrals

• Eliminates “affiliation arrangements” with outside organizations

• Allows scripts only from employed or independently contracted

providers, such that the entity bills for the provider services

• Eliminates prescriptions by “privileged/credentialed” providers

• Disallows 340B eligibility for discharge prescriptions

• Eliminates blanket 340B eligibility for self-insured employees


Medicaid Duplicate Discount• Proposes a new mechanism for entities to separately elect to carve-in/out Fee-

for-Service Medicaid from MCO Medicaid • Requires entities to block FFS and MCO Medicaid at contract pharmacies (or

create other arrangements to prevent duplicate discounts)

Contract Pharmacy Elements• Requires pharmacy registrations to be submitted by covered entities only• Requires quarterly self-audits and annual independent audits

Split Billing Elements• Eliminates 340B for infused drugs prescribed by outside providers • Excludes 340B drugs bundled as a single payment under Medicaid• Clarifies three possible exceptions to the Hospital GPO Prohibition• Eliminates 340B used on outpatients later admitted as inpatients

Proposed MegaGuidance—Significant Elements


Other 340B Regulatory Activities

Congressional Activities• Potential Congressional Legislation

(not yet introduced by Congress)o Program intento Use of 340B fundso Minimum Rx discountso Mandatory independent audits o Hospital eligibility (replace

eliminate DSH%)o Patient definition

Other Activities

• Exchanges and Medicaid expansion moving more uninsured to insured

• Lower reimbursement is driving patients to safety net providers

• Expect continued attacks on 340B (political posturing)

340B will continue to provide high market value


www.nchastrategicpartners.org

NCHA and SUNRxContacts

Brian [email protected]

Ronnie [email protected]

Jeff [email protected]

Jody [email protected]

mailto:[email protected]





© 2014 sunrx, inc. all rights reserved. ncha and sunrx megaguidance overview october 19, 2015 1

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sunrx megaguidance overview

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critical access hospitals

sole community hospitals