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340B for Newly Eligible Rural Hospitals

Overview . Intro to SNHPA and NRHABackground on 340B programExpansion to new rural hospitalsEnrollment processGPO exclusion Orphan drugsStrategies to maximize 340B program benefitsKey program challenges340B legislationSNHPA advocacy goals/membershipUpcoming events/Q

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340B for Newly Eligible Rural Hospitals

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    1. 340B for Newly Eligible Rural Hospitals Safety Net Hospitals for Pharmaceutical Access National Rural Health Association July 7, 2010, 1:00 p.m. to 2:30 p.m. EDT   Toll free: 1-866-237-3252 Participant Passcode: 308407 William von Oehsen Anna Mangum SNHPA President/General Counsel SNHPA Director - Programs & Membership Brock Slabach Maggie Elehwany NRHA Sr. Vice-President for NRHA Vice President, Government Affairs Member Services and Policy `

    2. Overview Intro to SNHPA and NRHA Background on 340B program Expansion to new rural hospitals Enrollment process GPO exclusion Orphan drugs Strategies to maximize 340B program benefits Key program challenges 340B legislation SNHPA advocacy goals/membership Upcoming events/Q&A

    3. Who is SNHPA? Non-profit organization representing and supporting 500+ hospitals and health systems in 340B – including rural hospitals Board Chair is CEO of network of rural hospitals Took lead role in including hospitals in the 340B law – including rural hospitals Advocates on federal legislative and regulatory issues related to drug pricing and other pharmacy matters affecting safety-net providers Educates members on 340B policy developments in Congress and regulatory agencies

    4. Who is NRHA? National nonprofit membership organization with more than 20,000 members (individuals and organizations) Mission: To provide leadership on rural health issues Nine (9) recognized constituency groups: Community Health Status Clinical Services Community-operated Practices Frontier Hospitals and Community Health Systems Diverse Underserved Populations Research and Education Rural Health Clinics Statewide Health Resources

    5. Background on 340B Program Created by Congress in 1992 to lower the drug costs of safety net providers Legislative intent: to help safety net providers stretch their scarce tax dollars in order to provide more services and serve more vulnerable patients Administered by Office of Pharmacy Affairs (OPA) within the Health Resources and Services Administration (HRSA) Requires drug manufacturers participating in Medicaid and/or Medicare Part B to sell “covered outpatient drugs” to “covered entities” at discounted prices determined by statutory formulas. 5

    6. Background (cont’d) Discounts based on Medicaid rebate formulas Greater discounts for brand name drugs, lesser discounts for generics Prices are best in nation outside of “Big Four” 25-50% off group purchasing organization (GPO) contracts Applies to both pharmacy-dispensed and clinic-administered drugs Do not need to own and operate an outpatient pharmacy to participate 6

    7. 340B Price Comparisons

    8. 340B Covered Entities Prior to Health Reform High-Medicaid disproportionate share hospitals (DSHs) Free-standing children’s hospitals Community health centers AIDS drug assistance programs (ADAPs) Black lung clinics Ryan White AIDS clinics Federally qualified health center “look alikes” Hemophilia treatment centers Native Hawaiian health centers Urban Indian clinics/638 tribal centers Title X family planning clinics STD clinics TB clinics 8 The Consolidated Health Center program includes community health centers, migrant health centers, health care for the homeless, public housing primary care and school-based health centers.   The Consolidated Health Center program includes community health centers, migrant health centers, health care for the homeless, public housing primary care and school-based health centers. 

    9. Background (cont’d) OPA maintains databases of participating covered entity sites, manufacturers, & contract pharmacies Registered as of June 29, 2010: 14,600 covered entities 870 manufacturers 3900 pharmacies Over 800 hospitals currently enrolled Some rural hospitals already participating Examples include sole community hospitals and rural referral centers with DSH adjustment percentages above 11.75% 9

    10. Background (cont’d) OPA relies extensively on support from two HRSA contractors: Prime Vendor Program (PVP) and Pharmacy Support Services Center (PSSC) PVP contractor: Apexus Negotiates sub-ceiling pricing on behalf of PVP participants Provides other value-added services No cost to join PSSC contractor: American Pharmacists Association Provides technical assistance to covered entities and other stakeholders Staffs 340B call center No charge for services 10

    11. Health Reform and 340B 340B provisions in health reform are first changes to program since its inception in1992 Impacts all 340B stakeholders -- particularly rural hospitals SNHPA, NRHA and other hospital groups all pushed for expansion

    12. Expansion to New Entities Now eligible: Free-standing children’s hospitals & free-standing cancer hospitals that have Medicare DSH adjustment > 11.75% Sole community hospitals and rural referral centers that have Medicare DSH adjustment = 8% Critical access hospitals (no DSH threshold)

    13. Limits on Participation All eligible hospitals must either be publicly owned or a private nonprofit corporation under contract with state or local government to provide indigent care For-profit hospitals are not eligible What is Medicare DSH adjustment? Medicare add-on payment for hospitals treating disproportionate share of low income patients Driven by Medicaid and SSI inpatient days List of hospitals with qualifying DSH adjustments available on OPA website SNHPA can assist in assessing your hospital’s eligibility OPA list is sometimes out of date and inaccurate Appeals process

    14. Enrollment for New Entities Enrollment anticipated in 3rd or 4th quarter of 2010 Waiting for additional funding Enrollment usually starts at beginning of calendar quarter after approved “Rolling admission” is possible First step, prior to applying for enrollment: Determine ownership status If private, non-profit hospital, look for or establish indigent care agreement with state or local government SNHPA can help

    15. GPO Prohibition Modified for Rural Hospitals Once enrolled, DSH, children’s, and cancer hospitals may not obtain covered outpatient drugs through GPO or other group purchasing arrangement If using GPO, must discontinue GPO use for outpatient drugs before enrollment May continue to use GPO for inpatient drugs and med/surg supplies GPO prohibition does not apply to critical access hospitals or to sole community hospitals or rural referral centers with DSH adjustments of 8%-11.75%

    16. Orphan Drug Exclusion “Orphan drugs” excluded from 340B for newly-eligible entities Almost 350 such drugs, including some high-priced cancer drugs, many used for multiple indications other than indication(s) designated for orphan status Orphan drugs include Bevacizumab, Remicade, Oncaspar, Elaprase, Neupogen, and most IVIG and factor therapies For a list, visit www.snhpa.org/public/documents/excel/OrphanDrugList.xls Exclusion will likely be applied regardless of whether drug is for rare condition or not

    17. Orphan Drug Exclusion (cont’d) SNHPA, NRHA, NACHRI challenging exclusion Children’s hospitals fix in House jobs/tax bill Awaiting Senate approval, but may need new legislative vehicle Rural hospitals will not fully benefit until orphan drug exclusion is fixed SNHPA, NRHA to survey members Will need your help on Capitol Hill!

    18. Maximizing 340B Program Benefits: Strategies Extend 340B to all eligible facilities Extend 340B to all eligible patients Purchase all covered outpatient drugs through 340B Establish contract pharmacy arrangements

    19. Extend 340B to All Eligible Facilities Include all components of eligible hospital in 340B program Any facility whose costs are reimbursable on hospital’s Medicare cost report is considered part of 340B hospital Typically facilities are “provider-based” under Medicare Examples: rural health clinics oncology clinics nursing homes and other long-term care facilities Consider moving non-hospital facilities under 340B hospital to take advantage of 340B pricing

    20. Extend 340B to All Eligible Patients Is your hospital using 340B for all eligible patients? HRSA’s patient definition test: Relationship with individual patient such that hospital maintains records of individual’s health care; and The individual receives health care services from health care professional employed by hospital or provides health care under contractual or other arrangement (e.g. referral) such that responsibility for care remains with hospital.

    21. Extend 340B to All Eligible Patients (cont’d) Hospital may use 340B for prescriptions written: In connection with services rendered within a hospital-based facility, By a prescriber who is treating the patient within the scope of his or her employment or contract with the hospital, or By a non-hospital prescriber if the services provided are proximate in type and time to prior hospital-based services

    22. Long-term care facility residents Home health patients Employees Prisoners Mental health patients Managed care enrollees Extend 340B to All Eligible Patients (cont’d)

    23. Purchase All Covered Outpatient Drugs Through 340B Many hospitals do not use 340B drugs in “mixed use” settings due to concerns about diversion Split-billing software can help Anesthesia products and other liquid or gas drugs can be bought through 340B if based on reasonable methodology for excluding inpatient Some manufacturers interpret “covered outpatient drug” narrowly e.g., Integrillin, Thrombin, etc.

    24. Contract Pharmacy Opportunities/Challenges Previously: Limit of one contract pharmacy per covered entity; could not have both in-house and contract pharmacy April 5: Limits removed. Multiple contracts permissible even if hospital has in-house pharmacy Particularly helpful in increasing patient access to 340B pharmacy services for rural hospitals, especially those lacking outpatient pharmacies Hospitals may be able to capture higher percentage of outpatient prescription drug business New compliance challenges, including “expectation of” annual independent audits, required ongoing monitoring of compliance and reporting of noncompliance

    25. Contract Pharmacy Opportunities/Challenges (cont’d) Consider contracting with one or more outside pharmacies even if you have an in-house outpatient pharmacy Less overhead Options include chain drug stores, independent pharmacies, mail order pharmacies and/or telepharmacy companies Working with pharmacies in your community will help to ensure support of 340B program by pharmacists who may otherwise view 340B as competition

    26. Key Program Challenges Keeping 340B and non-340B inventories separate may require special expertise and resources Software, technology, vendors available to help Some Medicaid agencies expect 340B savings to be passed through to the program However, models exist for sharing 340B savings with the state (SNHPA can help) HRSA would like to narrow definition of “eligible patient” SNHPA and other 340B Coalition members have successfully challenged those efforts so far

    27. 340B Legislation Victories in health reform Program expanded to rural hospitals Tougher enforcement of drug industry to ensure compliance with the law Improved price verification methods

    28. Continued Challenges Expansion of 340B to inpatient setting Currently 340B inpatient discounts voluntary Legislation requiring drug industry to offer inpatient discounts signed by President but removed one week later Pharmaceutical industry offered a modest step towards inpatient program: 340B-1

    29. Next Steps on Inpatient 340B-1 Limited inpatient extension in House jobs/tax bill Only for uninsured patients DSH hospitals would need adjustments of 20.2% or greater to qualify Most rural hospitals would be eligible since DSH adjustment requirements would be same as under 340B

    30. Next Steps on Inpatient (cont’d) 340B-1 SNHPA has some concerns with legislation Too limited in scope Difficult compliance standards and Office of Inspector General (OIG) investigations Standards in 340B-1 could apply to current outpatient program

    31. SNHPA’s Advocacy Goals Extend 340B to inpatient setting without restrictions Help hospitals utilize current program to fullest extent without compromising program integrity Address orphan drug restrictions Protect against patient definition being unduly restricted Reasonable Medicaid billing requirements

    32. SNHPA Membership Benefits Free technical assistance calls with attorneys and other professionals with 18 years of 340B experience Help with application and implementation questions Guidance on contract pharmacies Inventory management guidance Biweekly electronic bulletin Free subscription to The Drug Discount Monitor Best practice tools “Survival Kit”

    33. SNHPA Membership Benefits (cont’d) Comprehensive comparison tools Pricing clearinghouse Identify and recover overcharges Free regional roundtables State and federal policy tracking tools Patient assistance programs information Medicare Part D Resources Center Members-only listserv Significant discounts on membership for small hospitals

    34. Membership Options Small hospital membership: $975 For hospitals w/25 or fewer beds Three (3) technical assistance calls Membership dues range from $1,650 to $7,500 for larger hospitals and those seeking additional technical assistance Affiliate membership: $500 For hospitals not yet enrolled in 340B

    35. SNHPA Rural Hospital Advisory Committee Open to rural hospital members Meets every other month via teleconference to provide input into new programs for rural hospitals Co-chairs (SNHPA Board members): Dr. Charles Hart, CEO, Rapid City Regional Health, Inc. (SD) Brad Atherton, Director of Pharmacy, John D. Archbold Memorial Hospital (GA) To join, contact Anna Mangum at anna.mangum@snhpa.org or (202) 552-5863

    36. Upcoming Events 14th Annual 340B Coalition Conference Co-hosted by Apexus July 19-21, 2010 Washington, DC www.340bcoalition.org *Special breakout sessions for rural providers SNHPA Legislative Day July 22, 2010 Contact Jaimie Vickery at (202) 552-5855 or jaimie.vickery@snhpa.org

    37. SNHPA Resources SNHPA 1501 M Street, NW, 7th Floor Washington, DC 20005 Phone: 202-552-5850 Fax: 202-552-5868 www.snhpa.org SNHPA Newsletter Drug Discount Monitor www.drugdiscountmonitor.com (free for members) 340B Career Resource www.rxjobsolutions.com (member discounts)

    38. SNHPA Contact Information Bill von Oehsen President/General Counsel (202) 872-6765 william.vonoehsen@ snhpa.org Ted Slafsky Executive Director (202) 552-5860 ted.slafsky@snhpa.org Anna Mangum Director, Programs and Membership (202) 552-5863 anna.mangum@snhpa.org Rob Recklaus Director of Government Relations (202) 552-5852 Rob.recklaus@snhpa.org

    39. NRHA Contact Information Brock Slabach Sr. Vice-President for Member Services (816) 756-3140 ext. 14 bslabach@nrharural.org Maggie Elehwany Vice President, Government Affairs and Policy (202) 639-0550 elehwany@nrharural.org

    40. Question & Answer Session To ask a question via your telephone, press *1 to connect to the operator and be put in the queue. To ask a written question, click on the Q&A button at the top left of your screen. The presentation is available for download by clicking on the handouts button ( ) at the top right of your screen.

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