July 16, 2012—The Office of Pharmacy Affairs’ (OPA) may change its timetable for enrolling covered entities and their satellites in the 340B program to free up staff for program integrity efforts, OPA Director Krista Pedley said during the 340B Coalition annual conference.
Currently, when an entity or one of its outpatient sites meets all 340B requirements, OPA makes it eligible for drug discounts on the first day of the next quarter of the year.[ms-protect-content id=”2799″] While Pedley did not specifically say that OPA was considering cutting enrollment back from the current four times per year to something less often, this might be the case.
Speaking on July 9 before the largest annual gathering of 340B stakeholders, Pedley also said that OPA will require entities applying for 340B for the first time to re-apply if any information on their enrollment form is missing.
Pedley also said that OPA’s recertification and audit initiatives have made it clear that the agency needs to publish guidance or regulations on the prohibition on buying drugs through a group purchasing organization (GPO).
In her opening remarks, Pedley said “it’s important first and foremost to understand why this program even exists.”
“It’s for these covered entities to stretch their resources so they can provide more care for more patients. There is no doubt about its benefits. It’s obvious why it’s important and why it’s here.”
But, she continued, “I want to be real with everyone about the state of affairs in the program. We’ve heard about its benefits but I want to caution that the program also brings risks and it’s important that entities understand what that means.”
Pedley structured her talk around three themes: Responsibility, compliance, and accountability.
OPA, she said, is focusing its program integrity efforts on (1) covered entity eligibility, including the prohibition on using group purchasing organizations; (2) diversion of drugs to ineligible patients; and (3) the payment of 340B discounts and Medicaid rebates on the same drugs.
Those efforts’ results, including the final reports from 340B covered entity audits, will be posted on the OPA Web site’s new program integrity page.
Under the subject of responsibility, Pedley said it is up to covered entities to ensure that “each and every site using 340B is listed in our database,” to let OPA know if any become ineligible, and to keep their information in the covered entity database up to date. She warned providers to understand the risks of signing up large numbers of contract pharmacies for a single site or enrolling large numbers of outpatient facilities. “You need to make sure they are all in compliance or you can jeopardize your entire program,” she observed.
Turning next to compliance, she disclosed that the overwhelming majority of 340B hospital sites have retained their eligibility for drug discounts following OPA’s recent hospital recertification initiative, She cited preliminary data showing that about 250 sites are being decertified out of a total of 3,800.
Reasons for withdrawal of 340B eligibility included hospitals closing or declaring bankruptcy; nonprofit hospitals transitioning to for-profit status; hospitals lacking contracts with state or local government to provide care to the indigent and underinsured; and hospitals falling below the requisite Medicare disproportionate share (DSH) threshold for eligibility. Some hospitals also decertified themselves, Pedley said.
About 98 percent of 340B hospital parent and child sites have completed the recertification process and roughly 30 have been granted extensions, Pedley said.
Recertification “was an eye-opening experience for you and for us,” Pedley told the hospital representatives in the audience. The process, she continued, taught OPA a great deal about program compliance.
OPA is now looking into whether any of the decertified sites ever bought covered outpatient drugs with the 340B discount while they were ineligible, Pedley said. If any are found to have done so, they will have to make repayments to manufacturers.
“I’m glad to say that this has been a success story,” Pedley said of the recertification initiative. “We have learned a lot and will apply it next year” when covered entities will once again have to certify that they remain eligible for 340B.
Now that hospital recertification is complete, community health centers are next in line. Their recertification is likely to begin in September, Pedley said. There is still no timeline for recertification of hemophilia treatment centers.
Regarding 340B hospital audits, Pedley reaffirmed that OPA has decided against releasing its audit protocol to the public “in order to maintain the integrity of the process.”
Pedley disclosed that in addition to the 45 hospitals that were selected for an audit on the basis of a risk profile, OPA will audit “at least” six others on the basis of allegations of noncompliance. She also noted that drug manufacturers have authority to audit covered entities and “for the first time are actively involved in the audit process.”
“If a manufacturer is asking you questions, it is in your best interest to reply because non-responsiveness is a good case for establishing reasonable cause” for launching an audit, she cautioned.
Pedley also explained that the new 340B components being added to the annual audit for some Health Resources and Services Administration (HRSA) grantees will trigger “a full-blown audit” if they reveal major compliance problems. HRSA grant recipients that spend more than $500,000 in federal aid per year must have a so-called A-133 audit once a year. Pedley said that HRSA grantees will also be questioned about 340B compliance during their annual program reviews.
In response to a question from the audience, Pedley said OPA probably will need to issue guidance on whether a covered entity is obliged to inform all other drug manufacturers that it has voluntarily made a repayment to one.
Also in response to a question, Pedley said the recertification and audit initiatives have made it clear that OPA needs to publish guidance or regulations on the prohibition on buying drugs through a group purchasing organization (GPO). Disproportionate share (DSH) hospitals, children’s hospitals, and free-standing cancer hospitals enrolled in 340B are not permitted to participate in a GPO or other group purchasing arrangement for covered outpatient drugs.
Pedley said the agency understands the challenges of trying to comply with a strict prohibition against using a GPO for any outpatient drugs “Obviously, the conservative approach is to not use a GPO at all, but there are other interpretations of what it means to use a GPO or when it’s O.K.”
During the portion of her talk on accountability, Pedley reminded drug manufacturer representatives in attendance that OPA has authority to audit their companies as well. While it has not audited any to date, it could consider doing so, she said.
“It’s important that [manufacturers] are providing the 340B price to covered entities and if they are not we want to understand the reasons why,” Pedley said. If manufacturers need to implement limited distribution plans for drugs in short supply, she asked that they make the plans public on the OPA Web site “so there are limited disputes and covered entities understand why you did what you did.”
“If there are issues with limited distribution, we work with the Department of Justice to ensure compliance,” she added.[/ms-protect-content]