Roadmap to Applying to Participate in the 340B Program David Garbarino Director of Government Financ

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Roadmap to Applying to Participate in the 340B
ProgramDavid GarbarinoDirector of Government
FinancChildrens Hospital Boston12th Annual
340B Coalition ConferenceJuly 15th, 2008
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Agenda

• Introduction
• Getting started
• Preparing the Application/ Meeting the
  Requirements
• Where are we now/Next Steps

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Introduction

• Institutional background
• Childrens Hospital Boston is a 395 bed
  independent free standing
• facility offering a full range of pediatric
  services from community level to
• quaternary care
• Operate one main pharmacy department, four
  satellites locations
• and one remote site that services all
  outpatient departments and clinics
• 16,000 discharges, 55,000 ED visits and
  250,000 outpatient visits
• Annual drug buy is 25m, 6m O/P, dispense
  2.9m doses per year
• 30 Medicaid or Government payer, 70 managed
  care commercial
• No institutional experience with the 340B
  program unlike adult
• hospitals or childrens hospitals that are
  part of a larger adult system

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Getting Started

• How we assessed the opportunity
• Assembled a multidisciplinary team including
  representation from
• Pharmacy Dept, Finance, Government Relations and
  Compliance,
• to review the following areas
• 1. Potential Savings
• 2. Institutional Eligibility
• 3. Operational Issues
• 4. Regulatory and Compliance

• Took a conservative approach in our evaluation
  to participate in the
• 340B program to provide a comfortable
  compliance margin

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Getting Started

• Potential Savings
• Determine if the potential savings are worth
  the effort necessary
• to meet the requirements
• Childrens Hospital Boston does not operate a
  retail pharmacy so
• the potential savings are limited
• Performed the analysis looked at O/P drug
  volume by type of drug
• and the current cost and determined that
  the potential savings,
• based on our estimated discount, could be
  substantial
• Estimated potential savings in year 1 of
  program participation
• to be worthwhile with anticipated growth
  over several years

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Getting started

• Eligibility for the Program
• 1. There are 11 organizational primary
  categories and several
• sub-categories that qualify for 340B
  participation
• Childrens Hospital Boston applied as a Private,
  Non-Profit
• Disproportionate Share Hospital
• 2. Under contract with the state or local
  Government to
• provide health care services to low income
  individuals
• who are not eligible for Medicare or Medicaid
• Massachusetts operated an Uncompensated Care
  Pool which
• required low-income participant eligibility and
  provider enrollment
• Childrens was an enrolled provider and had a
  signed contract

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Preparing the Application-continued

• 3. Meet the Disproportionate share adjustment
  percentage
• requirement of 11.75
• Childrens disproportionate share patient
  percentage based
• on inpatient days was 32, gt 27.32
  requirement
• Adjusted Disproportionate share was 15.94
  gt 11.75
• threshold

4. Certify that the hospital will not obtain
340B covered drugs through a group
purchasing agreement
5. Provide an attestation of compliance with
the PHS Act including - Prohibition against
diversion - Protecting manufacturers from
duplicate rebates - Preserving the right to audit
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Operational Considerations and Challenges

• Operational Issues
• 1. Should we proceed alone or bring experienced
  consultants
• to set-up the program.
• Should acquire split-billing software to
  facilitate tracking?
• Do we create separate physical storage or use
  virtual segregation?
• How do we accommodate and track partial doses?
• How do we create a strict use policy and
  operational structure
• so that 340B purchased drugs are only provided
  to
• - Patients of the covered entity who meet the
  regulatory definition
• - Outpatient only
• - Controls to prevent diversion to inpatient
  use

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Operational Considerations and Challenges

• Operational Decisions
• 1. Decided to hire experienced consultants to
  address set up.
• Initially we were on the fence about
  split-billing software due to questions about
  their set-up and ease of use did decide to
  acquire software advantages out weighed
  disadvantages.
• Decided in favor of separate physical storage
  despite the challenges
• We will need to acquire software to address issue
  of partial doses
• 5. Created a strict use policy and operational
  structure that
• - Created separate 340B purchasing accounts
  and delivery
• - Tracked patient use by type
• - Set up a listing of all 340B purchased
  drugs-updated as needed
• - Developed a daily use report managed by the
  charge pharmacist

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Operational Considerations and Challenges
6. Billing -In keeping with uniform billing
standards, Hospital will charge
340B purchased drugs at the same rate as non-340B
drugs - Historically,
Massachusetts Medicaid allowed providers to
benefit from the 340B savings and
does not seek rebates on those
patients - Each state would have there own
policy on 340B billing.
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Compliance and Regulatory Issues

• Monitor compliance with all statutory
  requirements
• Create a comprehensive compliance plan that
  includes all key
• areas of the program
• -Eligibility
• -Inventory
• -Dispensing
• -Billing
• -Reporting
• Monitor all regulatory elements so to remain a
  covered entity
• Ensure that only patients who meet definition
  receive 340B
• purchased drugs
• Develop the ability to report all dispensing
  activity for both
• internal needs and external audits.

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Compliance Plan
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Preparing the Application-continued
Process
Output
Responsible
Time
Months
Analyze Potential Savings
-Savings Analysis
Finance Pharmacy
0
Determine Institutional Eligibility
-Org type -DSH Calc -State contract -340B
non-group purchase cert
Finance Government Relations
Establish operations plan
-Split billing -Partial dose -storage
Pharmacy
Develop Compliance Reporting plan
Finance Pharmacy Compliance
-Compliance plan -Compliance Cert
Submit Application
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Where we are now

• Application was filed in August of 2006
• We have been anxiously waiting by the phone for
  word of final approval
• As result of the uncertainty over the final
  disposition, we have put on hold
• all of our plans to set up 340B program
• We had hoped to take advantage of the
  retroactive billing provision
• allowing cost recovery back to the date of
  passage, but it is unlikely
• that we will be prepared to take take
  advantage of the short window
• of opportunity.