340B Prime Vendor Program | 340B Drug Pricing Program …



Purpose: The purpose of this tool is to share strategies to optimize WAC account (referred to as the sub-WAC account when loaded with PVP contracts) purchasing in 340B hospitals subject to the GPO Prohibition (DSH/PED/CAN). It is important to assess the drug purchases across all three accounts (340B, GPO, and sub-WAC) to effectively reduce excess expenditures while maintaining 340B Program compliance. These purchasing strategies are based on operational best practices covered entities across the country have implemented, and not based on HRSA policy. Background: To effectively utilize this tool, it is important to understand the terms WAC and sub-WAC. WAC stands for wholesale acquisition cost, which indicates the price charged by pharmaceutical manufacturers to wholesale drug distributors. Prime Vendor Program (PVP) sub-WAC is a contracted price that allows entities subject to the GPO Prohibition who are PVP members to purchase covered outpatient drugs at a negotiated price in lieu of purchasing at the WAC price. For the purpose of this document, sub-WAC will be referred to when discussing purchases on the non-340B/non-GPO account where those PVP sub-WAC contracts are loaded. For more information on compliant account contract load options, please see the “Wholesaler Non-GPO Account Load Options” PVP tool.Instructions: Follow the steps below to ensure use across all three accounts is optimized. Step 1: Calculate Blended PricingIdentify the best priced NDC for purchase across all three accounts (340B, GPO, and sub-WAC) based on both utilization in each account and the contracts available in each. This concept is often referred to as blended pricing. This approach may be used when making decisions about which products to purchase such as formulary decisions or generic interchanges.Example of calculating blended pricing for a single NDC:Price: 340B = $1; GPO = $2; sub-WAC = $2Utilization: 340B = 50%; GPO = 30%; sub-WAC = 20%Blended price = (1x0.5)+(2x0.3)+(2x0.2) = $1.50This blended price calculation would be done for each NDC within the therapeutic drug class or generic equivalent to find the product with the lowest overall price based on utilization Step 1: Calculate Blended Pricing1a: Obtain pricing information Price files can be obtained from your wholesaler as a catalog for each of the three types of accounts (340B, GPO, and sub-WAC)Alternately, PVP members may also obtain sub-340B and sub-WAC price files from the secure portal (). This will still need to be combined with a GPO file from another source.Your 340B vendor software may also be able to provide you a copy of the price files that they receive from the wholesaler, but these may be more limited in products than the first two optionsInclude some kind of identifier to “link” like medications together (e.g. generic code number for generic interchanges; AHFS code for therapeutic interchanges). This type of code is often readily available in wholesaler catalog information.1b: Obtain utilization information Utilization files can come from a variety of sources including purchase history (from wholesaler, inventory management software, 340B vendor software) or patient administration information (EMR or 340B vendor software). Often, purchase history information is the easiest to use.This is used to identify what percent of time the drug is being used in each patient population to extrapolate how much would be purchased on each account. Consider any anticipated short-term changes to utilization that may affect how a newly selected product would be used (e.g. if you implement some of the changes in step 2 below to lead to more purchasing on the 340B or GPO accounts)PVP members can run customized historical sales report under the purchasing tools section of the PVP secure portal1c: Combine the two data setsAfter identifying each drug to be compared to other alternatives (e.g. all suitable drugs within a generic grouping), pull in the price point and utilization each account to replicate the above calculation for each NDCThis can easily be done through logic built into an Excel document or Access databaseThis will demonstrate which NDC is the lowest priced NDC based on the accounts where it will be purchasedStep 2: Assess Sub-WAC accountOnce the most appropriate NDC is chosen, the next area of focus is optimizing the appropriate purchases across all three accounts based upon compliant practices. Many sites find that even after they have set up their replenishment models for inventory management, there are specific areas where medications are not accounted for and therefore the purchases default to the sub-WAC account.Step 2: Assess Sub-WAC Account 2a: Understand sub-WAC spend for program compliance There are some reasons that covered entities need to purchase from the sub-WAC account in order to maintain compliant operations, examples include:A covered outpatient drug is used for an ineligible outpatient (e.g. seen by an ineligible physician or at an ineligible site)Medicaid patients receiving medication from a carve-out entity Establishment of a neutral inventory for a replenishment model (first purchase; any purchase for increased inventory or other purchases when no accumulations are present)2b: Develop internal benchmarks As a best practice for 340B and GPO account purchasing, entities may want to establish internal benchmarks to track progress such as % sub-WAC spend from one timeframe to the nextEntities should avoid trying to benchmark externally because sub-WAC spend can vary greatly from site to site based on 340B program implementation and examples of factors that can affect this include:Carve-in/out decision and Medicaid populationUtilization of contract pharmacies that have no corresponding sub-WAC purchases Entity owned pharmacies that only serve 340B eligible patients340B only inventories such as offsite infusion centersIntentional sub-WAC spend due to compliance mitigation or contract price availabilitySplit billing software settingsIntentional capture of ineligible patients (e.g. as service for employees)2c: Prioritize items to target firstRun a 3 month purchase history for 340B and sub-WAC accountsUse below criteria to choose which NDCs to first target when looking for 340B and GPO account opportunitiesStart with highest spend ($) items on the sub-WAC accountCalculate % purchased on 340B account and sub-WAC account; look at quantities instead of dollars to identify greatest potential. Start with items with high % sub-WAC quantities.Remove (or integrate additional data for) any items where 340B purchases are made direct and may not be captured in the report used for this evaluationOnce the targeted NDCs are identified, review possible areas for additional opportunity as described in the 4 different sections of 2d belowStep 2: Assess Sub-WAC Account2d(1): Identify 340B and GPO opportunity (charge capture)If a covered outpatient drug is dispensed and administered to a patient, but the patient is not billed for the drug or the administration is captured in a different system, the usage may not be transmitted to the split-billing software and no accumulation will be captured. Examples include: Code cart medications that are not separately billedMedications administered through a different billing system in the ORAreas that bundle bill and therefore do not submit individual charges (e.g. BMT)Ambulance or other emergency response servicesBulk products that are difficult to build within the EMR such as inhalers or creamsConsider if there is a way to implement a billing capture system for each of these. It may also be possible to capture non-billed medications used for a specific patient.The most important compliance element here is the ability to maintain auditable records for the use of a 340B purchased product for a 340B eligible patient2d(2): Identify 340B and GPO opportunity (split-billing software)Verify that the billing codes are correctly linked to the 11-digit NDCs of drugs dispensed in a way that ensures an 11 digit NDC replenishment processSplit billing software often directs all purchases of a new NDC to the sub-WAC account until this mapping is completed since there is no way to validate accumulations until this mapping is completedMany software vendors will offer a report or a bucket to allow users to identify unmapped CDMs or NDCsVials with multiple sizes used for the same CDM can be especially difficult to manageConsider whether using one vial size would be practical Missing data files from the EMR or wholesaler can create split billing software issuesCorrupt or incorrect information within the fields of these data files could also cause unforeseen consequencesDedicate appropriate resources for split billing software system mapping/maintenanceReview the NDC/billing unit per package (BUPP) crosswalk regularly to validate that mapping was done correctly and nothing has changed within the systemsDevelop a checks and balances system to ensure data files are loaded correctly and that the 340B team is notified ahead of changes that could affect these files 2d(3): Identify 340B and GPO opportunity (covered outpatient drugs)Hospitals should define covered outpatient drug (COD) in their policies and procedures in accordance with the Social Security Act, section 1927(k)Products that do not meet this definition may be purchased using a GPO while remaining compliant with the GPO prohibitionNon-COD may include fluids, anesthesia gases, contrast agents, flushes in certain scenariosDefinition should be applied consistently across all areas of the organization based upon what is documented in the policies and proceduresReview definition within policies and procedures to develop list of non-COD drugs.Step 2: Assess Sub-WAC Account2d(4): Identify 340B and GPO opportunity (waste accumulation)Waste often is uncaptured in billing systems and therefore does not accumulate in a way to allow 340B or GPO replenishmentOne solution is to identify ways to capture those wasted products that can be attributed back to a specific patient. The patient definition must be met in order to use 340B drugs. If wasted medication is not able to be verified to match a specific 340B or GPO eligible patient, that product should be replaced at WAC.Developing 340B or GPO-only inventories can alleviate this need to capture waste at a patient level (see below)Discuss waste with operations staff to understand which items are being wasted. Focus on high cost items first.2e: Consider GPO only or 340B only inventory modelsOutpatient clinics must meet four criteria to use a GPO: (1) be located at a separate physical address; (2) use a separate wholesaler account from that of the parent; (3) be unregistered on OPAIS; and (4) maintain records demonstrating that GPO drugs are not used or transferred to 340B registrants. Statutory Prohibition on Group Purchasing Organizations Participation GPO only areas: If a drug is restricted to only inpatient use, you may consider communicating this information along with 11-digit NDCs to your split-billing software. This would categorize the drug as GPO-only. Ensure that these products are actually restricted to only outpatients or inpatients and not based on “most of the time”Documentation of these drugs should be included in your policies and procedures along with rationale for restricting administration locations and a process for regularly auditing to ensure product is not being used in other settingsExamples: TPN (total parenteral nutrition) compounding area, new formulary additions for inpatient use only 340B only inventory areas: Sites that only dispense 340B product, such as an offsite eligible clinic that only see eligible patients and carves in Medicaid, may want to consider using a 340B only inventory to avoid initial sub-WAC spend for a neutral inventory Consider the impact of this on the split billing software. Most sites order on a 340B account that is separate from the split billing system and block these dispensations from feeding into the accumulations within the system. Others have chosen to have a separate instance of their split billing software systems for these sites to help in auditing practices.This tool is written to align with Health Resources and Services Administration (HRSA) policy, and is provided only as an example for the purpose of encouraging 340B Program integrity. This information has not been endorsed by HRSA and is not dispositive in determining compliance with or participatory status in the 340B Drug Pricing Program. 340B stakeholders are ultimately responsible for 340B Program compliance and compliance with all other applicable laws and regulations. Apexus encourages each stakeholder to include legal counsel as part of its program integrity efforts.? 2018 Apexus. Permission is granted to use, copy, and distribute this work solely for 340B covered entities and Medicaid Agencies. ................
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