340B a small program with tricky compliance field

Although drug spending under the 340B program is a small fraction of drug spending in the country overall, compliance remains important for all entities involved: hospitals, pharmacies, and manufacturers. In a Health Care Compliance Association webinar entitled “340B Program: Finding Clarity in Uncertain Times,” presenters Karolyn Woo and Tony Lesser, both from Deloitte & Touche LLP, advised listeners to allocate the necessary resources to ensure compliance in light of increased audit activity.

340B program

Created by section 340B of the Public Health Service Act (PHSA), the program requires drug manufacturers participating in the Medicaid program to provide outpatient drugs to participating health care organizations at reduced prices. These discounts allow providers to save between 25-50 percent on outpatient drug costs. However, for perspective, 340B spending only accounted for just over $12 billion of the $310 billion spent on drugs in 2015.

Oversight and audits

Despite the program’s relatively small size, Woo and Lesser underscored the necessity of compliance, noting the Health Resources and Services Administration’s (HRSA) increased oversight activity. The agency has recently contracted experienced auditors, who focus on eligibility, drug diversion, duplicate discounts, and billing accuracy. If issues are found during the audit, the HRSA Office of Pharmacy Affairs (OPA) will review these issues, present a corrective action plan to HRSA, and finalize its report. Drug diversion is the most common issue, and repayment to manufacturers was required in over half of the completed audits in fiscal years (FYs) 2015 and 2016. Although there has been no uptick in the number of manufacturer audits recently, HRSA may contact an entity to request certain information outside of an audit, which should be presented as clearly as possible. In addition, specialty pharmacies, which often represent a high percentage of a manufacturer’s 340B revenue, may fall under particular scrutiny.

Compliance plan

Repayment requires that the covered entity and the manufacturer work out a financial remedy in good faith. The process is hampered by outdated OPA information, lack of deadline guidance, and differing repayment calculations. To avoid being placed in this situation, covered entities should create a compliance plan that ensures close oversight of 340B activity, starting with educating staff and reviewing 340B policies and procedures. Entities should perform internal audits to find areas of non-compliance, and learn how to prevent and detect identified issues. When areas of non-compliance are found, they should be reported to manufacturers, HRSA, or other entities as required.

Webinar gives tips on navigating physician peer review process

Hospitals and compliance officers should know the reporting requirements of the Health Care Quality Improvement Act (HCQIA) (42 U.S.C §11101 et seq.) and be “very strict” in complying with the four standards to obtain immunity from damages. In a Health Care Compliance Association webinar entitled, Physician Peer Review: 10 Steps to Navigating the Process, Theresamarie Mantese and Fatima M. Bolyea, health care attorneys at Mantese Honigman, PC, gave practical tips on dealing with the process of physician peer review.

Federal and state reporting requirements

HCQIA (42 U.S.C. §11133) requires health care entities to report the following “reportable events” to the applicable state board of medical examiners: (1) a professional review action that adversely affects the clinical privileges of a physician for a period longer than 30 days; (2) the surrender of clinical privileges while the physician is under an investigation by the entity relating to possible incompetence or improper professional conduct, or in return for not conducting such an investigation or proceeding; or (3) in the case of a professional society, a professional review action by the professional society that adversely affects the membership of a physician in the society.

Mantese noted that it is important to know both federal and state requirements, since state requirements can be more stringent. For example, in Michigan reporting requirements are triggered when a disciplinary action affects a health professional’s privileges for more than 15 days.

Compliance officers must also clearly define “investigation” so that they know when reporting requirements are triggered. While the NPDB Guidebook defines “investigation” broadly, a general review of physicians for overall performance in relation to each other is not an investigation.

Immunity from damages

HCQIA (42 U.S.C. §11112(a)) provides that hospitals and other participants are immune from damages if the professional review action was taken: (1) in the reasonable belief that the action was in the furtherance of quality health care; (2) after a reasonable effort to obtain the facts of the matter; (3) after adequate notice and hearing procedures; and (4) in the reasonable belief that the action was warranted by the facts. Compliance officers should, said Mantese, be “very strict” is attempting to comply with these standards. She said the third prong is where the most litigation happens and one of physicians’ strongest arguments in challenging a professional review action.

HCQIA immunity applies to money damages only, not to equitable relief such as reinstatement or the striking of a report. Mantese said, however, that if immunity applies, a request for equitable relief usually fails, too.

Notices

Under 42 U.S.C. §11112(b), the hospital is required to give the physician notice of a proposed action. If the notice is deficient, the physician should challenge it. Mantese encouraged compliance officers to have a template of a notice to ensure that the fundamental features are included. She emphasized that each notice should be compliant, even if the same information is repeated across notices; several notices cannot be taken together to create completeness.

Hospital policies

The presenters emphasized the importance of adequate hospital policies and bylaws, including the appeal rights of physicians after a peer review hearing. For example, the bylaws are critical in determining what records the physician can obtain from the hospital. A fair hearing plan is also a good idea in case the physician claims that the hospital arbitrarily denied a request for documents. According to Mantese, hospitals should consider providing the physician with as much information as possible—the more information the physician has about an issue, the less likely he or she is to bring litigation, and the case is more likely to be dismissed if litigation does ensue.

Peer review hearing

If the physician requests a hearing on a timely basis, then a hearing must be held (as determined by the health care entity) before: (1) an arbitrator mutually acceptable to the physician and health care entity; (2) a hearing officer who is appointed by the entity and who is not in direct economic competition with the physician; or (3) a panel of individuals who are appointed by the entity are not in direct competition with the physician involved. A panel usually consists of other physicians on staff at the hospital.

During the hearing, the physician has the following rights: (1) representation by an attorney; (2) a record of the proceedings; (3) the ability to call, examine, and cross-examine witnesses; (4) to present relevant evidence regardless of its admissibility in a court of law; and (5) the ability to submit a written statement at the close of the hearing.

A question that usually emerges is whether the panel members are in direct economic competition with the physician. If the physician raises this issue and the hospital has a number of people to serve on the panel, it should simply replace that person.

The presenters strongly recommended having a court reporter at the hearing. Because a common point of contention is which party will cover the costs, they recommended splitting the cost between the provider and the physician. Mantese also emphasized that hearing “exhibits are very, very important.” One person should maintain control of the exhibits during the hearing, and no one should leave until all are marked and accounted for.

Post-hearing

After the hearing the parties should submit a brief written statement with proposed findings of fact. Pursuant to HCQIA, upon completion of the hearing, the physician involved has the right to receive (1) the written recommendation of the arbitrator, officer, or panel, including a statement of the basis for the recommendations; and (2) a written decision of the health care entity, including a statement of the basis for the decision.

Energy and Commerce committee unanimously approves FDA reauthorization

The House Energy and Commerce Committee voted unanimously—54 to zero—to approve H.R. 2430, the Food and Drug Administration Reauthorization Act of 2017 (FDARA), after a markup on June 7, 2017. The bill would reauthorize the FDA’s user fee programs for prescription drug, medical device, generic drug, and biosimilar biological products. Without the reauthorization, the use fee programs will expire at the end of September, 2017.

The FDARA would renew the FDA’s authority to collect user fees from the makers of prescription brand drugs, medical devices, generic drugs, and biosimilars. The fees account for more than one-fourth of the agency’s funding (see HELP committee advances FDA user fee agreements to Senate floor, May 12, 2017).

The bill passed the committee with six amendments, offered by: Chairman Greg Walden (R-Ore), Rep. Ryan Costello (R-Pa), Rep. Scott Peters (D-Calif), Rep. Mimi Walters (R-Calif), and Rep. Jan Schakowsky (D-Ill). Rep. Schakowsky offered two amendments. The amendments are designed to further the development of generic therapies, update approval and quality reporting requirements for medical devices, allow for risk-based classification of accessories, foster the development of medical device safety surveillance pilots, and encourage steps to lower the cost of prescription drugs.

Webinar gives tips on improving next eCQM submissions

Health care compliance professionals who are involved in electronic clinical quality measures (eCQM) submissions should prepare now for their 2017 submissions, according to Catherine Gorman Klug RN, MSN, Director, Quality Service Line, for Nuance Communications. In a Health Care Compliance Association (HCCA) webinar titled, “eCQM Lessons Learned and How to Prepare for 2017 Submissions,” Klug warned attendees about hidden dangers, including the lack of experience for eCQM vendors, inaccurate data submissions, and the challenges posed by multiple types of electronic health record (EHR) data files generated from more than one system. She also gave recommendations for reducing risk and listed sample questions for the information technology (IT) department.

CMS requires hospitals to report eight of 15 eCQMs, with data reported for the entire year. According to Klug, the agency expects “one file, per patient, per quarter,” that includes all episodes for care and measures associated with the patient. Many hospitals use vendors to assist with the eCQM submissions, but Klug noted that vendors must have an adequate amount of time to respond to required changes before submission, and that although many vendors support a broad number of eCQMs, they may lack adequate depth of coverage. Hospitals should choose vendors who are experienced in the eCQMs they are reporting. Further, there is no way to validate the files submitted. Possible consequences include an annual payment update reduction, failure to receive the EHR incentive payment, or poor quality scores on CMS’ Hospital Compare site.

To reduce risks, hospitals should ask the core measures vendor to validate files before submission to CMS. They should also review file error reports from the vendor and make corrections before the data is submitted. Aggregated file error reports should also be reviewed to ensure that formatting or data elements don’t result in an inaccurate submission. Klug said that accurate coding is absolutely essential. Therefore, hospital IT departments should be prepared to explain how files are validated prior to submission to ensure accuracy, and if not, what the remediation strategy is. Further, compliance professionals should request a file error report, and any other reports to help understand the data being submitted.