NEW TECHNOLOGY
Federal oversight of compliance at 340B contract pharmacies needs improvement The 340B Drug Pricing Program (340B Program), which is administered by the U.S. Department of Health and Human Services' (HHS) Health Resources and Services Administration (HRSA), requires drug manufacturers to sell outpatient drugs at a discount to covered entities so that their drugs can be covered by Medicaid. Covered entities include certain hospitals and federal grant- ees (such as federally qualified health centers). About one-third of the more than 12,000 cov-
ered entities contract with outside pharmacies — contract pharmacies — to dispense drugs on their behalf. The Government Accountability Office’s (GAO) review of 30 contracts found that all but one contract included provisions for the covered entity to pay the contract pharmacy a flat fee for each eligible prescription. The flat fees generally ranged from $6 to $15 per prescription, but varied by several factors, including the type of drug or patient's insurance status. Some covered entities also agreed to pay pharmacies a percentage of revenue generated by each prescription. Thirty of the 55 covered entities GAO reviewed
reported providing low-income, uninsured pa- tients discounts on 340B drugs at some or all of their contract pharmacies. Of the 30 covered entities that provided dis-
counts, 23 indicated that they pass on the full 340B discount to patients, resulting in patients paying the 340B price or less for drugs. Addition- ally, 14 of the 30 covered entities said they deter- mined patients' eligibility for discounts based on whether their income was below a specified level, 11 reported providing discounts to all patients, and 5 determined eligibility for discounts on a case-by-case basis. GAO found weaknesses in HRSA's oversight
that impede its ability to ensure compliance with 340B Program requirements at contract pharma- cies, such as: HRSA audits do not fully assess compliance
with the 340B Program prohibition on duplicate discounts for drugs prescribed to Medicaid ben- eficiaries. Specifically, manufacturers cannot be required to provide both the 340B discount and a rebate through the Medicaid Drug Rebate Pro- gram. However, HRSA only assesses the potential for duplicate discounts in Medicaid fee-for-service and not Medicaid managed care. As a result, it cannot ensure compliance with this requirement for the majority of Medicaid prescriptions, which occur under managed care. HRSA requires covered entities that have non- compliance issues identified during an audit to assess the full extent of noncompliance. However, because HRSA does not require all the covered entities to explain the methodology they used for determining the extent of the noncompliance, it does not know the scope of the assessments and whether they are effective at identifying the full extent of noncompliance.
PRODUCTS & SERVICES The great freight debate
Should freight-shipping strategies be aligned with distribution, inventory strategies? by Rick Dana Barlow
ice-filled beverage and meat coolers to the family summer picnic every year. The family tolerates and relies on him but typically takes him for granted until he fails to show up one year when the temperature hits the triple digits.
F
In healthcare organizations, freight and shipping remains a necessary tactic. How else would Supply Chain get the stuff clinicians need — or demand — quickly? Where it gets costly, however, is when the high price for convenience or lack of plan- ning somehow morphs into acceptable operating procedure, and everyone looks the other way when the charges surface at budget time.
Some Supply Chain experts argue that freight and shipping practices should be treated similarly to distribution. Both in- volve the movement of products between two or more locations. But higher freight and shipping costs may indicate a deeper problem.
“Shipping methods can be an indicator of inventory issues,” said John Freund, founder and CEO, Jump Technologies. “If items are being routinely shipped using some sort of express freight option, it can point to an inventory problem. A high number of overnight or express shipments can be an in- dication that a hospital
John Freund
isn’t managing its inventory effectively. For example, many hospitals will look at inventory today for procedures scheduled tomorrow. If they are short on a item and they don’t get from a distributor, they will often have it shipped via next day early delivery. If there is a large number of overnight packages coming daily and the orders are for the same items, it points to an inventory issue. Understanding your inventory velocity and forecasting demand within procedural areas (most procedures are scheduled weeks in advance), a hospital can avoid having to rush items in for a pro- cedure scheduled for tomorrow.”
44 August 2018 • HEALTHCARE PURCHASING NEWS •
hpnonline.com
or Supply Chain, overseeing freight and shipping costs seems a bit like the crazy uncle assigned to bring the
Jump’s JumpStock product enables end users to track the retail costs of their UPS and FedEx shipments, according to Freund, recording the data in reports that helps them adjust their order levels and frequency as necessary.
As healthcare organizations have cen- tralized their contracting, purchasing and distribution operations, so should they centralize their shipping and transportation management, according to Bill Denbigh, Director, Business Development and Mar- keting, TECSYS. “For a health system [the] outbound shipping of supply chain goods is a very small percentage of the total transporta- tion budget, often less than 20 percent,” Denbigh
Bill Denbigh
acknowledged. “In many leading health systems such as Mercy Health or Inter- mountain the supply chain transportation team have taken on responsibility for the entire transportation network including all the clinical service goods — often referred to as courier — along with the in hospital transportation.”
Such a “total transportation” approach for outbound freight and shipping can improve customer service and reduce costs, he added.
“Transportation as a total is up in the 20 percent to 25 percent of the total cost of supply chain these days,” Denbigh con- tinued. “A health system can reduce their outbound shipping costs by a significant percentage and also provide better quality of service to their customers and patients by taking transportation out of the hands of the departments and centralizing it. Other than the lack of transportation experience in the health system and ‘protectionism’ within the departments not wanting to lose control I’d say it’s more a question of why would you not?”
More acute scrutiny of freight and ship- ping expenses via a centralized and total program can shed light on issues other- wise hidden or misunderstood, according to Gerry Romanelli, Chief Commercial Officer, TRIOSE Inc.
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