Wednesday, September 29, 2010

GP Jeopardy at IIR!

Compliance Implementation Services (CIS) was a sponsor of this year's MDRP Event. Steven Moore, who was on site with CIS, got to play a very important role during one of his sessions. This blog is co-posted with Moore's Pharma Compliance Blog.

By: Steven Moore, Director, Business Development

Dear GP Friends,

For those of you who missed this past IIR conference in Chicago, you missed quite the show! However, my favorite part was clearly the Government Pricing (GP) Jeopardy portion of the show. Not because CIS hosted it and I got to play Alex Trebec — oh wait, yes, that’s exactly why!

Here are some highlights for those who couldn’t make the trip — and others who might like to relive it:

- CIS’ marketing department had purchased me a gray wig and mustache in order for me to complete the ‘look’ of Alex Trebec. Remarkably enough, they were stolen from the CIS booth MOMENTS before the show (I blame the competition). I was frantic — digging under our table in hopes that my fake mop would appear. Distressed, I quickly turned to the bartender who was setting up next to our booth and loudly asked, “Sir, have you seen a wig and a mustache?” Much to my dismay, this gentleman was WEARING A WIG and had a MUSTACHE!!! His response, “You mean this one?” (Pointing to his head). True story, I sh*t you not! It was one of those key moments in life where you want to take the words back before they leave your mouth. Examples include:

  • “My Janice, I had no idea you were pregnant!” (Clearly Janice is not pregnant.)
  • “Sir.” (Clearly a Ma’am upon further review, unfortunately for you, named ‘Pat’.)
  • “It’s a treadmill.” (After you give said gift to your wife for Christmas.)
  • “Yes. This product basically treats every disease I’ve heard of.” (Pharma sales rep temporarily forgetting the PhRMA Code.”
  • “What’s the worst that could happen?” (Just before the worst happens.)
  • “I love you.” (Just before you hear “Thanks.”)
  • “We’re definitely ready for an OIG audit.” (No need for filler.)
  • Again, for those playing along at home, “Have you seen a wig and a mustache.”

- So, as any comedian would, I used my unfortunate blunder to my advantage and opened the show this way. No wonder why I got such terrible service during the cocktail hour…
- CIS’ Bill Baxter was my assistant and here is my loose translation to open the show:

  • “My counterpart, mentor and hero will be playing our proverbial “Vanna White” (clearly not as attractive, but we’re on a budget since economic times are making things tight). Bill will serve as the scorekeeper and judge since I’m in sales and clearly know very little about the subject matter areas I sell.”

- CIS’ Bill Baxter proceeds to come out with a Nordstrom bag (one of the kinds that, well, women carry) and pulls out a beer for me and what appeared to be ‘water, ice and olives’ for him.
- I announce our contestants and, for privacy’s sake, I will keep their names anonymous. I will say that there were a couple of highlights:

  • One contestant volunteered to be introduced as “Bill Baxter, Jr.” and, upon hearing his name (obviously chosen at random), he came running down the middle lane and yelled “Daddy” and gave our esteemed assistant a big hug.
  • Rules time. Loosely, I say, “Okay, the rules are, well, the rules of Jeopardy. If you don’t know the rules of Jeopardy, you probably don’t even know what OBRA 90 is. (funny laugh and stop quickly). The key rule is that all answers must be in the form of a question. If not, Bill will hit you on the head with a tack-hammer a couple dozen times and your answer will be deemed incorrect.”

- For some reason, our buzzers did not make the trip so I had to come up with some alternative. I came up with, “CIS IS AWESOME” as the catch phrase that each contestant had to shout upon knowing the answer. The first of many shameless plugs. All of which I owned up to throughout the show… Each time someone shouted, “CIS is awesome”, I replied, “Yes. Yes it is.” Shameless sales guy.
- One contestant says, “I’ll take, ‘What is Healthcare Reform for $300?’”, I reply, “Um, you don’t have to phrase your requests in the form of a question.”

  • Sub-bullet. I guess I don’t have to write that since this is, indeed, a sub-bullet: We won’t be getting any business from them either…

- So Bill hands me the amounts for Final Jeopardy so contestants wager and they are as follows (please note that dollar amounts were in increments of $100 from $100 to $300 and there were 9 questions total):

  • Contestant 1: -$400
  • Contestant 2: $1,900,000
  • Contestant: Four squiggly lines and a smiley face.

- Clearly too much ‘water, ice and olives’ for Bill during the show.
- One contestant responds, “Who is E&Y” for their Final Jeopardy answer, which was obviously supposed to be another CIS shameless plug. He didn’t win.
- Our contestants get GP Jeopardy trophies and the winner gets a CIS “GP Geeks Kick ASP” Tee Shirt.

  • Winner complains, “This shirt is wet.” Um, I took it off my back and it was, apparently, sweaty since I wore it over my button down shirt and sport jacket. Ewww…

- I have subsequently asked marketing if we can change our slogan to: “CIS, we’ll give you the sweaty shirt off our back.” To date, I have not gotten anywhere…

We do hope you enjoyed the show and GP Jeopardy and, for those who missed it or would like to relive it, check out the following two videos! If they don’t match up exactly to what I said above, relax, I took some creative license and tried to type what might have been funnier…

For Your Space,

Steven Moore (A.K.A. “Scooter-Trebec”)

Friday, September 17, 2010

MDRP 2010 Conference - Minimizing Revenue Leakage in the Government Programs

Allison Pugsley – Hogan Lovells
Catrina Hirschauer - Xenodyne

There are several ways to manage and reduce the revenue leakage within your company. With Class of Trade being the foundation of the GP building this is a good place to start. In negotiating that CoT and evaluating the contract membership lists you can help to identify ways of reducing any leakage in your company. As well as monitoring the CoT for all government contracts. These entity lists change regularly, and while at one time there should have been a discount given, it may not be the case today. Not to mention that if a non-government entity is purchasing with a discount to which they are not entitled, you will then create a Best Price issue for your company. With a new lower Best Price you will see a reduction in revenue through bigger price concessions, while not catching a Best Price issue you run the risk of seeing a large settlement take a chunk out of your revenue.

Chargebacks are also an important way to ensure you are determining the sales as they should be captured. Was it a non-retail sale or a retail one? Was the transaction a sale or a return/reversal? Was the government entity entitled to that chargeback? Going back to the issue above; without maintaining and reconciling your chargebacks, how are you going to know if you are out of compliance by giving a discount where it was not supposed to be? The government is going to want to know if that was an error or if you were trying to commit fraud with by-passing the Best Price issue: either way you are out of compliance. You have spent a great deal of your company’s revenue to maintain your compliance programs and if you do not take the time to check the detail, you are just creating another revenue leak.

Another area is in your FSS contracts. There are entities that are entitled to FCP and others who are entitled to the OGA price. In addition, there are also situations where the entity is entitled to both. Are you paying attention to which entities are receiving the lower FCP price and which are not entitled to it? And you are required to offer the FCP, but have you avoided paying anything lower than the FCP? With the OGA price being a negotiated amount there is certainly movement possibilities there.

So, make sure you are looking at your contracts and detail. Yes, there is a lot of detail out there, but it could very well be worth the effort to “follow the money” and see if there are areas of savings.

MDRP 2010 Conference - Best Practices in Bundling and Discount Reallocation

Jennifer Norton – I-many

Healthcare reform is making your contracts more complex and there is more scrutiny around pricing and bundling seems to be an easy target for audit.

First you must identify the bundle. This can be done by various parts of the organization and you need to establish ownership of this action. Is it the responsibility of the GP staff? Or is it the Commercial contracts department? What about legal as this is a legal requirement? And in identifying the responsibility of determination of bundles you also should understand the corporate position on what is considered a bundle. If your company does not have such a position, you should consider gathering the troops and making that determination for moving forward.

Second you need to reallocate the bundle using an algorithm. This process is something that should come from these teams listed above including your counsel. Because bundling components could be across types such as sales, admin fees, rebates, and chargebacks, there are real world issues with the timing of data and the type of data you will be using. Do you reallocate by product or do you reallocate by price concession type? If you have intertemporal bundles do you use a rolling-average calculation? And how many times do you go back to recalculate a specific quarter? Are prompt pay discounts considered part of a bundle for your products? How about Tiers? What if your WAC changes mid-period? And, goodness gracious, what about if you have overlapping bundles?

And how often do you do these reallocations? Daily, weekly, monthly, quarterly, or yearly? And what if you own one of the 5i drugs or have RCP drugs; are you unbundling across the two separate AMPs you will be calculating? There is also a new industry trend between walk-in pharmacies, clinics, and PBMs (CVS being an example)… are those units now part of a bundled situation?

Finally you need to analyze and store your results. Storage of this information is extremely important. Just as the need to be able to rebuild your AMP calculations, you also need to be able to rebuild your unbundling reallocations in the future for audit purposes. Once you have formed an assumption about how you view bundles and how you reallocate them, be sure to document, document, document.

MDRP 2010 Conference - New Strategies and Opportunities in Medicaid and Medicare Programs

Mary Kay Owens – Southeastern Consultants

As we look further into the new healthcare reform changes the only thing that is clear at this time is that things are very unclear.

One issue being the Take-Back (a.k.a. clawback) provision which is already in place. Will the states use the increase in the prescription volume from the MCOs to negotiate supplemental rebate increases in an effort to recapture the 8% Take-Back amount? Or will they be looking at other options that will help to make up for that “lost” money? In addition, it is uncertain if there will be new methods for calculating pharmacy capitation rates for MCOs.

The managed care end of the business will have various impacts due to the new regulations. Included, but certainly not limited to, being unable to capture existing rebates for the Commercial and Medicaid populations due to the decrease in prescription volume as the rebates shift to the stats.

There is confusion on the increase of the direct and administrative costs. Will the costs go up specifically due to all of the possible system edit changes that could be taking place? And will we see an increase in the renegotiating for those “other” covered population rebate contracts/agreements? One thing is certain; there is an increase in reporting requirements for the states coming down the line. This additional reporting burden will be placed on the staffs that are already faced with increased volumes and complicated cross population issues.

As for the industry there are many additional questions that are still up in the air. Will the new regulations affect the placement of products on not only the MCO formularies, but also the FFS PDLs? And if so, what will be the impact on administrative costs in tracking and working for that placement? Along those lines; how will the access to products be affected? Will there be more restrictions in those changes to placement, including but not limited to, policies for PAs, step therapies, and quantity limits that will be imposed by the state. Again, one thing is for certain; the industry will be seeing increases in costs attributable to the rebates and also in their administrative costs.

These scenarios (and no doubt several others) will be playing out in the next few months as companies/entities gain more understanding of the impacts on them. Be prepared by expecting some shifts to your “responsibility” relationships with other companies/entities in healthcare. I doubt that Newton had the healthcare industry in mind when he came up with his Third Law; but it is certainly true that with these reform actions being placed upon companies/entities, there will be equal and opposite reactions from them.

MDRP 2010 Conference - Enforcement of the Federal False Claims Act

Viveca Parker - Assistant United States Attorney, USDOJ
Michael Theis – Hogan Lovells

The Department of Justice is looking for many things that manufacturers are doing to enforce the laws within the healthcare industry. Some of which are: Off-label promotion, anti-kickback violations, marketing spreads, and Best Price reporting errors. In the last few years there have been over $4 Billion in settlements by manufacturers to the DOJ for these types of violations.

They are also looking at ways that payments are made from companies to purchasers that are guised as grants, educational funding, and meeting sponsorship without taking them into consideration during the submission of their Best Price as a discount/rebate. This recently was brought to light in a complaint filed January 15, 2010 against Johnson & Johnson. There are also complaints being filed due to Temporary Price Allowance Programs where purchasers are offered prices from six months prior, but not including those price discounts in the calculations thus falsely inflating the average sales price.

Another thing to remember is that if you are submitting a false Best Price and/or AMP you are also submitting false PHS pricing, as it is based off of the those two numbers. And in reverse, there is language that covers those instances where entities are using 340B discounted products but have not reported the discount, while then submitting a claim for a rebate through Medicaid or Managed Medicaid. This means that the government has received two price concessions when they were only entitled to one. In this case the entity/pharmacist, under the new regulations, will be submitting a false claim.

The take away is that due to changes, amendments, and loosened language in the false claim rules the DOJ now has more tools than ever available to go after fraud in the programs by companies or by individuals within the company. Be diligent in your compliance efforts and if you are concerned that your actions may be interpreted as fraud it is always best to be safe than sorry. The amount of money you may save in your possibly-false actions will never negate any settlement you will have to face from a complaint.

MDRP 2010 Conference - 340B Pricing Structure and True-Up Operational Challenges and Compliance Strategies to Comply with New Enforcement Rules

Christopher Hatwig – Apexus/340B Prime Vendor Program
Lisa Scholz – Health Resources and Services Administration (HRSA), Pharmacy Services Support Center (PSSC)
LCDR Devin Williams – Office of Pharmacy Affairs (OPA)
CDR Krista Pedley - Office of Pharmacy Affairs (OPA)

The Office of Pharmacy Affairs is working diligently to get the new provisions of the healthcare reform bills implemented. Section 7102 is complete and will be up on the website for public comments starting on Monday. This section deals with the civil monetary penalties and the dispute resolution process. They are asking that everyone please log on, read through the proposals, and comment up to November 19th. This is the first time that the OPA has ever had regulations in their program and is very anxious to get feedback and work in partnership.

They are still working on Section 7101 and have 260 sites enrolled since August 2nd. The new sites will be posted weekly until September 30th at which time it will go back to quarterly posting. The OPA did not receive any funding to implement the new regulations and they are having some of the same problems with the provisions (e.g., orphan drugs) that manufacturers are having. Having said that, they are working hard on these issues while wanting to maintain high customer service and integrity in the program and ask for our help, feedback, and patience.

Another way that the departments are trying to reach out and make the 340B program better is by starting the 340BIQ group. This group works with entities in ways to develop more access to the drugs and to the utilization, while they focus on the outcomes, quality, and efficiency of the entity and the program.

Apexus is working to integrate the refund process into the system due to the new provisions. They have found that there are small entities that are unable to cash a check, and that it is costing manufacturers more to process the check than the amount of the check. One process is for electronic credits – including re-bills if the changes are being made within six months of original bill date. The OPA/HRSA/340B Prime Vendor groups are all working on this and encourage manufactures to contact them if they need assistance; they will work with you and the OIG for solutions.

Thursday, September 16, 2010

MDRP 2010 Conference - Successful Rebate Processing with NCPDP Standardization

Dan Hardin, Senior VP Public Sector & Resident Care Management – SXC Health Solutions and Chair - NCPDP

What do you do when you have a new drug coming to market (or an existing product that has repetitive UoM issues)? Contacting NCPDP should be one of your first steps.

This volunteer organization has over 1500 members who are ready to help you head off any problems you may have in the future. NCPDP was started as a way to streamline issues within the industry by creating standards of forms, processes, and other items that change from agency to agency and they continue that work today.

One of the groups they currently have is Work Group 2 which was created in an effort to have proper product identification. The group will help you to organize your product label, unit of measure, package documentation, and other items which could possibly have different interpretations of the same information across agencies. Without a mandatory billing unit standard across all agencies there will always be room for error. Having seen and worked with the various agencies and understanding that a pain patch could be considered one unit by CMS, part of one kit by FDA, and one part of a unit of 12 by the states, NCPDP can help you to understand those conversions.

What about a bottle of syrup that is 4 fl. oz. which also shows 118 mL on the bottle? They can help you to understand how that unit conversion being printed on the same bottle could confuse pharmacists. And if the state agency does not know your specific product, they might bill you for one claim at 4 units, another at 118, and yet another at 1 unit based on what the pharmacist has entered into their system. NCPDP can foresee this type of UoM issue and can advise you on how to update your label in a way that makes the issue less cloudy to all persons who handle your product information along the reimbursement route.

Remember, everyone’s goal is to ensure that our products are accurately billed, so that they are accurately paid. Let their volunteer groups help you to reach that goal.

MDRP 2010 Conference - Government Pricing Program Audits, Restatements, Adjustments, and Disclosures: The Needle has Moved – Have You?

Constance Wilkinson, Member – Epstein Becker & Green

The Health and Human Services agency has released the Fiscal Year 2010 work plan for their audits of the pharmaceutical industry. If you are an eligible participant in a government program, you are also an eligible participant for their audit groups. This additional participation means that you may want to make adjustments and become compliant before you get that knock on the door.

The first focus will be on the AMP Calculations and will be done by the Office for Audit Services. One of the issues that may trigger an audit would be if you restated with a significant change to the number. But having said that it is not a certain trigger and far from the complete list of reasons for an audit. With many areas of AMP being left to reasonable assumptions it is imperative that you document, document, document! When the auditor does come to your door and asks you why the AMP calculation was done the way it was done in Q303, you better be able to not only justify your reasons for the calculation actions, but also be able to recreate them.

The second focus will be done by the Office of Evaluation and Inspections to look for those companies who are participating in the Medicaid Reimbursement Program with Unapproved Drugs. There are drugs out there that are so old (e.g., grandfathered drug) they do not have an NDA and the company has failed to submit a new one to the FDA bringing their product into the Approved drug category. If the state is reimbursing pharmacies for this drug, with the assumption that it is approved and you are allowing that action, it can be considered fraud. There has already been one settlement on this issue and with future audits coming, it is imperative that you update your drugs with the FDA and ensure you are compliant with all government program participation.

The last area of focus will be for the Impact on Medicaid Rebates for Authorized Generic Drugs and will also be done by the Office of Evaluations and Inspections. There are still some companies that do not understand the difference between an Authorized and an Unauthorized Generic and how each should be treated differently. If you think you may be treating your generic incorrectly, and thus paying the incorrect rebate amount, you need to take action to restate those rebate numbers and true-up any monetary adjustments as a result. Be sure to work with your regulatory department to understand how your product is categorized in the eyes of the FDA and thus CMS, and then make any necessary changes.

Be sure to understand that with the tight budgets we have all seen these past few years, it is more and more important for the government to ensure they are getting all the discounts and reimbursements they are owed. And with the new money being funneled into the offices that do the overseeing and auditing of the pharmaceutical industry, you can bet there will be more chances for your door to be next on which to be knocked. Make sure you are prepared.

MDRP 2010 Conference - Navigating the Operational Impacts of Health Care Reform

Erinn Hutchinson and Katherine Buckley – PricewaterhouseCoopers

The new healthcare reform allows for additions to the PHS program of the Children’s Hospitals, Free Standing Cancer Hospitals, Critical Access Hospitals, Rural Referral Centers, and Sole Community Hospitals. This expansion in the program will obviously add volume to your PHS sales and thus you will not only be giving more discounts, but you will also have much more data to sort through for validation purposes.

On top of the current list of entities that will be added, there is talk that some DSH entities are considering a change in their designation during the enrollment period. If their center can be determined and designated to be a more specific entity such as the FSCH, CAH, RRC, and SCH it might be better financially for them to apply for the newly available PHS pricing. If there is a shift of designation, your company must anticipate that increase in volume and discounts.

Due to these increases, validation is more important than ever. In looking at the PHS list you will now have to be very diligent in ensuring that the designation code for that entity actually does show the entity as is getting the correct price when purchasing your product. For the smaller companies, this means to use the PHS database and compare it to your PHS sales to ensure they are truly deserving entities which will add burden to your manual process. However, if you have a great deal of PHS sales you may be using a system to compare and exclude those entities which are not eligible, your largest impact may be on processing time for the comparison.

And if you are one of those companies who has not been able to justify the purchase of a system for your PHS entity validation, this new regulation may be the proverbial last straw for the back of the camel. With so many new entities that are currently eligible under the new language, and with the entities that may eventually become eligible there is just so much more detail to review. With the downsizing that has occurred in the industry and the fact that the Medicaid/GP staff has so many more steps to follow in order to comply with the new regulations, it may just not be possible for them to go through each quarterly PHS list release and each PHS sale manually for validation purposes.

No matter your situation, know that the PHS tsunami is coming; prepare and hold on!

MDRP 2010 Conference - State Price Reporting Laws and Other State Disclosure Requirements

Danielle Drissel – Hogan Lovells

Are you compiling with all of your reporting requirements?

About eight years ago states started to adopt their own reporting requirements above and beyond the Medicaid reporting requirements of manufacturers. This started in 2002 when Texas required those with any drug on the Texas formulary to submit their quarterly AMP directly to the state. They have two requirements total and they require that all price changes are communicated to Texas within 15 days. The state Attorney General seems to be paying more attention to this obligation under Texas Admin Code § 354.1923 and if you do not act in accordance with the code the state can kick you off their formulary.

Then came along New Mexico in 2004 which requires annual reporting for each prescription drug sold in New Mexico based on the data for the reporting period and has come out with additional guidance in November 2007. You have to report your AMP, CPPs, WAC, lowest price to PBM that takes possession in New Mexico, Direct sales lowest price to a company in New Mexico.

In 2005 Maine jumped on the state reporting bandwagon. This is a quarterly report of the AMP along with a methodology of how you did that calculation. Maine also requires a certification process similar to that done for the submission to CMS.

And the last state to require reporting is Vermont in 2008, which requires that you report directly to the providers as well. And this is for every drug of yours that is dispensed in the state of Vermont (Vt. Stat. Ann. Tit. 33 § 2010). This provision also covers reporting of prices to wholesalers who are actually located in Vermont. Vermont is similar to Maine and CMS in that they require a certification. This state also requires that any pharmaceutical marketers provide prescribers with which they deal a short form that discloses the AWP and the lowest dosage of your drug and for others within the same therapeutic class.

There are several other items that are specific to the reporting requirements for each of these states and you are encouraged to communicate with the states to ensure you fulfill those requirements (and those for disclosure of your marketing practices). When you are unsure of a provision, it is always best to disclose and explain to them why you have done what you have done. These states AG offices are activity looking at these issues and are prepared to take action on those who are not in compliance.

MDRP 2010 Conference - Current CMS Rebate Data, Operations and Technical/Systems Updates

Kim Howell, Meagan Khau, Tamara Bruce, and Dona Coffman from CMS

April 27, 2010 CMS published a State Medicaid letter that addressed the rebate percentages, rebate off-sets, and managed Medicaid provisions. It is recommended that we all take a look at it on the CMS site. There is also information on the policy spotlight page and manufactures should log on and take a look and the items posted.

On August 11, 2010 there was guidance on the identification of pediatrics and clotting drugs. This information was included in state and manufacturer releases, as well as being posted on the CMS site and in the DDR system.

CMS will be doing three provisions in the AMP Final Rule. The proposed rule is currently out and comments are due October 4, 2010.

The operations team had several updates to provide:
They are currently hiring for several positions. They have been at five staff for many years now and will be adding around eight more in the next few weeks. They have just hired someone with experience on the industry side who will bring that perspective to the team; this is exciting for them. And would love to have more like her. One of the positions is for a Dispute Resolution staffer. The positions are located in Baltimore, and unfortunately, there is no moving reimbursement offered to the candidates.

CMS has been sending out a lot of invoices with zero URAs and will be doing so for the Q310 as well. There is just not enough time to get those URAs changed but are working on it and hope to have it completed by the Q410, but that timeframe is not solid. Manufacturers must be sure to do the URA calculations for their rebates if it is not yet on the invoice for all NDCs. It is everyone’s responsibility not just CMS.

Clawback provision might have impact on the operations team and will take time away from other processes. They will have to engineer the off-set calculations and will also be under scrutiny for that work which also takes time. In addition, they do not make the decisions and have no idea when any guidance will be coming down the pike.

CMS is required and is working with OIG on late payments. OIG has begun to submit letters to manufacturers saying they are late with their payments and which can trigger penalty fines. CMS must provide a report on active drug information that is not submitted or when there is an incomplete submission. Be sure to go into the DDR system and ensure you are in compliance. If you are out of compliance address it immediately, before you get a letter. It is thought that the first letters were just warnings, however that determination is up to the OIG and not CMS. CMS currently tracks how many late submissions there are and tells OIG monthly AND quarterly. If you are a repeat offender you can be sure that your company will be flagged for these late submission penalties.

Last month the operations team was able to make the changes to the DDR system for date fields – please log on and take a look. If you encounter issues with the new fields please email the DDR support address and let them know immediately. At this time there is no official time frame on when this data needs to be entered into the system by the manufacturers before a late penalty is assessed, however it is suggested that you do it as soon as you can

Coming soon: the URL will change for the DDR system. Currently you cannot search for “DDR” on the web, so be sure to look for the informational letter coming to those who people who are listed as users of the DDR system.

CMS has completed the transfer of five states to the electronic file system. They will be working to get others transferred.

FYI on the system: If your utilization is 50% higher or lower than previous data you will get a warning email to ensure it was not an error.

For the state agencies: If your state’s quarterly utilization data is missing from the CMS site you will get an error message each quarter until it is fixed. States must have all data back to 1991 and supply CMS with that data for their archive information.

One attendee questioned that a state has asked for pricing data because manufacturers are having to calculate the URA while CMS is still setting it up (and currently providing only zero URAs). Can they? No, the states should wait for the ROSI information from the manufacturer.

At this time there is no directive on how the states will submit their managed Medicaid invoices. And states are not mandated to move to electronic from paper. It is a goal, but CMS cannot force states to go paperless. CMS did say that Managed Medicaid claims should be processed just as the FFS claims have been processed. However, they cannot speak directly to any conversations they may have had with the states on this subject.

There will be upcoming forms, processes, and language forthcoming… be sure to comment on them if you have a comment or concern. Right now they cannot speak to issues around CoT or the 5i drugs – if you have a question email it to

It may be helpful for manufacturer GP staff to give their IT staff a warning that once CMS gets the URA data calculated and loaded for the states you will have a large influx of PQAS invoices with the new URA detail provided where the zero URAs are currently.

For any guidance on issues like line extensions refer to the PPACA and the national rebate agreement for your reasonable assumptions and look for any guidance that may come through in the future.

MDRP 2010 Conference - Translating the GP Impact of Healthcare Reform for Senior Management

Katie Lapins – Government Program Specialists
Janet Dozois – Eisai, Inc.

We all know how important the Medicaid/GP rules are and how much change is coming down the line. This is why we all come to the conferences. However, it is sometimes difficult to educate our senior management on the very complex (and ever changing) regulations and get them to understand the implications of these rules.

One option is for your company to construct a Cross Functional Team with all stakeholders, including senior management staff. Various members can include your contracting and pricing staff and also your legal department. These are the people who will be furthest into the detail of the regulations and involved in the interpretation to the most extent. Inviting the managed markets and reimbursement team is also important as they will have to start thinking about how their detail impacts your calculations, the double dips that may come across the rebates, and BP implications.

You will also need your government affairs group to ensure that they are on the same page in regard to your products. Have they told the FDA that your product is an orphan product? Has their determination of the drug category put them in the grouping of the 5i drugs, and is that how they provided the paperwork to the FDA which then goes back to CMS?

Also on the team should be staff from the finance department, especially those doing the accruals as we have seen that the healthcare reform will bring a significant change in volume, thus a change in reimbursement/discounts information.

Another important group would be the commercial operations staff which includes the sales and marketing groups. Manufacturers will have to give thought to changes in their approach of how to market a drug and contract strategies. As we all know the types of sales and contract language for the commercial end of the business has impact on the GP side. With open communication you can head off any potential issues with current and future products that may arise out of their actions that would leave an unintentional reaction. Also if you are planning a product launch (or line extensions), discussions should include the impact of future WAC increases that will outpace the CPI-U.

And lastly, do not forget your IT staff! After all the planning and decisions you do not want someone to tell you it is impossible to do within your system. Make sure they are able to handle your needs before you need them.

MDRP 2010 Conference - Translating the Impact of Healthcare Reform on your Medicaid, Medicare and PHS/340B Processes

Alice Valder Curran, Partner – Hogan Lovells
Rick Zimmerer, Partner – KPMG

5i products (which is now what the language from H.R. 1586 is being called for those drugs that are inhalation, infusion, instilled, implanted or injection) will create various issues that you must sit down and think about. What about specialty pharmacies? With the pharmacy groups saying that specialties are not retail pharmacies, do pill versions of drug dispensed through the specialty pharmacy fall under the traditional AMP calculation or does it now fall under the 5i AMP rule?

And how should the “general” wording in the 5i rule be interpreted? Many people are looking to the VA 90/10 rule to set a percentage number to their amount of sales that are attributed to non-retail community pharmacies. That is a good start except that the VA rule specifically states (without the word “general”) that this is for sales through merchant middlemen (wholesalers). So, do you exclude all sales EXCEPT those to wholesalers when trying to determine your general sales percentage for the 5i AMP? Or is it all sales?

The Part B regulation is another option as it also has language on the types of sales; however that language states that it is generally 50%. So, what to manufactures do once they have diligently gone through all their sales and identified how they should be treated? At this point we are all still waiting for the clarification on this issue. Realistically there are many potential answers: is the mix 90/10, is it 75/25, it is 50/50, or can we expect anything being a majority with at least 51% of the sales?

Unfortunately at this point it is down to interpretation and there is no current direction as to how those interpretations should be made. Be sure to think through all the options and prepare your data identification for inclusion/exclusion… and stay tuned!

MDRP 2010 Conference - Reforming Medicaid: Covering the Uninsured and Providing for Long-Term Care

Keynote Speaker:
Dr. Mark McClellan, Director – Engelberg Center for Healthcare Reform, Brookings Institution

There has been much talk in the political arena about how the costs of the new healthcare regulations will be covered. There are several actions within the bill that will help in doing this.

Some include the payment reductions for reimbursement which will be a huge part of the amount off-setting the spending increases. This will also include the provider payment reforms which will reduce the amount states are paying out to the entities for the treatment patients receive. There is an Independent Payment Advisory Board that will be put in place to oversee and help to set those levels.

The closing of the Donut Hole will be helped by the year 2020 through pricing discounts and rebates from manufacturers. This “saved” money will be put back into the system to help slow the increase in pricing that will come from the increase in people being covered. And not only are more people being covered, but we have to keep in mind that patients are living longer. In addition to living longer, diseases are being detected earlier which begins the treatment process earlier and can thus increase the overall healthcare costs for the patients over their lifetimes.

There are also more industry fees imposed upon the insurance, healthcare, and pharmaceutical entities. As well as the implementation of the no excises tax rule for those “Cadillac” plans that may be offered by companies to their employees. This rule will be in effect until 2018. Companies will also be faced with a payroll tax increase of 0.9%, plus a new 3.8% tax on non-wage income (e.g., investments) for individuals earning over $200,000, not indexed.

There were also a few items included in the legislation outside of the healthcare industry. One being the student loan reform language which not only helps to cover those patients in need, but also makes student loan rules also benefits the students/parents of students.

Some provisions in legislation may not help to obtain funds on the back-end, but will be extremely helpful to the agencies that will be paying to cover their patients on the front-end. Language was included that makes insurance subsidy increases to be along with CPI, instead of along with healthcare spending. This change will be seen over the next few years and will help to keep the payments down. With the reduction in inflationary payments and with other cost cutting (e.g., reduction in ER visits by those without individual health coverage, additional preventive services) within the healthcare world, the impact to the agencies will be less than those per-patient costs seen before healthcare reform.

Some of these items are already in effect while others are coming down the pike. But stay tuned as lawsuits unfold which will no doubt have impact on the implementation.

Wednesday, September 15, 2010

MDRP 2010 Conference - Operational and System Answers

Amy VanDeCar – Compliance Implementation Services (CIS)
Tom Evegan – Acorda Therapeutics
Rob LaPorte – Paddock Laboratories Inc.

There are several ways to respond to change – and if anyone understands “change” it is those of us in the GP/Medicaid world!

First, you PREPARE for the upcoming changes. You get a general grasp upon how these changes will impact your business and affect your business practices.

Then you LEARN as much as you can. There are various ways to gather information including but not limited to: attending conferences; visiting compliance sites; talking to peers; obtaining the help of a consultant; and reading as much of the legislation that you can. The networking part of this section is very important when you consider that regulations can be inserted in any bill, not just those dealing with healthcare. Case in point was the AMP language in the recent H.R. 1586 which was an FAA bill. The more interaction you seek, the better the chance you have to hear about those obscure changes.

ANALYZE and integrate your preparations into the information that you learned. See how much you still need to understand or how far off you were with your preparations. Take the information that you learn and figure out how it works for or against your company. And if you can, take that knowledge and do some forecasting to get a better idea as to where these new changes are leading you and your company.

After you feel you have enough of an understanding of what needs to be done, start to COMMUNICATE those changes to all stakeholders within your organization. Remember to ask the question if these changes actually change the list of stakeholders. Do you now have to include a department or staff member that in the past you never had dealings? And ensure that your communication includes the proper amount of emphasis. If the CFO needs to know that there is a compliance risk to not making a change, communicate that to them and in the right amount of alertness. If they do not understand the importance and you do not tell them the importance, your company will more than likely not make that critical change a priority.

And finally, once you have understood the change and have systems in place it is time to move forward, which is how you REACT to the change. If you are prepared and educated, done the analysis and conveyed that to others, your reactions should be much easier than just taking that leap before you have looked.

Happy Implementation!

MDRP 2010 Conference - Estimating and Operationizing Health Care Reform

Bob Inserra – Johnson & Johnson Healthcare Systems
Karin Moore – Johnson & Johnson Healthcare Systems

So, we all know that there are many changes coming from the healthcare reform bills. But are you aware of the increased scrutiny and additional resources that will be available to the government in an effort to ensure that these regulations are enforced?

This increase in oversight means that you not only need to be more diligent with your compliance, but that you need to convey that message to the other departments of your company. These departments may include ones that you have not found the need to communicate with in the past.

First and foremost you should become best friends with your regulatory group. If CMS determines that your product is or is not one of the pediatric drugs with the rebate percentage that goes alone with it, you should make sure that your regulatory group agrees. Your company may see your product differently than CMS and communication between the two of you will have to be opened. Same situation with an orphan drug; does your company view of the drug category pool equal to where CMS has classified it?

Getting together with your staff that is in charge of processing sales to discuss COT is imperative. They may have one way of classifying returns/reversals that makes sense to their department and to the person who processes the financial data into the company GL. But when it comes to your GP calculations their designation may cause you to inadvertently treat that transaction erroneously in the calculations.

Most importantly, whomever in your company maintains your products within the FDA database – get to know them and make sure they understand how important that database compliance is to CMS. This annually updated information is now one of the ways that CMS checks your products for how they are used and how they are packaged. To head off issues it is best to check that data and continue to ensure that it is accurate as you move forward.

Happy Processing!

MDRP 2010 Conference - Operational Process for the Extension of Medicaid Rebate to Medicaid Managed Care Lives

David Iuliani – sanofi-aventis
Edward McAdam – Daiichi Sankyo
Jay McKinley - Cephalon

Put your data into your system in a way where you are thinking about how you want that detail back out. Looking at it another way; with the new Managed Medicaid units coming through from the states your set-up of your systems is vital to getting the output of the detail correctly.

Manufacturers have begun to see all types of invoices coming in for payment. Some states have done different invoices per plan, while others are submitting two invoices (one as Medicaid and one as Managed Medicaid), and still another state has indicated that their invoices will be rolled-up into one.

The different types of invoicing poses a problem in how you set up your system. Do you put all of the invoices into your system as one from each state, or do you set up your system to have different invoices that pull into one check request? And if you have different invoices that get connected together within the system will your finance department cut one check for all invoices or will your systems relay the information that these linked accounts should be paid as separate checks. And if the state is segregating all plans to have each on a separate invoice will you be required to make check requests and cut a check for each?

At this point it appears that the states are still trying to feel their way through this and working on the Managed side of the business to pull the information they need to invoice you. Until all states have sent their new Medicaid/Managed Medicaid invoices, your best bet is to be prepared for all scenarios and think through your potential process changes now.

Not to add to your plate, but I will… also think about the fact that the state of Arizona (which many of us have not had to address each quarter) has always been Managed Medicaid. How is that going to affect your systems? And think about how you will handle the double dip (which are allowed across Medicaid and Managed Medicaid) units when you dispute on one side. Do you have to dispute on both sides and will the disputes be concurrent instead of one side having to be a historical dispute?

Happy Processing!

MDRP 2010 Conference - Quantifying the Impact of the Medicaid Expansion on your Business

Eirik Olsen – IMS Managed Markets Services
John Glover – IMS Managed Markets Services

The most important part of Medicaid/GP is looking at the data. Not only looking at the data for use in your calculations and for rebates, but to use in forecasting, as well as heading off or preparing for any spikes in the numbers.

Currently most manufacturers are seeing their Medicaid numbers in the 10%-12% range of their business. As it stands now 16 states do not have Managed Medicaid, 14 states have “Carve-outs” of the pharmacy benefits, and 21 or fewer states have Managed Medicaid… again that is for now. Some analysis of the rebates paid during 2009 seems to show an average increase of 3% over the previous year, with some anticipation of up to a 30% increase over the next year due to the new healthcare regulations. Having said that, you must remember that with any issue in Pharma, the type of drug and the demographic of your patients will determine how much your rebates will go up or down. With an increase in volume, the analysts may see an increase in workload. Are you going to get more than one invoice? Will it be one per NDC? Will it be consolidated into one invoice? And will you now have more claims to look at for outliers, as well as more opportunities for those outliers?

In addition to the increase in the utilization, manufacturers have seen the increase in the minimum rebate per unit. With healthcare reform the base rebate manufacturers pay has gone up, sometimes significantly, depending on the type of drug. So, even without the increase in Managed Medicaid populations you are paying a higher rebate for the same number of units that you paid last year.

Okay, enough of the bad news. Good news may be that your company is one of the lucky ones that will see some offset from your supplemental agreements? Many companies see the inverse reaction of “if one goes up, the other goes down”. Will your supplemental invoices see enough of a decline to make it less of a hit to the reimbursement bottom line? And will the marketing end of your company want to aggressively pursue the Managed Medicaid business by offering higher reimbursement rates through your product’s formulary position?

These are important questions that you must ask of yourself and of your company. Look at the data and it will help you to be able to expect the unexpected.

Happy Calculating!

MDRP 2010 Conference - Continuing Challenges from the DRA Medicaid Regulation

Alice Valder Curran – Hogan Lovells
Rick Zimmerer – KPMG

What did the lawsuits teach us?

When the various parties submitted lawsuits based on the DRA, CMS learned that there are more entities that pay attention to GP than just the pharmaceutical manufacturers. Pharmacy groups, as well as others, showed CMS that they are not only reading the statutes, but they are making sure that CMS enforces the regulations, and enforces them as the group interpret the regulations to be.

In addition, they made it known that lawsuits were not off the table when it came to ensuring that manufacturers adhered to the regulations based on how they read the language.

So, CMS is listening. They come into the heathcare reform regulations with eyes open that people are watching and that interpretations may be far from the original intent. The consensus seems to be that this understanding of the language and how it affects those other than manufacturers will be taken into account when written guidance is released.

The take away? First, do not be surprised if the language used in guidance and regulations is no longer geared towards manufacturers specifically. Second, do not be surprised if the decisions on the guidance do not make sense for your type of pharmaceutical company as it may not be for your company as much as it is a way for CMS to avoid further lawsuits. Third, do not get comfortable with the HCR. When the Remember when DRA was implemented we were all in a frenzy to make the changes as we saw them. And just as we got to catch our breath due to feeling we had a good understanding of the regulations, along came the HCR bills. Chances are that in the attempt by CMS to make everyone happy, they will make someone (or everyone) unhappy and when that happens entities now know that lawsuits that get changes made even if the suit does not prevail. Nothing is for certain in Medicaid and GP other than it is a very fluid process and never set in stone.

Happy calculating!

MDRP 2010 Conference - AMP after HCR: Implementation is Here – What Issues Still Remain?

Steven Benz – Eli Lilly and Company
Katie Lapins – Government Pricing Specialists

So, you spent much time and money setting up your COT based on the DRA changes we all had to implement in 2007… guess what? You have to do it again. Just as we were all getting used to the understanding of what our companies were including and excluding by how those sales were treated.

Now, the healthcare reform language may change that sale and place it into another class of trade with a change to the include/exclude methodology you have. Well, it is another process of determining how those sales are treated and where they fall in the AMP calculation. Which if you are working in Excel this is not that big of a deal as you have your historical data that is set and archived for the suggested 10 years.

But what if you have a system? Will that system think that you are changing your methodology for all historical calculations? In thinking that you are making a complete change in the methodology (because the system does not understand that congress likes to make sure we are never having a dull moment when it comes to AMP) will your system recalculate all of your historical GP information?

If your system is recalculating the numbers, you will lose the ability to go back to a past calculation in the case of a recalc or for audit purposes. If you are not sure about how your system will treat past calculations, you must be sure to make a snap-shot of your historical calculations. And ensure that you have the numbers and methodologies for those calcs and archive them as you had them when they were submitted to CMS. Remember, being able to rebuild your calculation at the time and during the correct regulation language it imperative to be compliant based on the date of the AMP submission; none of the regulations (so far) do not change what you have done in the past, only what you are going to do moving forward.

Happy Calculating!

Thursday, September 9, 2010

8th Annual Medicare Congress Brochure Ready for Download

The 8th Annual Medicare Congress brochure is now ready to download! With the passage of health care reform, Medicare Plans face critical changes. Maintain your competitive edge and act now to reengineer your strategy to ensure future success and sustainable profits.

Key Takeaways for 2011:
• Ensure compliance with RADV audits, MLR thresholds, and new CMS regulations
• Conquer the star rating challenge to achieve payment bonuses
• Reinvent your use of HIT to improve sales and marketing strategies
• Seize new business opportunities for Medicare Part D, SNPs, and Med Supps
• Obtain best practices to manage dual eligibles to improve care and reduce costs
• Leverage your medical and revenue management to achieve optimal reimbursement
• Learn from case studies on ACO pilot programs to prepare for and ACO future

Plus, Don’t Miss Our Keynote Presentations:

How Do Health Plans Deliver More with Less? John Gorman, CEO, GORMAN HEALTH GROUP The Future of Private Medicare

Susan Dentzer, Editor-in-Chief, HEALTH AFFAIRS & Murray N. Ross, Ph.D., Vice President, KAISER FOUNDATION HEALTH PLAN INC., Director, KAISER PERMANENTE INSTITUTE FOR HEALTH POLICY Medicare And Health Reform - What Will Changes Mean for the Beneficiary

Tricia Neuman, Vice President, KAISER FAMILY FOUNDATION

Click here to download the newly completed 2011 agenda.