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Government Pricing & Commercial Contracting “Big Changes Coming”
Tim NugentManaging DirectorHuron Consulting Group
Debjit GhoshDirectorHuron Consulting Group
John D. ShakowCounselKing & Spalding, LLP
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Today’s Agenda
1. Investigations, Settlements, and Lawsuits
2. Changes Enacted by the Deficit Reduction Act
3. Operational Challenges of the Deficit Reduction Act
4. Final Physician Fee Schedule Rule (ASP)
5. Determining Fair Market Value for Service Fees
6. Compliance Challenges for Medicare Part-D
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Section I
Investigations, Settlements, and Lawsuits
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Pricing Litigation
AWP cases Medicaid rebate cases Congressional investigations False Claims Act prosecutions Qui Tam actions (340B cases)
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Pricing Litigation: AWP cases
GSK settlement Plain meaning ruling (November 2, 2007) Track I case underway Attempts to remove are failing Federal intervention in Dey qui tam Magistrate Bowler decision on Baxter discovery
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Pricing Litigation: State False Claims Acts
DRA § 6031 Incentive for states to enact false claims act laws that
establish liability to the state for entities that submit false or fraudulent claims to a state Medicaid program– Increased percentage recovery if the state law qualifies– OIG guidelines for evaluating state false claims acts issued
August 21, 2006– Generally modeled after the Federal False Claims Act
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Pricing Litigation: State False Claims Acts
Trickle down incentive: to qualify for the increased percentage of the recovery, the state law must, among other things, reward the relator in a way that is “at least as effective in rewarding and facilitating” federal qui tam relators
Treble damages and guaranteed percentages make state false claims act actions more attractive to relators
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Pricing Litigation: Medicaid Integrity Program
DRA § 6034 Comprehensive Integrity Plan issued in mid-July Well funded and staffed fraud investigation unit
charged with addressing “programmatic vulnerabilities” including “the provision of prescription drugs to beneficiaries and the underlying costs of those drugs as reported to the States”
Division of Fraud Research and Detection Enforcement authority?
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Penalties for Non-Compliance with Price Reporting Laws
Exclusion from the Medicaid market Civil monetary penalties
– Up to $100k for false statements of AMP or best price
– $10k per day for failure to file AMP or best price
– $10k per day for misreported ASP
Civil False Claims Act (federal and state) Submitting false statements is a felony (particularly on
the ASP certification)
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King Settlement
November, 2005 $124 million settlement of a false claims act allegation Payments to the Federal Medicaid program, several states, the
Big 4 and PHS covered entities Based on the following conduct (performed "knowingly"):
– failing to collect and analyze its pricing information in a manner to ensure that it would be able to accurately report AMP and BP;
– failing to adequately train its personnel to accurately calculate AMP and BP;
– failing to provide its employees with appropriate software and other tools for calculating AMP and BP correctly; and
– including inappropriate customers in its retail class of trade (resulting in inaccurate AMPs).
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King Settlement (cont’d.)
The "false records" are alleged to have been the calculations themselves, included in the quarterly CMS submissions
King's failure to have adequate systems and training -- not that they set out to mislead or defraud -- that was enough to trigger an FCA investigation and settlement
Attendant invasive CIA
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Other Significant Pricing Settlements
GlaxoSmithKline (September, 2005)– $150 million– AWP, AMP and ASP
Schering Plough (July, 2004)– $345 million – Best price
AstraZeneca (June, 2003)– $355 million– AWP and best price
Bayer (April, 2003)– $250 million– Concealed discounts
TAP (September, 2001)– $875 million– AWP and best price
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Corporate Integrity Agreements
Most settlements have attendant CIAs Invasive
– Independent Review Organizations– Government Audits
Long-lasting Limit sales and marketing opportunities Expensive Potentially experimental
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Section II
Changes Enacted by the Deficit Reduction Act
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Overview of the Deficit Reduction Act 2005
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Deficit Reduction Act of 2005
Federal Upper Limits
Federal FULs on multiple source drugs to fall from 150% of lowest AWP to 250% of AMP (January 2007)
FULs set for any drug with one other therapeutically equivalent drug (down from two)
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Deficit Reduction Act of 2005
Retail Survey Prices and State Reports
CMS to engage a private vendor to determine nationwide average retail prices for Medicaid drugs on a monthly basis
CMS is required to give this data to the states States must submit a report annually detailing Medicaid
payment rates and dispensing fees; CMS must compare the national retail sales price data with the data reported by each state program (January 2007)
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Deficit Reduction Act of 2005
Nominal sales, best price and ASP
Excludable nominal sales are only those made to:– 340B covered entities– intermediate care facilities for the mentally retarded– state owned or operated nursing facilities– other safety net providers (as determined by HHS)
Nominal sales information to be reported to CMS (January 2007)
Applicable to ASP in that it mirrors best price definition
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Deficit Reduction Act of 2005
Authorized generics, AMP and best price
Best price for all single source and innovator multiple source drugs inclusive of the best price at which the associated authorized generic is sold (January 2007)
Same for AMP
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Deficit Reduction Act of 2005
Physician administered drugs
States to collect and submit to CMS utilization and NDC data on PA single source drugs (January 2006) and the twenty most dispensed PA multiple source drugs (January 2008)
This is an attempt to permit the states to collect Medicaid rebates on PA drugs, which are currently being tracked by HCPCS J-code
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Deficit Reduction Act of 2005
340B eligibility
Upon enactment, certain qualified children’s hospitals will be eligible to receive 340B covered entity pricing
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Deficit Reduction Act of 2005
State False Claims Act Laws and Other Fraud & Abuse Provisions
Powerful incentives for states to enact their own statutes based on the Federal False Claims Act
May require entities (including pharmaceutical manufacturers) to revise and update their compliance training programs (January 2007)
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Deficit Reduction Act of 2005
Rejected provisions
Increased rebate percentages for both single source and multiple source drugs
Federal oversight of dispensing fees Extension of rebates to Medicaid MCOs Limited ability to subject certain antipsychotic or
antidepressant single source drugs to prior authorization
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Issues
Operational Compliance
Monitor and Participate
Pricing Transparency
Aggregation of AMP and BP and Third Party Authorized Generics
False Claims Act Expansions - Litigation Threat
False Claims Act Expansions - Employee Education
Medicaid Integrity Program
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Operational Compliance
Need for robust systems and resources– Frequency of reporting– Potential changes to AMP methods resulting from
rulemaking– Ability to differentiate among different methodological
rule sets (e.g., prompt pay in ASP v. AMP)– Possible need for update class of trade designations
(e.g., ICF/MR nominal)
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Monitor and Participate
Need to monitor AMP reforms, consider financial impact, and participate actively in the regulatory process– Exclusion of prompt pay and potentially other COT
discounts will increase AMP– Mechanism to avoid “apples and oranges” issues
associated with Base AMP – Medicare ASP comments may have spillover effects
on Medicaid
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Pricing Transparency
Transparency and use of AMP data in reimbursement may raise pricing and compliance challenges– Pharmacies now have a financial interest in AMP calculations– Need to balance rebate benefits of lower AMPs against
pharmacy product access issues– Potential pressure for fee-based arrangements in lieu of
discounts– Improper AMP calculations may raise new false claims theories
if used in pharmacy payment rates (directly or upper limits)– Potential compliance effect on manufacturer AMP calculation
“look-back” procedures
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Aggregation of AMP and BP and Third Party Authorized Generics
DRA § 6003 AMPs and BPs are to be aggregated across all products
“sold under a new drug application” Relatively simple for a vertically integrated operation But where authorized generics are licensed to third party
manufacturers, this aggregation poses significant challenges
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Aggregation of AMP and BP and Third Party Authorized Generics
Potential implementation strategies:– share core transaction data, calculate independently, compare
and reconcile?– designate a responsible manufacturer and adopt?– calculate independently, compare, combine and report?– others
Calculation remains the legal responsibility of each labeler
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Aggregation of AMP and BP and Third Party Authorized Generics
Legal and contractual concerns:– Indemnification– Confidentiality– Differing methodologies and SOPs– Antitrust – Obligations to provide data in a timely way– Third party reconciliation– Audit rights– Costs
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False Claims Act Expansions - Litigation Threat
DRA § 6031 Incentive for states to enact false claims act laws that
establish liability to the state for entities that submit false or fraudulent claims to a state Medicaid program– Increased percentage recovery if the state law qualifies– OIG guidelines for evaluating state false claims acts issued
August 21, 2006– Generally modeled after the Federal False Claims Act
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False Claims Act Expansions - Litigation Threat
Trickle down incentive: to qualify for the increased percentage of the recovery, the state law must, among other things, reward the relator in a way that is “at least as effective in rewarding and facilitating” federal qui tam relators
Treble damages and guaranteed percentages make state false claims act actions more attractive to relators
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False Claims Act Expansions - Employee Education
DRA § 6032 Any entity that receives or pays $5 million annually to
Medicaid must have written policies regarding– federal and state false claims acts– detection and prevention of waste fraud and abuse– whistleblower rights (in the employee handbook)
These policies must extend beyond just management and employees to contractors and agents
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False Claims Act Expansions - Employee Education
No guidance yet issued: questions of scope and depth of required educational initiatives
The DRA makes these previously voluntary compliance policies mandatory
Manufacturers must establish these policies as a precondition of participation in Medicaid (by January 1, 2007)
Monitoring for compliance
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Medicaid Integrity Program
DRA § 6034 Comprehensive Integrity Plan issued in mid-July Well funded and staffed fraud investigation unit charged
with addressing “programmatic vulnerabilities” including “the provision of prescription drugs to beneficiaries and the underlying costs of those drugs as reported to the States”
Division of Fraud Research and Detection Enforcement authority?
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Section III
Operational Challenges of the Deficit Reduction Act
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Overview of the Deficit Reduction Act 2005 Internal Functional Areas Impacted
Government Price Reporting Department- Calculating AMP and BP
Contracting Department- Effect on Authorized Generics
- Narrow definition of Nominal Prices
Financial Accounting Department- Effects on Government and Commercial Rebate Accruals
Information Technology- Effects on implementing changes on core transaction systems
- Effects on implementing changes on government price reporting system
Compliance & Internal Audit Functions- Monitoring and Auditing policies, procedures, controls and practices
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Overview of Deficit Reduction Act 2005 – Operational Challenges
Prompt Pay Discounts to Wholesalers for drugs distributed to the retail pharmacy class of trade are excluded from the AMP calculation. In addition, manufacturers will be required to submit data regarding the customary prompt pay discount extended to wholesalers.
Open Questions to CMS- Definition of a wholesaler- How will the Base AMP be adjusted, if at all- What data reporting is CMS going to require regarding prompt pay discounts- Will this require a certification similar to ASP?
Operational Readiness- Assess data systems requirements to gather, apply and report these amounts- Assess the impact this will have Medicaid rebates- Assess the ability to re-file the Base AMP
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Overview of Deficit Reduction Act 2005 – Operational Challenges, cont’d
The DRA narrows the definition of ineligible nominal price transactions by limiting ineligibility to certain entity types to be excluded from the Best Price Calculation. In addition, DRA requires manufacturers to report these nominal prices.
Entity types where defined as:- A covered entity described in section 340B(a)(4) of the Public Health Service- An intermediate care facility for the mentally retarded- A State-owned or operated nursing facility- Other entities determined by the Secretary as a safety net provider
Operational Readiness- Assess current nominal price contractual arrangements - Assess the current class of trade schema- Assess the impact this will have Medicaid rebates- Which functional area will track, manage, monitor and report nominal pricing
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Overview of Deficit Reduction Act 2005 – Operational Challenges, cont’d
The DRA expands Children’s Hospitals participation in Section 340B
drug discount program beginning February 8, 2006.
Operational Readiness- If these entities are not added to HRSA’s 340B list of participating entities,
manufacturers will have to establish a process (both business and systems) to:
o Identify the appropriate facility within an entityo Assess the pricing being offered to such facilitieso Determine the appropriate inclusion/exclusion from each of the calculations
- Assess and monitor SOPs and controls to ensure that 340B membership eligibility is being maintained
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Overview of Deficit Reduction Act 2005 – Operational Challenges, cont’dThe DRA amends the definition of AMP and Best Price to include all drugs that are sold under a new drug application approved under section 505(c) of the Federal Food, Drug and Cosmetic Act. Therefore, authorized generic product pricing data will be included in the branded product AMP and Best Price.
Open questions to CMS- What information is required to be reported to each entity without
violating anti-trust laws- How will these amounts be included in the AMP and Best Price
calculations- Are transfer prices and/or commercial sales prices included- Royalty, license and revenue sharing payments
Operational Readiness- Begin reviewing contractual arrangements and begin discussing the
process to manage and receive data from/to each entity- System capabilities for transferring data - Controls in place to ensure accuracy and completeness of the data
being provided- Assess the impact Authorized Generic pricing data may have on
Medicaid Rebates
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Overview of Deficit Reduction Act 2005 – Operational Challenges, cont’d
The DRA amends the Medicaid rebate statute to increase the reporting frequency of AMP and Best Price from quarterly to include a monthly reporting requirement. CMS will be providing this information on a website accessible to the public.
Open questions to CMS- What methodology is required to calculate monthly AMP and BP - What are the AMP and BP calculation restatement or smoothing requirements- Will the Medicaid rebates still be based on the quarterly AMP and BP calculations- Will this require certification similar to ASP
Operational Readiness- What processes and/or systems would need to be updated or modified- What additional resources (both manual effort and automated systems) are
required- Can the appropriate data elements be gathered and applied on a monthly basis- What controls are in place to ensure the data is accurate and complete- What updates to the current policies, procedures, systems and controls need to
implemented- What will the process be for training (all levels of management and operations)
and how will the process be monitored on a go forward basis- What level of variability would be expected from a monthly amount and what
implications may that have on Medicaid rebates
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The provisions of the DRA require any entity that receives or makes at least $5 million in annual Medicaid payments needs to perform the following:
Manufacturers must establish written policies for all employees (including management), and of any contactor or agent, that provides detailed information about the False Claims Act, any State laws pertaining to civil or criminal penalties
for false claims and statements, and whistle blower protections under such laws.
Detailed provisions regarding the manufacturer’s policies and procedures for detecting and preventing fraud, waste, and abuse must be included as part of such
written policies,
The employee handbook for the manufacturer must include in a specific discussion of the laws described above, the rights of employees to be protected as
whistleblowers, and the manufacturer's policies and procedures for detecting and preventing fraud, waste, and abuse.
These requirements take effect on January 1, 2007.
Overview of Deficit Reduction Act 2005 – Operational Challenges, cont’d
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Deficit Reduction Act 2005 – Next Steps
Most manufacturers have done some level of review to assess the impact of DRA Some have commissioned studies or internal projects to study the financial impact A typical DRA Impact Assessment should assess the following:
- Policy and Procedures – Developing and/or updating the current guidelines and processes, as well as requirements of DRA
- Data – How is the data currently being gathered, assessed and applied and how is the data and/or feeds going to have to change
- Systems – Current data management and government price reporting systems and what will need to be changed to address DRA
- Customer and Contracting Strategy – What new pricing and contracting strategies of products and customer segments needs to be changed to address the changes of DRA
- Training and Monitoring - What level of training at all levels of management and operations is being performed, as well as what controls have been put in place and how are they being monitored throughout this process and going forward
The DRA Impact Assessment should provide a complete understanding of the current government price reporting environment, changes required to assess and meet the DRA requirements and a detailed timeline of implementation throughout the organization
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Section IV
Final Physician Fee Schedule Rule (ASP)
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Overview of CMS Final Ruling
Key highlights to the Final Ruling include:- Published and distributed on November 3, 2006
- Additional changes and clarification to the ASP calculation
- Addresses Deficit Reduction Act of 2005 (“DRA”) effect on the
Medicare Average Selling Price (“ASP”) calculation
- Majority of the changes are effective for the quarter beginning
January 1, 2007
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Summary of ASP Clarification and Changes
Determining and applying fees not considered to be Price Concessions
Application of excluding non-eligible sales on a lagged basis
Determining and applying nominal sales Other price concession issues
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Determining and Applying Fees Not Considered Price Concessions
Currently Manufacturers must consider:- Volume Discounts;- Prompt Pay Discounts;- Cash Discounts;- Free Goods that are contingent on any purchase requirement;- Chargebacks; and - Rebates (other than rebates under the Medicaid drug rebate program)
Clarification on the application of Service and Administrative Fees:- Fee paid must be for a “bona fide”, itemized service that is actually performed on
behalf of the manufacturer;- The manufacturer would otherwise perform or contract for the service in the
absence of the service arrangement;- Fee represents fair market value;- Fee is not passed on in whole or in part to a client or customer of any entity.
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Determining and Applying Fees Not Considered Price Concessions
Points for consideration:- Application of the above definition is first quarter of 2007;
- Encompass any reasonably necessary or useful services of value to the manufacturer that are associated with the efficient distribution of drugs;
- CMS would not establish a list of “bona fide services”;
- CMS did not mandate the methodology for determining fair market value, manufacturers must determine a reasonable method;
- If a manufacturer determines that a fee meets the requirements of a bona fide service (excluding “Not Passes On”), the presumption can be made (absence any evidence or notice to the contrary) that the fee paid is not passed on;
- Contrary to DRA provisions, prompt pay discounts extended to wholesalers will not be excluded from ASP reporting.
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Application of Excluding Non-Eligible Sales on a Lagged Basis
Certain chargebacks, rebates and other transactions are not eligible for ASP calculation, however are lagged in nature, such as:
- VA transactions;- 340B transactions;- Eligible SPAP transactions;- Other ASP ineligible entities.
A 12 month rolling average ratio methodology based on units must be calculated to more accurately estimate and exclude these sales from the ASP calculation, such as:
- Sum of the lagged exempted sales units for the most recent 12-month period;- Sum sales units after non-lagged exempt sales have been subtracted from total sales units
for the same period.
A. A / B = rolling average percentage estimate for lagged exempt salesB. C * Sales (both $ and units) after non-lagged exempt sales have been subtracted for the
current quarter
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Determining and Applying Nominal Sales
Currently ASP requires sales considered to be nominal to be excluded from the ASP calculation– A price less than 10% of the AMP in the same quarter for which AMP is
computed.
Effective January 1, 2007, DRA revised to limit this definition to nominal prices made to the following:- Covered entities as described in section 340B(a) (4) of the Public Health
Services Act;- Intermediate care facilities for the mentally retarded (ICFs/MR);- State-owned or operated nursing facilities;- Any other facility or entity that the Secretary determines is a safety net
provider.
Effective January 1, 2007, ASP definition of nominal pricing will mirror the DRA definition, therefore a single method for identifying nominal sales for both ASP and AMP will be in effect.
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Other Price Concession Issues
Lagged Price Concession for NDCs with less than 12 months of Sales
- If less than 12 months of data is available than the 12 month rolling average will be based on the lesser period, except when the products NDC has been re-designated.
Re-designated NDCs- Use of sales and price concession data for both the prior and re-designated NDCs
to estimate lagged price concessions applicable to the re-designated NDC.
Bundled Price Concessions- Given the potentially wide range of bundling arrangements that might exist and
the information they currently have around such arrangements, methodology for applying bundled arrangements was provided at this time.
- MedPac is studying this issue in the upcoming year and this position may change.
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Other Price Concession Issues
Other ASP Reporting Issues- Further clarification around drugs covered by Medicare Part B, as well
as resources to assist in identifying NDCs requiring ASP reporting- Manufacturer’s are not required to report ASP data for an NDC
beginning the reporting period after the expiration date of the last lot sold occurs
- Wholesalers that relabel or repackage NDCs and pharmacies must report ASP data to the extent they qualify as a manufacturer for Medicaid drug rebate purposes
- Returns should not be included in the ASP calculation- Units of drugs sold to an approved CAP vendor for use under the CAP
are excluded from the ASP calculation- If a manufacturer has a good cause for resubmitting its quarterly ASP
data, it may do so following the submission instructions available at:- http://questions.cms.hhs.gov/cgi-bin/cmshhs.efg
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Section V
Determining Fair Market Value for Service Fees
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Stark II Definition for Fair Market Value
Fair Market Value
This term appears in most of the compensation exceptions. The definition in the final rule is almost the same as the January 1998 proposal. It defines "fair market value" as the value in an arm's-length transaction, consistent with the general market value. "General market value" is defined as the price an asset brings, or the compensation that would be included in a service agreement, as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party on the date of the acquisition or time of the service agreement. The fair market price is the price at which other sales have been consummated for similar assets in a particular market, and for services, the compensation included in other bona fide service agreements with comparable terms at the time of the agreement.
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The Compliance Challenge
Unlike Medicaid, PHS, and Federal Supply Schedule Pricing, ASP is a reimbursement mechanism.
The level of reimbursement may adversely affect physician choice for a product.
In particular, the treatment of service fees may be a critical factor in the determination of ASP.
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Example w/o Service Fees
WAC/List Price = $100.00 Only discount (constructive or otherwise) is prompt pay
at 2% or $2.00 Average Sales Price = $98.00 Reimbursement at 106% of ASP = $103.88 Assume product is sold by wholesaler/distributor at list or
$100.00 Net difference to provider at purchase price of $100.00 =
$3.88
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Example w/ Service Fees Treated as Discount
WAC/List Price = $100.00 Only discount (constructive or otherwise) is prompt pay at 2% WAC or $2.00 Average Sales Price = $98.00 Reimbursement at 106% of ASP = $103.88 Assume product is sold by wholesaler/distributor at list or $100.00 Net difference to provider at purchase price of $100.00 = $3.88
Service fees paid to wholesalers/distributors = 1.5% of WAC or $1.50Service fees paid to wholesalers/distributors = 1.5% of WAC or $1.50
If treated as a discount ASP = $96.50 (reduced from $98.00)If treated as a discount ASP = $96.50 (reduced from $98.00)
Reimbursement at 106% of ASP = $102.29Reimbursement at 106% of ASP = $102.29
Net difference to provider at purchase price of $100.00 = $2.29Net difference to provider at purchase price of $100.00 = $2.29
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CMS Final Guidance - Treatment of Service Fees
Clarification on the application of Service and Administrative Fees:- Fee paid must be for a “bona fide”, itemized service that is actually
performed on behalf of the manufacturer;
- The manufacturer would otherwise perform or contract for the service in the absence of the service arrangement;
- Fee represents fair market value;
- Fee is not passed on in whole or in part to a client or customer of any entity.
“Bona fide” service fees paid at “fair market value” can be excluded from the calculation of ASP.
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Typical Types of Fees This May Affect
Typical customer classes that may be affected:– Wholesalers– Distributors– Specialty Pharmacies– MCO’s & PBM’s– GPO’s
Various fee types:– Inventory management– Service level delivery– Chargeback processing– Data fees– Customer solicitation and management– Product and patient support– Shipping and handling (pick, pack, ship, etc.)– Brand protection activities
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The Standards Being Imposed
“Bona Fide Service Fees”– A determination must be made by the manufacturer with regard
to the specific itemized service being “bona fide” based on the latest guidance.
– The guidance provides a basic minimum standard for “determination”.
– Specifically, it states the following - “…itemized service actually performed by an entity on behalf of the manufacturer…”.
“Fair Market Value”– CMS is also providing a basic minimum standard for FMV.– Based on the above referenced quote, FMV is being referenced
as “at the same rate had these services been performed by other entities”.
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Valuation Basics – Service Agreements
In applying the cost approach to services, a “cost build-up” approach is often utilized. Under the cost build-up approach, actual or expected costs incurred are analyzed and an assumed profit level is estimated to derive an indication of the fair market value of the services.
In applying the market approach we are looking for agreements involving the sale of similar services. This market data is adjusted for significant differences. Based on types of services provided, data provided, pricing for services can greatly impact value and lead to appropriate adjustments.
– Services provided by outside companies – Outsourcing functions (e.g., sales force training, contract enrollment and administration, call center support, data fees);
– Services performed in similar settings or environments; and
– Our industry knowledge from other projects of a similar nature.
In applying the income approach to services, analyses of various rates of return provide corroboration for estimated fair market values.
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Section VI
Compliance Challenges for Medicare Part-D
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CMS Issued Comprehensive FWA Guidance for Part-D Plan Sponsors
Earlier this year, CMS issued comprehensive Fraud, Waste and Abuse (“FWA”) guidance to Medicare Part-D Plan Sponsors.– Prescription Drug Benefit Manual Chapter 9
Section 60 outlines the implementation guidelines for detecting, correcting, and preventing FWA.– CMS provides examples of risks to Part-D Plan Sponsors,
Pharmacies, Prescribers, Wholesalers, Pharmaceutical Manufacturers, and Medicare Beneficiaries.
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Section 70.1.6 – Pharmaceutical Manufacturer Fraud, Waste and Abuse
Lack of integrity of data to establish payment and/or determine reimbursement…
Kickbacks, inducements, and other illegal remuneration– Inappropriate marketing and/or promotion of products
reimbursable by federal health care programs– Improper inducements: inappropriate discounts, inappropriate
product support services, inappropriate educational grants, inappropriate research funding, or other inappropriate remuneration
Formulary and formulary support activities– Inappropriate relationships with formulary committee members,
payments to PBM’s, and formulary placement payments…
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Section 70.1.6 – Pharmaceutical Manufacturer Fraud, Waste and Abuse
Inappropriate relationships with physicians:– “Switching” arrangements– Incentives to physicians to prescribe medically unnecessary
drugs– Consulting and advisory payments, payments for detaling,
business courtesies and other gratuities, and educational and research funding
– Improper entertainment or incentives offered by sales agents Illegal off-label promotion: Illegal promotion of off-label
drug usage through marketing, financial incentives, or other promotion campaigns.
Illegal usage of free samples
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Questions?