[Federal Register Volume 60, Number 149 (Thursday, August 3, 1995)]
[Notices]
[Pages 39762-39764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19061]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Notice Regarding Section 602 of the Veterans Health Care Act of
1992 Patient and Entity Eligibility
AGENCY: Public Health Service, HHS.
ACTION: Notice.
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SUMMARY: Section 602 of Public Law 102-585, the ``Veterans Health Care
Act of 1992,'' enacted section 340B of the Public Health Service Act
(PHS Act), ``Limitation on Prices of Drugs Purchased by Covered
Entities.'' Section 340B provides that a manufacturer who sells covered
outpatient drugs to eligible entities must sign a pharmaceutical
pricing agreement with the Secretary of Health and Human Services in
which the manufacturer agrees to charge a price for covered outpatient
drugs that will not exceed that amount determined under a statutory
formula.
The purpose of this notice is to inform interested parties of
decisions regarding certain issues of program implementation. The
notice will discuss the determination of covered entity status (i.e.,
PHS entity and disproportionate share hospital eligibility) and the
administrative program requirements for ``covered entity'' status.
Further, PHS is proposing a definition of eligible covered entity
``patient'' in section III for public comment.
DATES: The public is invited to submit comments on the proposed
definition of ``patient'' in section III by September 5, 1995. After
consideration of the comments submitted, the Secretary will issue the
final guidelines.
FOR FURTHER INFORMATION CONTACT: Marsha Alvarez, R. Ph., Attn: Drug
Pricing Program, Bureau of Primary Health Care, 4350 East West Highway,
10th Floor, Bethesda, MD 20814, Phone (301) 594-4353.
SUPPLEMENTARY INFORMATION: The Office of Drug Pricing has developed the
following guidelines to facilitate program implementation and is
proposing a definition of ``patient'' in section III for public
comment.
I. Covered Entity Status
PHS Entities
Section 340B(a)(4) of the PHS Act lists the various categories of
PHS programs eligible to receive section 340B outpatient drug discount
pricing. For each category, there is a Federal program office which
oversees the grant program. The respective Federal program offices
determine which individual facilities receive the grant funds specified
by section 340B or are eligible under other criteria and compile a list
of such entities. The Federal program office then submits this list to
the Office of Drug Pricing (ODP) for inclusion on the master list of
eligible facilities (``covered entities'').
Each program office is responsible for maintaining a current data
file of eligible entities and submitting all updated information to the
ODP. This information may either be submitted on a quarterly or yearly
basis, depending upon the number of entity status changes in a given
period. Each program office determines how often updates are necessary
to maintain current entity information on the ODP master list of
covered entities and notifies the ODP of their respective update time
periods. The update file data is submitted to ODP in either a dbf or
ASCI file, the formats of which are available from the ODP. Program
offices submit their updates to the ODP on the following dates: (a)
December 1 for the January 1 update, (b) March 1 for the April 1
update, (c) June 1 for the July 1 update, and (d) September 1 for the
October 1 update.
The ODP will update the master covered entity file on a quarterly
basis. The name of an entity will not be added or deleted at any other
time. For example, if an entity becomes an eligible PHS grantee, its
name will not appear on the ODP master list until the program office
submits the name in its update package and the ODP subsequently updates
the ODP master list during the next quarterly cycle. ODP will not
directly add to or delete an entity name from the ODP master list. An
entity name to be added or deleted must be submitted by the program
office during a scheduled update period.
The following is a list of the Federal program offices which
oversee the 340B eligible programs and contact persons (except as
otherwise indicated, references are to sections of the Public Health
Service Act):
1. Federally-qualified health center, as defined in section
1905(1)(2)(B) of the Social Security Act (42 U.S.C.
Sec. 1396d(1)(2)(B)), means an entity that:
(a) receives a grant under section 329 (migrant health center),
section 330 (community health center), section 340 (health services for
the homeless), and section 340A (health services for residents of
public housing); or
(b) (i) receives funding from such a grant under a contract with
the recipient of the grant, and (ii) meets the requirements to receive
a grant under section 329, 330, 340 and 340A; or
(c) based on the recommendation of the Health Resources and
Services Administration (HRSA) within the Public Health Service, is
determined by the Secretary to meet requirements for
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receiving such a grant (i.e., ``look-alikes''); or
(d) was treated by the Secretary, for purposes of part B of Title
XVIII of the Social Security Act, as a comprehensive Federally funded
health center as of January 1, 1990; or
(e) an outpatient health program or facility operated by a tribe or
tribal organization under the Indian Self-Determination Act (Public Law
93-638) or by an urban Indian organization receiving funds under title
V of the Indian Health Care Improvement Act for the provision of
primary health services. (Norma Campbell, Division of Community and
Migrant Health, 301-594-0287), (Marie Garramone, Division of Community
and Migrant Health {for look-alikes}, 301-594-4335), (Charles Woodson,
Division of Programs for Special Populations, homeless and public
housing health centers, 301-594-4430: Laura Visser, {for 340S school
based programs}, 301-594-4470), (Elmer Brewster, DCSP, Special
Initiatives Branch {for Urban Indian}, 301-443-4680), and (Merry Elrod,
Office of Tribal Activities {for P.L. 93-638}, 301-443-1044).
2. Family planning projects receiving grants or contracts under
section 1001, 42 U.S.C. 300. (Sophia Lawson, Office of Population
Affairs, 301-594-4000).
3. An entity receiving a grant for outpatient early intervention
services for HIV infection under subpart II of part C of title XXVI, 42
U.S.C. 300ff-51 et seq. (Laverne Green, Office of Programs for Special
Populations, HIV, 301-594-4451).
4. A State-operated AIDS drug purchasing assistance program
receiving financial assistance under section 2616 of the Act, 42 U.S.C.
300ff-26. (Richard Schulman, Division of HIV Services, 301-443-9091).
5. A black lung clinic receiving funds under section 427(a) of the
Black Lung Benefits Act, 30 U.S.C. 937(a). (Norma Campbell, Division of
Community and Migrant Health, 301-594-0287).
6. A comprehensive hemophilia diagnostic treatment center receiving
a grant under section 501(a)(2) of the Social Security Act, 42 U.S.C.
701(a)(2). (Patrick McGuckin, National Hemophilia Program, 301-443-
9051).
7. A Native Hawaiian Health Center receiving funds under the Native
Hawaiian Health Care Act of 1988, 42 U.S.C. 11701 et seq. (Julia
Tillman, Division of Programs for Special Populations, 301-594-4460).
8. Certain covered facilities must be certified by the Secretary
before they become eligible for the discount drug prices, pursuant to
section 340B(a)(7) of the PHS Act. The facilities requiring
certification are those that
(a) receive grant funds related to the treatment of sexually
transmitted diseases through a state or local government under section
318 of the PHS Act, 42 U.S.C. 247c, or related to the treatment of
tuberculosis through a state or local government under section 317 E
(a) of the PHS Act, 42 U.S.C. 247b-6, (Carmine Bozzi, Centers for
Disease Control and Prevention, National Center for Prevention
Services, 404-639-8008), or
(b) receive assistance under title XXVI of the PHS Act, 42 U.S.C.
300ff et seq., other than a State or unit of local government or a
grantee for HIV outpatient early intervention services (subpart II of
part C of title XXVI of the PHS Act). (Richard Schulman, Division of
HIV Services, 301-443-9091).
The criteria for eligibility include State certification that the
facility does receive Federal grant funds and is a facility described
in (a), or (b) above.
Electronic Data Retrieval System (EDRS) which can be accessed by
dialing (301) 594-4992.
Disproportionate Share Hospitals
Certain hospitals are eligible for section 340B discount outpatient
drug pricing if they meet the eligibility criteria. First, section
340B(a)(4)(L)(ii) provides that a hospital must be a ``disproportionate
share'' hospital (DSH) as defined in section 1886(d)(1)(B) of the
Social Security Act, which (for the most recent cost reporting period
that ended before the calendar quarter involved) had a disproportionate
share adjustment greater than 11.75 percent. This percentage is
determined by the Health Care Financing Administration (HCFA), and a
list of DSHs which meet this criteria is provided to the Office of Drug
Pricing.
Second, section 340B(a)(4)(L)(i) provides that DSHs eligible for
PHS pricing must meet one of the following requirements: (1) is owned
or operated by a unit of State or local government, (2) is a public or
private non-profit corporation which is formally granted governmental
powers by a unit of State or local government, or (3) is a private
nonprofit hospital which has a contract with a State or local
government to provide health care services to low income individuals
who are not entitled to benefits under title XVIII or XIX of the Social
Security Act. All DSHs wishing to have access to section 340B discount
outpatient drug pricing must provide the ODP a certification of their
compliance with one of the three alternative requirements.
Third, a DSH is prohibited from participating in a group purchasing
organization or any group purchasing association, pursuant to section
340B(a)(4)(L)(iii). DSHs wishing to access the discount pricing must
provide the Office of Drug Pricing with a certification of their
compliance with this prohibition.
DSHs must submit all necessary certifications to the Public Health
Service DSH contact person--Elizabeth Hickey, Office of Drug Pricing,
Bureau of Primary Health Care, West Tower, 10th Floor, 4350 East West
Highway, Bethesda, Maryland, 20814, telephone (301) 594-4353.
II. Entity Participation Requirements
Section 340B(a)(4) of the PHS Act defines a ``covered entity'' as
belonging to one or more of the eligible categories of PHS grantees or
disproportionate share hospitals listed in subparagraph (4) and meeting
the requirements of subparagraph (5). Subparagraph (5)(A) requires HHS
to develop a mechanism to prevent a double PHS discount/Medicaid rebate
potential; therefore, as part of this mechanism, each eligible entity
must provide the ODP with certification of its pharmaceutical Medicaid
billing status. Any entity which does not comply with this requirement
will not be deemed a ``covered entity'' and will not be eligible for
section 340B drug discounts. Those entities currently listed on the ODP
master list which have not certified their Medicaid billing status will
be removed from the ODP master list unless they certify their current
billing status by the next quarterly update. Entities listed on
subsequent program updates will be given one quarter from the date of
the program update or until the next ODP update to certify their
Medicaid billing status to ODP. Once the entity has certified its
Medicaid billing status, its name will be included on the master list
as a covered entity on the next ODP update.
A certification of the following information must be provided to
the ODP before an entity will be deemed a ``covered entity:'' First, a
covered entity, billing on a cost basis for covered outpatient drugs,
must provide the ODP with a pharmaceutical Medicaid number (the number
which the entity uses to bill Medicaid for such drugs). Second, a
covered entity using an all-inclusive rate (either per encounter or
visit) must provide the ODP with certification of this billing status
and whether the all-inclusive rate includes covered outpatient drugs.
Third, if a covered entity does not bill Medicaid for covered
outpatient drugs, the entity
[[Page 39764]]
must notify the ODP of this decision. Fourth, a facility which houses
many different clinics, only one or several of which are eligible, must
obtain a separate Medicaid provider number for the eligible clinics.
For those States which cannot generate additional Medicaid provider
numbers for entities, the covered entity must discuss and implement an
alternative arrangement with the States to prevent the duplicate PHS
discount/Medicaid rebate potential. See 59 FR 25112 (May 13, 1994).
Please note that only covered entities wishing to access the PHS
discount pricing should certify their pharmaceutical Medicaid billing
status to ODP.
III. Definition of Eligible Entity ``Patient''
Section 340B(a)(5)(B) of the PHS Act states that the covered entity
must provide drugs, discounted under the statute, only to its patients
and not resell or otherwise transfer such drugs to individuals who are
not patients of the entity. To address the potential for drug resale or
transfer, PHS published final entity guidelines concerning drug
diversion. See 59 Fed. Reg. 25112, May 13, 1994. In part, covered
entities are required to ``develop and institute adequate safeguards to
prevent the transfer of discounted outpatient drugs to individuals who
are not eligible for the discount.'' To accomplish this end, entities
are encouraged to utilize a separate purchasing account and separate
dispensing records. To further address the potential for drug
diversion, PHS is now proposing a definition of a covered entity
``patient.''
An individual is a ``patient'' of a covered entity (with the
exception of State-operated AIDS drug purchasing assistance programs)
only if:
1. the covered entity has established a relationship with the
individual, such that the covered entity maintains records of the
individual's health care; and
2. the individual receives health care services from a health care
professional who is either employed by the covered entity or provides
health care under contractual or other arrangements (e.g. referral for
consultation) such that responsibility for the care provided remains
with the covered entity; and
3. the individual receives a health care service or range of
services from the covered entity which is consistent with the service
or range of services for which grant funding or Federally-qualified
health center look-alike status has been provided to the entity.
Disproportionate share hospitals are exempt from this requirement.
An individual will not be considered a ``patient'' of the entity
for purposes of 340B if the only health care service received by the
individual from the covered entity is the dispensing of a drug or drugs
for subsequent self-administration or administration in the home
setting.
An individual registered in a State-operated AIDS drug purchasing
assistance program receiving financial assistance under title XXVI of
the PHS Act will be considered a ``patient'' of the covered entity for
purposes of this definition if so registered as eligible by the State
program.
Dated: June 5, 1995.
Ciro V. Sumaya,
Administrator, Health Resources and Services Administration.
[FR Doc. 95-19061 Filed 8-2-95; 8:45 am]
BILLING CODE 4160-15-P