340B Protection and Accountability Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1559 To amend the Public Health Service Act to strengthen program integrity and enhance low-income patient benefits for safety net providers. IN THE HOUSE OF REPRESENTATIVES MARCH 6, 2019 Mr. COLLINS of New York introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To amend the Public Health Service Act to strengthen pro- gram integrity and enhance low-income patient benefits for safety net providers. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘340B Protection and 4 Accountability Act of 2019’’. 5 SEC. 2. STRENGTHENING 340B PROGRAM INTEGRITY AND 6 ENHANCING LOW-INCOME PATIENT BENE- 7 FITS FOR SAFETY NET PROVIDERS. 8 (a) DEFINITION OF PATIENT.—Section 340B(b) of 9 the Public Health Service Act (42 U.S.C. 256b(b)) is 10 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1559 IH amended by adding at the end the following new para- 1 graph: 2 ‘‘(3) PATIENT.— 3 ‘‘(A) IN GENERAL.—In this section, the 4 term ‘patient’ means, with respect to a covered 5 entity described in subparagraph (L) or (M) of 6 subsection (a)(4), an individual who, on a pre- 7 scription-by-prescription or order-by-order 8 basis— 9 ‘‘(i) receives a health care service at a 10 covered entity or an outpatient hospital fa- 11 cility described in subsection (c)(3) which 12 is registered for the drug discount program 13 under this section and listed on the public 14 internet website of the Department of 15 Health and Human Services relating to 16 this section; 17 ‘‘(ii) receives an outpatient in-person 18 health care service from a health care pro- 19 vider employed by the covered entity or 20 who is an independent contractor of the 21 covered entity, such that the covered entity 22 bills for services on behalf of the provider; 23 ‘‘(iii) receives a drug that is ordered 24 or prescribed by the covered entity pro- 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1559 IH vider, including any renewals of existing 1 prescriptions, as a result of the service de- 2 scribed in clause (ii); 3 ‘‘(iv) in the case of a covered entity 4 that has a contract with a State or local 5 government described in subclause (III) of 6 subsection (a)(4)(L)(i), receives a health 7 care service or range of such services, to 8 include the ordering or prescribing of a 9 covered outpatient drug, from the covered 10 entity pursuant to such contract; 11 ‘‘(v) is classified as an outpatient 12 when the drug is ordered or prescribed, as 13 demonstrated by how the service was reim- 14 bursed by the applicable payer, or, where 15 the covered entity does not seek such reim- 16 bursement, how the service would have 17 been reimbursed under title XVIII of the 18 Social Security Act; and 19 ‘‘(vi) has a relationship with the cov- 20 ered entity such that the covered entity 21 creates and maintains auditable health 22 care records which demonstrate that— 23 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1559 IH ‘‘(I) the covered entity has a pro- 1 vider-to-patient relationship with the 2 individual; and 3 ‘‘(II) responsibility for the indi- 4 vidual’s health care service that re- 5 sulted in the prescription or order for 6 the drug described in clause (iii) is 7 with the covered entity. 8 ‘‘(B) EXCLUSIONS.—For purposes of this 9 section, an individual shall not be considered a 10 patient of a covered entity described in sub- 11 paragraph (L) or (M) of subsection (a)(4) if— 12 ‘‘(i) the individual is an inmate of a 13 correctional facility; 14 ‘‘(ii) the health care service described 15 in clause (ii) of subparagraph (A) received 16 by the individual from the covered entity 17 consists only of the administration or infu- 18 sion of a drug or drugs, or the dispensing 19 of a drug or drugs for subsequent self-ad- 20 ministration or administration in the home 21 setting, without a covered entity provider- 22 to-patient encounter; 23 ‘‘(iii) the health care service described 24 in clause (ii) of subparagraph (A) received 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1559 IH by the individual from the covered entity is 1 provided by a health care organization that 2 has only an affiliation arrangement with 3 the covered entity, even if the covered enti- 4 ty has access to the affiliated organiza- 5 tion’s records; or 6 ‘‘(iv) the primary relationship between 7 the individual and the covered entity is one 8 of employment. 9 ‘‘(C) REGULATIONS.—Not later than 180 10 days after the date of enactment of the 340B 11 Protection and Accountability Act of 2019, the 12 Secretary shall promulgate final regulations 13 through notice-and-comment rulemaking to de- 14 fine the term ‘patient’ with respect to covered 15 entities described in subparagraph (L) or (M) 16 of subsection (a)(4) to reflect the requirements 17 described in subparagraphs (A) and (B) of this 18 paragraph. 19 ‘‘(D) DEFINITION RELATING TO OTHER 20 COVERED ENTITIES.—In this section, the term 21 ‘patient’, with respect to a covered entity de- 22 scribed in subparagraphs (A) through (K) of 23 subsection (a)(4), has the meaning given such 24 term in the October 24, 1996, HRSA Final No- 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1559 IH tice Regarding Section 602 of the Veterans 1 Health Care Act of 1992 Patient and Entity 2 Eligibility (61 Fed Reg. 55156). 3 ‘‘(E) RECORD RETENTION.—A covered en- 4 tity described in subparagraph (L) or (M) of 5 subsection (a)(4) shall retain auditable health 6 care records which demonstrate the existence of 7 a patient relationship in accordance with this 8 paragraph for each prescription or order for a 9 rolling period of not less than five years, or 10 longer to the extent required by State or Fed- 11 eral law.’’. 12 (b) TREATMENT OF CONTRACTED SERVICES.—Sub- 13 section (a) of section 340B of the Public Health Service 14 Act (42 U.S.C. 256b) is amended by adding at the end 15 the following new paragraphs: 16 ‘‘(11) CONTRACTED SERVICES.—In the case of 17 a covered entity described in subparagraph (L) or 18 (M) of subsection (a)(4) that elects to enter into a 19 contractual arrangement with a third party for serv- 20 ices related to the drug discount program under this 21 section, such as to dispense covered outpatient drugs 22 subject to an agreement under this section to pa- 23 tients of the covered entity, to administer contracted 24 pharmacy services, or to provide any other service 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1559 IH related to the drug discount program under this sec- 1 tion, the remuneration for which is based in whole 2 or in part on the volume of dispensed covered out- 3 patient drugs subject to an agreement under this 4 section, such covered entity shall— 5 ‘‘(A) have a contractual agreement in place 6 between the covered entity and each contracted 7 entity, including with each location of a phar- 8 macy contracted to dispense covered outpatient 9 drugs subject to an agreement under this sec- 10 tion to patients (as so defined) of the covered 11 entity, which shall specify that the contracted 12 entity shall adhere to all requirements of the 13 drug discount program under this section, but 14 that ultimate responsibility for program compli- 15 ance and oversight of compliance by each con- 16 tracted entity shall remain with the covered en- 17 tity and that all covered outpatient drugs sub- 18 ject to an agreement under this section shall be 19 purchased by the covered entity; 20 ‘‘(B) register each such agreement with 21 the Secretary, include in such registration such 22 information as shall be specified by the Sec- 23 retary, and make available such agreement 24 upon request by the Secretary; 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1559 IH ‘‘(C) ensure the compliance of each such 1 agreement with the requirements of this section 2 to prevent drug diversion in violation of sub- 3 paragraph (B) of paragraph (5) and to prevent 4 duplicate discounts in violation of subparagraph 5 (A) of such paragraph before utilizing the serv- 6 ices of the contracted entity, including by— 7 ‘‘(i) developing and implementing, 8 with each contracted entity subject to such 9 an agreement, a system to verify eligibility 10 of patients (as so defined) of the entity; 11 ‘‘(ii) developing and implementing, 12 with each such contracted entity, a mecha- 13 nism for tracking the inventory of covered 14 outpatient drugs that are subject to an 15 agreement under this section that is suit- 16 able to prevent diversion in violation of 17 subparagraph (B) of paragraph (5) and to 18 prevent duplicate discounts in violation of 19 subparagraph (A) of such paragraph, such 20 as a separate inventory for such drugs; 21 and 22 ‘‘(iii) establishing a mechanism with 23 each such contracted entity and each appli- 24 cable State Medicaid agency that is suit- 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 1559 IH able to prevent duplicate discounts for cov- 1 ered outpatient drugs that are subject to 2 an agreement under this section, including 3 such drugs dispensed to enrollees of Med- 4 icaid managed care organizations, and 5 complies with regulations on methodologies 6 to prevent duplicate discounts issued by 7 the Secretary; 8 ‘‘(D) make available, to the extent the cov- 9 ered entity offers a charity care policy or has 10 an obligation under subsection (a)(5)(E) to 11 have a sliding fee scale, patient access to a cov- 12 ered entity’s prescription drug charity care ben- 13 efit and its sliding fee scale, and developing and 14 implementing, with each such contracted entity, 15 a mechanism for documenting the income and 16 insurance status of each patient (as so defined) 17 of the covered entity and the amount each such 18 patient pays to receive covered outpatient drugs 19 that are subject to an agreement under this sec- 20 tion; 21 ‘‘(E) maintain, and ensure that each such 22 contracted entity maintains, auditable records 23 that pertain to the compliance of the covered 24 entity and the contracted entity with the re- 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 1559 IH quirements described in this paragraph, for a 1 rolling period of not less than 5 years; 2 ‘‘(F) establish a process for, and conduct, 3 periodic comparisons of the covered entity’s pre- 4 scribing records with the dispensing records of 5 each such contracted entity, as applicable, to 6 detect potential irregularities and to ensure that 7 all drugs dispensed by the contracted entity are 8 for patients (as so defined) of the covered enti- 9 ty; 10 ‘‘(G) provide for annual on-site audits of 11 each such contracted entity to be conducted by 12 an independent outside auditor; 13 ‘‘(H) maintain arrangements to dispense 14 covered outpatient drugs that are subject to an 15 agreement under this section to patients (as so 16 defined) of the covered entity with no more 17 than 5 contract pharmacy locations at any 18 given time, all of which must be located within 19 (or, for mail-order pharmacies, serve patients 20 residing in) lower-income (using American 21 Community Survey data as determined by the 22 Secretary) census tracts served by the covered 23 entity, except in the case that the covered entity 24 files a publicly available exception request with 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 1559 IH the Secretary that seeks authorization to estab- 1 lish a particular contract pharmacy arrange- 2 ment in a higher-income census tract and ex- 3 plains the reason in that particular case such a 4 contract pharmacy would best meet the needs of 5 low-income patients of the covered entity, and 6 the Secretary decides to grant the request to es- 7 tablish one of the 5 contract pharmacies in the 8 census tract requested; 9 ‘‘(I) ensure, as applicable, that patients (as 10 so defined) of the covered entity have access to 11 the covered entity’s prescription drug charity 12 care benefit through each contract pharmacy lo- 13 cation at the time of purchase of each covered 14 outpatient drug subject to an agreement under 15 this section to the same extent such patients 16 have access to the benefit with respect to such 17 drugs purchased directly through the covered 18 entity; and 19 ‘‘(J) limit any amount paid by the covered 20 entity, or any agent of the covered entity, to the 21 contracted entity for dispensing covered out- 22 patient drugs subject to an agreement under 23 this section or for any other service related to 24 the drug discount program under this section to 25 VerDate Sep 11 2014 18:53 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1559.IH H1559 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 1559 IH a reasonable amount, which shall not exceed the 1 fair market value of such drug dispensing or 2 other service. 3 In the case the Secretary grants a request under 4 subparagraph (H) to establish a particular contract 5 pharmacy arrangement in a higher-income census 6 tract, the Secretary shall make such decision avail- 7 able on a public website. 8 ‘‘(12) AUDITING.—A covered entity described in 9 subparagraph (L) or (M) of subsection (a)(4) and a 10 contracted entity that enter into a contractual ar- 11 rangement described in paragraph (11) shall per- 12 mit— 13 ‘‘(A) the Secretary to audit the records of 14 the covered entity and of the contracted entity 15 that pertain to the covered entity’s and the con- 16 tracted entity’s compliance with the require- 17 ments described in such paragraph; and 18 ‘‘(B) the manufacturer of a covered out- 19 patient drug that is subject to an agree [Text truncated for display. 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