HHS Finalizes 340B Dispute Resolution Process
The Department of Health & Human Services (HHS) finalized in the Federal Register a 340B alternative dispute resolution (ADR) process. HHS indicates this ADR process is designed to help covered entities and manufacturers resolve disputes regarding overcharging, duplicate discounts, or diversion, as set forth in the 340B statute. The 340B ADR changes are effective June 18, 2024.
No minimum threshold, auto transfer of claims
Given the smaller, community-based nature of many covered entities, HHS removed the prior threshold of $25,000 to use the ADR process. HHS believes flexibility should be maintained with respect to the amount of damages and did not finalize a minimum threshold for accessing the ADR process.
However, HHS says covered entities and manufacturers should carefully evaluate whether the ADR process is appropriate for minor or de minimis claims given the time and resource investment required of the parties involved.
| “HHS is finalizing a 340B alternative dispute resolution (ADR) process designed to help covered entities and manufacturers resolve disputes regarding overcharging, duplicate discounts, or diversion,” said Kim Doud, CLA’s 340B services leader. “Covered entities should be aware of this and other important changes.” Reach out today for help navigating the ever-changing 340B landscape. |
Additionally, HHS finalizes the automatic transfer of any pending 340B claims into the new process. The decision to automatically transfer any submitted claims still pending will reduce burden on all parties involved. For petitioners, it will mean they do not have to resubmit claims under the new process. Additionally, claims that are automatically transferred will be first in the queue to be reviewed once this final rule becomes effective.
ADR board, panel members
The ADR board consists of at least six members appointed by HHS with equal numbers from the Health Resources and Services Administration, the Centers for Medicare & Medicaid Services, and the HHS Office of the General Counsel. HRSA will be required to select three members from the ADR board to form a 340B ADR Panel, and each 340B ADR panel will be assisted by one ex-officio, nonvoting member (appointed by the Secretary) from the Office of Pharmacy Affairs (OPA).
The 340B ADR Panel members are to be from the OPA and have specific knowledge on 340B, the authorizing statute, the operational processes of the 340B Program (e.g., registration and program integrity efforts), and the ability to dedicate a portion of their time to ADR Panel service. All members on the 340B ADR Panel will undergo additional screening prior to reviewing a specific claim to confirm the Panel member was not involved in previous agency actions related to the claim (including previous 340B ADR Panel decisions).
ADR requirements
The final rule still requires entities to work to resolve claims in a “good faith effort” before using the ADR process. The final rule requires the ADR process to be reserved for those disputes set forth in the statutory ADR provision (overcharge, diversion, or duplicate discount). Plus, HRSA still requires a manufacturer to complete an audit of the covered entity prior to filing an ADR claim.
Did you know there is a requirement for an annual 340B contract pharmacy audit?
Per HRSA’s audit requirements, “In order to fulfill the ongoing obligation of compliance, all covered entities are required to provide oversight of the contract pharmacy, maintain auditable records and are expected to conduct, at a minimum, annual audits of their contract pharmacies, completed by an independent auditing firm.”
CLA can help. Reach out today.
The ADR process is available for claims by a covered entity overcharged by a manufacturer for a covered outpatient drug. It is also available to a manufacturer after it has conducted an audit of a covered entity related to duplicate discounts or diversions. HHS provides more context around the word “overcharge” and explains an overcharge claim generally includes claims where a manufacturer has limited the covered entity’s ability to purchase covered outpatient drugs at or below the 340B ceiling price or the manufacturer does not offer the 340B ceiling price.
Additionally, the ADR Panel has the following duties:
- Reviewing and evaluating claims, including consolidated and joint claims, and documents and information submitted by covered entities and manufacturers
- Reviewing and possibly requesting additional documentation, information, or clarification of an issue from any or all parties to make a decision
- Evaluating claims based on information received, unless, at the 340B ADR Panel’s discretion, the nature of the claim necessitates a meeting with the parties
- Consulting with other federal agencies while reviewing the claim, at the 340B ADR Panel’s discretion
- Making decisions on each claim
OPA review, ADR process
A covered entity or manufacturer must file a 340B ADR claim in writing to OPA within three years of the date of the alleged violation. During OPA’s initial review of a submitted claim, OPA could request additional information of the initiating party, and the party would have 20 business days from the receipt of the request to respond.
If the initiating party does not respond (or request and receive an extension to respond during that time period), the claim would not move forward to the 340B ADR Panel for review. Once the claim review is complete, a written response would be sent to the initiating party and OPA would send that verification of completion to the opposing party with instructions regarding the 340B ADR process, including timelines and information on how to submit their response. Once OPA receives the opposing party’s response, OPA would notify both parties, either advising the claim would move forward for the 340B ADR Panel for review or that OPA determined the claim did not meet the requirements and the reasons why.
When responding to a submitted claim, the opposing party would have 30 business days to submit a written response to OPA upon receipt of notification that the claim is deemed complete. Once the opposing party’s response is received, OPA would provide a copy to the initiating party. If the opposing party’s response was not received or the party elects not to participate in the 340B ADR process, OPA would notify both parties that the claim has proceeded to 340B ADR Panel review.
The OPA director will select three members from the roster to serve on a 340B ADR Panel to review claims and make final agency decisions that will be binding on the parties involved, unless invalidated by an order of a federal court. Any 340B Panel decision or reconsideration will be effective 30 business days from issuance and serve as the final agency decision unless within 30 business days of issuance, the Secretary of HHS determines they will review the decision.
Either party may ask the HRSA Administrator to reconsider the 340B ADR Panel decision within 30 business days of issuance. No new “facts,” information, or legal or policy arguments may be submitted as part of the reconsideration process. If no request for reconsideration from either party and the HRSA Administrator has not initiated a reconsideration, the 340B ADR Panel’s decision letter will serve as the final agency decision and will be binding on the parties involved in the dispute, unless invalidated by an order of a federal court.
HHS is clarifying the expectation that the 340B ADR Panel will make a decision on a claim within one year of receiving the claim for review. However, HHS recognizes this general timeframe may not be suitable in every situation, as there may be complexities that warrant additional time.
Other provisions
HHS will permit associations or organizations filing a claim on behalf of its member covered entities to submit an attestation, rather than submitting signatures from each individual covered entity, that they have confirmed that all of the individual covered entities have agreed to be part of the ADR claim. As part of the initial review of the claim, the OPA will review the attestation statement submitted by the organization or association. If attestation documentation is missing, OPA will follow-up to obtain the attestation.
A covered entity may request documents from the manufacturer via the ADR panel and the manufacturer must respond to the request within 20 business days of receiving the request. The manufacturer must fully respond, in writing, to an information/document request from the 340B ADR Panel by the response deadline. An extension will be granted by notifying the 340B ADR Panel in writing within 15 business days of receipt of the request.
How we can help
With the required ADR dispute resolution process taking effect on June 18, 2024, and regular compliance audits required, now is the time to reach out to CLA’s health care team for assistance.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.