Facilitating data exchange to improve program integrity

Part A of title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is amended by adding the following new section: 1150D. 340B drug discount program data clearinghouse (a) General For a period of four (4) years from the enactment of this section, a manufacturer shall offer covered outpatient drugs at the ceiling price required under section 340B(a)(1) of the Public Health Service Act as a reduction in the purchase price and not through retrospective rebates or other post-sale payments. This obligation shall not apply to rebates for the AIDS Drug Assistance Programs who have implemented a rebate model prior to the effective date of this section. (b) Clearinghouse performance Notwithstanding any other provision of this section, the obligation under subsection (a) shall automatically conclude at the end of the period described in such subsection if the Secretary has not certified, in a public report validated by the Office of Inspector General, that the conditions described in paragraphs (1) through (4) have been satisfied. If such certification is not made as of the end of the period described in subsection (a), no provision of this subsection shall be construed to impose any additional or continuing limitation on the form, timing, or mechanism by which a manufacturer makes available the ceiling price required under section 340B(a)(1) of the Public Health Service Act— (1) all claims for 340B drugs described in subsection (g) are submitted to, and processed through, the clearinghouse entity with a contract in effect under subsection (f); (2) not less than 90 percent of the value of such claims submitted during the most recent 12-month period are identified by such clearinghouse entity as unique transactions that do not result in duplicate discounts or other applicable overlapping price concessions; (3) not less than 90 percent of the value of claims for 340B drugs as described in subsection (g) are adjudicated, including identification of any duplicate discounts, rebates, or other overlapping price concessions, within timeframes established by the Secretary through notice and comment rulemaking; and (4) not less than 95 percent of the value of claims for 340B drugs as described in subsection (g) contain the data elements required by the Secretary and are determined to be complete and accurate at the time of initial submission. (c) Ongoing validation of clearinghouse performance (1) Periodic oig reports If the obligation under subsection (a) remains in effect after the end of the 4-year period described in subsection (a), the Inspector General of the Department of Health and Human Services shall issue public reports evaluating whether the clearinghouse entity with a contract in effect under subsection (f) continues to satisfy the performance benchmarks described in subsection (b). Such reports shall be issued— (A) not later than 2 years after the end of the 4-year period described in subsection (a); (B) not later than 5 years after the end of the 4-year period described in subsection (a); and (C) every 5 years thereafter. (2) Contents Each report under paragraph (1) shall assess, with respect to the most recent 12-month period for which data are available, whether the performance benchmarks described in subsection (b) continue to be satisfied. (3) Corrective period If a report issued under paragraph (1) determines that one or more of the performance benchmarks described in subsection (b) are not being maintained, the clearinghouse entity shall have 6 months from the date of issuance of such report to cure the deficiency. (4) Follow-up report Not later than 60 days after the end of the 6-month corrective period described in paragraph (3), the Inspector General shall issue a follow-up public report evaluating whether the deficiency has been cured and whether the applicable performance benchmarks are being maintained. (5) Failure to maintain performance benchmarks The obligation under subsection (a) shall cease to apply if the follow-up report issued under paragraph (4) determines that the deficiency has not been cured or that one or more of the applicable performance benchmarks are not being maintained. (d) Interim performance report Not later than 2 years after the date of enactment of this section, the Secretary shall issue a preliminary public report, validated by the Office of Inspector General, detailing the progress made towards accomplishing the goals and standards in subsection (b). The report shall include the data, methodology, and assumptions used by the Secretary and identify any material operational, data-quality, or compliance barriers affecting achievement of such benchmarks. (e) Special rule for selected drugs Notwithstanding subsection (b) and any other provision of this section requiring a covered entity to submit data to the third-party entity with a contract in effect under subsection (f), with respect to a drug that is a selected drug (as defined in section 1192(c))— (1) each covered entity shall transmit directly to the manufacturer, in a timely manner and in accordance with standards established by the Secretary through notice and comment rulemaking, claims-level data sufficient to enable the manufacturer to prevent duplicate discounts, rebates, or other overlapping price concessions and to validate compliance with the requirements of this section and section 1191, et seq.; and (2) a covered entity that fails to comply with paragraph (1) shall, following written notice from the Secretary identifying the specific failure and a 30-day period to cure such failure, be subject to civil monetary penalties in an amount of $5,000 per day during the period of such non-compliance following the expiration of such cure period. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this section in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). (f) Clearinghouse contracting entity Not later than 1 year after the date of enactment of this section, the Secretary shall enter into a contract with an independent, third-party clearinghouse entity (who shall be free of conflicts of interest with covered entities, manufacturers, health plans, pharmacy benefit managers, and of other conflicts of interest as specified by the Secretary) for purposes of carrying out the clearinghouse duties under subsection (g) with respect to the drug discount program under section 340B of the Public Health Service Act to facilitate robust and verifiable data exchange between relevant parties in order to improve program integrity under section 340B of the Public Health Service Act. Such contract shall provide that the third-party entity shall perform the duties described in subsection (g) and shall be for a 4-year term that may be renewed after a subsequent bidding process or using competitive procedures, as defined in section 132 of title 41, United States Code. (g) Duties With respect to any 340B drug dispensed or administered to an individual, without regard to the individual’s insurance status or the type or source of payment for the drug, a third-party entity with a contract in effect under subsection (f) shall— (1) establish a procedure for collecting data elements specified in subparagraph (A), including any additional data elements required by the secretary pursuant to subparagraph (A)(iv) to improve program integrity of the drug discount program under section 340B of the Public Health Service Act, such that— (A) pharmacy benefit and medical benefit claims-level data elements reported under this section shall include the data elements specified in clauses (i) through (iv) of this subparagraph— (i) with respect to a pharmacy benefit claim— (I) the date of service; (II) the date on which the drug was prescribed; (III) the prescription number; (IV) the fill number; (V) the 11-digit National Drug Code for the drug dispensed; (VI) the quantity dispensed; (VII) the prescriber identifier; (VIII) the identifier of the dispensing pharmacy or other service provider, including the National Provider Identifier, as applicable; (IX) the 340B identification number of the covered entity; (X) the prescription benefit bank identification number; and (XI) the prescription benefit processor control number; (ii) with respect to a medical benefit claim— (I) the date of service; (II) the claim number; (III) the claim line number; (IV) the quantity of the drug furnished; (V) the unit of measure; (VI) the physician or other furnishing provider identifier; (VII) the applicable Healthcare Common Procedure Coding System code and any applicable modifiers; (VIII) the 11-digit National Drug Code for the drug furnished; (IX) the National Provider Identifier of the billing provider; (X) the 340B identification number of the covered entity; (XI) the health plan identifier; and (XII) the name of the health plan; (iii) with respect to a pharmacy benefit claim or medical benefit claim described in clause (i) or (ii)— (I) the name of the wholesaler; (II) the wholesaler account number; (III) the invoice date; (IV) the invoice number; (V) the National Provider Identifier of the pharmacy or other location to which the drug was shipped; (VI) the 11-digit National Drug Code for the drug purchased; (VII) the number of package units purchased; and (VIII) the 340B identification number of the covered entity; and (iv) such additional data elements as the Secretary determines necessary to carry out this section to improve the integrity of the drug discount program under section 340B of the Public Health Service Act; (B) claims-level data under this section shall be submitted and must be adjudicated within timeframes established by the Secretary through notice and comment rulemaking, with such timeframes taking into account operational capabilities of covered entities; and (C) reclassification of historical claims by covered entities from non-340B to 340B beyond 6 months after the drug is furnished is prohibited, except that the Secretary may permit such reclassification upon a showing of good cause by the covered entity; (2) request and receive, in the most efficient and least burdensome manner practicable, with an established timeframe for such reporting— (A) claims-level rebate file data under section 1927, from State Medicaid agencies; (B) claims-level data from covered entities and, to the extent necessary, contract pharmacies, health plans, entities providing pharmacy benefit management services to health plans; (C) claims-level rebate file data from commercially paid claims that are eligible under Section 340B; and (D) any other data specified by the Secretary as necessary to carry out this section; (3) request, receive, and maintain data described in paragraph (1) in a confidential manner; (4) ensure that claims-level data submissions by covered entities are complete and accurate, and if not, obtain complete and accurate data from the covered entity; (5) notify the covered entity, the Secretary, the State Medicaid agency, and the manufacturer of any violation described in section 340B(a)(5)(A) of the Public Health Service Act to allow for remediation; (6) provide the manufacturer of a 340B drug with claims-level data submitted by a covered entity, so that the manufacturer may identify units of a 340B drug that may generate a rebate or discount under a voluntary rebate or discount arrangement, such as those related to commercial plans; (7) where feasible, share with a covered entity, the Secretary, a State Medicaid agency, and a manufacturer, data the third-party entity identifies in a timely manner with the purpose of preventing any of the violations described in section 2729A(b)(2) of the Public Health Service Act or duplicate discounts for a selected drug under section 1847A(i), section 1860D–14B, section 1192; (8) allow covered entities except those described under subparagraph (L), (M), (N), or (O) of section 340B(a)(4) of the Public Health Service Act the option of submitting claims-level data in a batched, retrospective basis that does not require the application of modifiers on individual claims or point-of-sale identification; (9) determine total sales of 340B drugs to such individuals for purposes of being used as the basis for determining user fees under section 340B(a)(17) of such Act; (10) identify claims and provide manufacturer access to claims data for covered outpatient drugs purchased under the drug discount program under Section 340B of the Public Health Service Act that— (A) are selected drugs (as defined in section 1192(c)) to enable manufacturers to meet the nonduplication requirements of section 1193(d); (B) are subject to inflation rebates under section 1847A(i) or section 1860D–14B; (C) for a rebate or discount submitted by two or more covered entities or child sites with respect to the same unit of a covered outpatient drug purchased under the drug discount program; or (D) received reimbursement under a State plan (or waiver of such plan) and ensuring such claims are or were not included in any State rebate request under section 1927 in violation of sections 1903(m)(2)(A)(xiii) or 1927(j)(1) or section 340B(a)(5)(A) of the Public Health Service Act; (11) connect claims data and purchasing order data received under this section in a streamlined, timely, and efficient way; (12) provide access to State Medicaid agencies to data that is reasonably necessary to prevent duplicate discounts prohibited by section 340B(a)(5) of the Public Health Service Act; (13) establish procedures for covered entity reporting that may provide the same function for State Medicaid agencies as covered entity reporting to State Medicaid agencies; (14) respond to requests from covered entities or manufacturers within a number of days established by the Secretary through notice and comment rulemaking; (15) facilitate manufacturer reasonable good faith inquiries, reasonable manufacturer audits, duplicate-discount reviews, diversion reviews, and other program integrity activities under section 340B of the Public Health Service Act by receiving, validating, matching, analyzing, and producing claims-level data, validation results, or other outputs necessary to resolve such inquiries, audits, reviews, or activities within timeframes established by the Secretary through notice and comment rulemaking, as well as all standards specified by the Secretary to be promulgated pursuant to section 1150D(g)(16); (16) establish, subject to standards established by the Secretary through notice and comment rulemaking, which standards shall be consistent with applicable law, including applicable Federal and State data privacy and security laws and regulations (including, without limitation, the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations), uniform confidentiality, access, use, retention, and data-security terms applicable to information submitted to, maintained by, or transmitted through the clearinghouse, including terms governing manufacturer access to and receipt of claims-level data, validation results, or other outputs under this section; (17) ensure that the terms described in paragraph (16) apply uniformly to covered entities, manufacturers, health plans, pharmacy benefit managers, and other participating entities and are not subject to individualized negotiation as a condition of submitting information to, receiving information from, or otherwise participating in the clearinghouse process; (18) establish procedures to document any failure by a covered entity to timely submit complete and accurate information required under this section and to notify the Secretary and any affected manufacturer of such failure; and (19) maintain, with appropriate safeguards, submitted data elements for a period of 10 years. (h) Restrictions on clearinghouse contracting entity The entity receiving a contract under subsection (f) shall— (1) ensure that it has no conflicts of interest, including no direct contractual involvement with any covered entity, or manufacturer participating in the drug discount program under section 340B of the Public Health Service Act or any payer that makes payments for drugs purchased through such program; (2) not disclose confidential information obtained through carrying out the clearinghouse duties under this section other than as necessary to carry out the purposes of this section, including for program integrity functions; (3) not sell or otherwise generate revenue by licensing or making available the data described in subsection (g)(1); and (4) not collect pricing information regarding drugs that are not 340B drugs from covered entities. (i) Duties of covered entity (1) In general Covered entities shall facilitate and participate in data transmission with the third-party clearinghouse entity with a contract in effect under subsection (f), including submission of data elements established by the Secretary through notice and comment rulemaking. Such data transmission requirements shall also apply with respect to data relating to 340B drugs dispensed through any external contract pharmacy arrangement, and shall include data maintained by or on behalf of the covered entity by a contract pharmacy or third-party administrator. (2) Timely and complete submission A covered entity shall timely submit complete and accurate information required under this section to the clearinghouse contracting entity in the form, manner, and time specified by the Secretary through notice and comment rulemaking. (3) Failure to timely submit information If a covered entity fails to timely submit complete and accurate information required under this section to the clearinghouse contracting entity, such failure shall be treated as a failure to participate in the clearinghouse process and the affected manufacturer shall provide written notice to the covered entity and the Secretary identifying the specific deficiency. If the covered entity does not cure such failure within 30 days of receipt of such notice, the affected manufacturer may suspend the availability of discounts under section 340B(a)(1) of the Public Health Service Act with respect to such covered entity, in whole or in part, until the covered entity cures such failure. (4) Limitation on separate confidentiality terms A covered entity may not condition, delay, or deny submission of information to the clearinghouse contracting entity, or otherwise condition, delay, or deny participation in the clearinghouse process, on the execution or individualized negotiation of a confidentiality agreement, data use agreement, or similar agreement that is duplicative of, inconsistent with, or more restrictive than the uniform confidentiality, access, use, retention, and data-security terms established by the Secretary through notice and comment rulemaking under this section. (j) Restrictions on manufacturer and pbm use of data (1) In general A manufacturer who receives data under subsection (g) may use such data only for the purpose of preventing duplicate discounts and diversion under section 340B(a)(5) of the Public Health Service Act, preventing duplicate discounts in connection with inflation rebates under section 1847(A)(i) and 1860D–14B as well as for selected drugs (as defined in section 1192(c)) to enable a manufacturer to meet the nonduplication requirements of section 1193(d), and validating compliance with other requirements under the drug discount program under section 340B of the Public Health Service Act. (2) Restrictions on plans, issuers, and pbms A health plan, third party administrator of a health plan, or entity providing pharmacy benefit management services may use data received from the clearinghouse only for the purpose of preventing duplicate discounts and diversion under this section. (3) Enforcement Any manufacturer or other person found by the Secretary to have used data received under subsection (g) for uses other than those described in paragraphs (1) and (2), such as for pricing or marketing, shall be subject to civil monetary penalties, established by the Secretary through notice and comment rulemaking. (k) Privacy, confidentiality, and data security requirements (1) In general The information exchange required under this section shall occur pursuant to standards established by the Secretary through notice and comment rulemaking, including uniform confidentiality, access, use, retention, and data-security terms applicable to information submitted to, maintained by, or transmitted through the clearinghouse contracting entity, including terms governing manufacturer access to claims-level data, validation results, or other outputs under this section, and in a manner consistent with applicable Federal and State data privacy, security, and breach notification laws. (2) Purpose of clearinghouse The use of the clearinghouse contracting entity under this section is intended to facilitate secure exchange of information for 340B program integrity activities, and the clearinghouse contracting entity shall be required to qualify as a covered entity under the privacy, security, and breach notification regulations promulgated under section 264(c) of the Health Insurance Portability and Accountability Act of 1996, provided, however, that no manufacturer shall be required to qualify as a covered entity or business associate under HIPAA in order to obtain and use data from the clearinghouse for only the purposes identified in this Act. (3) Rule of construction Nothing in this section shall be construed to— (A) limit, narrow, or create any new precondition to the disclosure of claims-level, utilization, or other information that may otherwise be disclosed under applicable law for purposes of 340B program integrity activities; or (B) require the execution or individualized negotiation of a confidentiality agreement, data use agreement, or similar agreement not otherwise required by law as a condition of disclosing, submitting, receiving, maintaining, or using information in accordance with this section. (l) Repayment to manufacturers The Secretary shall, establish through notice and comment rulemaking, establish a process to require covered entities to work with affected manufacturers regarding identified duplicate discounts and diversion of 340B drugs, regardless of the method used to dispense the 340B drug, which shall include repayment plus accrued interest— (1) by the covered entity as a result of the covered entity’s noncompliance with section 340B of the Public Health Service Act; or (2) by a State Medicaid program of rebates improperly requested by the State Medicaid program. (m) Prohibited actions of group health plans and pbms (1) In general A group health plan, a health insurance issuer offering group or individual coverage (as such terms are defined in section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91)), or an entity providing pharmacy benefit management services may not interfere with the ability of covered entities, contract pharmacies (as such terms are defined in section 340B of the Public Health Service Act (42 U.S.C. 256b)), or manufacturers of drugs to prevent duplicate discounts or to recoup the full amount of any identified duplicate discounts pursuant to the drug discount program under section 340B of the Public Health Service Act (42 U.S.C. 254b). (2) Enforcement The Secretary of Health and Human Services shall impose civil monetary penalties on any group health plan, health insurance issuer, or entity providing pharmacy benefit management services that violates paragraph (1). (n) State medicaid agencies In accordance with requirements established by the Secretary through notice and comment rulemaking, each State’s agency responsible for the administration of a State plan under section 1902(a)(5) of the Social Security Act (42 U.S.C. 1396a(a)(5)) shall establish and publish written procedures that— (1) specify the extent to which a 340B drug may be dispensed to a Medicaid beneficiary, including beneficiaries of managed care programs; (2) effectively identify when a 340B drug is dispensed to a Medicaid beneficiary; and (3) exclude 340B drugs dispensed to Medicaid beneficiaries from requests for rebates under section 1927. (o) Definitions In this section: (1) Covered entity The term covered entity means an entity described in section 340B(a)(4) of the Public Health Service Act. (2) Federal health care program The term Federal health care program has the meaning given that term in section 1128B(f). (3) Health plans The term health plan has the meaning given that term in section 1128C(c). (4) Manufacturer The term manufacturer has the meaning given that term in section 1927(k)(5). (5) 340B drug The term 340B drug means a drug that is— (A) a covered outpatient drug (as defined for purposes of section 340B of the Public Health Service Act); and (B) purchased under an agreement in effect under such section. (p) Oversight Not later than 1 year after implementation of the clearinghouse, the Secretary shall: (1) engage an independent auditor to conduct an annual audit of the clearinghouse contracting entity to ensure compliance with this section, including but not limited to timely and accurate adjudication of claims; timely and complete transmission of data to relevant parties; and timely and substantive engagement with covered entities and manufacturers, when requested. If the Secretary finds through these audits that the clearinghouse contracting entity is not in compliance with this section, the Secretary shall take appropriate action to ensure compliance, which may include the imposition of civil monetary penalties against the clearinghouse contracting entity, or early termination of its contract, provided another compliant solution is available. (2) issue a report to Congress detailing coordinated efforts, including through the use of existing resources to address requests from covered entities (as defined in section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 256b(a)(4))) for payment under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) for medical assistance for a drug that is subject to an agreement under section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) if the drug is subject to the payment of a rebate to the State under section 1927 of the Social Security Act (42 U.S.C. 1396r–8), as prohibited under section 340B(a)(5)(A) of the Public Health Service Act (42 U.S.C. 256b(a)(5)(A)), and to prevent the duplicate discounts for covered outpatient drugs that are—selected drugs (as defined in section 1192(c) of the Social Security Act) to enable manufacturers to meet the nonduplication requirements of section 1193(d) of such Act; or subject to inflation rebates under as defined by section 1847A(i) or section 1860D–14B of the Social Security Act. (q) Regulations The Secretary of Health and Human Services, in consultation with the Administrator of the Centers for Medicare & Medicaid Services and the Administrator of the Health Resources and Services Administration, shall, through notice and comment rulemaking, promulgate such regulations as are necessary to implement the provisions of this section, advance the purpose of the drug discount program under section 340B of the Public Health Service Act (42 U.S.C. 256b) and prevent duplicate discounts and diversion through the clearinghouse established by the amendment made by this section..