Legal Update, September 2019

Legal Update

Keeping and Getting Back What’s Yours
By Elizabeth “Issie” Karan

Hemophilia Treatment Centers (HTCs) located in a larger organization do not always have control over their operational procedures, including when and how bills for factor are paid. HTCs may face challenges when their organizations’ approach to paying drug manufacturers contradicts the HTCs’ best interests. For example, we have heard from several HTCs about payments to manufacturers being made late or using credit cards which means the HTC must forego “prompt pay” and/or “cash pay” discounts on factor purchases. In these circumstances, HTCs are missing an opportunity to reduce expenses. Although these discounts may be marginal, they add up over time and may run afoul of the spirit, if not also certain obligations, of the Uniform Grants Guidance (“UGG”).

The UGG requires that all costs charged to the federal award be “reasonable” and delineates what federal grantees should consider when determining reasonableness. 45 CFR §75.404 states that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. In determining what is prudent, grantees should consider if the decision demonstrates good judgment (as applied to action or conduct) and the degree of care required by the exigencies or circumstances under which it is to be exercised.

The UGG also indicates what should happen to credits applicable to federal programs. Specifically, 45 CFR §75.406 states that “applicable credits” refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect costs. The UGG includes examples of such transactions, including purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. The UGG instructs that, to the extent that such credits accruing to or received by the grantee relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate.

HTCs which must give up discounts because of institutional policies should keep these rules in mind. Auditors may question the prudence of not taking discounts on bills for factor from manufacturers. If a prudent person would behave differently under the circumstances, the institution’s policies for paying manufacturers may violate the requirements of the UGG. For violating federal grant rules, the HTC and the institution could be forced to pay back funds to the government. Additionally, to the extent that the institution receives credits or bonuses from credit card payments related to the HTC’s expenses, they should be credited back to the HTC program.

If you have questions, please contact us.

Also in this Issue…

Notes from Joe
· Celebrating 20 Years of the Alliance!

Alliance Update
· Alliance Seeking Board Member Nominations
· Portland Didn’t Disappoint
· Linda Gammage Social worker conference – Register for one of the spots

Washington Update

Payer Update
· 15 Key Points From Your Payer Team

Notes from the Community
· HTC Patients Highly Satisfied with HTC 340B Programs Nationwide


Team Alliance Contact Information

We work for you! Please don’t hesitate to contact any of us with any questions or concerns:

Name Email Phone
Joe Pugliese joe@hemoalliance.org 215-439-7173
Sean Singh sean@hemoalliance.org 727-388-7326
Jeff Blake jeff@hemoalliance.org 317-657-5913
Jeff Amond amond@hemoalliance.org 608-206-3132
Johanna Gray, MPA jgray@dc-crd.com 202-484-1100
Elizabeth Karan ekaran@feldsmantucker.com 202-466-8960
Roland P. Lamy, Jr. roland@hemoalliance.org 603-491-0853
Dr. George L. Oestrich, Pharm.D., MPA george@gloetal.com 573-230-7075
Ellen Riker eriker@dc-crd.com 202-484-1100
Mark Plencner mark@hemoalliance.org 701-318-2910
Michael B. Glomb MGlomb@ftlf.com 202-466-8960
Theresa Parker theresa@hemoalliance.org
Karen Bowe
Joel Bellucci webmaster@hemoalliance.org 727-504-0491