340B Update October 2014 “Know Your Medicare Cost Report”

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340B Update October 2014 “Know Your Medicare Cost Report”

Medicare Cost Report

340B Medicare Cost ReportIn this month’s article we will focus on the Medicare Cost Report and provide some updates for the 340B program.

Well, it is October and we are still awaiting the arrival of the 340B Mega Reg. In a way, it almost feels like an upcoming dentist visit.

– At first, you sort of dread it and prefer it not happen at all.
– Then, the waiting becomes painful (more painful then just getting it done).
– Until, you simply hope it gets here soon so you can get it over with.

I think knowing is better than the agony of anticipation. For the love of all that is holy, I hope OPA receives the green light to relieve us of our suffering soon. . . I JUST WANT TO KNOW!!!

In a more recent news update, it appears that PhRMA has decided to go ahead and file a follow-up law suit on the Orphan Drug clarification. It will be interesting to see how this one plays out. We still have some manufacturers that have not provided Orphan pricing to ACA covered entities (i.e., CAH, SCH, RRC, CAN covered entity types). There is also some discussion around the idea that these manufacturers may have to pay back covered entities that could have bought drug at 340B, but were not extended the 340B price. Hopefully we can get some clear decisions on this so that this does not drag out too much longer.

We do need to offer congratulations to Apexus for being awarded the OPA contract through 2019. I personally feel they provide a great service and Apexus Answers is a great resource for all involved in the 340B program. Also, the Apexus 340B University is the best training for those involved in the 340B program (and for the record, the 340B Basics for Hospitals in San Diego at NACHC this past August had the best all around survey score, EVER! . . . Who did that one again?). Glad to have you around for years to come!

Focus for this article: Medicare Cost Report (Caveat: for clinic covered entity types, you will need to review your scope of services. Some of the same information applies related to departments and service lines.)

Do you know your Medicare Cost Report? More than ever, if you are in a leadership role with your 340B program, you need to become knowledgeable about your Medicare Cost Report and the associated Trial and Balance Sheet. Why?

– It is the source of truth for what qualifies for 340B in your hospital.
– For qualified areas with a different physical address, they need to be registered as Child Sites.
– For Child Sites, all departments and service lines identified on the Trial Balance need to be registered separately.

This is a level of detail that recent HRSA audits have focused on. If you have a child site that is a hospital for instance, every department and service line visible on the Cost Report and Trial Balance that either administers 340B drugs or writes a prescription that could be filled as 340B need to be registered as a separate Child Site.

Here is a good FAQ from Apexus FAQs on this subject:
FAQ ID: 1975
Last Modified: 03/18/2014
Q: How do I know if an off-site outpatient facility is eligible for 340B as a child site and should be added to the 340B database?
A: Off-site outpatient facilities are eligible child sites of a 340B covered entity in the following circumstances: (1) The outpatient facility is listed as a reimbursable facility on a 340B hospital covered entity’s most recently filed Medicare cost report. If the facility is a free-standing clinic of the hospital that submits its own cost reports using a different Medicare number (not under the covered entity’s Medicare provider number), then it would NOT be eligible. (2) The facility is included in a non-hospital covered entity’s scope of grant or part of the scope of services. An off-site outpatient facility meeting one of these criteria must register and be listed on the 340B database before it can access 340B drugs for eligible patients.
For hospitals, all clinics located off-site of the parent hospital, regardless of whether those clinics are in the same building, must register as child sites of the parent 340B-eligible hospital if the covered entity purchases and/or provides 340B drugs to patients of those facilities. For example, if the off-site outpatient facility is a hospital, all clinics/departments within that off-site location that plan to purchase and-or provide 340B drugs to its patient must register as a child site.
Outpatient clinics/departments within the four walls of the 340B parent hospital do not need to also register for the 340B Program. However, the covered entity remains responsible for demonstrating that those outpatient clinics/departments within the four walls of the parent hospital are only using 340B drugs for eligible outpatients and meet all 340B Program requirements, as demonstrated through auditable records.

Between now and the end of the year, determine if your covered entity site needs additional child site locations enrolled. This is one of those better safe than sorry, so register it if has a different address and can be seen as a separate department or service line.

As always, please let us know if you have any questions or need some help. Also, if you are interested in having your covered entity site receive a full independent audit of your 340B operations, come see us at Turnkey Pharmacy Solutions.

Thank you and Aloha, -Rob Nahoopii

About Author

Rob Nahoopii, PharmD, MS, 340B ACE

Experience as a Director of Pharmacy for a 400 bed DSH hospital (also served as a regional director of pharmacy). Rob has presented at many 340B University sessions and on the topic of 340B at numerous other conferences around the country. He has provided many external 340B audits for various covered entity types, and onsite support for multiple 340B HRSA audits. Rob is part of our 340B independent auditing team and also supports our maintenance clients and 340B implementation. His perspective is from front line pharmacy leadership and program compliance.



January 9, 2015at 9:55 am

I have been doing some research online to try to find what exactly HRSA recognizes as a “parent” hospital?
We have a large campus with 4 buildings all within walking distance and connected by a ‘Tram’ (per Medicare request to make it one entity). Does HRSA see it this way?
We have a separate building strictly for women and children but it’s not considered a separate building legally… so to us these two buildings are one hospital.
Thoughts?? Please don’t hesitate to contact me via email.

Thank you!

    Rob, PharmD, MS

    February 19, 2015at 10:57 am

    Hi Britney,

    My apologies for the late reply. I missed this one. HRSA uses the physical mailing address to determine parent site. If the other towers have a different physical mailing address, then they would need to be registered as child sites (and all eligible areas in them registered as child sites, which can be a lot). I hope that helps, you can email us direct if you need more information, and thank you for asking the question.


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