Author Archives: Jennifer Hagen, PharmD, 340B ACE

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HRSA Allows for Immediate 340B Use at PBDs/HOPDs

Several Apexus frequently asked questions (FAQs) have been released recently that have been interpreted to mean hospital 340B CEs will no longer need to wait to use 340B drugs at new or relocated provider-based clinics. Turnkey is just as pleasantly surprised as you are! Below is an attempt to clarify implications of these FAQs and highlight some important considerations. This much needed good news for hospitals means that there appears to be a renewed focus by HRSA to rely on the statutory definition of a patient, as Medicare would, and consider individuals to be patients of the hospital even though the service or department has not yet appeared on a filed Medicare Cost Report (MCR). A new provider-based location may begin to use 340B drug immediately, so long as provider-based requirements of CMS are met.  The following are some caveats to consider.

1. Policy and Procedure must outline this new consideration and how auditable records must be maintained. When updating your policy, be sure to address necessary changes to definitions, as well as procedures for determining eligibility and enrollment.

Turnkey has drafted potential policy language to address the clarification made by these FAQs:

340B Eligible Location Definition:  An onsite or offsite service area or facility (location) that is an integral part of a 340B hospital covered entity, as evidenced by the fact that it has reimbursable outpatient revenue and expense allocated to the hospital’s Medicare Cost report.

  • New locations that are not yet registered with OPA, but that are either (i) listed on the CE’s most recently-filed Medicare cost report with reimbursable outpatient costs and charges or (ii) will be listed with such on the next filed MCR, are 340B Eligible Locations where 340B drugs can be purchased and/or used.
  • Offsite 340B Eligible Locations shall be registered with OPA as soon as possible once listed on the hospital’s filed MCR. All clinics/services of an offsite 340B Eligible Location must be registered as a child site, regardless of whether they are in the same offsite building.

2. Once registered, a ship to address would be available for wholesalers to open a 340B account and ship 340B drugs to the off-site location. Until that occurs, alternate arrangements would need to be made to have 340B drug shipped to an already registered location (e.g., the parent).

3. Consider duplicate discount prevention strategies for an off-site clinic that carves-in Medicaid and uses a different NPI than the parent NPI to bill.  The new clinic’s NPI would need to be added to the parent registration, and subsequently the MEF, prior to utilizing 340B drug to prevent duplicate discount.

4. This new interpretation of statute does not appear to reflect HRSA’s flexibility during the COVID-19 health emergency and is expected to continue after the emergency ends.

Turnkey has drafted potential policy language to address the clarification made by these FAQs:

Here are the newly approved FAQs:

Unpublished FAQ 1318 (5/29/20) Question:  Hospitals that have only ‘costs’ associated with that cost center/dept have been rejected from 340B registration because they had to wait for revenue to be on the MCR for that cost center/dept. Does worksheet A (and/or C) have to show costs, revenue, or both? For example, a clinic might just be opened and have costs, but has not seen patients (no revenue on cost report). Would such a clinic be eligible?
Answer:  HRSA is not able to register and list this site on 340B OPAIS at this time.  In order to be registered and listed on the 340B Office of Pharmacy Affairs Information System (OPAIS), the site must have reimbursable outpatient costs and charges on the most recently filed Medicare cost report.  However, until such time the site is listed on the cost report, you should evaluate whether the patients of the site would be considered eligible patients of the hospital and defined in your policies and procedures. More information on HRSA’s patient definition guidance can be found by reviewing the October 24, 1996 Federal Register Notice on Patient and Entity Eligibility.

Unpublished FAQ 1648 (5/29/20) Question: Our hospital subject to the GPO Prohibition moved a clinic outside the four walls but didn’t register it on the 340B OPAIS. It is not on the most recently filed cost report at that location but will be on our next cost report as a reimbursable clinic. Will OPA consider the site “continuously eligible?”
Answer:  HRSA is not able to register and list this site on 340B OPAIS at this time.  In order to be registered and listed on the 340B Office of Pharmacy Affairs Information System (OPAIS), the site must have reimbursable outpatient costs and charges on the most recently filed Medicare cost report.  However, until such time the site is listed on the cost report, you should evaluate whether the patients of the site would be considered eligible patients of the hospital and defined in your policies and procedures. More information on HRSA’s patient definition guidance can be found by reviewing the October 24, 1996 Federal Register Notice on Patient and Entity Eligibility.

Published FAQ ID: 4301 (06/04/2020) Question: Are hospital covered entities able to register offsite, outpatient facilities before being listed as reimbursable on their Medicare Cost Report?
Answer
: In order to register for the 340B Program and be listed on the 340B Office of Pharmacy Affairs Information System (340B OPAIS), HRSA must first verify that the offsite, outpatient facility is listed as reimbursable on the hospital’s most recently filed Medicare cost report and has associated outpatient costs and charges as outlined in HRSA’s 1994 Outpatient Hospital Facilities Guidelines. HRSA notes that for hospitals who are unable to register their outpatient facilities because they are not yet on the most recently filed Medicare Cost Report, the patients of the new site may still be 340B eligible to the extent that they are patients of the covered entity. More information on HRSA’s patient definition guidance can be found by reviewing the October 24, 1996 Federal Register Notice on Patient and Entity Eligibility. These situations should be clearly documented in the covered entity’s policies and procedures. In addition, a covered entity is responsible for demonstrating compliance with all 340B Program requirements and ensure that auditable records are maintained for each patient dispensed a 340B drug.

Published FAQ ID: 1193 (06/02/2020) Question: May an outpatient facility that is reimbursed by CMS as a provider-based facility, but not included on the most recently filed Medicare cost report, participate in the 340B Program?
Answer: 
A facility must be both reimbursable and included in the hospital’s most recently filed Medicare cost report with associated outpatient costs and charges to access the 340B Program and register in 340B OPAIS. HRSA’s outpatient facility guidelines can be found at in HRSA’s 1994 Outpatient Hospital Facilities Guidelines.

Please don’t hesitate to reach out if you have specific questions on this new development.


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Key 340B Compliance Elements and Program Updates

Have you been wondering how to keep up with HRSA’s compliance expectations since there has been no new policy released since 2014 and no new compliance related program regulations since 2010?  If yes, then you might be interested to learn that HRSA has been posting program updates in the “News” section of the website for quite some time.  Since May of 2018, updates are being released at an unprecedented rate and appear to be a main source for 340B program expectations.  If you have not yet done so, consider signing up to receive these updates by email.  In previous newsletters Turnkey has summarized many of these updates. In this blog the most important notices as well as other program developments will be highlighted with reference to the specific previous newsletter breakdown of each topic.

A little background as to possibly why updates are occurring as they have been recently… HRSA has consistently told congressional committees that they need additional authority in order to make any changes to the 340B program. Congressional leadership has maintained that HRSA should use its existing authority to make changes to the 340B program. This led to a stalemate between HRSA and Congress with no passage of any filed legislation and no new regulations from HRSA.  However, on the heels of the Government Accountability Office (GAO) report (June 2018) that analyzed covered entities use of contract pharmacies, HRSA swiftly posted updates in response to the main concerns.  These concerns include a lack of assessment for duplicate discounts in Medicaid managed care and that more information is needed regarding how a CE determines the scope of noncompliance with evidence of corrective action prior to closing audits.

In addition to the program updates, the HRSA audit data request (last updated September of 2018) is where additional expectations can be gleaned. In particular, Turnkey observed the need for more robust policy and procedures (e.g., drug waste), crosswalking of the cost report to child sites (a.k.a., Environment Crosswalk or Map of the Environment, ), and specific contract pharmacy contract expectations.  A copy of the data request is posted in Apexus tools. 

Audit results have been another source of information for program expectations.  In particular, just this past July several areas for improvement were released regarding new policy expectations (e.g., contract pharmacy oversight, independent audit requirement, inventory control, and strategies to prevent duplicate discount on drugs reimbursed through Medicaid MCOs).

From the updates, audit data request, audit findings, and as witnessed during multiple HRSA audits, recent compliance developments fall into the following categories:

  1. Hospitals Must Have Proper 340B Eligibility Documentation
    • HRSA announced in the July 2018 Program Update (Program Integrity Analysis) that they will begin selecting random hospitals from the quarterly registration periods to request documentation supporting the eligibility type the hospital selected. Failure to provide the requested documentation before the registration period closes will result in the registration being rejected and requiring the hospital to re-register during the next quarterly registration period.
    • Documentation of hospital eligibility was expanded in the updated Data Request List in the third quarter of 2018 for two groups of hospitals. Hospitals that participate in 340B under the category of (a) being owned or operated by a state or local government; or (b) having been granted governmental powers, must submit documentation to support that status. HRSA auditors are reviewing the submitted documentation as part of the auditing process. July also brought quality assurance checks of previous audits where hospital documentation has passed and then upon review no longer met standards.
    • The March 2019 update further clarifies documentation needed for all three hospital types and stipulates what must be included in an agreement.  The updated hospital registration instructions are posted.
    • Hospital documentation is being requested as a part of recertification.
    • Previous Turnkey newsletter discussions: March 2019 HRSA Update, July 2018
  2. Contract Pharmacy Expectations
    • List All Hospital Locations in Contract Pharmacy Agreement.  Specifically, HRSA notes in audit reports “Area for Improvement” when the contract does not list all of the participating covered entity locations or uses an inclusive statement. If a list is used, hospitals must update the contract when changes occur with their locations using the contract pharmacy arrangement per this page on the HRSA website.
    • Ensure Remedial Action Is Taken for Audit Findings Involving Contract Pharmacies.  HRSA emphasizes in its June 2018 Program Update that it is the covered entities’ responsibility to take remedial action to assure compliance when it discovers diversion or duplicate discount non-compliance relating to prescriptions filled through a contract pharmacy. HRSA makes clear that signing contractual agreements with third parties does not exempt covered entities from the responsibility of ensuring compliance. Liability for and the consequences of errors by third parties remains with the covered entity.
    • There have been desk audits of contract pharmacy (CP) agreements and we know of one instance of HRSA asking for the agreement between the state and the CE when carving in Medicaid at the CP.
    • Previous Turnkey newsletter discussions: March 2019 Tidbit, July 2018
  3. Duplicate Discount Prevention for 340B MCO Drugs and Out of State Medicaid Plans
    • No federal requirements exist for covered entities around the prevention of duplicate discounts for 340B MCO drugs. However, current law prohibits states from collecting rebates on Medicaid managed care claims that are filled with 340B drugs. A 2016 regulation from the Centers for Medicare and Medicaid Services (CMS) gave states two options for how to prevent Medicaid MCO duplicate discounts. States can require MCOs to exclude 340B drugs from data sent to the state. States can instead require covered entities to submit 340B claims data directly to the state or its contractors so the claims can be scrubbed from rebate submissions. As a result of these requirements, many states and many MCO’s have instituted specific policies that covered entities must follow to identify 340B claims.
    • HRSA Issues AFIs for Medicaid MCO Duplicate Discounts: Prior to April 2018, HRSA did not include MCO claims in their review of duplicate discount compliance. Beginning April 1, 2018, if HRSA becomes aware during an audit that the covered entity is not following state rules related to duplicate discount prevention for 340B MCO claims, HRSA will note this as an “area for improvement” in the audit report. It is important to verify whether your state Medicaid agency has policies around Medicaid managed care and 340B and if so, that you can comply with those policies. Routinely and periodically audit your claims to confirm compliance with state Medicaid rules.
    • Newsletters related to MCO Medicaid: August 2019 Q&A, November 2019 Q&A, August 2018 Q&A)
    • Turnkey newsletter related to out of state Medicaid: June 2019 Q&A
  4. Policy and Procedure Area for Improvements (AFIs)
    • AFIs newly added in July 2019:
      • HRSA expects CE to review and update comprehensive written 340B Program policies and procedures – Meaning evidence of policy updates is required
      • Address compliance with HRSA’s patient eligibility guidelines at the CE specifically addressing confirmation of eligibility of site location of service resulting in the prescription or drug order; eligibility of provider as employed or contracted with the CE, or through a referral process; ownership and maintenance of the medical/patient health record for the service resulting in the prescription or drug order; and patient relationship to CE as an eligible patient including how outpatient to inpatient status change is determined.  New July 2019 – is that this should be specified for both the CE and the CP
      • Medicaid Related:
        • Address compliance with HRSA’s duplicate discount prohibition at the covered entity and off-site outpatient facilities for physician administered medications when billing multiple state Medicaid agencies.
        • HRSA expects CE to review and update written 340B Program policies and procedures for the prevention of duplicate discounts on covered outpatient drugs reimbursed through Medicaid managed care organizations (MCOs).
        • New July 2019 HRSA expects covered entities to work with their state to develop strategies to prevent duplicate discounts on covered outpatient drugs reimbursed through Medicaid MCOs.
        • After the 2018 data request update and as of July is now an AFI: HRSA expects a written contract pharmacy contracts to accurately identify by name and address all contract pharmacy locations participating in the contract pharmacy arrangement and registered in 340B OPAIS. The information for contract pharmacies recorded in the 340B OPAIS is provided by the Drug Enforcement Administration database.  A covered entity should maintain policies and procedures which describe the process for ensuring names and addresses in the written contract pharmacy contracts are accurate and an identical match to 340B OPAIS.
      • HRSA expects CE to engage in an independent organization to perform annual audits of its contract pharmacies and to review and update comprehensive written contract pharmacy policies and procedures that include performing independent audits of its contract pharmacies.
      • July updated language in red we are curious about because GPO prohibition is added which is not relevant in the CP universe:
        • Address the process for conducting oversight of its contract pharmacies to prevent diversion and duplicate discount by internal audit including elements of testing, frequency, documentation and process for resolving identified issues. 
        • Ensure controls for the procurement of 340B drugs including compliance with the GPO prohibition including for replenishment to (stocking of) contract pharmacies at 11-digit to 11-digit NDC match including a process for maintaining auditable records to demonstrate proper accumulation where 11-digit match is not met;
      • 340B OPAIS accuracy, specifically regular review and timely update of 340B records for contract pharmacies.
    • Turnkey newsletters: Current September 2019 Newsletter and October 2018 Q&A
  5. Corrective Action Plan Expectations and Re-Audit
    • HRSA updated the “CAP Implementation and Repayment” section of its Program Integrity webpage, which now says that “HRSA may re-audit a covered entity to assess compliance with 340B program requirements.” HRSA’s prior policy was to conduct follow-up audits of entities with audit findings requiring repayment.
    • HRSA updated the same section of the webpage to say that when the same non- compliance finding occurs in the first and second audits, the covered entity must submit additional documentation, determined by HRSA, supporting the implementation of the CAP and any applicable repayment to manufacturers. A second audit finding will trigger a third audit. If the third audit results in the same non-compliance violation, HRSA may deem the violation as “systemic and egregious as well as knowing and intentional” and remove the covered entity from the 340B program for a “reasonable period of time.”
    • Under the “Audit Process” tab, in the section titled “CAP Implementation and Repayment,” HRSA says it expects full CAP implementation, including any settlement with manufacturers, to be completed within six months of the CAP approval date.
    • Only covered entities with audit finding(s) must address noted AFI(s) in the CAP. If there are no findings, HRSA does not require a written response but expects the covered entity to implement the AFI and states they reserve the right to require additional information related to the implementation of the AFI in the future.
    • Beginning April 1, 2018, covered entities subject to targeted audits and re-audits must provide to HRSA additional documentation before HRSA will close the audit. HRSA added this requirement to the Data Request List for audits. This information includes:
      1. A description of how the covered entity determined the full scope of non-compliance
      2. A list of all affected manufacturers, a copy of the letter offering repayment to manufacturers, and a list of all settlements with manufacturers
      3. Documentation of continuous monitoring with periodic assessment related to the previous finding(s)
    • HRSA expects 340B covered entities to submit a CAP when filing a non-compliance self- disclosure. That is not a new policy, however, HRSA included in an August website update that self-disclosure CAPs, including any settlement with manufacturers, are expected to be completed within 6 months of submitting the disclosure to HRSA. Not meeting this expectation may subject the covered entity to an HRSA audit. HRSA expects periodic progress reports, as specified, and a final report at the end of the 6 months.
    • Turnkey newsletter discussion on CAP expectations: July 2018

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American Patients First

A Review of: American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs – May 2018

Is the Trump Administration Blueprint to lower drug costs really about reducing drug prices or reducing drug spending?  According to President Trump, “Prices will come down.” Alex Azar further explains,

“When it comes to the cost of prescription drugs, our healthcare system faces four major challenges:  high list prices for drugs; seniors and government programs overpaying for drugs due to lack of the latest negotiation tools; high and rising out-of- pocket costs for consumers; and foreign governments free-riding off of American investment in innovation.”

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How to dig deeper into 340B

The Federal 340B Drug Pricing Program isn’t a primary focus for most people, but it plays a big role in helping America’s safety net providers maintain and strengthen their services. Each year, thousands of hospitals, clinics, and health centers receive savings on outpatient pharmaceuticals—savings they can use to reach more patients and deliver more comprehensive care.

Running a 340B program isn’t easy. It’s a complex structure that demands a clear understanding of policy requirements, operations integrity, and a commitment to compliance. Keeping all of the know-how you need in your head is nearly impossible. Earlier this year, though, I discovered a resource that I turn to often when working with 340B clients.

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A Review of Expectations to Prevent Duplicate Discount

Carve-In Medicaid Entities:

At a minimum, list the NPI of the entity for each registered site on the HRSA database and subsequently the Medicaid exclusion file (MEF).  Covered entities (CEs) with multiple child sites will need to confirm the NPI number used for billing at each site as it might be different than the parent NPI.  In addition, Medicaid provider numbers (MPNs) for each site should also be listed, as suggested by a recent 340B Health Webinar on HRSA audit findings.  It is not clearly explained by HRSA if the NPI or MPN is preferred, therefore best practice is to place both numbers on the MEF.  Confirmation that the information is correct on the MEF should be reviewed quarterly and annually during recertification.

During a recent HRSA audit, the auditor asked that for each FFS claim sampled, the CE demonstrate that the NPI placed on the claim/UB04 matched the NPI listed on the database.  The auditor also asked that confirmation of discussion of the carve-in arrangement that occurred with the State DHS office be uploaded as data by the end of the audit.

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Split billing company, suggestion on Medicaid Claims for Contract Pharmacy? Consider this

When your split billing company suggests it is Ok to include Managed Care Medicaid claims for contract pharmacy, please consider the following:

Allowing managed (MCO) Medicaid 340B accumulations, for contract pharmacy, is not worth the risk because at the end of the day it would likely be the covered entity that would have to work out the impact with the manufacturer (and potentially HRSA if it were Material).

Apexus sticks to its advice that,

340B drugs should not be used in a contract pharmacy situation for Medicaid patients unless there is an arrangement to prevent duplicate discounts that has been reported to HRSA in collaboration with the state Medicaid agency” – note they do not make special exception or have different advice for MCO claims.

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Change of Entity Type from Rural Hospital to DSH

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Does your hospital qualify as more than one type of 340B entity?  Is your hospital a Sole Community or Rural Referral Hospital with a DSH percentage that has risen above 11.75%?

Making the change is not as scary as you think and the possibility of additional savings to help your hospital’s indigent is well worth it.

Here are a few things to consider and an account of my experience of changing entity type from SCH to DSH:

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What does the final CMS rule implementing the site neutrality provision mean to 340B Hospitals?

As summarized by 340B Health, the final CMS rule will not impact enrollment of new Off-campus clinics in 340B in 2017, but could leave the door open to possible changes in the future.

It appears that CMS’ rule will not prevent hospitals from enrolling new off-campus provider based departments (PBDs) as 340B child sites in 2017. However, CMS plans to reevaluate its policy for future years, and changes could impact 340B.

340B Health submitted comments to CMS in response to the original proposed rule requesting that whatever payment system CMS adopted, hospitals be allowed to report costs and charges for new off-campus PBDs on reimbursable lines of the cost report. In response to criticism about its proposed payment policy, CMS is adopting a significantly different payment system for new off-campus PBDs than the one it proposed. Because the revised policy is so different than the proposal, CMS issued an interim final rule effective Jan. 1, 2017 and is accepting comments until Dec. 31, 2016. Under the interim final rule, hospitals will bill Medicare for services provided in new off-campus PBDs on the institutional claim form using a new modifier to identify the services. Medicare will pay hospitals for those services under new, reduced rates (generally, 50 percent of the OPPS rate) that will apply specifically to new off-campus PBDs.

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