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Some call it Novel Coronavirus SARS-CoV-2.  Others call it Corona Virus disease of 2019. Many like to say Covid-19 or just plain Corona. Anyway you say it, it brings up many emotions for nearly every American. Everyone in our society has been impacted in some way. The virus has thrown the Healthcare industry into near chaos since the virus reached our shores earlier this year.  

To the shock and dismay of many, the AHA is estimating that American hospitals alone are losing $50 Billion a month.  Yep, that is billion…with a capital B.  The impact is being felt especially hard by our Safety Hospitals, who already run on razor thin margins.

Since we do not have a genie in a bottle (or a vaccine), what can our 340B community do to help our facilities?  HRSA is now allowing several options and opportunities  to provide help to our Safety Net Providers. 

  1. Entity/Child Site Registration: They are allowing immediate enrollment into the 340B program.  Several of our clients have taken advantage of this, and can make a huge impact to the entity, especially in the short term.  What does an entity have to do?   
    • Reach out to Apexus (apexusanswers@340Bpvp.com) to answer a few simple questions regarding the reason for the off-cycle registration, and the impact Covid-19 is having on the entity.  The questions and the reason for the off-cycle enrollment must be related to the hardships incurred from Covid-19.  
    • Explain the urgency of the request for the enrollment.  Confirm the clinic/location is under the reimbursable section of the latest filed Medicare Cost Report.
    • All other enrollment requirements are still required ( i.e., DSH%, and GPO prohibition, if applicable etc.).
  2. Contract Pharmacy Registration:  HRSA is also allowing off-cycle contract pharmacy enrollment.
    • Similar process, reach out to Apexus (apexusanswers@340Bpvp.com) to answer a few simple questions.

HRSA has been supportive of allowing entities to shift, expand, and reorganize departments and locations in order to accommodate the influx of Covid-19 patients.  For example, some entities are creating new clinics just for Covid patients.  Several have separated their Emergency departments into two,  one for Covid patients and one for non-Covid patients.  

As usual, it is critical that these changes/moves/updates are documented in your policies (did you receive a copy of Turnkey’s Emergency Policy last month?  If not, reach out)!  Also, auditable records demonstrating 3430B compliance for each patient must be kept.  

Over the last two months, we have had several entities reach out to see if and how Telemedicine encounters could be counted as qualified 340B encounters.  The short answer is yes, but again, it   must be in your policies, and auditable records must be maintained.  Also, see Rich Buchers’ Blog from last month!  As he says, “it reads like a John Grisham novel”.

These are unprecedented times for our 340B hospitals, clinics and safety net providers.  From the Turnkey and Elevate340B team, a big THANK YOU to all of the front line Healthcare workers.  

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Telehealth and the 340B Patient Definition

Unless you have been living under a rock the past several months, you know that the COVID-19 Public Health Emergency (PHE) has dramatically impacted how both hospital and clinic providers strategize to provide healthcare to patients, including remotely via telehealth services (aka telemedicine). Given COVID-19 travel and gathering restrictions, it is obvious why the use of remote telehealth services has become an important strategy for continuing to provide healthcare to patients that do not have to be onsite. In just the last week, I have personally been engaged in telehealth related strategic discussions with at least six different 340B covered entities (CEs). These discussions have been mainly directed to inquiries about whether telehealth services can be relied upon for meeting HRSA’s patient definition used for 340B eligibility, and if so, what steps should be taken to ensure compliance. To answer these questions, it helps to first consider the acceptance and expansion of telehealth over the years.

Telehealth Acceptance

The use of telehealth in the U.S. is not a new concept. As early as the 1950s, detailed transmission of radiology images by telephone was underway. However, it was not until the late 1990s that telehealth services started to really take off, primarily due to technology changes such as more rapid data transmission and video communication. From then on, the use of telehealth has steadily grown – at least for some organizations. To put it in perspective, as far back as 2006, Kaiser Permanente’s CEO reported that it was seeing more patients online than in person. The Patient Protection and Affordable Care Act of 2010 (“ACA”) formally promotes the use of technology in health care reform as a means to increase care quality and access while reducing costs. Telehealth has become important enough that HRSA established the Office for the Advancement of Telehealth (OAT) to promote the use of telehealth technologies, especially in rural and remote areas. According to the American Hospital Association (AHA), last year, the use of telehealth in U.S. hospitals grew rapidly from approximately 35% in 2010 to 76% in 2017. This growth has also occurred in non-hospital settings (e.g., health centers) as well. For example, earlier this year the Bureau of Primary Health Care (BPHC) under HRSA even published a Program Assistance Letter (PAL) to highlight significant issues to consider when utilizing telehealth as a means to increase access to care for health center patients.

Telehealth Expansion

While the use of telehealth as an accepted treatment modality continues to grow, it has not expanded as rapidly as it could have due to barriers such as coverage and payment limitations, state and federal laws (e.g., privacy and security, provider licensure – especially across states), and limited broadband access. With respect to coverage, many argue telehealth is still not treated on parity with more traditional in-person treatment modalities. The most important example is reimbursement by CMS. Medicare has only reimbursed for interactive real-time (i.e., live-video) telehealth services. Also, there have been significant reimbursement restrictions based on the provider/ health care professional (HCP) type (only qualified health care providers), the patient’s and HCP’s location (e.g., for patients at a medical facility in rural area), and the type of service provided (e.g., for routine visits). While CMS has expanded its coverage recently to some extent (e.g., for stroke and substance abuse patients), until COVID-19 this expansion has been modest at best. Similarly, while many states have begun to expand Medicaid telehealth reimbursement, others have retracted it and/or placed other significant limitations. As with CMS, this state-based reimbursement has generally been more favorable to real-time services as compared to other telehealth modalities that are not in real-time, such as store-and-forward (e.g., digital imaging) or remote monitoring.

Parity with In-Person Care and 340B

So why is this important? Although telehealth has long been recognized by governmental agencies such as CMS, HRSA, and state Medicaid agencies, it is still not treated on parity with in-person treatment – especially with respect to coverage as discussed above. But what about 340B? Recall that as part of its omnibus guidance (aka mega-guidance) proposed back in August of 2015, although expressly stated that the use of telemedicine would be permitted (so long as authorized under state or federal law and otherwise compliant with the 340B Program), it also included language about health care services needing to be provided at a registered hospital or clinic. 340B Health was concerned enough about HRSA’s possible enforcement of this that it emphasized multiple times in its mega-guidance analysis that telemedicine was a means of health care service that could be affected. Although the mega-guidance was pulled from awaiting final approval in January 2017, the takeaway seemed to be that telehealth is a recognized modality – but enforcement was still uncertain. Other than with the mega-guidance, up until COVID-19, HRSA has been noticeably silent with respect to telehealth’s implications with 340B eligibility.


In response to COVID-19, federal agencies such as CMS and HRSA have provided important additional information regarding telehealth. With respect to coverage, federal legislation has been recently signed into law that significantly expands telehealth coverage and implementation during the COVID-19 PHE. Recently, the law firm of Powers Pyles Sutter & Verville held a Telehealth and COVID-19 webinar that provided a good summary of this legislation and its implications. Also, many government administrative websites with telehealth information have been provided, including a CMS Medicare Telehealth FAQ website, a HRSA BPHC COVID-19 FAQ website and Office of Pharmacy Affairs (OPA) COVID-19 340B resources FAQ website, and an Office of Civil Rights (OCR) website regarding its enforcement discretion of privacy and security laws during the COVID-19 PHE.

Regarding 340B in particular, the OPA COVID-19 340B resources FAQ website states that HRSA recognizes telemedicine as merely a mode by which health care services can be delivered and recommends that CEs outline the modalities they utilize in policies/procedures and maintain auditable 340B records. Also, recently we reached out to Apexus and received the following guidance and internal Apexus FAQ below:

  • Guidance: The guiding principles are the patient must meet the patient definition, the physical location of service for patient or physician does not necessarily have to be a registered location, as long as the Service for grantees is consistent with the scope of grant, and for hospitals, reimbursable on the most recently filed MCR. An eligible site/location (e.g. Cardiology Clinic) of the CE has to be responsible for the service. For hospitals, this would mean that any sites/clinics outside the 4 walls (Cardiology Clinic) would need to be registered separately on OPAIS, even if that is not the physical location of where the patient/physician is.
  • Apexus Internal FAQ: Question: Is telemedicine an eligible service to qualify for 340B drug pricing in a covered entity? Answer: In the case of eligible hospitals, the clinic at which the covered entity provides healthcare services must be an integral part of the hospital, listed as reimbursable on its Medicare cost report. In the case of all other covered entities, the patients must be provided healthcare services by the covered entities that are within the scope of the grant or other statutory basis for eligibility. The entity is responsible for meeting the definition of a patient.

340B and Telehealth: Moving Forward

Based on above, it is clear that telehealth is a recognized healthcare modality that can be applicable to 340B eligibility, and this is not limited to only during the COVID-19 PHE. In other words, there does not appear to be any reason that a telehealth encounter cannot be relied upon for establishing 340B eligibility where the patient and/or treating HCP are not physically at the CE’s 340B eligible location, so long as auditable records show that:

  • The CE documented the telehealth care provided to the patient in the patient’s medical record,
  • The documentation clearly shows that:
    • The care provided by the CE to the patient during the encounter was tied to the CE’s 340B eligible location (and within the scope of grant if the CE is a grantee), and
    • The care was provided by an HCP that had a documented arrangement with the CE such that the CE remained responsible for the care.

To further help support such an argument, it is prudent to follow HRSA’s recommendation that this telehealth modality be outlined/supported in the CE’s policies and procedures. This is consistent with our experience in which we have seen HRSA often defer to a CE’s policies/procedures to support practices that are not clearly delineated in law or HRSA’s guidance. Turnkey Pharmacy Solutions recently sent a template emergency policy/procedure to its clients with example language that may be helpful during the COVID-19 PHE. Also, please feel free to reach out to us if you have specific questions!

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340B Program Legislative & Regulatory Update

For those of us in the 340B program trenches, it feels like we are constantly under assault from our legislatures (e.g., Senate and House bills with detrimental effects on 340B), regulatory agencies (e.g., CMS reimbursement, HHS/HRSA interpretations of the law), drug manufacturer groups (e.g., PhRMA doing anything possible to dismantle the program), and even the judicial system (e.g., courts considering the viability of the ACA). I don’t know about you, but as we have gone about our work to keep the 340B program functional for the last 28 years, there is this gnawing in the back of my head that something big could happen to 340B. Oddly enough, we have not seen a significant change in the program in quite some time. The question is, are we due for a big change or with everything else going on in the country and world, are we likely to maintain 340B in its current state? My crystal ball is currently broken, but let’s break down what we do know and where the biggest risks are today.

Judicial: The Affordable Care Act (ACA) was determined to be invalid by the lower Federal courts in December of 2018. This was a lawsuit filed in February 2018 by 20 states and led by Texas (2 states have since dropped off the case, Wisconsin and Maine). In December of 2019, the 5th Circuit Court of Appeals affirmed the lower court’s decision on the unconstitutionality of the individual mandate but did not decide on whether the rest of the ACA should also be struck down. Instead, they referred the case back to the lower courts. In an interesting turn of events, the Supreme Court has stepped in and has agreed to review the case. A request was made for an expedited review, but in January, the Supreme Court said no to an expedited review and will likely hear arguments for the case in October 2020. It is highly likely that a decision will not be made until after the presidential election. If you have read this far, and are now wondering, “okay, so what does this mean for 340B,” then let me remind you of the various changes the ACA made to 340B:

  • Most Importantly: It added the rural hospitals to 340B qualification. This includes our critical access hospitals (CAH), rural referral centers (RRC), and sole community hospitals (SCH) and of course their lower (or none for CAH) DSH% thresholds for entering the program. A repeal would mean a loss of these covered entity (CE) types.
  • Medicaid Expansion: At least for the states that took the Medicaid Expansion, this increased DSH percentages and likely allowed for additional hospitals to qualify. If we see a decrease in DSH percentage, we will see a decrease in qualified hospitals (in addition to the loss of the rural hospitals).
  • MCO Medicaid: It was the ACA that allowed state Medicaid agencies to seek Medicaid rebates on MCO Medicaid paid claims in addition to the FFS Medicaid paid claims. At least this would clear up how we handle MCO Medicaid, but it will be a large budget loss for the Medicaid program.
  • Annual Recertification: Hmm, I think this was a good thing (albeit a pain sometimes). I remember when some hospitals would lose their DSH percent but “forget” to tell HRSA. I am not sure why they would stop this, but technically it was added as part of the ACA.
  • 340B Pricing Oversight: Both the HRSA ceiling price website and monetary penalties were likely the result of the ACA. Again, I hope they wouldn’t stop the website now, but it is thanks to the ACA.

As you can see, losing the ACA will have a significant impact on the 340B program. Not a ton we can do about it, I suppose hoping the RBG (i.e., Ruth Bader Ginsburg) can maintain her health through the year would be good. Many pundits believe the current Supreme Court would likely keep the ACA intact (mostly), but a switch of one of the liberal justices for a more conservative one could change the dynamics of the Supreme Court such that a full repeal of the ACA becomes more likely.

I think I used up most of my time on that one, so what else . . .

Legislative: Although we saw a slew of bills from both the Senate and House in 2019 regarding 340B, nothing actually passed. Yes, NOTHING! To be fair, some of the bills were pro-340B, so it would have been nice to see some of them come through. However, here we are in 2020, a re-election year. The House and Senate are split Democratic and Republican, respectively, and it is unlikely we will see 340B bills being passed in this session either. One area of potential risk is around drug pricing legislation. This is a hot topic and people on both sides of the aisle have an appetite to do something. Where 340B has some risk is if any of the drug pricing bills affect the 340B ceiling price calculation and/or provide exemptions to manufacturers on 340B for participating (e.g., one of the international pricing index bills had some provisions on 340B exemptions).

Regulatory: I think this is where we will continue to see an erosion of 340B savings. On both a Federal and State level. CMS is still decreasing drug reimbursement with an ASP minus 22.5% on status indicator K drugs for most hospitals (i.e., they left out CAH and SCH that are rural for now). This is in addition to the reduction in clinical payments for off-site clinics, often referred to as “site neutrality.” States, such as California, are pushing all retail prescriptions to FFS Medicaid, where an actual acquisition cost (AAC) plus a fee is required. This is where it is critical to work with your states and ensure they are aware of the impact these decisions can have on patients and the healthcare system.

I tried to not take too many sides, rather just share what we are hearing and seeing. I would like to end on a positive note. In 2019, West Virginia, Minnesota, South Dakota, Montana, and Oregon all passed laws prohibiting discriminatory reimbursement by health plans. Nice work to those states, and there are additional states working on similar legislation for 2020. I would love to see all states pass a similar law in order to protect 340B from payors harvesting 340B savings for themselves. If your state isn’t already working on it, then maybe they should be. Now is a good time (it is always a good time) to reach out to your legislatures and ensure they are aware of how important the 340B program is to hospitals, clinics, and patients in their communities.

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A Difference Made

We hear negative goings-on in the world so often that we gloss over what happened and keep reading down the page.  We are engrossed in our work and don’t always respect why we continue to do the daily grind.  Some work for a paycheck.  Some work for the difference they make.  I believe that most do it for a combination of both.  It is easy to get absorbed in your work and not think about how you are making a difference.  

Recently, our CEO, Rob, sent the team an email with a link to an article discussing hospital closings and discussed how Turnkey has helped entities realize savings that have actually kept their doors open.  The article made me stop and reflect on the importance of the 340B program. More specifically, I reflected on how important the program is for rural communities. Each of us who works in the 340B space makes a difference.  If that statement is the only thing you take away from this piece, I have accomplished my goal.

​Hospitals closing or hospitals limiting their services occursmore often than not.  This seems due to poor (in some cases no) reimbursement from Medicare and Medicaid (M&M).  The topic of Medicare and Medicaid reimbursement is extremely complex so I will provide a very basic example of what poor reimbursement can look like.  

A patient receives a medication in the emergency room that costs $1.00 for the pharmacy to procure. The medication will be marked up to $3.00 to contain all overhead costs related to it being administered.  Now, Medicare or Medicaid comes in and only pays $0.50 for the medication.  Not only does the reimbursement not pay for the hospital to buy the medication, but none of the overhead costs are paid.  I cannot walk into the grocery store and pay for a gallon of milk that cost the grocer $1.00 and is marked up to $4.00 for only a penny!  Why? The obvious answer is because the grocer could not remain in business if they are not paid what they need to cover the costs of selling the gallon of milk.

The lack of reimbursement in hospitals does not apply to medications only, it applies to all areas of a healthcare entity. There are other reasons for poor financial performance from hospitals such as bad debts, patients not paying, etc., but a continual concern is poor reimbursement from M&M. This is where 340B folks make a difference.  The program allows the hospital to make the initial purchase of the drug at a discounted price which in turn allows the poor reimbursement to now cover the cost of the drug along with a small portion of overhead costs involved in the administration.

So why does anyone care that a hospital closes when we have so many?  The instant answer is that it creates obstacles to healthcare. We have to remember that for rural communities, the hospital not only serves as a place for inpatient care but also serves as the local clinic for family health and specialty provider services. The loss of a local hospital means our most vulnerable and in a lot of cases, our oldest patients, will have to drive quite a distance to receive even basic healthcare services. On a lighter note, I would not want anyone to get stuck behind my grandpa who drives 15 mph on the highway ON A GOOD DAY when he has to drive 45 minutes (5 hours in his way of driving) to get to the doctor.

340B betters the country and allows communities to have access to healthcare they would not otherwise have. It is important to remain compliant and for hospitals to optimize their 340B programs to continue to save money. I cannot imagine having to rush my wife 45 minutes after she goes into labor to get her to an appropriate facility.  I know because of what I have done working within 340B that my local hospital continues to be able to offer OB services.  My grandpa’s local hospital is able to provide him the services he needs and both of the hospitals’doors are still open.

You have made a difference too.  I encourage you to reflect on what you have done for your community and continue to do as much as you can to help serve our most vulnerable populations and to keep our communities happy and healthy. If you are interested in seeing how some 340B entities use their 340B savings, check out Megan Kussay’s December 2019 blog title ’Tis the Season For Giving at https://turnkeyrxsolutions.com/blog/.

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‘Tis the Season for Giving

Last weekend, my family and I made our annual trip to Philadelphia to enjoy the elaborate holiday décor and festivities, including Macy’s Christmas light show and the Comcast Holiday Spectacular. Of course, our trip to the city would not be complete without a visit to Santa. I am happy to report, I spoke with Santa personally, and all our wonderful clients are on the “Nice” list!

Turnkey is fortunate to witness the numerous ways in which the 340B Program expands access to our underserved and most vulnerable patient populations. If you have participated in an external audit with Turnkey, attended a 340B Coalition, perused 340B Health, or listened to NACHC’s Office Hours, you are aware of the importance of your Covered Entity’s (CE) ability to communicate the use of 340B savings. Apexus provides a 340B Savings and Community Benefit Template Tool to assist in this exercise. Currently, 340B statute does not require CE’s to document how savings are being utilized, however, it is considered best practice. 

Both our grantee and hospital CE type clients have developed creative and unique ways to use their 340B savings. Stories such as how our friends at Salina Family Healthcare Center and Orlando Health have developed impactful ways to utilize their 340B savings, excites us at Turnkey, equivalent to that of Buddy The Elf’s excitement when he hears “Santa is Coming”!! If you are wondering how much excitement that is, please do yourself a favor and watch Elf this holiday season!!

Salina Family Healthcare Center (Salina), a Community Health Center, is a great example of how 340B savings can be used to minimize gaps in health care, which directly affects the quality of life of their patients. Salina has seen improvements in patient care through their various programs including medication assistance programs, prescription adherence and condition management, dental services and education, mental health and substance abuse therapy. Salina has been able to take their patient care a step further by integrating savings into their community by utilizing Care Coordinators and including “learners” throughout the clinic. The Care Coordinators assistmany of their patients – from affording groceries to helping with transitional care management. Additionally, Salina hosts “learners” from the community and is also well known for their Smoky Hill Family Medicine Residency Program. Involving members of the community to understand the needs and the gaps in insurance that leave many of their patients vulnerable, in turn encourages folks to participate in the betterment of their own community. The residency program was started due to theshortage and maldistribution of physicians in Kansas. The mission of education, and its positive impact on the community,is taken seriously at Salina. 

If you live in Central Florida, you are aware of the numerous and amazing ways Orlando Health, a Disproportionate Share Hospital, has been able to use their 340B savings to strengthen and create a healthier community. Orlando Health shares their Community Benefit Report which highlights their community outreach efforts. I encourage all to seek out this document, it is guaranteed to make you feel empowered about your participation in the 340B program and serves as a reminder of how many patients would be gravely affected without the 340B program. A standout community partnership of Orlando Health is with The University of Central Florida’s (UCF) Go Baby Go! This initiative allows children with delayed or hindered mobility the ability to experience the independence of discovering and playing. The concept is the purchase of an off-the-shelf motorized toy car that is then rewired and retrofitted for children with unique abilities. The cars allow the children to gain confidence as many of the children taking part in the program cannot walk.  The redesigned cars allow them more freedom to explore and learn on their own.

Turnkey is privileged to consult with many CEs that are working tirelessly to ensure their patients receive the attention and empathy that is needed to care for their own health and the health of their families. There are many CEs that use the 340B savings to simply keep their doors open, this does not go unrecognized. It is important to spread the word of how your 340B program is helping your patients and to stay involved in the advocacy for the program. Allow the Holiday Season to reinvigorate your team and take the time to reflect on how important your 340B program is to the community. 

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A Game of Capture the Referral

As the 340B Program faces increasing scrutiny and possible changes that could lead to reduced savings, covered entities are looking for ways to diversify and maximize their 340B Programs.  Maximization and diversification can come in the form of, for example, implementing software solutions, expanding the range of services offered, or, the topic of today’s blog, capturing referral prescriptions.  Referral prescriptions can provide significant savings opportunities for covered entities, but identifying and qualifying referral prescriptions compliantly can be a challenge. So, what does it take to capture the referral?

What is a referral prescription? 

A covered entity’s providers may refer patients out to specialists for care at a location that is not 340B eligible (i.e. a specialist’s private office). If the specialist writes prescriptions for the patient as a result of the referral by the covered entity’s provider, those prescriptions would be considered referral prescriptions.  For more information about unique referral scenarios, check out the Indirect Referrals blog post.

How can referral prescriptions qualify for 340B if they are written at ineligible locations?

According to HRSA’s patient definition, referral prescriptions may qualify as 340B eligible in certain circumstances. A patient is eligible if:

“1. the covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s health care; and

 2. the individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity; and

3. The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or Federally qualified health center look-alike status”[1]

There are several considerations when applying HRSA’s patient definition in the context of a referral prescription.  The sticking point is that, if a covered entity wishes to qualify referral prescriptions as 340B eligible, it must demonstrate that it has responsibility of care for the patient and referral prescription(s).  This can be achieved by implementing the best practice referral loop [JM1] (Figure 1). First, the covered entity must demonstrate that it has established care with the patient, typically by confirming that the patient has an associated visit at an eligible 340B location with an employed or contracted provider of the covered entity. If the patient is an established patient of the covered entity, documentation of an outgoing referral in the patient’s medical record on or prior to the written date of the referral prescription is necessary to support that the covered entity has responsibility of care for the referral prescription(s).  Finally, the covered entity must receive referral summary notes to be uploaded in the patient’s medical record in order to “close the loop”.  The covered entity’s provider should update the patient’s medical record with any new information, including medications prescribed during the referral visit.

What are the compliance risks associated with capturing referrals?

Capturing referral prescriptions can increase a covered entity’s compliance risks.  A covered entity interested in capturing referrals must first evaluate if the risk, potentially a HRSA diversion finding, is worth the benefits of increased program savings and patient care. Consider, are enough referrals being made by the covered entity’s prescribers?  Are the referral prescriptions being sent to pharmacies within the covered entity’s 340B network (i.e. contract or in-house), would a new contract pharmacy need to be added, or are the prescriptions scattered to multiple pharmacies? Keep in mind, increasing the number of contract pharmacies can introduce more program complexity (i.e new TPAs) and subsequently increase a covered entity’s chance of being selected for a HRSA audit. 

Once a covered entity determines that it is interested in capturing referral prescriptions, additional considerations need to be made.  To start, the covered entity must evaluate its referral process to determine if providers are documenting outgoing referrals consistently.  Some electronic health records (EHRs) may have standardized outgoing referral forms, while others may require manipulation by an IT department to create a template or field for free-form documentation.  Would additional provider training be required? Does the covered entity’s IT department need to be involved for EHR manipulation? Are providers reliably documenting outgoing referrals? Remember, a referral must be documented in the patient’s medical record on or prior to the written date of the referral prescription to be justifiable.

After standardizing the outgoing referral process, a covered entity must assess the risk associated with obtaining referral visit summaries promptly to corroborate the eligibility of the referral prescription. At a very minimum, the covered entity must have documented attempts for obtaining the referral documentation.  However, best practice would be to obtain the visit summaries and update the patient’s medical record prior to qualifying a referral prescription as 340B eligible. Does the covered entity share an EHR with the specialists?  Can the covered entity obtain referral consult notes and update the patient’s medical record in a timely manner?

How can a covered entity capture a referral prescription?

Meeting the recommended guidelines for documentation of referrals and subsequent prescriptions requires significant resources.  There are a few approaches that a covered entity may choose from when deciding what best suits the needs of the covered entity.  First, the covered entity must determine how it will identify referral prescriptions.  If there is a known list of specialists, these specialists could be added to an eligible provider list, on a limiting basis, for easy identification.  Some pharmacy Third Party Administrators (TPAs) can sort prescriptions from these specialists into a separate queue for manual review by the covered entity’s staff.   If the covered entity is not using a TPA, staff may use the list to cross reference against the prescription to determine if it could be a referral prescription.  These options require significant staff resources but allow the covered entity to keep most or all of the savings.   Another option is to outsource the entire process, from identification to retrieval of documentation and communication with pharmacy TPAs, to an external party.  A consideration when using an external vendor is that a covered entity will be forfeiting some of its savings.  However, by outsourcing the labor, the covered entity would be minimizing the operational changes that would need to be made internally to accommodate the demands of capturing referral prescriptions. 

As a covered entity, the decision to capture referral prescriptions is multifaceted and may require significant resources and operational changes.  However, the benefits of adding this to your 340B portfolio may have a significant impact to program savings and ultimately, patient care.  The undertaking may be worthwhile, because at the end of the day, 340B is the bloodline for those who are providing care where it is needed most. 


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What does this have to do with me?

Many of us are so focused on our next meeting, the crisis that needs to be addressed now, or how we are going to get through all of our emails; that it is easy to read something and not think beyond the here and now.  Recently the state of Minnesota implemented an update effective August 1st that allows pharmacists to dispense a refill of a medication despite no refills remaining on the prescription. Emergency refills of prescriptions for a 30-day supply are allowable under the following circumstances:

  • The patient has been compliant with taking the medication and has consistently had the drug filled or refilled as demonstrated by records maintained by the pharmacy;
  • The pharmacy from which the legend drug is dispensed has record of a prescription drug order for the drug in the name of the patient who is requesting it, but the prescription drug order does not provide for a refill, or the time during which the refills were valid has elapsed;
  • The pharmacist has tried but is unable to contact the practitioner who issued the prescription drug order, or another practitioner responsible for the patient’s care, to obtain authorization to refill the prescription; or the drug is essential to sustain the life of the patient or to continue therapy for a chronic condition;
  • Failure to dispense the drug to the patient would result in harm to the health of the patient; and
  • The drug is not a controlled substance listed in Minnesota Statues Health section 152.02, subdivisions 3 to 6, except for a controlled substance that has been specifically prescribed to treat a seizure disorder, in which case the pharmacist may dispense up to a 72-hour supply.

Similarly, the Governor of the state of Florida, on August 28th, declared a State of Emergency, in which a pharmacist can use their judgement to refill prescriptions early for a 30-day supply provided certain criteria are met in the areas or counties affected by Hurricane Dorian.

In both states, the pharmacist must notify the practitioner who prescribed the medication.  In Minnesota it is no later than 72 hours after the drug was sold or dispensed. Florida does not define a time but rather states that the provider should be notified within a reasonable amount of time.  A record of the drug being dispensed should be maintained just as it would be for any other refills. 

Most would read these updates from the Board of Pharmacy and not think beyond the impact of the practice change.  I am challenging you to do just that and ask does this impact how we oversee our 340B Program and if so, how?  And would also argue it should be a thought every time practice change is implemented either by your State Board of Pharmacy or internally by your covered entity.  In response to the question above, the answer is, yes.  It could make it challenging to comply with the statutory requirement for auditable records.

Because there may not be auditable records for the fill (i.e., refill authorization) in the patient record at the covered entity, Turnkey is recommending that language be added to policy. Consider the following language for example: “The state of (insert applicable state) allows a one-time 30-day supply of a medication when certain requirements are met without provider authorization or documentation. In these cases, auditable records would include any documentation by the filling pharmacy to indicate the medication was refilled and the provider was contacted.” In addition, it may be wise to reference the link in which the practice change is stated in policy.  I have attached the link for both the state of Minnesota and Florida respectively, that outlines the practice change and requirements.

Just as you need to keep updated with practice changes, states can change their requirements to prevent duplicate discounts.  The state of North Carolina updated their Clinical Policy No. 9 for outpatient pharmacy on July 15th, 2019.  This update requires the use of both the ‘08’ in the basis of cost determination field via the National Council for Prescription Drug Programs (NCPDP D.0 field 423-DN) and a ‘20’ in the submission clarification field (NCPDP D.0 field 420-DK) for point of service claims.   Prior to this update a covered entity could use one or the other.  In addition, per the updated policy, only the actual purchased drug price should be submitted in the usual and customary charge field.

The state of Kentucky posted on August 2, 2019 changes to its Medicaid policies and procedures for Managed Care Organization (MCO) and Fee-for-Service (FFS) providers who participate in the 340B Drug Pricing Program.  Beginning on January 1, 2020, providers should submit 340B Medicaid FFS and MCO claims with the NCPDP D.0 value “20” in the field 420-DK submission clarification code.  This indicates to the Kentucky Department of Medicaid Services that a 340B purchased drug was used and not to collect rebates on the claim.

The following links outline the changes to the NCPDP requirements as discussed above for the states of North Carolina and Kentucky, respectively.

Key takeaway:  Stay abreast of what is happening with state requirements including changes to pharmacy practice.  One never knows when a change may impact your 340B Program.

P.S.  Although the picture above depicts a beautiful snow scene – the winters in Minnesota are long, and it gets very cold here -50 degrees with the windchill.  Okay, that is not typical, but it has been known to happen and impacting travel and one’s ability to be outside.  You need to be a lover of snow and really cold weather to live here year-round or crazy.  I think I am the latter.

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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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FQHC Updates from the Summer Coalition Conference

It is hard to believe that summer is almost over. The threat of fall is already in the air here in Maine and I am missing that sweltering D.C. heat we enjoyed at the Summer Coalition conference. The conference was highlighted by the positive message that at least for the time, the 340B environment in Washington is not as overtly hostile as it previously was and that politicians have shifted their focus to areas like the upcoming presidential election and other more pressing social issues. We learned that the 340B battles are moving to the state legislature. Here there have been some positive developments, as was the case in West Virginia, where a PBM reform bill was passed protecting 340B pharmacies from discriminatory pricing, and some less than positive developments in states like California.

One big area of change noted at the conference was for the FQHC’s where changes have been made to the 340B review process and sliding fee scale expectations have been clarified to some extent.

In 2015, the Bureau of Primary health Care (BPHC) added questions about 340B to the official operational site visit (OSV) protocol. The questions involved demonstrating that appropriate 340B policies and procedures, contracts and program oversite were in place. If areas of concern were noted when reviewing these screening questions, covered entities had the potential to receive a formal HRSA audit. Earlier this year, BPHC officially removed the 340B questions from the OSV protocol. This was likely due to variation and limited 340B expertise among auditors.

While the 340B screening questions have been removed from the OSV, two areas of 340B focus were highlighted at the Summer Coalition conference. One is that the OSV auditors are asking the FQHC staff if they are completing their annual 340B external audits. The second is that there are now formalized expectations being vocalized for pharmacy services sliding fee scales.

The 340B program has no requirements regarding how much patients should be charged for 340B drugs.  HRSA’s sliding fee scale rule for pharmacy applies only to the service fee and not to the medication charge itself. HRSA does not require that the ingredient cost be subject to a sliding fee scale (SFS), but FQHC’s can choose to apply further discounts beyond that of the service fee. The pharmacy SFS can be structured differently from the other SFS’s offered by the health center. Based on BPCH’s standard sliding fee rules, the dispensing (service) fee should be no more than a nominal fee for those below 100% of the federal poverty limit (FPL), have at least three slide levels between 101% and 200%, and have no discount above 200% of FPL. The expectation has been expressed that the SFS’s are offered at both the FQHC’s in-house and contract pharmacies.

The application of the pharmacy sliding fee scale levels should correspond with those of the health centers medical sliding fee scale and they should use a shared enrollment process. For contract pharmacies, the TPA’s may be able to assist in developing the mechanisms to allow for patients to access sliding fee scale prices on their 340B prescriptions. If a TPA is not able to provide a solution, external pharmacy benefits managers may be able to assist in setting up the contract pharmacy sliding fee scale program. Failure to apply sliding fee scales at in-house and contract pharmacies could result in area for improvement findings during OSV reviews.

We are always happy to help if you have questions about sliding fee scales or anything else!

Sample Sliding Fee Scales

FPL Level Dispensing (Service) Fee Model Flat Fee Model
greater than
No discount No discount
199-150% $12 + Cost of Medication $20
149-101% $8 + Cost of Medication $10
100-1% $3 + Cost of Medication $5
No Income $0 + Cost of Medication or No Charge No Charge

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Outpatient Prescriptions from Covered Entity Internal Hospitals With & Without Child Site Registrations

Happy Summer Everyone, as we are just wrapping up the July OPAIS registration period and the 340B hospitals are ramping up for recertification, it seemed a great time to talk about hospital child site registration or the lack there of and how this impacts 340B prescription eligibility. This blog is intended to build on Rich Bucher’s article from last month. During the last year, I have encountered a number of hospitals with OPAIS database listings which include a historic registration of “child site hospitals” as well as individual registrations for each of the departments within the child site hospital. During discussions onsite, the 340B teams are often leery of removing these registrations as they still intend to capture 340B discharge prescriptions from the “child site hospital”

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