FQHC Updates from the Summer Coalition Conference

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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
200%
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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Inpatient Discharge Prescription Clarification

Inpatient Discharge Prescriptions

Traditionally, hospital discharge prescriptions written for eligible patients at eligible locations have generally been understood to be 340B eligible – regardless of whether they were written in connection with a hospital outpatient service ultimately billed as an outpatient service (i.e., outpatient discharge prescription) or with a hospital inpatient service ultimately billed as an inpatient service (i.e., inpatient discharge prescription). This is because after discharge, these prescribed drugs are to be used on an outpatient basis.

This general understanding was challenged by the Health Resources and Services Administration (HRSA) proposed Omnibus Guidance (a.k.a. “Mega Guidance”) in August 2015. Among other changes, the Mega-Guidance proposed changes to the current patient definition, including that only outpatient discharge prescriptions would be eligible. In a 2016 survey by 340B Health of hospital covered entities regarding the loss of inpatient discharge prescriptions, 81% of the respondents indicated they would lose discounts, with 57% saying they would struggle and 11% saying they could be forced to drop 340B altogether.

Confusion Regarding Unregistered Offsite Locations

In January 2017, the proposed Mega-Guidance was withdrawn and thus the common understanding continued that both inpatient and outpatient discharge prescriptions were eligible –when written in connection with a hospital service at an eligible location. However, based on our experience, until recently there has been a lot of concern over just what constitutes an eligible location. More particularly, for many it has not always been clear if an offsite inpatient location that is an integral part of the hospital, but that is not registered as a child site on Office of Pharmacy Affairs Information System (OPAIS), can be considered an eligible location. This general concern was reflected in an April 14, 2016 letter from 340B Health to HRSA. This letter explained that there was no guidance requiring registration of inpatient locations in order to use 340B drugs for discharge prescriptions from those locations. This letter also detailed the long history of HRSA approving such use. Later, 340B Health indicated that HRSA had informed it that 340B could be used for discharge prescriptions written following care that was delivered in an inpatient location. For many, the question of whether offsite inpatient locations had to be registered remained. Based on our experience supporting numerous clients during formal HRSA audits, 340B discharge prescriptions from unregistered offsite inpatient locations continued to be questioned and treated with skepticism by auditors, though no formal findings for these clients were issued to our knowledge. As a result, many of our hospital clients have been hesitant to qualify discharge prescriptions from unregistered offsite inpatient locations.

Recent Apexus Guidance

Because of the general confusion regarding discharge prescriptions from unregistered offsite locations, we reached out to Apexus on several occasions seeking guidance. Recently, we received guidance that confirmed that 340B eligible discharge prescriptions may include those originating from a location considered to be an integral part of the covered entity and having either inpatient or outpatient costs/charges on the covered entity’s most recently filed Medicare cost report (MCR). Very recently, Apexus released an FAQ (FAQ 2693, Last Modified 05/21/2019) that appears to formally confirm the guidance we received:

FAQ ID: 2693

Last Modified: 05/21/2019

Q:  Can a covered entity use 340B for discharge prescriptions from a child site hospital that does not have outpatient clinics to register?

A:  Discharge prescriptions are allowed as long as the prescription originated from a location that is considered an integral part of the covered entity and has reimbursable costs and charges on the covered entity’s Medicare Cost Report.

Although the question of this FAQ is directed to “a child site hospital, the answer appears to confirm the traditional understanding that discharge prescriptions written for eligible patients can be 340B eligible – regardless of whether they are inpatient or outpatient discharge prescriptions. This interpretation appears to be supported by 340B Health, which has stated that this FAQ clarifies that hospitals can use 340B discharge prescriptions that originate from all locations with reimbursable costs and charges on its MCR, and not just outpatient locations.

Apexus also recently released another related FAQ 2692, Last Modified 05/21/2019confirming that inpatient locations with observation beds do not have to necessarily be registered and acknowledging that 340B eligible patients may receive healthcare services in observation beds located in inpatient sections of the hospital. This FAQ indicates hospitals must be able to explain how they remain responsible, maintain auditable records, and have 340B policies/procedures defining inpatient/outpatient and how it relates to observation patients.

We encourage hospital covered entities to become familiar with these FAQs and to review the comments made by 340B Health and to reach out to Apexus with further questions. Of course, we are available for consultation as well.

Note: For clarification, if you do not register the child site hospital inpatient/observation locations, then you can only capture discharge prescriptions. 340B is not available for administered drugs for patients at unregistered locations, including observation patients of unregistered inpatient locations.


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Medicare Site Neutral Payments – Changing Healthcare

To preface, Medicare site neutral payments refer to the technical portion of outpatient bills. This does not refer to drug reimbursement cuts down to ASP minus 22.5% for 340B sites, which is a totally different topic (especially with a federal court judge determining that the drug reimbursement Part B cuts by Medicare are in violation of federal law). Site neutrality is the Medicare change in reimbursement to mimic private physician billing and hospital outpatient departments that are more than 250 yards away from a hospital. This financial payment reduction is not 340B specific and applies to all hospitals. 

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OPAIS Database: Missing Points and HRSA Findings

Turnkey has had the opportunity to support over 45 HRSA audits for our amazing clients.  One thing we have noted from each audit is the close evaluation of the new 340B Office of Pharmacy Affairs Information System (OPAIS) database and entity’s information.  Apexus tells us the purpose of the OPAIS database “increases the integrity and effectiveness of 340B stakeholder information and focuses on three key priorities: security, user accessibility, and accuracy.
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HRSA Audit Highlights

We have been busy supporting our wonderful clients on HRSA 340B audits almost constantly throughout the year, but in the recent months we have seen some changes. Here is a quick update on things we have seen that may catch you off guard if you’re not prepared.

First, whether you are carve-in or carve-out, you will very likely be asked to provide UB04/HCFA 1500 billing claim forms for all 28-33 sampled claims. Additionally, you will be asked to provide UB04 claim forms for all out-of-state Medicaid plans you have billed and to do this, the auditor will go outside of the audit period, as far back as necessary to complete the request.

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The Medicaid Challenge

It was great to see everyone at the 340B Coalition in San Diego last month. Thank you to everyone that stopped by Turnkey’s booth to say hello. We hope you had the chance to find out more about Turnkey’s affiliates, cutting-edge central supply chain service, Trulla, and the newly updated optimization service, Elevate.

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Transparency for Everyone

In 2018, meaningful conversations around 340B have included transparency. Many covered entities, large and small, have embraced the notion of transparency in their 340B program. In order to protect the 340B program, CEs have put pen to paper and began telling their stores of how 340B savings are being utilized. I think we can agree, we have all been waiting for manufacturer to follow suit.

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New 340B Stewardship Principles

This summer’s Congressional 340B hearings drew attention to the need for covered entities to be able to speak to the use of their 340B savings in alignment with program intent. While the documentation and demonstrated use of savings is currently not required by statue for hospitals, many of the grantee covered entity types are already required to demonstrate that all resources generated through the 340B program are used to expand and support services within the scope of their grant. Many covered entities, including hospitals have developed “Use of Savings” documents highlighting the valuable services and programs supported by 340B savings and have shared them with their communities and congressional delegations. The sharing of the importance of the 340B program has gone a long way to build program support.

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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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