DSH Risk, Advocate, and Hope it is not needed, Steps to Terminate

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DSH Risk, Advocate, and Hope it is not needed, Steps to Terminate

 “One-Fourth of 340B DSH Hospitals at Risk of Losing Eligibility Due to Pandemic, Analysis Finds.” This is a shocking headline that recently caught my eye as I was perusing the 340B Report. The article further goes on to explain that an analysis of hospital Medicare cost reports for 2019 and 2020 show that about one out of 10 current 340B sole community hospitals (SCHs) and rural referral centers (RRCs) also are at risk. This is primarily due to COVID-19 pandemic-related changes in patient mix. The DSH calculation is based on inpatient days and for many months during the worst of the pandemic, hospitals had to reduce inpatient admissions. With too few Medicaid or Medicare beneficiaries as inpatients, the DSH calculations could fall below the required 11.75% for DSH, PED, or CAN hospitals, or 8% for SCH or RRC.

Bipartisan legislation has been introduced to protect hospitals from losing their eligibility for the 340B program based on shifts in patient case mix due to the public health emergency.

A group of senators led by Sen. John Thune (R-S.D.) on March 16 introduced S. 773, a bill that would prevent 340B hospitals from losing access to drug discounts if their DSH adjustment percentage drops below the statutory minimum because of COVID-related patient mix changes. The legislation would provide this eligibility protection throughout the public health emergency.

A group of House members led by Rep. Doris Matsui (D-Calif.) on May 13 introduced H.R. 3203, a bill similar to the Senate measure but with expanded eligibility protections. The House bill also applies to: DSH hospitals that enrolled in 340B after the COVID public health emergency began; DSH hospitals that already lost eligibility for the program; and DSH hospitals that had to change their 340B registration status to sole community hospital (SCH) or rural referral center (RRC) to stay in the 340B program.

340B Health summarizes that it supports both measures which, protect hospitals from losing access to 340B discounts during any period for which a hospital’s eligibility is based on a DSH adjustment percentage that was affected by the COVID-19 public health emergency. 340B Health, echoed by Turnkey SpendMend Pharmacy, urges advocacy by contacting your lawmakers. 340B Health has posted an email template that will prepare and send messages to your senators and House member asking for their support. If one of your lawmakers already has cosponsored the legislation, the template will prepare and send a thank-you note to that member of Congress. email template

According to the 340B Report writer Tom Mirga, the legislation’s odds of enactment (mentioned above) are slim unless attached to a higher-profile, must pass bill. So, the risk of 340B Program termination is real, get your voice heard and advocate.

For a few some of you who may already be in the planning stages of 340B Program termination, below are a few things to consider.

Straight from HRSA.gov/OPA/FAQs
Q: If an entity learns it may no longer be 340B eligible, must it notify HRSA?
A: Yes, it is the covered entity’s responsibility to notify the HRSA Office of Pharmacy Affairs immediately if the entity learns it may no longer be 340B eligible.

From Apexus: HRSA FAQ ID: 1373
Last Modified: 05/28/2020

Q:  What actions does HRSA expect an entity to take if it loses 340B Program eligibility?

A:  Covered entities should stop purchasing 340B drugs immediately upon losing eligibility. The entity must complete a termination request on 340B OPAIS and answer the following three questions:
1) The date the entity became ineligible; 2) The circumstances surrounding the loss of eligibility; 3) The last date 340B drugs were purchased. Covered entities should work with the manufacturer to determine the most appropriate method for handling. There may be several options for handling the drug inventory once eligibility is lost. These options will depend upon the specific circumstances but may include transferring the inventory to an associated covered entity site/pharmacy that is still 340B registered, credit/rebill, return, or destruction according to state law. Covered entities should keep auditable records and ensure the process is transparent to manufacturers and wholesalers.

Some Additional Turnkey Spend Mend Pharmacy TidBits to Know When DSH% Drops Below Required Amount:

  • Termination date is the date the MCR is filed with an ineligible DSH%.
  • Notify HRSA in the form of immediate termination on OPAIS.  FAQ 1373 had previously suggested notification in writing, however, this is no longer the case.
  • Notify Wholesaler to put a stop on 340B and WAC accounts. Begin purchasing on the GPO account only. If not subject to GPO prohibition, put a stop on 340B accounts
  • Notify Split Billing vendor (TPA) of termination.  Ask that orders be no longer split.  Begin process of reversal/reclassification which would be best to be done within 60 days post filed cost report (date when DSH dropped) and the time allowed for reclassification.
  • Consider having the IS team stop data transfer to TPA but verify with TPA first.
  • Set up meeting with consultant to discuss accumulator action if needed. (For all 340B Universes)
  • Notify contract pharmacies of termination
  • Notify State(s) of Termination if Carve-In as NPI’s won’t fall off MEF until the following quarter.
  • Work with Revenue Cycle/Business Office to remove all 340B reimbursement modifiers from billing (including Medicaid and Medicare Part B) effective on the MCR file date.

About Author

Jennifer Hagen, PharmD, 340B ACE

Jennifer Hagen joined the Turnkey Pharmacy Solutions team in October of 2016. She has served in various pharmacy leadership positions including Director of Ambulatory Pharmacy Services for CentraCare Health for over 5 years. Dr. Hagen had operational responsibility for Infusion Pharmacy Services, the Health System’s four retail pharmacies, and was responsible for 340B compliance at St. Cloud Hospital, a 489 bed regional medical center. Jennifer has served as a HRSA peer-to-peer mentor for the past two years and has presented numerous times for 340B University and chaired round table events for 340B Health. Jennifer is a member of our 340B independent auditing team. Her perspective involves rural health program administration.

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