Inpatient Discharge Prescription Clarification

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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In January 2017, the proposed Mega-Guidance was withdrawn and thus the common understanding continued that both inpatient and outpatient discharge prescriptions were eligible –when written in connection with a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.

About Author

Rich Bucher, JD, RPh, 340B ACE

Pharmacist with experience in pharmacy leadership, compliance, and contracting for a large healthcare organization and for a large regional health plan. This includes practical experience dealing with operational, compliance, and legal issues associated with managing a system-wide 340B Program. Also, over 10 years of legal practice experience, including in health care law and contracting. Rich has presented on 340B and other health care compliance topics at numerous conferences. Rich has conducted many external 340B audits and provided consultation for various covered entity types, including providing onsite support during HRSA audits. Rich is a lead auditor on our 340B independent auditing team, oversees legal and compliance issues, and provides client contract and policy/procedure reviews.

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