By Kristin Fox-Smith and Angela De Ianni

For decades, the 340B drug pricing program has served an important purpose by helping hospitals and other Covered Entities (CEs) receive discounted prices on drugs to offset care provided to vulnerable, underserved populations.

But over the past several years, drug companies have started pushing back on the 340B program, putting restrictions and conditions in place that have threatened to dismantle it altogether. These restrictions are causing significant financial losses for CEs with contract pharmacy relationships.

One such condition has been for CEs to submit their 340B contract pharmacy claims data to drug companies through a third-party contractor called ESP. The goal of ESP was to provide a secure and easy-to-use platform for 340B CEs and pharmaceutical manufacturers to work together to resolve duplicate discounts. Ideally, the CEs submit their claims data, ESP takes the data and submits it to the manufacturer, and pricing is restored to the CE. This has also given CEs the hope that manufacturer inquiries and audits would decrease (or go away altogether) for manufacturers that participate in ESP, given they are receiving all the necessary details related to the 340B dispense on the front end.

Since this structure was put in place, large numbers of CEs have begun submitting data to ESP in an effort to regain some of the past two years’ lost revenue. The process was said to be simple, straightforward, and efficient – but the reality has been quite the opposite.

The entire process of pricing restoration is dependent on communication between the wholesaler, manufacturer, and Third-Party Administrator (TPA), and often takes 12 weeks or more for CEs to see pricing restored. There is also tremendous effort involved in managing communication to keep the process moving forward.

Combine this with the fact that pricing is not restored all at once, but rather manufacturer-by-manufacturer, and the process slows down even further. Meanwhile, CEs need to allocate supplementary resources to manage additional requests and track the delays. Manufacturer lookback dates also vary by manufacturer, making data retrieval and submission even more challenging.

Strategies to help manage 340B challenges

Visante continues to encourage TPAs to develop standard reporting for their CEs to use to allow for easier data extraction, analysis, and submission. While several vendors have made progress in this regard over the last several months, there are still several TPA vendors that are lagging, creating work around processes for CEs that are both time consuming and inefficient.

Furthermore, Visante recommends that CEs consider ways to reduce losses. As losses continue to challenge many CEs, 340B optimization should be considered as an opportunity to decrease revenue loss. Some potential areas to target are referral prescription capture, managing WAC spend, and auditing non-eligible claims to determine ways to make them eligible. Through auditing non-eligible claims, a CE may discover multiple issues that prohibit claims from qualifying, such as:

Settings within the 340B validating process that prohibit claims from qualifying
Outdated prescriber files or non-eligible prescribers writing prescriptions from a 340B eligible area
Clinics not currently captured in the 340B universe
Contract pharmacy opportunities
Referral capture opportunities

Visante’s team of 340B experts, most with 340B ACE credentials, is an industry-leading consulting firm that helps CEs of all kinds to reach their compliance goals, prepare for and successfully complete audits. Our experience and know-how with ESP has helped hundreds of CEs recover funds in a timely manner. We help hospitals and health systems to make the most of their programs and optimize savings. Contact us at solutions@visanteinc.com to talk to one of our team members.

On August 16, President Joe Biden signed the $750 billion health care, tax and climate bill the Inflation Reduction Act (IRA) into law. This followed passage by the Senate through the budget reconciliation process which required votes from all 50 Democratic senators and the Vice President’s tie-breaking vote – since no Republican senators voted in favor of the bill. The measures in the bill are restricted to those that directly change federal spending and revenue, and all elements were subject to review by the Senate parliamentarian who did indeed make some cuts.

With the passage and signing of the IRA, there is now some forward movement toward prescription drug price control. The bill finally recognizes the federal government as the largest purchaser of drugs and includes a measure that allows the federal health secretary to negotiate the prices of certain drugs each year for Medicare. However, the measure applies to only a very limited number of drugs and it won’t take effect quickly.

Under the new provisions, Medicare would be able to negotiate “a fair price” for 10 drugs covered by Medicare Part D starting in 2026. Medicare would select from those drugs with the highest total annual Medicare costs. The negotiated price list would then expand to 15 drugs in 2027 and 2028. In 2029 and subsequent years, 20 more drugs would be added. Medicare will only be allowed to select part B drugs starting in 2028, and a drug would be removed from the list if a generic alternative becomes available.

Overall, to be eligible for negotiation, drugs must have been approved for nine years for small molecule entities and 13 years for biologics. While these changes will have no immediate impact for patients or Medicare spending, it at least opens the door to expanded opportunities to leverage better drug pricing moving forward.

The cost of insulin nationwide has been a critical issue and the bill attempted to cap the price of insulin at $35 per month. However, that was ruled out of order by the Senate parliamentarian, who ruled the cap could apply on Medicare, a government program, but not on private insurance. As a result of that ruling, the Democrats split the measure between Medicare and private insurance, but Republicans ultimately blocked the measure for private insurance.

As part of the “vote-a-rama” of amendments initiated by Republicans, there was also a failed amendment to reintroduce a defunct Trump administration regulation that would have required federally qualified health centers (FQHCs) to make insulin and injectable epinephrine available to patients at or below 340B costs.

The parliamentarian also ruled that a measure that was in the bill to force drug companies to offer rebates if prescription prices outpaced inflation was not totally in line with the rules for budget reconciliation and could only apply to Medicare patients – but not those with private insurers. This provision is expected to begin in October for Part D drugs and in January 2023 for Part B drugs.

The bill puts a cap of $2,000 on out-of-pocket prescription drug costs for people on Medicare, effective in 2025. While this is a positive move, it also offers no immediate relief to patients struggling with current out-of-pocket prescription drug costs.

Finally, there is also a three-year extension on healthcare subsidies in the Affordable Care Act originally passed in a pandemic relief bill last year, intended to help keep premiums for eligible enrollees at $10 per month or lower and helping millions of Americans avoid spikes in their health care costs.

For decades, the 340B Drug Pricing Program has served an important purpose by helping hospitals and other covered entities receive discounted prices on drugs to offset care provided to vulnerable, underserved populations.

But over the past few years, drug companies have started pushing back on the 340B program by putting restrictions and conditions in place that have threatened to dismantle it altogether. These restrictions are causing significant financial losses for covered entities with contract pharmacy relationships.

One such condition has been for covered entities to submit their 340B contract pharmacy claims data to drug companies through a third-party contractor called 340B ESP. The goal was to provide a secure and easy-to-use platform for 340B covered entities and pharmaceutical manufacturers to work together to resolve duplicate discounts. Ideally, the CEs submit their claims data, 340B ESP takes the data and submits it to the manufacturer, and pricing is restored to the covered entity. This has also given CEs the hope that manufacturer inquiries and audits would decrease (or go away altogether) for manufacturers that participate in 340B ESP, given they are receiving all necessary detail related to the 340B dispense on the front end.

Since this structure was put in place, large numbers of CEs have begun submitting data to 340B ESP in an effort to regain some of the past two years’ lost revenue. The process was intended to be simple, straightforward, and efficient – but the reality has been quite the opposite.

340B ESP Submission Challenges

The 340B ESP portal is supposed to provide general information regarding the “restoration of 340B pricing within 10 business days,” but this has been a gross understatement compared to the actual amount of time it has taken for CEs to see pricing restored. This is not the fault of only 340B ESP, but all the parties necessary to restore pricing in a timely manner.

The entire process of pricing restoration is dependent on communication between the wholesaler, manufacturer, and TPA, and it is often taking 12 weeks or more for CEs to see pricing restored. There is also tremendous effort involved for the covered entity in managing communication to keep the process moving forward.

Combine this with the fact that pricing is not restored all at once but rather manufacturer-by-manufacturer, and the process slows down even further if covered entities don’t have the resources to manage and track. Manufacturer lookback dates also vary by manufacturer, making data retrieval and submission even more challenging.

Factors of 340B ESP Submission Challenges

So what is ultimately causing these challenges? There are a number of factors at play.

First is the volume of submissions, as so much data is being submitted that 340B ESP simply cannot keep up with its proposed timeline. But this is partly due to the fact that there is little effort being made to escalate or fast-track communication, largely on the part of wholesalers and manufacturers. CEs are continually reaching out to wholesalers who do not show a congruent level of urgency.

The manufacturers and wholesalers are simply not as incentivized financially to speed up the process, which is undoubtedly a root cause of the issue.

What Covered Entities Can Do

While the team at Visante has witnessed dozens of success stories from CEs seeing pricing restored several months post-submission, it has not come without its challenges. It is important for CEs to appoint appropriate resources and time to allow the ongoing communication and research necessary for pricing to be restored in a timely manner.

While many contract pharmacy chains early on had not allowed their covered entity partners to share data with 340B ESP, this has largely been reversed. However, there are still several contract pharmacy chains that are not allowing CEs to share data with 340B ESP, with the warning that doing so would be a violation of their existing contract and relationship. This leaves these covered entities in a vulnerable position and continues to fragment their data submission process and the ability to regain lost revenue.

For CEs that have been without contract pharmacy revenue from all the impacted manufacturers for some time that have recently made a decision to move ahead with 340B ESP, these wrinkles create an additional challenge after the years of uncertainty and revenue loss they have faced.

How Visante Can Help

In the face of these challenges, many covered entities are left wondering how and whom to communicate with. Many lack the resources to perform the follow-up necessary to see their pricing restored.

Visante can provide resource support and can help open the lines of communication, extending the bandwidth of CEs’ internal teams while leveraging industry connections to help make follow-up more effective.

We work with all types of covered entities to support them in making the most of their 340B program while avoiding duplicate discounts and seeing pricing restored in the manner they deserve.

Join us for an upcoming 30-minute webinar on Monday, March 7 at 2 PM ET. Kristin Fox-Smith will provide an update about pharmaceutical manufacturer actions to restrict 340B Contract Pharmacy medication access and opportunities via ESP to change this dynamic.

The 340B Drug Pricing Program has served an important purpose for decades, helping hospitals and other covered entities receive discounted prices on drugs for vulnerable, underserved populations. 340B not only provides these groups with a discounted price for important drugs, but it also helps covered entities manage rising prescription drug costs.

The list of covered entities capable of registration for the 340B program includes six categories of hospitals and 10 categories of non-hospitals as listed below.

Hospitals
- Disproportionate share hospitals
- Children’s hospitals and cancer hospitals exempt from the Medicare prospective payment system
- Sole community hospitals
- Rural referral centers
- Critical access hospitals
Non-hospitals
- Federally qualified health centers (FQHCs)
- FQHC “lookalikes”
- State-operated AIDS drug assistance programs
- Ryan White Comprehensive AIDS Resources Emergency (CARE) Act clinics and programs
- Tuberculosis clinics
- Black lung clinics
- Title X family planning clinics
- Sexually transmitted disease clinics
- Hemophilia treatment centers
- Urban Indian clinics
- Native Hawaiian health centers

As important as 340B is and continues to be for these organizations, it has come under fire in recent years, primarily by drug manufacturers. This has forced covered entities to make tough decisions as it pertains to submitting 340B contract pharmacy claims data. Here is a closer look at the issue and what it ultimately means for covered entities today.

340B pushback from drug manufacturers

Over the past few years, drug companies have started pushing back on 340B by putting restrictions and conditions in place that threaten to dismantle the program and that are causing significant financial losses to covered entities with contract pharmacy relationships.

One of these conditions is for covered entities to submit their 340B contract pharmacy claims data to drug companies through a third-party contractor called ESP. The primary goal of this data submission is to eliminate duplicate discounts for 340B drugs.

Given that a covered entity may buy drugs at a discounted rate and dispense those products to a patient that does not qualify, it is critical to manage the duplicate discount prohibition. ESP provides one avenue that several manufacturers appear to feel confident with.

How does ESP work?

Independently, State Medicaid programs and pharmaceutical manufacturers lack the information necessary to resolve duplicate discounts. 340B ESP provides a secure and easy-to-use platform for 340B covered entities and pharmaceutical manufacturers to work together to resolve duplicate discounts without the hassle of ongoing dispute resolution.

Once submitted, ESP will take all your data and submit it to the pharmaceutical manufacturer on your behalf. 340B ESP enables covered entities to upload de-identified 340B claims data linked to Medicaid and commercial rebate data provided by pharmaceutical manufacturers to identify duplicate discounts.

A large number of covered entities resisted ESP for some time but are now beginning to see it as a temporary resolution – while still remaining hopeful that these manufacturer restrictions are eventually considered unlawful/illegal and are ultimately reversed.

What this means for you

HRSA wants to ensure hospitals and covered entities are providing discounts only to patients that meet the definition of 340B eligibility. This leaves these organizations with essentially two choices:

Submit data to ESP to open up restricted contract pharmacy networks.
Do not submit data to ESP.

If you decide to submit data to ESP, Visante can work closely with you to make the process simpler and more efficient. If you decide not to submit to ESP, Visante can still work with you to find other ways to optimize your 340B program.

Visante is here to help

Visante works with all types of covered entities to support them in making the most of their 340B program while avoiding duplicate discounts. We routinely perform external audits to identify compliance gaps and also provide internal oversight for organizations that need dedicated resource support.

Join Kristin Fox-Smith, MPA, 340B ACE, as she discusses why a covered entity should partner with Visante for their 340B program audits.

Written by: Kristin Fox-Smith (Senior Vice President) and William Wood (RPh, Senior Director)

Those of us actively engaged in the 340B Program are well aware of the scores of issues faced by participating hospitals and it’s not surprising they account for an exceptionally large percentage of all HRSA audits. But, what about other types of Covered Entities (CEs), such as the Specialty Clinics and Grantees? These important CEs are also subject to HRSA audits and face the same severe penalties for non-compliance, including the possibility of repayments to manufacturers.

Over the last decade, Visante‘s industry leading 340B Program Assessment and Integrity Audit Readiness has been successfully implemented in virtually all types of grantees. As a result of our experience in this specialized area, we are pleased to provide our NEW “Need to Know” series of key takeaways for grantees.

We plan to offer this “Need to Know” series over a period of a few months. This schedule will give us the opportunity to add new information as changes in the 340B Program dictate.

HINT: You may want to start by reading our Visante Insider blog titled Manufacturers Create Chaos For the 340B Program from August 21.

Ready? Here is our first “Need to Know” blog for new grantees.

Need to Know #1: You’re new!

Okay, you know that. What else do you know and what do you need to know?

What do you know about the 340B Program? More specifically, what do you know about grantees such as yours?

What do you know about your role? Are you:

An Authorizing Official (AO)? If so, do you know your role and responsibilities?
A Primary Contact (PC)? Do you fully understand your role and responsibilities and how they differ from the AO?
A healthcare provider? How do the 340B rules and regulations impact your role?
A board member of your newly eligible organization? Did you even know that your organization is newly enrolled in the 340B Program?
One of the many other 340B stakeholders?
Compliance
Accounting
Billing
Medical records
Legal

As you can see, there is a lot that a 340B newcomer needs to know. Undoubtedly, you had to learn a lot to enable your covered entity to enroll. Is there more? You bet there is, keep reading!

Takeaway: Newcomers to the 340B Program have a lot to learn. Visante can help!

Need to Know #2: The grant

Non-hospital types of organizations include a variety of health centers, Ryan White HIV/AIDS Program Grantees, and several types of specialized clinics. Some of them receive direct funding while others receive grants. These organizations will be referred to collectively as grantees as they all have similar 340B requirements.

ALL grantees may utilize 340B drugs only within the scope of their grant.

This leads us into Need to Know #2: The grant

Have you read your grant? What is the scope of your grant? For some types of grantees this may be quite limited and easy to define. For others it may not be so straight forward.

A Comprehensive Hemophilia Treatment Center, for example, is expected to provide optimal care using a multi-disciplinary team approach that provides accessible, family-centered, continuous, comprehensive, coordinated and culturally effective care for individuals with hemophilia and other bleeding disorders. As such, the only 340B drugs that would be included in the scope of their grant would be antihemophilic factor VIII or factor IX or other drugs to treat bleeding disorders.

On the other hand, grantees such as Federally Qualified Health Centers (FQHC)

provide primary care services in underserved areas. Primary care services encompass many different drugs which makes utilization within the scope of the grant large. Referrals to outside specialists could even qualify, assuming that the FQHC maintains the appropriate auditable records.

What is the term of your grant? The HRSA Notice of Award will specify a “project period” and will include several terms and conditions, including reporting requirements. What is the grant number? This can be found on Line 4B of the HRSA notice of award. Does it match the grant number shown for your organization of the Office of Pharmacy Affairs Information System (OPAIS)?

What is OPAIS? Keep reading, we will discuss that a bit later.

If your entity is selected for a HRSA 340B integrity audit the grant will be among the documents requested. Do you know where it is and how to obtain it?

Takeaway: Grantees may utilize 340B drugs only within the scope of their grant. Do you fully know the scope of your grant?

Need to Know #3: Navigating OPAIS

What is this OPAIS we mentioned above? OPAIS stands for Office of Pharmacy Affairs Information System.

The 340B registration and pricing databases are collectively known as the 340B Office of Pharmacy Affairs Information System (340B OPAIS). Authorized users of 340B OPAIS must have a user account with appropriate roles and permissions granted by HRSA. The functions a user can perform are determined by the user’s role. Until the user logs in, the user may only access the Public User Guides, Public Search, Reports/Files, and Login functions.

Authorized users may use OPAIS to initiate Covered Entity/Manufacturer registrations, change requests, or to respond to annual recertification requests.

Public users only have access to a limited selection of the system’s capabilities which include a variety of search criteria to search for Covered Entities (CEs), Contract Pharmacies (CPs), and Manufacturers (MFRs). Public users can also review and download a variety of available reports and files.

Now that you know what the OPAIS is, why do you need to understand it?

Among the findings that HRSA may issue following an audit is one for failure to maintain the accuracy of the covered entity’s information as it appears on the OPAIS. This can occur for things as seemingly minimal as incorrect entries for address, site ID, and name for offsite outpatient facilities. HRSA has been known to issue this finding even when the address for a contract pharmacy shown on the OPAIS differed from that on the contract by a little as a suite number!

A review of all of your OPAIS information should be part of your internal audit process and should include verification of:

the name of your entity including address and shipping addresses, type of entity, and 340B ID number
your grant number
your AO and PC including their contact information
your Medicaid billing status including whether you are carved in or carved out and all NPI and Medicaid billing numbers if you are carved in.
If you are carved in you MUST also check the Medicaid Exclusion File (MEF) to verify the NPI and Medicaid billing numbers for all participating sites
ALL contract pharmacies including proper addresses

Takeaway: Review of the OPAIS is a task that is fairly simple to accomplish. Don’t risk a HRSA audit finding for something this easy!

Written by: Kristin Fox-Smith (Senior Vice President), Douglas E. Miller (PharmD, Senior Director), William Wood (RPh, Senior Director)

In recent weeks, several drug manufacturers announced plans to discontinue offering 340B drugs to contract pharmacies. These actions, in addition to plans by some manufacturers to require Covered Entities to upload contract pharmacy claims to a new and unproven vendor’s software platform, have created new challenges to 340B Covered Entities already burdened by the COVID-19 pandemic.

It comes as no surprise to those of us who have worked with the 340B program for many years that these actions began almost immediately after the Health Resources and Services Administration (HRSA) stated that HRSA’s power to enforce 340B guidance is limited.

At the recent 340B Coalition Virtual Conference; Admiral Krista Pedley, Director of HRSA’s Office of Pharmacy Affairs (OPA) stated: “HRSA’s enforcement ability is limited, as guidance does not provide HRSA appropriate enforcement capability.” This statement came shortly after the U.S. House Appropriations Committee turned down HRSA’s request to give it broad regulatory authority over the 340B program.

Was HRSA’s announcement that its authority is limited what the drug manufacturers have been waiting for? The following statement from the highly regarded “340B Report” seems to think so: “The wave of drug manufacturer activity all appears to trace back to HRSA’s position that it cannot enforce its 340B program guidance absent a clear violation of the 340B statute.”

The first “salvo” was fired by Merck in late June. Merck issued strongly worded “requests” that 340B Covered Entities start submitting a wide array of 340B contract pharmacy claims data as part of what the company calls a new “integrity initiative.” Part of Merck’s letter involves requests for commercial, Medicare Part D, and Medicaid managed care claims data that are beyond the scope of the 340B statute. In the letter, Merck asked Covered Entities to begin uploading contract pharmacy claims data every two weeks into a new and unproven vendor’s software platform, 340B ESP platform of Second Sight Solutions. Second Sight Solutions is a prescription drug information technology company that collects 340B contract pharmacy claims data on manufacturers’ behalf.

Although the company letter was described as a request, Merck said it might take “less collaborative, and substantially more burdensome” action against uncooperative entities. It asked entities to begin supplying the requested data by August 14.

Those of us that follow 340B closely might have heard of 340B ESP’s founder, Aaron Vandervelde. As Managing Director of Berkeley Research Group (BRG), he has written or co-written articles about the 340B program on behalf of Pharmaceutical Research and Manufacturers of America (PhRMA). He has also done work for the drug-company-led advocacy group AIR 340B and the trade association for private practice oncologists Community Oncology Alliance (COA). PhRMA, AIR 340B, and COA cite Vandervelde’s research in arguments that hospitals benefit from the 340B program, but low-income and uninsured patients do not, and that the program raises the cost of cancer care.

The next drug manufacturer to announce a similar plan was Sanofi. The letter sent from Sanofi to covered entities stated: “Sanofi will require 340B covered entities to submit claims data for 340B prescriptions of Sanofi products filled through its contract pharmacies.” The letter goes on to say “340B covered entities that elect not to provide 340B claims data will no longer be eligible to place Bill To / Ship To replenishment orders for Sanofi products dispensed through a contract pharmacy.”

The letter adds, beginning October 1, entities must submit the requested data to 340B ESP, the same contractor Merck is using, every two weeks. HRSA’s only comment to date states it “is aware of Sanofi’s requests to covered entities and is working to better understand their plan.” We hope to receive updates from HRSA in the near future as it relates to these types of manufacturer changes.

Yet another drug manufacturer, Novartis, has now announced that it intends to begin collecting and analyzing 340B Covered Entities’ contract pharmacy claims data to mitigate duplicate 340B drug discounts and “ineligible rebates.” As recently as August 18, Novartis declined to address reports that it is joining Merck and Sanofi as clients of Second Sight.

In a similar policy release on August 17, AstraZeneca sent letters to 340B Covered Entities and their wholesalers informing them that, effective October 1, it “only will process 340B pricing through a single contract pharmacy site for those covered entities that do not maintain their own on-site dispensing pharmacy.” In the event a Covered Entity does not have an owned outpatient pharmacy, they will need to make a selection of only one contract pharmacy to limit their bill to/ship to arrangements.

So far HRSA’s only comment has been “We are in the process of reviewing the information.”

In addition to the above-named manufacturer actions; AstraZeneca and Eli Lilly announced restrictions to sales of their products to contract pharmacies.

Lilly took the first step when it said it would only allow contract pharmacies to get discounted units of Cialis if a 340B provider did not have an in-house pharmacy.

Following the Lilly announcement, AstraZeneca informed Covered Entities that, starting Oct. 1, it no longer will offer 340B pricing to Covered Entities with on-site outpatient pharmacies for any of its drugs dispensed through contract pharmacies.

In response to Lilly’s action, 340B advocacy organization 340B Health sent Lilly a letter stating that “we believed its policy change was contrary to the 340B statute” and requested a meeting with company officials to discuss further. Lilly declined a follow-up meeting and insisted that it is on firm legal ground in cutting off access to program discounts through contract pharmacies.

AstraZeneca said it believes the change is consistent with HRSA guidelines and operative 340B statutory provisions in a written statement.

An article published in Modern Healthcare on August 19 made the following statement: “Pharmaceutical companies appear to be testing how far they can challenge sub regulatory guidance issued by the Health Resources and Services Administration that allows 340B providers to receive discounts for working with multiple contract pharmacies.”

As we stated above, it does appear obvious that the drug manufacturers are indeed testing how far they can go in challenging HRSA’s lack of statutory enforcement authority.

COVID-19 implications for 340B

The Secretary of the Department of Health and Human Services (HHS) Alex Azar, declared a public health emergency under the Public Health Service Act (PHSA) on January 31, 2020, to aid the nation’s healthcare community in responding to 2019 novel coronavirus. The declaration stated in part, “The emergency declaration gives state, tribal, and local health departments more flexibility to request that HHS authorize them to temporarily reassign state, local, and tribal personnel to respond to 2019-nCoV if their salaries normally are funded in whole or in part by Public Health Service Act programs. These personnel could assist with public health information campaigns and other response activities.”

On March 13, 2020, the President declared a public health emergency under the National Emergencies Act, a move that frees up billions of dollars in federal funds and sets the Federal Emergency Management Agency in motion.

As a result of the COVID-19 pandemic and concerns voiced by many Covered Entities, HRSA issued the following statement: HRSA understands that many 340B stakeholders are concerned about the evolving impact of the COVID-19 pandemic. The circumstances surrounding this public health emergency may warrant additional flexibilities, especially to affected 340B covered entities. To the extent a 340B stakeholder has a specific circumstance where they believe their COVID-19 response may affect their compliance or eligibility in the 340B Program, the stakeholder should contact the 340B Prime Vendor at 1-888-340-2787 (Monday – Friday, 9 a.m. – 6 p.m. ET) or apexusanswers@340bpvp.com . The 340B Prime Vendor will coordinate with HRSA to provide technical assistance and evaluate each issue on a case-by-case basis. Below are general flexibilities that covered entities should adhere to during this public health emergency.

In response to the COVID-19 pandemic, HRSA has issued several positions of flexibility including:

GPO
Record keeping
Enrollment
Telehealth
Temporary expansion sites
340B audits

GPO

With respect to the GPO Prohibition, HRSA has issued the following statement:

HRSA is unable to waive the 340B statutory requirements, specifically with respect to the Group Purchasing Organization (GPO) prohibition pursuant to section 340B(a)(4)(L)(iii) of the Public Health Service Act. Hospitals that are subject to the GPO prohibition include disproportionate share hospitals, children’s hospitals, and freestanding cancer hospitals.

These hospitals may not use a GPO for covered outpatient drugs at any time, including private label products. However, if a hospital is unable to purchase a covered outpatient drug at the 340B ceiling price, the covered entity should first try to obtain the drug at wholesale acquisition cost (WAC). If it is also unable to purchase the product at WAC due to shortages, a hospital may use a GPO (or GPO private label products). Hospitals do not need to report this information to HRSA under the COVID-19 public health emergency. The covered entity should address these situations in their policies and procedures, and it must continue to keep auditable records. This is a significant change, and appropriate documentation and record keeping is critical for compliance success in regard to this allowance.

Record Keeping

In a webinar presented by PPSV on April 3, the following statement was made concerning Relaxed Documentation Standards for Patient Definition:

OPA will accept an abbreviated medial record, self-reporting of patient medical and insurance information, and contact information for volunteer health workers to support patient relationship
These relaxed documentation standards apply to all health care visits, not just telehealth

A webinar presented by 340B Health on April 2, 2020, discussed several recent HRSA audits that indicate more flexibility in defining the location where a prescription is written.

In addressing COVID-19 and Patient Definition it stated:

Covered Entities should address definition of a 340B patient during an emergency in Policies & Procedures
- - Care is being provided by a health care professional employed by the hospital or under a contractual or other relationship or arrangement (e.g. referral for consultation); and
  - The hospital owns the medical record or has joint access to the medical record with the professional providing the care
If an abbreviated health record such as a single form or note page is maintained during a public health emergency, the record, at a minimum:
- - Identifies the patient
  - Records the medical evaluation, including any testing, diagnosis, or clinical impressions, and the treatment provided or prescribed

In addition, it stated that HRSA:

Appears to be more flexible around location where prescription is written
May not be required to be written on the premises; not tied to receiving referral notes from non-hospital clinics
The covered entity must still show:
- - Patient received services at the hospital documented in the medical record
  - Hospital owns, or has access to, the record that documents the care
No change related to infusion orders o
May be written by outside providers; hospital does not need to have access to records maintained by outside providers but must administer the infusion to the patient and document the procedure

Enrollment

A 340B Health webinar titled COVID-19 Webinar 340B Flexibilities on April 7 discussed several new HRSA flexibilities related to the COVID-19 pandemic. The webinar addressed several enrollment flexibilities including:

HRSA, upon request and review, is allowing some entities to immediately enroll in 340B. Case-by-case requests are to be submitted to the 340B Prime Vendor Apexus at 1-888-340-278 for:

Immediate registration of facilities and contract pharmacies
Temporary moving of clinics from within a hospital’s four walls

The request must include

confirmation that the need for immediate registration is related to the hospital’s response to COVID-19
a detailed explanation of the urgency for immediate registration
a specific description of what the facility will be used for
and confirmation that the facility is listed as reimbursable on the Medicare Cost Report and meets all other 340B program requirements

Telehealth

The HRSA website, under the COVID-19 Resources section, provides the following statement: HRSA understands that the use of technology in health care delivery during this time is critical, and that telemedicine is merely a mode by which the health care service is delivered. For the 340B Program, HRSA recommends that covered entities outline the use of these modalities in their policies and procedures and continue to ensure auditable records are maintained for each eligible patient dispensed a 340B drug.

Although HRSA has previously stated that telemedicine is merely a mode by which the health care service is delivered, there have recently been significant changes to telehealth rules and regulations in response to the COVID-19 pandemic that offer increased flexibility to 340B covered entities.

Specific new advantages include:

Waiving Medicare coverage for telehealth services regardless of whether patient is in a rural area
Waiving the “originating site” requirement, meaning services can be provided to beneficiaries in any healthcare facility, as well as in their home.

New Telehealth covered services now include:

Emergency department visits
Observation day management
Critical care
Home visits
Intensive care
Radiation treatment management
Established Patient Requirement Eliminated for:
- Remote patient monitoring
- Telephone calls and virtual check-ins
- Digital e-visits
Medicare pays the same amount for telehealth services as it would if the service were furnished in person.

Visante strongly recommends that all Covered Entities be vigilant to HRSA’s recommendation that Covered Entities outline the use of these modalities in their policies and procedures and continue to ensure auditable records are maintained for each eligible patient dispensed a 340B drug.

Temporary Expansion Sites

The 340B Health webinar referenced above also discussed recent CMS guidelines to permit hospitals to provide inpatient and outpatient services in locations beyond their existing walls, including:

Ambulatory surgical centers
Free-standing emergency departments
Inpatient rehabilitation hospitals
Hotels and dormitories

Notably, CMS considers services provided in temporary expansion sites to be “hospital based.”

340B Audits

HRSA has made the following statement regarding 340B audits: Based on the current COVID-19 pandemic, HRSA is moving towards conducting 340B Program covered entity audits remotely (virtually) for the next several months while we monitor and assess the impact on the covered entities. If a covered entity has specific questions regarding an audit once it has been engaged, please contact the Bizzell Group (the 340B audit contractor) at 340baudit@thebizzellgroup.com who will coordinate with HRSA based on the specifics of the request. HRSA will continue to monitor the COVID-19 response and provide updates accordingly.

Due to the time constraints encountered in dealing with the COVID-19 pandemic, 340B Health requested postponement of the 340B compliance audits. HRSA responded stating:

Onsite audits will be changed to virtual review
Case-by-case accommodations may be granted as requested:
- - postponement
  - additional preparation time

Legislative issues

An article in the May 15 issue of Modern Healthcare reported that some safety-net hospitals are concerned that delays of non-urgent procedures due to the COVID-19 pandemic could make them ineligible for the 340B drug discount program.

The article stated that hospitals are concerned drastic changes in the number of patients treated could alter their payer mixes and temporarily change their 340B eligibility. Obviously, the opposite effect could also occur. Depending on the long-term economic impacts of the pandemic, there is also a chance that more facilities might become eligible if their Medicaid patients increase.

Shahid Zaman, a principal policy analyst at America’s Essential Hospitals, stated “HRSA has some discretion over enforcement. So far, the agency has only said that hospitals concerned about their eligibility should reach out to Apexus, the 340B Prime Vendor, for technical assistance on a case-by-case basis.”

The hospital demands have gained some traction with lawmakers. Sen. Ben Sasse (R-Neb.) in April introduced a bill to pause 340B redeterminations, and a bipartisan group of 121 House lawmakers asked congressional leadership to give hospitals extra flexibility in the event their payer mixes change. However, the proposal was left out of the House Democrats’ fifth COVID-19 legislative package.

Summary

The COVID-19 pandemic has resulted in several flexibility changes that affect 340B covered entities. These changes have been made by both HRSA and CMS.

While the changes may certainly be beneficial to covered entities, Visante cautions ALL TYPES of covered entities that such changes are NOT permanent. The pandemic crisis that created the need for many flexibilities will end at some time. Will the flexibilities also end? Will there be a period during which some flexibilities may be terminated while others continue? Time will tell.

Visante strongly suggests 340B Covered Entities understand that at some point rules and guidelines made more flexible will revert to those in effect prior to the COVID-19 pandemic. Visante also urges Covered Entities to address all of the new flexibility situations in their policies and procedures and to continue to maintain auditable records.

References:

340B Drug Pricing Program COVID-19 Resources

HRSA website March 2020 FAQ

Telehealth and Covid-19 PPSV Webinar April 3, 2020

340B Health Audit Trends Webinar April 2, 2020

340B Health COVID-19 Webinar May 7, 2020 340B Flexibilities

Your 340B Report for Thursday April 16, 2020

Modern Healthcare May 15, 2020

Surprise move by HRSA creates expedited 340B pathway for new provider-based off-site locations

In a surprise and significant move, 340B Health announced that according to information they have received from HRSA, hospitals will no longer have to wait until new provider-based off-site locations appear on a filed Medicare cost report (MCR) to be eligible to participate in the 340B program. This change would materially impact hospitals time to use 340B drugs for eligible patients in those locations and could reduce that time by up to 22 months, which would create valuable savings to help support the care of their most vulnerable patients.

Under this change, HRSA is allowing hospitals to consider patients 340B-eligible in new locations of the hospital that are reimbursable under Medicare cost reporting rules, even if the new location has not yet appeared on a filed MCR. This move supports and is consistent with HRSA’s focus on the statutory meaning of “patient,” as Medicare considers such individuals to be patients of the hospital even though they have not yet appeared on a filed MCR.

HRSA will continue to require that hospitals register these new off-site locations with the Office of Pharmacy Affairs Information System (OPAIS) once they have appeared on a filed MCR. Previously, use of 340B in a provider-based clinic that had not yet appeared on a filed MCR risked receiving a diversion finding in a HRSA audit. 340B Health has indicated that it is their understanding that hospitals no longer are at risk of receiving a diversion finding in such circumstances if they outline those situations in their policies and procedures and maintain auditable records. With this change, Visante recommends that 340B hospitals using this new opportunity under these new HRSA provisions make sure that they are auditing sufficient numbers of claims from these new locations to demonstrate full compliance with all 340B program requirements including that the hospital maintain a record of the patient’s care, maintain a relationship (employment, contractual, or other arrangement) with the health care professional treating the patient, and maintain responsibility for the patient’s care.

340B hospitals should address the use of 340B drugs in new provider-based outpatient clinics and services that are not included in the most recently filed MCR and include language in their policies and procedures that explains why patients seen in these locations are considered to be eligible patients of the hospital as outlined in the 1996 guidance (e.g., the outpatient department meets Medicare provider-based rules to be treated as part of the hospital). If a wholesale distributor will not ship 340B drugs to locations that are not registered on OPAIS, a hospital may need to ship those orders to a registered “ship to” location of the hospital and redistribute them to the eligible locations where they are needed for eligible patients. If this is the case, hospitals should maintain clear and auditable records of these purchases and transfers.

While this change will certainly help address COVID-19 pressures It is important to note that this change is intended to continue in effect after the public health emergency ends. We understand that HRSA and Apexus will update their FAQ pages to address this new information and hospitals should watch for this change in guidance documentation.