HRSA releases 340B Program 'mega guidance': 18 key points

HHS' Health Resources and Services Administration has released long-awaited guidance on the 340B Drug Pricing Program.

The 340B Drug Pricing Program — which has stirred up considerable controversy in recent years — allows certain safety-net healthcare organizations to purchase outpatient drugs at discounted prices.

HRSA's 90-page guidance on the program was made available for public inspection Thursday and is scheduled to be formally published in the Federal Register Aug. 28. There will be a 60-day comment period, with comments due on or before Oct. 27.

Here 18 things to know about HRSA's guidance.

1. The guidance addresses a broad range of topics within the 340B Program, including the definition of patient, contract pharmacy compliance requirements, hospital eligibility criteria and eligibility of off-site outpatient locations.

Covered entities
2. Under the guidance, all off-site outpatient facilities and clinics not located at the same physical address as the parent hospital covered entity will be listed on the public 340B database and are able to purchase and use 340B drugs for eligible patients if the hospital-covered entity provides its most recently filed Medicare cost report demonstrating the following:

  • Each of the facilities or clinics is listed on a line of the cost report that is reimbursable under Medicare; and
  • The services provided at each of the facilities or clinics have associated outpatient Medicare costs and charges.

3. HHS is seeking comments on alternatives to demonstrating the eligibility of an off site outpatient facility or clinic.

Individuals eligible to receive 340B drugs
4. Section 340B of the Public Health Service Act prohibits covered entities from reselling or transferring drugs purchased under the 340B Program to individuals who are not patients of the covered entity.

5. HHS is proposing a clarified definition of patient for purposes of the 340B Program. Under the proposed guidance, an individual is considered a patient of a covered entity if the following six conditions are met:

  • The individual receives a healthcare service at a facility or clinic site that is registered for the 340B Program and listed on the public 340B database.
  • The individual receives a healthcare service provided by a covered entity provider who is either employed by the covered entity or is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider.
  • An individual receives a drug that is ordered or prescribed by the covered entity provider as a result of the services described in the previous point.
  • The individual's healthcare is consistent with the healthcare service or range of services designated in the federal grant, project, designation or contract.
  • The individual's drug is ordered or prescribed pursuant to a healthcare service that is classified as outpatient.
  • The individual's patient records are accessible to the covered entity and demonstrate that the covered entity is responsible for care.

6. HHS is proposing to clarify when a covered entity can re-enroll in the 340B Program once removed for violation of an eligibility requirement, including the requirement not to use a group purchasing organization.

7. Under the proposed guidance, a covered entity removed from the program would be able to re-enroll during the next regular enrollment period after it had satisfactorily demonstrated to HHS that it will comply with all statutory requirements moving forward and is in the process of offering repayment to affected manufacturers, if necessary.

8. HHS is specifically seeking comments on what type of information a covered entity would submit to HHS to demonstrate compliance to re-enroll in the 340B Program.

GPO prohibition
9. In its proposed guidance, HHS offers clarification on the group purchasing organization prohibition for certain covered entities.

10. HHS is proposing that an off-site outpatient facility which is not participating or listed on the public 340B database is able to access outpatient drugs through a GPO as long as that facility has a purchasing account separate from that of any 340B enrolled site, and that facility ensures GPO-purchased drugs are never provided to outpatients of the hospital or other care sites enrolled in the program.

11. HHS is proposing to recognize an exception to the GPO prohibition for hospitals that cannot access a drug at the 340B price or at wholesale acquisition cost to prevent disruptions in patient care.

12. The guidance states that HHS will consider a hospital in compliance with the statute if a hospital-covered entity that resorts to using a GPO for covered outpatient drugs in this circumstance documents the facts surrounding the purchase and provides HHS with the name of the drug in question, the manufacturer and a brief description of the attempts to purchase the drug at the 340B price and the wholesale acquisition cost price prior to purchasing the drug through a GPO.

Maintenance of auditable records
13. HHS is proposing a record retention standard for all 340B Program records for a period of not less than five years, which HHS believes appropriately balances the need for a covered entity to document its compliance with program requirements and the effort and expense required to maintain records for an extended period of time.  

Compliance with statutory requirements
14. HHS is proposing compliance mechanisms for covered entities that contract with pharmacies to dispense 340B drugs.

15. An annual review and audit of contract pharmacy operations will provide covered entities a regular opportunity to review and reconcile pertinent 340B patient eligibility information at the contract pharmacy and help prevent diversion, according to the guidance.

16. As an additional compliance mechanism, covered entities should compare their 340B prescribing records with the contract pharmacy's 340B dispensing records at least quarterly.

Multiple 340B discounts and rebates
17. HHS is proposing that no covered entity may obtain 340B pricing on a drug purchased by another covered entity at or below the 340B ceiling price.

Notice and hearing for noncompliance
18. HHS is proposing a notice and hearing process under which a covered entity has the opportunity to respond to adverse audit findings and other instances of noncompliance or to respond to the proposed loss of 340B Program eligibility.

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