In early June, HRSA quietly updated several FAQs on its website and its contractor for the 340B Prime Vendor Program. One of the new questions that was added could make a big difference to covered entities in terms of 340B eligibility for offsite locations (often referred to as “child sites”). The update means that 340B hospitals may use 340B drugs at certain offsite locations before such locations are reported on hospitals’ most recently filed Medicare Cost Report (MCR) and registered on the 340B Office of Pharmacy Affairs Information System (OPAIS).
The question reads:
“Q: Are hospital covered entities able to register offsite, outpatient facilities before being listed as reimbursable on their Medicare Cost Report?
A: In order to register for the 340B Program and be listed on the 340B Office of Pharmacy Affairs Information System (340B OPAIS), HRSA must first verify that the offsite, outpatient facility is listed as reimbursable on the hospital’s most recently filed Medicare Cost Report and has associated outpatient costs and charges as outlined in HRSA’s 1994 Outpatient Hospital Facilities Guidelines.
HRSA notes that for hospitals who are unable to register their outpatient facilities because they are not yet on the most recently filed Medicare Cost Report, the patients of the new site may still be 340B eligible to the extent that they are patients of the covered entity. These situations should be clearly documented in the covered entity’s policies and procedures. In addition, a covered entity is responsible for demonstrating compliance with all 340B Program requirements and ensuring that auditable records are maintained for each patient dispensed a 340B drug.”
What does this mean for covered entities?
Until now, covered entities were required to file their offsite, outpatient facilities on their MCR, and then wait – sometimes up to 22 months – before that site was registered with CMS so that it would be 340B eligible and they could begin receiving savings from the 340B program.
According to this new FAQ, that is still the case, with one small but significant change. Now, even though it may still be more than a year before the offsite, outpatient facility is officially registered as a 340B site, patients treated at the offsite location may still be 340B eligible.
The result is that, if the covered entity can provide adequate documentation that those patients are patients of the covered entity, the hospital can prescribe drugs that are purchased at the discounted 340B rate, thereby allowing the covered entity to reap the benefits of 340B savings far sooner than previously possible. For rural hospitals and small, offsite clinics treating indigent patients, collecting those saving earlier can mean the difference between keeping doors open to serve vulnerable populations or not.
In reviewing HRSA’s FAQ and information from the 340B Prime Vendor Program resource center, a few questions remain: Will the wholesaler or distributor ship drugs to the offsite location, or will the covered entity utilize an existing registered site or pharmacy location? If a manufacturer receives a chargeback request for a covered entity site that was not registered on 340B OPAIS as of the date of the chargeback, must the manufacturer honor the chargeback? In this case, the address will appear with a start date later than that listed on the chargeback. The answer to the second question, at least, is no; a manufacturer does not have to honor the chargeback if it is for a date prior to registration on 340B OPAIS.
Covered entities should consider seeking legal counsel to review their specific situation to determine the best course of action.
Understanding patient definition
One important aspect of HRSA’s answer to this FAQ is that it relies upon the covered entity being able to document that the person being treated at the offsite location is a patient of the covered entity. This, of course, means we must refer back to who meets the criteria of “patient” for hospitals under the 340B program.
For hospitals, HRSA’s patient definition provides that an individual is a patient of the hospital only if:
- The hospital has established a relationship with the individual, such that the hospital maintains records of the individual’s healthcare; and
- The individual receives healthcare services from a healthcare professional who either is employed by the hospital or provides healthcare under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the hospital.
Seeing savings faster
“This policy change could advance 340B participation of Child Sites by as much as one year or more,” according to The National Law Review. “We confirmed this change with Apexus, HRSA’s 340B prime vendor, and verbally with HRSA. However, this is still a developing issue, so hospitals should consider the risks and challenges posed by proceeding in light of HRSA’s changed position.”
What should you do next? We recommend that you start with a conversation with your finance team, who is responsible for your Medicare cost report, to make sure you have all the proper documentation to ensure that your child site is eligible and ready to be added to the MCR.
If you can prove that the child site is part of your entity, with appropriate legal review, those patients may be covered under 340B while you wait for the location to appear on your MCR. As soon as the location appears on the MCR, however, you need to register it with OPAIS.
Covered entities should update their policies and procedures to reflect how child site eligibility will be determined and the method by which patient definition is determined.
If you have an offsite, outpatient facility that you believe meets or will meet these criteria in the coming months, please contact your Sentry account management team so we can assist you with mapping the location and validating your data feeds.