Eligible Outpatient Facilities of 340B Hospitals Can Now Bypass Registration Delays

Based on recent interactions Hall Render has had with HRSA Office of Pharmacy Affairs (“OPA”) representatives, hospitals participating in the 340B drug discount program as covered entities (“Covered Entities”) may now be able to consider patients 340B-eligible in new locations of the hospital outside of the four walls of the hospital building even if the new location has not yet appeared as reimbursable on a filed Medicare cost report (“MCR”) and is not yet registered on the 340B Office of Pharmacy Affairs Information System (“OPAIS”). While this revised position is non-published in FAQs or other HRSA OPA guidance, 340B Health (a membership organization of more than 1,400 public and private nonprofit hospitals and health systems participating in the federal 340B drug pricing program) has commented on this revised position, as have other news outlets.

While again this position is non-published and should be carefully considered based on historical guidance from HRSA OPA, it would reflect a major policy shift from HRSA and would allow Covered Entities to use 340B drugs for eligible patients in qualifying new locations months and even a year earlier than would have been permitted under HRSA’s published policy position. While HRSA has not yet formally announced or detailed the policy change, 340B Health reported to its members that the change is not limited to the duration of the current COVID-19 public health emergency. Rather, the change is intended to continue indefinitely.

Overview and Key Takeaways

Under the new policy, eligible outpatient locations of Covered Entities can now use 340B drugs for patients who otherwise meet the current 340B drug discount program eligible patient standards before the location appears on the Covered Entity’s as-filed MCR, provided the outpatient facility meets MCR rules. A location would still need to be registered with OPAIS once it appears on a filed MCR. Covered Entities should address these situations in existing policies and procedures and maintain auditable records consistent with 340B drug discount program standards sufficient to document compliance with eligible patient standards.

HRSA has not officially announced the new policy, which counsels for caution regarding reliance and implementation, but HRSA and Apexus are expected to update their FAQ pages to address the new position according to 340B Health. In the interim, Covered Entities should consider obtaining individual written confirmation from Apexus prior to implementing any significant operational changes as this represents a major shift in HRSA policy. The guidance does not address prescriptions for patients who received care via telehealth, home health or other non-traditional pathways.

Prior Policy Position

HRSA’s longstanding policy has been that in order for an offsite location to be registered with HRSA as a child site, and in order to establish 340B patient eligibility for prescription orders, the location must first be included on a filed MCR. The requirement that a child site be included on the MCR was first addressed in Federal Register commentary in 1994 but has been incorporated into HRSA FAQs and other guidance since then.

One practical consequence of this longstanding policy is that there is often a significant delay between when a new provider-based location is established and when the Covered Entity can start using 340B drugs for eligible patients in those locations. In some cases the delay could be up to 22 months.

New Policy

According to communications with HRSA OPA representatives as validated by 340B Health, HRSA has recently advised that if a Covered Entity has been unable to register a new outpatient facility because the facility is not yet listed as reimbursable on its MCR, the outpatient facility’s patient may still be eligible for 340B drugs provided the facility meets the CMS requirements for a provider-based location. HRSA’s recent interpretation deviates from the 1994 guidance and its longstanding policy.

The new policy does seem to be consistent with HRSA’s historical interpretation of an “eligible patient,” which would include a patient of a registered Covered Entity if the Covered Entity has an established relationship with the patient such that it maintains records of the individual’s health care and the individual receives health care services from an employee of the Covered Entity or from an independent contractor under a contractual arrangement with the Covered Entity such that the Covered Entity remains responsible for the individual’s care.

HRSA will reportedly continue to require that Covered Entities register these locations with OPAIS once they have appeared on a filed MCR.

According to 340B Health, HRSA has suggested that this guidance is intended to continue in effect even after the COVID-19 public health emergency ends.

Recommendations

Covered Entities should maintain documentation of an outpatient facility’s eligibility and compliance with MCR rules, address these circumstances in their policies and procedures, and maintain auditable records consistent with HRSA standards. This includes maintaining records of the patient’s care, maintaining a relationship (employment, contractual or other arrangement) with the health care professional treating the patient, and maintaining responsibility for the patient’s care.

From a practical perspective, if a wholesale distributor will not ship 340B drugs to locations that are not registered on OPAIS, a Covered Entity can address this issue by shipping orders to a registered “ship to” location of the Covered Entity and redistributing them to the eligible locations for eligible patients provided this is done in a manner that is consistent with applicable state and federal laws.

Since the guidance does not address telemedicine, home visits or non-traditional care, such as care provided under a “Hospital Without Walls” model, Covered Entities should very carefully consider how they will apply this guidance in circumstances other than traditional, hospital-based departments that bill for both technical and professional component services that are reimbursable on the Covered Entity’s MCR.

Finally, Covered Entities should be on the lookout for additional guidance on this important policy change from HRSA and Apexus. According to 340B Health, both are expected to update their FAQ pages to address this new information. In the interim, Covered Entities should consider working with legal counsel before relying on this new policy position.

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