Sharing Our 340B Journey
Hi All! Yes, it has been awhile (we have been auditing, a lot!). Our sincere apologies, we need to bring back our 340B Blog A game. The team at Turnkey Pharmacy Solutions has been growing and the leadership team is learning how to handle the growth and work effectively with our team. In addition to Roxanne, we now have Jen and Annie supporting audits with our core team (and a few per diem staff as additional support). We also added an operations manager to oversee operational functions of the organization (so excited for Chelsea to start on April 4th!) We are not the only ones with change, the 340B program has had significant changes recently, and we are going to share two big ones! Hold on to your hats . . .
Inpatient Discharge Prescriptions: A big shift for HRSA has been a March 5th, 2016 decision (unannounced, but confirmed by multiple HRSA 340B audited sites) that discharge prescriptions for “inpatients” will not qualify for 340B. We believe the primary reason being used is that the inpatient location is not a qualified location (i.e., not in the outpatient reimbursable area of the cost report). This is a tough one for the 340B hospitals, it is common for patients who cannot afford their medications to receive it via a charity care process at discharge. Based on HRSA’s current interpretation, you cannot use 340B purchased drugs if the patient had a patient status of inpatient at discharge. There are defensible positions that could be used, and we recommend reaching out to your legal team and/or 340B consulting group for guidance to review your specific situation. If you are part of 340B Health, a technical assistance call may also be beneficial. The elephant in the room is if this could be viewed as an attempt to move forward with 340B Omnibus Guidance (since this was in the Omnibus Guidance) before final publication in the Federal Register. Things that make you go . . . Hmmmmmmmm!
Track & Trace – Contract Pharmacy: Well, March 1st has come and gone. DSCSA (Track and Trace) for dispensers (pharmacies) is now in effect. The FDA can now audit pharmacies for compliance, and I for one am very concerned about contract pharmacy and DSCSA compliance. It was timely, 340B Health has a bulletin that went out today that confirms that the FDA is not going to exempt the contract pharmacy relationship. So what does this mean? Well, the FDA considers the entity that purchases the drug as the owner. In a contract pharmacy arrangement, the covered entity buys the drug, but ships it directly to the contract pharmacy from the wholesaler. This is not addressed in the DSCSA specifically, and therefore those “3Ts” (transaction information, transaction statement, and transaction history) should exist between the covered entity and the contract pharmacy. Currently, the most common approach is to sign some documents that allow the wholesaler to provide the covered entity’s 3Ts in a view rights format to the contract pharmacy. This is better than nothing, but the problem is that the contract pharmacy is receiving drug for which they have no 3Ts with their name on it. It will only have the covered entities name on it. How will this look if the FDA audits your contract pharmacy? Are you at risk of having your contract pharmacy program halted because your contract pharmacy cannot receive drug from you? A process that can provide the 3Ts to the contract pharmacy such that the contract pharmacy is listed on the 3Ts and the DSCSA criteria are met is critical. This may be a huge issue as we move forward, and have partnered with Drug Track IQ to create a solution to help protect your contract pharmacy process. If you are concerned and want to learn more, go to Drug Track IQ and see how their program can help you meet the DSCSA requirements.
We know those are two large items to chew on. There is so much more I want to share based on the 130 plus audits we have conducted and 13 HRSA audits we have attended, and will commit to writing more articles soon. If you have any questions or comments, please use our contact email and one of our team members will respond. Thank you and Aloha, -Rob
Over the last month, many of our clients have been asking for input on the 340B Mega-Guidance (officially titled: 340B Drug Pricing Program Omnibus Guidance). We have also been onsite conducting external 340B audits and are already assessing the impact of the Mega-Guidance if it is finalized in its current form (which has some significant consequences). In case you have been hiding under a rock, here is a link to the official document: 340B Drug Pricing Program Omnibus Guidance.
For focus, we are going to address the three (3) areas of the 340B Mega Guidance that we feel will have the most impact. We strongly recommend all affected parties provide comments to HRSA on how this would impact your covered entity. (We will cover additional areas in the next post)
1) Covered Outpatient Drug Two-Part Limiting Definition Test (pg. 22): This one is tough! The primary focus is concerned around bundled drugs being non-covered outpatient drugs. What is interesting is that it focuses on Medicaid reimbursement, and only mentions other third party payors as part of a contrasting statement at the bottom of page 22.
The two-part limiting definition states that a drug is a non-covered outpatient drug and not eligible for 340B pricing if it is 1) “provided as part of, or incident to and in the same setting as the services listed in section 1927(k)(3),” which are just about every outpatient area you can think of; and 2) the drug can be paid by Medicaid as part of the service “and not as direct reimbursement for the drug.”
The guidance then states that this limiting definition to exclude drugs from 340B purchasing does not apply when “a drug is provided as part of a hospital outpatient service which is billed to any other third party [not Medicaid] or directly billed to Medicaid.
It seems clear in the preceding wording that the definition is based on Medicaid reimbursement. However, the exclusion states how Medicaid is billed. We definitely need some clarification on which one it is. We feel that basing it on reimbursement is very difficult as every state Medicaid can have different formularies for what is separately reimbursed. Covered entities may attempt to bill separately and that is how drugs have accumulated up to this point. We are also concerned if it is solely based on reimbursement that ACO/Medical Home models (i.e., capitated patient payment systems) could fall into a “bundled payment system” and all drugs administered to patients in these service models would be non-covered outpatient drugs. This would adversely incentivize covered entities to not enter into ACO or ACO like agreements. Also, think about CAH hospitals and how they are cost-based reimbursed by CMS. Would these drugs also not count since there is no direct reimbursement for the drug, rather a percentage reimbursement based on actual cost? This would result in a negative impact on CMS as they are paying for care based on actual cost. Finally, how do we even accumulate on a model that requires us to know the ultimate reimbursement of a patient? It is very tough indeed.
Please think about the impact on your covered entity and provide comments as appropriate.
2) Infusion Services Orders Need to Be Written from a Qualified Location and Provider (pg. 26): “The dispensing of or infusion of a drug alone, without a covered entity provider-to-patient encounter, does not qualify an individual as a patient for purposes of the 340B Program.” This one is pretty straight forward. If the order for the infusion services drug was not written from a qualified location by a qualified provider for a qualified patient, then you cannot use 340B. In fact, if you are subject to the GPO Prohibition, you need to use WAC. Ouch!
I think back to my DSH hospital. We had agreements with our providers (e.g., oncology clinic providers), but they were technically a different business unit of our parent organization, and therefore not a qualified child site or location. We felt that our infusion service visit was the qualified visit as we provided care and had at least in part joint responsibility of care for that infusion. If the patient coded, it was our infusion clinic that provided the care for that patient. This scenario is clearly not going to be okay with the current language. The hard part is that this infusion center is where we provided charity care and took insurance plans that many providers were unwilling to take due to reimbursement issues. To have to buy these drugs on WAC is a significant concern.
If your site has an infusion center that services patients that do not have orders written from qualified locations, you may want to assess the impact on your program and share your perspective with HRSA.
3) Outpatient versus Inpatient Status for Qualification (pg. 27): “… an individual cannot be considered a patient of the entity furnishing outpatient drugs if his or her care is classified as inpatient.” It also states that “An individual is considered a [qualified 340B] patient if his or her health care service is billed as outpatient to the patient’s insurance or third party payor.”
This is the section that many people are interpreting that patients who discharge from the hospital as inpatients could not have their drugs filled as 340B. The other interpretation is that accumulation systems need to accumulate based on how a drug is billed, or more accurately, how it is reimbursed by payors. Once again, like the non-covered outpatient drug issue, we don’t always know when we are dispensing the drug what the insurance status will be. We know what the patient’s status is at the time the drug is being dispensed.
An interesting test is this: If a covered entity were to use a physically separate inventory (i.e., 340B, GPO, and WAC if it is a DSH), the pharmacy technician would fill the patient’s order using a specific inventory based on the patient’s status at that exact point in time. They would not be factoring in Medicare’s 72 hour rule or a two-midnight rule, as they don’t have a crystal ball to know if the patient is going to be admitted as inpatient or not.
The discharge prescription part is really concerning. At my previous hospital, we were attempting to identify patients at high risk of medication non-compliance and providing a financial support process for their discharge medications. CMS has recognized the importance of medication adherence and teaching at discharge as well, and now include it as part of their “Core Measures” for success. Many hospitals have instituted a discharge prescription program to ensure patients leave the hospital with all of their needed medications. For GPO Prohibition hospitals, they would now need to buy their inpatient discharge medications at WAC. Once again, adversely incentivizing hospitals to create such programs that have a significant impact on readmissions to the hospital (a significant cost for healthcare as a whole).
Please assess how this may impact your covered entity, and provide comments as appropriate.
There are other areas of concern, and some areas we feel are positive (e.g., GPO Prohibition exemptions). We will continue the discussion, but wanted to start with these three first. Please provide your comments to HRSA, and please remember that the deadline is October 27th, 2015. Below are the information and ways on how to submit comments:
You may submit comments, identified by the Regulatory Information Number (RIN) 0906-AB08, by any of the following methods. Please submit your comments in only one of these ways to minimize the receipt of duplicate submissions. The first is the preferred method.
Federal eRulemaking Portal: http://www.regulations.gov. Follow instructions for submitting comments. This is the preferred method for the submission of comments.
Email: 340BGuidelines@hrsa.gov. Include RIN 0906-AB08 in the subject line of the message.
Mail: Krista Pedley, Director, Office of Pharmacy Affairs (OPA), Health Resources and Services Administration (HRSA), 5600 Fishers Lane, Mail Stop 08W05A, Rockville, Maryland 20857.
340B Mega Guidance: Well played by the government. We had some news about delays and later than September, and BOOM, 340B Omnibus Guidance is published in August (love it). First, if you did not already see it or know it came out, the 340B Mega Guidance is out for comment and you can read the 90 page document here: https://www.federalregister.gov/articles/2015/08/28/2015-21246/340b-drug-pricing-program-omnibus-guidance. My preference is to click on the pdf link to the right on the page and get the pdf. If this link stops working and you want the pdf, contact us and we will send you the copy.
We are currently digesting all of the document and determining impact to covered entities based on our experience with HRSA 340B audits and our own external audits we have conducted. Our plan is to get a more detailed analysis out early next week for your reading pleasure. My initial read through highlighted the following critical changes/clarifications:
– Patient Definition and the providers and location is much stronger, tight contract pharmacy filtering is needed.
– Inpatient hospital discharge prescriptions may not count (this will likely have some significant comments).
– Morford Letter language regarding follow-up care is officially dead.
– Infusion Services orders written externally (i.e., non-qualified area) are likely an issue.
– Non-covered outpatient drug language may require a re-look at purchasing of products and how they are billed and reimbursed.
– Responsibility for care is “medical” and not financial, so anyone doing the employee is a patient approach for 340B needs to really consider if they meet the new enhanced patient definition.
– MCO Medicaid officially mentioned as part of Duplicate Discount.
– One other article already written mentioned contract pharmacy entirely could be an issue, but I did not read it that way. We will follow-up on this.
More to come as we analyze it!
Quick Update on Turnkey Pharmacy Solutions: Wow, I cannot believe it is conference time already. We intended to get a few more blog articles out before now, but work got in the way (I hate it when that happens). This is a good thing, since it means we are onsite with covered entities and gaining more and more experience to share (as long as we get to the sharing part). We have been onsite for 5 HRSA audits in the last few months as well as many 340B independent audits. We actually have plans to share what we are seeing, both best practice and compliance concerns. We are going to share this in the next few months, and are deciding the best way to do this (maybe a free Webinar). With Rich Bucher being full-time and adding Roxanne Nevarez to our auditing team full-time, we are at a good place for supporting more clients and are now at this conference with a booth (and hopefully I do not have another 8-week stretch of travel, which I must thank my wife for putting up with me for that period of time).
Before I get into some highlights, I must send some love to 340B Health (a.k.a., SNHPA – still getting used to the name change). They put a lot of time and effort into making this conference both educational and a great venue to attend. My highlights below are simply that, some keys I pulled out to share. There is so much more content and tracks for education, I am covering a small fraction of the content in our blog. I know travel budgets are tough, but strongly recommend you attend one or both of the 340B Coalition meetings in the future (plus we hand out really awesome Utah mint truffle chocolates at our booth).
Pre-Conference – Implementing Effective Compliance Plans:
Started with Kevin Jones (he and I were both pharmacy directors of 340B hospitals at the same time at Intermountain Healthcare). Kevin shared what he does from his new role as the 340B Program Director. They have a robust compliance plan, and here is the biggest key I took away: Education is key and they do a quarterly education (off-site location and runs about 6 hours) training. We started this when I was still there, and it provides education on key updates and for new staff supporting the program to learn quickly what they need to know. Great idea!
Next was Shaun Phillips from Bronson Battle Creek Hospital. Love this guy, he was awesome. Shared details about their program and what they do for compliance. Shaun highlighted the need to have a dedicated 340B Analyst to support their program. He also noted the difficulty in finding the right person: Pharmacists are expensive, wanted some pharmacy knowledge, accounting background, and some general idea about 340B at minimum. They finally found the right person and as luck would have it, received their HRSA audit letter. That is baptism by fire! Shaun is right though, you need a dedicated resource for most medium to large covered entity sites (partial resource if you are smaller).
Last was Cynthia Williams from Riverside Health System. She hit on another key topic that is related to split-billing software maintenance. This is a key for us as well. If you are new to the program, do not underestimate the time and resource it will take to maintain a split billing software system. Cynthia also added a 340B Analyst, and stated “this should be a no brainer.” However, when your system is doing a RIF (reduction in force) it is still a tough ask! Cynthia educated CFO and COO on program complexity, growth, and financial impact. She used resources with 340B Health and Apexus as well. They ultimately hired a pharmacy technician buyer with significant 340B experience. Nice work Cynthia!
All three speakers mentioned having a 340B Oversight committee – we feel this is a Best Practice for all covered entity organizations. This committee should have C-Suite leadership and pharmacy, finance, and IT support as well. Also good to add compliance and legal when needed. We recommend meeting quarterly.
Okay, that was the pre-conference workshop for us. More to come on when we officially start the conference this afternoon. Aloha, -Rob
This is Turnkey’s first year participating in the HCCA Compliance Institute annual meeting. Interestingly, I spoke about 340B at this conference two years ago and while there was a fair amount of interest at that time, 340B was still relatively unknown to most attendees. That was not surprising, however, given that the HCCA institute is really directed to health care compliance in general, with topics like patient privacy /protected health information (PHI), Stark Law, Fraud, Waste & Abuse, physician compliance, and quality of care auditing getting most of the attention from the compliance officers, health care leaders, and compliance professionals in attendance. While this focus has not changed significantly, it is interesting to see that there is more focus on the 340B program this year. For example, today there is a session specifically directed to enforcement of 340B by HRSA. Given the number of HRSA audits that our team has been on-site for in the last 18 months (approximately 50 covered entity audits and 10 HRSA audits), this should prove to be an interesting discussion for us to participate in. So far, we have been hard pressed to find anyone (other than HRSA auditors themselves!) that has been involved with as many HRSA audits as we have. In addition to the 340B enforcement session this afternoon, later this week there are a couple of sessions directed to 340B in general planned. These should be interesting, and of course there will be more to come from us reflecting on these sessions.
Regarding compliance in general, one of the most interesting sessions here so far was the Office of the Inspector General (OIG) update during the general session. Speaking was Inspector General Daniel Levinson, of the U.S. Department of Health & Human Services (HHS). Mr. Levinson’s discussion focused on the concept of a “knowledge worker” and Peter Drucker’s work regarding our shift to a knowledge society. Of particular interest was Mr. Levinson’s focus on a knowledge worker’s ability to take raw data and transform it into meaningful information that can be put to practical use with respect to maintaining compliance. In the context of 340B, this is very relevant to what covered entities often struggle with. All too often our clients are faced with the dilemma of having a great deal of information about their 340B operations, whether it be from vendors or their own internal processes, that they are unable to put to practical use. This is not surprising, however, given the fact that transforming these data into meaningful information typically requires 340B-dedicated resources with significant experience and training. While this may include internal resources, such as pharmacy and compliance staff, an outside perspective that can be provided by 340B-focused is essential. This is where Turnkey comes in; with close to 50 covered entity audits and on-site support of 10 actual HRSA audits, we can help transform your 340B data into meaningful information and strategies for compliance. More to come as this HCCA conference progresses!
Thank you, -Rich Bucher (from the HCCA Conference in Lake Buena Vista, FL)
It appears that 2015 went off with a bang for the 340B Program. Here are some notes from 340B University, 340B Coalition Conference, the March U.S. Congress 340B Hearing, and our own experience conducting 340B audits in the field and working with covered entities.
340B Audits: We are aware of seven (7) covered entities who are going through a HRSA 340B audit in the next month or just completed one in the last month. Definitely feels like an increase from the past year. We learned at 340B University and Coalition Conference that although HRSA planned on closer to 400 covered entity audits in 2015, the number has been reduced to 200. At least one note we have says 33 audits occurred in January. At that rate, 200 definitely looks possible, but I suppose keeping up with 33 audits a month is a lot of work. Take home message: Semper Paratus – Always Ready! We must keep our 340B programs in a state of constant readiness. If you don’t know how, then ask. Plausible deniability will not work in a HRSA audit (translated – saying you didn’t know you had to do that will still result in a finding).
Mega Guidance: The substitute for the Mega Regulation will be guidance. Commander Pedley has confirmed that this will be released in June (of this year for you smart alecks). It will be released for comment, so please be prepared to read it and provide comment as needed. Update: I have not seen the formal notice, but there may be a delay in the Mega Guidance.
HRSA IT Updates: You likely have seen additional enhancements to the HRSA database. I like them (thanks HRSA). For 340B pricing transparency, HRSA is adding 340B pricing by the end of 2015. Currently, you can see 340B pricing if you are a registered covered entity with Apexus through your login. However, this is information provided by wholesalers, and is the best thing we currently have. Actual 340B ceiling pricing from HRSA will help us confirm we have the right pricing loaded with our wholesalers.
340B U – Utah Representing: I have to just throw it out there. I had a lot of fun at this last 340B University (just prior to the Winter Conference in SF). We had Kevin Jones (a.k.a., K-Jo), Intermountain Healthcare 340B Program Director (previous DOP at Primary Children’s Medical Center). We also had our Peer-to-Peer colleague and pharmacy Director, Donovan Smith (a.k.a., D-Smitty). For the record, I just made those nicknames up. The three of us are from Utah and it was great. If you have not been to a 340B University in the last year, I recommend you check the Apexus website for the next 340B University near you. We provide a lot of real world examples and pearls that you can implement at your covered entity. Plus, there is a ton of networking opportunity, which is also true of the Coalition meeting as well.
340B Hearing by Energy and Commerce Committee: I thought the hearing went well. Commander Pedley, OPA Director, and Diana Espinosa, Deputy Director of HRSA, spoke well and I definitely think they have the support of congress to obtain some rule making authority if they seek it through legislation, especially around patient definition. I also have a new favorite congress person. The congresswoman from Florida, Kathy Castor, 14th District, was great. You can tell she gets the importance of the 340B Program by her statement, “the 340B program saves lives.” Amen sister! If she is reading this, Thank You. There is of course some work to be done on compliance and potentially changes to some parts of the program, but I think we all knew that already.
Secret Sauce: If you are still reading, then I want to thank you with a pearl from our compliance programs and audits. If you have contract pharmacy, then you should regularly (annually) check to ensure your contract pharmacy agreements (CPAs) include all of the contract pharmacies listed on your OPA database record. This is often reviewed by HRSA auditors, and changes by the contract pharmacy chains may not be accompanied by an addendum. For instance, you may have a chain of contract pharmacies that has added central fill stores. These are registered and your AO approves them. You need to ensure a CPA addendum adds these stores to your contract.
I hope you have enjoyed this one, and remember . . . Semper Paratus!
The 2016 Department of Health and Human Services (HHS) budget has been submitted to President Obama. HHS invests in scientific research, health care, disease prevention, early education, social services, and children’s well-being, to support healthier families, stronger communities, economic opportunity, and a thriving America. HRSA (and the 340B Program) fall into this category.
340B Drug Pricing Program: The Budget provides $17 million in budget authority for the 340B Drug Pricing Program, which represents an increase of $7 million above FY 2015. In addition, it proposes a new user fee totaling $7.5 million as a long-term financing strategy to support the program’s activities. These fees represent 0.1 percent of each purchase of 340B drugs from entities participating in the 340B Program to pay for the operating costs of the program. These fees will be collected by the Secretary based on sales data that shall be submitted by drug manufacturers and shall be credited to this account, to remain available until expended.
In recent years, HRSA has significantly increased its commitment to program integrity and compliance (covered entities should plan on being audited very soon!). As additional covered entities and associated sites join the 340B Program, HRSA has nearly doubled its program audits, instituted annual recertification for all entities, and increased its proactive education and technical assistance. Nearly 26,000 covered entities across the country currently participate in the 340B Program. It is estimated that covered entities participating in the 340B Program spend an estimated $7.5 billion on covered outpatient drugs.
See the full articles here:
Fiscal Year 2016 – Budget In Brief
Budget Justifications 2016
As always, please let us know if you have any questions or need some help with your 340B Program. Also, if you are interested in having your covered entity site receive a full independent audit of your 340B operations, come see us at Turnkey Pharmacy Solutions.
Richard Iverson, PMP
Despite our crazy travel schedule lately, I was able to carve out a weekend to attend 340B University in Anaheim, California on December 7th. 340B University is sponsored by Apexus, who is the prime vendor for the 340B program. Apexus’ mission is to leverage their resources and expertise to deliver maximum value to 340B stakeholders, as well as to contract for the lowest sub-ceiling drug prices. Plus, it is free to attend!! I strongly encourage all 340B Stakeholders to attend this at least once, or even better once a year.
Rob Nahoopii, Turnkey’s illustrious CEO, is on the 340B University faculty, and gets to present on various topics 5 or 6 times a year. There always seems to be a little friendly competition among the faculty to see who can grade out the highest. Not surprisingly, Rob frequently comes out on top!
Although the presentations generally cover the basics of the program, each time I go, I feel that I learn something new. Since my background is Finance related, I enjoy the discussions about 340B pricing. Several panel members remind us that the 340B price is one of the most difficult formulas used in the crazy world of pharmaceutical pricing.
Another interesting discussion centered on auditing. One scenario that was asked was if a covered entities Internal Audit department was sufficient to conduct audits. Both panel members like the idea of having internal audit help, but both highly recommended a fresh set of eyes to review your program, and bring in a competent, external company to review your program.
Rob and I are on a plane now, coming back from an audit of 3 covered entities in North Carolina. It certainly has been a crazy year. We have truly enjoyed meeting new people, seeing new places, and sharing our knowledge of the 340B program. This year, we have completed over 40 audits, and have visited 20 states. If we can be of assistance in your 340B journey, please reach out to us. From all of us at Turnkey Pharmacy Solutions, we wish you all Happy Holidays!!
In this month’s article we will focus on the Medicare Cost Report and provide some updates for the 340B program.
Well, it is October and we are still awaiting the arrival of the 340B Mega Reg. In a way, it almost feels like an upcoming dentist visit.
– At first, you sort of dread it and prefer it not happen at all.
– Then, the waiting becomes painful (more painful then just getting it done).
– Until, you simply hope it gets here soon so you can get it over with.
I think knowing is better than the agony of anticipation. For the love of all that is holy, I hope OPA receives the green light to relieve us of our suffering soon. . . I JUST WANT TO KNOW!!!
In a more recent news update, it appears that PhRMA has decided to go ahead and file a follow-up law suit on the Orphan Drug clarification. It will be interesting to see how this one plays out. We still have some manufacturers that have not provided Orphan pricing to ACA covered entities (i.e., CAH, SCH, RRC, CAN covered entity types). There is also some discussion around the idea that these manufacturers may have to pay back covered entities that could have bought drug at 340B, but were not extended the 340B price. Hopefully we can get some clear decisions on this so that this does not drag out too much longer.
We do need to offer congratulations to Apexus for being awarded the OPA contract through 2019. I personally feel they provide a great service and Apexus Answers is a great resource for all involved in the 340B program. Also, the Apexus 340B University is the best training for those involved in the 340B program (and for the record, the 340B Basics for Hospitals in San Diego at NACHC this past August had the best all around survey score, EVER! . . . Who did that one again?). Glad to have you around for years to come!
Focus for this article: Medicare Cost Report (Caveat: for clinic covered entity types, you will need to review your scope of services. Some of the same information applies related to departments and service lines.)
Do you know your Medicare Cost Report? More than ever, if you are in a leadership role with your 340B program, you need to become knowledgeable about your Medicare Cost Report and the associated Trial and Balance Sheet. Why?
– It is the source of truth for what qualifies for 340B in your hospital.
– For qualified areas with a different physical address, they need to be registered as Child Sites.
– For Child Sites, all departments and service lines identified on the Trial Balance need to be registered separately.
This is a level of detail that recent HRSA audits have focused on. If you have a child site that is a hospital for instance, every department and service line visible on the Cost Report and Trial Balance that either administers 340B drugs or writes a prescription that could be filled as 340B need to be registered as a separate Child Site.
Here is a good FAQ from Apexus FAQs on this subject:
FAQ ID: 1975
Last Modified: 03/18/2014
Q: How do I know if an off-site outpatient facility is eligible for 340B as a child site and should be added to the 340B database?
A: Off-site outpatient facilities are eligible child sites of a 340B covered entity in the following circumstances: (1) The outpatient facility is listed as a reimbursable facility on a 340B hospital covered entity’s most recently filed Medicare cost report. If the facility is a free-standing clinic of the hospital that submits its own cost reports using a different Medicare number (not under the covered entity’s Medicare provider number), then it would NOT be eligible. (2) The facility is included in a non-hospital covered entity’s scope of grant or part of the scope of services. An off-site outpatient facility meeting one of these criteria must register and be listed on the 340B database before it can access 340B drugs for eligible patients.
For hospitals, all clinics located off-site of the parent hospital, regardless of whether those clinics are in the same building, must register as child sites of the parent 340B-eligible hospital if the covered entity purchases and/or provides 340B drugs to patients of those facilities. For example, if the off-site outpatient facility is a hospital, all clinics/departments within that off-site location that plan to purchase and-or provide 340B drugs to its patient must register as a child site.
Outpatient clinics/departments within the four walls of the 340B parent hospital do not need to also register for the 340B Program. However, the covered entity remains responsible for demonstrating that those outpatient clinics/departments within the four walls of the parent hospital are only using 340B drugs for eligible outpatients and meet all 340B Program requirements, as demonstrated through auditable records.
Between now and the end of the year, determine if your covered entity site needs additional child site locations enrolled. This is one of those better safe than sorry, so register it if has a different address and can be seen as a separate department or service line.
As always, please let us know if you have any questions or need some help. Also, if you are interested in having your covered entity site receive a full independent audit of your 340B operations, come see us at Turnkey Pharmacy Solutions.
Thank you and Aloha, -Rob Nahoopii
We are finding our groove at Turnkey Pharmacy Solutions and rededicating time to providing timely and relevant content to the 340B community here at the 340B Program Blog. I have heard from many people at the 340B Coalition Conference and at 340B University that you actually read it and like it! That was awesome to hear, thank you! Please read through and respond to the request at the end, it will benefit everyone.
In this article, you will learn about our takeaways from our latest independent audits we performed and a recent 340B University. This includes some Mega-Reg fun, Medicaid and Medicaid Managed Care, new registration changes, Orphan Drugs, and an important compliance tip on 340B contract pharmacy compliance.
Mega-Reg: Well, we are coming to the end of August and we still do not have a visual on those highly anticipated Mega-Regs. Do you remember the Disney classic Lion King? Toward the beginning of the movie, the three hyenas are talking about Mufasa (the current lion king, Simba’s dad) and the hyena voiced by Whoopi Goldberg hears Mufasa’s name and shudders and says that name has so much power, just hearing it makes her shiver, and of course she says “say it again!” That is how I feel about the mega-reg. Just the name alone conjures of emotion (some of it is fear, some excitement). I know our colleagues at OPA are just as anxious as we are, and want to get it out for review. However, they have likely learned a lot from the Orphan Drug push back and court decision, which is likely the cause for the delay. Appropriately presenting the Mega-Reg (…shiver…) is critical for its success. Mega-Reg, Mega-Reg, Mega-Reg!!! (can you feel it!)
Medicaid and Medicaid Managed Care: We are definitely seeing a lot more managed care Medicaid groups working with their corresponding state Medicaid agencies to obtain the Medicaid rebate (which is ultimately done by state Medicaid). If you are carving in (or carving out), make sure you know what your state Medicaid is doing in relation to managed care Medicaid, what to do if they are paying secondary, and if your managed care Medicaid has any billing requirements. Also ensure that both your hospital/clinic administered drugs AND contract pharmacy/in-house arrangements are properly dealing with Medicaid (or excluding it as needed). This is a focus for HRSA, so make sure you are getting it right!
Recertification and New Registration: As a reminder, make sure you recertify by September 10th (hospitals). For CAHs, it is pretty easy and fast. Other hospital types, you will need your DSH calculation on your most recently filed cost report. If you are newly registering, please note that OPA now has your recently filed cost report loaded for child site selection; however, if you do not see your child site, then you will need to manually add it. One major change to new registration is the requirement for the government person attesting to your relationship or status now having to approve of this relationship via email. If this is not done in the specified time, you will not be enrolled in the program. We heard that the recent July enrollment had 75 covered entities that were initially not enrolled, they re-opened the program to allow for more time and all but 5 made it. They may not be so generous next time, so make sure your government person knows they need to respond to the email from HRSA when it comes.
Orphan Drugs: It appears some of the 11 drug companies are still holding out for legal clarification before they return pricing on orphan drugs for CAH, SCH, and RRC hospital covered entity types (i.e., those subject to the Orphan Drug Exclusion). Some have returned pricing (Thank You). Our critical access hospitals can really use the help when they use these orphan drugs for their non-orphan indications. One compliance recommendation: regardless of your split billing vendor or if you use a manual process. Whenever you identify a qualified orphan drug (i.e., used on an outpatient for the non-orphan indication and duplicate discount is prevented) then track this patient and drug administration on a spreadsheet with the indication. For recurring patients, you can simply list the administration for tracking since you already have the indication. This is then readily retrievable in the event of a HRSA audit and a good check for you to know you have confirmed indications.
Contract Pharmacy Compliance Tip: Pay careful attention to your patient encounter data you are sending to your vendor. We always recommend removing patient visits that never generate prescriptions (even if they technically qualify). These areas include lab, imaging, IV infusion, physical therapy, etc. You could also send all the data to your vendor and have them exclude areas if that is an option. It should also go without saying that you need to exclude non-qualifying areas (i.e., non-reimbursable areas of your cost report). Check this feed at least annually to ensure nothing has changed or been added to, . . . Stuff Happens!
Request From Us: For future articles, we will definitely continue to write on what’s hot and in the news for 340B; however, we also know that those of you on the front line are dealing with different issues. Please send us your questions and issues you are having and we will respond to them in future articles. You can send us your questions and issues by emailing them to email@example.com.