Industry Insights

HRSA Publishes 340B Drug Program Mega Guidance

September 2015
Author:  Michael Earls

Michael Earls



Health Care
Not-for-Profit & Government

200 E. Main Street, Suite 700
Fort Wayne, IN 46802-1900

Fort Wayne

In late August 2015, the Health Resources and Services Administration (HRSA) published the long-awaited 340B Drug Pricing Program Omnibus Guidance, more commonly referred to as the “Mega Guidance.” It includes recommended changes and clarifications to a number of 340B program items. Covered entities and other parties are encouraged to comment on the Mega Guidance; those comments must be submitted by October 27, 2015. Remember this is proposed guidance; final guidance may include revisions. 

Significant proposed changes or clarifications to the program’s structure include:

  • Clarification is provided on the Group Purchasing Organization (GPO) exclusion for covered entities enrolled as disproportionate share hospitals (DSH). This clarification extends and prohibits the use of a GPO to any pharmacy owned or operated by a DSH-covered entity.
  • If a covered entity purchases from a GPO as a last resort and documents appropriately, the covered entity will not be considered in violation of the GPO exclusion. This is extremely important due to drug shortages that occur periodically.
  • Several areas pertaining to the patient definition are clarified, including: 
    • A service provided in a location not listed in the 340B database is not considered to be provided at an eligible location. Verifying that child sites are properly registered will remain a critical compliance element.
    • One of the most significant areas is noted in Part C(5). HRSA has provided clarity on who’s considered an eligible patient for 340B drug dispensations. Simply having physician privileges or credentials at a covered entity is no longer sufficient to demonstrate an individual treated by a privileged provider is a patient of the covered entity for 340B program purposes. Covered entities must either employ the provider or have a contract in place with the provider, such that the covered entity may bill for services on the provider’s behalf. Historically, a covered entity was able to fill referral prescriptions if certain requirements were met. Under the proposed guidance, these prescriptions must be written by an eligible provider to be filled using 340B drugs.
    • An individual is not considered a patient of the covered entity if his or her care is classified and billed as inpatient. Historically, a patient who was in the emergency room, observation status or other outpatient areas and was later admitted as an inpatient was eligible to receive 340B drugs up to the time of admission. This may have further implications for entities subject to the three-day window. Of greater importance is the clarification that prescriptions written as part of an inpatient stay, e.g., discharge prescriptions, often filled under a meds-to-beds program or subsequently through contract pharmacy relationships, no longer are considered eligible 340B dispensations within contract pharmacy arrangements.
  • HRSA addresses an area of growing concern:  Medicaid Managed Care Organizations (MCO). Covered entities long have been able to carve in or carve out Medicaid to prevent duplicate discounts and, since the nationwide expansion of MCO, the question arose as to whether this only applied to fee-for-service (FFS) or MCO. The proposed guidance indicates covered entities now can make a separate determination for both FFS and MCO for internally dispensed drugs. However, preventing duplicate discounts still will be a requirement of the covered entity. Covered entities must maintain dialogue with state Medicaid agencies and MCO to prevent duplicate discounts.
  • In addition, under contract pharmacy arrangements, both FFS and MCO dispensations will be excluded from the 340B program unless a well-documented plan from the covered entity, managed care company and state Medicaid agency clearly states how duplicate discounts will be mitigated.

The Mega Guidance also addresses the continued importance and expectation of an annual independent audit and maintenance of auditable data for a period not less than five years. The guidance further requires audits of contract pharmacies; any 340B program violation detected through quarterly reviews or annual audits of a contract pharmacy should be disclosed to the Department of Health and Human Services.

The full Mega Guidance, along with guidance on how to provide comments, is available in the Federal Register. For more information, contact your BKD advisor.

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