Outpatient Locations Can Avoid 340B Registration Delays

Thoughtware Alert Jul 01, 2020
Healthcare COVID-19

The Health Resources & Services Administration (HRSA) has updated the frequently asked questions (FAQ) on its COVID-19 Resources page stating patients of outpatient facilities that meet provider-based requirements but aren’t yet listed on the most recently filed Medicare cost report may still be eligible for the 340B Drug Pricing Program (340B Program) to the extent they’re patients of the covered entity.

This update is significant and will allow covered entities to dispense 340B Program-eligible drugs to outpatient facilities as soon as the covered entity meets provider-based requirements. If the outpatient facility is outside the four walls of the 340B Program parent hospital and has a separate physical address than the parent hospital, the covered entity should still register the facility as a child site on the HRSA Office of Pharmacy Affairs Information System (OPAIS) database once it’s listed on the most recently filed Medicare cost report. The FAQ states the following:

Are hospital covered entities able to register offsite, outpatient facilities before being listed as reimbursable on their Medicare Cost Report?

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. Learn more about HRSA's patient definition guidance.

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 ensure that auditable records are maintained for each patient dispensed a 340B drug.

Prior to this update, outpatient facilities wouldn’t be considered 340B-eligible until they were listed on a reimbursable line of the most recently filed Medicare cost report and, if located off site, registered within the HRSA OPAIS database, which could delay 340B Program eligibility up to 22 months from when the outpatient facility initially meets provider-based status requirements. 

Apexus has clarified that if the patient meets the 340B Program patient definition and the clinic is a provider-based location of the covered entity, the patient would be eligible for drugs administered in the clinic and at contract pharmacies. Covered entities should consider the following:

  1. If covered entities are going to use the 340B Program at nonregistered sites before including on the Medicare cost report, they should outline how they’re making the determination of eligibility and cover these scenarios in their policies and procedures. The patient still needs to meet the 340B Program patient definition, and auditable records need to be maintained.
  2. The location should still be registered as soon as possible once it’s included on the Medicare cost report. If audited by HRSA and the location is on the filed Medicare cost report but the covered entity hasn’t registered the site, this could be considered an OPAIS database record finding.
  3. Because the site isn’t yet registered, manufacturers and wholesalers may not be able to validate that it’s a 340B Program location; therefore, a wholesaler may not open up a new 340B Program account specifically for that site if the covered entity requires a separate 340B Program account. The covered entity may need to operationalize purchasing through existing 340B Program account(s).
  4. If the site has a different NPI number than the parent and is carving in Medicaid, the NPI should be registered in OPAIS under the parent until the site is registered as a child site.
  5. In a contract pharmacy arrangement or entity-owned pharmacy, some vendors may process prescriptions based on location and/or address. If this is the case, the covered entity should determine if the qualifications and data feeds are set up to appropriately capture prescriptions from these locations that aren’t yet registered, if the patient meets 340B Program patient definition.

Covered entities are still responsible for demonstrating compliance with the 340B Program and should carefully review HRSA guidance and maintain documentation and auditable records of outpatient facility eligibility, as well as address these circumstances in their 340B Program policies and procedures.

In response to COVID-19, HRSA previously announced flexibilities for 340B Program eligibility and telehealth on its Resources page, and BKD summarized these flexibilities in a recent BKD Thoughtware® article. Prescriptions that result from telehealth encounters continue to be accepted when 340B patient definition 340B Program requirements are met. The U.S. Department of Health & Human Services (HHS) previously eased various regulatory burdens during COVID-19 through waivers. Although agencies are still determining which waivers to make permanent, the flexibilities in telehealth have been positive and will potentially allow covered entities to further expand contract pharmacy opportunities.

Covered entities should continue to monitor HRSA guidance and the use of telehealth encounters for 340B and document the use of telehealth in their 340B Program policies and procedures. 

Covered entities should work with their legal counsel before relying on updated FAQs.

To connect on this or other 340B Program topics, reach out to your BKD Trusted Advisor™ or use the Contact Us form below.

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