340B

HRSA Releases Much-Anticipated 340B MegaGuidance

On August 28, 2015, the Health Resources and Services Administration (HRSA) published in the Federal Register its much-anticipated '340B Drug Pricing Program Omnibus Guidance,' also known as “MegaGuidance.” Industry stakeholders have long requested HRSA to clarify various program and compliance elements.

HRSA considered proposing new 340B regulations last year, but determined it did not have rulemaking authority, so instead issued this informal “guidance,” which is still in proposal form. It now enters a 60-day public comment period, which ends October 27, 2015.

While it is important to report on what HRSA proposes in the MegaGuidance, it is equally important to report on what it does not address. As expected (due to its lack of authority), HRSA changes neither the basic intent of the 340B program nor the types of entities eligible to participate, and it doesn’t limit the types of patients that can be served based on insurance status or the number or geography of contract pharmacies.

While much of the MegaGuidance clarifies or formalizes current informal guidance, other elements represent significant programmatic changes – especially around the definition of an eligible patient, and the use of 340B for Medicaid patients.

Patient Eligibility

The proposed guidance increases from three to six the number of eligibility criteria that must be met “on a prescription-by-prescription or order-by-order basis,” for someone to be considered a patient of a 340B covered entity (CE). The six criteria are:

The individual receives a healthcare service at a facility or clinic site which is registered for the 340B program and listed on the 340B database
The individual receives a healthcare service provided by a CE provider who is either employed by the CE or who is an independent contractor for the CE, such that the covered entity may bill for services on behalf of the provider as a result of the service described above
The individual receives a drug that is ordered or prescribed by the CE provider
The individual’s health care is consistent with the scope of the CE’s federal grant, project, designation, or contract
The individual’s drug is ordered or prescribed pursuant to a health care service that is classified as outpatient
The individual’s patient records are accessible to the CE and demonstrate that the CE is responsible for care

HRSA further stated that privileges or credentials with a 340B hospital would no longer be “sufficient to demonstrate that an individual treated by that privileged provider is a patient of the covered entity for 340B program purposes.”

HRSA reiterated its current position that the 340B program does not serve as a general employee pharmacy benefit or self-insured pharmacy benefit. Only individuals who are patients of the covered entity are eligible for drugs purchased through the 340B Program.

Prescription Eligibility

Under the above patient definitions, prescriptions written by providers outside the 340B registered facility would no longer qualify for 340B discounts, even if that care was a result of a follow-up to the entity’s visit, from an entity’s referral, or through an affiliate arrangement with the entity. Likewise, infused drugs could not be purchased at 340B prices if the drugs are prescribed by outside providers.

Medicaid Exclusion/Duplicate Discount Prohibition

The guidance also discusses Medicaid duplicate discounts. HRSA proposes that an entity may make a different determination regarding carve in or carve out status for Medicaid managed care organization (MCO) patients than it does for Fee-for-Service (FFS) patients, and can make different decisions by entity site and by MCO. HRSA also presumes that contract pharmacies will not dispense 340B drugs to Medicaid FFS or MCO patients – unless the entity enters into a HRSA-reported arrangement with the state or MCO to avoid duplicate discounts.

Audits

From an audit perspective, the guidance proposes a new five-year retention requirement for auditable records, and that entities perform quarterly self-audits of their contract pharmacies in addition to an annual independent audit. It also changes the standards for manufacturers, requiring them to have “reasonable cause,” in order to audit a covered entity.

While industry leaders say the guidance may help clarify the program’s grey areas, some believe it could negatively impact access to the program for smaller and more rural hospitals. Entity leaders are concerned that a scaled-back 340B program would hurt the very patients it was designed to benefit.

MedImpact supports the 340B program, and the benefit it brings to safety-net providers and the communities they serve. While we oppose scaling back the program or implementing over-burdensome standards that hurt an entity’s ability to serve their patients, MedImpact also believe that responsible regulatory standards and oversight that assures accountability and does not hinder patient care are in everyone’s best interest.

MedImpact, through its 340B subsidiary SUNRx, helps covered entities nationwide implement and manage 340B programs, develop a network of contract pharmacies, and comply with applicable regulations.

Brian Ward, R.Ph.
VP, Regulatory Affairs and Compliance
SUNRx, LLC.