September 2, 2015—Healthcare providers would have less leeway to use 340B-discounted drugs under draft program guidelines released late last week. [ms-protect-content id=”2799″]
As written, the Health Resources and Services Administration’s proposed 340B program omnibus guidance would place tighter limits on which patients could receive 340B drugs, which practitioners could write 340B prescriptions or orders, where 340B prescriptions or orders could be written, and which drugs could qualify for 340B discounts.
If finalized, these limits would likely reduce the volume of drugs purchased at 340B discounted pricing. They also might reduce provider savings and complicate program management to a degree that that some providers might consider exiting 340B.
It’s a scenario that probably would draw cheers from those who say 340B is too big and has strayed from its purpose. On the flip side, it would be a sore disappointment to providers who say they rely on 340B savings to keep carrying out their safety-net mission and, in some cases, to keep the lights on and doors open. For its part, HRSA says “the guidance is intended to assist 340B covered entities and drug manufacturers in complying with the statute.”
The proposed mega-guidance’s appearance in the Aug. 28 Federal Register is the latest chapter in a story that began more than eight years ago, when HRSA published a notice inviting comment on a proposed clarification of the 340B patient definition. That notice was eventually withdrawn, as was a successor proposed regulation.
HRSA’s new proposed 340B patient definition is the mega-guidance’s heart. The guidance also includes nearly all of 340B’s other vital organs: covered entity eligibility and termination; drug replenishment models; the definition of covered outpatient drugs; the duplicate discount prohibition; contract pharmacy; drug manufacturer responsibilities; and audits.
Comments on the mega-guidance are due on or by Oct. 27, and HRSA is sure to get many. Based on past experience, it probably will take months for HRSA to pore through the feedback, revise the guidance, send it to the White House Office of Management and Budget for a second time for review and approval, and then publish the guidance in final form.
Much of the mega-guidance restates HRSA’s existing written 340B policies or policies it has been adhering to in covered entity audits. The most noteworthy provision in the proposed guidance is HRSA’s new definition of “patient.”
The three-part test in effect for almost 20 years currently states that a person is a patient of a 340B covered entity only if:
- The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s health care;
- The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity; and
- The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or federally-qualified health center look-alike status has been provided to the entity. Disproportionate share hospitals are exempt from this requirement.
HRSA adds that “an individual will not be considered a ‘patient’ of the entity for purposes of 340B if the only health care received by the individual from the covered entity is the dispensing of a drug or drugs for subsequent self-administration or administration in the home setting.” It also says “an individual registered in a State operated or funded AIDS drug purchasing assistance program receiving financial assistance under title XXVI of the [Public Health Service] Act will be considered a ‘patient’ of the covered entity for purposes of this definition if so registered as eligible by the State program.”
HRSA includes a six-part patient definition test in the proposed mega-guidance. It says an individual will be considered a patient “on a prescription-by-prescription, order-by-order basis,” if all of the following conditions are met:
- The individual receives a health care service at a facility or clinic site which is registered for the 340B program and listed on the public 340B database.
- The individual receives a health care service provided by a covered entity provider who is either employed by the covered entity or who is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider.
- An individual receives a drug that is ordered or prescribed by the covered entity provider as a result of the service described in (2).
- The individual’s health care is consistent with scope of the 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 covered entity and demonstrate that the covered entity is responsible for care.
Hospital groups say they understand this test to mean that hospitals would no longer be able to fill prescriptions or orders with 340B priced drugs in ways that HRSA has allowed for decades.
Under yet another proposed policy clarification, drugs paid for by Medicaid as part of a bundled rate would be ineligible for 340B pricing, further reducing the number of drugs for which hospitals could obtain 340B pricing.
Healthcare providers also would be expected to conduct new quarterly reviews of each contract pharmacy location. Providers would have to disclose to HRSA all instances of noncompliance that these reviews or audits turn up, no matter how small.
Hospitals groups have expressed concerns that these and other new limitations and requirements could make it more difficult for their members to serve their vulnerable patients.
340B Health, for example, said in response to the guidance’s release that “it is our hope that safety-net healthcare providers will not find themselves limited in their ability to meet their mission to treat the underserved.”
“We want to make certain that the new requirements do not over-burden hospitals and strike a balance between hospitals and pharmaceutical companies for ensuring program integrity,” the American Hospital Association said.
Pharmaceutical Research and Manufacturers of America said in a Sept. 1 statement that “a first look at the guidance indicates both positive signs that HRSA is taking steps to curb abuses of the program as well as some causes for concern.”
PhRMA said it “was pleased to see that the guidance attempts to provide a clearer patient definition” but concerned that it will let providers “that have violated 340B rules to reenter the program with minimal delay.” It also expressed disappointment that the guidance “also continues to allow hospitals unlimited contract pharmacies.” [/ms-protect-content]