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Covered entities should continue to remain alert going forward to ensure that discharge prescriptions are properly categorized in advance of audits.

Navigating health reform

Program Auditors Looking Closely at 340B Discharge Prescriptions

  • 5/5/2016

Several 340B covered entities (CEs) have reported that the Health Resources and Services Administration’s (HRSA) 340B Program auditors have recently taken a different stance on 340B eligibility for discharge prescriptions. The auditors are scrutinizing discharge prescriptions from inpatient units of the hospital and classifying them as non-340B qualified. 

Through the 340B Prime Vendor Program (PVP), the HRSA stated it is not planning a policy change on discharge prescriptions. 340B Health, which represents public and private nonprofit hospitals and health systems that participate in the 340B drug discount program, published a similar response from the HRSA to its membership. Regardless of whether the HRSA is making a change, 340B CEs should remain alert going forward to ensure that discharge prescriptions are properly categorized. It is very important that CEs regularly review their data to ensure that all 340B eligibility requirements are met. 

Discharge prescriptions under 340B 

The HRSA is required by legislation to contract with the 340B PVP to provide guidance and education to 340B CEs. 340B PVP published an FAQ in September 2014 that addresses discharge prescriptions: 

“The 340B Program is an outpatient drug program. Enrolled covered entities have the responsibility to ensure that drugs purchased under the 340B Program be limited to outpatient use and provided to individuals who meet the requirements of the current patient definition.”

It goes on to say that if CEs use 340B drugs, they should be able to explain the use of the drugs on an outpatient basis and have auditable records that comply with the 340B program requirements. 

For hospitals, the current definition of a patient requires that a CE has established a relationship with the individual, maintains the individual’s health care records, and provides health care services through a professional employed or under contractual or other arrangement with the CE. 

The definition does not address the site of service as a qualifying factor. Although the Omnibus guidance published in August 2015 excludes the use of 340B drugs for discharge prescriptions, it has not been published as final guidance and is not part of the current regulations. 

Outpatient expenses 

An HRSA FAQ states that: 

“the covered entity remains responsible for demonstrating that those outpatient clinics and /departments [of the registered parent 340B hospital] are listed as reimbursable on the hospital’s most recently filed Medicare cost report, are only using 340B drugs for eligible outpatients, meet all 340B Program requirements, and maintain auditable records.”

One possible reason for the heightened interest in discharge prescriptions is that the HRSA may have determined that the inpatient units do not have associated outpatient expenses or charges on the Medicare cost report, and are therefore deeming them 340B ineligible. 

At this time, it is unclear how the HRSA will handle inpatient units that may have observation (considered outpatient) expenses/charges on the cost report. 

CEs that have been cited for using 340B drugs for inpatient discharge prescriptions have appealed the findings. To help attain further information, 340B Health sent a letter to the HRSA Office of Pharmacy Affairs asking for clarification on the practice and the findings. 

Review 340B qualified prescriptions 

The HRSA has made 340B Program audits a high priority because of increased scrutiny from Congress and others, due to concerns about fraud and abuse of the program. 

Organizations should perform a review of 340B qualified prescriptions from inpatient areas of the hospital to ensure that they satisfactorily meet the current patient definition. The review should include validation of patient responsibility of care, provider eligibility, duplicate discounts, and 340B drug procurement and replenishment. 

How we can help 

CLA will help you assess your program controls, identify risk areas, and proactively implement effective strategies to mitigate your risks. There is some ambiguity about complying with the 340B Program. Let CLA help you clarify and strengthen your position.