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This HRSA guidance on the 340B program addresses issues including patient definition, site eligibility, group purchasing, auditable records, audits, and manufacturer pricing.

Navigating health reform

New 340B Drug Pricing Program Omnibus Guidance

  • 9/15/2015

The Health Resources and Services Administration (HRSA) released its 340B program omnibus guidance on August 28, 2015. The guidance addresses a wide range of issues including patient definition, site eligibility, group purchasing, auditable records, audits, and manufacturer pricing.

Guidance provides clarifications

The HRSA guidance clarifies aspects of the 340B program for several different constituencies. Issues addressed include the following:

  • Eligibility for both hospital and non-hospital covered entities along with their child sites.
  • Group purchasing prohibition, including some exceptions to the exclusion.
  • Continued HRSA 340B audits of both covered entities and manufacturers, and more information regarding the notice and hearing process to respond to adverse findings.
  • The requirement to have auditable records and maintain them for a minimum of five years.
  • Compliance with the prohibition against duplicate discounts for both Medicaid Fee-For-Service and Medicaid Manage Care Organization (MCO).
  • Contract pharmacy arrangements and the expectation that covered entities perform quarterly internal audits and annual independent audits of its contract pharmacy arrangements.
  • Manufacturer responsibilities for pharmaceutical pricing, limited distribution, refunds/credits, and recertification.

Clarifying the definition of patient

One of the most significant proposed changes is to increase the number of 340B patient qualifying conditions from three to six. For a patient to be eligible for 340B drugs, the individual must now meet the following six conditions:

  1. Receive a health care service at a facility or clinic site registered for the 340B Program and listed in the 340B database.
  2. Receive a health care service from a health care provider employed by (or that is an independent contractor of) a 340B entity, and the entity can bill for those services.
  3. Receive a drug that is ordered or prescribed by the provider as a result of the services described in the previous statement.
  4. Receive health care services consistent to the scope of grant, project, or contract.
  5. Be classified as an outpatient when the drug is ordered or prescribed.
  6. The entity must demonstrate a provider-to-patient relationship by maintaining auditable health records and the responsibility for care of the individual.

The HRSA also confirmed that an employee of a covered entity must also meet the above conditions to receive 340B drugs.

What the guidance means for health care organizations

Covered entities need to ensure that the controls they have in place to qualify individuals to receive 340B drugs incorporates the additional patient definition requirements. Organizations also need to confirm that all off-site clinics meet the guidance. In the cases of split billing, organizations need to work with their vendor to see what updates they anticipate making to their systems. And finally, if the entity’s state Medicaid program utilizes MCOs, they should prepare to work with both the state and the MCOs to determine how to comply with the prohibition of duplicate discounts.

How we can help

Among the many topics discussed, the guidance affirmed that 340B audits would continue. CLA can help you assess risk and internal controls and evaluate your audit readiness. Our team can also provide the annual independent audit of contract pharmacy arrangements. In addition, we can help you develop policies, procedures, and self-audit programs that incorporate this new guidance.