Written by Kristin Fox-Smith (MPA) and William Wood (RPh)

There is great concern in the 340B community about a rumor that the Health Resources and Services Administration (HRSA) is no longer allowing 340B drugs to be used to fill discharge prescriptions (effective March 5, 2016). HRSA was not the source of the misinformation, but it spread quickly throughout the community, becoming viral in less than 48 hours. Visante’s 340B consultant team has encountered this disconnect several times in recent audit support assignments and would like to share what we have learned thus far.

Sorting out what’s really happening

The proposed HRSA Omnibus Guidance (a.k.a. the “mega guidance”) includes language that would limit use of 340B program discounted drugs for inpatient discharge prescriptions to be used on an outpatient basis. As of this writing, the guidance has not been finalized, and there is no indication that this new policy would mean a significant shift from past guidance in this area. Furthermore, current law requires that HRSA provide advance notice of and such change in policy, which has not occurred. Those experienced with administration of the 340B program will also recognize that the rumored change to discharge prescriptions is in conflict with HRSA’s previously stated position on the use of 340B drugs for outpatient prescriptions.

Since it began conducting audits in 2012, HRSA has not issued any findings indicating that inpatient discharge prescriptions to be used on an outpatient basis do not qualify for 340B drug use. A possible exception to this involved a HRSA finding of ineligibility for discharge prescriptions, which was later overturned when the covered entity (or CE) appealed by documenting that the site from which the discharge prescriptions originated had appeared on a reimbursable line of its Medicaid Cost Report.

Our experiences with HRSA’s auditors suggest a change in policy may be pending

Notwithstanding the above, Visante recently encountered some situations indicating that a change in HRSA’s position on the use of 340B for discharge prescriptions could be forthcoming. During a recent HRSA audit for which we provided on-site support, the field auditor repeatedly challenged the use of 340B drugs for discharge prescriptions because they originated from inpatient sites, as shown on the hospital’s Medicare Cost Report. Visante consultants questioned the auditor’s interpretation of an eligible site, and the auditor stated that he was only following instructions from his boss. After further questioning by our team, the auditor said he would have to check with his boss. The result was that nothing further was mentioned about this issue and the hospital recently received its HRSA Final Report with no negative findings.

In March of this year, Visante was providing on-site HRSA audit support for a different type of CE undergoing review by a different field auditor. Once again, there was repeated questioning of the use of 340B drugs for discharge prescriptions. Our consultants and the CE questioned this auditor, requesting the reason for this position and asking if this was a new policy. The auditor’s statement was “it has always been this way.” Although the auditor reiterated concern about the number of “ineligible” prescriptions at the conclusion of the retail/contract pharmacy claims tracer, it remains to be seen if this issue will appear in the final report and, if so, as a finding requiring remediation and a Corrective Action Plan. This hospital has not yet received its official HRSA Final Report and may not for several months.

An official response to the rumors

 On April 4, 2016 HRSA finally issued a response to the rumors of a new policy regarding 340B use for discharge prescriptions. This was reported that same day by Charles Hayes following an interview with HRSA leadership (Charlie.hayes@340Bhealth.org) to 340B Health’s membership.

“Discharge prescriptions from an inpatient location qualify for 340B if they are used on an outpatient basis, the Health Resources and Services Administration confirmed this afternoon. HRSA said it does not matter whether the inpatient location is onsite or offsite. Hospitals do not have to register inpatient locations, either onsite or offsite, to be able to use 340B for discharge prescriptions from those locations, HRSA continued. Hospitals, it said, must continue to ensure that 340B is not used for medications given to and used by individuals that are hospital inpatients at the time of use. HRSA is aware that some audit reports have been released to hospitals that may indicate that discharge prescriptions from an inpatient stay are not eligible for 340B. HRSA said it encourages hospitals to appeal such findings and said it may reach out to those hospitals.”

In view of the fact that HRSA apparently has not issued instructions to its auditors to highlight or address concerns regarding the use of 340B for discharge prescriptions, we are wondering how the auditors in our recent experiences suddenly began to implement this line of questioning. It may be that HRSA is anticipating its proposed Mega Guidance” that disallows 340B for discharge prescriptions may never be finalized and is attempting to “feel out” the 340B community for its response. At this point we are encouraging our clients to hold fast to current policy until there is clearer direction from HRSA.

What does this mean for your 340B program? 

Although HRSA is now in its fifth year of conducting 340B compliance audits and should be employing a defined audit scope and process, we find that the process continues to evolve. More audits require more auditors, and this can result in the increased possibility of differing auditor interpretations.

While HRSA’s statement of April 4 appears to reinforce the eligibility of 340B use for discharge prescriptions, can 340B eligible hospitals feel confident enough to continue their current use of 340B drugs? For hospitals that are considering a formal, structured discharge prescription program such as “meds-to-beds” we wonder how this statement will affect those plans. For hospitals considering opening or expanding an outpatient pharmacy, this issue may be an important issue to consider in your financial modeling.

Visante encourages all 340B hospitals to stay informed regarding HRSA’s future audit findings and its continual shift in audit focus. Audit results are posted for public viewing on the Office of Pharmacy Affairs (OPA) website and can provide valuable insight into any changes in policy interpretation and findings.

We are here to help

Current 340B program participants will benefit from Visante’s 340B Integrity Assessment and Audit-Readiness Review which is designed to respond to 340B audits coming out of HRSA and OPA. For those healthcare organizations that are new to this program, Visante’s 340B covered entity assessment is a also valuable resource. If you are at the beginning of qualifying for 340B program participation, we will help you complete your application and set up the required compliant systems and supporting policies and procedures.

For your ongoing 340B compliance management and self audits, we also offer a NEW software tool to support your internal operations. Click here to learn about Visante’s Compliance Tool: 340B, which is an easy to use, web-based application.

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