By Bill Wood, Tony Zappa and Tammy Zukowski

Crystal balls everywhere are working overtime to predict what will happen with 340B in 2017 and beyond. What will happen to HRSA’s Omnibus Guidance, or “Mega-Guidance,” which was originally expected to be published in its final form in late 2016? Will the new Administration delay it, for a short time or indefinitely? Also in question: What happens to 340B eligibility for rural hospitals if the Affordable Care Act is repealed since the ACA gave them their eligible status. These two questions, as well as some possible good news in eligibility for new non-grandfathered clinics of hospitals will be closely watched in the coming months.

The Election: Now What?

As most people know, President-elect Donald Trump previously committed to a “repeal” of the ACA. While it now appears that he may be open to keeping some portions of the ACA in his (or the GOP’s) new health insurance program, no mention has been made of whether this includes the expansion of 340B eligibility to rural hospitals, stand-alone children’s hospitals and stand-alone cancer centers.

Also of concern is the general nature of the 340B Program and whether the new Administration, which appears to be Pharma-friendly, will try to tamp it down. This could be done by passing new legislation raising the disproportionate share thresholds, revising the patient definition (as in the Mega-Guidance) or changing other key Program components. The American Hospital Association has sent the transition team a list of their “wishes,” which includes protecting the 340B Program. One can only assume PhRMA is also advancing their wish list to dismantle or at least scale back the Program.


On November 18, 2016, the Office of Management and Budget (OMB) announced the anticipated date of release of the Mega -Guidance is still December 2016. However, Congressional Republicans requested that the Obama administration not release any rules or regulations during the transition period and made clear that they would overturn them if the administration ignored their request.

As of today, the mega guidance has not been released and it appears most likely that it will not be released during the remainder of the Obama administration. It is also possible that the guidance may never be released and that the 340B Program will carry on as is.

Still unresolved are the questions around HRSA’s ability to promulgate “interpretive” rules that they make binding. Court rulings from 2015 limited HRSA’s ability to publish binding rules to the three areas in the original 1992 legislation. Most of the items in the Mega-Guidance fall outside of these areas, leaving some question about HRSA’s ability to make covered entities responsible for them. Visante will be watching for responses to the published final rules (if they happen) and any court proceedings that arise from them.

340B Legislation

In September, Representatives Peter Welch (D-Vt.) and Morgan Griffith’s (R-Va.), members of the Health Subcommittee of the House E&C Committee, introduced a bipartisan bill to limit the 340B drug discount program’s orphan drug exclusion. This bill has not been acted upon during the lame duck session but will be reintroduced in the new Congress.

Visante also believes that if the Mega-Guidance is not released, PhRMA may seek legislation to achieve its own goals. Given that the Republicans will control the Senate and House, PhRMA may be in the best position of the past several decades to make these changes a reality.

HRSA Audits

On November 11, 2016, HRSA announced it contracted with the Bizzell Group, LLC to perform audits of 340B covered entities starting in fiscal year 2017, which began October 1, 2016. At the Summer 340B Coalition Conference, HRSA previously announced it was “considering” outsourcing compliance audits but was not clear whether they were considering outsourcing all or some of them.

This announcement clarifies that Bizzell Group will be conducting all audits.

Visante is still studying the implications of this move. Will HRSA be able to conduct more audits? Will there be more consistency amongst auditors? There are also questions about Bizzell Groups’ knowledge of 340B and training of their auditors. Visante is working to uncover more about this relationship and experience of covered entities with the new audit team.

Site Neutral Law:

As reported in the November 3 issue of “Inside CMS,” CMS has modified its original proposal and is issuing an interim rule that will allow affected hospitals to bill for the services. CMS has previously stated that the new off-site clinics will be considered “part of the hospital” and may be listed on a reimbursable line of the Medicare Cost Report. Since clinics are now reported on line 90 of Worksheet A, it is expected, but not confirmed, that this will be the appropriate line. Stay tuned on this.

Hospital policy changes:

The 21st Century Cures bill, which passed both houses, includes provisions to change site-neutral policies for facilities under construction and excludes prospective payment system-exempt cancer hospitals from the site-neutral payment policies. Passage of the 21st Century Cures Act clarified an exemption for new off-site clinics “under development.”




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