The Big Picture
In a frequently asked question (FAQ) published late last week, the Health Resources and Services Administration (HRSA) indicated that patients of certain offsite outpatient clinics of hospitals that participate in the prescription drug pricing program established under Section 340B of the federal Public Health Service Act (the “340B program”) may be eligible for 340B drugs before the hospital files a Medicare Cost Report that includes those clinics, and before those clinics are registered on the 340B Office of Pharmacy Affairs Information System (OPAIS). This represents a significant change, since offsite outpatient locations of 340B participating hospitals have historically not been eligible to participate in the 340B program until such locations are included as reimbursable facilities in the hospital’s most recently filed Medicare cost report and listed on the OPAIS.
The FAQ in Question
The FAQ in question, which was published on June 4, 2020, reads as follows:
Q: Are hospital covered entities able to register offsite, outpatient facilities before being listed as reimbursable on their Medicare Cost Report?
A: In order to register for the 340B Program and be listed on the 340B Office of Pharmacy Affairs Information System (340B OPAIS), HRSA must first verify that the offsite, outpatient facility is listed as reimbursable on the hospital's most recently filed Medicare cost report and has associated outpatient costs and charges as outlined in HRSA's 1994 Outpatient Hospital Facilities Guidelines.
HRSA notes that for hospitals who are unable to register their outpatient facilities because they are not yet on the most recently filed Medicare Cost Report, the patients of the new site may still be 340B eligible to the extent that they are patients of the covered entity. (More information on HRSA’s patient definition guidance can be found here.)
These situations should be clearly documented in the covered entity’s policies and procedures. In addition, a covered entity is responsible for demonstrating compliance with all 340B program requirements and ensure that auditable records are maintained for each patient dispensed a 340B drug.
340B Patient Definition
For hospitals, HRSA’s patient definition provides that an individual is a patient of the hospital only if:
- the hospital has established a relationship with the individual, such that the hospital maintains records of the individual's healthcare; and
- the individual receives healthcare services from a healthcare professional who either is employed by the hospital or provides healthcare under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the hospital.
Implications of Change
The change in policy evidenced by the FAQ is likely to have a significant impact on hospitals that acquire or open new outpatient clinics, or that move existing on-campus outpatient operations to an off-campus location. Under the prior guidance, when a hospital acquires or opens a new offsite outpatient facility during the course of a given calendar year, that facility is not eligible to participate in the 340B program until the hospital files a Medicare cost report that includes that facility – which, in some situations, can be a year or more later. The new guidance indicates that a hospital would be able to use 340B purchased drugs for patients of that facility immediately, so long as the patients meet the elements of the patient definition described above, and provided that the hospital has policies and procedures in place that address the eligibility of patients who receive services at such locations for 340B drugs.