What is the 340B Drug Pricing Program?
The 340B Drug Pricing Program is a federal program that requires drug manufacturers participating in the Medicaid drug rebate program to provide outpatient drugs to enrolled “covered entities” at or below the statutorily-defined ceiling price. This requirement is described in Section 340B of the Public Health Service Act and codified at 42 USC 256b. The purpose of the 340B Program is to permit covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992).
Please see http://www.hrsa.gov/opa/eligibilityandregistration/index.html for additional information and a complete list of covered entity types.
What is the Prime Vendor Program (PVP)?
As part of the original 340B legislation, the government was required to establish a prime vendor program (PVP). The PVP serves its participants in three primary roles:
- Negotiating sub-340B pricing on pharmaceuticals;
- Establishing distribution solutions and networks that improve access to affordable medications; and
- Providing other value-added products and service. The PVP is a voluntary program for 340B covered entities. All covered entities may participate in the PVP including those hospitals that are prohibited from purchasing in a group purchasing arrangement. The PVP negotiates discounts for all participating entities.
Does the Prime Vendor Program (PVP) negotiate inpatient discounts on pharmaceutical products for its participants?
The PVP does not negotiate inpatient pricing. Its efforts are dedicated to outpatient products and services.
Can a covered entity use 340B drugs for patients with private insurance?
The 340B Program does not prohibit covered entities from providing 340B drugs to individuals with private insurance as long as the individual is a qualifying patient of the covered entity and the drug is not subject to a duplicate discount under Medicaid.
Are 340B prices available when purchasing inpatient drugs?
No. Section 340B pricing applies to covered outpatient drugs only.
How does the Medicare and Medicaid anti-kickback statute, 42 U.S.C. 1320a-7b(b), apply to 340B covered entities?
Covered entities should always ensure they are adhering to all federal, state, and local laws. Covered entities contracting with pharmacies to dispense 340B drugs should be aware of the federal anti-kickback statute and the way in which such requirements could apply to their arrangements with contract pharmacies. Cases of suspected violations of the anti-kickback statute should be directly referred to the Office of the Inspector General (OIG) who oversees this provision. The OIG can be reached at:
Phone: 1-800-HHS-TIPS (1-800-447-8477)
*Note: While you may remain anonymous, in order to accept submissions for review via facsimile, the OIG Hotline requires a complaint to include a formal cover letter or the use of the downloadable complaint submission form, available https://oig.hhs.gov/fraud/report-fraud/hotline_complaint_submission_form.pdf (PDF - 34 KB) or https://oig.hhs.gov/fraud/report-fraud/hotline_complaint_submission_form.docx (MS Word - 178 KB) TTY: 1-800-377-4950
What does HRSA consider as the 340B unique identifier?
HRSA considers the 340B ID the unique identifier. While HRSA does not use Health Industry Numbers (HIN) as a method of identifying 340B entities, we recognize that HIN and DEA numbers may be used by certain stakeholders, in addition to the 340B ID, to operationalize the 340B Program.
Can the receipt of in-kind contributions through section 318 of the Public Health Service Act (PHSA) qualify an entity for participation in the 340B Drug Pricing Program?
Yes. An entity receiving in-kind contributions through section 318 may qualify for the 340B Drug Pricing Program provided all the remaining 340B requirements are met.
Our children’s hospital is part of a larger, non-DSH eligible hospital. Both hospitals share the same cost report, however, only our children’s hospital will likely meet the criteria for 340B Program eligibility. Given these circumstances, will it be possible for our children’s hospital to still qualify, and how will this impact the status of the larger hospital?
As a general rule, if the larger hospital does not meet the qualifications for 340B Program eligibility and they share a single Medicare cost report, then a hospital listed on that cost report may not enroll as a 340B covered entity, nor may it receive 340B drugs for its patients. If such a children’s hospital has its own 3300 series Medicare Provider number and believes that it can meet all statutory criteria, the Office of Pharmacy Affairs (OPA) will evaluate them on a case by case basis.
What if a children’s hospital does not know what its disproportionate share adjustment percentage is?
What is a “Pickle” hospital, and is it true that the "greater than 11.75% DSH Adjustment percentage" requirement is waived for them?
The 11.75% requirement is waived for a few hospitals known as "Pickle" hospitals (named for a JJ Pickle, a former member of Congress). They are defined in the Section 1886(d)(5)(F)(i)(II) of the Social Security Act as "a hospital that serves a significantly disproportionate number of low income patients and is located in an urban area, has 100 or more beds, and can demonstrate that its net inpatient care revenues (excluding any of such revenues attributable to this title or State plans approved under title XIX) during the cost reporting period in which the discharges occur, for indigent care from state and local government sources exceed 30 percent of its total of such net inpatient care revenues during the period.
What documentation should be provided to HRSA in order to show that an outpatient facility is included on the hospital’s Medicare cost report?
To ensure that the outpatient facility to be enrolled is an integral and reimbursable part of the most recently filed cost report of the hospital, OPA requires the submission of the following documentation:
- Worksheet A and C from the most recently filed cost report. Provide supplemental documentation if the clinics are bundled on the worksheet (e.g., working trial balance);
- Worksheet S-2 from the most recently filed cost report for sites with a different Medicare number from the main hospital; and
- Worksheet E, part A, from the most recently filed cost report for hospitals with a DSH adjustment percentage requirement.
In addition, in cases where the name of the facility is not the same as the cost reporting listing, documentation that shows the outpatient facility was filed with the most recent cost report is required.
May an outpatient facility that is reimbursed by CMS as a provider-based facility, but not included on the most recently filed cost report, access 340B drugs under the final guidance published in 1994?
No. Under the final guidelines, a facility must be both reimbursable and included in the hospital’s most recently filed Medicare cost report.
What outpatient facilities are hospitals required to register on the 340B database?
In order for off-site outpatient facilities to purchase 340B drugs and/or provide 340B drugs to its patients, they must be listed on the 340B database. OPA will verify the eligibility of each off-site outpatient facility by using the hospital’s most recently filed Medicare cost report. All clinics located off-site of the parent hospital, regardless of whether those clinics are in the same building, must register with OPA as outpatient facilities of the parent 340B-eligible hospital if the covered entity purchases and/or provides 340B drugs to patients of those facilities. For example, if the off-site outpatient facility is a hospital, all clinics/departments within that off-site location that plan to purchase and-or provide 340B drugs to its patient must register with OPA. If an off-site outpatient facility is only providing referral services for a covered entity, the requirement to register that outpatient facility with OPA would not apply. However, the outpatient facility that is providing referral services cannot purchase or dispense 340B drugs.
Since 1994, HRSA’s policy has been to use the most recently filed Medicare cost report for purposes of determining 340B eligibility for outpatient facilities (59 Fed. Reg. 47884 (Sept. 19, 1994)). In order for off-site facilities to be eligible for the 340B Program, a covered entity must show that each outpatient facility is an integral part of the hospital and included as reimbursable on the covered entity’s most recently filed Medicare cost report. OPA requires that the most recently filed Medicare cost report is submitted with the enrollment package in order to verify eligibility. Registering all off-site (from the parent) outpatient facilities with OPA will ensure that each facility has been reviewed and verified by HRSA OPA as eligible to participate in the program, therefore alleviating any potential for providing pharmaceuticals to ineligible facilities or patients.
Do clinics/departments located within the four walls of a registered 340B hospital have to be registered in the OPA database?
Outpatient clinics/departments within the four walls of the registered 340B parent hospital do not need to also register/enroll into the 340B Program. However, the covered entity remains responsible for demonstrating that those outpatient clinics/departments within the four walls of the parent hospital are only using 340B discounted drugs for eligible outpatients, meet all 340B Program requirements, and maintain auditable records.
My covered entity has a few physician clinics, do we need to register them as child sites?
It depends upon what is meant by physician clinic, as private physician offices themselves are not eligible to participate as part of a hospital in the 340B Program. Only hospital outpatient facilities that appear as reimbursable outpatient cost centers on the hospital’s most recently filed Medicare cost report are eligible to be listed and participate in the 340B Program.
HRSA OPA requires each hospital to register all of its off-site outpatient facilities where 340B drugs are purchased and/or provided to patients of that facility. This will ensure that each facility has been reviewed and verified by HRSA OPA as eligible to participate in the program, therefore strengthening the hospital’s compliance efforts.
I was told that we cannot list our in-house pharmacy as an outpatient facility. Is that correct?
Pharmacies are not eligible 340B covered entities and therefore, should not be listed as outpatient facilities with a 340B ID in the database. If the site is only a pharmacy and is listed as a covered entity with a 340B ID, this pharmacy must be terminated from the database. It should then be determined whether it is appropriate for the pharmacy to be added as a “ship to” address for the actual covered entity in the database.
If the pharmacy is located within an offsite outpatient facility that also provides healthcare services and purchased and/or provides 340B drugs to its patients, the outpatient facility must be registered as an outpatient facility site with the pharmacy listed as a “ship to” of that outpatient facility. When a pharmacy is supporting multiple outpatient facilities of a parent entity, the pharmacy should be listed as a “ship to” address under the parent entity’s 340B ID.
What process does OPA use for verifying the enrollment of outpatient facilities outside of the main hospital in the 340B Program?
Since 1994, HRSA’s policy has been to use the most recently filed Medicare cost report for purposes of determining 340B eligibility for outpatient facilities (59 Fed. Reg. 47884 (Sept. 19, 1994)). In order for the new facilities to be eligible for the 340B Program, a covered entity’s most recently filed cost report must show that each outpatient facility is an integral part of the hospital and included as reimbursable on the covered entity’s Medicare cost report. OPA requires that the most recently filed cost report is submitted with the enrollment package in order to ensure verify eligibility.
Can 340B drugs be used for 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 patients who meet the requirements of the current patient definition.
340B drugs can be used for discharge prescriptions to the extent that the drugs are for outpatient use. Whether a drug qualifies as outpatient and the individual meets the definition of patient depends upon the factual circumstances surrounding the care of that particular individual. If a covered entity uses 340B drugs, it should be able to explain why the covered entity is responsible for the use of the drugs on an outpatient basis and have auditable records that demonstrate compliance with 340B Program requirements.
If my hospital cannot track utilization of 340B-priced drugs on a drug-by-drug basis, may it rely on historical utilization data or other means for meeting 340B tracking requirements?
Your hospital may rely on alternative tracking systems if it submits a written request to the Office of Pharmacy Affairs describing the proposed methodology. The OPA may consult with the Office of the Inspector General as necessary in evaluating a proposed alternative tracking system. The “alternative tracking system” cannot be used until it has been approved by OPA.
My hospital does not have an outpatient pharmacy. May we use the 340B Program to purchase drugs administered in hospital outpatient settings such as hospital outpatient clinics, a chemotherapy or dialysis center, and/or the hospital?
Yes. The 340B Program covers not only drugs dispensed by outpatient pharmacies for patient self-administration, but also drugs administered by physicians in hospital outpatient settings. The hospital must develop a tracking system to ensure that drugs purchased through the 340B Program are not used for hospital inpatients. Hospital pharmacies that purchase drugs for both inpatient and outpatient use have an increased responsibility to ensure that proper safeguards are in place to protect against diversion of 340B-priced drugs to hospital inpatients.
Manual or electronic processes can be implemented to appropriately address the 340B Program requirements for mixed patient care settings.
May a hospital use 340B-priced drugs in "mixed-use" settings, such as a surgery department, where both inpatients and outpatients are treated? If so, what if the hospital cannot track which drugs are used for inpatients and which ones are used for outpatients?
A hospital may use 340B-discounted drugs for patients treated in mixed-use settings that appear as reimbursable cost centers on the hospital’s most recently filed Medicare cost report and meet the definition of a patient under the 340B statute. The hospital must develop appropriate tracking systems to ensure that covered outpatient drugs purchased through the 340B Program are not used for hospital inpatients. It is the responsibility of the hospital to ensure appropriate safeguards are in place to protect against diversion. If a hospital is unable to implement an effective tracking system, it should not use the 340B Program in that setting.
If a DSH, children’s hospital, or freestanding cancer hospital registers with OPA to participate in the 340B Program, when does their participation become effective and the GPO prohibition apply?
The GPO prohibition form, signed by the hospital’s authorizing official upon enrollment, states that the hospital “...will not participate in a group purchasing organization or group purchasing arrangement for covered outpatient drugs as of the date of this listing on the OPA website.”
Our hospital isn’t subject to the GPO prohibition. Does the GPO Policy Release impact our hospital?
The GPO prohibition applies to all disproportionate share hospitals, children’s hospitals, and freestanding cancer hospitals enrolled in the 340B Program. The GPO policy release does not apply to entities registered as any other type of covered entity.
If a critical access hospital enrolls and participates in the 340B Program, will the critical access hospital have to stop participating in our group purchasing organization (GPO)?
No. Under section 340B(a)(4)(N) of the Public Health Service Act, as amended by the Affordable Care Act, the prohibition against participation in GPO arrangements does not apply to critical access hospitals, rural referral centers, or sole community hospitals. The GPO prohibition only applies to 340B-enrolled disproportionate share hospitals, children's hospitals, and freestanding cancer hospitals.
Can a 340B hospital subject to the group purchasing organization (GPO) prohibition (disproportionate share hospitals, children's hospitals, freestanding cancer hospitals) continue to purchase items from a GPO that are at a lower cost than 340B pricing?
Hospitals that participate in the 340B Program for covered outpatient drugs and are subject to the GPO prohibition cannot purchase any covered outpatient drugs through a group purchasing organization or other group purchasing arrangement. This “GPO prohibition” is found in the 340B statute, at section 340B(a)(4)(L) and applies even if items are available at a lower price through the GPO. Hospitals can continue to purchase all products for inpatient operations through a GPO, even if the outpatient departments participate in the 340B Program.
How does the GPO policy release apply to hospitals currently enrolled in the 340B Program and utilizing a conventional replenishment model in a mixed-use setting? If a hospital intends to convert to a WAC first purchase model (integrated with inpatient and outpatient accruals), may that hospital utilize GPO purchased drugs remaining in inventory at the time of transition until those GPO purchased drugs are expended?
The answer to this question is important in understanding whether the hospital would need to do an initial purchase of all 340B utilized drugs at WAC to demonstrate compliance versus an alternative, and less costly, approach of allowing existing GPO inventory to be utilized until expended under the new WAC first purchase model.
Disproportionate share hospitals (DSH), children’s hospitals, and free-standing cancer hospitals participating in the 340B Program are subject to the GPO prohibition.
The hospital may utilize GPO purchased drugs remaining in inventory at the time of transition until those GPO purchased drugs are expended. The hospital should keep auditable records to demonstrate that accumulation occurs to inpatient GPO or outpatient 340B based upon eligible patients. A non-GPO outpatient account should be available for replenishment for covered outpatient drugs in the event a 340B product is not available.
If a DSH, children’s, or freestanding cancer hospital has purchased covered outpatient drugs on a GPO account and then replenished through their 340B account, how can the hospital get back into compliance?
The accumulation for specific accounts is based upon 340B patient eligibility status, and the hospital must maintain auditable records of its policies, procedures, and transactions. For example:
- 340B eligible patients generate accumulation for orders on the 340B outpatient account.
- Inpatients generate accumulation for orders on the inpatient GPO account.
- 340B ineligible outpatients (or situations where 340B is not available) generate accumulation for orders on an outpatient non-GPO (i.e., Non-340B) account. PVP participants may access the PVP’s Non 340B contract.
HRSA recognizes that the variety of patient eligibility status categories accumulate to produce corresponding virtual inventories. These accumulations will eventually produce replenishment orders that result in a physical inventory in the mixed-use area comprising drugs from a variety of contract purchases. Hospitals must maintain auditable records showing that the virtual accumulations are based upon documented 340B patient eligibility status categories.
A hospital system owns and controls many hospitals, some of which are 340B participating hospitals. The 340B participating hospitals each have their own 340B Program identification number. The hospital system would like to negotiate prices for drugs used at their hospitals, including those that participate in the 340B Program. Does the above scenario violate the 340B GPO prohibition? That is, does it constitute a group purchasing arrangement?
The 340B participating hospitals within the hospital system in this scenario have separate 340B registrations. For the hospitals registered for the 340B Program as a disproportionate share hospital, children’s hospital, or freestanding cancer hospital, conducting price negotiations for covered outpatient drugs with any other hospital would create a prohibited group purchasing arrangement. The hospital system may negotiate prices for inpatient drugs only.
A DSH with an in-house pharmacy would like to serve 340B and non-340B eligible patients. May the DSH use a GPO to purchase drugs for our non-340B eligible patients that receive services at sites registered on the OPA database?
If a product does not have a 340B price, does that mean it is not considered a covered outpatient drug for the purposes of the 340B Program?
The definition of covered outpatient drug is found in section 1927 (k) of the Social Security Act. The availability of a 340B price is not determinative of whether that drug meets this definition of a covered outpatient drug.
Can a hospital subject to the GPO prohibition use a GPO to purchase drugs that do not meet the definition of covered outpatient drug (as defined by section 1927(k) of the Social Security Act)?
Yes. Entities should have clear documentation demonstrating how the entity applies the definition of covered outpatient drug with respect to GPO use.
Can our 340B hospital, subject to the GPO prohibition, use a GPO for outpatient drugs at a non-reimbursable clinic
within the four walls of the parent hospital?
If one child site can not comply with the GPO prohibition as of August 7, 2013, should the parent site unregister the child site?
A mixed-use area has only inpatients or 340B eligible outpatients. There are no 340B ineligible patients
. In this setting where the status of a patient (inpatient vs. outpatient) is not known until replenishment occurs by the split ordering software, and the accumulator splits orders into inpatient GPO and 340B, is it required to start with a WAC inventory?
The hospital must keep auditable records demonstrating that accumulation occurs for inpatient GPO or outpatient 340B for eligible patients (as defined by current patient definition guidelines (61 Fed. Reg. 55156 (Oct. 24, 1996)). A non-GPO outpatient account should be available for replenishment for covered outpatient drugs in the event a 340B product is not available.
When a covered entity is unable to purchase a covered outpatient drug at a 340B price, may the covered entity subject to the GPO prohibition buy via a GPO?
A covered entity that is subject to the GPO prohibition may not use a GPO for covered outpatient drugs at any point in time. If a covered entity is unable to purchase a covered outpatient drug at the 340B price, written notification should be sent to OPA immediately detailing the covered outpatient drug(s) involved, the manufacturer, and the process by which the entity was notified that the purchase could not be made. HRSA reviews all allegations to ensure compliance with 340B Program requirements.
If you are not able to obtain the drug at a 340B price here is the suggested process: Contact the manufacturer and request 340B pricing. If they refuse, ask for their reasoning in writing. Forward a cover letter describing the situation and the collected explanations to:
Office of Pharmacy Affairs
5600 Fishers Lane
Mail Stop 10C-03
Rockville, MD 20857
How does a hospital determine if our split billing software product is in compliance for drugs administered on site in our hospital outpatient departments or in the hospital in mixed settings?
By August 7, 2013, hospitals subject to the GPO prohibition should be able to answer NO to all of the following: Does the hospital…
- Use GPO purchased covered outpatient drugs for 340B ineligible outpatients in OPA-registered participating clinics?
- Have systems (or vendor systems) set up to use GPO purchased covered outpatient drugs for 340B ineligible outpatients?
- Obtain GPO purchased covered outpatient drugs via a contract pharmacy for 340B ineligible outpatients?
- Use GPO purchased covered outpatient drugs within the four-walls of our registered parent hospital for
340B ineligible outpatients?
- Use a GPO to purchase any covered outpatient drugs unavailable at a 340B price without notifying OPA in writing?
Additionally, covered entities should clearly document their operations in their policy and procedure manuals.
May a Hemophilia Treatment Center (HTC) that is part of a hospital participate in a GPO for outpatient drugs?
The answer depends on how the HTC is registered with respect to the hospital.
- If the HTC is within the four walls of a parent hospital subject to the GPO prohibition and not separately registered for the 340B Program with a 340B ID beginning with “HM”, the HTC may not use an outpatient GPO.
- If the HTC is registered as an off-site outpatient clinic of a hospital subject to the GPO prohibition, the HTC may not use an outpatient GPO.
- If the HTC is an off-site outpatient facility of a hospital subject to the GPO prohibition, but is not registered for the 340B Program (as a child site of the hospital) and meets all of the following, if may use a GPO for covered outpatient drugs:
- is located at a different physical address than the parent;
- is not registered on the OPA 340B database as participating in the 340B Program;
- purchases drugs through a separate pharmacy wholesaler account than the 340B participating parent; and
- The hospital maintains records demonstrating that any covered outpatient drugs purchased through the GPO at the HTC are not utilized or otherwise transferred to the parent hospital or any outpatient facilities registered on the OPA 340B database.
- If the HTC is otherwise an eligible entity and registered as such (340B identification number beginning with “HM”), then it is not subject to the GPO prohibition with respect to its own patients.
In no circumstances may the HTC’s permitted use of a GPO be used to circumvent the GPO prohibition for a hospital and its outpatient clinics subject to the GPO prohibition.
Can Community Health Centers participate in the Prime Vendor Program (PVP) and a group purchasing organization (GPO)?
When does HRSA consider covered entities in violation of the GPO prohibition?
Yes. All covered entities may participate in the PVP, although disproportionate share hospitals, children's hospitals, and freestanding cancer centers that participate in the 340B Program are prohibited from purchasing outpatient drugs through a GPO. 340B Prime Vendor participation is voluntary, and there are no restrictions placed on covered entities electing to participate. Most alternative purchasing groups serving 330 grantees and other entities encourage participation in the 340B PVP to ensure members have access to best pricing on pharmaceuticals while offering members their own contract portfolios of medical/surgical, dental, office, and other non-pharmacy supplies, which tend to be complementary to the 340B PVP pharmacy portfolio. On occasion, there may be an alternative purchasing group that does not permit a member to simultaneously access their own contracts and 340B PVP contracts due to existing business relationships with a supply partner. In this situation, the covered entity may be required to notify the alternative purchasing group to cancel its membership before the selected pharmacy wholesaler will load the 340B PVP pricing available to the entity's pharmacy account.
HRSA published Policy Release 2013-1 (PDF - 227 KB) on February 7, 2013 to clarify its policy regarding this 340B Program statutory prohibition. HRSA initially allowed covered entities 60 days after the publication of the GPO policy release (until April 7, 2013) to make certain their drug replenishment practices comply with the GPO policy release. Based on a large number of covered entities providing comments that this deadline could not be met due to the work required to implement the needed changes, HRSA is extending the deadline to August 7, 2013 for those entities that are not able to comply with the initial April 7 deadline. No additional extensions will be granted beyond the August 7 date.
During this extension, HRSA expects that covered entities will comply with the GPO Prohibition as soon as possible prior to the August 7 deadline. HRSA reviews and follows-up on all allegations regarding non-compliance and has the ability to audit a covered entity. In such cases, covered entities should be able to demonstrate that they made their best effort to be in compliance as soon as they were able to do so and should have a legitimate reason for any delay. Any evidence of deliberate delay could result in immediate removal from the 340B Program.
If a covered entity is unable to be in compliance by August 7, the covered entity must immediately notify HRSA, and will be terminated from the program. The covered entity may reapply during the next quarterly registration period (October 1 – 15) once it determines that it is in compliance with all 340B Program requirements and can attest to such during the enrollment process. If after August 7, HRSA determines that a covered entity still participating in the program is not in compliance with the GPO prohibition, HRSA will terminate such entity from the 340B Program.
In addition, HRSA will be conducting annual recertification of hospitals after the August 7 deadline as part of the regular annual recertification process. At that time, all participating 340B hospitals must attest that they are in compliance with all 340B program requirements, including compliance with the GPO prohibition as detailed in Policy Release 2013-1 (PDF - 227 KB).
Are employees of a covered entity eligible to receive 340B drugs?
Covered entities may only distribute 340B drugs to their employees if the employees meet the patient definition set forth under the 340B Program. For current patient definition, see 61 Fed. Reg. 55156 (Oct. 24, 1996). The 340B Program is limited to patients of the covered entity and has never been a general employee pharmacy benefit or self-insured organization pharmacy benefit. Evidence of an employer relationship or insurer relationship is not a consideration in determining whether the patient is eligible for 340B drugs. HRSA has never approved of arrangements that have sought to expansively interpret the 1996 patient definition guidelines to include individuals other than actual patients of the covered entity.
Can non-Medicaid patients receive 340B drugs?
Yes, as long as they are patients of the covered entity.
Are 318A grantees (STD grantees) that participate in the 340B Program permitted to purchase contraceptives and other 340B covered drugs for use by grantee patients?
STD (318A grantee) clinics that participate in the 340B Program may purchase 340B covered outpatient drugs (including prescribed contraceptives), for grantee patients that meet the patient definition criteria (61 Fed. Reg. 55156 (Oct. 24, 1996)) as follows: the covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual's health care; and the individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity; and the individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or Federally qualified health center look-alike status has been provided to the entity. Therefore, if an individual meets all of the requirements of the definition of patient, including the third requirement that the individual receives a healthcare service or range of services sufficient to establish a provider-to-patient relationship under the 340B Program from the 318A grantee that are consistent with screening, preventing, or treating sexually transmitted diseases, then the covered entity may purchase and dispense any 340B drugs for which the covered entity is responsible, including contraceptives, to that patient.
Are 340B covered entities required to contract with a retail pharmacy?
No. Covered entities are free to choose how they will provide 340B pharmacy services to their patients, subject to federal and state laws. Options include contracting with a retail pharmacy, providing in-house pharmacy services, or both. For more information, including tools and technical assistance in providing 340B pharmacy services, contact Apexus Answers at 888-340-2787, or ApexusAnswers@340bpvp.com
What does OPA mean by a "ship to, bill to" arrangement?
The "ship to, bill to" arrangement refers to an arrangement set up by the covered entity who is responsible for purchasing 340B drugs from wholesalers and/or manufacturers and directs those 340B drugs to be shipped to the contract pharmacy. In other words, the covered entity maintains title of the 340B drugs as required, but the contract pharmacy(ies) houses the drugs and provides dispensing services to patients of the covered entity.
What are the compliance elements both the covered entity and contract pharmacy are responsible for under the multiple contract pharmacy services guidelines?
The covered entity is primarily responsible for ensuring compliance with all 340B Program requirements. Covered entities along with contract pharmacies are responsible for ensuring compliance with all 340B Program requirements in order to prevent diversion and duplicate discounts. The contract pharmacy, with the assistance of the covered entity, will establish and maintain a tracking system to prevent diversion and develop a system to verify patient eligibility. Both parties must agree that they will not resell or transfer 340B drugs to any party but the covered entity's patients. Both must also establish an arrangement with the state Medicaid agency to prevent duplicate discounts. In addition, both covered entities and contract pharmacies must adhere to all federal, state, and local laws.
Records maintained by the covered entity and contract pharmacy pertaining to compliance with the 340B Program guidelines are subject to audits by a third party including the government and participating manufacturers. The agreement between the covered entity and the contract pharmacy(ies) must specify the services that will be provided by the latter. The guidelines (75 Fed. Reg. 10272 (Mar. 5, 2010)) were effective on April 5, 2010.
Covered entities must list all the pharmacy locations eligible to dispense drugs or provide services to patients of the covered entity under the contract.
Does the covered entity need to submit an Alternative Method Demonstration Project proposal for multiple contract pharmacies?
The multiple contract pharmacy Federal Register Notice, published March 5, 2010, permits multiple contract pharmacies and removes the need for an AMDP proposal for covered entities that wish to:
- Use multiple contract pharmacy service sites, and/or
- Utilize a contract pharmacy to supplement in-house pharmacy services.
The AMDP process will continue for those covered entities wishing to develop 340B networks of covered entities.
What are the audit requirements under the contract pharmacy guidelines?
Although annual independent audits are not expressly required, the covered entity must have sufficient information to meet its obligation of ensuring ongoing compliance and the timely recognition of any problem. All covered entities are required to maintain auditable records and it is the expectation of HRSA that most covered entities will utilize independent audits as part of fulfilling their ongoing obligation of ensuring 340B Program compliance. However, HRSA leaves it up to covered entities to determine how to meet their compliance responsibilities. The guidelines intentionally do not specify the precise method, personnel, or items for ensuring that sufficient information is obtained by the covered entity. To the extent that any internal compliance activity or audit performed by a covered entity indicates that there has been a violation of 340B Program requirements, it is HRSA’s expectation that such finding be disclosed to HRSA along with the covered entity’s plan to address the violation. Auditable records need to be maintained for a period of time that complies with all applicable federal, state, and local requirements.
What are the record-keeping requirements for multiple contract pharmacies?
The covered entity must have fully auditable records that demonstrate compliance with all 340B Program requirements. The contract pharmacy will provide the covered entity with reports consistent with customary business practices (e.g., quarterly billing statements, status reports of collections and receiving, and dispensing records). The contract pharmacy, with the assistance of the covered entity, will establish and maintain a tracking system suitable to prevent diversion of 340B drugs and duplicate discounts on the drugs. Customary business records, which must be readily retrievable, may be used for this purpose. The covered entity will establish a process for a periodic comparison of its prescribing records with the contract pharmacy's dispensing records to detect potential irregularities. Such records can include: prescription files, velocity reports, and records of ordering and receipt of drugs. These records will be maintained for a period of time required by State law and regulations (75 Fed. Reg. 10272 (Mar. 5, 2010)).
Am I required to fill out a change request form for recertification if my covered entity has no necessary changes to be made in the 340B database?
No change request form will be required if all information in the 340B database is accurate.
If a covered entity submits a change request form, must the covered entity do anything else to recertify?
Yes. A change request form only updates the covered entity’s information in the 340B database. Recertification is a separate process that will require the covered entity’s Authorizing Official to update information if necessary and certify to compliance with 340B Program requirements during a specified time period. The Authorizing Official is responsible for ensuring program compliance for the covered entity. Recertification will cover the organization (parent) and all registered outpatient (child) sites in the 340B Program database. OPA, however strongly recommends that you update the database using the change request form prior to recertification to ensure a smooth recertification process. It is the covered entity’s responsibility to keep all information in the 340B Program database up to date at all times. The 340B Program database is the sole source for covered entity and manufacturer information.
During recertification will the Authorizing Official and Primary Contact receive emails?
The Authorizing Official and Primary Contact will receive an email from OPA with the date that recertification will begin. On the start date, only the Authorizing Official will receive the required user name and password to perform recertification.
Is my covered entity required to submit our Medicaid/NPI number to the database for inclusion in the HRSA Medicaid Exclusion File?
Covered entities can choose whether they will use 340B drugs for their Medicaid patients. If they choose to do so, they must provide the Office of Pharmacy Affairs (OPA) with their pharmacy Medicaid Provider number, which is placed in the HRSA Medicaid Exclusion File. OPA makes the HRSA Medicaid Exclusion File available to state Medicaid agencies and manufacturers so that the state does not request a Medicaid rebate from a manufacturer for the already discounted 340B drugs. If an outpatient facility or sub-grantee/sub-contractor bills under a different Medicaid Provider Number or NPI than the parent site, those need to be appropriately listed with the sites.
What is the HRSA Medicaid Exclusion File?
The HRSA Medicaid Exclusion File is a mechanism created by HRSA which helps state Medicaid agencies comply with a specific 340B statutory provision: that drugs purchased at 340B prices must be excluded from Medicaid rebate requests to drug manufacturers.
Covered entities can choose whether they will use 340B drugs for their Medicaid patients. If they choose to do so, they must provide the Office of Pharmacy Affairs (OPA) with their pharmacy Medicaid Provider number, which is placed in the HRSA Medicaid Exclusion File. OPA makes the HRSA Medicaid Exclusion File available to state Medicaid agencies and manufacturers so that the state does not request a Medicaid rebate from a manufacturer for the already discounted 340B drugs.
Why must state Medicaid agencies forego rebates on 340B purchased drugs?
The 340B statute prohibits state Medicaid agencies from collecting rebates on drugs purchased at 340B prices for Medicaid patients because this practice would result in “duplicate discounts.”
The “duplicate discount” would occur if an up-front 340B discount and back-end Medicaid rebate were provided on the same drug/drug claim.
Which Medicaid Provider and NPI numbers should our entity submit to OPA?
The entity should submit Medicaid Provider numbers that are used to bill 340B purchased drugs to Medicaid patients. This is most often the pharmacy’s Medicaid Provider/NPI number, but could also be the clinic Medicaid Provider/NPI number or a combination of both, depending on the services at the clinic. For more information, contact the 340B Prime Vendor at 1-888-340-2787 or via email at ApexusAnswers@340BPVP.com
What if our entity uses 340B for some Medicaid patients and not for others? Which Medicaid Provider Number and NPI should we submit?
It is the entity’s responsibility to work with the respective State Medicaid agency to ensure that 340B purchased drugs can be identified by Medicaid agencies. OPA requests that the information in the HRSA Medicaid Exclusion File reflect what is occurring at that entity for ALL of its Medicaid patients. The HRSA Medicaid Exclusion File does not support entities which pick and choose how they bill Medicaid on a case-by-case basis. If the Medicaid Provider/NPI number is listed in the Medicaid Exclusion File that Medicaid Provider number should always be used to bill Medicaid for 340B purchased drugs.
How does a covered entity carve out Medicaid?
To carve out Medicaid, a covered entity chooses to forego the 340B discount drugs for its Medicaid patients. In this arrangement, 340B drug inventory is dispensed only to non-Medicaid patients.