340B Drug Pricing Program news and updates
In November, several key updates to the 340B Drug Pricing Program were published for covered entities to review and make appropriate updates to their program operations. It is important to note that none of these updates include changes to 340B law or eligibility requirements; rather they provide clarification to covered entities regarding how to address recent changes and events that are direct results of external parties’ involvement in the 340B Program. These updates include clarification on HRSA’s enforcement of the patient definition, operational changes due to the discontinued COVID-19 public health emergency, and CMS reimbursement and repayment changes to DSH hospitals.
In October, HRSA released a federal register notice to provide a long-awaited update regarding how covered entities should address the end of the COVID-19 public health emergency. During the PHE, HRSA provided certain allowances and waivers to program operations to help covered entities adapt to the ever-changing health care environment. One notable waiver allowed hospital covered entities to forgo the requirements for off-site outpatient hospital facilities to be listed in the reimbursable section of the hospital’s Medicare cost report prior to participation and be registered and listed on OPAIS prior to participation. The intent of this waiver was to assist hospitals with making quick and efficient changes to continue to attend to the needs of their patients. The waiver was issued in June 2020 for off-site outpatient facilities that would meet the MCR requirements on a future cost report.
HRSA provided the example of a hospital moving a clinic outside the four walls of the hospital in order to create more space to care for critical patients or transitioning certain hospital areas to meet care needs, resulting in potential changes to 340B purchasing eligibility in these areas. Now that the PHE has ended, HRSA no longer sees a need to continue these allowances, and they have issued guidance on how covered entities should proceed.
The federal register notice states that in order for covered entities’ off-site outpatient facilities to continue to purchase 340B drugs, they must be listed on the hospital’s most recently filed Medicare cost report and registered on OPAIS by the next registration period or the covered entity should notify HRSA that they are in the process of meeting these requirements.
A full review of HRSA communication and the federal register notice can be found here.
340B registration requirement for off-site outpatient hospital facilities
In October, HRSA released a federal register notice to provide a long-awaited update regarding how covered entities should address the end of the COVID-19 public health emergency. During the PHE, HRSA provided certain allowances and waivers to program operations to help covered entities adapt to the ever-changing health care environment. One notable waiver allowed hospital covered entities to forgo the requirements for off-site outpatient hospital facilities to be listed in the reimbursable section of the hospital’s Medicare cost report prior to participation and be registered and listed on OPAIS prior to participation. The intent of this waiver was to assist hospitals with making quick and efficient changes to continue to attend to the needs of their patients. The waiver was issued in June 2020 for off-site outpatient facilities that would meet the MCR requirements on a future cost report.
HRSA provided the example of a hospital moving a clinic outside the four walls of the hospital in order to create more space to care for critical patients or transitioning certain hospital areas to meet care needs, resulting in potential changes to 340B purchasing eligibility in these areas. Now that the PHE has ended, HRSA no longer sees a need to continue these allowances, and they have issued guidance on how covered entities should proceed.
The federal register notice states that in order for covered entities’ off-site outpatient facilities to continue to purchase 340B drugs, they must be listed on the hospital’s most recently filed Medicare cost report and registered on OPAIS by the next registration period or the covered entity should notify HRSA that they are in the process of meeting these requirements.
A full review of HRSA communication and the federal register notice can be found here.
Genesis Healthcare v. Becerra
In November, a U.S. district court issued their decision in the case of Genesis Healthcare v. Becerra. This court case originated in 2017 as a result of HRSA audit findings and subsequent termination of Genesis Healthcare. The audit findings were in relation to the patient definition and Genesis’ failure to maintain auditable records. Genesis sued and was reinstated to 340B; however, the dispute continued as Genesis urged the courts to declare the following, taken directly from the summary judgment publication:
- The only statutory requirement for 340B eligibility of a person is that the person must be a patient of the covered entity, as clearly stated in 42 U.S.C. § 256b(a)(5)(B);
- Plain wording of 42 U.S.C. § 256b(a)(5)(B) requires that any prescription from any source is available to a patient of a covered entity;
- Any and all interpretations or guidance of HRSA in contradiction of the plain wording of 42 U.S.C. § 256b(a)(5)(B) are unlawful and unenforceable as a matter of law; and
- HRSA did not have the broad rulemaking authority necessary to implement its interpretations and restrictions to the plain language of 42 U.S.C. § 256b(a)(5)(B).
The court agreed with Genesis regarding the first declaration. They deemed the second statement too broad for the court to agree with as written. Instead, they proposed the following declaration: “The plain wording of the 340B statute does not require the ‘covered entity’ to have initiated the health care service resulting in the prescription.” The court stated that the third declaration was a restatement of the law, but they disagreed with the fourth declaration, stating that HRSA does have the authority to implement and interpret that statutory patient definition, but their interpretation must be consistent with the statute.
View the full summary judgment here.
2023 CMS OPPS repayment
In 2018, CMS adopted a policy changing the payment issued to certain covered entities from ASP plus 6 percent to ASP minus 22.5 percent for 340B drugs. In June 2022, the Supreme Court deemed this change in payment unlawful; however, this change in payment was in effect through September 2022 and resulted in an under-reimbursement of $9 billion to affected hospitals. In November 2023, CMS issued its final rule detailing their remedy for repaying the affected hospitals for 340B drugs purchased from 2018 to 2022. CMS reverted back to ASP plus 6 percent after September 28, 2022, and through calendar year 2023.
The CMS final rule issued in November 2023 states that they will award a one-time lump sum payment to the affected hospitals. They can find their estimated repayment calculation here in addendum AAA. CMS will remit these repayments through Medicare administrative contractors. CMS will issue guidance to the MACs who will issue the lump sum payment within 60 days of receiving such guidance from CMS.
If you have any questions about how these updates may affect 340B operations at your facility, reach out to Abby Summers.
NRHA adapted the above piece from PharmD On Demand, a trusted NRHA partner, for publication within the Association’s Rural Health Voices blog.