New Clarity on the 340B Drug Pricing Program: Was It Worth the Wait?

December 2015, Vol 5, No 9
Leah Ralph
Director of Health Policy, ACCC
In August, the Health Resources and Services Administration (HRSA) released its much-anticipated “mega-guidance” on the 340B Drug Pricing Program, proposing new limits on the program but stopping short of a complete overhaul, which prompted mixed reviews from healthcare stakeholders. The Association of Community Cancer Centers (ACCC) has long advocated for more clarity in the program, and we commend HRSA for taking this important step amid legal challenges and congressional pressure. But just how far the guidance will go remains unclear. Although the HRSA’s directives are not legally binding, they do inform 340B program participants how the agency believes the program should operate, and we can expect that this new guidance, if finalized, will be used as a basis for future audits. It also remains to be seen whether Congress will codify the guidance or move any other legislation related to the 340B program.

Patient Eligibility Criteria

Although HRSA’s guidance addresses many of the key issues needing clarification—including hospital and patient eligibility, contract pharmacy arrangements, and audit procedures—it most notably proposes to place tighter controls on patient eligibility. HRSA lays out 6 requirements (replacing a previous 3-pronged approach) for a patient to be classified as a patient of a 340B covered entity, requiring that a prescription for a 340B drug would have to be generated by an encounter that satisfies all 6 of the new criteria. Of note, HRSA also specifies that the revised patient definition would be applied on a prescription-by-prescription basis, meaning that each individual encounter would be evaluated for eligibility, and a patient would not qualify for 340B drugs for all his or her needs based on being treated by the covered entity for one medical issue. Under HRSA’s guidance, to be classified as a patient of a 340B covered entity:
  1. The patient must receive a healthcare service at a registered covered entity
  2. That service must be provided by a covered entity–associated provider (employed by or an independent contractor of that covered entity)
  3. The prescribed drug is a result of the service provided by the covered entity and, most important, is not limited to the dispensing or infusion of a drug
  4. The service is consistent with the covered entity’s grant or contract (typically for grantees only)
  5. The drug prescribed is the result of an outpatient service, determined by how the covered entity bills the payer
  6. The covered entity maintains access to auditable health records, demonstrating a provider-to-patient relationship and that the covered entity is responsible for that patient’s care.


So what does this mean? Essentially, the guidance significantly strengthens the relationship between the covered entity and the patient, requiring that the covered entity provide a more comprehensive service for a patient to be classified as a patient of that covered entity and receive discounted 340B drugs. This could have significant implications for referrals and follow-up care, limiting the ability of patients to move between sites of care. Stakeholders predict that, of the guidance, the proposed patient eligibility provisions could most significantly affect the number of outpatient drugs that would be eligible for the 340B program discount. Other important provisions include HRSA’s guidance on the eligibility of an off-site, or “child-site,” facility. HRSA proposes to retain the current standard that the facility or the clinic be listed as a reimbursable line of the hospital’s Medicare cost report, but it also specifies that the services provided have associated Medicare outpatient costs and charges. Notably, HRSA is also soliciting alternative methodologies to this approach. The guidance is fairly quiet on contract pharmacy arrangements, emphasizing a covered entity’s compliance obligations, and proposes that covered entities conduct a quarterly review and annual independent audit of these arrangements. ACCC recently submitted comments on HRSA’s guidance; however, it remains unclear if or when the agency will release final guidance. Stay tuned.

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