340B Health Preliminary Analysis of Mega-Guidance Discussion of Part C Individuals Eligible to Receive 340B Drugs August 31, 2015

Transcription

1 340B Health Preliminary Analysis f Mega-Guidance Discussin f Part C Individuals Eligible t Receive 340B Drugs HRSA explains in the preamble t the prpsed rule that the agency is prpsing a clarified definitin f a patient eligible t receive 340B drugs. The preamble restates the 340B statute s prhibitin n diversin, which prhibits cvered entities frm reselling r therwise transferring a 340B drug t a persn wh is nt a patient f the entity. Under the 340B statute, cvered entities are liable t manufacturers fr vilatins f the prhibitin against diversin fr an amunt equal t the 340B discunt. HRSA als reviews its current guidance addressing the definitin f a patient, which was published in the Federal Register in The 1996 guidance includes a three-part test, which states that an individual is a patient f a cvered entity nly if: 1. The cvered entity has established a relatinship with the individual, such that the cvered entity maintains recrds f the individual s health care; 2. The individual receives health care services frm a health care prfessinal wh is either emplyed by the cvered entity r prvides health care under cntractual r ther arrangements (e.g., referral fr cnsultatin) such that respnsibility fr the care prvided remains with the cvered entity; and 3. The individual receives a health care service r range f services frm the cvered entity which is cnsistent with the service r range f services fr which grant funding r Federally-qualified health center lk-alike status has been prvided t the entity. Disprprtinate share hspitals are exempt frm this requirement. An individual will nt be cnsidered a patient f the entity fr purpses f 340B if the nly health care received by the individual frm the cvered entity is the dispensing f a drug r drugs fr subsequent selfadministratin r administratin in the hme setting. An individual registered in a State perated r funded AIDS drug purchasing assistance prgram receiving financial assistance under title XXVI f the PHS Act will be cnsidered a patient f the cvered entity fr purpses f this definitin if s registered as eligible by the State prgram. I. Under the prpsed patient definitin test, an individual will be cnsidered a patient f a cvered entity if the fllwing cnditins are met: 1. The individual receives a health care service at a cvered entity site which is registered fr the 340B Prgram and listed n the public 340B database 2. The individual receives a health care service frm a health care prvider emplyed by the cvered entity r wh is an independent cntractr f the cvered entity such that the cvered entity may bill fr services n behalf f the prvider 3. An individual receives a drug that is rdered r prescribed by the cvered entity prvider as a result f the service described in (2). An individual will nt be cnsidered a patient f the cvered entity if the nly health care received by the individual frm the cvered entity is the infusin f a drug r the dispensing f a drug. 4. The individual receives a health care service that is cnsistent with the cvered entity s scpe f grant, prject, r cntract 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

2 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 2 5. The individual is classified as an utpatient when the drug is rdered r prescribed. The patient s classificatin status is determined by hw the services fr the patient are billed t the insurer (e.g., Medicare, Medicaid, private insurance.) An individual wh is self-pay, uninsured, r whse cst f care is cvered by the cvered entity will be cnsidered a patient if the cvered entity has clearly defined plicies and prcedures that it fllws t classify such individuals cnsistently; and 6. The individual has a relatinship with the cvered entity such that the cvered entity maintains access t auditable health care recrds which demnstrate that the cvered entity has a prvider-t-patient relatinship, that the respnsibility fr care is with the cvered entity, and that each element f this patient definitin in this sectin is met fr each 340B drug. II. Fr a prescriptin r rder t be filled with 340B under the prpsed test, it wuld have t be written as a result f a health care service prvided by a hspital prvider at a registered hspital r clinic. This wuld prhibit 340B use in several situatins where 340B is permitted tday. Sme hspitals use 340B in situatins where a prescriptin is written by nn-hspital physicians a result f care prvided utside the hspital r its registered child sites. HRSA audits have allwed 340B use in these situatins when the hspital can demnstrate nging medical respnsibility f the hspital fr [the nn-hspital] health care services prvided t the individual. The prpsed guidance wuld nt allw 340B use in these situatins. Accrding t a July B Health survey, 75 percent f respndents reprted that they nly use 340B drugs in cnnectin with services prvided at the hspital r a registered site, s limiting 340B use t these lcatins may have a limited impact fr many hspitals. Many hspitals currently use 340B in cnnectin with telemedicine services. The preamble specifically states that 340B culd be used with telemedicine if it invlved issuing a prescriptin, is allwed under state r federal law and therwise cmplies with 340B. An individual wuld nt be eligible fr 340B if he r she was treated in a physician s private practice nt listed n the OPA database. This is generally HRSA s current standard, under which there have been HRSA audit findings because the hspital s relatinship with a prescribing prvider des nt extend t the prvider s private practice, but is valid nly fr services rendered at the hspital. Such findings have been verturned n ccasin, nly if the hspital can shw the patient cntinued t seek care frm the hspital, such that the hspital maintained nging respnsibility fr the patient s care. It appears that under the new standard, n prescriptin written in a private physician s ffice wuld be eligible fr 340B under any circumstance. Althugh HRSA generally prhibits 340B use in nn-hspital lcatins nw, there are sme circumstances where HRSA audits have allwed 340B use in these situatins. The guidance explicitly references several f these situatins that wuld be prhibited under the prpsed test: Referrals. HRSA audits have allwed hspitals t use 340B fr prescriptins resulting frm nn-hspital care when hspitals have been able t demnstrate the hspital referred the patient t the utside prvider, which was dcumented in the patient s medical recrd and/r the utside prvider reprted back t the hspital n the utcme f the referral. Audits have als permitted use f 340B in cnnectin with prescriptins written by utside prviders thrugh a referral agreement r arrangement with the hspital. The guidance prpses that if a cvered entity referred an individual t be treated at a nn-entity prvider, a prescriptin resulting frm that prvider wuld nt be eligible fr 340B at the cvered entity. If the individual were t return t the cvered entity, additinal prescriptins written at by the cvered entity s prviders may be eligible. Fllw-up care. In the past, HRSA recgnized situatins in which 340B can be used, even when the prescriptin is written by a nn-hspital prvider as a result f care prvided in a nn-hspital lcatin. In a 2001 letter knwn as the Mrfrd Letter, HRSA stated: A 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

3 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 3 patient s subsequent, nn-cst reprt care shuld bear a prximate relatinship t the initial CE hspital care with respect t bth type and time f care. The letter prvided an example f a situatin in which 340B wuld be allwed, where a hspital treats a diabetic in the emergency rm fr diabetes and then the patient receives a prescriptin frm a nn-cst reprt clinic as a result f fllw-up diabetes care. HRSA audits have said this nly applies t affiliated clinics, nt private physician practices. The guidance prpses that an individual wuld nt be eligible fr 340B if he r she was treated in a physician s private practice r any ther nn-340b site f a cvered entity, even as fllw-up t care at a registered site. This wuld appear t prhibit 340B use fr fllw-up care in bth affiliated clinics and private physician practices. Therefre, it appears that the diabetes example frm the Mrfrd Letter wuld nt be permitted under the prpsed test. It appears the prpsed test wuld narrw the current standard used in audits even further and wuld prhibit 340B use in any fllw-up care scenari. Affiliatin agreements. HRSA audits have allwed hspitals t use 340B fr prescriptins resulting frm nn-hspital care when a hspital can demnstrate it is still respnsible fr the nn-hspital care thrugh an affiliatin agreement between the hspital and the nn-hspital prvider. The guidance prpses that an individual wuld nt be eligible fr 340B if he r she was treated by anther health care rganizatin that has an affiliatin agreement with the cvered entity. This wuld be the case even if the entity had access t the individual s recrds. Crrectinal facilities. Althugh nt mentined explicitly, the guidance wuld als appear t prevent 340B use fr drugs prescribed in cnnectin with services furnished at hspital clinics lcated in crrectinal facilities. Fr these drugs t be eligible, such clinics wuld need t appear n a reimbursable line f the hspital s Medicare cst reprt and be registered as child sites. Because services prvided t incarcerated individuals are nt cvered by Medicare, such clinics are generally unable t be listed n a reimbursable line. III. Fr a prescriptin r rder t be filled with 340B under the prpsed test, it wuld have t be written as a result f a health care service prvided at a registered hspital r clinic by a prvider wh is emplyed by r is an independent cntractr f the hspital. It appears that under this requirement, prviders with privileges r credentials at a hspital wuld be able t write 340B prescriptins, because prviders with hspital privileges are generally cnsidered t be either an emplyee r an independent cntractr f a hspital, unless the prvider is acting utside the scpe f his r her arrangement with the hspital. The preamble states that simply having privileges r credentials at a cvered entity is nt enugh fr a prvider t meet this standard. It is pssible that this requirement is cnsistent with HRSA s current plicy. HRSA audits indicate that hspitals may nt use 340B t fill prescriptins written by prviders with hspital privileges r credentials as a result f care prvided in their private ffices. Audits have allwed 340B use if the prescriptin is written as a result f care prvided by a privileged r credentialed prvider in the hspital r a child site. It may be that the requirement is simply articulating the general rule laid ut in the guidance that t fill a prescriptin r rder with 340B, it must be written as a result f care prvided at the hspital. S lng as the care was prvided at the hspital by a privileged r credentialed prvider, and it was within the scpe f the prvider s agreement with the hspital, then 340B culd be used. If, hwever, a hspital currently uses 340B fr prescriptins written by privileged r credentialed prviders as a result f care prvided utside the scpe f their arrangement, then this 340B use may nt be allwed under the requirement. Clarificatin is needed frm HRSA in this area. The guidance makes clear that faculty practice arrangements and established residency, internship, lcum tenens, and vlunteer health care prvider prgrams wuld meet the prpsed standard. The guidance des nt say that a prvider wh ffers services under ther arrangements (e.g., referral fr cnsultatin) with the hspital may write 340B prescriptins, which the current patient definitin test allws. Perhaps HRSA des nt include this language because a prescriptin resulting frm a referral fr cnsultatin wuld be written utside the hspital, and the guidance requires 340B prescriptins t be written as a result f care prvided at the hspital. 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

4 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 4 The current patient definitin test requires that a 340B-eligible patient receive health care services frm a health care prfessinal wh is either emplyed by the cvered entity r prvides health care under cntractual r ther arrangements with the entity. The prpsed test wuld require that an individual s prescriptin r rder be written as a result f health care services received at the hspital frm a health care prvider wh is emplyed by the entity r is an independent cntractr f the entity, such that the cvered entity may bill fr services n behalf f the prvider. It appears that the prpsed test wuld narrw the types f prviders wh culd write 340B prescriptins r rders, althugh HRSA s intent here is nt entirely clear. The language in the guidance requiring that the hspital may bill fr services n behalf f the prvider is nt clear. HRSA appears t be referring t health prfessinals with this language, thugh they culd cnceivably be referring t the cvered entity (e.g. billing fr the hspital facility fee). If fcusing n the health prfessinal, HRSA may be prpsing that fr the hspital-prvider relatinship t be sufficient, the hspital must be able t bill fr services n behalf f the prvider, althugh it wuld nt be required that the hspital d s. Fr example, prviders may permit a hspital t bill Medicare fr the services the prvider furnishes t patients at the hspital if the prvider is emplyed by the hspital and is required t prvide the hspital with his r her fees, r if there is a cntractual arrangement between the hspital and the prvider under which the hspital bills fr the hspital s services. Perhaps HRSA s prpsal indicates that if a hspital emplyed a prvider r were able t put such a cntractual arrangement in place, the hspital culd meet this requirement. This prvisin needs substantial clarificatin. IV. Fr a prescriptin r rder t be filled with 340B under the prpsed test, it wuld have t be written as a result f a hspital health care service prvided by a hspital prvider at the hspital. Althugh HRSA s current patient definitin test requires an individual t receive a health care service frm the hspital t qualify fr 340B, the current test des nt require the specific prescriptin r rder t be written in cnnectin with a hspital service. The guidance prpses t limit 340B use t situatins when the prescriptin r rder was written by a hspital prvider in cnnectin with a health care service prvided in the hspital r registered child site. The fllwing are situatins in which hspitals currently use 340B that culd be affected by this change: Orders fr physician-administered drugs. Many hspitals use 340B fr physician-administered drugs, such as infusin prducts, that are administered t individuals in the hspital r a registered infusin clinic, even if the rder is written by a nn-hspital physician at a nn-hspital lcatin. Althugh there have been a few hspital findings in this area relating t infusin, the hspitals were able t have the findings verturned by shwing that even thugh the rder was nt written by ne f their eligible prviders, the administratin f the rder qualified as an actual health care service fr 340B purpses. The guidance wuld limit 340B use fr physician-administered drugs t situatins where the rder was written by a hspital prvider as a result f an utpatient service prvided at the hspital. Telemedicine, telepharmacy, remte, and ther health care arrangements (e.g., medicatin therapy management). The guidance explicitly states that 340B culd be used t fill drugs prescribed r rdered as a result f these services if the service invlved a prescriptin being issued and the practice was allwed under state r federal law and therwise cmplied with 340B. V. Fr a prescriptin r rder t be filled with 340B under the prpsed test, it wuld have t be written as a result f an utpatient health care service prvided by a hspital prvider at a registered hspital r clinic. HRSA s current patient definitin test requires nly that an individual receive a health care service frm the cvered entity and des nt limit the type f health care service that must be received. The guidance prpses t limit 340B use t situatins when the prescriptin r rder was written by a hspital prvider pursuant t an utpatient service prvided at the hspital r a registered clinic. Services wuld be cnsidered utpatient if they were billed as utpatient. There are several situatins in which hspitals currently use 340B that wuld be prhibited by this change. We are als cncerned abut the ability f hspitals t track these issues. 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

5 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 5 Discharge prescriptins. Many hspitals use 340B in situatins where an individual is admitted as an inpatient and upn discharge is written a prescriptin t be filled n an utpatient basis. HRSA s FAQs allw 340B use fr discharge prescriptins when the drugs are fr utpatient use and say hspitals must demnstrate they are respnsible fr the use f the drugs n an utpatient basis. The guidance wuld appear t prhibit the use f 340B fr discharge prescriptins when the individual is discharged frm an inpatient setting, because such prescriptins are written pursuant t inpatient, nt utpatient services. Sixty percent f respndents t a July B Health survey said that prhibiting the use f 340B fr discharge prescriptins wuld be highly prblematic r s prblematic that they wuld cnsider drpping ut f the 340B prgram. Outpatient drugs billed as part f inpatient stays. Many hspitals administer 340B drugs t utpatients up until the time they are admitted as inpatients. Current FAQs n the Apexus website state that entities may determine inpatient vs. utpatient status if the determinatin cmplies with 340B rules. The guidance wuld require hspitals t determine inpatient vs. utpatient status based n billing practices and wuld nt allw 340B use if a drug is billed as part f an inpatient service, even if the patient were actually an utpatient at the time the drug was dispensed r administered. This wuld prhibit 340B use in situatins where a hspital administers a drug t an individual in an utpatient setting but the individual is then admitted and the utpatient drug is billed as part f the inpatient stay. An example f the imprtance f this prvisin is with Medicare s 72-hur rule, which says that if a Medicare beneficiary receives services in an utpatient setting and is then admitted as an inpatient, the hspital must bill Medicare fr any services prvided within 72-hurs f the patient s admissin, including drugs, as part f the inpatient stay. (Nte that the 72-hur rule des nt apply t critical access hspitals). Other payrs may have similar billing plicies. Outpatient drugs billed t any payr as inpatient wuld nt qualify fr 340B. Insurer determinatins. The guidance acknwledges that under the prpsed test fr determining inpatient vs. utpatient, the status culd change based n an insurer s determinatin. Fr example, a drug initially billed as utpatient culd later be changed by the insurer t inpatient. Medicare bservatin stay rules culd be an example f this. The guidance prpses that a hspital shuld maintain auditable recrds dcumenting any changes in patient status due t insurer determinatins. This language suggests that a hspital culd be prtected against a diversin finding if the patient s status changed due t an insurer determinatin. Uninsured/self-pay. The guidance acknwledges that the prpsed test fr determining inpatient vs. utpatient wuld nt wrk fr uninsured and self-pay patients, because in thse situatins a hspital des nt bill a payr. The guidance wuld require the determinatin t be made in these cases based n a hspital s plicies and prcedures. HRSA states that they expect that mst plicies wuld base the determinatin n hw the services wuld have been billed t Medicare r anther third party payer, if such patient were eligible. It is unclear hw HRSA wuld expect a hspital t chse which payr s plicy t base this determinatin n, given that each payr culd have a different billing plicy and hspitals deal with ptentially hundreds f different payrs. Hspitals subject t the GPO exclusin, including DSH and free-standing children s and cancer hspitals, may nt purchase cvered utpatient drugs thrugh a GPO r ther grup purchasing arrangement. It is unclear hw the GPO exclusin wuld apply t drugs that wuld nt be eligible fr 340B under the prpsed guidance because they were billed as inpatient. Fr example, it is unclear whether these drugs wuld be cnsidered cvered utpatient drugs and, therefre, whether hspitals subject t the GPO exclusin wuld be permitted t use GPO pricing fr thse drugs. It wuld nt appear t be HRSA s intentin t require WAC pricing fr thse purchases, but it is an area f cncern. VI. The prpsed patient definitin test wuld address the patient/cvered entity relatinship required fr a patient t be 340B-eligible. HRSA s current patient definitin test requires that respnsibility fr the care prvided remains with the cvered entity, but there has been little guidance defining what this means. The prpsed guidance wuld 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

6 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 6 describe in mre detail the level and type f respnsibility a hspital must have fr an individual s care fr that individual t qualify as a 340B patient. The guidance wuld require that fr an individual t be 340B-eligible, the hspital must be medically respnsible fr the individual s care. This appears t be a mre-detailed standard than the current test, which des nt mentin the need fr medical respnsibility. HRSA audit reprts have indicated that when prescriptins are written in ffsite lcatins, the hspital must shw an nging medical respnsibility fr care prvided t the individual, but HRSA has nt previusly articulated such a standard fr type f respnsibility a hspital must demnstrate fr care prvided in the hspital. The prpsed patient definitin test wuld be applied n a prescriptin-by-prescriptin r rder-byrder basis, suggesting that it wuld nt be applied n a patient-by-patient basis. This appears t be cnsistent with HRSA s enfrcement f patient definitin in audits. HRSA audits have indicated that prescriptins written after an individual s encunter at a hspital are nt autmatically eligible fr 340B at the hspital based slely n the initial encunter. In ther wrds, just because a patient qualified fr 340B at ne pint des nt mean all prescriptins brught t a hspital s pharmacy by that patient will als be 340B-eligible ging frward. The prpsed test wuld require a cvered entity t maintain auditable health care recrds demnstrating that all criteria in the patient definitin test are met fr every prescriptin r rder resulting in a 340B drug being dispensed r accumulated thrugh a replenishment mdel. This appears t be cnsistent with HRSA s current enfrcement plicy. The prpsed test wuld require that a cvered entity maintains access t auditable health care recrds that shw the entity has a prvider-t-patient relatinship with the individual, specifically fr the health care service that results in the rder r prescriptin. This wuld appear t amend the first part f the current patient definitin test, which merely requires that a cvered entity maintains recrds f the individual s health care t shw that the entity has established a relatinship with the patient. Althugh this language is nt in the current patient definitin test, HRSA audits are currently using a versin f this standard. Auditrs are lking fr dcumentatin shwing hw the hspital is respnsible fr the care prvided that resulted in the prescriptin r rder being written. VII. The guidance reiterates HRSA s current psitin that 340B use is prhibited fr hspital emplyees whse prescriptins are nt written as a result f direct health care services prvided at the hspital. The prpsed guidance explicitly addresses the use f 340B fr prescriptins written fr cvered entity emplyees. Under the 1996 patient definitin guidance, there is a legal thery that hspitals that have a cntract with a health prfessinal as part f a self-insured plan s netwrk meet the requirement f being respnsible fr care furnished t emplyees cvered under that plan. HRSA audits have made clear that HRSA des nt find this relatinship between a hspital and a prvider sufficient t demnstrate the hspital is respnsible fr the nn-hspital care resulting in the prescriptin. The preamble t the prpsed guidance states that cvered entities must prvide direct health care services t an emplyee fr the individual t be an eligible patient. Merely having financial respnsibility fr an emplyee s health care and having cntracts with lsely affiliated r unaffiliated health care prfessinals wuld nt be a sufficient level f respnsibility. This appears t limit 340B use fr emplyees nly t thse situatins where a prescriptin r rder fr a drug is written by a hspital prvider in cnnectin t health care services given t the emplyee at the hspital r registered clinic. Althugh the preamble says the patient definitin test is prpsed, the language in the preamble suggests that the agency is articulating HRSA s current plicy and that HRSA expects hspitals t cmply nw. 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

7 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 7 VIII. The prpsed guidance lists exceptins t wh is eligible t receive 340B drugs. AIDS Drug Assistance Prgram (ADAP). HRSA prpses t reaffirm its lngstanding psitin that an individual in a Ryan White HIV/AIDS Prgram AIDS Drug Assistance Prgram will be cnsidered a patient f the cvered entity. Public health emergency declared by the Secretary. HRSA prpses that during public health emergencies declared by the Secretary f the Department f Health and Human Services (HHS), the agency will allw flexibility in shwing whether an individual is an eligible patient. HRSA prvides several examples in the preamble, including having limited medical dcumentatin r a site nt being listed in the OPA database. Entities must maintain auditable recrds shwing effective dates and alternative methds during the emergency. This is cnsistent with HRSA s current plicy n flexibility during disasters, which is available n the OPA website. Drug inventry/replenishment mdels. The prpsed guidance states that entities using virtual inventries that rely n drug replenishment may nly rder 340B drugs based n actual prir usage fr eligible patients f that cvered entity t avid cmmitting diversin. HRSA has recgnized in the past that hspitals use replenishment systems, in particular in OPA s 2013 Plicy Release n the GPO prhibitin, but this is the mst detail HRSA has ever prvided n hw the replenishment prcess shuld wrk. The preamble describes the replenishment prcess in mre detail. The language used in the preamble suggests that HRSA is describing its current plicy n hw replenishment shuld ccur. In particular, HRSA says, Each 340B drug rder placed shuld be supprted by auditable recrds demnstrating prir receipt f that drug by a 340B-eligible patient. This language suggests that HRSA expects hspitals t use inventry management systems that identify the exact drug administered t a 340B-eligible patient and that ensure the drug rdered in a replenishment rder t replace the administered drug is the same drug. Ntably, HRSA des nt refer t use f natinal drug cdes (NDCs) t identify the exact drug. Perhaps HRSA des nt mentin the use f NDCs t allw fr the use f alternative arrangements t track drugs, but it is nt clear. HRSA says an imprper accumulatin f a 340B drug wuld cnstitute diversin, even if it ccurred prir t replenishment. It appears that HRSA is suggesting that manually adjusting an accumulatr prir t placing a replenishment rder wuld nt adequately fix an incrrect accumulatin, and this wuld result in diversin. The ntice des nt make clear hw this culd cnstitute diversin if dne befre an rder is submitted. HRSA says it wuld als be diversin if the recrded number f 340B drugs des nt match the actual number f 340B drugs in inventry, whether the hspital uses a virtual r physically separate inventry. It is unclear what HRSA is suggesting. Perhaps HRSA is making clear that the number f units f a particular drug in the 340B accumulatr shuld never be mre than the number f units f that drug that the hspital has purchased at 340B. If this is the case, it is cnsistent with current hspital replenishment practices. This area is in need f clarificatin frm HRSA. Credit and rebill. HRSA recgnizes that manufacturers and cvered entities use a credit and rebill prcess t crrect errrs within 30 days f an initial purchase, and HRSA encurages this practice t cntinue. Ding s requires entities t mnitr cmpliance frequently s entities can identify errrs within 30 days and alert a manufacturer. Althugh HRSA has nt prhibited the credit and rebill prcess in the past, HRSA has nt encuraged its use in current plicies and has nt indicated that credit and rebill wuld be apprpriate within 30 days f a purchasing errr. A current Apexus FAQ states that HRSA has nt authrized the use f a credit/rebill, banking, r similar prcess t re-characterize previus transactins. Reclassificatin/banking. HRSA als recgnizes that entities have n ccasin retractively reclassified r re-characterized prir nn-340b drug purchases as 340B, smetimes ging back several years, which HRSA refers t as banking. Cnsistent with HRSA s current plicy, HRSA ntes that entities are respnsible fr requesting 340B pricing at the time f the 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

8 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 8 riginal purchase. In additin, entities shuld first ntify manufacturers t re-characterize a prir purchase as 340B. Inventry discrepancies. HRSA ntes that reviewing 340B inventry regularly ensures that any inventry discrepancy is accunted fr and prperly dcumented t demnstrate that 340B drugs are nt diverted. In additin, HRSA states that a cvered entity shuld fllw standard business prcedures t return unused r expired 340B drugs and apprpriately accunt fr waste f 340B drugs (e.g., discards after expiratin dates). It is unclear what situatins HRSA is referring t with these examples, and clarificatin is needed. HRSA suggests that auditable recrds are necessary fr an entity t demnstrate that 340B inventry discrepancies have nt caused diversin. One way t meet this standard is thrugh plicies and prcedures n 340B inventry discrepancies and hw an entity will recncile a discrepancy. This des nt appear t be incnsistent with current HRSA plicy, althugh it is mre detail than HRSA has articulated in the past. Repayment. HRSA makes clear in the prpsed guidance that cvered entities are respnsible fr repaying manufacturers fr vilatins f the statutry prhibitin against diversin. 90-day standard. The preamble articulates an expectatin that cvered entities wrk with manufacturers t repay them fr instances f diversin within 90 days f identifying a vilatin. This plicy has nt been previusly articulated in writing, but the language HRSA uses suggests that HRSA expects entities t meet this standard nw. Ntificatin standard. HRSA ges further and states that a cvered entity must ntify HHS and each affected manufacturer f diversin and is expected t dcument ntificatin attempts in auditable recrds. This standard seems t deviate frm HRSA s current plicy, which is laid ut in the attestatins cvered entities must sign when they register fr 340B and during the annual recertificatin prcess. These attestatins cmmit entities t disclsing a material breach f a prgram requirement t HRSA and d nt require disclsure t a manufacturer. The language in the preamble suggests that this is HRSA s current plicy and HRSA may expect entities t cmply nw. Clarificatin is needed in this area. Manufacturer discretin. HRSA ntes that manufacturers have discretin related t repayment requests, s lng as manufacturers cmply with the law, including the Federal anti-kickback statute. The examples HRSA prvides suggest that manufacturers may waive repayment if they chse. Alternatively, they may chse the frm f repayment, such as thrugh a credit/rebill prcess. Crrective actin requirement. The prpsed guidance states that an entity shuld ntify HHS f its crrective actins regarding diversin, including any manufacturer agreements n repayment. This appears cnsistent with HRSA s current plicy requiring the submissin f crrective actin plans when cvered entities identify prgram vilatins. What is unclear is whether this requirement wuld require ntificatin f crrective actins fr any instance f diversin, r nly thse that rise t the level f a material breach f a prgram requirement, as HRSA s current plicy requires. It is als unclear if this language describes HRSA s current plicy r a prpsed requirement. The language in the guidance suggests an entity shuld make such a ntificatin currently, althugh it may nt be required. IX. The prpsed guidance appears t clarify the current scpe f grant requirement fr HRSA grantees. The preamble includes additinal language related t the requirement. The current patient definitin test requires that, fr cvered entities eligible thrugh their receipt f federal funding frm a grant, prject, r cntract t be 340B-eligible, an individual must receive a health care service r range f services frm the cvered entity which is cnsistent with the service r range f services fr which grant funding r Federally-qualified health center lk-alike status has been prvided t the entity. The test included in the guidance uses similar language and requires that an individual receive a health care service that is cnsistent with the cvered entity s scpe f grant, prject, r cntract. Althugh the preamble says the patient definitin test is prpsed, the language in this sectin f the preamble suggests the guidance is 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.

9 Discussin f Part C Individuals Eligible t Receive 340B Drugs Page 9 clarifying the agency s current requirement and that HRSA may expect entities t cmply with the plicy nw. The preamble says the fllwing: Individuals will be cnsidered patients f the entity if the care they receive frm the entity is cnsistent with the health care service r range f services designated in the Federal grant, prject, designatin, r cntract (emphasis added). The wrd designated des nt appear in the current patient definitin test. Individuals will be cnsidered patients if they receive health care at a cvered entity site frm a cvered entity prvider (emphasis added). This suggests that individuals wh receive health care frm the cvered entity in a lcatin that is nt a cvered entity site will nt be cnsidered patients. If an individual receives health care in a grantee s child site, the individual will be cnsidered a patient if the care received is within the scpe f the child site s grant, prject r cntract. If the scpe f the child site s grant, prject r cntract is narrwer than the scpe f the parent site s grant, prject r cntract, the individual will be a patient if he r she receives services cnsistent with the narrwer scpe. The scpe f grant requirements d nt apply t cvered entities registered in 340B as a hspital, but if a hspital is registered in 340B as a grantee entity type based n receipt f a Federal grant, cntract, r prject, the hspital cannt use 340B fr patients treated utside f the areas receiving the funding and cannt use 340B fr patients wh receive services utside the scpe f the grant, cntract, r prject. 340B Health All rights reserved. This dcument is intended fr 340B Health members internal use nly and shall nt be redistributed r reprduced in any frm fr external use withut express prir written permissin frm 340B Health.