Published March 26, 2020

Expanded Flexibility for 340B Stakeholders in the COVID-19 Pandemic

As the COVID-19 pandemic continues to sweep the nation, many 340B stakeholders are curious about the implications for their 340B programs and any flexibility in program requirements that may emerge. The Health Resources and Services Administration (HRSA) has recently created a COVID-19 resources page and is encouraging covered entities to reach out to the 340B Prime Vendor with any concerns regarding compliance or eligibility in the 340B Drug Pricing Program based on COVID-19 response.

Noting that every organization will face unique challenges in coming days, weeks, and months, PYA has outlined five key areas to consider and evaluate as covered entities (CEs) continue to deliver healthcare services to their patients. These areas present opportunities for CEs to expand their 340B programs through additional prescribers and delivery mechanisms such as telehealth, but may also present compliance risks during future HRSA audits, without proper internal controls.

1.     Review eligible prescriber listings in your split billing software to validate appropriate capture of all eligible prescribers, including those additional prescribers who may be brought in to provide care as a result of COVID-19. The eligible prescriber listing should be regularly reviewed, and any updates should also be communicated to all covered entities’ registered contract pharmacies to ensure all eligible outpatient drug prescriptions are qualified accordingly.

2.     HRSA plans to continue conducting audits of covered entities remotely. As a result, it is critical that CEs continue to maintain auditable records to support the CE’s responsibility for the patient. However, during the current public health emergency, providers may not have access to full medical histories, patient insurance information, and/or identification documentation. In response, HRSA has issued guidance stating an abbreviated health record may be adequate for purposes of the 340B program during this time. At minimum, the health record should identify the patient, record the medical evaluation, and outline the treatment provided or prescribed.

In addition, covered entities may be using volunteer health professionals to deliver care. HRSA will require emergency documentation that clarifies the relationship between the provider and the covered entity, as well as the covered entity’s responsibility for providing care. Documentation should recognize the emergency nature of the situation and include the name and address of the volunteer, as well as his or her relationship to the clinic or hospital.

In order to promote social distancing and decrease risk within their patient populations, many organizations are also delivering services via telemedicine. The organization’s 340B program policies and procedures should include details on the delivery of telemedicine services, as well as documentation requirements for these encounters, to ensure auditable records are maintained for eligible patients receiving 340B drug dispensations.

3.     As organizations experience an increase in patients, some may need to expand or reallocate services to other sites. At this time, HRSA has not outlined any flexibility in the child site registration process; however, covered entities are encouraged to contact the 340B Prime Vendor Program for evaluation of their circumstances on a case-by-case basis.

4.     For those disproportionate share hospitals, children’s hospitals, and freestanding cancer hospitals subject to the Group Purchasing Organization (GPO) prohibition, HRSA is unable to waive the 340B statutory requirements. These covered entity types may not use a GPO for purchasing covered outpatient drugs; however, HRSA notes that if a hospital is unable to purchase a covered outpatient drug at the 340B price, it should try to obtain the drug at wholesale acquisition cost (WAC). If the drug is unavailable at WAC, entities may use a GPO only if they immediately notify the Office of Pharmacy Affairs (OPA) and detail the covered outpatient drug in question, the manufacturer, and any communication regarding the lack of availability at 340B or WAC pricing. In these situations, the covered entity should submit this information using the HRSA Template Notification Tool: Unavailable 340B Price.

5.     Chloroquine and hydroxychloroquine have been approved by the U.S. Food and Drug Administration (FDA) for treatment of malaria, lupus, and rheumatoid arthritis, but research suggests they may be suitable for treatment of COVID-19. Additionally, remdesivir, a drug previously tested for the treatment of Ebola, is also under consideration for treatment of COVID-19. Of these drugs, chloroquine and remdesivir are included on the orphan drug listing, meaning critical access hospitals, sole community hospitals, rural referral centers, and freestanding cancer hospitals are prohibited from purchasing these medications at discounted 340B prices. Covered entity types subject to the orphan drug exclusion should pay close attention to the purchase and dispensation of these medications to ensure they are in compliance.

If you have any questions regarding these matters, or require assistance in evaluating 340B program eligibility and compliance, contact one of our PYA executives below at (800) 270-9629.

Disclaimer: To the best of our knowledge, this information was correct at the time of publication. Given the fluid situation, and with rapidly changing new guidance issued daily, be aware that some or all of this information may no longer apply. Please visit our COVID-19 hub frequently for the latest updates, as we are working diligently to put forth the most relevant helpful guidance as it becomes available.

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