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North Carolina Hospital Association

Serving North Carolina Hospitals & Health Systems


340B Overview

HHS Issued Proposed 340B Omnibus Guidance; Comment By October 27 

On August 27, 2015, the U.S. Department of Health and Human Services (HHS) released the long-awaited and much anticipated proposed 340B Drug Pricing Program Omnibus Guidance. The Proposed Guidance addresses most 340B Program eligibility and compliance requirements that are not subject to HHS rulemaking authority (e.g., covered entity eligibility and registration, eligible drugs, eligible patients, Group Purchasing Organization prohibition, auditable record requirements, dispensing of 340B drugs to Medicaid managed care enrollees, and contract pharmacy oversight).

The most significant changes contained in the Proposed Guidance are the proposed definitions of "covered outpatient drug" and an "eligible patient." The Proposed Guidance includes changes to these definitions that would likely reduce the overall volume of drugs eligible for 340B pricing and would require implementation of costly dispensing and inventory tracking systems.

One of the most anticipated areas in the Proposed Guidance is the long-awaited update to the 340B definition of an eligible patient. Currently, the covered entity may dispense drugs purchased at the 340B price only to patients of the covered entity but it is important to note that the 340B statute does not define the term "patient." The Proposed Guidance clarifies and appears to narrow the current patient definition and Health Resources and Services Administration's (HRSA) 2007 proposed patient definition that was never implemented. Key items worth noting in the new eligible patient definition include:

  • The Proposed Guidance states that the eligibility determination would be on a per prescription (or per order) basis and must meet all 6 criteria being proposed. The current patient definition guidance only includes 3 criteria.
  • HHS notes that the individual's treating physician having privileges or credentials at the covered entity would not be sufficient to demonstrate that the individual is an eligible 340B Program patient.
  • The definition proposes to introduce a new requirement that the covered entity be able to bill for services on behalf of the employed or contracted professional that provides services to the patient.
  • The Proposed Guidance could adversely impact the availability of 340B drugs for infusion centers operated by covered entities, as it would expressly require services in addition to the receipt of an infusion to qualify an individual as an eligible patient.
  • The Proposed Guidance states that a patient's status as inpatient or outpatient for 340B eligibility purposes must be determined by how the claim is billed to the patient's insurance or third party payor. An individual who is self-pay, uninsured, or whose cost of care is covered by the Covered Entity will be considered a patient if the Covered Entity has clearly defined policies and procedures that its follows to classify such individuals consistently. Currently, HHS permits each 340B entity to establish guidelines for determining patient status at the time a drug is dispensed; therefore, if the entity determines that a patient is an outpatient at the time of dispensing (e.g., drugs dispensed in the emergency department prior to time of admission), but the patient is later admitted as an inpatient, the entity can dispense the 340B drug to the patient while in outpatient status as long as the entity retains documentation to support the patient's outpatient status at the time of dispensing.
  • The Proposed Guidance appears to prohibit prescriptions written at the time of an inpatient discharge to be filled with a 340B drug even if the prescription is filled after the patient is no longer an inpatient.
  • The proposed changes to the patient definition are likely to create challenges for most hospital covered entities, because they make it virtually impossible to determine patient eligibility for 340B drugs at the time of dispensing because of the new billing requirement. Many hospitals that operate outpatient clinics and currently stock only 340B drugs would be required to implement new inventory systems because it would not be possible to determine with certainty, that all services furnished at the location, would ultimately be billed to all payors as outpatient services.

It is imperative that all 340B covered entities review this Proposed Guidance carefully, evaluate the impact of these proposed interpretations on the entity's 340B Program, and submit comments during the open comment period that ends on October 27, 2015.

340B Program Essentials

The 340B Federal Drug Discount Program expands access to affordable medications to low-income populations by supporting the operations of healthcare safety net providers. The program was created in 1992 with the enactment of Public Law 102-585 of the Veterans Health Care Act.

The passage of the Affordable Care Act in 2010 opened new opportunities within the Federal 340B Drug Program for hospitals, patients and pharmacies. The categories of eligible hospitals and options for pharmacy contracting were expanded. Definitions of covered entities include children's hospitals, free-standing cancer centers, critical access hospitals (CAH), sole community hospitals and rural referral centers (RRC).

The 340B program is primarily a discounted drug purchasing option for safety net providers, including disproportionate share, rural referral centers, sole community and critical access hospitals. Public hospitals and non-profit hospitals in these categories are eligible to participate in 340B. Eligible hospitals may save an average of 25% on drug purchases for outpatient pharmacy distribution (excluding orphan drugs for CAHs, sole community or rural referral). Contract pharmacy agreements are also available to the 340B hospitals (for hospital patients only) to extend 340B pricing into the community.

In order to participate, an eligible hospital is required to submit an application to the Office of Pharmacy Affairs with HRSA, the federal agency responsible for the 340B program. The application materials and guidelines are posted on the Pharmacy Affairs website. Please be certain to use the forms and the application guidelines for the correct hospital type.

Who is an Eligible 340B Patient?

The posted Federal Register Notice addresses the definition of an eligible 340B patient. The key determination always requires the person receiving 340B drugs must be a patient of the 340B entity.

An individual is a "340B eligible patient" of a covered entity only if:

  1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual's health care; and
  2. 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
  3. 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. Disproportionate share hospitals are exempt from this requirement.

For More Information Contact:

Jeff Spade
NCHA, Executive Director, NC Center for Rural Health Innovation and Performance

Chris Skowronek
NCHA, Director of Health Policy


NCHA Corporate Partner: SUNRx

NCHA entered into a corporate partnership arrangement with SUNRx, to provide North Carolina hospitals with a vendor that has automated solutions to create, manage and expand 340B contract pharmacy relationships as well as education on 340B regulations, compliance, reporting and program management. With almost 70 hospitals in NC qualifying for 340B, this partnership represents significant benefit and cost saving opportunities for North Carolina patients.

Because of the complex regulatory, compliance and contracting environment associated with the 340B program, many hospitals and pharmacies elect to engage a third party 340B program management vendor, like SUNRx, when starting or expanding their own 340B contract pharmacy network. For example, eligible hospitals wishing to expand their 340B program now have the opportunity to contract with multiple community pharmacies to ensure a robust pharmacy network for their patients to access. Each pharmacy must agree to provide the hospital with reports such as quarterly billing statements, status of collections, receiving and drug dispensing and records pertaining to drug diversion, duplicate discount prohibitions and patient eligibility. The hospital then must manage the contracting and reporting relationship with each contract pharmacy. Both the hospital and contracting pharmacy can be audited by manufacturers or the government, thus accurate records directly pertaining to compliance with drug diversion and duplicate discount prohibitions, for example, must be kept to ensure compliance. SUNRx, NCHA and Strategic Partners can help streamline this complicated process to create a program tailored to the hospital's needs.

The SUNRx 340B Complete software automates patient eligibility matching and compliance reporting requirements, creating and maintaining auditable records for all parties involved. SUNRx also manages pharmacy contracts, product restocking and tracking and claims adjudication on behalf of the hospital. 

For More Information Contact:

Matthew Bobo
Director, Sales SUNRx

Chris Skowronek
NCHA, Vice President

340B Resources and Key Contacts

The Office of Pharmacy Affairs (OPA)

The Office of Pharmacy Affairs is the HRSA department responsible for the 340B program. The site specifies the eligibility criteria, the application process and forms, the required certifications, FAQs, databases and the various rules and regulations.

The Pharmacy Services Support Center (PSSC)

PSSC, organized and supported by HRSA, is the new technical assistance center website for the 340B program. 340B eligible entities may contact PSSC for consultation about enrolling and managing their 340B program. Critical Access Hospitals are encouraged to seek 340B enrollment support and consultation from PSSC.

Peer-to-Peer Community
HRSA, OPA and Pharmacy Services Support Center (PSSC) recently launched a 340B Peer-to-Peer Community at www.healthcarecommunities.org. This 340B community will connect enrolled and eligible 340B entities with high performing sites that have exemplary pharmacy service offerings. This online resource contains various resources on 340B. Peer-to-Peer assistance will be provided through the 340B Network Webinar series where entities will have the opportunity to interact with the mentor sites for guidance, as well as access to a listserv to ask questions to the community as a whole.

Safety Net Hospitals for Pharmaceutical Access (SNHPA)

SNHPA is the primary advocacy resource for safety net hospitals and the 340B program. Be sure to visit the very informative '340B Resources' section of the site. The site includes sample application letters, policy briefs and an excellent summary of the 340B criteria. Presentations, links, FAQs, forms, certifications, databases, policy briefs and requirements are shared on the website. The SNHPA newsletter, called the Drug Discount Monitor, is an excellent resource to track the changes and regulations in the 340B drug program.

340B Prime Vendor Program

To simplify the process for obtaining 340B drugs, the original 340B legislation contained a special requirement that mandated the establishment of a "prime vendor." Benefits of the 340B Prime Vendor Program include familiarity with subtleties of the Section 340B program, value-added service and sub-340B prices.


340B Information

SUNRx/NCHA Contract Pharmacy Webinar
On Thursday, March 1, 2012, NCHA, in partnership with SUNRx held a webinar presentation providing both an overview of the 340B drug program and highlighting some of the changes brought on by the Affordable Care Act. The PowerPoint presentation can be downloaded using the link on the right.

The presentation covered the following objectives:

• Receive an overview of the history and intent of the 340B program
• Understand the changes to 340B due to Healthcare Reform
• Realize the value of expanding the program at the facility level
• Review the benefits and savings opportunities
• Understand how 340B savings can directly help serve the uninsured and most vulnerable patients
• Chart next steps to expand 340B at your facility

Visit NCHA's 340B corporate partner at www.SUNRx.com


Matthew Bobo
Director, Sales SUNRx

Chris Skowronek
NCHA, Vice President

340B Drug Discount Program for Critical Access Hospitals Webinar
NCHA organized a 340B informational webinar for CAHs featuring Paul Shank, a 340B expert with HRSA. The webinar explains the benefits of the 340B Drug Program and details the 340B enrollment process. The webinar is posted to NCHA's website under the 'Rural Health' tab, along with a downloadable PowerPoint.

340B Webinar for Critical Access Hospitals, sponsored by NCHA

Presenter: Paul Shank, consultant coordinator for the Pharmacy Services Support Center

340B Recertification
HRSA hosted a webinar about the process for 340B Recertification. The recording and slides for the HRSA webinar are posted on the 340B Peer-to-Peer Network website: http://www.healthcarecommunities.org/default.aspx

The Pharmacy Support Center website includes a list of FAQs about the 340B Recertification process: http://pssc.aphanet.org/faqs/340b-recertification-faqs/

The key points from the 340B Recertification webinar:

  1. HRSA anticipates that the recertification process will begin on April 1, 2012. All covered entities enrolled in the 340B database before June 1, 2011 will require recertification.
  2. It is critical to update the 340B database for your hospitals and affiliated entities, including the Authorizing Official, name and address of eligible organizations, provider numbers, etc. The Authorizing Official is the person that will receive emails about the online recertification process.
  3. The 340B database has progressed over the past few years. If your hospital has been enrolled in 340B for several years, please visit the website soon and update your 340B database. New information is requested on the 340B database and must be updated by the Authorizing Official before recertification can occur.

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