340B Program Guidance Finally Sets Sail

For several years, hospital administrators and clinicians have been anxiously awaiting proposed new “mega” regulations affecting the federal 340B drug program. After hitting a bump in the road earlier this year, the Health Resources and Services Administration (HRSA) finally released guidance in late August that tightens the reins on the discounts covered under the program by expanding the conditions of participation.The draft regulations are open for public comment until the end of October. Then, it’s simply a matter of time until the final rule is issued and implemented.

Critics have been increasingly vocal about the program’s broad interpretation, questioning the amount of charity care actually provided by eligible participants. The new guidance lays out six conditions to be considered a patient of a 340B-covered entity, up from the previous three. To receive medication discounts, providers must meet these additional criteria:
  • Providers must be registered for the 340B program and listed on the public 340B database.
  • Individual providers dispensing the medications must either be employees of the covered entity or have valid contracts designating them as independent contractors. This eliminates a common practice of covered entities submitting 340B requests for prescriptions written by physicians affiliated with a hospital; having privileges or credentials are no longer sufficient.
  • Prescriptions billed to insurers can only be for outpatient medication.
While the precise details are still being refined and are only in the proposal phase, providers should start preparing now for these changes, as most pundits believe the regulations will be in force soon. Among the actions that should be taken by hospitals currently deemed as 340B dispensers:
  • Review the current list of eligible providers dispensing the medications, and consider the implications of making them employees or adjusting contractual arrangements. This analysis is much more complex than room allows here, and the appropriateness of some actions may vary from state to state. Whatever course of action is determined should have strong physician engagement behind it.
  • Evaluate current levels of care provided to Medicaid and uninsured patients; many organizations have seen a drop in the percentage of uninsured patients and may lose their 340B status eligibility as a result.
  • Aggressively monitor the accounting procedures and flow of 340B dispensed medications, completely separating the inventory of 340B medications from all other medications. Strict logs should be kept to ensure they are only for outpatient utilization.
Infractions of the above, even under current rules, may result in disciplinary actions. The new mega regulations are largely clarifying past regulations that have been open to wide interpretation. Such interpretation will be curtailed if the new regulations are actually promulgated, approved and enforced—putting a huge dent in the bottom line of many hospitals.