HRSA curtails pandemic-era 340B flexibilities for hospitals’ off-campus outpatient facilities

In an expected move that stands to affect the savings reaped by health systems from the 340B Drug Pricing Program, the Health Resources and Services Administration (HRSA) is tightening participation requirements for off-campus outpatient facilities.

In a published alert, HRSA announced plans to end pandemic-related flexibilities that have made it easier for off-campus outpatient facilities to participate in 340B. Going forward, HRSA will apply longstanding criteria according to which those departments are eligible for 340B discounts only if:

• They have been listed as “reimbursable” on their parent facility’s Medicare cost report, with associated costs and charges represented
• They have registered with HRSA’s Office of Pharmacy Affairs Information System

Exceptions to those requirements apply as follows:

• If a facility is listed on its parent hospital’s cost report but is not yet registered with OPAIS, it is eligible for 340B discounts as long as it registers with OPAIS during the quarterly registration period ending Jan. 16.
• If a facility does not yet appear on its parent hospital’s cost report, it will remain eligible for 340B discounts if the parent hospital provides HRSA with the projected dates for when the facility will register with OPAIS and appear on the hospital’s cost report as required. That information must be sent to [email protected] by Jan. 25 (i.e., within 90 days of the new alert’s Oct. 27 publication).

“After the 90-day grace period, noncompliant covered entities may be subject to audit and compliance action,” the alert states.

Facilities that open going forward will not be eligible for 340B until they appear on their hospital’s cost report and register with OPAIS.

Justifying the change

Starting in June 2020, HRSA waived the requirements for an off-campus outpatient facility to be listed on its parent hospital’s cost report and be registered with OPAIS.

The waiver was offered “in recognition of the need for hospitals to quickly respond to the rapidly evolving conditions of the COVID–19 pandemic and assist in creating efficiencies for hospitals to adjust operations in that response.” Specific scenarios envisioned for the waiver included instances when hospitals had to quickly set up a new facility to treat COVID-19 patients or needed to shift clinic operations to a different site.

HRSA’s intent, though, was for any such facility to be listed on its parent hospital’s cost report at the earliest opportunity.

“Various HRSA program integrity efforts conducted since the start of the COVID–19 PHE [public health emergency] have demonstrated that the waiver has added risk and complexity to HRSA’s ability to effectively oversee ongoing compliance in the 340B program,” the agency wrote in the new alert. “Further, the circumstances of COVID–19 are no longer rapidly evolving in a manner that requires significant unplanned activities or changes by hospital-covered entities to accommodate these exigencies or adjust operations without planning for additional requirements to conduct business.”

A cited concern about the waiver is that if a facility is not registered with OPAIS, it cannot be listed in HRSA’s Medicaid Exclusion File. Any such absence increases the chance that a facility will receive a duplicate discount on a drug price via 340B and the Medicaid rebate program.

Hospital advocate expresses concern

America’s Essential Hospitals (AEH), which represents many 340B hospitals, said pandemic-era accommodations should have continued. The lag time between a new facility’s operational launch and its inclusion on the parent hospital’s cost report can put the hospital at a disadvantage if the 340B discount is not available.

“Offsite locations are critical parts of 340B hospitals’ ambulatory networks that expand hospitals’ reach into their underserved communities,” AEH said in a statement attributed to Beth Feldpush, DrPH, senior vice president of policy and advocacy. “HRSA’s 2020 guidance corrected a longstanding barrier to access by allowing hospitals to use 340B drugs at offsite outpatient locations as soon as they began serving patients. The reversal of this guidance will significantly harm essential hospitals and curb their ability to serve patients where they live and work.

“We appreciate HRSA’s flexibility in allowing a transition period for locations opened before publication of the guidance, but the new notice will stifle essential hospitals’ ability to expand access to discounted drugs and other services through new locations in the future.”