Understanding the 340B Drug Pricing Program Modifications

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The HRSA has made some timely modifications to the 340B Drug Pricing Program due to COVID-19.

The COVID-19 pandemic is fundamentally changing hospital operations and, in many cases, causing substantial operating losses. Changes in payer mix and occupancy levels due to the pandemic can be severe and alter a hospital’s eligibility or non-eligibility for the 340B program in radical ways. Because of all these factors, HRSA (Health Resources & Service Administration) has made some important modifications to the 340B Drug Pricing Program including:

  • Allowing certain entities, upon request and review, to immediately enroll in the program and bypass the four application periods plus the one quarter delay from approval to participation in the program. This increased flexibility for enrollment is critically important for hospitals with 12/31/19 year ends whose cost report due date has been extended to July 31, 2020. Typically, without this new flexibility, a hospital would not be able to apply until the next regular application period, October 1, 2020 to October 15, 2020. Then, if approved, the hospital would not be enrolled into the program until January 1, 2021. This new flexibility could allow a hospital to participate in the 340B program for at least four additional months. In addition, a hospital may be able to immediately enroll a new site that is established due to the surge in COVID-19 patients but is not on a current Medicare cost report or have existing outpatient cost and charges. According to the HRSA website, “To the extent a covered entity has a specific concern about 340B eligibility of a new site, the covered entity should contact the 340B Prime Vendor Program (1-888-340-2787 or [email protected] ) and we will evaluate each circumstance on a case-by-case basis.”
  • Providing the ability in limited circumstances for a hospital subject to the GPO prohibition to purchase drugs through a GPO if the hospital is unable to obtain the drug at the 340B price or wholesale acquisition cost (WAC) due to shortages. The hospital should clearly document the efforts made to acquire the drug at WAC and retain a record of all such purchases. HRSA is not currently requiring hospitals to report these purchases or contact the manufacturers.
  • Offering further guidance on certain compliance and operational issues including the use of telehealth services and the proper handling of volunteer health professionals that are providing health care services. Hospitals need to clearly document in their 340B policies and procedures any changes made that might affect the hospital’s compliance with 340B regulations and maintain auditable records supporting the hospital’s responsibility for the patient.

HRSA has established a website specific to the COVID-19 pandemic and the 340B program to assist hospitals with understanding these changes.  Our experts will continue to provide helpful resources and updates to this important topic.