340B Patient Definition Gets Much-Needed Update In Omnibus Guidance

HRSA's long-awaited comprehensive guidance clarifies numerous program policies and procedures to help ensure integrity of the drug discount program.

The long-awaited 340B "mega-guidance" issued Aug. 27 provides a new six-point definition of which patients are eligible to receive deeply discounted drugs purchased by providers under the 340B program.

The patient definition is one of a number of policy guidelines included in the Health Resources and Services Administration's (HRSA) proposed omnibus guidance that will help 340B-participating providers, known as covered entities, comply with program requirements. These include the statutory requirements that discounted drugs must not be diverted to individuals who are not patients of the covered entity and the prohibition on duplicate discounts, whereby a state obtains a Medicaid rebate when that same drug was discounted under 340B (see table of guidance contents at bottom of story).

Current 340B Definition Of Eligible Patient (Issued 1996)

1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s health care;
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.

Originally envisioned to be issued through the rulemaking process, the regulatory status of the omnibus was demoted to guidance after a federal court, as a result of a lawsuit brought by the Pharmaceutical Research and Manufacturers of America, told HRSA it lacks authority to issue 340B rules except on topics mandated by Congress (Also see "340B Integrity “Guidance," Not “Rule,” Will Issue In 2015" - Pink Sheet, 21 Nov, 2014.). It is scheduled for publication in the Aug. 28 Federal Register, with comments due 60 days later.

Manufacturers have been vocal in their criticism of the lack of guidance and oversight to ensure compliance with the prohibitions on diversion and "double dipping" on discounts, so the new guidance has been eagerly anticipated. HRSA has an existing definition of an eligible patient in place since 1996, but it is vague enough to allow a fair amount of leeway when it comes to interpretation by covered entities (see box above). This issue has been compounded by the rapid expansion of the program, which has included covered entities contracting with retail pharmacies to dispense 340B prescriptions, frequently with no oversight to ensure compliance (Also see "340B Pharmacy Safeguards Against Rx Diversion, Double Discounts Are Inconsistent – OIG" - Pink Sheet, 5 Feb, 2014.).

New Six-Point Definition Of Eligible Patient

The proposed definition of a patient eligible to receive 340B drugs helps eliminate some of the vagueness of the current definition, since it offers six criteria that must all be met, rather than the current list of three, and further clarifies each point by discussing situations where a patient would or would not be eligible to receive 340B drugs:

1) "The individual receives a health care service at a facility or clinic site which is registered for the 340B program and listed on the public 340B database."

On this point, HRSA further clarifies that an individual who sees a physician in his or her private practice which is not listed on the public 340B database or any other non-340B site of a covered entity, even as follow-up to care at a registered site, would not be eligible to receive 340B drugs for the services provided at these non-340B sites.

An individual will not be considered a patient of the covered entity if the individual’s health care is provided by another health care organization that has an affiliation arrangement with the covered entity, even if the covered entity has access to the affiliated organization’s records. Access to an individual’s records by a covered entity, by itself, does not make the individual a patient of that covered entity.

2) "The individual receives a health care service provided by a covered entity provider who is either employed by the covered entity or who is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider."

The guidance clarifies that simply having privileges or credentials at a covered entity is not sufficient to demonstrate that someone treated by that provider is a patient of the covered entity for 340B purposes. Also, if a patient is referred from the covered entity for care at an outside provider and receives a prescription from that provider, the drug in question would not be eligible for a 340B discount at that covered entity.

3) "An individual receives a drug that is ordered or prescribed by the covered entity provider as a result of the service described in (2)."

A prescription resulting from a telemedicine, telepharmacy or remote service encounter would be eligible for 340B. However, an individual would not be considered a patient of a covered entity if the only relationship to the individual is the dispensing or infusion of a drug.

4) "The individual’s health care is consistent with scope of the Federal grant, project, designation, or contract."

Some health care facilities are eligible for 340B by virtue of receiving a grant, etc., to treat a specific population, such as a pediatric clinic or family planning project. In those cases, only patients receiving treatment consistent with the services designated in the grant would be able to receive 340B drugs.

5) "The individual’s drug is ordered or prescribed pursuant to a health care service that is classified as outpatient."

Since the statute says 340B discounts apply only to outpatient drugs, a patient whose services are classified as inpatient cannot be eligible for 340B drugs. An individual is eligible if the health care service is billed as outpatient to the patient’s insurance or third party payer. The covered entity should maintain auditable records documenting any changes in patient status due to insurer determinations.

The status of uninsured patients would be determined through a covered entity's documented, auditable policies and procedures. HRSA says it expects those patients would be classified as inpatient or outpatient based on how the services would have been classified for Medicare or another third-party payer.

6) "The individual’s patient records are accessible to the covered entity and demonstrate that the covered entity is responsible for care."

A patient of a covered entity has a provider-to-patient relationship that can be demonstrated with auditable records for the service resulting in a prescription as well as continued responsibility for care that results in every 340B drug ordered, dispensed or prescribed to an individual. Covered entities must maintain records that demonstrate that all of the criteria above were met for every prescription.

Scope Of Proposed 340B Omnibus Guidance
Main Part	Sub-headings
Part A: 340B Program eligibility and registration	Non-hospital covered entities
	Hospital covered entities
	Registration and termination
	Annual recertification
	Group purchasing organization prohibition for certain covered entities
Part B: Drugs eligible for purchase under the 340B program
Part C: Individuals eligible to receive 340B drugs
Part D: Covered entity responsibilities	Prohibition of duplicate discounts
	Maintenance of auditable records
Part E: Contract pharmacy arrangements
Part F: Manufacturer responsibilities	Pharmaceutical pricing agreement
	Obligation to offer 340B prices to covered entities
	Procedures for issuance of refunds and credits
	Manufacturer recertification
Part G: Rebate option for AIDS Drug Assistance Programs
Part H: Program integrity	HHS audit of a covered entity
	Manufacturer audit of a covered entity
	HHS audit of a manufacturer and its contractors