Your 340B Report for Tuesday April 7, 2020

Telehealth Is Becoming the New Normal. What Does it Mean for 340B?

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The COVID-19 pandemic is poised to make telehealth as common as a visit to the doctor’s office. The change will have major implications for providers’ compliance with the 340B program’s patient definition. Source: Shutterstock

Telehealth Is Becoming the New Normal. What Does it Mean for 340B?

Before last month, odds are good you never had a doctor’s visit via computer or smartphone. The COVID-19 pandemic is likely to change that. Many predict this will be the year telehealth becomes a routine mode of health care delivery. That means there will be major implications for 340B covered entities’ compliance with 340B drug discount program requirements—for example, for a prescription for a patient at home sick in bed, written by a practitioner working at home in a different state.

Late last week, Powers Law, a 340B Report sponsor, held a webinar on telehealth and COVID-19 that covered 340B patient definition considerations. Powers Principal Barbara Straub Williams led that segment.

Many 340B providers are asking, “If a prescription is written as a result of a telehealth visit, can it be filled with 340B drugs?” Williams said. “Does it meet [the Health Resources and Services Administration’s] patient definition standard?” A few weeks before the pandemic began, Williams said she obtained an unpublished Apexus/340B Prime Vendor Program FAQ on the subject. While the FAQ doesn’t explicitly deem telemedicine an eligible service to qualify for 340B drug pricing, “there’s not a no,” she said. The FAQ is clear that telemedicine can be the basis for a establishing a patient relationship for 340B, she said. HRSA said the same in 2015 in its withdrawn 340B program omnibus guidance, Williams pointed out.

Last month on its COVID-19 340B resources webpage, Williams said, HRSA issued an FAQ “that recognizes that telehealth is critical at this time, that it merely is a modality by which health care is delivered, that covered entities should have policies and procedures in place to address telehealth, and that auditable records should be maintained.”

“This is important because HRSA is not flat-out saying no, you cannot establish a patient relationship through telehealth,” she said.

While the Apexus and HRSA FAQs are helpful, they don’t answer the critical question, “Is it important that the patient and prescriber be in a particular location when the telehealth services are provided?” Williams said. HRSA generally requires that services be delivered at a 340B-eligible location, she observed, but patients and many providers need to remain home during the COVID-19 emergency. Williams said she raised the matter with Apexus, and it said, “as long as the prescriber is logged into an electronic medical record in the same way as if in a covered entity location, the service will be viewed as being provided in an eligible site.”

Grantee 340B covered entities must provide services within the scope of their grant for prescriptions that result from such services to be 340B-eligible, Williams said. HRSA’s HIV/AIDS Bureau (HAB), which oversees Ryan White program grantees, has launched its own COVID-19 FAQs webpage. “It clearly says it is encouraging the use of telehealth at this time, that Ryan White money can be used for telehealth, and that providers do not have to be in their clinic, that they can provide services from their home.“ Williams also said HAB recently stated in a call with Ryan White grantees that grant funds can be used for telehealth, thereby affirming that telehealth is all within the scope of their grant.

HRSA’s Bureau of Primary Care, which oversees federally qualified health centers and FQHC look-alikes, has similar FAQs on its website. “They verify that even when the provider is at home, it’s within the scope of your grant,” Williams said. Williams encouraged the audience to review applicable FAQs for additional guidance on the use of telehealth, such as having policies and procedures in place to address telehealth. 

As of April 3, the Centers for Disease Control and Prevention did not have similar FAQs for sexually transmitted disease clinics. Nor did HRSA’s Maternal and Child Health Bureau, which oversees hemophilia treatment centers.

Finally, HRSA has relaxed its documentation requirements for purposes of the 340B patient definition. “These relaxed documentation standards apply to all health care visits, not just telehealth,” Williams said.

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Hospitals Are Spending Millions Fighting COVID-19. Increased 340B Savings Could Help Cushion the Blow.

Hospitals reported saving more money through 340B drug discounts in 2019 than they did in recent years, a hospital group says. The April 2 report comes out at time when hospitals are facing enormous financial challenges grappling with the COVID-19 pandemic. Hospitals are facing a double whammy of unprecedented costs of COVID-19 care as well as a big hit from the loss of everyday procedures. With income-generating elective surgeries, diagnostic procedures, and other non-essential services suspended during the public health emergency, hospitals’ 340B savings take on greater significance.

According to 340B Health, the majority of its nearly 500 members who took its 2019 member survey “reported an increase in their 340B benefit relative to the prior year.”

340B Health said 2019 median savings for disproportionate share (DSH) hospitals, which account for about 80 percent of all spending on 340B drugs, were $8.9 million. Other median 340B savings were $12.6 million for children’s hospitals, $2.4 million for rural referral centers, $1.7 million for sole community hospitals, and $564,000 for critical access hospitals.

In 2017, 340B Health said DSH hospitals reported median estimated 340B savings of between $5 million and $10 million, with 23 percent reporting less than $2 million and 20 percent reporting more than $25 million. Rural hospitals reported median estimated savings of between $500,000 and $1 million.

The findings come against the backdrop of the nearly 30 percent reduction in Medicare Part B reimbursement for 340B-purchased drugs for many 340B hospitals. The authors of a recent study of whether hospital participation in 340B increases safety-net care said their findings “cast doubt on hospitals' predictions” that the Part B cuts would force patient service reductions, layoffs, and emergency room closures. 340B Health’s new report says the cuts “led about a third of affected hospitals to make cutbacks in personnel or programs or take other action in response including reducing the level of uncompensated care provided.”

340B Health said its survey also found that “about a quarter of the average 340B benefit comes from contract pharmacy arrangements.” More than half (57 percent) of critical access hospitals’ 340B benefit comes from contract pharmacy arrangements while DSH hospitals reported 24 percent, it said.


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Sasse Reintroducing Bill to Keep Hospitals from Losing 340B Eligibility During Pandemic

U.S. Sen. Ben Sasse (R-Neb.) says he is reintroducing legislation to protect hospitals from losing their 340B eligibility due to changes in patient mix during the COVID-19 epidemic.

Five types of hospitals must maintain a Medicare disproportionate share (DSH) adjustment percentage greater than 11.75 percent to stay eligible for 340B. As we reported March 26, Sasse offered an amendment, ultimately tabled, to the $2 trillion economic stimulus bill to pause the process of checking hospital DSH percentages for 340B eligibility purposes for the duration of the pandemic. In an April 6 press release, Sasse said he would seek to attach the same language, along with other relief for rural health care providers, “in the next round of emergency relief.”

House Oversight Chairwoman Asks PhRMA to Make COVID-19 Treatments Affordable

House Oversight and Reform Committee Chairwoman Carolyn Maloney (D-N.Y.) sent an April 2 letter to Pharmaceutical Research and Manufacturers of America (PhRMA) asking the association’s members “to commit to setting affordable list prices for any medications, including vaccines, that may be used to prevent or treat coronavirus.”

“We hope you agree that no drug company should be allowed to profiteer, especially during this public health emergency, and we look to you to set this standard for all of your members,” the new Chairwoman wrote.

Maloney observed that drug company Gilead recently obtained an orphan drug designation for its investigational drug remdesivir for the treatment of COVID-19 despite projections that as many as 96 million people in the nation could be infected with the SARS-CoV-2 virus. The Orphan Drug Act is intended to spur development of treatments for diseases and conditions affecting fewer than 200,000 people. “Only after immense public pressure did Gilead reverse course and ask FDA to rescind this orphan drug designation,” Maloney pointed out.

Gilead is no stranger to drug pricing controversies. It gained notoriety for its $1,000 a pill launch price for its hepatitis C treatment Sovaldi and even higher price for its follow-on HVC drug Harvoni. A bipartisan Senate Finance Committee investigation concluded Gilead’s pricing and marketing strategies for the drugs were “designed to maximize revenue with little concern for access or affordability.” Gilead also has come under fire for the between $1,600 and $2,000 monthly cost of its HIV pre-exposure prophylaxis drug Truvada.

In an April 4 open letter, Gilead Chairman and CEO Daniel O’Day said his company has 1.5 million doses of remdesivir ready for distribution, which “could equate to well over 140,000 treatment courses for patients.” He continued:

Gilead is providing the entirety of this existing supply at no cost, to treat patients with the most severe symptoms of COVID-19. The 1.5 million individual doses are available for compassionate use, expanded access and clinical trials and will be donated for broader distribution following any potential future regulatory authorizations. These doses are for treating patients with severe symptoms, through daily intravenous infusions in a hospital setting. Having a potential treatment in our hands comes with significant responsibility. Providing our existing supplies at no charge is the right thing to do, to facilitate access to patients as quickly as possible and in recognition of the public emergency posed by this pandemic.

We have set an ambitious goal of producing more than 500,000 treatment courses by October and more than 1 million treatment courses by the end of this year.

In her letter to PhRMA, House Oversight Chairwoman Maloney asked if its members would pledge

  • to not raise list prices of existing drugs that could be used to treat COVID-19

  • set launch prices of new drugs that are no greater than necessary to recover costs

  • provide a detailed accounting of drug development costs

  • provide drug for free to uninsured or low-income patients who need them.

Maloney asked PhRMA to respond by April 9.


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Hospitals and Health Centers Straining Under COVID-19’s Pressure

HHS Inspector General Depicts Hospitals Under Extreme Stress

Hospitals surveyed in late March about COVID-19 by the HHS Office of Inspector General reported severe supply shortages, challenges maintain adequate staff levels and beds, increasing costs and decreasing revenues, and changing and sometimes inconsistent guidance from authorities.

OIG released the survey report April 3. “We recognize that HHS has taken and continues to take actions toward these hospital challenges and needs,” OIG said. “Our report presents hospital suggestions on ways that the government could assist them for HHS’s and other decision-makers’ consideration as they continue to respond to the COVID-19 pandemic.”

The report noted that “to manage patient flow and hospital capacity, some hospitals were providing ambulatory care for patients with less severe symptoms, telehealth services when possible, and setting up alternate facilities such as fairgrounds, and non-operating college dorms and closed correctional facilities as additional space for patient care.”

At an April 6 White House briefing, President Trump said the report was wrong and asked for the name of the inspector general. “Could politics be entered into that?” he said.

COVID-19 Straining Health Center Finances and Forcing Layoffs

COVID-19 also is straining the finances of and forcing layoffs at community health centers, The New York Times reported on April 4.

According to the article, the $1.3 billion health centers received under the $2 trillion stimulus package “will only keep the system afloat for about 37 days from the start of the first payments, according to estimates by the National Association of Community Health Centers.” The Times said center revenues have been falling in recent weeks due to fewer paid patient visits and reductions in dental care and other revenue-generating care due to the need to conserve resources and keep the disease from spreading. Centers, meanwhile, are being called upon to work with hospitals to screen people for the virus and to prepare for a surge of patients unable to get care at overwhelmed hospitals, the newspaper said.

HHS Wants to Make Hospitals Use Part of Their $100 Billion in COVID-19 Emergency Aid to Cover the Uninsured

HHS Secretary Alex Azar said at an April 3 White House briefing that, under President Trump’s direction, “we will use a portion” of the $100 billion in emergency assistance hospitals got under the $2 trillion stimulus package “to cover providers’ costs of delivering COVID-19 care for the uninsured.”

“As a condition of receiving funds under this program, providers will be forbidden from balance billing the uninsured for the cost of their care,” Azar said. “Providers will be reimbursed at Medicare rates. We will soon have more specifics on how the rest of the $100 billion will go to providers.”

In a statement the same day, American Hospital Association Rick Pollack said the money “was intended to provide hospitals with an infusion of emergency relief as providers incur substantial expenses in preparing and dealing with fighting this battle against COVID-19. At the same time, given that virtually all regular operations have come to a halt—such as elective or scheduled procedures—there are limited revenues coming in, causing major cash flow concerns that threaten the viability of hospitals. This is also creating a historic financial crisis, threatening the ability to keep our doors open for both the insured and uninsured alike.” He said AHA is encouraging the administration to look at other options to provide coverage for the uninsured.

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