1. Demystifying 340B: Frequently Asked Questions
Mindy McGrath, MPH
NFPRHA
FEBRUARY 13, 2018

2. What is 340B?
Allows safety-net providers to access discounted drugs in order to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services”
Administered by the Office of Pharmacy Affairs (OPA) of the Health Resources and Services Administration (HRSA)
What is the 340B Drug Pricing Program and who can use it?
340B is a program that allows safety net providers to obtain and provide discounts to outpatient drugs at a discounted, or “340B” rate. The purpose of the 340B program is to help safety-net providers to, "Stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.“ [
The program is administered by the Office of Pharmacy Affairs, the Health Resources and Services Administration of the Health and Human Services Department.
340B covered entities may not be charged any higher than the 340B ceiling price, which is the average manufacturer price – the unit rebate amount.
Covered entity categories include FQHC’s independent of receiving Title X, health centers receiving Title X, CDC 318 STD, Ryan White, and other federal grants, as well as hospitals (DSH, rural referral centers, etc.)
Source:
H.R. Rept. No (Part 2), at 12 (1992) (Conf. Rept.), Office of Pharmacy Affairs

3. Is My Site Eligible? All Title X-funded sites are eligible
Safety Net Providers
STD Program Funding (318)
Ryan White
FQHC
Title X
Some Hospitals
For this program, safety net providers include, “disproportionate share” hospitals, federal grantees from HRSA, the Centers for Disease Control and Prevention (CDC), the Department of Health and Human Services’ Office of Population Affairs, and the Indian Health Service. All Title X-funded health centers are considered “safety net” providers and are eligible.
Once a safety net provider service site is registered in the 340B database, they are referred to as "covered entities."
How do we become a “covered entity”?
340B registration (4 annual registration periods, become active on the first day of the following calendar quarter)
340B covered entities may not be charged any higher than the 340B ceiling price, which is the average manufacturer price – the unit rebate amount.
Covered entity categories include health centers receiving Title X, CDC 318 STD, Ryan White, and other federal grants, as well as hospitals (DSH, rural referral centers, etc.)

4. How Do We Get “Certified”?
Go to the 340B Office of Pharmacy Affairs Information System to register during one of these open enrollment periods.
After you set up your account, you will be able to register new entities and contract pharmacies during the registration period, make changes to your records, or withdraw sites from the program at any time.
Authorizing Officials (AOs) and Primary Contacts (PCs) must create individual user accounts. They will not be able to share access. It is required that you select different individuals to serve in the AO and PC roles to ensure access to your 340B database entry, links and information for annual recertification, and to provide continuity if one of the two is away or leaves the organization.

5. Key Information Four registration periods:
January 1-15
April 1-15
June 1-15
October 1-15
Registration is effective at the beginning of the next calendar quarter
There are four registration periods per year, and there is a three-month lag in between registration and eligibility for 340B pricing.
Covered entities must recertify annually during designated periods for each funding stream.
Registration periods are the first 15 days of each calendar quarter annually (January 1-15, April 1-15, June 1-15, and October 1-15).
Registration becomes effective on the first day of the following calendar quarter.

6. Annual Recertification
Must recertify annually, & attest to compliance during set recertification period
Failure to recertify results in termination from the program
Entities must recertify annually, & attest to compliance during set recertification period.
Failure to recertify results in termination from the program.
Entities which are recipients of more than one qualifying grant may register for each grant. This requires completing the recertification period for each grant.

7. Title X & …
We receive Title X and 318 STD funding. Do we need to be certified with both?
We receive Title X funding and are a FQHC. Do we need to be certified with both?
If you receive both Title X funding and 318 STD funding. Do we need to be certified as a 340B-covered entity twice?
You are not required to register for each eligible grant you receive. However, some entities choose to maintain two registrations in order to maximize the number of patients able to receive 340B-priced drugs, since you can only provide 340B-priced drugs to patients who receive services consistent with the grant.
Also, if for some reason you lost status for one grant, you’d still have the other.
If you are a federally-qualified health center (FQHC) that also receives Title X funding. Do we need to be 340B-certified as a covered entity twice?
No. Because FQHCs have an expanded scope of services that includes family planning services, many choose to register only once under their FQHC designation.

8. How Can Providers Purchase 340B Drugs?
Prime Vendor Program (Apexus)
Directly from manufacturer
Example: Liletta
Wholesaler
Group purchasing organization
Example: Afaxys
Once registered, 340B covered entities may begin purchasing 340B-priced drugs. Sub-ceiling prices are often available through the Prime Vendor Program or other GPOs, for example, Afaxys GPO.
There are a variety of ways to purchase 340B drugs, but the primary way is the “Prime Vendor Program” which is run by Apexus.
The Prime Vendor Program is essentially a large group purchasing organization.
340B covered entities can become members of the Prime Vendor Program.
Membership is free and you can purchase drugs and devices through them.
Most of their pricing is at what is referred to as a sub-ceiling price and is an even better deal than you might get directly from the manufacturer.
Alternatively, you can also purchase through the manufacturer at a 340B price.
Some drugs and devices, such as LARCs, can get a deep 340B discount through a specialty distributor, such as Afaxys, which is a group purchasing organization specializing in contraceptive methods.

9. Eligible Patient
The patient must have an established relationship with the provider practice (i.e., have a medical record).
They must have received some clinical services from a provider that is employed by or contracted with your organization - either that day or previously.
The patient has to receive a health care service that is consistent with the grant for which your entity is 340B certified.
Which patients can receive these medications, and which cannot?
There are three criteria for a Title X Service Site to utilize a 340B priced medications for a particular patient:
The patient must have an established relationship (i.e. medical record). (In other words, they must be your patient, and not coming to you solely for the purpose of obtaining discounted medications.)
They must have received some clinical services from a provider that is employed by or contracted with your organization. (In other words, they must be your patient, and not coming to you solely for the purpose of obtaining discounted medications.)
The patient has to receive a health care service that's consistent with the grant for which your entity is 340B certified. For a 340B entity certified under Title X, a patient has to come in and have some kind of family planning related service, in order to be eligible to receive 340B-priced drugs.
Not dependent upon the patient’s coverage status or source.
As long as the patient is outpatient and meets those three prongs, any drug that you give at that visit can be a 340B-priced drug. If a patient comes in and they receive a service consistent with the grant, but then you are prescribing them an additional drug that maybe has nothing to do with family planning, but is needed by the patient, that can still be 340B.
Source: See this FAQ from HRSA:FAQ ID: 1565
Last Modified: 09/15/2014
Q: Is a covered entity grantee limited to using or prescribing drugs that address the core function of their grant program?
A: The 340B Program does not limit the drugs a covered entity can use or prescribe; however, 340B drugs may only be transferred to individuals who qualify as patients of the covered entity grantee. All parts of the 340B patient definition (61 Fed. Reg (October 24, 1996), including the provision that 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, must be met.

10. Case Example #1 In a 340B certified 340B under Title X:
Mariam came in for a preventive health visit and decided to continue with Depo Provera last month.
This month, if she comes in for a positive syphilis – does she qualify for 340B-priced Bicillin L-A? (STD treatment, a service consistent with their Title X grant)
If she comes in for a strep throat (a service outside the scope of the Title X grant), does she qualify to get 340B-priced penicillin?
Example:
Mariam came in for a preventive health visit and decided to continue with Depo Provera last month.
This month, if she comes for a positive syphilis – does she qualify for 340B priced Bicillin L-A?
If she comes in for a strep throat do they qualify to get 340B priced penicillin?
If the STD services are consistent with their Title X grant, that visit would still be 340B-eligible.
The strep throat visit, however, would not be consistent with their Title X grant, and so would not be.
“The patient has to receive a health care service that is consistent with the grant for which your entity is 340B certified” during any given visit, in order to qualify for 340B-priced drugs in that visit.

11. Case Example #2
At the Sunshine Title X Family Planning clinic, Sally was seen 3 months ago for an initial exam and is coming in for a nurse-only visit to get a repeat Depo. Can you provide her with a 340B priced Depo today if she has:
Self-pay?
Private insurance?
Medicaid Fee-for-Service?
Medicaid Managed Care?
If the Depo Provera was purchased with Title X funds?
Example:
At the Sunshine Title X Family Planning clinic, Sally was seen three months ago for an initial exam and is coming in for a nurse-only visit to get a repeat Depo. Can you provide her with a 340B priced Depo today, if she has:
Self-pay? Yes.
Private insurance? Yes.
Medicaid FFS? Yes, if you are “carved in”
What if she has Medicaid Managed Care? “Yes, if you are “carved in”
Purchased with Title X funds? Yes, if this is consistent with your Title X grant.
Depo is considered a “refill” so she does not need to receive any additional services in order to still be eligible to receive this medication under 340B pricing.
If it was a new medication, however, she’d need to receive services consistent with the grant under which the entity is certified as 340B (for instance, if the visit included contraceptive counseling or reproductive life planning for Title X certified sites).

12. Billing for 340B Insurance Can I use 340B? How do I bill for drugs?
Self-Pay
Yes, if patient meets eligibility criteria
Use sliding fee scale and charge according to Title X requirements.
Private
Bill co-pay and insurance contracted rate.
Medicaid FFS
If “carve in.” Yes, if patient meets eligibility criteria
Bill the state Medicaid agency as specified in state policy.
Medicaid Managed Care
Bill the Medicaid MCO according to your state Medicaid agency’s policy

13. Case Example #3
If I provide a $20 340B priced medication to a privately insured patient.
Do I bill the insurance company $20 or would I bill them the $35 that is in our contract with them for that medication?
Is this different for a patient with Medicaid?
Example:
If we use a 340B-priced drug for a privately insured patient that costs $20 at 340B pricing, do we bill the insurance company $20, or $35, the rate that is in our contract with the company?
For private insurance, you should bill the insurance company at whatever your agreed-upon contracted rate is, regardless of what you paid for the drug.
For Medicaid, it depends. Check your state Medicaid policy.

14. Billing Questions
Can we use Title X funds to purchase 340B priced medications?
Can we use 340B medications for Expedited Partner Therapy?
2014 (FAQ ID 1375) : “340B drugs may be used for STD partner therapy in situations meeting the 340B Patient Definition”
Can you use Title X funds to purchase 340B priced medications (Can we use our 340B priced medications for our Title X patients who slide to zero)?
Yes. Self-pay patients whose income is at or below 100% FPL would not be charged for the drug per Title X guidance. Patients whose income is over 100% FPL more would be charged on the sliding scale and in compliance with Title X requirements.
If a patient has private insurance, can I give them a 340B priced drug and bill their insurance at the same time?
Yes.
Can you use 340B medications for Expedited Partner Therapy?
Yes, but check what your state allows. The argument is that EPT is actually treatment for your patient, as it is preventing reinfection. The guidance is, “340B drugs may be used for STD partner therapy in situations meeting the 340B Patient Definition.”
Source: 2014 (FAQ ID 1375): 340B drugs may be used for STD partner therapy in situations meeting the 340B Patient Definition: Any patient of a participating 340B entity is considered a 340B patient provided that the following criteria are met: the covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual's health care; and 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 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.

15. Who is NOT Eilgible to Get 340B Drugs?
Anyone in an inpatient setting (including immediate postpartum LARC)
An individual receiving no service other than administration/dispensing of a drug.
Return visit for repeat administration or refills such as a Depo Provera are ok.
Employees of your organization who are not your patient (unless they separately meet patient definition)
Eligible patients must meet three prongs of definition:
an established patient
receiving services from your entity beyond the medication
receiving a service consistent with the grant for which you are registered as 340B.
Not dependent upon the patient’s coverage status or source. However, there are additional compliance considerations when using 340B drugs with Medicaid patients.
Who is NOT eligible?
Anyone in inpatient setting
Individuals receiving no service other than the medication
Employees (unless they meet patient definition)
Source: Reference:   the 340B Program includes the following outpatient drugs:
FDA-approved prescription drugs;
Over-the-counter (OTC) drugs written on a prescription;
Biological products that can be dispensed only by a prescription (other than vaccines); or
FDA-approved insulin.

16. Medicaid and 340B
340B and Medicaid drug rebate program are tied together
Use of 340B drugs with Medicaid patients is more complicated than for other patients
Federal guidance only applies to fee-for-service/“straight” Medicaid

17. Carve-in or Carve-out?
Each covered entity makes a decision to either carve-in or carve-out and it is noted in the Medicaid Exclusion File (MEF)
It is a decision made per entity, not per medication
Carving in: Using 340B drugs w/ Medicaid patients ⇒ state should not collect rebate
Carving out: Not using 340B drugs w/ Medicaid patients ⇒ state collects rebate
For fee-for-service Medicaid, when you register for the 340B program as a covered entity, one of the things you have to elect to “carve in” or “carve out.”
You have to make a decision about whether or not you plan on using 340B drugs with your Medicaid fee-for-service patients.
If you want to use 340B drugs with those patients, that's referred to as “carving in.” If you're not going to use 340B drugs with your Medicaid patients, that's referred to as “carving out.”
If you “Carve in” then your entity will go into the Medicaid exclusion file. When a Medicaid covered patient is given a drug, and the state Medicaid agency pays for that drug, there's a separate government program, the Medicaid Drug Rebate Program, that requires that the pharmaceutical manufacturer to pay this state Medicaid agency a rebate, so they get a discount on that drug, but they get it on the back end.
However, you can’t get both 340B pricing, and the Medicaid rebate. In order to protect manufacturers from having to give a 340B discount up front and then give an additional discount on the back end to the Medicaid agency, they set up rules so that there's only ever one of those discounts being given.
For Medicaid patients, if you want to use 340B drugs with those patients, then the Medicaid agency can't collect their rebate on those drugs, because that would be what's referred to as a duplicate discount. The mechanism that the federal government has set up to avoid that happening, is this Medicaid Exclusion File.
If you “carve out” then you cannot use 340B medications for Medicaid patients. Instead, you will receive the Medicaid rebates on the back end.
You may change that selection at any point, but it doesn't become effective until the beginning of the next calendar quarter, because that's when they update the Medicaid Exclusion File.

18. Making your carve in/out decision
Some factors to consider when deciding to carve in or out:
Size of Medicaid population
Which drugs are most frequently dispensed
The differences in available prices of 340B vs. non-340B drugs
Reimbursement rates and requirements for 340B vs. non-340B drugs
Whether or not you dispense on site
Factors to consider when making the decision:
 Size of the Medicaid population
Which drugs are most frequently dispensed
Available prices of 340B v. non-340B drugs
Reimbursement of 340B v non-340B drug
Whether or not you dispense on site

19. What about Medicaid Managed Care (MMC)?
Differs state by state
To carve-in: consult state Medicaid agency’s policies
Duplicate discounts prohibited
Medicaid agencies get rebates from manufacturers for their drugs.
Rebates can’t be given when the drug was sold at the 340B price. When this happens, it’s called “duplicate discount”
A “duplicate discount” occurs when a state Medicaid agency collects a rebate from a manufacturer on a drug that was purchased at a 340B price. It is the responsibility of the covered entity to take the necessary steps to avoid duplicate discount.

20. Compliance
Maintain auditable records of compliance with 340B Program requirements
What are common 340B audit findings?
Insufficient Policies and Procedures
Inpatient
Diversion
Duplicate Discount
Covered entities are subject to audit by manufacturers or the federal government. Any covered entity that fails to comply with 340B Program requirements may be liable to manufacturers for refunds of the discounts obtained. Maintain auditable records documenting compliance with 340B Program requirements.
Common compliance findings:
Insufficient Policies and Procedures
Drugs given To non-patients
Inpatient
Diversion
Duplicate Discount

21. Case Example #4
Title X-funded Big City Hospital has both 340B and non-340B priced medications.
Do I have to store them separately?
If we run out of inpatient supplies, can we use our 340B-priced drugs and just replace them?
Example:
My program has on site both 340B and non-340B priced medications. Do I have to store them separately?
If you're going to use 340B-priced drugs in a mixed use setting:
You can either maintain two completely separate physical inventories of drugs: 340B drug inventory and non-340B drug inventory, but they have to be kept physically separate This works, but requires a fair amount of space.
You can use a virtual inventory model with one physical inventory and a split billing system that monitors all data from a variety of systems.
If you run out of inpatient supplies, can you use our 340B-priced drugs and just replace them?
No. That is considered “diversion.” (If an individual seeks services at your agency and does not meet the 340B patient definition, but is provided 340B drugs, this is considered “diversion.”)

22. Diversion
Providing 340B drugs to someone who does not meet the patient definition.
Transferring drugs from one covered entity to another
Transferring from one covered entity to an uncovered entity
Using 340B drugs in an inpatient setting
Using 340B drugs with individuals who do not meet criteria for established patient relationship
What is diversion?
If a patient doesn't meet the patient definition for some reason (inpatient or no existing relationship and they came in only to purchase medication).
If you are transferring drugs from one covered entity to another, or if you're transferring 340B drugs to a non-340B covered entity.
If an individual seeks services at your agency and does not meet the 340B patient definition, but is provided 340B drugs, this is considered “diversion.”
Examples of diversion:
Transferring drugs from one covered entity to another (this includes transferring drugs across 340B entities within the same agency)
Transferring 340B drugs to a non-340B covered entity
Using 340B drugs for inpatient/non-eligible patients if your non-340B supplies run out (even if you later replace them)
Using 340B drugs for a patient who has been admitted as an inpatient
Using 340B drugs for an individual who only wants to purchase medication, but with whom you have no established patient relationship

23. Duplicate Discount Carving in Carving out Duplicate Discount
Use 340B priced meds
Medicaid agency does not collect rebates
Carving out
Do not use 340B meds for Medicaid
Medicaid collects rebates
Duplicate Discount
Obtaining discounted drugs, when state Medicaid agency also receives rebate for drug
Illegally obtaining discounted drugs, when state Medicaid agency also receives rebate for drug, is referred to as “Duplicate Discount.”
If an entity has chosen to carve-out for Medicaid fee-for-service and is listed appropriately in the Medicaid Exclusion File, the Medicaid agency is entitled to collect rebates from the manufacturer on those drugs.
If, in actuality, the entity is giving 340B-priced drugs to Medicaid patients, duplicate discounts will occur.

24. Compliance Best Practices
Check/update 340B database entry quarterly
Conduct regular internal audits
Conduct regular trainings for staff; include in new staff onboarding
Have robust written policies and procedures
Compliance best practices:
Check and update your 340B database entry at least quarterly to make sure that everything on there is still correct and matching your practice. Outdated information such as listing authorizing officials that don't work at that organization anymore is considered a finding on an audit.
Conduct regular internal audits of your 340B compliance of your service site(s) and any vendors that you are contracting with to do any kind of 340B work. If you have contract pharmacy arrangements, or third party vendor for a virtual inventory system, you're expected to audit that arrangement annually, to make sure that all of the data going into that system is accurate, that it's pulling from the right places.

25. Policies and Procedures
Robust policies and procedures should include:
Definition of patient
Inventory management
Responsible staff
Separation of services
Medicaid carve in or out decision, billing procedures
Oversight and management of vendors, providers, and contract pharmacies (if applicable)
Internal audits
Policies and procedures should include:
How you define a patient.
Beyond the 340B definition of a patient, covered entities need to be specific about how they define a patient, especially with respect to what services they define to be consistent with the grant. What are these services?
How you're making sure that drugs are not being diverted to non-eligible patients
How you're making sure that duplicate discount isn't happening
What point in the process a patient goes from outpatient to inpatient (if applicable)
How you manage inventory.
How frequently you are doing a physical inventory and how frequently you are checking your inventory management systems
What staff is involved in managing the inventory, and who has access to the drugs
Who are the responsible staff, and what positions are engaged in all the steps in managing 340B at your agency
If you are a Title X-funded entity and provide other primary care services, how you are keeping the 340B drugs separate from the non-340B drugs
If your entity decided to carve-in or carve-out for Medicaid fee-for-service, and how you are billing in a way that is compliant
A description of the oversight and management of your vendors, providers, and contract pharmacies
Material breach (the term for when a compliance problem rises to the level of something that needs to be reported to the federal government)
How, when, how frequently, and who is involved in your internal audits
Have robust, detailed written policies and procedures that document your 340B-related decisions and match your practice’s policies and procedures. This is the most important thing you can do to ensure compliance with the 340B Program. Establish a regular schedule for reviewing and updating your 340B policies and procedures.

26. Questions or comments? Please use the chat!
Thank you!

27. Contact: The 340B Prime Vendor Program apexusanswers@340bpvp.com
Family Planning National Training Center
Mindy J. McGrath, NFPRHA
Contact:
The 340B Prime Vendor Program:
Family Planning National Training Center
Mindy J. McGrath, NFPRHA