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Five Suggested Updates for 340B Covered Entities Facing COVID-19 Challenges

The Health Resources and Services Administration (HRSA) recently published guidance regarding the evolving impact of COVID-19 on 340B stakeholders.  This new guidance is one part of the U.S. Department of Health and Human Services’ broader effort to maximize regulatory flexibility for health care providers scrambling to meet patient needs during the COVID-19 crisis. We have documented those efforts in our ongoing series of blog posts.

While HRSA’s new guidance begins by acknowledging “it is appropriate to take into account the realities of the COVID-19,HRSA offers little in the way of substantive relief when it comes to 340B.  Long on generalities and short on specifics, HRSA merely advises entities to ensure they “have policies and procedures in place to address the proper dispensing of 340B drugs.” 

HRSA’s lack of specificity is not a surprise.  As regular readers of our blog know, after multiple lawsuits and the invalidation of the 340B Orphan Drug Rule, HRSA now believes that its authority to issue regulations, or even guidance, on 340B is strictly limited to a few items explicitly stated in Section 340B of the Public Health Services Act.  By this logic, HRSA lacks authority to temporarily relieve covered entities from program requirements, such as allowing broader use of 340B drugs during the COVID-19 emergency.    

Given the circumstances, necessity is likely compelling many providers to disregard their existing policies and procedures as they strain to care for too many patients with too few supplies.  However, for providers with the luxury of time to plan, HRSA’s guidance contains a few useful nuggets of information regarding revisions to existing policies and procedures that can protect covered entities down the road. 

Suggestions for Updating Covered Entity Policies and Procedures

HRSA’s COVID-19 guidance includes a set of frequently asked questions (FAQs), mostly focused on the documentation covered entities should maintain to establish compliance with underlying 340B requirements.  Based on these FAQs, covered entities should consider the following recommendations for updates to their existing 340B policies and procedures. 

  1. The update should initially set out that the covered entity considers COVID-19 as creating an emergency, justifying modifications to the existing policies/procedures to meet the crisis. 
  2. The update should document that the COVID-19 emergency justifies the need for using volunteer and otherwise unaffiliated health care providers to meet the medical needs of patients.  HRSA recommends the update specify that volunteer and unaffiliated health care providers are considered as working under an emergency agreement with the covered entity.  This arrangement grants outpatient prescriptions written by the covered entity the potential for 340B eligibility.  The covered entity should also keep records of all individual volunteer or otherwise unaffiliated providers. 
  3. HRSA’s guidance states that for COVID-19 treatment, “self-reporting of identity, condition and history are adequate for purposes of 340B recordkeeping requirements.”  Thus, to ensure that the covered entity can document an established relationship with the patient, the covered entity should consider updating policies and procedures to acknowledge that while the emergency exists, the covered entity will accept a broader classification of records to document the covered entity-patient relationship.  These policies and procedures should give examples of the types of records that can be used.    
  4. Covered entities are establishing satellite locations, and even tents in parking lots, to expand their surge capacity.  In the guidance, HRSA refuses to grant any special exception for these expansion sites.  Instead, the agency is directing covered entities concerned about eligibility of prescriptions written and drugs dispensed out of these new sites to contact Apexus to evaluate the covered entity’s individual circumstances.  At a minimum, however, covered entities should still update their policies and procedures to address the status of emergency satellite locations as part of the covered entity. 
  5. Many covered entities are taking advantage of other Department of Health and Human Services (HHS) guidance to offer or expand telehealth services.  340B policy and procedure updates should specifically address the fact that health services offered through telehealth qualify as the delivery of a health care service by the covered entity. 

HRSA indicated that during the crisis, it “is moving” towards conducting future covered entity audits remotely.  However, HRSA passed off any specific responsibility for those audits to its audit contractor, the Bizzell Group.  It is hard to fathom that the agency would force covered entities to divert resources to an administrative audit during a pandemic.  Let us hope reason prevails. 

HHS has recognized that the administrative challenges of coping with COVID-19 call for maximum flexibility.  Despite the rigidity of HRSA’s position, we are also hopeful that HRSA follows HHS’ lead and accommodates covered entities with some flexibility to overall 340B compliance during this crisis. 

Everyone on the Mintz health care team joins us in sending our best wishes to all health care entities and providers on the front line of combating COVID-19. 

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Daryl Berke