Speaker 1 (00:05):
Welcome to 340B Insight from 340B Health.

David Glendinning (00:13):
Hello from Washington DC, and welcome back to 340B Insight, the podcast about the 340B drug pricing program. I'm David Glendinning with 340B Health. This episode is sponsored by Sentry Data Systems, a pioneer in providing 340B management and compliance solutions to healthcare organizations and now a craneware company. Sentry's integrated platforms address your three biggest challenges. Reducing total cost of care, managing compliance and producing better quality century has helped hospital systems and realize significant documented savings since 2003. Our guest today is Amanda Nagrotsky, 340B Health's legal counsel.

David Glendinning (00:58):
We brought in Amanda to discuss child site registration under the 340B program. Child sites are a key component of how hospitals use 340B savings to stretch resources and serve more patients, so we wanted to learn the details about how that registration process works. But before we go to that interview, let's take a minute to cover some of the latest news about 340B

David Glendinning (01:20):
The Health Resources and Services Administration has initiated federal enforcement actions against another drug company that had imposed restrictions on 340B pricing through contract pharmacy arrangements. HRSA has sent Boehringer Ingelheim a letter informing the company that it's restrictive policy, which went into effect August 1st, is unlawful. The letter says BI must restore 340B pricing on all eligible drug purchases and it gives the company an October 18th deadline to submit a plan for doing so. The letter also directs the company to issue credits or refunds to all hospitals that it overcharged under the policy. BI is one of eight drug companies to cut off 340B pricing through contract pharmacies and it is the seventh company to receive such a letter from HRSA. The first six companies have gone to federal courts in an effort to block such enforcement actions, so the agency has referred the cases of those six drug makers to the Health and Human Services Office of Inspector General. The OIG will determine if their continued refusals to comply with the 340B law, make them liable for civil monetary penalties for knowingly and intentionally overcharging covered entities.

David Glendinning (02:39):
We covered those possible penalties, the news of which came right at the end of a busy summer for 340B, in our most recent episode with our president and CEO, Maureen Testoni. So if you have not yet listened to Maureen's updates, please be sure to do so. You can read the new HRSA letter to BI in the show notes for this episode.

David Glendinning (03:06):
Now for our feature interview with 340B health legal counsel, Amanda Nagrotsky. Miles Goldman recently sat down with Amanda to discuss 340B child sites and how hospitals can register those sites. Here's that conversation.

Miles Goldman (03:20):
Thank you, David. I'm joined by Amanda Nagrotsky, who is the legal counsel at 340B Health. Amanda, welcome to 340B Insight.

Amanda Nagrotsky (03:30):
Thank you so much Miles, it's great to be here.

Miles Goldman (03:32):
And Amanda, it's great to have you. We had your colleague from the legal and policy team, Amanda Sellers Smith on earlier this year and she predicted you'd be on and here you are. And we're talking about a really important topic today, 340B child site registration. To make sure we're all on the same page, what is a child's site?

Amanda Nagrotsky (03:54):
Sure, so a child site is an offsite hospital clinic, department or service that's eligible to participate in 340B, so eligible to purchase and provide 340B drugs to patients of the facility. And they are an integral part of the hospital under Medicare cost reporting rules and offsite typically refers to locations outside of the four walls of the main parent hospital.

Miles Goldman (04:27):
Why does HRSA require hospitals to register their outpatient facilities?

Amanda Nagrotsky (04:33):
So HRSA requires hospitals to register offsite outpatient facility is where 340B drugs are purchased or provided to hospital patients of that facility. So, the registration requirement for child sites is really about oversight and compliance. HRSA is reviewing and verifying the facilities where 340B drugs are being purchased or provided to patients of the hospital.

Amanda Nagrotsky (05:02):
An outpatient facility must be an integral part of the hospital in order to be eligible to purchase and provide 340B drugs to patients of that facility. So, it's not like any outpatient facility of a hospital can register. HRSA uses a Medicare cost report kind of test to determine which facilities are integral parts of the hospital and therefore eligible to register as child sites and use 340B. So, the facility must be reimbursable under the hospital's Medicare cost report. That means that the facility, it meets CMS's provider-based requirements.

Amanda Nagrotsky (05:44):
And this is all outlined in guidelines that HRSA issued years and years ago on eligible offsite outpatient facilities. Those guidelines were published in the federal register in 1990. Miles, remember that the 340B statute lists certain types of hospitals that are eligible to participate in 340B. So, way back when, when the program was enacted in 1992, shortly after that in '94, HRSA issued those outpatient facility guidelines because they, HRSA, essentially needed to define what a hospital is for purposes of 340B.

Amanda Nagrotsky (06:26):
So, in terms of which child site locations must be registered, it's only facilities that are located outside of the four walls of the main hospital that need to be registered. So, facilities that are located within the four walls of the main hospital still need to be an integral part of the hospital. They still need to be reimbursable on the hospital's Medicare cost report in order to use 340B, they just don't need to separately register with OPA since they're not offsite.

Amanda Nagrotsky (06:55):
For the offsite locations that do need to register, each clinic, department and service has to be separately registered in the Office of Pharmacy Affairs Information System, OPAIS. So, if a hospital has, let's say, a single offsite location that provides pediatric services and radiology services, or physical therapy services, the hospital should register each of those services individually to establish their eligibility for 340B. And that Miles, is a really big change from the way HRSA used to do it.

Amanda Nagrotsky (07:33):
Years ago, HRSA used to only require hospitals to register offsite facilities that were receiving direct shipments of 340B drugs, but in 2012 or so, HRSA started telling hospitals to register offsite facilities that use 340B drugs, even if they don't receive direct shipments of 340B drugs and the requirement to register services as child sites separately, came a couple of years after that.

Miles Goldman (08:03):
I appreciate you sharing all that background, Amanda. Can in-house pharmacies be considered child sites?

Amanda Nagrotsky (08:11):
That's a really good question, Miles. The answer is no, they can not. So, entity-owned pharmacies or pharmacies that are legally owned by a hospital, those aren't eligible covered entities, so they can't be registered as child sites, but pharmacies can be listed and often are listed as shipping addresses of a registered child site or of the parent hospital. It depends on the locations that are being served by the pharmacy.

Miles Goldman (08:40):
There's a lot of steps involved, it sounds like, in child site registration, what is the timeline for this process?

Amanda Nagrotsky (08:49):
It can be long, Miles. In some cases, it can take close to two years from when a clinic opens to when it can register as a child site. Offsite clinics must appear on a reimbursable line of the most recently filed cost report to register for 340B and filed cost reports are typically due to CMS five months after the end of the cost reporting periods. So, let's just take an example. Let's say a hospital has a clinic that opened on January 1st of 2020. That hospital may not file a cost report with the clinic appearing on a reimbursable line until May of 2021 of the following year. Even then, there's a further delay due to quarterly registration. So, HRSA allows for child sites to be registered during open enrollment, which is the first 15 days of January, April, July, and October.

Amanda Nagrotsky (09:53):
So, going back to our example, let's say hospital opens clinic in January of 2020, it's on a filed cost report in May of 2021. It can't be registered until the next open registration period, which would be July of 2021. And then, the hospital needs to wait for that registration to be effective, which is on the first day of the following quarter. So, we're talking about a clinic that opens in January of 2020 only being able to start using 340B right around this time now, in October of 2021.

Amanda Nagrotsky (10:28):
340B Health, over the years has advocated for HRSA to use a different kind of measure to demonstrate that a facility is an integral part of the hospital, like a provider attestation form to CMS, something that doesn't involve these delays. But I will say the delays are less of an issue now, given a policy clarification that came out from HRSA last year, on when 340B drugs can be used in reimbursable outpatient facilities.

Miles Goldman (11:00):
Can you actually go into that a bit for us?

Amanda Nagrotsky (11:03):
Sure. So HERSA in, I believe it was June of last year, basically clarified that hospitals can use 340B drugs for patients in reimbursable provider-based locations even if those locations are new and haven't yet appeared on a reimbursable line of a file cost report. So, this allows hospitals to use 340B drugs in these new locations during the period of time before they can be registered, assuming that the patients of this new site are in fact, patients at the hospital and meet HRSA's patient definition requirement. That really eliminates the delay that we were talking about earlier in terms of having to wait until the clinic appears on a reimbursable line of a filed cost report.

Amanda Nagrotsky (11:52):
These clinics ultimately do need to be registered. These clinics or services need to be registered once they do appear on a reimbursable line of a cost report. These kinds of situations, if hospitals are using 340B drugs in these new provider-based location, should definitely be documented in policies and procedures.

Miles Goldman (12:13):
This is all really good to know for hospitals in there in terms of their planning. What is the documentation needed to register a child site?

Amanda Nagrotsky (12:22):
So, the main documents are worksheets A and C of the Medicare cost report. So, on worksheet A, that provides the total costs from the cost center for the site that's being registered and on worksheet C, we have the outpatient charges that are associated with the cost center or line that's being registered. Sometimes though, that isn't enough. Occasionally, hospitals will need to go to their working trial balance or other supporting documentation. That's when a clinic is listed on a cost report line that includes other clinics, departments or services, when it's bundled and not separate.

Amanda Nagrotsky (13:05):
OPA pulls this information from CMS electronically. So, if the data submitted matches CMS's data exactly, then there isn't a need for additional documentation, but I always like to tell hospitals, assume that it won't be an exact match, assume that you will need additional supporting documentation. It's just better to be prepared for that, especially Miles, because this documentation needs to be submitted on the same day as the registration if it's requested by HRSA.

Miles Goldman (13:42):
We've had your colleague Steve Miller on the podcast before, and one of the themes that continues to emerge when it comes to topics of operations and compliance, is preparation really is key.

Amanda Nagrotsky (13:52):
Absolutely.

Miles Goldman (13:53):
Are there common challenges with child site registration that you hear about from hospitals?

Amanda Nagrotsky (13:59):
There are common questions that we get asked about child site registration. A common issue or scenario is when the costs and charges for more than one clinic or service are rolled up into a single cost center. We talked about this a bit earlier, but in that case you would need, the hospital would need, the specific costs and charges from the working trial balance. It's a lot simpler, registration is a lot simpler, when the cost center reflects only a single outpatient clinic service or facility, because in that case, the figures will come directly from worksheets A and C.

Amanda Nagrotsky (14:40):
Sometimes it can be tricky to know when a service should be registered. I think it's helpful to think about it in terms of how HRSA views offsite facility registration, and registration of services as focusing on, "Okay, well, where are the locations of the services?" So, a unique question that I occasionally get asked that is tricky is, what happens if a service expands and is an existing service that's already registered as a child site in OPAIS, what if that service expands and occupies a new location? Generally speaking, that new location has to be registered after the cost and charges for that service appear on a file cost report.

Miles Goldman (15:29):
Thank you for sharing those insights. What happens if a hospital makes a mistake when registering? Does it affect their ability to participate in 340B?

Amanda Nagrotsky (15:39):
So, it depends on the kind of mistake and it shouldn't affect their ability to participate in 340B, but there are different levels of mistakes when it comes to using 340B in child sites and registration. So, let's say a hospital has an offsite facility that is reimbursable on the hospital's cost report, is provider-based to the hospital, and the hospital is using 340B or purchasing 340B for that location, and it's not registered with OPAIS as a child site. That's going to be, if the hospital were to be audited or discover it on their own, well, in terms of an audit, that would be more of a registration finding, like a database finding and those don't require repayment to affected drug companies.

Amanda Nagrotsky (16:32):
It gets more complicated and it's a bigger issue if you have a hospital that's using 340B in an offsite facility that is not reimbursable on the hospital's cost report, because then we're getting into diversion issues and giving 340B drugs to patients who aren't eligible to receive them, for a site that isn't eligible to be purchasing them. That gets into repayment to manufacturers.

Miles Goldman (17:01):
It reminds me a little bit of sports in terms of whether it's football or basketball, where there's different levels of penalties involved.

Amanda Nagrotsky (17:09):
I do think that that's a good analogy. It's definitely more significant when you have that location that isn't reimbursable, as opposed to just making an error with registration. The consequences are definitely greater.

Miles Goldman (17:23):
We've covered a lot of ground. For hospitals that still need guidance with child site registration, what resources are available to them?

Amanda Nagrotsky (17:33):
So, 340B Health provides a number of resources to our member, hospitals on registration and other compliance issues. So, technical assistance calls with the legal and policy team here at 340B Health, child site registration is a pretty common kind of topic that we get questions on from our members. We also have policy guides that we've created for members, including on that policy clarification from HRSA, allowing 340B to be used in new provider-based locations that are reimbursable. When HRSA came out with that, we created a policy guide specifically for that scenario to help hospitals operationalize that change.

Amanda Nagrotsky (18:22):
Also our conference, the 340B Coalition Conference, we traditionally have a session on the Medicare cost report and implications for child site registration and 340B. We've over the years had a really dynamic duo of speakers. So, we've had a CPA who has extensive experience auditing healthcare entities and preparing Medicare cost reports. He has presented with an attorney with years of experience in 340B and who has a deep knowledge and understanding of the provider-based rules and HRSA's child site requirements. So, that is a really great session to check out, especially if you're interested in digging into the details of the cost report and child site registration.

Miles Goldman (19:14):
A lot of great resources for 340B hospitals. Amanda, thank you so much for taking the time to speak with us today about this really important operations and compliance issue in the 340B world.

Amanda Nagrotsky (19:27):
Thank you so much for having me, Miles. This was really fun.

David Glendinning (19:31):
Our thanks again to Amanda Nagrotsky, for giving us the rundown on 340B child sites. If your hospital or health system is thinking about registering a new site, be sure to check out all the resources Amanda mentioned. If you have any questions for 340B Health's legal and policy team, or ideas for future episodes, please email us at podcast@340bhealth.org. We will be back in a few weeks. As always, thanks for listening and be well.

Speaker 1 (20:05):
Thanks for listening to 340B Insight. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at 340bpodcast.org. You can also follow us on twitter @340bhealth and submit a question or idea to the show by emailing us at podcast@340bhealth.org.