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340B Insight provides members and supporters of 340B Health with timely updates and discussions about the 340B drug pricing program. The podcast helps listeners stay current with and learn more about 340B to help them serve their patients and communities and remain compliant. We publish new episodes twice a month, with news reports and in-depth interviews with leading health care practitioners, policy and legal experts, public policymakers, and our expert staff.
Speaker 1 (00:04):
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 your host, David Glendinning, with 340B Health. Our guest for this episode is Chuck Stubbs with Intermountain Healthcare, based in Salt Lake City. Last year, the Health Resources and Services Administration announced it was making some changes affecting eligibility of 340B hospital child sites.
(00:40):
This announcement was unexpected, and it prompted many 340B hospitals to reassess their 340B operations under the altered eligibility expectations. We wanted to hear from one of the health systems that needed to adjust plans for its clinics in the wake of these changes.
(00:57):
Chuck is a 340B pharmacist at Intermountain Healthcare, and he has a unique perspective on how the child site eligibility development made waves throughout the 340B hospital community. We caught up with him at the 340B Coalition Winter Conference in San Diego, where he shared the Intermountain experience and his advice with fellow attendees. Here's that conversation.
(01:22):
I'm here with Chuck Stubbs, and we are meeting up during the 340B Coalition Winter Conference, and we are having the evening reception going on. Chuck, I very much appreciate you being here with us. Thank you, and welcome to 340B Insight.
Chuck Stubbs (01:37):
Thank you. It's my pleasure to be here.
David Glendinning (01:40):
Tell us, please about Intermountain Health and the patients you serve.
Chuck Stubbs (01:46):
Intermountain Health is a large integrated delivery network, a healthcare system in the Intermountain West. When I think of it, I think of it as primarily Utah, Colorado, but it does extend into some other states. We have a very large 340B hospital system, in which we have all designations for hospitals. We also have some HTCs and an HIV clinic, some grantee sites. In addition to the hospital sites and the 340B sites, we have also our self-owned specialty pharmacy, as well as some community retail pharmacy.
(02:24):
One thing that's a little bit unique about our healthcare system is we actually have a health plan, which is SelectHealth. We're providing care and we're also paying for care, and we have a million covered lives there. Really, what we're trying to do the very best we can is to help people live the healthiest lives possible.
David Glendinning (02:44):
Healthiest lives possible, I like that. We are here to discuss recent developments on eligibility for 340B child sites. I will confess that when I first got started in 340B, I thought the child sites had something to do with providing care to children. I know in this case, it's actually a little bit of both, but when we're speaking about a child site, what do we mean when we use that term?
Chuck Stubbs (03:09):
Right. It is a confusing term, and it's even more confusing when you see them registered with HRSA. Sometimes they'll have a one or an A or something beside them, but really what we're talking about is we call the main hospital site the parent, and then we call ancillary outpatient sites that are really not on the main hospital campus, typically, we call those child sites.
(03:34):
I think of it more as the down-line of the affiliation of the hospital. HRSA requires that we register those separately, and then they're eligible for 340B savings. That's why they're an important part of the hospital.
David Glendinning (03:49):
We are focusing, in terms of talking about the latest developments, on new child sites and eligibility there. Just take us back and explain how has a new hospital child site typically gained eligibility for 340B?
Chuck Stubbs (04:05):
Prior to COVID, how that would work is HRSA uses the Medicare Cost Report, and so typically how you would register a child site is you would need the child site to appear on your Cost Report. Then when you were registering the site, you would upload the Medicare Cost Report, and HRSA would double check that that appeared on your Cost Report. Typically, what was happening before is you would have a child site, it would appear on your Cost Report, say, for 2022.
(04:40):
Then what would happen is you wouldn't file that report until say, May of 2023. There's already a delay, and then you couldn't register it with HRSA until the beginning of the next quarter, which would be July 1st. Then you'd wait another three months to the first day of the next quarter before it could go live. Just saying that out loud, it sounds so confusing, because it really is.
(05:06):
You have to have the site registered on this financial report that you're filing with CMS, and so you use this financial document that everybody in the 340B community needs to understand and use, because it's the litmus test that HRSA uses to say if this is a valid outpatient, AKA, child site.
David Glendinning (05:26):
I understand, given those timing issues with the MCR and the registration, that the process can take up to almost two years, at the longest period of time it could take.
Chuck Stubbs (05:38):
It really can. That's what was happening before COVID is it would take sometimes up to two years for this to happen, just based on the timing of when you filed those charges and revenues, received the revenue on your MCR, and then you filed it in the year to come. It was really quite a long delay. Imagine if you have a site that you want to serve patients in, you've spent the money to build the site, and then you need to wait almost two years to register it and recover savings. It's a long wait.
David Glendinning (06:09):
When the policy changed during the COVID public health emergency, how did it change?
Chuck Stubbs (06:14):
It changed in a wonderful way. I thought to myself, "Wow, why haven't we been doing this all along?" You can immediately begin using 340B drugs in these areas. It was such a relief. During COVID, when we had child sites that went live, we could immediately begin using 340B, and it just seemed like a natural way to do it. It was such a welcome change because we'd been waiting so long and it really just...
(06:44):
When we saw that change, we felt like it could be permanent. We hoped it would be permanent. It certainly became the day-to-day workflow for us, and patients were immediately able to use 340B. With the COVID change, we were allowed to use 340B drugs in these areas for 340B patients of the facility. Now, they still had to be qualified patients of the entity per HRSA guidelines. It was just we didn't have to wait that extended timeframe for it.
(07:14):
That was what became such a welcome change, and frankly, what we kind of came to view as the new normal for us.
David Glendinning (07:22):
We know now, of course, that this did not end up being a permanent policy. When did that situation change?
Chuck Stubbs (07:30):
When it changed for good, so to speak, was in late October. What happened is HRSA came out with a federal register notice, and what it said was that this flexibility was ending. That really caught a lot of people flat-footed, because it had never really been called a waiver in their presentation. We were never led to believe, or it was never stated specifically in a way that we understood, that this was going to be a temporary solution. We had gone from immediately helping patients, and immediately recognizing savings to be able to help those patients, to now recognizing that we were back to something that had been done four years ago.
David Glendinning (08:18):
October, 2023 that notice comes out. Some hospitals clearly did not know, or at least did not know for sure the policy was a temporary flexibility until that time. In the notice, how long did HRSA give hospitals to comply with these restored eligibility requirements?
Chuck Stubbs (08:36):
It was a very short amount of time to comply. The notice came out in October. In October 27th, that was the deadline. What they did is they said, for, "If you've been using 340B drug by October 27th, and your site is on the MCR, go ahead and register it right away. If it's not on the MCR, then we need you to tell us all about it. Email us, tell us where you're using it. Tell us when you think it will be on the MCR, and tell us when you plan to register that site."
David Glendinning (09:08):
There was a grace period, at least for some hospitals. How did that grace period affect Intermountain?
Chuck Stubbs (09:17):
Well, we didn't meet the definition for the exceptions. We have a hospital that we had been building in this whole time. Now, the reason why we built this hospital is because we want to serve patients more closely to the area in which they live, which is about 20, 25 miles away. We built this hospital to serve our patients better. The parent hospital, the main hospital, qualifies for 340B. Our plan was we built this hospital, it's going to be 340B eligible immediately. That's what was happening while it was being built.
(09:59):
Now, this hospital opens officially in February, and you'll recognize that we were not using 340B at that hospital on October 27th. We fell outside of this narrow window, which was meant to help hospitals, however, it did not apply to our hospital.
David Glendinning (10:19):
The transition period doesn't protect plan sites or sites that were not yet using 340B drugs on October 27th? I'm doing the math right, that means that child site missed out on the grace period by about three months, which is not a very long time.
Chuck Stubbs (10:36):
Exactly. When you think of the time that this was in place, these exceptions, and the time it takes to build a hospital, it's both a fairly long period of time, and to be notified at the end, it's certainly not helpful for our hospital.
David Glendinning (10:52):
Did that realization, did that leave you with any other options at that point?
Chuck Stubbs (10:58):
We did have some strategies that we were able to think through and work on. If you remember earlier in the podcast, we were talking about how this process was, the child site needs to be on the MCR, the Medicare Cost Report. In our case, we file an annual Cost Report following the calendar year. We needed to get some of these locations on our 2023 hospital Cost Report before 12/31.
(11:28):
Our strategy was to say, "Okay, if we can't get everything on there, why don't we look at the areas that will be most important for savings so that we can have savings to help our patients?" That, of course, was IV therapy. What we did is we were able to see patients in our IV therapy location at the new hospital, and we were able to have the expenses and the outpatient charges available to go on to our 2023 Medicare Cost Report, which we will now file in May of 2024.
David Glendinning (12:03):
I'm glad to hear you were able to at least pursue this solution, partial, though it may be. Having gone through all of this, Chuck, what advice do you have for hospitals that are similarly dealing with the new eligibility policy, or the restored eligibility policy, I should say, and similarly trying to minimize these delays?
Chuck Stubbs (12:26):
I would encourage people really to try to use that transition period. However, that really has largely come and gone. Now you're left with how to mitigate the delays in savings. Largely speaking, that is returning in some ways to your strategies, pre-COVID exceptions, which are first to get those expenses and charges on your Medicare Cost Report as soon as possible, so that it's ready to be filed in the next filing period.
(13:02):
My first advice would be pause and think about what you need on your Cost Report, so that you can go live as soon as possible. As you think about those sites, it's important to recognize that all child sites are not created equal. Once those are on your Cost Report, then my advice would be to register during the first open quarterly period after you file your Cost Report. Typically speaking, most hospitals will file their previous year's hospital report in May.
(13:32):
For example, in May of 2024, most hospitals are going to be filing their 2023 Cost Report, so make sure they're on that filed Cost Report. Then when the open period comes out in July, remember to register those prioritized sites. I would say another strategy people have been thinking about lately too is to remember that HRSA uses the Medicare Cost Report as the gold standard for what is an outpatient area and what could be registered as a child site.
(14:05):
When you think about a Medicare Cost Report, you might want to keep in mind that you don't have just your annual Cost Report. Many hospitals will file what's called an Interim Cost Report, and I would remind you that an Interim Cost Report would also qualify as the most recently filed Cost Report. Remember, as you're preparing your child sites for registration, to consider the advice of your legal counsel, as well as input you might have from your finance teams.
David Glendinning (14:34):
Great points all, Chuck, and I'm sure listeners looking to make the best of this situation really appreciate the advice. Good luck with getting this new child site up and running this spring in the coming months, and thank you for sharing your experience with us. We really appreciate it.
Chuck Stubbs (14:52):
Thank you. It was a privilege to be here. I appreciate it.
David Glendinning (14:56):
Our thanks again to Chuck Stubbs for walking us through the evolution of the 340B child site eligibility issue, and the impact the recent changes have had on health systems such as Intermountain Healthcare. We especially appreciate his guidance for other hospitals that might be facing some of the same complex questions about how to plan their 340B clinic operations, so they can best serve their communities.
(15:21):
How has the child site eligibility issue or any other recent federal policy development affected your hospital? We are always interested in hearing about your experiences, and your feedback can help inform future episodes. Please contact us at Podcast@340BHealth.org. We will be back in a few weeks. In the meantime, as always, thanks for listening, and be well.
Speaker 1 (15:53):
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 at 340BHealth, and submit a question or idea to the show by emailing us at Podcast@340BHealth.org.