Disproportionate Share Hospitals (DSH), Children’s Hospitals and Freestanding Cancer Hospitals participating in the 340B program are subject to GPO prohibition. These hospitals may not purchase 340B covered outpatient drugs through a group purchasing organization (GPO) or other group purchasing arrangement. However, inpatient drugs and non-covered outpatient drugs may be purchased using a GPO.
The proposed Mega-Guidance has added a few helpful exceptions for 340B covered entities clarifying specific situations when a GPO purchased drug can be used and not violate the GPO prohibition.
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A GPO account may be used at an outpatient facility that is not located at the same physical address as the 340B covered entity and is not listed in the 340B database. The outpatient facility must have a GPO purchasing account separate from the 340B covered entity. The facility must never provide a GPO purchased drugs to outpatients of the 340B covered entity.
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A covered entity can maintain 340B eligibility “when GPO drugs are provided to an inpatient whose status is subsequently changed to outpatient by a third party, such as an insurer, Medicare Recovery Audit Contractor or a hospital review, provided there is sufficient documentation of the patient’s change of status”.
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“HHS is proposing to recognize an exception to the GPO prohibition for hospitals that cannot access a drug at the 340B price or at wholesale acquisition cost (WAC) to prevent disruption of care”. The hospital must keep documentation and provide HHS with the name of the drug, the manufacturer, and details of the attempts made to purchase the drug at 340B and WAC pricing.
Purchasing 340B covered outpatient drugs through a GPO is grounds for termination from the 340B program. The Mega-Guidance does clarify if a covered entity is found in violation of the GPO prohibition and can demonstrate it was an isolated error, they may be permitted to continue participating in the 340B program. If the violation is found to be systematic, the 340B covered entity will be immediately removed from the 340B program and required to offer repayment to manufacturers for any 340B drug purchases made after the first date of violation of the GPO prohibition.
If the GPO prohibition violation is isolated to a child site, the parent site may be able to continue participating in the 340B program with removal of the child site BUT only if the child site purchases drugs on a different account from the parent site and other child sites.
If a covered entity is removed from the 340B program, it is possible for the covered entity to re-enroll in the 340B program when they can demonstrate to HHS that they comply with the GPO prohibition.
The Mega-Guidance also re-stated that facilities subject to the GPO prohibition must stop purchasing covered outpatient drugs through a GPO before the first day they are listed on the public 340B database as eligible to purchase 340B drugs; however, they may use the remaining inventory of GPO drugs until they are expended. We caution facilities to have clear auditable documentation if using remaining inventory of GPO purchased covered outpatient drugs at 340B eligible sites.
This is your reminder that public comments on the proposed Mega-Guidance are due on or before October 27, 2015.