Telehealth and the 340B Patient Definition

Unless you have been living under a rock the past several months, you know that the COVID-19 Public Health Emergency (PHE) has dramatically impacted how both hospital and clinic providers strategize to provide healthcare to patients, including remotely via telehealth services (aka telemedicine). Given COVID-19 travel and gathering restrictions, it is obvious why the use of remote telehealth services has become an important strategy for continuing to provide healthcare to patients that do not have to be onsite. In just the last week, I have personally been engaged in telehealth related strategic discussions with at least six different 340B covered entities (CEs). These discussions have been mainly directed to inquiries about whether telehealth services can be relied upon for meeting HRSA’s patient definition used for 340B eligibility, and if so, what steps should be taken to ensure compliance. To answer these questions, it helps to first consider the acceptance and expansion of telehealth over the years.

Telehealth Acceptance

The use of telehealth in the U.S. is not a new concept. As early as the 1950s, detailed transmission of radiology images by telephone was underway. However, it was not until the late 1990s that telehealth services started to really take off, primarily due to technology changes such as more rapid data transmission and video communication. From then on, the use of telehealth has steadily grown – at least for some organizations. To put it in perspective, as far back as 2006, Kaiser Permanente’s CEO reported that it was seeing more patients online than in person. The Patient Protection and Affordable Care Act of 2010 (“ACA”) formally promotes the use of technology in health care reform as a means to increase care quality and access while reducing costs. Telehealth has become important enough that HRSA established the Office for the Advancement of Telehealth (OAT) to promote the use of telehealth technologies, especially in rural and remote areas. According to the American Hospital Association (AHA), last year, the use of telehealth in U.S. hospitals grew rapidly from approximately 35% in 2010 to 76% in 2017. This growth has also occurred in non-hospital settings (e.g., health centers) as well. For example, earlier this year the Bureau of Primary Health Care (BPHC) under HRSA even published a Program Assistance Letter (PAL) to highlight significant issues to consider when utilizing telehealth as a means to increase access to care for health center patients.

Telehealth Expansion

While the use of telehealth as an accepted treatment modality continues to grow, it has not expanded as rapidly as it could have due to barriers such as coverage and payment limitations, state and federal laws (e.g., privacy and security, provider licensure – especially across states), and limited broadband access. With respect to coverage, many argue telehealth is still not treated on parity with more traditional in-person treatment modalities. The most important example is reimbursement by CMS. Medicare has only reimbursed for interactive real-time (i.e., live-video) telehealth services. Also, there have been significant reimbursement restrictions based on the provider/ health care professional (HCP) type (only qualified health care providers), the patient’s and HCP’s location (e.g., for patients at a medical facility in rural area), and the type of service provided (e.g., for routine visits). While CMS has expanded its coverage recently to some extent (e.g., for stroke and substance abuse patients), until COVID-19 this expansion has been modest at best. Similarly, while many states have begun to expand Medicaid telehealth reimbursement, others have retracted it and/or placed other significant limitations. As with CMS, this state-based reimbursement has generally been more favorable to real-time services as compared to other telehealth modalities that are not in real-time, such as store-and-forward (e.g., digital imaging) or remote monitoring.

Parity with In-Person Care and 340B

So why is this important? Although telehealth has long been recognized by governmental agencies such as CMS, HRSA, and state Medicaid agencies, it is still not treated on parity with in-person treatment – especially with respect to coverage as discussed above. But what about 340B? Recall that as part of its omnibus guidance (aka mega-guidance) proposed back in August of 2015, although expressly stated that the use of telemedicine would be permitted (so long as authorized under state or federal law and otherwise compliant with the 340B Program), it also included language about health care services needing to be provided at a registered hospital or clinic. 340B Health was concerned enough about HRSA’s possible enforcement of this that it emphasized multiple times in its mega-guidance analysis that telemedicine was a means of health care service that could be affected. Although the mega-guidance was pulled from awaiting final approval in January 2017, the takeaway seemed to be that telehealth is a recognized modality – but enforcement was still uncertain. Other than with the mega-guidance, up until COVID-19, HRSA has been noticeably silent with respect to telehealth’s implications with 340B eligibility.


In response to COVID-19, federal agencies such as CMS and HRSA have provided important additional information regarding telehealth. With respect to coverage, federal legislation has been recently signed into law that significantly expands telehealth coverage and implementation during the COVID-19 PHE. Recently, the law firm of Powers Pyles Sutter & Verville held a Telehealth and COVID-19 webinar that provided a good summary of this legislation and its implications. Also, many government administrative websites with telehealth information have been provided, including a CMS Medicare Telehealth FAQ website, a HRSA BPHC COVID-19 FAQ website and Office of Pharmacy Affairs (OPA) COVID-19 340B resources FAQ website, and an Office of Civil Rights (OCR) website regarding its enforcement discretion of privacy and security laws during the COVID-19 PHE.

Regarding 340B in particular, the OPA COVID-19 340B resources FAQ website states that HRSA recognizes telemedicine as merely a mode by which health care services can be delivered and recommends that CEs outline the modalities they utilize in policies/procedures and maintain auditable 340B records. Also, recently we reached out to Apexus and received the following guidance and internal Apexus FAQ below:

  • Guidance: The guiding principles are the patient must meet the patient definition, the physical location of service for patient or physician does not necessarily have to be a registered location, as long as the Service for grantees is consistent with the scope of grant, and for hospitals, reimbursable on the most recently filed MCR. An eligible site/location (e.g. Cardiology Clinic) of the CE has to be responsible for the service. For hospitals, this would mean that any sites/clinics outside the 4 walls (Cardiology Clinic) would need to be registered separately on OPAIS, even if that is not the physical location of where the patient/physician is.
  • Apexus Internal FAQ: Question: Is telemedicine an eligible service to qualify for 340B drug pricing in a covered entity? Answer: In the case of eligible hospitals, the clinic at which the covered entity provides healthcare services must be an integral part of the hospital, listed as reimbursable on its Medicare cost report. In the case of all other covered entities, the patients must be provided healthcare services by the covered entities that are within the scope of the grant or other statutory basis for eligibility. The entity is responsible for meeting the definition of a patient.

340B and Telehealth: Moving Forward

Based on above, it is clear that telehealth is a recognized healthcare modality that can be applicable to 340B eligibility, and this is not limited to only during the COVID-19 PHE. In other words, there does not appear to be any reason that a telehealth encounter cannot be relied upon for establishing 340B eligibility where the patient and/or treating HCP are not physically at the CE’s 340B eligible location, so long as auditable records show that:

  • The CE documented the telehealth care provided to the patient in the patient’s medical record,
  • The documentation clearly shows that:
    • The care provided by the CE to the patient during the encounter was tied to the CE’s 340B eligible location (and within the scope of grant if the CE is a grantee), and
    • The care was provided by an HCP that had a documented arrangement with the CE such that the CE remained responsible for the care.

To further help support such an argument, it is prudent to follow HRSA’s recommendation that this telehealth modality be outlined/supported in the CE’s policies and procedures. This is consistent with our experience in which we have seen HRSA often defer to a CE’s policies/procedures to support practices that are not clearly delineated in law or HRSA’s guidance. Turnkey Pharmacy Solutions recently sent a template emergency policy/procedure to its clients with example language that may be helpful during the COVID-19 PHE. Also, please feel free to reach out to us if you have specific questions!