On October 26, the Health Resources and Services Administration (HRSA) published a Federal Register notice addressing the use of 340B drugs at off-campus hospital outpatient locations that have not yet appeared on a filed Medicare cost report. These locations are known as “unregistered child sites.”
In the notice, HRSA maintains that its prior policy allowing the use of 340B drugs at unregistered child sites was intended only to be a waiver during the COVID-19 public health emergency (PHE) and that the waiver is no longer needed. HRSA further explains that the waiver created challenges in its ability to oversee the integrity of the 340B program.
HRSA states in the notice that some covered entities believed that the use of 340B drugs at unregistered child sites was a permanent policy change. HRSA is providing two compliance options for covered entities that used 340B drugs at unregistered child sites after the end of the PHE:
- For off-site outpatient locations that have appeared on a filed Medicare cost report with associated outpatient costs and charges, but have not yet registered in the Office of Pharmacy Affairs Information System (OPAIS), HRSA will allow registration in January 2024.
- For off-site outpatient locations that began using 340B drugs prior to the publication of the notice, but have not yet appeared on a filed Medicare cost report with associated outpatient costs and charges, HRSA will allow their continued use of 340B drugs if the covered entities provide the following information to HRSA within 90 days of today’s notice:
- The name of the off-site outpatient facility
- The date the site will be listed on the hospital’s Medicare cost report (this must be the next filed Medicare cost report) with associated outpatient costs and charges
- The date the covered entity will register the site in OPAIS
Unregistered locations using 340B drugs that do not fall into one of these two categories will be considered non-compliant with 340B program requirements and may be subject to audit and compliance action.
HRSA’s Notice perpetuates a policy that plainly contrary to the 340B statute. It will result in negative consequences to 340B-covered entities that open new off-campus outpatient locations in the future, and to the communities that those 340B-covered entities serve.
McDermott Will & Emery law clerk, Jae Hyun Lee, also contributed to this blog post.
