As speculation regarding what will be within the “Mega-Guidance” swirls around, there seems to be a growing consensus that there may be some change in criteria for hospital eligibility. Currently, the 340B statute requires that private, non-profit hospitals must have a contract with their state or local governments to provide services (charity care) to low-income individuals who are not covered by Medicare or Medicaid. At this time, there is no specific requirement for the amount of charity care that must be provided by the hospital for 340B program eligibility. One theory is that HRSA will propose a specific threshold of charity care that a hospital must provide to be eligible for, or retain eligibility in the 340B program and this, in all likelihood, will be monitored using S-10 data found on the Medicare cost report.
Worksheet S-10 and charity care have received heightened attention over the last several years and rightfully so considering the expectation of using the data in more ways. As SCA noted in a previous blog, “340B Meets S-10”, CMS intended to transition to S-10 data for determining the uncompensated care pool distribution in the new DSH formula that was changed as a result of the Affordable Care Act. But due to inconsistent reporting methods and hospital feedback regarding the required content of S-10 data by stakeholders during the comment period, CMS decided to delay using the S-10 data allowing hospitals time to revise their uncompensated care reporting process to make the data more reliable. However, CMS continues to signal that it intends to migrate to S-10 data for computing the uncompensated care payment once the process around its reporting is consistent and reliable.
In the 340B realm, charity care was at the center of the Alliance for Integrity and Reform of 340B’s (AIR340B) Spring 2014 report concluding that hospitals provided minimal amounts of charity care and as a result, Congress’ intentions for the 340B program were not being met. Their conclusion was derived from the flawed data reported on Worksheet S-10.
It is still unknown what is covered in the 340B guidance but we should know soon. HRSA sent the highly anticipated 340B Omnibus Guidance, “Mega-Guidance”, to the Office of Management and Budget (OMB) for review on May 6, 2015. The proposed guidance will be published in the Federal Register for a 60-day comment period following the OMB’s review.
In addition to the robust efforts that hospitals should be investing into 340B program integrity and compliance activities, hospitals should also be seriously evaluating their efforts in reporting accurate cost report data, and in this case, Worksheet S-10 which includes charity care data. If 340B program eligibility becomes tied to some threshold of charity care, hospitals will need to be aware of what percentage of charity care they provide and be able to justify how they arrived at their percentage. It becomes even more crucial that hospitals understand the importance of their S-10 data and its impact on known reimbursement issues and also understand that the S-10 portion of the cost report may have future reimbursement and 340B program participation implications.
We urge 340B stakeholders to become familiar with the reporting of data on S-10 and to work closely with the institution’s reimbursement department as the data is being compiled and reported. Please do not hesitate to contact us if you have specific questions about your particular situation and S-10 reporting.
We’ve got more to write on the 340B Drug Pricing Program in general including 340B external audits, 340B compliance reviews, 340B program requirements, 340B audit results, etc. Don’t miss out on future articles delving deeper into the 340B program!
