The proposed guidance added some additional language to the hospital 340B eligibility requirements. There is some language change in the first category of hospitals; however, the biggest change is in the third category of hospitals which many DSH hospitals fall into. There are changes in the required elements in the contract that private, non-profit hospitals must have with their State or local government to provide health care services to low income individuals. Hospitals should take note of the changes for their respective category, evaluate what impact the changes will have and submit comments to HHS if necessary. If the Mega-Guidance is finalized as proposed, 340B covered entities will need to ensure their contracts contain the additional language required.
First Category
Current: Hospital owned or operated by a unit of State or local government.
Proposed Clarification: Hospital owned or operated by State or local government and recognized as such in Internal Revenue Service filings and acknowledgements or other documentation from Federal entities. This includes hospitals operated through an arrangement where the State or local government is the sole operating authority of a hospital.
To demonstrate eligibility, the hospital will typically show the type of control on worksheet S-2 of the Medicare Cost Report as controlled by the government and a government official must certify to the government ownership or operation status. It is not clear if the proposed clarification is requiring additional documentation or merely providing alternatives. We recommend that hospitals in this category compare how they currently demonstrate 340B eligibility to the proposed clarification to confirm their documentation will be adequate in the event that the Mega-Guidance is finalized as proposed.
Second category
Current: A public or private non-profit corporation which is formally granted governmental powers by a unit of State or local government.
Proposed Clarification: Hospital is a public or private non-profit corporation which is formally granted governmental powers by a unit of State or local government. Hospitals qualifying under this provision must submit the name of the government entity granting the governmental power to the hospital, a description of the governmental power granted, a brief explanation as to why the power is considered to be governmental and a copy of an official document issued by the State or local government to the hospital that reflects the formal grant of government power.
The proposed clarification does give more explanation as to what is needed at 340B registration for these covered entities but there is little change to current expectation.
Third category
Current: A private, non-profit hospital which has a contract with a State or local government to provide health care services to low income individuals who are not entitled to benefits under title XVIII of the Social Security Act or eligible for assistance under the State plan under this title.
Proposed: Private, non-profit hospital that has a contract with State or local government to provide healthcare services to low income individuals who are not eligible for Medicare or Medicaid. Hospitals must provide a signed certification by the hospital’s 340B program authorizing official and an appropriate government official (such as the governor, county executive, mayor or an individual authorized to represent and bind the governmental entity). The signed certification indicates that a contract is currently in place between the private, non-profit hospital and the State or local government to provide health care services to low-income individuals who are not entitled to Medicare or Medicaid. For purposes of the 340B program, such contract should create enforceable expectations for the hospital for the provision of health care services, including the provision of direct medical care.
Many DSH Hospitals fall in this third category and need to take note of the additional language added to the certification requirements. Hospitals should review their current certifications to make sure they include language of enforceable expectations and have a provision of direct medical care if the Mega-Guidance stands as proposed.
Please note, comments should be submitted on or before TUESDAY, OCTOBER 27, 2015. We will also have additional 340B Drug Pricing Program Mega-Guidance related articles posted to the blog in the coming weeks such as 340B covered drug changes, duplicate discounts expanding to MCO, GPO prohibition exceptions, etc. If you aren't subscribed yet, do so below so you don't miss these future articles!
