March 13, 2013—The Health Resources and Services Administration (HRSA) has added additional detail to its policy on the criteria that hospitals that are not publicly owned or operated must meet to be eligible for 340B drug discounts.
In its September 2011 report on 340B, the Government Accountability Office called on HRSA to further specify 340B eligibility criteria for such hospitals.[ms-protect-content id=”2799″] Under the 340B statute, to qualify for the program, a hospital that is not publicly owned or operated must have a contract with state or local government to provide services to low-income individuals who do not qualify for either Medicare or Medicaid, or it must be formally granted governmental powers by a unit of state or local government.
In a March 7 guidance document, HRSA leaves its existing policy essentially intact while sketching out some aspects in finer detail.
For example, when a hospital seeks to participate in 340B based upon possessing a government contract, on the day it registers it has always been required to file a form certifying that the contract is valid. In the new guidance, HRSA says the form must be signed by (1) the hospital senior official legally responsible for its participation in 340B (aka its 340B “authorizing official”) and (2) a government official such as a governor, county executive, or mayor who possesses authority to represent and bind the government entity to a contract. Previously, HRSA did not specify that the government signatory had to be empowered to represent and bind his or her agency.
As for hospitals claiming 340B eligibility on the basis of possessing government powers, HRSA’s policy release says that government may delegate such authority through statute or regulation; by creating a public corporation; or by developing a hospital authority or district to serve the public on the government’s behalf. It said examples of government powers may include the power to tax, issue bonds, or otherwise “act on behalf of the government.”
- When registering for 340B, such hospitals must supply on the same day as registration:
- the identity of the government entity granting power to the hospital;
- a description of the power and an explanation as to why the power is governmental; and
- copies of documents reflecting the granting of government powers.
In the past, HRSA’s Office of Pharmacy Affairs (OPA) had indicated that, to be eligible for 340B, a hospital’s state needed to grant the hospital “a type of power usually exercised by the state, for the purpose of providing health care services to the medically indigent population of the state.” OPA also had said that it would it would evaluate grants of state power to hospitals on a case-by-case basis.[/ms-protect-content]