In April 2013, the federal Office of Pharmacy Affairs (OPA) released guidance instructing hospitals participating in the 340B Drug Pricing Program (340B Program) to register new outpatient facilities by service, rather than location.  More recently, OPA has been informally indicating that it expects hospitals with existing outpatient facilities that were registered by location to re-register such facilities according to the service or services provided at each location.  It is not anticipated that the re-enrollment process will interrupt 340B participation for the affected hospitals or that failing to re-enroll by service during the July open enrollment period will prevent a hospital from recertifying program compliance during the upcoming annual recertification period (expected to begin in late July).  As yet there is no deadline for such reenrollment.  It is expected, however,  that OPA may impose a deadline for such reenrollments in the near future.  Hospitals participating in the 340B Program should review their 340B database entries to determine if their outpatient facilities are currently registered by location or service and, if registered by location, begin gathering the information necessary to re-enroll each facility by service.

In another recent development, the OPA will now more routinely accept amended Medicare cost reports to establish a covered entity’s eligibility for participation in the 340B Program or to establish the eligibility of outpatient facilities.  Now, if an entity files an amended Medicare cost report containing additional data that increases the entity’s disproportionate share hospital (DSH) percentage above the applicable threshold or that reflects a qualifying outpatient facility, OPA will accept the entity’s amended Medicare cost report as support for 340B Program participation.  Hospitals that have lost 340B Program eligibility upon the filing of a Medicare cost report, or that were near the DSH threshold for participation and have filed or will file an amended Medicare cost report, should review the filed amended Medicare cost report to evaluate potential 340B Program eligibility.

Joseph Parise, an associate in McDermott’s New York office, also contributed to this newsletter.