• Reference Material
  • December 18, 2014

340B Drug Pricing Program Participation Criteria for Children's Hospitals

Freestanding children’s hospitals must meet the following qualifications and criteria to participate in the 340B Drug Discount Program.

Qualifications

  • Prior to entry into the 340B Program, a hospital must provide a Medicare provider number identifying the hospital as a “children’s hospital” (i.e., a hospital with a 3300 series Medicare provider number).
  • In addition to having a 3300 series Medicare provider identification number, children’s hospitals must have a disproportionate share (DSH) adjustment percentage greater than 11.75 percent.
  • If a children’s hospital does not receive Medicare DSH payment adjustments, the hospital can show compliance by providing an independent verification that if the DSH adjustment were calculated, it would be greater than 11.75 percent. Under current law, one method for reaching this conclusion would be to have a disproportionate patient percentage (DPP) greater than a threshold amount that equates a DSH adjustment percentage greater than 11.75 percent.
  • If a hospital does not submit a Medicare cost report, the hospital can confirm eligibility through the findings of an independent auditor and certification by the covered entity as to the appropriate value of the hospital DSH adjustment percentage, as based on the DPP.
  • If a children’s hospital does not know its DPP, the hospital should contact their accounting department or auditor to see if they can calculate this number.

Criteria

Prior to entry into the program, a children’s hospital must demonstrate that it meets one of the following criteria:

  • Is a private non-profit hospital that is under contract with the State or local government to provide health care services to low income individuals who are not eligible for Medicare or Medicaid;
  • Is owned or operated by a unit of State or local government; or
  • Is a public or private non-profit corporation, which is formally granted governmental powers by unit of State or local government.
The OPA requires supporting documentation, such as a contract between the government and hospital. Interested members should ensure they have a contract with their State or local government as soon as possible. If one does not exist, the children’s hospital should begin efforts to finalize a contract. While the OPA does not have a sample contract, they do have talking points that can be used as a guideline for developing a contract.

Certifications Required by Participating Hospitals

  • Children’s hospitals must certify that it will not participate in a group purchasing organization (GPO) or group purchasing arrangement for covered outpatient drugs as of the effective date in the 340B covered entity database. If a children’s hospital has an agreement with a GPO, the entity should determine when the contract ends and determine if the agreement can be terminated.
  • Prior to entry into the 340B Program, a children’s hospital must certify that it will abide by all the requirements of section 340B that all covered entities must follow (e.g., prohibition on resale of covered outpatient drugs; prohibition on duplicate discounts or rebates).
Association Contact: Liz Parry, (202) 753-5392