SHIP grantee hospitals may be eligible for the 340B
Drug Pricing Program
Thanks to a change in the cap on the Medicare Disproportionate
Share (DSH) adjustment for rural hospitals, SHIP grantee hospitals
may now be eligible for the 340B Drug Pricing Program.
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (P.L. 108-173) increased the DSH cap for small urban and
rural hospitals to 12 percent. That change has opened the door to
the 340B program, which provides substantial savings on outpatient
drug purchases for participating entities. For more information
and to find out if your facility qualifies for this benefit read
“Eligibility” below and visit HRSA's Healthcare Systems
Bureau, Office of Pharmacy Affairs Web site.
The Program
Section 340B of the Public Health Service Act was enacted through
passage of the 1992 Veterans Health Care Act. The 340B program sometimes
referred to as PHS pricing or 602 pricing, enables certain Federal
facilities to obtain dramatic discounts on outpatient drugs. In
order to participate in the Medicaid program pharmaceutical manufacturers
are required to participate in 340B. Consequently, drugs purchased
through this program have extremely discounted prices. On average,
340B drugs cost 20 to 40 percent of the Average Wholesale Price
(AWP). Drugs purchased through the 340B program can only be used
by the covered entities' patients, and covered entities cannot "double-bill"
by including those drugs in the state Medicaid rebate program.
Eligibility
A variety of entities including Federally Qualified Health Centers
(FQHCs), Urban Indian Health Centers, Family Planning Clinics and
others are eligible to participate in 340B. In addition, disproportionate
share hospitals (as defined in section 1886(d)(1)(B)) of the SSA
that meet the following eligibility criteria are also eligible to
participate:
(i) be owned or operated by a unit of State or local government,
is a public or private non-profit corporation which is formally
granted governmental powers by a unit of State or local government,
or is 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;
(ii) for the most recent cost reporting period that ended before
the calendar quarter involved had a disproportionate share adjustment
percentage (as determined under section 1886(d)(5)(F) of the Social
Security Act) greater than 11.75 percent or was described in section
1886(d)(5)(F)(i)(II) of such Act; and
(iii) does not obtain covered outpatient drugs through a group purchasing
organization or other group purchasing arrangement.
Although Critical Access Hospitals are safety net providers, they
are not eligible to participate in the 340B Program because they
receive cost-based reimbursement and do not have a disproportionate
share adjustment percentage.
Applying
Applying to participate in the 340B program is relatively straightforward.
If your hospital meets the eligibility criteria above, visit the
website of HRSA's Office of Pharmacy Affairs (OPA) for additional
program information and to download the required enrollment forms
from the Disproportionate Share Hospital & 340B link. Entities
are admitted to the 340B program on a quarterly basis so please
note the quarterly deadlines for submission of registration forms.
Written confirmation will be forwarded upon completion of the registration
process.
Please direct questions about the 340B program to:
Office of Pharmacy Affairs
Toll Free: 1-800-628-6297
Local: (301) 594-4353
Pharmacy Services Support Center (PSSC)
PSSC Call Center:
Toll Free: 1-(800) 628-6297
Local: (202) 429-7518
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