Additional requirements for 340B hospitals

Section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) is amended by adding at the end the following: (11) Clarification of eligibility standards for private nonprofit hospitals with a contract with a State or local government to provide health care services (A) Contract requirements For purposes of paragraph (4)(L)(i) and cross-references to subparagraph (L) or clause (i) of such paragraph appearing in subparagraph (M) and subparagraph (O) of such paragraph with respect to a rural referral center, a private nonprofit hospital has a contract with a State or local government to provide health care services to low-income individuals who are uninsured if— (i) the hospital submits a copy of the contract (including any appendices or addenda or subsequent amendments) to the Secretary for review; (ii) the Secretary determines that the contract creates an enforceable obligation for the hospital to provide direct medical care to low-income individuals who are uninsured in an amount that represents at least 10 percent of the hospital’s total costs of care; (iii) the Secretary further determines, based on a review of the contract (as described in clause (i)) that the contract creates an enforceable obligation for the hospital to furnish the individuals described in clause (ii) the full range of services provided at the hospital (including any child sites); and (iv) the contract (as described in clause (i)) is available to the public as part of the information describing the hospital in the covered entity identification system established under subsection (d)(2)(B)(iv). (B) Deregistration If at any time a hospital not owned or operated by a unit of State or local government that has been participating in the program under this section on the basis of having a contract with a State or local government to provide health care services that is subject to subparagraph (A) no longer satisfies a requirement under such subparagraph, the hospital shall immediately notify the Secretary that the hospital no longer satisfies the relevant requirement, deregister the hospital from the program under this section and the identification system described in subsection (d)(2)(B)(iv), and cease making purchases under such program and representing to third parties that it may purchase under such program. (C) Obligation to self-disclose A covered entity described in subparagraph (B) shall immediately disclose to the Secretary and the manufacturer of the affected covered outpatient drug any purchase made under the program under this section by such covered entity that, at the time of the purchase of such drug, did not fully satisfy the requirements in subparagraph (A). Any such purchase shall require the covered entity to promptly conduct an audit supervised by the Secretary to identify the full scope of noncompliance with such requirements and to provide the written results of such audit to the Secretary and the manufacturer of the affected covered outpatient drug. The covered entity shall be liable to the manufacturer of the covered outpatient drug that is the subject of the noncompliance in an amount equal to the reduction in the price of the drugs provided under subsection (a)(1), plus interest on such amount, which shall be compounded monthly and equal to the current short-term interest rate as determined by the Federal Reserve for the time period for which the covered entity is liable. (D) Civil monetary penalty Where a covered entity fails to satisfy a requirement in subparagraph (B) or (C), the covered entity shall be required to pay a civil monetary penalty equal to $2,500 for each violation, which amount shall be adjusted for inflation annually to reflect the rate of change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). The Office of Inspector General of the Department of Health and Human Services shall carry out the provisions related to the imposition of civil monetary penalties under this subparagraph. (E) Definitions In this paragraph: (i) Federal poverty guidelines The term Federal poverty guidelines means the poverty guidelines updated periodically in the Federal Register by the Department of Health and Human Services pursuant to section 9902(2) of title 42, United States Code. (ii) Low-income individual The term low-income individual means an individual with family income at or below 200 percent of the Federal poverty guidelines. (iii) Uninsured The term uninsured means lacking minimum essential coverage, as defined in subsection 5000A(f) of the Internal Revenue Code (26 U.S.C. 5000A(f)) and implementing regulations. (12) Additional requirement for private nonprofit disproportionate share hospitals located in urban areas (A) In general A covered entity described in paragraph (4)(L)(i) that is either a private nonprofit hospital that has as the basis for its participation in the program under this section a contract with a State or local government as described in such paragraph and in paragraph (11), or that is a private nonprofit corporation which is formally granted governmental powers by a unit of State or local government, and such entity is located in a county that is part of a Metropolitan Statistical Area, as defined by the Office of Management and Budget, must, for the preceding year, fall within the top 40 percent of hospitals on each of the lists described in subparagraphs (B) and (C) prepared by the Secretary with respect to the State in which the covered entity is located. As described further in subparagraph (D), placement in the top 40 percent of hospitals on both of such lists is a condition of such covered entity’s participation in the program under this section and failure to meet this condition shall require deregistration and self-disclosure using the procedures described in subparagraphs (B) and (C) of paragraph (11). Such covered entity shall be subject to a civil monetary penalty described in paragraph (11)(D) for failure to deregister and self-disclose in accordance with the preceding sentence. (B) Medicaid and CHIP outpatient revenue Within 90 days following the conclusion of a year, the Secretary shall prepare and make available to the public in an electronic, machine-readable format for each State for the concluded year, a list that ranks all acute care hospitals in such State in descending order based on each hospital’s share of total outpatient services revenue derived from base reimbursement to such hospital (excluding supplemental and indirect reimbursement) under title XIX of the Social Security Act (including with respect to individuals also entitled to benefits under part A of title XVIII of such Act or enrolled in part B of title XVIII of such Act) and payments under title XXI of such Act for items and services furnished on an outpatient basis at the hospital (including any cost sharing for such items and services). The Secretary shall specify the threshold for the top 40 percent of hospitals on the list. (C) Uncompensated outpatient care Within 90 days following the conclusion of a year, the Secretary shall prepare and make available to the public in an electronic, machine-readable format for each State for the concluded year, a list that ranks all acute care hospitals in such State in descending order based on each hospital’s total cost of uncompensated care for items and services furnished on an outpatient basis as a share of the hospital’s total outpatient services revenue. For purposes of this list, costs of uncompensated outpatient care shall be determined in a manner consistent with the instructions on worksheet S–10 to the Medicare cost report (or any successor form), with adjustments to limit uncompensated outpatient care costs to those incurred in providing items and services on an outpatient basis at the hospital. The Secretary shall specify the threshold for the top 40 percent of hospitals on the list. (D) Deregistration Within 30 days following the Secretary’s publication of the lists described in subparagraphs (B) and (C), each covered entity subject to this paragraph that is not included in the top 40 percent of hospitals on both lists shall notify the Secretary that the covered entity does not satisfy one or more requirements described in this paragraph, deregister the entity from the program under this section and the identification system described in subsection (d)(2)(B)(iv), and cease making purchases under such program and representing to third parties that it may purchase under such program. Such an entity may seek to register under another covered entity category described in paragraph (4) if such entity meets the criteria for such a category and applicable requirements under this section. (E) Obligation to self-disclose A covered entity described in subparagraph (D) shall immediately disclose to the Secretary and the manufacturer of the affected covered outpatient drug any purchase made under the program under this section by such covered entity that, at the time of the purchase of such drug, did not fully satisfy the requirements in subparagraphs (B) and (C). Any such purchase shall require the covered entity to promptly conduct an audit supervised by the Secretary to identify the full scope of noncompliance with such requirements and to provide the written results of such audit to the Secretary and the manufacturer of the affected covered outpatient drug. The covered entity shall be liable to the manufacturer of the covered outpatient drug that is the subject of the noncompliance in an amount equal to the reduction in the price of the drugs provided under paragraph (1), plus interest on such amount, which shall be compounded monthly and equal to the current short-term interest rate as determined by the Federal Reserve for the time period for which the covered entity is liable. (F) Civil monetary penalty Where a covered entity fails to satisfy a requirement in subparagraph (D) or (E), the covered entity shall be required to pay a civil monetary penalty equal to $2,500 for each violation, which amount shall be adjusted for inflation annually to reflect the rate of change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). The Office of Inspector General of the Department of Health and Human Services shall carry out the provisions related to the imposition of civil monetary penalties under this subparagraph. (13) Prohibition against extraordinary collection actions (A) ECAs prohibited A covered entity described in subparagraphs (L) through (O) of paragraph (4) is prohibited from engaging in extraordinary collection actions (ECAs), as such term is described in section 501(r)(6) of the Internal Revenue Code and its implementing regulations set forth in section 1.501(r)–6 of title 26 of the Code of Federal Regulations (or any successor regulations), with respect to health care items and services furnished to uninsured individuals or low-income individuals. (B) Audits The Secretary shall audit for covered entity compliance with this paragraph, establish a process for individuals to report suspected violations of this paragraph to the Secretary, and promptly and fully investigate such reports of suspected violations. (C) Civil monetary penalty Where a covered entity violates the prohibition in this paragraph, the covered entity shall be required to pay a civil monetary penalty equal to $2,500 for each extraordinary collection action taken with respect to an individual described in this paragraph, which amount shall be adjusted for inflation annually to reflect the rate of change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this paragraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). The Office of Inspector General of the Department of Health and Human Services shall carry out the provisions related to the imposition of civil monetary penalties under this paragraph. (D) Definitions In this paragraph, the terms low-income individual and uninsured have the meanings given such terms in paragraph (11). (14) Additional requirement for certain hospitals (A) In general During the first calendar year beginning on or after the date that is 24 months after the date of enactment of this paragraph and during each subsequent calendar year, a covered entity described in paragraph (4)(L) shall determine by October 1 of each such year, based on the most recent year of data it has reported to the Secretary under paragraph (5)(L) at that point in time, whether the annual charity care costs it incurred for the year reported were greater than or equal to the margin it realized under the program under this section for that same year. As described further in subparagraph (D), for the period specified in the preceding sentence, having annual charity care costs that equal or exceed the margin for the most recently reported year is a condition of such covered entity’s participation in the program under this section for the upcoming calendar year, and failure to meet this condition shall require deregistration and self-disclosure using the procedures described in subparagraphs (D) and (E). Such covered entity shall be subject to a civil monetary penalty described in subparagraph (F) for failure to deregister and self-disclose in accordance with the preceding sentence. (B) Annual charity care costs The term annual charity care costs means the total costs incurred during the year by the covered entity and its child sites (as defined in paragraph (5)(E)(i)) for charity care (as defined in line 23 of worksheet S–10 to the Medicare cost report, or in any successor form). (C) Margin The term margin means the margin reported by the covered entity for the year pursuant to paragraph (5)(L)(i)(V). (D) Deregistration and conditions for subsequent registration (i) De-registration On October 1 of each year beginning on or after the date that is 24 months after the date of enactment of this paragraph, each covered entity subject to this paragraph that has reported at least one year of data to the Secretary under paragraph (5)(L) and that does not have, for the most recently reported year, annual charity care costs greater than or equal to the margin, shall notify the Secretary that it does not meet the condition of participation under this paragraph for the upcoming calendar year, deregister the entity from the program under this section and the identification system described in subsection (d)(2)(B)(iv) for the upcoming calendar year, cease making purchases under such program as of the start of the upcoming calendar year, cease representing to third parties that it may purchase under such program beyond the current calendar year, and refrain from purchasing covered outpatient drugs under this section in quantities exceeding such entity’s bona fide needs for the remainder of the current calendar year. (ii) Registration following de-registration (I) Registration under another covered entity category A covered entity that must deregister under this subparagraph shall not be prohibited from registering to participate in the program under this section under another covered entity category described in paragraph (4) if such entity meets the criteria for such a category and applicable requirements under this section. (II) Registration under paragraph (4)(L) In order to register under paragraph (4)(L), a hospital that has been required to deregister under this subparagraph must demonstrate to the Secretary (in a form and manner specified by the Secretary, and in addition to demonstrating that it satisfies the other applicable registration criteria under paragraph (4)(L)) that its annual charity care cost (as defined in subparagraph (B)) for the most recent year that the hospital would have reported under paragraph (4)(L) absent the deregistration exceeded by at least one percent point the annual charity care cost for the year preceding deregistration by the hospital. If the hospital is found to meet this requirement and approved by the Secretary for registration under paragraph (4)(L), then the hospital will be required to resume reporting under paragraph (5)(L) and (once the entity has reported at least one year of data to the Secretary under paragraph (5)(L)) to meet the condition of participation described in this paragraph for the most recently reported year as of October 1 of each year. (E) Obligation to self-disclose A covered entity described in subparagraph (D) shall immediately disclose to the Secretary and the manufacturer of the affected covered outpatient drug any purchase it made under this section during a calendar year in which it was ineligible to participate in the program under this section. Any such purchase shall require the covered entity promptly to conduct an audit supervised by the Secretary to identify the full scope of noncompliance and to provide the written results of such audit to the Secretary and the manufacturer of the affected covered outpatient drug. The covered entity shall be liable to the manufacturer of the covered outpatient drug that is the subject of the noncompliance in an amount equal to the reduction in the price of the drugs provided under paragraph (1), plus interest on such amount, which shall be compounded monthly and equal to the current short-term interest rate as determined by the Federal Reserve for the time period for which the covered entity is liable. (F) Civil monetary penalty Where a covered entity fails to satisfy a requirement in subparagraph (D) or (E), the covered entity shall be required to pay a civil monetary penalty equal to $2,500 for each violation, which amount shall be adjusted for inflation annually to reflect the rate of change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). The Office of Inspector General of the Department of Health and Human Services shall carry out the provisions related to the imposition of civil monetary penalties under this subparagraph..