Eligibility for child sites

Section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) is further amended by adding at the end the following: (14) Child sites (A) In general A covered entity described in subparagraph (L), (M), (N), or (O) of paragraph (4) that owns and operates a child site that participates in the drug discount program under this section shall maintain documentation of, and annually certify to the Secretary through such certification processes established under the Medicare enrollment and cost reporting rules, that each such child site is wholly owned by the entity and clinically and financially integrated with the covered entity and providing care consistent with the policies of the covered entity, including by— (i) registering each child site with the Secretary; (ii) applying the same financial assistance policy and patient assistance policy as apply with respect to other sites operated by the covered entity; and (iii) ensuring that each child site complies with the Medicare provider-based rules under section 413.65 of title 42, Code of Federal Regulations (or any successor regulations) or meets the requirements of subparagraph (B)(i). (B) Eligibility for child sites (i) In general A child site is eligible for participation in the drug discount program under this section, through the eligibility of the covered entity that owns and operates such child site, only if the covered entity demonstrates that the child site meets the following requirements: (I) The child site applies the same patient financial assistance policy as the covered entity. (II) The child site participates as a provider or supplier in both the Medicare program under title XVIII of the Social Security Act, and the Medicaid program under title XIX of such Act of the State in which the child site is located, without discrimination against patients of such programs at such locations. (III) The child site ensures that the providers who order or dispense covered outpatient drugs purchased under this section at the child site have clinical responsibility for health care services that are related to the use of the covered outpatient drug purchased under this section that is dispensed. (IV) The child site provides a clinically meaningful range of services within the scope of the services that prescribing providers employed by or contracted with the child site, covered entity, or a physician organization affiliate of the covered entity are qualified to deliver. (V) If the child site is owned by a covered entity described in paragraph (4)(L), the child site shall ensure that the provider who prescribes a covered outpatient drug purchased under this section meets the requirements in paragraph (12). (VI) The child site and the covered entity are operated under the same license, except in areas where the State requires a separate license for the child site, or in States where State law does not permit licensure of the child site and the covered entity under a single license. If a State health facilities cost review commission or other agency that has authority to regulate the rates charged by providers in a State finds that a child site is not part of the covered entity, the child site shall not be eligible for the drug discount program under this section. (VII) The clinical services of the child site and the covered entity are integrated as evidenced by the following: (aa) Professional staff of the child site have clinical privileges at the covered entity. (bb) The covered entity maintains the same monitoring and oversight of the child site as for any other owned entity or subsidiary of the covered entity. (cc) The medical director of the child site maintains a reporting relationship with the chief medical officer or other similar official of the covered entity that has the same frequency, intensity, and level of accountability that exists in the relationship between the medical director of a department of the covered entity and the chief medical officer or other similar official of the covered entity, and is under the same type of supervision and accountability as any other director, medical or otherwise, of the covered entity. (dd) Medical staff committees or other professional committees at the covered entity are responsible for medical activities in the child site, including quality assurance, utilization review, and the coordination and integration of services, to the extent practicable, between the child site and covered entity. (ee) Medical records for patients treated in the child site are integrated into a unified retrieval system, or have the ability to be readily accessed by the covered entity. (ff) Inpatient and outpatient services of the child site and the covered entity are integrated, and patients treated at the child site who require further care have full access to all services of the covered entity and are referred where appropriate to the corresponding inpatient or outpatient department or service of the covered entity. (VIII) The financial operations of the child site are fully integrated within the financial system of the covered entity, as evidenced by shared income and expenses between the covered entity and the child site. For purposes of the Medicare program under title XVIII of the Social Security Act, the costs of a child site are reported in the appropriate cost center or cost centers of the covered entity, and the financial status of any child site is incorporated and readily identified in the covered entity’s trial balance. (IX) The child site is held out to the public as part of the covered entity. When patients enter the child site, they are aware that they are entering the covered entity. (X) The child site is operated under the ownership and control of the covered entity, as evidenced by the following: (aa) The business enterprise that constitutes the child site is 100 percent owned by the covered entity; except that a child site may be jointly owned if: (AA) the covered entity holds a majority ownership interest of not less than 51 percent; (BB) each co-owner is either: (i) an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, or (ii) a State or local governmental entity, including a public university or academic medical center; (CC) each co-owner that is not a covered entity has, independent of the joint venture, a bona fide charitable, public health, or governmental mission that includes the direct provision of health care services to low-income, uninsured, or medically underserved individuals; (DD) no co-owner is a for-profit entity; (EE) no co-owner that is not a covered entity was formed, reorganized, converted, or materially restructured for the purpose of qualifying as an eligible co-owner under this subparagraph; and (FF) the Administrator of the Health Resources and Services Administration has not determined, after notice and an opportunity to respond, that the joint venture structure was constituted for the purpose of obtaining eligibility under the drug discount program under this section or expanding claims for discounts under such program, rather than to further the health care mission of the covered entity and the health care needs of the patient population served by the child site. (bb) The covered entity and the child site have the same governing body. (cc) The child site is operated under the same organizational documents as the covered entity, and is subject to common bylaws and operating decisions of the governing body of the covered entity. (dd) The covered entity has final responsibility for administrative decisions, final approval for contracts with outside parties, final approval for personnel actions, final responsibility for personnel policies (such as fringe benefits or code of conduct), and final approval for medical staff appointments at the child site. (XI) The reporting relationship between the child site and the covered entity have the same frequency, intensity, and level of accountability that exists in the relationship between the covered entity and its other departments, as evidenced by compliance with all of the following requirements: (aa) The child site is under the direct supervision of the covered entity. (bb) The child site is operated under the same monitoring and oversight by the covered entity as any other department of the covered entity, and is operated as any other department of the covered entity with regard to supervision and accountability. The director or individual responsible for daily operations at the child site— (AA) maintains a reporting relationship with a manager at the covered entity that has the same frequency, intensity, and level of accountability that exists in the relationship between the covered entity and its existing departments; and (BB) is accountable to the governing body of the covered entity, in the same manner as any department head of the covered entity. (XII) The following administrative functions of the child site are integrated with the functions of the covered entity: billing services, records, human resources, payroll, employee benefit package, salary structure, and purchasing services. Either the same employees or group of employees handle such administrative functions for the child site and the covered entity, or the administrative functions for both the child site and the covered entity are— (aa) contracted out under the same contract agreement; or (bb) handled under different contract agreements, with the contract of the child site being managed by the covered entity. (XIII) The child site is listed on the covered entity’s most recently filed Medicare cost report on a line that is reimbursable under the Medicare program (or, if the covered entity is a children’s hospital that does not file a Medicare cost report, the covered entity submits to the Secretary a signed statement certifying that the site would be correctly included on a reimbursable line of a Medicare cost report if the covered entity filed a cost report). Such cost report demonstrates that the services provided at the child site have associated costs and charges for covered entity outpatient department services under title XVIII of the Social Security Act (or, if the covered entity is a children’s hospital that does not file a Medicare cost report, the covered entity submits to the Secretary a signed statement certifying that the services provided at the child site include or consist solely of outpatient services). (ii) HRSA deeming (I) In general If the Administrator of the Centers for Medicare & Medicaid Services has determined a site to be qualified as a provider-based entity and in compliance with the provider-based requirements under section 413.65 of title 42, Code of Federal Regulations (or any successor regulations), the Secretary shall deem the site to have met the requirements described in clause (i). (II) Rule of construction This clause shall authorize the Secretary to establish a process through notice and comment rulemaking to determine whether a child site, as determined by the Administrator of the Center for Medicare & Medicaid Services, complies with the Medicare provider-based rules. (iii) Child site registration: community need standard (I) Definitions For purposes of this subsection: (aa) The term child site has the definition set forth in Section 340B(b)(4). (bb) The term Community Vulnerability Score means the percentile ranking assigned to a ZIP Code Tabulation Area under the Social Vulnerability Index maintained by the Centers for Disease Control and Prevention and the Agency for Toxic Substances and Disease Registry (CDC/ATSDR SVI), or such successor or supplementary validated index as the Secretary may designate by regulation, on a scale of 0 to 1 in which a score of 1 represents maximum social vulnerability. The Secretary shall, through notice and comment rulemaking, establish a method for mapping or aggregating the underlying index to the ZIP Code Tabulation Area level. Where the Secretary designates a supplementary or successor index, the Secretary shall ensure that such index is based on publicly available ZIP Code Tabulation Area-level or equivalent data, updated at least biennially, and validated for use in identifying medically underserved or socially vulnerable communities. (cc) The term parent entity means the covered entity whose eligibility status under subsection (a)(4) forms the basis for a child site’s registration. (dd) The term qualifying ZIP Code means a ZIP Code Tabulation Area with a Community Vulnerability Score at or above the 50th percentile threshold when ranked nationally—meaning the ZIP Code Tabulation Area falls within the more vulnerable half of all ZIP Code Tabulation Areas in the United States—or at or above the 40th percentile threshold when ranked against all ZIP Code Tabulation Areas within the same State, whichever threshold the covered entity elects to apply. If the ZIP Code Tabulation Area in which a child site’s street address is located has not been assigned a Community Vulnerability Score, including because the area is unpopulated, non-residential, or otherwise lacks the underlying data necessary to compute such a score, the qualifying status of such area shall be determined based on the Community Vulnerability Score of the census tract in which the street address is located, or if no such score is available for that census tract, the county in which the street address is located, applying the same national and State-relative percentile thresholds described in this subparagraph. The Secretary shall, through notice and comment rulemaking, define the circumstances under which a ZIP Code Tabulation Area is treated as unscored and establish another method for assigning a Community Vulnerability Score. (ee) The term ZIP Code Tabulation Area means the geographic unit designated by the United States Census Bureau corresponding to a 5-digit ZIP code, consistent with the geographic units used by the Secretary under this subsection. For purposes of this subsection, a child site’s ZIP Code Tabulation Area shall be determined based on the first five digits of the child site’s street address ZIP code as registered with the Secretary. (II) Community need standard for child sites (aa) General requirement A child site shall meet the community need standard established under this paragraph as a condition of initial registration and continued participation under this section. A child site meets such standard if the covered entity demonstrates that the child site is physically located in a qualifying ZIP Code Tabulation Area, as determined using the street address of the child site in a manner specified by the Secretary through notice and comment rulemaking. (bb) Application to new child sites For a child site seeking registration on or after the date of enactment of this subsection, compliance with item (aa) shall be determined by the Secretary at the time of initial registration based on the ZIP Code Tabulation Area in which the child site’s street address is situated, as submitted by the covered entity. (cc) Application to existing child sites For a child site registered as of the date of enactment of this subsection, compliance with item (aa) shall be evaluated at the time of the next applicable recertification of the covered entity. For the purposes of applying the community need standard to a child site registered as of the date of enactment of this subsection, the Secretary shall determine eligibility based on the ZIP Code Tabulation Area in which the child site’s street address is situated at the time of such recertification. (dd) Ongoing validation Compliance with the community need standard under item (aa) shall be verified for all child sites on an ongoing basis through the annual recertification process, or such other periodic review as the Secretary may establish. (ee) Failure to meet standard A child site that does not satisfy the community need standard under item (aa), as determined by the Secretary, shall be subject to removal from the covered entity’s registration in accordance with procedures established by the Secretary, including notice and an opportunity to respond. Removal of a child site from registration under this paragraph shall not affect the continued eligibility of the parent entity or any other child site of the parent entity that satisfies the applicable standard. (ff) Payor-mix exception Notwithstanding item (aa), a child site that does not independently meet the community need standard described in item (aa) shall nonetheless be deemed to meet such standard if the covered entity demonstrates, to the satisfaction of the Secretary, that not less than 40 percent of patients served by the child site are enrolled in Medicaid, are uninsured, or have incomes at or below 200 percent of the Federal poverty level, as determined using patient data for the most recent 12-month period. (gg) Safety-net exception The Secretary may grant a temporary exception from the community need standard under item (aa) for a child site that does not otherwise qualify under item (aa) or (ff), if the covered entity demonstrates that— (AA) the child site provides primary care, behavioral health, substance use treatment services or other services specifically directed at individuals who are low income, uninsured, or otherwise medically underserved and for which there is no adequate alternative provider within a reasonable geographic proximity—to a patient population that includes a significant proportion of low-income, uninsured, or otherwise medically underserved individuals; and (BB) removal of the child site from registration under this section would materially reduce access to such services for such patient population. Any exception granted under this subparagraph shall be for a period not to exceed 2 years, subject to renewal upon re-demonstration. The Secretary shall promulgate regulations specifying the criteria and application process for exceptions under this subparagraph. (hh) Rule of construction A child site shall not fail to satisfy the community need standard solely because the parent entity is located in a different ZIP Code Tabulation Area, provided the child site independently satisfies the requirements of this paragraph. (III) Rulemaking Not later than 6 months after the date of enactment of this subsection, the Secretary shall promulgate regulations to implement this subsection, including the method for determining the ZIP Code Tabulation Area in which a child site is located under item (aa) and, where such area is unscored, the method for assigning a Community Vulnerability Score. In promulgating such regulations, the Secretary shall account for geographic disparities in national SVI rankings by providing for a State-relative eligibility determination, consistent with the State-relative threshold established in subparagraph (I)(dd), ensuring that child sites serving communities with relatively high social vulnerability within their State are not disadvantaged solely by lower absolute national percentile rankings. (iv) Limitation Only a child site that meets each of the requirements under this subparagraph may purchase covered outpatient drugs under the 340B program or use covered outpatient drugs purchased under the 340B program by another part of the covered entity that is authorized to participate in such program. Any transfer of 340B drugs to another facility or another part of a covered entity that is not authorized to participate in the 340B program shall be deemed a violation of paragraph (5)(B)..