[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8574 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 8574
To amend the Public Health Service Act to reform the 340B drug pricing
program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 28, 2024
Mr. Bucshon (for himself, Mr. Carter of Georgia, and Mrs. Harshbarger)
introduced the following bill; which was referred to the Committee on
Energy and Commerce, and in addition to the Committee on Ways and
Means, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Public Health Service Act to reform the 340B drug pricing
program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``340B Affording
Care for Communities and Ensuring a Strong Safety-net Act'' or the
``340B ACCESS Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Prevention of Medicaid duplicate discounts; oversight of
covered entities.
Sec. 4. Hospital child site requirements.
Sec. 5. Contract pharmacies.
Sec. 6. Ensuring patient affordability of drugs purchased under section
340B.
Sec. 7. Requirements for nonhospital covered entities and subgrantees.
Sec. 8. Claims modifiers; covered entity data submission.
Sec. 9. Covered entity reporting on scope of grant, contract, and
project.
Sec. 10. Ensuring covered entity transparency.
Sec. 11. Revisions to existing 340B hospital eligibility requirements.
Sec. 12. Additional requirements for 340B hospitals.
Sec. 13. 340B program.
Sec. 14. Audits of private nonhospital contracts with State and local
governments.
Sec. 15. Ensuring covered entity compliance with transparency
requirements.
Sec. 16. 340B claims data clearinghouse.
Sec. 17. Limitation on administrator service fees and contract pharmacy
fees.
Sec. 18. Clarification.
Sec. 19. Ensuring the equitable treatment of 340B covered entities and
pharmacies participating in the 340B drug
discount program.
Sec. 20. Effective date.
SEC. 2. DEFINITIONS.
(a) Definition of Patient.--Section 340B(b) of the Public Health
Service Act (42 U.S.C. 256b(b)) is amended by adding at the end the
following:
``(3) Patient.--
``(A) In general.--In this section, the term
`patient' means, with respect to a covered entity
described in subsection (a)(4), an individual who, on a
prescription-by-prescription or order-by-order basis--
``(i) is dispensed or administered a
covered outpatient drug that is--
``(I) directly related to the
service described in clause (iii);
``(II) ordered or prescribed by a
covered entity provider described in
clause (ii) as a result of the service
described in clause (iii); and
``(III) dispensed or administered
on site at a covered entity location, a
child site (as defined in subsection
(a)(5)(E)), or an entity pharmacy (as
defined in subsection (a)(5)(F)) listed
in the identification system described
in subsection (d)(2)(B)(iv), or on site
at a contract pharmacy in accordance
with subsection (a)(5)(F) or dispensed
through a mail order pharmacy in
accordance with subsection (a)(5)(F);
``(ii) receives the health care service
described in clause (iii) from a `covered
entity provider', meaning a health care
professional who either--
``(I) is an employee or independent
contractor of the covered entity, such
that the covered entity bills for
services furnished by the health care
professional and is responsible for the
care furnished by such professional; or
``(II) furnishes health care
services under an ongoing contractual
obligation to the covered entity such
that responsibility for the care
provided remains with the covered
entity and meets the other requirements
in this paragraph, in the event State
law prohibits or otherwise
substantially limits the ability of the
covered entity to bill for services of
the health care professional;
``(iii) receives a covered outpatient drug
in connection with a health care service
furnished at the covered entity (including a
child site) and such drug and service are paid
by the insurer or third-party payor as
outpatient items and services (or where third-
party reimbursement is not made, such items and
services are deemed outpatient if less than 24
hours have elapsed between such individual's
hospital registration and discharge);
``(iv) is described in a category of
individuals within the scope of, and receives a
health care service at the covered entity
(including a child site) that is within the
scope of--
``(I) the Federal grant, project,
or Federal grant-authorizing statute,
as applicable, that qualifies such
entity for participation in the program
under this section, if the covered
entity is described in one of
subparagraphs (A) through (K) of
subsection (a)(4); or
``(II) the contract as required in
paragraphs (4)(L)(i) and (11) of
subsection (a), if the covered entity
is a private nonprofit hospital which
has, as the basis for participating in
the program under this section, a
contract with a State or local
government to provide health care
services to specified individuals,
provided that clause (iv) shall not
apply with respect to a covered entity
described in subsection (a)(4)(N) or a
sole community hospital described in
subsection (a)(4)(O); and
``(v) has an ongoing relationship with the
covered entity such that the covered entity
creates and maintains auditable health care
records which demonstrate compliance with this
paragraph and that the covered entity--
``(I) has a provider-to-patient
relationship with the individual;
``(II) is responsible for the
individual's health care service that
resulted in the prescription or order
for the drug; and
``(III)(aa) has provided a health
care service to the individual through
an in-person visit within the past 12
months, if the covered entity is a
hospital described in subparagraph (L)
or subparagraph (M) of subsection
(a)(4) or is a rural referral center
described in subparagraph (O) of such
subsection; or
``(bb) has provided a health care
service to the individual through an
in-person visit within the past 24
months, if the covered entity is
described in one of subparagraphs (A)
through (K) of subsection (a)(4),
subparagraph (N) of such subsection, or
is a sole community hospital described
in subparagraph (O) of such subsection.
``(B) Telehealth and telemedicine.--
``(i) In general.--A prescription for a
covered outpatient drug resulting from a health
care service furnished to an individual through
telehealth, telemedicine, or other remote
health care service arrangements shall not
qualify for pricing described in subsection
(a)(1) unless--
``(I) the covered entity (including
child site, as applicable) at which
such service is furnished is a covered
entity (or a child site of a covered
entity, as applicable) described in one
of subparagraphs (A) through (K) of
subsection (a)(4), subparagraph (N) of
such subsection, or is a sole community
hospital described in subparagraph (O)
of such subsection; and
``(II) subject to the exception in
clause (ii), a covered entity provider
has conducted an in-person examination
of the individual within the 6-month
time period immediately preceding the
health care service resulting in the
prescription or order for the drug.
``(ii) Exception.--The requirement in
clause (i)(II) shall not apply with respect to
an individual for whom the covered entity
maintains auditable records sufficient to
demonstrate that such entity verified such
individual is determined eligible for benefits
under either title II of the Social Security
Act or title XVI of such Act in accordance with
the provisions of such applicable title.
``(C) Prescriptions from non-covered entity
providers ineligible.--
``(i) In general.--Subject to the exception
for a qualifying referral described in clause
(ii), a covered outpatient drug prescribed or
ordered for an individual by a health care
professional who is not a covered entity
provider shall not qualify for pricing
described in subsection (a)(1).
``(ii) Exception for qualifying
referrals.--In the case of a `qualifying
referral', all requirements in subparagraph (A)
shall apply, except for clauses (i)(I),
(i)(II), (ii), (iii), and (v)(II) of such
subparagraph. For purposes of this paragraph, a
`qualifying referral' shall refer to the
sequence of occurrences described in this
clause for which a covered entity maintains
documentation sufficient to demonstrate that--
``(I) a covered entity provider
evaluates and recommends to the
individual, during an encounter at the
covered entity (including child site,
as applicable), that such individual
receive a specified type of specialty
health care not available at the
covered entity and such recommendation
is contemporaneously documented, at the
time of such encounter, in the medical
record the covered entity creates and
maintains for such individual;
``(II) within one year of the date
of the encounter and recommendation
described in subclause (I), the
individual receives a health care
service from a medical specialist of
the type described in such
recommendation;
``(III) within the time period
specified in subclause (II), the
covered entity provider making the
recommendation receives, directly from
the medical specialist that furnishes
the health care service described in
subclause (II), written documentation
specifying the service or services
furnished to such individual and the
diagnoses made in connection with such
service or services; and
``(IV) the covered entity retains
overall responsibility for the care of
the individual.
``(iii) Covered entity eligibility for
qualifying referrals.--Notwithstanding any
other provision in this section, a covered
entity shall not qualify for pricing described
in subsection (a)(1) with respect to a
prescription or order for a covered outpatient
drug resulting from a qualifying referral
unless such covered entity--
``(I) is described in subparagraph
(N) of subsection (a)(4);
``(II) is a sole community hospital
described in subparagraph (O) of such
subsection; or
``(III) is described in one of
subparagraphs (A) through (K) of such
subsection, is not a specified
nonhospital covered entity (as defined
in subsection (b)(4)), and has a
Federal grant that requires such entity
to contract or refer for the health
care service or services furnished to
the individual by the medical
specialist described in clause (ii).
``(D) Health care service required.--For purposes
of this section, an individual shall not be considered
a patient of the covered entity described in subsection
(a)(4) if the individual receives from the covered
entity only the administration or infusion of a drug or
drugs, or the dispensing of a drug or drugs for
subsequent self-administration or administration in the
home setting, without a covered entity provider-to-
patient encounter involving the provision of a health
care service.''.
(b) Definition of Specified Nonhospital Covered Entity.--Section
340B(b) of the Public Health Service Act (42 U.S.C. 256b(b)) is further
amended by adding at the end the following:
``(4) Specified nonhospital covered entity.--In this
section, the term `specified nonhospital covered entity' means
a covered entity that--
``(A) is described in one of subparagraphs (B)
through (K) of subsection (a)(4), other than a covered
entity described in subparagraph (G) of such
subsection, and--
``(i) has average annual operating revenues
exceeding $1,000,000,000 calculated over the
most recent three-year period for which data
are available, which revenue threshold shall be
adjusted for inflation annually to reflect rate
of change in the Consumer Price Index for All
Urban Consumers published by the Bureau of
Labor Statistics; or
``(ii) is an affiliate of a hospital; or
``(B) is described in subsection (a)(4)(A) and
becomes affiliated with a hospital on or after December
1, 2023.
For purposes of this definition, the term `affiliate' shall
mean an entity that, directly or indirectly, controls, is
controlled by, or is under common control with the referenced
entity, including the referenced entity's parent, and the term
`control' shall mean the power to direct the management and
policies of an entity, directly or indirectly, whether through
the ownership of voting securities, by contract, or
otherwise.''.
SEC. 3. PREVENTION OF MEDICAID DUPLICATE DISCOUNTS; OVERSIGHT OF
COVERED ENTITIES.
Section 340B(a)(5) of the Public Health Service Act (42 U.S.C.
256b(a)(5)) is amended--
(1) in subparagraph (A)--
(A) in clause (ii), by striking ``The Secretary''
and inserting ``Subject to subsection (d)(2)(C), the
Secretary''; and
(B) by adding at the end the following:
``(iii) Regulations.--Not later than 1 year
after the date of enactment of this clause, the
Secretary shall promulgate final regulations
through notice-and-comment rulemaking
describing--
``(I) methodologies State Medicaid
programs and all covered entities under
subsection (a)(4), and their contract
pharmacies, shall use to identify and
bill drugs purchased under the 340B
program in a manner that ensures
compliance with applicable prohibitions
regarding duplicate discounts or
rebates, including the duplicate
discount prohibition under this
subparagraph and the prohibitions under
sections 1927(j)(1) and
1903(m)(2)(A)(xiii) of the Social
Security Act, to include the
application of such prohibitions to
340B drugs used by Medicaid managed
care enrollees; and
``(II) procedures State Medicaid
programs shall use to exclude requests
for Medicaid rebates on covered
outpatient drugs purchased under the
340B program that are dispensed,
administered, or otherwise furnished to
a Medicaid managed care enrollee and
requirements for State Medicaid
programs to promulgate rules to provide
affected manufacturers a prompt remedy
with respect to any incorrectly billed
rebates for such drugs.'';
(2) in subparagraph (C)--
(A) by striking ``A covered entity shall permit''
and inserting:
``(i) Duplicate discounts and drug
resale.--A covered entity shall permit'';
(B) by striking ``(A) or (B)'' and inserting ``(A),
(B), (J), or (K)''; and
(C) by adding at the end the following:
``(ii) Use of margin.--A covered entity
shall permit the Secretary to audit, at the
Secretary's expense, the records of the entity
to determine--
``(I) how the margin (as defined in
subparagraph (L)(iv)) generated on
covered outpatient drugs subject to an
agreement under this section dispensed
or furnished by such entity (or a
contract pharmacy described in
subsection (a)(5)(F)) is used by such
entity; and
``(II) such entity's compliance
with subparagraph (L).
``(iii) Records retention.--Covered
entities shall retain such records and provide
such records and reports as determined
necessary by the Secretary for carrying out
this subparagraph.''; and
(3) in subparagraph (D), by striking ``(A) or (B)'' and
inserting ``(A), (B), (J), or (K)''.
SEC. 4. HOSPITAL CHILD SITE REQUIREMENTS.
(a) Hospital Child Site Requirements.--Section 340B(a)(5) of the
Public Health Service Act (42 U.S.C. 256b(a)(5)) is amended by adding
at the end the following:
``(E) Hospital child site requirements.--
``(i) In general.--A covered entity
described in one of subparagraphs (L) through
(O) of paragraph (4) may register an off-campus
outpatient facility associated with such
covered entity for inclusion in the
identification system described in subsection
(d)(2)(B)(iv) to participate in the program
under this section as an integral part of such
covered entity if such covered entity
demonstrates to the Secretary, in a manner
specified by the Secretary, that such facility
satisfies each of the requirements in this
subparagraph. For purposes of this section,
each facility registered to participate in the
program under this section and satisfying the
requirements in this subparagraph shall be
referred to as a `child site').
``(I) The facility 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
facility would be correctly included on
a reimbursable line of a Medicare cost
report if the covered entity filed a
cost report).
``(II) Such cost report
demonstrates that the services provided
at the facility have associated costs
and charges for hospital 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 facility include outpatient
services).
``(III) The facility is wholly
owned by the covered entity.
``(IV) The Secretary has made a
determination, under the process
described in section 413.65(b) of title
42, Code of Federal Regulations (or any
successor regulations), that the
facility meets the Medicare provider-
based standards under section 413.65 of
title 42, Code of Federal Regulations
(or any successor regulations) for an
off-campus outpatient department of the
covered entity.
``(V) The facility provides
outpatient health care services that
are not limited to only dispensing,
administering, or otherwise furnishing
covered outpatient drugs.
``(VI) The facility is subject to
and adheres to all charity care and
sliding fee scale policies of the
covered entity and makes such policies
publicly available in a manner
consistent with requirements
established under section 501(r) of the
Internal Revenue Code of 1986
applicable to hospital financial
assistance policies.
``(VII) The facility is located in
an area with a shortage of personal
health services that is--
``(aa) initially designated
by the Secretary pursuant to
section 254b(b)(3) of title 42,
United States Code, on or
before December 1, 2023; or
``(bb) designated by the
Secretary pursuant to
subparagraphs (A) through (C)
of section 254b(b)(3) of title
42, United States Code, after
December 1, 2023, using the
scoring methodology and
criteria specified by the
Secretary as of December 1,
2023.
``(VIII) In the case of a covered
entity described in one of
subparagraphs (L) through (O) of
paragraph (4) that is 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 to
provide health care services to low-
income individuals who are uninsured,
as described in paragraphs (4)(L)(i)
and (11), the facility independently
complies with all requirements
applicable to such covered entity with
respect to such contract.
``(IX) For the most recent year,
the facility's total cost incurred for
charity care (as such term is defined
in line 23 of worksheet S-10 to the
Medicare cost report, or in any
successor form) furnished at such
facility during such year, as a share
of the facility's total patient service
revenue, is greater than or equal to
the amount described in item (aa) or
item (bb), whichever is greater--
``(aa) for such year, the
total cost incurred for charity
care, as a share of total
patient service revenue,
furnished at the covered
entity's on-campus locations
(as `campus' is defined in
section 413.65(a)(2) of title
42, Code of Federal Regulations
(or any successor
regulations)); or
``(bb) the average cost
incurred for charity care, as a
share of total patient service
revenue, calculated for the
year prior to the most recent
year for which data is
available, across all hospitals
in the State where the facility
is located that receive
payments for inpatient hospital
services under the prospective
payment system established
under section 1886(d) of the
Social Security Act.
``(X) For the most recent year, the
facility's share of total outpatient
services revenue derived from base
reimbursement to such entity (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 facility (including any
cost sharing for such items and
services) is greater than or equal to
the amount described in item (aa) or
item (bb), whichever is greater--
``(aa) for such year, the
share of total outpatient
services revenue derived from
base reimbursement to such
entity (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 on-
campus locations of the covered
entity with which the facility
is associated (including any
cost sharing for such items and
services) (`campus' shall have
the meaning given such term in
section 413.65(a)(2) of title
42, Code of Federal Regulations
(or any successor
regulations)); or
``(bb) the average share of
total outpatient services
revenue derived from base
reimbursement (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 (including any
cost sharing for such items and
services), calculated for the
year prior to the most recent
year for which data is
available, across all hospitals
in the state where the facility
is located that receive
payments for outpatient
hospital services under the
prospective payment system for
covered outpatient department
services established under
section 1833(t) of such Act.
``(XI) The covered entity
certifies, at the time such facility is
initially registered for inclusion in
the identification system described in
subsection (d)(2)(B)(iv) to participate
in the drug pricing program under this
section and annually thereafter as part
of the recertification process, that
the facility satisfies all applicable
requirements under this subparagraph.
``(ii) Limitation.--Only an off-campus
outpatient facility 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 subparagraph (B).
``(iii) Deregistration.--If at any time
following registration a requirement described
in clause (i) is no longer fully satisfied with
respect to a facility, the covered entity
described in such clause shall immediately
notify the Secretary that such facility no
longer fully satisfies the relevant
requirement, deregister the facility from the
program under this section, remove the facility
from the identification system described in
subsection (d)(2)(B)(iv), and take all
necessary actions to prohibit such facility
from making any purchases under the program
under this section or representing to third
parties that such facility may purchase covered
outpatient drugs under such program.
``(iv) Obligation to self-disclose.--A
covered entity described in clause (i) 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 or on behalf of the covered
entity with respect to a facility that, at the
time of the purchase of such drug, did not
fully satisfy the requirements in such clause.
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.
``(v) Civil monetary penalty.--Where a
covered entity knowingly and intentionally
violates clause (ii) or otherwise fails to
satisfy a requirement in clause (iii) or clause
(iv), the covered entity shall be required to
pay a civil monetary penalty equal to $2,500
for each such 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 clause 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 clause.
``(vi) Secretarial publication of
reports.--On an annual basis, the Secretary
shall prepare and make available to the public
in an electronic, machine readable format
separate reports listing facilities that
satisfy the requirements in each of subclauses
(IX) and (X) of clause (i).''.
(b) Effective Date.--The provisions in section 340B(a)(5)(E) of the
Public Health Service Act, as added by this Act, shall become effective
120 days after the date of enactment of this Act.
(c) Implementation of Hospital Child Site Standards.--Not later
than 60 days prior to the effective date of section 340B(a)(5)(E) of
the Public Health Service Act, as added by this Act, the Secretary
shall issue program instructions directing each covered entity
described in section 340B(a)(5)(E)(i) of the Public Health Service Act,
as amended by this Act, to, before the effective date of section
340B(a)(5)(E) of the Public Health Service Act, as added by this Act,
register in the identification system described in section
340B(d)(2)(B)(iv) of the Public Health Service Act, or update existing
registrations in such system for, off-campus outpatient facilities
associated with such covered entity that satisfy the requirements in
such section. Such instructions shall direct each such covered entity
to, on or before the effective date of section 340B(a)(5)(E) of the
Public Health Service Act, as added by this Act, remove from such
system the existing registration of any off-campus outpatient facility
associated with such covered entity that does not satisfy the
requirements in section 340B(a)(5)(E)(i) of the Public Health Service
Act. Clauses (iii) through (v) of section 340B(a)(5)(E) of the Public
Health Service Act shall apply with respect to any covered entity
described in one of subparagraphs (L) through (O) of section 340B(a)(4)
of the Public Health Service Act that fails to remove a facility
described in the immediately preceding sentence on or before the
effective date of section 340B(a)(5)(E) of the Public Health Service
Act, as added by this Act.
SEC. 5. CONTRACT PHARMACIES.
Section 340B(a)(5) of the Public Health Service Act (42 U.S.C.
256b(a)(5)) is further amended by adding at the end the following:
``(F) Contract pharmacies.--
``(i) In general.--Subject to the
conditions set forth in this subparagraph, a
covered entity may enter into written
agreements with contract pharmacies to dispense
to patients of such entity covered outpatient
drugs purchased by such entity under the 340B
program. Subject to such conditions, a
manufacturer of covered outpatient drugs shall
ship or facilitate shipment of such drugs to
contract pharmacies at the request of such
covered entity. Except with respect to covered
outpatient drugs shipped to and dispensed by a
contract pharmacy as provided in this
subparagraph, and notwithstanding any other
provision in this section, a manufacturer of
covered outpatient drugs shall have no
obligation to pay a discount or rebate under
this section with respect to covered outpatient
drugs delivered or otherwise transferred to any
location other than a registered address of the
covered entity (including an entity pharmacy or
child site, as applicable) listed in the
identification system described in subsection
(d)(2)(B)(iv).
``(ii) Conditions for covered entity use of
contract pharmacies.--In order for a covered
entity to enter into a written agreement with a
contract pharmacy to dispense to patients of
such entity covered outpatient drugs purchased
by such entity under the program under this
section, the entity shall--
``(I)(aa) be described in one of
subparagraphs (A) through (K) of
paragraph (4) and purchase covered
outpatient drugs for its patients
within the scope of the Federal grant,
project, or Federal grant-authorizing
statute, as applicable, that qualifies
such entity for participation in the
program under this section; or
``(bb) be described in one of
subparagraphs (L) through (O) of
paragraph (4);
``(II) establish and implement
compliance procedures to satisfy the
requirements described in subparagraphs
(A), (B), (G) (as applicable), (H) (as
applicable), (J), and (K) of paragraph
(5) and section 1193(d) of the Social
Security Act with respect to covered
outpatient drugs purchased by the
covered entity under this section,
including with respect to such drugs
dispensed by a contract pharmacy, which
compliance procedures shall be
considered records of the covered
entity subject to audit under
subparagraph (C);
``(III) prior to purchasing covered
outpatient drugs subject to an
agreement under this section to be
shipped to or dispensed by such
pharmacy, register such pharmacy in the
identification system described in
subsection (d)(2)(B)(iv) as a contract
pharmacy, to include such pharmacy's
national provider identifier, and
certify to the Secretary upon initial
registration of such pharmacy in such
system and annually thereafter that
such pharmacy complies with all
requirements under this subparagraph,
including the covered entity compliance
procedures described in subclause (II);
and
``(IV) as applicable, comply with
the requirements and limitations set
forth in clauses (iii) through (vii) of
this subparagraph.
``(iii) Limitation on contract pharmacies
for certain hospital covered entities.--
Notwithstanding clause (ii), a covered entity
described in paragraph (4)(L), a free-standing
cancer hospital described in paragraph (4)(M),
and a rural referral center described in
paragraph (4)(O) may not enter into written
agreements with more than 5 contract pharmacies
to dispense covered outpatient drugs purchased
by the covered entity under this section to
patients of such entity under this
subparagraph. For purposes of this clause, a
contract pharmacy shall not include a mail
order pharmacy.
``(iv) Service area requirement for
eligible contract pharmacies.--A contract
pharmacy with which a covered entity enters
into a written agreement to dispense covered
outpatient drugs to patients of such entity
subject to the conditions in this subparagraph
shall be located in the service area of the
covered entity (as defined in clause (x)(IV)).
Notwithstanding any other provision in this
subparagraph, this clause (iv) shall not apply
with respect to a covered entity described in
paragraph (4)(G) or a contract pharmacy that is
a mail order pharmacy.
``(v) Requirements for use of mail order
pharmacies.--
``(I) In general.--Notwithstanding
any other provision in this section, a
covered outpatient drug subject to an
agreement under this section may be
dispensed to a patient of a covered
entity through a mail order pharmacy
only if--
``(aa) the covered entity
dispensing such drug (or on
whose behalf such drug is
dispensed) through a mail order
pharmacy to such a patient is
described in one of
subparagraphs (A) through (K)
of paragraph (4), such entity
is not a specified nonhospital
covered entity (as defined in
subsection (b)(4)), and, except
for a covered entity described
in subparagraph (G) of such
subsection, the patient
dispensed such drug resides
within the service area of the
covered entity (as defined in
clause (x)(IV)); or
``(bb) the covered entity
dispensing such drug (or on
whose behalf such drug is
dispensed) through a mail order
pharmacy to such a patient is
described in subparagraph (N)
of paragraph (4) or is a sole
community hospital described in
subparagraph (O) of such
paragraph, and the patient
dispensed such drug resides in
a county that is not part of a
Metropolitan Statistical Area,
as defined by the Office of
Management and Budget.
``(II) Requirements for use of mail
order contract pharmacies.--Subject to
the conditions set forth in this
subparagraph, a covered entity
described in item (aa) or (bb) of
subclause (I) may enter into written
agreements with contract pharmacies
that are mail order pharmacies to
dispense to patients described in such
relevant clause covered outpatient
drugs purchased by such entity under
the 340B program.
``(vi) Requirements for covered entity
compliance procedures and written agreements.--
Not later than 180 days following the date of
enactment of the 340B ACCESS Act, the Secretary
shall issue guidance to covered entities
specifying requirements for--
``(I) covered entity compliance
procedures described in clause (ii)(II)
that the Secretary determines are
sufficient to ensure that covered
outpatient drugs are not subject to
duplicate discounts in violation of
subsection (a)(5)(A) (including with
respect to such drugs used by Medicaid
managed care enrollees), that such
drugs cannot be resold or otherwise
transferred to persons who do not meet
the definition of a patient of the
covered entity in violation of
subparagraph (B), that the patient
affordability requirements specified in
subparagraphs (G) and (H), as
applicable, are appropriately applied
at the point of drug dispense or
administration, that data and other
information is submitted in accordance
with subparagraphs (J) and (K), and
that the nonduplication requirement in
section 1193(d) of the Social Security
Act is satisfied; and
``(II) written agreements between
covered entities and contract
pharmacies described in clause (vii).
``(vii) Written agreement required.--The
written agreement between a covered entity and
a contract pharmacy described in this
subparagraph shall include binding and
enforceable obligations on the contract
pharmacy to comply with the covered entity's
compliance procedures described in clause
(ii)(II) with respect to covered outpatient
drugs dispensed to patients of such entity in
accordance with this subparagraph. Within 30
days of the applicable effective date of such
written agreement, including any amendment or
addendum thereto, the covered entity shall
submit a copy of the agreement, together with
any amendments or addenda, to the Secretary in
a form and manner specified by the Secretary.
The Secretary shall review all such agreements,
including amendments and addenda, for
compliance with the requirements set forth in
this subparagraph and may require a covered
entity and contract pharmacy to modify an
agreement to conform to the requirements of
this subparagraph. Such agreements, including
amendments and addenda, shall be considered
records of the covered entity subject to audit
under subparagraph (C).
``(viii) Clarification for covered
outpatient drugs subject to restricted
distribution.--Notwithstanding any other
provision in this section, a manufacturer of a
covered outpatient drug requiring exclusive use
of a specialty pharmacy or a restricted
distribution network shall be deemed to have
satisfied its obligations under this
subparagraph with respect to a contract
pharmacy if such manufacturer offers each
covered entity such drug for purchase at or
below the applicable ceiling price described in
paragraph (1) through a wholesaler,
distributor, or pharmacy included in the
restricted distribution network for such drug.
``(ix) Penalties for contract pharmacy
compliance violations.--
``(I) In general.--A contract
pharmacy that is found to have violated
the covered entity compliance
procedures described in clause
(ii)(II), violated subparagraph (A), or
violated subparagraph (B) shall--
``(aa) in the first
instance of such violation, be
liable to a manufacturer of a
covered outpatient drug that is
the subject of such violation
in an amount equal to the
reduction in the price of such
drug (as described in
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;
``(bb) in the second
instance of such violation--
``(AA) be liable to
a manufacturer of a
covered outpatient drug
that is the subject of
such violation in an
amount equal to the
reduction in the price
of the drug (as
described in paragraph
(1)), plus interest on
such amount, which
shall be calculated in
the manner specified in
item (aa); and
``(BB) be required
to pay a civil monetary
penalty equal to
$13,946 for each claim
for a covered
outpatient drug that is
subject to the
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;
and
``(cc) in the third
instance of such violation--
``(AA) be liable to
a manufacturer of a
covered outpatient drug
that is the subject of
such violation in an
amount equal to the
reduction in the price
of the drug (as
described in paragraph
(1)), plus interest on
such amount, which
shall be calculated in
the manner specified in
item (aa);
``(BB) be required
to pay a civil monetary
penalty equal to
$13,946 for each claim
for a covered
outpatient drug that is
subject to the
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;
and
``(CC) be removed
from the program under
this section and
disqualified from
reentry into such
program for a period of
not less than two
years, or such longer
period as the Secretary
may determine based on
the severity of the
violation (or
violations) and the
risk such pharmacy
presents to the
integrity of the
program, with no
ability to reenter the
program unless and
until the Secretary
determines such
pharmacy has resolved
the violation (or
violations) and taken
reasonable steps to
prevent similar future
violations.
``(II) Corrective action plan.--In
the first instance of a violation
described in subclause (I)(aa), in the
second instance of a violation
described in subclause (I)(bb), and
prior to reentry into the program
following a violation described in
subclause (I)(cc)--
``(aa) the pharmacy shall
conduct an internal review to
identify the cause of the
violation (or violations) that
is inclusive of all calendar
quarters within the period in
which such violation (or
violations) occurred and all
covered outpatient drugs
subject to an agreement under
this section dispensed during
such period;
``(bb) the pharmacy shall
prepare a written corrective
action plan, in a form
specified by the Secretary,
which shall include, at a
minimum, the results of such
internal review, the pharmacy's
methodology for identifying the
full scope of such violation
(or violations), and the
pharmacy's proposed corrective
actions, and submit such plan
to the Secretary in a form and
manner specified by the
Secretary; and
``(cc) the Secretary shall
review such plan, notify the
pharmacy of any revisions to
such plan, including additional
corrective actions, necessary
for the Secretary to approve
such plan, and publish the
approved plan on a public
website of the Department of
Health and Human Services (with
redactions of any confidential
or proprietary information).
``(III) Civil monetary penalty for
violations by removed pharmacy.--A
contract pharmacy removed from the
program under this section pursuant to
subclause (I)(cc) that dispenses a
covered outpatient drug subject to an
agreement under this section during a
time period that such pharmacy is
removed from the program and is not
approved for reentry shall be required
to pay a civil monetary penalty equal
to $13,946 for each claim for each such
drug dispensed during such period,
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.
``(IV) Procedures and delegation.--
The provisions of section 1128A of the
Social Security Act (other than
subsections (a) and (b)) shall apply
for purposes of any payment, civil
monetary penalty, or removal described
in this clause 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 of this
clause.
``(x) Definitions.--In this subparagraph:
``(I) Contract pharmacy.--The term
`contract pharmacy' means, with respect
to a covered entity described in clause
(ii), any individual pharmacy (as
determined by a national provider
identifier unique to the pharmacy
address) that is--
``(aa) licensed as a
pharmacy by the relevant State
(or States);
``(bb) authorized to
dispense covered outpatient
drugs subject to an agreement
under this section to patients
of such entity (as defined in
subsection (b)(3)) pursuant to
a valid written agreement with
such entity (as described in
this subparagraph); and
``(cc) not an entity
pharmacy.
``(II) Entity pharmacy.--The term
`entity pharmacy' means any individual
pharmacy (as determined by a national
provider identifier unique to the
pharmacy address) that is--
``(aa)(AA) licensed as a
pharmacy by the relevant State
(or States); and
``(BB) the same legal
entity as the covered entity
and located within the covered
entity's service area, if the
covered entity is described in
one of subparagraphs (A)
through (K) of paragraph (4)
and is not a specified
nonhospital covered entity (as
defined in subsection (b)(4));
or
``(bb) the same legal
entity as the covered entity
and located within the covered
entity's four walls, if the
covered entity is described in
one of subparagraphs (L)
through (O) of paragraph (4) or
is a specified nonhospital
covered entity (as defined in
subsection (b)(4)).
``(III) Mail order pharmacy.--The
term `mail order pharmacy' is a
pharmacy that is licensed as a pharmacy
by the State (or States) and that
dispenses prescription medications to
individuals primarily through the mail,
as determined in accordance with
guidance issued by the Secretary in
connection with part 447, subpart I of
title 42 of the Code of Federal
Regulations (or any successor
regulations).
``(IV) Service area.--The term
`service area' means, with respect to a
covered entity described in paragraph
(4), other than a covered entity
described in subparagraph (G) of such
paragraph, the Public Use Microdata
Area (as defined by the United States
Census Bureau) in which such entity is
located and up to three additional
Public Use Microdata Areas that are
contiguous with the Public Use
Microdata Area in which such entity is
located, which shall be listed in the
identification system described in
subsection (d)(2)(B)(iv).
``(xi) Rules of construction.--
``(I) Location.--For purposes of
this subparagraph, the location of a
covered entity shall be determined
based on the physical address of the
entity listed in the identification
system described in subsection
(d)(2)(B)(iv) without regard to any
off-campus outpatient facilities.
``(II) Same legal entity.--For
purposes of this subparagraph, a
pharmacy is the same legal entity as
the covered entity if the name,
ownership, and employer identification
number of the pharmacy is identical to
the name, ownership, and employer
identification number of the covered
entity.''.
SEC. 6. ENSURING PATIENT AFFORDABILITY OF DRUGS PURCHASED UNDER SECTION
340B.
(a) In General.--Section 340B(a)(5) of the Public Health Service
Act (42 U.S.C. 256b(a)(5)) is further amended by adding at the end the
following:
``(G) Patient affordability requirements for
hospital covered entities.--
``(i) In general.--Notwithstanding any
other provision of law, a covered entity
described in one of subparagraphs (L) through
(O) of paragraph (4) shall establish a sliding
fee scale that results in the covered entity
providing, on behalf of an eligible patient (as
defined in clause (iv)), a discount that
results in such patient paying no more than the
maximum out-of-pocket obligation (as defined in
clause (ii)), with respect to each covered
outpatient drug subject to an agreement under
this section dispensed, furnished, or
administered to such patient at such covered
entity, any child site, or any entity pharmacy.
The sliding fee scale and related policies
shall be written and posted prominently at each
such covered entity location, including any
child site and entity pharmacy, and shall be
included in any billing-related communications
sent by such covered entity to any patient
dispensed, furnished, or administered a covered
outpatient drug at such covered entity
location, including any child site or entity
pharmacy. Eligibility for a reduced out-of-
pocket obligation pursuant to this clause shall
be based on insurance and income information
provided by the eligible patient. With respect
to covered outpatient drugs that are self-
administered by an eligible patient, the out-
of-pocket reductions described in this clause
shall apply at the point of sale.
``(ii) Maximum out-of-pocket obligation.--
For each dispense or administration of a
covered outpatient drug, the maximum out-of-
pocket obligation for an eligible patient with
family income--
``(I) below the Federal poverty
guidelines is $0;
``(II) at or above the Federal
poverty guidelines but below 200
percent of the Federal poverty
guidelines is the lesser of 20 percent
of the otherwise applicable out-of-
pocket obligation or $35, which shall
be adjusted for inflation annually to
reflect rate of the change in the
Consumer Price Index for All Urban
Consumers published by the Bureau of
Labor Statistics; and
``(III) at or above 200 percent of
the Federal poverty guidelines is the
lesser of 30 percent of the otherwise
applicable out-of-pocket obligation or
$50, which shall be adjusted for
inflation annually to reflect rate of
the change in the Consumer Price Index
for All Urban Consumers published by
the Bureau of Labor Statistics.
``(iii) Applicability to contract
pharmacies.--With respect to an eligible
patient of a covered entity described in clause
(i) dispensed a covered outpatient drug subject
to an agreement under this section on behalf of
such covered entity at a contract pharmacy
pursuant to subparagraph (F), such covered
entity shall require such contract pharmacy to
provide discounts to eligible patients on
behalf of such covered entity and comply with
all other requirements described in clauses (i)
and (ii) as if such contract pharmacy were a
covered entity described in clause (i).
``(iv) Definitions.--In this subparagraph:
``(I) Child site.--The term `child
site' shall have the meaning given such
term in subparagraph (E).
``(II) Contract pharmacy.--The term
`contract pharmacy' shall have the
meaning given such term in subparagraph
(F).
``(III) Eligible patient.--The term
`eligible patient' means a patient, as
defined in subsection (b)(3), who is
not covered under minimum essential
coverage as defined under section
5000A(f) of the Internal Revenue Code
of 1986 or has family income below 200
percent of the Federal poverty
guidelines and is covered under a group
health plan, health insurance coverage
in the individual market or group
market (as such terms are defined in
section 2791 of the Public Health
Service Act) or coverage described in
section 156.602(a), title 45, Code of
Federal Regulations or successor
regulation.
``(IV) Entity pharmacy.--The term
`entity pharmacy' shall have the
meaning given such term in subparagraph
(F).
``(V) 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.
``(VI) Out-of-pocket obligation.--
The term `out-of-pocket obligation'
means any copayment, coinsurance,
deductible, or other cost sharing
amount or payment required from an
eligible patient in connection with
such patient's receipt of a specific
health care item or service, including
a covered outpatient drug.
``(v) Civil monetary penalty.--A covered
entity or contract pharmacy that violates a
requirement of this subparagraph shall be
subject to a civil monetary penalty of $2,500
for each such 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 clause 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 of this clause.
``(vi) Regulations.--The Secretary shall
promulgate regulations through notice and
comment rulemaking to implement the
requirements described in this subparagraph and
shall issue final regulations not later than 90
days after the date of enactment of this
subparagraph. The authority to promulgate
regulations under this clause is limited to
specifying the obligations of covered entities
and contract pharmacies under this subparagraph
and other details necessary to carry out the
requirements of this subparagraph efficiently,
effectively, and in conformity with this
subparagraph.
``(vii) OIG studies.--The Office of
Inspector General of the Department of Health
and Human Services shall conduct and publish
annual studies of covered entity (including
child site and entity pharmacy) and contract
pharmacy practices with respect to the
requirements under this subparagraph and
evaluate whether eligible patients are
receiving assistance to reduce their out-of-
pocket obligations in accordance with this
subparagraph.
``(H) Patient affordability requirements for
certain nonhospital covered entities.--
``(i) In general.--Notwithstanding any
other provision of law, a covered entity
described in one of subparagraphs (A) through
(K) of paragraph (4) that is required by the
Federal statute authorizing the grant, project,
or contract that is the basis for such entity's
participation in the program under this section
to provide affordability assistance to eligible
individuals receiving health care items or
services from such entity shall, with respect
to an eligible patient (as defined in clause
(iii)) dispensed or administered a covered
outpatient drug subject to an agreement under
this section at a covered entity site,
including an entity pharmacy, establish a
policy that provides a discount to reduce the
out-of-pocket obligation of an eligible patient
with respect to such drug to an amount
sufficient to ensure such patient is not denied
access to such drug based on such patient's
ability to pay for such drug.
``(ii) Applicability to contract
pharmacies.--With respect to an eligible
patient of a covered entity described in clause
(i) dispensed a covered outpatient drug subject
to an agreement under this section on behalf of
such covered entity at a contract pharmacy
pursuant to subparagraph (F), such covered
entity shall require such contract pharmacy to
provide discounts to eligible patients on
behalf of such covered entity in accordance
with the covered entity's policy described in
clause (i).
``(iii) Definitions.--In this subparagraph:
``(I) Contract pharmacy.--The term
`contract pharmacy' shall have the
meaning given such term in subparagraph
(F).
``(II) Eligible patient.--The term
`eligible patient' means a patient, as
defined in subsection (b)(3), who is
not covered under minimum essential
coverage as defined under section
5000A(f) of the Internal Revenue Code
of 1986 or has family income below 200
percent of the Federal poverty
guidelines and is covered under a group
health plan, health insurance coverage
in the individual market or group
market (as such terms are defined in
section 2791 of the Public Health
Service Act) or coverage described in
section 156.602(a), title 45, Code of
Federal Regulations or successor
regulation.
``(III) Entity pharmacy.--The term
`entity pharmacy' shall have the
meaning given such term in subparagraph
(F).
``(IV) 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.
``(V) Out-of-pocket obligation.--
The term `out-of-pocket obligation'
means any copayment, coinsurance,
deductible, or other cost sharing
amount or payment required from an
eligible patient in connection with
such patient's receipt of a specific
health care item or service, including
a covered outpatient drug.''.
SEC. 7. REQUIREMENTS FOR NONHOSPITAL COVERED ENTITIES AND SUBGRANTEES.
Section 340B(a)(5) of the Public Health Service Act (42 U.S.C.
256b(a)(5)) is further amended by adding at the end the following:
``(I) Additional requirements for nonhospital
covered entities; requirements for subgrantees.--
``(i) Additional requirements for
nonhospital covered entities.--A covered entity
described in one of subparagraphs (A) through
(K) of paragraph (4) shall, as a condition of
participation in the program under this
section--
``(I) be a nonprofit or public
entity (as determined by the
Secretary);
``(II) be eligible to purchase a
covered outpatient drug subject to an
agreement under this section only with
respect to a patient receiving a health
care service at a registered covered
entity site, and such service and such
drug are within the scope and time
period of the Federal grant, project,
or Federal grant-authorizing statute,
as applicable, that qualifies such
covered entity for participation in the
program under this section;
``(III) oversee the participation
in the program under this section of
any subgrantee with which such covered
entity enters into an enforceable
written agreement in accordance with
subclause (IV) and be directly liable
for noncompliance by any such
subgrantee with any requirement under
this section;
``(IV) have an enforceable written
agreement with any subgrantee, which
shall apply to all registered sites of
such subgrantee, and require such
subgrantee to comply with all
requirements under this section
otherwise applicable to the covered
entity and to maintain written records,
which shall be made available to the
Secretary upon request, sufficient to
demonstrate such subgrantee's receipt
of eligible Federal funds or an in-kind
contribution purchased with such funds,
as described in clause (iii), and the
grant under which such subgrantee
receives such funds or contribution;
and
``(V) maintain written records
sufficient to demonstrate such entity
authorized such subgrantee to, prior to
purchasing covered outpatient drugs
subject to an agreement under this
section, register each subgrantee site
in the covered entity identification
system established under subsection
(d)(2)(B)(iv) to participate in the
program under this section as a
subgrantee of such entity and provide
the Secretary with such registration
information as requested to demonstrate
such subgrantee's receipt of eligible
Federal funds or an in-kind
contribution purchased with such funds,
as described in clause (iii), and the
grant under which the subgrantee
receives such funds or contribution.
``(ii) Requirements for subgrantees.--
Notwithstanding any other provision in this
section, a subrecipient of a Federal grant
shall be eligible to participate in the program
under this section only if such subrecipient is
a subgrantee (as defined in clause (iii)) and
such subgrantee--
``(I) is a nonprofit or public
entity (as determined by the
Secretary);
``(II) prior to purchasing covered
outpatient drugs subject to an
agreement under this section--
``(aa) enters into an
enforceable written agreement
with the covered entity
providing eligible Federal
funds or an in-kind
contribution, pursuant to
clause (i)(IV);
``(bb) maintains written
records, which shall be made
available to the Secretary upon
request, sufficient to
demonstrate such subgrantee's
receipt of eligible Federal
funds or an in-kind
contribution purchased with
such funds, as described in
clause (iii), and the grant
under which such subgrantee
receives such funds or
contribution; and
``(cc) registers each
subgrantee site to participate
in the program under this
section in the covered entity
identification system
established under subsection
(d)(2)(B)(iv);
``(III) purchases covered
outpatient drugs subject to an
agreement under this section only with
respect to a patient receiving a health
care service at a registered subgrantee
site, and such service and such drug
are within the scope and time period of
the Federal grant, project, or grant-
authorizing statute, as applicable,
that qualifies such subgrantee for
participation in the program under this
section;
``(IV) in the case of a subgrantee
that receives an in-kind contribution
from a covered entity described in
paragraph (4)(K), demonstrates to such
covered entity and to the Secretary,
upon initial registration to
participate in the program under this
section and on an annual basis
thereafter, that the number of
individuals aged 19 to 64 years
receiving a health care service at the
registered subgrantee site during the
most recent calendar year who are
enrolled under a State plan under title
XIX of the Social Security Act (or a
waiver of such plan), as a share of all
individuals aged 19 to 64 years
receiving a health care service at the
registered subgrantee site during such
calendar year, exceeds the number of
individuals aged 19 to 64 years who
reside in the State where such
subgrantee site is located and are
enrolled under a State plan under title
XIX of such Act (or a waiver of such
plan), as a share of all individuals
aged 19 to 64 who reside in such State,
each as measured by data available from
the American Community Survey of the
Bureau of the Census for the calendar
year preceding the most recent calendar
year;
``(V) in the case of a subgrantee
that receives an in-kind contribution
from a covered entity described in
paragraph (4)(K), submits to such
covered entity and to the Secretary,
upon receipt of each in-kind
contribution described in clause
(iii)--
``(aa) a written plan in a
form specified by the Secretary
describing how such
contribution will be used to
further the goals of the
relevant Federal grant, how
such subgrantee will ensure
that purchases of covered
outpatient drugs under the
program under this section are
consistent with the goals of
such grant, and how such
subgrantee will ensure
compliance with the
requirements under subparagraph
(A) and (B); and
``(bb) a written plan in a
form specified by the Secretary
and using criteria established
by the Secretary to determine
the date upon which its
eligibility to participate in
the program under this section,
as a result of such
contribution, shall terminate
(absent such subgrantee's
receipt of additional funds or
contributions described in
clause (iii));
``(VI) subject to subclause (VII),
immediately notifies the Secretary,
disenrolls from the program under this
section, and discontinues making
purchases under such program and
representing to third parties that it
may purchase under such program as of
the date described in subclause (V)(bb)
or if, at any time during its
participation in the program under this
section, it no longer meets one or more
applicable requirements under this
section; and
``(VII) not later than 30 days
following the date on which the covered
entity with which such subgrantee has
an agreement pursuant to clause (i)
ceases participation in the program
under this section, such subgrantee
either--
``(aa) disenrolls from the
program under this section and
discontinues making purchases
under such program and
representing to third parties
that such subgrantee may
purchase under such program; or
``(bb) enters into an
enforceable written agreement
with a different covered entity
described in one of
subparagraphs (A) through (K)
of paragraph (4) that is
participating in the program
under this section, and
satisfies all applicable
requirements under this section
with respect to such different
covered entity.
``(iii) Subgrantee defined.--
``(I) In general.--In this
subparagraph, the term `subgrantee'
means a subrecipient of a Federal grant
that--
``(aa) receives eligible
Federal funds from a covered
entity described in one of
subparagraphs (A) through (K)
of paragraph (4) in the form of
nonnominal and ongoing payments
by such covered entity directly
to such subrecipient to
directly support the provision
of health care services by such
subrecipient to individuals
within the scope and time
period of the Federal grant,
project, or Federal grant-
authorizing statute, as
applicable, that qualifies such
covered entity for
participation in the program
under this section; or
``(bb) receives in-kind
contributions from a covered
entity described in paragraph
(4)(K) and such contributions--
``(AA) are ongoing
and are in the form of
real property,
equipment, supplies, or
services;
``(BB) subject to
subclause (II), have a
value exceeding $25,000
per year, which 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 and
determined by the
subrecipient and
approved by the covered
entity providing such
contribution in a
manner specified by the
Secretary;
``(CC) are
specifically
identifiable and
provided by such
covered entity directly
to such subrecipient;
and
``(DD) directly
support the provision
of health care items
and services by such
subrecipient solely to
individuals within the
scope and time period
of the Federal grant
that qualifies such
covered entity for
participation in the
program under this
section.
``(II) Exclusion.--The requirement
specified in subclause (I)(bb)(BB)
shall not apply with respect to a
subrecipient of a Federal grant that
receives in-kind contributions from a
covered entity described in paragraph
(4)(K) if--
``(aa) as of January 1,
2024, such subrecipient is
participating in the program
under this section as such a
subrecipient and is in
compliance with all
requirements under this section
otherwise applicable to such
subrecipient; and
``(bb) with respect to any
in-kind contribution such
subrecipient receives after
January 1, 2024, such
subrecipient has continuously
participated in the program
under this section as such a
subrecipient in compliance with
all requirements under this
section for the period
beginning on January 1, 2024
and continuing through the date
on which program participation
ends as determined in the plan
submitted to the Secretary
pursuant to clause (ii)(V)(bb)
or any such earlier date on
which program participation
ends.
``(iv) Rule of construction.--For purposes
of this section, any subgrantee that is not
itself a covered entity described in one of
subparagraphs (A) through (K) of paragraph (4)
shall be subject to the obligations under this
section applicable to the covered entity with
which such subgrantee has an enforceable
written agreement pursuant to clause (i).
Further, for purposes of this section, each
registered site of such subgrantee shall be
subject to the requirements set forth in
subparagraph (F) as if such site were the
covered entity with which such subgrantee has
an enforceable written agreement pursuant to
clause (i).''.
SEC. 8. CLAIMS MODIFIERS; COVERED ENTITY DATA SUBMISSION.
Section 340B(a)(5) of the Public Health Service Act (42 U.S.C.
256b(a)(5)) is further amended by adding at the end the following:
``(J) Claims modifier and covered entity data
submission.--
``(i) Claims modifier.--All claims
submitted to a payor, including, without
limitation, Medicare and Medicaid, by a covered
entity or a contract pharmacy under a contract
with a covered entity in compliance with
subparagraph (F) for reimbursement of a unit of
a covered outpatient drug purchased under the
program under this section shall include the
relevant 340B modifier established by the
Secretary under Medicare Part B (that is `JG',
`TB', or any successor modifier) or the
Submission Clarification Code of `20' or any
successor modifier developed by the National
Council for Prescription Drug Programs (NCPDP)
to identify claims for covered outpatient drugs
purchased under such program. All claims
submitted by a covered entity or a contract
pharmacy described in this clause to a payor,
including, without limitation, Medicare and
Medicaid, for reimbursement of a unit of a
covered outpatient drug not purchased under
such program shall also include a relevant non-
340B modifier, which shall be established by
the Secretary, or a non-340B modifier developed
by the NCPCP to identify such claims.
``(ii) Covered entity data submission.--A
covered entity described in paragraph (4) shall
(and shall cause any entity acting on its
behalf to) furnish to the clearinghouse
described in subsection (d)(2)(C) the data
described in clause (iii), in a machine-
readable format, with respect to each covered
outpatient drug dispensed, furnished, or
administered by the covered entity (including
such drugs dispensed by a contract pharmacy
under contract with such covered entity in
compliance with subparagraph (F)), for which
such covered entity seeks or has received
discounted pricing under this section. Such
covered entity shall provide, or cause to be
provided, such data to the clearinghouse within
45 days after the date on which the covered
outpatient drug was dispensed, furnished, or
administered (or such shorter time period as
may be specified by the Secretary through
notice-and-comment rulemaking) in an electronic
format specified by the Secretary. The covered
entity shall require (and shall cause any
entity acting on its behalf to require) that
data on pharmacy-dispensed drugs described in
this subparagraph be submitted to the
clearinghouse directly by the pharmacy
dispensing such drug.
``(iii) Claim level data elements.--The
data described in this clause shall include the
following, as applicable:
``(I) Self-administered drugs.--
With respect to a self-administered
drug dispensed at a pharmacy, by a mail
order service, or by another
dispenser--
``(aa) prescription number;
``(bb) prescribed date;
``(cc) prescription fill
date;
``(dd) national drug code
(NDC) of the drug;
``(ee) quantity dispensed;
``(ff) bank identification
number, processor control
number, and group number of the
plan receiving the claim (as
applicable);
``(gg) national provider
identifier (NPI) of the
prescriber;
``(hh) NPI of the
dispensing pharmacy;
``(ii) name and 340B
identifier of the covered
entity dispensing the drug, or
on whose behalf the drug is
dispensed;
``(jj) 340B/non-340B claim
modifier;
``(kk) wholesaler invoice
number; and
``(ll) an indicator, which
shall be specified by the
clearinghouse or the Secretary,
denoting that the drug was or
was not dispensed as a result
of a qualifying referral
described in subsection (b)(3).
``(II) Provider-administered
drugs.--With respect to a drug
furnished or administered by a
physician or other provider of services
or a supplier--
``(aa) drug billing and
payment code/HCPCS code;
``(bb) NDC of the drug;
``(cc) claim number;
``(dd) Medicare provider
number of prescriber (as
applicable);
``(ee) NPI of the
prescriber;
``(ff) name and 340B
identifier of the covered
entity furnishing or
administering the drug;
``(gg) date drug furnished
or administered;
``(hh) claim adjudication
date;
``(ii) quantity furnished
or administered;
``(jj) 340B/non-340B claim
modifier; and
``(kk) an indicator, which
shall be specified by the
clearinghouse or the Secretary,
denoting that the drug was or
was not furnished or
administered as a result of a
qualifying referral described
in subsection (b)(3).
``(iv) Information privacy and security.--A
covered entity described in paragraph (4) shall
provide the data specified in clause (iii) to
the clearinghouse in a secure manner,
consistent with such entity's obligations under
the Security Standards for the Protection of
Electronic Protected Health Information
described in part 164 of subpart C of title 45,
Code of Federal Regulations (or any successor
regulations). A covered entity shall not be
required to obtain an individual authorization
under part 164 of subpart E of title 45, Code
of Federal Regulations (or any successor
regulations) for its reporting of such data to
the clearinghouse.
``(v) Standardization of reported data
elements; prohibition on modifications.--A
covered entity described in paragraph (4) shall
take reasonable steps to ensure the data
specified in clause (iii) submitted to the
clearinghouse fully complies with the data
submission standards (including field
descriptors and definitions) specified by the
clearinghouse or the Secretary following
consultation with relevant stakeholders,
including manufacturers of covered outpatient
drugs. A covered entity described in paragraph
(4) is prohibited, and shall prohibit any
entity acting on its behalf (including any
affiliate of such entity), from taking or
refraining from taking any action that would
cause such information to no longer comply with
the standards described in this clause. In
specifying the data submission standards
described in this clause, the clearinghouse and
the Secretary, as applicable, shall seek to
minimize administrative burden on covered
entities while ensuring such data satisfies the
intent of this subparagraph.
``(vi) Covered entities that fail to
report.--A covered entity that fails to furnish
the information as required under this
subparagraph shall be subject to a civil
monetary penalty in the amount of $2,500 for
each day of such 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 clause 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 of this clause.''.
SEC. 9. COVERED ENTITY REPORTING ON SCOPE OF GRANT, CONTRACT, AND
PROJECT.
Section 340B(a)(5) of the Public Health Service Act (42 U.S.C.
256b(a)(5)) is further amended by adding at the end the following:
``(K) Reporting on scope of grant, contract, and
project.--A covered entity described in one of
subparagraphs (A) through (K) of paragraph (4) shall
submit information specified by the Secretary to the
identification system described in subsection
(d)(2)(B)(iv) at least annually, in a form and manner
specified by the Secretary, describing the scope of its
Federal grant or project, or the Federal grant-
authorizing statute, as applicable, that is the basis
for such entity's eligibility for the program under
this section. Such information shall include copies of
agreements between such entity and any subgrantee, as
described in subparagraph (I). Access to information
described in this subparagraph shall be made available
to a manufacturer of a covered outpatient drug, upon
request, in a manner specified by the Secretary.''.
SEC. 10. ENSURING COVERED ENTITY TRANSPARENCY.
(a) In General.--Section 340B(a)(5) of the Public Health Service
Act (42 U.S.C. 256b(a)(5)) is further amended by adding at the end the
following:
``(L) Reporting.--
``(i) In general.--During the first year
beginning on or after the date that is 14
months after the date of enactment of this
subparagraph and during each subsequent year,
each covered entity described in subparagraph
(L) of paragraph (4) (and any other covered
entity specified by the Secretary) shall report
to the Secretary (at a time and in a form and
manner specified by the Secretary) the
following information with respect to the
preceding year:
``(I) With respect to such covered
entity and each child site, as
applicable, of such entity--
``(aa) the total number of
individuals who were dispensed
or administered covered
outpatient drugs during such
preceding year that were
subject to an agreement under
this section; and
``(bb) the number of such
individuals described in a
category specified in clause
(iii), broken down by each such
category.
``(II) With respect to such covered
entity and each child site, as
applicable, of such entity--
``(aa) the percentage of
the total number of individuals
furnished items and services
during such preceding year who
were dispensed or administered
covered outpatient drugs during
such preceding year that were
subject to an agreement under
this section; and
``(bb) for each category
specified in clause (iii), the
percentage of the total number
of individuals described in
such category furnished items
and services during such
preceding year who were
dispensed or administered
covered outpatient drugs during
such preceding year that were
subject to an agreement under
this section.
``(III) With respect to such
covered entity and each child site, as
applicable, of such entity, the total
costs incurred during the year at each
such site and the cost incurred at each
such site for charity care (as defined
in line 23 of worksheet S-10 to the
Medicare cost report, or in any
successor form).
``(IV) With respect to such covered
entity and each child site, as
applicable, of such entity, the costs
incurred during the year of furnishing
items and services at each such entity
or site to patients of such entity who
were entitled to benefits under part A
of title XVIII of the Social Security
Act or enrolled under part B of such
title, enrolled in a State plan under
title XIX of such Act (or a waiver of
such plan), or who were uninsured for
services, minus the sum of--
``(aa) payments under title
XVIII of such Act for such
items and services (including
any cost sharing for such items
and services);
``(bb) payments under title
XIX of such Act for such items
and services (including any
cost sharing for such items and
services); and
``(cc) payments by
uninsured patients for such
items and services.
``(V) With respect to such covered
entity and each child site, as
applicable, of such entity, the margin
(as defined in clause (iv)) generated
on covered outpatient drugs subject to
an agreement under this section
dispensed or furnished by such entity
or site (and any entity pharmacy or
contract pharmacy dispensing such drugs
on behalf of such entity in accordance
with subparagraph (F)), with each
component of the margin calculation
described in item (aa) through (cc) of
such clause listed as a separate line
item.
``(VI) To the extent the Secretary
requires covered entities described in
one of subparagraphs (A) through (K) of
paragraph (4) to report information
pursuant to this subparagraph, with
respect to each such covered entity,
use of margin (as defined in clause
(iv)) generated on covered outpatient
drugs subject to an agreement under
this section in the following
categories of expenditures, if
applicable, which the Secretary shall
define in interim final regulations in
a manner consistent with reporting
under the Health Resources and Services
Administration Uniform Data System
(UDS)--
``(aa) medical care;
``(bb) dental care;
``(cc) mental health;
``(dd) pharmaceuticals,
which shall include margin used
to provide free and discounted
covered outpatient drugs
subject to an agreement under
this section dispensed or
furnished to eligible patients
(as defined in subparagraph
(H)), notwithstanding any UDS
reporting requirement that may
limit or interfere with the
inclusion of margin used for
such purpose;
``(ee) sliding fee
discounts;
``(ff) case management;
``(gg) transportation;
``(hh) patient and
community education;
``(ii) community health
workers;
``(jj) outreach;
``(kk) eligibility
assistance; and
``(ll) nutritional
assessment and referral.
``(ii) Publication.--The Secretary shall
publish data reported under clause (i) with
respect to a year annually on the public
website of the Department of Health and Human
Services in an electronic and searchable
format, which may include the 340B Office of
Pharmacy Affairs Information System (or a
successor to such system), in a manner that
shows each category of data reported in the
aggregate and identified by the specific
covered entity submitting such data. The
Secretary shall include in such publication the
disproportionate patient percentage (as defined
in section 1886(d)(5)(F)(vi) of the Social
Security Act) of each such covered entity (if
applicable) for each cost reporting period
occurring during such year.
``(iii) Categories specified.--For purposes
of clause (i), the categories specified in this
clause are the following:
``(I) Individuals covered under a
group health plan or group or
individual health insurance coverage
(as such terms are defined in section
2791).
``(II) Individuals entitled to
benefits under part A or enrolled under
part B of title XVIII of the Social
Security Act.
``(III) Individuals enrolled under
a State plan under title XIX of such
Act (or a waiver of such plan).
``(IV) Individuals enrolled under a
State child health plan under title XXI
of such Act (or a waiver of such plan).
``(V) Individuals not described in
any preceding subclause and not covered
under any Federal health care program
(as defined in section 1128B of such
Act but including the program
established under chapter 89 of title
5, United States Code).
``(iv) Definitions.--In this subparagraph:
``(I) Child site.--The term `child
site' shall have the meaning given such
term in subparagraph (E).
``(II) Entity pharmacy.--The term
`entity pharmacy' shall have the
meaning given such term in subparagraph
(F).
``(III) Margin.--The term `margin'
means, with respect to covered
outpatient drugs purchased by a covered
entity under an agreement under this
section, the following amount for such
drugs dispensed, furnished, or
administered to an individual by such
entity or a child site of such entity
(and any entity pharmacy or contract
pharmacy dispensing such drugs on
behalf of such entity in accordance
with subparagraph (F))--
``(aa) aggregate payments
received by the covered entity
for such drugs from individuals
(including cost-sharing
amounts) and third parties,
including government and
private payors; minus
``(bb) aggregate costs to
acquire such drugs at either
the ceiling price described in
paragraph (1) or any voluntary
subceiling price at which the
covered entity purchased such
drug or drugs, as applicable;
minus
``(cc) aggregate costs
incurred by the covered entity
that are necessary for such
entity to participate in the
program under this section and
to comply with such program's
requirements, including
program-related compliance,
legal, educational, and
administrative costs (such
costs shall be determined in
accordance with Generally
Accepted Accounting
Principles), and compensation
paid to third-party
administrators or contract
pharmacies to carry out
program-related functions.''.
(b) Rulemaking.--Not later than 180 days after the date of
enactment of this Act, the Secretary of Health and Human Services shall
issue an interim final rule to carry out section 340B(a)(5)(L) of the
Public Health Service Act, as added by subsection (a).
SEC. 11. REVISIONS TO EXISTING 340B HOSPITAL ELIGIBILITY REQUIREMENTS.
Section 340B(a)(4) of the Public Health Service Act (42 U.S.C.
256b(a)(4)) is amended--
(1) in subparagraph (L)(i)--
(A) by inserting ``and that was registered with the
340B program in the covered entity identification
system established under subsection (d)(2)(B)(iv) as
such a hospital on or before December 1, 2023'' after
``formally granted governmental powers by a unit of
state or local government''; and
(B) by striking ``not entitled to benefits under
title XVIII of the Social Security Act'' and all that
follows up to the semicolon at the end and inserting
``uninsured, as such terms are defined in subsection
(a)(11)'';
(2) by amending subparagraph (N) to read as follows:
``(N) An entity that is a critical access hospital
(as determined under section 1820(c)(2) of the Social
Security Act (42 U.S.C. 1395i-4(c)(2))) or a rural
emergency hospital (as determined under the
requirements in section 1861(kkk) of the Social
Security Act (42 U.S.C. 1395x(kkk) and in implementing
regulations set forth in parts 419, 424, 485, 488, and
489 of title 42 of the Code of Federal Regulations in
effect as of January 1, 2023)), and that meets the
requirements of subparagraph (L)(i).''; and
(3) in subparagraph (O) by inserting ``that demonstrates to
the Secretary that at least 60 percent of annual inpatient
discharges for cost reporting periods beginning after December
1, 2023 are for inpatients who reside in a county that is not
part of a Metropolitan Statistical Area, as defined by the
Director of the Office of Management and Budget'' before ``, or
a sole community hospital''.
SEC. 12. 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.''.
SEC. 13. 340B PROGRAM.
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:
``(15) 340B program.--The intent of this section is to
provide for manufacturer price reductions that enable covered
entities, whose mission is to serve underserved or otherwise
vulnerable communities, to increase access to affordable drugs
and health services for these communities.''.
SEC. 14. AUDITS OF PRIVATE NONHOSPITAL CONTRACTS WITH STATE AND LOCAL
GOVERNMENTS.
Section 340B(d)(2)(B) of the Public Health Service Act (42 U.S.C.
256b(d)(2)(B)) is amended by adding at the end the following:
``(vi) The conducting of annual audits by
the Secretary of contracts between a covered
entity described in subparagraph (L) or
subparagraph (M) of subsection (a)(4), or
subparagraph (O) of such subsection with
respect to a rural referral center, that is a
private nonprofit hospital subject to the
requirements in subsections (a)(4)(L)(i) and
(a)(11) and a State or local government for at
least 10 percent of all such entities
participating in the program under this
section. The Secretary shall develop and
publicly disclose standards used to determine
whether such contracts satisfy the applicable
requirements described in subsections
(a)(4)(L)(i) and (a)(11) and publicly disclose
the findings from such audits. The Secretary
shall remove from the program under this
section any such entity that does not have a
contract in effect with a State or local
government that satisfies the applicable
requirements set forth in subsections
(a)(4)(L)(i) and (a)(11), and such removal
shall require such covered entity to promptly
conduct an audit supervised by the Secretary to
identify discounts on covered outpatient drugs
purchased at a discount under this section to
which such covered entity was not eligible and
provide the written results of such audit to
the Secretary and the manufacturer of the
affected covered outpatient drug. Such covered
entity shall be liable to the manufacturer of
such covered outpatient drug 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. Where a covered
entity described in this clause knowingly and
intentionally violates a requirement in
subsection (a)(4)(L)(i) or (a)(11), the covered
entity shall be required to pay a civil
monetary penalty equal to $1,000 for each claim
for a covered outpatient drug that is subject
to the 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 clause 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 clause.''.
SEC. 15. ENSURING COVERED ENTITY COMPLIANCE WITH TRANSPARENCY
REQUIREMENTS.
Section 340B(d)(2)(B) of the Public Health Service Act (42 U.S.C.
256b(d)(2)(B)) is further amended by adding at the end the following:
``(vii) The imposition of civil monetary
penalties in amounts determined appropriate by
the Secretary in the case that the Secretary
determines that a covered entity is not in
compliance with subsection (a)(5)(L).''.
SEC. 16. 340B CLAIMS DATA CLEARINGHOUSE.
(a) 340B Claims Data Clearinghouse.--Section 340B(d)(2) of the
Public Health Service Act (42 U.S.C. 256b(d)(2)) is amended by adding
at the end the following:
``(C) 340B claims data clearinghouse.--
``(i) In general.--The improvements
described in subparagraph (A) shall include the
establishment of a claims data clearinghouse
described in this subparagraph. Not later than
one year after the date of enactment of this
subparagraph, the Secretary shall enter into a
contract with a third-party entity that meets
the criteria specified in clause (ii) (such
entity is hereinafter referred to as the
`clearinghouse') for purposes of--
``(I) identifying claims for
covered outpatient drugs purchased
under the program under this section
for which reimbursement was made under
a State plan (or waiver of such plan)
and ensuring such claims are or were
not included in any State rebate
request under section 1927 of the
Social Security Act in violation of
sections 1903(m)(2)(A)(xiii) or
1927(j)(1) of such Act or section
340B(a)(5)(A) of this Act;
``(II) identifying claims for
covered outpatient drugs purchased
under the program under this section
that are selected drugs (as defined in
section 1192(c) of the Social Security
Act) and ensuring that, for each such
claim, the nonduplication requirements
of section 1193(d) of such Act have
been met;
``(III) identifying claims for
covered outpatient drugs purchased
under the program under this section
that are either Part B rebatable drugs
or Part D rebatable drugs and providing
all relevant information regarding such
claims to the Secretary to ensure that
claims that are subject to a discount
under the program under this section
are excluded from inflation rebate
calculations pursuant to section
1847A(i)(3)(B)(ii)(I) of the Social
Security Act (with respect to Part B
rebatable drugs) and section 1860D-
14B(b)(1)(B) of such Act (with respect
to Part D rebatable drugs);
``(IV) identifying duplicate claims
for a rebate or discount submitted by
two or more covered entities (or an
entity or entities acting on their
behalf) with respect to the same unit
of a covered outpatient drug purchased
under the program under this section
and implementing a process to ensure a
manufacturer of such a drug does not
pay more than one rebate or discount
under this section with respect to such
unit; and
``(V) providing to manufacturers of
covered outpatient drugs, in a form and
manner specified by the Secretary in
consultation with manufacturers, access
to the data described in subsection
(a)(5)(J) with respect to each dispense
or administration of a manufacturer's
covered outpatient drugs for which a
covered entity receives a discount
under this section.
``(ii) Criteria for clearinghouse.--The
criteria described in this clause include the
following:
``(I) The clearinghouse shall not
be owned by, overseen by, or affiliated
with a covered entity described in
subsection (a)(4) and shall not
currently be a party to a contractual
arrangement with the Health Resources
and Services Administration.
``(II) The clearinghouse shall have
demonstrated experience adjudicating
claims for health care items and
services in real time for self- and
provider-administered drugs and working
with protected health information and
confidential pricing information.
``(III) The clearinghouse shall
agree to confidentiality obligations
that prohibit the clearinghouse from
using information it receives under
this subparagraph for any purpose other
than a purpose set forth in this
subparagraph, or disclosing such
information to any individual or entity
other than the Secretary, provided the
Secretary shall not use such
information for purposes of making
reimbursement or coverage
determinations, or a manufacturer in
accordance with this subparagraph (and
only with respect to such
manufacturer's covered outpatient
drugs).
``(IV) The clearinghouse shall
maintain the security of the data
reported pursuant to this subsection
(a)(5)(J) in a manner consistent with
the HIPAA Security Standards set forth
in sections 164.304-164.312 and 164.316
of title 45, Code of Federal
Regulations (or any successor
regulations), as if the clearinghouse
were subject to those standards as a
HIPAA covered entity.
``(iii) Duties of clearinghouse.--The
clearinghouse shall--
``(I) review claims level data for
covered outpatient drugs described in
subsection (a)(5)(J) submitted by
covered entities in accordance with
such subsection;
``(II) review claims level data,
including rebate file data, submitted
to the clearinghouse by State agencies
and Medicaid managed care organizations
for covered outpatient drugs subject to
an agreement under this section
dispensed or administered to
individuals enrolled under a State plan
(or a waiver of such plan) and claims
level data submitted by Medicare
Administrative Contractors, Medicare
Advantage organizations (including
Medicare Advantage Organizations
offering an MA-PD plan), and PDP
sponsors for covered outpatient drugs
subject to an agreement under this
section dispensed or administered to
individuals enrolled under Part B, Part
C, or Part D of title XVIII of the
Social Security Act;
``(III) within 5 days of
identification, provide written notice
of a duplicate discount or rebate to
the State agency, the Secretary, the
covered entity, and the affected drug
manufacturer itemizing any violation
described in clause (i)(I);
``(IV) within 5 days of
identification, provide written notice
to the Secretary, the covered entity
(or entities, as applicable), and the
affected drug manufacturer itemizing
any violation described in subclauses
(II) or (IV) of clause (i);
``(V) have access to the internet
website described in paragraph
(1)(B)(iii) containing applicable
ceiling prices for covered outpatient
drugs for purposes of identifying
violations described in clause (i)(II);
``(VI) subject to clauses (i)(V)
and (ii)(III), make the data described
in subclauses (I) and (II) available to
the manufacturer in electronic format
not later than 10 days after such data
is provided to the clearinghouse;
``(VII) upon request by the Centers
for Medicare & Medicaid Services, make
the data described in subclauses (I)
and (II) available for purposes of
excluding 340B purchased units of Part
B rebatable drugs or Part D rebatable
drugs from Part B or Part D inflation
rebates pursuant to section
1847A(i)(3)(B)(ii)(I) or section 1860D-
14B(b)(1)(B) of the Social Security
Act; and
``(VIII) identify claims for
covered outpatient drugs subject to an
agreement under this section that are
submitted by pharmacies removed from
the 340B program pursuant to subsection
(a)(5)(F)(ix)(III) and notify the
Secretary of the submission of any such
claims by any such pharmacies.
``(iv) Resolution of violations.--
``(I) Medicaid duplicate
discounts.--The Secretary, in
consultation with the State, as
appropriate, shall take prompt action
to fairly and adequately resolve
violations described in clause (i)(I)
reported by the clearinghouse in
accordance with clause (iii)(III).
``(II) Nonduplication with maximum
fair price.--The Secretary shall take
prompt action to fairly and adequately
resolve violations described in clause
(i)(II) reported by the clearinghouse
in accordance with clause (iii)(IV).
``(III) Duplicate covered entity
discounts.--The Secretary shall develop
and implement a process to resolve
duplicate claims for a rebate or
discount under this section described
in clause (i)(IV) such that the
manufacturer pays only one rebate or
discount under this section with
respect to the same unit of a covered
outpatient drug purchased under the
program under this section. Covered
entities (and any entities acting on
their behalf) shall be subject to
determinations made by the Secretary to
resolve such duplicate claims (and the
Secretary may contract this function to
the clearinghouse to make such
determinations). In making such
determinations, the Secretary shall
investigate duplicate claims for
rebates or discounts and require
covered entities (and any entities
acting on their behalf) to take action
to avoid or pay refunds to reverse a
duplicate claim.
``(IV) Refunds to manufacturers.--
The Secretary shall be responsible for
promptly refunding affected
manufacturers of covered outpatient
drugs for violations described in
subclauses (I) and (II) of clause (i)
and seeking subsequent repayment from
covered entities or States (with
respect to violations described in
clause (i)(I)), or providers or
dispensers (with respect to violations
described in clause (i)(II)). Subject
to the determination by the Secretary
or clearinghouse under subclause (III),
the covered entity (or entities) shall
be liable to the manufacturer of the
covered outpatient drug that is the
subject of the violation described in
clause (i)(IV) in an amount equal to
the reduction in the price of the drug
(as described in subsection (a)(1)) and
shall repay such amount to such
manufacturer within 60 days of
receiving a notice described in clause
(iii)(IV).''.
(b) Provision of Drug Claims Data by Medicaid; Removal of Duplicate
Claims.--
(1) Medicaid.--Section 1902(a) of the Social Security Act
(42 U.S.C. 1396a(a)) is amended--
(A) in paragraph (86), by striking ``and'' at the
end;
(B) in paragraph (87)(D), by striking the period
and inserting ``; and''; and
(C) by inserting after paragraph (87) the following
new paragraph:
``(88) provide for a mechanism for the State agency to
furnish, and for the State agency to require each Medicaid
managed care organization (as defined in section 1903(m)(1)(A))
to furnish, to the clearinghouse, in a machine-readable format,
within 5 days following the date of claim payment, claims level
data, including rebate file data, for covered outpatient drugs
dispensed, furnished, or administered to individuals enrolled
under a State plan (or a waiver of such plan) that includes,
with respect to each dispense, furnishing, or administration of
such a drug, the data elements described in subsection
340B(a)(5)(J)(iii) of the Public Health Service Act, and for
the State agency to remove from any rebate request described in
section 340B(d)(2)(C)(i)(I) of such Act any claim that is the
subject of a notice submitted by such entity under section
340B(d)(2)(C)(iii)(III) of such Act.''.
(c) Provision of Drug Claims Data by Medicare.--
(1) Medicare part b.--Section 1842 of the Social Security
Act (42 U.S.C. 1395u) is amended by adding at the end the
following:
``(v) Provision of Drug Claims Data; Mechanism To Refund Duplicated
Amounts.--Each Medicare administrative contractor shall furnish to the
clearinghouse, in a machine-readable format, claims level data for
covered outpatient drugs furnished or administered to individuals
enrolled under this part that includes, with respect to each furnishing
or administration of such a drug, the data elements described in
section 340B(a)(5)(J)(iii) of the Public Health Service Act. Each
Medicare administrative contractor shall furnish such data to the
clearinghouse within 5 days following the date the claim for such drug
is paid by the Medicare administrative contractor.''.
(2) Medicare advantage organizations.--Section 1857(e) of
the Social Security Act (42 U.S.C. 1395w-27(e)) is amended by
adding at the end the following:
``(6) Provision of drug claims data; mechanism to refund
duplicated amounts.--A contract under this part shall require a
Medicare+Choice organization to furnish to the clearinghouse,
in a machine-readable format, claims level data for covered
outpatient drugs furnished or administered to individuals
enrolled with the organization under this part that includes,
with respect to each furnishing or administration of such a
drug, the data elements described in section 340B(a)(5)(J)(iii)
of the Public Health Service Act. Such contract shall require
the Medicare+Choice organization to furnish such data to the
clearinghouse within 5 days following the date the claim for
such drug is paid by the Medicare+Choice organization.''.
(3) Prescription drug plans.--Section 1860D-12(b) of the
Social Security Act (42 U.S.C. 1395w-112(b)) is amended by
adding at the end the following:
``(9) Provision of drug claims data; mechanism to refund
duplicated amounts.--A contract under this part shall require a
PDP sponsor to furnish to the clearinghouse in a machine-
readable format, claims level data for covered outpatient drugs
dispensed to individuals enrolled in a prescription drug plan
offered by such sponsor under this part that includes, with
respect to each dispense of such drug, the data elements
described in section 340B(a)(5)(J)(iii) of the Public Health
Service Act. Such contract shall require a PDP sponsor to
furnish such data to the clearinghouse within 5 days following
the date the claim for such drug is paid by the PDP sponsor.''.
(4) MA-pds.--Section 1857(f)(3) of the Social Security Act
(42 U.S.C. 1395w-27(f)(3)) is amended by adding at the end the
following:
``(E) Provision of drug claims data; mechanism to
refund duplicated amounts.--Section 1860D-12(b)(9).''.
SEC. 17. LIMITATION ON ADMINISTRATOR SERVICE FEES AND CONTRACT PHARMACY
FEES.
Section 340B of the Public Health Service Act (42 U.S.C. 256b) is
amended by adding at the end the following:
``(f) Requirements for TPA and Contract Pharmacy Remuneration.--
``(1) Third-party administrator fees.--A third-party
administrator furnishing 340B program-related services on
behalf of a covered entity described in subsection (a)(4),
including reviewing or processing claims or other information
to identify covered outpatient drugs dispensed to individuals
who are patients of the covered entity (as defined in
subsection (b)(3)) may receive remuneration from such covered
entity for the performance of such services only if--
``(A) such remuneration is a flat dollar amount not
directly or indirectly based on any price of, or
discount or other remuneration provided with respect
to, a covered outpatient drug, paid for each unit of
service furnished to the covered entity, regardless of
whether a prescription was dispensed to an individual
who is a patient of the covered entity;
``(B) the amount of such remuneration is consistent
with fair market value in an arm's-length transaction
for the bona fide, itemized 340B-related services
actually performed on behalf of the covered entity; and
``(C) such remuneration complies with applicable
State and Federal law, including section 1128B(b) of
the Social Security Act.
``(2) Contract pharmacy fees.--A contract pharmacy that has
entered into a written agreement with a covered entity pursuant
to and satisfies the applicable requirements in subsection
(a)(5)(F) may receive remuneration from such covered entity for
the performance of services associated with dispensing covered
outpatient drugs subject to an agreement under this section to
individuals who are patients of the covered entity (as defined
in subsection (b)(3)) only if--
``(A) such remuneration is a flat dollar amount not
directly or indirectly based on any price of, or
discount or other remuneration provided with respect
to, a covered outpatient drug, paid for each dispense
of such a drug to a patient of the covered entity;
``(B) the amount of remuneration for each dispense
does not exceed 125 percent of the average per-
prescription dispensing fee paid to such pharmacy by
all third-party payors, based on data from the most
recent full calendar year for which such data is
available;
``(C) the amount of such remuneration is consistent
with fair market value in an arm's-length transaction
for the bona fide, itemized 340B-related services
actually performed on behalf of the covered entity; and
``(D) such remuneration complies with applicable
State and Federal law, including section 1128B(b) of
the Social Security Act.
For purposes of subparagraph (B), if a covered entity has
entered into an agreement for contract pharmacy services
pursuant to subsection (a)(5)(F) that permits the contract
pharmacy service provider to dispense covered outpatient drugs
on behalf of the covered entity at more than one pharmacy
location, the average dispensing fee shall be calculated across
all pharmacy locations subject to such agreement.
``(3) Auditable records.--A covered entity shall retain
copies of written agreements with third-party administrators or
contract pharmacies described in this subsection for a period
of time specified by the Secretary and shall make copies of
such agreements available to the Secretary or their designee
upon request.
``(4) Civil monetary penalty.--A third-party administrator
or contract pharmacy described in this subsection that fails to
comply with the applicable requirements specified in this
subsection shall be required to pay a civil monetary penalty
equal to 10 times the amount such third-party administrator or
contract pharmacy received for the performance of relevant
services described in this subsection. 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.''.
SEC. 18. CLARIFICATION.
Section 340B of the Public Health Service Act (42 U.S.C. 256b) is
further amended by adding at the end the following:
``(g) Clarification.--The provisions of this section supersede any
provision or requirement of State or local law insofar as that State or
local law may establish, implement, or continue in effect a standard or
requirement that differs from or relates in any way to the provisions
of this section or, except for any State regulations issued to carry
out subsection (a)(5)(A)(iii), relates in any way to the drug discount
program under this section or covered outpatient drugs subject to an
agreement under this section, including the distribution of such drugs.
Except for any State regulations issued to carry out subsection
(a)(5)(A)(iii), no provision or requirement of State or local law shall
grant additional rights or impose additional obligations related to the
340B program.''.
SEC. 19. ENSURING THE EQUITABLE TREATMENT OF 340B COVERED ENTITIES AND
PHARMACIES PARTICIPATING IN THE 340B DRUG DISCOUNT
PROGRAM.
(a) Group Health Plan and Health Insurance Issuer Requirements.--
Subpart II of part A of title XXVII of the Public Health Service Act
(42 U.S.C. 300gg-11 et seq.) is amended by adding at the end the
following:
``SEC. 2730. REQUIREMENTS RELATING TO THE 340B DRUG DISCOUNT PROGRAM.
``(a) In General.--A group health plan, a health insurance issuer
offering group or individual health insurance coverage, or a pharmacy
benefit manager acting on behalf of such plan or issuer, may not
discriminate against a covered entity (as defined in subsection
(e)(1)), a contract pharmacy (as defined in subsection (e)(2)), or a
participant, beneficiary, or enrollee of such plan or coverage by
imposing requirements, exclusions, reimbursement terms, or other
conditions on such entity or pharmacy that differ from those applied to
entities or pharmacies that are not covered entities or contract
pharmacies on the basis that the entity or pharmacy is a covered entity
or contract pharmacy or that the entity or pharmacy dispenses 340B
drugs, by taking any action prohibited under subsection (b).
``(b) Specified Prohibited Actions.--A group health plan, a health
insurance issuer offering group or individual health insurance
coverage, or a pharmacy benefit manager acting on behalf of such plan
or issuer, may not discriminate against a covered entity, a contract
pharmacy, or a participant, beneficiary, or enrollee of such plan or
coverage by doing any of the following:
``(1) Reimbursing a covered entity or contract pharmacy for
a quantity of a 340B drug (as defined in subsection (e)) in an
amount less than such plan, issuer, or pharmacy benefit manager
(as applicable) would pay to any other similarly situated (as
specified by the Secretary) entity or pharmacy that is not a
covered entity or a contract pharmacy for such quantity of such
drug on the basis that the entity or pharmacy is a covered
entity or contract pharmacy or that the entity or pharmacy
dispenses 340B drugs.
``(2) Imposing any terms or conditions on covered entities
or contract pharmacies with respect to any of the following
that differ from such terms or conditions applied to other
similarly situated entities or pharmacies that are not covered
entities or contract pharmacies on the basis that the entity or
pharmacy is a covered entity or contract pharmacy or that the
entity or pharmacy dispenses 340B drugs:
``(A) Fees, chargebacks, clawbacks, adjustments, or
other assessments.
``(B) Professional dispensing fees.
``(C) Restrictions or requirements regarding
participation in standard or preferred pharmacy
networks.
``(D) Requirements relating to the frequency or
scope of audits or to inventory management systems
using generally accepted accounting principles.
``(E) Any other restrictions, conditions,
practices, or policies that interfere with the ability
of a covered entity or contract pharmacy to use the
discounts provided under section 340B in accordance
with applicable requirements under such section.
``(3) Interfering with an individual's choice to receive a
340B drug from a covered entity or contract pharmacy, whether
in person or via direct delivery, mail, or other form of
shipment, as permitted under section 340B.
``(4) Interfering with, limiting, or prohibiting actions by
a covered entity or contract pharmacy to identify, either
directly or through a third party, claims for 340B drugs,
including by submission of claims data or use of claims
modifiers or indicators.
``(5) Refusing to contract with a covered entity or
contract pharmacy for reasons other than those that apply
equally to entities or pharmacies that are not covered entities
or contract pharmacies, or on the basis that--
``(A) the entity or pharmacy is a covered entity or
a contract pharmacy; or
``(B) the entity or pharmacy is described in any of
subparagraphs (A) through (O) of section 340B(a)(4).
``(6) With respect to a group health plan or health
insurance issuer for health insurance coverage, denying
coverage of a drug on the basis that such drug is a 340B drug.
``(c) Prohibited Actions in Derogation of Section 340B
Affordability Assistance Provisions.--A group health plan, a health
insurance issuer offering group or individual health insurance
coverage, or a pharmacy benefit manager acting on behalf of such plan
or issuer shall not prohibit or restrict, in contracts with pharmacies
in their network that are contract pharmacies or entity pharmacies, or
in any other manner, any reduction in or subsidy for the out-of-pocket
amount for a 340B drug charged to an individual (including a
participant, beneficiary, or enrollee of such plan or coverage) that is
required or authorized by subparagraphs (G) or (H) of section
340B(a)(5). Any general prohibition or restriction on reducing or
subsidizing the out-of-pocket amount for a drug charged to an
individual that lacks an express exemption for any reductions in or
subsidies for the out-of-pocket amount for a 340B drug that are
required or authorized by subparagraphs (G) or (H) of section
340B(a)(5) is a violation of this subsection. Any contractual provision
that violates this subsection in any manner shall be void and
unenforceable.
``(d) Enforcement Mechanism for Pharmacy Benefit Managers.--The
Secretary shall impose a civil monetary penalty on any pharmacy benefit
manager that violates the requirements of this section. Such penalty
shall not exceed $5,000 per violation per day. The Secretary shall
issue proposed regulations to implement this subsection not later than
60 days after the date of the enactment of this subsection and shall
finalize such regulations not later than 180 days after such date of
enactment.
``(e) Definitions.--For purposes of this section:
``(1) 340b drug.--The term `340B drug' means a drug that
is--
``(A) a covered outpatient drug (as defined for
purposes of section 340B); and
``(B) purchased under an agreement in effect under
such section.
``(2) Contract pharmacy.--The term `contract pharmacy' has
the meaning given such term in section 340B(a)(5)(F).
``(3) Covered entity.--The term `covered entity' has the
meaning given such term in section 340B(a)(4).
``(4) Entity pharmacy.--The term `entity pharmacy' has the
meaning given such term in section 340B(a)(5)(F).''.
(b) Application of Requirements to Medicare.--
(1) Part d.--Section 1860D-12(b) of the Social Security Act
(42 U.S.C. 1395w-112(b)) is amended by adding at the end the
following:
``(10) Application of requirements relating to the 340b
drug discount program.--Each contract entered into under this
subsection with a PDP sponsor shall provide that the
requirements of section 2730 of the Public Health Service Act
apply to such sponsor, and to any pharmacy benefit manager that
contracts with such sponsor, in the same manner as such
requirements apply with respect to a group health plan, a
health insurance issuer, or a pharmacy benefit manager
described in such section.''.
(2) Part c.--Section 1857(f)(3) of the Social Security Act
(42 U.S.C. 1395w-27(f)(3)) is amended by adding at the end the
following:
``(F) 340B drug discount program.--Section 1860D-
12(b)(10).''.
SEC. 20. EFFECTIVE DATE.
Except as otherwise specified, the provisions in this Act shall
become effective on the date that is one year following the date of
enactment of this Act.
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