Section 1. Short title; table of contents

Sec. 2. Establishing a clear patient definition

Sec. 3. Allowable use and robust oversight of contract pharmacies

Sec. 4. Eligibility for child sites

Section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) is further amended by adding at the end the following:

(14) Child sites

(A) In general

A covered entity described in subparagraph (L), (M), (N), or (O) of paragraph (4) that owns and operates a child site that participates in the drug discount program under this section shall maintain documentation of, and annually certify to the Secretary through such certification processes established under the Medicare enrollment and cost reporting rules, that each such child site is wholly owned by the entity and clinically and financially integrated with the covered entity and providing care consistent with the policies of the covered entity, including by—

(i)

registering each child site with the Secretary;

(ii)

applying the same financial assistance policy and patient assistance policy as apply with respect to other sites operated by the covered entity; and

(iii)

ensuring that each child site complies with the Medicare provider-based rules under section 413.65 of title 42, Code of Federal Regulations (or any successor regulations) or meets the requirements of subparagraph (B)(i).

(B) Eligibility for child sites

(i) In general

A child site is eligible for participation in the drug discount program under this section, through the eligibility of the covered entity that owns and operates such child site, only if the covered entity demonstrates that the child site meets the following requirements:

(I)

The child site applies the same patient financial assistance policy as the covered entity.

(II)

The child site participates as a provider or supplier in both the Medicare program under title XVIII of the Social Security Act, and the Medicaid program under title XIX of such Act of the State in which the child site is located, without discrimination against patients of such programs at such locations.

(III)

The child site ensures that the providers who order or dispense covered outpatient drugs purchased under this section at the child site have clinical responsibility for health care services that are related to the use of the covered outpatient drug purchased under this section that is dispensed.

(IV)

The child site provides a clinically meaningful range of services within the scope of the services that prescribing providers employed by or contracted with the child site, covered entity, or a physician organization affiliate of the covered entity are qualified to deliver.

(V)

If the child site is owned by a covered entity described in paragraph (4)(L), the child site shall ensure that the provider who prescribes a covered outpatient drug purchased under this section meets the requirements in paragraph (12).

(VI)

The child site and the covered entity are operated under the same license, except in areas where the State requires a separate license for the child site, or in States where State law does not permit licensure of the child site and the covered entity under a single license. If a State health facilities cost review commission or other agency that has authority to regulate the rates charged by providers in a State finds that a child site is not part of the covered entity, the child site shall not be eligible for the drug discount program under this section.

(VII)

The clinical services of the child site and the covered entity are integrated as evidenced by the following:

(aa)

Professional staff of the child site have clinical privileges at the covered entity.

(bb)

The covered entity maintains the same monitoring and oversight of the child site as for any other owned entity or subsidiary of the covered entity.

(cc)

The medical director of the child site maintains a reporting relationship with the chief medical officer or other similar official of the covered entity that has the same frequency, intensity, and level of accountability that exists in the relationship between the medical director of a department of the covered entity and the chief medical officer or other similar official of the covered entity, and is under the same type of supervision and accountability as any other director, medical or otherwise, of the covered entity.

(dd)

Medical staff committees or other professional committees at the covered entity are responsible for medical activities in the child site, including quality assurance, utilization review, and the coordination and integration of services, to the extent practicable, between the child site and covered entity.

(ee)

Medical records for patients treated in the child site are integrated into a unified retrieval system, or have the ability to be readily accessed by the covered entity.

(ff)

Inpatient and outpatient services of the child site and the covered entity are integrated, and patients treated at the child site who require further care have full access to all services of the covered entity and are referred where appropriate to the corresponding inpatient or outpatient department or service of the covered entity.

(VIII)

The financial operations of the child site are fully integrated within the financial system of the covered entity, as evidenced by shared income and expenses between the covered entity and the child site. For purposes of the Medicare program under title XVIII of the Social Security Act, the costs of a child site are reported in the appropriate cost center or cost centers of the covered entity, and the financial status of any child site is incorporated and readily identified in the covered entity’s trial balance.

(IX)

The child site is held out to the public as part of the covered entity. When patients enter the child site, they are aware that they are entering the covered entity.

(X)

The child site is operated under the ownership and control of the covered entity, as evidenced by the following:

(aa)

The business enterprise that constitutes the child site is 100 percent owned by the covered entity; except that a child site may be jointly owned if:

(AA)

the covered entity holds a majority ownership interest of not less than 51 percent;

(BB)

each co-owner is either: (i) an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, or (ii) a State or local governmental entity, including a public university or academic medical center;

(CC)

each co-owner that is not a covered entity has, independent of the joint venture, a bona fide charitable, public health, or governmental mission that includes the direct provision of health care services to low-income, uninsured, or medically underserved individuals;

(DD)

no co-owner is a for-profit entity;

(EE)

no co-owner that is not a covered entity was formed, reorganized, converted, or materially restructured for the purpose of qualifying as an eligible co-owner under this subparagraph; and

(FF)

the Administrator of the Health Resources and Services Administration has not determined, after notice and an opportunity to respond, that the joint venture structure was constituted for the purpose of obtaining eligibility under the drug discount program under this section or expanding claims for discounts under such program, rather than to further the health care mission of the covered entity and the health care needs of the patient population served by the child site.

(bb)

The covered entity and the child site have the same governing body.

(cc)

The child site is operated under the same organizational documents as the covered entity, and is subject to common bylaws and operating decisions of the governing body of the covered entity.

(dd)

The covered entity has final responsibility for administrative decisions, final approval for contracts with outside parties, final approval for personnel actions, final responsibility for personnel policies (such as fringe benefits or code of conduct), and final approval for medical staff appointments at the child site.

(XI)

The reporting relationship between the child site and the covered entity have the same frequency, intensity, and level of accountability that exists in the relationship between the covered entity and its other departments, as evidenced by compliance with all of the following requirements:

(aa)

The child site is under the direct supervision of the covered entity.

(bb)

The child site is operated under the same monitoring and oversight by the covered entity as any other department of the covered entity, and is operated as any other department of the covered entity with regard to supervision and accountability. The director or individual responsible for daily operations at the child site—

(AA)

maintains a reporting relationship with a manager at the covered entity that has the same frequency, intensity, and level of accountability that exists in the relationship between the covered entity and its existing departments; and

(BB)

is accountable to the governing body of the covered entity, in the same manner as any department head of the covered entity.

(XII)

The following administrative functions of the child site are integrated with the functions of the covered entity: billing services, records, human resources, payroll, employee benefit package, salary structure, and purchasing services. Either the same employees or group of employees handle such administrative functions for the child site and the covered entity, or the administrative functions for both the child site and the covered entity are—

(aa)

contracted out under the same contract agreement; or

(bb)

handled under different contract agreements, with the contract of the child site being managed by the covered entity.

(XIII)

The child site is listed on the covered entity’s most recently filed Medicare cost report on a line that is reimbursable under the Medicare program (or, if the covered entity is a children’s hospital that does not file a Medicare cost report, the covered entity submits to the Secretary a signed statement certifying that the site would be correctly included on a reimbursable line of a Medicare cost report if the covered entity filed a cost report). Such cost report demonstrates that the services provided at the child site have associated costs and charges for covered entity outpatient department services under title XVIII of the Social Security Act (or, if the covered entity is a children’s hospital that does not file a Medicare cost report, the covered entity submits to the Secretary a signed statement certifying that the services provided at the child site include or consist solely of outpatient services).

(ii) HRSA deeming

(I) In general

If the Administrator of the Centers for Medicare & Medicaid Services has determined a site to be qualified as a provider-based entity and in compliance with the provider-based requirements under section 413.65 of title 42, Code of Federal Regulations (or any successor regulations), the Secretary shall deem the site to have met the requirements described in clause (i).

(II) Rule of construction

This clause shall authorize the Secretary to establish a process through notice and comment rulemaking to determine whether a child site, as determined by the Administrator of the Center for Medicare & Medicaid Services, complies with the Medicare provider-based rules.

(iii) Child site registration: community need standard

(I) Definitions

For purposes of this subsection:

(aa)

The term child site has the definition set forth in Section 340B(b)(4).

(bb)

The term Community Vulnerability Score means the percentile ranking assigned to a ZIP Code Tabulation Area under the Social Vulnerability Index maintained by the Centers for Disease Control and Prevention and the Agency for Toxic Substances and Disease Registry (CDC/ATSDR SVI), or such successor or supplementary validated index as the Secretary may designate by regulation, on a scale of 0 to 1 in which a score of 1 represents maximum social vulnerability. The Secretary shall, through notice and comment rulemaking, establish a method for mapping or aggregating the underlying index to the ZIP Code Tabulation Area level. Where the Secretary designates a supplementary or successor index, the Secretary shall ensure that such index is based on publicly available ZIP Code Tabulation Area-level or equivalent data, updated at least biennially, and validated for use in identifying medically underserved or socially vulnerable communities.

(cc)

The term parent entity means the covered entity whose eligibility status under subsection (a)(4) forms the basis for a child site’s registration.

(dd)

The term qualifying ZIP Code means a ZIP Code Tabulation Area with a Community Vulnerability Score at or above the 50th percentile threshold when ranked nationally—meaning the ZIP Code Tabulation Area falls within the more vulnerable half of all ZIP Code Tabulation Areas in the United States—or at or above the 40th percentile threshold when ranked against all ZIP Code Tabulation Areas within the same State, whichever threshold the covered entity elects to apply. If the ZIP Code Tabulation Area in which a child site’s street address is located has not been assigned a Community Vulnerability Score, including because the area is unpopulated, non-residential, or otherwise lacks the underlying data necessary to compute such a score, the qualifying status of such area shall be determined based on the Community Vulnerability Score of the census tract in which the street address is located, or if no such score is available for that census tract, the county in which the street address is located, applying the same national and State-relative percentile thresholds described in this subparagraph. The Secretary shall, through notice and comment rulemaking, define the circumstances under which a ZIP Code Tabulation Area is treated as unscored and establish another method for assigning a Community Vulnerability Score.

(ee)

The term ZIP Code Tabulation Area means the geographic unit designated by the United States Census Bureau corresponding to a 5-digit ZIP code, consistent with the geographic units used by the Secretary under this subsection. For purposes of this subsection, a child site’s ZIP Code Tabulation Area shall be determined based on the first five digits of the child site’s street address ZIP code as registered with the Secretary.

(II) Community need standard for child sites

(aa) General requirement

A child site shall meet the community need standard established under this paragraph as a condition of initial registration and continued participation under this section. A child site meets such standard if the covered entity demonstrates that the child site is physically located in a qualifying ZIP Code Tabulation Area, as determined using the street address of the child site in a manner specified by the Secretary through notice and comment rulemaking.

(bb) Application to new child sites

For a child site seeking registration on or after the date of enactment of this subsection, compliance with item (aa) shall be determined by the Secretary at the time of initial registration based on the ZIP Code Tabulation Area in which the child site’s street address is situated, as submitted by the covered entity.

(cc) Application to existing child sites

For a child site registered as of the date of enactment of this subsection, compliance with item (aa) shall be evaluated at the time of the next applicable recertification of the covered entity. For the purposes of applying the community need standard to a child site registered as of the date of enactment of this subsection, the Secretary shall determine eligibility based on the ZIP Code Tabulation Area in which the child site’s street address is situated at the time of such recertification.

(dd) Ongoing validation

Compliance with the community need standard under item (aa) shall be verified for all child sites on an ongoing basis through the annual recertification process, or such other periodic review as the Secretary may establish.

(ee) Failure to meet standard

A child site that does not satisfy the community need standard under item (aa), as determined by the Secretary, shall be subject to removal from the covered entity’s registration in accordance with procedures established by the Secretary, including notice and an opportunity to respond. Removal of a child site from registration under this paragraph shall not affect the continued eligibility of the parent entity or any other child site of the parent entity that satisfies the applicable standard.

(ff) Payor-mix exception

Notwithstanding item (aa), a child site that does not independently meet the community need standard described in item (aa) shall nonetheless be deemed to meet such standard if the covered entity demonstrates, to the satisfaction of the Secretary, that not less than 40 percent of patients served by the child site are enrolled in Medicaid, are uninsured, or have incomes at or below 200 percent of the Federal poverty level, as determined using patient data for the most recent 12-month period.

(gg) Safety-net exception

The Secretary may grant a temporary exception from the community need standard under item (aa) for a child site that does not otherwise qualify under item (aa) or (ff), if the covered entity demonstrates that—

(AA)

the child site provides primary care, behavioral health, substance use treatment services or other services specifically directed at individuals who are low income, uninsured, or otherwise medically underserved and for which there is no adequate alternative provider within a reasonable geographic proximity—to a patient population that includes a significant proportion of low-income, uninsured, or otherwise medically underserved individuals; and

(BB)

removal of the child site from registration under this section would materially reduce access to such services for such patient population. Any exception granted under this subparagraph shall be for a period not to exceed 2 years, subject to renewal upon re-demonstration. The Secretary shall promulgate regulations specifying the criteria and application process for exceptions under this subparagraph.

(hh) Rule of construction

A child site shall not fail to satisfy the community need standard solely because the parent entity is located in a different ZIP Code Tabulation Area, provided the child site independently satisfies the requirements of this paragraph.

(III) Rulemaking

Not later than 6 months after the date of enactment of this subsection, the Secretary shall promulgate regulations to implement this subsection, including the method for determining the ZIP Code Tabulation Area in which a child site is located under item (aa) and, where such area is unscored, the method for assigning a Community Vulnerability Score. In promulgating such regulations, the Secretary shall account for geographic disparities in national SVI rankings by providing for a State-relative eligibility determination, consistent with the State-relative threshold established in subparagraph (I)(dd), ensuring that child sites serving communities with relatively high social vulnerability within their State are not disadvantaged solely by lower absolute national percentile rankings.

(iv) Limitation

Only a child site that meets each of the requirements under this subparagraph may purchase covered outpatient drugs under the 340B program or use covered outpatient drugs purchased under the 340B program by another part of the covered entity that is authorized to participate in such program. Any transfer of 340B drugs to another facility or another part of a covered entity that is not authorized to participate in the 340B program shall be deemed a violation of paragraph (5)(B).

Sec. 5. Improving patient affordability and protections

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) Patient assistance programs

(A) In general

Covered entities shall maintain and extend their patient financial assistance policy to patients served by their child sites and contract pharmacies. The covered entity shall ensure that its financial assistance policy is transparent to patients at point of care, satisfies the notice requirements in paragraph (C), and publicly reported. The Secretary shall establish a process, through notice and comment rulemaking, to require covered entities to maintain auditable records related to the implementation and enforcement of this paragraph. Nothing in this section shall be construed to require a covered entity to waive or eliminate all patient cost-sharing or other out-of-pocket obligations, or to provide covered outpatient drugs or related services at no cost, except to the extent required under the covered entity’s generally applicable financial assistance policy.

(B) Financial assistance policy defined

In this paragraph, a financial assistance policy means a written financial assistance policy described in section 501(r)(4)(A) of the Internal Revenue Code of 1986, provided to patients—

(i)

up to at least 400 percent of the Federal poverty level, for covered entities described under subparagraph (L), (M), (N), and (O) of subsection (a)(4);

(ii)

up to at least 200 percent of the Federal poverty level, for all covered entities not described in paragraph 14(b)(i) that are not otherwise subject to sliding fee schedule or grant requirements by law; and

(iii)

a sliding fee scale for covered outpatient drugs dispensed to patients under the drug discount program under this section, as applicable, provided that—

(I)

for covered entities described under subparagraph (L), (M), (N), and (O) of subsection (a)(4)—

(aa)

such sliding fee schedule must be made available for all patients up to at least 400 percent of the Federal poverty level; and

(bb)

copayment requirements under such sliding fee schedule must be nominal in amount; or

(II)

such other alternative policy as the Secretary may determine through notice and comment rulemaking with respect to a specific covered entity.

(C) Notice

(i)

Covered entities shall provide adequate notice and application of any financial assistance policy described in subparagraph (A).

(ii)

In order to ensure meaningful understanding of eligibility of a patient for a financial assistance policy, any notice described in clause (i) must be made available to patients of the covered entity—

(I)

in a plain-language summary (as defined in 42 U.S. Code 18031(e)(3)(B)) in English; and

(II)

if English is not the primary language in the community served by the covered entity, in the primary language served by such community.

(D) Implementation for contract pharmacies

The financial assistance policies under this section shall apply to contract pharmacies by the following timeline:

(i)

prospectively to all newly registered contract pharmacy locations after the enactment of this clause; or

(ii)

not later than 3 years after the date of enactment of this clause for all other contract pharmacy locations.

(E) Oversight

The Comptroller General of the United States shall conduct a study and report to Congress on the impact of requirements of this paragraph on patient access to covered outpatient drugs purchased under this section.

(F) Rule of construction

Compliance with this paragraph shall not be considered a prohibited act under section 1128A, 1128B(b), or 1877 of the Social Security Act.

(16) Medical debt

(A) Prohibitions

(i) In general

Covered entities described under subparagraph (L), (M), (N), and (O) of subsection (a)(4) shall not—

(I)

sell a patient’s debt to another party;

(II)

report adverse information about an individual to consumer credit reporting agencies or credit bureaus; and

(III)

defer or deny, or require a payment before providing, medically necessary care, because of an individual’s non-payment of one or more bills.

(ii) Exception

A covered entity described under subparagraph (L), (M), (N), and (O) of subsection (a)(4) may sell an individual’s debt to another party if the party’s sole purpose is to pay for the individual’s debt in full.

(B) Debt collection

(i) In general

Except as provided in clause (ii), covered entities described under subparagraph (L), (M), (N), and (O) of subsection (a)(4) shall not take any legal action to collect debt from a patient at such covered entity.

(ii) Exception

A covered entity described under subparagraph (L), (M), (N), and (O) of subsection (a)(4) may collect debt only from patients with a clear ability to pay, as demonstrated by the greater of—

(I)

income at or above 600 percent of the Federal poverty level; or

(II)

assets valued at more than 400 percent of the patient’s outstanding balance of debt owed to the covered entity.

(iii) Interest

A covered entity described under subparagraph (L), (M), (N), and (O) of subsection (a)(4) shall be prohibited from charging interest on any outstanding balance of debt owed by a patient to such covered entity that is more than the allowable percentage specified in the applicable usury laws or regulations of the State in which the covered entity is located.

(C) Monitoring compliance

(i) In general

The Secretary shall conduct an annual review, in a form and manner established in regulations to be promulgated by the Secretary not later than 180 days after the date of enactment of this subparagraph, to monitor covered entity compliance with the requirements of this paragraph.

(ii) Enforcement

If the Secretary finds that, as a result of a review described in clause (i), a covered entity is not in compliance with the requirements of this paragraph, the Secretary shall—

(I)

impose civil monetary penalties, which—

(aa)

shall be assessed according to standards established in regulations to be promulgated by the Secretary not later than 180 days after the date of enactment of this subclause; and

(bb)

shall not exceed $5,000 for each instance of noncompliance that may have occurred;

(II)

where the Secretary determines that a violation of this paragraph was systematic and egregious as well as knowing and intentional, refer matters to appropriate authorities within the Office of Inspector General of the Department of Health and Human Services; and

(III)

where the Secretary determines that a covered entity may not be in compliance with the requirements of section 501(r) of the Internal Revenue Code of 1986, refer matters to appropriate authorities within the Internal Revenue Service.

(D) GAO report

Not later than 2 years after the enactment of this subparagraph, and every 2 years thereafter, the Comptroller General of the United States shall submit to the Secretary and to the appropriate committees of Congress a report that—

(i)

analyzes covered entity compliance with the requirements described in this paragraph; and

(ii)

makes recommendations with respect to policies intended to improve compliance with the requirements described in this paragraph.

(E) Inspector general report

The Inspector General of the Department of Health and Human Services shall conduct an annual risk-based assessment of covered entity compliance with the requirements of this paragraph.

Sec. 6. Data reporting for transparency

Section 340B(d) of the Public Health Service Act (42 U.S.C. 256b(d)) is amended by adding at the end the following:

(5) Reporting of program savings

(A) In general

Not later than 1 year after the date of enactment of this paragraph, and annually thereafter, each covered entity shall report to the Secretary, as an addendum to the Medicare cost report most recently submitted by such entity, or in the case of a covered entity that does not submit a Medicare cost report, by direct report to the Secretary, the following information with respect to the entity, including all sites and contract pharmacy arrangements of the entity, for the preceding year:

(i)

The total number of individuals who were dispensed or administered covered outpatient drugs purchased under this section during such preceding year that were subject to an agreement under subsection (a)(1).

(ii)

The total number of prescriptions filled with covered outpatient drugs purchased under this section and billed to insurance, organized by type of health insurance coverage (as specified by the Secretary through notice and comment rulemaking, including by the Medicare program under title XVIII of the Social Security Act, the Medicaid program under title XIX of such Act, the Children’s Health Insurance Program under title XXI of such Act, health insurance coverage offered in the individual or group market or a group health plan (as such terms are defined in section 2791), and uninsured).

(iii)

(I)

The cost incurred at each site for charity care, based on the charity care level of the covered entity, defined as a fraction, the numerator of which is the amount of charity care reported on worksheet S–10 of the Medicare cost report (or any successor), and the denominator of which is the total operating cost of the hospital, as reported for the most recent cost reporting period; or

(II)

in the case of a covered entity that is not required to submit a Medicare cost report that indicates charity care levels, a qualitative description of the charity care provided by such entity, in the aggregate, in such manner that is not overly burdensome to covered entities, as the Secretary may require through notice and comment rulemaking.

(iv)

A description of the covered entity’s use of the savings received through participation in the drug discount program under this section, including a description of health care services or health-related benefits used to benefit the patients and communities served by the covered entity, delineated by categories of services and benefits and populations served, including such services and benefits provided to underserved and uninsured patients and communities.

(v)

The financial demographics of patients of the covered entity, including—

(I)

the percentage of patients eligible for financial assistance programs and sliding scale fees;

(II)

the percentage of patients who reside in a health professional shortage area (as defined in section 332) or a medically underserved community (as defined in section 799B), or who are part of a medically underserved population (as defined in section 330(b)(3)), and the percentage of uninsured patients;

(III)

the percentage patients who are Medicaid beneficiaries;

(IV)

the percentage of patients who are Children’s Health Insurance Program beneficiaries;

(V)

to the extent data are available, the percentage of patients earning below each of each of the following levels of the Federal Poverty Level: 100 percent, 200 percent, 300 percent, and 400 percent; and

(VI)

the number of patients who receive assistance from another party in paying for a prescription drug and the mean amount of discount or benefit received.

(vi)

Policies of the covered entity to—

(I)

promote access and adherence to prescribed medications; and

(II)

promote access to prescription medicines for patients earning under 200 percent of the Federal Poverty Level.

(vii)

In the case of a nongovernmental hospital, any contracts between such hospital and a State or local governmental entity, and any modifications to any such contract.

(viii)

Any third-party administrators in contract with the covered entity for the administration of the drug discount program.

(ix)

The funding shortfall for the covered entity attributable to services provided to Medicare and Medicaid beneficiaries, as reported on the Internal Revenue Service Form 990.

(x)

The number of patients using the outpatient services of the covered entity.

(xi)

Operation costs to the covered entity related to the drug discount program under this section.

(xii)

The names and addresses of all contract pharmacy locations.

(xii)

Utilization rates of outpatient hospital services furnished to patients earning below each of the following level of the Federal Poverty Level: 100 percent, 200 percent, 300 percent, and 400 percent.

(B) Records retention

Covered entities shall retain such records for a period of at least 3 years and provide such records and reports pursuant to standards established by the Secretary through notice and comment rulemaking for purposes of carrying out this paragraph.

(C) Availability of information

(i) In general

Not later than 30 days after receiving the information reported by covered entities under subparagraph (A), the Secretary shall publish such information on the public website of the Department of Health and Human Services, which may include the website of the 340B Office of Pharmacy Affairs Information System (or a successor to such system).

(ii) Format

Data published under clause (i) shall be published in an electronic and searchable format that shows each category of data reported both in the aggregate and identified by individual covered entity(ies) described in subsection (a)(4). In carrying out this paragraph, with respect to data reported pursuant to subparagraph (A), the Secretary shall ensure that any proprietary information be redacted from contracts submitted pursuant to paragraph (5)(A)(vii) before posting such contracts.

(D) Reports to congress

Not later than 1 year after the date of the enactment of this subparagraph, and annually thereafter, the Secretary shall submit a report to Congress on the information collected under subparagraph (A).

(E) Regulations

The Secretary shall promulgate regulations to carry out this paragraph.

Sec. 7. Enhancing program integrity

Sec. 8. Facilitating data exchange to improve program integrity

Part A of title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is amended by adding the following new section:

1150D. 340B drug discount program data clearinghouse

(a) General

For a period of four (4) years from the enactment of this section, a manufacturer shall offer covered outpatient drugs at the ceiling price required under section 340B(a)(1) of the Public Health Service Act as a reduction in the purchase price and not through retrospective rebates or other post-sale payments. This obligation shall not apply to rebates for the AIDS Drug Assistance Programs who have implemented a rebate model prior to the effective date of this section.

(b) Clearinghouse performance

Notwithstanding any other provision of this section, the obligation under subsection (a) shall automatically conclude at the end of the period described in such subsection if the Secretary has not certified, in a public report validated by the Office of Inspector General, that the conditions described in paragraphs (1) through (4) have been satisfied. If such certification is not made as of the end of the period described in subsection (a), no provision of this subsection shall be construed to impose any additional or continuing limitation on the form, timing, or mechanism by which a manufacturer makes available the ceiling price required under section 340B(a)(1) of the Public Health Service Act—

(1)

all claims for 340B drugs described in subsection (g) are submitted to, and processed through, the clearinghouse entity with a contract in effect under subsection (f);

(2)

not less than 90 percent of the value of such claims submitted during the most recent 12-month period are identified by such clearinghouse entity as unique transactions that do not result in duplicate discounts or other applicable overlapping price concessions;

(3)

not less than 90 percent of the value of claims for 340B drugs as described in subsection (g) are adjudicated, including identification of any duplicate discounts, rebates, or other overlapping price concessions, within timeframes established by the Secretary through notice and comment rulemaking; and

(4)

not less than 95 percent of the value of claims for 340B drugs as described in subsection (g) contain the data elements required by the Secretary and are determined to be complete and accurate at the time of initial submission.

(c) Ongoing validation of clearinghouse performance

(1) Periodic oig reports

If the obligation under subsection (a) remains in effect after the end of the 4-year period described in subsection (a), the Inspector General of the Department of Health and Human Services shall issue public reports evaluating whether the clearinghouse entity with a contract in effect under subsection (f) continues to satisfy the performance benchmarks described in subsection (b). Such reports shall be issued—

(A)

not later than 2 years after the end of the 4-year period described in subsection (a);

(B)

not later than 5 years after the end of the 4-year period described in subsection (a); and

(C)

every 5 years thereafter.

(2) Contents

Each report under paragraph (1) shall assess, with respect to the most recent 12-month period for which data are available, whether the performance benchmarks described in subsection (b) continue to be satisfied.

(3) Corrective period

If a report issued under paragraph (1) determines that one or more of the performance benchmarks described in subsection (b) are not being maintained, the clearinghouse entity shall have 6 months from the date of issuance of such report to cure the deficiency.

(4) Follow-up report

Not later than 60 days after the end of the 6-month corrective period described in paragraph (3), the Inspector General shall issue a follow-up public report evaluating whether the deficiency has been cured and whether the applicable performance benchmarks are being maintained.

(5) Failure to maintain performance benchmarks

The obligation under subsection (a) shall cease to apply if the follow-up report issued under paragraph (4) determines that the deficiency has not been cured or that one or more of the applicable performance benchmarks are not being maintained.

(d) Interim performance report

Not later than 2 years after the date of enactment of this section, the Secretary shall issue a preliminary public report, validated by the Office of Inspector General, detailing the progress made towards accomplishing the goals and standards in subsection (b). The report shall include the data, methodology, and assumptions used by the Secretary and identify any material operational, data-quality, or compliance barriers affecting achievement of such benchmarks.

(e) Special rule for selected drugs

Notwithstanding subsection (b) and any other provision of this section requiring a covered entity to submit data to the third-party entity with a contract in effect under subsection (f), with respect to a drug that is a selected drug (as defined in section 1192(c))—

(1)

each covered entity shall transmit directly to the manufacturer, in a timely manner and in accordance with standards established by the Secretary through notice and comment rulemaking, claims-level data sufficient to enable the manufacturer to prevent duplicate discounts, rebates, or other overlapping price concessions and to validate compliance with the requirements of this section and section 1191, et seq.; and

(2)

a covered entity that fails to comply with paragraph (1) shall, following written notice from the Secretary identifying the specific failure and a 30-day period to cure such failure, be subject to civil monetary penalties in an amount of $5,000 per day during the period of such non-compliance following the expiration of such cure period.

The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this section in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).

(f) Clearinghouse contracting entity

Not later than 1 year after the date of enactment of this section, the Secretary shall enter into a contract with an independent, third-party clearinghouse entity (who shall be free of conflicts of interest with covered entities, manufacturers, health plans, pharmacy benefit managers, and of other conflicts of interest as specified by the Secretary) for purposes of carrying out the clearinghouse duties under subsection (g) with respect to the drug discount program under section 340B of the Public Health Service Act to facilitate robust and verifiable data exchange between relevant parties in order to improve program integrity under section 340B of the Public Health Service Act. Such contract shall provide that the third-party entity shall perform the duties described in subsection (g) and shall be for a 4-year term that may be renewed after a subsequent bidding process or using competitive procedures, as defined in section 132 of title 41, United States Code.

(g) Duties

With respect to any 340B drug dispensed or administered to an individual, without regard to the individual’s insurance status or the type or source of payment for the drug, a third-party entity with a contract in effect under subsection (f) shall—

(1)

establish a procedure for collecting data elements specified in subparagraph (A), including any additional data elements required by the secretary pursuant to subparagraph (A)(iv) to improve program integrity of the drug discount program under section 340B of the Public Health Service Act, such that—

(A)

pharmacy benefit and medical benefit claims-level data elements reported under this section shall include the data elements specified in clauses (i) through (iv) of this subparagraph—

(i)

with respect to a pharmacy benefit claim—

(I)

the date of service;

(II)

the date on which the drug was prescribed;

(III)

the prescription number;

(IV)

the fill number;

(V)

the 11-digit National Drug Code for the drug dispensed;

(VI)

the quantity dispensed;

(VII)

the prescriber identifier;

(VIII)

the identifier of the dispensing pharmacy or other service provider, including the National Provider Identifier, as applicable;

(IX)

the 340B identification number of the covered entity;

(X)

the prescription benefit bank identification number; and

(XI)

the prescription benefit processor control number;

(ii)

with respect to a medical benefit claim—

(I)

the date of service;

(II)

the claim number;

(III)

the claim line number;

(IV)

the quantity of the drug furnished;

(V)

the unit of measure;

(VI)

the physician or other furnishing provider identifier;

(VII)

the applicable Healthcare Common Procedure Coding System code and any applicable modifiers;

(VIII)

the 11-digit National Drug Code for the drug furnished;

(IX)

the National Provider Identifier of the billing provider;

(X)

the 340B identification number of the covered entity;

(XI)

the health plan identifier; and

(XII)

the name of the health plan;

(iii)

with respect to a pharmacy benefit claim or medical benefit claim described in clause (i) or (ii)—

(I)

the name of the wholesaler;

(II)

the wholesaler account number;

(III)

the invoice date;

(IV)

the invoice number;

(V)

the National Provider Identifier of the pharmacy or other location to which the drug was shipped;

(VI)

the 11-digit National Drug Code for the drug purchased;

(VII)

the number of package units purchased; and

(VIII)

the 340B identification number of the covered entity; and

(iv)

such additional data elements as the Secretary determines necessary to carry out this section to improve the integrity of the drug discount program under section 340B of the Public Health Service Act;

(B)

claims-level data under this section shall be submitted and must be adjudicated within timeframes established by the Secretary through notice and comment rulemaking, with such timeframes taking into account operational capabilities of covered entities; and

(C)

reclassification of historical claims by covered entities from non-340B to 340B beyond 6 months after the drug is furnished is prohibited, except that the Secretary may permit such reclassification upon a showing of good cause by the covered entity;

(2)

request and receive, in the most efficient and least burdensome manner practicable, with an established timeframe for such reporting—

(A)

claims-level rebate file data under section 1927, from State Medicaid agencies;

(B)

claims-level data from covered entities and, to the extent necessary, contract pharmacies, health plans, entities providing pharmacy benefit management services to health plans;

(C)

claims-level rebate file data from commercially paid claims that are eligible under Section 340B; and

(D)

any other data specified by the Secretary as necessary to carry out this section;

(3)

request, receive, and maintain data described in paragraph (1) in a confidential manner;

(4)

ensure that claims-level data submissions by covered entities are complete and accurate, and if not, obtain complete and accurate data from the covered entity;

(5)

notify the covered entity, the Secretary, the State Medicaid agency, and the manufacturer of any violation described in section 340B(a)(5)(A) of the Public Health Service Act to allow for remediation;

(6)

provide the manufacturer of a 340B drug with claims-level data submitted by a covered entity, so that the manufacturer may identify units of a 340B drug that may generate a rebate or discount under a voluntary rebate or discount arrangement, such as those related to commercial plans;

(7)

where feasible, share with a covered entity, the Secretary, a State Medicaid agency, and a manufacturer, data the third-party entity identifies in a timely manner with the purpose of preventing any of the violations described in section 2729A(b)(2) of the Public Health Service Act or duplicate discounts for a selected drug under section 1847A(i), section 1860D–14B, section 1192;

(8)

allow covered entities except those described under subparagraph (L), (M), (N), or (O) of section 340B(a)(4) of the Public Health Service Act the option of submitting claims-level data in a batched, retrospective basis that does not require the application of modifiers on individual claims or point-of-sale identification;

(9)

determine total sales of 340B drugs to such individuals for purposes of being used as the basis for determining user fees under section 340B(a)(17) of such Act;

(10)

identify claims and provide manufacturer access to claims data for covered outpatient drugs purchased under the drug discount program under Section 340B of the Public Health Service Act that—

(A)

are selected drugs (as defined in section 1192(c)) to enable manufacturers to meet the nonduplication requirements of section 1193(d);

(B)

are subject to inflation rebates under section 1847A(i) or section 1860D–14B;

(C)

for a rebate or discount submitted by two or more covered entities or child sites with respect to the same unit of a covered outpatient drug purchased under the drug discount program; or

(D)

received reimbursement 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 in violation of sections 1903(m)(2)(A)(xiii) or 1927(j)(1) or section 340B(a)(5)(A) of the Public Health Service Act;

(11)

connect claims data and purchasing order data received under this section in a streamlined, timely, and efficient way;

(12)

provide access to State Medicaid agencies to data that is reasonably necessary to prevent duplicate discounts prohibited by section 340B(a)(5) of the Public Health Service Act;

(13)

establish procedures for covered entity reporting that may provide the same function for State Medicaid agencies as covered entity reporting to State Medicaid agencies;

(14)

respond to requests from covered entities or manufacturers within a number of days established by the Secretary through notice and comment rulemaking;

(15)

facilitate manufacturer reasonable good faith inquiries, reasonable manufacturer audits, duplicate-discount reviews, diversion reviews, and other program integrity activities under section 340B of the Public Health Service Act by receiving, validating, matching, analyzing, and producing claims-level data, validation results, or other outputs necessary to resolve such inquiries, audits, reviews, or activities within timeframes established by the Secretary through notice and comment rulemaking, as well as all standards specified by the Secretary to be promulgated pursuant to section 1150D(g)(16);

(16)

establish, subject to standards established by the Secretary through notice and comment rulemaking, which standards shall be consistent with applicable law, including applicable Federal and State data privacy and security laws and regulations (including, without limitation, the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations), uniform confidentiality, access, use, retention, and data-security terms applicable to information submitted to, maintained by, or transmitted through the clearinghouse, including terms governing manufacturer access to and receipt of claims-level data, validation results, or other outputs under this section;

(17)

ensure that the terms described in paragraph (16) apply uniformly to covered entities, manufacturers, health plans, pharmacy benefit managers, and other participating entities and are not subject to individualized negotiation as a condition of submitting information to, receiving information from, or otherwise participating in the clearinghouse process;

(18)

establish procedures to document any failure by a covered entity to timely submit complete and accurate information required under this section and to notify the Secretary and any affected manufacturer of such failure; and

(19)

maintain, with appropriate safeguards, submitted data elements for a period of 10 years.

(h) Restrictions on clearinghouse contracting entity

The entity receiving a contract under subsection (f) shall—

(1)

ensure that it has no conflicts of interest, including no direct contractual involvement with any covered entity, or manufacturer participating in the drug discount program under section 340B of the Public Health Service Act or any payer that makes payments for drugs purchased through such program;

(2)

not disclose confidential information obtained through carrying out the clearinghouse duties under this section other than as necessary to carry out the purposes of this section, including for program integrity functions;

(3)

not sell or otherwise generate revenue by licensing or making available the data described in subsection (g)(1); and

(4)

not collect pricing information regarding drugs that are not 340B drugs from covered entities.

(i) Duties of covered entity

(1) In general

Covered entities shall facilitate and participate in data transmission with the third-party clearinghouse entity with a contract in effect under subsection (f), including submission of data elements established by the Secretary through notice and comment rulemaking. Such data transmission requirements shall also apply with respect to data relating to 340B drugs dispensed through any external contract pharmacy arrangement, and shall include data maintained by or on behalf of the covered entity by a contract pharmacy or third-party administrator.

(2) Timely and complete submission

A covered entity shall timely submit complete and accurate information required under this section to the clearinghouse contracting entity in the form, manner, and time specified by the Secretary through notice and comment rulemaking.

(3) Failure to timely submit information

If a covered entity fails to timely submit complete and accurate information required under this section to the clearinghouse contracting entity, such failure shall be treated as a failure to participate in the clearinghouse process and the affected manufacturer shall provide written notice to the covered entity and the Secretary identifying the specific deficiency. If the covered entity does not cure such failure within 30 days of receipt of such notice, the affected manufacturer may suspend the availability of discounts under section 340B(a)(1) of the Public Health Service Act with respect to such covered entity, in whole or in part, until the covered entity cures such failure.

(4) Limitation on separate confidentiality terms

A covered entity may not condition, delay, or deny submission of information to the clearinghouse contracting entity, or otherwise condition, delay, or deny participation in the clearinghouse process, on the execution or individualized negotiation of a confidentiality agreement, data use agreement, or similar agreement that is duplicative of, inconsistent with, or more restrictive than the uniform confidentiality, access, use, retention, and data-security terms established by the Secretary through notice and comment rulemaking under this section.

(j) Restrictions on manufacturer and pbm use of data

(1) In general

A manufacturer who receives data under subsection (g) may use such data only for the purpose of preventing duplicate discounts and diversion under section 340B(a)(5) of the Public Health Service Act, preventing duplicate discounts in connection with inflation rebates under section 1847(A)(i) and 1860D–14B as well as for selected drugs (as defined in section 1192(c)) to enable a manufacturer to meet the nonduplication requirements of section 1193(d), and validating compliance with other requirements under the drug discount program under section 340B of the Public Health Service Act.

(2) Restrictions on plans, issuers, and pbms

A health plan, third party administrator of a health plan, or entity providing pharmacy benefit management services may use data received from the clearinghouse only for the purpose of preventing duplicate discounts and diversion under this section.

(3) Enforcement

Any manufacturer or other person found by the Secretary to have used data received under subsection (g) for uses other than those described in paragraphs (1) and (2), such as for pricing or marketing, shall be subject to civil monetary penalties, established by the Secretary through notice and comment rulemaking.

(k) Privacy, confidentiality, and data security requirements

(1) In general

The information exchange required under this section shall occur pursuant to standards established by the Secretary through notice and comment rulemaking, including uniform confidentiality, access, use, retention, and data-security terms applicable to information submitted to, maintained by, or transmitted through the clearinghouse contracting entity, including terms governing manufacturer access to claims-level data, validation results, or other outputs under this section, and in a manner consistent with applicable Federal and State data privacy, security, and breach notification laws.

(2) Purpose of clearinghouse

The use of the clearinghouse contracting entity under this section is intended to facilitate secure exchange of information for 340B program integrity activities, and the clearinghouse contracting entity shall be required to qualify as a covered entity under the privacy, security, and breach notification regulations promulgated under section 264(c) of the Health Insurance Portability and Accountability Act of 1996, provided, however, that no manufacturer shall be required to qualify as a covered entity or business associate under HIPAA in order to obtain and use data from the clearinghouse for only the purposes identified in this Act.

(3) Rule of construction

Nothing in this section shall be construed to—

(A)

limit, narrow, or create any new precondition to the disclosure of claims-level, utilization, or other information that may otherwise be disclosed under applicable law for purposes of 340B program integrity activities; or

(B)

require the execution or individualized negotiation of a confidentiality agreement, data use agreement, or similar agreement not otherwise required by law as a condition of disclosing, submitting, receiving, maintaining, or using information in accordance with this section.

(l) Repayment to manufacturers

The Secretary shall, establish through notice and comment rulemaking, establish a process to require covered entities to work with affected manufacturers regarding identified duplicate discounts and diversion of 340B drugs, regardless of the method used to dispense the 340B drug, which shall include repayment plus accrued interest—

(1)

by the covered entity as a result of the covered entity’s noncompliance with section 340B of the Public Health Service Act; or

(2)

by a State Medicaid program of rebates improperly requested by the State Medicaid program.

(m) Prohibited actions of group health plans and pbms

(1) In general

A group health plan, a health insurance issuer offering group or individual coverage (as such terms are defined in section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91)), or an entity providing pharmacy benefit management services may not interfere with the ability of covered entities, contract pharmacies (as such terms are defined in section 340B of the Public Health Service Act (42 U.S.C. 256b)), or manufacturers of drugs to prevent duplicate discounts or to recoup the full amount of any identified duplicate discounts pursuant to the drug discount program under section 340B of the Public Health Service Act (42 U.S.C. 254b).

(2) Enforcement

The Secretary of Health and Human Services shall impose civil monetary penalties on any group health plan, health insurance issuer, or entity providing pharmacy benefit management services that violates paragraph (1).

(n) State medicaid agencies

In accordance with requirements established by the Secretary through notice and comment rulemaking, each State’s agency responsible for the administration of a State plan under section 1902(a)(5) of the Social Security Act (42 U.S.C. 1396a(a)(5)) shall establish and publish written procedures that—

(1)

specify the extent to which a 340B drug may be dispensed to a Medicaid beneficiary, including beneficiaries of managed care programs;

(2)

effectively identify when a 340B drug is dispensed to a Medicaid beneficiary; and

(3)

exclude 340B drugs dispensed to Medicaid beneficiaries from requests for rebates under section 1927.

(o) Definitions

In this section:

(1) Covered entity

The term covered entity means an entity described in section 340B(a)(4) of the Public Health Service Act.

(2) Federal health care program

The term Federal health care program has the meaning given that term in section 1128B(f).

(3) Health plans

The term health plan has the meaning given that term in section 1128C(c).

(4) Manufacturer

The term manufacturer has the meaning given that term in section 1927(k)(5).

(5) 340B drug

The term 340B drug means a drug that is—

(A)

a covered outpatient drug (as defined for purposes of section 340B of the Public Health Service Act); and

(B)

purchased under an agreement in effect under such section.

(p) Oversight

Not later than 1 year after implementation of the clearinghouse, the Secretary shall:

(1)

engage an independent auditor to conduct an annual audit of the clearinghouse contracting entity to ensure compliance with this section, including but not limited to timely and accurate adjudication of claims; timely and complete transmission of data to relevant parties; and timely and substantive engagement with covered entities and manufacturers, when requested. If the Secretary finds through these audits that the clearinghouse contracting entity is not in compliance with this section, the Secretary shall take appropriate action to ensure compliance, which may include the imposition of civil monetary penalties against the clearinghouse contracting entity, or early termination of its contract, provided another compliant solution is available.

(2)

issue a report to Congress detailing coordinated efforts, including through the use of existing resources to address requests from covered entities (as defined in section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 256b(a)(4))) for payment under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) for medical assistance for a drug that is subject to an agreement under section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) if the drug is subject to the payment of a rebate to the State under section 1927 of the Social Security Act (42 U.S.C. 1396r–8), as prohibited under section 340B(a)(5)(A) of the Public Health Service Act (42 U.S.C. 256b(a)(5)(A)), and to prevent the duplicate discounts for covered outpatient drugs that are—selected drugs (as defined in section 1192(c) of the Social Security Act) to enable manufacturers to meet the nonduplication requirements of section 1193(d) of such Act; or subject to inflation rebates under as defined by section 1847A(i) or section 1860D–14B of the Social Security Act.

(q) Regulations

The Secretary of Health and Human Services, in consultation with the Administrator of the Centers for Medicare & Medicaid Services and the Administrator of the Health Resources and Services Administration, shall, through notice and comment rulemaking, promulgate such regulations as are necessary to implement the provisions of this section, advance the purpose of the drug discount program under section 340B of the Public Health Service Act (42 U.S.C. 256b) and prevent duplicate discounts and diversion through the clearinghouse established by the amendment made by this section.

Sec. 9. Prohibition on discriminatory practices and contracting

Sec. 10. Ensuring HRSA has adequate resources to oversee the program

Sec. 11. Studies and reports

Sec. 12. Meanings

Section 340B(b) of the Public Health Service Act (42 U.S.C. 256b(b)), as amended by the preceding sections, is further amended by adding at the end the following:

(4) Child site

In this section, the term child site means any outpatient department, clinic, or facility that is separately registered under this section as an outpatient facility of a covered entity described in subparagraph (L), (M), (N), or (O) of subsection (a)(4) and that is not itself the covered entity’s principal operating location or the location through which the covered entity satisfies the requirements for eligibility under subsection (a)(4).

(5) Contract pharmacy

In this section, the term contract pharmacy means a pharmacy that, pursuant to a contract or other arrangement with a covered entity, dispense or otherwise furnishes covered outpatient drugs to patients on behalf of the covered entity, whether in person, by mail, or through any other delivery method.

Sec. 13. 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:

(F) 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 through notice and comment rulemaking 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, 2025, 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, 2025, 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, 2025, 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. 14. Effective date