45206 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Notices 

substantiating claims made in the 

advertisements; to provide copies of the 

order to certain of their personnel; to 

notify the Commission of changes in 

corporate structure that might affect 

compliance obligations under the order; 

to notify the Commission of changes in 

residence, employment, or business 

affiliation; to file compliance reports 

with the Commission; and to respond to 

other requests from FTC staff. Part VII 

provides that the order will terminate 

after twenty (20) years under certain 

circumstances. 

The purpose of this analysis is to 

facilitate public comment on the 

proposed order. It is not intended to 

constitute an official interpretation of 

the agreement and proposed order or to 

modify in any way their terms. 

By direction of the Commission. 

Donald S. Clark 

Secretary. 

[FR Doc. E9–20976 Filed 8–31–09: 2:25 pm] 

BILLING CODE 6750–01–S 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Health Resources and Services 

Administration 

Notice Regarding 340B Drug Pricing 

Program—Children’s Hospitals 

AGENCY: Health Resources and Services 

Administration, HHS. 

ACTION: Final notice. 

SUMMARY: Section 340B of the Public 

Health Service Act (section 340B) and 

section 1927(a) of the Social Security 

Act (section 1927(a)) implement a drug 

pricing program in which manufacturers 

who sell covered outpatient drugs to 

covered entities must agree to charge a 

price that will not exceed an amount 

determined under a statutory formula. 

Section 6004 of the Deficit Reduction 

Act of 2005 (Pub. L. 109–171) (section 

6004) added certain qualifying 

children’s hospitals to the list of 

covered entities eligible to access 340B 

discounted drugs. The purpose of this 

notice is to inform interested parties of 

final guidelines regarding the addition 

of children’s hospitals that meet certain 

requirements, specifically: (1) The 

process for the registration of children’s 

hospitals to the 340B Program; and (2) 

the obligation of manufacturers to 

provide the statutorily mandated 

discount to those children’s hospitals. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Jimmy Mitchell, Director, Office of 

Pharmacy Affairs (OPA), Healthcare 

Systems Bureau (HSB), Health 

Resources and Services Administration 

(HRSA), 5600 Fishers Lane, Parklawn 

Building, Room 10C–03, Rockville, MD 

20857, or by telephone through the 

Pharmacy Services Support Center at 

1–800–628–6297. 

DATES: Effective Date: September 1, 

2009. 

SUPPLEMENTARY INFORMATION: 

(A) Background 

Proposed guidelines for children’s 

hospitals were announced in the 

Federal Register at 72 FR 37250 on July 

9, 2007. A comment period of 60 days 

was established to allow interested 

parties to submit comments. HRSA, 

HSB, acting through the OPA, received 

20 comments concerning the proposal. 

Section 602 of Public Law 102–585, 

the Veterans Health Care Act of 1992, 

established section 340B of the Public 

Health Service Act and added certain 

implementation provisions for the 340B 

Program to section 1927(a) of the Social 

Security Act. Section 340B contains the 

majority of the requirements for covered 

entities participating in the 340B 

Program, while the relevant provisions 

of section 1927(a) of the Social Security 

Act provide primarily for the 

requirement that manufacturers provide 

the statutorily mandated discount to 

covered entities. 

Section 340B contains a list of 

covered entities that are eligible to 

receive discounts through the 340B 

Program. The list includes entities such 

as Federally Qualified Health Centers, 

State-operated AIDS drug purchasing 

assistance programs, and certain 

disproportionate share hospitals. 

Children’s hospitals were not included 

as covered entities under section 340B 

in the Veterans Health Care Act of 1992 

as enacted. 

Section 6004 of the Deficit Reduction 

Act (DRA), Pub. L. 109–171, added 

certain qualifying children’s hospitals as 

covered entities eligible to access 340B 

discounted drugs. Section 6004 did not 

amend section 340B (which contains 

many of the requirements for covered 

entities), however, the DRA provision 

amended section 1927(a) of the Social 

Security Act (which primarily contains 

requirements for manufacturers’ 

participation) to add children’s 

hospitals to the 340B Program. 

To be eligible for the 340B Drug 

Pricing Program, section 1927(a), as 

amended by section 6004 of the DRA, 

requires children’s hospitals to meet the 

requirements of clauses (i) and (iii) of 

section 340B(a)(4)(L) of the Public 

Health Service Act, which contain 

provisions for State or local government 

affiliations and non-participation in 

group purchasing organizations. In 

addition, children’s hospitals must meet 

the requirements of clause (ii) of such 

section, which contains requirements 

for the provision of indigent care, if 

such section ‘‘were applied by taking 

into account the percentage of care 

provided by the hospital to patients 

eligible for medical assistance’’ under 

Medicaid. 

We received several comments in 

support of the proposal. Supporting 

comments agreed with the proposed 

guidelines and that section 6004 of the 

DRA brings eligible children’s hospitals 

into the 340B program. Several 

commenters agreed with requiring 

children’s hospitals to demonstrate their 

status as defined by the Social Security 

Act section 1886(d)(1)(B)(iii) and to 

obtain a Medicare provider number in 

the 3300 series. Many comments 

supported obtaining an independent 

audit to certify eligibility requirements 

and to help ensure program integrity. 

Comments supported HRSA’s position 

that current Pharmaceutical Pricing 

Agreements (PPAs) are already broad 

enough to include children’s hospitals 

as covered entities. 

Additional comments challenged 

HRSA’s legal authority and compliance 

with the Administrative Procedure Act 

as well as contractual authority with 

existing PPAs. Other comments raised 

issues of retroactive discounts, 

prevention of duplicate discounts, and 

alternative eligibility criteria such as 

using disproportionate patient 

percentages and independent audits. All 

comments discussed the potential 

impacts on covered entities, patients, 

and manufacturers. 

The following section presents a 

summary of all major comments, 

grouped by subject, and a response to 

each comment. All comments were 

considered in developing this final 

notice and changes were made to 

content when appropriate. 

(B) Comments and Responses 

(1) HRSA’s Legal Authority 

Comment: HRSA lacks authority to 

add children’s hospitals to the 340B 

program through guidelines. 

Response: HRSA disagrees. The 

Department publishes guidelines in the 

Federal Register providing a public 

comment period to obtain input into 

guidance development. Congress did 

not prescribe the process by which 

children’s hospitals would be added 

into the 340B program. HRSA has 

authority to provide guidelines 

interpreting the statute and its intended 

administration of the 340B program. 

The guidelines are not subject to the 

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Administrative Procedure Act’s notice 

and comment requirements; however, 

the Department chose to solicit and 

respond to public comments. These 

guidelines help to fulfill the Secretary’s 

obligation to provide for the operation 

of the program under section 340B. 

Comment: It is unclear that Congress 

has authorized the Secretary to enter 

into PPAs that include children’s 

hospitals. Contractual obligations of the 

PPA are directly tied to section 340B, 

which has not been amended to include 

children’s hospitals as covered entities. 

Response: HRSA acknowledges that 

section 6004 of the DRA did not amend 

section 340B to include children’s 

hospitals as covered entities. However, 

Congress did add children’s hospitals to 

the 340B program by amending section 

1927(a) of the Social Security Act which 

requires that manufacturers provide the 

statutorily mandated discount to 

covered entities. Congress specifically 

defined the term covered entity as 

including certain qualifying children’s 

hospitals. Considering the statutory 

scheme as a whole, it is clear that the 

Secretary has been authorized to 

include children’s hospitals within the 

program. 

Comment: Since the appropriate 

legislative changes were not made, it is 

out of the scope of authority of the 

Secretary and HRSA to read the current 

PPA as including children’s hospitals. 

Response: The existing PPAs do not 

need to be amended to include 

children’s hospitals. The PPAs require 

manufacturers to extend 340B pricing to 

all covered entities listed by HRSA in its 

database. The PPA also requires that it 

be interpreted in a manner that best 

effectuates the underlying statutory 

scheme. As previously discussed, 

including children’s hospitals as 

covered entities for purposes of the PPA 

best effectuates the statutory scheme 

and therefore children’s hospitals are 

covered entities for purposes of the 

PPA. 

(2) Certification of Eligibility 

Comment: Clarify the Social Security 

Act definition of children’s hospitals to 

mean that in any fiscal year or calendar 

year, no less than 80 percent of patient 

days involve patients under 18 years of 

age. 

Response: We disagree with a 

suggestion that HRSA utilize an 80 

percent figure. It is unclear on what 

basis such a figure would be 

determined. The statute indicates that 

section 1886(d)(1)(B)(iii) of the Social 

Security Act defines the term children’s 

hospital for purposes of 340B eligibility. 

This section defines a children’s 

hospital as ‘‘a hospital whose inpatients 

are predominantly individuals under 18 

years of age.’’ In using the statutory 

definition, HRSA has taken into account 

the CMS interpretation of this provision 

and the context of the 340B Drug Pricing 

Program. 

Comment: The guidelines should 

require participating children’s 

hospitals to demonstrate that the entity 

is a children’s hospital as defined by the 

Social Security Act and obtain a 

Medicare provider number in the 3300 

series identifying it as a children’s 

hospital. 

Response: We agree. The statute 

defines ‘‘children’s hospitals’’ by 

reference to section 1886(d)(1)(B)(iii) of 

the Social Security Act. CMS has 

reserved the 3300 series of Medicare 

Provider Numbers for children’s 

hospitals that meet the statutory 

definition. The guidelines have been 

changed accordingly to make this 

clearer. 

Comment: Clarify how the 

disproportionate share adjustment 

percentage eligibility criteria can be 

applied to children’s hospitals since 

children’s hospitals do not receive 

Medicare disproportionate share 

hospital (DSH) payment adjustments. 

Children’s hospitals should be 

permitted to rely on its disproportionate 

patient percentage (DPP) as defined by 

CMS for purposes of Medicaid. The DPP 

formula demonstrating a percentage of 

greater than 27.32 percent is just as 

reliable as the required greater than 

11.75 percent disproportionate share 

adjustment percentage. 

Response: HRSA agrees with the 

comment that children’s hospitals that 

do not receive Medicare DSH payment 

adjustments may have difficulty in 

showing their disproportionate share 

adjustment percentage. As an 

alternative, children’s hospitals can 

show compliance with this requirement 

if they provide independent verification 

that if the disproportionate share 

adjustment percentage were calculated, 

it would be greater than 11.75 percent. 

Under current law, one method for 

reaching such a conclusion would be to 

have a DPP greater than a threshold 

amount that equates to a 

disproportionate share adjustment 

percentage greater than 11.75 percent. 

DPP for this purpose is defined at 42 

CFR 412.106 and is used in the current 

applicable statutory formula to calculate 

the disproportionate share adjustment 

percentage for DSHs. 

Comment: Many children’s hospitals 

do not file any or full Medicare cost 

reports. If no cost report exists, 

children’s hospitals should be permitted 

to rely on their own independent 

auditors to confirm their DPP. 

Response: If a children’s hospital does 

not file a Medicare cost report, HRSA 

agrees that children’s hospitals can 

confirm eligibility through the findings 

of an independent auditor and 

certification by the covered entity as to 

the appropriate value of the hospital’s 

disproportionate share adjustment 

percentage, as based upon the DPP. 

Comment: In addition to requiring 

verification from independent auditors 

from children’s hospitals that the entity 

meets 340B eligibility requirements, a 

comment was made to require this 

verification to OPA annually because 

the data used in the calculation to meet 

the requirements of section 

340B(a)(4)(L)(ii) are subject to change. 

Response: HRSA agrees that there is a 

need for ongoing verification as to 

whether this eligibility requirement 

continues to be met over time. After 

enrollment, children’s hospitals, as do 

all covered entities, have an ongoing 

responsibility to immediately notify the 

OPA in the event of any change in 

eligibility for the 340B Drug Pricing 

Program. No less than on an annual 

basis, children’s hospitals will need to 

demonstrate that the children’s hospital 

continues to have the required 

disproportionate share adjustment 

percentage or DPP. The OPA will 

provide additional guidance as it 

develops its plans to annually certify 

covered entities. To the extent that the 

OPA is able to obtain periodic 

documentation of data similar to that 

provided by CMS with respect to DSHs, 

it may notify the covered entity that 

information need not be provided. 

(3) Eligibility for Rebates Back to 

February 8, 2006 

Comment: The eligibility criteria for 

receiving retroactive discounts are 

overwhelming and confusing to both 

manufacturers and covered entities. 

HRSA should remove the ability to 

receive retroactive discounts from the 

final rule or, at a minimum, clearly 

define these criteria. 

Response: Although the statute can be 

complex, we disagree that it is 

overwhelming or that unilaterally 

disallowing any ‘‘retroactive’’ discounts 

is appropriate. The parties are in the 

best position to understand and resolve 

claims over these issues. In this 

guidance, HRSA believes it has 

provided an appropriate level of detail 

as to its view on how covered entities 

can qualify for rebates on purchase back 

to February 8, 2006, the date of 

enactment of the DRA. 

Comment: HRSA should post on its 

on-line database the date when a 

children’s hospital satisfied the 340B 

eligibility criteria for manufacturers to 

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45208 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Notices 

verify if and when the children’s 

hospital was entitled to receive 

retroactive discounts. 

Response: HRSA does not currently 

plan to provide the eligibility date on its 

Web site for purposes of retroactive 

rebates. HRSA intends to follow the 

current practice of listing the date of 

eligibility for direct purchase under the 

340B Drug Pricing Program as is 

consistent with the purpose of that 

database. The addition of retroactivity 

dates would be outside the established 

purpose of the database and lead to 

potential confusion. If a covered entity 

and manufacturer are unable to agree on 

the date that the covered entity 

complied with program requirements or 

otherwise disagree, HRSA believes that 

it is most appropriate to follow its 

published dispute procedures that 

require the parties to resolve any 

disputes in good faith. HRSA’s first 

priority is to have eligible children’s 

hospitals register for the 340B Drug 

Pricing Program. HRSA has concluded 

that this approach is the most efficient 

and that HRSA will assist parties to 

resolve disputes through the published 

dispute resolution process to the extent 

resources permit. 

Comment: HRSA should clarify 

‘‘appropriate’’ documentation to 

demonstrate that drugs did not generate 

Medicaid rebates. 

Response: This is a fact-specific 

inquiry that may vary from case to case 

and State to State. The children’s 

hospital should demonstrate that the 

covered outpatient drugs for which it 

seeks retroactive discounts were not 

subject to Medicaid rebates because they 

were not billed to Medicaid or it can 

otherwise show the State did not seek 

a rebate on the drugs for which a 

retroactive claim is sought. 

Comment: Children’s hospitals lack 

access to Medicaid drug rebate invoices/ 

claims data needed to establish the 

requirement that covered outpatient 

drugs did not generate Medicaid rebates 

during retroactive periods. 

Response: HRSA believes it 

appropriate to require that children’s 

hospitals seeking refunds provide 

sufficient factual evidence to 

demonstrate compliance with statutory 

requirements. Children’s hospitals 

seeking retroactive discounts should 

have access to records of which drugs 

were billed to Medicaid and which 

drugs were not billed to Medicaid. 

HRSA suggests that children’s hospitals 

consider contacting State Medicaid 

agencies for supporting documentation 

as is appropriate. 

Comment: HRSA should coordinate 

with CMS to provide guidance regarding 

monthly Average Manufacturer Price 

(AMP) and quarterly Average Sales 

Price (ASP) calculations already 

submitted, if retroactive discounts are 

given. 

Response: HRSA will do what it 

reasonably can to assist in the process; 

however, the issue of resolving whether 

retroactive discounts are appropriate 

should be resolved to the full extent 

possible by the covered entities and 

manufacturers. Manufacturers will need 

to consult with CMS with respect to the 

separate issue on how to handle 

calculations reported to CMS. 

Comment: Children’s hospitals should 

not be penalized for use of Group 

Purchasing Organizations (GPOs) during 

the long interval that has elapsed since 

enactment of section 6004. Initially, 

HRSA allowed DSHs to use GPOs and 

to receive 340B retroactive discounts as 

long as discounts were not for drugs 

obtained through the GPO. Similarly, 

children’s hospitals should be eligible to 

receive retroactive discounts for covered 

outpatient drugs that were not 

purchased through a GPO. 

Response: HRSA disagrees and finds 

the proposed treatment of retroactive 

rebates to be inconsistent with the 

applicable standards for DSHs. The 

statute makes clear that children’s 

hospitals must meet the same criteria 

applicable to DSHs. In 1994, final 

guidance was published on the GPO 

exclusion that expressly provides that 

any participation in a GPO or other 

group purchasing arrangement for 

covered outpatient drugs by a DSH 

results in loss of eligibility as a covered 

entity. HRSA believes that under the 

statute and under current guidance it 

should exclude from eligibility for 

retroactive rebates any purchases while 

the children’s hospital purchased 

covered outpatient drugs through a GPO 

or other purchasing arrangement. 

The guideline for retroactive rebates 

published in 1994 (59 FR 25110) was 

consistent with the GPO exclusion 

guideline in place for the period of 

retroactivity. Likewise, this guideline 

for retroactive rebates is consistent with 

the GPO exclusion guideline in place for 

the period of retroactivity. 

Comment: Retroactive discounts 

should only apply to children’s 

hospitals that comply with statutory 

prohibition against use of a GPO. 

Furthermore, a comment was received 

stating that children’s hospital should 

not be able to request retroactive rebates 

on a covered outpatient drug that was 

not purchased under a GPO contract if 

the entity used a GPO contract for other 

covered outpatient drugs during that 

same time period. 

Response: HRSA agrees and has 

changed the guidelines to make this 

issue clear. 

Comment: HRSA should be required 

to establish a process to document the 

eligibility and compliance of these new 

entities for any time period of eligibility, 

including retroactive periods. HRSA 

should create an audit or certification 

process to determine the actual date that 

the facility met all requirements. 

Manufacturers should be allowed to 

audit the processes and documentation 

before they are obligated to provide the 

retroactive discounts. 

Response: HRSA believes that the 

process outlined in the guidelines 

provides enough safeguards to ensure 

program integrity. To the extent that a 

manufacturer has a specific concern 

about a covered entity’s status, the 

manufacturer should bring those 

concerns to HRSA’s attention. 

Manufacturers also have the option of 

bringing a dispute through the dispute 

resolution process as addressed in 

previous guidance (61 FR 65406). The 

issue of manufacturer audits has also 

been previously addressed in finalized 

guidance (61 FR 65406). 

Comment: HRSA should shorten the 

proposed 120-day period allowed to 

submit requests for retroactive discounts 

to 30 days, similar to its Federal 

Register notice dated May 13, 1994, 

following the enactment of section 340B 

in 1992, where HRSA permitted eligible 

covered entities to request retroactive 

discounts within 30 days of publication 

of guidelines. 

Response: While HRSA understands 

that after enactment of the 340B statute 

and the implementation of the initial 

guidances, there was only a 30-day 

retroactivity period, there are materially 

different circumstances between the 

situations in 1994 and today. HRSA 

must take into account the potential 

time necessary to obtain sufficient 

evidence to demonstrate eligibility 

(requirements which did not exist in 

1994) as well as the delay between the 

time of application to the 340B Drug 

Pricing Program and listing in the 

Covered Entity Database at the 

beginning of the quarter. Upon further 

review, taking into account changes to 

this final guidance, HRSA has 

determined that in order to ensure that 

all eligible hospitals have reasonable 

time they should have three full 

calendar quarters after publication 

during which they must get registered 

and officially listed on the 340B 

Covered Entity Database. To be eligible 

a children’s hospital must register and 

be listed on 340B Covered Entity 

Database within one year of publication 

of this notice. This amount of time will 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Notices 45209 

ensure that all eligible children’s 

hospitals will have reasonable time to 

obtain the necessary documentation, 

enroll, and be listed on the 340B Drug 

Pricing Program Database as eligible to 

purchase under 340B. Children’s 

hospitals will need to abide by all 

applicable deadlines for registration and 

will only be added to the list at the time 

of standard quarterly updates. Once 

listed on the 340B Drug Pricing Program 

Database, a children’s hospital will have 

30 days to notify manufacturers in 

writing to preserve their claims. 

(4) Eligibility of Off-site Facilities of 

Children’s Hospitals 

Comment: HRSA did not address how 

off-site locations of children’s hospitals 

may participate in 340B. The DSH 

requirement states that the off-site 

location be an ‘‘integral’’ part of the 

hospital and be reimbursable on the 

Medicare cost report. HRSA should be 

partially guided by Medicare providerbased standards to establish an 

alternative to the cost report for off-site 

facilities of children’s hospitals to be 

eligible for 340B. 

Response: To the extent possible, 

eligibility for off-site locations will be 

determined through the same method 

applied for DSHs in the 340B Program. 

Additional clarification on this issue 

has been provided in the final guidance. 

(5) Hemophilia Treatment Centers 

Comment: Several commenters asked 

that HRSA require, as prerequisite, that 

children’s hospitals agree to maintain 

Hemophilia Treatment Centers as 

independent purchasers under 340B. 

Response: HRSA does not find that 

such a requirement is necessary to 

ensure against duplicate discounts or 

diversion, and does not find sufficient 

basis to issue such a requirement in this 

guidance. 

(6) Miscellaneous Comments 

Comment: There should be a dispute 

resolution process if a manufacturer has 

reason to believe that HRSA’s 

determination of eligibility period for a 

children’s hospital is incorrect. 

Response: HRSA is not initially 

making such a determination. HRSA 

does have guidance on its dispute 

resolution process. 

Comment: HRSA should require 

explicitly that children’s hospitals abide 

by program guidance relating to the 

patient definition. 

Response: HRSA agrees and finds that 

the guidance as proposed already makes 

that explicit. 

(C) Obligation of Manufacturers To 

Provide 340B Discounts to Children’s 

Hospitals 

Section 1927(a)(5)(A) of the Social 

Security Act requires manufacturers to 

enter into agreements with the Secretary 

that meet the requirements of section 

340B with respect to covered outpatient 

drugs purchased by a covered entity. 

Section 1927(a)(5)(B), as amended by 

section 6004, defines covered entities 

for purposes of section 1927(a)(5) as 

those covered entities listed in the 

Public Health Service Act and certain 

children’s hospitals. As section 

1927(a)(5)(A) requires manufacturers to 

enter into agreements ‘‘with respect to 

covered outpatient drugs purchased by 

a covered entity,’’ and covered entity is 

defined as including children’s 

hospitals for purposes of section 1927, 

manufacturers are required to extend 

340B pricing to eligible children’s 

hospitals. 

The PPAs between the Secretary and 

each manufacturer require 

manufacturers to provide 340B 

discounted covered outpatient drugs to 

covered entities. Given the clear 

congressional intent in section 6004 to 

expand the category of covered entities, 

the PPAs currently in place effectively 

require manufacturers to provide 340B 

discounts to children’s hospitals 

without need for further amendment to 

currently existing PPAs. 

(D) Process for Admission of Children’s 

Hospitals to the 340B Program 

(1) Children’s Hospitals Participation 

Children’s hospitals participation in 

the 340B Drug Pricing Program is 

voluntary. Consistent with the 

participation of other covered entities, 

once a children’s hospital has elected to 

participate in the program, it must wait 

to enter or withdraw from the program 

until the next official update of the 340B 

covered entity database. Participating 

children’s hospitals must comply with 

all program guidelines for covered 

entities until the date they are removed 

from the 340B covered entity database. 

The OPA will accept applications from 

children’s hospitals for entry into the 

340B Program as of the date of 

publication of the final notice of these 

guidelines. Hospitals that submitted 

documentation seeking recognition as a 

children’s hospital eligible for the 340B 

Drug Pricing Program prior to the 

publication of the guidance should 

apply again in accordance with the 

procedures described in this guidance. 

(2) Certification by Children’s Hospitals 

Prior to 340B Drug Pricing Program 

Entry 

As with other covered entities, prior 

to entry into the 340B Drug Pricing 

Program, children’s hospitals will be 

required to provide OPA with a 

certification regarding several different 

program requirements. As a threshold 

matter, a hospital wishing to qualify for 

the 340B Program as a children’s 

hospital must demonstrate that the 

hospital is a ‘‘children’s hospital’’ as 

defined by section 6004. Section 6004 

requires that a hospital wishing to 

qualify as a children’s hospital covered 

entity must satisfy the definition of 

‘‘children’s hospital’’ contained in 

section 1886(d)(1)(B)(iii) of the Social 

Security Act; and meet minimum 

requirements for the receipt of an 

additional payment under Medicare 

pursuant to section 1886(d)(5)(F)(i) of 

the Social Security Act (if such clause 

were applied to the children’s hospital 

while taking into account the percentage 

of care provided by the hospital to 

Medicaid patients). 

(i) Certify That the Hospital Is a 

Children’s Hospital as Defined by 

Statute 

Given the reliance of section 6004 on 

Medicare payment provisions for the 

definition of ‘‘children’s hospital’’ and 

the requirement that a children’s 

hospital must demonstrate that they 

would meet the same requirements as a 

DSH, if they were eligible for DSH 

payments, a hospital will need to 

demonstrate that it has been assigned a 

Medicare provider number identifying 

the hospital as a ‘‘children’s hospital’’ 

(i.e., a hospital with a 3300 series 

Medicare provider number). 

(ii) Certify That the Hospital Will Abide 

by All Requirements of Section 340B of 

the Public Health Service Act 

Prior to entry into the 340B Program, 

a children’s hospital must certify that it 

will abide by all the requirements of 

section 340B that all other covered 

entities abide by (e.g., prohibition on 

resale of covered outpatient drugs; 

prohibition on duplicate discounts or 

rebates). While children’s hospitals are 

not explicitly mentioned in section 

340B, it is implicit in section 1927(a) of 

the Social Security Act that children’s 

hospitals abide by the requirements of 

section 340B. Section 1927(a) provides 

that manufacturers must have entered 

into agreements with the Secretary that 

meet the requirements of section 340B 

and several of the provisions contained 

in these agreements concern covered 

entities’ compliance with provisions of 

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45210 Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Notices 

section 340B. Furthermore, it is within 

the Secretary’s authority under section 

340B to create guidelines necessary for 

the implementation of the program. 

Unless children’s hospitals are subject 

to all of the same rules as other covered 

entities, the inclusion of children’s 

hospitals in the 340B Program would be 

difficult, if not impossible. 

(iii) Certify Compliance With 

340B(a)(4)(L) as Modified by Section 

6004 of the DRA 

Prior to entry into the 340B Program, 

a children’s hospital must certify 

compliance (along with the date of 

compliance) with clauses (i), (ii), and 

(iii) of section 340B(a)(4)(L) (in 

accordance with section 1927(a)(5)(B) of 

the Social Security Act) in the following 

manner: 

(A) Meets the requirements of section 

340B(a)(4)(L)(i). 

To comply with the requirements of 

section 340B(a)(4)(L)(i), a children’s 

hospital will have to certify (and 

include such supporting documentation 

as requested by OPA) that the hospital 

is (1) owned or operated by a unit of 

State or local government; (2) is a public 

or private non-profit corporation which 

is formally granted governmental 

powers by a unit of State or local 

government; or (3) is a private nonprofit hospital under contract with State 

or local government to provide health 

care services to low income individuals 

who are not eligible for Medicare or 

Medicaid. 

(B) Meets the requirements of section 

340B(a)(4)(L)(ii). 

To comply with section 

340B(a)(4)(L)(ii), as modified by section 

6004, a children’s hospital will have to 

certify (and include such supporting 

documentation as requested by OPA) 

that the children’s hospital (1) is located 

in an urban area, has 100 or more beds, 

and can demonstrate that its net 

inpatient care revenues (excluding any 

of such revenues attributable to 

Medicare), during the cost reporting 

period in which the discharges occur, 

for indigent care from State and local 

government sources and Medicaid 

exceed 30 percent of its total of such net 

inpatient care revenues during the 

period; or (2) for the most recent cost 

reporting period that ended before the 

calendar quarter involved, had a 

disproportionate share adjustment 

percentage (as determined under section 

1886(d)(5)(F) of the Social Security Act) 

greater than 11.75 percent. 

Supporting documentation must 

include a signed statement by an 

appropriate official (e.g., Chief Financial 

Officer) of the children’s hospital that 

he/she is familiar with the requirements 

under section 340B(a)(4)(L)(ii), has 

examined the documentation, and 

certifies that to the best of his/her 

knowledge that the children’s hospital 

satisfies the requirements. In addition, 

the documentation must include: (1) An 

official document from the Department 

of Health and Human Services (HHS) or 

a HHS contractor that is authorized to 

make official determinations, showing 

that the children’s hospital meets one or 

both criterion listed above; (2) if the 

organization files a Medicare cost 

report, the report filed does not contain 

a disproportionate share adjustment 

percentage, and the report includes 

sufficient information to calculate the 

disproportionate share adjustment 

percentage, include a copy of those 

pages of the filed Medicare cost report 

with the data necessary to calculate the 

disproportionate share adjustment 

percentage; or (3) if the organization 

does not file a Medicare cost report with 

sufficient information to calculate the 

disproportionate share adjustment 

percentage, a statement from a qualified 

independent auditor certifying that the 

auditor performed an audit on the 

records of the children’s hospital, that 

the auditor is familiar with Federal rules 

and regulations relevant to its findings, 

and found that the hospital would meet 

one or both of the criterion in section 

340B(a)(4)(L)(ii), as modified by section 

6004 (described in the previous 

paragraph). The supporting 

documentation for (1), (2) or (3) should 

identify the basis for that conclusion 

including the actual percentage value 

upon which the determination is made 

(e.g., disproportionate patient 

percentage defined at 42 CFR section 

412.106), a concise description of any 

mathematical calculations, and the 

quarter for which the determination was 

made. The children’s hospital should 

notify OPA if (1), (2) or (3) result in 

different conclusions as to eligibility of 

the children’s hospital. 

(C) Meets the requirements of section 

340B(a)(4)(L)(iii). 

To comply with section 

340B(a)(4)(L)(iii), a children’s hospital 

will have to certify that it will not 

participate in a group purchasing 

organization (GPO) or group purchasing 

arrangement for covered outpatient 

drugs as of the effective date of 

participation as listed in the 340B 

covered entity database. 

(3) Inclusion of Children’s Hospitals’ 

Off-Site Outpatient Facilities 

Children’s hospitals must meet the 

applicable requirements for DSHs as 

described in the guidance published in 

59 FR 47884 (Sept. 19, 1994). 

(i) Children’s Hospitals That File 

Medicare Cost Reports With CMS 

Children’s hospitals that file Medicare 

cost reports will be required to utilize 

the same process to add outpatient 

facilities as DSHs (59 FR 47884). A 

children’s hospital, eligible for the 340B 

Drug Pricing Program, must first request 

that the OPA include in its covered 

entity database the outpatient facilities 

that are included as reimbursable in its 

Medicare cost report. A list of these 

outpatient facilities along with Medicare 

and Medicaid billing status information 

must be included with the request. 

Second, an appropriate official (e.g., 

Chief Financial Officer) of the children’s 

hospital must sign a statement that he/ 

she is familiar with CMS guidelines 

concerning Medicare certification of 

hospital components as one cost center, 

has examined the list of outpatient 

facilities, and certifies that the facilities 

are correctly included on the Medicare 

cost report of the children’s hospital. 

When these outpatient facilities are 

added to the master list of eligible and 

participating covered entities, the offsite facilities will be able to access 340B 

Drug Program pricing. Outpatient 

facilities that are not included as 

reimbursable on the Medicare cost 

report or file independent Medicare cost 

reports will not be eligible for 340B 

pricing as part of the children’s hospital. 

(ii) Children’s Hospitals That Do Not 

File Medicare Cost Reports With CMS 

Children’s hospitals that do not file a 

Medicare cost report with CMS must 

first request that the OPA include in its 

covered entity database the outpatient 

facilities that are integral parts of the 

hospital. A list of these outpatient 

facilities along with Medicaid billing 

status information must be included 

with the request. Second, an appropriate 

official (e.g., Chief Financial Officer) of 

the children’s hospital must sign a 

statement that he/she is familiar with 

CMS guidelines concerning Medicare 

certification of hospitals as a cost center, 

has examined the list of outpatient 

facilities, and certifies that each facility 

is an integral part of the children’s 

hospital whose patients are considered 

patients of the children’s hospital, 

according to the most current published 

guidelines on patient definition, and 

would have been correctly included on 

the Medicare cost report if the hospital 

filed such a report and that the 

outpatient facility meets the 

requirements of a provider-based facility 

within a DSH under 42 CFR 413.65. 

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Federal Register / Vol. 74, No. 168 / Tuesday, September 1, 2009 / Notices 45211 

(E) Annual Re-Certification by 

Children’s Hospitals To Maintain 

Eligibility Status in 340B Drug Pricing 

Program 

Children’s hospitals have an ongoing 

responsibility to immediately notify 

OPA in the event of any change in 

eligibility for the 340B Drug Pricing 

Program. No less than on an annual 

basis, children’s hospitals will need to 

demonstrate continued maintenance of 

the required disproportionate share 

adjustment percentage or 

disproportionate patient percentage. 

OPA will provide additional guidance 

as it gains experience and develops its 

plans to annually certify covered 

entities. To the extent that OPA is able 

to obtain periodic documentation of 

such data similar to that provided by 

CMS with respect to DSHs, it may notify 

the covered entity that such information 

need not be provided. 

(F) Eligibility for Discounts Back to 

February 8, 2006 

Section 6004 of the DRA indicates 

that the amendment authorizing entry of 

children’s hospitals into the 340B 

Program ‘‘shall apply to drugs 

purchased on or after the date of the 

enactment of this Act.’’ The DRA 

provision was enacted on February 8, 

2006. Therefore, once children’s 

hospitals are admitted to the 340B 

Program and listed on the Covered 

Entity Database, they are eligible for 

340B drug pricing back to February 8, 

2006. However, a children’s hospital 

will be eligible for such retroactive 

discounts only to the extent that it has 

satisfied all requirements for 

participation in the 340B program back 

to the date discounts are requested. 

Children’s hospitals may request 

retroactive discounts (discounts, 

rebates, or account credit) directly from 

pharmaceutical manufacturers for 

covered outpatient drugs when all the 

following conditions are satisfied: 

(1) The children’s hospital is listed on 

the 340B Covered Entity Database as 

eligible to purchase under 340B within 

one year of publication of this notice. 

(2) The children’s hospital sent a 

request in writing to each manufacturer 

of the drug(s) for which retroactive 

discounts are sought within 30 days of 

the children’s hospital having been 

listed as eligible to purchase under 340B 

on the 340B Covered Entity Database; 

(3) The covered outpatient drugs must 

have been purchased on or after 

February 8, 2006; 

(4) The covered outpatient drugs must 

not have generated Medicaid rebates 

(the children’s hospital must have 

appropriate documentation to 

demonstrate this); 

(5) The covered outpatient drugs must 

not have been sold or transferred to a 

person who was not a patient of the 

children’s hospital; and 

(6) The covered outpatient drugs must 

have been purchased on or after the date 

on which the children’s hospital 

satisfied all requirements for 

participation in the 340B Program as 

outlined in section (D) of this notice. 

In order to satisfy the last condition 

listed above, a children’s hospital must 

be able to demonstrate, at a minimum, 

that as required by section 

340B(a)(4)(L)(iii) of the Public Health 

Service Act, the children’s hospital did 

not have a group purchasing agreement 

for covered outpatient drugs and 

satisfied the requirements of section 

340B(a)(4)(L)(i) and 340B(a)(4)(L)(ii) at 

the time the covered outpatient drugs 

for which rebates are requested were 

purchased. Participation in a GPO for 

any covered outpatient drugs would 

disqualify a children’s hospital for 

retroactive rebates during any quarter 

that the children’s hospital purchased 

any covered outpatient drug through a 

GPO or other group purchasing 

arrangement. Consistent with section 

340B(a)(5)(C) of the Public Health 

Service Act, children’s hospitals must 

have auditable records that support 

claims for retroactive discounts and 

permit the Government or 

manufacturers to audit those records (in 

accordance with procedures established 

by the Secretary relating to the number 

scope and duration of such audits (61 

FR 65406)). 

In fulfilling the conditions listed 

above, any children’s hospital that 

believes it is entitled to retroactive 

discounts may preserve its rights by 

sending manufacturers a letter 

requesting such refunds, explaining 

how they meet the requirements in this 

notice, and providing adequate 

documentation of purchases within 30 

days being listed on the 340B Covered 

Entity Database as eligible. Such 

children’s hospitals should engage in 

good faith efforts to resolve any disputes 

with manufacturers. To the extent they 

are unable to resolve disputes and wish 

to pursue further involvement with the 

OPA, they are encouraged to follow the 

guidance on the dispute resolution 

process as described in the Federal 

Register (61 FR 65406). 

Dated: August 26, 2009. 

Mary K. Wakefield, 

Administrator. 

[FR Doc. E9–21109 Filed 8–31–09; 8:45 am] 

BILLING CODE 4165–15–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Agency for Healthcare Research and 

Quality 

Agency Information Collection 

Activities: Proposed Collection; 

Comment Request 

AGENCY: Agency for Healthcare Research 

and Quality, HHS. 

ACTION: Notice. 

SUMMARY: This notice announces the 

intention of the Agency for Healthcare 

Research and Quality (AHRQ) to request 

that the Office of Management and 

Budget (OMB) approve the proposed 

information collection project: ‘‘Health 

IT Community Tracking Study 2009.’’ In 

accordance with the Paperwork 

Reduction Act of 1995, 44 U.S.C. 

3506(c)(2)(A), AHRQ invites the public 

to comment on this proposed 

information collection. 

This proposed information collection 

was previously published in the Federal 

Register on June 30th, 2009 and allowed 

60 days for public comment. No 

comments were received. The purpose 

of this notice is to allow an additional 

30 days for public comment. 

DATES: Comments on this notice must be 

received by October 1, 2009. 

ADDRESSES: Written comments should 

be submitted to: AHRQ’s OMB Desk 

Officer by fax at (202) 395–6974 

(attention: AHRQ’s desk officer) or by email at OIRA_submission@omb.eop.gov 

(attention: AHRQ’s desk officer). 

Copies of the proposed collection 

plans, data collection instruments, and 

specific details on the estimated burden 

can be obtained from the AHRQ Reports 

Clearance Officer. 

FOR FURTHER INFORMATION CONTACT: 

Doris Lefkowitz, AHRQ Reports 

Clearance Officer, (301) 427–1477, or by 

e-mail at doris.lefkowitz@ahrg.hhs.gov. 

SUPPLEMENTARY INFORMATION: 

Proposed Project 

Health IT Community Tracking Study 

2009 

Electronic prescribing (e-prescribing) 

is a central focus of efforts to promote 

health information technology (IT) and 

is of particular interest to AHRQ 

because of its potential to improve 

patient safety by reducing medication 

errors. Despite many public- and 

private-sector initiatives to support eprescribing, to date, physician adoption 

and use has been limited (Friedman, 

Schueth and Bell 2009). Recently, 

Section 132 of the Medicare 

Improvements for Patients and 

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