I 
118TH CONGRESS 
2D SESSION 
H. R. 8574 
To amend the Public Health Service Act to reform the 340B drug pricing 
program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 28, 2024 
Mr. BUCSHON (for himself, Mr. CARTER of Georgia, and Mrs. HARSHBARGER) 
introduced the following bill; which was referred to the Committee on En-
ergy and Commerce, and in addition to the Committee on Ways and 
Means, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To amend the Public Health Service Act to reform the 340B 
drug pricing program, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘340B Affording Care for Communities and Ensuring a 
Strong Safety-net Act’’ or the ‘‘340B ACCESS Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
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Sec. 1. Short title; table of contents. 
Sec. 2. Definitions. 
Sec. 3. Prevention of Medicaid duplicate discounts; oversight of covered entities. 
Sec. 4. Hospital child site requirements. 
Sec. 5. Contract pharmacies. 
Sec. 6. Ensuring patient affordability of drugs purchased under section 340B. 
Sec. 7. Requirements for nonhospital covered entities and subgrantees. 
Sec. 8. Claims modifiers; covered entity data submission. 
Sec. 9. Covered entity reporting on scope of grant, contract, and project. 
Sec. 10. Ensuring covered entity transparency. 
Sec. 11. Revisions to existing 340B hospital eligibility requirements. 
Sec. 12. Additional requirements for 340B hospitals. 
Sec. 13. 340B program. 
Sec. 14. Audits of private nonhospital contracts with State and local govern-
ments. 
Sec. 15. Ensuring covered entity compliance with transparency requirements. 
Sec. 16. 340B claims data clearinghouse. 
Sec. 17. Limitation on administrator service fees and contract pharmacy fees. 
Sec. 18. Clarification. 
Sec. 19. Ensuring the equitable treatment of 340B covered entities and phar-
macies participating in the 340B drug discount program. 
Sec. 20. Effective date. 
SEC. 2. DEFINITIONS. 
(a) DEFINITION OF PATIENT.—Section 340B(b) of 
the Public Health Service Act (42 U.S.C. 256b(b)) is 
amended by adding at the end the following: 
‘‘(3) PATIENT.— 
‘‘(A) IN
GENERAL.—In this section, the 
term ‘patient’ means, with respect to a covered 
entity described in subsection (a)(4), an indi-
vidual who, on a prescription-by-prescription or 
order-by-order basis— 
‘‘(i) is dispensed or administered a 
covered outpatient drug that is— 
‘‘(I) directly related to the service 
described in clause (iii); 
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‘‘(II) ordered or prescribed by a 
covered entity provider described in 
clause (ii) as a result of the service 
described in clause (iii); and 
‘‘(III) dispensed or administered 
on site at a covered entity location, a 
child site (as defined in subsection 
(a)(5)(E)), or an entity pharmacy (as 
defined in subsection (a)(5)(F)) listed 
in the identification system described 
in subsection (d)(2)(B)(iv), or on site 
at a contract pharmacy in accordance 
with subsection (a)(5)(F) or dispensed 
through a mail order pharmacy in ac-
cordance with subsection (a)(5)(F); 
‘‘(ii) receives the health care service 
described in clause (iii) from a ‘covered en-
tity provider’, meaning a health care pro-
fessional who either— 
‘‘(I) is an employee or inde-
pendent contractor of the covered en-
tity, such that the covered entity bills 
for services furnished by the health 
care professional and is responsible 
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for the care furnished by such profes-
sional; or 
‘‘(II) furnishes health care serv-
ices under an ongoing contractual ob-
ligation to the covered entity such 
that responsibility for the care pro-
vided remains with the covered entity 
and meets the other requirements in 
this paragraph, in the event State law 
prohibits or otherwise substantially 
limits the ability of the covered entity 
to bill for services of the health care 
professional; 
‘‘(iii) receives a covered outpatient 
drug in connection with a health care serv-
ice furnished at the covered entity (includ-
ing a child site) and such drug and service 
are paid by the insurer or third-party 
payor as outpatient items and services (or 
where third-party reimbursement is not 
made, such items and services are deemed 
outpatient if less than 24 hours have 
elapsed between such individual’s hospital 
registration and discharge); 
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‘‘(iv) is described in a category of in-
dividuals within the scope of, and receives 
a health care service at the covered entity 
(including a child site) that is within the 
scope of— 
‘‘(I) the Federal grant, project, 
or Federal grant-authorizing statute, 
as applicable, that qualifies such enti-
ty for participation in the program 
under this section, if the covered enti-
ty is described in one of subpara-
graphs (A) through (K) of subsection 
(a)(4); or 
‘‘(II) the contract as required in 
paragraphs (4)(L)(i) and (11) of sub-
section (a), if the covered entity is a 
private nonprofit hospital which has, 
as the basis for participating in the 
program under this section, a contract 
with a State or local government to 
provide health care services to speci-
fied individuals, provided that clause 
(iv) shall not apply with respect to a 
covered entity described in subsection 
(a)(4)(N) or a sole community hos-
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pital 
described 
in 
subsection 
(a)(4)(O); and 
‘‘(v) has an ongoing relationship with 
the covered entity such that the covered 
entity creates and maintains auditable 
health care records which demonstrate 
compliance with this paragraph and that 
the covered entity— 
‘‘(I) has a provider-to-patient re-
lationship with the individual; 
‘‘(II) is responsible for the indi-
vidual’s health care service that re-
sulted in the prescription or order for 
the drug; and 
‘‘(III)(aa) has provided a health 
care service to the individual through 
an in-person visit within the past 12 
months, if the covered entity is a hos-
pital described in subparagraph (L) or 
subparagraph (M) of subsection (a)(4) 
or is a rural referral center described 
in subparagraph (O) of such sub-
section; or 
‘‘(bb) has provided a health care 
service to the individual through an 
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in-person visit within the past 24 
months, if the covered entity is de-
scribed in one of subparagraphs (A) 
through (K) of subsection (a)(4), sub-
paragraph (N) of such subsection, or 
is a sole community hospital described 
in subparagraph (O) of such sub-
section. 
‘‘(B) TELEHEALTH AND TELEMEDICINE.— 
‘‘(i) IN GENERAL.—A prescription for 
a covered outpatient drug resulting from a 
health care service furnished to an indi-
vidual through telehealth, telemedicine, or 
other remote health care service arrange-
ments shall not qualify for pricing de-
scribed in subsection (a)(1) unless— 
‘‘(I) the covered entity (including 
child site, as applicable) at which such 
service is furnished is a covered entity 
(or a child site of a covered entity, as 
applicable) described in one of sub-
paragraphs (A) through (K) of sub-
section (a)(4), subparagraph (N) of 
such subsection, or is a sole commu-
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nity hospital described in subpara-
graph (O) of such subsection; and 
‘‘(II) subject to the exception in 
clause (ii), a covered entity provider 
has conducted an in-person examina-
tion of the individual within the 6- 
month time period immediately pre-
ceding the health care service result-
ing in the prescription or order for the 
drug. 
‘‘(ii) EXCEPTION.—The requirement 
in clause (i)(II) shall not apply with re-
spect to an individual for whom the cov-
ered entity maintains auditable records 
sufficient to demonstrate that such entity 
verified such individual is determined eligi-
ble for benefits under either title II of the 
Social Security Act or title XVI of such 
Act in accordance with the provisions of 
such applicable title. 
‘‘(C) PRESCRIPTIONS FROM NON-COVERED 
ENTITY PROVIDERS INELIGIBLE.— 
‘‘(i) IN GENERAL.—Subject to the ex-
ception for a qualifying referral described 
in clause (ii), a covered outpatient drug 
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prescribed or ordered for an individual by 
a health care professional who is not a cov-
ered entity provider shall not qualify for 
pricing described in subsection (a)(1). 
‘‘(ii) EXCEPTION
FOR
QUALIFYING 
REFERRALS.—In the case of a ‘qualifying 
referral’, all requirements in subparagraph 
(A) shall apply, except for clauses (i)(I), 
(i)(II), (ii), (iii), and (v)(II) of such sub-
paragraph. For purposes of this para-
graph, a ‘qualifying referral’ shall refer to 
the sequence of occurrences described in 
this clause for which a covered entity 
maintains documentation sufficient to dem-
onstrate that— 
‘‘(I) a covered entity provider 
evaluates and recommends to the indi-
vidual, during an encounter at the 
covered entity (including child site, as 
applicable), that such individual re-
ceive a specified type of specialty 
health care not available at the cov-
ered entity and such recommendation 
is contemporaneously documented, at 
the time of such encounter, in the 
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medical record the covered entity cre-
ates and maintains for such indi-
vidual; 
‘‘(II) within one year of the date 
of the encounter and recommendation 
described in subclause (I), the indi-
vidual receives a health care service 
from a medical specialist of the type 
described in such recommendation; 
‘‘(III) within the time period 
specified in subclause (II), the covered 
entity 
provider 
making 
the 
rec-
ommendation receives, directly from 
the medical specialist that furnishes 
the health care service described in 
subclause (II), written documentation 
specifying the service or services fur-
nished to such individual and the di-
agnoses made in connection with such 
service or services; and 
‘‘(IV) the covered entity retains 
overall responsibility for the care of 
the individual. 
‘‘(iii) COVERED
ENTITY
ELIGIBILITY 
FOR
QUALIFYING
REFERRALS.—Notwith-
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standing any other provision in this sec-
tion, a covered entity shall not qualify for 
pricing described in subsection (a)(1) with 
respect to a prescription or order for a cov-
ered outpatient drug resulting from a 
qualifying referral unless such covered en-
tity— 
‘‘(I) is described in subparagraph 
(N) of subsection (a)(4); 
‘‘(II) is a sole community hos-
pital described in subparagraph (O) of 
such subsection; or 
‘‘(III) is described in one of sub-
paragraphs (A) through (K) of such 
subsection, is not a specified nonhos-
pital covered entity (as defined in sub-
section (b)(4)), and has a Federal 
grant that requires such entity to con-
tract or refer for the health care serv-
ice or services furnished to the indi-
vidual by the medical specialist de-
scribed in clause (ii). 
‘‘(D) 
HEALTH
CARE
SERVICE
RE-
QUIRED.—For purposes of this section, an indi-
vidual shall not be considered a patient of the 
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covered entity described in subsection (a)(4) if 
the individual receives from the covered entity 
only the administration or infusion of a drug or 
drugs, or the dispensing of a drug or drugs for 
subsequent self-administration or administra-
tion in the home setting, without a covered enti-
ty provider-to-patient encounter involving the 
provision of a health care service.’’. 
(b) DEFINITION OF SPECIFIED NONHOSPITAL COV-
ERED ENTITY.—Section 340B(b) of the Public Health 
Service Act (42 U.S.C. 256b(b)) is further amended by 
adding at the end the following: 
‘‘(4) SPECIFIED NONHOSPITAL COVERED ENTI-
TY.—In this section, the term ‘specified nonhospital 
covered entity’ means a covered entity that— 
‘‘(A) is described in one of subparagraphs 
(B) through (K) of subsection (a)(4), other 
than a covered entity described in subparagraph 
(G) of such subsection, and— 
‘‘(i) has average annual operating rev-
enues exceeding $1,000,000,000 calculated 
over the most recent three-year period for 
which data are available, which revenue 
threshold shall be adjusted for inflation an-
nually to reflect rate of change in the Con-
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sumer Price Index for All Urban Con-
sumers published by the Bureau of Labor 
Statistics; or 
‘‘(ii) is an affiliate of a hospital; or 
‘‘(B) is described in subsection (a)(4)(A) 
and becomes affiliated with a hospital on or 
after December 1, 2023. 
For purposes of this definition, the term ‘affiliate’ 
shall mean an entity that, directly or indirectly, con-
trols, is controlled by, or is under common control 
with the referenced entity, including the referenced 
entity’s parent, and the term ‘control’ shall mean 
the power to direct the management and policies of 
an entity, directly or indirectly, whether through the 
ownership of voting securities, by contract, or other-
wise.’’. 
SEC. 3. PREVENTION OF MEDICAID DUPLICATE DIS-
COUNTS; OVERSIGHT OF COVERED ENTITIES. 
Section 340B(a)(5) of the Public Health Service Act 
(42 U.S.C. 256b(a)(5)) is amended— 
(1) in subparagraph (A)— 
(A) in clause (ii), by striking ‘‘The Sec-
retary’’ and inserting ‘‘Subject to subsection 
(d)(2)(C), the Secretary’’; and 
(B) by adding at the end the following: 
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patient drugs purchased under the 
340B program that are dispensed, ad-
ministered, or otherwise furnished to 
a Medicaid managed care enrollee and 
requirements for State Medicaid pro-
grams to promulgate rules to provide 
affected manufacturers a prompt rem-
edy with respect to any incorrectly 
billed rebates for such drugs.’’; 
(2) in subparagraph (C)— 
(A) by striking ‘‘A covered entity shall per-
mit’’ and inserting: 
‘‘(i) 
DUPLICATE
DISCOUNTS
AND 
DRUG RESALE.—A covered entity shall per-
mit’’; 
(B) by striking ‘‘(A) or (B)’’ and inserting 
‘‘(A), (B), (J), or (K)’’; and 
(C) by adding at the end the following: 
‘‘(ii) USE OF MARGIN.—A covered en-
tity shall permit the Secretary to audit, at 
the Secretary’s expense, the records of the 
entity to determine— 
‘‘(I) how the margin (as defined 
in subparagraph (L)(iv)) generated on 
covered outpatient drugs subject to an 
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agreement under this section dis-
pensed or furnished by such entity (or 
a contract pharmacy described in sub-
section (a)(5)(F)) is used by such en-
tity; and 
‘‘(II) such entity’s compliance 
with subparagraph (L). 
‘‘(iii) RECORDS RETENTION.—Covered 
entities shall retain such records and pro-
vide such records and reports as deter-
mined necessary by the Secretary for car-
rying out this subparagraph.’’; and 
(3) in subparagraph (D), by striking ‘‘(A) or 
(B)’’ and inserting ‘‘(A), (B), (J), or (K)’’. 
SEC. 4. HOSPITAL CHILD SITE REQUIREMENTS. 
(a) HOSPITAL CHILD SITE REQUIREMENTS.—Sec-
tion 340B(a)(5) of the Public Health Service Act (42 
U.S.C. 256b(a)(5)) is amended by adding at the end the 
following: 
‘‘(E) HOSPITAL
CHILD
SITE
REQUIRE-
MENTS.— 
‘‘(i) IN GENERAL.—A covered entity 
described in one of subparagraphs (L) 
through (O) of paragraph (4) may register 
an off-campus outpatient facility associated 
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with such covered entity for inclusion in 
the identification system described in sub-
section (d)(2)(B)(iv) to participate in the 
program under this section as an integral 
part of such covered entity if such covered 
entity demonstrates to the Secretary, in a 
manner specified by the Secretary, that 
such facility satisfies each of the require-
ments in this subparagraph. For purposes 
of this section, each facility registered to 
participate in the program under this sec-
tion and satisfying the requirements in this 
subparagraph shall be referred to as a 
‘child site’). 
‘‘(I) The facility is listed on the 
covered entity’s most recently filed 
Medicare cost report on a line that is 
reimbursable under the Medicare pro-
gram (or, if the covered entity is a 
children’s hospital that does not file a 
Medicare cost report, the covered enti-
ty submits to the Secretary a signed 
statement certifying that the facility 
would be correctly included on a reim-
bursable line of a Medicare cost report 
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if the covered entity filed a cost re-
port). 
‘‘(II) Such cost report dem-
onstrates that the services provided at 
the facility have associated costs and 
charges for hospital outpatient depart-
ment 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 Sec-
retary a signed statement certifying 
that the services provided at the facil-
ity include outpatient services). 
‘‘(III) The facility is wholly 
owned by the covered entity. 
‘‘(IV) The Secretary has made a 
determination, under the process de-
scribed in section 413.65(b) of title 
42, Code of Federal Regulations (or 
any successor regulations), that the 
facility meets the Medicare provider- 
based standards under section 413.65 
of title 42, Code of Federal Regula-
tions (or any successor regulations) 
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for an off-campus outpatient depart-
ment of the covered entity. 
‘‘(V) The facility provides out-
patient health care services that are 
not limited to only dispensing, admin-
istering, or otherwise furnishing cov-
ered outpatient drugs. 
‘‘(VI) The facility is subject to 
and adheres to all charity care and 
sliding fee scale policies of the covered 
entity and makes such policies pub-
licly available in a manner consistent 
with requirements established under 
section 501(r) of the Internal Revenue 
Code of 1986 applicable to hospital fi-
nancial assistance policies. 
‘‘(VII) The facility is located in 
an area with a shortage of personal 
health services that is— 
‘‘(aa) initially designated by 
the Secretary pursuant to section 
254b(b)(3) of title 42, United 
States Code, on or before Decem-
ber 1, 2023; or 
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‘‘(bb) designated by the Sec-
retary 
pursuant 
to 
subpara-
graphs (A) through (C) of section 
254b(b)(3) of title 42, United 
States Code, after December 1, 
2023, using the scoring method-
ology and criteria specified by the 
Secretary as of December 1, 
2023. 
‘‘(VIII) In the case of a covered 
entity described in one of subpara-
graphs (L) through (O) of paragraph 
(4) that is a private nonprofit hospital 
that has, as the basis for its participa-
tion in the program under this sec-
tion, a contract with a State or local 
government to provide health care 
services to low-income individuals who 
are uninsured, as described in para-
graphs (4)(L)(i) and (11), the facility 
independently complies with all re-
quirements applicable to such covered 
entity with respect to such contract. 
‘‘(IX) For the most recent year, 
the facility’s total cost incurred for 
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charity care (as such term is defined 
in line 23 of worksheet S–10 to the 
Medicare cost report, or in any suc-
cessor form) furnished at such facility 
during such year, as a share of the fa-
cility’s total patient service revenue, is 
greater than or equal to the amount 
described in item (aa) or item (bb), 
whichever is greater— 
‘‘(aa) for such year, the 
total cost incurred for charity 
care, as a share of total patient 
service revenue, furnished at the 
covered entity’s on-campus loca-
tions (as ‘campus’ is defined in 
section 413.65(a)(2) of title 42, 
Code of Federal Regulations (or 
any successor regulations)); or 
‘‘(bb) the average cost in-
curred for charity care, as a 
share of total patient service rev-
enue, calculated for the year 
prior to the most recent year for 
which data is available, across all 
hospitals in the State where the 
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facility is located that receive 
payments for inpatient hospital 
services under the prospective 
payment 
system 
established 
under section 1886(d) of the So-
cial Security Act. 
‘‘(X) For the most recent year, 
the facility’s share of total outpatient 
services revenue derived from base re-
imbursement to such entity (excluding 
supplemental and indirect reimburse-
ment) under title XIX of the Social 
Security Act (including with respect 
to individuals also entitled to benefits 
under part A of title XVIII of such 
Act or enrolled in part B of title 
XVIII of such Act) and payments 
under title XXI of such Act for items 
and services furnished on an out-
patient basis at the facility (including 
any cost sharing for such items and 
services) is greater than or equal to 
the amount described in item (aa) or 
item (bb), whichever is greater— 
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‘‘(aa) for such year, the 
share of total outpatient services 
revenue derived from base reim-
bursement to such entity (exclud-
ing supplemental and indirect re-
imbursement) under title XIX of 
the Social Security Act (including 
with respect to individuals also 
entitled to benefits under part A 
of title XVIII of such Act or en-
rolled in part B of title XVIII of 
such Act) and payments under 
title XXI of such Act for items 
and services furnished on an out-
patient basis at the on-campus 
locations of the covered entity 
with which the facility is associ-
ated (including any cost sharing 
for such items and services) 
(‘campus’ shall have the meaning 
given 
such 
term 
in 
section 
413.65(a)(2) of title 42, Code of 
Federal Regulations (or any suc-
cessor regulations)); or 
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‘‘(bb) the average share of 
total outpatient services revenue 
derived from base reimbursement 
(excluding supplemental and indi-
rect reimbursement) under title 
XIX of the Social Security Act 
(including with respect to individ-
uals also entitled to benefits 
under part A of title XVIII of 
such Act or enrolled in part B of 
title XVIII of such Act) and pay-
ments under title XXI of such 
Act for items and services fur-
nished on an outpatient basis (in-
cluding any cost sharing for such 
items and services), calculated 
for the year prior to the most re-
cent year for which data is avail-
able, across all hospitals in the 
state where the facility is located 
that receive payments for out-
patient hospital services under 
the prospective payment system 
for covered outpatient depart-
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ment services established under 
section 1833(t) of such Act. 
‘‘(XI) The covered entity cer-
tifies, at the time such facility is ini-
tially registered for inclusion in the 
identification system described in sub-
section (d)(2)(B)(iv) to participate in 
the drug pricing program under this 
section and annually thereafter as 
part of the recertification process, 
that the facility satisfies all applicable 
requirements under this subpara-
graph. 
‘‘(ii) LIMITATION.—Only an off-cam-
pus outpatient facility that meets each of 
the requirements under this subparagraph 
may purchase covered outpatient drugs 
under the 340B program or use covered 
outpatient drugs purchased under the 
340B program by another part of the cov-
ered 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 
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participate in the 340B program shall be 
deemed a violation of subparagraph (B). 
‘‘(iii) DEREGISTRATION.—If at any 
time following registration a requirement 
described in clause (i) is no longer fully 
satisfied with respect to a facility, the cov-
ered entity described in such clause shall 
immediately notify the Secretary that such 
facility no longer fully satisfies the relevant 
requirement, deregister the facility from 
the program under this section, remove the 
facility from the identification system de-
scribed in subsection (d)(2)(B)(iv), and 
take all necessary actions to prohibit such 
facility from making any purchases under 
the program under this section or rep-
resenting to third parties that such facility 
may purchase covered outpatient drugs 
under such program. 
‘‘(iv) 
OBLIGATION
TO
SELF-DIS-
CLOSE.—A covered entity described in 
clause (i) shall immediately disclose to the 
Secretary and the manufacturer of the af-
fected covered outpatient drug any pur-
chase made under the program under this 
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section by or on behalf of the covered enti-
ty with respect to a facility that, at the 
time of the purchase of such drug, did not 
fully satisfy the requirements in such 
clause. Any such purchase shall require the 
covered entity to promptly conduct an 
audit supervised by the Secretary to iden-
tify the full scope of noncompliance with 
such requirements and to provide the writ-
ten results of such audit to the Secretary 
and the manufacturer of the affected cov-
ered outpatient drug. The covered entity 
shall be liable to the manufacturer of the 
covered outpatient drug that is the subject 
of the noncompliance in an amount equal 
to the reduction in the price of the drugs 
provided under paragraph (1), plus inter-
est on such amount, which shall be com-
pounded monthly and equal to the current 
short-term interest rate as determined by 
the Federal Reserve for the time period for 
which the covered entity is liable. 
‘‘(v) CIVIL
MONETARY
PENALTY.— 
Where a covered entity knowingly and in-
tentionally violates clause (ii) or otherwise 
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fails to satisfy a requirement in clause (iii) 
or clause (iv), the covered entity shall be 
required to pay a civil monetary penalty 
equal to $2,500 for each such violation, 
which amount shall be adjusted for infla-
tion annually to reflect the rate of change 
in the Consumer Price Index for All Urban 
Consumers published by the Bureau of 
Labor Statistics. The provisions of section 
1128A of the Social Security Act (other 
than subsections (a) and (b)) shall apply to 
a civil monetary penalty under this clause 
in the same manner as such provisions 
apply to a penalty or proceeding under sec-
tion 1128A(a). The Office of Inspector 
General of the Department of Health and 
Human Services shall carry out the provi-
sions related to the imposition of civil mon-
etary penalties under this clause. 
‘‘(vi) SECRETARIAL PUBLICATION OF 
REPORTS.—On an annual basis, the Sec-
retary shall prepare and make available to 
the public in an electronic, machine read-
able format separate reports listing facili-
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ties that satisfy the requirements in each 
of subclauses (IX) and (X) of clause (i).’’. 
(b) EFFECTIVE DATE.—The provisions in section 
340B(a)(5)(E) of the Public Health Service Act, as added 
by this Act, shall become effective 120 days after the date 
of enactment of this Act. 
(c) IMPLEMENTATION
OF HOSPITAL CHILD SITE 
STANDARDS.—Not later than 60 days prior to the effec-
tive date of section 340B(a)(5)(E) of the Public Health 
Service Act, as added by this Act, the Secretary shall issue 
program instructions directing each covered entity de-
scribed in section 340B(a)(5)(E)(i) of the Public Health 
Service Act, as amended by this Act, to, before the effec-
tive date of section 340B(a)(5)(E) of the Public Health 
Service Act, as added by this Act, register in the identi-
fication system described in section 340B(d)(2)(B)(iv) of 
the Public Health Service Act, or update existing registra-
tions in such system for, off-campus outpatient facilities 
associated with such covered entity that satisfy the re-
quirements in such section. Such instructions shall direct 
each such covered entity to, on or before the effective date 
of section 340B(a)(5)(E) of the Public Health Service Act, 
as added by this Act, remove from such system the exist-
ing registration of any off-campus outpatient facility asso-
ciated with such covered entity that does not satisfy the 
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requirements in section 340B(a)(5)(E)(i) of the Public 
Health Service Act. Clauses (iii) through (v) of section 
340B(a)(5)(E) of the Public Health Service Act shall 
apply with respect to any covered entity described in one 
of subparagraphs (L) through (O) of section 340B(a)(4) 
of the Public Health Service Act that fails to remove a 
facility described in the immediately preceding sentence on 
or before the effective date of section 340B(a)(5)(E) of 
the Public Health Service Act, as added by this Act. 
SEC. 5. CONTRACT PHARMACIES. 
Section 340B(a)(5) of the Public Health Service Act 
(42 U.S.C. 256b(a)(5)) is further amended by adding at 
the end the following: 
‘‘(F) CONTRACT PHARMACIES.— 
‘‘(i) IN
GENERAL.—Subject to the 
conditions set forth in this subparagraph, 
a covered entity may enter into written 
agreements with contract pharmacies to 
dispense to patients of such entity covered 
outpatient drugs purchased by such entity 
under the 340B program. Subject to such 
conditions, a manufacturer of covered out-
patient drugs shall ship or facilitate ship-
ment of such drugs to contract pharmacies 
at the request of such covered entity. Ex-
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cept with respect to covered outpatient 
drugs shipped to and dispensed by a con-
tract pharmacy as provided in this sub-
paragraph, and notwithstanding any other 
provision in this section, a manufacturer of 
covered outpatient drugs shall have no ob-
ligation to pay a discount or rebate under 
this section with respect to covered out-
patient drugs delivered or otherwise trans-
ferred to any location other than a reg-
istered address of the covered entity (in-
cluding an entity pharmacy or child site, as 
applicable) listed in the identification sys-
tem described in subsection (d)(2)(B)(iv). 
‘‘(ii) CONDITIONS FOR COVERED EN-
TITY USE OF CONTRACT PHARMACIES.—In 
order for a covered entity to enter into a 
written agreement with a contract phar-
macy to dispense to patients of such entity 
covered outpatient drugs purchased by 
such entity under the program under this 
section, the entity shall— 
‘‘(I)(aa) be described in one of 
subparagraphs (A) through (K) of 
paragraph (4) and purchase covered 
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outpatient drugs for its patients with-
in the scope of the Federal grant, 
project, or Federal grant-authorizing 
statute, as applicable, that qualifies 
such entity for participation in the 
program under this section; or 
‘‘(bb) be described in one of sub-
paragraphs (L) through (O) of para-
graph (4); 
‘‘(II) establish and implement 
compliance procedures to satisfy the 
requirements described in subpara-
graphs (A), (B), (G) (as applicable), 
(H) (as applicable), (J), and (K) of 
paragraph (5) and section 1193(d) of 
the Social Security Act with respect to 
covered outpatient drugs purchased by 
the covered entity under this section, 
including with respect to such drugs 
dispensed by a contract pharmacy, 
which compliance procedures shall be 
considered records of the covered enti-
ty subject to audit under subpara-
graph (C); 
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‘‘(III) prior to purchasing cov-
ered outpatient drugs subject to an 
agreement under this section to be 
shipped to or dispensed by such phar-
macy, register such pharmacy in the 
identification system described in sub-
section (d)(2)(B)(iv) as a contract 
pharmacy, to include such pharmacy’s 
national provider identifier, and cer-
tify to the Secretary upon initial reg-
istration of such pharmacy in such 
system and annually thereafter that 
such pharmacy complies with all re-
quirements under this subparagraph, 
including the covered entity compli-
ance procedures described in sub-
clause (II); and 
‘‘(IV) as applicable, comply with 
the requirements and limitations set 
forth in clauses (iii) through (vii) of 
this subparagraph. 
‘‘(iii) 
LIMITATION
ON
CONTRACT 
PHARMACIES FOR CERTAIN HOSPITAL COV-
ERED
ENTITIES.—Notwithstanding clause 
(ii), a covered entity described in para-
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‘‘(v) REQUIREMENTS
FOR
USE
OF 
MAIL ORDER PHARMACIES.— 
‘‘(I) 
IN
GENERAL.—Notwith-
standing any other provision in this 
section, a covered outpatient drug 
subject to an agreement under this 
section may be dispensed to a patient 
of a covered entity through a mail 
order pharmacy only if— 
‘‘(aa) the covered entity dis-
pensing such drug (or on whose 
behalf such drug is dispensed) 
through a mail order pharmacy 
to such a patient is described in 
one 
of 
subparagraphs 
(A) 
through (K) of paragraph (4), 
such entity is not a specified non-
hospital covered entity (as de-
fined in subsection (b)(4)), and, 
except for a covered entity de-
scribed in subparagraph (G) of 
such subsection, the patient dis-
pensed such drug resides within 
the service area of the covered 
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entity (as defined in clause 
(x)(IV)); or 
‘‘(bb) the covered entity dis-
pensing such drug (or on whose 
behalf such drug is dispensed) 
through a mail order pharmacy 
to such a patient is described in 
subparagraph (N) of paragraph 
(4) or is a sole community hos-
pital described in subparagraph 
(O) of such paragraph, and the 
patient dispensed such drug re-
sides in a county that is not part 
of 
a 
Metropolitan 
Statistical 
Area, as defined by the Office of 
Management and Budget. 
‘‘(II) REQUIREMENTS
FOR
USE 
OF
MAIL
ORDER
CONTRACT
PHAR-
MACIES.—Subject to the conditions 
set forth in this subparagraph, a cov-
ered entity described in item (aa) or 
(bb) of subclause (I) may enter into 
written 
agreements 
with 
contract 
pharmacies that are mail order phar-
macies to dispense to patients de-
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scribed in such relevant clause covered 
outpatient drugs purchased by such 
entity under the 340B program. 
‘‘(vi) REQUIREMENTS
FOR
COVERED 
ENTITY
COMPLIANCE
PROCEDURES
AND 
WRITTEN
AGREEMENTS.—Not later than 
180 days following the date of enactment 
of the 340B ACCESS Act, the Secretary 
shall issue guidance to covered entities 
specifying requirements for— 
‘‘(I) covered entity compliance 
procedures described in clause (ii)(II) 
that the Secretary determines are suf-
ficient to ensure that covered out-
patient drugs are not subject to dupli-
cate discounts in violation of sub-
section (a)(5)(A) (including with re-
spect to such drugs used by Medicaid 
managed care enrollees), that such 
drugs cannot be resold or otherwise 
transferred to persons who do not 
meet the definition of a patient of the 
covered entity in violation of subpara-
graph (B), that the patient afford-
ability requirements specified in sub-
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paragraphs (G) and (H), as applica-
ble, are appropriately applied at the 
point of drug dispense or administra-
tion, that data and other information 
is submitted in accordance with sub-
paragraphs (J) and (K), and that the 
nonduplication requirement in section 
1193(d) of the Social Security Act is 
satisfied; and 
‘‘(II) written agreements between 
covered entities and contract phar-
macies described in clause (vii). 
‘‘(vii) 
WRITTEN
AGREEMENT
RE-
QUIRED.—The written agreement between 
a covered entity and a contract pharmacy 
described in this subparagraph shall in-
clude binding and enforceable obligations 
on the contract pharmacy to comply with 
the covered entity’s compliance procedures 
described in clause (ii)(II) with respect to 
covered outpatient drugs dispensed to pa-
tients of such entity in accordance with 
this subparagraph. Within 30 days of the 
applicable effective date of such written 
agreement, including any amendment or 
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addendum thereto, the covered entity shall 
submit a copy of the agreement, together 
with any amendments or addenda, to the 
Secretary in a form and manner specified 
by the Secretary. The Secretary shall re-
view all such agreements, including amend-
ments and addenda, for compliance with 
the requirements set forth in this subpara-
graph and may require a covered entity 
and contract pharmacy to modify an agree-
ment to conform to the requirements of 
this subparagraph. Such agreements, in-
cluding amendments and addenda, shall be 
considered records of the covered entity 
subject to audit under subparagraph (C). 
‘‘(viii) CLARIFICATION FOR COVERED 
OUTPATIENT
DRUGS
SUBJECT
TO
RE-
STRICTED
DISTRIBUTION.—Notwith-
standing any other provision in this sec-
tion, a manufacturer of a covered out-
patient drug requiring exclusive use of a 
specialty pharmacy or a restricted distribu-
tion network shall be deemed to have satis-
fied its obligations under this subpara-
graph with respect to a contract pharmacy 
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if such manufacturer offers each covered 
entity such drug for purchase at or below 
the applicable ceiling price described in 
paragraph (1) through a wholesaler, dis-
tributor, or pharmacy included in the re-
stricted distribution network for such drug. 
‘‘(ix) 
PENALTIES
FOR
CONTRACT 
PHARMACY COMPLIANCE VIOLATIONS.— 
‘‘(I) IN
GENERAL.—A contract 
pharmacy that is found to have vio-
lated the covered entity compliance 
procedures described in clause (ii)(II), 
violated subparagraph (A), or violated 
subparagraph (B) shall— 
‘‘(aa) in the first instance of 
such violation, be liable to a man-
ufacturer of a covered outpatient 
drug that is the subject of such 
violation in an amount equal to 
the reduction in the price of such 
drug (as described in subsection 
(a)(1)), plus interest on such 
amount, which shall be com-
pounded monthly and equal to 
the current short-term interest 
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rate as determined by the Fed-
eral Reserve for the time period 
for which the covered entity is 
liable; 
‘‘(bb) in the second instance 
of such violation— 
‘‘(AA) be liable to a 
manufacturer of a covered 
outpatient drug that is the 
subject of such violation in 
an amount equal to the re-
duction in the price of the 
drug (as described in para-
graph (1)), plus interest on 
such amount, which shall be 
calculated in the manner 
specified in item (aa); and 
‘‘(BB) be required to 
pay a civil monetary penalty 
equal to $13,946 for each 
claim for a covered out-
patient drug that is subject 
to 
the 
violation, 
which 
amount shall be adjusted for 
inflation annually to reflect 
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the rate of change in the 
Consumer Price Index for 
All Urban Consumers pub-
lished by the Bureau of 
Labor Statistics; and 
‘‘(cc) in the third instance of 
such violation— 
‘‘(AA) be liable to a 
manufacturer of a covered 
outpatient drug that is the 
subject of such violation in 
an amount equal to the re-
duction in the price of the 
drug (as described in para-
graph (1)), plus interest on 
such amount, which shall be 
calculated in the manner 
specified in item (aa); 
‘‘(BB) be required to 
pay a civil monetary penalty 
equal to $13,946 for each 
claim for a covered out-
patient drug that is subject 
to 
the 
violation, 
which 
amount shall be adjusted for 
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inflation annually to reflect 
the rate of change in the 
Consumer Price Index for 
All Urban Consumers pub-
lished by the Bureau of 
Labor Statistics; and 
‘‘(CC) be removed from 
the program under this sec-
tion and disqualified from 
reentry into such program 
for a period of not less than 
two years, or such longer pe-
riod as the Secretary may 
determine based on the se-
verity of the violation (or 
violations) and the risk such 
pharmacy presents to the in-
tegrity of the program, with 
no ability to reenter the pro-
gram unless and until the 
Secretary determines such 
pharmacy has resolved the 
violation (or violations) and 
taken reasonable steps to 
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prevent similar future viola-
tions. 
‘‘(II) 
CORRECTIVE
ACTION 
PLAN.—In the first instance of a vio-
lation described in subclause (I)(aa), 
in the second instance of a violation 
described in subclause (I)(bb), and 
prior to reentry into the program fol-
lowing a violation described in sub-
clause (I)(cc)— 
‘‘(aa) the pharmacy shall 
conduct an internal review to 
identify the cause of the violation 
(or violations) that is inclusive of 
all calendar quarters within the 
period in which such violation (or 
violations) occurred and all cov-
ered outpatient drugs subject to 
an agreement under this section 
dispensed during such period; 
‘‘(bb) the pharmacy shall 
prepare a written corrective ac-
tion plan, in a form specified by 
the Secretary, which shall in-
clude, at a minimum, the results 
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of such internal review, the phar-
macy’s methodology for identi-
fying the full scope of such viola-
tion (or violations), and the phar-
macy’s proposed corrective ac-
tions, and submit such plan to 
the Secretary in a form and man-
ner specified by the Secretary; 
and 
‘‘(cc) the Secretary shall re-
view such plan, notify the phar-
macy of any revisions to such 
plan, including additional correc-
tive actions, necessary for the 
Secretary to approve such plan, 
and publish the approved plan on 
a public website of the Depart-
ment of Health and Human 
Services (with redactions of any 
confidential or proprietary infor-
mation). 
‘‘(III) CIVIL MONETARY PENALTY 
FOR VIOLATIONS BY REMOVED PHAR-
MACY.—A contract pharmacy removed 
from the program under this section 
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pursuant to subclause (I)(cc) that dis-
penses a covered outpatient drug sub-
ject to an agreement under this sec-
tion during a time period that such 
pharmacy is removed from the pro-
gram and is not approved for reentry 
shall be required to pay a civil mone-
tary penalty equal to $13,946 for each 
claim for each such drug dispensed 
during such period, which amount 
shall be adjusted for inflation annu-
ally to reflect the rate of change in 
the Consumer Price Index for All 
Urban Consumers published by the 
Bureau of Labor Statistics. 
‘‘(IV) PROCEDURES
AND
DELE-
GATION.—The provisions of section 
1128A of the Social Security Act 
(other than subsections (a) and (b)) 
shall apply for purposes of any pay-
ment, civil monetary penalty, or re-
moval described in this clause in the 
same manner as such provisions apply 
to a penalty or proceeding under sec-
tion 1128A(a). The Office of Inspec-
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tor General of the Department of 
Health and Human Services shall 
carry out the provisions of this clause. 
‘‘(x) DEFINITIONS.—In this subpara-
graph: 
‘‘(I) 
CONTRACT
PHARMACY.— 
The term ‘contract pharmacy’ means, 
with respect to a covered entity de-
scribed in clause (ii), any individual 
pharmacy (as determined by a na-
tional provider identifier unique to the 
pharmacy address) that is— 
‘‘(aa) licensed as a phar-
macy by the relevant State (or 
States); 
‘‘(bb) authorized to dispense 
covered outpatient drugs subject 
to an agreement under this sec-
tion to patients of such entity (as 
defined in subsection (b)(3)) pur-
suant to a valid written agree-
ment with such entity (as de-
scribed in this subparagraph); 
and 
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or is a specified nonhospital cov-
ered entity (as defined in sub-
section (b)(4)). 
‘‘(III) 
MAIL
ORDER
PHAR-
MACY.—The term ‘mail order phar-
macy’ is a pharmacy that is licensed 
as a pharmacy by the State (or 
States) and that dispenses prescrip-
tion medications to individuals pri-
marily through the mail, as deter-
mined in accordance with guidance 
issued by the Secretary in connection 
with part 447, subpart I of title 42 of 
the Code of Federal Regulations (or 
any successor regulations). 
‘‘(IV) SERVICE AREA.—The term 
‘service area’ means, with respect to a 
covered entity described in paragraph 
(4), other than a covered entity de-
scribed in subparagraph (G) of such 
paragraph, the Public Use Microdata 
Area (as defined by the United States 
Census Bureau) in which such entity 
is located and up to three additional 
Public Use Microdata Areas that are 
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contiguous 
with 
the 
Public 
Use 
Microdata Area in which such entity 
is located, which shall be listed in the 
identification system described in sub-
section (d)(2)(B)(iv). 
‘‘(xi) RULES OF CONSTRUCTION.— 
‘‘(I) LOCATION.—For purposes 
of this subparagraph, the location of a 
covered entity shall be determined 
based on the physical address of the 
entity listed in the identification sys-
tem 
described 
in 
subsection 
(d)(2)(B)(iv) without regard to any 
off-campus outpatient facilities. 
‘‘(II) SAME LEGAL ENTITY.—For 
purposes of this subparagraph, a 
pharmacy is the same legal entity as 
the covered entity if the name, owner-
ship, and employer identification num-
ber of the pharmacy is identical to the 
name, ownership, and employer identi-
fication number of the covered enti-
ty.’’. 
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SEC. 6. ENSURING PATIENT AFFORDABILITY OF DRUGS 
PURCHASED UNDER SECTION 340B. 
(a) IN GENERAL.—Section 340B(a)(5) of the Public 
Health Service Act (42 U.S.C. 256b(a)(5)) is further 
amended by adding at the end the following: 
‘‘(G) PATIENT AFFORDABILITY REQUIRE-
MENTS FOR HOSPITAL COVERED ENTITIES.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of law, a covered entity 
described in one of subparagraphs (L) 
through (O) of paragraph (4) shall estab-
lish a sliding fee scale that results in the 
covered entity providing, on behalf of an 
eligible patient (as defined in clause (iv)), 
a discount that results in such patient pay-
ing no more than the maximum out-of- 
pocket obligation (as defined in clause (ii)), 
with respect to each covered outpatient 
drug subject to an agreement under this 
section dispensed, furnished, or adminis-
tered to such patient at such covered enti-
ty, any child site, or any entity pharmacy. 
The sliding fee scale and related policies 
shall be written and posted prominently at 
each such covered entity location, including 
any child site and entity pharmacy, and 
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shall be included in any billing-related 
communications sent by such covered enti-
ty to any patient dispensed, furnished, or 
administered a covered outpatient drug at 
such covered entity location, including any 
child site or entity pharmacy. Eligibility 
for a reduced out-of-pocket obligation pur-
suant to this clause shall be based on in-
surance and income information provided 
by the eligible patient. With respect to cov-
ered outpatient drugs that are self-admin-
istered by an eligible patient, the out-of- 
pocket reductions described in this clause 
shall apply at the point of sale. 
‘‘(ii) MAXIMUM OUT-OF-POCKET OBLI-
GATION.—For each dispense or adminis-
tration of a covered outpatient drug, the 
maximum out-of-pocket obligation for an 
eligible patient with family income— 
‘‘(I) below the Federal poverty 
guidelines is $0; 
‘‘(II) at or above the Federal 
poverty guidelines but below 200 per-
cent of the Federal poverty guidelines 
is the lesser of 20 percent of the oth-
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erwise applicable out-of-pocket obliga-
tion or $35, which shall be adjusted 
for inflation annually to reflect rate of 
the change in the Consumer Price 
Index for All Urban Consumers pub-
lished by the Bureau of Labor Statis-
tics; and 
‘‘(III) at or above 200 percent of 
the Federal poverty guidelines is the 
lesser of 30 percent of the otherwise 
applicable out-of-pocket obligation or 
$50, which shall be adjusted for infla-
tion annually to reflect rate of the 
change in the Consumer Price Index 
for All Urban Consumers published by 
the Bureau of Labor Statistics. 
‘‘(iii) APPLICABILITY
TO
CONTRACT 
PHARMACIES.—With respect to an eligible 
patient of a covered entity described in 
clause (i) dispensed a covered outpatient 
drug subject to an agreement under this 
section on behalf of such covered entity at 
a contract pharmacy pursuant to subpara-
graph (F), such covered entity shall re-
quire such contract pharmacy to provide 
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discounts to eligible patients on behalf of 
such covered entity and comply with all 
other requirements described in clauses (i) 
and (ii) as if such contract pharmacy were 
a covered entity described in clause (i). 
‘‘(iv) DEFINITIONS.—In this subpara-
graph: 
‘‘(I) CHILD
SITE.—The term 
‘child site’ shall have the meaning 
given such term in subparagraph (E). 
‘‘(II) CONTRACT
PHARMACY.— 
The term ‘contract pharmacy’ shall 
have the meaning given such term in 
subparagraph (F). 
‘‘(III) ELIGIBLE PATIENT.—The 
term ‘eligible patient’ means a pa-
tient, as defined in subsection (b)(3), 
who is not covered under minimum es-
sential coverage as defined under sec-
tion 5000A(f) of the Internal Revenue 
Code of 1986 or has family income 
below 200 percent of the Federal pov-
erty guidelines and is covered under a 
group health plan, health insurance 
coverage in the individual market or 
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group market (as such terms are de-
fined in section 2791 of the Public 
Health Service Act) or coverage de-
scribed in section 156.602(a), title 45, 
Code of Federal Regulations or suc-
cessor regulation. 
‘‘(IV) ENTITY
PHARMACY.—The 
term ‘entity pharmacy’ shall have the 
meaning given such term in subpara-
graph (F). 
‘‘(V) FEDERAL POVERTY GUIDE-
LINES.—The term ‘Federal poverty 
guidelines’ means the poverty guide-
lines updated periodically in the Fed-
eral Register by the Department of 
Health and Human Services pursuant 
to section 9902(2) of title 42, United 
States Code. 
‘‘(VI) OUT-OF-POCKET
OBLIGA-
TION.—The term ‘out-of-pocket obli-
gation’ means any copayment, coin-
surance, deductible, or other cost 
sharing amount or payment required 
from an eligible patient in connection 
with such patient’s receipt of a spe-
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cific health care item or service, in-
cluding a covered outpatient drug. 
‘‘(v) CIVIL MONETARY PENALTY.—A 
covered entity or contract pharmacy that 
violates a requirement of this subpara-
graph shall be subject to a civil monetary 
penalty of $2,500 for each such violation, 
which amount shall be adjusted for infla-
tion annually to reflect the rate of change 
in the Consumer Price Index for All Urban 
Consumers published by the Bureau of 
Labor Statistics. The provisions of section 
1128A of the Social Security Act (other 
than subsections (a) and (b)) shall apply to 
a civil monetary penalty under this clause 
in the same manner as such provisions 
apply to a penalty or proceeding under sec-
tion 1128A(a). The Office of Inspector 
General of the Department of Health and 
Human Services shall carry out the provi-
sions of this clause. 
‘‘(vi) REGULATIONS.—The Secretary 
shall promulgate regulations through no-
tice and comment rulemaking to implement 
the requirements described in this subpara-
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graph and shall issue final regulations not 
later than 90 days after the date of enact-
ment of this subparagraph. The authority 
to promulgate regulations under this clause 
is limited to specifying the obligations of 
covered entities and contract pharmacies 
under this subparagraph and other details 
necessary to carry out the requirements of 
this subparagraph efficiently, effectively, 
and in conformity with this subparagraph. 
‘‘(vii) OIG STUDIES.—The Office of 
Inspector General of the Department of 
Health and Human Services shall conduct 
and publish annual studies of covered enti-
ty (including child site and entity phar-
macy) and contract pharmacy practices 
with respect to the requirements under this 
subparagraph and evaluate whether eligible 
patients are receiving assistance to reduce 
their out-of-pocket obligations in accord-
ance with this subparagraph. 
‘‘(H) PATIENT AFFORDABILITY REQUIRE-
MENTS FOR CERTAIN NONHOSPITAL COVERED 
ENTITIES.— 
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‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of law, a covered entity 
described in one of subparagraphs (A) 
through (K) of paragraph (4) that is re-
quired by the Federal statute authorizing 
the grant, project, or contract that is the 
basis for such entity’s participation in the 
program under this section to provide af-
fordability assistance to eligible individuals 
receiving health care items or services from 
such entity shall, with respect to an eligible 
patient (as defined in clause (iii)) dis-
pensed or administered a covered out-
patient drug subject to an agreement 
under this section at a covered entity site, 
including an entity pharmacy, establish a 
policy that provides a discount to reduce 
the out-of-pocket obligation of an eligible 
patient with respect to such drug to an 
amount sufficient to ensure such patient is 
not denied access to such drug based on 
such patient’s ability to pay for such drug. 
‘‘(ii) APPLICABILITY
TO
CONTRACT 
PHARMACIES.—With respect to an eligible 
patient of a covered entity described in 
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clause (i) dispensed a covered outpatient 
drug subject to an agreement under this 
section on behalf of such covered entity at 
a contract pharmacy pursuant to subpara-
graph (F), such covered entity shall re-
quire such contract pharmacy to provide 
discounts to eligible patients on behalf of 
such covered entity in accordance with the 
covered entity’s policy described in clause 
(i). 
‘‘(iii) DEFINITIONS.—In this subpara-
graph: 
‘‘(I) 
CONTRACT
PHARMACY.— 
The term ‘contract pharmacy’ shall 
have the meaning given such term in 
subparagraph (F). 
‘‘(II) ELIGIBLE
PATIENT.—The 
term ‘eligible patient’ means a pa-
tient, as defined in subsection (b)(3), 
who is not covered under minimum es-
sential coverage as defined under sec-
tion 5000A(f) of the Internal Revenue 
Code of 1986 or has family income 
below 200 percent of the Federal pov-
erty guidelines and is covered under a 
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group health plan, health insurance 
coverage in the individual market or 
group market (as such terms are de-
fined in section 2791 of the Public 
Health Service Act) or coverage de-
scribed in section 156.602(a), title 45, 
Code of Federal Regulations or suc-
cessor regulation. 
‘‘(III) ENTITY PHARMACY.—The 
term ‘entity pharmacy’ shall have the 
meaning given such term in subpara-
graph (F). 
‘‘(IV) FEDERAL POVERTY GUIDE-
LINES.—The term ‘Federal poverty 
guidelines’ means the poverty guide-
lines updated periodically in the Fed-
eral Register by the Department of 
Health and Human Services pursuant 
to section 9902(2) of title 42, United 
States Code. 
‘‘(V) OUT-OF-POCKET
OBLIGA-
TION.—The term ‘out-of-pocket obli-
gation’ means any copayment, coin-
surance, deductible, or other cost 
sharing amount or payment required 
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from an eligible patient in connection 
with such patient’s receipt of a spe-
cific health care item or service, in-
cluding a covered outpatient drug.’’. 
SEC. 7. REQUIREMENTS FOR NONHOSPITAL COVERED EN-
TITIES AND SUBGRANTEES. 
Section 340B(a)(5) of the Public Health Service Act 
(42 U.S.C. 256b(a)(5)) is further amended by adding at 
the end the following: 
‘‘(I) ADDITIONAL
REQUIREMENTS
FOR 
NONHOSPITAL
COVERED
ENTITIES; REQUIRE-
MENTS FOR SUBGRANTEES.— 
‘‘(i) ADDITIONAL REQUIREMENTS FOR 
NONHOSPITAL
COVERED
ENTITIES.—A 
covered entity described in one of subpara-
graphs (A) through (K) of paragraph (4) 
shall, as a condition of participation in the 
program under this section— 
‘‘(I) be a nonprofit or public enti-
ty (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 cov-
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ered 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 writ-
ten agreement in accordance with sub-
clause (IV) and be directly liable for 
noncompliance by any such sub-
grantee 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 require-
ments under this section otherwise ap-
plicable to the covered entity and to 
maintain written records, which shall 
be made available to the Secretary 
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upon request, sufficient to dem-
onstrate 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 sub-
grantee receives such funds or con-
tribution; 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 pro-
gram under this section as a sub-
grantee of such entity and provide the 
Secretary with such registration infor-
mation as requested to demonstrate 
such subgrantee’s receipt of eligible 
Federal funds or an in-kind contribu-
tion purchased with such funds, as de-
scribed in clause (iii), and the grant 
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under which the subgrantee receives 
such funds or contribution. 
‘‘(ii) 
REQUIREMENTS
FOR
SUB-
GRANTEES.—Notwithstanding any other 
provision in this section, a subrecipient of 
a Federal grant shall be eligible to partici-
pate in the program under this section 
only if such subrecipient is a subgrantee 
(as defined in clause (iii)) and such sub-
grantee— 
‘‘(I) is a nonprofit or public enti-
ty (as determined by the Secretary); 
‘‘(II) prior to purchasing covered 
outpatient drugs subject to an agree-
ment under this section— 
‘‘(aa) enters into an enforce-
able written agreement with the 
covered entity providing eligible 
Federal funds or an in-kind con-
tribution, pursuant to clause 
(i)(IV); 
‘‘(bb) 
maintains 
written 
records, which shall be made 
available to the Secretary upon 
request, sufficient to demonstrate 
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such subgrantee’s receipt of eligi-
ble 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 sub-
grantee site to participate in the 
program under this section in the 
covered entity identification sys-
tem established under subsection 
(d)(2)(B)(iv); 
‘‘(III) purchases covered out-
patient drugs subject to an agreement 
under this section only with respect to 
a patient receiving a health care serv-
ice 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 partici-
pation in the program under this sec-
tion; 
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‘‘(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 Sec-
retary, upon initial registration to 
participate in the program under this 
section and on an annual basis there-
after, that the number of individuals 
aged 19 to 64 years receiving a health 
care service at the registered sub-
grantee 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 individ-
uals aged 19 to 64 years receiving a 
health care service at the registered 
subgrantee site during such calendar 
year, exceeds the number of individ-
uals 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 
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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 cal-
endar 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 contribu-
tion 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 out-
patient drugs under the program 
under this section are consistent 
with the goals of such grant, and 
how such subgrantee will ensure 
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compliance with the requirements 
under subparagraph (A) and (B); 
and 
‘‘(bb) a written plan in a 
form specified by the Secretary 
and using criteria established by 
the Secretary to determine the 
date upon which its eligibility to 
participate in the program under 
this section, as a result of such 
contribution, shall terminate (ab-
sent 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 
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more applicable requirements under 
this section; and 
‘‘(VII) not later than 30 days fol-
lowing 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 ei-
ther— 
‘‘(aa) disenrolls from the 
program under this section and 
discontinues making purchases 
under such program and rep-
resenting to third parties that 
such subgrantee may purchase 
under such program; or 
‘‘(bb) enters into an enforce-
able written agreement with a 
different covered entity described 
in one of subparagraphs (A) 
through (K) of paragraph (4) 
that is participating in the pro-
gram under this section, and sat-
isfies all applicable requirements 
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under this section with respect to 
such different covered entity. 
‘‘(iii) SUBGRANTEE DEFINED.— 
‘‘(I) IN GENERAL.—In this sub-
paragraph, 
the 
term 
‘subgrantee’ 
means a subrecipient of a Federal 
grant that— 
‘‘(aa) receives eligible Fed-
eral funds from a covered entity 
described in one of subpara-
graphs (A) through (K) of para-
graph (4) in the form of non-
nominal and ongoing payments 
by such covered entity directly to 
such subrecipient to directly sup-
port 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-author-
izing statute, as applicable, that 
qualifies such covered entity for 
participation 
in 
the 
program 
under this section; or 
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‘‘(bb) receives in-kind con-
tributions from a covered entity 
described in paragraph (4)(K) 
and such contributions— 
‘‘(AA) are ongoing and 
are in the form of real prop-
erty, equipment, supplies, or 
services; 
‘‘(BB) subject to sub-
clause (II), have a value ex-
ceeding $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 pub-
lished by the Bureau of 
Labor Statistics and deter-
mined by the subrecipient 
and approved by the covered 
entity providing such con-
tribution in a manner speci-
fied by the Secretary; 
‘‘(CC) are specifically 
identifiable and provided by 
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such covered entity directly 
to such subrecipient; and 
‘‘(DD) directly support 
the provision of health care 
items and services by such 
subrecipient solely to indi-
viduals within the scope and 
time period of the Federal 
grant that qualifies such 
covered entity for participa-
tion in the program under 
this section. 
‘‘(II) EXCLUSION.—The require-
ment 
specified 
in 
subclause 
(I)(bb)(BB) shall not apply with re-
spect to a subrecipient of a Federal 
grant that receives in-kind contribu-
tions from a covered entity described 
in paragraph (4)(K) if— 
‘‘(aa) as of January 1, 
2024, such subrecipient is par-
ticipating in the program under 
this section as such a sub-
recipient and is in compliance 
with all requirements under this 
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section otherwise applicable to 
such subrecipient; and 
‘‘(bb) with respect to any in- 
kind 
contribution 
such 
sub-
recipient receives after January 
1, 2024, such subrecipient has 
continuously participated in the 
program under this section as 
such a subrecipient in compliance 
with all requirements under this 
section for the period beginning 
on January 1, 2024 and con-
tinuing through the date on 
which program participation ends 
as determined in the plan sub-
mitted 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 ob-
ligations under this section applicable to 
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the covered entity with which such sub-
grantee has an enforceable written agree-
ment 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 en-
forceable written agreement pursuant to 
clause (i).’’. 
SEC. 8. CLAIMS MODIFIERS; COVERED ENTITY DATA SUB-
MISSION. 
Section 340B(a)(5) of the Public Health Service Act 
(42 U.S.C. 256b(a)(5)) is further amended by adding at 
the end the following: 
‘‘(J) CLAIMS MODIFIER AND COVERED EN-
TITY DATA SUBMISSION.— 
‘‘(i) CLAIMS
MODIFIER.—All claims 
submitted to a payor, including, without 
limitation, Medicare and Medicaid, by a 
covered entity or a contract pharmacy 
under a contract with a covered entity in 
compliance with subparagraph (F) for re-
imbursement of a unit of a covered out-
patient drug purchased under the program 
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under this section shall include the rel-
evant 340B modifier established by the 
Secretary under Medicare Part B (that is 
‘JG’, ‘TB’, or any successor modifier) or 
the Submission Clarification Code of ‘20’ 
or any successor modifier developed by the 
National Council for Prescription Drug 
Programs (NCPDP) to identify claims for 
covered outpatient drugs purchased under 
such program. All claims submitted by a 
covered entity or a contract pharmacy de-
scribed in this clause to a payor, including, 
without limitation, Medicare and Medicaid, 
for reimbursement of a unit of a covered 
outpatient drug not purchased under such 
program shall also include a relevant non- 
340B modifier, which shall be established 
by the Secretary, or a non-340B modifier 
developed by the NCPCP to identify such 
claims. 
‘‘(ii) COVERED ENTITY DATA SUBMIS-
SION.—A covered entity described in para-
graph (4) shall (and shall cause any entity 
acting on its behalf to) furnish to the 
clearinghouse 
described 
in 
subsection 
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(d)(2)(C) the data described in clause (iii), 
in a machine-readable format, with respect 
to each covered outpatient drug dispensed, 
furnished, or administered by the covered 
entity (including such drugs dispensed by a 
contract pharmacy under contract with 
such covered entity in compliance with sub-
paragraph (F)), for which such covered en-
tity seeks or has received discounted pric-
ing under this section. Such covered entity 
shall provide, or cause to be provided, such 
data to the clearinghouse within 45 days 
after the date on which the covered out-
patient drug was dispensed, furnished, or 
administered (or such shorter time period 
as may be specified by the Secretary 
through notice-and-comment rulemaking) 
in an electronic format specified by the 
Secretary. The covered entity shall require 
(and shall cause any entity acting on its 
behalf to require) that data on pharmacy- 
dispensed drugs described in this subpara-
graph be submitted to the clearinghouse 
directly by the pharmacy dispensing such 
drug. 
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‘‘(iii) 
CLAIM
LEVEL
DATA
ELE-
MENTS.—The data described in this clause 
shall include the following, as applicable: 
‘‘(I) 
SELF-ADMINISTERED 
DRUGS.—With respect to a self-ad-
ministered drug dispensed at a phar-
macy, by a mail order service, or by 
another dispenser— 
‘‘(aa) prescription number; 
‘‘(bb) prescribed date; 
‘‘(cc) prescription fill date; 
‘‘(dd) national drug code 
(NDC) of the drug; 
‘‘(ee) quantity dispensed; 
‘‘(ff) 
bank 
identification 
number, processor control num-
ber, and group number of the 
plan receiving the claim (as ap-
plicable); 
‘‘(gg) national provider iden-
tifier (NPI) of the prescriber; 
‘‘(hh) NPI of the dispensing 
pharmacy; 
‘‘(ii) name and 340B identi-
fier of the covered entity dis-
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pensing the drug, or on whose 
behalf the drug is dispensed; 
‘‘(jj) 340B/non-340B claim 
modifier; 
‘‘(kk) 
wholesaler 
invoice 
number; and 
‘‘(ll) an indicator, which 
shall be specified by the clearing-
house or the Secretary, denoting 
that the drug was or was not dis-
pensed as a result of a qualifying 
referral described in subsection 
(b)(3). 
‘‘(II) 
PROVIDER-ADMINISTERED 
DRUGS.—With respect to a drug fur-
nished or administered by a physician 
or other provider of services or a sup-
plier— 
‘‘(aa) drug billing and pay-
ment code/HCPCS code; 
‘‘(bb) NDC of the drug; 
‘‘(cc) claim number; 
‘‘(dd) 
Medicare 
provider 
number of prescriber (as applica-
ble); 
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‘‘(ee) NPI of the prescriber; 
‘‘(ff) name and 340B identi-
fier of the covered entity fur-
nishing 
or 
administering 
the 
drug; 
‘‘(gg) date drug furnished or 
administered; 
‘‘(hh) 
claim 
adjudication 
date; 
‘‘(ii) quantity furnished or 
administered; 
‘‘(jj) 340B/non-340B claim 
modifier; and 
‘‘(kk) an indicator, which 
shall be specified by the clearing-
house or the Secretary, denoting 
that the drug was or was not fur-
nished or administered as a re-
sult of a qualifying referral de-
scribed in subsection (b)(3). 
‘‘(iv) INFORMATION PRIVACY AND SE-
CURITY.—A covered entity described in 
paragraph (4) shall provide the data speci-
fied in clause (iii) to the clearinghouse in 
a secure manner, consistent with such enti-
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ty’s obligations under the Security Stand-
ards for the Protection of Electronic Pro-
tected Health Information described in 
part 164 of subpart C of title 45, Code of 
Federal Regulations (or any successor reg-
ulations). A covered entity shall not be re-
quired to obtain an individual authoriza-
tion under part 164 of subpart E of title 
45, Code of Federal Regulations (or any 
successor regulations) for its reporting of 
such data to the clearinghouse. 
‘‘(v) STANDARDIZATION OF REPORTED 
DATA ELEMENTS; PROHIBITION ON MODI-
FICATIONS.—A covered entity described in 
paragraph (4) shall take reasonable steps 
to ensure the data specified in clause (iii) 
submitted to the clearinghouse fully com-
plies with the data submission standards 
(including field descriptors and definitions) 
specified by the clearinghouse or the Sec-
retary following consultation with relevant 
stakeholders, including manufacturers of 
covered outpatient drugs. A covered entity 
described in paragraph (4) is prohibited, 
and shall prohibit any entity acting on its 
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behalf (including any affiliate of such enti-
ty), from taking or refraining from taking 
any action that would cause such informa-
tion to no longer comply with the stand-
ards described in this clause. In specifying 
the data submission standards described in 
this clause, the clearinghouse and the Sec-
retary, as applicable, shall seek to mini-
mize administrative burden on covered en-
tities while ensuring such data satisfies the 
intent of this subparagraph. 
‘‘(vi) COVERED ENTITIES THAT FAIL 
TO REPORT.—A covered entity that fails to 
furnish the information as required under 
this subparagraph shall be subject to a 
civil monetary penalty in the amount of 
$2,500 for each day of such violation, 
which amount shall be adjusted for infla-
tion annually to reflect the rate of change 
in the Consumer Price Index for All Urban 
Consumers published by the Bureau of 
Labor Statistics. The provisions of section 
1128A of the Social Security Act (other 
than subsections (a) and (b)) shall apply to 
a civil monetary penalty under this clause 
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in the same manner as such provisions 
apply to a penalty or proceeding under sec-
tion 1128A(a). The Office of Inspector 
General of the Department of Health and 
Human Services shall carry out the provi-
sions of this clause.’’. 
SEC. 9. COVERED ENTITY REPORTING ON SCOPE OF 
GRANT, CONTRACT, AND PROJECT. 
Section 340B(a)(5) of the Public Health Service Act 
(42 U.S.C. 256b(a)(5)) is further amended by adding at 
the end the following: 
‘‘(K) REPORTING
ON
SCOPE
OF
GRANT, 
CONTRACT, AND
PROJECT.—A covered entity 
described in one of subparagraphs (A) through 
(K) of paragraph (4) shall submit information 
specified by the Secretary to the identification 
system described in subsection (d)(2)(B)(iv) at 
least annually, in a form and manner specified 
by the Secretary, describing the scope of its 
Federal grant or project, or the Federal grant- 
authorizing statute, as applicable, that is the 
basis for such entity’s eligibility for the pro-
gram under this section. Such information shall 
include copies of agreements between such enti-
ty and any subgrantee, as described in subpara-
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graph (I). Access to information described in 
this subparagraph shall be made available to a 
manufacturer of a covered outpatient drug, 
upon request, in a manner specified by the Sec-
retary.’’. 
SEC. 10. ENSURING COVERED ENTITY TRANSPARENCY. 
(a) IN GENERAL.—Section 340B(a)(5) of the Public 
Health Service Act (42 U.S.C. 256b(a)(5)) is further 
amended by adding at the end the following: 
‘‘(L) REPORTING.— 
‘‘(i) IN GENERAL.—During the first 
year beginning on or after the date that is 
14 months after the date of enactment of 
this subparagraph and during each subse-
quent year, each covered entity described 
in subparagraph (L) of paragraph (4) (and 
any other covered entity specified by the 
Secretary) shall report to the Secretary (at 
a time and in a form and manner specified 
by the Secretary) the following information 
with respect to the preceding year: 
‘‘(I) With respect to such covered 
entity and each child site, as applica-
ble, of such entity— 
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‘‘(aa) the total number of 
individuals who were dispensed or 
administered covered outpatient 
drugs during such preceding year 
that were subject to an agree-
ment under this section; and 
‘‘(bb) the number of such in-
dividuals described in a category 
specified in clause (iii), broken 
down by each such category. 
‘‘(II) With respect to such cov-
ered entity and each child site, as ap-
plicable, of such entity— 
‘‘(aa) the percentage of the 
total number of individuals fur-
nished items and services during 
such preceding year who were 
dispensed or administered cov-
ered outpatient drugs during 
such preceding year that were 
subject to an agreement under 
this section; and 
‘‘(bb) 
for 
each 
category 
specified in clause (iii), the per-
centage of the total number of 
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individuals described in such cat-
egory furnished items and serv-
ices during such preceding year 
who were dispensed or adminis-
tered covered outpatient drugs 
during such preceding year that 
were subject to an agreement 
under this section. 
‘‘(III) With respect to such cov-
ered entity and each child site, as ap-
plicable, of such entity, the total costs 
incurred during the year at each such 
site and the cost incurred at each 
such site for charity care (as defined 
in line 23 of worksheet S–10 to the 
Medicare cost report, or in any suc-
cessor form). 
‘‘(IV) With respect to such cov-
ered entity and each child site, as ap-
plicable, of such entity, the costs in-
curred during the year of furnishing 
items and services at each such entity 
or site to patients of such entity who 
were entitled to benefits under part A 
of title XVIII of the Social Security 
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site (and any entity pharmacy or con-
tract pharmacy dispensing such drugs 
on behalf of such entity in accordance 
with subparagraph (F)), with each 
component of the margin calculation 
described in item (aa) through (cc) of 
such clause listed as a separate line 
item. 
‘‘(VI) To the extent the Sec-
retary requires covered entities de-
scribed in one of subparagraphs (A) 
through (K) of paragraph (4) to re-
port information pursuant to this sub-
paragraph, with respect to each such 
covered entity, use of margin (as de-
fined in clause (iv)) generated on cov-
ered outpatient drugs subject to an 
agreement under this section in the 
following categories of expenditures, if 
applicable, which the Secretary shall 
define in interim final regulations in a 
manner 
consistent 
with 
reporting 
under the Health Resources and Serv-
ices Administration Uniform Data 
System (UDS)— 
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‘‘(aa) medical care; 
‘‘(bb) dental care; 
‘‘(cc) mental health; 
‘‘(dd) 
pharmaceuticals, 
which shall include margin used 
to provide free and discounted 
covered outpatient drugs subject 
to an agreement under this sec-
tion dispensed or furnished to eli-
gible patients (as defined in sub-
paragraph (H)), notwithstanding 
any UDS reporting requirement 
that may limit or interfere with 
the inclusion of margin used for 
such purpose; 
‘‘(ee) sliding fee discounts; 
‘‘(ff) case management; 
‘‘(gg) transportation; 
‘‘(hh) patient and commu-
nity education; 
‘‘(ii) 
community 
health 
workers; 
‘‘(jj) outreach; 
‘‘(kk) eligibility assistance; 
and 
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‘‘(ll) nutritional assessment 
and referral. 
‘‘(ii) PUBLICATION.—The Secretary 
shall publish data reported under clause (i) 
with respect to a year annually on the pub-
lic website of the Department of Health 
and Human Services in an electronic and 
searchable format, which may include the 
340B Office of Pharmacy Affairs Informa-
tion System (or a successor to such sys-
tem), in a manner that shows each cat-
egory of data reported in the aggregate 
and identified by the specific covered entity 
submitting such data. The Secretary shall 
include in such publication the dispropor-
tionate patient percentage (as defined in 
section 1886(d)(5)(F)(vi) of the Social Se-
curity Act) of each such covered entity (if 
applicable) for each cost reporting period 
occurring during such year. 
‘‘(iii) CATEGORIES
SPECIFIED.—For 
purposes of clause (i), the categories speci-
fied in this clause are the following: 
‘‘(I) Individuals covered under a 
group health plan or group or indi-
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vidual health insurance coverage (as 
such terms are defined in section 
2791). 
‘‘(II) Individuals entitled to bene-
fits under part A or enrolled under 
part B of title XVIII of the Social Se-
curity Act. 
‘‘(III) Individuals enrolled under 
a State plan under title XIX of such 
Act (or a waiver of such plan). 
‘‘(IV) Individuals enrolled under 
a State child health plan under title 
XXI of such Act (or a waiver of such 
plan). 
‘‘(V) Individuals not described in 
any preceding subclause and not cov-
ered under any Federal health care 
program (as defined in section 1128B 
of such Act but including the program 
established under chapter 89 of title 
5, United States Code). 
‘‘(iv) DEFINITIONS.—In this subpara-
graph: 
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‘‘(I) CHILD
SITE.—The term 
‘child site’ shall have the meaning 
given such term in subparagraph (E). 
‘‘(II) ENTITY
PHARMACY.—The 
term ‘entity pharmacy’ shall have the 
meaning given such term in subpara-
graph (F). 
‘‘(III) MARGIN.—The term ‘mar-
gin’ means, with respect to covered 
outpatient drugs purchased by a cov-
ered entity under an agreement under 
this section, the following amount for 
such drugs dispensed, furnished, or 
administered to an individual by such 
entity or a child site of such entity 
(and any entity pharmacy or contract 
pharmacy dispensing such drugs on 
behalf of such entity in accordance 
with subparagraph (F))— 
‘‘(aa) aggregate payments 
received by the covered entity for 
such drugs from individuals (in-
cluding 
cost-sharing 
amounts) 
and third parties, including gov-
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ernment 
and 
private 
payors; 
minus 
‘‘(bb) aggregate costs to ac-
quire such drugs at either the 
ceiling price described in para-
graph (1) or any voluntary sub-
ceiling price at which the covered 
entity purchased such drug or 
drugs, as applicable; minus 
‘‘(cc) aggregate costs in-
curred by the covered entity that 
are necessary for such entity to 
participate in the program under 
this section and to comply with 
such program’s requirements, in-
cluding program-related compli-
ance, legal, educational, and ad-
ministrative costs (such costs 
shall be determined in accordance 
with Generally Accepted Account-
ing Principles), and compensa-
tion paid to third-party adminis-
trators or contract pharmacies to 
carry out program-related func-
tions.’’. 
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(b) RULEMAKING.—Not later than 180 days after the 
date of enactment of this Act, the Secretary of Health and 
Human Services shall issue an interim final rule to carry 
out section 340B(a)(5)(L) of the Public Health Service 
Act, as added by subsection (a). 
SEC. 11. REVISIONS TO EXISTING 340B HOSPITAL ELIGI-
BILITY REQUIREMENTS. 
Section 340B(a)(4) of the Public Health Service Act 
(42 U.S.C. 256b(a)(4)) is amended— 
(1) in subparagraph (L)(i)— 
(A) by inserting ‘‘and that was registered 
with the 340B program in the covered entity 
identification system established under sub-
section (d)(2)(B)(iv) as such a hospital on or 
before December 1, 2023’’ after ‘‘formally 
granted governmental powers by a unit of state 
or local government’’; and 
(B) by striking ‘‘not entitled to benefits 
under title XVIII of the Social Security Act’’ 
and all that follows up to the semicolon at the 
end and inserting ‘‘uninsured, as such terms 
are defined in subsection (a)(11)’’; 
(2) by amending subparagraph (N) to read as 
follows: 
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‘‘(N) An entity that is a critical access hos-
pital (as determined under section 1820(c)(2) 
of the Social Security Act (42 U.S.C. 1395i– 
4(c)(2))) or a rural emergency hospital (as de-
termined under the requirements in section 
1861(kkk) of the Social Security Act (42 
U.S.C. 1395x(kkk) and in implementing regula-
tions set forth in parts 419, 424, 485, 488, and 
489 of title 42 of the Code of Federal Regula-
tions in effect as of January 1, 2023)), and 
that meets the requirements of subparagraph 
(L)(i).’’; and 
(3) in subparagraph (O) by inserting ‘‘that 
demonstrates to the Secretary that at least 60 per-
cent of annual inpatient discharges for cost report-
ing periods beginning after December 1, 2023 are 
for inpatients who reside in a county that is not part 
of a Metropolitan Statistical Area, as defined by the 
Director of the Office of Management and Budget’’ 
before ‘‘, or a sole community hospital’’. 
SEC. 12. ADDITIONAL REQUIREMENTS FOR 340B HOS-
PITALS. 
Section 340B(a) of the Public Health Service Act (42 
U.S.C. 256b(a)) is amended by adding at the end the fol-
lowing: 
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‘‘(11) CLARIFICATION OF ELIGIBILITY STAND-
ARDS FOR PRIVATE NONPROFIT HOSPITALS WITH A 
CONTRACT WITH A STATE OR LOCAL GOVERNMENT 
TO PROVIDE HEALTH CARE SERVICES.— 
‘‘(A) 
CONTRACT
REQUIREMENTS.—For 
purposes of paragraph (4)(L)(i) and cross-ref-
erences to subparagraph (L) or clause (i) of 
such paragraph appearing in subparagraph (M) 
and subparagraph (O) of such paragraph with 
respect to a rural referral center, a private non-
profit hospital has a contract with a State or 
local government to provide health care services 
to low-income individuals who are uninsured 
if— 
‘‘(i) the hospital submits a copy of the 
contract (including any appendices or ad-
denda or subsequent amendments) to the 
Secretary for review; 
‘‘(ii) the Secretary determines that 
the contract creates an enforceable obliga-
tion for the hospital to provide direct med-
ical care to low-income individuals who are 
uninsured in an amount that represents at 
least 10 percent of the hospital’s total 
costs of care; 
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‘‘(iii) the Secretary further deter-
mines, based on a review of the contract 
(as described in clause (i)) that the con-
tract creates an enforceable obligation for 
the hospital to furnish the individuals de-
scribed in clause (ii) the full range of serv-
ices provided at the hospital (including any 
child sites); and 
‘‘(iv) the contract (as described in 
clause (i)) is available to the public as part 
of the information describing the hospital 
in the covered entity identification system 
established under subsection (d)(2)(B)(iv). 
‘‘(B) DEREGISTRATION.—If at any time a 
hospital not owned or operated by a unit of 
State or local government that has been partici-
pating in the program under this section on the 
basis of having a contract with a State or local 
government to provide health care services that 
is subject to subparagraph (A) no longer satis-
fies a requirement under such subparagraph, 
the hospital shall immediately notify the Sec-
retary that the hospital no longer satisfies the 
relevant requirement, deregister the hospital 
from the program under this section and the 
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identification system described in subsection 
(d)(2)(B)(iv), and cease making purchases 
under such program and representing to third 
parties that it may purchase under such pro-
gram. 
‘‘(C) OBLIGATION TO SELF-DISCLOSE.—A 
covered entity described in subparagraph (B) 
shall immediately disclose to the Secretary and 
the manufacturer of the affected covered out-
patient drug any purchase made under the pro-
gram under this section by such covered entity 
that, at the time of the purchase of such drug, 
did not fully satisfy the requirements in sub-
paragraph (A). Any such purchase shall require 
the covered entity to promptly conduct an audit 
supervised by the Secretary to identify the full 
scope of noncompliance with such requirements 
and to provide the written results of such audit 
to the Secretary and the manufacturer of the 
affected covered outpatient drug. The covered 
entity shall be liable to the manufacturer of the 
covered outpatient drug that is the subject of 
the noncompliance in an amount equal to the 
reduction in the price of the drugs provided 
under subsection (a)(1), plus interest on such 
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amount, which shall be compounded monthly 
and equal to the current short-term interest 
rate as determined by the Federal Reserve for 
the time period for which the covered entity is 
liable. 
‘‘(D) CIVIL MONETARY PENALTY.—Where 
a covered entity fails to satisfy a requirement in 
subparagraph (B) or (C), the covered entity 
shall be required to pay a civil monetary pen-
alty equal to $2,500 for each violation, which 
amount shall be adjusted for inflation annually 
to reflect the rate of change in the Consumer 
Price Index for All Urban Consumers published 
by the Bureau of Labor Statistics. The provi-
sions of section 1128A of the Social Security 
Act (other than subsections (a) and (b)) shall 
apply to a civil monetary penalty under this 
subparagraph in the same manner as such pro-
visions apply to a penalty or proceeding under 
section 1128A(a). The Office of Inspector Gen-
eral of the Department of Health and Human 
Services shall carry out the provisions related to 
the imposition of civil monetary penalties under 
this subparagraph. 
‘‘(E) DEFINITIONS.—In this paragraph: 
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‘‘(i) 
FEDERAL
POVERTY
GUIDE-
LINES.—The term ‘Federal poverty guide-
lines’ means the poverty guidelines updated 
periodically in the Federal Register by the 
Department of Health and Human Serv-
ices pursuant to section 9902(2) of title 
42, United States Code. 
‘‘(ii) LOW-INCOME INDIVIDUAL.—The 
term ‘low-income individual’ means an in-
dividual with family income at or below 
200 percent of the Federal poverty guide-
lines. 
‘‘(iii) UNINSURED.—The term ‘unin-
sured’ means lacking minimum essential 
coverage, 
as 
defined 
in 
subsection 
5000A(f) of the Internal Revenue Code (26 
U.S.C. 5000A(f)) and implementing regu-
lations. 
‘‘(12) ADDITIONAL REQUIREMENT FOR PRIVATE 
NONPROFIT DISPROPORTIONATE SHARE HOSPITALS 
LOCATED IN URBAN AREAS.— 
‘‘(A) IN GENERAL.—A covered entity de-
scribed in paragraph (4)(L)(i) that is either a 
private nonprofit hospital that has as the basis 
for its participation in the program under this 
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section a contract with a State or local govern-
ment as described in such paragraph and in 
paragraph (11), or that is a private nonprofit 
corporation which is formally granted govern-
mental powers by a unit of State or local gov-
ernment, and such entity is located in a county 
that is part of a Metropolitan Statistical Area, 
as defined by the Office of Management and 
Budget, must, for the preceding year, fall with-
in the top 40 percent of hospitals on each of the 
lists described in subparagraphs (B) and (C) 
prepared by the Secretary with respect to the 
State in which the covered entity is located. As 
described further in subparagraph (D), place-
ment in the top 40 percent of hospitals on both 
of such lists is a condition of such covered enti-
ty’s participation in the program under this sec-
tion and failure to meet this condition shall re-
quire deregistration and self-disclosure using 
the procedures described in subparagraphs (B) 
and (C) of paragraph (11). Such covered entity 
shall be subject to a civil monetary penalty de-
scribed in paragraph (11)(D) for failure to 
deregister and self-disclose in accordance with 
the preceding sentence. 
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‘‘(B) MEDICAID
AND
CHIP
OUTPATIENT 
REVENUE.—Within 90 days following the con-
clusion of a year, the Secretary shall prepare 
and make available to the public in an elec-
tronic, machine-readable format for each State 
for the concluded year, a list that ranks all 
acute care hospitals in such State in descending 
order based on each hospital’s share of total 
outpatient services revenue derived from base 
reimbursement to such hospital (excluding sup-
plemental and indirect reimbursement) under 
title XIX of the Social Security Act (including 
with respect to individuals also entitled to bene-
fits under part A of title XVIII of such Act or 
enrolled in part B of title XVIII of such Act) 
and payments under title XXI of such Act for 
items and services furnished on an outpatient 
basis at the hospital (including any cost sharing 
for such items and services). The Secretary 
shall specify the threshold for the top 40 per-
cent of hospitals on the list. 
‘‘(C) 
UNCOMPENSATED
OUTPATIENT 
CARE.—Within 90 days following the conclusion 
of a year, the Secretary shall prepare and make 
available to the public in an electronic, ma-
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chine-readable format for each State for the 
concluded year, a list that ranks all acute care 
hospitals in such State in descending order 
based on each hospital’s total cost of uncompen-
sated care for items and services furnished on 
an outpatient basis as a share of the hospital’s 
total outpatient services revenue. For purposes 
of this list, costs of uncompensated outpatient 
care shall be determined in a manner consistent 
with the instructions on worksheet S–10 to the 
Medicare cost report (or any successor form), 
with adjustments to limit uncompensated out-
patient care costs to those incurred in providing 
items and services on an outpatient basis at the 
hospital. The Secretary shall specify the thresh-
old for the top 40 percent of hospitals on the 
list. 
‘‘(D) DEREGISTRATION.—Within 30 days 
following the Secretary’s publication of the lists 
described in subparagraphs (B) and (C), each 
covered entity subject to this paragraph that is 
not included in the top 40 percent of hospitals 
on both lists shall notify the Secretary that the 
covered entity does not satisfy one or more re-
quirements 
described 
in 
this 
paragraph, 
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deregister the entity from the program under 
this section and the identification system de-
scribed in subsection (d)(2)(B)(iv), and cease 
making purchases under such program and rep-
resenting to third parties that it may purchase 
under such program. Such an entity may seek 
to register under another covered entity cat-
egory described in paragraph (4) if such entity 
meets the criteria for such a category and ap-
plicable requirements under this section. 
‘‘(E) OBLIGATION TO SELF-DISCLOSE.—A 
covered entity described in subparagraph (D) 
shall immediately disclose to the Secretary and 
the manufacturer of the affected covered out-
patient drug any purchase made under the pro-
gram under this section by such covered entity 
that, at the time of the purchase of such drug, 
did not fully satisfy the requirements in sub-
paragraphs (B) and (C). Any such purchase 
shall require the covered entity to promptly con-
duct an audit supervised by the Secretary to 
identify the full scope of noncompliance with 
such requirements and to provide the written 
results of such audit to the Secretary and the 
manufacturer of the affected covered outpatient 
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drug. The covered entity shall be liable to the 
manufacturer of the covered outpatient drug 
that is the subject of the noncompliance in an 
amount equal to the reduction in the price of 
the drugs provided under paragraph (1), plus 
interest on such amount, which shall be com-
pounded monthly and equal to the current 
short-term interest rate as determined by the 
Federal Reserve for the time period for which 
the covered entity is liable. 
‘‘(F) CIVIL MONETARY PENALTY.—Where 
a covered entity fails to satisfy a requirement in 
subparagraph (D) or (E), the covered entity 
shall be required to pay a civil monetary pen-
alty equal to $2,500 for each violation, which 
amount shall be adjusted for inflation annually 
to reflect the rate of change in the Consumer 
Price Index for All Urban Consumers published 
by the Bureau of Labor Statistics. The provi-
sions of section 1128A of the Social Security 
Act (other than subsections (a) and (b)) shall 
apply to a civil monetary penalty under this 
subparagraph in the same manner as such pro-
visions apply to a penalty or proceeding under 
section 1128A(a). The Office of Inspector Gen-
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eral of the Department of Health and Human 
Services shall carry out the provisions related to 
the imposition of civil monetary penalties under 
this subparagraph. 
‘‘(13) PROHIBITION AGAINST EXTRAORDINARY 
COLLECTION ACTIONS.— 
‘‘(A) ECAS PROHIBITED.—A covered entity 
described in subparagraphs (L) through (O) of 
paragraph (4) is prohibited from engaging in 
extraordinary collection actions (ECAs), as such 
term is described in section 501(r)(6) of the In-
ternal Revenue Code and its implementing reg-
ulations set forth in section 1.501(r)–6 of title 
26 of the Code of Federal Regulations (or any 
successor regulations), with respect to health 
care items and services furnished to uninsured 
individuals or low-income individuals. 
‘‘(B) AUDITS.—The Secretary shall audit 
for covered entity compliance with this para-
graph, establish a process for individuals to re-
port suspected violations of this paragraph to 
the Secretary, and promptly and fully inves-
tigate such reports of suspected violations. 
‘‘(C) CIVIL MONETARY PENALTY.—Where 
a covered entity violates the prohibition in this 
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paragraph, the covered entity shall be required 
to pay a civil monetary penalty equal to $2,500 
for each extraordinary collection action taken 
with respect to an individual described in this 
paragraph, which amount shall be adjusted for 
inflation annually to reflect the rate of change 
in the Consumer Price Index for All Urban 
Consumers published by the Bureau of Labor 
Statistics. The provisions of section 1128A of 
the Social Security Act (other than subsections 
(a) and (b)) shall apply to a civil monetary pen-
alty under this paragraph in the same manner 
as such provisions apply to a penalty or pro-
ceeding under section 1128A(a). The Office of 
Inspector General of the Department of Health 
and Human Services shall carry out the provi-
sions related to the imposition of civil monetary 
penalties under this paragraph. 
‘‘(D) DEFINITIONS.—In this paragraph, 
the terms ‘low-income individual’ and ‘unin-
sured’ have the meanings given such terms in 
paragraph (11). 
‘‘(14) ADDITIONAL
REQUIREMENT
FOR
CER-
TAIN HOSPITALS.— 
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‘‘(A) IN GENERAL.—During the first cal-
endar year beginning on or after the date that 
is 24 months after the date of enactment of this 
paragraph and during each subsequent calendar 
year, a covered entity described in paragraph 
(4)(L) shall determine by October 1 of each 
such year, based on the most recent year of 
data it has reported to the Secretary under 
paragraph (5)(L) at that point in time, whether 
the annual charity care costs it incurred for the 
year reported were greater than or equal to the 
margin it realized under the program under this 
section for that same year. As described further 
in subparagraph (D), for the period specified in 
the preceding sentence, having annual charity 
care costs that equal or exceed the margin for 
the most recently reported year is a condition 
of such covered entity’s participation in the pro-
gram under this section for the upcoming cal-
endar year, and failure to meet this condition 
shall require deregistration and self-disclosure 
using the procedures described in subpara-
graphs (D) and (E). Such covered entity shall 
be subject to a civil monetary penalty described 
in subparagraph (F) for failure to deregister 
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and self-disclose in accordance with the pre-
ceding sentence. 
‘‘(B) ANNUAL CHARITY CARE COSTS.—The 
term ‘annual charity care costs’ means the total 
costs incurred during the year by the covered 
entity and its child sites (as defined in para-
graph (5)(E)(i)) for charity care (as defined in 
line 23 of worksheet S–10 to the Medicare cost 
report, or in any successor form). 
‘‘(C) MARGIN.—The term ‘margin’ means 
the margin reported by the covered entity for 
the year pursuant to paragraph (5)(L)(i)(V). 
‘‘(D) DEREGISTRATION
AND
CONDITIONS 
FOR SUBSEQUENT REGISTRATION.— 
‘‘(i) DE-REGISTRATION.—On October 
1 of each year beginning on or after the 
date that is 24 months after the date of 
enactment of this paragraph, each covered 
entity subject to this paragraph that has 
reported at least one year of data to the 
Secretary under paragraph (5)(L) and that 
does not have, for the most recently re-
ported year, annual charity care costs 
greater than or equal to the margin, shall 
notify the Secretary that it does not meet 
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the condition of participation under this 
paragraph for the upcoming calendar year, 
deregister the entity from the program 
under this section and the identification 
system 
described 
in 
subsection 
(d)(2)(B)(iv) for the upcoming calendar 
year, cease making purchases under such 
program as of the start of the upcoming 
calendar year, cease representing to third 
parties that it may purchase under such 
program beyond the current calendar year, 
and refrain from purchasing covered out-
patient drugs under this section in quan-
tities exceeding such entity’s bona fide 
needs for the remainder of the current cal-
endar year. 
‘‘(ii) REGISTRATION FOLLOWING DE- 
REGISTRATION.— 
‘‘(I) REGISTRATION
UNDER
AN-
OTHER
COVERED
ENTITY
CAT-
EGORY.—A covered entity that must 
deregister under this subparagraph 
shall not be prohibited from reg-
istering to participate in the program 
under this section under another cov-
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110 
ered entity category described in para-
graph (4) if such entity meets the cri-
teria for such a category and applica-
ble requirements under this section. 
‘‘(II) 
REGISTRATION
UNDER 
PARAGRAPH (4)(L).—In order to reg-
ister under paragraph (4)(L), a hos-
pital that has been required to 
deregister under this subparagraph 
must demonstrate to the Secretary (in 
a form and manner specified by the 
Secretary, and in addition to dem-
onstrating that it satisfies the other 
applicable registration criteria under 
paragraph (4)(L)) that its annual 
charity care cost (as defined in sub-
paragraph (B)) for the most recent 
year that the hospital would have re-
ported under paragraph (4)(L) absent 
the deregistration exceeded by at least 
one percent point the annual charity 
care cost for the year preceding 
deregistration by the hospital. If the 
hospital is found to meet this require-
ment and approved by the Secretary 
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111 
for 
registration 
under 
paragraph 
(4)(L), then the hospital will be re-
quired to resume reporting under 
paragraph (5)(L) and (once the entity 
has reported at least one year of data 
to the Secretary under paragraph 
(5)(L)) to meet the condition of par-
ticipation described in this paragraph 
for the most recently reported year as 
of October 1 of each year. 
‘‘(E) OBLIGATION TO SELF-DISCLOSE.—A 
covered entity described in subparagraph (D) 
shall immediately disclose to the Secretary and 
the manufacturer of the affected covered out-
patient drug any purchase it made under this 
section during a calendar year in which it was 
ineligible to participate in the program under 
this section. Any such purchase shall require 
the covered entity promptly to conduct an audit 
supervised by the Secretary to identify the full 
scope of noncompliance and to provide the writ-
ten results of such audit to the Secretary and 
the manufacturer of the affected covered out-
patient drug. The covered entity shall be liable 
to the manufacturer of the covered outpatient 
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drug that is the subject of the noncompliance in 
an amount equal to the reduction in the price 
of the drugs provided under paragraph (1), plus 
interest on such amount, which shall be com-
pounded monthly and equal to the current 
short-term interest rate as determined by the 
Federal Reserve for the time period for which 
the covered entity is liable. 
‘‘(F) CIVIL MONETARY PENALTY.—Where 
a covered entity fails to satisfy a requirement in 
subparagraph (D) or (E), the covered entity 
shall be required to pay a civil monetary pen-
alty equal to $2,500 for each violation, which 
amount shall be adjusted for inflation annually 
to reflect the rate of change in the Consumer 
Price Index for All Urban Consumers published 
by the Bureau of Labor Statistics. The provi-
sions of section 1128A of the Social Security 
Act (other than subsections (a) and (b)) shall 
apply to a civil monetary penalty under this 
subparagraph in the same manner as such pro-
visions apply to a penalty or proceeding under 
section 1128A(a). The Office of Inspector Gen-
eral of the Department of Health and Human 
Services shall carry out the provisions related to 
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113 
the imposition of civil monetary penalties under 
this subparagraph.’’. 
SEC. 13. 340B PROGRAM. 
Section 340B(a) of the Public Health Service Act (42 
U.S.C. 256b(a)) is further amended by adding at the end 
the following: 
‘‘(15) 340B PROGRAM.—The intent of this sec-
tion is to provide for manufacturer price reductions 
that enable covered entities, whose mission is to 
serve underserved or otherwise vulnerable commu-
nities, to increase access to affordable drugs and 
health services for these communities.’’. 
SEC. 14. AUDITS OF PRIVATE NONHOSPITAL CONTRACTS 
WITH STATE AND LOCAL GOVERNMENTS. 
Section 340B(d)(2)(B) of the Public Health Service 
Act (42 U.S.C. 256b(d)(2)(B)) is amended by adding at 
the end the following: 
‘‘(vi) The conducting of annual audits 
by the Secretary of contracts between a 
covered entity described in subparagraph 
(L) or subparagraph (M) of subsection 
(a)(4), or subparagraph (O) of such sub-
section with respect to a rural referral cen-
ter, that is a private nonprofit hospital 
subject to the requirements in subsections 
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(a)(4)(L)(i) and (a)(11) and a State or 
local government for at least 10 percent of 
all such entities participating in the pro-
gram under this section. The Secretary 
shall develop and publicly disclose stand-
ards used to determine whether such con-
tracts satisfy the applicable requirements 
described in subsections (a)(4)(L)(i) and 
(a)(11) and publicly disclose the findings 
from such audits. The Secretary shall re-
move from the program under this section 
any such entity that does not have a con-
tract in effect with a State or local govern-
ment that satisfies the applicable require-
ments set forth in subsections (a)(4)(L)(i) 
and (a)(11), and such removal shall re-
quire such covered entity to promptly con-
duct an audit supervised by the Secretary 
to identify discounts on covered outpatient 
drugs purchased at a discount under this 
section to which such covered entity was 
not eligible and provide the written results 
of such audit to the Secretary and the 
manufacturer of the affected covered out-
patient drug. Such covered entity shall be 
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liable to the manufacturer of such covered 
outpatient drug in an amount equal to the 
reduction in the price of the drugs pro-
vided under subsection (a)(1), plus interest 
on such amount, which shall be com-
pounded monthly and equal to the current 
short-term interest rate as determined by 
the Federal Reserve for the time period for 
which the covered entity is liable. Where a 
covered entity described in this clause 
knowingly and intentionally violates a re-
quirement in subsection (a)(4)(L)(i) or 
(a)(11), the covered entity shall be re-
quired to pay a civil monetary penalty 
equal to $1,000 for each claim for a cov-
ered outpatient drug that is subject to the 
violation, which amount shall be adjusted 
for inflation annually to reflect the rate of 
change in the Consumer Price Index for 
All Urban Consumers published by the Bu-
reau of Labor Statistics. The provisions of 
section 1128A of the Social Security Act 
(other than subsections (a) and (b)) shall 
apply to a civil monetary penalty under 
this clause in the same manner as such 
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provisions apply to a penalty or proceeding 
under section 1128A(a). The Office of In-
spector General of the Department of 
Health and Human Services shall carry 
out the provisions related to the imposition 
of civil monetary penalties under this 
clause.’’. 
SEC. 15. ENSURING COVERED ENTITY COMPLIANCE WITH 
TRANSPARENCY REQUIREMENTS. 
Section 340B(d)(2)(B) of the Public Health Service 
Act (42 U.S.C. 256b(d)(2)(B)) is further amended by add-
ing at the end the following: 
‘‘(vii) The imposition of civil monetary 
penalties in amounts determined appro-
priate by the Secretary in the case that the 
Secretary determines that a covered entity 
is not in compliance with subsection 
(a)(5)(L).’’. 
SEC. 16. 340B CLAIMS DATA CLEARINGHOUSE. 
(a) 340B CLAIMS DATA CLEARINGHOUSE.—Section 
340B(d)(2) of the Public Health Service Act (42 U.S.C. 
256b(d)(2)) is amended by adding at the end the fol-
lowing: 
‘‘(C) 
340B 
CLAIMS
DATA
CLEARING-
HOUSE.— 
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‘‘(i) IN GENERAL.—The improvements 
described in subparagraph (A) shall in-
clude the establishment of a claims data 
clearinghouse described in this subpara-
graph. Not later than one year after the 
date of enactment of this subparagraph, 
the Secretary shall enter into a contract 
with a third-party entity that meets the 
criteria specified in clause (ii) (such entity 
is hereinafter referred to as the ‘clearing-
house’) for purposes of— 
‘‘(I) identifying claims for cov-
ered 
outpatient 
drugs 
purchased 
under the program under this section 
for which reimbursement was made 
under a State plan (or waiver of such 
plan) and ensuring such claims are or 
were not included in any State rebate 
request under section 1927 of the So-
cial Security Act in violation of sec-
tions 
1903(m)(2)(A)(xiii) 
or 
1927(j)(1) of such Act or section 
340B(a)(5)(A) of this Act; 
‘‘(II) identifying claims for cov-
ered 
outpatient 
drugs 
purchased 
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‘‘(IV) identifying duplicate claims 
for a rebate or discount submitted by 
two or more covered entities (or an 
entity or entities acting on their be-
half) with respect to the same unit of 
a covered outpatient drug purchased 
under the program under this section 
and implementing a process to ensure 
a manufacturer of such a drug does 
not pay more than one rebate or dis-
count under this section with respect 
to such unit; and 
‘‘(V) providing to manufacturers 
of covered outpatient drugs, in a form 
and manner specified by the Secretary 
in consultation with manufacturers, 
access to the data described in sub-
section (a)(5)(J) with respect to each 
dispense or administration of a manu-
facturer’s covered outpatient drugs for 
which a covered entity receives a dis-
count under this section. 
‘‘(ii) 
CRITERIA
FOR
CLEARING-
HOUSE.—The criteria described in this 
clause include the following: 
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‘‘(I) The clearinghouse shall not 
be owned by, overseen by, or affiliated 
with a covered entity described in sub-
section (a)(4) and shall not currently 
be a party to a contractual arrange-
ment with the Health Resources and 
Services Administration. 
‘‘(II) The clearinghouse shall 
have demonstrated experience adjudi-
cating claims for health care items 
and services in real time for self- and 
provider-administered 
drugs 
and 
working with protected health infor-
mation and confidential pricing infor-
mation. 
‘‘(III) The clearinghouse shall 
agree to confidentiality obligations 
that prohibit the clearinghouse from 
using information it receives under 
this subparagraph for any purpose 
other than a purpose set forth in this 
subparagraph, or disclosing such in-
formation to any individual or entity 
other than the Secretary, provided the 
Secretary shall not use such informa-
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121 
tion for purposes of making reim-
bursement or coverage determinations, 
or a manufacturer in accordance with 
this subparagraph (and only with re-
spect to such manufacturer’s covered 
outpatient drugs). 
‘‘(IV) The clearinghouse shall 
maintain the security of the data re-
ported pursuant to this subsection 
(a)(5)(J) in a manner consistent with 
the HIPAA Security Standards set 
forth in sections 164.304–164.312 
and 164.316 of title 45, Code of Fed-
eral Regulations (or any successor 
regulations), as if the clearinghouse 
were subject to those standards as a 
HIPAA covered entity. 
‘‘(iii) DUTIES OF CLEARINGHOUSE.— 
The clearinghouse shall— 
‘‘(I) review claims level data for 
covered outpatient drugs described in 
subsection (a)(5)(J) submitted by cov-
ered entities in accordance with such 
subsection; 
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‘‘(II) review claims level data, in-
cluding rebate file data, submitted to 
the clearinghouse by State agencies 
and Medicaid managed care organiza-
tions for covered outpatient drugs 
subject to an agreement under this 
section dispensed or administered to 
individuals enrolled under a State 
plan (or a waiver of such plan) and 
claims level data submitted by Medi-
care 
Administrative 
Contractors, 
Medicare Advantage organizations (in-
cluding Medicare Advantage Organi-
zations offering an MA–PD plan), and 
PDP sponsors for covered outpatient 
drugs subject to an agreement under 
this section dispensed or administered 
to individuals enrolled under Part B, 
Part C, or Part D of title XVIII of 
the Social Security Act; 
‘‘(III) within 5 days of identifica-
tion, provide written notice of a dupli-
cate discount or rebate to the State 
agency, the Secretary, the covered en-
tity, and the affected drug manufac-
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123 
turer itemizing any violation described 
in clause (i)(I); 
‘‘(IV) within 5 days of identifica-
tion, provide written notice to the Sec-
retary, the covered entity (or entities, 
as applicable), and the affected drug 
manufacturer itemizing any violation 
described in subclauses (II) or (IV) of 
clause (i); 
‘‘(V) have access to the internet 
website 
described 
in 
paragraph 
(1)(B)(iii) containing applicable ceil-
ing prices for covered outpatient 
drugs for purposes of identifying vio-
lations described in clause (i)(II); 
‘‘(VI) subject to clauses (i)(V) 
and (ii)(III), make the data described 
in subclauses (I) and (II) available to 
the manufacturer in electronic format 
not later than 10 days after such data 
is provided to the clearinghouse; 
‘‘(VII) upon request by the Cen-
ters for Medicare & Medicaid Services, 
make the data described in subclauses 
(I) and (II) available for purposes of 
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124 
excluding 340B purchased units of 
Part B rebatable drugs or Part D 
rebatable drugs from Part B or Part 
D inflation rebates pursuant to sec-
tion 1847A(i)(3)(B)(ii)(I) or section 
1860D–14B(b)(1)(B) of the Social 
Security Act; and 
‘‘(VIII) identify claims for cov-
ered outpatient drugs subject to an 
agreement under this section that are 
submitted by pharmacies removed 
from the 340B program pursuant to 
subsection (a)(5)(F)(ix)(III) and no-
tify the Secretary of the submission of 
any such claims by any such phar-
macies. 
‘‘(iv) RESOLUTION OF VIOLATIONS.— 
‘‘(I) MEDICAID DUPLICATE DIS-
COUNTS.—The Secretary, in consulta-
tion with the State, as appropriate, 
shall take prompt action to fairly and 
adequately resolve violations described 
in clause (i)(I) reported by the clear-
inghouse in accordance with clause 
(iii)(III). 
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125 
‘‘(II) 
NONDUPLICATION
WITH 
MAXIMUM
FAIR
PRICE.—The Sec-
retary shall take prompt action to 
fairly and adequately resolve viola-
tions described in clause (i)(II) re-
ported by the clearinghouse in accord-
ance with clause (iii)(IV). 
‘‘(III) DUPLICATE COVERED EN-
TITY
DISCOUNTS.—The 
Secretary 
shall develop and implement a process 
to resolve duplicate claims for a re-
bate or discount under this section de-
scribed in clause (i)(IV) such that the 
manufacturer pays only one rebate or 
discount under this section with re-
spect to the same unit of a covered 
outpatient drug purchased under the 
program under this section. Covered 
entities (and any entities acting on 
their behalf) shall be subject to deter-
minations made by the Secretary to 
resolve such duplicate claims (and the 
Secretary may contract this function 
to the clearinghouse to make such de-
terminations). In making such deter-
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126 
minations, the Secretary shall inves-
tigate duplicate claims for rebates or 
discounts and require covered entities 
(and any entities acting on their be-
half) to take action to avoid or pay re-
funds to reverse a duplicate claim. 
‘‘(IV) REFUNDS
TO
MANUFAC-
TURERS.—The Secretary shall be re-
sponsible for promptly refunding af-
fected manufacturers of covered out-
patient drugs for violations described 
in subclauses (I) and (II) of clause (i) 
and seeking subsequent repayment 
from covered entities or States (with 
respect to violations described in 
clause (i)(I)), or providers or dis-
pensers (with respect to violations de-
scribed in clause (i)(II)). Subject to 
the determination by the Secretary or 
clearinghouse under subclause (III), 
the covered entity (or entities) shall 
be liable to the manufacturer of the 
covered outpatient drug that is the 
subject of the violation described in 
clause (i)(IV) in an amount equal to 
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127 
the reduction in the price of the drug 
(as described in subsection (a)(1)) 
and shall repay such amount to such 
manufacturer within 60 days of re-
ceiving a notice described in clause 
(iii)(IV).’’. 
(b) PROVISION OF DRUG CLAIMS DATA BY MED-
ICAID; REMOVAL OF DUPLICATE CLAIMS.— 
(1) MEDICAID.—Section 1902(a) of the Social 
Security Act (42 U.S.C. 1396a(a)) is amended— 
(A) in paragraph (86), by striking ‘‘and’’ 
at the end; 
(B) in paragraph (87)(D), by striking the 
period and inserting ‘‘; and’’; and 
(C) by inserting after paragraph (87) the 
following new paragraph: 
‘‘(88) provide for a mechanism for the State 
agency to furnish, and for the State agency to re-
quire each Medicaid managed care organization (as 
defined in section 1903(m)(1)(A)) to furnish, to the 
clearinghouse, in a machine-readable format, within 
5 days following the date of claim payment, claims 
level data, including rebate file data, for covered out-
patient drugs dispensed, furnished, or administered 
to individuals enrolled under a State plan (or a waiv-
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128 
er of such plan) that includes, with respect to each 
dispense, furnishing, or administration of such a 
drug, the data elements described in subsection 
340B(a)(5)(J)(iii) of the Public Health Service Act, 
and for the State agency to remove from any rebate 
request described in section 340B(d)(2)(C)(i)(I) of 
such Act any claim that is the subject of a notice 
submitted 
by 
such 
entity 
under 
section 
340B(d)(2)(C)(iii)(III) of such Act.’’. 
(c) PROVISION OF DRUG CLAIMS DATA BY MEDI-
CARE.— 
(1) MEDICARE PART B.—Section 1842 of the 
Social Security Act (42 U.S.C. 1395u) is amended 
by adding at the end the following: 
‘‘(v) PROVISION OF DRUG CLAIMS DATA; MECHA-
NISM TO REFUND DUPLICATED AMOUNTS.—Each Medi-
care administrative contractor shall furnish to the clear-
inghouse, in a machine-readable format, claims level data 
for covered outpatient drugs furnished or administered to 
individuals enrolled under this part that includes, with re-
spect to each furnishing or administration of such a drug, 
the data elements described in section 340B(a)(5)(J)(iii) 
of the Public Health Service Act. Each Medicare adminis-
trative contractor shall furnish such data to the clearing-
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129 
house within 5 days following the date the claim for such 
drug is paid by the Medicare administrative contractor.’’. 
(2) MEDICARE ADVANTAGE ORGANIZATIONS.— 
Section 1857(e) of the Social Security Act (42 
U.S.C. 1395w–27(e)) is amended by adding at the 
end the following: 
‘‘(6) PROVISION OF DRUG CLAIMS DATA; MECH-
ANISM TO REFUND DUPLICATED AMOUNTS.—A con-
tract 
under 
this 
part 
shall 
require 
a 
Medicare+Choice organization to furnish to the 
clearinghouse, in a machine-readable format, claims 
level data for covered outpatient drugs furnished or 
administered to individuals enrolled with the organi-
zation under this part that includes, with respect to 
each furnishing or administration of such a drug, 
the 
data 
elements 
described 
in 
section 
340B(a)(5)(J)(iii) of the Public Health Service Act. 
Such contract shall require the Medicare+Choice or-
ganization to furnish such data to the clearinghouse 
within 5 days following the date the claim for such 
drug is paid by the Medicare+Choice organization.’’. 
(3) 
PRESCRIPTION
DRUG
PLANS.—Section 
1860D–12(b) of the Social Security Act (42 U.S.C. 
1395w–112(b)) is amended by adding at the end the 
following: 
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