← Back to Bill Feed
FederalIn Committee
SECURE 340B Act
Introduced Jul 6, 2026 · Last action Jul 6, 2026 — Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Track this bill
Save bills and get alerts when status changes.
Sign in to saved bills.
Summary
This legislation is called the SECURE 340B Act. It is being reviewed by a committee.
Full bill text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9599 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 9599
To strengthen the 340B drug discount program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 6, 2026
Mr. Peters (for himself, Mr. Joyce of Pennsylvania, Mr. Auchincloss,
Mr. Crenshaw, and Ms. Barragan) introduced the following bill; which
was referred to the Committee on Energy and Commerce, and in addition
to the Committees on Ways and Means, and Education and Workforce, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To strengthen the 340B drug discount program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Strengthening the
Exercise of Controls and Upgrading Requirements for Efficiency in 340B
Act'' or the ``SECURE 340B Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Establishing a clear patient definition.
Sec. 3. Allowable use and robust oversight of contract pharmacies.
Sec. 4. Eligibility for child sites.
Sec. 5. Improving patient affordability and protections.
Sec. 6. Data reporting for transparency.
Sec. 7. Enhancing program integrity.
Sec. 8. Facilitating data exchange to improve program integrity.
Sec. 9. Prohibition on discriminatory practices and contracting.
Sec. 10. Ensuring HRSA has adequate resources to oversee the program.
Sec. 11. Studies and reports.
Sec. 12. Meanings.
Sec. 13. Requirements for nonhospital covered entities and subgrantees.
Sec. 14. Effective date.
SEC. 2. ESTABLISHING A CLEAR PATIENT DEFINITION.
(a) In General.--Section 340B(a) of the Public Health Service Act
(42 U.S.C. 256b(a)) is amended by adding at the end the following:
``(11) Patient defined.--
``(A) In general.--In this section, the term
`patient' means an individual who--
``(i) has received an outpatient health
care service from a prescribing provider at a
covered entity within the preceding 24 months,
and such health care service--
``(I) is a service that was
reimbursable under title XVIII of the
Social Security Act when furnished by a
prescribing provider or, in the case of
an individual who is not eligible for
benefits under such title, would have
been so reimbursable had the individual
been so eligible; a service shall be
considered reimbursable if it is of a
type eligible for reimbursement under
title XVIII; and
``(II) in the case of a covered
entity described in subparagraphs (A)
through (K) of subsection (a)(4), is a
service that is within the scope of the
grant or designation described in such
subparagraph.
``(ii) received the prescription or order
for the covered outpatient drug related to the
service described in clause (i); and
``(iii) has a relationship with the covered
entity such that the covered entity creates and
maintains auditable health care records which
demonstrate that--
``(I) the covered entity maintains
a provider-to-patient relationship with
the individual for the healthcare
service related to the covered
outpatient prescription or order;
``(II) the prescribing provider has
clinical responsibility and oversight
for the individual's health care
service related to the prescription or
order for the covered outpatient drug
with the covered entity; and
``(III) any other information
specified by the Secretary through
notice and comment rulemaking.
``(B) Application.--For each prescription or order
for a covered outpatient drug, an individual shall
qualify as a patient under subparagraph (A) only if the
requirements of such subparagraph are independently
satisfied with respect to that prescription or order.
``(C) Record retention and auditing.--A covered
entity shall--
``(i) retain auditable health care records
in a form and manner specified by the Secretary
through notice and comment rulemaking which
demonstrate the existence of a patient
relationship in accordance with this paragraph
for each prescription or order for a covered
outpatient drug for a period of the greater of
5 years or such period as required under
applicable State and Federal laws governing
medical or pharmacy records; and
``(ii) no more than one time annually, in
accordance with subsection (a)(5)(C), permit
the Secretary and the manufacturer of a covered
outpatient drug that is subject to an agreement
under this subsection, to audit, at the
Secretary's or the manufacturer's expense, the
records of the entity which demonstrate the
existence of a patient relationship in
accordance with this paragraph and which
directly pertain to the entity's compliance
with the requirements of subsection
(a)(5)(B).''.
(b) Additional Amendments.--Section 340B of the Public Health
Service Act (42 U.S.C. 256b) is amended--
(1) in subsection (a), by adding at the end the following:
``(12) Prescribing provider.--In this section, the term
`prescribing provider' means a health care provider who, at the
time the health care provider orders or prescribes a covered
outpatient drug--
``(A)(i) is an employee or independent contractor
of the covered entity such that the covered entity
bills for services furnished by the health care
provider and is responsible for the care furnished by
such provider; or
``(ii) is an employee or independent contractor of
a physician organization affiliate of the covered
entity, has assigned their right to bill and collect
for professional services to such physician
organization affiliate, and furnishes outpatient health
care services to patients of the covered entity.
``(B) has clinical responsibility over the care
related to the order or prescription for the covered
outpatient drug, as demonstrated by the provider's
signature on the relevant order or prescription for the
covered outpatient drug;
``(C) is enrolled as a provider in the Medicare
program under title XVIII of the Social Security Act,
or the Medicaid program under title XIX of the Social
Security Act; and
``(D) is not excluded by the Secretary from
participation in Medicare and State health care
programs pursuant to section 1128 of the Social
Security Act (42 U.S.C. 1320a-7).''; and
(2) in subsection (b), by adding at the end the following:
``(3) Physician organization affiliate defined.--For
purposes of subparagraph (A)(ii), the term `physician
organization affiliate' means an entity that--
``(A) is lawfully organized for the purpose of
employing or contracting with licensed professionals to
furnish clinical services;
``(B) has an ongoing, legally binding agreement
with the covered entity to provide health care services
to patients of the covered entity at the covered
entity's locations; and
``(C) the outpatient healthcare services are
provided such that responsibility for the care provided
remains with the covered entity and meets the other
requirements in this paragraph.''.
(c) Referral Requirements.--Section 340B of the Public Health
Service Act (42 U.S.C. 256b), as amended, is amended by adding at the
end the following new subsection:
``(f) Referral Qualifications.--
``(1) In general.--Subject to the requirements of this
subsection, in the case of a patient of an eligible covered
entity who is referred by such covered entity to a provider
outside such covered entity, and such non-covered entity
provider prescribes a covered outpatient drug within 24 months
of the date of such referral, the eligible covered entity may
provide such drug to such patient as a covered outpatient drug
pursuant to the drug discount program under this section, in
the same manner and under the same conditions as the covered
entity would provide such drug had such drug been prescribed by
a prescribing provider of such covered entity.
``(2) Covered entity eligibility.--For purposes of this
subsection the covered entity that dispenses or administers the
covered outpatient drug must be--
``(A) a federally qualified health center, as
described in subsection (a)(4)(A), that is also a
comprehensive primary care medical home, certified as a
Patient-Centered Medical Home by a national accrediting
organization;
``(B) a critical access hospital, as described in
subsection (a)(4)(N); or
``(C) a sole community hospital, as described in
subsection (a)(4)(O).
``(3) Patient eligibility.--For purposes of this
subsection--
``(A) the individual to whom a covered outpatient
drug is dispensed or administered must be a patient of
the covered entity meeting the requirements under
(a)(11);
``(B) the individual must have received direct care
from the covered entity within 24 months prior to the
date on which the individual was referred to receive
care by the prescribing entity;
``(C) the care furnished to the individual by the
covered entity that resulted in the referral must be--
``(i) in the case of a federally qualified
health center described in paragraph (2)(A),
within the scope of the grant application made
to the Secretary under section 330(k)(1);
``(ii) in the case of a critical access
hospital described in paragraph (2)(B), within
the scope of the agreement with the State under
section 1820(c)(2) of the Social Security Act;
and
``(iii) in the case of a sole community
hospital described in paragraph (2)(C), within
the scope of the request made to the Secretary
for such classification under section
1886(d)(5)(C)(iii) of the Social Security Act;
``(D) the covered entity must have--
``(i) Referred the individual to the
prescribing entity;
``(ii) Consulted with a clinician at the
prescribing entity regarding the individual's
care; and
``(iii) Provided care to the individual
after dispensing or administering the
prescription, as appropriate; and
``(E) in the case of a federally qualified health
center described in paragraph (2)(A), a prescription
generated as a direct result of an emergency department
visit or hospital discharge.
``(4) Exclusions.--The following categories of drugs shall
not be eligible for discounts under this subsection--
``(A) orphan-designated drugs; or
``(B) in the case of a prescription written by a
federally qualified health center described in
paragraph (2)(A), a drug that is infused or that
requires a clinician to administer, except for those
entities providing infusions as of the date of
enactment of this Act and subject to the limitation
described in paragraph (5).
``(5) Documentation requirements.--
``(A) In general.--In association with any covered
outpatient drug receiving a discount under this
subsection, the individual's medical record must
include documentation to demonstrate compliance with
the requirements of paragraph (3), including--
``(i) documentation of the direct care
provided to the individual by the covered
entity prior to the referral to the prescribing
entity;
``(ii) documentation of the referral from
the covered entity to the prescribing entity;
``(iii) documentation of direct care
received by the individual from the covered
entity that resulted in the referral and that
occurred within 24 months prior to the initial
referral;
``(iv) documentation of care received by
the individual from the prescribing entity
within 24 months of the covered entity
referral, which may take the form of receipt of
consult notes or documentation of a discussion
between the covered entity and prescribing
entity regarding the care furnished by the
prescribing entity;
``(v) documentation of ongoing consultation
between the covered entity and the prescribing
entity as appropriate for the covered entity's
ongoing responsibility of the individual's
care, consistent with the scope of care
described in paragraph (3)(C); and
``(vi) documentation of the prescribing
entity's prescription to be dispensed or
administered by the covered entity and updated
through the qualified entity's medication list
for the patient.
``(B) Document retention.--All documentation
described under this paragraph shall be maintained for
a period of the greater of 5 years or such period as
required under applicable State and Federal laws
governing medical or pharmacy records as auditable
records that demonstrate compliance with the
requirements of this subsection.
``(6) Referral audits based on volume.--
``(A) In general.--The Secretary shall conduct
audits of any eligible covered entity that meets the
following conditions in a given year--
``(i) referral prescriptions described in
paragraph (1) exceed 25 percent of the total
number of covered outpatient drugs purchased
and dispensed by the covered entity for the
year;
``(ii) referral prescriptions described in
paragraph (1) are in the 75th percentile of all
reporting covered entities by covered entity
classification; or
``(iii) referral prescriptions exceeding
the average annual percentage for that covered
entity classification over the most recent 3-
year period, of the total number of covered
outpatient drugs purchased and dispensed by the
qualified referral covered entity.
``(B) Transparency of information.--The Secretary
shall make public aggregate information on eligible
covered entities audited under subparagraph (A)
available on a website of the Health Resources and
Services Administration, in such form and manner that
the Secretary determines appropriate.
``(7) Additional audits.--
``(A) In addition to audits conducted under
paragraph (6), the Secretary shall audit any covered
entity receiving discounts under this subsection for
compliance with requirements of this subsection every
four years and, in the case of covered entities
receiving abnormal volumes of discounts as compared to
such covered entity's discounts over the previous three
year period, more frequently (but no more than one time
annually).
``(B) The Secretary shall through notice and
comment rulemaking establish a process for
manufacturers to request audits of discounts provided
under this subsection at any time the manufacturer
provides documentation to the Secretary of suspected
non-compliance with the requirements of this
subsection, with information received by the
manufacturer from the clearinghouse established under
section 1150D of the Social Security Act that provides
credible evidence of non-compliance serving as
acceptable documentation for this purpose.
``(8) Enforcement.--
``(A) Loss of referral authorization.--
``(i) A covered entity for which the
Secretary determines through an audit conducted
pursuant to or otherwise authorized under this
section that the share of referral
prescriptions during the previous calendar year
exceeds 35 percent of the covered entity's
total number of covered outpatient drugs
purchased and dispensed by the covered entity
in the applicable year, may be subject to a
Corrective Action Plan in accordance with the
corrective action plan process established
under subsection (d)(2)(B)(vii).
``(ii) A covered entity that fails to
implement a Corrective Action Plan required
under clause (i) and comply with the timeline
for correction set forth in such Corrective
Action Plan shall immediately lose eligibility
under this subsection for a period determined
by the Secretary through notice and comment
rulemaking, but no more than 1 year.
``(iii) The Secretary and the Administrator
of the Health Resources and Services
Administration shall develop a process through
notice and comment rulemaking for covered
entities that lose eligibility for discounts
under this section pursuant to clause (ii) to
complete the Corrective Action Plan and resume
referrals under the program.
``(B) Monetary penalties.--The Secretary may impose
civil monetary penalties on covered entities for any
discounts under this section later deemed ineligible on
the grounds the covered entity is found to be
noncompliant with the requirements of this subsection
with respect to the relevant prescription. The amount
of such civil monetary penalties shall be paid to the
affected manufacturer.''.
SEC. 3. ALLOWABLE USE AND ROBUST OVERSIGHT OF CONTRACT PHARMACIES.
(a) Use of Contract Pharmacies.--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:
``(13) Contract pharmacies.--
``(A) In general.--In the case of a covered entity
that elects to contract with a pharmacy or pharmacies
to dispense covered outpatient drugs purchased by a
covered entity at or below the applicable ceiling price
described in paragraph (1) to patients of the covered
entity, a manufacturer of a covered outpatient drug
that is subject to an agreement with the Secretary
under paragraph (1) shall--
``(i) offer each covered entity covered
outpatient drugs for purchase at or below the
applicable ceiling price described in paragraph
(1) regardless of whether the drug is dispensed
directly by the covered entity or via a
contract pharmacy arrangement;
``(ii) deliver or allow the delivery of
covered outpatient drugs purchased by covered
entity sites to pharmacy locations as requested
by a covered entity, in accordance with the
covered entity's contract pharmacy agreements;
``(iii) not place any of the following
conditions on the ability of a covered entity
to purchase a covered outpatient drug at or
below the applicable ceiling price described in
paragraph (1) for dispensing according to its
written contract pharmacy arrangements:
``(I) Restricting distribution
options only with respect to covered
outpatient drugs, covered entities, or
contract pharmacies.
``(II) Requiring the submission of
claims data directly to the
manufacturer out of submissions to the
entity receiving the contract to
maintain the clearinghouse under
section 1150D of the Social Security
Act.
``(III) Conditioning, restricting,
or refusing participation in such an
arrangement solely on the basis that
the covered entity elected to use a
contract pharmacy.
``(IV) Any such other conditions
specified by the Secretary through
notice and comment rulemaking.
``(B) Registration of contract.--Each covered
entity shall register with the Secretary any contract
described in subparagraph (A), in accordance with such
registration requirements established by the Secretary
through notice and comment rulemaking. Such
registration requirements shall include requiring
covered entities to--
``(i) submit all contract pharmacy
agreements to the Secretary in a timely manner;
``(ii) register each contract pharmacy
arrangement with the Secretary, as applicable,
prior to implementing the contract pharmacy
agreement; and
``(iii) attest to their compliance with the
requirements under this subsection at the time
of contract pharmacy registration and annually
thereafter.
``(C) Contract review process.--The Secretary shall
establish through notice and comment rulemaking a
process to review all written agreements between a
covered entity and each of its contract pharmacies, as
described in subparagraph (A), to ensure compliance
with the requirements under this subsection. In
connection with such review process, there shall be no
limitation on the number of contract pharmacies a
covered entity may contract with nor any geographic
limitation on the location of such contract pharmacies.
``(D) Transparency.--The Secretary shall make the
following information about contract pharmacy
arrangements that have been approved under
subparagraphs (A) and (B) available on the public
internet website of the Department of Health and Human
Services:
``(i) Name(s) of each covered entity,
including the name of its child site(s) that
uses contract pharmacy(ies).
``(ii) Name(s) and address(es) of each
contract pharmacy location to which the
contract pharmacy arrangement applies.
``(iii) Effective date(s) of the contract
pharmacy arrangement(s).
``(iv) The last year a drug was dispensed
under the contract pharmacy arrangement(s) from
each location.
``(v) The volume of dispensed drugs under
this section per reporting period.
``(vi) The geographic distance between the
covered entity reported under (i) and each
contract pharmacy reported under (ii).
``(vii) Information on the contract
pharmacy's status as a mail-order or specialty
pharmacy.
``(viii) Details on the location of the
contract pharmacy, including whether the
contract pharmacy is located in--
``(I) an urban area (under Census
definition);
``(II) a rural area (under Census
definition);
``(III) a frontier county or
frontier State (as defined in Section
1886(d)(3)(E)(iii)(II) of the Social
Security Act);
``(IV) a medically underserved area
(MUA) as defined in section 295p(6);
``(V) a Healthcare Provider
Shortage Area (HPSA) as defined in
section 254e; or
``(VI) an area classified as one
for a medically underserved population
(MUP) as defined in section 254b(b)(3).
``(E) Improvements in contract pharmacy arrangement
integrity.--To ensure the integrity of contract
pharmacy arrangements described in subparagraph (A),
including to prevent diversion and duplicate discounts
described in paragraph (5)(A), the Secretary shall
promulgate rules to carry out the following:
``(i) Require a written agreement between a
covered entity and any pharmacy with which the
covered entity has a contract pharmacy
arrangement. Each such agreement shall--
``(I) list the address of each
contract pharmacy location that will
dispense drugs on behalf of the covered
entity, including all covered entity
sites that plan to use the contract
pharmacy;
``(II) be signed and in effect not
later than the day before the contract
pharmacy begins dispensing covered
outpatient drugs purchased under this
section on behalf of the covered
entity; and
``(III) include the standard
contract provisions established under
clause (ii).
``(ii) Develop standard contract provisions
that are required to be included in each
written agreement described in clause (i),
including provisions providing that--
``(I) the covered entity will
purchase the drug and maintain title to
the drug pursuant to the terms of the
award or designation from the
Department of Health and Human Services
that qualifies such entity as a covered
entity and any applicable Federal,
State, or local law;
``(II) the contract pharmacy is
responsible for providing pharmacy
services and providing data to covered
entities to support their submission of
covered outpatient drug data to a
clearinghouse contracted entity
described in section 1150D of the
Social Security Act;
``(III) the covered entity will not
interfere with patient choice of their
pharmacy provider nor require patients
to use a certain pharmacy, including to
obtain a prescription from the covered
entity and obtain the drug from the
pharmacy provider of his or her choice;
``(IV) the contract pharmacy may
provide other services to the covered
entity or its patients at the option of
the covered entity, such as home care,
delivery, and reimbursement services;
``(V) regardless of the services
provided by the contract pharmacy,
access to covered outpatient drugs
purchased under this section will be
restricted to patients of the covered
entity;
``(VI) the covered entity and the
contract pharmacy will adhere to all
Federal, State, and local laws and
requirements;
``(VII) the contract pharmacy will
provide the covered entity with any
information requested consistent with
customary business practices, such as
quarterly billing statements, status
reports of collections, receiving and
dispensing records, and information
required for audits under subsection
(a)(5)(C);
``(VIII) the covered entity and the
contract pharmacy will utilize the
clearinghouse to verify patient
eligibility, as defined by the
Secretary, and will establish and
maintain safeguards to prevent
diversion of covered outpatient drugs
purchased under this section;
``(IX) the contract pharmacy may
not use covered outpatient drugs
purchased under this section to
dispense prescriptions that are
reimbursed under the Medicaid program
under title XIX of the Social Security
Act, unless the covered entity, the
contract pharmacy, and the State
Medicaid agency have established, in
writing and made available to
pharmaceutical manufacturers upon
request, an arrangement to prevent
duplicate discounts, consistent with
paragraph (5)(A);
``(X) both the covered entity and
the contract pharmacy shall be subject
to audits, by the Secretary and drug
manufacturers, of records that pertain
to the covered entity's compliance with
paragraph (5), to prevent diversion and
violations of the duplicate discount
prohibition; and
``(XI) the contract pharmacy is
required to submit to the covered
entity all data elements the covered
entity is required to report to the
clearinghouse pursuant to section 1150D
of the Social Security Act.
``(iii) Review written agreements, at the
time of registration or recertification, or
more frequently if the Secretary determines
necessary, between covered entities and
contract pharmacies to ensure compliance with
the requirements under this section, to analyze
program operations, and to provide program
oversight.
``(iv) Provide specific guidance to covered
entities regarding the needed practices and
procedures for contract pharmacy oversight,
including the scope and frequency of such
oversight.
``(v) Establish a retention period of the
greater of 5 years or such period as required
under applicable State and Federal laws
governing medical or pharmacy records during
which covered entities and contract pharmacies
are required to maintain all relevant auditable
records in relation to contract pharmacy
arrangements, including records relating to
transactions of drugs purchased pursuant to an
agreement under paragraph (1), sufficient to
demonstrate compliance with the requirements to
prevent diversion and violations of the
duplicate discount prohibition.''.
(b) Program Integrity.--Section 340B(d)(1)(B)(vi)(III) of the
Public Health Service Act (42 U.S.C. 256b(d)(1)(B)(vi)(III)) is
amended--
(1) by striking ``intentionally charges a'' and inserting
the following: ``intentionally--
``(aa) charges a covered
entity a price for purchase of
a covered outpatient drug that
exceeds the maximum applicable
price under subsection
(a)(1);'';
(2) by striking the period and inserting a semicolon; and
(3) by adding at the end the following:
``(bb) refuses to offer a
covered outpatient drug for
purchase at or below the
maximum applicable price under
subsection (a)(1) or deliver or
allow to be delivered a covered
outpatient drug purchased by a
covered entity at or below such
maximum applicable price; and
``(cc) places conditions on
the ability of a covered entity
to purchase a covered
outpatient drug at or below the
maximum applicable price under
subsection (a)(1).''.
SEC. 4. ELIGIBILITY FOR CHILD SITES.
Section 340B(a) of the Public Health Service Act (42 U.S.C.
256b(a)) is further amended by adding at the end the following:
``(14) Child sites.--
``(A) In general.--A covered entity described in
subparagraph (L), (M), (N), or (O) of paragraph (4)
that owns and operates a child site that participates
in the drug discount program under this section shall
maintain documentation of, and annually certify to the
Secretary through such certification processes
established under the Medicare enrollment and cost
reporting rules, that each such child site is wholly
owned by the entity and clinically and financially
integrated with the covered entity and providing care
consistent with the policies of the covered entity,
including by--
``(i) registering each child site with the
Secretary;
``(ii) applying the same financial
assistance policy and patient assistance policy
as apply with respect to other sites operated
by the covered entity; and
``(iii) ensuring that each child site
complies with the Medicare provider-based rules
under section 413.65 of title 42, Code of
Federal Regulations (or any successor
regulations) or meets the requirements of
subparagraph (B)(i).
``(B) Eligibility for child sites.--
``(i) In general.--A child site is eligible
for participation in the drug discount program
under this section, through the eligibility of
the covered entity that owns and operates such
child site, only if the covered entity
demonstrates that the child site meets the
following requirements:
``(I) The child site applies the
same patient financial assistance
policy as the covered entity.
``(II) The child site participates
as a provider or supplier in both the
Medicare program under title XVIII of
the Social Security Act, and the
Medicaid program under title XIX of
such Act of the State in which the
child site is located, without
discrimination against patients of such
programs at such locations.
``(III) The child site ensures that
the providers who order or dispense
covered outpatient drugs purchased
under this section at the child site
have clinical responsibility for health
care services that are related to the
use of the covered outpatient drug
purchased under this section that is
dispensed.
``(IV) The child site provides a
clinically meaningful range of services
within the scope of the services that
prescribing providers employed by or
contracted with the child site, covered
entity, or a physician organization
affiliate of the covered entity are
qualified to deliver.
``(V) If the child site is owned by
a covered entity described in paragraph
(4)(L), the child site shall ensure
that the provider who prescribes a
covered outpatient drug purchased under
this section meets the requirements in
paragraph (12).
``(VI) The child site and the
covered entity are operated under the
same license, except in areas where the
State requires a separate license for
the child site, or in States where
State law does not permit licensure of
the child site and the covered entity
under a single license. If a State
health facilities cost review
commission or other agency that has
authority to regulate the rates charged
by providers in a State finds that a
child site is not part of the covered
entity, the child site shall not be
eligible for the drug discount program
under this section.
``(VII) The clinical services of
the child site and the covered entity
are integrated as evidenced by the
following:
``(aa) Professional staff
of the child site have clinical
privileges at the covered
entity.
``(bb) The covered entity
maintains the same monitoring
and oversight of the child site
as for any other owned entity
or subsidiary of the covered
entity.
``(cc) The medical director
of the child site maintains a
reporting relationship with the
chief medical officer or other
similar official of the covered
entity that has the same
frequency, intensity, and level
of accountability that exists
in the relationship between the
medical director of a
department of the covered
entity and the chief medical
officer or other similar
official of the covered entity,
and is under the same type of
supervision and accountability
as any other director, medical
or otherwise, of the covered
entity.
``(dd) Medical staff
committees or other
professional committees at the
covered entity are responsible
for medical activities in the
child site, including quality
assurance, utilization review,
and the coordination and
integration of services, to the
extent practicable, between the
child site and covered entity.
``(ee) Medical records for
patients treated in the child
site are integrated into a
unified retrieval system, or
have the ability to be readily
accessed by the covered entity.
``(ff) Inpatient and
outpatient services of the
child site and the covered
entity are integrated, and
patients treated at the child
site who require further care
have full access to all
services of the covered entity
and are referred where
appropriate to the
corresponding inpatient or
outpatient department or
service of the covered entity.
``(VIII) The financial operations
of the child site are fully integrated
within the financial system of the
covered entity, as evidenced by shared
income and expenses between the covered
entity and the child site. For purposes
of the Medicare program under title
XVIII of the Social Security Act, the
costs of a child site are reported in
the appropriate cost center or cost
centers of the covered entity, and the
financial status of any child site is
incorporated and readily identified in
the covered entity's trial balance.
``(IX) The child site is held out
to the public as part of the covered
entity. When patients enter the child
site, they are aware that they are
entering the covered entity.
``(X) The child site is operated
under the ownership and control of the
covered entity, as evidenced by the
following:
``(aa) The business
enterprise that constitutes the
child site is 100 percent owned
by the covered entity; except
that a child site may be
jointly owned if:
``(AA) the covered
entity holds a majority
ownership interest of
not less than 51
percent;
``(BB) each co-
owner is either: (i) an
organization described
in section 501(c)(3) of
the Internal Revenue
Code of 1986 and exempt
from tax under section
501(a) of such Code, or
(ii) a State or local
governmental entity,
including a public
university or academic
medical center;
``(CC) each co-
owner that is not a
covered entity has,
independent of the
joint venture, a bona
fide charitable, public
health, or governmental
mission that includes
the direct provision of
health care services to
low-income, uninsured,
or medically
underserved
individuals;
``(DD) no co-owner
is a for-profit entity;
``(EE) no co-owner
that is not a covered
entity was formed,
reorganized, converted,
or materially
restructured for the
purpose of qualifying
as an eligible co-owner
under this
subparagraph; and
``(FF) the
Administrator of the
Health Resources and
Services Administration
has not determined,
after notice and an
opportunity to respond,
that the joint venture
structure was
constituted for the
purpose of obtaining
eligibility under the
drug discount program
under this section or
expanding claims for
discounts under such
program, rather than to
further the health care
mission of the covered
entity and the health
care needs of the
patient population
served by the child
site.
``(bb) The covered entity
and the child site have the
same governing body.
``(cc) The child site is
operated under the same
organizational documents as the
covered entity, and is subject
to common bylaws and operating
decisions of the governing body
of the covered entity.
``(dd) The covered entity
has final responsibility for
administrative decisions, final
approval for contracts with
outside parties, final approval
for personnel actions, final
responsibility for personnel
policies (such as fringe
benefits or code of conduct),
and final approval for medical
staff appointments at the child
site.
``(XI) The reporting relationship
between the child site and the covered
entity have the same frequency,
intensity, and level of accountability
that exists in the relationship between
the covered entity and its other
departments, as evidenced by compliance
with all of the following requirements:
``(aa) The child site is
under the direct supervision of
the covered entity.
``(bb) The child site is
operated under the same
monitoring and oversight by the
covered entity as any other
department of the covered
entity, and is operated as any
other department of the covered
entity with regard to
supervision and accountability.
The director or individual
responsible for daily
operations at the child site--
``(AA) maintains a
reporting relationship
with a manager at the
covered entity that has
the same frequency,
intensity, and level of
accountability that
exists in the
relationship between
the covered entity and
its existing
departments; and
``(BB) is
accountable to the
governing body of the
covered entity, in the
same manner as any
department head of the
covered entity.
``(XII) The following
administrative functions of the child
site are integrated with the functions
of the covered entity: billing
services, records, human resources,
payroll, employee benefit package,
salary structure, and purchasing
services. Either the same employees or
group of employees handle such
administrative functions for the child
site and the covered entity, or the
administrative functions for both the
child site and the covered entity are--
``(aa) contracted out under
the same contract agreement; or
``(bb) handled under
different contract agreements,
with the contract of the child
site being managed by the
covered entity.
``(XIII) The child site is listed
on the covered entity's most recently
filed Medicare cost report on a line
that is reimbursable under the Medicare
program (or, if the covered entity is a
children's hospital that does not file
a Medicare cost report, the covered
entity submits to the Secretary a
signed statement certifying that the
site would be correctly included on a
reimbursable line of a Medicare cost
report if the covered entity filed a
cost report). Such cost report
demonstrates that the services provided
at the child site have associated costs
and charges for covered entity
outpatient department services under
title XVIII of the Social Security Act
(or, if the covered entity is a
children's hospital that does not file
a Medicare cost report, the covered
entity submits to the Secretary a
signed statement certifying that the
services provided at the child site
include or consist solely of outpatient
services).
``(ii) HRSA deeming.--
``(I) In general.--If the
Administrator of the Centers for
Medicare & Medicaid Services has
determined a site to be qualified as a
provider-based entity and in compliance
with the provider-based requirements
under section 413.65 of title 42, Code
of Federal Regulations (or any
successor regulations), the Secretary
shall deem the site to have met the
requirements described in clause (i).
``(II) Rule of construction.--This
clause shall authorize the Secretary to
establish a process through notice and
comment rulemaking to determine whether
a child site, as determined by the
Administrator of the Center for
Medicare & Medicaid Services, complies
with the Medicare provider-based rules.
``(iii) Child site registration: community
need standard.--
``(I) Definitions.--For purposes of
this subsection:
``(aa) The term `child
site' has the definition set
forth in Section 340B(b)(4).
``(bb) The term `Community
Vulnerability Score' means the
percentile ranking assigned to
a ZIP Code Tabulation Area
under the Social Vulnerability
Index maintained by the Centers
for Disease Control and
Prevention and the Agency for
Toxic Substances and Disease
Registry (CDC/ATSDR SVI), or
such successor or supplementary
validated index as the
Secretary may designate by
regulation, on a scale of 0 to
1 in which a score of 1
represents maximum social
vulnerability. The Secretary
shall, through notice and
comment rulemaking, establish a
method for mapping or
aggregating the underlying
index to the ZIP Code
Tabulation Area level. Where
the Secretary designates a
supplementary or successor
index, the Secretary shall
ensure that such index is based
on publicly available ZIP Code
Tabulation Area-level or
equivalent data, updated at
least biennially, and validated
for use in identifying
medically underserved or
socially vulnerable
communities.
``(cc) The term `parent
entity' means the covered
entity whose eligibility status
under subsection (a)(4) forms
the basis for a child site's
registration.
``(dd) The term `qualifying
ZIP Code' means a ZIP Code
Tabulation Area with a
Community Vulnerability Score
at or above the 50th percentile
threshold when ranked
nationally--meaning the ZIP
Code Tabulation Area falls
within the more vulnerable half
of all ZIP Code Tabulation
Areas in the United States--or
at or above the 40th percentile
threshold when ranked against
all ZIP Code Tabulation Areas
within the same State,
whichever threshold the covered
entity elects to apply. If the
ZIP Code Tabulation Area in
which a child site's street
address is located has not been
assigned a Community
Vulnerability Score, including
because the area is
unpopulated, non-residential,
or otherwise lacks the
underlying data necessary to
compute such a score, the
qualifying status of such area
shall be determined based on
the Community Vulnerability
Score of the census tract in
which the street address is
located, or if no such score is
available for that census
tract, the county in which the
street address is located,
applying the same national and
State-relative percentile
thresholds described in this
subparagraph. The Secretary
shall, through notice and
comment rulemaking, define the
circumstances under which a ZIP
Code Tabulation Area is treated
as unscored and establish
another method for assigning a
Community Vulnerability Score.
``(ee) The term `ZIP Code
Tabulation Area' means the
geographic unit designated by
the United States Census Bureau
corresponding to a 5-digit ZIP
code, consistent with the
geographic units used by the
Secretary under this
subsection. For purposes of
this subsection, a child site's
ZIP Code Tabulation Area shall
be determined based on the
first five digits of the child
site's street address ZIP code
as registered with the
Secretary.
``(II) Community need standard for
child sites.--
``(aa) General
requirement.--A child site
shall meet the community need
standard established under this
paragraph as a condition of
initial registration and
continued participation under
this section. A child site
meets such standard if the
covered entity demonstrates
that the child site is
physically located in a
qualifying ZIP Code Tabulation
Area, as determined using the
street address of the child
site in a manner specified by
the Secretary through notice
and comment rulemaking.
``(bb) Application to new
child sites.--For a child site
seeking registration on or
after the date of enactment of
this subsection, compliance
with item (aa) shall be
determined by the Secretary at
the time of initial
registration based on the ZIP
Code Tabulation Area in which
the child site's street address
is situated, as submitted by
the covered entity.
``(cc) Application to
existing child sites.--For a
child site registered as of the
date of enactment of this
subsection, compliance with
item (aa) shall be evaluated at
the time of the next applicable
recertification of the covered
entity. For the purposes of
applying the community need
standard to a child site
registered as of the date of
enactment of this subsection,
the Secretary shall determine
eligibility based on the ZIP
Code Tabulation Area in which
the child site's street address
is situated at the time of such
recertification.
``(dd) Ongoing
validation.--Compliance with
the community need standard
under item (aa) shall be
verified for all child sites on
an ongoing basis through the
annual recertification process,
or such other periodic review
as the Secretary may establish.
``(ee) Failure to meet
standard.--A child site that
does not satisfy the community
need standard under item (aa),
as determined by the Secretary,
shall be subject to removal
from the covered entity's
registration in accordance with
procedures established by the
Secretary, including notice and
an opportunity to respond.
Removal of a child site from
registration under this
paragraph shall not affect the
continued eligibility of the
parent entity or any other
child site of the parent entity
that satisfies the applicable
standard.
``(ff) Payor-mix
exception.--Notwithstanding
item (aa), a child site that
does not independently meet the
community need standard
described in item (aa) shall
nonetheless be deemed to meet
such standard if the covered
entity demonstrates, to the
satisfaction of the Secretary,
that not less than 40 percent
of patients served by the child
site are enrolled in Medicaid,
are uninsured, or have incomes
at or below 200 percent of the
Federal poverty level, as
determined using patient data
for the most recent 12-month
period.
``(gg) Safety-net
exception.--The Secretary may
grant a temporary exception
from the community need
standard under item (aa) for a
child site that does not
otherwise qualify under item
(aa) or (ff), if the covered
entity demonstrates that--
``(AA) the child
site provides primary
care, behavioral
health, substance use
treatment services or
other services
specifically directed
at individuals who are
low income, uninsured,
or otherwise medically
underserved and for
which there is no
adequate alternative
provider within a
reasonable geographic
proximity--to a patient
population that
includes a significant
proportion of low-
income, uninsured, or
otherwise medically
underserved
individuals; and
``(BB) removal of
the child site from
registration under this
section would
materially reduce
access to such services
for such patient
population. Any
exception granted under
this subparagraph shall
be for a period not to
exceed 2 years, subject
to renewal upon re-
demonstration. The
Secretary shall
promulgate regulations
specifying the criteria
and application process
for exceptions under
this subparagraph.
``(hh) Rule of
construction.--A child site
shall not fail to satisfy the
community need standard solely
because the parent entity is
located in a different ZIP Code
Tabulation Area, provided the
child site independently
satisfies the requirements of
this paragraph.
``(III) Rulemaking.--Not later than
6 months after the date of enactment of
this subsection, the Secretary shall
promulgate regulations to implement
this subsection, including the method
for determining the ZIP Code Tabulation
Area in which a child site is located
under item (aa) and, where such area is
unscored, the method for assigning a
Community Vulnerability Score. In
promulgating such regulations, the
Secretary shall account for geographic
disparities in national SVI rankings by
providing for a State-relative
eligibility determination, consistent
with the State-relative threshold
established in subparagraph (I)(dd),
ensuring that child sites serving
communities with relatively high social
vulnerability within their State are
not disadvantaged solely by lower
absolute national percentile rankings.
``(iv) Limitation.--Only a child site that
meets each of the requirements under this
subparagraph may purchase covered outpatient
drugs under the 340B program or use covered
outpatient drugs purchased under the 340B
program by another part of the covered entity
that is authorized to participate in such
program. Any transfer of 340B drugs to another
facility or another part of a covered entity
that is not authorized to participate in the
340B program shall be deemed a violation of
paragraph (5)(B).''.
SEC. 5. IMPROVING PATIENT AFFORDABILITY AND PROTECTIONS.
Section 340B(a) of the Public Health Service Act (42 U.S.C.
256b(a)) is further amended by adding at the end the following:
``(15) Patient assistance programs.--
``(A) In general.--Covered entities shall maintain
and extend their patient financial assistance policy to
patients served by their child sites and contract
pharmacies. The covered entity shall ensure that its
financial assistance policy is transparent to patients
at point of care, satisfies the notice requirements in
paragraph (C), and publicly reported. The Secretary
shall establish a process, through notice and comment
rulemaking, to require covered entities to maintain
auditable records related to the implementation and
enforcement of this paragraph. Nothing in this section
shall be construed to require a covered entity to waive
or eliminate all patient cost-sharing or other out-of-
pocket obligations, or to provide covered outpatient
drugs or related services at no cost, except to the
extent required under the covered entity's generally
applicable financial assistance policy.
``(B) Financial assistance policy defined.--In this
paragraph, a `financial assistance policy' means a
written financial assistance policy described in
section 501(r)(4)(A) of the Internal Revenue Code of
1986, provided to patients--
``(i) up to at least 400 percent of the
Federal poverty level, for covered entities
described under subparagraph (L), (M), (N), and
(O) of subsection (a)(4);
``(ii) up to at least 200 percent of the
Federal poverty level, for all covered entities
not described in paragraph 14(b)(i) that are
not otherwise subject to sliding fee schedule
or grant requirements by law; and
``(iii) a sliding fee scale for covered
outpatient drugs dispensed to patients under
the drug discount program under this section,
as applicable, provided that--
``(I) for covered entities
described under subparagraph (L), (M),
(N), and (O) of subsection (a)(4)--
``(aa) such sliding fee
schedule must be made available
for all patients up to at least
400 percent of the Federal
poverty level; and
``(bb) copayment
requirements under such sliding
fee schedule must be nominal in
amount; or
``(II) such other alternative
policy as the Secretary may determine
through notice and comment rulemaking
with respect to a specific covered
entity.
``(C) Notice.--
``(i) Covered entities shall provide
adequate notice and application of any
financial assistance policy described in
subparagraph (A).
``(ii) In order to ensure meaningful
understanding of eligibility of a patient for a
financial assistance policy, any notice
described in clause (i) must be made available
to patients of the covered entity--
``(I) in a plain-language summary
(as defined in 42 U.S. Code
18031(e)(3)(B)) in English; and
``(II) if English is not the
primary language in the community
served by the covered entity, in the
primary language served by such
community.
``(D) Implementation for contract pharmacies.--The
financial assistance policies under this section shall
apply to contract pharmacies by the following timeline:
``(i) prospectively to all newly registered
contract pharmacy locations after the enactment
of this clause; or
``(ii) not later than 3 years after the
date of enactment of this clause for all other
contract pharmacy locations.
``(E) Oversight.--The Comptroller General of the
United States shall conduct a study and report to
Congress on the impact of requirements of this
paragraph on patient access to covered outpatient drugs
purchased under this section.
``(F) Rule of construction.--Compliance with this
paragraph shall not be considered a prohibited act
under section 1128A, 1128B(b), or 1877 of the Social
Security Act.
``(16) Medical debt.--
``(A) Prohibitions.--
``(i) In general.--Covered entities
described under subparagraph (L), (M), (N), and
(O) of subsection (a)(4) shall not--
``(I) sell a patient's debt to
another party;
``(II) report adverse information
about an individual to consumer credit
reporting agencies or credit bureaus;
and
``(III) defer or deny, or require a
payment before providing, medically
necessary care, because of an
individual's non-payment of one or more
bills.
``(ii) Exception.--A covered entity
described under subparagraph (L), (M), (N), and
(O) of subsection (a)(4) may sell an
individual's debt to another party if the
party's sole purpose is to pay for the
individual's debt in full.
``(B) Debt collection.--
``(i) In general.--Except as provided in
clause (ii), covered entities described under
subparagraph (L), (M), (N), and (O) of
subsection (a)(4) shall not take any legal
action to collect debt from a patient at such
covered entity.
``(ii) Exception.--A covered entity
described under subparagraph (L), (M), (N), and
(O) of subsection (a)(4) may collect debt only
from patients with a clear ability to pay, as
demonstrated by the greater of--
``(I) income at or above 600
percent of the Federal poverty level;
or
``(II) assets valued at more than
400 percent of the patient's
outstanding balance of debt owed to the
covered entity.
``(iii) Interest.--A covered entity
described under subparagraph (L), (M), (N), and
(O) of subsection (a)(4) shall be prohibited
from charging interest on any outstanding
balance of debt owed by a patient to such
covered entity that is more than the allowable
percentage specified in the applicable usury
laws or regulations of the State in which the
covered entity is located.
``(C) Monitoring compliance.--
``(i) In general.--The Secretary shall
conduct an annual review, in a form and manner
established in regulations to be promulgated by
the Secretary not later than 180 days after the
date of enactment of this subparagraph, to
monitor covered entity compliance with the
requirements of this paragraph.
``(ii) Enforcement.--If the Secretary finds
that, as a result of a review described in
clause (i), a covered entity is not in
compliance with the requirements of this
paragraph, the Secretary shall--
``(I) impose civil monetary
penalties, which--
``(aa) shall be assessed
according to standards
established in regulations to
be promulgated by the Secretary
not later than 180 days after
the date of enactment of this
subclause; and
``(bb) shall not exceed
$5,000 for each instance of
noncompliance that may have
occurred;
``(II) where the Secretary
determines that a violation of this
paragraph was systematic and egregious
as well as knowing and intentional,
refer matters to appropriate
authorities within the Office of
Inspector General of the Department of
Health and Human Services; and
``(III) where the Secretary
determines that a covered entity may
not be in compliance with the
requirements of section 501(r) of the
Internal Revenue Code of 1986, refer
matters to appropriate authorities
within the Internal Revenue Service.
``(D) GAO report.--Not later than 2 years after the
enactment of this subparagraph, and every 2 years
thereafter, the Comptroller General of the United
States shall submit to the Secretary and to the
appropriate committees of Congress a report that--
``(i) analyzes covered entity compliance
with the requirements described in this
paragraph; and
``(ii) makes recommendations with respect
to policies intended to improve compliance with
the requirements described in this paragraph.
``(E) Inspector general report.--The Inspector
General of the Department of Health and Human Services
shall conduct an annual risk-based assessment of
covered entity compliance with the requirements of this
paragraph.''.
SEC. 6. DATA REPORTING FOR TRANSPARENCY.
Section 340B(d) of the Public Health Service Act (42 U.S.C.
256b(d)) is amended by adding at the end the following:
``(5) Reporting of program savings.--
``(A) In general.--Not later than 1 year after the
date of enactment of this paragraph, and annually
thereafter, each covered entity shall report to the
Secretary, as an addendum to the Medicare cost report
most recently submitted by such entity, or in the case
of a covered entity that does not submit a Medicare
cost report, by direct report to the Secretary, the
following information with respect to the entity,
including all sites and contract pharmacy arrangements
of the entity, for the preceding year:
``(i) The total number of individuals who
were dispensed or administered covered
outpatient drugs purchased under this section
during such preceding year that were subject to
an agreement under subsection (a)(1).
``(ii) The total number of prescriptions
filled with covered outpatient drugs purchased
under this section and billed to insurance,
organized by type of health insurance coverage
(as specified by the Secretary through notice
and comment rulemaking, including by the
Medicare program under title XVIII of the
Social Security Act, the Medicaid program under
title XIX of such Act, the Children's Health
Insurance Program under title XXI of such Act,
health insurance coverage offered in the
individual or group market or a group health
plan (as such terms are defined in section
2791), and uninsured).
``(iii)(I) The cost incurred at each site
for charity care, based on the charity care
level of the covered entity, defined as a
fraction, the numerator of which is the amount
of charity care reported on worksheet S-10 of
the Medicare cost report (or any successor),
and the denominator of which is the total
operating cost of the hospital, as reported for
the most recent cost reporting period; or
``(II) in the case of a covered entity that
is not required to submit a Medicare cost
report that indicates charity care levels, a
qualitative description of the charity care
provided by such entity, in the aggregate, in
such manner that is not overly burdensome to
covered entities, as the Secretary may require
through notice and comment rulemaking.
``(iv) A description of the covered
entity's use of the savings received through
participation in the drug discount program
under this section, including a description of
health care services or health-related benefits
used to benefit the patients and communities
served by the covered entity, delineated by
categories of services and benefits and
populations served, including such services and
benefits provided to underserved and uninsured
patients and communities.
``(v) The financial demographics of
patients of the covered entity, including--
``(I) the percentage of patients
eligible for financial assistance
programs and sliding scale fees;
``(II) the percentage of patients
who reside in a health professional
shortage area (as defined in section
332) or a medically underserved
community (as defined in section 799B),
or who are part of a medically
underserved population (as defined in
section 330(b)(3)), and the percentage
of uninsured patients;
``(III) the percentage patients who
are Medicaid beneficiaries;
``(IV) the percentage of patients
who are Children's Health Insurance
Program beneficiaries;
``(V) to the extent data are
available, the percentage of patients
earning below each of each of the
following levels of the Federal Poverty
Level: 100 percent, 200 percent, 300
percent, and 400 percent; and
``(VI) the number of patients who
receive assistance from another party
in paying for a prescription drug and
the mean amount of discount or benefit
received.
``(vi) Policies of the covered entity to--
``(I) promote access and adherence
to prescribed medications; and
``(II) promote access to
prescription medicines for patients
earning under 200 percent of the
Federal Poverty Level.
``(vii) In the case of a nongovernmental
hospital, any contracts between such hospital
and a State or local governmental entity, and
any modifications to any such contract.
``(viii) Any third-party administrators in
contract with the covered entity for the
administration of the drug discount program.
``(ix) The funding shortfall for the
covered entity attributable to services
provided to Medicare and Medicaid
beneficiaries, as reported on the Internal
Revenue Service Form 990.
``(x) The number of patients using the
outpatient services of the covered entity.
``(xi) Operation costs to the covered
entity related to the drug discount program
under this section.
``(xii) The names and addresses of all
contract pharmacy locations.
``(xii) Utilization rates of outpatient
hospital services furnished to patients earning
below each of the following level of the
Federal Poverty Level: 100 percent, 200
percent, 300 percent, and 400 percent.
``(B) Records retention.--Covered entities shall
retain such records for a period of at least 3 years
and provide such records and reports pursuant to
standards established by the Secretary through notice
and comment rulemaking for purposes of carrying out
this paragraph.
``(C) Availability of information.--
``(i) In general.--Not later than 30 days
after receiving the information reported by
covered entities under subparagraph (A), the
Secretary shall publish such information on the
public website of the Department of Health and
Human Services, which may include the website
of the 340B Office of Pharmacy Affairs
Information System (or a successor to such
system).
``(ii) Format.--Data published under clause
(i) shall be published in an electronic and
searchable format that shows each category of
data reported both in the aggregate and
identified by individual covered entity(ies)
described in subsection (a)(4). In carrying out
this paragraph, with respect to data reported
pursuant to subparagraph (A), the Secretary
shall ensure that any proprietary information
be redacted from contracts submitted pursuant
to paragraph (5)(A)(vii) before posting such
contracts.
``(D) Reports to congress.--Not later than 1 year
after the date of the enactment of this subparagraph,
and annually thereafter, the Secretary shall submit a
report to Congress on the information collected under
subparagraph (A).
``(E) Regulations.--The Secretary shall promulgate
regulations to carry out this paragraph.''.
SEC. 7. ENHANCING PROGRAM INTEGRITY.
(a) Audits.--
(1) In general.--Section 340B of the Public Health Service
Act (42 U.S.C. 256b) is further amended by adding at the end
the following new subsection:
``(g) Audits by the Secretary.--
``(1) In general.--In addition to the audits otherwise
authorized under this section, the Secretary may audit covered
entities, including the contract pharmacies and child sites of
such entities, and manufacturers to assess compliance with
requirements under this section, including identifying any
statutory violations related to: improperly claiming
eligibility for the program under this section, drug diversion,
duplicate discounts, use of contract pharmacies, claiming of a
discount under this section on a drug that is not a covered
outpatient drug purchased under this section, or failing to
provide an accurate ceiling price.
``(2) Standards.--The Secretary shall conduct audits
described in this section in accordance with generally accepted
standards, as may be prescribed by the Comptroller General of
the United States, and shall make the protocol for such audits
publicly available.
``(3) Requirements.--The Secretary may not close an audit
described in paragraph (1) before a corrective action plan
required by the Secretary has been fully implemented, as
applicable.
``(4) 340b vendor information.--To meet the requirements
for submission of information for audits under this clause,
covered entities shall contract only with vendors agreeing to--
``(A) submit data to the Secretary and independent
auditors contracting with covered entities necessary to
determine the covered entity's compliance with
statutory and regulatory requirements under this
program, prohibitions on drug diversion and duplicate
discounts, use of contract pharmacies, and claims for
discounts on covered outpatient drugs purchased
pursuant to agreements under subsection (a)(1); and
``(B) respond to requests from auditors in a timely
manner.
``(5) Consequences of audit.--The Secretary shall ensure
that, in the case of an audit finding that an entity did not
meet one or more of the eligibility criteria for being a
covered entity, as defined in subsection (a)(4), the full
period under review in an audit, the audit results in
consequences that are consistent and appropriate with the
violation, which may include disenrollment, and that do not
treat the failure to meet eligibility criteria as an issue that
can be corrected retroactively. Nothing in this subsection
shall be construed to limit the authority of the Secretary to
impose any remedy or consequence otherwise available under this
Section.
``(6) Regulations.--Not later than 1 year after the date of
enactment of this paragraph, the Secretary shall promulgate
regulations to establish the audit and reporting procedures
required by this subsection.
``(h) Independent Audits of Covered Entities and Contract Pharmacy
Locations.--
``(1) On a biennial basis, each covered entity shall engage
an independent auditor to conduct an audit of the covered
entity's and each of its child site's and contract pharmacy
location's compliance with this section. The independent
auditor shall not--
``(A) have any direct or indirect financial
interest in the covered entity or its contract
pharmacy;
``(B) have any decision-making authority with
respect to the covered entity; or
``(C) intervene with the governance of the covered
entity.
``(2) Upon conclusion of each audit, each covered entity
shall--
``(A) review the methodology used by the auditor to
identify the full scope of any noncompliance;
``(B) identify and fully correct all violations
that have been identified in such independent audit of
the covered entity;
``(C) take steps to prevent such violations
effectively in the future;
``(D) specifically disclose to the Secretary--
``(i) the methodology used by the
independent auditor described in subparagraph
(A);
``(ii) the nature and extent of any
identified non-compliance; and
``(iii) steps taken to prevent such
violations effectively in the future;
``(E) assign responsibility to certify the audit
results make corrections under subparagraph (B) to a
corporate officer of the covered entity; and
``(F) within a reasonable time period, disclose to
the manufacturer of the affected covered outpatient
drug any purchase made under the drug discount program
under this section that, at the time of the purchase of
such drug, did not fully satisfy the requirements of
the program. If the aggregate amount owed to a
manufacturer as a result of an audit under this
subsection exceeds the de minimis threshold established
by the Secretary through notice and comment rulemaking,
the covered entity shall repay the manufacturer an
amount equal to the reduction in the price of the
affected drugs, plus interest on such amount calculated
using the applicable short-term interest rate
determined by the Secretary of the Treasury under
section 1274(d) of the Internal Revenue Code of 1986
for the period for which the covered entity is liable.
In establishing the de minimis threshold, the Secretary
shall consider the administrative costs associated with
calculating, processing, and receiving repayments.
Amounts may not be divided, allocated, or otherwise
structured for the purpose of avoiding the repayment
requirement under this subparagraph.
``(3) Not later than 1 year after the date of enactment of
this paragraph, the Secretary shall--
``(A) promulgate regulations governing how auditors
engaged by covered entities under this subsection shall
determine whether and to what extent a covered entity
is meeting its requirements under this section,
including requirements regarding nonprofit status and
any contract required under subsection (a)(4)(L)(i), as
applicable; and
``(B) promulgate regulations to establish the audit
and reporting procedures required by this
subsection.''.
(2) Additional sanctions authority.--Section 340B(d)(2)(B)
of the Public Health Service Act (42 U.S.C. 256b(d)(2)(B)) is
amended--
(A) in clause (v)(II), by inserting ``or where the
covered entity fails to implement a corrective action
plan relating to a violation involving improperly
claiming eligibility for the drug discount program
under this section, drug diversion, duplicate
discounts, compliance with contract pharmacy
requirements, or claiming a discount or rebate on a
drug that is not a covered outpatient drug, within 6
months of the Secretary notifying the entity of the
requirement for such plan'' after ``knowing and
intentional,''; and
(B) by adding at the end the following:
``(vi) Increasing the frequency of audits
conducted for entities previously found to be
in violation of requirements of the drug
discount program under this section that relate
to eligibility, drug diversion, duplicate
discounts, compliance with contract pharmacy
requirements, or claiming a discount or rebate
on a drug that is not a covered outpatient
drug, and assigning responsibility for making
corrections relating to such a violation to a
corporate officer of the entity.
``(vii) Establishing--
``(I) a process by which the
Secretary provides for proper and
timely notification of a potential
violation by a covered entity,
including the specific basis for the
potential violation and the information
relied upon by the Secretary in
identifying such potential violation;
``(II) a process for a covered
entity to develop, submit, and
implement a corrective action plan,
subject to approval and monitoring by
the Secretary, which shall--
``(aa) provide two months
to submit a corrective action
plan following notification of
a potential violation under
subclause (I);
``(bb) require the
Secretary, not later than 2
months after the date of
submission of such plan, to
approve the plan or request
changes to the plan; and
``(cc) require such plan to
identify the specific basis for
the finding of noncompliance
and the actions the covered
entity will take to correct
such noncompliance, prevent
recurrence, and demonstrate
ongoing compliance;
``(III) standards for timelines for
correction and demonstration of
compliance that are reasonable and
proportionate to the nature, scope, and
severity of the violation, including
the extent of any affected claims, the
risk of diversion or duplicate
discounts, and whether the violation
reflects isolated error, repeated
conduct, or willful disregard of
applicable requirements;
``(IV) circumstances under which,
during the period in which a corrective
action plan is in effect, the Secretary
may temporarily suspend the covered
entity's eligibility to participate in
the drug discount program under this
section, if the Secretary determines
that such suspension is necessary to
protect program integrity, including
cases involving willful disregard,
repeated or egregious noncompliance,
failure to respond to a Secretary-
approved audit, or failure to implement
a prior corrective action plan; and
``(V) a process for the Secretary
to publicly report, in a de-identified
manner, on the types and scope of
violations found in audits conducted
under this section.
``(viii) Disenrolling from the program
covered entities that fail to implement a
corrective action plan and correct violations
in accordance with the time frame set forth in
the Corrective Action Plan pursuant to the
process described in subparagraph (B)(vii),
related to any statutory violation of this
section.
``(ix) The imposition of civil monetary
penalties, which shall be assessed according to
standards established in regulations to be
promulgated by the Secretary, for covered
entities that knowingly or intentionally
continue to contract with third-party
administrators or contract pharmacies that are
not in compliance with the requirements of
subsection (a)(13).
``(x) Notwithstanding the foregoing, if the
Secretary determines that a covered entity has
engaged in a pattern of noncompliance, as
evidenced by: (1) 3 or more separate final
audit reports finding violations of the
requirements of this section within a 2-year
period, or (2) 5 or more such reports within a
5-year period. The Secretary may take any one
or more of the following actions with respect
to such repeat noncompliant entity: (A) require
the entity to implement an accelerated
corrective action plan within a timeframe
determined appropriate by the Secretary; (B)
impose civil monetary penalties without
providing an additional period for corrective
action; or (C) remove the entity from the drug
discount program under this section and
disqualify the entity from re-entry into such
program for a period of time determined by the
Secretary.''.
(b) Private Non-Profit Hospital Eligibility Based on Contracts With
State or Local Governments Meeting Specified Criteria.--Section
340B(a)(5) of the Public Health Service Act (42 U.S.C. 256b(a)(5)), as
amended by the preceding sections, is further amended by adding at the
end the following:
``(E) Private non-profit hospital eligibility based
on contracts with state or local governments meeting
specified criteria.--In the case of a hospital, whether
registered or seeking to register for the drug discount
program under this section as a covered entity
described under subparagraph (L), (M), (N), or (O) of
paragraph (4), that claims to be eligible for the
program by virtue of being a private non-profit
hospital that has a contract with a State or local
government to provide health care services to low-
income individuals who are not eligible for Medicaid or
Medicare, the Secretary shall take all of the following
steps, each of which shall be documented:
``(i) Prior to registering or approving
annual recertification of such a hospital (or
while carrying out any program audit of such a
hospital), the Secretary shall obtain and
review the hospital's contract with a State or
local government and shall verify and document
that--
``(I) the document provided by the
hospital is a contract, in that it is a
mutually binding agreement for the
hospital to provide health care
services or supplies in exchange for
something of value;
``(II) the contract clearly lists
the name of the hospital and the unit
of State or local government that are
parties to the contract and is signed
and appropriately dated by appropriate
officials of the hospital and the unit
of State or local government;
``(III) the contract specifies an
effective date;
``(IV) the contract clearly is in
effect and not expired at the time of
registration (or at the time of
recertification, in the case of annual
recertification, or for the full period
examined in an audit, in the case of an
audit); and
``(V) the contract explicitly
requires that the hospital provide
health care services, and that such
services must be provided to
individuals who are both low-income and
not eligible for either the Medicaid
program or the Medicare program.
``(ii) The Secretary shall verify the
existence of contracts meeting the requirements
of clause (i) for all covered entities
described in this subparagraph and registered
as of the date of enactment of this clause by
no later than 1 year after the date of
enactment of this clause.
``(iii) The Secretary shall not register or
recertify any covered entity described in this
subparagraph if the entity's contract with a
State or local government does not satisfy
subclauses (I) through (V) of clause (i).''.
(c) Verification of Certain Covered Entities.--Section
340B(a)(4)(L)(i) of the Public Health Service Act (42 U.S.C.
256b(a)(4)(L)(i)) is amended by inserting ``(provided that such a
private non-profit hospital annually submits to the Secretary
verification of such an active contract with a State or local
government and verification of its non-profit status)'' before the
semicolon.
(d) Amendment.--Section 340B(a)(7) of the Public Health Service Act
(42 U.S.C. 256b(a)(7)) is amended by inserting at the end the
following:
``(F) Non-profit status.--The Secretary shall
verify the non-profit status of any hospital, whether
registered or seeking to register for the drug discount
program as a covered entity described under
subparagraph (L), (M), (N), or (O) of subsection
(a)(4), that claims, in connection with drug discount
program registration, annual recertification, or an
audit, to meet drug discount program eligibility
criteria in part by being a private non-profit
hospital. The Secretary shall verify the non-profit
status of all such hospitals using reliable publicly
available information, such as by matching data
reported by hospitals against data from the Internal
Revenue Service or from the Centers for Medicare and
Medicaid Services on the hospital's Federal tax status.
The Secretary shall verify all registered covered
entities described under this section are in compliance
with these requirements within one year of the
enactment of this subparagraph.''.
SEC. 8. FACILITATING DATA EXCHANGE TO IMPROVE PROGRAM INTEGRITY.
Part A of title XI of the Social Security Act (42 U.S.C. 1301 et
seq.) is amended by adding the following new section:
``SEC. 1150D. 340B DRUG DISCOUNT PROGRAM DATA CLEARINGHOUSE.
``(a) General.--For a period of four (4) years from the enactment
of this section, a manufacturer shall offer covered outpatient drugs at
the ceiling price required under section 340B(a)(1) of the Public
Health Service Act as a reduction in the purchase price and not through
retrospective rebates or other post-sale payments. This obligation
shall not apply to rebates for the AIDS Drug Assistance Programs who
have implemented a rebate model prior to the effective date of this
section.
``(b) Clearinghouse Performance.--Notwithstanding any other
provision of this section, the obligation under subsection (a) shall
automatically conclude at the end of the period described in such
subsection if the Secretary has not certified, in a public report
validated by the Office of Inspector General, that the conditions
described in paragraphs (1) through (4) have been satisfied. If such
certification is not made as of the end of the period described in
subsection (a), no provision of this subsection shall be construed to
impose any additional or continuing limitation on the form, timing, or
mechanism by which a manufacturer makes available the ceiling price
required under section 340B(a)(1) of the Public Health Service Act--
``(1) all claims for 340B drugs described in subsection (g)
are submitted to, and processed through, the clearinghouse
entity with a contract in effect under subsection (f);
``(2) not less than 90 percent of the value of such claims
submitted during the most recent 12-month period are identified
by such clearinghouse entity as unique transactions that do not
result in duplicate discounts or other applicable overlapping
price concessions;
``(3) not less than 90 percent of the value of claims for
340B drugs as described in subsection (g) are adjudicated,
including identification of any duplicate discounts, rebates,
or other overlapping price concessions, within timeframes
established by the Secretary through notice and comment
rulemaking; and
``(4) not less than 95 percent of the value of claims for
340B drugs as described in subsection (g) contain the data
elements required by the Secretary and are determined to be
complete and accurate at the time of initial submission.
``(c) Ongoing Validation of Clearinghouse Performance.--
``(1) Periodic oig reports.--If the obligation under
subsection (a) remains in effect after the end of the 4-year
period described in subsection (a), the Inspector General of
the Department of Health and Human Services shall issue public
reports evaluating whether the clearinghouse entity with a
contract in effect under subsection (f) continues to satisfy
the performance benchmarks described in subsection (b). Such
reports shall be issued--
``(A) not later than 2 years after the end of the
4-year period described in subsection (a);
``(B) not later than 5 years after the end of the
4-year period described in subsection (a); and
``(C) every 5 years thereafter.
``(2) Contents.--Each report under paragraph (1) shall
assess, with respect to the most recent 12-month period for
which data are available, whether the performance benchmarks
described in subsection (b) continue to be satisfied.
``(3) Corrective period.--If a report issued under
paragraph (1) determines that one or more of the performance
benchmarks described in subsection (b) are not being
maintained, the clearinghouse entity shall have 6 months from
the date of issuance of such report to cure the deficiency.
``(4) Follow-up report.--Not later than 60 days after the
end of the 6-month corrective period described in paragraph
(3), the Inspector General shall issue a follow-up public
report evaluating whether the deficiency has been cured and
whether the applicable performance benchmarks are being
maintained.
``(5) Failure to maintain performance benchmarks.--The
obligation under subsection (a) shall cease to apply if the
follow-up report issued under paragraph (4) determines that the
deficiency has not been cured or that one or more of the
applicable performance benchmarks are not being maintained.
``(d) Interim Performance Report.--Not later than 2 years after the
date of enactment of this section, the Secretary shall issue a
preliminary public report, validated by the Office of Inspector
General, detailing the progress made towards accomplishing the goals
and standards in subsection (b). The report shall include the data,
methodology, and assumptions used by the Secretary and identify any
material operational, data-quality, or compliance barriers affecting
achievement of such benchmarks.
``(e) Special Rule for Selected Drugs.--Notwithstanding subsection
(b) and any other provision of this section requiring a covered entity
to submit data to the third-party entity with a contract in effect
under subsection (f), with respect to a drug that is a selected drug
(as defined in section 1192(c))--
``(1) each covered entity shall transmit directly to the
manufacturer, in a timely manner and in accordance with
standards established by the Secretary through notice and
comment rulemaking, claims-level data sufficient to enable the
manufacturer to prevent duplicate discounts, rebates, or other
overlapping price concessions and to validate compliance with
the requirements of this section and section 1191, et seq.; and
``(2) a covered entity that fails to comply with paragraph
(1) shall, following written notice from the Secretary
identifying the specific failure and a 30-day period to cure
such failure, be subject to civil monetary penalties in an
amount of $5,000 per day during the period of such non-
compliance following the expiration of such cure period.
The provisions of section 1128A (other than subsections (a) and (b))
shall apply to a civil monetary penalty under this section in the same
manner as such provisions apply to a penalty or proceeding under
section 1128A(a).
``(f) Clearinghouse Contracting Entity.--Not later than 1 year
after the date of enactment of this section, the Secretary shall enter
into a contract with an independent, third-party clearinghouse entity
(who shall be free of conflicts of interest with covered entities,
manufacturers, health plans, pharmacy benefit managers, and of other
conflicts of interest as specified by the Secretary) for purposes of
carrying out the clearinghouse duties under subsection (g) with respect
to the drug discount program under section 340B of the Public Health
Service Act to facilitate robust and verifiable data exchange between
relevant parties in order to improve program integrity under section
340B of the Public Health Service Act. Such contract shall provide that
the third-party entity shall perform the duties described in subsection
(g) and shall be for a 4-year term that may be renewed after a
subsequent bidding process or using competitive procedures, as defined
in section 132 of title 41, United States Code.
``(g) Duties.--With respect to any 340B drug dispensed or
administered to an individual, without regard to the individual's
insurance status or the type or source of payment for the drug, a
third-party entity with a contract in effect under subsection (f)
shall--
``(1) establish a procedure for collecting data elements
specified in subparagraph (A), including any additional data
elements required by the secretary pursuant to subparagraph
(A)(iv) to improve program integrity of the drug discount
program under section 340B of the Public Health Service Act,
such that--
``(A) pharmacy benefit and medical benefit claims-
level data elements reported under this section shall
include the data elements specified in clauses (i)
through (iv) of this subparagraph--
``(i) with respect to a pharmacy benefit
claim--
``(I) the date of service;
``(II) the date on which the drug
was prescribed;
``(III) the prescription number;
``(IV) the fill number;
``(V) the 11-digit National Drug
Code for the drug dispensed;
``(VI) the quantity dispensed;
``(VII) the prescriber identifier;
``(VIII) the identifier of the
dispensing pharmacy or other service
provider, including the National
Provider Identifier, as applicable;
``(IX) the 340B identification
number of the covered entity;
``(X) the prescription benefit bank
identification number; and
``(XI) the prescription benefit
processor control number;
``(ii) with respect to a medical benefit
claim--
``(I) the date of service;
``(II) the claim number;
``(III) the claim line number;
``(IV) the quantity of the drug
furnished;
``(V) the unit of measure;
``(VI) the physician or other
furnishing provider identifier;
``(VII) the applicable Healthcare
Common Procedure Coding System code and
any applicable modifiers;
``(VIII) the 11-digit National Drug
Code for the drug furnished;
``(IX) the National Provider
Identifier of the billing provider;
``(X) the 340B identification
number of the covered entity;
``(XI) the health plan identifier;
and
``(XII) the name of the health
plan;
``(iii) with respect to a pharmacy benefit
claim or medical benefit claim described in
clause (i) or (ii)--
``(I) the name of the wholesaler;
``(II) the wholesaler account
number;
``(III) the invoice date;
``(IV) the invoice number;
``(V) the National Provider
Identifier of the pharmacy or other
location to which the drug was shipped;
``(VI) the 11-digit National Drug
Code for the drug purchased;
``(VII) the number of package units
purchased; and
``(VIII) the 340B identification
number of the covered entity; and
``(iv) such additional data elements as the
Secretary determines necessary to carry out
this section to improve the integrity of the
drug discount program under section 340B of the
Public Health Service Act;
``(B) claims-level data under this section shall be
submitted and must be adjudicated within timeframes
established by the Secretary through notice and comment
rulemaking, with such timeframes taking into account
operational capabilities of covered entities; and
``(C) reclassification of historical claims by
covered entities from non-340B to 340B beyond 6 months
after the drug is furnished is prohibited, except that
the Secretary may permit such reclassification upon a
showing of good cause by the covered entity;
``(2) request and receive, in the most efficient and least
burdensome manner practicable, with an established timeframe
for such reporting--
``(A) claims-level rebate file data under section
1927, from State Medicaid agencies;
``(B) claims-level data from covered entities and,
to the extent necessary, contract pharmacies, health
plans, entities providing pharmacy benefit management
services to health plans;
``(C) claims-level rebate file data from
commercially paid claims that are eligible under
Section 340B; and
``(D) any other data specified by the Secretary as
necessary to carry out this section;
``(3) request, receive, and maintain data described in
paragraph (1) in a confidential manner;
``(4) ensure that claims-level data submissions by covered
entities are complete and accurate, and if not, obtain complete
and accurate data from the covered entity;
``(5) notify the covered entity, the Secretary, the State
Medicaid agency, and the manufacturer of any violation
described in section 340B(a)(5)(A) of the Public Health Service
Act to allow for remediation;
``(6) provide the manufacturer of a 340B drug with claims-
level data submitted by a covered entity, so that the
manufacturer may identify units of a 340B drug that may
generate a rebate or discount under a voluntary rebate or
discount arrangement, such as those related to commercial
plans;
``(7) where feasible, share with a covered entity, the
Secretary, a State Medicaid agency, and a manufacturer, data
the third-party entity identifies in a timely manner with the
purpose of preventing any of the violations described in
section 2729A(b)(2) of the Public Health Service Act or
duplicate discounts for a selected drug under section 1847A(i),
section 1860D-14B, section 1192;
``(8) allow covered entities except those described under
subparagraph (L), (M), (N), or (O) of section 340B(a)(4) of the
Public Health Service Act the option of submitting claims-level
data in a batched, retrospective basis that does not require
the application of modifiers on individual claims or point-of-
sale identification;
``(9) determine total sales of 340B drugs to such
individuals for purposes of being used as the basis for
determining user fees under section 340B(a)(17) of such Act;
``(10) identify claims and provide manufacturer access to
claims data for covered outpatient drugs purchased under the
drug discount program under Section 340B of the Public Health
Service Act that--
``(A) are selected drugs (as defined in section
1192(c)) to enable manufacturers to meet the
nonduplication requirements of section 1193(d);
``(B) are subject to inflation rebates under
section 1847A(i) or section 1860D-14B;
``(C) for a rebate or discount submitted by two or
more covered entities or child sites with respect to
the same unit of a covered outpatient drug purchased
under the drug discount program; or
``(D) received reimbursement under a State plan (or
waiver of such plan) and ensuring such claims are or
were not included in any State rebate request under
section 1927 in violation of sections
1903(m)(2)(A)(xiii) or 1927(j)(1) or section
340B(a)(5)(A) of the Public Health Service Act;
``(11) connect claims data and purchasing order data
received under this section in a streamlined, timely, and
efficient way;
``(12) provide access to State Medicaid agencies to data
that is reasonably necessary to prevent duplicate discounts
prohibited by section 340B(a)(5) of the Public Health Service
Act;
``(13) establish procedures for covered entity reporting
that may provide the same function for State Medicaid agencies
as covered entity reporting to State Medicaid agencies;
``(14) respond to requests from covered entities or
manufacturers within a number of days established by the
Secretary through notice and comment rulemaking;
``(15) facilitate manufacturer reasonable good faith
inquiries, reasonable manufacturer audits, duplicate-discount
reviews, diversion reviews, and other program integrity
activities under section 340B of the Public Health Service Act
by receiving, validating, matching, analyzing, and producing
claims-level data, validation results, or other outputs
necessary to resolve such inquiries, audits, reviews, or
activities within timeframes established by the Secretary
through notice and comment rulemaking, as well as all standards
specified by the Secretary to be promulgated pursuant to
section 1150D(g)(16);
``(16) establish, subject to standards established by the
Secretary through notice and comment rulemaking, which
standards shall be consistent with applicable law, including
applicable Federal and State data privacy and security laws and
regulations (including, without limitation, the Health
Insurance Portability and Accountability Act of 1996 and its
implementing regulations), uniform confidentiality, access,
use, retention, and data-security terms applicable to
information submitted to, maintained by, or transmitted through
the clearinghouse, including terms governing manufacturer
access to and receipt of claims-level data, validation results,
or other outputs under this section;
``(17) ensure that the terms described in paragraph (16)
apply uniformly to covered entities, manufacturers, health
plans, pharmacy benefit managers, and other participating
entities and are not subject to individualized negotiation as a
condition of submitting information to, receiving information
from, or otherwise participating in the clearinghouse process;
``(18) establish procedures to document any failure by a
covered entity to timely submit complete and accurate
information required under this section and to notify the
Secretary and any affected manufacturer of such failure; and
``(19) maintain, with appropriate safeguards, submitted
data elements for a period of 10 years.
``(h) Restrictions on Clearinghouse Contracting Entity.--The entity
receiving a contract under subsection (f) shall--
``(1) ensure that it has no conflicts of interest,
including no direct contractual involvement with any covered
entity, or manufacturer participating in the drug discount
program under section 340B of the Public Health Service Act or
any payer that makes payments for drugs purchased through such
program;
``(2) not disclose confidential information obtained
through carrying out the clearinghouse duties under this
section other than as necessary to carry out the purposes of
this section, including for program integrity functions;
``(3) not sell or otherwise generate revenue by licensing
or making available the data described in subsection (g)(1);
and
``(4) not collect pricing information regarding drugs that
are not 340B drugs from covered entities.
``(i) Duties of Covered Entity.--
``(1) In general.--Covered entities shall facilitate and
participate in data transmission with the third-party
clearinghouse entity with a contract in effect under subsection
(f), including submission of data elements established by the
Secretary through notice and comment rulemaking. Such data
transmission requirements shall also apply with respect to data
relating to 340B drugs dispensed through any external contract
pharmacy arrangement, and shall include data maintained by or
on behalf of the covered entity by a contract pharmacy or
third-party administrator.
``(2) Timely and complete submission.--A covered entity
shall timely submit complete and accurate information required
under this section to the clearinghouse contracting entity in
the form, manner, and time specified by the Secretary through
notice and comment rulemaking.
``(3) Failure to timely submit information.--If a covered
entity fails to timely submit complete and accurate information
required under this section to the clearinghouse contracting
entity, such failure shall be treated as a failure to
participate in the clearinghouse process and the affected
manufacturer shall provide written notice to the covered entity
and the Secretary identifying the specific deficiency. If the
covered entity does not cure such failure within 30 days of
receipt of such notice, the affected manufacturer may suspend
the availability of discounts under section 340B(a)(1) of the
Public Health Service Act with respect to such covered entity,
in whole or in part, until the covered entity cures such
failure.
``(4) Limitation on separate confidentiality terms.--A
covered entity may not condition, delay, or deny submission of
information to the clearinghouse contracting entity, or
otherwise condition, delay, or deny participation in the
clearinghouse process, on the execution or individualized
negotiation of a confidentiality agreement, data use agreement,
or similar agreement that is duplicative of, inconsistent with,
or more restrictive than the uniform confidentiality, access,
use, retention, and data-security terms established by the
Secretary through notice and comment rulemaking under this
section.
``(j) Restrictions on Manufacturer and Pbm Use of Data.--
``(1) In general.--A manufacturer who receives data under
subsection (g) may use such data only for the purpose of
preventing duplicate discounts and diversion under section
340B(a)(5) of the Public Health Service Act, preventing
duplicate discounts in connection with inflation rebates under
section 1847(A)(i) and 1860D-14B as well as for selected drugs
(as defined in section 1192(c)) to enable a manufacturer to
meet the nonduplication requirements of section 1193(d), and
validating compliance with other requirements under the drug
discount program under section 340B of the Public Health
Service Act.
``(2) Restrictions on plans, issuers, and pbms.--A health
plan, third party administrator of a health plan, or entity
providing pharmacy benefit management services may use data
received from the clearinghouse only for the purpose of
preventing duplicate discounts and diversion under this
section.
``(3) Enforcement.--Any manufacturer or other person found
by the Secretary to have used data received under subsection
(g) for uses other than those described in paragraphs (1) and
(2), such as for pricing or marketing, shall be subject to
civil monetary penalties, established by the Secretary through
notice and comment rulemaking.
``(k) Privacy, Confidentiality, and Data Security Requirements.--
``(1) In general.--The information exchange required under
this section shall occur pursuant to standards established by
the Secretary through notice and comment rulemaking, including
uniform confidentiality, access, use, retention, and data-
security terms applicable to information submitted to,
maintained by, or transmitted through the clearinghouse
contracting entity, including terms governing manufacturer
access to claims-level data, validation results, or other
outputs under this section, and in a manner consistent with
applicable Federal and State data privacy, security, and breach
notification laws.
``(2) Purpose of clearinghouse.--The use of the
clearinghouse contracting entity under this section is intended
to facilitate secure exchange of information for 340B program
integrity activities, and the clearinghouse contracting entity
shall be required to qualify as a covered entity under the
privacy, security, and breach notification regulations
promulgated under section 264(c) of the Health Insurance
Portability and Accountability Act of 1996, provided, however,
that no manufacturer shall be required to qualify as a covered
entity or business associate under HIPAA in order to obtain and
use data from the clearinghouse for only the purposes
identified in this Act.
``(3) Rule of construction.--Nothing in this section shall
be construed to--
``(A) limit, narrow, or create any new precondition
to the disclosure of claims-level, utilization, or
other information that may otherwise be disclosed under
applicable law for purposes of 340B program integrity
activities; or
``(B) require the execution or individualized
negotiation of a confidentiality agreement, data use
agreement, or similar agreement not otherwise required
by law as a condition of disclosing, submitting,
receiving, maintaining, or using information in
accordance with this section.
``(l) Repayment to Manufacturers.--The Secretary shall, establish
through notice and comment rulemaking, establish a process to require
covered entities to work with affected manufacturers regarding
identified duplicate discounts and diversion of 340B drugs, regardless
of the method used to dispense the 340B drug, which shall include
repayment plus accrued interest--
``(1) by the covered entity as a result of the covered
entity's noncompliance with section 340B of the Public Health
Service Act; or
``(2) by a State Medicaid program of rebates improperly
requested by the State Medicaid program.
``(m) Prohibited Actions of Group Health Plans and Pbms.--
``(1) In general.--A group health plan, a health insurance
issuer offering group or individual coverage (as such terms are
defined in section 2791 of the Public Health Service Act (42
U.S.C. 300gg-91)), or an entity providing pharmacy benefit
management services may not interfere with the ability of
covered entities, contract pharmacies (as such terms are
defined in section 340B of the Public Health Service Act (42
U.S.C. 256b)), or manufacturers of drugs to prevent duplicate
discounts or to recoup the full amount of any identified
duplicate discounts pursuant to the drug discount program under
section 340B of the Public Health Service Act (42 U.S.C. 254b).
``(2) Enforcement.--The Secretary of Health and Human
Services shall impose civil monetary penalties on any group
health plan, health insurance issuer, or entity providing
pharmacy benefit management services that violates paragraph
(1).
``(n) State Medicaid Agencies.--In accordance with requirements
established by the Secretary through notice and comment rulemaking,
each State's agency responsible for the administration of a State plan
under section 1902(a)(5) of the Social Security Act (42 U.S.C.
1396a(a)(5)) shall establish and publish written procedures that--
``(1) specify the extent to which a 340B drug may be
dispensed to a Medicaid beneficiary, including beneficiaries of
managed care programs;
``(2) effectively identify when a 340B drug is dispensed to
a Medicaid beneficiary; and
``(3) exclude 340B drugs dispensed to Medicaid
beneficiaries from requests for rebates under section 1927.
``(o) Definitions.--In this section:
``(1) Covered entity.--The term `covered entity' means an
entity described in section 340B(a)(4) of the Public Health
Service Act.
``(2) Federal health care program.--The term `Federal
health care program' has the meaning given that term in section
1128B(f).
``(3) Health plans.--The term `health plan' has the meaning
given that term in section 1128C(c).
``(4) Manufacturer.--The term `manufacturer' has the
meaning given that term in section 1927(k)(5).
``(5) 340B drug.--The term `340B drug' means a drug that
is--
``(A) a covered outpatient drug (as defined for
purposes of section 340B of the Public Health Service
Act); and
``(B) purchased under an agreement in effect under
such section.
``(p) Oversight.--Not later than 1 year after implementation of the
clearinghouse, the Secretary shall:
``(1) engage an independent auditor to conduct an annual
audit of the clearinghouse contracting entity to ensure
compliance with this section, including but not limited to
timely and accurate adjudication of claims; timely and complete
transmission of data to relevant parties; and timely and
substantive engagement with covered entities and manufacturers,
when requested. If the Secretary finds through these audits
that the clearinghouse contracting entity is not in compliance
with this section, the Secretary shall take appropriate action
to ensure compliance, which may include the imposition of civil
monetary penalties against the clearinghouse contracting
entity, or early termination of its contract, provided another
compliant solution is available.
``(2) issue a report to Congress detailing coordinated
efforts, including through the use of existing resources to
address requests from covered entities (as defined in section
340B(a)(4) of the Public Health Service Act (42 U.S.C.
256b(a)(4))) for payment under title XIX of the Social Security
Act (42 U.S.C. 1396 et seq.) for medical assistance for a drug
that is subject to an agreement under section 340B(a) of the
Public Health Service Act (42 U.S.C. 256b(a)) if the drug is
subject to the payment of a rebate to the State under section
1927 of the Social Security Act (42 U.S.C. 1396r-8), as
prohibited under section 340B(a)(5)(A) of the Public Health
Service Act (42 U.S.C. 256b(a)(5)(A)), and to prevent the
duplicate discounts for covered outpatient drugs that are--
selected drugs (as defined in section 1192(c) of the Social
Security Act) to enable manufacturers to meet the
nonduplication requirements of section 1193(d) of such Act; or
subject to inflation rebates under as defined by section
1847A(i) or section 1860D-14B of the Social Security Act.
``(q) Regulations.--The Secretary of Health and Human Services, in
consultation with the Administrator of the Centers for Medicare &
Medicaid Services and the Administrator of the Health Resources and
Services Administration, shall, through notice and comment rulemaking,
promulgate such regulations as are necessary to implement the
provisions of this section, advance the purpose of the drug discount
program under section 340B of the Public Health Service Act (42 U.S.C.
256b) and prevent duplicate discounts and diversion through the
clearinghouse established by the amendment made by this section.''.
SEC. 9. PROHIBITION ON DISCRIMINATORY PRACTICES AND CONTRACTING.
(a) In General.--Part A of title XXVII of the Public Health Service
Act (42 U.S.C. 300gg et seq.) is amended by inserting after section
2729 (42 U.S.C. 300gg-19b) the following:
``SEC. 2730. ANTI-DISCRIMINATION AND PERMISSIBLE 340B ARRANGEMENTS.
``(a) In General.--A group health plan, a health insurance issuer
offering group or individual health insurance coverage, or a pharmacy
benefit manager may not discriminate against a covered entity (as
defined in section 340B(a)(4)) or a contract pharmacy (as defined in
section 340B(b)(5)), or a participant, beneficiary, or enrollee of such
plan or coverage by imposing requirements, exclusions, reimbursement
terms, or other conditions on such entity or pharmacy that differ from
those applied to entities or pharmacies that are not covered entities
or contract pharmacies on the basis that the entity or pharmacy is a
covered entity or contract pharmacy or that the entity or pharmacy
dispenses covered outpatient drugs (as defined in section 1927(k) of
the Social Security Act), including by taking any action prohibited
under subsection (b).
``(b) Specified Prohibited Actions.--A group health plan, a health
insurance issuer offering group or individual health insurance
coverage, or a pharmacy benefit manager may not discriminate against a
covered entity, a contract pharmacy, or a participant or beneficiary in
a group health plan or health insurance offered by a health insurance
issuer offering group or individual health insurance by doing any of
the following:
``(1) Reimbursing a covered entity or contract pharmacy for
a quantity of a covered outpatient drug purchased under section
340B in an amount less than such plan, issuer, or pharmacy
benefit manager, as applicable, would pay to any other
similarly situated (as specified by the Secretary through
notice and comment rulemaking) entity or pharmacy that is not a
covered entity or a contract pharmacy for such quantity of such
drug on the basis that the entity or pharmacy is a covered
entity or contract pharmacy or that the entity or pharmacy
dispenses covered outpatient drugs purchased under section
340B.
``(2) Imposing any terms or conditions on covered entities
or contract pharmacies with respect to any of the following
that differ from such terms or conditions applied to other
similarly situated entities or pharmacies that are not covered
entities or contract pharmacies on the basis that the entity or
pharmacy is a covered entity or contract pharmacy or that the
entity or pharmacy dispenses covered outpatient drugs purchased
under this section--
``(A) fees, chargebacks, clawbacks, adjustments, or
other assessments;
``(B) professional dispensing fees;
``(C) restrictions or requirements regarding
participation in standard or preferred pharmacy
networks;
``(D) requirements relating to the frequency or
scope of audits or to inventory management systems
using generally accepted accounting principles; or
``(E) any other restrictions, conditions,
practices, or policies that, as specified by the
Administrator of the Health Resources and Services
Administration through notice and comment rulemaking,
interfere with the ability of a covered entity to
maximize the value of discounts provided under section
340B.
``(3) Interfering with an individual's choice to receive a
drug purchased under Section 340B from a covered entity or
contract pharmacy, whether in person or via direct delivery,
mail, or other form of shipment.
``(4) Requiring a covered entity or specified pharmacy to
identify, either directly or through a third party, covered
outpatient drug purchased under the 340B program. Other than
through the 340B Data Clearinghouse established at section
1150D.
``(5) Refusing to contract with a covered entity or
contract pharmacy for reasons other than those that apply
equally to entities or pharmacies that are not covered entities
or contract pharmacies, or on the basis that the covered entity
is described in section 340B(a)(4).
``(6) Denying coverage of a covered outpatient drug
purchased under the 340B program on the basis of its status as
a 340B eligible drug if the group health plan or health
insurance issuer otherwise covers the identical drug not
purchased under 340B.
``(c) Prohibition.--A group health plan, a health insurance issuer
offering group or individual health insurance coverage, or a pharmacy
benefit manager may not enter into a contract or other agreement, or
any other arrangement regardless of whether such arrangement is
memorialized in writing, with a covered entity (as defined in section
340B(a)(4)) in which the covered entity provides a share of any
discount or savings for a covered outpatient drug under section 340B to
the group health plan, health insurance issuer, or pharmacy benefit
manager, and may not condition network participation, preferred
formulary placement, claim routing, or any other benefit on the covered
entity's agreement to share any such discount or savings.
``(d) Enforcement Mechanism.--The Secretary shall impose a civil
monetary penalty on any pharmacy benefit manager that violates the
requirements of this section. Such penalty shall not exceed $5,000 per
violation per day. The Secretary shall issue proposed regulations to
implement this subsection not later than 60 days after the date of the
enactment of this subsection and shall finalize such regulations not
later than 180 days after such date of enactment.''.
(b) SSA.--Section 1860D(12) of the Social Security Act (42 U.S.C.
1395w-112) is amended by adding at the end the following new
subsection:
``(i) Nondiscrimination.--PDP sponsors may not include any
provision in a prescription drug plan that requires covered entities
under Section 340B of the Public Health Service Act to make use of
contract pharmacy sites that do not meet the requirements set forth in
Section 340B for the use of contract pharmacies or are otherwise
inconsistent with patient need and access.''.
(c) 340B.--Section 340B of the Public Health Service Act (42 U.S.C.
256b), as amended, is amended by adding at the end the following new
subsection:
``(i) Permitted Third Party Administrator Arrangements.--
``(1) A covered entity under this section may only contract
with a third-party administrator for the purposes of
administering the dispensing of covered drugs under this
section if compensation for the third-party administrator is in
the form of bona fide services fees.
``(2) Bona fide service fees as described in paragraph (1)
may not be determined as a percentage of revenue to the covered
entity for covered drugs under this section or by any other
metric tied to revenue for covered drugs to the covered entity
or volume of covered drugs dispensed by the covered entity.
``(3) HRSA may, pursuant to standards established through
notice and comment rulemaking, levy Civil Monetary Penalties
upon covered entities for knowing and intentional non-
compliance with requirements under paragraphs (1) and (2).''.
(d) Conforming Amendments.--
(1) Employee retirement income security act (erisa).--
Section 715(a)(1) of ERISA (29 U.S.C. 1185d(a)(1)) is amended
by inserting ``and subsequent legislation'' after ``as amended
by the Patient Protection and Affordable Care Act''.
(2) Internal revenue code.--Section 9815(a)(1) of the
Internal Revenue Code of 1986 (26 U.S.C. 9815(a)(1)) is amended
by inserting ``and subsequent legislation'' after ``as amended
by the Patient Protection and Affordable Care Act''.
SEC. 10. ENSURING HRSA HAS ADEQUATE RESOURCES TO OVERSEE THE PROGRAM.
(a) In General.--Section 340B(a) of the Public Health Service Act
(42 U.S.C. 256b(a)), as amended by the preceding sections, is further
amended by adding at the end the following:
``(17) User fee program.--
``(A) In general.--Beginning in fiscal year 2027,
the Secretary shall assess and collect fees from
covered entities participating in the program under
this section, in accordance with this paragraph.
``(B) Fee amounts.--The fees described in
subparagraph (A) shall be assessed and collected from
each covered entity on an annual basis, in an amount
determined by the Secretary through procedures
established through notice and comment rulemaking. In
general, the fee shall be 0.1 percent of the dollar
amount paid by the covered entity for covered
outpatient drugs under this section in the previous
year.
``(C) Use of fees.--Any fees collected under this
paragraph from covered entities shall be used by the
Secretary for purposes of administering this section
and enhancing program integrity and oversight
activities under this section, including--
``(i) the development of a multi-functional
web-based system to collect fees under this
paragraph;
``(ii) the establishment, use, and
maintenance of the data clearinghouse under
section 1150D of the Social Security Act;
``(iii) the improvement of the integrity,
transparency, security, searchability, and
reliability of the 340B Office of Pharmacy
Affairs Information System (or a successor to
such system), including to ensure that such
system continues to meet the needs of external
stakeholders;
``(iv) improvements to the compliance tool
used to integrate all information related to
manufacturers that have entered into agreements
with the Secretary under paragraph (1) and
covered entities;
``(v) audits under this section of covered
entities and such manufacturers; and
``(vi) any other uses for the purposes of
program integrity, as the Secretary determines
appropriate.
``(D) Supplement not supplant.--Any fees collected
under this paragraph shall be used to supplement and
not supplant amounts otherwise provided in
appropriations Acts to carry out this section.
``(E) Regulations.--The Secretary shall promulgate
regulations as necessary to implement the user fee
program under this paragraph, which shall include
establishment of a process to provide for exceptions to
the fee amount under subparagraph (B), including the
circumstances under which such exceptions may apply to
certain covered entities.
``(F) Oversight of user fee program.--The Inspector
General of the Department of Health and Human Services
shall--
``(i) conduct an annual review of the user
fee program under this paragraph for the first
5 years of such program; and
``(ii) not later than September 30 of each
year for which a review is required under
clause (i), submit to Congress a report on the
review conducted under clause (i), together
with such recommendations as the Inspector
General determines appropriate.''.
(b) Conforming Amendment.--Section 340B(a)(4) of the Public Health
Service Act (42 U.S.C. 256b(a)(4)) is amended, in the matter preceding
subparagraph (A), by inserting ``, has submitted user fees to the
Secretary in the amount assessed under paragraph (17) for the current
year,'' after ``paragraph (5)''. Section 340B(a)(1) of the Public
Health Service Act (42 U.S.C. 256b(a)(1)) is further amended by
inserting ``, and has submitted user fees to the Secretary in the
amount assessed under paragraph (17) for the current year,'' after the
first reference to ``agreement'' in such paragraph.
(c) Funding.--Section 340B of the Public Health Service Act (42
U.S.C. 256b) is amended by adding at the end the following new
subsection:
``(j) Authorizations of Appropriations.--
``(1) Authorization of appropriations for audits,
investigations, and other oversight and enforcement
activities.--In addition to amounts made available under
subsection (d)(4), there are authorized to be appropriated
$3,000,000 for each of fiscal years 2027 through 2031, for
purposes of conducting audits, investigations, and other
oversight and enforcement activities with respect to the drug
discount program under this section, including audits of
covered entities and manufacturers.
``(2) Authorization of appropriation for general
purposes.--In addition to amounts made available under
paragraph (1) and subsection (d)(4), there are authorized to be
appropriated $9,000,000 for each of fiscal years 2028 through
2031, for purposes of implementing the activities under this
section, including audits of covered entities and
manufacturers.''.
(d) Direct Hire Authority.--Section 340B(d) of the Public Health
Service Act (42 U.S.C. 256b(d)) is amended by adding at the end the
following new paragraph:
``(6) Direct-hire authority.--Notwithstanding section
3304(a)(3) of title 5, United States Code, and sections 3309
through 3318 of such title, and section 337 of title 5 of the
Code of Federal Regulations (or any successor regulations), the
Secretary may, beginning on the date of the enactment of this
paragraph, exercise direct-hire authority to appoint a minimum
of twenty qualified candidates to permanent positions within
the competitive service in order to carry out management and
oversight activities under this section, with respect to
covered entities and manufacturers participating in the drug
discount program under this section.''.
SEC. 11. STUDIES AND REPORTS.
(a) Cost of Dispensing Studies and Report.--
(1) Study.--Not later than 1 year after the date of the
enactment of this section, the Secretary shall conduct a study
on dispensing fees and reimbursements that health plans and
pharmacy benefit managers pay to pharmacies, separated by each
category of payer (at a minimum, Medicare, Medicaid, and
commercial payors) and whether the drug is purchased under
section 340B. The Secretary shall repeat this study not less
than every 24 months thereafter.
(2) Report.--Not later than 90 days after the completion of
each study conducted under paragraph (1), the Secretary shall
submit to Congress a report containing the results of such
study, including--
(A) the amount of dispensing fees for covered
outpatient drugs purchased under section 340B and
covered outpatient drugs not purchased under section
340B;
(B) whether such fees are reasonable; and
(C) any recommendations for further Congressional
action with respect to dispensing fees and the
establishment of acceptable standards for dispensing
fees.
(b) Comptroller General Study and Report on 340B Discount.--
(1) Study.--Not later than 1 year after the date of the
enactment of this section, the Comptroller General of the
United States shall conduct a study of the 340B discount (the
unit rebate amount referenced in section 340B(a)(1) of the
Public Health Service Act) that is retained by--
(A) contract pharmacies;
(B) health plans;
(C) pharmacy benefit managers;
(D) third-party vendors;
(E) patients; and
(F) covered entities.
(2) Report.--Not later than 2 years after enactment, the
Comptroller General of the United States shall submit to
Congress a report detailing the results of this study.
(A) Information shall be aggregated for each type
of covered entity, and by arrangements the covered
entity has with each different entity specified in
subparagraphs (A) through (D) of paragraph (1),
describing the amount of the 340B discount retained by
the covered entity and the entities specified in
subparagraphs (A) through (D) of paragraph (1).
(B) The report shall include recommendations to
Congress on a standardized set of definitions to
collect this information and a calculation methodology.
(c) GAO Report.--Not later than 2 years after the date of enactment
of this Act, the Comptroller General of the United States shall submit
to Congress a report on the debt collection practices of hospitals,
including hospitals that participate in the drug discount program under
section 340B of the Public Health Service Act (42 U.S.C. 256b) as
covered entities described in subparagraphs (L) through (O) of
subsection (a)(4)of such section.
(d) Reports to Congress.--
(1) Initial report.--Not later than 1 year after the date
of the enactment of this subsection, the Comptroller General of
the United States shall submit a report to Congress on the
following:
(A) analyzing such contracts between State and
local governments and covered entities described in
subparagraph (L), (M), (N), or (O) of subsection (a)(4)
that claim to be eligible for the drug discount program
under this section by virtue of being a private non-
profit hospital that has a contract with a State or
local government to provide health care services to
low-income individuals who are not eligible for
Medicaid or Medicare;
(B) assessing the amount of care the contracts
described in subparagraph (A) obligate the covered
entity to provide to individuals at or below 400
percent of the Federal Poverty Level, who are
ineligible for Medicare under title XVIII of the Social
Security Act and Medicaid under title XIX of such Act;
(C) assessing the amount of charity care and
uncompensated care covered entities reporting under
this section provide to individuals earning at or below
400 percent of the Federal Poverty Level;
(D) analyzing the difference between the aggregate
gross reimbursement and aggregate acquisition costs
received by each covered entity for covered outpatient
drugs purchased under the 340B program;
(E) analyzing the degree to which Federally
Qualified Health Centers, as such term is defined in
subsection (a)(4)(A), are subject to the violations
under section 2730(b) of the Public Health Service Act,
and the effect of these violations on Federally
Qualified Health Centers' ability to provide affordable
care to underserved populations; and
(F) analyzing how the contracts described in
subparagraph (A) define low-income individuals and
whether the Secretary reviews such determinations.
(2) Subsequent report.--Not later than 2 years after the
date of the enactment of this subsection, the Comptroller
General of the United States shall submit to Congress a final
report on the information collected under paragraph (1)
regarding the difference between the aggregate payment received
by each such covered entity (including child sites of such
entity and adding information on all sources of payment
received by the covered entity and its child sites) for drugs
purchased under this section and the aggregate costs paid by
the covered entity (including its child sites) to acquire such
drugs.
(3) Clarification.--When submitting these reports, the
Comptroller General of the United States shall not provide
copies of unredacted contracts or any work materials to
Congress or any other parties.
SEC. 12. MEANINGS.
Section 340B(b) of the Public Health Service Act (42 U.S.C.
256b(b)), as amended by the preceding sections, is further amended by
adding at the end the following:
``(4) Child site.--In this section, the term `child site'
means any outpatient department, clinic, or facility that is
separately registered under this section as an outpatient
facility of a covered entity described in subparagraph (L),
(M), (N), or (O) of subsection (a)(4) and that is not itself
the covered entity's principal operating location or the
location through which the covered entity satisfies the
requirements for eligibility under subsection (a)(4).
``(5) Contract pharmacy.--In this section, the term
`contract pharmacy' means a pharmacy that, pursuant to a
contract or other arrangement with a covered entity, dispense
or otherwise furnishes covered outpatient drugs to patients on
behalf of the covered entity, whether in person, by mail, or
through any other delivery method.''.
SEC. 13. REQUIREMENTS FOR NONHOSPITAL COVERED ENTITIES AND SUBGRANTEES.
Section 340B(a)(5) of the Public Health Service Act (42 U.S.C.
256b(a)(5)) is further amended by adding at the end the following:
``(F) Additional requirements for nonhospital
covered entities; requirements for subgrantees.--
``(i) Additional requirements for
nonhospital covered entities.--A covered entity
described in one of subparagraphs (A) through
(K) of paragraph (4) shall, as a condition of
participation in the program under this
section--
``(I) be a nonprofit or public
entity (as determined by the
Secretary);
``(II) be eligible to purchase a
covered outpatient drug subject to an
agreement under this section only with
respect to a patient receiving a health
care service at a registered covered
entity site, and such service and such
drug are within the scope and time
period of the Federal grant, project,
or Federal grant-authorizing statute,
as applicable, that qualifies such
covered entity for participation in the
program under this section;
``(III) oversee the participation
in the program under this section of
any subgrantee with which such covered
entity enters into an enforceable
written agreement in accordance with
subclause (IV) and be directly liable
for noncompliance by any such
subgrantee with any requirement under
this section;
``(IV) have an enforceable written
agreement with any subgrantee, which
shall apply to all registered sites of
such subgrantee, and require such
subgrantee to comply with all
requirements under this section
otherwise applicable to the covered
entity and to maintain written records,
which shall be made available to the
Secretary upon request, sufficient to
demonstrate such subgrantee's receipt
of eligible Federal funds or an in-kind
contribution purchased with such funds,
as described in clause (iii), and the
grant under which such subgrantee
receives such funds or contribution;
and
``(V) maintain written records
sufficient to demonstrate such entity
authorized such subgrantee to, prior to
purchasing covered outpatient drugs
subject to an agreement under this
section, register each subgrantee site
in the covered entity identification
system established under subsection
(d)(2)(B)(iv) to participate in the
program under this section as a
subgrantee of such entity and provide
the Secretary with such registration
information as requested to demonstrate
such subgrantee's receipt of eligible
Federal funds or an in-kind
contribution purchased with such funds,
as described in clause (iii), and the
grant under which the subgrantee
receives such funds or contribution.
``(ii) Requirements for subgrantees.--
Notwithstanding any other provision in this
section, a subrecipient of a Federal grant
shall be eligible to participate in the program
under this section only if such subrecipient is
a subgrantee (as defined in clause (iii)) and
such subgrantee--
``(I) is a nonprofit or public
entity (as determined by the
Secretary);
``(II) prior to purchasing covered
outpatient drugs subject to an
agreement under this section--
``(aa) enters into an
enforceable written agreement
with the covered entity
providing eligible Federal
funds or an in-kind
contribution, pursuant to
clause (i)(IV);
``(bb) maintains written
records, which shall be made
available to the Secretary upon
request, sufficient to
demonstrate such subgrantee's
receipt of eligible Federal
funds or an in-kind
contribution purchased with
such funds, as described in
clause (iii), and the grant
under which such subgrantee
receives such funds or
contribution; and
``(cc) registers each
subgrantee site to participate
in the program under this
section in the covered entity
identification system
established under subsection
(d)(2)(B)(iv);
``(III) purchases covered
outpatient drugs subject to an
agreement under this section only with
respect to a patient receiving a health
care service at a registered subgrantee
site, and such service and such drug
are within the scope and time period of
the Federal grant, project, or grant-
authorizing statute, as applicable,
that qualifies such subgrantee for
participation in the program under this
section;
``(IV) in the case of a subgrantee
that receives an in-kind contribution
from a covered entity described in
paragraph (4)(K), demonstrates to such
covered entity and to the Secretary,
upon initial registration to
participate in the program under this
section and on an annual basis
thereafter, that the number of
individuals aged 19 to 64 years
receiving a health care service at the
registered subgrantee site during the
most recent calendar year who are
enrolled under a State plan under title
XIX of the Social Security Act (or a
waiver of such plan), as a share of all
individuals aged 19 to 64 years
receiving a health care service at the
registered subgrantee site during such
calendar year, exceeds the number of
individuals aged 19 to 64 years who
reside in the State where such
subgrantee site is located and are
enrolled under a State plan undeOfficial legislative text sourced from the public record (cached on CivicsHQ). Display truncated for length.
Official source
View the original bill, actions, and full legislative record on Congress.gov.
Status
In Committee
- 1Introduced
- 2Committee
- 3Floor
- 4Passed
- 5Signed
Timeline reflects current normalized status only. Full action history is not yet stored in the API.
Sponsors
- Rep. Peters, Scott H. [D-CA-50]DHouseCA
Votes
Voting records are not yet available for this bill.