It goes without saying that 340B compliance can be challenging. As with all federally regulated programs, the 340B program is governed by a long and complicated list of rules that often create confusion among covered entities (CEs). A case in point is the child site issue.
Health Resources and Services Administration (HRSA) rules allow certain types of clinics, departments, and services to participate in the 340B program even though they are located at a different physical site. As such, hospital groups tend to ask if their off-site physician clinics need to be registered as child sites.
There is an answer in the FAQ section of the HRSA website, but it’s not a very detailed answer. Contacting a 340B consultant or the HRSA directly for a more detailed answer would be appropriate. RavinConsultants.com would be a good choice.
Definition of a Child Site
The starting point here is the definition of a child site. In order to maintain 340B compliance, child sites need to be reimbursable on a parent hospital’s Medicare cost report. That is just the starting point. Additional criteria will be discussed later in this post.
For purposes of definition, the 340B child site is any off-site clinic, department, or service eligible to receive discounted drugs under the program as a reimbursable entity directly under a parent hospital.
The relationship between parent hospital and potential child site cannot be a casual one. There needs to be verifiable ties that meet eligibility requirements. Those ties may have to be documented if questions ever arise.
Three Eligibility Requirements
Eligibility requirements for child sites are very specific. There are three, beginning with the clinic, department, or service being an integral part of the parent hospital. ‘Integral’ can be a matter of interpretation, so it’s best to err on the side of caution in this regard.
The second eligibility requirement is that the clinic, department, or service must be located in a different physical location. It cannot be located inside the parent hospital or on the hospital’s grounds. Off-site means off-site.
Finally, as previously mentioned, the clinic, department, or service must be reimbursable on the parent hospital’s Medicare cost report. Regulators pay close attention to that report, looking for potential errors and inaccuracies. 340B covered entities should not take this requirement lightly.
Examples of Child Sites
Regulatory language does not specifically mention the types of sites that can qualify as child sites under a parent hospital. This is probably intentional. A variety of facilities and programs could meet the eligibility requirements. Here are some of the most common examples:
- HIV/AIDS treatment centers.
- Urgent care centers.
- Standalone emergency departments.
- Outpatient clinics.
- Cancer treatment clinics.
- Mental health clinics.
Among all of these, the standalone emergency department most clearly illustrates eligibility criteria. A standalone ED owned and operated by a parent hospital is clearly reimbursable under the hospital’s Medicare cost report. It is not even a question.
The ED is also located in a physically separate location by default. Otherwise, it would not be a standalone operation. As for being an integral part of the parent hospital, it obviously is. By contrast, a physician’s office might not be even though it’s owned and operated by the parent hospital.
If you have questions about child site eligibility, working with consultants who can help you manage your program and maintain 340B compliance is wise. Helping CEs sort out client site issues is just one of the many things consultants do in the compliance arena. Taking advantage of their services can make a big difference in 340B compliance.