340B Drug Pricing Program

Critical Access Hospital (CAH): According to the Centers for Medicaid and Medicare Services (CMS), a Medicare-participating hospital must meet the following criteria to be designated by CMS as a CAH:

• Be located in a State that has established a State Medicare Rural Hospital Flexibility Program;
• Be designated by the State as a CAH;
• Be located in a rural area or an area that is treated as rural;
• Be located either more than 35-miles from the nearest hospital or CAH or more than 15 miles in areas with mountainous terrain or only secondary roads; OR prior to January 1, 2006, were certified as a CAH based on State designation as a “necessary provider” of healthcare services to residents in the area.
• Maintain no more than 25 inpatient beds that can be used for either inpatient or swing-bed services;
• Maintain an annual average length of stay of 96 hours or less per patient for acute inpatient care (excluding swing-bed services and beds that are within distinct part units);
• Demonstrate compliance with the CAH CoPs found at 42 CFR Part 485 subpart F; and
• Furnish 24-hour emergency care services 7 days a week;
• A CAH may also be granted “swing-bed” approval to provide post-hospital Skilled Nursing Facility-level care in its inpatient beds.
• In the case of hospice care, a hospice may contract with a CAH to provide the Medicare hospice hospital benefit. Reimbursement from Medicare is made to the hospice. The CAH may dedicate beds to the hospice, but the beds must be counted toward the 25-bed maximum. However, the hospice patient is not included in the calculation of the 96-hour annual average length of stay. The hospice patient can be admitted to the CAH for any care involved in their treatment plan or for respite care. The CAH negotiates reimbursement through an agreement with the hospice.
• In addition to the 25 inpatient CAH beds, a CAH may also operate a psychiatric and/or a rehabilitation distinct part unit of up to 10 beds each. These units must comply with the Hospital Conditions of Participation.

According to HRSA, Rural Referral Centers are high-volume acute care rural hospitals that treat a large number of complicated cases. The Centers for Medicare and Medicaid Services classifies hospitals as Rural Referral Centers. To be eligible to participate in the 340B Drug Pricing Program, Rural Referral Centers must meet the requirements of 42 USC 256b(a)(4)(L)(i). To be eligible to participate in the 340B Program and purchase outpatient drugs at significantly discounted prices, Rural Referral Centers must be one of the following classifications:

• A private nonprofit hospital under contract with state or local government to provide healthcare services to low-income individuals who are not eligible for Medicare or Medicaid; or
• Owned or operated by a unit of state or local government; or
• A public or private nonprofit corporation that is formally granted governmental powers by a unit of state or local government.

According to the Health Resources and Services Administration (HRSA), Disproportionate Share Hospitals serve low-income patients and receive payments from the Centers for Medicare & Medicaid Services to cover the costs of providing care to uninsured patients. To be eligible to participate in the 340B Drug Pricing Program, Disproportionate Share Hospitals must meet the requirements of 42 USC 256b(a)(4)(L). Disproportionate Share Hospitals must be classified as one of these:

• A private nonprofit hospital under contract with state or local government to provide healthcare services to low-income individuals who are not eligible for Medicare or Medicaid;
• Owned or operated by a unit of state or local government;
• A public or private nonprofit corporation that is formally granted governmental powers by a unit of state or local government;
• And must have a disproportionate share adjustment percentage greater than 11.75% for the most-recently filed cost report.