340B Qualification for Hospitals Affected by COVID-19 Public Health Emergency

On March 15, 2022, President Joe Biden signed the Consolidated Appropriations Act of 2022, HR 2471, into law.

The new law includes provision Section 121, which intends to help hospitals participating in the 340B drug pricing program that were affected by the COVID-19 public health emergency (PHE).

340B Eligibility Exception

Due to the COVID-19 PHE, many hospital patient case mixes were impacted that resulted in a lowered disproportionate share hospital (DSH) adjustment percentage.

As a result, many hospitals that traditionally have qualified for the 340B program failed to meet the minimum disproportionate share adjustment percentage requirement, which is a key data element in determining eligibility for 340B drug pricing program discounts.

The newly passed provision waives the minimum DSH requirement for hospitals that participated in the 340B program before COVID-19 was declared a public health emergency on January 31, 2020, which subsequently caused them to lose eligibility with respect to cost-reporting periods that began sometime between fiscal-year 2020 and a subsequent fiscal year.

This waiver will lapse with cost-reporting periods ending on or before December 31, 2022, and the covered entity must still meet the other requirements.

Eligible Hospitals

Hospitals eligible for the exception are:

  • DSHs
  • Sole community hospitals
  • Rural referral centers
  • Children’s hospitals
  • Free standing cancer hospitals

Timing and Required Information

Hospitals that have lost or stand to lose their 340B eligibility will have to apply for reinstatement or protection as detailed below.

Hospitals Seeking Reinstatement

Hospitals that have lost 340B eligibility can apply for reinstatement and have until April 14, 2022 to do so.

Hospitals Seeking Protection

Hospitals that will lose their 340B eligibility upon filing their next cost report can apply for protection at the time of filing.


Hospitals will be required to submit a self-attestation to the Department of Health and Human Services (HHS) within either 30 days of failing to meet the DSH requirement, or within 30 days of law’s enactment in the event that the failure to meet the DSH requirement occurred at an earlier time.

The attestation requires “information on any actions taken by or other impact on such hospital in response to or as a result of the COVID-19 public health emergency that may have impacted the ability to meet the applicable” DSH requirement.

Review and Approval

Attestation forms should be submitted to the Health Resources & Services Administration for consideration and requests will be evaluated on a case-by-case basis.

We’re Here to Help

If you have questions about the 340B eligibility exception or would like assistance evaluating whether your hospital will qualify for the 340B program, contact your Moss Adams professional.

You can also view more insights at our Provider Reimbursement Enterprise Practice.

Contact Us with Questions

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