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340B: To be or not to be. . . A Child Site

Possibly the best known soliloquy ever quoted (or misquoted) is from the ‘Nunnery’ scene of Hamlet, Act III Scene one: To be or not to be. . . 

For the sake of miscellaneous trivial knowledge:  The overused line sparked the title of a Kurt Vonnegut short story “2B R 0 2B” (0=naught).  In Vonnegut’s story this was a phone number for a Governmental agency’s assisted suicide phone number.  Which our resident curmudgeons would say holds similarities to 340B.  So if Vonnegut can use it, so can we.  And I already can read the emails from those curmudgeons out there (and they know who they are) chastising me for being so trite as to use this classic quote and tying it to 340B.  Yet it seems appropriate for this Blog’s topic, as a popular question for us is if a clinic should be a registered child site or not.


This blog relates to Hospitals, but not FQHCs or Ryan White AIDS clinics.  For Hospitals, a Child Site is a department or clinic, owned by the CE, but not within the four walls of the CE (off-site), and listed as a reimbursable facility on the CE’s most recently filed Medicare Cost Report.  Although this sounds simplistic, a lot of people define four walls and ‘off-site’ differently. 


So what’s the confusion?  Here’s the actual HRSA statement:  All clinics, services or departments located off-site of the parent hospital, regardless of whether they are located in the same building, must register with OPA as child sites of the parent 340B-eligible hospital.

Right.  Not confusing at all.

  1. Does this mean the same mailing address? The same ‘campus’?  Who determines the actual mailing address?
  2. What if the infusion center is across the street, but the pharmacy dispensing for it is within the four walls?
  3. What if there is a multi-hospital system under the same parent 340B ID – how are the four walls interpreted?
  4. What if the CE owns the space used by the physicians, but does not ‘own’ the medical record?

There is no simple answer, and frankly, the phrase ‘simple answer’ is an oxymoron in 340B contexts. 


How do you decide if a clinic, department, or facility is off-site and needs to be registered as a child site?  The portion of the above HRSA statement, “regardless of whether they are located in the same building” is particularly confusing. This led a lot of CE’s to register almost every department they own as a child site, even if it’s within the proverbial four walls of the institution.

In general, any department or clinic physically within the four walls of the institution, and using the same mailing address, does not need to be registered as a 340B Child Site.  The audits we’ve seen and known of consider any department or clinic within the four walls but with a different mailing address, and anything even slightly outside the four walls (across the street, connect by a walkway, etc.) to be required to be a child site.  One way to differentiate the address is if the clinic/department has its own DEA permit.  HRSA uses the DEA database to determine ‘legal’ addresses of Covered Entities, their child sites, and their contract pharmacies.

Actually registering a department or clinic is easy.  It must appear as a reimbursable outpatient cost center on your CE’s more recent Medicare Cost Report.  Typically, this is between lines 90 and 118 on the MCR, and it must link back to the CE’s trial balance.  At a minimum the report should reflect associated costs (and hopefully revenue) associated with the child site.  Specific Instructions on registering a child site can be found here:   HRSA Getting Started Guide 

More than one CE we’ve worked with heard there were added costs associated with registering a child site.  I’m not sure where that rumor got started, but registering and maintaining Child Sites on OPA is free, excepting the time to audit them periodically.


The situation becomes additionally complex if the Covered Entity has one Hospital as a Parent Facility, and other hospitals as child facilities.  The child facilities are listed as ‘Bill-To/Ship-to’ location, and every department/clinic at each child facility providing outpatient services must be listed as a Child Site with HRSA, even if they are within the four walls of the child facility.

Consider that every department or location at your facility, providing outpatient services, and with an eligible location code in your split billing software should be reviewed to ensure that it is either on-site or off-site, and if off-site, registered with OPA as a child site. And again, if the facility is a child facility, every OP service with an eligible location code should be registered, even if within the child facility’s four walls.

You can do a quick audit of this by downloading a few months of split billing data, then setting up a pivot table by location code.  Match each location code to the appropriate department or clinic, and check that it falls within the above criteria.

More Confused?

It’s likely this information helps no more than the original HRSA statement, and more than a few CE’s choose to register all outpatient departments, regardless of on-site or off-site, as Child Sites.  A HRSA auditor won’t cite a CE for a violation for doing this, but would recommend removing any unnecessary on-site departments/clinics from the OPA website.  You can always contact your CPS 340B Consultant if you need a decision tree for determining if a department or clinic needs to be registered as a Child Site.

Cost of a Deficiency

The good news about a deficiency of NOT listing an off-site clinic as Child Site is that HRSA considers this a Database Error and not Diversion.  If this is a finding in a HRSA integrity audit, HRSA will demand a corrective action plan, which is as simplistic as ensuring the child site is on the MCR and registering it on the OPA database.  The operational view is that the patients were otherwise eligible outpatients, and as such, there was no diversion, just the database error.  As a result, repayments of discounts for 340B products dispensed to patients in these clinics or departments is not required.


To wrap up:  If you have any clinics or departments that may be considered off-site or outside the four walls of your facility, check to be certain they are a reimbursable outpatient cost center on trial balance and MCR, and that they are registered as a child site with OPA.  This can be done during the first two weeks of every calendar quarter, with the approved additions ‘going live’ the first day of the following quarter.

Your Friendly Neighborhood CPS 340B Consultant

As always, please contact your Comprehensive Pharmacy Services 340B Consultant for answers to this or other 340B Questions. And if you get a chance, read Vonnegut’s “2B R 0 2B” short story, but note it's not one of his happy stories!


Posted: Tuesday, June 19, 2018

Tags: 340B, CPS Blog Posts, CPS, 340B Child Sites