Federal Court Strikes Down HRSA’s 340B Child Site Registration Policy

Federal Court Strikes Down HRSA’s 340B Clinic Registration Policy

A federal district court in Washington, D.C. has struck down HRSA’s policy requiring hospital outpatient clinics to appear on a Medicare cost report and be registered in OPAIS before accessing 340B pricing.

In a March 3 decision, the court ruled that HRSA’s registration requirement conflicts with the text of the 340B statute and therefore cannot be enforced. The statute, the court said, does not authorize HRSA to delay eligibility for a qualifying hospital site until the agency approves its registration. The full ruling can be read here.

The case was brought by Albany Medical Center and 43 other hospital systems after HRSA reversed its earlier COVID-era flexibility that allowed hospitals to begin using 340B drugs at new offsite clinics before those sites appeared on the Medicare cost report.

In its decision, the court emphasized that Congress specified only three core compliance requirements in the 340B statute: preventing diversion, preventing duplicate discounts, and allowing manufacturer audits. It concluded that HRSA cannot impose additional eligibility conditions that are not written into the law.

The ruling will have significant implications for hospitals opening new outpatient facilities. Under HRSA’s prior policy, hospitals often had to wait up to two years for a clinic to appear on a Medicare cost report before it could be registered as a 340B child site. The decision removes that registration requirement as a prerequisite for eligibility.

It may also affect hospitals that recently received HRSA audit findings tied to the timing of child site registration. Some providers and attorneys are already noting that the ruling could raise questions about whether those determinations remain valid.

It is not yet clear whether HRSA will appeal the decision or issue additional guidance in response. But the ruling continues a broader trend in which courts are limiting HRSA’s ability to impose operational requirements on the 340B program that are not explicitly written into the statute.

Why This Matters

For hospitals, the decision could significantly change how quickly newly opened outpatient clinics can begin using 340B pricing. Under the prior framework, eligibility was often delayed until a facility appeared on a Medicare cost report, a process that could take years.

More broadly, the ruling reinforces a recurring theme in recent 340B litigation: federal courts are increasingly scrutinizing HRSA policies that impose program requirements not explicitly written into the statute.

Hospitals may want to keep a close eye on how HRSA responds, as this decision could have meaningful implications for future strategy and past findings.

We will share updates as things develop.