Courts Strike Down HRSA’s 340B Offsite Registration Policy: What Hospitals Should Know
A recent federal court ruling could significantly change how hospitals expand participation in the 340B Drug Pricing Program.
On March 3, 2026, a U.S. District Court judge ruled that the Health Resources and Services Administration (HRSA) cannot require hospital outpatient locations—known as child sites—to appear on a Medicare Cost Report before being registered in the 340B program. The decision challenges a policy that HRSA has enforced for decades and may alter how hospitals plan the expansion of outpatient services under 340B.
Understanding the Previous Requirement
Since the early years of the 340B program, HRSA has required hospitals to meet two conditions before using 340B drugs at a new outpatient location:
- The site must appear as a reimbursable location on the hospital’s Medicare Cost Report
- The site must then be registered in HRSA’s 340B database
Only after completing both steps could hospitals begin using 340B-priced drugs at the location.
While this approach established a verification mechanism for HRSA, it often created delays. Because Medicare Cost Reports are filed annually, hospitals sometimes had to wait months—or longer—before newly opened or acquired sites could participate in the program.
What the Court Decided
The court determined that HRSA’s cost report requirement effectively added an eligibility condition that is not written into the 340B statute. According to the ruling, the agency does not have the authority to impose additional eligibility requirements that Congress did not include in the law.
As a result, the judge found HRSA’s policy unlawful.
Potential Implications for Hospitals
If the ruling ultimately stands, hospitals may gain more flexibility in registering new child sites for 340B participation. This could allow organizations to:
- Accelerate 340B enrollment for newly opened or acquired outpatient locations
- Reduce administrative delays tied to annual Medicare Cost Report timing
- Capture program savings sooner as service lines expand
For health systems pursuing outpatient growth strategies, the change could have meaningful operational and financial implications.
What Happens Next
HRSA has not yet announced whether it will accept the court’s decision or appeal the ruling. Until the agency provides guidance, uncertainty remains regarding how child site registration should proceed.
Hospitals considering new registrations should monitor HRSA updates closely and evaluate compliance implications before making changes to their current processes.
Strategic Considerations for Healthcare Leaders
The ruling highlights the evolving regulatory environment surrounding the 340B program. For finance, pharmacy, and compliance leaders, staying informed about policy developments is essential to protecting program participation and maximizing the value of 340B savings.
As organizations expand outpatient care and reassess pharmacy strategies, changes to registration requirements may influence how quickly new sites can participate in the program.
Supporting Members Through a Changing Landscape
Regulatory developments like this underscore the complexity of managing a compliant and financially effective 340B program. Alliant works alongside members to monitor policy changes, assess operational impacts, and support strategies that strengthen program oversight while protecting long-term margin performance.
Learn more about how Alliant helps healthcare organizations navigate complex regulatory and operational challenges at www.alliantpurchasing.com.
