340B Contract Pharmacy Rules and Infusion Center Compliance

340B contract pharmacy compliance in infusion care includes HRSA requirements, conditions set by manufacturers, state and federal law, and billing controls for each drug. To protect program savings, those rules must be part of the buy-and-bill and contract pharmacy workflows, with compliance built into patient care and payment as well as paperwork.

What the 340B program requires of covered entities and how infusion centers fit in

HRSA’s foundational requirements apply whether an infusion center participates as a covered entity or as a child site of a qualifying hospital or grantee. Those requirements are accurate OPAIS records, annual recertification, no diversion to ineligible patients, no duplicate discounts with Medicaid, and auditable records. Responsibility stays with the covered entity even when a pharmacy or third-party administrator runs part of the program. The Authorizing Official’s annual attestation cannot be delegated, and repayment obligations remain with the entity.

OPAIS registration is an ongoing condition of participation. Every outpatient facility and contract pharmacy must have the correct name and address listed and kept current. HRSA’s contract pharmacy guidance requires a pharmacy to appear as active before it dispenses 340B drugs. The windows for registration are October 1–15, January 1–15, April 1–15, and July 1–15. Missing authorization within the 15-calendar-day window cancels registration and forces a wait until the next period.

For buy-and-bill infusion care, patient eligibility puts those universal rules into daily practice. A 340B-priced drug can be administered only to an eligible patient of the covered entity who received a qualifying health care service. An infusion encounter does not automatically establish that relationship. When the EHR and infusion dispensing system are not integrated, staff must cross-reference encounters against 340B claims manually. Medicaid controls require equal care, with contract pharmacies carving out Medicaid unless the entity has an arrangement with the state Medicaid agency to prevent duplicate discounts and has reported it to HRSA. Approved carve-in requests take effect at the beginning of the next quarter, so an internal decision cannot authorize a mid-quarter switch.

How contract pharmacy arrangements work and what infusion centers must manage operationally

Infusion centers that participate but have no on-site pharmacy can get access to 340B through a contract pharmacy arrangement. The written agreement must name every pharmacy location and covered entity location that will use 340B drugs. Those locations must be exactly the same as those in the OPAIS registration. HRSA’s contract pharmacy guidance states that an incorrectly listed pharmacy may be removed from the entity’s program. Signing the agreement therefore establishes the arrangement but does not complete its operational requirements.

Oversight continues through annual independent audits and records available for HRSA review. HRSA has the right to ask for records or check whether entities follow the rules outside scheduled audit cycles. At the transaction level, split billing separates eligible 340B use from non-340B use. Physical inventory separation makes that distinction straightforward to audit, but it can be costly where space is limited and drug turnover is high. Virtual replenishment instead uses software to identify qualifying encounters retrospectively and trigger replenishment orders, which requires tight links between administration records, billing, and pharmacy ordering.

Net benefit is what remains of reimbursement after subtracting 340B drug cost, contract pharmacy fees, and third-party administrator fees. Tracking only the discount overstates what the program returns to the center. The administrator’s records and the entity’s ledger must agree so that the entity can demonstrate what happened. When non-compliance is discovered, self-disclosure to HRSA is required.

What HRSA auditors actually find and what findings cost infusion-participating covered entities

HRSA’s audit record shows that most audited covered entities receive at least one adverse finding. Recurring problems include stale OPAIS records, Medicaid Exclusion File discrepancies or duplicate discounts, and contract pharmacies without fully compliant signed agreements. These are documentation and process failures. A sound policy is not enough if the transaction records cannot show that staff followed it.

Patient eligibility accounts for more findings than any other category. Auditors compare patient records with 340B claims and look for evidence of an active patient relationship at the time of purchase. For an infusion center administering biologics to patients referred by outside providers, a referral alone does not establish a qualifying encounter with a covered entity provider. If that connection cannot be documented, the claim becomes a finding. HRSA’s consequences include corrective action plans, mandatory manufacturer repayments, and removal from the program for repeated or serious violations.

CMS’s guidance requires all covered entities to use the TB modifier on applicable Medicare claims involving 340B-purchased drugs as of January 1, 2025. The requirement belongs in the claim-submission workflow, including applicable infusion J-code claims. For a drug administration that can generate a five-figure claim, the infusion record, billing claim, and 340B purchase must reconcile at the transaction level. The finance team supplies part of that evidence because dispensing records alone cannot explain a disagreement between the ledger and the administrator’s report.

How manufacturer contract pharmacy restrictions fracture the compliance picture for infusion drug programs

More than 40 manufacturers have adopted contract pharmacy restrictions since 2020. A common restriction allows one pharmacy per covered entity and requires the entity to keep submitting claims data through a designated exchange to keep access. For an infusion program using several high-cost biologics, each manufacturer’s policy becomes a separate operational variable. Entities must meet those conditions as well as HRSA’s requirements.

340B ESP, from Second Sight Solutions, is the leading installed claims-exchange platform, but it is not the only option. Model N’s Kalderos technology and IntegriChain cover related duplicate-discount and channel-reconciliation work that is distinct from claims submission. What those platforms do has no bearing on whether a manufacturer restriction can be enforced under the law. Operations must identify which submission path supports a particular product and policy. A general billing workflow cannot stand in for that product-level assessment.

Johnson & Johnson began requiring claims data for each of its drugs dispensed or administered on September 15, 2026, including from grantees, to preserve upfront discounts. As of February 2026, Lilly requires claims data from the in-house pharmacy when drugs are dispensed in-house. These policies show why the dispensing path matters as much as the manufacturer’s name. Different drugs may carry different submission requirements, exceptions, and enforcement timelines. When a policy changes but the workflow does not, a center risks losing pricing or submitting data through an unvalidated path.

The financial stakes also differ by drug. Each quarter, the 340B ceiling price is AMP minus the Medicaid Unit Rebate Amount, and specialty brands with large unit rebate amounts have the deepest discounts. Losing access for one biologic can thus cost far more than the average across the program would suggest. Drug-level underwriting is necessary to understand the recoverable margin at risk. The resulting operating model needs product-level rules.

The fractured legal landscape governing contract pharmacy access and what it means for infusion centers operating across states

The Third Circuit ruled on January 30, 2023, that manufacturer contract pharmacy restrictions are legal. As of June 2025, no other federal appellate court had opined on the permissibility of limited distribution models, and HRSA had not updated its guidance to address the circuit decisions. State legislatures have moved in a different direction by protecting contract pharmacy access. Thirteen states enacted access laws in 2025, seven passed provider reporting bills, and 21 states now have contract-pharmacy-specific laws.

Court outcomes differ across those states. The Eighth Circuit upheld Arkansas’s law prohibiting limited contract pharmacy distribution networks in March 2024, and the Supreme Court declined review in December 2024. Separate enforcement litigation by AstraZeneca remains pending. The Fourth Circuit blocked West Virginia’s law and then Maryland’s, but both panel rulings were vacated when the full court agreed to rehear the cases en banc. The U.S. District Court in Oregon heard summary-judgment motions in Novartis v. Joyce on October 1, 2026, with no ruling issued as of October 7, 2026.

State obligations can also extend beyond access. Colorado requires hospitals that participate to report detailed revenue figures and how they use savings, including charity care costs, and bars certain uses. An infusion group with sites in more than one state cannot assume that a policy that fits one site will fit another. Applicable rules depend on the drug, pharmacy location, and jurisdiction, while litigation can change their legal status. No vendor platform can say what is enforceable for every combination, so the entity still needs legal judgment and someone in-house who is responsible for the policy. Even when those access questions are resolved for a particular workflow, reimbursement presents a separate risk.

The proposed CMS reimbursement change that would restructure the financial case for 340B in hospital-based infusion settings

CMS proposed on July 2, 2026, a rule that would reimburse 340B-acquired drugs for hospitals and most integrated hospital outpatient departments at ASP minus 33.4%. That would replace the current ASP plus 6% and take effect in 2027 if finalized. For hospital-based infusion programs, though, it would directly change the spread between what they pay for drugs and what Medicare reimburses. Full compliance would not protect that spread from a payment-rate change.

Buy-and-bill economics require reimbursement to cover more than the drug invoice. Intake, storage, preparation, nursing staff, facilities, and spoilage risk all contribute to the cost of administration. If payment falls below that all-in cost, the 340B discount does not make up the shortfall. CMS’s 2026 OPPS final rule already implemented site-neutral payments for drug administration services in excepted off-campus provider-based outpatient departments. CMS estimates that change will save the federal government approximately $11 billion over ten years, adding existing payment pressure to the prospective reduction.

HRSA has separately announced a rebate pilot beginning January 1, 2027, for the 10 approved manufacturers and the drugs included in the pilot, on a rebate platform. That scheduled change belongs in the same financial planning picture, but it is distinct from the proposed OPPS reimbursement rule. The OPPS proposal also does not directly apply to freestanding centers outside the hospital outpatient payment system. Those centers may not qualify for 340B at all or may participate through grantee structures with different economics.

What a functional compliance operating model for a 340B infusion program actually requires

A functional model connects compliance evidence to the work that generates it. Manufacturer policy tracking, patient eligibility, claims-data submission, split billing, TB modifier reporting, and payer-level accounts receivable management must operate together. The controls for each product must match the manufacturer policy now in place, the legal status in that jurisdiction, and the dispensing path the entity has registered. When any of those changes, the assessment must change too. Required data submissions must also preserve the fields, exceptions, disputes, and audit trail relevant to that manufacturer’s policy.

Each administration must tie back to an eligible encounter, its inventory treatment, the submitted claim, and the purchase. The ledger must account for reimbursement, acquisition cost, and pharmacy and administrator fees. Quarterly OPAIS reviews must cover child sites, contract pharmacies, ended arrangements, and current Authorizing Official and Primary Contact details. These controls make compliance traceable rather than dependent on separate teams producing reports that may not agree.

No single vendor platform removes the need for accountable owners and experienced operators who can handle judgment calls. An infusion-specialized revenue cycle model can connect buy-and-bill and contract pharmacy work through software and operational support, but the covered entity still owns compliance. That model must adapt to manufacturer changes, litigation, the scheduled rebate pilot, and the proposed reimbursement shift before they produce denials or audit gaps. The practical standard is proactive, integrated control at the drug and transaction level. A general-purpose billing process that reacts after the loss cannot provide the same protection.