Urban hospital reclassifies as a Rural Referral Center to secure additional $2 million in drug expense savings
This case study highlights how Baker Tilly helped an urban hospital reclassify as a Rural Referral Center to secure additional Medicare reimbursements from the 340B Drug Pricing Program.
Client background
An urban hospital with 1,600 employees that provides inpatient and outpatient care to a rural community of nearly 200,000 people. The hospital has 133 inpatient beds and provides 36,500 patient days with more than 29,000 emergency room visits annually.
The business challenge
The company was classified as an urban hospital and had a Medicare disproportionate share hospital (DSH) payment percentage of less than 11.75%. Because its DSH payment percentage was not above the required 340B Drug Pricing Program threshold of 11.75 %, they did not qualify for 340B drug manufacturer discounts. In addition, it did not originally appear that the hospital qualified for any special rural designation status (e.g., Sole Community Hospital, Rural Referral Hospital, etc.). This would have allowed the provider to qualify for 340B drug manufacturer discounts if its Medicare DSH payment percentage was 8% or higher.
