In a win for hospitals, health systems, and other medical facilities that participate in the 340B program on March 3rd, 2026, a Federal District Court ruled that 340B child sites are eligible to participate in the 340B Program regardless of whether they have yet to appear on the covered entity’s Medicare Cost Report (MCR) or appear in the OPAIS covered-entities database, collectively referred to as the “registration requirement.” The decision vacates the longstanding Health Resources & Services Administration (HRSA) policy that delayed access to 340B discounts until new child sites were included on a hospital’s filed MCR and registered with the agency; a lengthy process delaying access to 340B Drugs for more than 8 months. Under the recent ruling, hospitals can treat patients at new child sites with 340B drugs as soon as those sites qualify as part of the hospital, without waiting months for cost‑report cycles or HRSA approval.
Immediate effects of the ruling mean child sites may use 340B drugs as soon as they qualify as part of the hospital. While the court offered no opinion on when a child site qualifies as part of the covered entity, in the hospital context, child sites must meet the “provider-based” regulatory framework at 42 CFR 413.65 (often referred to as being a “HOPD”, “HOD”, or “PBB”) to qualify as part of the hospital.
Hospitals should also consider the likely appeal of this ruling by HRSA in their strategic decision-making.
Following the Supreme Court’s ruling overturning Chevron, courts are instructed to “exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” The court therefore cannot defer to HRSA’s interpretation of section 340B. The court found that the registration requirement conflicts with the text of the 340B statute and therefore is contrary to law. The 340B statute defines “covered entities” and lists only three statutory requirements they must meet. In short, these requirements are no duplicate discounts, no diversion, and allowing audits. The Court found that the statute does not directly authorize HRSA to impose additional eligibility conditions like appearing on the MCR or obtaining HRSA certification before using 340B drugs.
Advis will continue to track the progress of the case in courts and how the industry responds to the recent ruling.
Published March 5, 2026
