The federal 340B Drug Pricing Program (340B) allows certain entities that serve low-income patients to receive discounted outpatient drugs from manufacturers that participate in Medicaid and Medicare. Manufacturers must sell covered drugs at 340B prices for Medicaid to cover the drugs. The 340B Program is intended to enable covered entities to use federal resources to improve accessibility and provide more comprehensive services.

Program Overview

Section 602 of the Veterans Health Care Act of 1992 added Section 340B of the Public Health Service Act. Under 340B, entities receive a 20 to 50 percent discount on the average manufacturer price of outpatient prescription drugs. Note: While manufacturers report drug price data to the Health Resources and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services (HHS), ceiling prices are proprietary and are not disclosed to covered entities.

The covered entities may generate revenue under 340B if patients’ insurance reimbursements exceed the 340B price. Federal statutes do not restrict how covered entities may use this revenue. A survey by a group representing safety-net hospitals showed that covered entities use the revenue to reduce patients’ drug costs, provide uncompensated care, and maintain broader hospital operations, among other things. (Medicare Payment Advisory Commission, “Report to the Congress: Overview of the 340B Drug Pricing Program,” May 2015) HRSA’s Bureau of Primary Health Care, however, requires a federally qualified health center (FQHC) to use 340B discounts for community benefits to fulfill grant requirements and remain a covered entity.

According to the HRSA, which administers 340B, the discounts enable covered entities “to stretch scarce federal resources as far as possible” to fund safety-net care.
While both the 340B Program and the Medicaid Drug Rebate Program offer rebates to states, states cannot order “duplicate discounts” or stack rebates on prescription drugs.

Eligible Entities

Section 340B(a)(4) of the Public Health Service Act specifies the entities that are eligible to participate in 304B. These include qualifying hospitals, FQHCs, and specialized clinics. Entities are not allowed to divert drugs purchased at the 340B price to an individual who is not a patient of the entity.

Contract Pharmacies

Some covered entities enter into agreements with non-affiliated retail pharmacies, known as contract pharmacies, to provide services to patients. Contract pharmacies are not included in the federal 340B enacting statute. However, in 2001, HRSA created Alternative Methods Demonstration Projects (AMDP), which allow certain covered entities to contract with retail pharmacies. This allowed entities without in-house pharmacies to dispense medications under 340B. In 2010, HRSA expanded 340B to allow covered entities to contract with multiple pharmacies without going through the AMDP process.

Covered Entities in Kansas

As of September 2024, there are 937 eligible covered entities in Kansas, according to HRSA’s 340B Office of Pharmacy Affairs Information System. Note: A covered entity could have multiple sites of operation.

Active Covered Entities in Kansas

Entity Type	Amount
Disproportionate Share Hospital	220
Critical Access Hospital	193
Sexually Transmitted Diseases	163
Tuberculosis	150
HRSA-funded Health Center	95
Family Planning – Title X	55
Sole Community Hospital	35
Children’s Hospital	12
Ryan White Part C (formerly Title III)	4
Rural Referral Center	4
Health Center Program Look-alike	3
Ryan White Part B (formerly Title II)	1
Ryan White Part B (formerly Title II) ADAP Rebate Option	1
Urban Indian Health Center	1

Disproportionate Share Hospital (DSH). DSH facilities are general acute care hospitals that serve a disproportionate number of low-income patients and automatically qualify for 340B annually if they provide enough inpatient services to Medicaid and low-income Medicare beneficiaries.

Critical Access Hospital (CAH). CAHs are designated by the Centers for Medicare and Medicaid Services (CMS). The CAH designation aims to reduce the financial vulnerability of rural hospitals and enhance health care access by maintaining essential services in rural communities.

Sexually Transmitted Diseases (STDs). STD clinics are non-hospital facilities that diagnose and treat STDs. These clinics are supported by the STD Control Program overseen by the Centers for Disease Control and Prevention.

Kansas Legislation

The enacted 2024 Appropriations bill, SB 28, included language directing the Office of the Attorney General to enforce the Kansas Consumer Protection Act against manufacturers interfering with the acquisition of 340B drugs by certain pharmacies for FY 2025 and FY 2026.

U.S. Supreme Court Case

On June 15, 2022, the Supreme Court of the United States ruled in American Hospital Association v. Becerra that the reimbursement payment rates set by HHS for drugs obtained under 340B in calendar years 2018 and 2019 were unlawful. The Court’s decision was based on HHS’s failure to conduct a required survey of hospitals’ acquisition costs before implementing the rates.

To remedy the invalidated payment system, CMS finalized a rule on November 2, 2023, to offer one-time, lump-sum payments to covered entities as compensation for the difference in rates. The rule went into effect on January 8, 2024.

New Case Management Provider Contracts

State fiscal year (SFY) 2025 is the first year of the newly negotiated contracts between the Kansas Department for Children and Families (DCF) and case management providers (CMPs) of foster care. DCF will continue working with TFI, KVC Kansas, Cornerstones of Care, and Saint Francis Ministries. New to this contract is EmberHope, which will replace Saint Francis Ministries in Sedgwick County only. The contracts are in place from July 1, 2024, to June 30, 2028, with an optional renewal for four more years in 12-month periods.

The new contracts implemented the following key changes:

• Caseload standards for case managers. This adjustment reduced the caseload from 25 to 30 cases per case manager to 12 to 26 cases;
• Additional required positions. Three positions were added to each contractor: an Independent Living coordinator; an IT position to collaborate with DCF’s Comprehensive Child Welfare Information System; and a discharge transition position to help assist children leaving foster care; and
• Change in payment model. A prospective payment model, rather than retrospective, was adopted to allow for better stewardship of financial resources by the providers.

Kinship Care

Research shows that children and youth placed with relatives experience fewer placement changes, report better mental health outcomes, and have better permanency outcomes. In September 2023, the U.S. Administration for Children and Families issued a final rule that allows states the option to use kin-specific foster care licensing or approval standards and provided a process to access federal Title IV-E dollars for kin placements. States are encouraged to limit the kin-specific licensing standards to the less rigorous, federal safety requirements rather than adopt the safety standards for non-kin foster parents. Note: Kin-specific placement has been allowed, but foster care maintenance payments to families were fully state-funded. The rule changes the financing structure to include federal dollars.

This change will allow states to more easily license kinship providers as foster care providers. These licensed kinship families will be allowed to choose a sponsoring agency, identify a home worker to provide crisis intervention, have more access to training, and be eligible for paid respite care.

An update on Kansas families engaging in this new kinship licensing process will be provided to the Consensus Revenue Estimating Group when it meets during the fall of 2024.

Foster Care By the Numbers

DCF reports Kansas has a 24 percent decline of children in foster care since 2019 (7,588 in SFY 2019 to 5,792 in SFY 2024). Additionally, fewer children entered foster care in SFY 2024—a total of 2,578 children in SFY 2024 compared with 4,212 children in SFY 2018. DCF credits the State’s investment in preventative efforts to keep families together, including the Families First Prevention Service Act and local Family Resource Centers.

However, compared nationally, Kansas continues to be identified as a state with a high removal rate. In federal fiscal year (FFY) 2022, Kansas ranked seventh, with 4.40 removals per 1,000 children compared with the national average of 2.34. In FFY 2023, Kansas ranked tenth, with 3.84 removals per 1,000 children compared with the national average of 2.22.

Approximately 61 percent of children who are removed from the home are removed due to abuse or neglect, and 39 percent are removed as the family undergoes an assessment to determine future outcomes. The percentage of children removed for abuse and neglect has decreased over time, and the percentage of children removed during a family needs assessment has increased as the State invests in prevention efforts aimed at keeping families together.

The Centers for Medicare and Medicaid Services (CMS) published a final rule creating new requirements for staffing levels in CMS-certified long-term care facilities on May 10, 2024, in the Federal Register, effective June 21, 2024. The final rule makes the following changes:

• Minimum staffing hours. Facilities must provide a minimum of 3.48 hours per resident day of direct nursing care, of which at least 0.55 hours per resident day must be by registered nurses (RNs) and 2.45 hours per resident day must be made by nurse aides (NAs). The remaining 0.48 hours per resident day may be provided by any combination of nurse staff, including RNs, NAs, Licensed Vocational Nurses (LVNs), and Licensed Practical Nurses (LPNs);
• RN on-site requirement. Facilities must have at least one RN on-site 24 hours a day, 7 days a week (24/7) and available to provide direct resident care. The on-site RN may be the Director of Nursing (DON). However, the DON must be available to provide direct resident care; and
• Facility assessment requirements. Certain changes to the facility assessment include the following:
  • Require evidence-based methods when planning care for residents, including those residents with behavioral health needs;
  • Assess specific needs of each resident and adjust care based on the assessed needs in the resident population;
  • Consider input from nursing home leadership, management, direct care staff, residents, and family members; and
  • Develop a staffing plan to maximize recruitment and retention of staff.

Hardship Exemptions

Facilities may qualify for a temporary hardship exemption if the facility meets all of the following requirements based on its geographic area:

• Exemption from 3.48 hours per resident day requirement. The facility must demonstrate that the combined licensed nurse—which includes RNs, LVNs, and LPNs—and nurse-aide-to-population ratio is a minimum of 20 percent below the national average;
• Exemption from 0.55 RN hours per resident day requirement, and exemption of 8 hours per day from the RN on-site 24/7 requirement. The facility must demonstrate the RN-to-population ratio is a minimum of 20 percent below the national average; and
• Exemption from 2.45 nurse aide hours per resident day requirement. The facility must demonstrate the NA-to-population ratio is a minimum of 20 percent below the national average.

Facilities receiving an exemption must post notice in the facility, notify residents, and notify the State’s Long-term Care Ombudsman.

Implementation

The final rule has a different timeline based upon facility geographic classification as follows:

Non-rural facilities:

• By August 8, 2024, facilities must have complied with the facility assessment requirements;
• By May 11, 2026, facilities must comply with the requirement to have an RN on-site 24/7 and with the 3.48 hours per resident day total nurse staffing requirement; and
• By May 10, 2027, facilities must comply with the minimum staffing requirement of 0.55 and 2.45 hours per resident day for RNs and NAs.

Rural facilities: Note: “Rural facilities” are defined as facilities that are not part of a metropolitan statistical area, which is defined by the federal Office of Management and Budget as having at least one urbanized area with a minimum population of 50,000.

• By August 8, 2024, facilities must have complied with the facility assessment requirements;
• By May 10, 2027, facilities must comply with the requirement to have an RN on-site 24/7 and with the 3.48 hours per resident day total nurse staffing requirement; and
• By May 10, 2029, facilities must comply with the minimum staffing requirement of 0.55 and 2.45 hours per resident day for RNs and NAs.

Medical Assistance Programs

The State of Kansas offers medical assistance to eligible Kansans through three major programs.

Medicaid. Medicaid is part of KanCare, the state’s managed care program, and covers Kansans with limited income who meet program eligibility criteria in the following groups: pregnant women, children up to age 19, adult caretakers of children, persons who have aged out of foster care, individuals with disabilities, and senior citizens.

Children’s Health Insurance Plan (CHIP). CHIP is also part of KanCare and provides coverage to uninsured children up to age 19 who do not qualify for Medicaid.

MediKan. MediKan is a fully state-funded program that provides time-limited coverage to persons who are applying for Social Security disability benefits.

KanCare

KanCare is the State of Kansas’ managed care program and utilizes a variety of special programs to administer Medicaid. KanCare services are provided by contracted Managed Care Organizations (MCOs).

The first MCO contracts for KanCare began in January 2013 and ended December 31, 2018. The second set of MCO contracts, often referred to as KanCare 2.0, began January 1, 2019, and will end December 31, 2024. The State entered its third contract with MCOs (KanCare 3.0) in 2024. These contracts will begin January 1, 2025.

Eligibility

All persons who receive KanCare must reside in Kansas and either be a U.S. citizen or a non-citizen who meets a qualifying status as determined by the U.S. Department of Homeland Security. Individuals must also meet medical, age, and financial eligibility requirements. KanCare eligibility is determined on an annual basis.

Providers

The MCOs under KanCare 2.0 are Sunflower Health Plan (Sunflower), UnitedHealthcare Community Plan of Kansas (UHC), and Aetna Better Health of Kansas (Aetna).
Beginning January 1, 2025, the MCOs for KanCare 3.0 will be two incumbents, Sunflower and UHC, and a new MCO, Healthy Blue (Community Care Health Plan of Kansas and Healthy Blue).

KanCare 3.0 Procurement Process

The request for proposal (RFP) was written over many months through a joint agency effort that included the Kansas Department of Administration (DOA), Kansas Department of Health and Environment (KDHE), and Kansas Department for Aging and Disability Services (KDADS). The KanCare 3.0 RFP was released by DOA in October 2023, and a contract was announced in May 2024. The minimum contract term will be January 1, 2025, to December 30, 2027, with an option for the State to renew for two one-year terms. If the option to renew is authorized, the contracts could extend through December 30, 2029, at the latest.

Payment

KDHE pays each MCO a set per-member, per-month rate as specified in their contracts. This capitated rate is calculated each month and is based on the number of individuals enrolled in each eligibility category that month and the anticipated services they will require, including pharmaceuticals.

When establishing the rates at which MCOs are paid, KDHE must comply with federal regulations requiring such rates be developed in accordance with accepted actuarial practices and certified by qualified actuaries. Rates must be high enough to attract a provider base that can meet contractual requirements for availability and accessibility of services. KDHE’s actuaries review the MCO rates on a regular basis and adjust rates as needed to ensure they remain actuarially sound.

Agency responsibilities

KDHE

The State Medicaid Director is housed within KDHE, the primary agency involved in the management of KanCare. KDHE is responsible for MCO contract oversight, claims management, and ensuring that KanCare 3.0 meets all standards as required by the federal government. The federal partner for KanCare is the Center for Medicare and Medicaid Services (CMS). CMS is the federal agency that provides health coverage to more than 160 million individuals through Medicare, Medicaid, CHIP, and the Health Insurance Marketplace.

KDADS

A specialized component of KanCare is the Home and Community Based Services (HCBS) waivers, a system of community-based supports and services for persons in Kansas with disabilities, administered by KDADS. The HCBS provider network includes a variety of not-for-profit and for-profit organizations, as well as governmental entities. These services are provided through seven HCBS waiver programs.

KanCare 3.0 Improvements

KDHE and KDADS have jointly announced several key improvements included in the KanCare 3.0 MCO contracts, including:

• Educating, engaging, incentivizing, and empowering members to achieve personally defined health goals;
• Enhancing care coordination to ensure timely access to needed services, continuity of care, successful care transitions, and improved member outcomes;
• Improving prenatal and postpartum care, including requirements for maternity care coordination;
• Increasing the recruitment and retention of providers; and
• Expanding access to services in rural and frontier areas.

Open Enrollment

Members of KanCare will have two open enrollment periods in 2024 and 2025. As there is a new MCO, a minimum 60-day open enrollment period will be held in 2024. In addition, the regularly scheduled 90-day open enrollment period will occur between January 1, 2025, and March 31, 2025.

Community Support Waiver Services

The 2022 Special Committee on Intellectual and Developmental Disability Waiver Modernization (Committee) recommended the development of a Home and Community Based Services Medicaid Community Support Waiver (CSW) to serve youth and adults with intellectual and developmental disability (I/DD) who need less-intensive services and supports than those provided on the existing comprehensive I/DD Waiver.

The services provided would be tailored to meet individual needs and would not include day or residential services. The Committee envisioned the CSW as a means to reduce the waiting list for individuals seeking I/DD Waiver services. The Kansas Department for Aging and Disability Services (KDADS) anticipates current I/DD Waiver participants not using day or residential supports may choose to transfer to the CSW to allow them to take advantage of the flexibility to tailor goods and services to their individual needs and preferences.

Services discussed by the Committee for inclusion in the CSW are:

• Transportation to and from work;
• Staff support with employment;
• Individual budget authority;
• Individualized personal care services to assist with activities of daily living;
• Respite services for families caring for a family member on the waiver;
• Various therapy services;
• Assistive technology to increase a person’s independence;
• Minimal staff supports to allow independent living in one’s own home or apartment;
• Support and training for family and caregivers;
• Financial management services and support brokers to assist with personal budget and expenditures; and
• Benefits counseling provided by a navigator to assist the person and their family to understand KanCare.

Fiscal Impact Estimate

At the request of the Committee, KDADS estimated the fiscal impact for each service recommended for possible inclusion in the CSW. Because a CSW would offer a limited menu of services, its cost is anticipated to be less than the current I/DD waiver.
KDADS based its cost estimate on Missouri’s comparable CSW, with these considerations:

• Annual per-person cap on services of $20,000 (Missouri’s waiver is capped at $28,000);
• Cost match of approximately 60 percent federal funding and 40 percent State funding;
• Range of participants from 3,600 to 7,461, which would be refined based on the findings of the Kansas University Center on Developmental Disabilities Waiting List Study;
• Emphasis on supported employment, respite, training, and personal care options;
• Increase in self-directed services; and
• Phased rollout with assistance from community developmental disability organizations and other stakeholders to avoid overloading system capacity and ensure adequate service provision and correct waiver implementation.

Based on these considerations, KDADS estimates the cost of CSW implementation would range from $72.0 million all funds, including $29.0 million State General Fund (SGF), to $149.0 million all funds, including $40.0 million SGF.

Implementation Progress

KDADS has employed internal CSW staff, contracted with a third party to assist in writing the waiver application, and has convened a Technical Advisory Group made up of stakeholders that will meet monthly to advise the State on improvements to the I/DD system.

The anticipated CSW implementation timeline is:

• August 2023: Approval from the Centers for Medicare and Medicaid Services (CMS) to use Federal Medical Assistance Percentage funds to hire staff and a contractor for the CSW;
• Remainder of 2023: Hire an on-board internal CSW staff and draft a request for proposal to contract for additional assistance in development and application of the CSW;
• April to June 2024: Contractor will form and convene stakeholder groups to provide feedback to the State regarding services;
• July 2024 to July 2025: Contractor will draft CSW and expand the provider network;
• August 2025 to September 2025: Public comment period on the waiver application;
• October 2025: Submit CSW application to CMS, anticipating approximately six months to review and approve the application; and
• April 2026: Waiver approved by CMS.

KDADS estimates the earliest date for utilization of services through the CSW would be state fiscal year (FY) 2026. Upon approval, KDADS proposes adding 500 participants in the first year at a cost of $10.0 million all funds, including $4.0 million SGF. Each subsequent year, KDADS would add additional individuals based on provider capacity. The agency’s FY 2026 budget submission will include an enhancement request to fund a partial year’s cost to serve the first 500 individuals.

During the 2023 Interim, the Special Committee on Child Care Centers and Child Care Homes (Committee) met for two days to study and make recommendations regarding policy options for child care facilities, including day care regulation. Among the recommendations, the Committee requested the Legislative Coordinating Council compose a letter to the Office of the Attorney General to request that the proposed regulations from the Kansas Department of Health and Environment (KDHE) for child care centers and child care homes be expedited. The new rules and regulations regarding child care became effective on August 2, 2024. Selected revisions are highlighted below.

Staff-child Ratios

The new regulations update the staff-child ratios for licensees. Among the changes, “license capacity” is changed to “maximum group size” to reflect the maximum number of children allowed in a group changes depending on the ages of the children and the number of providers present. The changes also allow for some flexibility with infant child care slots, and providers who opt to care for an additional infant may adjust to do so. Additionally:

• The infant age group was adjusted to 0 to 12 months rather than 0 to 18 months;
• The maximum age of children is changed from age 11 to age 10; and
• A slot for 5-to-10-year-old children was shifted to the 12-month-to-5-year age range to allow for another preschool age child in a center’s capacity.

Age of Children	Minimum Staff-to-child Ratio	Maximum Number of Children Per Unit
Infants*	A. 1 to 3 or B. 1 to 4	A. 9 or B. 8
Infants and other children under the age of 6	1 to 6 (including not more than 3 infants)	12 (including not more than 6 infants)
Toddlers^	1 to 6	12
Children at least 2 years of age but under the age of 3	1 to 7	14
Children at least 2.5 years of age but under school-age***	1 to 12	24
School-age	1 to 16	32

Professional Development Training

The updated regulations specify that provider training must be completed before the provider is given sole responsibility for the care and supervision of children. Health and safety training requirements were updated to expand required training topics to include the prevention of child maltreatment; cognitive, social, emotional, and physical development; approaches to learning; and medication administration.

Pediatric first aid and cardiopulmonary resuscitation (CPR) certification requirements were updated to specify that certification must include a practical application component and be demonstrated in front of an instructor certified by a nationally recognized first aid and CPR training organization. At least one provider who has current certification in pediatric first aid and current certification in pediatric CPR must be present during operating hours.

Daily Care of Children

The new regulations specify storage and safe handling guidelines for breast milk provided for children in care. Accommodations must be provided to enable a parent to breastfeed their child.

Individuals who care for children are prohibited from giving any child any medications, herbal or folk remedies, or drugs to control or manage behavior, unless prescribed by a licensed physician, physician assistant, or advanced practice registered nurse.

Licensees must also develop and implement a written plan for safe sleep practices for children in care who are napping or sleeping.

Parental Access

The new regulations add requirements regarding video cameras used for the purpose of monitoring children’s activities or to provide remote visual access to parents and legal guardians. All staff members must be informed if cameras are used in a facility, and the parent or legal guardian of each child in care must be informed in writing. The use of cameras is not allowed to replace any requirements for supervision of children in care. Licensees must also give the Secretary’s designee access to recordings and viewing privileges for the purpose of investigating compliance.

When leaving the premises of the licensed child care facility, written permission must be obtained from the parent or legal guardian of each child participating in the trip. Each child’s emergency medical treatment form and medical record must be accessible when participating in any off-premises trip or activity.

Safety and Emergency Procedures

The updated regulations provide more specificity regarding the types of emergency plans that licensees must develop. Emergency plans must include procedures for events including a fire, a weather-related event, a missing or runaway child, a chemical release, a utility failure, an intruder, an act of terrorism, a lockdown, and an unscheduled closing. Facilities must specify a designated shelter-in-place area, a designated off-premises relocation site, and evacuation routes for each area and for each site. Licensees must also record procedures to meet the needs of individual children, including those with allergies, chronic medical conditions, or special needs, and procedures for notifying parents and reuniting children and parents when necessary.

Licensees must review the emergency plan at least annually and update it as needed.
The updated regulations are available in their entirety at the KDHE website.