The 340B drug pricing program was created by Congress in 1992 to provide significant discounts on prescription drugs for certain health care providers. Its purpose is to help reduce costs and fill revenue gaps for those providers. The program allows eligible hospitals, clinics, pharmacies, nursing homes, home healthcare agencies, hospices, dialysis centers and long-term acute care facilities (among others) to replenish prescription inventories at prices far below common acquisition costs.
In other words, the 340B program allows eligible providers to purchase medications at significantly reduced pricing, and bill normal market rates — creating higher margins on those drugs, as a means of filling revenue gaps that are inherent to their business models.
Who qualifies for 340B?
To qualify for the 340B program, you need to meet the following criteria:
- You are a hospital, clinic, physician practice group, skilled nursing facility, community mental health center, public health agency, federally qualified health center, Federally Insured Health Center or Indian Health Service.
- You are non-profit
- You serve low-income populations.
To determine if your organization is eligible, visit this page on HRSA’s website — which offers a comprehensive list of eligible organizations & covered entities.
How much can I save by taking advantage of my 340B eligibility?
The 340B program includes thousands of discounted drugs. Many hospitals taking full advantage of the program’s discounts save millions of dollars a year on prescription costs. For instance, that a single refill of a common Antirheumatic prescribed and not applied for 340B reimbursement will cost an eligible hospital roughly $1200 more than it can, and should, legally pay.
How does the 340B program work?
When a patient receives an eligible prescription from an eligible entity location, the entity is reimbursed for the full market price of the drugs, but pays only a fraction of the drugs’ cost — by purchasing the medication on the 340B catalog.
Who pays the 340B costs?
Manufacturers bear the burden of the cost. They reimburse wholesalers for the 340B discount on 340B purchased medications. PBM reimbursements are passed onto the healthcare system via third-party administrators like United Healthcare, Aetna, Cigna, Humana, etc. — which pass them on to the individual insurance company. Payments to healthcare systems for outpatient 340B administrations are paid by the medical plan, not the PBM. PBMs pay contract pharmacies.
How does the 340B payment process work?
As a covered entity, you send your encounter (visit) data to your TPA , and your pharmacy sends the prescription data. The TPA matches, and the pharmacy orders from the covered entity’s 340B account to replenish the drugs.
Using its proprietary software system, ProxsysRx monitors every prescription your organization fills, and identifies every eligible prescription generating sufficient savings to justify the time and effort. This extra layer of monitoring improves compliance, while ferreting-out hidden opportunities for more 340B savings.
ProxsysRx will work with you to determine how aggressively you want to pursue 340B savings, then maintain comprehensive records on every prescription applied for — always assuring you of complete compliance.
How do I assure I am compliant under 340B Regulations?
OPTION ONE (In-House Operation)
Keep 340B OPAIS information accurate and up to date.
Register new outpatient facilities and contract pharmacies as they are added. Subtract them when they are no longer eligible. Edit location data for clinics and pharmacies, as needed.
Recertify eligibility every year.
Prevent diversion to ineligible patients.
Covered entities must not resell or otherwise transfer 340B drugs to ineligible patients.
Duplicate Discount Prohibition
Manufacturers are protected from providing a discounted 340B price and a Medicaid drug rebate for the same drug. Covered entities must accurately report how they bill Medicaid fee-for-service drugs on the Medicaid Exclusion File, as mandated by 42 USC 256b(a)(5)(A)(i).
Prepare for program audits.
Maintain auditable records documenting compliance with 340B Program requirements. Covered entities are subject to audit by manufacturers or the federal government. Any covered entity that fails to comply with 340B Program requirements may be liable to manufacturers for refunds of the discounts obtained.
OPTION TWO (ProxsysRx-Managed Program)
ProxsysRx will manage all efforts to ensure your compliance at all times. Since 2013, ProxsysRx has served 24 health systems, and not once has a client of ours ever been fined for a 340B violation.