What we’ve learned. What it means for your 340B program.
Between late 2019 and the end of 2023, ProxsysRx’s 340B Support program went from Zero to more than $500 million in savings generated for the hospitals and health systems we serve. In spite of the drug manufacturer restrictions that have devastated many hospitals’ programs, every one of the 13 health systems we serve and support has enjoyed significant 340B-revenue increases.
And yet, if there is one thing that ProxsysRx 340B Team members Heather Brooks and Chance Spivey agree-on unequivocally, it’s this: There is no such thing as a 340B Expert. “I’ve lost count of how many times something like this has happened,” says Chance: “I’ll come into work and find an email in my Inbox that changes all of the data analytics I’d been using to submit a sizable percentage of my clients’ prescriptions for 340B discounts.” And that is why the one 340B prediction we can make for 2024, unequivocally, is repeated three times in this post’s headline.
Two potential 340B developments for 2024
In an article dated January 5, the subscriber-only website 340B Report projected that “In 2024, congressional gridlock and election year dynamics will likely slow momentum on any comprehensive 340B program reform package.”
Nevertheless, notes Chance, “There’s a lot going on in the regulatory area at the state level.” Arkansas, for instance, recently struck a deal with Novo Nordisk — restoring 340B contract pharmacy discounts while both sides await a forthcoming Appeals Court ruling. “I know other states, including Louisiana, have moved to shut down manufacturer restrictions. Which means we may see a lot more states putting manufacturers in their place, in 2024. If not, it’s likely we’ll see manufacturers taking advantage of the legislative inaction by adding even more restrictions.
“Either way, I see even more confusion coming, where 340B manufacturer restrictions are concerned.”
The Supreme Court voted unanimously to reverse 340B cuts.
As the American Hospital Association (AHA) reported in a special bulletin published June 15, 2022, The Supreme Court of the United States today ruled unanimously in favor of the AHA and others, reversing a 2020 court of appeals decision upholding the authority of the Department of Health and Human Services to significantly cut payments to certain hospitals that participate in the 340B Drug Pricing Program, and thereby threatening access to care for patients.
In response, The Centers for Medicare & Medicaid Services (CMS) issued a proposed remedy for covered entities whose 340B payments were wrongly reduced in calendar years 2018-22. As several media outlets have reported, including Modern Healthcare (on November 2, 2023), Providers participating in the 340B drug discount program will receive approximately $9 billion to compensate them for reductions in previous years under a final rule the Health and Human Services Department and the Centers for Medicare and Medicaid Services.
Given the Supreme Courts’ unanimous ruling against the HHS cuts, not to mention the very law Congress passed in 1992 law establishing the 340B program, one has to wonder – – –
How can drug manufacturers unilaterally impose 340B restrictions?
It’s a mystery to us. After all, according to the 340B law as written, those restrictions are clearly unlawful. We’ve published several posts stating the case against the 340B ESP website and manufacturer restrictions — none stronger than this one.
All that said, even with the 340B program’s constant state of change and confusion, there’s good news for ProxsysRx clients. “The most important improvement we’ve made — and continue making — to our 340B PRO software platform,” notes Heather, “is its ever-increasing agility. In its early days, whenever manufacturers or government entities made changes to their 340B rules and/or restrictions, we had to modify the system practically from the ground up. Now, we have so many filters bult-in that new manufacturer rules and 340B restrictions don’t require the core code being rewritten.”
How covered entities should prepare for 340B changes in 2024
Build a qualified 340B team.
Yes, it sounds obvious, but the first thing your health system should do is invest in the resources and the personnel necessary to optimize your 340B program results. In our experience, most hospitals’ 340B teams are comprised of the Director of Pharmacy (DOP) and a Pharmacy Tech — both of whom have full-time jobs, in addition to their 340B program responsibilities. Speaking again from our own experience, that never works, and it never will.
“In the early days of our 340B program,” Chance recalls, “Heather and I were both handling everything for our clients — and it was overwhelming. Even with our software platform, which aggregated all of the hospital’s 340B-prescription data into a single location, we didn’t have all of the analytics capabilities we have now. Which meant there was an overwhelming amount of legwork for both of us to do — not only in identifying available 340B-savings opportunities, but in targeting missed opportunities. And remember, as full-time 340B team members, we were able to dedicate a lot more time and effort than the typical in-house health system team has.”
Streamline processes, strengthen analytics and 340B program oversight.
Whatever software platform you use to manage your 340B program should streamline your process by minimizing the unnecessary detail-work your team-members have to undertake on a daily basis. “The efficiencies we’ve built-into our system,” says Heather, “enables each of our team members to accomplish as much as any three of us could do without the software. At the same time, the analytics we now get from our platform — many of which are just a click or two away from the system’s dashboard — are invaluable in helping us optimize each health system’s 340B program.
“For instance, we can instantly produce real-time reports that rank the revenues generated by every contract pharmacy in a health system’s network, as well as revenues generated by every clinic and physician participating in their 340B program.
“We can see all the prescriptions we’ve submitted their TPAs, and whether they’ve been matched or rejected. For prescriptions that have been wrongly rejected, we have a template for quickly re-submitting them.
“We can compare the revenue being generated by medication, and by drug manufacturer. All of which is why we routinely work with individual providers at the systems we serve — advising them on best practices for using 340B, not only to optimize revenue, but, more importantly, to improve patient outcomes.”
“The ultimate challenge of the 340B program,” Chance continues, “is taking all the moving parts, and pulling them together. What we’ve seen from every covered entity that’s tried to manage its own 340B program,” he notes, “is that everything comes to them in pieces, but they don’t have all the pieces pulled together.
“A single hospital can easily have five TPAs and 70 contract pharmacies. We’ve standardized our system so that we can put all of the players in one place. That’s really helped us leverage our knowledge to create better processes.”
Optimize, and scrutinize, your 340B contract pharmacy and TPA networks.
Another thing that we’ve found with every health system ProxsysRx serves is how much room they have for expanding and improving their contract pharmacy networks. As we noted in a previous article discussing the topic in-depth, the average number of quality 340B contract pharmacy relationships we’ve added to the networks of health systems we serve is five to ten. For one health system in South Carolina, we added nearly thirty contract pharmacies in two years — and we’re still adding more. What’s more, we’ve identified and secured solid contract relationships, more times than we can count, with pharmacies located virtually within walking distance of the hospitals we serve.
That said, your health system should also subject all of your 340B program TPAs to serious scrutiny. “Over the years,” says Chance, “we’ve encountered far too many contract pharmacies who just aren’t aligned with the mission of the hospitals we serve — even more so with TPAs. They see individual 340B hospitals as just another customer, and they’re not willing to go the extra mile to help them.
“While we were onboarding one health system’s 340B program, for instance, we came-across one TPA that was charging them a percentage of every prescription matched. We got their service contract changed from a percentage basis to a flat fee. Which saved the hospital $400,000 in one year. And here’s the thing: The hospital had no idea a flat fee was an option.”
Update your 340B program’s Best Practices.
For a start on ensuring that your 340B program is maintaining best practices, click here to access our in-depth article on the topic. If you’d like to schedule a conversation to discuss the best-practice updates we’ve implemented since that article was published, please feel free to reach-out to us anytime.
Listen. Share. Discuss.
It goes without saying we dove deep, and long, into learning about 340B before we launched our 340B program, but practically everything we’ve learned since then has been based on experience — and rarely does a day pass that we don’t learn something new.
“Collaboration has been the cornerstone of our team since the very beginning,” says Heather, “and we’re very protective of our team culture. Everyone here is encouraged to speak-up whenever they have an idea or a suggestion. Everyone understands that he or she brings value to the team, and that their opinions matter.”
Collaborate with other 340B covered entities.
“I liken the 340B program to a giant puzzle, and every covered entity is its own puzzle,” says Chance. “Once our team was large enough, we started assigning members to their own health systems. That’s when our collective learning curve really took-off, because while every hospital’s 340B program is unique, there’s just so much we can learn, and share with each other, from our own experiences. We now support every major category of covered entity in the private sector (DSH, RRC, PED, CAH, RHC, FQHC), and that’s had an equally-significant impact on our 340B program knowledge-base.
“Honestly, I don’t see how any single health system can possibly know, and apply, everything we’ve learned from serving so many different 340B hospitals every day. Which is why I can’t recommend this strongly enough: If your health system is committed to managing its own 340B program, you should build a network of covered entities that you can regularly share ideas with. Otherwise, you’re missing countless opportunities to optimize your 340B revenue and, more importantly, improve the overall quality of healthcare you’re giving your patients.”
Another one of our 340B Account Specialists, Angela, will tell you she learns something new every day — even after nearly a year with our team. With 17 years of pharmacy experience, including more than seven with a 340B contract pharmacy serving Birmingham’s largest hospital, she brings a unique insider’s perspective to the team.
“A lot of what I did involved placing prescription orders, so I already understood accumulations — and how things had to be billed, to be eligible for 340B. My pharmacy experience and drug knowledge has been so helpful for me doing my job here. Now that I’m on the covered entity side of 340B, surrounded by people experienced with so many different aspects of the program, I see how it all fits together.”
Understand, and master, your 340B specialty pharmacy opportunities.
The 340B revenue potential of specialty pharmacy is staggering. Some covered entities generate as much as 600% in revenue from 340B specialty drugs as they do in traditional retail / outpatient pharmacy 340B prescriptions. By the same token, mastering 340B specialty pharmacy opportunities enables your health system to provide the best possible care to your sickest patients.
The best possible strategy for optimizing 340B specialty-prescription revenue and patient outcomes is to build your own in-house specialty pharmacy. To learn how you can do just that, please refer to the articles below — or feel free to reach-out to us anytime.
Common qualities successful 340B health systems share
A 340B program “benefits-oriented” mindset
Launching and maintaining a successful 340B program starts with your health system truly understanding 340B’s savings and revenue potential — and, in turn, the potential of your 340B income to positively impact patient outcomes, not to mention your system’s overall mission in the community you serve.
Far too many hospitals don’t understand that. Even worse, too many eligible covered entities still believe the 340B program is somehow not legitimate. We can’t state this too strongly: If your hospital is 340B-eligible, you may be missing-out on millions of dollars in retail and specialty prescription reimbursements. Savings and revenue which, for some health systems we serve, literally make the difference between solvency and closure.
Other hospitals have used the 340B revenue we generate to dramatically expand and improve their services. Conway Medical Center DOP Andrew Wright says, “We’ve added a cancer center, a pain clinic as part of our orthopedic practice, a dermatology clinic, and a women’s center. We’re expanding our footprint, and we’re treating so many more patients than we used-to. Without ProxsysRx and 340B, that wouldn’t have been possible.”
A 340B program culture
“The hospitals who benefit the most from working with us,” says Heather, “are the ones who’ve adapted that 340B mindset, and are willing to collaborate with us. Just as importantly, they’ve come to understand that they can trust us. Every 340B program we manage is a partnership. We do the vast majority of the work, but we need their support — primarily in responding to data requests. The 340B program is just so data driven, and when a covered entity isn’t responsive to those requests, we’re not as effective as we can, and want, to be. That’s another place where our analytics have been so impactful. When they can see, let’s call it, their ‘340B story,’ it really opens their eyes to just how much we can do for them.”
A willingness to expand 340B clinical opportunities
“Anyone who’s studied the 340B program knows there are hospitals with more existing 340B opportunities than others have,” Heather continues, “for the simple reason that they already have more 340B-compatible clinical programs. We’ve worked with a number of hospitals to help them expand their clinical programs into areas that can benefit from 340B participation.” And at the risk of being redundant, the more 340B-eligible clinical programs a health system offers, the greater its 340B revenue potential and the greater its potential for improving patient outcomes and serving the community.
“What gives me the greatest job satisfaction from serving health systems’ 340B program,” Chance concludes, “is my ability to positively impact their missions. I see myself as not just a partner, but a virtual employee of those hospitals. And in that sense, we become a very real extension of their mission.”
ProxsysRx is here to help, if you have questions.
For more information on any of the topics discussed in this article, contact Howard Hall. C: 214.808.2700 | firstname.lastname@example.org