What Are The Requirements For 340B Programs?
Covered entities must meet the following ongoing requirements:
- Keep 340B OPAIS information accurate and up to date.
- Register new outpatient facilities and contract pharmacies as they are added.
- Prevent diversion to ineligible patients.
- Maintain auditable records documenting compliance with 340B Program requirements.
As a covered entity, it’s also your responsibility to notify drug manufacturers and wholesalers that you plan to purchase drugs at 340B prices. The wholesalers and manufacturers verify your enrollment on the 340B database and must sell their drugs to you — at or below the maximum price determined under the 340B statute.
How do I enroll in the 340B program?
To register, you need a 340B Office of Pharmacy Affairs (340B OPAIS) user account. To get started, visit the 340B OPAIS Registration page, and select the appropriate link toward the bottom of the page — either Grantee Registration or Hospital Registration.
The system should run you through the process from there. It’s important to know, in advance, that you must complete your registration in a single session. Which is why you’ll need to have your latest filed Medicare cost report on-hand while you’re completing the process.
You’ll also you’ll need to enroll your main location first, then add any Child Sites.
What is a 340B Child Site?
HRSA defines a 340B Child Site as an off-site outpatient clinic or location that uses, or purchases, 340B drugs for its patients. In general, “off-site” means a location has a separate physical address than the hospital parent site, and is not located within the main hospital.
Chapter 2: What entities, patients and drugs are 340B-eligible?
The following hospital categories are eligible for 340B participation
- Disproportionate Share Hospitals (DSH)
- Sole Community Hospitals (SCH)
- Rural Referral Centers (RRC)
- Critical Access Hospitals (CAH)
- Children’s Hospitals (PED)
- Free-Standing Cancer Hospitals (CAN)
340B eligibility requirements: An overview
In order for hospitals to qualify for the 340B program, they must meet the three requirements below — unless they are Rural Hospitals; in which case, they must meet only the first two requirements.
- Government owned or government-controlled.
In other words, hospitals must be either A) Owned or operated by a state or local government, B) Public or private non-profit corporations which have been formally granted governmental powers by their state or local government, OR C) Private non-profit hospitals under contract with their state or local governments to provide health care services to low-income patients who are not entitled to Medicare or Medicaid benefits. - Disproportionate Share Hospitals.
Disproportionate Share Hospitals must have an adjustment percentage (or the percentage by which the hospital’s allowable operating costs of inpatient hospital services exceeds the hospital’s target amount) higher than 11.75% for the most recent cost reporting period ending before the calendar quarter involved. Sole Community Hospitals and Rural Referral Centers must have an adjustment percentage of greater than 8 percent.Free-standing children’s hospitals and free-standing cancer hospitals must have a payer mix that gives them a DSH percentage of greater than 11.75 percent. Critical Access Hospitals do not have a DSH adjustment percentage requirement.NOTE: A hospital’s DSH adjustment depends on the number of inpatient days of its Medicaid and Supplemental Security Income (SSI) patients. - DSH hospitals, children’s hospitals and free-standing cancer hospitals meeting the first two criteria.
These hospitals are eligible to participate in the 340B program if they do not obtain covered outpatient drugs through Group Purchasing Organizations (GPOs), or through other group purchasing arrangements. At the same time, hospitals participating in 340B as CAHs, RRCs and SCHs are not subject to the GPO prohibition.
Which patients are covered under 340B programs?
Covered entities can dispense 340B-eligible prescriptions to patients who (1) Have established relationships with the covered entity, such that the entity maintains records of the patient's care; (2) Receive care from a professional employed by the covered entity, or under contract or other arrangements (e.g., referral for consultation) with the covered entity, such that responsibility for the care remains with the covered entity; and (3) Receive health services from the covered entity that are consistent with the services for which grant funding has been provided to the entity.
Under these guidelines, an individual is not considered a covered entity’s patient if the only health care service received by the patient from the entity is the dispensing of a drug for subsequent self-administration — or administration in the home setting.
Are 340B prices available for inpatient prescriptions?
No. 340B pricing applies to covered outpatient prescriptions only. Covered entities must therefore maintain appropriate tracking systems to ensure that covered outpatient drugs purchased through the 340B Program are not used for hospital inpatients — and it is the responsibility of health systems in the program to ensure that appropriate safeguards are in place to prevent these diversions.
What prescription drugs are eligible for 340B Savings?
In general, 340B eligibility involves both prescription medications and the covered entity writing the prescriptions. Here’s a simple checklist for determining whether drugs are eligible.
- As a covered entity, you have a relationship with the patient and maintains records of care.
- The services are provided by a healthcare professional who is either employed by, or contracted with, you.
- The responsibility for care rests with you, the covered entity.
- The services are within the scope of project for grantees and designees.
- The service provided must be more than just dispensing medication.
- The drug is administered in an eligible outpatient location or dispensed by one of your 340B contract pharmacies.
General drug exceptions to 340B eligibility
There are a few 340B-eligibility exceptions. These include vaccines and Orphan Drugs (which are, by definition, medications specifically developed to treat rare diseases or conditions — and drugs that have only recently been granted New Drug Status by the FDA).
Eligible drugs frequently NOT submitted for 340B savings
While narcotic medications are included among 340B eligible drugs, covered entities often choose to exclude them from their programs — due, primarily, to the complexity of procuring these medications for replenishment. That procurement complexity adds-up to significant time-and-effort costs. And as we’ve noted in a previous post, there’s no point in utilizing 340B discounts for medications when the time-and-effort costs exceed the savings generated.
About 340B Orphan Drugs
For the following covered entities, 340B-covered drugs do not include any drugs designated by the Secretary under Section 526 of the Federal Food, Drug, and Cosmetic Act for rare diseases and conditions:
- Free-standing cancer hospitals
- Rural referral centers
- Sole community hospitals
- Critical access hospitals
Take full advantage of specialty drug discounts
Specialty drugs, which Medicare defined (in 2019) as any drug costing more than $670 monthly, constituted about 50% of the overall prescription drug market’s expenditures (some $161 billion) in 2020. That’s a 29% increase of total expenditures over 2015. What’s more, according to Acentrus Specialty, 8 out of every 10 new drugs approved by the FDA in 2020 were specialty drugs. All of which makes specialty drugs the fastest-growing, and largest part, of the prescription-drug market.
Specialty pharmacies generate fewer 340B-eligible claims, and higher net savings
According to the estimates of several online sources, the average retail pharmacy prescription in 2020 cost $566 per month — while the average specialty drug prescription cost $6,565. AARP estimated, in a September 2021 article, that —in 2020 — the average annual cost for a single specialty medication used on a chronic basis was $84,442.
340B exposure risk is decreased.
Fewer claims means less exposure to potential audits and compliance claims. What’s more, most specialty pharmacies have dozens, even hundreds, of 340B contract pharmacy relationships; which means that they’re highly experienced, and educated, in maintaining 340B compliance for the covered entities they serve.
Take full advantage of specialty drug discounts
Specialty drugs, which Medicare defined (in 2019) as any drug costing more than $670 monthly, constituted about 50% of the overall prescription drug market’s expenditures (some $161 billion) in 2020. That’s a 29% increase of total expenditures over 2015. What’s more, according to Acentrus Specialty, 8 out of every 10 new drugs approved by the FDA in 2020 were specialty drugs. All of which makes specialty drugs the fastest-growing, and largest part, of the prescription-drug market.
Specialty pharmacies generate fewer 340B-eligible claims, and higher net savings
According to the estimates of several online sources, the average retail pharmacy prescription in 2020 cost $566 per month — while the average specialty drug prescription cost $6,565. AARP estimated, in a September 2021 article, that —in 2020 — the average annual cost for a single specialty medication used on a chronic basis was $84,442.
340B exposure risk is decreased.
Fewer claims means less exposure to potential audits and compliance claims. What’s more, most specialty pharmacies have dozens, even hundreds, of 340B contract pharmacy relationships; which means that they’re highly experienced, and educated, in maintaining 340B compliance for the covered entities they serve.
Implement a robust Meds To Beds program
Benefits of a Meds To Beds Program: Overview
On a purely practical level, a well-managed bedside prescription delivery program can improve your health system’s pharmacy revenue.
On the human level, Meds To Beds is more than a tangible sign of your system’s care of, and for, the individuals & families you treat. It’s your first line of offense in ensuring that your patients follow the prescription protocols you’ve given them — significantly decreasing the likelihood of their readmission while, in the process, improving your patient’s satisfaction ratings.
In general, health systems fail to implement Bedside Prescription Delivery programs because of the costs of staffing and administrations. In our experience, managing dozens of Meds to Beds programs, those costs are more than offset by the revenues generated. In one Mississippi health system alone, ProxsysRx filled over 18,000 outpatient prescriptions in just 12 months. During that time, the health system’s pharmacy revenues increased 125%, while its readmissions decreased 79%.
How a good Meds To Beds Program works
First, your health system’s retail pharmacy staff must commit to partner with your case management teams, nurses and physicians to implement a cohesive medication treatment plan for your patients who are transitioning back to their lives at home. That commitment means your pharmacy staff must be willing to perform the work necessary to enhance your health system’s current efforts, ensuring that there is never any additional burden placed on your hospital’s providers, nurses and staff.
Next, when prescriptions are delivered bedside to discharging patients, you should be sure to have a pharmacist available to help patients —reviewing both prescription protocols and any issues that could compromise your patients’ willingness (or ability) to maintain compliance with their prescriptions after they leave the hospital.
Once a patients accepts his or her prescriptions, and understands how to maintain compliance, your meds to beds program should pass-off the job of continued patient contact to a readmission risk reduction program.
How Meds To Beds benefit 340B drug programs
Bedside prescription delivery is arguably the most effective method for ensuring that your patients’ prescriptions are captured before they leave your care.
Put another way, your Meds To Beds program should not only support health systems' mission of maximizing patient care, compliance and satisfaction while minimizing readmissions, it should serve as a funnel for directing patients into 340B programs. This role is particularly significant, when you consider the aggressive efforts manufacturers have undertaken to minimize the number of pharmacies that 340B-eligible hospitals can utilize in their 340B programs.
Many manufacturers have launched initiatives to limit their support of eligible entities’ contract pharmacies to one per hospital. They’ve also fought HRSA’s efforts to overturn those limits, through protracted legal battles. It goes without saying, those manufacturers have determined that legal battles are less costly to them than upholding their legal obligation to support 340B drug discounting.
How Meds To Beds benefits your 340B patients
Patients entered into your 340B program “funnel” generally receive superior ongoing professional care and support, after they are discharges. And as we’ve mentioned elsewhere, hospitals with multiple contract pharmacies in their networks offer patients more choices, and convenience, in filling their prescriptions.
Statistical research conclusively demonstrates that two primary factors driving patient non-compliance are lack of education and understanding, and lack of access (both in terms of financial means and proximity) to pharmacies. Which is why many hospitals with 340B programs supplement their Meds To Beds programs by offering home delivery and prescription discounts to financially-challenged patients. Those health systems generally agree that the costs of additional patient support are more than offset by the benefits of superior post-discharge care — not to mention the savings that come with reducing readmissions.
According to a 2020 study published by Frontiers In Public Health, Meds To Beds programs have been shown to significantly reduce 30-day hospital readmissions — particularly among older adult patients.
Understand, and overcome, your TPAs’ limitations
TPAs play a critical role in 340B programs. It’s their job to “match” prescription claims from your contract pharmacies with patient data hospitals provide, and then to determine the eligibility of those claims. Without a match, a prescription cannot be qualified for 340B eligibility and savings.
Your TPAs’ ability to accurately qualify your 340B claims is only as reliable as the information you provide. Their systems simply aren’t configured to monitor and spot mismatches in that data.
340B data mismatches can be extremely trivial.
One of the most common reasons 340B claims are misqualified — particularly with Medicare patients — is inconsistency in Date Of Birth entries. Patient Name mismatches is another common cause of misqualifications. For instance, you may have a patient registered as Bob in your pharmacy system and Robert on your hospital’s system.
That said, the more complex 340B programs are, the higher the likelihood that their automated data submission process will be flawed. Which will naturally lead to missing EHR encounters and missed 340B savings opportunities — quite possibly substantial savings opportunities.
Technology often causes 340B data mismatches
The process of monitoring 340B programs is especially difficult when multiple TPAs are involved. Every TPA’s proprietary software system’s interface is unique. Making matters even more complicated, the reporting structure within TPA portals vary significantly from one to another. We’ve found that health system 340B personnel often spend an inordinate amount of time simply trying to access the information that they need — which leaves them far too little time to proactively take advantage of that information.
How common are TPA 340B misqualifications?
Mismatch rates vary from health system to health system, but we can say this with confidence: If you have a 340B program already in place, it’s probably a lot higher than you think.
One of the health systems ProxsysRx serves employs three experienced and well-trained full-time professionals — who monitor their system’s 340B claims on a full-time basis. And yet, during the first six weeks ProxsysRx supported their efforts, we provided matching justification for, and generated $187,000 worth of, 340B savings that they’d overlooked.
Avoid 340B Double-Dipping
The 340B program does not allow you to take advantage of 340B discounts and Medicaid drug rebates for the same drugs. That’s the practice known as Double Dipping, and as a covered entity, you need to maintain compliance mechanisms that prevent duplicate discounts.
Preventing 340B double-dipping begins at enrollment
If you decide to Carve-In Medicaid fee-for-service, you’ll be required to list each Medicaid state where plan to bill, as well as the corresponding billing number(s) you’ll list on your bills to those states. It follows, then, that you shouldn’t list any Medicaid states where you plan to carve-out.
Common 340B Errors to avoid in your program
Poor tracking. You must be able to prove that every drug purchased on your 340B account is administered to an eligible patient from an eligible point of service.
Lack of contract pharmacy oversight. As a covered entity, you’re ultimately responsible for monitoring your contract pharmacies and ensuring that they maintain compliance with all 340B program requirements. If you identify any diversions or duplicate discounts, it’s your responsibility to notify the Office of Population Affairs (OPA) of the violation — and offer a remedy.
Having too many contract pharmacies. The general rule of thumb in establishing your contract pharmacy network, is to limit your pharmacy contracts to five. Having more than five can raise red flags with regulators. OIG has generally found that health systems simply aren’t successful in effectively overseeing more than that number of contract relationships.
Failing to register all of your Child sites. Even if you have child site inside your hospital, or another registered primary facility, you should register it. That way, if you ever need to move that child site, you won't have to go through the registration process — and that typically takes six to nine months, sometimes an entire year. And during that time, you will not be legally entitled to 340B savings .
Manufacturers Accelerate 340B Drug Pricing Restrictions
There’s an old saying that it’s better to be rich and guilty than poor and innocent. It’s a sad truth that accurately reflects the current state of 340B manufacturer restrictions, particularly in the wake of the January 30, 2023 decision by the U.S. Court of Appeals for the Third Circuit — which was largely in favor of three drug companies that have imposed harmful limits on safety-net hospitals’ access to 340B drug pricing program discounts.
Novartis introduced a new tactic to evade its 340B obligations.
Novartis was the first drug manufacturer to limit 340B-eligible contract pharmacies to those located within 40 miles of the covered entity will have pricing added. On the surface, this doesn't seem particularly problematic. After all, most, if not all, of a typical 340B-eligible health system’s retail contract pharmacies — from chains to local independents — will still get 340B pricing. The problem with the 40-mile radius, and Novartis knows this, has to do with covered entities’ specialty pharmacy networks.
The number of specialty pharmacies across the country is significantly lower than the number of retail pharmacies — and a significant percentage of those pharmacies serving 340B-eligible entities are located outside that 40-mile radius.
On top of that, there’s the difficulty of 1) getting PBMs to allow pharmacies to dispense for their patients — other than the pharmacies health systems own — and 2) getting manufacturers to allow purchase of their specialty meds.
Johnson & Johnson’s 340B restrictions are even worse.
On February 15, 2023, one of the clients we serve forwarded us a 10-page, 3914-word letter they’d received from Johnson & Johnson. After they’d spent who-knows-how-many-hours poring over the contents, their email included one genuinely troubled question: “Does this mean what we think it means?”
The key restriction to which they were referring (which Johnson & Johnson announced would go into effect starting March 7, 2023) was as follows:
If a non-grantee Covered Entity does not have an in-house pharmacy, such Covered Entity may designate a single contract pharmacy location registered on the HRSA OPAIS database for delivery of 340B-priced covered outpatient drugs listed on Attachment A if (I) the Covered Entity provides limited claims data with respect to that contract pharmacy location and (ii) that single contract pharmacy location is within 40 miles of the Covered Entity parent site.
In plain English, Johnson & Johnson is telling 340B covered entities, that — starting March 7 — they can designate only one pharmacy as a contract pharmacy in their networks, AND that the pharmacy has to be located within 40 miles of the health systems’ campuses.
Consider the implications for 340B-eligible patients who lack easy access to transportation: For all practical purposes it means that, unless that single contract pharmacy offers prescription-shipping services, they’re either NOT getting their medication — or they’ll be incurring significant personal costs to fill their prescriptions.
Novartis and J&J’s 340B restrictions violate a core patient right: Choice.
One of the most critical benefits our vast pharmacy industry offers is patient choice. By law, patients have the right to choose where they get their medications. Covered entities don’t dictate which pharmacies their patients use. But when restrictions limit 340B pricing to one contract pharmacy (much less zero pharmacies), they’re robbing patients of their legal right to choose.
Taking their cue from J&J, three more manufacturers — AbbVie, Amgen and GSK — promptly imposed 40-mile restrictions on 340B-eligible claims for their drugs. Then, on April 3rd, Novartis implemented its own “single pharmacy within 40 miles” policy.
The impact of 340B ESP and other manufacturer restrictions
Making the rich richer at the expense of the poorest and most vulnerable.
For 340B covered entities operating without the sophisticated processes and advanced analytical software developed by ProxsysRx, the impact of manufacturer restrictions has been devastating. 340B revenues for numerous covered entities has plummeted. Many of those Disproportionate Share Hospitals rely on 340B revenue to help fund their Uncompensated Care and Community Outreach efforts. And when it comes to uncompensated care, the term Disproportionate Share couldn’t be more accurate. In 2020, the average 340B DSH hospital provided $38 million in uncompensated care — while the average non-340B hospital provided just over $14 million (Source: 340B Health).
Dealing daily with 340B ESP and other manufacturer restrictions
For ProxsysRx’s 340B team, those restrictions have meant an exponential increase in the time involved to ensure that the health systems we serve get the 340B savings to which they’re legally entitled. One ProxsysRx 340B Program Specialist estimates that he spends the first two to three hours of every day on the job dealing with manufacturer restrictions — and that’s before he’s submitted the first 340B claim for one of the three covered entity accounts he manages.
Manufacturers currently imposing unlawful 340B program price restrictions
As of April 10, 2023, there were 21 manufacturers imposing restrictions — either through 340B ESP, or independent of the website:
- AbbVie
- Amgen
- AstraZeneca
- Bausch
- Bayer
- Biogen
- Boehringer Ingelheim
- Bristol Myers Squibb*
- Eli Lilly
- EMD Serono
- Exelixis
- Gilead
- GSK
- Johnson & Johnson
- Merck
- Novartis
- Novo Nordisk
- Pfizer
- Sanofi
- UCB
- United
Of the 21, nine currently promise to uphold one of the standards established by the 340B program requirements — enabling covered entities to designate and supply claims for an unlimited number of contract pharmacies. That means 12 (or 57%) of those manufacturers are in open violation of the intent of the 340B program — which was created to enable covered entities to use multiple contract pharmacies.
How ProxsysRx Maintains A Constantly Updated List Of 340B Covered Drugs
Describing just one aspect of his own experience with manufacturer restrictions, one ProxsysRx 340B Program Specialist notes, “Because they're so ambiguous, and changing so quickly, the restrictions force our team to review all of the restricted NDCs on a daily basis. Every pharmacy we serve has to be cognizant of all 1628 restricted NDCs when submitting prescriptions for 340B savings. And when a covered entity has multiple contract pharmacies, there's a multiplier in tracking NDC's and prescriptions.
“Each one of our team members is literally monitoring thousands of prescriptions on a daily basis. Which is one reason our team continues to grow. And why our clients have benefited so greatly from the 340B PRO software we developed, which has enabled us to grow and scale. Because you don't just have a single question needing answers on every prescription. It's not just about the NDC's. There are layers and layers of problem-solving involved.”
Why specialized software is essential for successful 340B programs
Without specialized software solutions, the average 340B-eligible health system would likely need a dozen (or more) full-time employees, just to monitor their prescriptions to maximize savings and revenue. ProxsysRx rolled-out the first version of 340B Pro in 2021, and we are constantly updating and adjusting it to deal with the ever-evolving challenges manufacturers introduce in their 340B pricing restrictions.
340B programs need TPA support, but TPAs are far from perfect
TPAs’ systems are not especially adept at monitoring and spotting provider / entity data mismatches — which are common occurrences in 340B programs. Nor do their fees generally incentivize them to improve their performance. That’s why helping health systems minimize data mismatches at the source is so critical to maximizing 340B drug pricing program savings for a covered entity — and why meeting that challenge is a core component of our 340B software and service package.
The critical role humans play in the 340B software equation
Over the years, ProxsysRx’s software has identified untold millions of dollars’ worth of 340B-eligible prescriptions missed by the TPAs working with hospitals we serve — as well as with their contract pharmacy networks. However, software solutions alone can’t reliably requalify prescriptions for 340B drug pricing program savings — for the simple reason that there has to be a reason each prescription is requalified. And that reason has to be defensible, if it’s challenged in audit.
All of that requires 340B program management experience and judgment on a prescription-by-prescription basis, and as anyone familiar with technology can tell you, Artificial Intelligence still has a long way to go in solving problems that require nuance and insight.
What’s more, when a prescription is coded incorrectly by a provider — which happens regularly in even the best-managed 340B programs — it creates what amounts to a Domino Effect of incorrect coding throughout the step-by-step process of submitting that prescription for reimbursement. Without the intervention of an experienced 340B manager, TPA software can actually make the situation even worse.
How ProxsysRx overcomes manufacturer restrictions on 340B pricing.
As much as we’d love to report that we’ve discovered the proverbial magic bullet for piercing manufacturer barriers to optimizing 340B cost savings and revenue, we can’t. Our process starts with an in-depth assessment of a health system’s current 340B-program status (assuming the health system has an active 340B program). Once we’ve conducted that analysis, we work with the health system’s 340B professionals to develop strategies for improvement in every area of its program. ProxsysRx’s 340B support team then implements software-supported processes for auditing missed opportunities.
For most of the hospitals we serve, ProxsysRx’s team also provides hands-on support in managing their 340B programs.
The good news is, our process is producing results. And while those results vary from system to system, one of the small rural hospitals we serve has seen a monthly net savings increase of more than 900% over their historical averages since manufacturer restrictions were implemented.
Below are the seven key elements of our process.
1. Establish communications between health system providers and their outpatient pharmacies.
With manufacturer restrictions, it’s more important than ever that health systems have onsite pharmacies partnering with them to capture as many 340B-eligible prescriptions as possible — in part, to ensure that savings stay within the system, thereby enabling them to pass-along those savings to patients.
2. Upload only the 340B Data required, and NO MORE.
As with every aspect of our program, we learned this lesson through experience: When working in the 340B ESP platform, you should never upload any data that isn’t absolutely required by the platform. We submit the NDCs only from manufacturers that impose 340B pricing restrictions that are contingent on data reporting.
3. Do NOT trust 340B ESP to restore prices on its promised scheduling.
340B ESP says health systems should expect a period of 10 days, post-submission, for 340B prices to be restored in their contract pharmacies’ 340B wholesaler accounts. In reality, that rarely ever happens within 10 days — if at all. Which is why ProxsysRx has implemented a system for checking all NDCs, in all of our health systems contract pharmacies’ 340B accounts, before instructing their TPAs to restart processing on any restricted NDCs.
4. Do NOT trust 340B ESP price restoration, period.
Health systems cannot assume that any 340B price restorations they have will actually be honored. Manufacturers working with 340B ESP routinely, and unilaterally, decide that the purchases made for arbitrarily-selected contract pharmacies are more than the dispenses.
5. Don’t assume that submitted eligible dispenses result in 340B price access.
Some manufacturers now require you to submit 340B purchase data reports within 45 or 60 days from dispense — or they disallow those submissions. Although ProxsysRx mines clients’ 340B-submission records for eligible prescriptions missed by their TPAs, the time frame is tight with these arbitrary, fraudulent manufacturer requirements — and thus far, we’ve yet to develop a workaround for dealing with them.
6. Don’t assume that 340B ESP will be compatible with your TPAs’ reports.
If you’re thinking you can simply pull reports from your TPAs and upload them, when submitting your own reporting to 340B ESP, think again. Most TPAs’ reports require significant modifications first. Your own uploads have to be submitted in 340B ESP’s exactingly-specified format, and every upload has the potential for reporting errors that can cause failures.
7. Don’t bother asking 340B ESP for help.
Nobody working with 340B ESP — or the manufacturers — has ever helped our team when our clients didn’t receive the 340B prices to which they’re entitled, even when months have passed since we made data submission.
ProxsysRx is here to help, if you have questions.
There are so many ways to optimize your 340B savings and revenue, while overcoming 340B ESP and manufacturer restrictions. For more information, contact Howard Hall. C: 214.808.2700 | howard.hall@proxsysrx.com
Starting A 340B Specialty Pharmacy: What Does The Process Look Like?
Specialty pharmacies require costly accreditation, both financially and in terms of the time investment. You must contract with payers. Securing each contract takes considerable time and effort. You must provide a tremendous amount of data and analytics to PBMs and manufacturers, to prove that you can provide the level of quality patient care expected of Specialty Pharmacies.
Use your hospital’s retail pharmacy to build a specialty pharmacy
A well-run retail pharmacy can generate significant revenue and profits for your health system. Consider setting-aside a percentage of your 340B retail-prescription savings. By earmarking them for funding the project, you can gradually build-out your onsite specialty pharmacy capabilities — while analyzing your clinics and workflows — without drawing large capital expenditures from your budget.
ProxsysRx serves 340B hospitals as a retail pharmacy partner
When ProxsysRx builds-and-owns or manages retail pharmacies for health systems, we only pay ourselves from the revenue and savings we generate on their behalf. We take-on all the risk, so they are never exposed to the potential for loss.
Specialty Pharmacy Best Practices For 340B Hospitals
Meeting specialty pharmacy accreditation standards & policies
As you start building a specialty pharmacy, you can take steps towards accreditation — but you have to make sure that you have the policies, standards and protocols in place to ensure that your specialty pharmacy meets those accreditation standards.
You can actually start filling prescriptions on Day One, but it takes work to find the prescriptions you can fill immediately. Accreditation can take 6 months to a year, depending on the health system and the process of integrating a specialty pharmacy into its resources.
You have to have reporting in place when you begin filling prescriptions. And while you’re filling those prescriptions without accreditation, you're getting in the networks with your PBMs. And then, as you get your pharmacy and process stood up — and its procedures and policies in place — you're able to become accredited.
Specialty pharmacy accreditation metrics
When you become accredited, you have to keep certain metrics for patient phone calls. That means there must be someone in the pharmacy every hour it’s open. Someone who can answer phone calls promptly, so your patients have easy access to a pharmacy professional, who can answer their questions — and make sure they're getting the appropriate care. For accreditation, this confirms that you're a qualified specialty pharmacy, and that you're taking care of your patients in the possible best way.
Specialty pharmacy service-data reporting
There are patient monitoring and clinical assessments that have to be tracked and measured. Every specialty pharmacy patient should be monitored by a clinic pharmacist.
Clinical assessment for specialty pharmacy patients
In initial assessments, specialty pharmacists should ask patients what other medications they’re on, and what side effects they’ve experienced. Specialty pharmacy pharmacists should also work hand-in-hand with patients’ providers, to make sure that medication regimens are appropriate, up to date, and the most accurate regimens for patients and their disease states.
Continuous monitoring & reporting
In addition to ongoing monitoring, most patients should be monitored yearly by pharmacists — to review any side effects they may be having, or any other issues they have taking their medication.
Pharmacists should ask patients if they’ve skipped any medications, and if it’s affected their disease state. Moreover, all of that data should be reported back to the accrediting bodies.
Ensuring patient satisfaction with their specialty pharmacy’s support
Patient satisfaction surveys, conducted by independent third parties, are required — to ensure that you're upholding high standards.
To ensure that you're meeting or exceeding those standards, you should carefully review your specialty pharmacy’s processes. You should also make sure your providers know what it takes to ensure that patients know you care about their outcomes, and that they have the access to the appropriate medication.
Specialty pharmacy shipping & packaging protocols
Most specialty medications are delivered to patients at home. A lot of them require refrigeration, and some have to be frozen. Some need to stay at room temperature, and can't get too hot or too cold.
All of which is why it’s so important that your specialty pharmacy follows shipping and packaging protocols required by the accrediting bodies. You need a Cold Chain Vendor for shipping and packaging medications at appropriate temperatures. You also need processes and policies in to test vendors’ capabilities.
Integrating your specialty pharmacy’s technology with your health system’s technology
ProxsysRx has its own technology platform in place that pulls all the data, so we can create the necessary outlooks and outputs from our analytical tools. Data we then report back, not only to the accrediting bodies, but also to the payers — the PBMs. That way, when we're getting a specialty pharmacy in-network for a patient’s PBM, we can bill for the patient’s care.
That said, your health system should invest in similar software capabilities for your specialty pharmacy.
Integrating Specialty Pharmacy With 340B
ProxsysRx’s unique approach to specialty pharmacy provides health systems with a financial “glide path” to help fund their specialty pharmacies. One that starts with optimizing their 340B network. We’ve proven that ProxsysRx can help health systems improve revenues — often by millions of dollars annually — while their specialty pharmacies are being built. More importantly, we do it while helping hospitals improve the quality of patient care.
There are so many ways to optimize a 340B program, while making it more compliant. And it’s changing all the time, so we’re always looking for new ways to ensure that we’re capturing everything coming out a health system.
Avoiding negative specialty pharmacy 340B reimbursements
What causes negative reimbursement? Several factors, including:
- #1 Overlooking 340B dispense status
- Purchasing drugs at WAC instead of on a 340B account
- Receiving 340B specialty pharmacy drugs without PBM access
Overcoming 340B PBM / payor hurdles
Many PBMs will not pay for prescriptions right out of the gate, so there are a lot of hurdles you have to jump with payors to get drugs covered. Even after 340B specialty drugs are covered, copays can be very high — sometimes thousands of dollars. Most patients can't afford copays that high, so you need to know how to get copay assistance. There are a number manufacturer programs, and other assistance programs — including charity care. Learn to use all those options, to make sure your patients can get their prescriptions promptly.
Performing prior authorizations for specialty drugs
Another benefit of having a pharmacist embedded in the clinic where your patients are is: They’re able to look for financial assistance, and perform those prior authorizations — making sure that prescriptions are going to be paid for, and that patients can afford them.
The 340B Retail / Specialty Pharmacy Relationship
Meeting all of a patient’s medication needs
Very often, patients have prescriptions from both a hospital’s retail pharmacy and its specialty pharmacy. Make sure each pharmacy team always knows what the other is doing, as far as providing for those patients — even to the point where patients can routinely call your retail pharmacy with questions, and get answers about their specialty drugs.
Of course, when it comes to anything clinical about patient monitoring, or anything that has to do with high-complexity meds, patients should be connected with clinical pharmacists familiar with their disease states.
You should also ensure that specialty-medication patients speak to your clinical pharmacists before each refill, to answer questions or concerns — and check for medication effectiveness and side effects.
Why ProxsysRx For Your 340B Hospital’s Specialty Pharmacy?
Helping fund your 340B specialty pharmacy
ProxsysRx helps health systems create a financial glide path to build their specialty pharmacies. A path that ensures the burden of financing their specialty pharmacy is of little to no risk to the health system.
Minimizing the burden of opening a 340B specialty pharmacy
We take the burden of opening a specialty pharmacy off your health system. We navigate you through the process of getting your specialty pharmacy running and successful. We handle the accreditation requirements. We get you access to the medications you need. We get you access to the payors.
Clinically integrating your 340B specialty pharmacy
We also take responsibility for integrating your specialty pharmacy with your clinic teams. Then we take-on everything that's required to grow your specialty pharmacy. We get to know your doctors, your clinicians, and your patients — so that we can tailor your specialty pharmacy’s services and medications to the needs of your patients, and the difficult disease states that your health system needs to manage.
How Covered Entities Should Prepare for 340B Changes In 2024
Build a team fully capable of managing your 340B program
In our experience, most hospitals’ 340B teams are comprised only of the Director of Pharmacy and a Pharmacy Tech. That doesn't work, and it never will.
Invest in specialized 340B program software.
Whatever software platform you use to manage your 340B program should minimize the unnecessary legwork your team-members undertake to submit prescriptions. “The 340B program’s ultimate challenge,” Brooks continues, “is to pull-together all the moving parts. In our experience, every covered entity managing its own 340B program gets everything in pieces, but they don't have all the pieces in one place.”
Carefully evaluate your 340B contract pharmacy and TPA networks.
As we noted in an in-depth blog post, every health system ProxsysRx serves came to us with shortcomings in their contract pharmacy networks. The average number of quality 340B contract pharmacies we’ve added to their networks is five to ten.
You should also carefully evaluate your 340B program TPAs. “For instance,” she notes, “While we were onboarding one 340B hospital, we discovered a TPA that was charging them a percentage of every prescription matched. We renegotiated their service contract to a flat fee basis, which saved the hospital $400,000 in just one year.”
Review and update your 340B program’s Best Practices.
For an overview of tips to ensure that your 340B program is maintaining best practices, click here. To discuss best-practice updates we’ve implemented since publishing that blog post, contact us anytime.
Learn from, and share with, other 340B covered entities.
“Once our 340B program was large enough,” says Brooks, “we assigned team members to their own health systems. ProxsysRx now supports every major private-sector covered entity category (DSH, RRC, PED, CAH, RHC, FQHC). Needless to say, that has had a tremendous impact on our collective 340B program knowledge and experience.
If your health system is managing its own 340B program, it is critically-important that you build a network of covered entities for sharing knowledge and ideas.
Take full advantage of your 340B specialty pharmacy opportunities.
As we’ve discussed in this resource guide’s Chapter Six, the ideal option for optimizing your health system’s 340B specialty-prescription revenue (not to mention patient outcomes) is to have your own onsite specialty pharmacy.
Qualities Common To Successful 340B Programs
A solid understanding of 340B program benefits
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.
A system-wide culture of 340B program support
“The hospitals who benefit the most from working with us,” says Brooks, “are the ones who are willing to collaborate with us, and recognize that they can trust us. We do the vast majority of the work, but we still need their support — particularly in responding to our team’s data requests.”
A commitment to optimizing 340B clinical opportunities
“It’s no secret that some covered entities have more existing 340B opportunities than others,” she continues, “because they have more 340B-compatible clinical programs. We’ve helped number of health systems add clinical programs that can serve new 340B-eligible patients.”
“Ultimately,” Brooks concludes, “what gives me the greatest job satisfaction from serving health systems’ 340B programs is my ability to positively impact their missions. I consider myself to be more than just a partner of those hospitals. In a very real sense, I’m an extension of their missions.”
ProxsysRx is here to help, if you have questions.
There are so many ways to optimize your 340B drug program savings and benefits — overcoming manufacturer restrictions while maintaining compliance at all times. For more information on any aspect of developing and managing a successful 340B program, contact Howard Hall. C: 214.808.2700 | howard.hall@proxsysrx.com
