Introduction: What is 340B?

The 340B drug pricing program was created by Congress in 1992 to provide certain health care providers significant discounts on prescription drugs. 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 market rates. 

The purpose of 340B programs is to enable eligible providers to create higher margins on prescriptions as a means of filling revenue gaps that are inherent to their business models and patient populations.

The 340B program covers thousands of prescription medications. Many of the hospitals who take advantage of the program’s discounts save millions of dollars a year on their prescription costs. Savings and revenue which, for some of the hospitals ProxsysRx serves, literally make the difference between solvency and closure.

All of which begs the question: Why don’t all 340B-eligible hospitals and health systems take advantage of their legal rights to the program’s savings and discounts? In our experience, the primary reason (by far) is fear of the consequences of non-compliance — coupled with a lack of administrative bandwidth to effectively develop and administer 340B programs.

That’s why we’ve created this comprehensive guide: To give eligible entities all the information they need to understand the 340B program’s requirements — and how to 1) optimize their savings from 340B-elible medication replenishment and 2) improve patient care & satisfaction, while 3) still maintaining full compliance at all times.

Chapter 1: How do 340B programs work?

When a patient receives a 340B-eligible prescription from an eligible entity, the entity is reimbursed for the full market price of the drugs, but pays only a fraction of the drugs’ cost — by replenishing the medication from the 340B catalog.

Who pays the 340B costs?

Manufacturers bear the burden of the cost and reimburse wholesalers for 340B discounts on 340B-eligible medications.

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 TPA the prescription data. Your TPA creates a match when it determines that 340B qualification criteria has been met, and your pharmacy then orders from your 340B account to replenish the drugs.

Clients served by ProxsysRx use a proprietary software system, which monitors every prescription their organizations fill, and identifies every eligible prescription generating sufficient savings to justify the time and effort to claim 340B savings. This extra layer of monitoring improves compliance, while hunting-down hidden opportunities for more 340B savings.

ProxsysRx works with each client to determine how aggressively they want to pursue 340B savings. We then maintain comprehensive records on every prescription applied for — always assuring clients of complete compliance.

Which pharmacies can I use for 340B prescriptions?

340B-eligible hospitals can use the in-house (or on-campus) retail pharmacies they own and manage, as well as “contract pharmacies” — which can be both on-campus and off.

You can extend 340B eligibility to contract pharmacies (onsite or off) if they meet HRSA’s requirements — which include the following: Your contract pharmacies must 1) register for the 340B Program, 2) be listed on the 340B OPAIS prior to dispensing 340B drugs on your behalf, 3) not use 340B drugs for Medicaid patients unless you have an arrangement in place with the state.

Covered entities often choose contract pharmacies to dispense 340B drugs to patients for a number of reasons. Many hospitals, for instance, prefer their on-campus retail pharmacies to be operated independently. Some hospitals reach contract pharmacy agreements with multiple pharmacies in their communities, offering their patients more convenience, access and options when filling prescriptions written by their providers.


Understanding requirements for 340B programs


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.


Are you ready to enroll in the 340B drug program?


Can my TPA apply for 340B discounts on my behalf?

Yes. However, the work performed by TPAs has emerged as a distinct risk to Covered Entities — a topic we’ll cover, in-depth, in Chapter 3.

NOTE: ProxsysRx is not a TPA. However, we work closely with our clients’ TPAs, holding them accountable and ensuring that they maintain the same standards for 340B compliance that we do. To learn more about how ProxsysRx optimizes 340B savings and revenue, visit this page of our website.

How do 340B programs interact with the MDRP?

The Medicaid rebate program interacts with other programs receiving manufacturer discounts on drugs. As a condition of participation in the Medicaid Drug Rebate program, manufacturers must also participate in the 340B drug-discount program.

340B ceiling prices are calculated to match Medicaid prices, but manufacturers can (but rarely do) provide additional discounts to 340B providers that are not subject to the best price rule.

Safety net providers eligible for 340B discounts can choose whether or not they provide drugs purchased with the program discounts to Medicaid beneficiaries within state guidelines. This may not include drugs paid for by managed-care plans or those dispensed at contract pharmacies, but MCOs also are required to exclude 340B claims from reports they provide to states for rebate purposes.


Understanding requirements for 340B programs


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.

  1. 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.
  2. 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.

  3. 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.

The following types of facilities are included in the 340B program

  • Freestanding acute care general hospitals  
  • Psychiatric hospitals  
  • Long term/continuing care nursing homes  
  • Home infusion therapy centers  
  • Hospices  
  • Federally qualified health centers 
  • Rural health clinics 
  • State mental institutions 
  • Indian Health Service facilities 
  • Federally Qualified Health Centers
  • Community-based rehabilitation programs.


Understanding the six categories of 340B covered entities


Does HRSA Allow 340B Child Sites?

Yes. OPA requires that a covered entity register, as child sites, all offsite clinics, departments and services where 340B drugs are purchased or used, whether or not they are in the entity’s primary campus.

“Offsite” generally means a location has a separate physical address than the hospital parent site. A hospital does not need to register outpatient clinics, departments or services located within the entity's main hospital — but may do so if they appear on a reimbursable line of a hospital's most recently-filed cost report.

Applicable hospitals should ensure that their policies and procedures address qualification of 340B drugs dispensed at Child Sites for services not yet included in the most recently filed Medicare cost report, based on whether those locations meet Medicare provider-based requirements, whether the 340B covered entity maintains the responsibility and records of the patient's care, and whether the health care professionals prescribing 340B drugs have relationship with the 340B covered entity.

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


What drugs are not eligible for 340B savings?


Chapter 3: Optimizing savings and patient care through 340B

Why 340B programs should be optimized, and not maximized

For the health systems ProxsysRx serves, we pursue a policy of optimizing 340B savings that’s both aggressive and conservative. In other words, we believe you should aggressively pursue 340B savings for every prescription that’s worth pursuing. As we intimated earlier, some prescriptions are simply too low-cost, at market rates, to justify the effort needed to generate nominal savings.

Ideally optimized 340B programs generate a net savings on every eligible prescription claimed.

In our experience, 340B programs can’t be optimized without using proprietary software that keeps detailed electronic records on every prescription that hospitals' outpatient pharmacies (and contract pharmacies) fill, and enables them to easily and instantly produce all the evidence they would ever need to respond to audit requests. 

Two key elements of optimized 340B programs

An unblemished record of performance
Whether 340B programs are managed entirely in-house, or they use outsourced partners for support, they should be managed by people with the skillsets — and, ideally, the track records — to ensure that compliance at all times. It’s worth noting that, since 2013, ProxsysRx has optimized dozens of 340B programs, and not once has a hospital we serve ever been fined for a 340B violation.

The ability to mine your records for 340B-eligible prescriptions: Present and Past.
ProxsysRx’s proprietary software not only identifies current and past reimbursable prescriptions for our new clients, it automatically applies for those reimbursements. Typically, we’ll mine new clients’ prescriptions written up to one year prior to the date we started our service for them.

Get the most from your contract pharmacies

Contract pharmacies are critically important for optimizing the savings and revenue that your health system can generate with well-managed 340B programs. They’re also an important extension of your overall care of, and for, your outpatients. Increasing the number of independent pharmacies serving as contract pharmacies enhances your ability to offer your outpatients options and convenience in filing their prescriptions. 

While you can’t steer patients toward specific pharmacies, you can certainly make your patients aware of the options available to them. Which is why maximizing the number of 340B contract pharmacies in a network should also maximize prescription-replenishment savings and revenue for eligible hospitals; at least in theory. In practice, we’ve found that to be far from the case.

Why do hospitals use 340B contract pharmacies?

In addition to the locational convenience health systems offer their outpatients by having multiple off-site pharmacies, many prefer their on-campus retail pharmacies to be independently owned and operated. 

At the same time, community pharmacies need incentives to serve as contract pharmacies — and that’s where the problem lies with many contract pharmacy relationships. 

Some contract pharmacies cost hospitals more (in fees) than they generate in 340B savings and revenue. What’s more, it’s often not for lack of prescription volume, but rather because those pharmacies simply won’t qualify many 340B-eligible medications. The other problem with many contract pharmacies is that they’re located too far from hospitals, and their patients, to offer them convenience in refilling their prescriptions.

We recognize that the goal of serving a community’s needs (even at a loss) often outweighs your hospital’s objective of maintaining only net-positive 340B contract pharmacy relationships. At the same time, we’ve helped a significant number of health systems replace contract pharmacies with low 340B match rates, with nearby pharmacies that have much higher match rates — generating far better 340B savings for those hospitals. 

What should you avoid in your 340B pharmacy contracts?

The answer is complicated. And it typically applies on a market-by-market basis. In our experience, here are three primary situations you should avoid:

  • Processors who charge on a per-claim basis, coupled with high-volume pharmacies — which will lead to excessive transaction fees for your health system.
  • Contract pharmacies with low participation rates in allowing replenishments — picking and choosing which medications you’ve already approved.
  • Remotely-located pharmacies offering very few of your patients proximity convenience.

At the same time, hospitals can compromise the potential of their 340B programs by setting Dispensing fees set too low — which lowers local pharmacies’ incentive to partner with you in the program. The time-honored business aphorism applies: In order for your contract pharmacy relationships to reach their full potential, your agreements have to create Win-Win situations for both parties.

Audit requirements

In order to maintain 340B compliance, your health system is required to provide oversight of all contract pharmacies — while maintaining auditable records. You’re also expected to conduct annual audits of your contract pharmacies. Audits which should be completed by an independent auditing firm. 

That said, when you authorize ProxsysRx to manage and/or oversee your contract pharmacy agreements, we’ll give you complete support in maintaining auditable records, and conducting your annual audits.


Are your contract pharmacies optimizing your hospital’s 340B savings?


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.


How do I take advantage of the 340B program for my Specialty Pharmacy?


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.


How do I take advantage of the 340B program for my Specialty Pharmacy?


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. 


How Meds To Beds Can Drive Your 340B Savings


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.


How and why TPAs misqualify 340B prescriptions.


Chapter 4: Maintaining 340B compliance

A 340B Program Compliance Checklist

As we noted in a previous post, the number one reason eligible hospitals don’t take advantage of their legal right to participate in the 340B program is lack of administrative bandwidth to ensure full compliance. 

340B is complicated. That’s why so many covered entities have full-time employees monitoring their 340B programs. At the same time, for the clients whose 340B programs we manage, ProxsysRx performs all the duties of a dedicated full-time employee — and more.

Below is a condensed checklist of safeguards to help ensure successful, compliant 340B programs:

  • Develop written policies & procedures that detail all of your 340B-related decisions.
  • Make sure your 340B policies are compatible with your hospital’s existing policies and procedures. 
  • Double-check your provider files — as well as your National Drug Code crosswalks and the location maps for all of the contract pharmacies in your network — for accuracy.
  • Utilize software that’s been specifically developed to ensure that your 340B information is always up-to-date.
  • Support your providers, by giving them complete information on 340B program regulations, and how those regulations work with your hospital’s existing policies & procedures.
  • Conduct regular inventory-management and tracking-procedure checks, to ensure that you’re always in compliance.
  • Establish a Governance Committee to meet regularly and review your health system’s 340B program.
  • Conduct regularly-scheduled internal audits of your health system’s 340B program.

This final point is worth repeating: Routine self-audits are critical to ensuring your program’s compliance. 

Carve-in or Carve-out?

When you register your health system for the 340B program, you’ll be asked to choose whether you’ll Carve-In or Carve-Out Medicaid fee-for-service (FFS). This decision will apply to all of your Medicaid FFS patients. Choosing Carve-In means that you’ll be using 340B-priced medications with your Medicaid FFS patients. Choosing Carve-Out means you will not use 340B-priced medications with your Medicaid FFS patients.


How Can You Ensure 340B Compliance, and What are the Consequences of Non-Compliance?


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 .


What is 340B Double-Dipping, and How Can You Avoid It?


340B Audits: Overview. Consequences of non-compliance.

On average, HRSA conducts roughly 200 340B audits every year. Moreover, by law, manufacturers are legally entitled to audit covered entities, 1) to verify their compliance with patient definitions, and 2) to prevent duplicate discounts. However, manufacturer audits require HRSA approval, which is why they are extremely rare. 

What to do if your internal 340B audit uncovers instances of non-compliance

You are required to notify any impacted manufacturers and offer steps to resolve issues directly with them and their wholesalers. You’ll also need to send the HRSA Office of Pharmacy Affairs a written reports of any compliance issues. 

CHAPTER 5: 340B ESP & manufacturer restrictions, and how to overcome them

What is 340B ESP?

According to its website, “340B ESP allows 340B covered entities and pharmaceutical manufacturers to work collaboratively to resolve duplicate discounts.” In truth, the “service” is a brazen, unlawful ploy by drug manufacturers to evade the prescription-replenishment discounts they are legally required to offer eligible entities — by placing extraordinary reporting burdens on hospitals submitting claims for 340B savings.

The real reasons behind 340B ESP?

We believe the key factor that led to 340B ESP is the extensive range of commercial rebates the manufacturers themselves have voluntarily extended to PBMs — rebates which, in total, far exceed the combined discounts extended to 340B-eligible hospitals and health systems. In short, it's a situation of their own making.

340B ESP’s additional “hidden motives”

The 1400-member 340B advocacy group 340B Health notes that “claims data and other information submitted through the 340B ESP platform could be used by the Berkeley Research Group (BRG), the entity behind Second Sight Solutions [which owns 340B ESP], for research and analytics. BRG has published a number of negative reports on 340B in the past that have been funded by [the trade association formerly known as the Pharmaceutical Manufacturers Association].”

In short, there is a very real possibility that BRG could be using 340B pricing claims data submitted to 340B ESP to undermine the very entities it purports to be “serving.”

340B ESP’s “Terms Of Use” are absurd.

In unedited form, 340B ESP’s Terms Of Use runs 5798 words in length. Based on the average adult’s speed in reading technical documents (62.5 words per minute), that means 340B ESP’s terms of use alone will take the average reader nearly 93 minutes to complete. That estimate, of course, constitutes a fraction of the time it would take most health systems' 340B-reporting employees to read and fully comprehend the terms.

Excerpts from the 340B ESP Terms Of Use

The Covered Entity Platform is subject to modification (including addition, alteration, or deletion) by Second Sight in its sole discretion.

Upon termination…Second Sight shall have no obligation to return to you any data stored on Second Sight's systems.

You expressly acknowledge and agree that the Participating Pharmaceutical Manufacturers are third party beneficiaries of these Terms and have the full rights to enforce these Terms as if any one of them was a signatory hereto.

Second Sight may revise these Terms from time to time by posting such revised Terms on this website, or otherwise notifying you in advance of making effective such revisions to the Terms. Such revised Terms shall be effective to you upon the effective date provided in the posting or other notice, unless otherwise explicitly stated by Second Sight. It is your responsibility to be aware of any such revised terms by checking and reading these Terms from time to time and your notices.

Excerpt from 340B ESP’s Limitations Of Liability section


The reporting burdens 340B ESP place on covered entities

Under the requirements set down by Drug Manufacturers, 340B-eligible entities must report, twice monthly through the 340B ESP platform, their covered prescriptions from every TPA with whom they work.

Extracting covered prescription data from some TPAs is impossible, given the lack of available 340B pricing in the 340B wholesaler account. Moreover, it’s pointless to assume that covered entities and their contract pharmacies will regain access to their 340B discounts — since some manufacturers have placed 45-day time-frame restrictions from the dispensing of the prescription to replenishment. Why? They know that covered entities won’t be able to meet this requirement.

How effective has 340B ESP been in enabling drug manufacturers to evade their legal obligations? In the first year of its relationship with 340B ESP, Merck alone saved $2 billion. Worse still, at last count, 18 manufacturers are now requiring eligible health systems to report to 340B ESP.

How we help eligible entities deal with 340B ESP

If you choose to report claims data to 340B ESP, we’ll report on your behalf. Then we’ll track 340B price reinstatement — by manufacturer, and by contract pharmacy. We’ll also verify 340B price availability for each manufacturer, in each wholesaler account, for each of your contract pharmacies. Once verified pricing has been restored along the entire chain, we’ll work with your TPAs to ”turn-on” replenishment — and ensure they replenish appropriately.

Reporting to 340B ESP

  • ProxsysRx tracks, on a per-manufacturer / per-pharmacy basis, 340B price eligibility according to what 340B ESP claims it is.
  • We then verify in each 340B account — by Consumer Pricing and by manufacturer — if what 340B ESP claims is accurate.
  • Once we’ve verified each data point, we’ll notify your TPAs of newly restored pricing — then ensure that they request new price files from wholesalers.
  • Once your TPAs have 340B prices, we’ll order the 340B eligible drugs.

There are many places where communication-failure can and does occur — which is why we communicate with manufacturers, 340B ESP and wholesalers on your behalf. After that, we fight for reinstatement of the prices to which you’re entitled under the 340B statute.

Six Common 340B ESP Reporting Errors

1. Uploading Excessive 340B Data

Never upload more data than is absolutely necessary, and required, by 340B ESP. We submit the NDCs only from the manufacturers imposing restrictions on 340B pricing contingent on data reporting.

2. Trusting 340B ESP to Restore Prices On Its Promised Scheduling

Don’t ever assume that 340B prices are restored in your contract pharmacies’ 340B wholesaler accounts by the 10-day post-submission mark (the time frame 340B ESP says to allow).

3. Trusting 340B ESP Price Restoration, Period

If any manufacturer working with 340B ESP decides, unilaterally, that the purchases made for any of your contract pharmacies are more than the dispenses, they’ll refuse to pay the wholesaler’s chargeback. Which will result in a credit-rebill — which results in you, the covered entity, paying WAC — which is a much higher price.

4. Assuming submitted eligible dispenses result in 340B price access

Eligible 340B dispenses often do not occur in full-package-size increments. It may take months, and multiple claims, to equal a full reorderable package size — but some manufacturers won’t reimburse 340B purchases past 45 or 60 days from dispense. Which means covered entities will likely never be able to get many of the 340B prices they are entitled to.

5. Counting-On 340B ESP-Compatibility In Your TPAs’ Reports

When you submit your own reporting to 340B ESP, you can’t simply pull reports, verbatim, from your TPAs and upload them. Your uploads must be submitted in a highly-specified format, and every upload is fraught with potential pitfalls that can cause failures.

6. Counting-On Support From 340B ESP

In our experience, nobody working with 340B ESP — or the manufacturers — will help you when you don’t receive the 340B prices to which you’re entitled, even if months have passed since your first data submission.

The good news about 340B ESP, for covered entities

Despite 340B ESP and manufacturer restrictions, ProxsysRx continues to produce results for health systems. Altogether, our efforts have generated more than $500 million in savings and revenue for the 340B programs we optimize.

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 |



340B ESP. Why it’s Wrong, And How Hospitals Can Deal With It.


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. 


Brick Walls: Dealing With 340B Manufacturer Restrictions.


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:

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.”


Manufacturers Accelerate Pace And Severity Of 340B Drug Pricing Restrictions


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. 


Specialized Software Can Only Do So Much For 340B Programs


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 |



Seven Steps For Overcoming 340B ESP and Other Manufacturer Restrictions on 340B Pricing


Chapter 6: Using specialty pharmacy to optimize 340B revenue and patient outcomes

340B Hospitals Should Build Their Own Specialty Pharmacies 

Why a 340B specialty pharmacy?

The ultimate Win-Win scenario for any health system is increasing the quality of patient care, and getting paid to do it.

Chronic illnesses have become increasingly common in the United States. According to a report by The American Hospital Association, the number of Americans with chronic medical conditions will grow by a projected 14 million people between 2020 and 2030. According to some online reports, nearly 80% of new drug introductions are now specialty medications.

Moreover, for 340B-eligible hospitals dealing with increasingly squeezed bottom lines, an in-house specialty pharmacy offers enormous savings and revenue potential. Some covered entities generate as much as 600% in specialty pharmacy revenue from 340B drugs as they do in traditional retail / outpatient pharmacy 340B revenue.

Better patient outcomes. Better health system incomes.

In short, the reason 340B hospitals should build onsite specialty pharmacies is the significantly increased potential for generating 340B savings — and for passing-along those savings to patients in need. Today, hospitals and other 340B covered entities can acquire many specialty drugs for as little as 1¢ — which happens when a drug has hit its 100% Medicaid rebate cap. 

In 2016, Humirathe top-selling drug in the U.S., hit the rebate cap. Since that time, 340B hospitals have been able to buy Humira, and many other specialty drugs — including Epclusa, Harvoni, Imbruvica, Iressa, Gilenya, Revlimid and Stelara — at significantly-reduced prices. 

Nearly 90% of all large, for-profit hospitals are already operating their own specialty pharmacies. Ultimately, it stands to reason, every 340B health system looking to increase pharmacy revenue will need to consider building their own.

Streamlining 340B patient care

Onsite specialty pharmacies in 340B hospitals offer a seamless approach to caring for the “sickest of the sick” patients they serve. With their expertise, pharmacists at your onsite specialty pharmacy can collaborate closely with your health system’s providers, effectively managing complex medication regimens — while minimizing the risk of medication errors. 

Enhancing 340B-patient medication adherence 

Medication non-adherence is the number one cause of unnecessary patient readmissions. Onsite pharmacies can play a pivotal role in improving medication adherence among patients likeliest to burden hospitals with costly, compliance-related readmissions. 

Working in tandem with its retail pharmacy, a hospital’s specialty pharmacy can create efficient solutions to help manage prescription loads. Onsite specialty pharmacists can engage patients in one-on-one counseling, providing them with essential information about their medications' purposes, potential side effects, and proper administration. 

Expanding 340B-patient access to specialty medications 

The top two reasons for patient noncompliance with medication protocols are 1) the prohibitive cost of their prescriptions, and 2) the limited availability of those prescriptions. Onsite specialty pharmacies in 340B hospitals can overcome those problems by procuring 340B specialty drugs at discounted prices.

340B specialty-medication cost savings 

With your own onsite specialty pharmacy, your hospital can capture a greater percentage of the 340B revenue that would otherwise go to outside pharmacies — supporting your financial stability, while enabling you to expand healthcare services and make infrastructure improvements in serving your community.

Improving overall patient satisfaction

Patient satisfaction is an increasingly essential aspect of the Quality Ratings that impact many 340B health systems’ reimbursement rates. 

Onsite 340B specialty pharmacies can contribute to higher satisfaction levels in several ways: 

  • Reducing patient wait times 
  • Offering patients greater access to tailored medication services. 
  • Improving patients’ confidence in their treatment plans.
  • Increasing overall trust in the healthcare system.
  • Ensuring greater levels of medication compliance.

Facilitating clinical research and innovation

Onsite specialty pharmacies can serve as valuable resources for 340B hospitals conducting clinical research — promoting medical innovation and, ultimately, benefiting patient care for everyone.

Leveraging 340B Data Analytics

The integration of onsite specialty pharmacies within 340B hospitals enables the collection and analysis of comprehensive patient data. With enhanced data-driven insights, 340B hospitals can continually improve their patient care protocols and optimize treatment outcomes. 

Overcoming 340B ESP And Drug Manufacturer Restrictions 

The majority of 340B-eligible medications under access-restrictions are the most expensive and profitable drugs — which often means specialty drugs. This includes the aforementioned 40-mile-radius restriction and the Single Contract Pharmacy restriction.

Fortunately, there is a workaround for 340B hospitals forced to select a single pharmacy for certain manufacturers’ 340B pricing — and it’s legal in many states. Hospitals can operate specialty pharmacies alongside their retail pharmacies IF the two operations are in separate spaces (with separate Pharmacists-In-Charge), and there is no procedural, functional or personnel overlap between the two.

The not-so-good news for 340B hospitals is: Opening a specialty pharmacy is extremely challenging — particularly given the effort required just to get access to purchase specialty meds, and then to get “In Network” with PBMs. Payers and manufacturers control the players in Specialty, so newcomers need significant support and guidance navigating the process. That doesn’t even account for how hard it is accrediting and running a Specialty Pharmacy.

How ProxsysRx makes it easier for 340B hospitals

We guide the health systems we serve through the process steps that they’re required to participate in. Fortunately, those steps tend to be the least burdensome in the process. We handle the rest of the process — painstakingly documenting everything we do, and reporting back to the health systems at every critical step.

Ensuring your specialty pharmacy’s success

Internal operations are only part of the formula for a specialty pharmacy’s success. Which is why we seek inclusion from all PBMs in a health system’s area. We go in-network, securing cooperation and approval from all the major local insurers, for the PBMs that their patients are covered by. What’s more, we seek access from the drug manufacturers for what they’re prescribing — even the most egregiously restrictive manufacturers.

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. 


Enhancing Patient Care and System Revenue: The Case for Onsite Specialty Pharmacies in 340B Hospitals.


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.


Best Practices For A 340B Hospital Looking To Build An Onsite Specialty Pharmacy


Chapter 7: 340B’s Outlook For 2024, And How To Prepare Your Program.

What the changing 340B landscape means for your health system.

Between late 2019 and the end of 2023, ProxsysRx’s 340B Team generated more than $500 million in 340B revenue 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.

One thing 340B program veterans Heather Brooks and Chance Spivey know for certain is, nobody should ever consider themselves a 340B Expert. “I can’t tell you how often this happens,” says Chance: “I start my day by reading an email that changes all of the data analytics I’d been using to submit a significant percentage of my clients’ 340B prescriptions.” 

Potential 2024 developments for 340B

In an article dated January 5, 340B Report projected that “In 2024, congressional gridlock and election year dynamics will likely slow momentum on any comprehensive 340B program reform package.”

At the same time, there has been a lot of regulatory activity at the state level — specifically, where manufacturer restrictions concerned. We may, therefore, see more states taking similar action in 2024. If not, it’s likely that even more manufacturers will add new restrictions.

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,” Chance 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,” notes Heather, “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 Chance, “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 Heather, “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,” Heather 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,” Chance 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.”



340B Outlook For 2024: Change. Change. And More Change.


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 |