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 the the 340B program 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 a 340B program.

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 does the 340B program work?

When a patient receives a 340B-eligible prescription with 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.

ADDITIONAL READING

Understanding the 340B program requirements

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What Are 340B Program Requirements?

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.

ADDITIONAL READING

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

READ THE ARTICLE

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 does the 340B program 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.

ADDITIONAL READING

Understanding the 340B program requirements

READ THE ARTICLE

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.

ADDITIONAL READING

Understanding the six categories of 340B covered entities

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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?

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

ADDITIONAL READING

What drugs are not eligible for 340B savings?

READ THE ARTICLE

Chapter 3: Optimizing savings and patient care through 340B

Why you should optimize, and not maximize, your 340B program

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.

An ideally optimized 340B program generates a net savings on every eligible prescription claimed.

In our experience, you can’t optimize your 340B program without using proprietary software that keeps detailed electronic records on every prescription your outpatient pharmacy (and contract pharmacies) fill, and enables you to easily and instantly produce all the evidence you would ever need to respond to an audit request. 

Two key elements of our optimized 340B programs

An unblemished record of performance
Whether you manage your entire 340B program in-house, or you use an outsourced partner for support, be sure your people have the skillsets — and, ideally, the track records — to ensure that you maintain compliance at all times. It’s worth noting that, since 2013, ProxsysRx has served dozens of health systems, and not once has a client of ours 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 a well-managed 340B program. 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.

ADDITIONAL READING

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

READ THE ARTICLE

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.

Benefits of contracting with specialty pharmacies for 340B prescriptions

Where your health system’s mission is concerned, the greatest benefit of contracting with one or more specialty pharmacies is the significantly increased potential for generating savings, and for passing-along those savings to your patients in need. Today, hospitals and other 340B-covered entities can acquire many specialty drugs for as little as 1¢. That happens when a 340B-eligible drug has reached its 100% Medicaid rebate cap. 

For instance, Humirathe top-selling drug in the U.S., reached the rebate cap in 2016. And for years after that, 340B hospitals were able to buy Humira for . Many other specialty drugs — including Epclusa, Harvoni, Imbruvica, Iressa, Gilenya, Revlimid and Stelara — offer 340B discounts of 70% to 100%. 

That said, before you contract with any specialty pharmacy for your health system’s 340B program, it’s important that you’re aware of its insurance relationships. Insurance companies dictate which specialty pharmacies can dispense 340B-eligible specialty drugs, so it’s critical that they are indeed 340B-eligible.

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.

ADDITIONAL READING

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

READ THE ARTICLE

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 benefits your 340B drug program

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 your health system’s mission of maximizing patient care, compliance and satisfaction while minimizing readmissions, it should serve as a funnel for directing patients into your 340B program. 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 drug 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 in the 340B program 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. 

ADDITIONAL READING

How Meds To Beds Can Drive Your 340B Savings

READ THE ARTICLE

Understand, and overcome, your TPAs’ limitations

TPAs play a critical role in a 340B program. It’s their job to “match” prescription claims from your contract pharmacies with patient data you 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 your 340B Program is, the higher the likelihood that your 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 a 340B program is especially difficult when you use multiple TPAs. 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.

ADDITIONAL READING

How and why TPAs misqualify 340B prescriptions.

READ THE ARTICLE

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 you ensure a successful, compliant 340B program:

  • 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.

ADDITIONAL READING

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

READ THE ARTICLE

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 .

ADDITIONAL READING

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

READ THE ARTICLE

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. 

ProxsysRx is here to help, if you have questions.

There are so many ways to optimize your 340B specialty drug program savings and benefits, while minimizing the likelihood of noncompliance. For more information, contact Howard Hall. C: 205.588.0946 | howard.hall@proxsysrx.com