Although uninsured rates continue to trend downward, even with the impact of the Affordable Care Act a significant number of patients will remain uninsured. In light of this, many hospitals and health systems continue to rely upon indigent care programs designed to help alleviate financial burden, including the 340B drug discount program. However, participation can be time consuming and require staying current with ever-changing requirements. As pharmacies continue to serve as a strong partner in supporting indigent care management, it is important to know the facts and optimize program opportunities in order to realize the benefits of this important safety-net program.

What's changing in 340B?

Since the inception of the 340B program in 1992, the Office of Pharmacy Affairs (OPA) of the Health Resources and Services Administration (HRSA) in Health and Human Services has administered the program. OPA has governed the program through policy notices, letters and guidelines addressing elements of program compliance and implementation, rather than issuing comprehensive regulations.

HRSA does not specify, in detail, how participants are to implement the 340B program. However, OPA has implemented annual recertification of 340B program participants and started on-site audits. OPA has also announced that it will disseminate comprehensive guidance to direct program participants.

Pharmacists and others leading hospital 340B programs should focus on three areas of performance:

  1. Meeting 340B rules, regulations and guidelines
  2. Effectively capturing the full benefit of 340B
  3. Stretching 340B savings to provide health care services for the underserved

The 340B Program is complex and requires cooperation among hospital departments to ensure results while meeting program compliance requirements. Considering recent changes, anticipated regulations and OPA guidance, all hospitals—even well-established, successful 340B hospitals and pharmacies—should undertake a thoughtful "best practices" assessment that focuses on areas of risk and opportunities for improvement.

Areas of focus for 340B program assessment

  • Audit preparedness
  • Eligible patient identification
  • 340B program policies and procedures
  • 340B program executive oversight
  • "Mixed-use" area dispensing and replenishment processes
  • Medicaid duplicate discount avoidance
  • Multiple contract pharmacy arrangements
  • GPO exclusion provisions
  • 340B program operating and financial performance

Preparing for a 340B audit

Audit preparation is the best starting point to cover areas of 340B program compliance and gain insight into areas where program performance can be improved. Consultant experts in 340B, including McKesson's Pharmacy Optimization can provide a structured and independent review.

A detailed focus on 340B policies and procedures for completeness and consistency with actual practices is critical. Apexus, the 340B Prime Vendor and the Safety Net Hospitals for Pharmaceutical Access provide template policy guides and resources. Key policy elements include registration information on the HRSA website, a comparison to actual 340B program implementation and details regarding the accumulation of 340B data and the associated purchasing and inventory-management practices. The review should include an assessment of the 340B software vendor's implementation and a gap analysis with plans for improvement. Hospitals using legacy software or internally developed spreadsheet programs should consider upgrading to a more current program, such as Macro Helix 340B Architect?, based on the gap assessment and program goals.

Other best practices include:

  • Identification of personnel with content expertise for each audit segment.
  • Formalization of a 340B audit response team with executive leadership.
  • Recommendations for policy or operational changes to promote 340B program compliance.
  • Development of a 340B compliance plan and oversight committee.
  • A review of staffing and resources supporting the 340B program. This should include non-pharmacy staff in purchasing, finance, patient accounting, IT and compliance.
  • Hospitals engaged in 340B contract pharmacy should undertake a regular independent audit of compliance and financial elements of the contract pharmacy relationship, looking for gaps or areas where 340B patients may be missed or incorrectly included in the 340B program.
  • Staff involved in 340B program management should attend a "340B University" program run by Apexus, or a 340B introductory program run by SNHPA.

Hospitals subject to the GPO prohibition or the Orphan Drug Exclusion should also pay attention to the financial implications of maintaining a compliant 340B program. Hospitals running a compliant program may see additional cost through purchasing of 340B-excluded drugs at WAC or other non-340B price.

Expected change on the 340B horizon

As the 340B program has grown, it has come to the attention of drug manufacturers, Congress, regulators and others who are seeking to ensure that effective management safeguards are in place. Over the coming years, the 340B program will see a combination of increased regulation, growing oversight by HRSA through audits and penalties for hospitals whose programs are run outside of the new, tighter boundaries.

Watch for the following from HRSA in the future:

  • A "mega-guidance" document outlining key requirements for program management and addressing "gray areas" such as 340B patient definition, contract pharmacy compliance requirements, hospital eligibility criteria and the eligibility of off-site facilities.
  • Administrative enforcement regulations creating a mandatory administrative dispute resolution process and imposing fines on manufacturers for knowing and intentional 340B overcharges. A final guidance document would impose fines on safety-net providers for knowingly or intentionally violating the 340B statute and remove them from 340B for "systematic and egregious misconduct."
  • Deeper, more focused and more frequent audits with penalties as outlined in the regulations, in addition to the current requirements for payback of unearned discounts and remedy of the audit findings.

Manufacturers and others with an interest in the 340B program will continue to challenge hospital participation and the effectiveness of 340B. Hospitals should be prepared to meet the continuing challenge with a well-run 340B program supported by adequate resources, regularly reviewed for compliance and performance.

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About the author

Dr. Andrew Wilson is one of the nation’s foremost experts on the federal 340B program. He leads a team of consultants and pharmacists dedicated to providing pharmacy management, operations and financial advisory services to 340B program customers. With more than 25 years of health care operations experience Dr. Wilson has provided leadership in big four accounting firms, academic medical centers and integrated health centers, including a role as pharmacy director for Saint Louis University Hospital.

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