The 340B drug pricing program provides significant savings to eligible healthcare providers serving low-income patients and those in rural areas. To maximize these savings, health centers must take proactive steps to ensure they are effectively utilizing the program. The following are some tips for health centers to maximize 340B savings.
1. Comprehensive Program Management
Effective management of the 340B program is key to maximizing savings. Health centers should establish a dedicated team to manage the program, with clear roles and responsibilities. Regular audits should be conducted to ensure compliance with program requirements and identify areas for improvement. The use of a 340B Pharmacy Management Consultant can help reduce the burden of the 340B program management for the health center.
2. Expand Covered Entity Eligibility as Much as Possible
Expanding the eligibility of covered entities is a critical component of maximizing 340B savings. Health centers should work to expand their eligibility to include as many providers as possible, such as Federally Qualified Health Centers (FQHCs) and Ryan White grantees.
3. Optimize Medication Purchases
Health centers can maximize their savings by optimizing their medication purchases. This can be achieved by negotiating better prices with manufacturers, wholesalers, and pharmacies, as well as using a group purchasing organization to pool purchasing power.
4. Expand Patient Services
Health centers can also maximize their 340B savings by expanding patient services. For example, health centers can use savings from the 340B program to fund new patient care initiatives, such as expanding access to specialty care services, transportation for patients, and expanded outreach efforts to target deeply under-served patients.
5. Conduct Meaningful Data Analysis
Meaningful analysis of the data can help identify areas of cost savings, as well as improve the health center's ability to provide beneficial healthcare services. Data analysis can be used to identify problem areas that are driving up unnecessary healthcare costs, and identify innovative ways to create cost savings.
The 340B drug pricing program is critical to the financial sustainability of health centers and the continued access to affordable medications for low-income patients and those in rural areas. In order to maximize savings, health centers need to take a proactive approach to program management, expand covered entity eligibility as much as possible, optimize medication purchases, expand patient services, and conduct meaningful data analysis. By putting these tips into action, health centers can significantly improve their bottom line and better serve their patients.
The 340B drug pricing program was established to help safety net providers, such as community health centers, serve low-income patients and those in rural areas. The program requires pharmaceutical manufacturers to provide discounts on outpatient medications to eligible healthcare providers. However, recent 340B manufacturer restrictions have significantly impacted the program's effectiveness and ability to serve these communities.
In 2020, AstraZeneca, Sanofi, Novartis, and Eli Lilly all announced plans to limit the distribution of 340B drugs to contract pharmacies, and many other manufacturers have followed suit with over 20 manufactures now restricting Covered Entities access to 340B through their contract pharmacy partnerships. These restrictions limit the ability of covered entities to use multiple contract pharmacies, which is a common practice in the 340B program. These limitations have led to reduced access to discounted medications for patients in underserved communities.
The restrictions have also led to legal challenges, with covered entities arguing that they violate the terms of the 340B drug pricing program. The American Hospital Association has also filed a lawsuit against the Department of Health and Human Services over its enforcement of the restrictions.
Additionally, these limitations have led to increased costs for covered entities as they would be required to purchase more medications at full price from manufacturers and wholesalers. This would lead to reduced savings for the covered entities and their patients.
The 340B program has been instrumental in providing relief for low-income patients and those in rural areas. Over 90% of hospitals that participate in the 340B program belong to rural or urban safety net networks, making this program vital to the health of our nation's most vulnerable communities. Additionally, the program saves covered entities an estimated $6 billion annually, which can be reinvested in patient services and community health programs.
Operating an onsite pharmacy can be a complex undertaking that requires a great deal of expertise. As such, it is a good idea to hire a 340B pharmacy management consultant to help you with the process. Here are a few reasons why you should consider hiring a pharmacy management consultant for your community health center.
1. Expertise and Knowledge
Pharmacy management consultants bring a wealth of knowledge and expertise that can be invaluable when setting up and managing an onsite pharmacy. They have the experience and expertise necessary to help you navigate the many complexities associated with pharmacy operations.
It is important to ensure that your pharmacy is fully compliant with all regulatory requirements, such as state and federal laws, as well as Medicare and Medicaid regulations. Pharmacy management consultants have a deep understanding of these regulations and can help you ensure that your pharmacy is fully compliant.
3. Financial Management
Operating a pharmacy can be a complex undertaking that requires a significant investment of resources. A pharmacy management consultant can help you manage your finances, ensure that you are maximizing revenue, and identify areas where you can save money.
4. Technology and Automation
Pharmacy management consultants can help you evaluate the latest technology and automation systems to help you operate your pharmacy more efficiently. By leveraging the latest technology, you can streamline workflows, reduce errors, and improve patient care.
5. Staff Training
An onsite pharmacy requires a well-trained staff to operate effectively. Pharmacy management consultants can help you train your staff and ensure that they have the knowledge and skills necessary to provide the highest level of patient care.
In conclusion, hiring a pharmacy management consultant can help you navigate the complex process of setting up and managing an onsite pharmacy. They can provide the expertise and knowledge necessary to ensure compliance, manage finances, leverage technology, and train staff. By working with a consultant, you can maximize the benefits of an onsite pharmacy and provide the highest level of care to your patients.
As an onsite pharmacy is becoming a more popular option for many community health centers, it is important to note that there are many benefits associated with owning and operating one. The following are some of the key benefits that community health centers can experience by having an onsite pharmacy today especially considering all the manufacturer restrictions over the past few years at contract pharmacies.
1. Improved Patient Care
One of the primary benefits of having an onsite pharmacy is the ability to provide improved patient care. By having a pharmacy within the health center, patients can receive immediate access to medications prescribed during their appointment. This eliminates the need for patients to have to travel to another location to fill their prescriptions, which can often be inconvenient and time-consuming.
2. Better Medication Adherence
Studies have shown that patients who have access to an onsite pharmacy are more likely to adhere to their medication regimen. This is because having a pharmacy on-site makes it easier for patients to obtain their medications and stay on track with their treatment plan.
3. More Cost-Effective
Having an onsite pharmacy can also be more cost-effective for both patients and the health center. Patients can potentially save money on medication costs by filling their prescriptions in-house especially for patients who may not be able to afford their medications by qualifying for the sliding scale fee schedule (based on income) and the health center can earn additional revenue from dispensing fees paid by the Pharmacy Benefits Manager (PBM) when patients have insurance.
4. Streamlined Workflow
An onsite pharmacy can also help to streamline the workflow of the health center. By having all aspects of patient care in one location, including medication dispensing, the health center can operate more efficiently and reduce the need for patients to make multiple trips.
5. Increased Revenue
Having an onsite pharmacy can also increase revenue for the health center in many ways. The first is helping the health center maximize their 340B savings. Secondly, is through the generation of dispensing fees from third party payers. In addition to generating dispensing fees, an onsite pharmacy can also increase patient volume and attract new patients who are seeking the convenience of having pharmacy services on-site.
In conclusion, an onsite pharmacy can provide significant benefits for community health centers. From improved patient care to increased revenue, the benefits associated with owning and operating an onsite pharmacy can help to improve the overall health and well-being of the community.
WHAT IS 340B?
As healthcare costs continue to rise in the United States, hospitals and healthcare providers are always looking for ways to maximize revenue while still providing quality care to patients. One way that many healthcare providers are able to control costs and increase revenue is by participating in the 340B drug pricing program. However, to participate in this program, it is essential for healthcare providers to ensure that they are fully compliant with all program requirements.
The 340B drug pricing program was established by Congress in 1992 with the aim of providing eligible healthcare providers with discounted prices on drug purchases. The program is designed to help healthcare providers that serve large numbers of uninsured and low-income patients by allowing them to purchase drugs at significantly reduced prices. This enables healthcare providers to stretch their resources further, allowing them to provide much-needed care to underserved populations.
To be eligible to participate in the program, healthcare providers must meet certain criteria. These organizations must be public or non-profit and must serve a large number of uninsured, low-income, or under-insured patients. Once enrolled, healthcare providers are able to purchase drugs from participating manufacturers at a discount.
However, being part of the 340B drug pricing program is not a free pass for healthcare providers to purchase drugs at reduced prices without providing the necessary care to eligible patients. To ensure compliance, healthcare providers must adhere to strict program requirements, including designated record-keeping, staff training, and reporting. For example, eligible healthcare providers must ensure that they only use 340B drugs for eligible patients, and not for other purposes (such as resale or charity care). Additionally, healthcare providers must also ensure that they properly document each drug purchase and use, in accordance with federal regulations.
Maintaining compliance in the 340B drug pricing program is essential for healthcare providers, as the consequences of non-compliance can be severe. For example, healthcare providers that fail to adhere to program requirements may face financial penalties, loss of program eligibility, and other legal issues.
To ensure compliance with the 340B drug pricing program, healthcare providers should consider taking proactive measures to maintain compliance, such as regular staff training, thorough record-keeping, regular audits, and risk assessments. Additionally, healthcare providers should consider working with an experienced compliance advisor who can help them navigate the complex requirements of the program and avoid non-compliance.
In conclusion, the 340B drug pricing program is an essential resource for many healthcare providers and can be an effective way to control costs and increase revenue. However, to participate in the program, healthcare providers must ensure that they are fully compliant with all program requirements. By taking proactive measures to maintain compliance, healthcare providers can ensure that they maximize the benefits of the 340B program while still providing quality care to their patients.
Purpose of Contract Pharmacies
According to the HRSA 1996 Guidance on contract pharmacy partnerships (1), the goal of Partnering with contract pharmacies is to allow Covered Entities (CE) dispense outpatient 340B discounted drugs at other pharmacies outside their four walls to generate 340B savings to help:
Types of Contract Pharmacies
What are the different types of contract pharmacies a CE can partner with?
1. Independent or privately owned pharmacies typically with less than 4 stores within the same state.
Evaluating 340B Contract Pharmacy Opportunity
There are a few key points to consider ensuring that engaging in contract pharmacy partnership will be beneficial for the CE and their patients.
To evaluate a potential opportunity:
Prescription Volume Analysis and Financial Analysis
This is done to identify the most beneficial partnerships for the CE by ensuring that contract pharmacies have enough 340B eligible prescriptions to generate 340B savings after cost of program implementation and operation are deducted from the total program revenue.
This is done by reviewing CE EMR prescribing data (usually a 90-day range) to identify pharmacies that are capturing CE prescriptions and then sorting these pharmacies based on the volume of prescriptions or the value of the prescriptions.
The goal is to identify best positioned potential contract pharmacies with high volume or high value prescriptions. After the CE has identified the best positioned pharmacies, they need to further analyze this data to ensure that these partnerships will generate reasonable 340B saving for the CE.
The prescription volume analysis is further refined with the contract pharmacy eligible claims model, Medicaid MCO carve in/out status etc. These 2 factors can significantly reduce the number of eligible claims drastically and wipe out savings.
It is very important for the CE to understand the various components of the financial analysis and how they impact the net savings 340B revenue:
Other Key Partners
Apart from the contract pharmacy, there are 2 other key partners to ensuring a beneficial and compliant program.
Contract Pharmacy Agreement
Once the financial analysis looks good, the next step is to enter into a formal agreement with the contract pharmacy.
This is referred to as the Pharmacy Service Agreement (PSA). This is a contract between the CE and the contract pharmacy.
It is the CE responsibility to ensure that the PSA is compliant and contains the required elements per 340B guidelines.
APEXUS has information on what a compliant PSA should look like.
Very important to note that the PSA must be signed and dated to be fully executed and valid.
Registration in OPAIS: Once the PSA is signed, contract pharmacies can now be registered on OPAIS – Office of pharmacy affairs website.
Registration | Official web site of the U.S. Health Resources & Services Administration (hrsa.gov)
Registration Windows are:
CE Ongoing Due Diligence
Lastly , once the 340B savings start coming in, it is important that the CE does their due diligence to ensure that their contract pharmacies maintain ongoing compliance with the 340B program and prevent diversion and duplicate discounts.
This can be done through:
1. 6 Notice Regarding 340B Drug Pricing Program—Contract Pharmacy Services; Final Notice. 75 Fed. Reg., 10278 (Mar. 5, 2010). https://www.gpo.gov/fdsys/pkg/FR-2010-03-05/pdf/2010-4755.pdf