340B Program

340B Drug Pricing Program—Outpatient Pharmaceuticals The 340B Drug Pricing Program was established by Section 602 of the Veterans Health Care Act of 1992, Pub. L. 102-85.The program allows certain hospitals and federal grantees to purchase outpatient drugs from drug manufacturers and wholesalers at discounted prices. The bottom line: Purchasing drugs at these dramatically reduced rates enables safety net providers, including Disproportionate Share Hospitals, to receive significant savings in dispensing outpatient prescription drugs. Participating in the 340B program requires enrollment with the Health Resources and Services Administration (HRSA), the federal agency responsible for administering it. Moreover, participation requires complying with regulations relating to drug diversion and duplicate discounts, in addition to many others. Murer Consultants has extensive experience assisting clients with many aspects of the 340B program, including the enrollment and auditing processes, assisting 340B covered entities and 340B contract pharmacies with the development of HRSA-compliance inventory/dispensing methodologies, dispensing and invoicing of 340B drugs, as well as ongoing compliance initiatives and program management. That experience has translated into an in-depth, sophisticated understanding of the 340B program, an expertise that can capably assist you in setting-up and operating your 340B program.

General Details of the 340B Program

Who is Eligible to be a 340B Provider?

  • Certain hospitals and federal grantees (together “covered entities”).

Do You Need to Maintain an In-house Pharmacy to Participate?

  • No. Changes to the 340B program allow covered entities to utilize independent pharmacies, known as “contract pharmacies,” to dispense 340B drugs. Further, covered entities are permitted to dispense 340B drugs through multiple contract pharmacies.

Who is a 340B Patient?

  • HRSA rules say that an individual is a 340B patient if each of the following conditions is met:
    1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual’s health care;
    2. The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity; and
    3. The individual receives a health care service or range of services from the covered entity which is consistent with the service or range of services for which grant funding or Federally-qualified health center look-alike status has been provided to the entity. Disproportionate share hospitals are exempt from this requirement.

Can Privately-Insured Patients Receive 340B Drugs?

  • Yes. Payer source is not taken into consideration in deciding who is eligible to receive 340B drugs. So long as the individual qualifies as a patient for purposes of 340B, they may receive 340B drugs. Note that reimbursement from private payers may, in many instances, exceed the 340B purchase price.

Who Benefits from 340B?

  • Covered entities benefit by reducing outlays for outpatient prescription drugs. These savings can be used to, among other things, expand the health care services it renders, thereby improving patient health outcomes.
  • Patients benefit by having access to reduced-cost drugs to which they otherwise would not have access.
  • Both federal and state governments benefit by saving money for outpatient prescription drugs dispensed to public aid beneficiaries.

How to Start Participating in 340B?

  • Register with the Office of Pharmacy Affairs (OPA), an agency within the HRSA, and notify your drug distributor(s) of your participation with 340B. Contact State Medicaid agencies if you intend to dispense 340B drugs to Medicaid beneficiaries and seek reimbursement from a State Medicaid agency.

Increased Scrutiny of 340B Program Compliance Recently, both the OIG and HRSA have expressed their intent to increase scrutiny of the 340B program through recertification and audit efforts. HRSA announced in June 2012 its plans to start conducting audits of covered entities’ 340B programs, focusing specifically on the prohibitions against drug diversion, duplicate discounts and group purchasing arrangements. This increased scrutiny is primarily in reaction to a provision in the Affordable Care Act. Likewise, state Medicaid agencies are ramping up their audit and enforcement efforts to ensure that covered entities are administering their 340B programs in a manner that results in savings to the Medicaid agencies. This is a particularly important initiative in many states in light of their respective budget shortfalls. A prominent matter of interest to several State Medicaid agencies is verifying that covered entities are submitting claims for prescription drugs at their actual acquisition cost (AAC). While federal law permits State Medicaid agencies to formulate their own billing policies, many States are now requiring covered entities to bill for prescription drugs at AAC. The effect of this policy change is to make sure that all 340B savings from Medicaid prescriptions are passed on to the State, a policy change that is bolstered by another recent development: many States are now requiring eligible 340B entities to enroll in the 340B program as a prerequisite to their participation in their respective Medicaid programs. Murer’s 340B Expertise The consultants at Murer are acutely familiar with benefits as well as the resulting compliance obligations of the 340B program. We have been assisting various types of covered entities (disproportionate share hospitals, FQHCs, community clinics, etc.) and contract pharmacies with a number of the 340B program components, including initial program feasibility, registration and implementation, situational audits, day-to-day compliance assistance, 340B voluntary disclosures and 340B-Medicaid overpayments/ repayments, among others. Once up and running, we will continually apprise you of regulatory developments that have a bearing on your program, and help to plot responsive courses of action that ensure your continuing compliance with 340B regulations while minimizing added administrative costs.