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The 340B Program problem:  Achieving around-the-clock compliance

When asked what’s top of mind for a 340B Drug Pricing program manager, she said, “Knowing if I’m compliant today and if I would survive a HRSA audit without issue if that occurred next week.”

The program manager went on to say that “Maintaining and protecting our 340B benefit is extremely important to our profitability.”

Maintaining compliance every day and guarding profitability takes a complex balance of foresight and fortitude. Navigating the requirements requires equal parts insight and resources. To help bring that insight, we’re launching a 10-part blog series today that aims to examine not only the challenges to complying with the 340B Program but also strategies and tactics for making it easier to do so.

Continually complying with the U.S. Health Resources and Services Administration requirements is a linchpin for avoiding the financial risks that could derail a 340B Program. With media and politicians scrutinizing the 340B Program like never before, knowing that a program is compliant (or not) is critical to ensuring a covered entity maintains access to the federal drug program for itself and its patients. For example, according to The New York Times, “the Biden administration has proposed requiring [covered entities] to report how they spent profits generated through the program.” Complying with 340B Program criteria requirements, enables hospitals to receive discounts of 25 percent or more off the list price of drugs purchased from pharmaceutical makers. That, in turn, helps patients with less financial means or lacking insurance to receive care. Executives at covered entities can take the benefit from these discounted drugs and stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.

Lost in the details

Healthcare chief financial officers know that the discounts received through the 340B Program greatly enhance their employer’s profitability. But what’s less apparent to many CFOs is the length to which their 340B Program managers go to ensure their healthcare organization remains eligible for discounts. The work behind the scenes, which goes almost universally unnoticed by CFOs, is often burdensome and nerve wracking for 340B Program managers. That’s because most 340B Programs employ manual means to track data and update and monitor records and requirements to stay compliant. And even with all the work 340B Program teams put forth to stay compliant, there’s typically no guarantee the work will ensure their program passes a HRSA audit without issues. And if the issues an audit identifies involve errors in claims for discounts offered by drug makers, then the CFO and 340B Program manager might face a surprise payback to a pharmaceutical company for duplicate discounts on drugs dispensed. Errors like that could cost a healthcare system millions of dollars. The risk grows exponentially when a hospital tracks compliance with spreadsheets and shared file systems instead of turning to software designed to help achieve continuous program compliance.

Growing demands, straining resources

Compounding the problem are restrictions that drug companies are now imposing on community and specialty pharmacies that 340B grantees contract with to dispense discounted drugs for outpatient services. According to a March 2023 bulletin from 340B Health–an organization representing 340B stakeholders– many drug companies are asking hospitals to fill out and submit a heavy amount of claims data to receive discounted drug pricing. The rules for submitting data vary from drug maker to drug maker, says the report from 340B Health, and “requires pulling thousands of lines of claims data for hundreds of restricted drugs and extracting specific information.” Completing these submissions draws even more time and resources away from managing an already complex 340B Program.

Attention from drug makers and Congress on the 340B Program only appears to be growing, which spells more effort by 340B Program managers, covered entities, and consultants. Drug makers are alarmed at the growth of the 340B Program’s expansion from 8,100 provider sites in 2000 to approximately 50,000 in 2020. And many politicians believe there’s a lack of oversight and transparency into how 340B Program benefits are dispensed.

Regardless of the level of interest, oversight, or regulations, what 340B Program teams generally want is to know they have all the documents and processes to prove their organization complies–at any time–with what HRSA expects.