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340B Financial Health Check

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Leaders of hospitals, health centers and other 340B provider institutions are busy and don’t have time in their demanding days to be involved in the detailed, day-to-day financial oversight of their 340B programs. Yet, they also can’t afford to leave valuable program dollars on the table, which fund vital and expanded patient services. Here’s a checklist of six key steps to help you optimize the financial health of your 340B program in 2023 and beyond. And if you have a 340B TPA (third-party administrator), this list can help you ask them the right questions.

340B Financial Checklist

1. Know the facts about your contracts and fees
  • Be sure you know how you’re charged by your 340B TPA. Is it a flat fee per contract pharmacy, a flat fee and percentage of savings on 340B approved claims, or other?
  • Are there minimum dollar amount thresholds you must meet? 
  • Determine which fees in your contract may negatively impact your 340B savings—including switch fees, gateway fees, or fees for your TPA to collect monies owed by the contract pharmacy.
  • Ask your TPA if they charge for claims that were rejected due to a configuration error.
  • Are you under water, and if so, why?
2. Avoid Medicaid Managed Care Organization (MMCO) duplicate discounts
  • Most states don’t allow carve-in of MMCO at contract pharmacies. Make sure the list of plans to be carved out is up to date and accurate. If not, it can cause duplicate discounts, which will require refunding monies to manufacturers.
  • If your state does allow carve-in of MMCO plans, do your homework to understand your state’s policy and processes. Ask your 340B TPA to discuss the workflow needed to follow the state’s requirements so you avoid owing significant refunds to manufacturers.
3. Determine the impact of manufacturer blocks
  • Ask for impact reports by national drug code (NDC) to calculate the impact by manufacturer blocks. A growing number of manufacturers have NDC blocks that may impact your institution.
  • Determine whether uploading data to 340B ESP is right for your organization.
  • This may be the time to re-assess opening your own pharmacy, which often allows you to avoid these blocks. Ask your TPA how they can partner with you in this process – operationally, financially, etc.
4. Analyze patients’ medication adherence and abandonment of drug therapy
  • Monitor whether your patients are picking up and refilling their prescriptions on a timely basis. If they are not, they’re at risk for adverse health outcomes.
  • Make sure you have the data to understand and address why patients are abandoning their medications—e.g., because they cannot afford the medication or are concerned about side effects.  
  • Consider options to help reduce non-adherence, such as a follow-up program or a prescription subsidy program for eligible low-income patients.
5. Analyze your specialty drugs and referrals for missed 340B savings opportunities
  • Six specialties drive the majority of specialty prescription value: Dermatology, gastroenterology, rheumatology, endocrinology, neurology, and oncology. Ask your TPA for a breakdown of 340B savings by specialty. 
  • Ensure that the pharmacies you are considering are contracted with the insurance carriers that cover most of your patients.
  • Ask your TPA to help you analyze the potential for missed capture of 340B savings from these specialty referrals.
6. Ensure your TPA delivers high quality, transparent reports and assistance to optimize the value of your 340B program
  • Many covered entities don’t fully understand the reports they get from their 340B TPA or how to use the information they contain.  
  • Ensure your TPA provides you with detailed consistent reports and ensure you understand what reports correspond with the information needed to meet compliance needs, financial reporting, etc.

With the growing complexity and controversy of the 340B program, health center financial leaders must be more vigilant than ever to avoid leaving savings on the table. Opening an on-site pharmacy may make more sense for your organization today than in prior years. Maxor has extensive experience with a variety of 340B models and can help you determine the optimal model given your unique circumstances.

Mike Phillips is the Team Lead 340B Account Manager at Maxor. Mike has been in the 340B space for 5 years and healthcare for over a decade in hospital, clinic, and retail. Mike can be reached at Jmphillips@maxor.com.

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