Hospitals are constantly looking at ways to improve their 340B programs in order to benefit the patients they care for. At the same time, the lingering concern of “audit” and “adverse findings” often prevent hospitals from taking risks and making changes that could benefit their program.
Here are three reasonably low-risk options you should consider:
- "Carve-In" Medicaid
- Direct Manufacturer Agreements
- Get a 340B Program Opportunity Assessment
Consider Carving-In Medicaid
Will you bill Medicaid for drugs purchased at 340B prices? This is known as "carving in". No? Why not? At minimum, make sure to examine whether “yes” might work better for you.
Many states have not made arrangements with the federal government to allow “carve-in” of contract pharmacy claims. Some states, however, have gotten wise as to how a “mandatory carve-in” can help the state keep its prescription drug spend in check. CMS recently figured this out with the most recent Part B cuts for 340B participating hospitals order to save the Medicare program money.
What if you're in a state that requires you to exclude or “carve-out” Medicaid for contract pharmacies? Consider “carving-in” (including) Medicaid prescriptions filled at your hospital and clinics. Why?
The obvious answer would be that 340B inventory is, in a lot of cases, by far less expensive than both Group Purchasing Organization (GPO) or Wholesale Acquisition Cost (WAC) pricing on the same drugs. And there is no need to worry about getting dinged by an auditor for “duplicate discount”. You are allowed on the federal level to use the 340B drug discount on prescriptions for Medicaid patients, as long as you register as doing so and list your NPI number(s) with HRSA.
If/when you are audited, the auditor will ask to see a record of the patient’s visit. During that process, the auditor may ask you “who paid” for the claim they are auditing. If you carve-in, you can say Medicaid without hesitation.
An important consideration: If you elect to carve-in, your state may require additional details on claims you send them so that the state can do its part by not duplicating rebates from manufacturers for the drugs you have already billed for.
Direct Manufacturer Agreements
Qualifier: Not all covered entities are subject to the GPO prohibition. That said, direct manufacturer agreements can benefit all CEs. The GPO exclusion prohibits a CE from using drugs purchased at a GPO discount for the CE's covered outpatient prescriptions. The only option beyond 340B is WAC and direct contracts. If 340B pricing is not as good as WAC or Direct Contracts (which occassionaly happens), perhaps you should consider leveraging these options.
In most cases, 340B covered outpatients are not eligible to use GPO discounted drugs, so you are not violating GPO terms and conditions. But before you go ahead and get into a direct manufacturer agreement, you should carefully read your terms and conditions. Seek legal counsel if necessary to confirm you are not violating any rules.
For CEs subject to the Orphan Drug Exclusion (Critical Access Hospitals, etc.), consider the fact that manufacturers will often "voluntarily” offer 340B pricing to you, even though they are not required to do so. It's worthwhile exploring the possibilty of a Direct Purchasing Contract.
Get a 340B Program Opportunity Assessment
I’m not talking about a mock HRSA audit. I am talking about an Opportunity Assessment. I’m not even suggesting you use the same auditor you use for compliance auditing (though that may work, but could also be a huge mistake!).
Dig into the details of what your 340B program ecosystem looks like by asking questions like these:
- Where are the holes?
- What is your “uncaptured” opportunity?
In my six years of working with over 50 CEs, I have yet to meet a CE that did not have a single opportunity for improvement. Most are literally sitting on top of uncollected dollars. Read my sister post, 6 Ways You Are Losing Money On Your 340B Program Every Day, for the types of suggestions you may get from a review of your 340B program.
To summarize, there are multiple steps you can take to maximize your 340B program opportunities while maintaining a high-integrity, compliant program. And as always, don’t be afraid to reach out if you have any questions!