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    6 Ways You Are Losing Money On Your 340B Program Every Day

    By Timothy Kerr, PharmD • November 21, 2017

    340B programs are complicated. They can involve many integrated processes, people and technology. After working directly with over 50 covered entities over the past six years, I’ve learned a lot about technical and human factors that contribute to successful 340B programs.

    I've also gained tremendous insight into the biggest areas of lost opportunity for 340B participants. In this post, I will share these experiences with you so that you can better evaluate your own program and stop losing savings on a daily basis.

    1. Poor Data Management By You

    Let me say it again: Poor data management by you. (Yes - It's your fault.)


    How well do you know your own data and systems? Healthcare organizations have multiple sources of data. Clinic EHR, hospital EHR, same EHR, billing systems, and so on.

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    Make sure you are sending all of the data to your third-party administrator (TPA).

    Many times, hospital systems attempt to “simplify” the delivery of patient encounter data, provider files, and drug utilization files by using the “financial system”. Well, if you kn

    ow anything about hospital billing/clinic billing, you know it is very slow.  So be careful here -- and by "be careful", I mean automate your data delivery - and monitor it.

    Here's why: In the contract pharmacy scenario, you will match more prescriptions if you can deliver your data daily as opposed to in batches. Your TPA, however, may say, “Well, we only need this at a minimum every week”. 

    Really? No. Deliver your data daily, and do not rely on manual processes/people for moving data. If your staff is responsible for “moving the 340B files” over, what happens when they forget, go on vacation, or something else happens that gets in the way?

    There is absolutely no reason why 340B data cannot be completely 

    automated. People should get involved if/when data delivery fails. When you automate, you should set up “fault monitoring” systems (read: email triggers), when your files fail transmission or do not run.Yes, this is totally possible and I have set this up dozens of times.

    Simply put, you must understand the cost of untimely data delivery.


    2. Not Examining Data for Completeness.

    Bad queries! Bad, bad queries.


    Often, hospitals rely on IT resources or vendors that have little to no understanding of the 340B program. You need quality data: this cannot be overstated. I’ve literally walked into scenarios wherein the covered entity hospital, clinic provider and local retail pharmacy are in the same township, there are no health care services within 50 miles, and they are only matching 50% of prescriptions.Many of you might be thinking "Well, thanks Tim, but this doesn't apply to me, I am urban!" Keep reading.

    3. Poor Data Management by Your TPA.

    Your Capture 'Uncaptured' Rate

    If you are only matching 50% of prescriptions at a pharmacy, you need to know why. You may hear consultants and TPAs talk about your “match rate” or “capture rate”. How about unmatched rate or "uncaptured" rate?!

    What is an uncaptured rate? An uncaptured rate is your lost opportunity for 340B savings. There are many reasons why a prescription may not qualify for 340B. Some of these reasons are legitimate, while others are simply poorly executed business rules or errors in the matching process. Some of these reasons are rules you have in place because you did not know you could do it otherwise.

    Regardless of the reason, every covered entity has an uncaptured bucket of opportunity. Your job is to figure out what that is and track it regularly. This begs the question: Can your TPA tell you what you are both matching AND not matching - heavy emphasis on NOT matching?

    Well, some TPAs are more willing than others to share details on what you are not matching and why. As a business partner of the contract pharmacy, it might be in your best interest to approach the pharmacy to collect more details about what your TPA is unwilling to provide to you. Generally speaking, pharmacies are really great to work with, if you have a common objective such as maximizing your 340B opportunity.

    Once you understand what your 340B program is missing, you need start figuring out why. You may need to evaluate your business rules. Example questions to ask yourself:

    1. Should I begin using diagnosis codes or not?
    2. Should I have one provider list or two?
    3. Should I really be matching all prescriptions or just a subset (brand only, profitable only)?
    4. Why are you missing so many prescriptions? Is it referral prescriptions? Is it poor TPA data management? Is it poor covered entity data management? Is it specialty?

    The answers are: yes, yes, yes, yes and yes. Some may have legitimate reasons, but no gap should remain unaccounted for.

    4. Not Capturing "Referral Prescriptions" - AKA Prescriptions Written for Your Patients By An Outside Specialist

    Why is everyone so afraid of specialist referrals?

    "Low-hanging fruit” does exist in the referral category of referral prescriptions. You should consider capturing them for patients for whom you clearly manage primary care.  Client experiences suggest that capturing a mere 6% of referral prescriptions can increase your savings by as much as 20%.

    Forgive me for being blunt, but the elephant in the room would suggest you might be afraid to capture referral prescriptions because: You don’t know what you don’t know.

    Of course, you may feel like you do not have the documentation to support including them in your 340B program. That's a valid concern. You don’t know on a personal level the providers writing prescriptions as a result of your referrals, and therefore you don’t feel all "warm and fuzzy" about capturing the prescriptions for 340B. While this might seem to be a “higher risk” category because of documentation and stricter “care coordination” required to execute this in a compliant manner, referral prescriptions often carry a higher dollar value than standard retail prescriptions, so you should definitely consider it. There is little doubt that specialists providers are an integral part of the care you provide to your patients.

    Technology-enabled services such as par8o 340B Referral Capture are the key. (Editor's Note: Shameless plug #1!) What do I mean by "technology enabled"? Basically, human eyes combined with stellar technology and interfaces. Service providers such as par8o work with your TPA and provide the care coordination components to ensure you are meeting HRSA's patient definition and can count prescriptions in your 340B program in a compliant manner. 

    Further, instituting a referral capture program for 340B purposes can actually result in “better medicine” due to this extended care coordination effort. Your primary care providers might actually have better information including consult encounter notes for your clinic records. This can be very helpful in providing further care and follow-ups post-referral, and a more end-to-end approach to patient health.

    5. Partnering With the 'Cheapest' 340B TPA

    "Penny poor, pound foolish”.

    TPA “fees” can be deceiving - take them with a grain of salt. Be absolutely certain you understand the terms and conditions of your TPA agreement, including any exclusivity clauses.

    Some TPAs are really good about helping you with 340B for the pharmacies you have in mind. If you do a deep-dive into your program, you may discover additional pharmacies you want to add. If they are “low capture” pharmacies, meaning only 100 prescriptions or so, what seemed cheap originally may cost you dearly - so be very careful when choosing a TPA. Also, make the most of your time leading up to contract renewal periods to negotiate better terms.

    After all, what good is a TPA agreement if it prevents you from doing business with ALL potential pharmacy partners?

    I also need to stress the significance of a periodic opportunity assessment to add additional contract pharmacies. Prescriptions plans change for members. Perhaps a new pharmacy ownership occurs, or a new chain comes to town. Maybe a local employer recently required mail order for maintenance medications. All of these scenarios are reasons to periodically assess. And one area that is largely neglected is your opportunity to capture specialty prescriptions.

    6. Not Contracting with Specialty Pharmacies

    Understand that specialty pharmacy drugs are very, very expensive. Because of this expense, the patient’s insurance often dictates where the prescription can be filled - usually a mail order specialty pharmacy.

    Are you currently contracted with mail order specialty pharmacies? How would you even know what specialty pharmacy to contract with? The answer lies in your prescription data. 

    Understand that even your TPA may not have the best view of what your opportunity is. Your medical record/clinical systems, particularly in this modern era of EHRs, is probably your best bet for assessment. 

    You need to clearly understand your opportunity to capture 340B savings for specialty prescriptions. Capturing only a handful of prescriptions can justify writing a contract pharmacy agreement with a specialty pharmacy.

    Also of note, specialty pharmacy prescriptions typically follow the “result of referral” path mentioned above, so care coordination and comprehensive patient care documentation in your EHR systems is vital. par8o 340B Referral Capture works directly with many specialty pharmacy providers to maximize care coordination and track down medical record documentation (Editor's Note: Shameless plug #2!).

    In conclusion, I highly recommended that you regularly examine your program from top to bottom. The wrong combination of human and technical elements can cost you daily. Be informed about the ways you can maximize your program opportunity. If you have not read 3 things you can do today to improve your 340B program savings - read it. And feel free to reach out to me on LinkedIn if you have questions! 

    About the Blogger
    Tim Kerr, PharmD resides in Wichita, Kansas with his wife and children. He is an independent technology and business consultant and currently serves as VP of Pharmacy Consulting Services for Great Plains Health Alliance (GPHA). Tim can be reached via LinkedIn.

    340B Program Referrals Whitepaper