Are we there yet? 340B: It’s a journey, not a destination


Daniel Neal

Director of 340B Product and Service Marketing

The Federal 340B Drug Pricing Program: for more than 25 years, it has provided hospitals with vital cost savings to help them to continue providing comprehensive care for underserved patients.

The program allows hospitals (and other safety-net providers) to receive discounts from manufacturers on medications dispensed to eligible outpatients.  However, the program’s guidelines are complex – leading some hospitals to choose not to participate. Even among hospitals that have already implemented 340B, the program’s complexity can be a barrier to truly optimizing or expanding their participation. Many facilities also struggle to keep up with compliance and other program challenges.

The good news is that when managed effectively, the 340B program can be a cornerstone to a hospital’s ability to provide care to its community.  The key is viewing 340B not as a one-time implementation event, or a destination, but as a journey. A journey that requires continuous expertise and vigilance. Here are some insights into the key stages of that journey. 

Stage One: Implementation—where it all begins

The foundation of any 340B program’s success is a comprehensive and accurate launch, along with creation of an effective framework designed to support compliance. Collaboration and input of key stakeholders from across the hospital is critical to all phases of the 340B journey. That’s why it’s important to create a 340B committee comprised of representatives from not just the pharmacy, but also Finance, IT, Purchasing, Legal and Compliance, among other groups. The early and ongoing involvement of these key stakeholders helps set up a 340B program for success – and almost always results in less variability, increased compliance and engagement throughout the program’s operation. 

The 340B committee should collectively have input into and guide:

  • 340B program policies and procedures:  Not only are policies and procedures key to an efficient, compliant program, but they are also requested by HRSA in the event of a covered entity audit.

  • Technology selection for administration and management of the program: Technology plays an important role in the administration of any 340B program. It can help  identify eligible patients (especially in contract pharmacy settings), accurately map National Drug Code (NDC) and charge data master (CDM) data,  provide a compliant audit trail, and, perhaps most importantly, facilitate the purchasing of drugs at the correct cost basis.

  • 340B procurement, billing and dispensation practices: How will a facility manage 340B billing for Medicaid patients? How will the program affect the budgeting process? How will a facility’s inventory valuation be impacted?  These are just a handful of the types of questions that need to be answered, early on, with input from all affected departments.  Failure to establish these protocols can lead to compliance and other issues that, if left unchecked for even a short amount of time, require significant time and cost to unravel.

  • Cross-functional compliance training: It’s critical for all affected teams to receive comprehensive 340B training. Remember – one size does not fit all.  340B training should also be tailored to the needs and areas of expertise of each affected group. For example, the finance lead may not necessarily need to have the same depth of knowledge as the director of pharmacy, and the pharmacy buyer training is different than that provided to in-house counsel.

    340B training development should ideally be driven by an entity’s Legal or Compliance department, in conjunction with the individuals responsible for designing and leading other staff trainings. A number of free and relatively low-cost resources can be used to identify 340B best practices, via sources including Apexus 340B, the Office of Pharmacy Administration (OPA), 340B Health and the 340B Coalition, to name a few.

Stage Two: Optimization—getting it running and getting it right

Once the program is up and running, the next step in the 340B journey is to manage and continually optimize the program. Here, vigilance is key to ensuring that the full benefits of the program are realized, and to maintaining ongoing compliance. 

  • Ensure appropriate staffing. To optimize a 340B program, it’s important to identify (and revisit) the staffing model that will be used to manage it. Although it can be tempting to assign the management and oversight of the program solely to the pharmacy director, in our experience with numerous programs nationwide, the most successful 340B programs are usually managed with some level of dedicated staff.

    Staffing models can vary. Some facilities add pharmacy technicians or pharmacy buyers to help manage the program. Others hire a business manager with a financial background; while others dedicate additional pharmacist time to managing it. For more information on job descriptions of such positions, tools are available from Apexus.

    It’s also increasingly common for covered entities to contract with one or more 340B technology providers to access both specialized technology tools and expert account managers to help administer the ordering process, identify potential missed opportunities and more.
  • Continually manage and update rule sets. As the 340B program and supply chain practices evolve, the 340B procurement, billing and dispensation practices must be updated for completeness, accuracy and relevance.  Operational rules and configurations in 340B technology applications should be kept current with the most recent guidance from the OPA, Apexus, and the covered entity’s 340B committee.
  • Committee engagement. It’s important to keep the cross-functional 340B committee fully engaged, through at least quarterly meetings that feature comprehensive review of program compliance, financial performance, operational impact and other factors. Some covered entities have begun to utilize special dashboards to allow for standardized presentation of key performance indicators.  These meetings can also be used to update committee members on legislation, regulatory actions, and judicial rulings that may impact how the program is administered.
  • Consistent program review for compliance and program goals. Fully compliant 340B programs also require ongoing, day-to-day vigilance on a more granular level. Are there NDCs that are going unmapped? Are drugs being inappropriately billed to wholesale acquired cost (WAC) pricing? Are drugs administered in “mixed-use” settings being tallied correctly? This kind of day-to-day vigilance typically is handled by the Pharmacy, ideally with one or more dedicated resources, in addition to appropriate engagement from IT, Finance, Compliance and other teams.

Stage Three: Expansion—further extending the quality care mission

Once a hospital has tightened its 340B program’s operations and has the right processes and controls in place to ensure it is running compliantly, some facilities continue on their 340B journey by expanding their program. There are three primary pathways to expansion: 

  • Compliant network of child sites: Some entities work with qualifying outpatient facilities, typically clinics or services outside the four walls of the main hospital, to expand their quality care mission.
  • Contract pharmacy network: Other entities form relationships with community retail or specialty pharmacies to expand their programs, and some also expand participation through their own outpatient pharmacies.
  • Acquisitions:  As hospitals acquire other facilities, it’s also important to think about whether these facilities operate sites that would be a good fit for 340B participation, and whether they would be eligible for enrollment.

When considering 340B expansion, it’s critical to verify that the expansion will receive the necessary level of oversight to deliver sustainable compliance. Covered entities also need to have a clear picture of both costs and savings associated with any expansion, and a plan for how those savings will be reinvested in the covered entity’s care mission, especially as it relates to vulnerable patient populations. Finally, covered entities should remember that, as the size and complexity of their 340B program grows, the Health Resources and Services Administration (HRSA) may also consider the risk profile for non-compliance to have grown. This can result in a greater likelihood of selection for a HRSA audit. 

Compliance: The tie that binds

Compliance is not a single phase of the 340B journey. It’s a critical component of each and every phase. Why? Because the ability to navigate complex guidelines is the key to protecting critically important program savings. Each covered entity has its own unique operational requirements, and as a facility advances from one phase in the 340B journey to another, the aggregate amount of complexity increases. It’s critical to put in place the right resources to test and fine-tune compliance processes. In our next article in this 340B series, we’ll focus exclusively on best practices to ensure ongoing compliance.

As with any worthwhile initiative – especially in today’s evolving healthcare landscape – creating a strong 340B program is best viewed not as a destination, but as a journey. When managed correctly, including appropriate oversight, planning and preparation, this program can continue to be a cornerstone of an eligible hospital’s ability to improve access to care and sustain their community mission.