Offsetting 340B Program Losses from Manufacturer Restrictions
Hospitals and health centers that rely on 340B Drug Pricing Program discounts to fund essential community healthcare services face a growing risk as pharmaceutical companies increasingly limit contract pharmacy discounts and exclude specialty drugs. A total of 18 drug manufacturers now limit discount pricing for providers through their contract pharmacies.
This controversial, and potentially illegal, strategy is putting financial pressure on 340B covered entities. One recent report shows that 97% of covered entity hospitals have experienced or expect impact from drug manufacturer limitations. A majority of them, 62%, expect to lose more than 15% of their program savings this year.
Financial loss from manufacturer limitations is also putting added strain on the public health safety net as providers consider cutting or scaling back public health programs serving our most vulnerable populations. Many covered entities already report patient care problems such as delayed access to needed drugs (75%) and financial hardship from higher bills (69%).
Expand your 340B Program to Optimize Savings
As manufacturers escalate discount limitations and lobby against the program with policymakers and legislators, HRSA continues to push back by challenging drugmaker restrictions in the courts. Provider organizations like the American Medical Association and American Hospital Association, encouraged by top Washington health officials, are becoming more vocal about defending the program and exposing the poor health outcomes arising from restrictions. Meanwhile, many providers can at least partially parry the financial blows of manufacturer limitations by expanding their 340B programs to optimize discount pricing utilization and savings.
A commitment to compliance powers program growth
Covered entities cite regulatory compliance as their top concern more than any other issue – including manufacturer restrictions, revenue loss, and staffing shortages. That concern is causing some to forego expansion and simply maintain the status quo, even though that now means watching their program savings dwindle. But others are taking a proactive approach and using the strategies at their disposal to discover new prescription savings opportunities and optimize the return from their 340B programs. The key to successfully expanding your 340B program is to always put compliance first as you explore and employ strategies and tactics for growth.
Top strategies for expanding 340B program savings
For most covered entities there are two primary sources of 340B savings – eligible prescription claims considered ineligible, and referral claims. Here’s a look at these top two strategies providers can adopt to expand their 340B program, offset losses, and protect vital community health resources:
Eligible claims capture
Using the CloudmedAI™ Platform, our pharmacy experts and data scientists estimate that as many as 98% of prescriptions are considered ineligible for 340B discounts as a result of eligibility criteria that isn’t correctly documented or due to a technical issue with the claim. That pool represents an untapped source of potential savings. Regularly reviewing prescription claims for program eligibility can yield tens or hundreds of thousands of dollars from eligible claims capture for small rural hospitals, and millions for large urban hospitals.
While eligible claims capture finds missed revenue opportunities inside the facility, referral capture identifies missed savings outside the organization. HRSA allows covered entities to claim prescriptions from specialists and other referral providers for 340B savings if the covered entity can prove they own the patient’s care. This expansion strategy requires that each claim meets program requirements, and failure to do so can have significant consequences, including repaying manufacturers and exclusion from the program. Commitment to full compliance is an essential foundation for accurate and comprehensive referral capture, which is why our six-point compliance check of all referral claims sets us apart as a 340B partner.
Policies and procedures – the key enabler
To support both eligible claims and referral capture, it’s vital that facilities keep their policies and procedures up to date and aligned with operational reality. The 340B Program gives covered entities flexibility in determining some eligibility parameters, but they must be documented in policies and procedures. Keeping policies and procedures updated has the added benefit of smoothing and streamlining the process of a HRSA audit should you be selected for one.
While most added 340B savings will be garnered through eligible claims and referral capture, supported by up-to-date and operationally aligned policies and procedures, covered entities should also consider their contract and in-house pharmacy arrangements. Given how fast and frequently drug manufacturers are adding new restrictions on 340B discounts, making changes to your contract and in-house pharmacy structures could potentially help optimize program savings.
Learn how one provider leveraged compliant referral capture to fund more needed community health services in our case study.