2 Key Things To Know Now About 340B and Your Health Care Facility

For twenty years, the 340B program administered by The U.S. Department of Health and Human Services administration (HHS) has helped safety-net providers to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services. Over the past few years, with the passing of the Affordable Care Act (ACA), the number of qualifying health care entities (and patients) has grown. So have the number of contract pharmacies that can disperse 340B drugs to patients.

The program expansion has caused pharmaceutical companies to lobby for changes and clarifications to 340B. This has resulted in much political upheaval and the promise of mega changes to the program that were supposed to materialize this summer. That didn’t happen. But the program is definitely under scrutiny, so that means it’s important to document your 340B  transactions and understand the compliance requirements around this program.

Here’s what you need to know now about 340B to make sure your hospital or clinic is in compliance:

1) Run your program like you might get audited tomorrow

There are 3 main ways health care organizations can go awry with 340B.

  • Diversion – the risk that a non-eligible patient gets drugs under 340B 
  • Duplication – the risk that a Medicaid patient receives drugs under 340B and then additional Medicaid rebates are requested for the same drug 
  • Auditable records – failure to maintain auditable records documenting compliance with and on-going monitoring of program requirements. 

How do you avoid diversion and duplication? 

  • Train admissions staff to proactively and carefully qualify patients. This will help you make sure you are correctly including all the eligible patients that are served by your facility.
  • Formalize policies documenting your covered entity’s definition of key terms such as eligible patient and your requirements for physician referral relationships
  • Conduct on-going monitoring of pharmacy transactions. The Health Resources and Services Administration (HRSA) recommends independent audits of contract pharmacy transactions; however very few entities are actually monitoring these third-party entities. 

2) Understand the latest orphan drug prescription rules and how they apply to your facility

Despite an HHS ruling on the matter late last month, there is still a lack of clarity on how the orphan drug rule will be applied in the future. Basically the HHS ruling affirmed its interpretation that orphan drugs (medications for rare conditions) cannot be prescribed under 340B for its intended original use to treat a rare condition. But they CAN be prescribed for other conditions not in the original scope of the drug. 

There are some exceptions to this - AIDS related clinics and certain children’s hospitals, sole community hospitals, and other types of qualified entities. For a comprehensive list, visit the HRSA website where there is a detailed FAQ section on orphan drugs and other important information about 340B. 

The 340B program provides eligible health care facilities the means to better serve their safety net patients with FDA approved prescription drugs, over-the counter drugs that are prescribed, and drugs like insulin that treat chronic conditions.

Making prescribed medicines more affordable and accessible to low income patients is very much aligned with patient outcome based health care. This is a win for patients who, with proper medication, can prevent more serious complications; a win for providers who can more effectively treat their low income patients; and a win for taxpayers who may see less funds going toward serious complications of treatable diseases.

What is not a win for providers is being penalized for a lack of due diligence to stay in compliance with 340B rules.


Are you doing all you can to protect the integrity of your 340B Program? We can help. Set up a complimentary consultation with one of our health care practice experts.

Contact HORNE

Topics: Healthcare Facilities, 340B hospital

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