More than three decades after its inception, the federal 340B discount drug program has become a cornerstone of the healthcare safety net and a critical financial lifeline for hospitals that serve large numbers of Medicare and Medicaid patients. But with drug manufacturers unilaterally enacting new restrictions, scrutiny of the program growing and healthcare itself becoming ever more complex, managing the program has become more challenging.
By now, most 340B hospitals use split-billing software from third-party administrators (TPAs) to manage the program.
But not all 340B compliance solutions are created equal. Here, we’ll go over the essentials.
The Basics of 340B Management Software
Split Billing
Split billing is the process of separating eligible outpatient from ineligible inpatient hospital charges. It separates replenishment orders between accounts: 340B, group purchasing organizations (GPO), or wholesale acquisition cost (WAC).
Dedicated 340B software tracks data on whether the drugs were dispensed for inpatient or outpatient use, the quantity dispensed, and accumulations to automate ordering.
The 340B program relies on 11-digit National Drug Codes (NDC), which identify the drug
product, manufacturer, and package size. They’re also used alongside HCPCS and CPT codes in billing, so split-billing software must be able to track multiple NDCs and accurately discern between prescribed, dispensed, billed, ordered, and packaged quantity. This process is typically not straightforward but is critical to ensuring accurate billing and 340B accumulations.
Split billing is also key to managing a replenishment model, where a hospital refills its pharmacy inventory with drugs purchased at 340B discounts after dispensing them to eligible patients, especially at contract pharmacies. This model requires claims to qualify for eligibility before a drug can be purchased at 340B pricing.
Automated split billing allows hospitals to manage a single inventory virtually and avoid the complexity of keeping track of separate physical stores of 340B and non-340B drugs and determining eligibility at the point of sale. It’s one of the most important features of 340B software management systems.
Compliance
The other key function of 340B software is ensuring compliance, a critical component of the program. Covered entities may be subject at any time to an audit from the Health Resources & Services Administration (HRSA), so it’s key that software complies with HRSA guidelines and regulations for the 340B program.
Entities should also be prepared for the possibility of an audit by a manufacturer, which must be preceded by written notice of an alleged violation and approval from HRSA, if the two sides cannot resolve the dispute within 30 days.
To ensure against duplicate discounts or diversions, automated software should be configured based on the covered entity’s 340B policies and procedures, especially on the following considerations:
- Definition of an eligible patient
- Prescriber eligibility
- Referral eligibility
- Location where drug was dispensed, matched with a list of eligible sites as registered on
HRSA’s OPAIS database
Good 340B TPA software will also provide the ability to conduct self-audits to track purchases, inventory and claims to demonstrate compliance. The software should provide complete data accessibility for easy reporting and auditing.
Ultimately, the responsibility for complying with 340B requirements rests with the covered entity.
Other Features of 340B TPA Software
Excluding NDCs
With drugmakers announcing a seemingly ever-expanding number of contract pharmacy
restrictions, it’s helpful to have the flexibility to block 340B accumulations of these manufacturer- restricted NDCs. This functionality also enables non-covered outpatient drugs to be automatically purchased on GPO, and it’s also useful for certain 340B hospital types subject to the GPO prohibition or for the orphan drug exclusion.
Wholesaler Integration
By automating data between the application and the wholesaler, users save time by being able to order directly through the wholesaler website and reduce errors, as the software automatically splits orders.
Customizable Reporting
In addition to providing a record for an audit, flexible reporting options can provide valuable intelligence, with the ability to conduct deep analysis of program performance and opportunities to lower drug spending.
Proactive Analysis
More rare is the ability to produce dynamic business intelligence from reporting data such as:
- Dispensation cost
- Drug spending
- Drug cost monitoring and analyzation
- CDM-to-NDC mapping
- Actual and potential savings
- Precision eligibility from a longitudinal patient database
Sophisticated applications can monitor the ratio of purchases to dispensations to help entities remain compliant and identify lower-cost options. They can also enable covered entities to detect diversions in purchasing activities, a major compliance issue, and track other discrepancies.
Coordination of 340B Contract Pharmacies
Software can help contracted retail pharmacies automate replenishment, lower inventory expenses and hassles, and streamline workflows. It can also support discount programs, provide a performance dashboard, and facilitate invoicing and financial reporting.
Sentinel and Sentrex 340B Solutions
The Craneware Group® offers two applications for hospitals to manage 340B programs: Sentinel, for the mixed-use setting, and Sentrex, for contract pharmacies. Both employ proprietary, rules-based engines configured to reflect the covered entity’s 340B policies and procedures.
Thanks to the extensive data ingestion capabilities of The Craneware Group’s applications, we are also able to help covered entities quickly comply with reporting requirements in states that have enacted 340B transparency laws and proposed rebates, should they come to pass. In addition, we offer new forward-looking technology integrations that optimize purchasing, strengthen compliance and provide flexibility to adapt to proposed 340B rebates, should they come to pass.
Contact us to learn more about how our software solutions can help you maximize your 340B benefits.