NEW PROGRAMS TO INCREASE 340B REVENUE

25% is a reasonable expectation for growth for most 340B organizations in 2019 – 2020. Payer reimbursement continues to be strong. With the correct agreements in place, addition of new services such as referral prescription management, and contract and specialty pharmacy network expansion, 340B participants can elevate their programs substantially going into 2020. In addition, the costs associated with the program, in particular third-party administrator fees and auditing fees are decreasing as increased competition for these services continues to grow. 340B organizations should keep up-to-date on the operational costs such as the cost of paying independent auditors and continue to compare options in the marketplace.

Program Assessments

We are educating 340B participants on new programs. In 2019 and again in 2020, we will be conducting 340B program assessments for participating hospitals. The focus of these assessments are to:

  • Evaluate overall compliance strategy
  • Provide education to C-suite and operations personnel
  • Identify areas of unnecessary program risk
  • Identify new areas for program growth
  • Provide the organization a plan to implement recommendations

With the increased use of ePrescribe, increased transparency of 340B third-party software companies, and the ability to report data out of electronic medical record systems, evaluating 340B programs is becoming very efficient. Program Assessments can be done in reasonable time, at reasonable costs.

Referral Prescriptions

In 2019, newer service-oriented companies have emerged to assist 340B participants in the area of Referral Management. HRSA, has long held, that prescriptions written as a result of a referral can be included in participants 340B program. Referral prescription capture can amount to sizable, 340B revenue. Several Critical Access Hospital, Disproportionate Share Hospital’s, and FQHC’s, we work with are seeing increases in revenue of $10,000 plus per pharmacy per month.

Despite the option to include Referral Prescriptions as part of the 340B program, many 340B organizations have forgone the opportunity due to inadequate, incomplete documentation, and uncertainty regarding compliance. Lacking this documentation can result in a finding from HRSA when audited, and subsequent sanctions, including repayment to manufacturers.

Specialty Pharmacy Network Development

Speciality pharmacy continues to become a massive part of the overall drug spend. In fact, is projected to grow to $500 billion by 2020, accounting for 50% of drug costs for healthcare insurance sponsors. Specialty Pharmacy pro forma’s are becoming a popular part of the work our consulting company is doing.

There are many, regionally located specialty pharmacies eligible to participate in the 340B program. With this growing trend, we are starting to identify specialty pharmacies that will enter into 340B contract pharmacy arrangements with our clients. Although the relative volume of prescriptions can be small, the overall impact of specialty pharmacies can be substantial. We have seen increases of $20,000 per pharmacy per month for some of our clients, by partnering with the right specialty pharmacies.

HRSA AUDITS

1 in 3 of 340B participating healthcare organizations, audited repaid manufacturers in 2018 and thus far in 2019. Overall total number of audits, continued to increase in 2019. This has been consistent for the past 3 years. HRSA is now utilizing expert auditing groups, comprised of Pharmacy Business Experts, with direct experience in the 340B program. The scrutiny around compliance has never been more pointed. Again this year, only about 1/3 of audited participants escaped without a citation from HRSA.

Total % of Citations by HRSA
% of Entities requiring manufacturer repayment

Of those cited, over half required repayment to drug manufacturers. During 2019, our company has overseen several manufacturer repayment projects, calculating repayment amounts for 340B participants. The amount of repayment can vary significantly depending on the degree of compliance findings.

Medicare Part B cuts for 2020

30% reduction in reimbursement, is what to expect in 2020. Health and Human Services (HHS) has issued a proposed calendar year 2020 Medicare payment rule that would continue the Medicare Part B payment reductions for 340B hospitals.

This proposal would continue a nearly 30 percent rate reduction in Part B drug payments to many 340B hospitals, for specific drugs. Failure to comply with the Medicare payment rules can result in both financial and criminal penalties because it is considered fraudulent billing practices.

Healthcare organizations participating in 340B should ensure that they have updated all of their policies, day-to-day billing procedures, and electronic medical record and billing systems to ensure CMS compliance.

New COMPLIANCE RECOMMENDATIONS

Due to increased audits by more qualified HRSA auditors, our company is now recommending that 340B participants self-audit their programs monthly. Our company can provide self-audit tools to help with self-auditing.

In addition, our company is recommending at a minimum 6 months, but preferably quarterly audits by your independent audit company. This is simply to ensure that upon receipt of your audit letter from HRSA, the most recent claims you will present to HRSA have been scrutinized first by your independent auditors.

references

HRSA Audit Results 2018 – 2019

HRSA Position on Referrals, FAQ 1493 – 2014

Pharmacy Times, Specialty Pharmacy Trends

Health System Owned Specialty Pharmacies

Specialty Pharmacy Times, Specialty Pharmacy Growth

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