This is part one of a two-part series on 340B.
At the most recent 340B Coalition in Washington, D.C., I had the opportunity to meet with attendees from all sectors of the Pharmacy industry. During several conversations, I was reminded yet again of all the misinformation around 340B rules. Understandably, when the rules are constantly changing, how can you stay informed?
How Well Do You Know 340B?
Here are just a few of the misconceptions I encountered when talking to conference attendees:
- A potential client in Texas is convinced they must carve out Medicaid in a separate pharmacy. This is based on information told to them and rules and regulations that existed in 2010 prior to the Affordable Care Act. Prior to the ACA, a covered entity could only dispense outpatient drugs at one, and only one, pharmacy. Medicaid needed to be carved out as it was practically impossible to distinguish via claim data which scripts were 340B and which were not. At that time, virtual inventories were not allowed. Since a covered entity can have many pharmacies dispensing its 340B drugs. Virtual inventories are permissible and claims adjudication allows Medicaid to easily determine which claims are 340B and which are not.
- Another example is from a potential client in Pennsylvania who is convinced they must carve out Medicaid. However, this is only true for contract pharmacies in this state – not covered entity owned pharmacies.
- Lastly, a CFO stopped by our booth and informed us he had outsourced his pharmacy operation to Walgreens for 10 years (nine years to go!) — and became sadder and sadder once he learned what our system could do and the potential of all that missed revenue.
When I am not discussing the misinformation around 340B, conversations inevitably lead to Congress’s recent involvement with 340B.
Congress & 340B
At presentations and meetings with Congress, there were the usual threats from government to increase accountability and change 340B eligibility. One proposal floated was to increase the Medicaid expenditures from 11% to 18% for a DSH. This is likely just chatter rather than the start of real change.
In my opinion, a more serious tack is to increase HRSA audits and supply information on where 340B savings are going. From our outpatient pharmacy perspective, we can assist in this. ScriptPro has the ability to report on money saved, what area of the hospital benefitted, and provide detailed data to help pharmacies pass any HRSA audit.
As some key 340B attendees state things like “Why kill a program that is no more than 4% of money spent on drugs in the U.S. (where drugs are only 15% of all medical expenditures) that provide savings that can be plowed back into the Covered Entities to stretch dollars?” The savings comes from the spread between private insurers and Medicare D insurers payments vs. the cost of the drug. Kill the program and the Covered Entities will simply go back to the government, hat in hand, to replace the lost money.
Stay tuned for Bernie’s 340B part two.
Bernie Knutsen is a graduate of the Poly-technic Institute of Brooklyn and Massachusetts Institute of Technology (MIT). His early career was as an executive in the telecommunications industry. He started in the healthcare business in 1999. He was hired by ScriptPro in 2001 to lead development for our software data conversion group. He enjoys large scale data conversions and putting business intelligence into computers to streamline healthcare initiatives, and working to increase the productivity of people through the use of technology.