September 12, 2023

Why 340B Covered Entities Should Incorporate Reporting into their Workflows

In the 340B world, talk of increased transparency and reporting are nothing new. Drug companies for years have argued there should be more visibility into how covered entities use their program savings.

But recent legislative activity at both the state and federal levels — including two new state laws — make it clear: 340B entities should think about making reporting a regular part of their program operation, and not just to comply with government mandates.

This year, the governors of Minnesota and Maine signed bills that require annual reporting. Several other states reportedly discussed similar proposals that fell short of becoming law. In Congress, bills that include 340B reporting requirements have been voted out of committee in both the Republican-controlled House and Democrat-led Senate.

In Minnesota, the new law will require all covered entities to file annual reports starting April 1, 2024. They must report aggregate acquisition costs of and reimbursements for 340B drugs, and aggregate payments to contract pharmacies for dispensing 340B drugs, all broken down by payer type, according to America’s Essential Hospitals. Additionally, hospital entities will have to break the data down to the NDC level for the 50 most frequently dispensed drugs, which will add considerable complications.

Maine’s new law, which goes into effect Jan. 1, 2024, applies only to 340B hospitals and follows the American Hospital Association’s 340B Good Stewardship Principles. Hospitals will have to estimate their annual 340B savings, describe how program savings benefit their communities, compare their 340B program to total drug spending, and outline their “internal review and oversight” of the program.

The Need For Positive Publicity

Covered entities have long resisted these kinds of requirements, seeing them as administrative headaches, especially at a time when labor shortages are plaguing healthcare. But following some widely publicized news stories that scrutinized how some hospitals used their 340B savings, and as Congress shows more interest in tackling 340B reform, there is a growing sense that nationwide reporting requirements may be inevitable.

The truth is, 340B entities would do well to start doing some basic reporting for internal purposes. At a time when so many hospitals and grantee clinics are struggling with staff shortages and rising labor costs, it’s important to be able to demonstrate to your board, senior leadership and the C-suite that your 340B program is not just a cost center and is in fact critical to your organization’s nonprofit mission.

It’s also smart to be able to demonstrate the benefits of a strong 340B program to both the community you serve and your congressional representatives.

The key things you should know:

  • Your total 340B savings, or benefit, as defined by subtracting your total 340B acquisition price from what the drugs would have cost at GPO (or WAC, for hospitals subject to the GPO prohibition). This total should account for all your 340B sites, including any in-house or wholly owned pharmacies, not just the parent. It should also include your contract pharmacy network, determined by total reimbursement minus dispensing fees, cash cards or any sliding fees you may use, with this information available from your TPA. You may also want to consider subtracting from the overall total the costs associated with running your 340B program — labor, software, legal or membership fees, and so forth.
  • Your patient mix. You should highlight the ratio of patients who are uninsured or on Medicaid or your disproportionate share percentage. That will help demonstrate the need for your organization’s services, and 340B in particular.
  • The benefits your 340B program supports. You should talk with your 340B steering committee and compliance team to quantify the different safety net services that your program makes possible. These can include things like free or reduced-cost medical services or medications, transportation assistance, charity or uncompensated care, the ability to hire new clinicians, and so forth.

The good news is you don’t have to invent the wheel with any of this. You can use an Impact Profile available from 340B Health. Apexus also has tools to help you calculate your savings.

And of course, RxTrail can help relieve you of much of the burden of gathering and compiling this information, with dedicated experts available to walk you through it or perform the tasks entirely. We’ve helped many covered entities quantify their 340B benefits for internal purposes and would love to help you.

Interested in learning more?

Reach out to us today to start a conversation.

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