Since 1992, the federal government’s 340B program has helped hospitals and other healthcare providers better serve vulnerable patients through access to prescription medications at deeply discounted prices. The program’s intent is twofold: to help patients afford their medications and give healthcare providers more money to put back into improving access to care.
Program intent is important. If a covered entity demonstrably fails to achieve that intent over a period of time, eligibility could be revoked. Here is the challenge: determining whether the intent has been achieved by tracking spending.
Does your organization document actual 340B savings? Does the financial department keep track of spending related to the program’s intended cost savings? Without tracking and documentation, it is very difficult to accurately determine whether a covered entity is achieving program intent.
Documentation for Annual Audits
If you operate a covered entity, you know that the annual 340B audit determines continued participation in the program. You also know that annual audits consider:
- Whether or not a covered entity is eligible to continue participating in 340B.
- Whether or not a covered entity is purchasing covered drugs via 340B discounts.
- Whether or not a covered entity has properly documented its 340B purchases.
- Whether or not a covered entity is fully compliant with program requirements.
Annual audits tend to reveal when covered entities are not meeting program intent. Under such circumstances, things could get dicey for a covered entity. You certainly don’t want that for your organization, which is one of the primary reasons for conducting mock audits. An HRSA mock audit can reveal areas of concern so that a facility can address them prior to the real thing.
Document the Savings History
Industry best practices dictate creating a 340B savings history that is documented every step of the way. Such a history would detail a covered entity’s total program savings over the previous year. In addition, it would describe how those savings were utilized to meet program intent.
One way to structure a cost savings history is to use a line-item financial report. Total program savings are linked to specific actions and patient care services in a clear and distinct way. Unfortunately, the line-item report doesn’t work well for every covered entity. There are other options for such facilities, including using the Medicare cost report.
It should be noted that a 340B savings history should go beyond raw financial numbers. For example, covered entities must document how program savings are helping to increase access to care among eligible patients. In essence, covered entities need to document the fact that the program’s financial benefits are reaching patients rather than simply lining pockets higher up the chain.
Consulting Services Are Invaluable
Tracking and documenting cost savings is anything but a straightforward exercise. Beyond the raw numbers, much of the rest of it is open to interpretation. That why consulting firms specializing in 340B program optimization and compliance, firms like Ravin Consultants, are invaluable partners.
Covered entities should avail themselves of consulting firms with 340B expertise. It is their job to fully understand 340B program rules and regulations. It is their job to apply their expertise to help clients maintain compliance at all times.
The 340B discount drug program is a good program that does good things for people in need. But like all federal programs, 340B is hard to implement and maintain due to all the rules involved. From annual audits to compliance questions, covered entities almost always need help with something. If you operate a 340B program, find a consultant you can work with to maintain compliance.
