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Tomorrow's 340B: Accountability, growth and transparency for the covered entity

Reducing or eliminating 340B could cripple safety net providers across the country.

Jeffrey Lewis, Institute for Healthcare Innovation

Over the last two decades, Republicans and Democrats jointly supported legislation to expand 340B, the federal program that provides significant discounts on high cost, life-sustaining outpatient drugs to hospitals that serve a disproportionate share of low-income patients.

As Congress re-examines the Medicare Disproportionate Share Hospital (DSH) payment program, which in many ways keeps lights on and doors open for safety net hospitals and clinics that provide free or low cost care, lawmakers have a chance to strengthen these providers’ ability to serve disadvantaged communities. At a time when Medicaid and Medicare reimbursement rates continue to shrink, reducing or eliminating 340B could cripple safety net providers across the U.S.

[Also: Providers score in DSH challenge]

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Without a strong and vibrant 340B program, safety net providers may not be able to afford high-priced medications developed by pharmaceutical manufacturers to address the growing needs of chronically ill Americans. Many patients with hepatitis C, HIV/AIDS, COPD, multiple sclerosis and asthma, for example, would have to go without lifesaving medications. The challenge, indeed the opportunity, is to create a solution that modernizes the existing 340B infrastructure.

Hospitals and clinics benefiting from 340B deliver high quality care to patients who often represent truly complex medical cases. These patients are increasingly served in outpatient settings, where 340B drug discounts offset costs that support safety net providers. Some researchers argue this change has been a deliberate attempt to generate revenue. The truth is that smart business practices and wise clinical strategies continue to move more specialty care to lower cost outpatient settings.

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The 340B program will continue to attract scrutiny because both political parties are asking questions about its value and viability. Even though the program does not utilize taxpayer dollars to provide its deep discounts, federal and state elected officials require assurance that covered entities meet or exceed compliance and audit requirements.

Covered entities should do their best to implement more transparent community benefit programs that explain how 340B program savings are used and whom it benefits. As more and more elected officials begin asking to see the 340B program’s return on investment, covered entities must be in a position to respond.

The challenge is to use Congressional oversight to explore the value of the program and explain in public hearings and on the floor of the House and Senate that the program needs to be bolstered. Town Hall Meetings should be held all across America, where Federally Qualified Health Centers, Disproportionate Share Hospitals (that often reside in America’s toughest neighborhoods) and rural clinics have helped keep communities alive by providing needed medical care.

Because the Health Resources and Services Administration (HRSA) has increased and intensified 340B oversight by mounting onsite audits, covered entities face further challenges. In an effort to protect these entities, and presuming that Congress will continue to have great interest in these matters, the following questions should be considered and addressed:

  • What tools should a covered entity have to audit as well as to optimize its 340B program?
  • How does a covered entity ensure it is capturing all possible “locked away” specialty prescriptions?
  • How are covered entities ensuring their 340B strategies include sophisticated claims administration for maximum 340B prescription identification, specialty pharmacy dispensing capability and coordination with health plans?
  • What steps should covered entities take to emphasize the impact of the community benefit they provide as a direct result of 340B?
  • What are some best practices for providers, health plans and pharmacies in working together to help themselves and the patients they serve?
  • What else should covered entities do to ensure appropriate utilization and management relative to 340B?

Many covered entities are at the forefront of change. To maintain that leadership position, greater transparency, improved methodologies for identifying and capturing 340B prescriptions, partnering with lawmakers to ensure laws and regulations that effectively address everyone’s concerns make sense.

Covered entities have led the health care revolution. Most importantly, covered entities must sustain and grow their services to help more Americans in need. When Congress finally recognizes and values this, and decides to work with them to increase access for every person living in the United States, real progress will be made. 

The road less traveled to a strong 340B program goes in both directions. Congressional leaders with real courage and commitment, will walk this road with covered entities; not alone.

Jeffrey Lewis is the president of the Institute for Healthcare Innovation