20200512 FQHC Blog - 340B program success: The top four challenges for FQHCs

340B program success: The top four challenges for FQHCs

Federally Qualified Health Centers (FQHCs) operate on a not-for-profit basis and serve a disproportionate share of our nation’s vulnerable population – patients who often struggle with interconnected disparities that affect their health, including low income, little or no commercial insurance and several comorbidities.

Because of the complicated situations their patients face, FQHCs are very likely to take part in the 340B drug discount program, the savings from which enables these centers to stay open and ensure their patients can access affordable medications.

However, FQHCs often do not have the IT infrastructure, technology and staff they need to manage their program participation, making it difficult to maintain 340B compliance, avoid potential pitfalls that could come up in HRSA audit findings, and capture all eligible prescriptions to maximize savings. In fact, at the 2020 340B Coalition Winter Conference audit and compliance session, an analysis of FQHC findings showed a rise in findings as compared to all other entity types.

The right 340B management technology can help FQHCs with several common challenges, including:

1. Managing inventory for clinic-administered medications

In hospitals and health systems, most outpatient drugs are dispensed by prescriptions filled either on-site or at a contract pharmacy. Medications administered as part of on-site treatment are usually tracked by sophisticated technology systems. At FQHCs, however, drugs more often are administered directly to patients during treatment or before they leave, without a prescription. For example, a patient who visits an FQHC during a hypertensive crisis will be given a drug to treat the acute issue right away.

From a 340B compliance perspective, it is important to monitor those clinic-administered medications. Whereas a hospital might have a dispensing cabinet requiring electronic ID entry and tracking – which helps keep a tight rein on drug inventory – the FQHC might have a much more manual process in which a nurse or doctor unlocks a cabinet to retrieve a drug and administers it to a patient.

In this environment, drug diversion (both intentional and inadvertent) can take place much more easily, and drugs may be more likely to be overlooked and not billed through the 340B program, resulting in missed savings opportunities. FQHCs need the accountability of a 340B compliance and management software to help eliminate human error and properly track and document their 340B-eligible drugs.

2. Tracking retail and contract pharmacy prescriptions

Many FQHCs have onsite retail pharmacies for patients to pick up their medications more easily. As in the previous example of drugs administered directly to patients, these onsite pharmacies must consider inventory management from a 340B perspective.

Additionally, many FQHCs also contract with community pharmacies to give patients a choice whether to fill their prescriptions on-site or near their homes.

Tracking and managing 340B eligibility for all those prescriptions, whether onsite or through contract pharmacies, requires a robust technology solution to capture the 340B savings effectively.

3. Understanding state Medicaid policies

Under provisions of the 340B law, covered entities may not receive the 340B discount rate from drug manufacturers and rebates from Medicaid on the same drug; it must be one or the other. To avoid these “duplicate discounts,” state Medicaid programs set up guidelines that differ from state to state on how covered entities who choose to use 340B drugs for Medicaid patients must identify and separate the 340B drugs from those for which they request Medicaid rebates.

To help overcome this challenge, the Office of Pharmacy Affairs (OPA) requires covered entities that use drugs received at a 340B discount to provide OPA with an identifying number for the OPA Medicaid Exclusion File. This number helps states identify which hospitals are using 340B drugs with Medicaid populations so the Medicaid program can separate those drugs (“carve-out”) from rebate requests.

However, concerns about the accuracy of the Medicaid exclusion file mean that some states also require covered entities to use specific claims-level identifiers when they submit claims to Medicaid for 340B drugs. That way, the Medicaid program can exclude those drugs from its rebate requests.

The right 340B management solution can help covered entities maintain compliance with their state’s laws by automatically flagging drugs purchased on 340B and adding a modifier (according to individual state requirements) to help ensure that the 340B drugs are identified when billing Medicaid.

4. Incorporating “cash plans”

Federal guidelines require that FQHCs perform an income analysis on each patient and compare incomes against the U.S. federal poverty-level guidelines. Based on this income information, the FQHC must offer varying discount levels, ensuring that the most vulnerable have affordable access to needed care.

These discount plans often are referred to as “cash plans,” because many FQHC patients have little or no commercial insurance and will pay for care in cash.

A robust 340B management software can help sort out cash plans. For example, if an FQHC provides their 340B management partner with patients’ income and discount parameters, then the software should calculate exactly what each patient should pay based on the 340B drug cost and the parameters put in place.

To learn more about how your FQHC can make the most of the 340B program, contact us about a demo today.