340B Contract Pharmacies

The big thing right now in the 340B program is contract pharmacies, this article will discuss what we have been doing with 340B contract pharmacies.

First things first, an update: we have been looking for a regional pharmacy director for my region (my 400 bed hospital, and two additional smaller hospitals) for about 12 months. We did not find a match and they settled on me. Haha, I hope it was not settling and that I have proven my self over the last 10 months helping manage the pharmacy without a director. Of course, I had lots of help, but that is one of my reasons why we have been less active on this website. Rich and I talk regularly, and we almost always say stuff like, “that would be a great article” or “we have to talk about that.” Well, I am pretty close to back-filling my manager position and decided to get back to 340B. Another reason is that we have residents at my site, and I project pitched a 340B project and one of them accepted. I am very excited about the opportunity to mentor and work with a pharmacy resident with motivation and time to complete a thorough project. I will share the fruits of this labor here.

The project: To identify community/outpatient pharmacies near our hospital for 340B pharmacy contracting opportunity. Create a contract template to be used with each community pharmacy. Evaluate and choose a software vendor that will meet our needs for efficiently and effectively working with community pharmacies to provide split billing opportunity, data collection, and reporting. Enter into contract pharmacy agreements and measure net output as offset to expense (we are not for profit, so we do not call this profit). Once we have some dollars coming back to us from these contract pharmacy agreements, create a model for taking a percentage of the dollars and providing increased and expanded charity care through a voucher program. Finally, measure the net impact of charity care provided to the community and potential increased health (potentially resulting in overall lower healthcare cost).

Rich and I have also been talking about using some of the knowledge gained through this experience and creating a turnkey operation for our rural facilities (critical-access hospitals). We are in our contract negotiation phase with a retail pharmacy. Until it is over, I will withhold comment. I will share what I can, when we are through contracting and we turn it on for our facility. I am excited about increasing the charity care to our community, because we need it really bad. I know we are not the only ones. I brought this up with our Community Outreach Director and she was thoroughly excited over the prospect of having more dollars she can provide to those in need.

Stay tuned for updates on our first contract pharmacy (technically our second, since my hospital outpatient pharmacy has been doing this for a couple of years now). If we can share some of our experience through this process and it makes your implementation easier, then I will consider this a win. As a side note, I will be at ASHP Midyear (mostly recruiting for our residency program), but if you have some experience to share or want to learn more about what we are doing, use the “contact us” page to send me your email and let’s set something up. As always, thanks for visiting. -Rob

Click here to see the Federal Register update in May 2010 on multiple contract pharmacies

12 Replies to “340B Contract Pharmacies”

  1. Hi Vickie,
    My apologies for the late reply, I am sure this has passed. We will do a better job on comments in the future. If this is a qualified 340B clinic, then medications given to the patients or written via prescription from the clinic qualify. In either case, you need to have auditable records and document the administration or the prescription in the EMR.

  2. i am interviewing for a clinic position for the poor here in Joplin, Missouri. the majority of the patients are Medicaid (75%), some Medicare and some Commercial Insurance. Cardinal will provide the drugs etc. I have never done 340B before, do I actually have to do the billing myself and keep track of 340B patients who give me a voucher – how does this actually work ? Sorry to be so dumb about it, but I don’t want to act dumb in the interview.

  3. Hi, I presently work in Galveston, Tx at UTMB/University of Tx Medical Branch. I work for the Value Options department. It’s callled the VO/NorthSTAR/UTMB program. It differs from other telemedicine programs. Its under the 340B program. There are 23 indigent health care clinics in the Dallas County region. This program consist of annual health assessment for eligible members; these assessments plus labs are reviewed by a physician and outreach done to the eligible members that coordinates them to county indigent resources. There are four categories of lab values, critical, expedite, abnormal & normal. The critical patients try to be notified asap, unless contact cannot be made and then the NorthSTAR crisis management team is notified and they do outreach to shelters, last known addresses, etc. Each of the eligible members is notified of the outcome of the health screen and the referral is provided in writing. This reduces the number of telemedicine encounters but the network is essential for compliance and immediate contact with the physician as needed. This model allows for the eligible members to fall under the DSH umbrella for 340B and greatly reduce the cost of medication and allows this population access to new generation meds that they were unable to access in the past. Until this program was implemented NorthSTAR had a waiting list of over 2,000 individuals for such meds.. July 31, 2014 is my last day here, I do the administration functions of the the program. UTMB doesn’t want the contract anymore with Value Options. The reason for this e-mail is I am trying to save my job & trying to find another hospital or institution get the contract. Do you know anyone or company that would want a money making contract? Thanks for your time, Alan Horridge

  4. Hi Jo Ann, since I am not familiar with the details, I am going to answer generally on how we have handled this for our health-system and contract pharmacies. There are a few parts I want to address in your background information. For retail pharmacy 340B transactions, I strongly recommend you exclude Medicaid and Managedcare Medicaid. From the 3rd party payer’s perspecive, they will not know what went 340B and what didn’t. We have exluded this patient population from our 340B contract pharmacy contracts to ensure that the 340B duplicate discount provision is not violated. You are correct that you submit the full amount you collect minus your negotiated fee per prescription back to the covered entity. That is why the fee you negotiate is so important, it has to be better than what you would have cleared normally (on average). The drugs will be paid for by the hospital and clinic on their account and shipped to you (it is a replenishment model). For your actual question, other than Medicaid insurers, I am not sure why it matters. The duplicate discount provision in 340B is specific to Medicaid and not private third party payers. From their perspective, they will not know the difference if it is a 340B prescription or not. I wouldn’t contact all the insurers prospectively, I would take it on a case by case basis as contracts come up for renewal. I do need to add a disclaimer that this is my opinion and not professional advice, and becuase your state and set-up may be different then my own, I do recommend you check with your legal team. If you would like more detailed specific consulting, you can let us know through turnkeyrxsolutions.com.

  5. Our community pharmacy has been offered a contract by the local 340b hospital/clinic to provide drugs to 340b patients. The hospital pharmacy manager stated that all monies collected from 340 b drugs will be given to hospital/clinic – this includes cash sells, reimbursement checks from medicaid, as well as checks from all insurance companies. My question is– my current reimbursement from insurance checks (as per contract) is based on rural community rates. I have been receiving new/revised insurance contracts that include 340b pharmacy designation for “type of pharmacy”. Do I need to contact all insurance companies to update the pharmacy designation to include 403b? (if we accept the hospital/clinic contract?

  6. Hi Tara,

    I will send you an email with one of our voucher documents. I will also try and add more to the site in the event others are interested. Thanks for the comment.


  7. I am very interested in learning more about your voucher program for further enhancing your patient assistance program.

  8. Hi Felix, it is really up to the covered entities in your area. Covered entities can be hospitals or clinics that qualify. The best thing to do is to look on the OPA covered entity list and see if you can find any hospitals or clinics near your pharmacy. If you find one, then cal the pharmacy director/manager and ask if they are interested in partnering with you as a contract pharmacy. Many covered entities have not gone down the contract pharmacy path yet. This is new as of May 2010, and it is a lot of work to get it done. We have been working with two companies, one for about a year to get contract s done (this is partly my companies fault, we are very conservative and we need the contracts to be close to perfect before we give the green light). If you are lucky, the covered entity will have already gone through this and can simply add you to their current contract pharmacy network. If they have not but are interested, send me a direct email through the “Contact Us” tab and I will be happy to share who we have chosen and help the covered entity through the process. I hope to share this information on this site in the future, but since we have not finalized contracts, I need to be a little cautious (plus one of my partners on this site is an attorney/pharmacist and you know how they are).

  9. Hi
    My name is Felix Obasuyi and I am a community pharmacy owner. How can I participate in 340B program?


  10. Hi Edward,
    I am not sure if Steve ever responded or not. I have not seen any benchmark data, but I have spoken with critical access facilities who have been successful with a 340B roll out. In fact, I just spoke with a critical access out of California with 24 beds and three retail pharmacies around its geographical area. They estimated a $150K annual savings. It is typically run out of the inpatient pharmacy for most hospital covered entities. This is where the hospital outpatient drugs typically come from. In my 400 bed facility, we have about 1 FTE supporting this process (not one person, but a combination of people). My system also has multiple critical access hospitals we are looking at enrolling and turning on. The trick is to make sure you have enough benefit for you effort. We strongly believe you need to add the contract pharmacy component in order to make it worth the effort. We have a nice template to make this work that we are using, we figure that our critical access folks will not have the bandwidth to learn and implement the whole process, so our turn-key template should help resolve some of the issues. Let me know if you are interested.

  11. Hello Steve,

    My client has a designated department that manages 340B for the hospital, and the entire System (all regions). They are also from this cost center are currently implementing access to manufacturer Patient Assistance Programs for inpatients and outpatients at the hospital with plans to expand to the entire System as well. They also manage all of the Meditech crosswalks for the hospital and all of the System Critical Access Hospitals in all of the regions.

    Can you help me answer the following questions and/or help me understand 340b more:
    • Are there any benchmark or comparative data for 340b services ?
    • Is it normal to provide this service out of the pharmacy department or a designated cost center?
    • How many FTEs are usually needed to support this service?

    Any thoughts and/or information would be very helpful. Thanks.

    Edward D. West | 206.816.5859

Comments are closed.