While participation in the federal 340B Drug Pricing Program may seem simple in theory, in practice, pharmacies often find the process difficult to manage. However, with the right automated solution and internal procedures in place, compliance challenges can be overcome—translating into a substantial savings on drugs for pharmacy. Because 340B prices are, on average, 51% lower than AWP, and 27% lower than GPO contracts, spending the time and money to implement an automated solution is a worthwhile investment for many eligible facilities.

340B Challenges
The 340B program, which is administered by the Office of Pharmacy Affairs within the Health Resources and Services Admin­istration (HRSA), was established as part of the Veterans Health Care Act of 1992. The law enacted section 340B of the Public Health Service Act, mandating manufacturers provide discounted outpatient pharmaceuticals to safety net health care providers. These providers, deemed “covered entities” under the law, include certain disproportionate share hospitals as well as 11 other categories of providers. To be eligible, covered entities must adhere to guidelines controlling the purchase and distribution of pharmaceutical products, and it is these guidelines that often make it difficult for institutions to exploit 340B savings. These requirements exclusively cover medication dispensed from an outpatient pharmacy or administered under the control of a physician (i.e., clinic-administered). However, purchase and use of pharmaceuticals in the inpatient setting remain prohibited by the 340B program.

Automated dispensing cabinets (ADCs) pose a particular challenge to complying with 340B guidelines. While ADCs are used for both inpatient units and in outpatient clinics, the inpatient pharmacy operation typically manages the pharmaceutical inventory. Thus, keeping track of medications dispensed from ADCs in outpatient areas often requires pharmacy managers to manually review the cabinet inventory, keeping a list of product utilization. To order clinic-administered medications under the 340B program, the pharmacy must show NDC-specific product usage. In addition, accumulation must be documented to justify reordering the product after the package size has been met. For example, a pharmacy can only reorder a 100-count package of acetaminophen tablets after it has dispensed 100 tablets in the outpatient setting. Inpatient and outpatient medication use from the same ADC is often difficult to differentiate. In addition, these products often need to be reordered from different prime vendor catalogs, further complicating the process.

Software Solution Features
Split billing software was developed so organizations could better handle the challenges posed by the 340B program. By enabling pharmacy to effectively track, document, and reorder eligible products, this technology can free up resources and decrease expenditures.

A number of vendors currently offer 340B-based split billing software, so it is important to carefully review the features of each solution to choose a product that best fits your hospital’s needs. One thing to keep in mind is that the software should adequately interface with the pharmacy information and/or automation systems to record dispensing information for each product. This communication link should include the ability to provide fields such as manufacturer NDC, quantity dispensed, and units per quantity. This data should be fed to the split billing software on a real time or intermittent basis, and units between systems should be standardized; this ensures accumulation of dispensed doses remains accurate. (For those dispensing systems that do not provide NDC-level utilization, a mapping table can be created between the pharmacy or billing system’s identifier and a specific NDC number.) The solution should also provide tracking and reorder history in easy to read reporting formats.

Because report customization is an important feature to many institutions, the system should have the ability to produce custom reports based on the user’s needs. The ability to export data into an easy to analyze format also is helpful. One particularly useful report is the non-matched NDC report. With this data, the user can identify opportunities for additional replenishment justification.

Automatic reordering with the institution’s pharmaceutical supplier also is a common feature. By streamlining the communication between the split billing software and your supplier, the time spent reordering qualified products is reduced. This feature should include generation of replenishment purchase orders, and have the ability to separate them from normal orders.  From a usability standpoint, the solution should present a user-friendly experience to minimize staff resources spent reordering products. Appropriate user training and implementation support are helpful to ensure installation success.  

The RFP Process
While the evaluation process for vendors varies by institution, it typically involves a bid or request for proposal (RFP). To ensure an optimal outcome, the RFP process should incorporate appropriate information from both parties. The health system or hospital should provide demographics such as usage volume, purchase history, and the number of facilities. In addition, it is useful to organize institutional requirements in categories such as corporate, technical, and functional. Corporate needs might include company profiles, implementation and training methodologies, and post-installation support. It also is important to understand the vendor’s experience with similar hospitals. Technical requirements might involve interfaces or integration with existing systems, database design, reporting tools, system or network administration, and operating system specifics. The information technology department also may be interested in Internet, remote access, security (including HIPAA), disaster recovery, and response time. The functional requirements are typically most important to the pharmacy, and might consist of enterprise use, product mapping capabilities, patient identification, user friendliness, pricing details, support, and project management. Evaluation criteria should be carefully outlined with regards to cost, proposed services, qualifications, and terms of compliance with the RFP. The vendor’s ability to provide invoicing and documentation of policy compliance in
a timely manner also is imperative. Ultimately, the way the system functions for users is critical to justifying the purchase of a technology solution.  

Justifying the Purchase
Hospital and health system administrators frequently analyze potential solutions for a positive return on investment (ROI). Split billing software provides measurable hard dollar savings when purchasing under 340B is weighted against normal inpatient contracts. By minimizing manual data collection resources for compliance processes, additional cost savings can be realized. Intangible or indirect savings also can be justified with increased 340B guideline compliance.

Streamlining Processes
By creating a virtual medication supply, split-billing software helps pharmacy avoid extensive workloads and unnecessary overstock and eliminates the need for manual reporting or separate inventories. However, facilities should create well-defined policies to maximize efficiency. These policies should address ordering and maintenance responsibilities and corresponding procedures. An institution will typically request that usage accumulate in the software daily, although a facility may arrange a weekly import if volumes are relatively low. Normally, the pharmacy will assign ordering responsibilities to one inventory technician or pharmacist. This staff member will complete the normal order process either through manual entry or a mobile device; however, the order must be processed through the split-billing software that is synchronized with the standard order process. Once the staff member submits the needed quantities, the software will split the items into “340B” and “Non-340B” purchase orders using the software’s accumulated values. The purchase orders are then imported into the facility’s ordering platform where they are submitted to the vendor by standard means. If the software is not owned or operated by the facility’s pharmaceutical wholesaler, electronic data interchange (EDI) interfaces are utilized to regularly update accumulator quantities and pricing. As previously stated, regular software maintenance (approximately 30 minutes per day) is necessary to update non-matched NDCs or add/modify an NDC number based on changes in formulary or purchasing patterns.

Key Reports
Accurate reporting is critical to the successful operation of the split-billing software. Luckily, many software solutions include a detailed reporting package. At minimum, the software must provide a complete audit trail that shows accurate NDC-NDC replenishment for eligible patients. These reports will need to be presented in the event of an external or internal audit, but also should be evaluated on a regular basis to ensure contract compliance. Administrators also may be interested in reports that document the cost savings from purchasing under the lower-priced 340B contracts. Finally, as mentioned previously, reports that document unmatched NDCs help ensure adequate maintenance procedures.

System Monitoring and QA
After implementing a successful split billing software solution, quality assurance and system monitoring processes should be addressed. For instance, reviewing invoices and split billing software order reports can help audit automated procurement. Medication dose volume is also used for comparison to doses reported in the split billing software. These reporting tools help uncover discrepancies and ensure maximum cost savings. Weekly scans of formulary product changes also may provide a list of additions for the split billing software. Furthermore, audits of real-time data or spot checks in the split billing software may uncover additional revenue opportunities. Monitoring HRSA for newly published information on 340B split billing practices also is helpful.

Conclusion
For hospitals that are eligible to participate in the federal 340B Drug Pricing Program, the savings gained from purchasing certain drugs at substantial discounts can be tremendous. With split billing software, pharmacy can ensure these savings by properly accounting for all 340B-eligible drugs.

 
Chad Hardy, PharmD, is the pharmacy informatics manager at Harris County Hospital District in Houston, Texas. He obtained a PharmD from The University of Texas and a MS in information technology from Capella University. He has worked in the pharmacy industry since 1992, and his areas of interest include clinical informatics, medication use, automation, and health care software systems.

Anthony Lesser has served as the pharmacy inventory manager for Harris County Hospital District since 2007. His primary professional interest is the development of effective supply chain strategies to maximize patient safety, regulatory compliance, and financial performance. Anthony received a BS in microbiology from Texas A&M University and a MS in healthcare administration from Trinity University.