The 340B Drug Discount Program is a tremendous resource for hospitals that qualify, but our experience tells us that many of them are not receiving program pricing every time they make a purchase. In this post, we’ll take a look at some common 340B pricing issues and how they occur.
The 340B program is a wide-reaching program with many moving parts, so it’s no surprise the program has a lot of room for error. For starters, obtaining 340B program approval is a complex task requiring a significant amount of time and resources. Even after being approved, the program requires continual data maintenance in order to receive the correct pricing every time.
Pricing errors are the most common issues with 340B program. We see these errors when a pharmacy doesn’t follow the traditional PO process. A pharmacy may mistakenly issue a PO at a higher price and trust that the manufacturer will honor the correct price. If the invoice price doesn’t match the PO price, it should be flagged and analyzed by the organization’s internal processes. However, many hospitals choose to pay the higher invoice and move on.
The 340B program also presents several logistical challenges. For example, not all pharmacies within a hospital network may apply for 340B pricing. In this case, an organization must be even more diligent to ensure prices are maintained accurately and consistently across all pharmacies.
The difference between 340B and non-340B pricing is very significant. If a pharmacy continues purchasing drugs at higher prices, it will have a negative impact on the hospital’s cash flow. With the money lost to drug overpayments, a hospital could have reallocated it throughout the system, hired additional staff or invested in equipment.
Failure to manage the 340B program also creates a problem for executives. It is difficult to gauge the success of a program when you’re analyzing faulty data. Without the correct data, hospital leadership may make incomplete decisions regarding ROI and program participation.
Just like many issues we encounter, 340B program errors are often traced back to a lack of time within accounts payable departments and ever-increasing invoice volume. Managing the 340B program is a particularly data-intensive activity, as each and every purchase generates data that needs to be evaluated by both a machine and a human. Finally, many hospitals simply place too much trust in their vendors to catch every pricing error and report them back to their accounts payable departments.
Managing the 340B program is a time-consuming ordeal, and it’s one that most hospitals should not undertake themselves. Let The Audit Group help with a comprehensive pricing review. Our process is risk-free: we don’t charge anything unless we find overpayments.