6 Ways Providers Can Mitigate 340B Legislation Risks

Performance Improvement


August 7, 2018

Where there have been recent developments in government action towards the 340B program, there continue to be risks to the program and hospitals that pay attention can capture material risk mitigation opportunities.

The 340B Drug Pricing Program has been in the spotlight since the release of the January ’18 review of the program from the US House Committee on Energy & Commerce. While the two bills that reference the 340B program have little chance of passing Congress, there is a high likelihood that some amendments to the 340B program could show up on other legislation that has a higher likelihood of passing. [i], [ii]

Covered entities will have to be proactive in addressing the concerns of Congressional leaders. Current texts of proposed legislation, statements from politicians, and government inspection agency reports demonstrate where 340B legislation will likely focus.

Below are the areas, and associated levers, where North Highland believes hospitals can immediately mitigate the risk of changes to the law.

Program Development and Governance:

Ensure Proper Program Oversight

Legislators have pointed to program non-compliance as a talking point in the push for 340B legislation. Covered entities should ensure that their program does not violate HRSA guidelines including, but not limited to: a prohibition on duplicate discounts attained through either the Medicaid Drug Rebate program or GPO medication acquisition methods and disallowing non-340B eligible patients from being given 340B medications. The governance structure for the program should include the right mix of hospital leadership to effectively manage program success and compliance.

Register with HRSA

If your hospital has not yet registered as a 340B covered entity, it’s not too late. Significant risk to program expansion exists in both bills, via a two-year registration moratorium. The HELP Act goes so far as to nullify registrations that have occurred after December 31, 2017.[iii] Despite this, the benefits of increased savings that come with registration still outweigh the risk of any pending moratorium.

Prudent Program Expansion

Extra contract pharmacies come with the increased risk of HRSA audit. Additionally, the Medicare Payment Advisory Commission made note of the staggering increase of the 340B program as measured by the number of contract pharmacy arrangements and child sites. Covered entities need to focus on expansion opportunities that provide ample revenue benefit to outweigh the risks of higher scrutiny that come with expansion.

Measuring and Communicating Program Success:

Government Outreach and Communications

340B-covered entities can help protect the program by taking their message to key Congressional stakeholders. For starters, the program is empirically successful. Studies have shown that 340B entities have higher rates of charity and uncompensated care than hospitals who are eligible for the 340B program but have not registered. Leaders of healthcare providers should craft a message defending the program and take it to their representatives in Congress.

Expand Uncompensated & Charity Care Programs

Both a US DHHS Office of the Inspector General report and a US Government Accountability Office report focus on levels of uncompensated and charity care to measure the effectiveness of the 340B program. Going forward, hospitals will have to grow uncompensated and charity care programs alongside their 340B programs.

Build or Improve Reporting Capabilities

To prepare for potential reporting requirements, covered entities should track the connection between program savings and their charity care outlay.[iv] This will ensure hospitals can quantify the benefits of the 340B program to leaders in Congress. Tracking revenue per child site, revenue per contract pharmacy, and payor statistics will help the covered entity to further comply with potential reporting requirements.

Regulatory and legal compliance can often be a reactive capability in the healthcare industry. Movement around the 340B program presents an opportunity for provider-side leaders to proactively mitigate the risk of change of law and address rhetoric around the program head-on. The providers who mitigate the risks of potential change in law will find that they come out better for it whether the law changes or not.

This piece was co-authored by Scott McGinnis

Scott McGinnis is a Healthcare Strategy Principal leading North Highland’s Specialty Pharmacy practice.  He is responsible for managing consulting engagements with our Health System clients focused on developing and building out comprehensive, high quality specialty pharmacy services.


[i]HELP Act / S 2312, link: https://www.govtrack.us/congress/bills/115/s2312/text and 340B PAUSE Act / HR 4710, link: https://www.govtrack.us/congress/bills/115/hr4710/text; Probability Methodology, link: https://www.govtrack.us/about/analysis

[ii] House opioid legislative action in the 115th Congress: HR 5929: CRISIS ACT (48% probability passage); HR 6: SUPPORT for Patients and Communities Act (26%); HR 6082: Overdose Prevention and Patient Safety Act (35%); HR 5774: Combating Opioid Abuse for Care in Hospitals Act (35%); HR 5473: Better Pain Management Through Better Data Act (37%), among others. Probability percentages are from GovTrack page for each respective bill as of July ‘18.

[iii] 42 USC § 256b (f) of the proposed HELP Act.

[iv] 42 USC § 256b (a)(4)(L)(A) of the proposed HELP Act.