Interpreting the HRSA 340B Drug Pricing Program

July 15, 2022


For referral prescriptions, continuity of care documentation is key

Although its benefits are great, the 340B Drug Pricing Program leaves much up to interpretation by participating health systems when it comes to compliance, especially with referral prescriptions. Referral prescriptions, or prescriptions resulting from referrals to outside specialists, have long been a point of confusion under the 340B program. Can 340B participating organizations capture these prescriptions and if so, how?

What is the HRSA 340B Drug Pricing Program?

HRSA 340B FAQ 1493 states:
“If the covered entity can document that it retained responsibility for the health care services provided to the referred individual, then that individual may be eligible to receive 340B drugs from the covered entity. How a covered entity counts referrals under the 340B Program should be in their written policies and procedures.”

It sounds simple – a clinic may only capture referral prescriptions for its own patients. But how does a covered entity prove that it owns patient care when several complicating factors are involved? Those complications can include:

    • Interpreting program rules – As the HRSA FAQ cited above shows, providers have latitude regarding how they count referrals and the program allows the covered entities to determine and document. But this can create a significant degree of uncertainty around compliance and audit risk.
    • The dual discount dilemma – Many drugs included in the 340B program are also discounted through Medicaid and providers must ensure they do not realize the discounts through both programs for the same patient. Providers must ensure compliance and that can add an extra workload on an already overburdened staff.
    • Connecting documentation dots – Because the data required to document eligible prescriptions typically resides in multiple, disparate systems, providers must establish workflows and procedures for collecting, compiling, and reconciling eligibility data to comply with 340 program requirements around audit preparedness.

Documenting patient eligibility & continuity of care

340B participants must demonstrate that they are the central entity responsible for a patient’s care, even when a patient sees a specialist at a different facility. This could include documenting referrals, providing proof of provider-entity relationships, and/or maintaining patient notes from internal and external providers. Failure to document that ownership of care can have serious repercussions. HRSA 340B program requirements state, “Covered entities are subject to audit by manufacturers or the federal government. Any covered entity that fails to comply with 340B Program requirements may be liable to manufacturers for refunds of the discounts obtained.”

HRSA requires at minimum the referral documented in the EHR, and proof of patient encounters with both the referring and referred-to providers. However, “audit-proof” 340B referral prescription claims require more. HRSA advises, “Policies and procedures should include elements of program requirements, including methodologies for routine self-auditing and internal corrective action. Covered entities should regularly review and update their policies and procedures for all facets of the 340B Program to improve program integrity within their organization.”

Our clients’ Policies & Procedures account for a variety of qualification scenarios. For example:

    • How long after a patient’s visit (as documented by the encounter in your EHR) is the patient still considered active?
    • Must a patient have visited your primary care facility in the last 6 months, 12 months, 2 years?
    • How will you handle refills prescribed by specialists?

These types of parameters should inform whether your facility truly owns (or still owns) a patient’s care and whether a related referral prescription is considered valid.

Managing these requirements can place a significant work burden on a Pharmacy Manager-turned-340B Program Manager, which is often the case for many covered entities. Because of these resource constraints, many covered entities choose to forego 340B savings from referrals, even though the savings could add to an already vital source of income for resource-strapped federally-funded healthcare organizations. HealthNet in Indianapolis, for example, has identified over 2,000 additional prescription claims amounting to an average annual reimbursement increase of 96% over the past three years. Overall, R1 340B Recovery has helped more than 300 covered entities recover over $200 million in added program savings, with a 100% HRSA audit pass rate.

Additional Resources:

Learn more about R1 340B Recovery, and schedule a meeting to talk to our team today.

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