Making the Business Case for 340B Referral Capture

July 11, 2023

340B Referral Capture|

For healthcare facilities eligible for 340B drug pricing discounts, the program can be a lifesaver. 340B reimbursement funds critical health programs for vulnerable populations that demonstrably improve patient outcomes. As health systems struggle to recover financially from the pandemic, 340B can also be an important revenue stream for covered entities (CE) which typically serve less advantaged communities. Yet despite the many benefits of full 340B participation, some covered entities limit themselves to capturing obviously eligible prescription claims and forgo referral capture because of compliance concerns. That’s unfortunate because referral capture can pay real dividends for covered entities if they just make the business case for it.

The key to compliant referral capture is documentation

According to HRSA guidance, clear documentation that demonstrates a covered entity’s ownership of patient care allows the CE to claim prescriptions for 340B savings even when an outside referral provider writes them. That may seem straightforward, but the catch is that every covered entity must define ownership of patient care in their written policies and procedures when it comes to referral. At a minimum, HRSA requires that the referral be documented in the EHR, including proof of patient encounters with both the referring and referral providers.

Determining referral capture opportunity

  • Number of in-house and system-owned pharmacies
  • Number and size of contract pharmacies
  • Amount of referring providers
  • Amount of ineligible provider leakage

Four considerations for scoping referral capture opportunity

You can assess your opportunity for capturing referrals if your covered entity refers patients to ineligible 340B locations for care. For health centers and other federal grantees, consider the specialties to which you are currently referring patients out for specialty care. A high volume of potential prescriptions from those specialists for mutual patients would indicate a good opportunity to leverage referral capture.

For hospitals and health systems, besides the external referral opportunities mentioned above for grantees, it is worth reviewing service lines and service locations within the hospital or health system that are not currently 340B eligible. If a patient receives care from a 340B eligible location that refers out to an ineligible location, that could be a good referral capture opportunity as well.

Gauge potential results to determine opportunity size

Once you have completed your review of owned pharmacies, contract pharmacies, referring providers and ineligible referral provider leakage, you can compile the results into a top-down view of opportunity. R1 340B Recovery clients doing referral capture see fairly consistent results. Monthly contract pharmacy savings typically grow by 25% or more for Federally Qualified Health Centers and 10% or more for hospitals. That averages out to monthly savings of $40,000 and $20,000, respectively. This could mean funding life-saving services such as dialysis or oncology clinics, offering colon cancer screenings, or subsidizing obstetrics and prenatal care and behavioral health services like Adelante Health. Imagine the services you could offer your facility’s community if you had the additional funding.

Ensure you’re not leaving any 340B dollars behind

Understanding what ineligible claims you really have access to is the first step toward building a 340B referral program. CEs dependent on TPAs for data may not have access to any ineligible claims, or may only have access to ineligible claims if a patient has had a recent encounter, or may have access to all ineligible claims if the patient has ever had an encounter with the CE. Once you determine that there is indeed a referral opportunity, make sure you partner with trusted 340B experts to support your revenue recovery and audit needs. Referral claims audit can require manual verification for each claim, and additional internal support may not be available. Because compliance is especially critical when capturing referral claims, having an experienced partner can make all the difference. If you decide that partnering is right for your organization, here are some questions to ask when evaluating a potential partner:

  • Do they have HRSA audit experience with a focus on full compliance?
  • How many referenceable clients do they have?
  • Do they have integration with major retail and other contract pharmacies?
  • Is their solution technology or service based?

Each covered entity will have its own priorities and criteria for deciding to partner. One New England health system client, for example, places a premium on compliance and domain expertise. As for real-world results and impact on care quality and delivery, Andrew Gonzalez, director of pharmacy services at HealthNet in Indianapolis sums it up well:

“In 2021, we delivered almost a thousand babies, provided prenatal care for 2,300 women, and delivered health services for more than 1,300 city residents through our Homeless Initiative Project. R1 has really done a lot for us, and they’re probably one of my favorite vendors to work with.”

Learn more about the R1 compliance-first approach to referral capture.

Subscribe to our email list to get the latest in your inbox