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Use it (right or Lose It!: Documenting Use of 340B Savings

A Little History Lesson. . .

The House Committee on Energy and Commerce created the intent of the 340B program in 1992, the same year they created 340B. You can find the full act at this [LINK].   According to congressional report language, the purpose of the 340B program is to enable covered entities “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services."    Unfortunately, some groups seem to misunderstand the original intent and claim 340B facilities are not using savings as the program intended.  This erroneous understanding has taken on the force of fact, and is a driving factor in pending legislation shown at the link above.


While Covered Entities (CE) maintain they use 340B savings appropriately and for good causes, a significant number of other groups and agencies disagree [LINK] and [LINK].  The public concern goes past simply how facilities use 340B Savings.  Some feel 340B savings drive poor therapy decisions.  In fact, the GAO found oncology spending higher (2008 and 2012) at 340B hospitals than non-340B hospitals, leading to a recommendation that “Congress should consider eliminating the incentive to prescribe more drugs or more expensive drugs than necessary to treat Medicare Part B beneficiaries at 340B hospitals.” [LINK]

This apparent lack of trust is enough for Congress to want transparency, and the issue is significant enough to generate no less than seven bills in congress from 2017 through this year (2018).  You can view them [here].

With all the ‘noise’ in the press about 340B, I keep thinking of the Harry Nilsson hit song, “Everybody’s Talkin’.”

Everybody's talking at me
I don't hear a word they're saying
Only the echoes of my mind


Perhaps our ‘collective 340B consciousness’ mirrors Harry’s lyrics: “I don’t hear a word they’re saying”: most of us continue to ignore an increasingly popular theme for us to publicize how we use our savings.  It seems we may be at a point where we need to ‘adjust our sails’.


Adjusting the Sails


William Ward said:

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

I know a lot of 340B CE managers who, like me, have been both the pessimist and the optimist about the potential 340B changes in Congress.  Now I believe it is time to ‘adjust the sails’ and begin thinking about, and planning for how to best document use of 340B savings.


What’s Likely to Happen


My crystal ball broke when CMS implemented their Payment Adjustment rule in January 2018.  However, there seems to be a distinct trend in all the bills submitted for change.  They all have elements demanding transparency of use of funds, and a possible requirement to earmark some of the funds to discount prescription costs for indigent patients.

With this in mind, it is time to begin planning for how you can identify, document and publish ways in which your facility uses 340B savings.


Use of 340B Savings


Some grantees (Ryan White for example) are required to use their 340B savings for a specific purpose, but for now, HRSA does not specify how a Hospital should use their savings.  That seems certain to change in the near future.  Here are some ideas on use and documentation of savings from your 340B program.




It is not enough to say 340B keeps your doors open; you need to identify specific programs where the programs would not exist without 340B Savings. The odds are in your favor that you are already providing a number of charity programs, or community outreach programs.  Many facilities provide discharge drug therapies for their patients.  This is an excellent example of how 340B savings may be used. 


Action Steps


Consider these potential action items, and add on those more specific to your facility.

Action Item



Document how your facility serves as a provider to vulnerable patients.

Oversight Committee

Incorporate your mission statement and other vision statements that drive your charity care.

Implement a report documenting 340B savings and how your facility earmarks their use each month.

340B Coordinator, Finance Team

Show the savings compared to WAC/GPO and illustrate where the funds are derived.

Document uncompensated care

Finance Team

Document financial impacts of bad debt, charity care, and under-insured care.

Implement a mechanism to document direct savings on drug costs for indigent or low-income patients

Billing Office/Finance

Use total dollars spent in this work.


Note that while potential congressional changes may demand specific drug discounts for indigent patients, there is no reason other non-pharmacy related programs cannot be funded by 340B savings.  For example, one facility collaborated with their local fire department EMT’s.  The EMT’s visited discharged patients (specific diagnosis and repeat ER admissions) a week after discharge.  They reviewed how the patient was adhering to their drug therapy and reported to the facility if there were adverse findings.  This saved on Emergency transport to the ED for these patients, as well as unpaid ED visits by the same patients.  340B savings helped fund the costs of this program.




Since we don’t know exactly what legislative changes may require, it might be a little early to implement a specific program.  If you do, you run the risk of having to redesign it later.  However, it is time to begin raising awareness at your facility of both the potential changes, as well as looking at ways data may be collected. 

Many facilities I work with do not have a single source of information about the variety of charity care or outreach programs they provide.  This may be a great starting point.  Finance is likely to have a list of unpaid programs.  Work with them to generate a working list.  Work with your oversight committee to prioritize these programs.  Try to gain a consensus on which program(s) would ‘go-away’ if 340B savings were diminished.  This provides the groundwork for any potential future requirement.


Additional Resources


Check these links for more information:


In Closing


The question about 340B change is not ‘If’, but ‘When’, and although it may be difficult to specify the exact changes, there is a high possibility we’ll be required to document our use of savings in a demand from congress for more transparency.  Start considering how your facility can best accomplish this now!

Until the next blog.

Posted: Thursday, August 27, 2020

Tags: 340B, CPS Blog Posts