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Go Ahead, Have Your Cake and Eat it Too!

Written By Chelsea Violette and Matt Parker

Compliance is the foundation of a successful 340B program and, rightfully so, is the primary focus for most 340B covered entities. Often, this focus consumes most available staff and resources, leaving terms like optimization and augmentation not only feeling nebulous and out of reach, but also as though focusing on optimization compromises or puts compliant processes at risk. What many don’t realize is that compliance and optimization are not opposing forces, but rather companions that work in a symbiotic relationship; you can indeed have a compliant 340B program and ensure you are capturing all potential savings available to you!  When a 340B program is operating as it should, it is more likely to be operating compliantly and in a manner that optimizes savings to the organization. Conveniently, much of the information that is used to assess compliance of a 340B program can be used to identify missed opportunities, making it even easier to have your cake and eat it too. Commonly over-looked opportunities that may be buried in compliance analyses include improper wholesaler pricing, NDC and/or CDM mapping, drug waste management, and retail pharmacy prescription capture.

Let’s take a deeper dive into some of these areas; maybe you’ll find something new to investigate for your organization!

What is a Price Parity Analysis? An analysis of prices paid for a given pharmaceutical across multiple accounts of the same account type (GPO, 340B, even WAC) and within the same class of trade (COT), over a specified period of time. The intent of the analysis is to ensure that all invoices for a given pharmaceutical are the same when purchased on the same account type within the same class of trade. This can be helpful for both 340B covered entities and non-340B organizations.

What is a Price Spike Analysis? An analysis of prices paid for a given pharmaceutical within a single account type over a specified period of time. This is also helpful for both 340B covered entities and non-340B organizations.

What is a Utilization and Purchase Analysis? An analysis of 340B (and GPO when applicable) eligible drug administrations and corresponding purchases across 340B, GPO, and WAC accounts. Anomalies can represent opportunities such as un- or mis-mapped accumulator settings, inaccurate accumulator multipliers, missing utilization data, untapped orphan drug voluntary 340B-like pricing, incorrect contract loads, missing waste documentation, and improper manual purchasing practices.

Why are these analytical tools important? Due the complexity of pharmaceutical pricing and the size and process of data exchange between manufacturers and wholesalers pricing errors can occur. These errors may go unnoticed and impact the bottom-line performance of your pharmacy if internal controls are not in place to identify pricing discrepancies.

Who should be performing these analyses? We recommend that anyone who is purchasing pharmaceuticals from a wholesale distributor or third-party trading partner have a process in place to verify the prices paid on every invoice. If you have a network of pharmacies (ie Health System or IDN) with multiple accounts with the same account type and class of trade a Price Parity Analysis is the analytic of choice, otherwise, a Price Spike Analysis is appropriate when only a single account is available.

We also recommend that anyone managing a 340B program in a fashion where both 340B and non-340B drugs are purchased review their purchasing patterns, in light of their utilization records, to ensure they are not purchasing any 340B drugs without supporting utilization documentation and that they are not purchasing any drugs on a non-340B account unnecessarily.

When should these analyses be performed? Timing is key. For pricing analyses, our experience is that the older a pricing error is, the less likely you will be able to have the price corrected. In a perfect world every invoice would be verified in real time, however, that’s not really feasible for most pharmacies. We recommend that all prices paid be verified as part of a monthly review at minimum.

Analyses of utilizations and purchases are a little more entity-specific and are likely to look different depending on the type and size of the entity and the inventory mechanism used. A large DSH or RRC hospital using a TPA to manage a virtual inventory may need to conduct this analysis monthly, while a smaller CAH or a grantee site may only need to conduct an analysis quarterly to capture any opportunity from pricing or clinical practice changes.

Now go eat your cake and make sure you’re capturing all of the 340B savings you are entitled to! If you’d like help looking for these opportunities, let us know and one of our optimization strategists would be happy to take a deeper dive into your data. You can also join us for our next webinar, Road Map to HRSA Audit Readiness Series: Time for a Tune Up: Making the Most of Your 340B Program on December 14th from 3:00 – 4:00 EST. Click here to register!