What does this have to do with me?

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What does this have to do with me?

Many of us are so focused on our next meeting, the crisis that needs to be addressed now, or how we are going to get through all of our emails; that it is easy to read something and not think beyond the here and now.  Recently the state of Minnesota implemented an update effective August 1st that allows pharmacists to dispense a refill of a medication despite no refills remaining on the prescription. Emergency refills of prescriptions for a 30-day supply are allowable under the following circumstances:

  • The patient has been compliant with taking the medication and has consistently had the drug filled or refilled as demonstrated by records maintained by the pharmacy;
  • The pharmacy from which the legend drug is dispensed has record of a prescription drug order for the drug in the name of the patient who is requesting it, but the prescription drug order does not provide for a refill, or the time during which the refills were valid has elapsed;
  • The pharmacist has tried but is unable to contact the practitioner who issued the prescription drug order, or another practitioner responsible for the patient’s care, to obtain authorization to refill the prescription; or the drug is essential to sustain the life of the patient or to continue therapy for a chronic condition;
  • Failure to dispense the drug to the patient would result in harm to the health of the patient; and
  • The drug is not a controlled substance listed in Minnesota Statues Health section 152.02, subdivisions 3 to 6, except for a controlled substance that has been specifically prescribed to treat a seizure disorder, in which case the pharmacist may dispense up to a 72-hour supply.

Similarly, the Governor of the state of Florida, on August 28th, declared a State of Emergency, in which a pharmacist can use their judgement to refill prescriptions early for a 30-day supply provided certain criteria are met in the areas or counties affected by Hurricane Dorian.

In both states, the pharmacist must notify the practitioner who prescribed the medication.  In Minnesota it is no later than 72 hours after the drug was sold or dispensed. Florida does not define a time but rather states that the provider should be notified within a reasonable amount of time.  A record of the drug being dispensed should be maintained just as it would be for any other refills. 

Most would read these updates from the Board of Pharmacy and not think beyond the impact of the practice change.  I am challenging you to do just that and ask does this impact how we oversee our 340B Program and if so, how?  And would also argue it should be a thought every time practice change is implemented either by your State Board of Pharmacy or internally by your covered entity.  In response to the question above, the answer is, yes.  It could make it challenging to comply with the statutory requirement for auditable records.

Because there may not be auditable records for the fill (i.e., refill authorization) in the patient record at the covered entity, Turnkey is recommending that language be added to policy. Consider the following language for example: “The state of (insert applicable state) allows a one-time 30-day supply of a medication when certain requirements are met without provider authorization or documentation. In these cases, auditable records would include any documentation by the filling pharmacy to indicate the medication was refilled and the provider was contacted.” In addition, it may be wise to reference the link in which the practice change is stated in policy.  I have attached the link for both the state of Minnesota and Florida respectively, that outlines the practice change and requirements.

Just as you need to keep updated with practice changes, states can change their requirements to prevent duplicate discounts.  The state of North Carolina updated their Clinical Policy No. 9 for outpatient pharmacy on July 15th, 2019.  This update requires the use of both the ‘08’ in the basis of cost determination field via the National Council for Prescription Drug Programs (NCPDP D.0 field 423-DN) and a ‘20’ in the submission clarification field (NCPDP D.0 field 420-DK) for point of service claims.   Prior to this update a covered entity could use one or the other.  In addition, per the updated policy, only the actual purchased drug price should be submitted in the usual and customary charge field.

The state of Kentucky posted on August 2, 2019 changes to its Medicaid policies and procedures for Managed Care Organization (MCO) and Fee-for-Service (FFS) providers who participate in the 340B Drug Pricing Program.  Beginning on January 1, 2020, providers should submit 340B Medicaid FFS and MCO claims with the NCPDP D.0 value “20” in the field 420-DK submission clarification code.  This indicates to the Kentucky Department of Medicaid Services that a 340B purchased drug was used and not to collect rebates on the claim.

The following links outline the changes to the NCPDP requirements as discussed above for the states of North Carolina and Kentucky, respectively.

Key takeaway:  Stay abreast of what is happening with state requirements including changes to pharmacy practice.  One never knows when a change may impact your 340B Program.

P.S.  Although the picture above depicts a beautiful snow scene – the winters in Minnesota are long, and it gets very cold here -50 degrees with the windchill.  Okay, that is not typical, but it has been known to happen and impacting travel and one’s ability to be outside.  You need to be a lover of snow and really cold weather to live here year-round or crazy.  I think I am the latter.

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Key 340B Compliance Elements and Program Updates

Have you been wondering how to keep up with HRSA’s compliance expectations since there has been no new policy released since 2014 and no new compliance related program regulations since 2010?  If yes, then you might be interested to learn that HRSA has been posting program updates in the “News” section of the website for quite some time.  Since May of 2018, updates are being released at an unprecedented rate and appear to be a main source for 340B program expectations.  If you have not yet done so, consider signing up to receive these updates by email.  In previous newsletters Turnkey has summarized many of these updates. In this blog the most important notices as well as other program developments will be highlighted with reference to the specific previous newsletter breakdown of each topic.

A little background as to possibly why updates are occurring as they have been recently… HRSA has consistently told congressional committees that they need additional authority in order to make any changes to the 340B program. Congressional leadership has maintained that HRSA should use its existing authority to make changes to the 340B program. This led to a stalemate between HRSA and Congress with no passage of any filed legislation and no new regulations from HRSA.  However, on the heels of the Government Accountability Office (GAO) report (June 2018) that analyzed covered entities use of contract pharmacies, HRSA swiftly posted updates in response to the main concerns.  These concerns include a lack of assessment for duplicate discounts in Medicaid managed care and that more information is needed regarding how a CE determines the scope of noncompliance with evidence of corrective action prior to closing audits.

In addition to the program updates, the HRSA audit data request (last updated September of 2018) is where additional expectations can be gleaned. In particular, Turnkey observed the need for more robust policy and procedures (e.g., drug waste), crosswalking of the cost report to child sites (a.k.a., Environment Crosswalk or Map of the Environment, ), and specific contract pharmacy contract expectations.  A copy of the data request is posted in Apexus tools. 

Audit results have been another source of information for program expectations.  In particular, just this past July several areas for improvement were released regarding new policy expectations (e.g., contract pharmacy oversight, independent audit requirement, inventory control, and strategies to prevent duplicate discount on drugs reimbursed through Medicaid MCOs).

From the updates, audit data request, audit findings, and as witnessed during multiple HRSA audits, recent compliance developments fall into the following categories:

  1. Hospitals Must Have Proper 340B Eligibility Documentation
    • HRSA announced in the July 2018 Program Update (Program Integrity Analysis) that they will begin selecting random hospitals from the quarterly registration periods to request documentation supporting the eligibility type the hospital selected. Failure to provide the requested documentation before the registration period closes will result in the registration being rejected and requiring the hospital to re-register during the next quarterly registration period.
    • Documentation of hospital eligibility was expanded in the updated Data Request List in the third quarter of 2018 for two groups of hospitals. Hospitals that participate in 340B under the category of (a) being owned or operated by a state or local government; or (b) having been granted governmental powers, must submit documentation to support that status. HRSA auditors are reviewing the submitted documentation as part of the auditing process. July also brought quality assurance checks of previous audits where hospital documentation has passed and then upon review no longer met standards.
    • The March 2019 update further clarifies documentation needed for all three hospital types and stipulates what must be included in an agreement.  The updated hospital registration instructions are posted.
    • Hospital documentation is being requested as a part of recertification.
    • Previous Turnkey newsletter discussions: March 2019 HRSA Update, July 2018
  2. Contract Pharmacy Expectations
    • List All Hospital Locations in Contract Pharmacy Agreement.  Specifically, HRSA notes in audit reports “Area for Improvement” when the contract does not list all of the participating covered entity locations or uses an inclusive statement. If a list is used, hospitals must update the contract when changes occur with their locations using the contract pharmacy arrangement per this page on the HRSA website.
    • Ensure Remedial Action Is Taken for Audit Findings Involving Contract Pharmacies.  HRSA emphasizes in its June 2018 Program Update that it is the covered entities’ responsibility to take remedial action to assure compliance when it discovers diversion or duplicate discount non-compliance relating to prescriptions filled through a contract pharmacy. HRSA makes clear that signing contractual agreements with third parties does not exempt covered entities from the responsibility of ensuring compliance. Liability for and the consequences of errors by third parties remains with the covered entity.
    • There have been desk audits of contract pharmacy (CP) agreements and we know of one instance of HRSA asking for the agreement between the state and the CE when carving in Medicaid at the CP.
    • Previous Turnkey newsletter discussions: March 2019 Tidbit, July 2018
  3. Duplicate Discount Prevention for 340B MCO Drugs and Out of State Medicaid Plans
    • No federal requirements exist for covered entities around the prevention of duplicate discounts for 340B MCO drugs. However, current law prohibits states from collecting rebates on Medicaid managed care claims that are filled with 340B drugs. A 2016 regulation from the Centers for Medicare and Medicaid Services (CMS) gave states two options for how to prevent Medicaid MCO duplicate discounts. States can require MCOs to exclude 340B drugs from data sent to the state. States can instead require covered entities to submit 340B claims data directly to the state or its contractors so the claims can be scrubbed from rebate submissions. As a result of these requirements, many states and many MCO’s have instituted specific policies that covered entities must follow to identify 340B claims.
    • HRSA Issues AFIs for Medicaid MCO Duplicate Discounts: Prior to April 2018, HRSA did not include MCO claims in their review of duplicate discount compliance. Beginning April 1, 2018, if HRSA becomes aware during an audit that the covered entity is not following state rules related to duplicate discount prevention for 340B MCO claims, HRSA will note this as an “area for improvement” in the audit report. It is important to verify whether your state Medicaid agency has policies around Medicaid managed care and 340B and if so, that you can comply with those policies. Routinely and periodically audit your claims to confirm compliance with state Medicaid rules.
    • Newsletters related to MCO Medicaid: August 2019 Q&A, November 2019 Q&A, August 2018 Q&A)
    • Turnkey newsletter related to out of state Medicaid: June 2019 Q&A
  4. Policy and Procedure Area for Improvements (AFIs)
    • AFIs newly added in July 2019:
      • HRSA expects CE to review and update comprehensive written 340B Program policies and procedures – Meaning evidence of policy updates is required
      • Address compliance with HRSA’s patient eligibility guidelines at the CE specifically addressing confirmation of eligibility of site location of service resulting in the prescription or drug order; eligibility of provider as employed or contracted with the CE, or through a referral process; ownership and maintenance of the medical/patient health record for the service resulting in the prescription or drug order; and patient relationship to CE as an eligible patient including how outpatient to inpatient status change is determined.  New July 2019 – is that this should be specified for both the CE and the CP
      • Medicaid Related:
        • Address compliance with HRSA’s duplicate discount prohibition at the covered entity and off-site outpatient facilities for physician administered medications when billing multiple state Medicaid agencies.
        • HRSA expects CE to review and update written 340B Program policies and procedures for the prevention of duplicate discounts on covered outpatient drugs reimbursed through Medicaid managed care organizations (MCOs).
        • New July 2019 HRSA expects covered entities to work with their state to develop strategies to prevent duplicate discounts on covered outpatient drugs reimbursed through Medicaid MCOs.
        • After the 2018 data request update and as of July is now an AFI: HRSA expects a written contract pharmacy contracts to accurately identify by name and address all contract pharmacy locations participating in the contract pharmacy arrangement and registered in 340B OPAIS. The information for contract pharmacies recorded in the 340B OPAIS is provided by the Drug Enforcement Administration database.  A covered entity should maintain policies and procedures which describe the process for ensuring names and addresses in the written contract pharmacy contracts are accurate and an identical match to 340B OPAIS.
      • HRSA expects CE to engage in an independent organization to perform annual audits of its contract pharmacies and to review and update comprehensive written contract pharmacy policies and procedures that include performing independent audits of its contract pharmacies.
      • July updated language in red we are curious about because GPO prohibition is added which is not relevant in the CP universe:
        • Address the process for conducting oversight of its contract pharmacies to prevent diversion and duplicate discount by internal audit including elements of testing, frequency, documentation and process for resolving identified issues. 
        • Ensure controls for the procurement of 340B drugs including compliance with the GPO prohibition including for replenishment to (stocking of) contract pharmacies at 11-digit to 11-digit NDC match including a process for maintaining auditable records to demonstrate proper accumulation where 11-digit match is not met;
      • 340B OPAIS accuracy, specifically regular review and timely update of 340B records for contract pharmacies.
    • Turnkey newsletters: Current September 2019 Newsletter and October 2018 Q&A
  5. Corrective Action Plan Expectations and Re-Audit
    • HRSA updated the “CAP Implementation and Repayment” section of its Program Integrity webpage, which now says that “HRSA may re-audit a covered entity to assess compliance with 340B program requirements.” HRSA’s prior policy was to conduct follow-up audits of entities with audit findings requiring repayment.
    • HRSA updated the same section of the webpage to say that when the same non- compliance finding occurs in the first and second audits, the covered entity must submit additional documentation, determined by HRSA, supporting the implementation of the CAP and any applicable repayment to manufacturers. A second audit finding will trigger a third audit. If the third audit results in the same non-compliance violation, HRSA may deem the violation as “systemic and egregious as well as knowing and intentional” and remove the covered entity from the 340B program for a “reasonable period of time.”
    • Under the “Audit Process” tab, in the section titled “CAP Implementation and Repayment,” HRSA says it expects full CAP implementation, including any settlement with manufacturers, to be completed within six months of the CAP approval date.
    • Only covered entities with audit finding(s) must address noted AFI(s) in the CAP. If there are no findings, HRSA does not require a written response but expects the covered entity to implement the AFI and states they reserve the right to require additional information related to the implementation of the AFI in the future.
    • Beginning April 1, 2018, covered entities subject to targeted audits and re-audits must provide to HRSA additional documentation before HRSA will close the audit. HRSA added this requirement to the Data Request List for audits. This information includes:
      1. A description of how the covered entity determined the full scope of non-compliance
      2. A list of all affected manufacturers, a copy of the letter offering repayment to manufacturers, and a list of all settlements with manufacturers
      3. Documentation of continuous monitoring with periodic assessment related to the previous finding(s)
    • HRSA expects 340B covered entities to submit a CAP when filing a non-compliance self- disclosure. That is not a new policy, however, HRSA included in an August website update that self-disclosure CAPs, including any settlement with manufacturers, are expected to be completed within 6 months of submitting the disclosure to HRSA. Not meeting this expectation may subject the covered entity to an HRSA audit. HRSA expects periodic progress reports, as specified, and a final report at the end of the 6 months.
    • Turnkey newsletter discussion on CAP expectations: July 2018

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FQHC Updates from the Summer Coalition Conference

It is hard to believe that summer is almost over. The threat of fall is already in the air here in Maine and I am missing that sweltering D.C. heat we enjoyed at the Summer Coalition conference. The conference was highlighted by the positive message that at least for the time, the 340B environment in Washington is not as overtly hostile as it previously was and that politicians have shifted their focus to areas like the upcoming presidential election and other more pressing social issues. We learned that the 340B battles are moving to the state legislature. Here there have been some positive developments, as was the case in West Virginia, where a PBM reform bill was passed protecting 340B pharmacies from discriminatory pricing, and some less than positive developments in states like California.

One big area of change noted at the conference was for the FQHC’s where changes have been made to the 340B review process and sliding fee scale expectations have been clarified to some extent.

In 2015, the Bureau of Primary health Care (BPHC) added questions about 340B to the official operational site visit (OSV) protocol. The questions involved demonstrating that appropriate 340B policies and procedures, contracts and program oversite were in place. If areas of concern were noted when reviewing these screening questions, covered entities had the potential to receive a formal HRSA audit. Earlier this year, BPHC officially removed the 340B questions from the OSV protocol. This was likely due to variation and limited 340B expertise among auditors.

While the 340B screening questions have been removed from the OSV, two areas of 340B focus were highlighted at the Summer Coalition conference. One is that the OSV auditors are asking the FQHC staff if they are completing their annual 340B external audits. The second is that there are now formalized expectations being vocalized for pharmacy services sliding fee scales.

The 340B program has no requirements regarding how much patients should be charged for 340B drugs.  HRSA’s sliding fee scale rule for pharmacy applies only to the service fee and not to the medication charge itself. HRSA does not require that the ingredient cost be subject to a sliding fee scale (SFS), but FQHC’s can choose to apply further discounts beyond that of the service fee. The pharmacy SFS can be structured differently from the other SFS’s offered by the health center. Based on BPCH’s standard sliding fee rules, the dispensing (service) fee should be no more than a nominal fee for those below 100% of the federal poverty limit (FPL), have at least three slide levels between 101% and 200%, and have no discount above 200% of FPL. The expectation has been expressed that the SFS’s are offered at both the FQHC’s in-house and contract pharmacies.

The application of the pharmacy sliding fee scale levels should correspond with those of the health centers medical sliding fee scale and they should use a shared enrollment process. For contract pharmacies, the TPA’s may be able to assist in developing the mechanisms to allow for patients to access sliding fee scale prices on their 340B prescriptions. If a TPA is not able to provide a solution, external pharmacy benefits managers may be able to assist in setting up the contract pharmacy sliding fee scale program. Failure to apply sliding fee scales at in-house and contract pharmacies could result in area for improvement findings during OSV reviews.

We are always happy to help if you have questions about sliding fee scales or anything else!

Sample Sliding Fee Scales

FPL Level Dispensing (Service) Fee Model Flat Fee Model
greater than
No discount No discount
199-150% $12 + Cost of Medication $20
149-101% $8 + Cost of Medication $10
100-1% $3 + Cost of Medication $5
No Income $0 + Cost of Medication or No Charge No Charge

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Outpatient Prescriptions from Covered Entity Internal Hospitals With & Without Child Site Registrations

Happy Summer Everyone, as we are just wrapping up the July OPAIS registration period and the 340B hospitals are ramping up for recertification, it seemed a great time to talk about hospital child site registration or the lack there of and how this impacts 340B prescription eligibility. This blog is intended to build on Rich Bucher’s article from last month. During the last year, I have encountered a number of hospitals with OPAIS database listings which include a historic registration of “child site hospitals” as well as individual registrations for each of the departments within the child site hospital. During discussions onsite, the 340B teams are often leery of removing these registrations as they still intend to capture 340B discharge prescriptions from the “child site hospital”

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Inpatient Discharge Prescription Clarification

Inpatient Discharge Prescriptions

Traditionally, hospital discharge prescriptions written for eligible patients at eligible locations have generally been understood to be 340B eligible – regardless of whether they were written in connection with a hospital outpatient service ultimately billed as an outpatient service (i.e., outpatient discharge prescription) or with a hospital inpatient service ultimately billed as an inpatient service (i.e., inpatient discharge prescription). This is because after discharge, these prescribed drugs are to be used on an outpatient basis.

This general understanding was challenged by the Health Resources and Services Administration (HRSA) proposed Omnibus Guidance (a.k.a. “Mega Guidance”) in August 2015. Among other changes, the Mega-Guidance proposed changes to the current patient definition, including that only outpatient discharge prescriptions would be eligible. In a 2016 survey by 340B Health of hospital covered entities regarding the loss of inpatient discharge prescriptions, 81% of the respondents indicated they would lose discounts, with 57% saying they would struggle and 11% saying they could be forced to drop 340B altogether.

Confusion Regarding Unregistered Offsite Locations

In January 2017, the proposed Mega-Guidance was withdrawn and thus the common understanding continued that both inpatient and outpatient discharge prescriptions were eligible –when written in connection with a hospital service at an eligible location. However, based on our experience, until recently there has been a lot of concern over just what constitutes an eligible location. More particularly, for many it has not always been clear if an offsite inpatient location that is an integral part of the hospital, but that is not registered as a child site on Office of Pharmacy Affairs Information System (OPAIS), can be considered an eligible location. This general concern was reflected in an April 14, 2016 letter from 340B Health to HRSA. This letter explained that there was no guidance requiring registration of inpatient locations in order to use 340B drugs for discharge prescriptions from those locations. This letter also detailed the long history of HRSA approving such use. Later, 340B Health indicated that HRSA had informed it that 340B could be used for discharge prescriptions written following care that was delivered in an inpatient location. For many, the question of whether offsite inpatient locations had to be registered remained. Based on our experience supporting numerous clients during formal HRSA audits, 340B discharge prescriptions from unregistered offsite inpatient locations continued to be questioned and treated with skepticism by auditors, though no formal findings for these clients were issued to our knowledge. As a result, many of our hospital clients have been hesitant to qualify discharge prescriptions from unregistered offsite inpatient locations.

Recent Apexus Guidance

Because of the general confusion regarding discharge prescriptions from unregistered offsite locations, we reached out to Apexus on several occasions seeking guidance. Recently, we received guidance that confirmed that 340B eligible discharge prescriptions may include those originating from a location considered to be an integral part of the covered entity and having either inpatient or outpatient costs/charges on the covered entity’s most recently filed Medicare cost report (MCR). Very recently, Apexus released an FAQ (FAQ 2693, Last Modified 05/21/2019) that appears to formally confirm the guidance we received:

FAQ ID: 2693

Last Modified: 05/21/2019

Q:  Can a covered entity use 340B for discharge prescriptions from a child site hospital that does not have outpatient clinics to register?

A:  Discharge prescriptions are allowed as long as the prescription originated from a location that is considered an integral part of the covered entity and has reimbursable costs and charges on the covered entity’s Medicare Cost Report.

Although the question of this FAQ is directed to “a child site hospital, the answer appears to confirm the traditional understanding that discharge prescriptions written for eligible patients can be 340B eligible – regardless of whether they are inpatient or outpatient discharge prescriptions. This interpretation appears to be supported by 340B Health, which has stated that this FAQ clarifies that hospitals can use 340B discharge prescriptions that originate from all locations with reimbursable costs and charges on its MCR, and not just outpatient locations.

Apexus also recently released another related FAQ 2692, Last Modified 05/21/2019confirming that inpatient locations with observation beds do not have to necessarily be registered and acknowledging that 340B eligible patients may receive healthcare services in observation beds located in inpatient sections of the hospital. This FAQ indicates hospitals must be able to explain how they remain responsible, maintain auditable records, and have 340B policies/procedures defining inpatient/outpatient and how it relates to observation patients.

We encourage hospital covered entities to become familiar with these FAQs and to review the comments made by 340B Health and to reach out to Apexus with further questions. Of course, we are available for consultation as well.

Note: For clarification, if you do not register the child site hospital inpatient/observation locations, then you can only capture discharge prescriptions. 340B is not available for administered drugs for patients at unregistered locations, including observation patients of unregistered inpatient locations.

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Medicare Site Neutral Payments – Changing Healthcare

To preface, Medicare site neutral payments refer to the technical portion of outpatient bills. This does not refer to drug reimbursement cuts down to ASP minus 22.5% for 340B sites, which is a totally different topic (especially with a federal court judge determining that the drug reimbursement Part B cuts by Medicare are in violation of federal law). Site neutrality is the Medicare change in reimbursement to mimic private physician billing and hospital outpatient departments that are more than 250 yards away from a hospital. This financial payment reduction is not 340B specific and applies to all hospitals. 

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OPAIS Database: Missing Points and HRSA Findings

Turnkey has had the opportunity to support over 45 HRSA audits for our amazing clients.  One thing we have noted from each audit is the close evaluation of the new 340B Office of Pharmacy Affairs Information System (OPAIS) database and entity’s information.  Apexus tells us the purpose of the OPAIS database “increases the integrity and effectiveness of 340B stakeholder information and focuses on three key priorities: security, user accessibility, and accuracy.
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HRSA Audit Highlights

We have been busy supporting our wonderful clients on HRSA 340B audits almost constantly throughout the year, but in the recent months we have seen some changes. Here is a quick update on things we have seen that may catch you off guard if you’re not prepared.

First, whether you are carve-in or carve-out, you will very likely be asked to provide UB04/HCFA 1500 billing claim forms for all 28-33 sampled claims. Additionally, you will be asked to provide UB04 claim forms for all out-of-state Medicaid plans you have billed and to do this, the auditor will go outside of the audit period, as far back as necessary to complete the request.

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The Medicaid Challenge

It was great to see everyone at the 340B Coalition in San Diego last month. Thank you to everyone that stopped by Turnkey’s booth to say hello. We hope you had the chance to find out more about Turnkey’s affiliates, cutting-edge central supply chain service, Trulla, and the newly updated optimization service, Elevate.

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Transparency for Everyone

In 2018, meaningful conversations around 340B have included transparency. Many covered entities, large and small, have embraced the notion of transparency in their 340B program. In order to protect the 340B program, CEs have put pen to paper and began telling their stores of how 340B savings are being utilized. I think we can agree, we have all been waiting for manufacturer to follow suit.

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