What is the Criteria For a Hospital to Qualify for 340B? – Part 3

This is the third video in a series on leveraging the 340B drug discount program. This discussion focuses on Disproportionate Share Hospitals (DSH), which serve a significantly disproportionate number of low-income and Medicaid patients. See Part 1 and Part 2 here.

To take advantage of the 340B opportunity, hospitals must meet eligibility criteria to be considered a covered entity, and each prescription must meet specific criteria to qualify for 340B pricing. First and foremost, the disproportionate share hospital must meet one of the 340B program’s hospital ownership requirements:

  • Be owned and operated by a state or local government.
  • Be a public or private non-profit corporation that a state or local government unit has formally granted governmental powers.
  • Be a private non-profit hospital with a contract with a state or local government to provide health care services to low-income individuals who are not entitled to benefits under Medicare or Medicaid.

Second, the hospital must sign a written certification stating that it will no longer purchase outpatient drugs through a group purchasing organization (GPO) arrangement. Lastly, it must have a Medicare cost reporting percentage of greater than 11.75%.

What is the 340B Registration and Recertification Process?

Entity Registration and annual recertification take place on the 340B Office of Pharmacy Affairs Information System (340B OPAIS). In addition to covered entity registration/recertification, the site is also used for manufacturer registrations, change requests, and other updates. Registration is open for approximately two weeks on a quarterly basis each January, April, July, and October for hospitals and clinics. Following submission of their application, the Office of Pharmacy Affairs (OPA) reviews and determines final eligibility, with the earliest opportunity to start purchasing outpatient drugs on the discount being the next quarter. During the three-month waiting period, the hospital has an opportunity to establish their 340B policies and procedures. This can include determining which 340B vendors to work with for contract pharmacy relationships, implementing new software for mixed-use/split billing services, and select their 340B team responsible for maintaining program compliance.

Annual recertification is required to be completed by the Authorizing Official on the OPAIS website to continue to participate in the program. In addition to registration and recertification, the 340B entity must maintain program compliance by preventing duplicate discounts and diversion in the program.

If your hospital and health system clients are not taking advantage of 340B, they may be missing out on significant pharmacy savings. To find out more about 340B and other strategies to help your hospital clients lower their pharmacy benefits costs without the conflict inherent in most PBM contracts, check out our free e-book, The Complete Guide to Maximizing Pharmacy Benefits for Hospitals.

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