340B Software Maintenance Strategies

April 2014 - Vol.11 No. 4 - Page #6
Category: 340B Software

As more hospitals and health systems continue to invest in and implement information technology solutions in all aspects of the medication use process, many are learning that pharmacy-management software is often expensive and requires significant time, coordination, planning, and training for its value to be fully realized. However, these factors are largely front-loaded toward initial implementation goals, which can overshadow the development of vital and necessary maintenance strategies for continued and efficient use. Realizing the full capability of a new information system is certainly important, but it is the maintenance of that capability that will facilitate a financial and operational return on investment. Therefore, in addition to coordinating the implementation and optimization phases of an information technology project, institutions must adopt a robust and continuous plan for proper maintenance and auditing of the software program.

The federal 340B Drug Pricing Program (340B) enables eligible hospital entities to offset expenses associated with charitable care by allowing these entities to purchase medications at a discounted rate. While this is clearly a benefit in theory, many covered entities face significant challenges in ensuring compliance with the program’s complex medication inventory management, auditing, and tracking requirements. Among the primary tenets of the program, drugs purchased through the 340B program may only be dispensed by a covered-entity physician to outpatients of the covered entity. Furthermore, patients must also receive health care services other than drugs from the covered entity (the only exception being patients of state-operated or state-funded AIDS drug purchasing assistance programs). In order to comply with this requirement, 340B program hospitals and clinics must have a process in place to split purchased medications into 340B and non-340B inventory, as well as track and audit that medications purchased through 340B are only dispensed to 340B-eligible patients. Overall, 47% of US hospitals participate in the program and many of these facilities have implemented management software to aid in adherence to 340B program requirements.1

340B Requirements
Given its long-time service to a disproportionate share of uninsured patients, the University of North Carolina Medical Center (UNCMC), a 843-bed academic medical center located in Chapel Hill, has been a 340B covered entity since 1992. In order to take full advantage of the program and exercise control over its administration, UNCMC went live with a 340B management software in November 2011 allowing the institution to demonstrate, maintain, and validate auditable records of all 340B-eligible dispensations and patients.

The Health Resources and Services Administration (HRSA) has the authority to audit covered entities for compliance with the 340B program. In doing so, HRSA requires entities using split billing software to be able to audit individual purchases and dispensations to demonstrate a direct correlation between medications bought at 340B prices and dispensations to 340B-eligible patients. Furthermore, covered entities are prohibited from requiring manufacturers to pay discounts or rebates under both the 340B program and the Medicaid Drug Rebate Program. Entities also are prohibited from reselling 340B drugs, at any cost, to a person who is not a patient of the covered entity. Failure to comply with these mandates may lead to expulsion from the 340B program and the 340B-covered entity may be liable to manufacturers for refunds of any discounts conferred. As of January 2014, 51 entities have been audited by HRSA for 340B compliance; soberingly, only 26 of these entities had no adverse findings as a result of the audit.2

Auditing for Compliance
Recently, the 340B program has come under increased scrutiny by various stakeholders resulting in the need for more internal oversight, auditing ability, and fully transparent accounting practices. To ensure continued compliance, UNCMC engaged its group purchasing organization—given their 340B program knowledge—to perform a one-time compliance review. As a result of this review, it was clear that periodic internal audits must be continually conducted to identify any 340B system or process issues that may arise in the future. This was the impetus for a similar comprehensive analysis of the state of UNCMC’s utilization of 340B management software in October 2013. 

Over the course of four weeks, we interviewed all current 340B management software users, contacted the vendor for additional clarifications, and performed an audit of the top 80% of drug expenses for proper mapping. The vendor was able to clarify our data interfaces, the processes for uploading and maintenance of coding specific to UNCMC locations, as well as UNCMC’s utilization of specific aspects of the program. The analysis identified several maintenance opportunities in our utilization of the 340B management software and designated 12 distinct aspects of the software that need to be audited on a regular, on-going basis (see TABLE 1). After completing the assessment, administration supported the establishment of a previously budgeted full-time position to foster ongoing compliance, perform and manage program audits, and maintain program readiness in the event of a HRSA audit. An integral part of this position’s responsibilities is performing routine audits and maintenance of the 340B management software used to run the program.

Upon completion of our administrative assessment, we established several ongoing initiatives to ensure proper maintenance and upkeep of the 340B management software. The following ten steps can be applied to any software maintenance initiative:

  1. Ensure clarity of all data feeding into the software 
  2. Ensure understanding of all data output from software 
  3. Keep a record of all data input into the software, including system coding 
  4. Implement a process to monitor for and initiate any new updates for required data input 
  5. Have more than one software content expert available within the institution, with a proper succession plan
  6. Review all software processes to delineate the necessary steps to audit 
  7. Establish a formal procedure for performing the necessary audits
  8. Periodically review software support for optimization opportunities
  9. Maintain open communication with the software vendor to enable timely updates and attendant training
  10. Dedicate the resources necessary to assure proper utilization of implemented software 

The intricacies of the 340B program combined with the complexities of 340B management software require strategic approaches for entities to ensure compliance with such a valuable drug purchasing program. UNCMC’s utilization of 340B has benefited from the dedication of a full-time position to proactively monitor and refine program compliance. Prioritizing and building structure around the maintenance of 340B management software has provided UNCMC with improved confidence that the institution maintains the integrity of inventory management, tracking, and auditing requirements. Only 50% of the entities that have had (or are currently undergoing) a HRSA audit report no adverse findings, so other covered entities also may benefit from dedicated resources to ensure 340B compliance, especially in regard to the maintenance of 340B management software.


  1. 340B Data. 2013 State of Pharmacy Automation. Pharm Purch Prod. 2013;10 (8): 92.
  2. 340B Drug Pricing Program & Pharmacy Affairs. Program Integrity: Audit Results. Health Resources and Services Administration. Results updated January 4, 2014. Available at: www.hrsa.gov/opa/programintegrity/auditresults/index.html
  3. Apexus 340B Compliance Self-Assessment: Policy A quick Self-Assessment for DHS Leaders; October 2013. Available at: https://docs.340bpvp.com/documents/public/resourcecenter/DSH_340B_Compliance_SelfAssessment_Policy.pdf

Shailly Shah, PharmD, BCPS, is a post-graduate year-two health system pharmacy administration resident at the University of North Carolina (UNC) Hospitals and is currently completing her master of science in health system pharmacy administration at the UNC Eshelman School of Pharmacy. She received her doctor of pharmacy from the University of Pittsburgh School of Pharmacy.  

Robert Granko, PharmD, MBA, is an associate director of pharmacy at UNC Hospitals. He graduated with his bachelor of science in pharmacy from Long Island University’s School of Pharmacy. Robert received his doctor of pharmacy from the University of North Carolina at Chapel Hill and his master of business administration from Pfeiffer University’s School of Graduate Studies.

Scott Savage, PharmD, MS, is the associate director of pharmacy at the UNC Hospitals’ Shared Services Center. He received his doctor of pharmacy from UNC at Chapel Hill and his master of science in health system pharmacy administration from The Ohio State University while completing a residency at the school’s Wexner Medical Center in Columbus, Ohio. 


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