Selecting a 340B Software Solution

February 2019 - Vol.16 No. 2 - Page #18

The 340B drug pricing program plays a critical role in helping eligible facilities stretch resources to provide patients more comprehensive services. To ensure continued program eligibility, covered entities (CEs) participating in the program must recertify annually, prevent diversion of 340B drugs to ineligible patients, prohibit duplicate discounts, and prepare for audits.1

According to Pharmacy Purchasing & Products’ 2018 State of Pharmacy Automation Survey, 61% of health systems participate in the 340B drug pricing program.2 As the number of facilities participating in 340B increases, the program continues to receive heightened attention, with participating health systems experiencing varying degrees of success ensuring program compliance.

To facilitate compliance, CEs typically partner with vendors that prepare them for 340B requirement changes and support them through the increasing number of Health Resources and Services Administration (HRSA) audits.3 For example, CEs must separate 340B and non-340B eligible patient transactions through separately managed inventories, or more commonly, by utilizing 340B split-billing software, helps avert the challenges associated with limited physical space and complex operational processes. Choosing a 340B split-billing software solution requires a comprehensive understanding of a facility’s needs and the functionalities of the various software solutions.

Choosing a Software Solution

Split-billing software separates a purchase order into different accounts using logic based on configurations chosen by the CE to divide qualifying transactions virtually, either in real time or at a defined interval.4 A neutral physical inventory is established, and data is collected about dispensed medications, which facilitates reordering based on the appropriate accumulations from a utilization report.4 The 340B software vendor assists with implementation, user training, and longitudinal support of the software solution. Properly calibrated 340B split-billing software and supporting processes can be a critical asset to CEs, but risk abounds for any CE that has not pursued a robust request for proposal (RFP) process and thoughtfully chosen a software solution and supporting vendor for optimal 340B compliance and program support.4

Whether launching a new 340B program (see SIDEBAR) or switching to different split-billing software, the vendor selection process should be multidisciplinary. Many institutions have a multidisciplinary 340B committee in place that can be leveraged when reviewing vendors; participation from the various members of the committee will increase the value to the RFP process and the credibility of the final outcome. While the pharmacy department should lead the program and direct the RFP process, the RFP committee—in particular team members from legal, the internal audit or compliance departments, and finance and/or business services—are key to the software selection process.

If the 340B software is powered by a custom query with extensive data elements, early engagement of the informatics team will yield an expedited transition. When considering an integrated solution that performs the split-billing function for both hospital outpatient drug utilization as well as contract pharmacy prescriptions, be cognizant of the fact that some large retail pharmacy chains require the use of proprietary software to manage their contract pharmacy relationships. In this situation, consider minimizing the burden of sending multiple data feeds to multiple vendors, as this can become a challenge for auditing.

The hard truth is that there is no ideal time to switch vendors. In times of transition, it is critical to be aware that additional risks may arise; for example, having a corrective action on record (perhaps the problem which prompted the transition to a new software solution) may increase the risk of an audit, which highlights the importance of keeping detailed action records. A finding of non-compliance in two or more audits, depending on the type of violation, may be considered systematic, which could result in the CE being removed from the 340B program and disqualified from re-entry for “a reasonable period of time,” as described by HRSA.5 When creating and implementing a corrective action plan (which may include transitioning vendors), remember that no software solution is perfect; each has strengths and weaknesses. Avoid conveying to senior leadership that any 340B software solution or vendor relationship will provide absolute certainty of compliance. Robust pharmacy oversight remains critical to ensuring 340B compliance.

Nonetheless, choosing the right 340B software vendor for your organization pays strong dividends in terms of creating an effective program, preventing duplicate discounts, and supporting audits. The process for evaluating software vendors can be broken into three areas of focus:

  1. Vendor support
  2. Software functionality
  3. Workflow design

Vendor Support

Level of Service

While overall service levels vary among vendors, one crucial consideration is whether ongoing customer support is included in up-front costs or is provided at an additional cost. Some vendors offer tiered services with different pricing levels. While some vendors provide extensive assistance with reporting and troubleshooting, others expect the entity to manage these tasks on their own. Inquire about turnaround time for support requests and the mechanisms to submit requests for faster resolution.4 The vendor may offer a strategic account manager; access to this consistent contact, whether onsite or remote, will be critical during an audit. A secondary contact may also be valuable, as some institutions have found it helpful to have a secondary contact when issues must be escalated beyond the account manager. The contract between the vendor and the CE should include a written service level agreement (SLA) that addresses these arrangements and services.

Audit preparation should begin prior to the software implementation. Determine the ability of the vendor’s project team to view data and accumulations prior to going live. Will the vendor assist in checking and verifying claims post-implementation? Some vendors will be available onsite in the event of an audit to ensure that all questions concerning software use are accurately addressed; for others, this is a higher tier of service with additional fees.4 While data integrity is a baseline expectation, how that data is supplied to the CE can vary. There is value in requesting that the vendor prepare reports or dashboards instead of sending raw data that requires additional effort to format.

The level of industry expertise and direct customer support are critically important considerations when evaluating vendors. While the CE is ultimately responsible for the configuration of the split-billing system, the vendor’s account representative should have the requisite 340B knowledge and skill to function as a trusted advisor. Establish a schedule for regular telephone calls to discuss open issues, ongoing projects, and upcoming system enhancements. Implementing weekly or twice-monthly discussions with an account representative is a valuable way to ensure both parties are accountable to one another.

Staff Training

A vendor’s ability to provide and/or support a staff training plan should be a primary driver in awarding a 340B software contract. Determine what initial education will be provided for team members. It is highly advantageous to have robust software support and report guidance during program implementation. Determine how follow-up training and/or question-and-answer sessions will be handled once users become familiar with the tools. Are training services included in the price or will additional fees be required? If possible, continue regular project management calls with the vendor for up to 3 months after going live to allow for the rapid resolution of any post-implementation issues.4

Software Functionality

Ease of Use

As with any software selection, usability and customer support are key selection criteria. This is particularly important as user interface design, layout, and customization (eg, labeling, readability, etc) impact user fatigue. In addition, consider the speed of the software when evaluating functionality. An aesthetically pleasing interface is of little value if the report query times are slow. Ask if the vendor offers SLA on-help ticket response times. In addition, vendors should provide a historical update frequency and a list of enhancements made based on user requests. Potential customers may also inquire as to how enhancement priorities are decided. User experience sites, such as KLAS Research, offer a wealth of information based on actual user feedback.

Type of Interface

Vendors typically have established interfaces with the most common electronic health records (EHRs), medication inventory management systems, and financial systems. Determine whether interface setup is included in the implementation cost. Does this change if the vendor does not have established interfaces with the CE’s current systems? If the EHR software does not have an integrated admission, discharge, and transfer (ADT) interface, this must be considered as well, as a recurring extract/upload process will need to be designed and automated.

Ascertain whether the vendor offers a real-time interface or sends program information through a static file at regular intervals (or both, depending on the need). A well-designed, recurring flat file upload can sufficiently service program efforts, but real-time interfaces are preferred in split-billing software configuration, if resourcing is available. Determine what data must be conveyed in reports, as well as how frequently data should be uploaded to support appropriate reporting (if a real-time interface is not utilized). Daily file uploads are ideal in this situation. Equally vital is that the interface ensures the security of the CE’s data during file transmission.

NDC Crosswalk

The accuracy of the National Drug Code (NDC)/Charge Description Master (CDM) crosswalk is a significant driver of 340B program compliance and supporting workflows. Consider whether the software uses a rules-based engine or an NDC-to-NDC match (note that the CE’s EHR software may influence this decision as well). Accumulation and replenishment should use an 11-digit NDC match as the standard process.4

If a query will drive software accumulation via an algorithm, ensuring that internal resources have sufficient bandwidth and are available to respond to query needs will be critical; keep in mind that any query that makes assumptions will likely affect compliance in a negative manner. Even if the hospital has BCMA in place to capture the medication’s NDC at the point of administration, most EHR systems are configured so that medication line items have a one-to-many (line item to NDC) relationship, with one NDC being configured as the primary source of truth. This results in the accumulation being tied to an NDC that may be inaccurate. Thus, the NDCs purchased must be correctly linked to the charge number and continually updated to ensure correct accumulation of products in the split-billing software. Some available EHR and financial systems are designed to allow data to flow from the financial system, and the unit of measure may be converted (eg, to a HCPCS J-Code) in the EHR or financial system side. It is critical that the 340B team understands the feeds that generate accumulations, and is able to chart this pathway (see FIGURE).

Provider Identification

The ability to accurately identify providers can also impact compliance. Some vendors require a list of providers who practice only in 340B eligible areas, while other vendors accept separate lists of providers who are solely 340B as well as those who occasionally work in 340B-eligible areas. HRSA defines best practice as combining a provider list with a patient encounter file and cross-referencing the two to screen out any non-eligible appointments and supporting dispenses. Additionally, confirm that the software has the functionality to avoid accumulation for non-covered outpatient drugs and provide a documented audit trail and rationale.4

For entity-owned outpatient pharmacies and contract pharmacies, some vendors now offer prescription qualification filters that are based on a data feed of organization-generated e-prescriptions. If the e-prescription includes the location of service from which the prescription was generated, this qualification filter can be valuable to ensuring compliance.

Workflow Design

Performance Indicators

Assess the software’s top-line metrics for monitoring the overall performance of the 340B program. Key performance indicators that warrant ongoing review include:

  • Savings gleaned from the 340B program
  • The percentage of the organization’s drug spend that is made on the wholesale acquisition cost (WAC), group purchasing organization (GPO), and 340B purchase accounts
  • Drugs most frequently purchased at the WAC price

These, and any other metrics deemed important, should be available in the split-billing application in near real time with minimal data manipulation required.

For organizations with multiple CEs, assess how the software application handles each entity as well as the interplay between the different CEs. Does the application support running aggregated reports for multiple CEs at once? If the application is used to manage contract pharmacy arrangements, can it support testing the same prescription for contract pharmacy eligibility for multiple CEs? The multiple-CE workflow for contract pharmacy prescriptions becomes especially important for cases in which several CEs share the same medical staff members.

The organization should also assess the ability of the system to support required 340B-adjacent functions. For example, with Medicaid claims for outpatient physician-administered drugs, a number of states require the application of claim modifiers and/or repricing of the drug price on the claim.6 Consider whether it is necessary to select a split-billing application that has the capability to meet these requirements. Alternatively, the organization could work with another firm (eg, the organization’s claims management vendor) to perform these claim modifications. Additionally, when 340B drugs are used, CMS now requires the application of JG and TB claim modifiers for Status Indicator G and K medication under the Outpatient Prospective Payment System.7 The organization will need to implement an approach to ensure compliance with CMS billing requirements; a split-billing software system might be one such option.

Carve-In vs Carve-Out

The CE must designate if it will carve-in or carve-out for Medicaid, and then comply with all state requirements. This can become increasingly complicated as institutions carve-in for dispensing in additional states, because regulations vary by state. CEs should be aware of the state Medicaid requirements for avoiding duplicate discounts, for both the fee-for-service program and any or all managed Medicaid programs. This applies to dispensed medications billed through the pharmacy benefit and also those medications billed through the hospital benefit.8 Two broad considerations related to the split-billing software system and 340B Medicaid billing compliance are important:

  1. Assess the expertise of the vendors’ staff in developing a compliant approach to 340B and Medicaid
  2. Investigate the extent to which the software application can be customized to ensure compliance with the Medicaid billing rules for each state (eg, is the software capable of applying a claim modifier and/or repricing a Medicaid claim to the actual acquisition cost?)

Capture Manual Manipulations

Because manual manipulations may be required to address issues such as manufacturer-direct purchases or drop-shipped items, carefully assess both the audit trail and the suite of reports available to proactively monitor manual adjustments. Review the number of characters allowed in the notes field accompanying a manual adjustment; because a significant amount of detail is often required to ensure useful, auditable records, a robust note field is important. The software should also have a mechanism to record purchases outside of standard data feeds. CEs should map out the approved loan-borrow workflow so that accountability and other compliance considerations, such as the Drug Supply Chain Security Act, are addressed.

Maximize 340B Benefits

The ability to maximize the 340B benefit depends on the level of active monitoring and support provided by the vendor. Assess the workflow in place to assist the pharmacy buyer in utilizing the most financially advantageous purchase account. In cases where the 340B price is not the lowest price, does the software make this information visible to the buyer? Additionally, the system should have the capability to report an “adjusted WAC percentage” when the WAC price is equal to the 340B price.

Review how the vendors under consideration actively monitor the data feeds for completeness. Ideally, the vendor should have a system in place to detect situations in which the organization stops sending a data feed or sends an obviously truncated report (eg, a report with 100 lines of data instead of 5,000) due to unplanned downtime or an interface break/fix, etc.

Future Considerations

While 340B savings must be allocated to support the program, HRSA currently does not require CEs to report how savings are reinvested; however, recent policy discussions suggest this may be a future requirement.9 Thus, consider formalizing how savings from the program will be applied within the institution. Some split-billing software vendors are beginning to offer services to support organizations in meeting the intent of the program “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”10 One such example is a tool that facilitates CE-sponsored medication assistance programs for indigent individuals.


Ultimately, compliance with the 340B statute, as well as HRSA’s regulations and guidance documents, is an institutional responsibility, as the results of a HRSA audit will broadly impact the institution’s ability to provide care to indigent patients. To maintain eligibility for the 340B program, CEs must remain abreast of program changes and ensure compliance with all program provisions. Thoroughly researching and vetting the available 340B software solutions, and the vendors that offer these tools, is vital to choosing and implementing a solution that meets the comprehensive needs of the organization.


  1. Health Resources & Services Administration. 340B Drug Pricing Program: Program Requirements. Accessed January 11, 2019.
  2. 340B. Pharm Purch Prod. 2018;15(11):46.
  3. KLAS Research. 340B Split Billing 2017. Who Can Help Providers Adapt to a Changing Market? KLAS. February 2017 Performance Report. Accessed January 29, 2019.
  4. Apexus 340B Prime Vendor Program. 340B Vendor Decision Checklist. Accessed January 7, 2019.
  5. HRSA website. 340B Drug Pricing Program. Accessed January 7, 2019.
  6. Visante website. 340B Program Threats in 2018. Accessed January 7, 2019.
  7. Centers for Medicare and Medicaid Services. Medicare-FFS Program. Billing 340B Modifiers under the Hospital Outpatient Prospective Payment System (OPPS). Accessed January 7, 2019.
  8. Cooper C. Tips for ensuring 340B program integrity. Pharm Purch Prod. 2018;15(2):2.
  9. Abbasi G. Ensuring 340B program integrity. Pharm Purch Prod. 2018;15(7):26,28,30,31.
  10. Schatz LN, Paul-Aviles F. Chapter 7: 340B Policies and Procedures. In: Wilson AL, ed. The 340B Program Handbook: Integrating 340B into the Health-System Pharmacy Supply Chain. Bethesda, MD. American Society of Health-System Pharmacists; 2018.

David Aguero, PharmD, DPLA, is the director of medication systems and informatics at the St. Jude Children’s Research Hospital, and an assistant professor at the University of Tennessee Health Science Center.


John P. Gray, PharmD, MS, was the director of enterprise 340B operations at Keck Medicine of the University of Southern California (USC), and adjunct assistant professor of clinical pharmacy practice at the USC School of Pharmacy, when this article was written.



Supporting New 340B Program Launches

For those facilities that are initiating a 340B program for the first time, it is important to keep in mind the high likelihood of being audited. As such, choosing a software vendor that provides robust split-billing functionality is critical to establishing an effective program. The following issues should be resolved before embarking on an evaluation of software vendors:


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