340B Vendor Selection

Pharmacy Practice in Focus: Health SystemsMarch 2018
Volume 7
Issue 2

Among the most important members of the 340B team of a covered entity (CE) are the software vendors.

Among the most important members of the 340B team of a covered entity (CE) are the software vendors. Their primary function involves providing software that, based on the CE’s data elements for its internal and contract pharmacy relationships, drives 340B operations, including reporting capabilities to maintain auditable records for compliance and financial review. Software vendors also maintain support staff to troubleshoot problems and operational issues. Although it is the CE’s responsibility to use the software to meet program requirements established in policies and procedures, CEs rely on vendors for proper implementation, initial education, and user training. The more the CE knows about an application’s behavior in certain scenarios, the better equipped it can be to leverage software capabilities instead of reacting to unintended consequences.


Whether a CE intends to switch platforms or embark on its first vendor search, engaging a wide range of stakeholders early in the process is important. For example, a 340B coordinator may prefer a specific vendor with strong compliance reporting capabilities. However, an informatics specialist could find that the same vendor does not support the CE’s file transfer process.

When considering vendors, CEs should create a list of their interests and needs. Perhaps the entity is new to 340B and requires further program education. New entities may share their need for information on regulations and compliance elements with the vendor. What educational tools are available? Is the vendor’s frontline support staff knowledgeable about 340B regulations? Those who seek a switch should make a list of pain points with their current vendor for competitors to address. Regardless of the question posed, CEs should require that vendors provide specific answers on how their product or customer support addresses the primary areas of need.


Generally, the primary areas of consideration when evaluating 340B software vendors are compliance, finance, and customer support. Here is a closer look at each:

Compliance. The software must meet minimum requirements for 340B policy, such as preventing duplicate discounts and diversion; compliance with the group purchasing order prohibition for disproportionate share hospitals, freestanding cancer hospitals, and children’s hos- pitals; and compliance with the orphan drug rule for freestanding cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals. It also must be able to establish patient status and location consistent with the 340B patient definition. For additional consider- ations, see Apexus’ tool featuring a wide-ranging list of vendor compliance considerations.1

Finance. Financial considerations include more than just implementation and support costs of the 340B software vendor. Review whether a vendor’s software can support contractual requirements for the CE and its partners (ie, the contract pharmacy relationships). For example, a vendor promising lower monthly fees may not be the best value if it has hidden costs or its software requires burdensome maintenance by frontline staff.

Several types of cost structures exist for 340B software vendors. Common continuing costs include monthly subscriptions and volume-based fees depending on the num- ber of transactions reviewed by the vendor. Hidden costs include claim reprocessing fees, implementation fees, and travel costs for on-site training. Vendors that require a profit-sharing model could pose a conflict of interest because, whether intentional or not, the vendor is incentivized to qualify claims. Finally, if switching vendors, consider the cost involved. A change requires retraining staff and could mean starting over with accumulations, creating a negative financial impact.

Support. This area incorporates continuing, implementation, and information technology (IT) data support provided by a vendor. Both parties must ensure that the vendor’s software is compatible with the CE’s wholesaler, electronic health record, and dispensing software of its contract pharmacy arrangements, if applicable, including necessary electronic data interchange connections. It is important to inquire about average timelines for implementation and continuing go-live support. Because all 340B covered entities may be audited by the Health Resources and Services Administration, it is crucial to understand the level of audit support each vendor provides.


Before engaging a vendor in this space, a CE must assess its orga- nizational readiness. Any delays in software implementation could put the entity at a compliance or financial risk, so ensure appropriate staff resources are assigned with an ample timeline. CEs must be prepared for the work required to implement systems, train stakeholders, and maintain the software, as well as factor in legal timelines and appropriate IT/informatics setup time. The software is not a “set it and forget it” type of implementation. Optimization requires continuing staff support.

For additional considerations, review Apexus’ split-billing decision checklist.2

Ashley Mains Espinosa, PharmD, MS, CPHIMS, is the system pharmacy manager at SCL Health in Denver, Colorado. She completed her PharmD degree at Ohio Northern University in Ada and the 2-year health-system pharmacy administration residency and master’s program at the University of Kansas in Lawrence.

Chad Johnson, PharmD, MBA, is the 340B program manager at Froedtert Hospital in Milwaukee, Wisconsin. He completed his PharmD and MBA degrees at Drake University in Des Moines, Iowa, and 2-year health-system pharmacy administration residency at Froedtert Hospital.


1. Apexus 340B University. 340B compliance self-assessment: vendors. Apexus website. docs.340bpvp.com/documents/public/resourcecenter/340B_Compliance_SelfAssessment_Vendors.pdf. Published 2015. Accessed November 20, 2017.

2. Apexus 340B University. Split billing software considerations checklist. Apexus website. docs.340bpvp.com/documents/public/resourcecenter/Split-Billing_Decision_Checklist.pdf. Published 2016. Accessed November 20, 2017.

Related Videos
Practice Pearl #1 Active Surveillance vs Treatment in Patients with NETs
© 2024 MJH Life Sciences

All rights reserved.