How to Cost 340B Drugs Accurately

For any hospital, accurately determining the cost of 340B drugs can be challenging. One reason for this is that 340B drugs cost far less for some patients than others, but many hospitals have only one charge code for them. This leads to cost disparities among 340B and non-340B patients.

Determining costs also becomes difficult when hospitals co-mingle expenses for 340B and non-340B drugs. In effect, lumping the two classes together can cause all the drugs to be allocated with 340B savings. This hides the true cost of some drugs and provides a skewed picture overall. As a result, a hospital that misrepresents its expenses won’t receive the proper reimbursement it needs to cover its actual drug costs.

Although certain covered entities benefit from 340B drug discounts—Critical Access Hospitals, Sole Community Hospitals, Children’s Hospitals, Disproportionate Share Hospitals, and other medical facilities that serve vulnerable patients, for example—340B drug cost issues can affect all healthcare providers by obscuring their actual cost-to-profit ratio. Without accurate information, hospitals can’t identify the areas they need to improve to remain profitable.

A leading provider of cost-accounting software for hospitals across the country, CostFlex helps hospitals accurately determine the cost of 340B drugs. Over the past 30 years, CostFlex has implemented many solutions to 340B drug cost problems, including customized solutions to fit the unique needs of hospitals struggling to determine their true 340B drug expenses. 

CostFlex’s Solutions to 340B Drug Cost Accounting Issues

Since the early 1990s, when the 340B program began, CostFlex has worked with hospitals to develop solutions to cost accounting issues. During that time, they have identified and implemented many solutions to help hospitals accurately determine their 340B drug costs. These include:

Solution 1: Creating Unique Activity and Charge Codes

Many hospitals have only one charge code for each drug. For instance, a hospital may have a charge code of $100 for a drug. However, the cost of the drug for a 340B patient could be only $75, whereas the cost for a non-340B patient is $150. This can cause disparities in cost reports and skew profitability analyses, particularly if a hospital has more of one type of patient than the other.

One solution to this problem is to create unique charge codes for 340B drugs when loading data for outpatients. With CostFlex’s interface, hospitals can create Patient Type parameters and designate payer types. Then, the system will intercept the hospital’s single charge code and change it so that it is assigned a lower cost for 340B patients only.

Solution 2: Download Actual Costs at the Patient Level

CostFlex’s system can also load the actual cost at the patient level and use that information as the Direct Variable for cost accounting. For instance, a hospital can download the costs for each drug and patient into the system, and the software would calculate the different costs for each patient without creating separate charge codes.

This method can help hospitals determine the correct cost of 340B drugs without incurring the additional expense of generating separate codes for each drug. On its own, a hospital would need granular cost data for the method to work, but CostFlex’s experts can help hospitals implement the solution efficiently and cost-effectively.

Solution 3: Segregate General Ledger Expenses for 340B Drugs

Hospitals can also classify drugs into separate general ledger (GL) categories for cost accounting, as in solution 1, and apply 340B drug costs individually. This solution requires that hospitals maintain a separate GL line for their 340B expenses—or at least provide monthly numbers regarding those expenses – to run efficiently. 

CostFlex’s team can help hospitals re-classify their drug expenses, and the robust software can quickly generate reports to help administrators determine their true 340B drug costs.

Customized Solutions for Any Scenario

CostFlex prides itself on being able to create customized solutions for any healthcare organization struggling to accurately determine the actual cost of 340B drugs. 

Although the solutions mentioned above have worked for many clients, they don’t represent the full spectrum of solutions available. CostFlex’s team of industry experts will work with hospitals to analyze their current 340B drug cost system and its shortcomings. They can deliver effective and fully supported solutions to help hospitals measure their true drug accounting costs, realize efficiencies, and set a healthier bottom line.