Automated 340B program expands pharmacy reach

September 26, 2005

Mercy Hospital, Miami, Fla., is using discounted Rxs to lure patients into a preventive healthcare program. The hospital estimates that 4,000 patients saved an average of $140 for the 10,000 program prescriptions filled during the first quarter of 2005.

Mercy Hospital, Miami, Fla., is using discounted Rxs to lure patients into a preventive healthcare program. The hospital estimates that 4,000 patients saved an average of $140 for the 10,000 program prescriptions filled during the first quarter of 2005.

"We offer people meaningful discounts-from 30% to 70% -as incentives to take care of themselves," said Fernando Zaldivar, director of pharmacy at Mercy. "People on chronic meds shop around for the best price and we deliver it. In return, we make sure they are compliant with the latest best-care guidelines."

The key to Mercy's incentive push is the federal 340B program. Named for a section of the 1992 Public Health Service Act, 340B allows certain public and charity hospitals to purchase pharmaceuticals for indigent patients at steep discounts. As a hospital with a disproportionately large share of indigent patients, Mercy qualifies for 340B purchases.

"We tried to get such a program going years ago but didn't have the capital to invest," Zaldivar said. "Now we have a technology partner that created the infrastructure, so we can concentrate on providing patient care." The partner is Freedom Healthcare, a pharmacy benefit management and software firm based in Hollywood, Fla. Freedom CEO and pharmacist Travis Leonardi combined an electronic health record, PBM services, on-line claims adjudication, and mail-order pharmacy in a turnkey 340B program that is essentially free to hospitals. Mercy is the first hospital client to take FreedomNet live.

According to Leonardi, 340B is all about compliance. "Hospitals are risk-averse. They know that if you are not 100% compliant, you have to worry about paying the manufacturer back and risking your covered-entity status. FreedomNet keeps that from happening. Using this system, a covered entity simply cannot fill a script that is not 340B-eligible."

Besides income and other eligibility requirements, 340B requires that patients who take advantage of discounted drugs have an established patient relationship with the covered entity. FreedomNet uses an electronic medical record to establish and track every covered patient. Patients pay $25 for an initial exam, which establishes the relationship.

Participating physicians write the appropriate scripts, which are usually filled through Freedom's mail-order service. Freedom's profits are based on transaction and pharmacy fill fees for 340B scripts filled under the program. "We don't have any other fees, so FreedomNet does not stretch a hospital's already limited resources," Leonardi explained.

The program also generates an individualized treatment plan, or Road Map, based on U.S. Preventative Task Force guidelines for diabetes and other chronic conditions. The guidelines call for periodic health checks, regular glucose and other monitoring, appropriate medication use, and similar measures. To help patients meet specific compliance goals, the program also reminds patients when it is time for their next scheduled exam, drug refill, or other action.

"Very few disproportionate-share hospitals are maximizing the use of 340B programs because they have lacked the ability to track compliance," Leonardi said. "FreedomNet gives them the infrastructure to reach more patients and ensure compliance. Extending the reach of 340B programs helps covered entities boost their own economic viability. We help to ensure they are not leaving good money on the table."

The long-term results of expanding 340B coverage are an open question, said Zaldivar. FreedomNet is not designed as a money maker for the hospital, and it is not even clear if the program is having a significant impact on patients' health status.

"We don't have enough time or enough data to see any significant trends in utilization or changes in health status," Zaldivar said. "But in the short term, we have brought health care to a highly noncompliant population. We have encouraged our patients to take an active role in their own health care."

Bringing patients under the 340B umbrella also takes them off the hospital's charity care rolls. That lets Mercy focus more resources on patients who cannot afford to pay anything at all.