The 340B Drug Pricing Program is vital in supporting safety-net providers by enabling Covered Entities to maximize federal resources and expand access to affordable medications. While many associate 340B eligibility with hospitals, a significant portion of the program is designed for Federal Grantees—a diverse group of healthcare organizations that qualify for 340B based on their federal grant status rather than hospital-specific criteria.
Under the FQHC 340B umbrella, federally qualified health centers (FQHCs) and other grant-funded organizations—such as Ryan White Clinics, STD Clinics, and Tuberculosis Treatment Centers—benefit from the 340B Program’s power to enhance pharmacy operations, expand referral captures, and improve patient access to care. Unlike hospitals, which qualify based on factors like disproportionate share percentage (DSH), grantees are eligible if they maintain an active federal grant that aligns with one of the 12 designated grantee types.
FQHC 340B Compliance’s ongoing mission is to serve safety net providers, and our work includes offering crucial insights and guidance as your non-hospital FQHC navigates 340B compliance in all its forms. Here, we’ve gathered some key considerations for non-hospital federal grantees to help you maintain your 340B compliance effectively.
The 340B Program recognizes 12 types of Federal Grantees, each qualifying based on active federal grant status rather than hospital-related criteria. These entities receive funding from agencies like HRSA and the CDC, and each has unique eligibility requirements.
The 12 types of Federal Grantees are:
Alongside the list of types of federal grantees, there are two special considerations for 340B eligibility: FQHC Look-Alikes (FQHC-LAs) and Section 318 grants.
FQHC-LAs are key 340B Covered Entities that deliver primary care services to underserved communities; FQHC-LAs meet all FQHC requirements but do not receive direct federal funding, though they are still eligible for 340B pricing and Medicare/Medicaid Prospective Payment System (PPS) reimbursements.
Approximately 60% of registered STD clinics qualify based on in-kind support rather than direct funding. Because of this, 340B eligibility for STD programs can extend to sub-recipients of grant-funded services as long as they are part of the grant’s intended scope.
For organizations managing multiple 340B-covered entity types, such as a Federally Qualified Health Center (FQHC 340B) that also operates a Ryan White Clinic or an STD Clinic, compliance can quickly become complex. Each covered entity must adhere to its specific grant requirements, meaning 340B drugs purchased under one designation cannot be used for patients not meeting that entity’s eligibility criteria.
Consider the example of a clinic operating as both a Ryan White and STD clinic. An HIV-positive patient receiving STI treatment may qualify under both programs, while an HIV-negative patient treated for an STI would only qualify under the STD 340B designation. Establishing clear policies, procedures, and staff training is crucial for preventing errors and maintaining program integrity across multiple entity types.
To maintain 340B compliance across multiple designations, FQHC 340B Compliance recommends implementing separate purchasing accounts, using robust inventory tracking systems, and employing rigorous patient eligibility protocols. We know rigorous tracking avoids costly mistakes, so we help FQHCs establish routine practices, including using virtual or physical inventory separation and ensuring prescriptions align with the correct 340B ID. As an in-house 340B Monthly Coordinator, we conduct regular internal audits to verify compliance.
As a requirement of their FQHC 340B status, federally qualified health centers must implement a sliding fee scale based on the Federal Poverty Guidelines and offer full or partial discounts on medical services. Pharmacy operations are not mandated for the same sliding scale, so delineating services is crucial to maintaining 340B compliance.
Unlike hospitals, which bill per service or drug, FQHCs and FQHC Look-Alikes (FQHC-LAs) are reimbursed under the Medicare and Medicaid Prospective Payment System (PPS). This encounter-based reimbursement model includes bundled payments for medical visits, procedures, and certain medications. Although drugs covered under PPS are not separately reimbursed, they are still considered 340B-eligible, requiring FQHCs to properly track and report their use to avoid compliance issues.
FQHCs and FQHC-LAs must submit an annual Uniform Data System (UDS) report detailing patient demographics, clinical outcomes, financial performance, and 340B pharmacy revenue. This HRSA-mandated report includes key pharmacy data such as 340B drug costs, contract pharmacy dispensing fees, and medication-related revenue to ensure compliance and transparency in how 340B savings support patient care.
When operating as a non-hospital federal grantee, taking into account all required discount programs, reimbursement opportunities, and reporting requirements is crucial to maintaining 340B compliance. Establishing these aspects of operations can feel daunting, especially when these considerations are not yet routine for your organization.
FQHC 340B Compliance has helped countless FQHCs establish reliable routines and effective, compliant systems that make ensuring compliance easy. Our 340B experts work as an extension of your health center, ensuring that your 340B Program's day-to-day operations remain compliant and that both reporting and audits are straightforward, stress-free experiences.
Audits are a crucial component of 340B compliance, and with proper preparation, HRSA audits do not need to be stressful experiences. Hospitals often have integrated barcode scanning and automated tracking, but non-hospital federal grantees may use paper logs, creating risks for errors and HRSA audit findings. Inconsistent record-keeping can lead to compliance violations, particularly in organizations managing multiple 340B designations, where tracking medication use per covered entity type is essential.
FQHC 340B Compliance can help mitigate these risks in two ways: by helping federal grantees implement standardized documentation practices, and conducting regular internal audits. Using electronic record systems when possible can help streamline recordkeeping, and for entities relying on manual systems, policies should require staff to record patient details, medication usage, and administration times consistently.
Best practices for HRSA audit readiness include performing quarterly compliance audits, a service FQHC 340B has offered to multiple FQHCs to ensure HRSA audit readiness. They also recommend ensuring that contract pharmacy records align with entity policies and developing staff training programs focused on 340B patient eligibility and record-keeping accuracy. By proactively managing documentation, covered entities can reduce audit risks and maintain the integrity of their 340B pharmacy operations.
Whether your non-hospital FQHC is one of the 12 types of federal grantees, operates as an FQHC-LA, or through the Section 318 program, your program must adhere to unique 340B compliance requirements. Whether you're managing one or multiple 340B designations as a non-hospital federal grantee, careful and effective record keeping and proper staff training are essential. These, along with careful policy and operations considerations and a thorough understanding of 340B compliance, are crucial components to ensure your FQHC can continue to provide critical services to patient populations in need.
With decades of expertise, FQHC 340B Compliance can help non-hospital federal grantees establish and maintain 340B eligibility using tailored protocols that suit your entity’s exact needs. Contact us today to ensure your FQHC's continued success in navigating the intricacies of 340B compliance within your policies and procedures.
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FQHC 340B Compliance is the dedicated partner for Federally Qualified Health Centers seeking assistance with the 340B Program. Their mission is to provide the necessary resources to secure and optimize the 340B Program, enabling health centers to offer more comprehensive services to those in need. With a focus on improved compliance and oversight, they act as more than just consultants or automated systems, tailoring their services to meet your health center's unique needs. Visit their website, call (760) 780-7469, or email admin@fqhc340B.com to learn more about FQHC 340B Compliance and how they can help your health center thrive.
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