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What is discriminatory reimbursement?

Discriminatory reimbursement occurs when third parties keep savings from the 340B program that are intended to benefit community health centers, and other covered entities. Read on to learn more about the different third parties and how discriminatory reimbursement affects community health centers.
 
What is discriminatory reimbursement in the 340B program? 
Discriminatory reimbursement occurs when third parties keep savings from the 340B program that are intended to benefit community health centers, and other covered entities. Read on to learn more about the different third parties and how discriminatory reimbursement affects community health centers.
 
The Third Parties:
Pharmacy Benefit Managers (PBMs)
  • Pharmacy Benefit Managers (PBMs) are companies that manage prescription drug benefits on behalf of heatlh insurers. PBMs negotiate with drug manufacturers and pharmacies to control spending which gives them significant influence to determine drug costs, patients' access to medications, and determining how much pharmacies are paid. [1] 
  • Pharmacy benefit managers engage in discriminatory contracting by reimbursing community health centers and other covered entities less for certain drugs, simply because they were purchased under the 340B program. 
Insurers
  • Health insurers are companies that administer medical benefits.  
  • Health insurers can refuse to enter into contracts with community health centers for medical services unless health centers charge the cost of the drug charged by the pharmacy, known as the actual acquisition cost.  
Contract Pharmacies 
  • Contract pharmacies are pharmacies that are owned by an organization other than the community health centers. Community health centers rely on contract pharmacies to provide affordable medications to their patients because the pharmacies are often located in convenient locations and offer extended hours. [2] 
  • Contract pharmacies can refuse to enter into contracts with contracts with community health centers, unless the pharmacies can keep a portion of the savings from the 340B priced drugs, plus additional fees. 
  • In each of these cases, the third party is able to keep savings from the 340B program for themselves rather than the benefit accruing to community health centers. 
 
How Discriminatory Reimbursement Affects Community Health Centers
Discriminatory reimbursement prevents community health centers from accruing the savings generated from the 340B program. Community health centers rely on their ability to reinvest resources from the program into care for their patients. Reductions in 340B savings or their elimination all together will drastically curtail health centers' abilities to provide affordable medications to their patients and expand access to critical services. 
 
 

1. Commonwealthfund.org. 2019. Pharmacy Benefit Managers and Their Role in Drug Spending | Commonwealth Fund. Available at: https://www.commonwealthfund.org/publications/explainer/2019/apr/pharmacy-benefit-managers-and-their-role-drug-spending
2. NACHC, 2018. NACHC 340B Manual for Health Centers Second Edition. 







 




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