340B Capture Rates (Part 1) - How Much Does it Matter?

SPOILER ALERT: It Depends

Since 2020, I've had much less time on my hands to sit with my thoughts, much less to journal! However, since my last journal post, one irksome issue has remained constant (unlike much else in 340B), and is never far from my thoughts... Capture Rates.

Throughout my career, I've encountered more confusion around 340B Capture Rate than almost any other program topic. What does it mean; is the goal 100%? Is 30% a poor capture rate? To determine what it means and how much it matters to a Covered Entity (CE), let's first define it. 

AHA! If you're already stumped, you are not alone. Rather than one ambiguous term, "340B Capture Rate", the 340B Community needs several, more descriptive definitions to not only employ the terms correctly, but to make informed decisions based thereupon. The term 'Capture Rate' is thrown around casually at conferences, assuming that everyone (or perhaps no one) actually understands what it means.

Without a thorough repertoire of 'Capture Rate' definitions, Covered Entities may assume that they should strive for a 100% 340B Capture Rate, and make decisions based on that assumption. Unfortunately for those CEs, 100% 340B Capture is almost NEVER a realistic or even  desirable goal! 

Thus, this journal entry shall be the first in a series to define and discuss "340B Capture Rates" to provide actionable context and limitations for CEs regarding this ever more elusive term.

To kick the series off, let's start with the most commonly accepted (and in my opinion, least valuable) definition.

Standard TPA 340B Capture Rate: the proportion of prescriptions sent to contract pharmacies by a CE which are identified as "eligible" by a TPA and "Captured" for the CE's 340B program. This metric is typically calculated based on the contract pharmacy's incoming e-prescription data from a CE's eligible prescribers. *Note that this definition differs from the 340B Capture Rate based on CE's e-prescribing to all pharmacies (coming soon).

What of it?

Well, let's start with a few basic, reasonable assumptions for Happy Days FQHC (our CE):

1. 20% of the CE's patient population has Fee-for-Service Medicaid and carves OUT
2. 30% of patients have Managed Care Medicaid (MCO), and the CE does NOT exclude Managed Care Medicaid from 340B eligibility
3. 30% of this CE's patient population is dual-eligible under Medicare and Medicaid. 
4. 10% of this CE's patient population has private (commercial) insurance
5. The remaining 10% of this CE's patients are uninsured.
6. The patient population using TPA Pharmacy A is an accurate representation of the CE's overall patient population.

• Immediately, TPA Pharmacy A must exclude Medicaid FFS from the program, dropping the maximum Capture Rate to 80%

For this example, we'll use $8,000 as net savings for Happy Days FQHC when they achieve their maximum Capture Rate, 80%.

80% Capture Rate = $8000 net savings*
*Based on "Standard 340B TPA Capture Rate" equation, as described above

​Objective complete? Find out what happens next time when Happy Days FQHC signs a new, "Winners Only" contract with TPA Pharmacy A!