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Big changes are on the horizon for Kentucky’s 340B program—and if you’re a healthcare provider relying on these savings to serve your community, it’s time to pay attention.
After consolidation to a single MCO Payer, Kentucky DMS is finally ready to roll out their new voluntary 340B Claims Submission process. This is a huge win for the 340B program in the state of Kentucky and the CE's serving MCO patients. The announced go-live date is July 1, 2025. For clinics and hospitals across the state, this is more than just a paperwork update—it’s a high-stakes shift that could impact how you serve your patients and fund critical services.
Here’s a breakdown of what’s happening, what you need to do, and why this matters for the future of 340B in Kentucky.
DMS is launching a comprehensive system that requires covered entities to identify 340B-purchased drugs on Medicaid claims and submit detailed quarterly reports –-if entities decide to participate. The goal is to prevent duplicate discounts—ensuring drug manufacturers aren’t giving both a 340B discount and a Medicaid rebate on the same drug. While the focus of the policy is on compliance and preventing duplicate discounts, it is important to also recognize a significant development within the new framework: the inclusion of MCO claims as eligible for 340B.
For providers in Kentucky, this could present an opportunity to enhance 340B savings. In a typical scenario where a health center’s patient base is 50% medicaid, many of those claims, especially MCO, would be ineligible for 340B in other states. Kentucky’s approach allows for those claims to be carved in, potentially increasing the volume of eligible prescriptions and the resulting 340B savings.
As the program moves toward implementation, it is essential for covered entities to understand both the compliance obligations and the potential operational benefits of operating under the new structure. This dual focus –on meeting regulatory requirements and maximizing available savings– will be key for health centers and hospitals preparing for the July 1 deadline.
Kentucky’s decision to officially include these claims, while requiring accurate tracking and reporting, gives clinics and hospitals a chance to expand their 340B utilization in a way that is not currently possible in most parts of the country.
DMS has been clear: while testing is already underway, they’re targeting July 1, 2025 for full program launch.
What does this mean for you?
For community health centers, rural hospitals, and safety-net providers, the 340B program is an essential financial resource that supports critical services—ranging from medication access and addiction treatment to mobile health units and primary care expansion.
While the upcoming changes in Kentucky’s 340B program introduce new compliance and reporting requirements, they also present several key benefits for providers:
One of the most significant advantages is the official inclusion of MCO claims in the 340B program. In most other states, MCO claims are excluded from 340B eligibility. By allowing these claims to be carved in—with appropriate reporting—Kentucky enables providers to extend their 340B savings to a broader patient population. For clinics and hospitals that serve a large Medicaid base, this could translate into a meaningful increase in program benefit.
Kentucky’s clear expectations around claim identification, submission schedules, and file formatting help establish a more predictable and transparent environment for 340B participation. This reduces ambiguity for covered entities and may help avoid unintentional compliance gaps that can lead to exclusions or loss of savings.
With contract pharmacies currently excluded from Medicaid 340B claims unless formal agreements are in place, some providers may consider investing in on-site pharmacy capacity or expanding existing pharmacy infrastructure. This shift—while operationally significant—can allow providers to maintain closer control over their 340B programs and reinvest savings directly into in-house patient care services.
One Kentucky FQHC that had previously relied on contract pharmacy partnerships is now exploring the addition of an on-site pharmacy window. With MCO 340B claims newly eligible, the investment becomes more sustainable—and creates a new access point for patients needing low-cost medications.
Kentucky has already implemented pharmacy benefit reforms at the state level (e.g., moving to a single PBM model) designed to improve transparency and reduce administrative burden. The updated 340B structure complements those reforms and reinforces the state's intention to create a unified, accountable system—which, if managed carefully, can benefit providers and the patients they serve.
With advance notice, a phased rollout, and a clear July 1, 2025 implementation target, providers have time to align internal processes, technology, and vendor support to ensure a smooth transition. For many organizations, this also provides an opportunity to evaluate the strategic role of 340B in their overall care model and financial planning.
If you're a covered entity in Kentucky, now’s the time to act:
Subscribe to our email newsletter to unlock our Kentucky DMS Checklist.
And most importantly—prepare for July 1, 2025.
Need help navigating the reporting requirements or communicating with stakeholders? We’re here to support Kentucky clinics and hospitals as you adapt to the changing 340B landscape.
Reach out to our team if you'd like a custom strategy session or compliance checklist tailored to your operations.
