A Modern CFO Playbook – OPM for AI, 340B and Patient Engagement [PODCAST]

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A Modern CFO Playbook – OPM for AI, 340B and Patient Engagement

In this episode, Jack Risenhoover, healthcare attorney and chair of Velocity Health, discusses a modern CFO playbook for using “other people’s money” to support AI, 340B, and patient engagement initiatives.

Highlights of this episode include:

• How covered entities should strategically respond to protect margins while the rule remains proposed
• How hospitals and FQHCs can comply efficiently while protecting operational efficiency and patient privacy
• How forfeiture-based structures influence decision making compared to traditional benefit plans
• How AI is being applied today to address classic 340B challenges such as duplicate discounts, diversion risk, and HRSA audit preparedness
• What specialized capabilities are required to manage orphan drugs and high-cost specialty medications
• How hospitals should integrate 340B optimization with broader reimbursement strategy

Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome Jack Risenhoover. Jack counsels boards and CEOs with health systems on technology solutions and compliance matters. He connects with the sacred mission and importance of the 340B program with rural and underserved communities. He has been a senior healthcare technology executive since 1997 with responsibilities ranging from sales and marketing to operations and administration. Jack has founded and led several healthcare technology startups, most recently a leader in 340B optimization, AI enhanced patient outcomes, and specialty pharma capture. Jack has been a principal, managing director, and entrepreneur in residence for Princeton Capital Partners, Georgetown Advisors, and Georgetown Capital Partners.

He serves as corporate counsel for Patton Trial Group in Newport Beach. Jack began his career in financial services and venture capital at Merrill Lynch. His professional credentials include member of the California Bar Association, JD from Vanderbilt University, MBA from the University of Oklahoma, and a bachelor’s in management from Pepperdine University.

In this episode, we’re discussing a modern CFO playbook, Other People’s Money for AI, 340B, and Patient Engagement. Welcome, and thank you for joining us, Jack.

Jack Risenhoover: Thank you, Kelly.

Kelly: Well, let’s go ahead and jump in. So, CMS’s July 2026 proposed 2027 OPPS Rule would significantly cut Medicare Part B payments for 340B acquired drugs. How should covered entities strategically respond to protect margins while the rule remains proposed?

Jack: It’s a tough one and maybe one of the two or three most challenging and controversial issues for nonprofit hospitals and clinics as we move forward. The proposal itself is really damaging because of the shift and the decrease in the pricing targets. So, the response to it on the legislative front is probably bigger than any single place is going to be able to make a difference. But if you expect that that is what’s going to happen, it makes the back end of your 340B program tighter and even more important than it has been in the past. And so, the trade-off on the legislative side is supposed to result in some greater reimbursement in other categories to help offset what they know is a pretty good slice of the 340B cash flow in 2027 and beyond.

Kelly: Yeah, it should be interesting to see what comes with that. So, manufacturers such as Eli Lilly have begun enforcing detailed claims data submission requirements, cutting off 340B pricing for non-compliant entities. How can hospitals and FQHCs comply efficiently while protecting operational efficiency and patient privacy?

Jack: Wow, that’s another difficult one. The aggressiveness of the manufacturers and some of these unilateral proclamations that they’ve made, I originally didn’t think two or three years ago when the first ones came out, I didn’t think these were going to withstand judicial scrutiny. And I was wrong about that. There’s a split at the circuit court level. So, you have part of the United States that’s enforcing these unilateral restrictions and part of the United States that not. And we’ll see how this unravels. What Lilly did was to take it to a new level. And they’ve been followed by eight other manufacturers to date, probably growing weekly because I would expect most of the 30 or so that have done this in one form or another to be a little bit of a copycat on the Lilly strategy. And so, the idea is that they’re requiring some new and different data fields, but on the in-house transactions, which they weren’t looking for previously. So, it makes a little bit of a different effort than what we were doing for clients in the ESP front, although the process is the same, the data elements are different, so it may as well be a completely new reporting scheme.

To me, you just don’t really have any choice. You have to surrender to the hostage takers because the cash flow is vital to the continuing operations. And so what we’re recommending is for clients to look at the data that you have available, try and find a reliable, predictable way to submit it in the same ESP approach. And then to look for things that are in the background of your programs, to find other ways to generate additional cash flow to offset the squeeze from these different both government and manufacturer pressures.

Kelly: That is truly just so interesting to me, David. Thank you for explaining that. So how do forfeiture-based structures influence decision making compared to traditional benefit plans?

Jack: Oh, but they do. This is where retention becomes truly powerful. Most traditional benefit plans provide value regardless of whether the employee stays for the long term. An employee may receive higher compensation, employee retirement contributions, bonuses, or other benefits, and still leave for another opportunity. There’s nothing holding them in place. And what happens is the organization absorbs the cost and loses the employee anyway. A forfeiture-based structure operates differently. The employer funds the plan. The employer owns the plan. The asset remains on the organization’s balance sheet where it continues to grow and compound. And the power of compound interest is amazing. The employee earns the right to receive the benefit only by fulfilling the long-term commitment established in the agreement. If the employee leaves before that date, the benefit is forfeited. The organization keeps the asset. The employee receives nothing. That creates a completely different decision-making process. Remember when I said that choosing between two futures, one if I stay and one if I leave?

It’s the starting point for everything that you have to do with your 340B compliance is the first piece. And then the second piece is what are the opportunities that you can use? The advances in technology or AI, or some of the new capabilities that are coming out from TPAs or hub services? What do you do to drive better patient engagement over a longer period of time and at least optimize the cash flow that’s going to be available for the program in the near future?

Kelly: Yeah, I know optimizing that cash flow is really important, especially now. How is AI being applied today to address classic 340B challenges such as duplicate discounts, diversion risk, and HRSA audit preparedness?

Jack: Well, I think there’s a couple of fronts on that. The reality is the AI deployment in 340B is immature or not at all. And so, with the landscape changing so quickly, it’s important to let your IT team have some flexibility in evaluating the AI platforms and tools that are available from an analytics standpoint, and then as well on the patient education and patient engagement. And so, if you think about this as a teeter-totter, the more important advances in AI have been with conversational AI or clinical AI, which don’t sound like they’re really a central part of the 340B program. But in my opinion, they are the levers that allow you to do a better job of documenting and tracking your patients through the real world of pharmacy, and then being able to use the technology to provide the documentation from a compliance standpoint that will help your TPA capture as many of these prescriptions as possible without running afoul of– the duplicate discounts is a good example of something that pharma barks about in some of the changes that they’ve tried to deploy in the last couple of years.

But really, the bigger mismatches on the transaction side aren’t that pharma is paying for the same transaction twice. It’s that they’re not paying on eligible transactions even once. And the reason for that is that the data sources that are available in 340B have some blind spots from an IT perspective. And it’s not that the 340B industry from a technology standpoint isn’t doing a good job with what they have. I think, by and large, they do. But there are old practices and there are new opportunities, particularly around how you describe your referral network and the data that you use to identify prescriptions from outside providers that are part of your larger continuity of care initiatives. And most of the healthcare providers that we work with, they’re really oriented toward a lifetime patient relationship and how do they use the new engagement platforms to stay in touch with patients when they’re beyond the walls of the hospital or the clinic. And that has profound implications for the continuity of care prescriptions and the capture opportunities in 340B.

Kelly: Most definitely. And kind of just echoing what you said earlier about AI and 340B just being rather immature or nonexistent– so I’m sure that’s going to change as time rolls on. Orphan drugs and high-cost specialty medications present both significant opportunity and complexity within 340B. What specialized capabilities are required to manage them effectively?

Jack: Well, this is one of the more peculiar– one of the more peculiar areas. It’s undergone some regulatory and litigation changes in the last 10 years. And it’s another area where the rules are different depending on the type of organization you are. And so the ones that were added under Obamacare that became participants like rural referral centers, they’re excluded from this, and yet they still have a lot of opportunity related to orphan drugs because the manufacturers have voluntary programs. So I think on balance, there are areas where the conflict between hospitals and pharma has been strenuous and certainly complicated to unravel and unlucky that we haven’t been able to get at the same table and find clearer, easier ways to implement the program with the congressional intent and not have as much of the delays and  although those are great for– they’re great for Velocity because the world is so difficult that it requires a lot of experience and water under the bridge with these particular topics. Orphan drugs are a great example of that. The quantities are small, but the dollar values are so big that most places, if you have an active patient engagement and continuity of care program, or sometimes it’ll fall within a medication therapy management initiative, those all have implications from a 340B eligibility and compliance perspective. And the orphan drugs are one where it’s uncommon for those prescriptions to be in the small places. So about half of our relationships are in small places and half in big or half rural, half urban. And the resources that you have available to track this and then to follow up with the wholesalers, it’s a really good category to check with your TPA and make sure that you have the settings set up correctly and that you’re providing the tracking information in order to monitor the pricing with the wholesalers and see if you are receiving the open pricing on the orphan drugs that’s available to you, even though the statute is now pretty clear. The interpretation of that is that for certain types of entities, they’re not eligible. So, it’s a little bit of a twist where technically you’re not eligible, and yet you still have access to the pricing from many of the orphan drug manufacturers who are trying to do the good thing and pass along part of the profits from that therapy segment. And so, it’s a complicated area and certainly one worth looking into.

Kelly: It sounds very complex. And I’m sure having a partner who is well-versed in all of that is essential. So, with DISH percentages and program qualification remaining critical, how should hospitals integrate 340B optimization with broader reimbursement strategy?

Jack: Well, this is something that came on our radar four or five years ago, where we had a number of clients and relationships, especially in the larger hospital arena, where their DISH percentage or the percentage of uncompensated care and the 11 3/4% metric is something that gets measured a little bit in hindsight. So, if you don’t have the ability to pay attention to those metrics on a monthly or quarterly basis, it can sneak up on you. And the consequence is really deadly. You’re ineligible for the program if your percentage falls below that as a DISH hospital. So it’s tricky to look at the initiatives that you have to make sure if you’re in that sort of 10 to 14% range, if that’s the area, the fluctuations that can happen from year to year with different types of Medicaid and Obamacare coverage, the Affordable Care Act coverages influence all of that a lot. And so there are a number of strategies. If you’re paying attention to those metrics on a more frequent periodic basis, there are a number of things that you can do to make sure that you’re providing the level of care in the community. So, this is an area where you can line up your health equity and access initiatives with your 340B eligibility. And on the margins, it’s not usually a very– it’s not a very complicated decision. It really makes sense to have some outreach and engagement in the community in ways that if 340B didn’t exist, you wouldn’t be motivated to do it. And so, it’s one of the most fun things that I’ve been able to work on the last couple of years with some of our clients has been around their health equity initiatives and why those programs were important for sustaining their eligibility in the 340B program.

Kelly: No. It sounds very interesting. Well, thank you, Jack, for sharing your insights with us on a modern CFO playbook, Other People’s Money for AI, 340B, and patient engagement. And if a listener wants to learn more or contact you to discuss this topic further, how best can they do that?

Jack: Kelly, the easiest thing is to shoot me an email. It’s jack@velocity.health.

Kelly: Awesome. Thank you for providing that. And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…

[music] This concludes today’s episode of The Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.holdings/podcasts. The Hospital Finance Podcast is a production of Besler Holdings.

If you have a topic that you’d like us to discuss on The Hospital Finance Podcast or if you’d like to be a guest, drop us a line at contact@besler.holdings.

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