Reviewing HRSA audit results can offer 340B covered entities excellent insight to areas that HRSA is focusing on during their audits. Additionally, entities can get ideas for areas where their self-audits should be concentrated by monitoring HRSA’s audit results.
In the 2015 audit results posted, 48% of the covered entities had errors found in the HRSA database information. The 2016 results posted show a continuation of the errors found in 2015. We suggest that entities set up a process to review their HRSA database information quarterly. Even if the covered entity has not made any changes during the quarter, HRSA makes changes to the database quarterly. Those changes can accidentally be made to an entity’s information during HRSA’s database updates. The majority of the database errors continue to be offsite outpatient facilities providing 340B drugs that are not listed on the OPA database and contract pharmacies registered on the OPA database without a contract in place, however; HRSA is still finding incorrect contact information as well as incorrect child site and pharmacy names and addresses.
HRSA’s 2016 posted audit results also show diversion at 42% of the covered entities. Diversion is when a 340B drug is provided to someone that does not meet the 340B eligible patient definition or a covered outpatient drug that is dispensed at an ineligible location. The majority of the audit findings in this area are 340B drugs dispensed at contract pharmacies for prescriptions written at ineligible sites not supported by responsibility of care. This is a difficult area but there are controls that can be put in place to support the entity’s effort in prevention of diversion. The patient receiving the medication must meet the patient definition for a 340B eligible patient and documentation in the auditable record must support that the responsibility for care of the patient resulting in the prescription remains with the covered entity. The medication must be prescribed by an eligible provider from an eligible registered location of the covered entity. Contract pharmacies should match to an eligible provider as well as an encounter from an eligible registered location before qualifying a prescription as 340B eligible. Covered entities must have vigilant ongoing self-auditing of contract pharmacy prescriptions.
Duplicate discounts also continue to show up in the HRSA audit results. So far, 24% of covered entities audited in 2016 had a duplicate discount finding which is down from 30% in 2015. A duplicate discount is when a covered entity purchases a drug at a 340B price and the State receives a rebate for the same drug from the drug manufacturer. Covered entities that carve-in Medicaid are required to let the State know they are providing 340B purchased drugs to Medicaid patients by adding their NPI number in the Medicaid Exclusion File (MEF) located on the OPA database. HRSA also states that entities should follow the State’s 340B policies. The audit results showed that 24% of the covered entities were billing Medicaid contrary to information contained in the MEF. There were also findings of 340B drugs dispensed to Medicaid patients by a contract pharmacy without an arrangement to prevent duplicate discounts. Review of Medicaid claims should be part of the covered entity’s self-audit. It’s important to know if your Medicaid claims reflect the information you have provided in the MEF and that you are following State 340B policies.
HRSA terminated contract pharmacies from the 340B Program at 18 covered entities in 2015 and audit results for 2016 already show 5 contract pharmacies have been removed. Audit results illustrate the two main reasons for contract pharmacy termination are:
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Covered entities not having a contract in place with the contract pharmacy before registering the pharmacy on the OPA database.
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Covered entities not providing contract pharmacy oversight.
The covered entity is responsible for ensuring compliance of their contract pharmacy arrangements with all 340B Program requirements. Entities must continue to communicate with their contract pharmacies after contracts are signed. There should be a clearly defined process for when a contract pharmacy identifies a 340B violation and entities must have ongoing self-auditing of the contract pharmacy to ensure compliance.
HRSA has provided “5 Requirements for 340B Compliance in Contract Pharmacy”:
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Conduct independent, annual audits and provide adequate oversight. The proposed mega-guidance has also added quarterly audit expectations.
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Maintain auditable records at the covered entity and the contract pharmacy. This also includes written policies and procedures outlining contract pharmacy oversight and a written contract between the covered entity and the contract pharmacy, listing each contract pharmacy individually before registering the contract pharmacy in the HRSA database. The contract pharmacy may not distribute 340B purchased drugs until it has been registered, certified and listed in the HRSA database.
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Only 340B eligible patients receive 340B purchased drugs.
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Medicaid must be carved out unless alternate arrangements have been made with the State Medicaid Agency and approved by HRSA.
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Maintain accurate information in HRSA’s 340B database.
Southwest Consulting Associates (SCA) continues to analyze HRSA’s posted results for covered entity audits to establish trends in the findings. As HRSA posts more audit results for FY 2016, we will provide you with a more detailed breakdown of the findings and tips to help you ensure HRSA audit readiness. SCA provides independent, annual 340B compliance audits and 340B quarterly compliance audits to minimize or prevent adverse findings in a HRSA audit. To find out more about SCA’s 340B external audit program, please visit our website or request a proposal at 340B@southwestconsulting.net.
