Is your facility at risk of being terminated from the 340B program due to a GPO prohibition violation?
It appears HRSA is aggressively auditing for Group Purchasing Organization (GPO) violations in DSH hospitals participating in the 340B program. A GPO prohibition violation can remove a covered entity from the 340B program. During SNHPA’s April 9, 2015 Webinar “Update on 340B Audits”, they mentioned they were aware of at least 9 covered entities since November 2014 with this audit finding. In fact, SCA is aware of 2 hospitals in the last few months with a GPO prohibition violation audit finding that received an audit recommendation of “immediate removal from the 340B Drug Pricing program”. These entities are in the process of appealing the finding.
Sanctions are stiff for a GPO violation:
- Immediate removal from the 340B program;
- Repayment to manufacturers for the time period for which the violation occurred.
GPO Prohibition Compliance
You can find guidelines in the May 13, 1994 Federal Register final notice regarding section 602 of Public Law 102-585 the “Veterans Health Care Act” of 1992, (C) Revised Entity Guidelines, (7) Group Purchasing and also from a policy released by HRSA on February 7, 2013 to clarify the statutory prohibition against obtaining covered outpatient drugs through a GPO.
DSH hospitals, free-standing cancer hospitals or children’s hospitals that participate in the 340B program cannot purchase covered outpatient drugs from a GPO for clinics or departments at the same physical address as the hospital (within the four walls of the hospital). Also, any off-site outpatient clinics that are registered in the OPA database may not use covered outpatient drugs purchased from a GPO. According to HRSA’s clarification, facilities must stop obtaining covered outpatient drugs through a GPO before the first day they are eligible to purchase 340B drugs and listed in the OPA database.
Drugs that do not meet the definition of a covered outpatient drug[i] may be purchased from a GPO, as well as, drugs purchased for hospital inpatients. It is also possible for a hospital to have off-site outpatient clinics use a GPO for drug purchases if they meet the criteria listed below.
- The clinic is not registered in the OPA database.
- The clinic is located at a different physical address than the hospital.
- The clinic’s drugs are purchased through a separate GPO account than the hospital.
- The clinic uses a separate NPI or Medicaid number than the hospital for Medicaid billing.
- The hospital maintains auditable records demonstrating drugs purchased through the GPO at the clinic are not utilized or transferred to the hospital or any outpatient facility registered in the OPA database.
HRSA has also outlined the process to follow if a covered drug is not available. The drug should be purchased at the wholesale acquisition cost (WAC) and written notification should be sent to OPA detailing the covered outpatient drug involved, the manufacturer, and the process by which the entity was notified that the purchase could not be made.
Any purchases that are completed manually or outside of a routine purchase are at more risk for noncompliance. The covered entity should have comprehensive policies and procedures outlining controls in place for these types of purchases. Policies and procedures should also include a list of the entity’s non-covered outpatient drugs that may be purchased through a GPO. Pharmacy buyers should be routinely educated on the 340B program and the entity’s 340B program policies and procedures. Self-auditing should be consistent and ongoing in this area with corrective action plans in place for areas that may fall out of compliance.
Monitoring should include any direct order process, such as controlled substances, to ensure auditable records can demonstrate GPO prohibition compliance. All direct accounts should have a 340B, GPO, and WAC option with direct order purchases accumulating correctly.
Replenishment should always be based on the 11-digit NDC. In the rare case that the 11-digit NDC is not available, good (auditable) documentation should be available to support that the replenishment process does not violate the GPO prohibition.
If a covered entity is terminated from the 340B program due to a GPO prohibition violation, it does not mean you cannot re-enter the 340B program when you are able to show compliance. In HRSA’s policy release clarifying the statutory prohibition on GPO participation on February 7, 2013 under “Sanctions”, it states that, “Covered entities removed from the 340B Program for GPO prohibition violations must demonstrate the ability to comply with the GPO prohibition to be considered eligible to re-enter the 340B program during the next regular enrollment period”. It is critical that you demonstrate to the HRSA auditor current compliance with the proper tools in place for constant oversight to keep you from having any interruption in your 340B program savings.
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[i]Federal Register Vol.59 No.92, May 13, 1994 Final Notice Section 602 of the Veterans Health Care Act of 1992 Entity Guidelines, Sec. (C) Revised Entity Guidelines (9) Definition of Covered Outpatient Drug states: Section 1927(k)(2) of the Social Security Act (SSA) defines “covered outpatient drug’s to include most drugs and biologicals which may be dispensed only by prescription and which require approval by the Food and Drug Administration or a license under section 351of the PHS Act. Section 1927(k)(3) limits the definition of “covered outpatient drug” to exclude certain settings (e.g., such services as emergency room, hospice, dental, physician, nursing facilities, x-ray, lab and renal dialysis) in some instances. In these settings, if a covered drug is included in the per diem rate (i.e., bundled with other payments in an all-inclusive, per visit, or an encounter rate), it will not be included in the section 340B discount program. However if a drug is billed and paid for instead as a separate line item as an outpatient drug in a cost basis billing system, this drug will be included in the program. |
