A Glimpse Back at 2017 HRSA Audits

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A Glimpse Back at 2017 HRSA Audits

The Bizzell Group, began performing all HRSA 340B audits in fiscal year 2017 and as with most changes, there was concern about how audits might change. One difference from previous HRSA auditors is that the Bizzell Group hired pharmacists and 340B staff with hands-on 340B experience to perform and support 340B audits. We have noticed that having audit staff with hands-on 340B experience has helped the audits run a little smoother. The auditors have a better understanding of how the covered entities work.

The selection process for entities to be audited remains the same:

  • Risk-based audits which factor in the complexity of the covered entity’s 340B program such as the number of outpatient facilities, number of contract pharmacies and volume of purchases.
  • Targeted audits triggered by reported violations or allegations from manufacturers or the public. HRSA may also do a targeted audit to follow-up on previously audited entities to ensure corrective action plans have been fully implemented.
  • Random selections.

The type of audit findings posted for 2017 are similar to the 2016 audit findings; however, the number of findings appear to be decreasing. There have been 146 audit results posted of the expected 200 audits performed last fiscal year, roughly the same number as fiscal year 2016. Of the audits published, 46% resulted in repayments to the drug manufacturer. Covered entities in 35 states were audited. California led the way with 20 audits followed by Illinois and Texas with 10 each.



The top finding posted across covered entities is diversion, specifically, “340B drug dispensed to a patient at entity for a prescription written at an ineligible site.” The covered entity must be able to link a prescription back to a qualified visit at a 340B eligible location showing that the covered entity had responsibility for the patient’s care surrounding the prescription in order for 340B purchased drugs to be used. Keep in mind that every prescription filled with 340B purchased drugs must meet the following criteria:

  • The covered entity must have established a relationship with the individual such that it maintained their health care records; and,
  • The individual must have received health care services from a health care professional employed or under a contract or other arrangement (e.g., referral) with the covered entity; and,
  • The covered entity remains responsible for the individuals care with respect to the drug.


Duplicate Discounts

Additionally, the duplicate discount finding that appears most often continues to be, “incorrect or incomplete billing information on the 340B Medicaid Exclusion File.” If a covered entity decides to carve-in Medicaid, (billing Medicaid for drugs purchased at a 340B price), they must list their National Provider Identifier (NPI) and any Medicaid billing number on the 340B Medicaid Exclusion File. This should be the NPI and any Medicaid billing number that the billing office is adding to the claim to bill Medicaid.


Database Errors

There also continues to be a high number of 340B database errors. The top two incorrect 340B database findings in 2017 were, “offsite outpatient facilities were not listed on the 340B database” and “registered contract pharmacy without written contract in place.” Surprisingly, there are still findings for incorrect entry of Authorizing Official, Primary Contact and facility address. Covered entities should assign someone to check the HRSA database quarterly to ensure the entity’s information is correct. HRSA updates the database quarterly and mistakes happen. Keep agreements with contract pharmacies where they are easily accessible. Don’t rely on the contract pharmacy to keep up with the contract. Ensure the contract pharmacy registration date on the HRSA database is after the date on the contract pharmacy agreement or contract.

HRSA makes it clear that the covered entity is ultimately responsible for ensuring 340B program compliance. Covered entities should be monitoring their 340B compliance and always be audit ready. Reviewing HRSA’s audit results can help covered entities understand where to examine their 340B program to ensure audit readiness.

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New Year’s Resolution- 340B Style

The arrival of a “New Year” seems like a natural time to make important changes. But how quickly do those New Year’s resolutions lose traction? Instead of focusing on ourselves and all the clichés that could be your New Year’s resolution, let us instead vow to make a resolution for another! Can you think of a better way to help others than our 340B program? If we all take a moment to look at our own 340B programs, we are making a New Year’s resolution to protect it!

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How to dig deeper into 340B

The Federal 340B Drug Pricing Program isn’t a primary focus for most people, but it plays a big role in helping America’s safety net providers maintain and strengthen their services. Each year, thousands of hospitals, clinics, and health centers receive savings on outpatient pharmaceuticals—savings they can use to reach more patients and deliver more comprehensive care.

Running a 340B program isn’t easy. It’s a complex structure that demands a clear understanding of policy requirements, operations integrity, and a commitment to compliance. Keeping all of the know-how you need in your head is nearly impossible. Earlier this year, though, I discovered a resource that I turn to often when working with 340B clients.

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 CMS Releases Final OPPS Rates for 340B Covered Entities

On November 1, CMS released their final rule implementing Part B payment reductions for Disproportionate Share Hospitals (DSH) as well as Rural Referral Centers (RRC).  The Final Rule, which will begin January 1st 2018, will reduce payment for most separately reimbursed Part B drugs from a current average sales price (ASP) + 6% to ASP – 22.5%.  Under the proposed changes, if a drug’s ASP cost is $50,000, CMS currently pays $53,000, but starting January 1st, CMS will pay $38,750 for the same drug. Payment for vaccines will not change.  The estimated savings to CMS is believed to be around $1.65 billion, nearly double from the original estimate of $900 million. The savings will be re-allocated to other OPPS services.

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indirect referrals

Mitigating Risks of Indirect Referrals

Sometimes, reliance on a referral request to an outside prescriber (e.g., specialist) to qualify a prescription as 340B eligible can be relatively straightforward. For instance, when a direct referral request to the actual prescriber is documented in the patient’s medical record along with a referral visit summary back closing the loop, the covered entity’s responsibility of care can be clearly demonstrated.

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Chief Cook and Bottle Washer: Self-Auditing For 340B, When You Are the ‘Whole Enchilada’

Let’s be honest, pharmacy is not for the faint of heart. Add to regular pharmacy duties the immense joy of the 340B program and you can be over your head…quickly. 340B self-auditing can feel like a pipe dream. HRSA auditors may haunt your nightmares, with Zombies, that have an uncanny resemblance to your CFO and Compliance Manager, waving a Medicaid Cost Report…(ahem), I digress.
340B is a complex program that requires hands on, good old-fashioned work. Even with fancy, schmancy 340B software, the covered entity is ultimately responsible for compliance. Therefore, self-auditing should be one of your top priorities.

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340B Summer ’17 Coalition Meeting

We had a great time in DC for the 340B Coalition Meeting. Thank you to everyone who stopped by the booth to say hello, or to learn more about our services. We thought the conference did well with keeping the 340B community updated on what is potentially coming with 340B changes, of course, it is still speculation in most cases. Rich Bucher and Rob Nahoopii will try to hit the highlights below.
Ted Slafsky, President and CEO of 340B Health, spoke about the state of 340B, and looking back and moving forward. Ted noted recent scrutiny of disproportionate share hospitals (DSHs) and pointed out that while 36% of this nation’s hospitals are DSHs, they provide close to 60% of this nation’s uncompensated care. He also pointed out that many rural hospitals would most likely have to shut their doors if not for the 340B program. For perspective, it was also noted that manufacturers spend four times as much on advertising as they do on the 340B program.

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340B, the ACA, and YOU

To fully address the topic of how 340B and the ACA are intertwined would take far more than one blarticle (Roxie word for blog + article); but I will do my best to “nutshell” it. Regardless of your political views and where you stand on the “Repeal and Replace” agenda regarding the Affordable Care Act, if it is repealed and replaced this could be huge (YUUUGE), and even detrimental for and to your 340B program in one, two, or both ways. When the ACA was signed into place in 2010 (yeah, it’s been that long ago!), it expanded the types of sites that could be considered “covered entities” such as children’s hospitals, free-standing cancer hospitals, rural referral centers, critical access hospitals, and sole community hospitals. My guess is that more than a few of you fall into one of these types of covered entities whose 340B programs could go out the window faster than Trump can say, “you’re fired.” (Remember when he was just a fun celebrity personality with a catch phrase?!)

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Contract Pharmacy – Is it a Risk You Are Willing To Take?

When you think of compliance pitfalls in the 340B Program, contract pharmacy immediately comes to mind. Contract pharmacy is one of the highest compliance risk areas of the 340B program; however, the reward of better serving our vulnerable and underserved patients to many is well worth the risk. Contract pharmacies have allowed covered entities to expand their reach to the most vulnerable of patients. Through 340B savings, many covered entities have provided: access to medications, support for non-covered procedures; improved healthcare and education; and support and resources for patient care. In many cases, these most vulnerable patients would have otherwise fallen through the cracks of our sometimes-flawed healthcare system. So how does the covered entity handle the complexities of the contract pharmacy arrangements?

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Health care reform concept with a RX pharmacy medical symbol in a puzzle jigsaw texture with peices missing as change to the status quo of the broken hospital care insurance and healthcare system that needs to be fixed.

A Review of Expectations to Prevent Duplicate Discount

Carve-In Medicaid Entities:

At a minimum, list the NPI of the entity for each registered site on the HRSA database and subsequently the Medicaid exclusion file (MEF).  Covered entities (CEs) with multiple child sites will need to confirm the NPI number used for billing at each site as it might be different than the parent NPI.  In addition, Medicaid provider numbers (MPNs) for each site should also be listed, as suggested by a recent 340B Health Webinar on HRSA audit findings.  It is not clearly explained by HRSA if the NPI or MPN is preferred, therefore best practice is to place both numbers on the MEF.  Confirmation that the information is correct on the MEF should be reviewed quarterly and annually during recertification.

During a recent HRSA audit, the auditor asked that for each FFS claim sampled, the CE demonstrate that the NPI placed on the claim/UB04 matched the NPI listed on the database.  The auditor also asked that confirmation of discussion of the carve-in arrangement that occurred with the State DHS office be uploaded as data by the end of the audit.

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