RoseMarie BabbittHRSA Contractor

340B Drug Discount Program

Understanding the Audit Process and Preparing your Pharmacy

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Objectives

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Overview of 340B Drug Discount Program

Define the purpose of the HRSA Audits

Identify key practice areas to regularly ensure compliant programs

Describe methods to prepare a 340B entity for internal and/or external audits

Our Mission To promote access

to clinically and cost effective

pharmacy services

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Office of Pharmacy Affairs

ACCESS

QUALITY

OUTCOMESClinically & Cost

Effective Pharmacy Services

OPERATIONS

Clinically and Cost-EffectivePharmacy Services

Intent of the 340B Program

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Permit eligible safety net providers “to stretch scarce Federal Resources as far as possible, reaching more eligible patients and

providing more comprehensive services.”

H.R. Rep. No. 102-384(II), at 12 (1992)

340B Program: Overview and Benefits

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Provide outpatient drug discounts to certain safety-net covered entities

Average savings of 25-50%.

Savings may be used to:

Reduce price of pharmaceuticals for patients

Expand services offered to patients

Provide services to more patient

Estimated $6 billion dollars in 340B drug purchases last year Manufacturers that participate in Medicaid must also participate in the

340B Program

Administrator of 340B Program

Program oversight to help maximize value of 340B

Service as Federal resource on pharmacy

Functions of OPA

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OPAmaintains datafor each 340Bentity. Annualrecertification

Transparencyin drugpricing

FederalRegisterNotices

Accurate &consistent

interpretationof law/policy

In all of its functions, OPA prioritizes program integrity

Website FAQ,PSSC CallCenter, &PharmTA

340B Program Integrity Resource

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Eligible Entities

Federal Grantees Hospital Types

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Comprehensive Hemophilia Treatment Centers

Federally Qualified Health Centers

Urban/ 638 Health Center

Ryan White Programs

Sexually Transmitted Disease/Tuberculosis

Title X Family Planning

Disproportionate Share Hospitals

Critical Access Hospitals

Rural Referral Centers

Sole Community Hospitals

Children’s Hospitals

Free Standing Cancer Hospitals

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Recent OIG Study: June 2011

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State Medicaid Policies and OversightActivities Related to 340B-Purchased Drugs

OIG Recommendations:• CMS to direct States to create written 340B policies• CMS to inform States about tools they can use to

identify claims for 340B-purchased drugs• HRSA to share 340B ceiling prices with States. (HRSA

will need to seek legislative authority to implement)• HRSA, in conjunction with CMS, shall improve the

accuracy of the Medicaid Exclusion File

GAO FINDINGS

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Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement “GAO-11-836, Sep 23, 2011”

Oversight of the 340B program is inadequate in providing reasonable assurance that covered entities and drug manufacturers are in compliance with program requirements.

The 340B program has increasingly been used in settings, such as hospitals, where the risk of improper purchase of 340B drugs is greater.

GAO Recommendations

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GAO Recommendations include:Covered Entity Audits Patient DefinitionNondiscrimination by ManufacturersHospital eligibility

HHS RESPONSE TO RECOMMENDATIONS

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I. Covered Entity Audits Continue to work with manufacturers Target educational programs to diversion

II. Patient Definition Review and develop within context of PPACA changes

III. Nondiscrimination by Manufacturers Comprehensive education plan on existing policy Work with manufacturers to provide clearer guidance on working with HRSA

on allocation. Continue to work with DOJ.

IV. Hospital Eligibility Publicize existing criteria Initiate recertification process Develop and implement comprehensive educational plan.

ACA Provisions: Focus on Program Integrity

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Manufacturer Integrity (Civil Monetary Penalties) – HRSA published Advanced Notice of Proposed Rulemaking September 2010

Covered Entity Integrity Pricing Changes and Transparency (Regulations & on line

access in 340B data system) Administrative Dispute Resolution - HRSA published

Advanced Notice of Proposed Rulemaking September 2010 Annual on-line recertification of all entities

Policy Releases

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November 2011-Penny Pricing

-Manufacturer audits

March 2012-Covered Entity Audits

May 2012-Non-discrimination

-ACO’s

February 2013-Medicaid Exclusion file

-GPO Prohibition

Identified Compliance Issues

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Diversion Non-eligible entity or entity service (inpatient) Non-eligible patient Reselling of product

Process Unusual purchase patterns Unusual ratios of inpatient purchases Outpatient purchases of primarily inpatient medicine

Issues Definition of patient Duplicate discounts Multiple ship-to sites Split billing software and credit /re-bill activity Healthcare reform impact (ACOs, integration)

Program Prohibition: Diversion

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What constitutes “Diversion”? a drug that is provided to an individual who is not a patient

of that entity a drug dispensed in an area of a larger facility that is not

eligible (e.g. an inpatient service, a non-covered clinic) Entities should enroll all eligible outpatient or satellite

sites

Required to follow patient definition guidelines 61 Fed. Reg. 55156 (October 24, 1996)

Program Prohibition: Duplicate Discounts

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Duplicate Discount = Accessing 340B Discount AND Medicaid Rebate on the same drug

Inform HRSA at the time of enrollment whether the CE plans to purchase and dispense 340B drugs for their Medicaid patients and bill Medicaid.

HRSA maintains this list known as the Medicaid Exclusion File on HRSA’s public Website

HRSA Guidance“Medicaid Exclusion Tutorial” and “Medicaid Exclusion File Basics”

(http://www.hrsa.gov/opa/medicaidexclusion.htm). Final Notice, Duplicate Discounts and Rebates on Drug Purchases

published at 58 Fed. Reg. 34058 (June 23, 1993).

GPO Prohibition

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340B Statute states the hospital “- does not obtain covered outpatient drugs through an

group purchasing organization or other group purchasing arrangement…”

A condition of 340B eligibility forDisproportionate Share Children’s Hospitals Free Standing Cancer Centers

Registration: GPO Prohibition

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OPA GPO certification form, signed by authorizing official states such hospitals “...will not participate in a group purchasing

organization or group purchasing arrangement for covered outpatient drugs as of the date of this listing on the OPA website." OPA GPO Certification Form

Audits – HRSA conducted

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All covered entity types considered for risk-based audit selection Risk-based factors length in program, number of outpatient facilities, number of contract pharmacies, complexity of program, volume of purchase

Target audits – focus on specific allegation Conducted by HRSA regional staff

A summary on the audit process is available at http://www.hrsa.gov/opa go to Program Integrity Page

HRSA Audits

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FY 2012 45 risk based, 6 targetOnsite portion of audits completedResults are preliminary until finalized by OPA Finalized and posted

FY 2013Audits have begunNumber not yet finalized

HRSA Random/Targeted Audit Process

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Pre-Audit Engagement letter from HRSA Teleconference, document requests, scheduling

Onsite Audit Auditors obtain, review, examine data Exit interview, preliminary findings

Post-Audit Auditors provide preliminary findings to OPA OPA reviews preliminary findings, addresses concerns OPA finalizes report, post summary on website

On-site Process

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Audit Focus Areas Eligibility status - GPO Policies and procedures – procurement, inventory,

distribution, dispensing, billing Internal controls Policies, procedures, & records – Diversion Procurement & distribution – duplicate discount Sampling

Audits – Manufacturer conducted

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Authority Reasonable cause Independent auditor Submit workplan to OPA prior to conducting – December 12, 1996

(61 Fed. Reg. 65406 Encourage manufacturers to submit plans and we will work closely

with them throughout the process

HRSA has received 6 workplans – 4 have been approved to move forward with audits

One manufacturer audit report has been finalized Encourage manufacturers to share lessons learned

So now what…….

As a Compliance Professional

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Contact your pharmacy

Perform Reviews Processes, Policies and, Procedures

Add a 340B audit as a line item on your annual work plan

Check the OPA database and confirm information

Understanding the Process

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Audits are an ongoing process to ensure integrity of your use of the 340b

drug pricing program1. What to audit? audit prescription transactions as well as any onsite use or

administration of drugs2. How to choose the audit selection?

100% of transactions Sample transactions Random selection methods-

o Random number table creationo Extrapolation of results

Preparing Your Pharmacy

1. Audit records often, or at least monthly, to correct errors in a timely fashion.

2. Report audit results internally to Performance Improvement , Risk Management or Compliance

3. Provide any evidence of process changes made that are related to an audit finding.

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Preparing Your Pharmacy

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4. Have your own audit records and reports ready for review by the auditor.

5. Be able to describe the audit method(s) used by your Entity for a review of records.

6. Show corrective actions taken when discrepancies are found.

Available Resources

►OPA website: www.hrsa.gov/opa

►Apexus website: www.340BPVP.com

►Apexus Answers ►Call Center M-F 7:30 am-5:30 pm cst►Email: ApexusAnswers@340bpvp.com ►Live chat ►Phone: (888) 340-BPVP (340-2787)

►340B University tools & resources►www.340bpvp.com/resource-center/340b-university

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