In 2017, the Health Resources and Services Administration (HRSA) plans to audit 200-300 covered entities (CE) — a number expected to increase in coming years. Now is an opportune time for 340B drug discount program CEs to work with independent firms to conduct annual 340B reviews to maintain compliance with federal programmatic requirements.
While the 340B drug discount program can provide significant financial benefits to CEs, it is administratively complex. As HRSA audits increase, you need to consistently demonstrate programmatic compliance in these areas:
- CE programmatic eligibility
- Internal procedures and controls
- Patient definition
- Drug distribution system
- Systems to mitigate duplicate discounts
Keep in mind these key considerations, emphasized at this year’s 340B Coalition Summer conference, to maintain 340B programmatic compliance:
- Common Adverse Audit Findings: They include database record errors, drug diversion, duplicate discounts and Medicaid billing violations, inadequate program oversight and unauditable records.
- Corrective Action for Adverse Audit Findings: In the event of adverse audit findings (either by HRSA or a drug manufacturer), CEs may need to complete a corrective actions plan (CAP), usually due to the auditor within 60 days. HRSA has developed a CAP template, available on the HRSA website, to simplify reporting.
- Public Reporting: The Office of Pharmacy Affairs (OPA) website posts HRSA audit results. HRSA encourages drug manufacturers to review the publically available audits and to contact any CEs they believe they have overpaid. Note: while adverse findings from a self-audit are not posted on the OPA website, CEs should report any programmatic compliance issues to HRSA in a timely manner. Then, if your CE receives an HRSA audit notice, you may include self-audit findings in the formal federal audit.
- Materiality Threshold: HRSA recommends CEs include a materiality threshold in their policies and controls to formally document their consideration of materiality, and help ensure timely identification of compliance issues. HRSA expects that you develop your own CAPs to mitigate noncompliance and make restitution to drug manufacturers, where appropriate. Consider using HRSA’s CAP template.
Penalties and Compliance
HRSA can impose a range of penalties for noncompliance. Interest penalties on the cost of drugs can be imposed on CEs who ‘knowingly and intentionally’ divert 340B drugs for their own financial benefit. HRSA can remove a CE from the 340B program if HRSA deems its noncompliance to be ‘systematic and egregious.’ HRSA can also report CEs to other authorities if they identify other areas of concern.
As HRSA audits increase, CEs will be under more pressure than ever to comply with programmatic guidelines. CEs may want to augment any self-audits with independent third-party compliance reviews, as third-party reviews help CEs make sure its procedures and practices are independently vetted and verified by unbiased experts. These reviews are excellent preparation for any HRSA audit.
Industry leaders recommend one independent review per year to help CEs prepare for HRSA’s regular programmatic monitoring. It’s never too late to engage BerryDunn to help you gain control over your 340B program compliance.