Fortifying the integrity of hospitals’ 340B programs

340B Drug Pricing Program focuses on compliance; audits promote program integrity

Over the past few years, the 340B Drug Pricing Program has received increased scrutiny from Congress and the pharmaceutical industry. The Health Resources and Services Administration (HRSA) recently announced a renewed focus on making sure participants in the 340B program are adhering to specified policies and rules by conducting audits of covered entities. “Audits allow HRSA and all stakeholders the opportunity to improve oversight, monitor for potential violations, prevent and detect diversions of the discount, and most importantly, share information and create compliance,” said CDR Krista Pedley, PharmD, MS, Director of the HRSA Office of Pharmacy Affairs.

Becoming audit ready

During a session at the 2014 American Society of Health-System Pharmacists Summer Meeting, Pedley, along with experts from a hospital with a 340B program, and Apexus Inc., the exclusive contractor for HRSA’s 340B Prime Vendor Program, spoke about the audit process, the importance of conducting self audits, and the tools available to prepare for an audit.

Created in 1992, the 340B program allows qualified health care entities to purchase outpatient medications at discounted prices for use by low-income patients. 340B program participants include safety net hospitals, federally qualified health centers, and AIDS drug assistance programs.

HRSA update

Pedley kicked off the session by providing an update on activity on the 340B program. “We continue to move forward with program integrity efforts, including covered entity and manufacturer compliance with program requirements,” she told conference attendees.

Pedley highlighted areas that entities should pay particularly close attention to when it comes to compliance. Registration for the 340B program “continues to be a focal point for HRSA as we validate and ensure that entities are eligible for the [program],” she said.

HRSA is currently working to improve and streamline the registration process externally and internally. Pedley noted that next quarter CMS data will be electronically integrated with the registration process, which will assist entities and HRSA in reviewing registration in a more streamlined and easier-to-validate manner. This will also decrease the time to review registration, which will positively affect hospitals registering new sites, Pedley added.

Pedley also underscored the importance of recertification. “Failure to recertify will result in removal from the 340B program, and entities are removed every time we do recertification because they fail to go through the process,” she said.

Common mistakes

HRSA audited 51 covered entities during fiscal year 2012, including more than 410 outpatient facilities/subgrantees and more than 860 contract pharmacy locations. “Those audits are all finalized and posted on our ,” said Pedley.

According to Pedley, there were several recurring critical areas of noncompliance for hospitals and nonhospitals. The primary areas of noncompliance for hospitals included obtaining covered outpatient drugs through a Group Purchasing Organization, medications dispensed to ineligible individuals (diversion), and billing contrary to the Medicaid Exclusion File.

For nonhospitals, the top three noncompliance areas were the covered entity’s inability to maintain accurate database information; billing contrary to the Medicaid Exclusion File, which may have resulted in duplicate discounts; and diversion.

Information request

Sarah Lee, PharmD, MS, Clinical Manager of UNC Hospital in Chapel Hill, NC, was on vacation backpacking in Maine when a congressional letter of inquiry from Sen. Charles Grassley (R-IA) arrived that asked for specific and detailed information about the hospital’s 340B program.

The request for information was in response to a media report about the 340B program and the costs of oncology medicine. Specifically, Grassley wanted a summary of all revenue received from participating in the 340B program from 2008 to 2012, broken down by year. He asked for an explanation of whether, to what extent, and how UNC Hospital has reinvested those savings for the benefit of uninsured patients, noted Lee. He was also interested in the payer mix for all 340B drugs, the price at which UNC Hospital purchased each 340B drug, and the price at which it sold the drug, per payer mix, she added. He also asked for documentation on the hospital’s indigent care population. “We had to pull 4 years’ worth of data in 2 weeks, and at the time I was the sole manager of our 340B program,” she said.

The first thing Lee did was gather the right people. “We pulled together a team from legal compliance, finance, pharmacy, and executive leadership, all people that needed to be involved to come up with the responses,” she said. In the end, the original response to Grassley was 51 pages long, noted Lee.

Communication and oversight

Lee told meeting attendees that one of the primary lessons learned from this experience is the necessity to have team-based oversight of the 340B program. This kind of oversight ensures that we have accountability and allows us to do multifaceted decision making, she added.

Lee and her team developed organized communications and multiple task forces to do the legwork. We also took “individual policies and came up with one overarching policy to tell one story about our health care compliance,” she said.

After this experience, Lee and the team created a 340B Compliance Specialist position to have a person dedicated solely to the 340B program. “The program is too complex and [there are] too many details and too many things to understand for somebody to do it while they are also doing another job,” she said. The employee started in January 2014 and is responsible for conducting self audits, maintaining accurate provider and cost center lists, educating staff, maintaining splitting software, monitoring compliance within workflow and inventory management, and updating policies and procedures.

Self audits

According to Lee, there are several types of self audits. Every year Lee and her team conduct a “mock HRSA audit” using a tool from Apexus. During the annual mock audit, areas reviewed include policies and procedures, updated regulations, organized communication, and Medicaid billing. The group also conducts monthly miniaudits that are drug specific, patient specific, or location specific. There are also ongoing system audits of the pharmacy, split billing, and billing systems. The team performs workflow audits in which they interview staff, identify knowledge gaps, and capture opportunities for systems failure. “As you find things from the self audits, [you can] outline and [assign] them to a responsible party” to take care of, said Lee.

Helpful tools

When it comes to the 340B program, compliance is the responsibility of the covered entity, which is why it is essential to have constant oversight and a well-designed, well-managed program.

Apexus is a nonprofit organization that manages HRSA’s 340B Prime Vendor Program (PVP). It currently serves more than 22,000 safety-net providers by delivering additional savings on pharmaceuticals through the 340B PVP. It is also a forum to train and teach entities to be compliant, noted Christopher Hatwig, MS, RPh, FASHP, President of Apexus. The organization uses information that comes out of the HRSA audits to improve behavior. “Our goal is for all covered entities to actually pass the audit,” said Hatwig.

Apexus offers a variety of free tools and resources to promote program integrity, including 340B University, an in-depth educational program. Topics covered in the training include statutory ceiling price calculations, fundamentals in implementing a compliant pharmacy program, and hands-on training with tools and resources available to assist with program integrity. Upcoming programs will be held October 19, 2014, at the Westin O’Hare in Rosemont, IL, and December 7, 2014, at the Sheraton Park Hotel in Anaheim, CA.

In addition to 340B University, Apexus has a call center and online resources, including tools for audits and draft policies and procedures that can be customized according to practice site.

“I feel like we’re making an impact,” said Hatwig. “Our goal is to enable all of the eligible customers to run 340B-compliant pharmacy programs.”