WHO DAT! - HFMA Region 9 Annual Conference

11/10/2014
340B Audits
Kade Moody, CPA
HORNE LLP
November 16, 2014
WHO DAT!
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11/10/2014
Agenda
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Overview
Key compliance requirements
Best practices
HRSA audit process
Results from HRSA and OIG reviews
Hot topics and looking forward
The 340B Drug Pricing Program requires drug
manufacturers
f t
t
to
provide
id
outpatient
t ti t drugs
d
t
to
eligible health care organizations / covered entities
at significantly reduced prices.
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340B Program History
• Established by section 602 of Veterans Health Care Act
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•
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of 1992
Codified as section 340B of Public Health Service Act
(PHSA)
Section 340B instructs Department of Health and Human
Services (HHS) to enter into agreements with drug
manufacturers of covered outpatient drugs
Administered by Office of Pharmacy Affairs (OPA) in
Health Resources Services Administration (HRSA)
BENEFITS OF THE 340B DISCOUNT DRUG PROGRAM
• Provides discounts on outpatient
p
drugs
g p
purchased by
y “safety
y
net” providers for eligible patients
• Average savings of 25 - 50% for eligible covered entities on
outpatient drugs
• The benefits of the 340B Program
g
enable covered entities to
stretch scarce Federal resources reaching more eligible
patients and providing more comprehensive services.
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IN GENERAL, AND AS EXPANDED BY THE ACA,THE
FOLLOWING ENTITIES ARE ELIGIBLE TO PARTICIPATE
• DSH hospitals (greater than 11.75 DSH adjustment
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percentage)
Free-standing Children’s hospitals
Free-standing Cancer hospitals
Critical Access Hospitals
Sole community hospitals
Rural referral centers
Family Planning and Aids Centers
Others that provide care to a population in need
340B Program Key Compliance Requirements
1. Entity Eligibility and Recertification
2. Drug Diversion and Patient Eligibility
3. Duplicate Discounts
4. Group Purchasing Organization (GPO) Prohibition
• Applies to Disproportionate Share, Children’s Hospitals, Free Standing
Cancer Hospitals
5. Orphan Drug Exclusion
• Applies to Free Standing Cancer Hospitals, Rural Referral Centers, Sole
Community Hospitals, and Critical Access Hospitals
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LET’S LOOK A LITTLE DEEPER……
Entity Eligibility
To participate in the 340B Program, an entity must:
• Ensure it has the capability to comply program requirements and maintain auditable records
documenting compliance with those requirements
• Register on the HRSA 340B database
• Recertify accuracy of HRSA 340B database information annually
Recertification Statements:
• Database entry is complete, accurate, and correct
• Entity meets 340B eligibility requirements
• Compliance with 340B requirements/restrictions
• Maintenance
M i t
off auditable
dit bl records
d
• Systems in place to ensure compliance
• Contract pharmacy compliance, entity obtains sufficient information
• Entity contacts OPA for any breach of the above
• Entity acknowledges possibility of payment to manufacturers for failure to notify OPA timely
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Drug Diversion and Patient Eligibility
Patient Definition:
An individual is considered a patient of a 340B covered entity (with the
exception of state-operated or state-funded AIDS drug assistance programs)
only if the following criteria are met:
• The covered entity has established a relationship with the individual, which
includes maintaining records of the individual’s health care.
• The individual receives healthcare services from a healthcare professional
who is either employed by the covered entity or provides health care under
contractual or other arrangements (e.g., referral for consultation) such that
responsibility for the individual’s care remains with the covered entity.
• For FQHC and FQHC look-alikes, there must be evidence the patient is
receiving care that is consistent with the service or range of services for
which grant funding was provided to FQHC or on which the FQHC lookalike’s status is based.
Drug Diversion and Patient Eligibility
Drug Diversion:
• Covered entities must ensure that mechanisms are in
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place to prevent a drug purchased at a 340B price to be
sold or transferred to anyone other than a patient of that
covered entity.
Covered entities are responsible for maintaining systems
and verifiable records that demonstrate compliance with
340B anti-diversion requirements, including
comprehensive inventory control and self-audits.
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Duplicate Discount Prohibition
Duplicate discounts occur when manufacturers provide both a 340B discount
on a drug AND pay a Medicaid rebate to the State on that same drug.
Covered entity’s responsibility to:
• Work with the Medicaid Agency in each state to ensure that duplicate
discounts do not occur.
• Ensure Medicaid billing information in OPA database is accurate
• Inform OPA of election to carve-in or carve-out
• Carve-in – Entity uses 340B drugs for Medicaid patients (included in
Medicaid Exclusion File)
- Medicaid does not collect rebates on drug claims from this NPI
• Carve-Out - Covered entities may elect to purchase drugs for Medicaid
patients on a non-340B contract.
GPO Prohibition
The GPO Prohibition prohibits 340B participating DSHs, PEDs, and CANs from obtaining covered
outpatient
t ti t drugs
d
through
th
h group purchasing
h i organizations.
i ti
GPO Prohibition applies:
• To the certain hospitals, any clinics/departments within the four walls of the hospital, and the
hospital’s OPA-database registered off-site outpatient clinics
• As of entity’s effective date of participation as listed in 340B database
GPO Prohibition does not apply to certain off-site, outpatient facilities of the hospital that are located at
a different physical address than the parent, are not registered on the OPA database as participating,
purchase drugs
p
g through
g a separate
p
p
pharmacy
y wholesaler account than the p
participating
p
gp
parent,, and for
which the hospital maintains records that covered outpatient drugs purchased through GPO at these
sites are not utilized/transferred to the OPA registered parent hospital or outpatient facilities.
Entities electing to use a replenishment model must be able to demonstrate compliance with the GPO
Prohibition through auditable records.
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Orphan Drug Exclusion
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Applicable to Free-Standing Cancer Hospitals, Rural Referral Centers, Sole
Community Hospitals, and Critical Access Hospitals
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HRSA Orphan Drug Regulation (status pending)
• Allows applicable covered entities to receive 340B pricing on orphan drugs that
are not used to treat the rare disease for which it received orphan designation
• Provides clarification regarding the covered entity’s responsibility to maintain
auditable records that demonstrate compliance with terms of orphan drug
exclusion requirements
Best Practices for Ensuring Program Compliance
• Development and documentation of written comprehensive 340B Program
policies and procedures
• Development of concrete methodologies for routine self-auditing
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Consider need for independent review by third party given new compliance
challenges associated with OPA expectation of annual independent audits,
especially surrounding contract pharmacies
• Development of routine processes for internal corrective action
• Establishment 340B multidisciplinary team responsible for oversight of
program compliance
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Include pharmacy, administration, compliance, internal audit, legal, and
government affairs, information technology, medical records, and physician
services
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Best Practices for Policies and Procedures
Policies and procedures should specifically address the following issues:
• Patient eligibility
• Duplicate discounts
• Appropriate Medicaid billing
• Program intent
Policies and procedures should detail about how the covered entity will bill 340B drugs in
accordance with state law or guidance on how the entity will validate that its Medicaid
billing system is accurate and effective.
Policies and procedures should also describe how the organization will dispense or
administer drugs to the Medicaid population
- Election to “carve in” or “carve out”
Best Practices for Self Audits
g
y
• Developp a clear wayy to validate ppatient eligibility.
• Review reports of health care professionals’ NPIs to determine only
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professional meeting all aspects outlined in the patient definition
write for 340B drugs.
Regularly verify referral for care provided outside the entity.
Review billing practices for Medicaid and Medicaid managed care to
ensure consistency with state policy and entity’s 340B database
information.
Maintain updated Policies & Procedures on all aspects of 340B
purchasing and operations.
Ensure all information in the 340B database is current
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Best Practices Specific to Duplicate Discounts and
Diversion
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Plan for continuous monitoring, to include regular sampling of 340B dispensed drugs
• Periodic assessment of controls for provider eligibility, site eligibility, medical
records, and responsibility of care
• Audit software regularly
• Verify that contract pharmacy arrangements comply with the 340B Program
requirements and are properly listed in the OPA 340B database
• Have a clear understanding of how each contract pharmacy deals with carve-out
• Develop strong partnerships with State Medicaid agencies to meet state-specific
requirements and to ensure prevention of duplicate discounts
• Perform regular assessments of each site’s Medicaid billing info in the 340B database
HRSA Audit Process and Recent Changes
Pre-Audit
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Engagement letter from HRSA
Auditor will schedule a pre-site visit conference call
Data request includes:
• Policies and procedures related to 340B
• Most recently filed Medicare cost report
• 340B drug orders or prescriptions
• List of providers authorized to write prescriptions for drugs deemed 340B eligible
• Current 340B drug inventory
• Listing of contract pharmacies utilized and all current contracts
• Schedule of 340B drug purchase orders
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HRSA Audit Process and Recent Changes
Onsite Audit
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HRSA program integrity analysts obtain and review 340B Program data and internal
controls
Audit procedures include, but not limited to:
• Review of relevant policies and procedures and how they are operationalized
• Verification of eligibility, including GPO and outpatient clinic eligibility
• Review of 340B Program compliance at covered entity, outpatient or associated
facilities, and contract pharmacies
• Verification of internal controls to prevent diversion and duplicate discounts
• Testing of 340B drug transaction records on a sample basis
HRSA Audit Process and Recent Changes
Post Audit
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HRSA program integrity analysts provide a preliminary report to OPA for review
OPA reviews the preliminary findings, documents and addresses concerns
OPA drafts a final report and issues the report to the covered entity, with a request for
a corrective action plan, if applicable
• Agree – Covered entity must submit a corrective action plan to HRSA within 60
calendar days
• Disagree – Covered entity must notify HRSA in writing within 30 calendar days
with appropriate supporting documentation of disagreement
• OPA reviews covered entity’s response and, if appropriate, may reissue the final
report
Failure to submit a corrective action plan may result in removal from the 340B
Program
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HRSA Audit Process and Recent Changes
Post Audit, continued
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Once HRSA reviews and approves the submitted corrective action plan, covered
entities with diversion or duplicate discount findings are required to provide HRSA a
public letter which will be posted on OPA’s website
Intent of letter
Covered entities whose findings involve repayment will be subject to an audit the
following year
Once an audit report is finalized by OPA, the findings and any associated corrective
action will be summarized on the OPA website
HRSA Audit Process and Recent Changes
Changes to the Audit Process
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HRSA no longer issues preliminary reports to the audited covered entities.
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HRSA notifies audited covered entities of the audit findings in the HRSA final report.
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The entity’s opportunity for Notice and Hearing is after the final report.
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Formal exit interviews during the on-site audit will no longer be conducted.
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Results of HRSA Audits and OIG Review
Common findings from HRSA audits:
• Diversion
• Duplicate discounts
• Incorrect database information
• No oversight of contract pharmacy
Results of HRSA Audits and OIG Report
Common findings
g from HRSA audits:
Diversion
• 340B drug dispensed at ineligible site or written by ineligible
provider
• 340B drug dispensed which was not supported by a medical
record
• 340B drug dispensed to an inpatient
• 340B drug dispensed to a non-patient at a contract pharmacy
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11/10/2014
Results of HRSA Audits and OIG Report
Common findings
g from HRSA audits:
Duplicate Discounts
• Billing Medicaid contrary to Medicaid Exclusion File listing
• 340B drug used for Medicaid patients at a contract pharmacy, with
no arrangement to prevent duplicate discount
• Medicaid claims incorrectly coded when provided to the state, or
submitted without proper billing information
• Incorrect Medicaid or NPI listed in the Medicaid Exclusion File
• Outpatient sites incorrectly listed in the Medicaid Exclusion File
Results of HRSA Audits and OIG Report
Common findings
g from HRSA audits:
Eligibility and Auditable Records
• Incorrect Authorizing Official
• Primary location and contact information incorrect
• Closed child sites remained registered
• Incorrect name listed for a child site
• Incorrect address for facility
• Incorrect ship-to address
• Pharmacy listed as an entity with a 340B ID
• No written contract in place for a contract pharmacy
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11/10/2014
Results of HRSA Audits and OIG Report
OIG report
p on results of survey
y conducted of the use of contract
pharmacies by 340B covered entities
• Conducted in response to a Congressional request
• Findings related to discrepancies in the policies of covered entities
• Inconsistent determinations of 340B Program eligibility
• Treatment of Medicaid managed care enrollees
• Discounts of uninsured patients
• Variation
V i ti off oversight
i ht off 340B contract
t t pharmacies
h
i
• OPA has expressed expectation that covered entity retain an
independent auditor at least annually to review the activities
of contract pharmacies
Results of HRSA Audits and OIG Report
OPA released statement emphasizing commitment to strengthening program integrity, especially as it
relates
l t to
t contract
t t pharmacy
h
arrangements
t and
d provided
id d th
the ffollowing:
ll i
Contract Pharmacy Oversight Requirements
1. Conduct independent annual audits and/or adequate oversight mechanism
2. An expectation to develop written 340B Program policies and procedures involving contract
pharmacy oversight; maintain auditable records at both covered entity and contract pharmacy;
ensure written contract pharmacy agreement lists each contract pharmacy individually and is in
place before registering the contract pharmacy in 340B Program; and contract pharmacy may not
be utilized for purposed of 340B Program until it has been registered, certified, and pharmacy is
listed on the covered entity’s 340B database record.
3. Ensure that 340B drugs are only provided to 340B eligible patients.
4. Carve-out Medicaid at contract pharmacies – or develop an alternative arrangement to work in
collaboration with the state Medicaid agency to ensure duplicate discounts do not occur and report
this to HRSA
5. Maintain accurate information in the 340B database, including covered entity contact information,
contract pharmacy information, and Medicaid billing information.
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340B Hot Topics
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Referrals
• Covered entity must be able to provide documentation that it retained
responsibility for the health care services provided to the patient
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Outpatient facilities
• Changes in how registered with OPA (each clinic, service, dept registered as
separate child sites even if all located in same building)
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Transferring medications
• Reducing risk of drug diversion
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GPO prohibition
• Use of GPO instead of 340B in certain provider based departments of covered
entity
340B – What’s Trending
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Orphan drug ruling
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Status of 340B Omnibus “Mega-Reg”
• Intended to provide clarification on certain aspects of the 340B Program
• Issue of whether HRSA has rule-making authority
• Likely to be issued as interpretive guidance once orphan drug rulings settled
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HRSA program integrity and oversight investment
• $6M investment in staffing
• Streamline audit p
process and reporting
p
g and improvement
p
in overseeing
g covered
entity compliance
• Goal is to double the number of audits performed in FY 2015
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RESOURCES
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OPA: www.hrsa.gov/opa
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Apexus (Prime Vendor): www.340bpvp.com
• [email protected]
• Live chat at www.340bpvp.com
• 1-888-340-2787 (8:30am – 6:30pm ET M-F)
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HRSA Covered Entity Database: http://opanet.hrsa.gov/opa/CESearch.aspx
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