1. Program Integrity through 340B Compliance
Hosted By:
The HRSA Program Integrity Initiative Workgroup
August 8, 2012

2. Today’s Presenters Pat O’Rourke CFO Office
Michelle Herzog Health Services Bureau/Office of Pharmacy Affairs
Valerie Holm Office of Federal Assistance Management/Division of Financial Integrity
David Fleurquin Office of Regional Operations
Tammie Brown Office of Inspector General, HHS

3. Agenda HRSA’s Program Integrity Initiative
DHHS Office of Inspector General (OIG) National External Audit Review (NEAR) Center
Introduction to the 340B Drug Pricing Program
The Compliance Supplement and 340B Compliance Requirements
Questions and Answers

4. HRSA’s Program Integrity Initiative
The Administrator launched the HRSA Program Integrity Initiative (PII) in June 2010.
The PII was designed to:
Target risks of fraud, waste and abuse
Reduce risks by enhancing program integrity operations
Share the best program integrity practices, and measure the results of PII efforts.

5. Prioritized PII Actions
Provide training opportunities for grantees and staff to increase program integrity
Increase the number and quality of program integrity reviews and site visits conducted.
Create a toolkit to facilitate collaboration and sharing of best practices.

6. Office of Inspector General National External Audit Review Center
What is NEAR?
How does NEAR interact with DHHS sub-agencies?
How does NEAR interact with auditors?

7. HRSA’s Program Integrity Initiative
An introduction to the 340B Drug Pricing Program to assist auditors who now have to test 340B compliance during the A-133 audit..

8. Office of Pharmacy Affairs Mission:
Promote access to clinically and cost effective pharmacy services 8 8 8

9. 340B Program: Overview and Benefits
Provides discounts on outpatient drugs 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

10. Intent of the 340B Program
Permits 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 (II), at 12 (1992)

11. Eligible Entities Federal Grantees Hospital Types
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

12. 4 340B Enrollment Steps 3 2 1 Await Decision From OPA
Determine Eligibility 2
Complete Appropriate Forms 3
Submit Forms / Documents to OPA 4
Await Decision From OPA

13. 340B Enrollment
Deadline: October 15 January 15 April 15 July 15 Start Date: January 1 April 1 July 1 October 1

14. 340B Enrollment Once enrolled, the newly participating entity must:
Set up an account with wholesaler using 340B ID
Determine if contract pharmacy services are appropriate
Contact PSSC for assistance with any/ all technical issues
Contact the PVP to discuss participation in their added services.

15. Contract Pharmacies (2010 FRN (Vol. 75 No. )
340B program allows entities to have multiple contract pharmacies for increased patient access to cost effective pharmaceuticals
The Covered Entity purchases the drug, but “ship to - bill to” procedure may be used
The Covered Entity retains legal title to all drugs purchased under 340B. The Covered Entity must pay for all 340B drugs.

16. 340B Database
Entities are not eligible for the program unless listed in the 340B database
Wholesalers will not ship discounted drugs unless it is an exact match to the 340B database
Information is updated daily
Includes the Medicaid Exclusion File
Online registration available for all applicants

17. Program Prohibition: Diversion
Diversion means:
a drug is provided to an individual who are not a patient of that entity
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 (October 24, 1996)

18. Program Prohibition: Duplicate Discounts
Duplicate Discount = Accessing the 340B Discount and Medicaid Rebate on same drug
Safety-net providers required to inform HRSA at the time they enroll whether they plan 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 provides guidance to covered entities and states
“Medicaid Exclusion Tutorial” and “Medicaid Exclusion File Basics”
Final Notice, Duplicate Discounts and Rebates on Drug Purchases published at 58 Fed. Reg (June 23, 1993).

19. Recent OIG Study
State Medicaid Policies and Oversight Activities Related to 340B-Purchased Drugs – June 2011
OIG recommendations:
CMS direct States to create written 340B policies
CMS inform States about tools they can use to identify claims for 340B-purchased drugs
HRSA share 340B ceiling prices with States. (HRSA will need to seek legislative authority to implement)
HRSA, in conjunction with CMS, improve the accuracy of the Medicaid Exclusion File

20. GAO Findings
Manufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement.
GAO , Sep 23, 2011
GAO Recommendations:
Covered Entity Audits
Patient Definition
Nondiscrimination by Manufacturers
Hospital eligibility

21. ACA Provisions focusing on Program Integrity
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

22. Program Integrity - Current Activities
Determination of eligibility
Annual Recertification
Quarterly calculations of 340B prices
Maintenance of Medicaid Exclusion File
Investigations/resolutions of alleged drug diversion and incorrect pricing/inappropriate limits on drug access
Technical Assistance, webinars, FAQs, guidances

23. Policy Releases Penny Pricing – Nov. 2011
Non-discrimination – Nov. 2011
Manufacturer audits – Nov. 2011
Covered entity audits – Mar. 2012
Medicaid exclusion file
Hospital eligibility requirements
All of the policy releases can be found on
The program integrity page on the OPA
Database.

24. Audits – Manufacturer Conducted
Authority
Reasonable cause
Independent auditor
Submit audit workplan to OPA for approval prior to conducting - December 12, (61 Fed. Reg )
OPA encourages manufacturers to submit plans and we will work closely with them throughout the process
OPA has received its first audit plan from a manufacturer

25. Audits – HRSA Conducted
HRSA to date has conducted 50 of the 51 audits.
HRSA Leadership has proven commitment to this effort by providing additional auditors.
All covered entity types will be considered for audit selection, including non-HRSA grantees and hospitals
Proposed Focus Areas – Eligibility, Policies and Procedures, Internal Controls, Authorized 340B Discount, and Procurement/Distribution.

26. A-133 plans
In addition to on-site audits, OPA has also worked closely with DFI to include 340B in the A-133 audits for all federal grantees that participate in 340B.

27. 2012 Compliance Supplement
How do auditors know what they need to review for organizations that participate in the 340B Program?
The Compliance Supplement

28. What is the Compliance Supplement?
OMB document that is published once per year between March – June.
It is a document where the federal agencies communicate instructions to the auditor for auditing the agency’s programs. This document prevents the auditor from having to research laws and regulations for each program.

29. What is the Compliance Supplement?
Not all programs are included in the supplement.
Federal agencies are responsible for informing OMB of any changes on an annual basis.

30. Where Can I Find the 340B Compliance Requirements?
Since the 340B program has no CFDA number it does not have its own supplement.
The requirements for auditing 340B are found in the supplement for the applicable programs under the Special Tests and Provisions Section.

31. Where Can I Find the 340B Compliance Requirements?

32. Applicable Programs
For the 2012 Compliance Supplement the 340B Compliance Requirements can be found in the following program supplements:
93.224, – Consolidated Health Centers
– HIV Care Formula Grants (Ryan White, Part B)
– HIV Outpatient Early Intervention (Ryan White, Part C)

33. Applicable Programs
The 2013 Compliance Supplement will most likely contain 340B Compliance Requirements in the following programs:
– HIV Grants for Coordinated Services (Ryan White Act)
– Family Planning - Services
– HIV Emergency Relief Project Grants (Ryan White, Part A)

34. Suggested Audit Procedures
Determine if the grantee is participating in the 340B Program and, if so, continue with the remaining audit procedures.
Review the grantee’s latest change form submitted to OPA and compare it with the organization’s actual physical location and other current information about the entity.
Test a sample of drugs purchased for use under the funding program (CFDA 93.xxx) during the audit period to determine whether 340B drugs were properly identified throughout the procurement process, including (1) payment at the discounted price and (2) proper identification as a 340B drug upon receipt.

35. Suggested Audit Procedures Continued
Test a sample of records of 340B drugs purchased for use under the funding program and released from inventory during the audit period to determine whether required authorizations were received, to whom the drugs were dispensed, and if the grantee determined that such individuals were eligible patients before dispensing the drugs.
For eligible patients who received 340B drugs, test a sample of Medicaid reimbursement requests to verify that the grantee did not claim, receive, or retain a duplicate rebate for those drugs under the Medicaid program.

36. Takeaways The inclusion of 340B compliance testing in the A-133 audit will increase the integrity of the 340B Program and further the efforts of the Department of Health and Human Services in preventing and detecting Fraud, Waste and Abuse in their programs.