1. 340B Audit Experience Todd Karpinski, PharmD, MS, FASHP
Chief Pharmacy Officer
Froedtert & Medical College of Wisconsin
Catchier title

2. Objectives Outline the preparatory process for the 340B HRSA audit
Discuss the two day, on-site visit:
Areas of focus
Discussion points during the audit process
Issues identified during the audit
Recommendations from the auditors
Provide “tips” and “lessons learned” from the overall audit process
Here are the objectives for this presentation.

3. Froedtert Hospital 550 bed academic medical center
24,000 annual admissions
>140,000 patient days
Disproportionate share hospital
17.25% (FY2012)
Affiliated with Medical College of Wisconsin
Only Level I trauma center in Southeastern Wisconsin
Major referral center: 40 specialties and subspecialties
>220 Pharmacy FTE’s
Administration, Pharmacists, Technicians, EPIC® team
Even though HRSA stated that Froedtert Hospital was one of the 51 randomly selected entities, our use of the 340B program is fairly extensive which will be discussed in the next several slides.

4. How do we support the intent of the 340B program
How do we support the intent of the 340B program? Froedtert Hospital’s community benefit framework is to improve the quality of life in the communities we serve through health care programs and services that are measureable, accessible and culturally appropriate; recognizing the greatest impact is in Milwaukee’s underserved, urban population.
The Setting:
U.S Census: Milwaukee is #4 in poverty among the nation’s cities
In Milwaukee County, 30% are on Medicaid and 15% are uninsured
Our Investments in 2011:
$34 million uncompensated care
$41 million in government shortfalls
Over 10,000 patient accounts adjusted for charity care
$400,000 annual support to FQHC’s and a $2 million pledge for capital support
Over $58 million in health professions education, including college and high school scholarships / internships for underrepresented students
Froedtert Hospital specific
34 million – charity care and bad debt
41 million – loss in Medicaid and Medicare
400k – Progressive, 16th street, Milwaukee Health Service, Outreach Health service
58 million - $ to support training, $ to MCW, time

5. Community Benefit from Pharmacy
Charity Care
Medication Management Home Delivery
Diabetes Smart Start Program
Medication Collection Program
Sharps Collection Program
Medication Repository
Discharge Program (implemented 9/2011)
Ambulatory Care pharmacists
Blood pressure cuffs (Newly Transplanted Patients)
Within the department of pharmacy – we provide:
Charity care
Medication Management Home Delivery service – if the patient is not able to or would prefer to have their medications delivered to their home, we provide free delivery
Diabetes Smart Start Program – provide insulin and test strips at a substantial discounted rate to indigent patients
Medication Collection Program – take medications that patients want to toss

6. Froedtert Hospital 340B
Timeline
AUDIT

7. Contract Pharmacy - Background
On September 5th, 2010, HRSA published new guidelines stating covered entities would no longer be limited to the number of contract pharmacies.
Entities partner with outside pharmacies to connect qualifying patients with 340B medications
Identification via shared patient and provider data
Inventory via "Bill To - Ship To” wholesale arrangements
Entity-Contract Pharmacy relationship types :
Direct Contracting with Pharmacy
Contracting through 340B vendor with Pharmacy
This helps facilitate program participation for those covered entities that do not have access to available or appropriate ‘‘in-house’’ pharmacy services, or for those covered entities that have access to ‘‘in-house’’ pharmacy services but wish to supplement these services, and covered entities that wish to utilize multiple contract pharmacies to increase patient access to 340B drugs
Increased use of the 340B program by contract pharmacies and hospitals may result in a greater risk of drug diversion, further heightening concerns about HRSA’s reliance on participants’ self-policing to oversee the program. Operating the 340B program in contract pharmacies creates more opportunities for drug diversion compared to in-house pharmacies. For example, contract pharmacies are more likely to serve both patients of covered entities and others in the community;

8. Contract Pharmacy - Reinvest
Inventory compliance technician
Patient assistance programs
Indigent care fund
Ambulatory care pharmacists dedicated to transitions of care

9. Notification of the Audit
June 18th , Receive HRSA audit notification via
Assess compliance of the covered entity
Is eligible to participate in the 340B Program
Has sold or provided 340B covered drugs to persons who are not eligible patients
Has the proper controls in place to prevent and detect instances of diversion and duplicate discounts. 
HRSA audit will include (at a minimum)
Review of the facility’s policies, procedures and processes that pertain to 340B medications
Verification of internal controls in place to prevent diversion and duplicate discounts;
Testing, on a sample basis, transactions that pertain to 340B medications. 
We knew here was a possibility that we could randomly be chosen based on HRSA’s selection criteria - on June 18th, 2012 – that possibility became a reality. Jeff Van De Kreefe – the CFO of Froedtert received the letter from HRSA stating they would be coming to Froedtert to asses the compliance with the 340B requirements
Specifically reviewing the covered entities eligibility, patient/provider edibility, and drug diversion and duplicate discounts.
While onsite – their focus would be on the policies and procedures we have in place, internal controls relating to drug diversion and duplication discounts, and testing our practices to ensure proper use of the 340 medications.

10. What did we do to prepare?
Formed Froedtert Hospital 340B Team:
Legal
Corporate Compliance
Finance Leadership
Pharmacy Leadership
Scheduled weekly meetings within pharmacy
Reached out to other colleagues/organizations
SNPHA
Other 340B audited institutions
Wholesaler partner
Apexus
As soon as the letter was received on June 18th…We immediately went into preparation mode.
A team was formed which was not only - legal, corporate compliance, finance, and pharmacy represented to ensure proper steps were taken during the visit and proper information was shared during the audit visit.
Pharmacy is responsible for implementing the 340B program but the program involves the entire organization
This group met several times prior to the onsite visit.
Within pharmacy, the leaders and staff who work with the program MET weekly. At Froedtert, we do not have one person dedicated to understanding and implementing the 340B program, it’s a shared responsibility between several of us pharmacy leaders.
Lastly and most importantly, we reached out to other colleagues/organizations who had been audited before or experience with the audit process.
340B summer meeting
Todd sent out a request on the UHC listserve to solicit help from those who had been audited
Amerisource Bergen – our wholesaler
And Apexus
Shands
Denver Health
Lucile Packard Children's’ Hospital
Louisville
SNPHA
Amerisource Bergen
Apexus

11. What did we do to prepare?
Apexus Self-Assessment Gap Analysis
From Apexus – we used the self assessment gap analysis to help establish a baseline in regards to
Medicare Cost Report- DSH %
Patient Eligibility Criteria
Methods for split inventory
Outpatient pharmacy provider eligibility
GPO exclusion
Medicaid duplicate discounts
JBG

12. What did we do to prepare?
Identified “Gaps” and divided workload
Created stoplight report to establish deadlines and track progress
While the Apexus self assessment tool was valuable for identifying the high level gaps within out current 340B program, we needed to develop a tracking tool which:
to describe the regulation
our current status with this regulation
identified deficiency
Solution
Priority
Assignment
progress towards completion which was color coded – green (complete), yellow, red (no progress)
This tool became a working document for the entire team and held each of us accountable.
The GAP analysis helped us narrow down the major areas where we needed to target before the onsite visit.
One of our main gaps was to DEVELOP/REVAMP policies and procedures based on our current practices and contract pharmacies
Training and competencies for the staff and leaders which is used as the guiding resource.
Documentation of the provider and entity relationship – remember Todd mentioned that FMLH and MCW have a symbiotic relationships
And the need to have internal audits in place to ensure integrity of the program.
Major Projects
340B Policy and Procedure
340B Contract Pharmacy Policy
All staff 340B Policy and Procedure Competency
Documentation of provider and entity relationship
Eligible provider list
Internal Audit

13. Data Request Eight unique data elements were requested
Policies and procedures
Purchasing, Ordering, Invoice Processing, Inventory, 340B replenishment, Medicaid billing, contract pharmacy
Froedtert Hospital’s Medicare Cost Report
340B Drug Orders or Prescriptions Report of all 340B orders/prescriptions issued between 1/1/12 and 6/30/12
Unique identifying number, drug name, acquisition price, quantity, patient id, payer, and provider
Contact with the State Medicaid Prescription Drug Program
Listing of providers eligible to write 340B prescriptions
Current 340B pharmaceutical inventory listing including the most recent physical inventory count and reconciliation
Report of all 340B drug purchase orders made between January 1, 2012 and June 30, 2012, including price paid
Listing of contract pharmacies utilized, and the current contracts
Submitted data within one week of receiving the request
Because we done the pre-work prior to receiving the data request – when the request finally came – we were able to turn it around within the week.
Remind the group, from the first communication from HRSA notifying us of the audit to the time the data was requested was approximately one month. Based on other experiences the data request have been similar to this request.

14. The Audit - Day 1 Kick-off meeting Tour of Pharmacies
Attendees: Pharmacy, Legal, Corporate Compliance, Finance
Overview of Froedtert Hospital
Review of the audit visit
Tour of Pharmacies
Outpatient pharmacies
Day Hospital
65 orders randomly selected for on-site review
5 orders from high cost medications
10 orders from contract pharmacies
20 orders from outpatient pharmacies
30 orders from HOD areas
Accumulators
Purchasing via Rx Works
Before I start telling you about the days of the onsite audit – I want to let you know that we had not been give any insight from the auditors of what they wanted to see/hear/do while onsite.
If you look at the agenda created to your right, you can see between 2pm-5pm was TBD… The only information we had was that there would be 2 auditors - one from HRSA (the actually auditor) and one for OPA (legal) who was to there to observe and learn about the audit process
So on august 13th, 2012 finally came…
1) At the kick-off meeting, from our end – we had a representatives from pharmacy, legal, corporate compliance, and finance. A member of the corporate compliance team was with us throughout the process. An overview of Froedtert Hospital was provided to give the auditors a lay of the land, and then we reviewed the rest of the days with them.
2) Tour of the outpatient pharmacies and the Day Hospital. The auditors had the most questions for the inventory staff at the day hospital since they DH makes chemo for both inpatient and outpatient. There are two separate inventories housed in the DH.
3) Then it was straight to work, we headed to the pharmacy conference room and started to review the sample orders which the auditors selected. They requested to walk through every order from start to end. 65 total orders were selected.
5 orders from high cost medications
10 orders from contract pharmacies
20 orders from retail pharmacies
30 orders from HOD areas
Spoke with purchasers and asked questions about how inventory was separated – focused on separate inventory in the CC Day Hospital.
65 orders were from the past 6 months of requested data
The end of day 1 was with procedures around the accumulators and purchases via RX Works (splitting software for the HOD areas).
Wanted to know how the reports are written for the accumulator and asked for a demonstration.
Didn’t care to see the contract pharmacy reporting tool – as he had seen that at another institution.
The outpatient pharmacies at FMLH are closed 340b
As I mentioned before, RX works is our splitting software – the auditor reviewed 340B purchase orders generated and wanted an example of a split (340B/GPO) purchase order. Also asked for a list of accounts to verify we had an established 340b accounts.

15. The Audit – Day 1 Retail/Contract Pharmacy Orders (30 total)
Reviewed specific data fields for each order:
Patient eligibility via electronic system? (Epic)
Date of the prescription match the visit date?
Patient have multiple visits?
Provider eligibility?
Reference to the Provider list
The first orders they reviewed were the outpatient pharmacies/contract pharmacy orders (30 total). Justin, our outpatient pharmacy manager, sat next to the auditor with his laptop navigating the auditors through epic. The auditor wanted to see the following fields on the order:
Was the patient a patient of Froedtert Hospital
Did the date of the prescription match the date of the visit encounter
Did the patient have continuous care (multiple visits) provided at Froedtert Hospital
Was the provider on the order person who wrote the prescription
And was the provider on the provider eligibility list which we sent as part of the data request
The same process was done for those orders that were filled by our contract pharmacies.
No issues were found with those 30 orders!

16. The Audit – Day 2 HOD Orders (35 total)
Reviewed specifics of each order:
When was order written?
When was the drug administered?
Was the patient classified as outpatient at the time the drug of ordered?
Day 2 – the reason we wanted on doing the rest of the sample orders on Day 2 is because, the auditor wanted to see actual paper orders for the 35 HOD orders. The auditor provided us the 35 orders he wanted to review the day before so we could pull the paper orders for his review. FMLH implemented COPE the following week – not soon enough!
The same method was used from the day before. The paper order was viewed for key fields – patient name, date/time of the order, provider name, and classification of the patient at the time the order was written – this information was matched to the information in Epic when the order was processed and the provider eligibility was checked on the provider list we sent. The list we sent did not contain CRNA – so this was an outstanding item on our end.
SIDE NOTE: FH determines 340B versus GPO on the final status of the patient – for example – if the patient was admitted to the hospital even though some drugs were administered in the ED – GPO pricing would be used for all drugs administered to that patient
Here you can see the paper order on the bottom and then the order processed in Epic.
From the 35 orders – we had 2 orders that had missing provider signatures.

17. The Audit – Day 2 Contract Pharmacy questions Central Pharmacy Tour
Duplicate Discounts – Medicaid
Policy / Procedure Review
Provider Eligibility
Outstanding Items
My mid afternoon – we had completed the sample orders (65 total orders), and we were back onto - contract pharmacy. Some of the questions which were asked – how often do you review the contract pharmacy list (quarterly) and what criteria do we use to establish a contract pharmacy – prior to the audit we thought there would be more questions around contract pharmacy relationships, but it was a minimal part of the onsite audit process. Even had the contract pharmacies on standby in case the auditors wanted a tour – they were not interested.
To break up the day – they suggested a tour of the central pharmacy – to visually see the discussions from the past day – reviewed the process for receiving/invoicing/purchasing for HOD areas and the borrow/loan procedure from outpatient to inpatient.
Duplicate Discounts - Medicaid
How do we bill Medicaid on outpatient/HOD areas?
HMO – Medicaid (not straight Medicaid) – how does the state handle it?
Verification that Medicaid was not receiving duplicate discounts
Reviewed Policies and Procedures
Questioned the date of which the polices/procedures were developed
More procedural questions:
How do we bill Medicaid on the retail side and HOD areas – more importantly – how do we handle HMO – Medicaid – this is state specific – in the state of Wisconsin – we do not pass through the acquisition cost
Prior to the onsite visit – reached out to the state to get documentation that they were not receiving discounts bc we were passing through the acquisition costs
More review of policies/procedures – auditor did ask why the policies are developed after the notification of the visits
Extra notes…A duplicate discount occurs when the 340B discount and a Medicaid rebate are paid on the same unit of unitization. There is no uniform approach by state Medicaid programs
Provider Eligibility
Discuss contractual agreement between MCW providers and Froedtert Hospital
Outstanding items
List of MCW providers to patient and provider eligibility
Verification of how the state of Wisconsin manages HMO-Medicaid
Met with Legal: Provider Eligibility – provided bylaws and MCW/FMLH affiliation agreement – patients’ medical record is owned by the FMLH
Asked legal for a provider list to verify against the provider list we sent them during the data collection phase
HMO Medicaid - auditors will work with the state
Audit complete!!
The visit was intended to last three days, the auditors felt like they had seen and heard what they needed to from us in our we use the 340B program, and were comfortable leaving in less than 2 days.

18. Days After the Visit
We did have some follow s about patient/provider eligibility – as the auditor was writing his review of our hospital as well as a conference call to ensuring his interpretation of the HOD inventory process.
s back from HRSA auditor verifying patient/provider eligibility
Conference calls with pharmacy leaders and HRSA auditor reviewing inventory process

19. Final Report from HRSA

20. How do we Maintain Compliance???
In FY2012, one FTE technician was approved to maintain 340B compliance by conducting internal audits
Responsibilities include:
Conduct quarterly audits of contract pharmacies
Evaluate and implement cost savings opportunities
Coordinate purchasing for split inventory within internal pharmacies
Conduct self-audits of 340B pharmacy operations on a quarterly basis
Once the audit was complete – our efforts have been around maintaining compliance with the 340B program
When we developed the business proposal for establishing contract pharmacies, we asked for an tech FTE to help us maintain compliance – the tech would be responsible for
Conduct quarterly audits of contract pharmacies
Evaluate and implement cost savings opportunities
Coordinate purchasing for split inventory within internal pharmacies
Conduct self-audits of 340B pharmacy operations on a quarterly basis
Having a dedicated body responsible for audits for helps significantly with making sure it is done AND in a timely fashion.

21. How do we Maintain Compliance???
Audit 1: Compliance Validation
Confirm presence of all covered entities and accuracy of information; verify contact information including phone and information, Medicaid exclusion information and ship to / bill to information. This must include signoff by finance and legal.
Completed annually
Next several slides I will share with you how we maintain compliance by the audits we perform internally and on the contract pharmacies we have established relationships with.
1) Internal audit of ourselves – make sure the information is up to date – done annually

22. How do we Maintain Compliance???
Audit 2: Prescription Eligibility Review
Review 15 of the most expensive and 10 of the least expensive (penny priced) dispenses within each of the 340B eligible outpatient pharmacies. Review will consist of verifying patient eligibility and provider eligibility. Any variances are corrected and documented on the 340B audit report
Completed daily
2) Review the 15 most expensive and the 10 of the least expensive prescriptions – looking at specifically patient and provider eligibility. – this is done monthly!

23. How do we Maintain Compliance???
Audit 3: Physician Data Base Maintenance
Perform a monthly assessment of the accuracy of the prescriber database to ensure proper designation. Any variances are corrected and documented on the 340B Audit Report.
Audit 4: Accumulated Against Purchased (5 drugs)
Verify that the correct quantity is purchased on the 340B accounts based on the quantity that was processed in the accumulator.
Completed monthly
3) Monthly audit of the prescriber database

24. How do we Maintain Compliance???
Audit 5: Purchasing Volume Analysis
Purchasing volume for each account is reviewed to ensure purchases have been made on the correct account. Significant changes in purchase volume are reviewed for appropriateness. Any variance are corrected, using credit and rebill if necessary, and documented on the 340B Audit Report.
Monitor WAC / GPO / 340b spend
5) Monthly audit to ensure 340B purchases are placed on 340B accounts

25. How do we Maintain Compliance???
Audit 6: HOD Mixed Use – ED patients Admitted vs. Not Admitted
Review 25 patients from mixed use areas which the splitting software for 340B drug purchase. Check status to ensure patient status was Outpatient and eligible for 340B purchase. Any variances are corrected and documented on the 340B Audit Report.
Completed monthly
6) Monthly audit of 25 patients from mixed use area to ensure proper patient status is outpatient and thus eligible

26. How do we Maintain Compliance???
Audit 7: Accumulator vs. Expected
Verify accuracy of NDCs in the accumulator. Compare accumulator expected purchases, actual purchases, wholesaler purchases, and proper account ordering.
Complete monthly
7) Monthly audits to verify accuracy of NDCs in the accumulator

27. How do we Maintain Compliance with Contract Pharmacy???
Audit 1: Patient Eligibility
From the vendor’s report, choose 20 patients to audit. Select patients who are filling the prescription for the first time. Select patients that have multiple first fills prescriptions written by different prescribers. Verify each patient in EPIC to ensure visit was completed by an eligible provider.
Completed daily
Audit 2: Hardcopy Prescription Request
Request 20 prescription hardcopies from vendor. Verify patient and provider eligibility. Verify that dispenses were accumulated appropriately.
Completed monthly
Audits from the contract pharmacies
From the contract pharmacy reporting tool – we select 5 patients daily to ensure eligibility
request hardcopies of 5 prescriptions from the vendor to verify eligibility on a monthly basis.

28. How do we Maintain Compliance with Contract Pharmacy???
Audit 3: Vendor Prescriber Audit
Evaluate each provider used to dispense 340B eligible prescriptions for inclusion on eligible provider list. Eligibility is based on NPI number.
Updated provider eligibility list is sent each month
Completed monthly
3) On a monthly basis we update the provider list which we match-up against those prescriptions who

29. Hot button 340B issues GPO exclusion Continued Audit preparedness
Employee prescriptions
Contract pharmacy
Case example of a compliant program (describe 1-2 areas you feel confident you are compliant and why—perhaps high level:
“We know we don’t generate duplicate discounts in our contract pharmacy bc our data feeds are set up like this [x—very general description] and we self-audit weekly. Our self-audit is conducted by a team including x staff.”
“We have really great systems to ensure compliance with patient definition, bc we are able to include a location code that helps us exclude physicians who aren’t practicing at our hospital location).
I’d argue that including one example of a lesson learned might be of interest as well.
How we handle the gpo exclusion—points made: this is an ongoing challenge. We have our 3 accounts established, but it’s not an issue of setting up the accounts and then just walking away. It is very time-consuming to stay on top of this so that we are minimizing WAC; lots of manual review and adjustments. Here’s the kind of staff I added to handle this. Here is an estimate of how much this policy has changed our bottom line….
Audit preparation (talk about staff needs for this, the general types of data and team approach. Example—we need to work with med records + compliance + etc.)
Maintain compliance (first bullet duplicate)
Employee prescriptions—talk about how your internal policy and how this aligns with HRSA policy on this area. (employees must meet patient definition, now there is a challenge bc GPO use for employees may only occur if certain situations are met.)
Contract pharmacy—I’d talk about how this can be a great way to increase access, but it comes with a lot of oversight. Provide an example of what is working well and what you are working on continually. Discuss vendors/role, how you can’t turn over compliance to them. Generally talk about contracts/terms you’ve seen.

30. Lessons Learned Understand! Be proactive! Stay engaged!
Work with national organizations
Network with other covered entities
Utilize internal resources
Be proactive!
Review and understand Polices & Procedures
Review audit process with key stakeholders
Stay engaged!
Continue to measure and test compliance
National org – SNPHA, OPA, HRSA, Apexus
Other organizations – UHC
Internal resources – legal, compliance, finance

31. Questions?