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340B Management Tips for Hospitals


May 2015 - Vol. 12 No. 5 - Page #42

Q&A with Anthony Lesser, MSHA,
Manager at Deloitte & Touche, LLP 

 

 

Pharmacy Purchasing & Products: In your experience, what are the biggest challenges with ensuring 340B compliance? 
Anthony Lesser: The challenges in ensuring 340B compliance begin with interpreting the requirements, in conjunction with other applicable rules and regulations at the state and federal levels. Such is the case for many hospitals faced with interpreting their respective state Medicaid and 340B billing and reimbursement policies. Hospitals should research their state Medicaid policy thoroughly, relying on official state sources (eg, law, administrative code, provider billing manual, etc). 

Another major compliance challenge is the ability to appropriately configure 340B split billing software programs to meet the organization’s needs and desired functionality. If these systems are not tailored to the hospital’s specific practices and 340B program requirements, the entity’s program runs the risk of being non-compliant, particularly if the appropriate controls to prevent diversion are lacking. As a leading practice, consider defining clear eligibility criteria and choosing a software vendor that best supports these guidelines rather than relying on software vendors to dictate and define 340B eligibility processes.   

Finally, the scope of the fiduciary responsibility for the 340B program extends beyond any one department and truly is a cross-functional endeavor. However, many organizations often assume that responsibility for the 340B program resides solely within the pharmacy department. This results in a lack of coordination between departments, which can lead to potential gaps in program performance. For example, given the complexities of pharmaceutical billing, there can be a disconnect between the pharmacy department and the hospital billing department (eg, in the charge capture process, the Charge Description Master [CDM] to National Drug Code [NDC] crosswalk, etc). Forming a cross-functional team or committee oversight structure may help hospitals address these coordination challenges.

PP&P: How should a hospital ensure that 340B drugs are dispensed only to eligible individuals?
Lesser: In addition to the items discussed previously, developing formal compliance and monitoring tools is another task that is essential for monitoring patient eligibility. As another leading practice, hospitals should implement periodic review processes. Maintenance of auditable records documenting compliance with 340B program eligibility requirements and enlisting the support of your 340B software vendor through analytics and reporting may greatly assist with preparing for an audit by the federal government or drug manufacturer. Covered entities also may consider establishing controls to ensure that 340B drugs are used only in eligible locations for eligible patient encounters.  

PP&P: What are the key elements of a comprehensive 340B policy and procedure?
Lesser: 340B policies and procedures (P&Ps) should be robust in nature andinclude specific, measurable criteria pertaining to the assumptions used by the hospital to determine 340B-eligible patient prescriptions filled within the hospital facility’s walls or at contract pharmacy locations. The hospital’s 340B P&P manual should detail its compliance with program regulations and be reflective of the actual day-to-day program operations. 

Some specific topics to include in the 340B P&Ps are the criteria used to determine the hospital’s eligible prescriber list and listing of eligible clinic locations, and language for contract pharmacy billing practices to explicitly state that no patients using Medicaid payer plans may be included in the program. Developing policies and protocols for performing regular self-audits, corrective action plans, and timely remediation of identified non-compliance also are important topics to include.  

PP&P: What internal audit practices should be put in place? 
Lesser: An organization’s internal audit program can be leveraged to periodically review the processes and controls over the 340B program. Some key practices to consider when conducting an internal audit include: verify that the HRSA database is accurate with respect to accountable administration and child site registration; perform business process walkthroughs and inquiries; and document reviews to assess whether 340B-compliant procedures and internal controls are in place. 

Additionally, review a pharmacy-generated list of areas using 340B drugs and compare those with the reimbursable clinics listed on the most recently filed Medicare Cost Report. Finally, assess controls to prevent drug diversion andduplicate discounts, and include definitions of a qualified 340B patient andeligible provider.

PP&P: How should a hospital ensure staff maintains compliance over time?
Lesser: Hospitals should provide ongoing education and build awareness within all departments that are responsible for managing a compliant 340B pharmacy operation, including pharmacy, charge capture, coding, and materials management. In addition, it may be prudent to develop a policy to incorporate onboarding and periodic cross-functional department trainings of operational staff, as this may enhance the entity’s ability to attain compliance with the 340B program. Establishing control mechanisms in the form of monthly reviews of (1) 340B drug purchase volumes, (2) eligible drug purchases for drugs used in mixed use areas, (3) purchases from ineligible locations, and (4) comparison of the prescriber database records, electronic medical record, and contract pharmacy data feed to capture only 340B eligible providers, also provide continuous monitoring opportunities for hospitals. 

Developing a formal compliance plan using the Office of Inspector General’s Elements of an Effective Compliance Program1 as a guide (see TEXT BOX) and establishing a standing 340B oversight committee that meets regularly both are leading industry practices.   

PP&P: How should a hospital prepare for a 340B HRSA audit? 
Lesser: Large hospitals participating in the 340B program are more likely to be subject to an audit given the fact that they usually comprise several dispensing locations, such as multiple child sites and contract pharmacy locations. A hospital may prepare for a 340B HRSA audit by reviewing and updating their 340B P&Ps to reflect current practices for the HRSA recertification process and verification of patient and facility program eligibility. Hospitals also will need to make available their most recently filed Medicare Cost Report (worksheets S, A, C, and E), as well as the hospital’s active list of eligible providers, 340B purchase orders, and 340B drug orders and prescriptions for the most recent 6-month, look-back period. Additional preparations are necessary to make 340B drug transaction records accessible, as the auditors will most likely conduct sample testing on these transactions.  

Performing mock audits to assess employees’ knowledge of the program and to determine if current 340B P&Ps reflect actual practice are extremely useful.  These mock audits are an optimal time to remind employees of the medication policies, in particular that only certain medications qualify for 340B pricing, and that the pricing for these medications cannot be used for inpatient services, nor can the medications be used for patients treated by the hospital or clinic who do not meet the definition of a patient under the program guidelines.

PP&P: What are some red flags for 340B auditors?
Lesser: Potential red flags for 340B auditors may include:

  • Drugs dispensed through non-eligible entities
  • Duplicate discounts whereby Medicaid plans are billed for 340B drugs
  • Diversion, with 340B drugs prescribed to unqualified patients or by un-credentialed physicians
  • Inconsistent application of the definition of an eligible patient
  • Inconsistent application of criteria used to determine the classification of prescriptions as 340B eligible 
  • Violation of the GPO prohibition
  • Drug inventory replenishment practices that are not in compliance with the program’s requirements
  • A lack of oversight over contract pharmacy arrangements by covered entities, which may qualify as a violation of program requirements, thus resulting in HRSA no longer permitting the participation of that contract pharmacy arrangement.  

PP&P: What changes do you foresee for the 340B program moving forward?
Lesser: 2015 will likely be an important year for the 340B program. While 340B remains a viable resource for safety net providers to expand access to care, the program may become more regulated. Therefore, covered entities should maintain an active role in the oversight and development of compliance initiatives to ensure perpetual compliance with 340B program requirements. As the program evolves, it will be increasingly important to stay current with the latest HRSA guidance, particularly as significant changes are likely on the horizon.

Reference

  1. DHHS. Health Care Fraud Prevention and Enforcement Action Team (HEAT). Office of Inspector General (OIG). https://oig.hhs.gov/compliance/provider-compliance-training/files/Compliance101tips508.pdf. Accessed February 3, 2015.

Anthony Lesser, MSHA, is a manager in Deloitte & Touche’s Life Sciences and Health Care Regulatory practice. He has more than 10 years of experience in the health care industry, working mostly with safety net hospitals. Anthony’s career has largely focused on the 340B program, and he now advises health care organizations throughout the US and speaks regularly to national audiences on program compliance. 

Disclaimer
This publication contains general information only, and Deloitte is not, by means of this publication or presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

 


TEXT BOX
The Seven Fundamental Elements of an Effective Compliance Program1 

  1. Implement written policies, procedures, and standards of conduct. 
  2. Designate a compliance officer and compliance committee. 
  3. Conduct effective training and education. 
  4. Develop effective lines of communication. 
  5. Conduct internal monitoring and auditing. 
  6. Enforce standards through well-publicized disciplinary guidelines. 
  7. Respond promptly to detected offenses and undertake corrective action. 

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