PharmD, MS, MBA
Pharmacy Purchasing & Products: What quality measures are key to ensuring 340B program integrity?
Ghalib Abbasi, PharmD, MS, MBA: It is important to dedicate resources to developing a versatile strategy for implementing and monitoring the 340B program. Begin by establishing criteria to measure the health of the 340B program; include numerical or volumetric data, reported on a monthly or quarterly basis, in order to identify costs saved by the program, and indicate how these funds are used to expand patient care. In addition, a designated individual within the organization should be responsible for keeping abreast of legislative changes to the program, as these have increased in recent years. It is not sufficient to wait until 340B updates are distributed once or twice yearly, given the increased frequency of changes and the need to address updates in a timely manner. Finally, continue to track the payer mix over time, as changes to the disproportionate share hospital (DSH) percentage may dictate program eligibility changes. It is not uncommon for covered entities to see a gradual decline in the DSH percentage, so keeping current is necessary to avoid losing eligibility to participate in the program.
Creating a dashboard to trend 340B compliance over time simplifies program integrity efforts. A vendor can provide this technology, or a simple spreadsheet will suffice. At a minimum, target points should include monthly audit passing rates, DSH percentage, and savings generated. The dashboard must be easily accessible. After conducting an internal audit, the results should be posted on the dashboard and presented to the C-suite.
PP&P: How should internal auditing be conducted?
Abbasi: Upon initiation of the program, establish a 340B auditing process and include it in the organization’s policies and procedures. Some entities perform audits daily, while others take a less frequent approach. Comprehensive auditing should occur at least once a month, although more often is preferred if resources permit. The amount of time dedicated to comprehensive internal auditing will vary by facility and available resources, but typically will require 1 to 3 days each month. Informal oversight of 340B practice, including updating the split billing software, should occur continuously.
The pharmacy director and the 340B program manager/coordinator should be involved in the auditing process. It is recommended that organizations have a 340B steering committee to inform these decisions and review findings.
Three areas of the 340B program require auditing: the mixed-use areas, contract pharmacies, and self-owned pharmacies. In each area, review a selection of claims to assess eligibility for 340B, and determine the provider’s status (ie, eligible or ineligible). In addition, authenticate the entirety of the claim to verify that a 340B-eligible medication was actually administered and that no duplicate discounts occurred.
Covered entities should monitor and periodically evaluate their contract pharmacies. All too often organizations utilize contract pharmacies without providing sufficient oversight. The Heath Resources & Services Administration (HRSA) holds the hospital responsible for having a strategy in place to monitor and evaluate the compliance of its contract pharmacies. If a contract pharmacy is noncompliant with 340B medication utilization, it is the covered entity who bears responsibility for not providing sufficient oversight. In this case, the covered entity should seek a corrective action plan, up to and including terminating that contract pharmacy.
Both targeted and random samples must be collected. Targeted samples should encompass claims with high dollar amounts, high dispensing volumes, and those from high-risk areas. In addition, include medications that could be questionable. For example, if an organization has any entities that are subject to the orphan drug exclusion, audit those claims to ensure no orphan drugs qualify. If the covered entity carves out Medicaid prescriptions, ensure Medicaid is not used to bill such claims. For randomly selected samples, ensure that a sufficient number are collected and audited. A spreadsheet can be used to randomize the sample claims. Pick approximately 25 claims for each of the three aforementioned areas: mixed-use areas, contract pharmacies, and self-owned pharmacies. Note specific providers who are noncompliant or provide ineligible information or locations.
Ensure that the entity’s 340B split billing software is accurate. To that end, review the split billing software during the audit to ensure it is functioning properly. The information added to the software must be accurate and representative of actual purchasing practices.
When conducting internal audits, the entity must operate with a high level of transparency. Should negative findings be identified, follow up quickly to establish a corrective action plan. Review negative findings in light of the scope and impact of each finding on the 340B program overall. It may prove helpful to establish a flow chart that specifies how to address negative findings; include yes/no questions related to whether the finding exceeds, for example, the breach policy, impacts patient care, and so on (see FIGURE). The flow chart should specify how to handle various scenarios, with the goal of correcting problems and/or reporting them to HRSA.
Audit results should be reported within a structured reporting system: To the pharmacy director, the 340B steering committee (if one exists), and the compliance officers. Thereafter, present the audit results to stakeholders and the 340B authorizing official on a quarterly basis. Certain findings must be reported to HRSA—for example, if the findings exceed what the organization’s breach policy dictates. The breach policy typically specifies the percentage or dollar value which, once exceeded, must be reported. These thresholds should be defined by each covered entity and documented in policies and procedures.
PP&P: What strategies help reinforce good 340B practices?
Abbasi: First of all, it is critical that covered entities cultivate a non-punitive reporting environment. Staff must feel comfortable reporting negative findings; it is impossible to address problems with the 340B program without proactive reporting. In addition, the following suggestions may be helpful:
- Rotate roles within the auditing process. One staff member should not maintain all responsibility for 340B auditing. Including multiple individuals ensures comprehensive, non-biased representation throughout the auditing process.
- Provide adequate training to staff to reinforce 340B best practices. Regular training is vital to keep staff abreast of 340B program changes and to reinforce current practice. Staff managing the 340B program should attend periodic conferences and educational sessions to ensure their knowledge is current. As updates to the 340B program have been frequent of late, organizations must remain vigilant. It is impossible to reinforce best practices when accurate information is unavailable.
- 340B University, from the Apexus Prime Vendor Program (www.340bpvp.com/education/340b-university), offers both free and paid online classes.
- 340B Health is an organization that communicates 340B changes and information to its members; subscribing to this group may prove useful in remaining well informed as to 340B requirements (www.340bhealth.org www.340bhealth.org). This group is especially valuable as its pool of users can share their practices, allowing a useful compare-and-contrast opportunity for organizations.
PP&P: What is the value of annual HRSA recertification?
Abbasi: Annual HRSA recertification of an entity’s 340B program is required for continued participation in the federal program. In addition, recertification is a useful checkpoint to ensure that scarce federal resources are properly allotted to 340B designations. Organizations should appreciate the value of this annual check, as it helps ensure that 340B savings are generated as intended and applied to enhance offerings to qualified patients (be sure to document the recertification each year). The annual recertification helps revisit the amount the hospital is saving and how these savings are being applied. For example, is the hospital reaching out to all low-income patients who qualify? Annual recertification can be used as a barometer for organizations to track their progress over time. In addition, the yearly review reminds all staff of the purpose of the 340B program and its effect on patient care.
PP&P: What future trends do you expect to impact the 340B program?
Abbasi: Moving forward, more specific 340B reporting may be required. While 340B savings must be allocated to support the program, HRSA currently does not require covered entities to report where savings are applied. However, in the future this specificity might be required, as the possibility has been recently discussed by policy makers.
In recent years there has been increased scrutiny of the 340B program, as well as its legislative updates. Organizations that anticipate this additional scrutiny and plan accordingly will be in an excellent position moving forward. Meticulous documentation that includes the entity’s 340B strategy and tracking of savings, is key. Prioritizing these pursuits will avert unnecessary headaches in the long term. By keeping 340B practice orderly and compliant, covered entities will ensure the program continues to serve its purpose.
Ghalib Abbasi, PharmD, MS, MBA, is a senior consultant for Visante, Inc. His areas of expertise include pharmacy informatics, sterile compounding regulations and technologies, and 340B implementation and utilization. Ghalib received his Doctor of Pharmacy and MS in clinical/hospital pharmacy from the University of Iowa and his MBA from West Texas A&M University.
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