HRSA`s Program Integrity Initiative

Program Integrity through
340B Compliance
Hosted By:
The HRSA Program Integrity Initiative Workgroup
August 8, 2012
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
 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
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
 Share the best program integrity practices, and
measure the results of PII efforts.
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.
Office of Inspector General
National External Audit Review Center
• What is NEAR?
• How does NEAR interact with DHHS
• How does NEAR interact with auditors?
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..
Office of
Pharmacy Affairs Mission:
Promote access to clinically and
cost effective pharmacy services
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
• Manufacturers that participate in Medicaid must also
participate in the 340B Program
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. 102-384(II), at 12 (1992)
Eligible Entities
Federal Grantees
• Comprehensive
Hemophilia Treatment
• Federally Qualified Health
• Urban/ 638 Health Center
• Ryan White Programs
• Sexually Transmitted
• Title X Family Planning
Hospital Types
• Disproportionate Share
• Critical Access Hospitals
• Rural Referral Centers
• Sole Community
• Children’s Hospitals
• Free Standing Cancer
340B Enrollment Steps
• Determine
• Complete
• Submit
Forms /
• Await
to OPA
340B Enrollment
Deadline: October 15
January 15 April 15 July 15
Start Date: January 1
April 1
July 1
October 1
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
Contract Pharmacies
(2010 FRN (Vol. 75 No. )
• 340B program allows entities to have multiple contract
pharmacies for increased patient access to cost effective
• 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.
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
Program Prohibition:
• 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. 55156 (October 24, 1996)
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. 34058
(June 23, 1993).
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
GAO Findings
• Manufacturer Discounts in the 340B Program
Offer Benefits, but Federal Oversight Needs
GAO-11-836, Sep 23, 2011
• GAO Recommendations:
• Covered Entity Audits
• Patient Definition
• Nondiscrimination by Manufacturers
• Hospital eligibility
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
• Annual on-line recertification of all entities
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
• Technical Assistance, webinars, FAQs, guidances
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
Audits – Manufacturer Conducted
• Authority
• Reasonable cause
• Independent auditor
• Submit audit workplan to OPA for approval prior
to conducting - December 12, 1996
(61 Fed. Reg. 65406)
• OPA encourages manufacturers to submit plans
and we will work closely with them throughout the
• OPA has received its first audit plan from a
Audits – HRSA Conducted
• HRSA to date has conducted 50 of the 51
• 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.
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.
2012 Compliance Supplement
• How do auditors know what they need to
review for organizations that participate in
the 340B Program?
The Compliance Supplement
What is the Compliance
• 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.
What is the Compliance
• Not all programs are included in the
• Federal agencies are responsible for
informing OMB of any changes on an
annual basis.
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.
Where Can I Find the 340B
Compliance Requirements?
Applicable Programs
• For the 2012 Compliance Supplement the 340B
Compliance Requirements can be found in the
following program supplements:
93.224, 93.527– Consolidated Health Centers
93.917 – HIV Care Formula Grants
(Ryan White, Part B)
93.918 – HIV Outpatient Early Intervention
(Ryan White, Part C)
Applicable Programs
• The 2013 Compliance Supplement will most likely
contain 340B Compliance Requirements in the
following programs:
93.153 – HIV Grants for Coordinated Services
(Ryan White Act)
93.217 – Family Planning - Services
93.914 – HIV Emergency Relief Project Grants
(Ryan White, Part A)
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 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
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
 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.
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.

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