340B Compliance: Practical · •Additional opportunities •Evaluate electronic prescriptions sent from your covered entity to identify potential new contract pharmacy opportunities

340B Compliance: Practical Strategies and Self‐Assessment

Matt Atkins, CPA, CIA, 340B ACEJudy Lapinksi, PharmD

Today’s PresentersMatt AtkinsCPA, CIA

• Manager at Draffin & Tucker, LLP• Recognized as 340B Apexus Certified Expert

Judy LapinskiPharmD

• Principal at JL Healthcare Solutions, LLC

• Experience as COO in both a PCA and a large health center

Self‐assessment

• Do you have a robust set of policies and procedures that accurately describe your health center’s 340B operations and its compliance with the Program?

• Is the OPA Information System accurate and does it correctly list associated sites and contract pharmacy locations?

• Do you conduct ongoing monitoring of your health center’s compliance?

Self‐assessment

• Do you know where all of your pharmacy service agreements are maintained? • Does the information match the OPA Information System?

• Are you confident in your audit trail for ALL 340B purchases?

• Do key employees receive on‐going 340B training?

Self‐assessment

• Do you conduct self‐audits?

• Do you maintain records of the self‐audits you conducted?

• Do not rely on your software vendor to conduct the self‐audits for you!• Based on our experience, these are generally worth what you pay for them – NOTHING!

GAO Report

• Federal Oversight of Compliance at 340B Contract Pharmacies Needs Improvement

• Released June 2018

• The report states “HRSA’s audit process does not adequately identify compliance issues, nor does it ensure that identified issues are corrected.”

• GAO concluded that HRSA does not have reasonable assurance that covered entities have adequately identified and addressed noncompliance with 340B Program requirements.

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GAO Report – Recommendations

1. Require CEs to register contract pharmacies for each site2. HRSA should issue guidance on prevention of duplicate discounts

for Medicaid managed care3. HRSA audits should assess compliance with duplicate discounts for

Medicaid managed care4. HRSA should issue guidance on length of time for look back to

identify full scope of noncompliance identified during audit

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GAO Report – Recommendations (continued)

5. CEs should specify methodology for identifying full scope of noncompliance

6. HRSA should require CEs provide proof their CAPs have been fully implemented

7. HRSA should provide more specific guidance regarding contract pharmacy oversight, including scope and frequency of such oversight

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Audit Distribution Since 2012

10 10 14 24 36 30 29 1641

84 85

176 164 169 170

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2012 2013 2014 2015 2016 2017 2018 2019*

Non-CHC CHC

CHCs remain a low proportion of total audits.

Percentage of Entities with Adverse Findings

90% 90% 86% 83%

67% 70% 72%81%

2012 2013 2014 2015 2016 2017 2018 2019

Community Health Centers

Community Health CentersTypes of Audit Findings 2012‐2018

37%

21%

6%2%

34%

Duplicate discounts

Diversion

No contract pharmacy oversight

Inaccurate MEF

Incorrect OPA Database record

Community Health CentersTypes of Audit Findings 2017 & 2018

42%

18%

4%3%

33%

Duplicate discounts

Diversion

No contract pharmacy oversight

Inaccurate MEF

Incorrect OPA Database record

CHCs With Adverse FindingsSanctions by Type

Repayment to manufacturers, 61%Contract

Pharmacy terminated, 18%

No sanction, 20%

Ineligible site termination, 1%

• Manufacturers receive notifications (from covered entity) of the HRSA audit findings.

• It is up to the manufacturer to request refunds.

• If systemic problem, payback could reach millions of dollars.

Paybacks

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HRSA Audit Process

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1. Engagement Letter2. Pre‐Visit Conference Call3. On‐site Visit4. Preliminary Audit Report to HRSA5. HRSA Finalized Report6. Corrective Action Plan

Audit Process

Pre‐Audit Process

Data Request from a recent HRSA 340b Audit:• Policies and Procedures• CE Eligibility Documentation• Claims ‐ Six‐month 340b Universe• Provider List• Purchasing Information • Contract Pharmacy Information• Any Self‐Disclosure Information• Medicaid

HRSA Audit Data Request:https://docs.340bpvp.com/documents/public/resourcecenter/sample‐hrsa‐340b‐audit‐data‐request‐for‐covered‐entities.pdf

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•Pre‐visit conference call• Set expectations for on site visit•Discuss pre‐visit documents and manner by which you will provide the information (SharePoint, Secure email, etc.)

•Discuss tech and space needs for reviewer while on site

•Discuss key staff expected to be available•Discuss visits to other locations

Pre‐Audit Process

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•On‐site Review• Opening Meeting• Provision of sampled dispenses• P&P review and questions• General operations overview• Plan for affiliated site visits

•While the auditor is there…• Auditors are not authorized to summarize any findings to the entity• Auditors may make comments and recommendations while on‐site, but these are not considered final and are subject to change

On‐Site Audit Process

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•Walkthroughs – main & associated site(s)• 100% Virtual inventory –

• Physically Separate inventories• Avoid the Gotcha! moment

On‐Site Audit

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• Actual sample size depends on operations –approximately 60 dispenses seems to be a common number

• Can be much larger!• Review for patient, provider, and location eligibility• For retail pharmacy dispenses, hard copy

prescriptions are requested

Sample Testing

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•Medicaid• Medicaid dispenses are targeted to ensure some are included in sample

• For FFS Medicaid, bills will be requested• Check for billing number (MPN or NPI) and compare to MEF

Sample Testing

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•Medicaid (continued)• In addition to the sample, recent audits have requested Medicaid example bills from ALL locations billing Medicaid FFS during sample period

• Out‐of‐state Medicaid billing is a target

Sample Testing

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•Anticlimactic• (Adjective) /ˌan(t)ēˌklīˈmaktik,ˌanˌtīklīˈmaktik/

(1) causing disappointment at the end of an exciting or impressive series of events(2) causing unhappiness by being less than expected or not as interesting as

something that happened earlier

Exit Meeting

Corrective Action Plans (CAPs)Community Health Centers

Corrective Action Plans

•Required for adverse findings• HRSA will provide template form to complete

• “Encouraged” to use template• Must submit within 60 days

• CE must implement a CAP to ensure program compliance• HRSA staff are generally helpful and willing to work with CE’s to ensure the CAP is adequate and practical

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Corrective Action Plans

•May 2018 Update• HRSA now expects CAP’s to be implemented within six months of approval, including repayment to manufacturers

• Subject to termination if unable to meet this expectation• HRSA may re‐audit to assess compliance

• Findings of non‐compliance in two or more audits may result in removal from the Program

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Causes of 2018 Adverse FindingsCommunity Health Centers

Duplicate Discount

• 2018 HRSA audit findings:• Inaccurate or incomplete information in the Medicaid Exclusion File• Entity did not have controls in place to prevent duplicate discounts• Medicaid billing numbers and NPI numbers were incorrect on the Medicaid Exclusion File

• Entity was billing Medicaid contrary to information included in the Medicaid Exclusion File

• Entity was billing Medicaid at contract pharmacies

Incorrect 340B Database Record

• 2018 HRSA audit findings:• Incorrect entries for offsite outpatient facility names• Failed to remove closed contract pharmacy location registration• Failed to include entity owned pharmacy as a shipping address• Failed to remove duplicate registrations for offsite outpatient facilities• Incorrect entry for entity name• Incorrect entry for Primary Contact• Registered a contract pharmacy without a contract in place

Diversion

• 2018 HRSA audit findings:• 340B drugs dispensed at entity for prescriptions written at ineligible sites.• 340B drug dispensed at a contract pharmacy for a prescription written at an ineligible site

• 340B drug dispensed at a contract pharmacy for a prescription written by an ineligible provider

• 340B drug dispensed at a contract pharmacy for prescription not supported by a medical record

Oversight of Contract Pharmacies

• 2018 HRSA audit findings:• No oversight by covered entity of contract pharmacy 340B operations

Specific CHC ExamplesInternal Audits


• Contract was not executed before the pharmacy registration date in the OPA database.

CH99999 Patient Centered Medical Home

Patient Centered Medical HomePatient Centered Medical Home

LocalPharmacy

456 Main Street

Your town

1/1/20141/1/2014Your state


• Often covered entities are unable to locate a copy of contract signed by both parties.

HRSA’s Program Integrity Analysis

• Incorrect contract pharmacy registration remains a problem area

• HRSA issued notification of Program Integrity Analysis (PIA) in July 2018

• AO’s will receive notification of selection for PIA.

• Failure to pass PIA will result in registration rejection.

Duplicate Discounts/Inaccurate MEF

• Different Carve‐in/Carve‐out elections by associated site• Billing Medicaid inconsistent with MEF

Individual Dispense Testing – Clinic Administered Drugs

• Don’t make assumptions• Often health centers assume in‐house inventories need not be audited if they are Medicaid carve‐in

• Why?• This assumption can lead to significant difficulties under audit

The Good News

• It’s not difficult to add this step!• Periodically reconcile 340B inventory• Test audit trail

Drug Beginning Inventory

Purchases Eligible Dispenses

Waste/Expired/Other

Computed Ending Inventory

Actual Inventory on Hand

Variance

A 10 20 25 0 5 6 1

B 5 2 2 0 5 5 0

C 400 2,100 1,500 50 950 900 (50)

Individual Dispense Testing

• Unable to locate support in CHC medical record for 340B replenishment drugs purchased by contract pharmacy

CHC medical record did not contain a documented encounter that supported the prescription.

OPA Finding:Diversion – 340B drugs dispensed at contract pharmacy for prescription not supported by responsibility of care.

Individual Dispense Testing

• Prescriptions were generated in ineligible locations.

Prescriptions were provided to patients while in a non‐registered offsite location.

Physicians were moonlighting in other locations which were not affiliated with the covered entity.

OPA Finding :Diversion – 340B drug dispensed at contract pharmacy for prescription originating from ineligible site.

Opportunities to Enhance Compliance AND Savings

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• If you carve‐in, list every Medicaid provider number and NPI used to bill Medicaid

• Consider out‐of‐state Medicaid• Will you carve‐out or carve in?• How will you prevent duplicate discounts?

• Develop process for notifying 340B team when MPN or NPI’s are changed or added

Duplicate Discount Prevention

• Compliance initiatives• Diversion prevention• Duplicate discounts• Routine self‐audits• Patient compliance with treatment plan?

Retail Pharmacies – In‐house or Contract

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•Additional opportunities• Evaluate electronic prescriptions sent from your covered entity to identify potential new contract pharmacy opportunities

• Evaluate mix of prescribed medications• Opportunity costs with new contract pharmacies• Does an entity‐owned retail pharmacy make sense?

Retail Pharmacies

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• Monitor for trends and address possible operational issues or system misconfigurations

• Do you have a chartered Oversight Committee?• Develop a higher level “Oversight” report to provide information to Senior Leaders, BOD, etc.

• Environmental and Policy Issues• Internal Audit result summary• Combined Financial Report• Trend Report

• Sometimes findings from internal audits identify missed opportunities – don’t be afraid to dig into the cause!

Self‐audits & Oversight

Pharmacy Name and Location Identifier

MRN Rx # Date Filled Was the drug prescribed from 340b eligible location?

Is the provider an eligible

Provider?

Is the prescription documented in the EHR?

Does the dispensing record

accurately reflect data on prescription?

Is the prescription a

result of services

included in the scope of

grant?

Was the claim linked to an eligible

encounter?

Source EMR TPA Audit Report

TPA Audit Report

EMR Active Provider list

EMR EMR and TPA Audit Report

EMR EMR

10045 217918 271869 01/06/2019 Yes Yes Yes Yes Yes Yes2609 202954 1420327 03/26/2019 Yes Yes Yes Yes No Yes16477 2993 77174 03/13/2019 No Yes Yes Yes Yes Yes1625 22976 2420473 11/19/2018 Yes Yes Yes Yes Yes Yes1625 22976 2420473 01/09/2019 Yes Yes Yes Yes Yes Yes15025 137306 1163465 01/22/2019 Yes No Yes Yes Yes Yes2314 143554 1299520 12/21/2018 Yes Yes Yes Yes Yes Yes2314 143554 1299520 01/16/2019 Yes Yes Yes No Yes Yes

Date:Audit Period:Last Audit: Reviewer:

PATIENT ELIGIBILITY/ CLAIMS TESTING September 2019

Audit Template Examples

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Additional Audit Checks

Medicaid Carve Out:Recommend export entire claims report for all pharmacies and sort by BIN/PCN (or other identifier) and scan for Medicaid or MCO claims….. Then document!


Replenishment Model:Can you tie an individual purchase to the prescription numbers and dates filled that qualified that purchase for replenishment?

‐ TPAs are getting better at providing this function smoothly‐ If you can’t do this, push your TPA to provide this‐ While you are waiting, there are other options:

• Pick multiple high dollar and highly utilized NDCs• Start with an opening balance (Zero is OK)• Track purchases and dispenses for these meds and

monitor variance


OPAIS Information• MEF

• Medicaid Billing Numbers• Billing NPIs

• Active Contract Pharmacies• CE Locations• Authorizing Official• Primary Contact• Grant Numbers

Accurate TPA Provider Lists

Accurate TPA Location Lists

Correct TPA System Settings

Other Considerations

• Organize files in Secure Monthly Folders• Retain Source Documents in Monthly Folders

• Input Specific Source Reports and Data Fields from which data is collected in comments or notes on Audit Template headers

• Develop a system to track audit findings, action steps and resolutions

Financial Tracking

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Pharmacy Name RevenueCost of Goods

Charges for

Fees TPA Fees True UpNet

Savings

Pharmacy A $868,733 ($194,087) ($16,113) ($194,720) ($11,746) $452,068

Pharmacy B $159,744 ($16,879) $0 ($30,738) ($12,360) ($2,130) $97,637

Pharmacy C $339,701 ($204,442) ($6,530) ($27,249) ($280) $0 $101,200

Pharmacy D $7,124 ($1,456) $0 ($2,742) ($4,500) $0 ($1,573)

Total: $1,375,303 ($416,863) ($22,643) ($255,449) ($17,140) ($13,876) $649,332

340B Program Financial Performance Year to Date 340b Program Savings ‐ September 2019

Trend Report Metrics

• Total Revenue• Revenue/Script• Cost of Goods/Total Revenue (%)• Dispense Fees/Total Revenue (%)• TPA Fees/Revenue (%)• CE subsidized medications (% and/or $)• True Up Costs (% and/or $)• Total Net Saving• Net Savings/Script• Capture Rates

A Few Hot Topics

•Walgreens New Reconciliation Process•Compliance with Clinic Administered Drugs•Kalderos

Take‐aways?Questions we did not answer?

Contact Us

Matt AtkinsCPA, CIA

matkins@draffin‐tucker.com229‐883‐7878

Judy LapinskiPharmD

[email protected]‐386‐0714