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© 2016 340B Health 1 © 2016 340B Health
HRSA Audit Findings and Implications
for Patient Definition Thursday, April 14, 2016
1:00-2:00 PM (Eastern)
Maureen Testoni, Senior Vice President and General Counsel 340B Health
Amanda Nagrotsky, Assistant Counsel
SPEAKERS:
© 2016 340B Health 2
This presentation is not to be construed or relied upon as
legal advice.
This copyrighted presentation is intended for 340B Health
member and prospective member hospitals and corporate
partners only. Distribution outside of your organization is
expressly prohibited.
Disclaimer
© 2016 340B Health 3
Agenda
• Update on audit statistics
• Overview of audit process
• Key findings
• New HRSA audit policies
• Resources
© 2016 340B Health 4
Audit Finding Overview
• Results for Hospitals Posted on HRSA Website
Total Posted for 2012-2016: 341
No findings or finding that does not require
repayment: 124 (36%)
Findings that require repayment: 217 (64%)
• Another 500 expected in 2016-2017
© 2016 340B Health 5
Hospital Audit Findings Over Time
FY 12 FY 13 FY14 FY15*
No Findings 57% 20% 16% 23% Findings 42% 80% 84% 77% Repayment 45% 68% 69% 65% No
Repayment 54% 32% 31% 35%
*not all results are available yet
© 2016 340B Health 6
Specific Hospital Audit Findings FY 12 FY 13 FY14 FY15*
Diversion 33% 58% 61% 52% Duplicate Discount 30% 21% 23% 24% Inaccurate Database 24% 50% 49% 43% Contract pharmacy
oversight 4% 5% 3%
GPO 1% 11% 11% Inauditable records 1% Nonreimbursable site 1% 1% DSH % 1% Orphan Drug Violation 2%
*not all results are available yet
© 2016 340B Health 7
Audit Process Overview
Initiation of the Audit • HRSA sends an “engagement letter” notifying the entity that it has been
selected for a 340B audit and typically calls within one week of the notice to coordinate the date and details of the audit
Data Request • Sent shortly after the audit notice, the data request describes information
that must be provided to the auditor(s)
• Data requests typically seek: All 340B prescriptions and related information over a 6-month time frame
Starting and ending inventory balances for the same period
A schedule of 340B purchases
Lists of the covered entity’s participating locations and eligible physicians
Medicare cost report documentation
340B policies and procedures
Contact information
• Past data requests available on 340B Health website
© 2016 340B Health 8
Audit Process Overview (cont’d)
• Audit Takes place three or more weeks after the audit
notice is issued
Involves an on-site visit that usually lasts between one and three days
One or two auditors are typically present
• Audit Follow-Up After the audit, the auditor(s) or HRSA may reach out
to the covered entity with questions about the audit data
© 2016 340B Health 9
Audit Process Overview (cont’d)
• Final Audit Report HRSA will issue a final audit report (FAR) typically
3-12 months after the audit
If the FAR contains an adverse finding(s), the covered entity may accept HRSA’s finding(s) or submit a Notice of Disagreement within 30 days
• Covered entities have 60 days to file a CAP if an appeal is unsuccessful
If the covered entity accepts the findings, it has 60 days to submit a CAP
If an entity fails to submit a CAP, it may be removed from the 340B program
© 2016 340B Health 10
Audit Process Overview (cont’d)
• Corrective Action Plans (CAPs) CAPs must describe how the problem has been fixed
and identify the process that the covered entity will use to ensure that the problem does not reoccur (e.g., internal or independent audit process, quarterly review of database information, etc.)
CAPs must identify the implementation date, the individual responsible for implementation and an education strategy
Samples of HRSA-approved CAPs can be found on 340B Health’s website (http://www.340bhealth.org/340b-resources/compliance-resources/audits/sample-corrective-action-plans-and-repayment-letters)
© 2016 340B Health 11
Audit Process Overview (cont’d)
• Publication of Findings
HRSA will publish on its website a summary of
the final audit report findings and whether
repayment is required
HRSA does not currently plan to remove the
audit findings from the website
Self-disclosures made after receipt of the
engagement letter are almost always included
as findings
© 2016 340B Health 12
Audit Process Overview (cont’d)
• Notice to Manufacturers
If repayments are required, HRSA will also
publish on its website a notice to inform
manufacturers of findings that may require
repayment
The notice also includes the entity’s contact
information so that manufacturers who have
questions can contact the covered entity
© 2016 340B Health 13
Audit Process Overview (cont’d)
• Future Audit Requirement
Entities that had to make repayments are
subject to an audit after one year
• Closing of the Audit
HRSA closes the audit once the entity attests
that all necessary repayment is resolved and
that the CAP has been fully implemented
© 2016 340B Health 14
Diversion
© 2016 340B Health 15
Main Focus of Audit
• Looking for situations where the script
relates to care provided outside the
hospital – likely to result in findings
• Exceptions: referrals
© 2016 340B Health 16
Definition of Patient Existing Requirements for hospitals
1. The covered entity has established a relationship with the
individual, such that the covered entity maintains records of the
individual’s health care; and
2. The individual receives health care services from a health care
professional who is either employed by the covered entity or
provides health care under contractual or other arrangements (e.g.,
referral for consultation) such that responsibility for the care
provided remains with the covered entity
3. An individual will not be considered a “patient” of the covered entity
for purposes of 340B if the only health care service received by the
individual from the covered entity is the dispensing of a drug or
drugs for subsequent self-administration or administration in
the home setting.
(61 Fed. Reg. 55156 (Oct. 24, 1996))
© 2016 340B Health 17
HRSA Audit Reports on Diversion
• Audit results indicate that hospital responsibility shown if the script is written:
within the four walls of the hospital or at a 340B registered offsite location pursuant to care provided in that location (script must be for outpatient use)
outside hospital but outpatient drugs are provided in connection with care furnished at the hospital for which the hospital has responsibility (e.g., infusion)
pursuant to a referral when the referral and the outcome of the referral are documented in the medical record (exact parameters are unclear; very fact specific)
pursuant to a referral and the patient obtained subsequent services from the hospital for the same condition after the referral (exact parameters are unclear; very fact specific)
© 2016 340B Health 18
HRSA Audit Reports on Diversion (cont’d)
• Audit results suggest diversion will be found if:
Script is written in hospital, but no hospital service
was provided (e.g., script was written by physician
for a friend who had never been seen at the hospital)
Script was written in hospital owned or related
physician clinic that is not included on a
reimbursable line of the hospital’s Medicare cost
report and patient was never seen in the hospital
(e.g., patient was only seen in a clinic that is part of
the hospital’s health system, but is not a provider-
based part of the hospital)
© 2016 340B Health 19
• Audit results suggest diversion will be found if (cont’d):
• Script was written in private physician’s practice for a
hospital patient, but for a condition that was not
treated at the hospital (mentioning the condition in the
hospital’s medical record is not enough to
demonstrate responsibility)
HRSA Audit Reports on Diversion (cont’d)
© 2016 340B Health 20
Diversion
• Very fact specific
• Exact parameters are unclear
• Hospitals continue to have some diversion
findings overturned on appeal
© 2016 340B Health 21
Employees
• HRSA has issued findings for scripts written pursuant to a self-insured health plan when the patient has not received services at the hospital and there was no documented referral.
• Comments in audit findings on employees: “A hospital’s role as the administrator of a self-funded
plan does not rise to the health care arrangements contemplated by the 340B patient definition”
Managing an employee benefit plan shows a hospital acting as an administrator of a self-funded plan, not as the health care provider of these individuals
• Findings may be overturned if patient received care at the hospital, but very fact specific
© 2016 340B Health 22
Contract Pharmacy
• Half of all diversion findings relate to contract pharmacy!
• HRSA audits are looking for logic that verifies: 1. Status of patient
2. Location where prescription originated from
3. Eligibility of the provider
4. Verification that covered entity maintains responsibility for patient’s healthcare
5. Evidence of referral if script is written at an ineligible location
• Per HRSA final audit reports: logic based on time is not enough
logic based on eligible provider list definitely not enough.
© 2016 340B Health 23
Contract Pharmacy Vendors
• Hospital, not the vendor, has the
responsibility to ensure compliant logic is
used
• Do not assume that vendor’s logic options
will protect you from findings
© 2016 340B Health 24
Hospital Strategies
• Link script to location
Electronic prescribing
Prescription printed at hospital locations with identifier
• Limit eligible providers to those that provide services only in the hospital or a 340B registered location
• Regular auditing of claims to confirm claim logic is appropriate
© 2016 340B Health 25
Other Audit Findings
© 2016 340B Health 26
GPO Repayment
• HRSA audit report says hospital may need
to repay manufacturers for 340B drugs
made while hospital was in violation of
GPO Prohibition
© 2016 340B Health 27
Drugs Not Properly Accumulated
• Finding: Replenishment occurred based
on charge code, but charge was linked to
multiple NDCs. Hospital may have
accumulated 340B drugs that were
different than the drugs originally
dispensed
© 2016 340B Health 28
Inventory Management
• 9-digit replenishment is permissible when hospital is unable to match package size
“In cases where 11-digit NDC replenishment is not possible because [the hospital] is unable to match the package size, [the hospital] may replenish at the 9-digit NDC and is responsible for having policies and procedures to handle this situation. [The hospital] must have auditable records to demonstrate proper accumulation in a replenishment model.”
© 2016 340B Health 29
Duplicate Discounts
• Findings of duplicate discounts when
Medicaid is secondary payor
States may collect rebate even when
Medicaid is secondary; not all do
• Out-of-state Medicaid patients
If 340B is used for out-of-state Medicaid
patients and you bill for their services, billing
number/NPI must be on exclusion file
© 2016 340B Health 30
Discharge Prescriptions
© 2016 340B Health 31
Inpatient-Only Settings
• Concerns raised by hospitals about HRSA taking the
position that hospitals could not use 340B for discharge
prescriptions from inpatient units
• Reasoning seemed to be that 340B could only be used
for scripts written in an outpatient location within the four
walls of the hospital or at an offsite location that is
separately registered as a 340B location
• Beginning in March, this issue was frequently mentioned
by auditors and at least two hospitals had reported to
340B Health that they had findings in this area
• HRSA audit finding on this issue cited directly to 1994
guidance on registration of outpatient facilities.
© 2016 340B Health 32
Inpatient-Only Settings (cont’d)
• 340B Health sent letter to HRSA explaining there
is no guidance requiring registration of inpatient
locations in order to use 340B drugs for discharge
prescriptions from those locations. Also detailed
long history of HRSA approving such use.
(http://www.340bhealth.org/files/Letter_to_OPA_re
_discharge_prescriptions_-_Final_-_3.29.16.pdf)
• HRSA has informed 340B Health that 340B may
be used for discharge prescriptions written
following care that was delivered in an inpatient
location
© 2016 340B Health 33
Implementing Mega-Guidance in Audits?
• Not seeing proposed Mega-Guidance policies in findings so far
• The inpatient discharge prescription issue relied on guidance from 1994, not the proposed mega-guidance
• No one has reported findings on other key areas of mega-guidance such as infusion, bundled drugs, or duplicate discounts for managed care
• Please continue to keep us informed of your findings!
© 2016 340B Health 34
HRSA’s New Audit Policies
• HRSA’s new policy on public letters announced in
January 2016 monthly program update
“Covered entities audited in FY 2016 will no longer be required
to post on HRSA’s website a public letter informing
manufacturers of audit violations that involve possible
repayment. However, HRSA will post a public notice on the
340B program website to inform manufacturers regarding
violations that have occurred. This notice will include findings of
the 340B Program audit requiring possible repayment, and
covered entity contact information for manufacturers to utilize for
questions.”
© 2016 340B Health 35
HRSA’s New Audit Policies (cont’d)
• HRSA has increasingly included CAP templates with
audit finding letters
• HRSA recent statements on CAPs in hospital audit
letters:
HRSA’s approval of the CAP does not extend to any action taken
regarding repayment. HRSA does not endorse any specific
methodology to determine the scope of 340B noncompliance,
the amounts owed to the affected manufacturers, or a covered
entity’s plan to repay the affected manufacturers
HRSA defers to affected manufacturers for approval of a covered
entity’s plan to determine the scope of 340B non-compliance and
appropriate remedy
© 2016 340B Health 36
HRSA’s New Audit Policies (cont’d)
• HRSA now accepts all audit-related
submissions in a new email inbox
([email protected]) and strongly
encourages its use.
© 2016 340B Health 37
Challenging Findings
• Hospitals have success in overturning findings
• Some findings are made in error, so hospital just needs to provide additional facts
• Findings related to patient definition issues are sometimes overturned, but are very fact specific
• At least half of the hospitals that report challenging findings to 340B Health succeed in overturning one or more of the findings
• Hospitals have only 30 days and one opportunity to prepare an appeal
© 2016 340B Health 38
340B Health Audit Resources
• We have spoken to hospitals about hundreds of audits
• Member benefits: Technical assistance (TA) calls with staff that follow
hospital audits • Staff can discuss what to expect in an audit and if there have
been any new types of findings showing up in FARs
• TA available before, during, and after audits, including during the process of challenging findings and/or developing CAP
Contacts with hospitals that have had your auditor (if available)
Contact Charlie Hayes at (202) 536-2288 or [email protected] to schedule a TA call
© 2016 340B Health 39
Resources (cont’d) • 340B Health compliance resources (for 340B Health members)
(http://www.340bhealth.org/340b-resources/compliance-
resources/audits)
What to expect when you receive an audit letter
Data requests used in HRSA audits
Compliance outline, checklist, sample policy guides
Samples of HRSA-approved CAPs and letters to
manufacturers
• OPA resources (http://www.hrsa.gov/opa)
• PVP resources (https://www.340bpvp.com/resource-center/)
Includes sample policies and procedures and self-audit
outlines
© 2016 340B Health 40
340B Health: Health System/
Hospital Membership
• Member dues for 2016 range from $650 to $9,000 ($54-$750/month)
depending on bed size and desired level of service
• Unlimited access to benefits by all hospital employees
• Group/system discounts available
• A valuable investment in the future of 340B – and more than pays for
itself!
• A list of membership benefits can be viewed on our website here
For more information, contact Shane Kelley at
[email protected] or (202) 552-5864
© 2016 340B Health 41
Coming Soon….
Participate in our new members only on-line community!
Stay tuned for more information!
© 2016 340B Health 42
Join the Alliance to Protect 340B
• Special initiative to ensure pro-340B message is
heard
• Significant progress so far – but more work is
needed to counter critics!
• Over 100 hospitals and 11 corporate partners have
joined – we need hundreds more!
• A full contributors list is available on our website
here.
• For more details contact Anna Mangum at
[email protected] or (202) 552-5863
© 2016 340B Health 43
The Alliance at Work
The Health Resources and Services Administration’s 2015
proposed guidance on the 340B Drug Pricing Program may
have intended to cut through previous confusion in the
administration of the program, but
a survey of 340B Hospitals indicates the proposed
guidance
would cause significant harm to hospitals that rely on 340B
to provide critical care in their communities.
February 11, 2016
© 2016 340B Health 44
The Alliance at Work
Rep. Gilbert “Gil” Gutknecht (R)
Former Representative from
Minnesota’s 1st District
Rep. Henry Waxman (D)
Former Representative from
California’s 33rd District
© 2016 340B Health 45
Alliance Contributors
Leader ($20,000 and above)
Ascension Health (St. Louis, MO)
Avera McKennan Hospital
Barnes-Jewish Hospital
Carolinas Medical Center
(Sioux Falls, SD)
(St. Louis, MO)
(Charlotte, NC)
Cedars-Sinai Medical Center (Los Angeles, CA)
Charleston Area Medical Center (Charleston, WV)
Duke University Hospital (Durham, NC)
Henry Ford Hospital
Loma Linda University Medical Center
(Detroit, MI)
(Loma Linda, CA)
Regional Health (Rapid City, SD)
© 2016 340B Health 46
Alliance Contributors (cont’d)
Leader ($20,000 and above)
RxStrategies (Boca Raton, FL)
Sentry Data Systems (Deerfield Beach, FL)
Sharp HealthCare (San Diego, CA)
Tampa General Hospital (Tampa, FL)
University Hospitals (Cleveland, OH)
University of Minnesota Medical Center (Fairview, MN)
Vanderbilt University Medical Center (Nashville, TN)
Verity Solutions (Kirkland, WA)
© 2016 340B Health 47
Alliance Contributors (cont’d)
Champion ($10,000-19,999)
American Health Care (Rocklin, CA)
Boston Medical Center (Boston, MA)
Bronson Health Group (Kalamazoo, MI)
CCN Pharmacy (Pittsburgh, PA)
Denver Health Medical Center (Denver, CO)
Inova Fairfax Hospital (Falls Church, VA)
Kootenai Medical Center (Coeur d’Alene, ID)
Macro Helix (Atlanta, GA)
MedImpact/SUNRx (San Diego, CA)
Ohio Health (Columbus, OH)
PDMI (Youngstown, OH)
PSG (Plano, TX)
© 2016 340B Health 48
Champion ($10,000-19,999)
St. Luke’s Health System (Boise, ID)
UMass Memorial Medical Center (Worcester, MA)
University of Colorado Hospital (Aurora, CO)
University of Kentucky Hospital (Lexington, KY)
University of Utah Health Care (Salt Lake City, UT)
Virginia Commonwealth University Health System (Richmond, VA)
Wellpartner (Portland, OR)
Alliance Contributors (cont’d)
© 2016 340B Health 49
Alliance Contributors (cont’d)
Advocate ($5,000-9,999)
Baptist Health (Montgomery, AL)
Faxton St. Luke’s Healthcare (Utica, NY)
Indiana University Health (Indianapolis, IN)
Long Island Jewish Medical Center (Hyde Park, NY)
Southern Ohio Medical Center (Portsmouth, OH)
Women & Infants Hospital of Rhode Island (Providence, RI)
© 2016 340B Health 50
Alliance Contributors (cont’d)
Supporter ($4,999 or less)
Atchison Hospital Association (Atchison, KS)
Central Drugs (Portland , OR)
Columbus Regional Healthcare System (Columbus, GA)
Davis Medical Center (Elkins, WV)
Fenway Community Health Center (Boston, MA)
Jackson General Hospital (Ripley, WV)
Jesse Glidewell 340B Consultant (Eden, UT)
Midtown Medical Center (Columbus, GA)
Sidney Health Center (Sidney, MT)
United Regional Health Care System (Wichita Falls, TX)
Waupun Memorial Hospital (Waupun, WI)
© 2016 340B Health 51
Upcoming Events
20th Annual 340B Coalition Summer Conference
July 11-13, 2016
Washington, DC
340bsummerconference.org Save the Date!!
For registration details, contact Sam Wilhelm-Ross at [email protected] or 202-536-2280
340B Health Summer Legislative Event July 13-14, 2016
Washington, DC Save the Date!!
For details, contact Liam Steadman at [email protected] or 202-536-2282
© 2016 340B Health 52
Upcoming In-Person Events
The 340B Drug Pricing Program:
Challenges and Opportunities in 2016
HFMA 2016 Annual Meeting
Las Vegas, NV
Tuesday, June 28
9:30 -10:45 AM
For registration details, please contact Lee-Anne Gabrielli at
[email protected] or 202-522-5856.
© 2016 340B Health 53
Upcoming Webinars
Healthcare Financial Management Association
Webinar:
Key Issues Impacting 340B
Tuesday, April 19, 2016
3:00 - 4:30 p.m. Eastern
© 2016 340B Health 54
Thank You!
Maureen Testoni
Senior Vice President and General Counsel
202-552-5851
Amanda Nagrotsky
Assistant Counsel
202-552-5866
