340B Compliance, Audits &Opportunities

Kentucky Primary Care AssociationNovember 5, 2018

Jason Prokopik, Pharm.D. & David Layne, CPAManagersBlue & Co.

Agenda

• HRSA Eligibility• HRSA Audit Statistics• Audit Findings• Audit Focus• HRSA Audit Process• Corrective Action Plan-Timing, Completion• Steps for a successful audit• Maximizing Opportunities

Basic Information

• Begins with the Medicaid Rebate Program in 1990 in Section 1927 of the Social Security Act.

• Then Section 340B was added to the Public Health Service Act in 1992.

• The Office of Pharmacy Affairs (OPA) administers the program• Is part of Health Resources and Services Administration (HRSA)

• HRSA – Primary Federal agency for improving access to health care services for people who are:

• Uninsured• Isolated• Medically vulnerable

• Apexus (www.apexus.com) is a great resource to assist with 340B

340B Intention

• According to congressional report language, the purpose of the 340B program is to enable covered entities “to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.“

• Achieved by requiring pharmaceutical manufacturers to provide front-end discounts on covered outpatient drugs purchased by covered entities that serve the nation’s most vulnerable patient populations.

HRSA Eligibility

• Federal Grantees• Hemophilia Treatment Centers• Federally Qualified Health Centers / Look A-likes• Ryan White Programs• Sexually Transmitted Disease / Tuberculosis• Title X Family Planning• Urban / 638 Health Centers• Native Hawaiian Health Centers

HRSA Eligibility

• Non-grantees• Disproportionate Share Hospitals• Critical Access Hospitals• Rural Referral Centers• Sole Community Hospitals• Children’s Hospitals• Free Standing Cancer Hospitals

Covered Patients

• Patient must receive health care services other than drugs from 340B entity.

• Patient has established relationship with 340B entity.• Entity retains patient health records.• Patient must be seen in an eligible location for the 340B

entity.• Patient must receive services from employed or

contracted health care provider.• Patient services must be consistent with the services of

the 340B institution.

Provider Eligibility

• Eligible entities must register with OPA (now called OPAIS)

• Provider cannot buy at 340B price until listed as a registered provider

• HRSA database determines eligibility and Medicaid billing

• Registration applies to Grantee and contract pharmacy• New registration occurs the first 15 days of each

quarter• New entities become eligible the following quarter

Covered Drugs

• Only certain outpatient drugs are eligible• Must be for outpatient use• FDA-approved prescription drugs• OTC written on a prescription• Biological products dispensed only by a prescription• FDA-approved insulin• Vaccines excluded

Program Types

• Clinic use – Inside the four walls of the covered entity• Drugs administered to patients directly at covered entity• 340B savings through relationship with vendors that provides

medications to covered entity• Samples and free products are not eligible for 340B

• Contract pharmacy – Covered entity contracts with a retail pharmacy to accept outpatient prescriptions

• CE pays pharmacy a dispensing fee• Program proceeds (claim revenue – drug cost – fees) are

returned to hospital• Both use Third Party software to track dispensing of

eligible claims

HRSA Audits

Bizzell Group-Silver Spring, Maryland• Prior Hospital experience• Many are pharmacists• Experienced• Subject matter experts

Completed HRSA Audits

0

50

100

150

200

250

2018 2017 2016 2015 2014

HRSA Audit Findings-2017

• No Adverse Findings-67 Covered Entities (34%)• Adverse Findings-129 Covered Entities (66%)

Remedies• Corrective Action Plans• Possible Repayment to Manufacturers

• 112 covered entities

Kentucky Covered Entities2017

• 8 audits (6 DSH, 1 CAH, 1 CHC)• 4 – No findings (50%)• 4 – With findings (50%)

• Diversion - drugs dispensed to Inpatients• Diversion - drugs dispensed for prescriptions at ineligible sites• Incorrect Database - Incorrect information on Medicaid

Exclusion File

2018• 5 Audits (2 DSH, 3 CAH)• 2 – No findings (40%)• 3 – With findings (60%)

HRSA Audit Findings-2017Adverse Fiindings-129 Covered Entities (66%)Eligibility Requirements Entity did not meet the eligibility requirements of a DSH hospital 2Incorrect Database Offsite facilities not listed on HRSA Database 31 Wrong address, duplicate listings, closed locations, other 20 Contract Pharmacy registered w/o written contract 12 Contract Pharmacy agreement inconsistent with HRSA database 11 Incorrect entry for primary contact 7 Ineligible site listed on HRSA database 7Duplicate Discount Entity billing Medicaid inconsistent with Medicaid Exclusion File 11 Inaccurate information on the Medicaid Exclusion File 10Diversion Drug dispensed for prescription written at ineligible location 61 340B Drugs were not accumulated properly 20 Drug dispensed to patients w/o documented provider to patient relationship 11 Drug dispensed for prescription written by ineligible provider 1 Drug dispensed at entity not supported by the medical record 4 Drugs dispensed to inpatients 7GPO Violation Covered OP drugs acquired through GPO 7Oversight Entity did not provide adequate contract pharmacy oversight 5

Audits-ComplianceAreas of Focus

• Eligibility• Registration and Database Issues• Drug Diversion• Duplicate Discount• Contract Pharmacy Oversight

Registration and Database IssuesContract Pharmacy RegistrationsRequired to be listed on the HRSA database to be eligible• Must be signed• Contain a list of all pharmacy locations • Addresses on HRSA database must match exactly

to the contract

Drug DiversionTransferring a drug purchased at 340B to an ineligible patient

HRSA Patient DefinitionCovered entity has established a relationship with the

individual, such that the covered entity maintains records of the individual’s health care; and 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 the responsibility of care remains with the covered entity

Drug DiversionExamples

• Prescription written at ineligible Location• Prescription written by ineligible Provider• Drug dispensed to ineligible Patients• Prescription not supported in the medical record• Drugs not accumulating properly

DiversionClaims Audit - Clinic Use Audit• HRSA selects sample from report generated for drugs

purchased on 340B account• HRSA auditor works with facility personnel when reviewing

the medical records• An expert medical record navigator can help audit go

smoothly• Only selects 28 claims

Good or Bad?

DiversionClinic Use Audit

• Locate patient in EMR• Locate drug • Locate provider• Locate medication prescription or order• Find administration data from MAR/nurses

notes/physician record

DiversionClinic Use Audit

• Type of insurance• Find bills for Medicaid

• How is Managed Medicaid handled in your state?• Is your Medicaid number / NPI number/ modifier on

the bill?

DiversionClinic Use Audit - Accumulator Issues

• HRSA requires an exact 11 digit NDC match• If 11 digit NDC is not available, HRSA will allow a 9 digit

match (entity must maintain auditable records)• NEW NDC’s -1st package should NOT be purchased at

340B• When multiple NDC’s are mapped to single charge code

1st package should be bought at WAC• Accumulator needs to ensure exact 11 digit NDC

matching

DiversionClinic Use Audit - Accumulator Issues

Current Audit Findings Example• Entity maps multiple NDC’s to single charge code• HRSA found some issues regarding replenishing one NDC for

a different NDC• HRSA assumes the issue is systemic• Analysis to determine the impact• Repayment to Manufacturers

DiversionProvider File

• HRSA requirement “provider must be employed or under contract”

• Clinic use claims must have a provider from the provider file to be eligible

• The physician must be practicing in an approved location

DiversionClaims Audit - Contract Pharmacy Audit• 28 claims• Locate patient in chart• Find provider• Address of location where prescription was written• Date written (match with date written in EHR)• Often times (phone request); needs to be documented in

EHR

DiversionClaims Audit - Contract Pharmacy Audit (cont.)• Verify last eligible visit in EHR (should be within 12 months)• Verify order or documented RX• Verify insurance information• Medicaid FFS should be excluded from contract pharmacies• If handwritten, should be scanned into record or in the

progress note

• Manufacturers that participate in Medicaid are required to issue a rebate to the State’s each quarter

• Manufacturers are not required to provide a rebate on the same drug it sold at 340B pricing

• Covered entities must have mechanisms in place to prevent duplicate discounts from happening

Duplicate Discounts

HRSA Medicaid Exclusion File• MEF applies to FFS Medicaid only• Will you bill Medicaid for drugs purchased at 340B prices• ANSWER YES - Must list your Medicaid Provider #s and NPI #s

on the MEF• Out of State Medicaid - Must list ALL NPI #s• MEF must be accurate and complete for every registered site

Duplicate Discounts

HRSA Medicaid Exclusion File• Where both MPN & NPI are included on the state then both

have to be listed on HRSA MEF• HRSA will pull claims to verify the billing numbers agree with

the MEFCurrent Audit Findings• HRSA found some exceptions• Analysis to determine the impact• Is this systemic• CAP and Repayment to manufacturers

Duplicate Discounts

• State Medicaid Policy-Bissell inquires how it is applied at the organization

• They do NOT test claims specifically for Managed Medicaid compliance with the state policy

• They do review the Medicaid Exclusion File

Bissell Audit re: State Medicaid Policy

• HRSA states that the Medicaid exclusion file is the “official” data source regarding covered entities that bill FFS Medicaid

• MEF is NOT applicable for MCO Medicaid • Rules are very vague in Kentucky• Unable to find guidance from the state in writing

Kentucky Medicaid

Pharmacy TourQuestions

• What is the procedure for drugs administered at the entity?• Do you audit your contract pharmacies? • Did you have an external audit this year?

NOTE-Only offer answers to the auditors specific questions. Do not offer any additional information

Contract Pharmacy TourQuestions

What do you do when an item is received that you feel is incorrect?

Best Answer

We call our 340B contact at the entity and work through it with them. Then if it is incorrect, we return it.

Child Site TourQuestions

What does the staff at the covered entity know about the 340B program?Most employees know very little about 340B?Basic Education of 340B is appropriate for staff members

Sanctions for Non-Compliance• Immediate removal from 340B Program• Repayment to manufacturers for period of non-

compliance (112 Entities in 2017)• Corrective Action Plans (CAP)

Sanctions for Non-ComplianceCorrective Action Plans-Updated May 2018• Full CAP implementation, including repayment to

manufactures is required to be completed within six months from CAP approval date

• CE’s unable to meet this requirement may e subject to termination from the program

• HRSA will post to their website the extent of the violations and contact information of the CE’s

• CE may be required to submit “proof” that the CAP has been implemented

• CE may be subject to re-audit to verify they are in compliance

Manufacturers Audit• Kalderos-Chicago IL• Letters to covered entities stating they represent

manufacturers• “We have identified one or more transactions that may have

been filled with a 340B drug”• Upon acknowledgement that you are the appropriate

contact for the covered entity• They will allow you to access a link to verify claims they are

questioning

HRSA Data Request

HRSA Data Request

Basics to Prepare For HRSA Audit 1. Policies and Procedures-Are they complete? Are they

being followed?

2. Are you performing quarterly internal audits

3. Do you have an internal 340B committee that meets regularly to monitor the program? Do you keep minutes?

4. Are you working with independent audit firm? Do you have an annual external audit?

Maximizing Opportunities 1) Review IT feeds to the 340B vendor to make sure all

eligible grantees are included

2) Verify 340B wholesale pricing is loaded and charged correctly every quarter

3) Review wholesaler invoices to verify that you are paying ONLY for eligible 340B patients

4) Monitor and benchmarking program profitability over time.

Contact Information

Jason Prokopik, Pharm.D.Manager

317.713.7916jprokopik@blueandco.com

David Layne, CPAManager

502.992.3481dlayne@blueandco.com