March 9, 2012—The Health Resources and Services Administration (HRSA) has posted a document on the Office of Pharmacy Affairs (OPA) Web site clarifying its policy on 340B covered entity audits.
The March 5 document, called a policy release, notes that the 340B statute permits the federal government and drug manufacturers to audit covered entity records pertaining to entities’ compliance with the prohibitions against drug diversion and duplicate discounts.[ms-protect-content id=”2799″] As is already widely known, the policy release says that HRSA has begun such audits. During the recent 340B Coalition winter meeting in San Diego, Clarissa Crain of the drug industry consulting firm Compliance Implementation Services (CIS) said some drug manufacturers are currently compiling documents to establish reasonable cause for launching their own audits. The Monitor has learned that some pharmaceutical companies have already submitted such documents to OPA and are awaiting approval to commence audits.
In its policy release, HRSA said its audits would use a standard protocol that “will be made publicly available in order to assist covered entities in preparation for an audit.” As of mid-day March 9, the protocol had not yet been posted on the OPA Web site despite the fact that audits have already begun.
HRSA said it would conduct both random and targeted audits. The random audits will initially include covered entities randomly chosen from program types determined to be at higher program risk due to volume of purchases, increased complexity of program administration, and use of contract pharmacies. Subsequent random audits will include entities randomly chosen from program types determined to be at lesser risk.
HRSA said targeted audits may be triggered by allegations of violations of 340B requirements, and are not limited to those made by whistleblowers, manufacturers, or self-reporting by covered entities themselves.
Selective and targeted audits will include a more thorough investigation of policies and procedures, review of auditable records, and system compliance to prevent diversion and duplicate discounts, HRSA said. The findings from these audits may be used to refer matters to the Department of Health and Human Services Office of Inspector General (OIG) or the Department of Justice (DOJ).
HRSA also said it is incorporating a 340B component into the A-133 audit submission process. In accordance with the Single Audit Act Amendments of 1996, OMB Circular A-133, all non-federal entities that spend $500,000 or more in federal awards in a year are required to obtain an annual audit. Covered entities that submit A-133 audits will be required to review 340B eligibility status, program policies and procedures, internal controls, and records concerning 340B compliance. The policy release said the 340B component will be added to these audits during fiscal 2013.
More information about 340B audits also emerged during the 340B Coalition winter meeting.
Lisa Scholz of HRSA’s Pharmacy Services Support Center (PSSC) said HRSA’s Office of Regional Operations (ORO) is conducting the government audits with support from HRSA’s Division of Financial Integrity (DFI), Apexus/340B Prime Vendor Program (PVP), and PSSC. HRSA will conduct six on-site audits per month “at a minimum,” she said, adding that “there may also be ways of doing telephone audits.”
Chris Hatwig of PVP said several factors that might raise an entity’s risk of being audited include:
- Entity type, with DSH hospitals being more likely to be selected than smaller types with less complex operations
- Volume of 340B purchases and how an entity’s shares of inpatient and outpatient purchases compare with those of typical hospitals
- Having multiple outpatient sites registered
- Using multiple contract pharmacies
- Length of time enrolled in 340B
Hatwig and Scholz both said that the fact that an entity uses split billing software would neither increase nor decrease its odds of being selected for an audit. Hatwig speculated that, over time, audit results might reveal trends showing that certain split billing software programs support 340B program compliance more than others. It will be interesting to see if using some systems increases an entity’s likelihood of being audited, he said.
Scholz said that OPA intends to eventually “post [its] findings so that everybody can learn from them.”[/ms-protect-content]