340B COMPLIANCE, AUDITS, &OPPORTUNITIES

340B COMPLIANCE, AUDITS, &OPPORTUNITIES

Kentucky Hospital AssociationJune 27, 2019

David Layne, CPA, ACEManager

Blue & Co.

Agenda-Maximizing 340B Opportunities

• Referral Prescriptions• DIR Fees• Capture Rates• Telemedicine• Nursing Home Visits• IV Solutions

Agenda-HRSA Audits & Compliance

• HRSA Audit Statistics• Audit Findings• Audit Focus• HRSA Audit Process• Steps for a successful audit

Referral Prescriptions Patient Definition- the covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual's health care; andthe 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

Referral Prescriptions 1) Patient has visit with an eligible provider at an eligible location at the Covered Entity2) A “documented referral” to the specialty physician is included in the patient’s medical record3) Patient has a “visit” with the specialist4) The specialist summarizes the visit and treatment plan in the office notes and sends the notes back to the referring physician5) The referring physician reviews the notes and incorporates them into the medical record6) The prescribed drugs are listed in the patients med list7) The patient has follow-up visit with the referring provider

DIR Fees

• Direct and Indirect Remuneration fees that pharmacies pay to PBM’s

• Applied to Medicare Part-D claims• Fees are paid or recouped after the point-of-sale• PBM’s claim DIR fees are necessary to bring down drug

costs• DIR fees are more common on Generic Claims• Average 5.5% to 6.5% of Medicare Part D claim revenue

DIR Fees

• Several Independent Pharmacies have requested Covered Entities reimburse them for DIR fees

• Pharmacies will incur DIR fees whether they participate in 340B or not

• Some independent pharmacies have approached covered entities requesting that they pay the DIR fees to make them whole

• If hospital chooses to adjust dispensing fee to help independent pharmacy, only adjust fee on 340B claims only

Capture Rate

• CAPTURE RATE-340B prescriptions processed/total prescriptions generated from eligible locations

• Many covered entities e-prescribe prescriptions to 50-100 different pharmacies (even in small communities)

• Not feasible to contract with all pharmacies• Capture rate

50% Average60% Above average70% Good70% to 100% Target

Capture Rate

• Mail Order-Home Delivery• Capturing prescriptions for patients that do not use

contracted pharmacies• Can be utilized to “mop-up” and capture incremental

volume• These prescriptions will never be captured through the

contract pharmacy process• Clients capturing an additional $250,000 annually in 340B

contract pharmacy revenue

Telemedicine

• 340B eligible as long as it meets the patient definition• Video conferencing takes place in eligible, provider-based

340B location• Emergency room, Outpatient Clinic• Provider seeing the patient should either be credentialed

or have a “contractual relationship” with the covered entity

• Covered entity must maintain the medical record and the “responsibility of care” must remain with the covered entity

Nursing Home Visits-Rural Health Clinic

• 340B eligible as long as it meets the patient definition• RHC is owned by the Hospital• RHC is listed in allowable section of Hospital’s MCR• RHC Provider sees patient in the Nursing Home• Hospital bills as a RHC visit• Hospital maintains the medical record and the

“responsibility of care” remains with the covered entity• Most nursing homes contract pharmacy services with a

non-traditional pharmacy (non CVS, Walgreens)• Hospital would need a contract pharmacy relationship

with the nursing home pharmacy

IV Solutions

• IV Solutions qualify for 340B• Must meet the 340B eligibility requirements• Normally IV solutions are purchased in the materials

management department of the Hospital• Hospital would need to establish a 340B account with

Baxter• Purchasing department would check with 340B area to

confirm the available 340B accumulations IV solutions• When order is received the invoice is sent to 340B area to

manually adjust the accumulator

Other Opportunities

1) Review IT feeds to the 340B vendor to make sure all eligible departments 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 WAC purchases over time

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-2018

• No Adverse Findings-62 Covered Entities (32%)• Adverse Findings-134 Covered Entities (68%)

Remedies• Corrective Action Plans• Possible Repayment to Manufacturers

• 112 covered entities

Kentucky Covered Entities2017

• 7 - Audits (5 DSH, 1 CAH, 1 Clinics)• 3 - No findings (43%)• 4 - With Findings (57%)

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

File20172018

• 7 - Audits (2 DSH, 5 CAH)• 3 - No findings (43%)• 4 - With Findings (57%)

• Diversion-drugs dispensed to patients not supported by medical record

• Contract registered on OPAIS prior to executed contract• Duplicate Discounts-Incorrect Medicaid Exclusion File• Incorrect OPAIS Database

Common Audit Findings

• Entity billing Medicaid inconsistent with Medicaid Exclusion File

• Incorrect information listed on Medicaid Exclusion File• Drugs dispensed for prescriptions written at ineligible

locations• Drugs dispensed to patients not supported in the

medical record• 340B Drugs not accumulated properly

Audits-ComplianceAreas of Focus

• Eligibility• Registration and Database Issues• Drug Diversion• Duplicate Discount• Accumulator issues

EligibilityHospital Ownership

Government Owned• Owned or operated by unit of State or local gov’t• Granted governmental powers State or local gov’t

Proof or attestation of ownership must be documentedHRSA will ask to see this document

Non-Profit• Private non-profit with a contract with state or local gov’t

to provide health care to low income individuals not entitled to Medicare or Medicaid

• HRSA will ask to see this contract

EligibilityHospitals

HRSA verifies the cost report type with the registration data

Cost Report Classification• Type 1-2 Nonprofit• Type 7-13 Governmental

EligibilityHospitals DSH Requirements

DSH Hospital-11.75%RRC Hospital- 8.00%SCH Hospital- 8.00%CAH Hospital- NAPED Hospital-11.75CAN Free Standing-11.75

HRSA verifies this with the most recently filed cost reportWorksheet E Part A Line 33

Registration and Database IssuesOff-site locations• Required to be listed on the HRSA database to be eligible• Cost report trial balance with reimbursable

expense/revenue• Cost Report -Worksheet A-Expenses > 0• Cost Report-Worksheet C-Revenue > 0• OP Services Lines 50-117• All are verified with OPA database

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 • Must list all child sites OR

Statement “covered entity including all child sites”***Verify this before the audit***

• 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 Inpatients• Prescription not supported in the medical record• Drugs not accumulating properly

DiversionClaims Audit-Mixed Use Audit• HRSA selects sample from report generated by Hospital for

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

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

smoothly• Only selects 28 claims plus five (5) additional claims

DiversionMixed Use Audit

• Locate patient in EMR• Locate drug in EMR• Verify ordering provider• Verify medication order• Verify administration data from MAR/nurses

notes/anesthesia record/physician record• Verify patient status at time of administration/order:

inpatient versus outpatient.

DiversionMixed Use Audit

• Verify type of insurance• Requests bills for Medicaid to verify billing data agrees

with the HRSA Medicaid Exclusion File• How is Managed Medicaid handled in your state?• Is your Medicaid number / NPI number/ modifier on

the bill?

DiversionMixed 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 (WAC if available)• When multiple NDC’s are mapped to single charge code

1st package should be bought at WAC

DiversionMixed Use Audit-Accumulator Issues

Current Audit Findings Example• Hospital 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”

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

• The physician must be practicing in a provider-based location • NOTE-One of the top reasons for Diversion is that the

physician file is not updated routinely

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

HER• Example-Mock Audit

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 (HRSA Notice 12/12/14,

Release no. 2013-2)• 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• They will pull some bills (UB-04) claims for Medicaid and match

up the provider #s

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

• 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 sent to the child sites?• 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 TourQuestionsWhat do you do when an item is received that you feel is incorrect?Best AnswerWe call our 340B contact at the hospital and work through it with them. Then if it is incorrect, we return it.

Child Site TourQuestions

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

Drug Logs

Checked drug logs to verify drugs are checked in when received from the pharmacy

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

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

Sanctions for Non-Compliance

• 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

HRSA Data Request

HRSA Data Request

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?

David LayneManager

502.992.3481 dlayne@blueandco.com