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Program Integrity through 340B Compliance

Hosted By:

The HRSA Program Integrity Initiative Workgroup

August 8, 2012

1Todays PresentersPat ORourke CFO OfficeMichelle Herzog Health Services Bureau/Office of Pharmacy AffairsValerie Holm Office of Federal Assistance Management/Division of Financial IntegrityDavid Fleurquin Office of Regional OperationsTammie Brown Office of Inspector General, HHS

2AgendaHRSAs Program Integrity InitiativeDHHS Office of Inspector General (OIG)National External Audit Review (NEAR) CenterIntroduction to the 340B Drug Pricing ProgramThe Compliance Supplement and 340B Compliance RequirementsQuestions and Answers

3HRSAs Program Integrity InitiativeThe Administrator launched the HRSA Program Integrity Initiative (PII) in June 2010.

The PII was designed to:Target risks of fraud, waste and abuseReduce risks by enhancing program integrity operationsShare the best program integrity practices, and measure the results of PII efforts.4Prioritized PII ActionsProvide training opportunities for grantees and staff to increase program integrityIncrease the number and quality of program integrity reviews and site visits conducted.Create a toolkit to facilitate collaboration and sharing of best practices.

5Office of Inspector GeneralNational External Audit Review CenterWhat is NEAR?How does NEAR interact with DHHS sub-agencies?How does NEAR interact with auditors?1HRSAs Program Integrity InitiativeAn introduction to the 340B Drug Pricing Program to assist auditors who now have to test 340B compliance during the A-133 audit..7Office of Pharmacy Affairs Mission:

Promote access to clinically and cost effective pharmacy services8888340B Program: Overview and BenefitsProvides discounts on outpatient drugs to certain safety-net covered entitiesAverage savings of 25-50%

Savings may be used to:Reduce price of pharmaceuticals for patientsExpand services offered to patientsProvide services to more patient

Estimated $6 billion dollars in 340B drug purchases last yearManufacturers that participate in Medicaid must also participate in the 340B Program9Intent of the 340B ProgramPermits eligible safety net providers to stretch scarce Federal Resources as far as possible, reaching more eligible patients and providing more comprehensive services.

H.R. Rep. No. 102-384(II), at 12 (1992)10Eligible EntitiesFederal Grantees Comprehensive Hemophilia Treatment Centers Federally Qualified Health CentersUrban/ 638 Health CenterRyan White ProgramsSexually Transmitted Disease/TuberculosisTitle X Family Planning

Hospital TypesDisproportionate Share HospitalsCritical Access HospitalsRural Referral CentersSole Community HospitalsChildrens HospitalsFree Standing Cancer Hospitals

11340B Enrollment Steps 12340B EnrollmentDeadline:October 15January 15April 15July 15

Start Date:January 1April 1July 1October 1340B Enrollment Once enrolled, the newly participating entity must:

Set up an account with wholesaler using 340B ID

Determine if contract pharmacy services are appropriate

Contact PSSC for assistance with any/ all technical issues

Contact the PVP to discuss participation in their added services.

14Contract Pharmacies (2010 FRN (Vol. 75 No. )340B program allows entities to have multiple contract pharmacies for increased patient access to cost effective pharmaceuticals

The Covered Entity purchases the drug, but ship to - bill to procedure may be used

The Covered Entity retains legal title to all drugs purchased under 340B. The Covered Entity must pay for all 340B drugs.

15340B DatabaseEntities are not eligible for the program unless listed in the 340B databaseWholesalers will not ship discounted drugs unless it is an exact match to the 340B databaseInformation is updated dailyIncludes the Medicaid Exclusion FileOnline registration available for all applicantshttp://opanet.hrsa.gov/opa/default.aspx16Program Prohibition: DiversionDiversion means: a drug is provided to an individual who are not a patient of that entityDrug dispensed in an area of a larger facility that is not eligible (e.g. an inpatient service, a non-covered clinic)Entities should enroll all eligible outpatient or satellite sites

Required to follow patient definition guidelines - 61 Fed. Reg. 55156 (October 24, 1996)

17Program Prohibition: Duplicate DiscountsDuplicate Discount = Accessing the 340B Discount and Medicaid Rebate on same drug Safety-net providers required to inform HRSA at the time they enroll whether they plan to purchase and dispense 340B drugs for their Medicaid patients and bill Medicaid. HRSA maintains this list known as the Medicaid Exclusion File on HRSAs public website HRSA provides guidance to covered entities and states Medicaid Exclusion Tutorial and Medicaid Exclusion File Basics http://www.hrsa.gov/opa/medicaidexclusion.htm). Final Notice, Duplicate Discounts and Rebates on Drug Purchases published at 58 Fed. Reg. 34058 (June 23, 1993).

18Recent OIG StudyState Medicaid Policies and Oversight Activities Related to 340B-Purchased Drugs June 2011OIG recommendations:CMS direct States to create written 340B policiesCMS inform States about tools they can use to identify claims for 340B-purchased drugsHRSA share 340B ceiling prices with States. (HRSA will need to seek legislative authority to implement)HRSA, in conjunction with CMS, improve the accuracy of the Medicaid Exclusion File

1GAO FindingsManufacturer Discounts in the 340B Program Offer Benefits, but Federal Oversight Needs Improvement. GAO-11-836, Sep 23, 2011GAO Recommendations:Covered Entity AuditsPatient DefinitionNondiscrimination by ManufacturersHospital eligibility

1ACA Provisions focusing on Program IntegrityManufacturer Integrity (Civil Monetary Penalties) HRSA published Advanced Notice of Proposed Rulemaking September 2010Covered Entity IntegrityPricing Changes and Transparency (Regulations & on line access in 340B data system)Administrative Dispute Resolution - HRSA published Advanced Notice of Proposed Rulemaking September 2010Annual on-line recertification of all entities

Program Integrity - Current ActivitiesDetermination of eligibilityAnnual RecertificationQuarterly calculations of 340B pricesMaintenance of Medicaid Exclusion FileInvestigations/resolutions of alleged drug diversion and incorrect pricing/inappropriate limits on drug accessTechnical Assistance, webinars, FAQs, guidancesPolicy ReleasesPenny Pricing Nov. 2011Non-discrimination Nov. 2011Manufacturer audits Nov. 2011Covered entity audits Mar. 2012Medicaid exclusion fileHospital eligibility requirements

23All of the policy releases can be found onThe program integrity page on the OPA Database.Audits Manufacturer ConductedAuthorityReasonable causeIndependent auditorSubmit audit workplan to OPA for approval prior to conducting - December 12, 1996 (61 Fed. Reg. 65406)OPA encourages manufacturers to submit plans and we will work closely with them throughout the processOPA has received its first audit plan from a manufacturer

24Audits HRSA ConductedHRSA to date has conducted 50 of the 51 audits.HRSA Leadership has proven commitment to this effort by providing additional auditors.All covered entity types will be considered for audit selection, including non-HRSA grantees and hospitalsProposed Focus Areas Eligibility, Policies and Procedures, Internal Controls, Authorized 340B Discount, and Procurement/Distribution.25A-133 plansIn addition to on-site audits, OPA has also worked closely with DFI to include 340B in the A-133 audits for all federal grantees that participate in 340B.262012 Compliance SupplementHow do auditors know what they need to review for organizations that participate in the 340B Program?

The Compliance Supplement27What is the Compliance Supplement?OMB document that is published once per year between March June.It is a document where the federal agencies communicate instructions to the auditor for auditing the agencys programs. This document prevents the auditor from having to research laws and regulations for each program.

28What is the Compliance Supplement?Not all programs are included in the supplement.Federal agencies are responsible for informing OMB of any changes on an annual basis.

29Where Can I Find the 340B Compliance Requirements?Since the 340B program has no CFDA numberit does not have its own supplement.

The requirements for auditing 340B are found in the supplement for the applicable programs under the Special Tests and Provisions Section.30

Where Can I Find the 340B Compliance Requirements?31Applicable ProgramsFor the 2012 Compliance Supplement the 340B Compliance Requirements can be found in the following program supplements:

93.224, 93.527 Consolidated Health Centers93.917 HIV Care Formula Grants (Ryan White, Part B)93.918 HIV Outpatient Early Intervention (Ryan White, Part C)

32Applicable ProgramsThe 2013 Compliance Supplement will most likely contain 340B Compliance Requirements in the following programs:

93.153 HIV Grants for Coordinated Services (Ryan White Act)93.217 Family Planning - Services93.914 HIV Emergency Relief Project Grants (Ryan White, Part A)

33Suggested Audit ProceduresDetermine if the grantee is participating in the 340B Program and, if so, continue with the remaining audit procedures.

Review the grantees latest change form submitted to OPA and compare it with the organizations actual physical location and other current information about the entity.

Test a sample of drugs purchased for use under the funding program (CFDA 93.xxx) during the audit period to determine whether 340B drugs were properly identified throughout the procurement process, including (1) payment at the discounted price and (2) proper identification as a 340B drug upon receipt.

34Suggested Audit Procedures ContinuedTest a sample of records of 340B drugs purchased for use under the funding program and released from inventory during the audit period to determine whether required authorizations were received, to whom the drugs were dispensed, and if the grantee determined that such individuals were eligible patients before dispensing the drugs.

For eligible patients who received 340B drugs, test a sample of Medicaid reimbursement requests to verify that the grantee did not claim, receive, or retain a duplicate rebate for those drugs under the Medicaid program.

35Takeaways

The inclusion of 340B compliance testing in the A-133 audit will increase the integrity of the 340B Program and further the efforts of the Department of Health and Human Services in preventing and detecting Fraud, Waste and Abuse in their programs.

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