Navigating 340B compliance

Navigating 340B through the healthcare revolution

Healthcare is broken, and nothing short of a revolution can fix it. A revolution:

  • Creates a new way of thinking and doing that was previously unimagined
  • Leverages the most powerful new ideas and technologies to transform the “way we’ve always done things”
  • Has the power to make previous competitors or adversaries partners in pursuit of a grander vision

The world of healthcare must change. This requires a greater ability to take action to comply with regulatory requirements in ways previously not envisioned. Consider the 340B program as just one example.

For nearly 25 years, the federally mandated 340B drug discount program has required drug manufacturers participating in Medicaid to provide outpatient drugs to eligible covered entities (CEs) at substantially reduced prices. It’s viewed as “essential” by the executives of many safety net provider organizations – both for their consumers and to minimize lost revenue on pharmacy services for the uninsured.

However, prior to 2012, 340B oversight was lax, with Health Resources and Services Administration (HRSA) regulators relying mainly on program participants to decipher gray areas on their own. Key reports issued that year from the General Accountability Office (GAO) and the Office of the Inspector General (OIG) discovered myriad compliance challenges, including limited transparency, a lack of consistent coverage, and weak eligibility oversight, all a result of unclear directives and rules laid out by the government.

In 2012, driven by funding and requirements from the Affordable Care Act, HRSA began conducting audits of 340B organizations to ensure compliance with program rules (see Status of GAO Recommendations to Improve 340B Drug Pricing Program Oversight). To date, there have been over 500 HRSA Audits conducted. In 2017 and beyond, auditing is expected to further increase to give HRSA greater control over the program, even if they do not receive the proposed regulatory authority.

A changing 340B landscape

The president’s fiscal year 2017 budget proposed changes to the 340B program, including allowing HRSA to develop policy regulations for certain aspects of the program, such as the definition of an eligible patient. Currently, HRSA lacks the regulatory authority to make program rules. The proposed budget also supports increased auditing capability, additional funds to develop a 340B drug payment database, and a compliance management tool (see CMS 340B Program Update).

To ensure and maintain 340B compliance amidst the changing audit landscape, staff must understand that the task is a collective and collaborative responsibility. If you don’t already have one, now is the time to form a dedicated 340B compliance team. Assemble a multidisciplinary team with representation from various departments, including pharmacy, materials management, information technology, physician credentialing, finance/billing, compliance, legal, medical records, and a Medicaid liaison.

The team should also have representation from the hospital’s leadership. The committee’s most important responsibility is to work together to develop and drive an effective 340B culture of compliance.

This team should also be trained on how to utilize an integrated analytics application, like the one from Sentry Data Systems, that’s built to leverage the power of the data set and uncover disruptive new insights for hospital drug, purchasing, cost, utilization and outcome patterns. These initiatives have consistently yielded an annualized ROI of up to 1,800%. Sentry’s solutions have processed more than 7 billion dispensations on more than 1.2 billion claims. To date, the company has helped hospitals, health systems and IDNs realize more than $5.7 billion in savings to help them better meet their safety net mission and continue to serve their communities.

With built-in audit tools and reports, a dedicated team, and experience supporting its customers through more than 100 HRSA audits, it’s no surprise that Sentry Data System’s customers feel confident they’re prepared for an audit. You can be too.

Conduct routine self-auditing

The very suggestion of a HRSA audit can be overwhelming. What will HRSA ask? What data will they need to review? Do those in charge of the process know how to get to it? And do they understand what’s required well enough to explain it to others?

That’s why the 340B compliance team should also be able to articulate any of the summary numbers presented within the organization. That said, this typically requires efforts beyond software-generated standard reports, given the unique goals of 340B in each organization.

Having a robust internal and external auditing process in place along with a well-utilized 340B management software package can help mitigate risks. Regular internal audits can detect any potential non-compliance issues, and corrective procedures can be put in place to prevent them from recurring. Remember, it’s a requirement to self-report any non-compliance issues discovered during an internal audit that meet the CE material breach threshold to HRSA.

Also make sure that your self-audit program is included in your 340B policies and procedures, and that it defines how to establish a threshold for materiality for self-reporting any findings and how to respond to findings.

340B implementation is not a destination, it is a journey. Facilities that choose to take the 340B journey need to remain focused on continuous compliance, every step of the way. Dedicating the right resources, creating a 340B committee, and establishing appropriate self-audit and external-audit practices will drive continual compliance and help ensure that your facility is always ready for an HRSA audit.