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“340B Covered Entities: What to Expect When OPA Comes Knocking”

To Be or Not To 340B By Alyce C. Katayama

Now that OPA has ramped up its audit activities, covered entities should not be surprised to find themselves on the receiving end of a 340B program review conducted by HRSA/OPA. The likelihood of this may be increased if the entity uses contract pharmacies. It is important therefore to be aware of what information is likely to be requested. This could include documentation showing the entity’s basis for eligibility in the 340B program. (This underscores the need to keep all information in the OPA database accurate and current, including information for all covered entity sites and contract pharmacies.)

The covered entity will also have to produce its organizational chart reflecting the individuals or positions responsible for administering and supporting the 340B drug program and non-340B drugs if applicable. The covered entity ought to be able to provide a brief narrative providing an overview of its 340B program and how that program is implemented and managed.

Policies and procedures relating to purchasing, invoicing and receiving for each site and contract pharmacies, if applicable, need to be available. Policies and procedures must also address inventory process, including a replenishment process if virtual inventory/split billing software is used. There also need to be policies and procedures around the dispensing process including the identification of 340B eligible patients.

The covered entity should maintain an active list of all systems used to manage any of its 340B processes, including its electronic health records systems. The covered entity is expected to have a list of the 340B eligible providers that it employs, contracts with, or uses through other arrangements such as by referral. Any audit done by HRSA will examine whether the HRSA grantee has indicated that it will bill Medicaid (carve in) for 340B drugs dispensed or will carve out.

The covered entity’s policies and procedures, including billing procedures, to prevent duplicate discounts on 340B dispenses are important. These would include the processes followed to identify Medicaid patients. If 340B eligible medications are administered to patients from more than one state, the covered entity’s policies and procedures need to address avoiding duplicate discounts in all of the applicable states.

There also needs to be documentation to show that the covered entity’s internal audit department or compliance function is engaging in appropriate activities to confirm compliance with 340B program requirements. Furthermore, during any audit, there will be a review of a sample of 340B dispenses and the auditor will want to review all of the data elements associated with the sampled dispenses.

The key point is to get ready now, because otherwise, there will be way too much to do when you get the audit entrance call from your HRSA and receive the initial Information Request document.The covered entity should maintain an active list of all systems used to manage any of its 340B processes, including its electronic health records systems. The covered entity is expected to have a list of the 340B eligible providers that it employs, contracts with, or uses through other arrangements such as by referral. Any audit done by HRSA will examine whether the HRSA grantee has indicated that it will bill Medicaid (carve in) for 340B drugs dispensed or will carve out. The covered entity’s policies and procedures, including billing procedures, to prevent duplicate discounts on 340B dispenses are important. These would include the processes followed to identify Medicaid patients. If 340B eligible medications are administered to patients from more than one state, the covered entity’s policies and procedures need to address avoiding duplicate discounts in all of the applicable states.

There also needs to be documentation to show that the covered entity’s internal audit department or compliance function is engaging in appropriate activities to confirm compliance with 340B program requirements. Furthermore, during any audit, there will be a review of a sample of 340B dispenses and the auditor will want to review all of the data elements associated with the sampled dispenses.

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