Hospital Recertifications of Compliance
HRSA’s second annual recertification process for all hospitals participating in the 340B program begins August 19, 2013. Hospitals have four weeks to complete their recertification, and failure to recertify may be grounds for removal from the 340B program. An authorized official for a participating hospital must review information in HRSA’s 340B-covered entity database to ensure that the listing for the hospital is correct, including the listings for all contract pharmacies, outpatient hospital sites that utilize 340B program drugs, and any child sites that receive 340B program drugs through the parent’s 340B-covered entity status. In addition, the authorized official must certify compliance with 340B program requirements.
This year, HRSA’s hospital recertification language requires the hospital to certify that, if applicable, the hospital complies with the 340B program statutory prohibition on Group Purchasing Organization (GPO) participation and HRSA’s Policy Release 2013-1 that specify that applicable covered entities not obtain covered outpatient drugs through a GPO. The GPO prohibition applies to disproportionate share hospitals (DSH), children’s hospitals, and free-standing cancer hospitals. The deadline for complying with the HRSA Policy Release was August 7, 2013.
Specifically, the upcoming hospital recertifications will require the authorizing official to certify on behalf of the covered entity that:
340B Program Audits
During the 2012 fiscal year, HRSA conducted audits of 51 covered entities to determine their compliance with 340B program rules. The audits were conducted randomly, with a focus on covered entities that posed a higher risk of non-compliance based on several factors, including program type, volume of 340B program purchases, complexity of program administration, and use of contract pharmacies, as well as on a targeted basis, such as through responses to specific complaints, self-reports, or whistleblowers. During the 2013 fiscal year, HRSA has expanded the audit program, and has audited or is currently auditing more than 100 covered entities.
The results of completed 2012 audits have been made publicly available.1 Examples of violations include the diversion of 340B program drugs to ineligible patients, inaccurate records in the 340B program database, use of contract pharmacies without compliant written contracts, and the claiming of duplicate discounts. Many of the covered entities found to be in violation have been required to submit corrective action plans and are awaiting sanctions from HRSA.
In addition to audits conducted by HRSA, many drug manufacturers also have begun conducting audits of covered entities. Manufacturer audits may focus on issues such as the diversion of 340B program drugs to individuals who are not patients, duplicate discounts claimed under the 340B program and the Medicaid Drug Rebate Program, or lack of documentation to support billing to the manufacturer. Adverse findings from a drug manufacturer audit can be resolved between the parties, or submitted to HRSA for dispute resolution.
The recertification requirements and audit activity are the result of an ongoing emphasis on improving oversight of 340B program compliance. Participating covered entities should take the opportunity provided by the recertification effort to review their programs so they can complete their recertifications and demonstrate compliance to HRSA in the event of an audit. While HRSA has not expressly required covered entities to conduct self-audits, the certification language expressly requires confirmation that the covered entity has auditable records available that demonstrate compliance, and internal audits have been highly recommended by HRSA. Covered entities should also have policies and procedures in place that document their procedures for ensuring 340B program compliance. HRSA also expects that covered entities exercise oversight of the activities conducted on their behalf by contract pharmacies, through actions such as periodic independent audits and review of the contract pharmacy’s policies and procedures.
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Elizabeth S. Elson
Los Angeles, California
Los Angeles, California