HRSA Says it Will Begin 340B Covered Entity Audits in February

by Admin | November 11, 2011 8:04 pm

November 11, 2011—The Health Resources and Services Administration (HRSA) plans to begin its first-ever audits of 340B covered entities beginning in February 2012 and to publish the results two to three months later, the agency revealed in response to questions from three influential Republican members of Congress[1].

The agency also said it plans to send a policy letter to drug manufacturers encouraging them “to submit audit plans … to investigate claims of diversion and duplicate discounts.”

HRSA also disclosed that during the past year it referred two suspected cases of drug diversion by covered entities to the Department of Health and Human Services (HHS) Office of Inspector General (OIG) “to determine whether further action … is warranted.” It said that it has records of only two other cases of diversion over the course of the program’s 19-year history and that in both “the covered entities were removed from 340B participation.”

HRSA referenced those two prior cases in another section of its letter. In 2006, an HHS appeals board ruled that the Mashantucket Pequot Tribal Nation could not use federal drug discounts for its non‐Indian employees[2], ending a six-year legal battle over whether the Nation could dispense drugs purchased through 340B and off of the Federal Supply Schedule (FSS) to employees of a large casino it owned. That same year, federal prosecutors reached a settlement with a Pittsburgh-area physician[3] who had been charged with illegally distributing pharmaceuticals obtained through 340B. Dr. Joseph Rudolph agreed to cease involvement in the 340B program and pay the government $565,000—the sum the government said represented his profits from the program he ran through Aliquippa Community Hospital.

Also in its letter to the GOP lawmakers, HRSA said:

• In addition to the initial covered entity audits scheduled to begin in February, it will be “conducting selected audits of participating covered entities annually … to investigate 340B compliance and cases of diversion.”

• It is still reviewing draft guidance on the definition of “patient” for 340B purposes and if it “determines a new patient definition is needed, it would be published as a proposed guidance and/or a proposed regulation depending on the scope of the definition.”

• It plans to issue three publicly available policy letters to manufacturers addressing “its non-discrimination guidance, penny pricing, and manufacturer audits” and a policy letter to all stakeholders “outlining in detail the hospital criteria for 340B eligibility.”

• It plans to hold a webinar this month with the Centers for Medicare and Medicaid Services (CMS) for 340B stakeholders and state Medicaid agencies regarding the 340B Medicaid exclusion file and duplicate discounts.

• The 0.1 percent 340B user fee that Congress is considering would be used to finance program integrity activities in the areas of manufacturer civil monetary penalties; covered entity guidance and/or regulations; pricing changes and transparency; administrative dispute resolution; and the creation of a secure web site to permit covered entities to access 340B ceiling price information. HRSA said “covered entities would have to pay the user fee to continue to participate” in 340B.

• It is “aware that some states are auditing covered entities” but that it “is not involved in state Medicaid audits or other processes involving financial transactions between states and covered entities for overpayments.”

• “Under its own authority” it is currently investigating a manufacturer’s claim, initially submitted for voluntary dispute resolution and subsequently dismissed without prejudice, that a covered entity “was diverting 340B drugs to non-patients.”

• It has recertified the eligibility of all 340B Ryan White grantees, has begun recertifying STD/TB grantees and Indian Health Service clinics, and plans to begin recertifying hospitals in February 2012.

• It plans to release a policy notice about allocation procedures when a sufficient supply of a covered drug in inadequate to meet market demands.

HRSA’s letter was dated Oct. 21 but it was made public only on Nov. 9 when one of its recipients, Sen. Charles Grassley (R-Iowa), issued a news release calling for enhanced oversight of 340B in light of HRSA’s acknowledgement that “it has not conducted a single audit since the program began.” A HRSA spokesperson said the agency had no comment on Senator Grassley’s remarks.

Source URL: https://340binformed.org/2011/11/hrsa-says-it-will-begin-340b-covered-entity-audits-in-february/

---