Get Ready for A HRSA 340B Program Audit

Many covered entities (“CE”)  have already experienced the Health Resources and Services Administration (“HRSA”) audit procedure. If your CE hasn’t already experienced a HRSA review yet, be assured it’s coming to you and perhaps sometime soon.

innova-blog4340B Program Audit Basics

There are two main reasons a CE gets audited:

(1) there are alleged violations of the 340B Drug Pricing Program (“340B Program”) (termed “targeted audits”) or

(2) the CE’s process possesses qualities that make its 340B program more complicated (termed “risk-based audits”).

The 340B program audit procedure has three steps. First is the pre-audit, where HRSA supplies the CE notice and asks for data. About four to eight weeks afterwards, the HRSA auditor comes onsite to actually complete the audit.  At the end of the onsite audit, the auditor is prohibited from disclosing the audit discoveries. In the third and final step, post-audit outcomes are shared with the CE. Apexus states that the audit findings will be sent out within 30 to 90 days, but the final report may take longer than 90 days.

Audit Finding Trends

The three most regular 340B program audit discoveries relate to the following:

– Incorrect 340B Database Records

– Diversion.

– Duplicate Discounts.

HRSA has been citing CEs who have not entered their 340B Medicaid status correctly or maintained current information. Approximately half of all diversion findings are related to contract pharmacies.

As soon as the CE receives the audit findings, the CE should carefully assess them. CEs have 30 days to dispute the findings with supporting documentation. If the CE finds errors or incorrect information,  the Entity may contest the findings. About 50 percent of the CEs that dispute audit findings succeed in overturning one or more findings. The support of experienced counsel can be invaluable in this process.

If a CE finds itself in total agreement with the discoveries and chooses not to dispute, the CE has 60-days to publish a corrective action plan (“CAP”). If the 60-day time frame expires, the CE risks termination from the 340B Program. A CAP demonstrates to HRSA that the CE takes the audit results seriously and outlines the direct steps that will be taken to correct the findings. Once the CAP is approved, the CE is required to prepare a mea culpa letter, which will be put up on the HRSA webpage, along with a summary of the CAP. CEs that are mandated to repay manufacturers are subject to a follow-up audit within a year.

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