CCP-340B Certification Review

Certified Compliance Pharmacist – 340B Focus (CCP-340B) Review

A Review Guide for the Certified Compliance Pharmacist – 340B Focus (CCP-340B) Exam

Block 1: Program Fundamentals & Eligibility

A-C

  • 340B OPAIS: 340B Office of Pharmacy Affairs Information System.
  • ADC: Average Daily Census.
  • ADR: Alternative Dispute Resolution.
  • AMP: Average Manufacturer Price.
  • AO: Authorizing Official.
  • BPHC: Bureau of Primary Health Care.
  • CAH: Critical Access Hospital.
  • CAP: Corrective Action Plan.
  • CE: Covered Entity.
  • CMS: Centers for Medicare & Medicaid Services.

D-G

  • DSH: Disproportionate Share Hospital.
  • EHR: Electronic Health Record.
  • EIN: Employer Identification Number.
  • FFS: Fee-For-Service (Medicaid).
  • FQHC: Federally Qualified Health Center.
  • FSS: Federal Supply Schedule.
  • FY: Fiscal Year.
  • GAO: Government Accountability Office.
  • GPO: Group Purchasing Organization.
  • HAB: HIV/AIDS Bureau.

H-M

  • HHS: Department of Health and Human Services.
  • HIPAA: Health Insurance Portability and Accountability Act.
  • HRSA: Health Resources and Services Administration.
  • IHS: Indian Health Service.
  • MCO: Managed Care Organization (Medicaid).
  • MCRN: Medicare Cost Report Number.
  • MDRP: Medicaid Drug Rebate Program.
  • MEF: Medicaid Exclusion File.
  • MIP: 340B Program Integrity.
  • NDC: National Drug Code.

N-R

  • NPI: National Provider Identifier.
  • OIG: Office of Inspector General.
  • OPA: Office of Pharmacy Affairs.
  • PC: Primary Contact.
  • PED: Free-standing Children's Hospital.
  • PHS: Public Health Service.
  • PVP: Prime Vendor Program.
  • RRC: Rural Referral Centers.
  • SCH: Sole Community Hospitals.
  • SNH: Safety Net Hospital.

S-Z

  • TPA: Third-Party Administrator.
  • URA: Unit Rebate Amount.
  • URL: Uniform Rate Limitation.
  • USP: United States Pharmacopeia.
  • VA: Department of Veterans Affairs.
  • WAC: Wholesale Acquisition Cost.
  • ADAP: AIDS Drug Assistance Program.
  • CHIP: Children's Health Insurance Program.
  • DEA: Drug Enforcement Administration.
  • PBM: Pharmacy Benefit Manager.

Program Intent & Purpose

  • The 340B Program was created by Congress in 1992.
  • Its primary intent is to stretch scarce federal resources.
  • It allows certain safety-net providers to purchase outpatient drugs at significantly reduced prices.
  • This enables Covered Entities (CEs) to reach more eligible patients.
  • CEs can provide more comprehensive services using the savings.
  • The program is not a grant; it is a discount program mandated by law.
  • Savings are generated from the difference between the 340B price and the price billed to payers.
  • Entities use these savings to support their patient care mission.
  • Examples include providing free care, offering clinical pharmacy services, or reducing costs for low-income patients.
  • Understanding this intent is crucial for justifying program expansion and use of savings.

Governing Legislation

  • The program is enacted under Section 340B of the Public Health Service (PHS) Act.
  • It was part of the Veterans Health Care Act of 1992.
  • The Affordable Care Act (ACA) of 2010 significantly expanded the types of CEs eligible.
  • The ACA also introduced new program integrity provisions and created the ADR process.
  • The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 had implications for 340B as well.
  • Numerous other pieces of legislation have amended or clarified aspects of the program over time.
  • There is no single, comprehensive "340B law," but a collection of statutes.
  • HRSA issues regulations and guidance to interpret these statutes.
  • The legislative text is the ultimate source of authority for program requirements.
  • A CCP-340B must be familiar with the key legislative milestones and their impact.

Oversight Bodies: HRSA & OPA

  • The Health Resources and Services Administration (HRSA) has overall responsibility for the program.
  • HRSA is an agency within the U.S. Department of Health and Human Services (HHS).
  • The Office of Pharmacy Affairs (OPA) is the specific office within HRSA that administers the 340B Program.
  • OPA is responsible for day-to-day program administration and oversight.
  • Their duties include registering CEs, maintaining the 340B OPAIS database, and conducting audits.
  • OPA also provides policy guidance and technical assistance to stakeholders.
  • The OPA website is the primary source for official program information, guidance, and FAQs.
  • OPA collaborates with the Centers for Medicare & Medicaid Services (CMS) on issues like duplicate discounts.
  • OPA does not set the 340B price; it is calculated by manufacturers based on a statutory formula.
  • The OPA Call Center is a resource for CEs to ask questions and seek clarification.

Key Stakeholders

  • Covered Entities: The hospitals and clinics eligible to participate in the program.
  • Manufacturers: Pharmaceutical companies that participate in Medicaid are required to provide 340B discounts.
  • Wholesalers: Distribute drugs to CEs and are responsible for ensuring correct (340B vs. GPO) pricing.
  • Government: HRSA/OPA provides oversight; Congress writes the laws.
  • Third-Party Administrators (TPAs): Software vendors that help CEs manage 340B compliance, especially in contract pharmacy.
  • Contract Pharmacies: Retail pharmacies that partner with CEs to dispense 340B drugs to eligible patients.
  • Patients: The ultimate beneficiaries of the program's benefits and services.
  • Prime Vendor Program (PVP): A HRSA-contracted entity (currently Apexus) that negotiates sub-ceiling prices and provides education.
  • Payers: Insurance companies, MCOs, and PBMs who reimburse for drugs, creating the margin for CEs.
  • Consultants: Experts who assist CEs with program implementation, compliance, and audit readiness.

Program Integrity Pillars

  • Program Integrity refers to the set of rules ensuring the program operates as intended.
  • Pillar 1: **No Diversion.** 340B drugs must not be dispensed or provided to individuals who are not eligible patients of the CE.
  • Pillar 2: **No Duplicate Discounts.** Manufacturers are prohibited from providing both a 340B discount and a Medicaid rebate for the same drug.
  • These two prohibitions are the responsibility of the Covered Entity.
  • Pillar 3: **No Overcharging.** Manufacturers must not charge CEs a price higher than the statutory 340B ceiling price.
  • This third prohibition is the responsibility of the manufacturer.
  • HRSA's audit activities for CEs focus primarily on diversion and duplicate discounts.
  • HRSA also audits manufacturers to ensure they are not overcharging.
  • The GPO Prohibition and Orphan Drug Exclusion are other key compliance areas for specific CE types.
  • A robust compliance program is built around these core integrity pillars.

Hospital Types (DSH, CAH, etc.)

  • Disproportionate Share Hospitals (DSH): Must have a DSH adjustment percentage > 11.75% for most hospitals.
  • Children’s Hospitals (PED): Free-standing hospitals with a DSH adjustment percentage > 11.75%.
  • Cancer Hospitals (CAN): Free-standing hospitals exempt from the Medicare prospective payment system (PPS).
  • Critical Access Hospitals (CAH): Designated by CMS as a CAH, meeting specific rural and size criteria.
  • Rural Referral Centers (RRC): High-volume rural hospitals designated by CMS.
  • Sole Community Hospitals (SCH): Geographically isolated hospitals that are the main provider for a community.
  • Eligibility for hospital types is based on their classification and Medicare cost report data.
  • Hospitals must be owned or operated by state or local government, or be a private non-profit with a contract with government.
  • This "government affiliation" is a key requirement for most hospital types.
  • Each hospital type has specific compliance requirements, such as the GPO Prohibition or Orphan Drug Exclusion.

Federal Grantee Types (FQHC, Ryan White, etc.)

  • Federally Qualified Health Centers (FQHC): Receive PHS Act Section 330 grants to serve underserved populations.
  • FQHC Look-Alikes: Meet FQHC requirements but do not receive grant funding; still 340B eligible.
  • Ryan White HIV/AIDS Program Grantees: Clinics receiving grants under Parts A, B, C, or D of the Ryan White CARE Act.
  • State-based AIDS Drug Assistance Programs (ADAPs): Also eligible under the Ryan White program.
  • Hemophilia Treatment Centers: Receive federal grants for comprehensive hemophilia diagnostic and treatment services.
  • Family Planning Clinics: Receive grants under Title X of the PHS Act.
  • Sexually Transmitted Disease Clinics: Receive grants under PHS Act Section 318.
  • Tuberculosis Clinics: Receive grants under PHS Act Section 317.
  • Eligibility is tied directly to receiving an active, eligible federal grant.
  • The scope of the 340B program for grantees must align with the scope of their grant project.

The Registration Process

  • Registration occurs online through the 340B Office of Pharmacy Affairs Information System (OPAIS).
  • There are quarterly registration periods for new entities and sites.
  • January 1-15 for an April 1 start date.
  • April 1-15 for a July 1 start date.
  • July 1-15 for an October 1 start date.
  • October 1-15 for a January 1 start date.
  • The entity's Authorizing Official (AO) must complete the registration.
  • Required information includes the entity's name, address, tax ID, and specific eligibility documentation (e.g., Medicare Cost Report).
  • Once HRSA approves the registration, the entity is listed on the public 340B OPAIS database.
  • The entity is then responsible for setting up accounts with wholesalers and the Prime Vendor Program.

Annual Recertification

  • All Covered Entities must recertify their eligibility annually to remain in the 340B Program.
  • The recertification period is typically announced by HRSA in the late summer/early fall.
  • The entity's Authorizing Official is responsible for completing the recertification process in OPAIS.
  • The AO must attest that the entity meets all 340B Program requirements.
  • This includes maintaining accurate information in the OPAIS database.
  • The AO must also confirm that the entity has auditable records demonstrating compliance.
  • Failure to recertify by the deadline will result in removal from the 340B Program.
  • The recertification process is an annual compliance check-in.
  • The CCP-340B is often responsible for preparing all necessary documentation and information for the AO.
  • It is a critical deadline that cannot be missed.

Change Requests & Terminations

  • Entities must notify HRSA of any material changes to their program.
  • This is done via a "Change Request" in OPAIS.
  • Examples of changes include a new Authorizing Official or Primary Contact.
  • Another common change is updating the "ship-to" address for a facility.
  • Updating the Medicaid Exclusion File (MEF) information is also done via a change request.
  • Entities must also terminate any sites (e.g., outpatient clinics, contract pharmacies) that are no longer eligible.
  • Termination should be done as soon as the site becomes ineligible.
  • An entity can also voluntarily terminate its participation in the 340B program entirely.
  • HRSA can terminate an entity from the program for failing to meet requirements, such as after a failed audit.
  • Maintaining accurate and up-to-date information in OPAIS is a fundamental compliance requirement.

The Three-Part Test

  • The 340B statute does not define "patient," so HRSA created a three-part test through guidance.
  • Part 1: The covered entity has an established relationship with the individual.
  • This means the CE maintains records of the individual’s health care.
  • Part 2: The individual receives health care services from a professional employed by or contracted with the CE.
  • This professional must provide care within the scope of their employment (e.g., a hospital physician).
  • Part 3: The individual receives a health care service or range of services from the CE which is consistent with the services for which grant funding or hospital classification has been provided.
  • The drug prescribed must be related to the care provided by the CE.
  • All three parts of this test must be met for an individual to be an eligible patient.
  • This definition is the cornerstone of preventing diversion.
  • Every prescription dispensed with a 340B drug must be for an eligible patient.

Recordkeeping for Patient Status

  • Covered entities must maintain auditable records that demonstrate patient eligibility.
  • The key record is the documentation of the healthcare encounter.
  • This record must show that a CE provider provided a service to the patient.
  • The service must result in a prescription or order for a medication.
  • The records must clearly link the patient, the provider, the encounter location, and the prescription.
  • This is often accomplished through the Electronic Health Record (EHR).
  • For referral scenarios, the CE must document that it retains responsibility for the patient's care.
  • The CE must be able to produce these records upon request during a HRSA audit.
  • Inadequate documentation is a common audit finding.
  • The CCP-340B must ensure that documentation practices are robust and support patient eligibility for every 340B drug.

Inpatient vs. Outpatient Status

  • The 340B Program is strictly for outpatient drugs.
  • Drugs administered to inpatients are not eligible for 340B pricing.
  • Inpatient drugs are typically bundled into a prospective payment (e.g., DRG) from Medicare.
  • The GPO Prohibition, for applicable hospitals, does not apply to inpatient drugs.
  • An individual is considered an outpatient when they are not formally admitted as an inpatient of a hospital.
  • This includes patients seen in the emergency room (if not admitted), observation status patients, and patients in outpatient clinics.
  • A drug for an eligible patient upon discharge from an inpatient stay (a "take-home" script) can be 340B eligible.
  • This is because the patient's status changes to outpatient upon discharge.
  • The CE must have clear policies to distinguish between inpatient and outpatient drug administration.
  • This distinction is a critical component of preventing diversion.

Provider Eligibility Criteria

  • The healthcare provider prescribing the drug must be employed by or have a contractual/other arrangement with the CE.
  • This includes independent physicians with credentials and privileges to practice at the CE and bill on its behalf.
  • The CE must be able to document this relationship (e.g., employment contract, medical staff bylaws).
  • Volunteers and students may qualify if the CE has a legal responsibility for their actions.
  • The provider must be acting within their scope of practice for the CE.
  • A prescription from a CE provider's private practice is not 340B eligible.
  • The link between the prescription and the provider's relationship with the CE is key.
  • A CE should maintain an up-to-date, auditable list of all its eligible providers.
  • This list is often used by TPA software to help determine prescription eligibility.
  • Provider credentialing files are a primary source for documenting this eligibility during an audit.

Special Scenarios (Referrals, Telehealth, Discharge)

  • A prescription from a specialist on referral from the CE can be 340B eligible.
  • The CE must initiate the referral, and the drug must result from that consultation.
  • The CE must retain responsibility for the patient's care.
  • This must be documented in the patient's medical record (e.g., a note from the CE provider based on the specialist's consult).
  • Telehealth encounters can establish patient eligibility if the provider is a CE provider and standard of care is met.
  • Discharge prescriptions are eligible if they are written upon discharge from an inpatient stay to facilitate transition of care.
  • Prescriptions from an Emergency Department visit are eligible as long as the patient is not subsequently admitted.
  • Drugs administered in observation status are generally considered outpatient and are 340B eligible.
  • A CE must have specific, written policies and procedures for each of these special scenarios.
  • Meticulous documentation is required to defend eligibility in these complex cases.

Definition of a Child Site

  • A "child site" is an outpatient facility or clinic associated with a 340B parent entity.
  • These sites are not separately eligible for 340B but can participate under the parent's registration.
  • They are often referred to as "associated sites" or "outpatient clinics."
  • For a hospital, a location is a child site if it is an integral part of the hospital.
  • This means it is included as a reimbursable cost center on the hospital's most recent Medicare Cost Report.
  • For a grantee, a child site must be within the scope of the federal grant.
  • All child sites where 340B drugs are purchased or provided must be registered in OPAIS.
  • This includes off-site outpatient clinics, ambulatory surgery centers, and infusion centers.
  • The address listed in OPAIS must be the physical location where patients receive care.
  • Failure to register an eligible site is a common compliance issue.

Medicare Cost Report Test for Hospitals

  • For DSH, PED, and CAN hospitals, child site eligibility is determined by the Medicare Cost Report (MCR).
  • A site is eligible if it is listed on a reimbursable line of the MCR filed with CMS.
  • The line must fall within the trial balance of the hospital.
  • The services provided at the site must be typical outpatient hospital services.
  • The associated costs and charges must be included in the hospital's MCR.
  • HRSA's test is simple: if the site appears on a reimbursable line in the MCR, it is eligible to be registered.
  • The address on the MCR should match the physical address of the clinic.
  • The hospital must be prepared to provide the MCR as evidence during an audit.
  • The entire MCR, not just a single worksheet, must be available.
  • The CCP-340B must work with the finance department to verify MCR information before registering a site.

Scope of Grant for Grantees

  • For federal grantees (like FQHCs and Ryan White clinics), child site eligibility is determined by the "scope of grant."
  • The scope of grant defines the sites, services, and personnel supported by the federal grant.
  • This information is documented in the grant application and approved by the funding agency (e.g., HRSA's BPHC).
  • A site is eligible to participate in 340B if it is listed within the grant's approved scope of project.
  • This is verified through Form 5A (for FQHCs) or similar documentation.
  • Any changes to sites or services must be approved by the granting agency before the site can be registered for 340B.
  • The use of 340B drugs at these sites must be consistent with the services described in the grant.
  • This is a key component of the third part of the patient definition for grantees.
  • The CCP-340B for a grantee must have a deep understanding of the grant's scope.
  • Maintaining alignment between the grant scope and 340B operations is critical.

Registering Child Sites in OPAIS

  • Child sites are registered using the same quarterly schedule as parent entities.
  • The parent entity's Authorizing Official or Primary Contact initiates the registration in OPAIS.
  • The registration requires the site's legal name and physical address.
  • It also requires a "ship-to" address if different from the physical location.
  • For hospitals, no additional documentation is usually needed at the time of registration, but it must be on file.
  • For grantees, documentation verifying the site is within the scope of grant may be requested.
  • Once approved by HRSA, the new child site will appear in OPAIS under the parent entity's 340B ID.
  • The site is then eligible to begin purchasing and dispensing 340B drugs starting on the first day of the next quarter.
  • It is crucial to wait until the official start date before using 340B at a new site.
  • The CCP-340B must have a process for identifying and registering new eligible sites in a timely manner.

Maintaining and Terminating Child Sites

  • The list of registered child sites in OPAIS must be kept accurate at all times.
  • This is a key part of the annual recertification attestation.
  • If a clinic or facility closes or is no longer eligible, it must be terminated in OPAIS.
  • For hospitals, this occurs if a clinic is no longer part of the hospital (e.g., sold) or no longer on the MCR.
  • For grantees, this occurs if a site is removed from the scope of grant.
  • Termination should be requested via a change request in OPAIS as soon as the site becomes ineligible.
  • The entity must immediately stop using 340B drugs at the terminated site.
  • Continuing to use 340B at an ineligible site is a serious diversion violation.
  • A regular review (e.g., annually) of the Medicare Cost Report and grant scope against the OPAIS listing is a best practice.
  • The CCP-340B is responsible for this reconciliation process.

Purpose and Function

  • The 340B Office of Pharmacy Affairs Information System (OPAIS) is the official HRSA database for the 340B program.
  • It serves as the definitive source of information for all stakeholders.
  • Its primary function is to list all eligible Covered Entities and their registered sites.
  • It also lists all participating drug manufacturers.
  • Wholesalers use OPAIS to verify CE eligibility before allowing 340B purchases.
  • Manufacturers use OPAIS to verify which CEs they must provide discounts to.
  • The database has both a public-facing side and a secure side for CEs to manage their information.
  • The public side is searchable and transparent to all.
  • The information in OPAIS is considered the "source of truth" for the 340B program.
  • A CCP-340B must be proficient in navigating and understanding the data within OPAIS.

Key Data Elements for Covered Entities

  • 340B ID: A unique identifier assigned by HRSA to each parent entity.
  • Entity Name & Address: The legal name and physical location of the parent entity.
  • Authorizing Official (AO): The high-level official legally responsible for the program.
  • Primary Contact (PC): The individual responsible for day-to-day program management.
  • Entity Type: The specific classification making the entity eligible (e.g., DSH, FQHC).
  • Start/End Dates: The dates an entity entered or was terminated from the program.
  • Child Sites: A list of all registered outpatient facilities and contract pharmacies associated with the parent.
  • Medicaid Exclusion File (MEF) Data: The NPIs and/or Medicaid numbers used for billing carved-in Medicaid.
  • GPO Prohibition Status: Indicates if the hospital type is subject to the GPO prohibition.
  • Orphan Drug Exclusion Status: Indicates if the hospital type is subject to the orphan drug rule.

Authorizing Official vs. Primary Contact

  • The Authorizing Official (AO) must be a high-level executive of the organization.
  • For a hospital, this is typically the CEO, COO, or CFO.
  • The AO has the legal authority to bind the entity in a contract or agreement.
  • The AO is ultimately responsible for the entity's 340B compliance.
  • The AO is the only person who can complete the annual recertification attestation.
  • The Primary Contact (PC) is the main operational point of contact for the 340B program.
  • This is often the Director of Pharmacy or a dedicated 340B Coordinator/Manager (e.g., the CCP-340B).
  • The PC can perform most administrative tasks in OPAIS, such as registering new sites or updating contact info.
  • However, the PC cannot complete the final recertification.
  • The AO and PC must both have accounts in OPAIS and keep their contact information current.

The Publicly Searchable Database

  • The public side of OPAIS allows anyone to search for 340B information.
  • Users can search for Covered Entities by name, state, or 340B ID.
  • This allows manufacturers and wholesalers to verify eligibility in real-time.
  • The search results show the entity's status, type, and dates of participation.
  • It also lists all registered child sites and contract pharmacies.
  • Users can also view the Medicaid Exclusion File to see which CEs carve in Medicaid.
  • The database of participating manufacturers is also publicly available.
  • Historical data is available, allowing users to see if an entity was eligible on a specific date in the past.
  • This feature is critical for audit "look-back" analyses.
  • The CCP-340B should regularly check their entity's public information to ensure it is accurate.

CE's Responsibility to Maintain Accuracy

  • HRSA requires that the information in OPAIS be accurate and up-to-date at all times.
  • This is a fundamental compliance requirement and is part of the annual recertification attestation.
  • The CE is responsible for promptly submitting change requests when information changes.
  • This includes changes to the AO or PC, addresses, or MEF data.
  • It also includes registering new eligible sites and terminating ineligible sites.
  • An inaccurate OPAIS listing can lead to serious compliance issues.
  • For example, shipping 340B drugs to an unregistered address is a potential diversion.
  • Billing carved-in Medicaid with an NPI not listed on the MEF can cause a duplicate discount.
  • The CCP-340B should have a formal policy for periodically reviewing and validating all OPAIS data.
  • Failure to maintain an accurate OPAIS record is a common HRSA audit finding.

Block 2: Core Compliance Mandates

Definition and Scope

  • Diversion is the act of providing a 340B drug to an individual who does not meet the 340B patient definition.
  • It is one of the two primary compliance prohibitions for Covered Entities.
  • Diversion can be intentional or unintentional.
  • Examples include dispensing a 340B drug to a patient seen at a non-eligible clinic.
  • Another example is dispensing a 340B drug for a refill when the patient no longer has an active relationship with the CE.
  • Selling or transferring a 340B drug to another pharmacy or entity for non-patient use is also a form of diversion.
  • The prohibition applies to all drugs purchased at the 340B price.
  • It is the CE's responsibility to have systems and policies in place to prevent diversion.
  • A single instance of diversion is a violation of the 340B statute.
  • HRSA audits focus heavily on identifying any evidence of diversion.

Preventing Diversion in Mixed-Use Settings

  • A mixed-use setting is a pharmacy or clinic area that serves both eligible 340B patients and non-eligible individuals.
  • This is common in hospital outpatient pharmacies or clinics.
  • The CE must have a robust system to track drug eligibility at the point of dispensing or administration.
  • This involves segregating 340B inventory from non-340B (GPO/WAC) inventory.
  • Inventory can be segregated physically (separate shelves) or virtually (using software).
  • Virtual inventory systems use "accumulators" to track purchases and dispenses from different accounts.
  • The system must be able to determine if a patient is 340B-eligible before a 340B drug is dispensed.
  • This determination must be made for every prescription, every time.
  • Regular internal audits of dispensing records against patient eligibility are crucial.
  • Technology and software are essential tools for managing compliance in mixed-use areas.

Auditing Dispensing & Administration Records

  • Regular self-audits are a best practice for ensuring compliance.
  • Audits should involve selecting a random sample of 340B dispenses.
  • For each dispense, the auditor traces the record back to verify patient eligibility.
  • This means confirming the patient met the three-part definition at the time of the prescription.
  • The audit should verify the encounter location, the provider's eligibility, and the patient's outpatient status.
  • The audit trail should connect the prescription, the dispense from the 340B account, and the patient's medical record.
  • Discrepancies must be investigated to determine the root cause.
  • Findings should be documented, and a corrective action plan developed if necessary.
  • These audits create an evidence trail demonstrating the CE's commitment to program integrity.
  • The CCP-340B is typically responsible for designing and conducting these self-audits.

Contract Pharmacy Considerations

  • Diversion risk also exists in the contract pharmacy model.
  • The CE is ultimately responsible for all 340B drugs dispensed at its contract pharmacies.
  • The CE must ensure the contract pharmacy has a clear process to identify eligible 340B prescriptions.
  • This is usually managed by a Third-Party Administrator (TPA) software.
  • The TPA receives claims data from the contract pharmacy and matches it against CE patient/provider eligibility files.
  • Only matched, eligible claims should trigger a 340B replenishment order.
  • The CE must conduct oversight of its contract pharmacies and TPA.
  • This includes reviewing TPA reports and conducting its own audits.
  • The contract between the CE and the pharmacy should clearly outline compliance responsibilities.
  • Lack of oversight of contract pharmacy arrangements is a common HRSA audit finding.

Remediation of Diversion Findings

  • If diversion is identified, either through a self-audit or a HRSA audit, the CE must take corrective action.
  • The first step is to quantify the extent of the diversion.
  • The CE is expected to work with the manufacturer(s) to arrange for repayment of the 340B discount.
  • This means paying the difference between the 340B price and the GPO/WAC price for the diverted drugs.
  • The CE must also develop and implement a Corrective Action Plan (CAP).
  • The CAP should address the root cause of the diversion to prevent recurrence.
  • This could involve policy changes, staff re-training, or software system updates.
  • The CE must report the diversion and the CAP to HRSA.
  • Demonstrating a proactive approach to identifying and correcting diversion is viewed favorably by HRSA.
  • Ignoring or failing to address diversion can lead to removal from the 340B program.

Definition and Scope

  • A duplicate discount occurs when a manufacturer provides a 340B discount and a Medicaid rebate for the same drug.
  • The 340B statute expressly prohibits this from happening.
  • Preventing duplicate discounts is the responsibility of the Covered Entity.
  • The prohibition applies to Medicaid Fee-for-Service (FFS).
  • It also applies to Medicaid Managed Care (MCO) plans in states that require it.
  • The CE must have a system to identify which drugs will be billed to Medicaid.
  • The CE must decide whether to use 340B drugs for its Medicaid patients ("carve-in") or not ("carve-out").
  • This decision is communicated to the state Medicaid agency and HRSA.
  • The mechanism for this communication is the Medicaid Exclusion File (MEF).
  • Failure to prevent duplicate discounts is a major compliance violation.

The Medicaid Exclusion File (MEF)

  • The MEF is the official database used to prevent duplicate discounts.
  • It is maintained by HRSA and provided to state Medicaid agencies and manufacturers.
  • When a CE "carves in" Medicaid, it means they will use 340B drugs for Medicaid patients.
  • To do this, the CE must list its NPI and/or Medicaid provider number on the MEF for the specified dates of service.
  • The state then knows not to seek a Medicaid rebate for drugs billed with that provider number.
  • When a CE "carves out" Medicaid, it means they will not use 340B drugs for Medicaid patients.
  • Their information is not listed on the MEF, and the state is free to seek rebates.
  • The CE's information on the MEF must be accurate and reflect its actual practices.
  • The decision to carve-in or carve-out can be made for the parent entity and each registered child site and contract pharmacy.
  • The CCP-340B must ensure the MEF is updated quarterly to match the CE's policies.

Carve-In vs. Carve-Out Strategy

  • The decision to carve-in or carve-out is a strategic financial and operational choice.
  • To make the decision, a CE must compare the 340B discount to the state's Medicaid reimbursement for the drug.
  • If Medicaid reimbursement is higher than the 340B cost plus a dispensing fee, carving in is financially advantageous.
  • If reimbursement is lower than the 340B cost, the CE would lose money and should carve-out.
  • Carving in requires robust systems to identify Medicaid patients at the point of dispense and bill claims correctly.
  • Carving out is operationally simpler but forgoes potential 340B savings on the Medicaid population.
  • The CE must have a mechanism to purchase drugs for carved-out Medicaid patients from a non-340B (WAC) account.
  • This decision may vary by site or by contract pharmacy.
  • The strategy should be re-evaluated periodically as reimbursement rates change.
  • The CCP-340B often performs the financial analysis to support this strategic decision.

State Medicaid Requirements & Identifiers

  • Each state Medicaid agency has its own rules regarding 340B.
  • States may require specific modifiers or billing codes on claims for drugs purchased through 340B.
  • This helps the state identify 340B claims and exclude them from their rebate requests.
  • Reimbursement rates for 340B drugs are also set by the state and can vary widely.
  • Some states require CEs to share a portion of the 340B savings through lower reimbursement.
  • Rules for Medicaid Managed Care (MCO) plans also vary by state.
  • Some states require MCO claims to be identified as 340B, while others do not.
  • A CE must be aware of and comply with the specific requirements of every state in which it bills Medicaid.
  • This is especially complex for health systems that operate in multiple states.
  • Staying current on state-level policy is a key compliance responsibility.

Remediation of Duplicate Discount Findings

  • If a duplicate discount is identified, the CE must work with the state Medicaid agency and the manufacturer.
  • The goal is to determine which entity received the improper discount/rebate and make the manufacturer whole.
  • The process is typically led by the manufacturer, who was harmed by paying twice.
  • The CE's role is to provide data and evidence of its purchasing and billing practices.
  • This often involves a "look-back" analysis of claims data.
  • The CE must identify the root cause of the error.
  • Common causes include an incorrect MEF listing or a billing system error.
  • A Corrective Action Plan (CAP) must be developed and implemented.
  • The CAP is reported to HRSA as part of the audit closeout process.
  • Proving that robust systems are in place to prevent duplicate discounts is key to passing a HRSA audit.

Applicability and Scope

  • The Group Purchasing Organization (GPO) Prohibition is a compliance requirement for specific types of 340B hospitals.
  • It applies to Disproportionate Share Hospitals (DSH), Children's Hospitals (PED), and free-standing Cancer Hospitals (CAN).
  • It does not apply to Critical Access Hospitals (CAH), Rural Referral Centers (RRC), or Sole Community Hospitals (SCH).
  • It also does not apply to any of the federal grantee types of CEs.
  • The rule states that these hospitals may not use a GPO for covered outpatient drugs.
  • A "covered outpatient drug" is the same definition used for the Medicaid Drug Rebate Program.
  • This means almost all FDA-approved prescription drugs and some over-the-counter drugs.
  • The prohibition is intended to prevent these hospitals from accessing both GPO discounts and 340B discounts.
  • It is a strict prohibition with significant audit implications.
  • The CCP-340B at an affected hospital must have a deep understanding of this rule.

Definition of a GPO

  • A Group Purchasing Organization (GPO) is an entity that aggregates the purchasing volume of a group of businesses.
  • They negotiate contracts with manufacturers and distributors on behalf of their members.
  • By leveraging the collective buying power, they can secure lower prices than individual members could alone.
  • In healthcare, most hospitals are members of at least one GPO.
  • GPOs are used to purchase almost everything in a hospital, from medical supplies to drugs.
  • Under the 340B GPO Prohibition, affected hospitals cannot use their GPO membership for outpatient drugs.
  • They must purchase these drugs on a different account, typically a WAC (Wholesale Acquisition Cost) account.
  • This WAC account is separate from their 340B account and their inpatient GPO account.
  • The hospital's purchasing team must be trained to manage these separate accounts.
  • Violations often occur when purchasing systems are not configured correctly.

Inpatient vs. Outpatient Distinction

  • The GPO Prohibition applies only to "covered outpatient drugs."
  • Therefore, affected hospitals are free to use a GPO for all drugs administered in the inpatient setting.
  • This creates a critical need for the hospital to distinguish between inpatient and outpatient drug use.
  • Most hospitals maintain a "GPO account" for inpatient purchasing and a "WAC account" for non-340B outpatient purchasing.
  • This requires careful inventory management, especially in mixed-use settings.
  • A common compliance strategy is to physically segregate inpatient and outpatient pharmacy stock.
  • Alternatively, virtual inventory management systems must be configured to track GPO, WAC, and 340B purchases.
  • The definition of outpatient for GPO prohibition purposes is the same as for the rest of the 340B program.
  • An incorrect determination of a patient's status could lead to a GPO violation.
  • For example, using a GPO-purchased drug for an emergency room patient would be a violation.

Compliance and Auditing

  • HRSA actively audits for compliance with the GPO Prohibition.
  • Auditors will review a hospital's drug purchasing records.
  • They will select a sample of outpatient drugs and trace them back to the purchase order and invoice.
  • The goal is to verify that the drug was not purchased on a GPO account.
  • Auditors will look at account names, contract numbers, and pricing to identify GPO purchases.
  • Any evidence of a GPO purchase for a covered outpatient drug is a violation.
  • A hospital must have clear policies and procedures for outpatient drug procurement.
  • Internal audits should regularly test purchasing records to ensure compliance.
  • The CCP-340B must work closely with the pharmacy purchasing department to ensure they understand and follow the rules.
  • This is a high-risk area for DSH, PED, and CAN hospitals.

Exceptions to the Prohibition

  • There is one major exception to the GPO Prohibition.
  • An affected hospital can use a GPO for outpatient drugs if it is also a member of a bundled GPO/340B purchasing arrangement.
  • This exception applies only when the GPO contract also provides drugs at the 340B price.
  • This scenario is relatively rare and requires specific contractual language.
  • The hospital must be able to prove that the arrangement meets HRSA's requirements.
  • Another limited exception involves the transition period when a hospital first enrolls in 340B.
  • Some argue that drugs not on the PHS pricing agreement are not "covered outpatient drugs" and can be bought on GPO. This is a gray area.
  • The general rule and safest compliance position is to never use a GPO for any covered outpatient drug.
  • The CCP-340B should be extremely cautious about applying any exceptions.
  • Seeking legal counsel before using a GPO for any outpatient drug is highly recommended.

Applicability and Scope

  • The Orphan Drug Exclusion was created by the Affordable Care Act in 2010.
  • It applies to Critical Access Hospitals (CAH), Rural Referral Centers (RRC), and Sole Community Hospitals (SCH).
  • It also applies to free-standing Cancer Hospitals (CAN). Note: DSH and PED hospitals are not subject to this rule.
  • The rule states that manufacturers are not required to provide the 340B discount for drugs with an orphan designation.
  • This applies only when the drug is used for its designated rare disease or condition.
  • An "orphan drug" is one designated by the FDA to treat a rare disease affecting fewer than 200,000 people in the US.
  • The exclusion is drug- and indication-specific.
  • If an orphan drug is used for a non-orphan indication, the 340B discount must be provided.
  • This creates a significant compliance challenge for affected hospitals.
  • The CCP-340B must have a system to track the indication for which an orphan drug is used.

The FDA Orphan Drug Designation

  • The FDA Office of Orphan Products Development (OOPD) grants orphan designation.
  • The designation provides incentives to manufacturers to develop drugs for rare diseases.
  • The 340B exclusion is one of these incentives.
  • The FDA maintains a publicly searchable database of all orphan drug designations.
  • A CCP-340B must regularly consult this database.
  • The database lists the drug, the manufacturer, and the specific rare disease or condition for the designation.
  • A single drug can have multiple orphan designations for different indications.
  • The designation is for a drug, not a specific NDC. All NDCs for that drug are affected.
  • The hospital must have a process to identify which drugs on its formulary have an orphan designation.
  • This list must be kept up-to-date as new designations are granted.

Operationalizing Compliance

  • Affected hospitals must have a system to determine the patient's diagnosis for every orphan drug dispense.
  • This is necessary to know whether the 340B price applies.
  • If the drug is for the orphan indication, the hospital must purchase it at the WAC price (or other non-340B price).
  • If the drug is for a common, non-orphan indication, the hospital is entitled to the 340B price.
  • This requires capturing diagnosis codes (e.g., ICD-10) at the time of prescribing or dispensing.
  • Pharmacy and clinical staff must be trained on the importance of documenting the indication.
  • The hospital's EHR and pharmacy software must be configured to manage this process.
  • This is often a manual and labor-intensive compliance requirement.
  • Some hospitals choose to "carve out" all orphan drugs to simplify compliance, forgoing potential 340B savings.
  • This means they purchase all orphan drugs at WAC, regardless of indication.

Documentation and Auditing

  • Affected hospitals must maintain auditable records to demonstrate compliance.
  • If a hospital purchases an orphan drug at the 340B price, it must be able to prove it was used for a non-orphan indication.
  • The patient's medical record is the key source of documentation.
  • The record must clearly state the diagnosis or indication for which the drug was prescribed.
  • HRSA can audit for compliance with the Orphan Drug Exclusion.
  • Auditors will select a sample of 340B-priced orphan drugs and review the medical records.
  • If the indication is not documented or matches the orphan designation, it is a violation.
  • The hospital would be required to repay the manufacturer the 340B discount.
  • Regular internal audits of orphan drug purchases are a best practice.
  • The CCP-340B must design these audits and ensure documentation is sufficient.

Manufacturer and Hospital Responsibilities

  • The hospital is responsible for tracking the indication and purchasing on the correct account.
  • The hospital must notify the manufacturer if it will be using an orphan drug for a non-orphan indication.
  • The manufacturer is responsible for providing the 340B discount when the drug is not used for its orphan indication.
  • If a manufacturer refuses to provide the discount for a non-orphan use, the hospital can use the HRSA ADR process.
  • Some manufacturers have created attestation forms for hospitals to complete.
  • These forms require the hospital to attest that it will only use 340B-priced orphan drugs for non-orphan indications.
  • The interpretation and implementation of this rule have been a source of significant dispute.
  • HRSA issued a final rule in 2023 to clarify the expectations for both parties.
  • The CCP-340B must stay current on any new guidance or regulations related to this complex issue.
  • This remains one of the most challenging areas of 340B compliance.

Block 3: Operations & Inventory Management

Establishing Wholesaler Accounts

  • Once registered in OPAIS, a CE must establish purchasing accounts with drug wholesalers.
  • The CE must inform the wholesaler of its 340B status and provide its 340B ID.
  • The wholesaler is responsible for verifying the CE's eligibility in OPAIS before opening a 340B account.
  • A CE typically needs multiple accounts to manage compliance.
  • A "340B account" is used to purchase drugs at the 340B ceiling price.
  • A "GPO account" is used for inpatient drug purchasing (for hospitals).
  • A "WAC account" (or "non-GPO account") is used for non-340B outpatient drugs (e.g., for carved-out Medicaid or GPO-prohibited hospitals).
  • The CE's purchasing staff must be trained to order on the correct account.
  • Incorrect purchasing can lead to GPO violations or missed 340B savings.
  • The CCP-340B must ensure accounts are set up and used correctly.

The Prime Vendor Program (PVP)

  • The 340B statute authorized HHS to create a Prime Vendor Program (PVP).
  • The PVP is a single, government-contracted entity that provides services to 340B CEs.
  • The current Prime Vendor is Apexus.
  • Membership in the PVP is free and voluntary for all 340B CEs.
  • The PVP's primary role is to negotiate sub-ceiling prices on behalf of its members.
  • This means securing prices that are even lower than the 340B ceiling price.
  • The PVP also provides a distribution network for these sub-ceiling products.
  • Apexus is also a major source of 340B education and technical assistance.
  • They offer the Advanced 340B Operations Certificate Program (ACE).
  • The PVP is a valuable resource for both new and experienced CEs.

Sub-Ceiling Pricing

  • The 340B ceiling price is the maximum price a manufacturer can legally charge.
  • Manufacturers are free to offer discounts below the ceiling price.
  • The PVP (Apexus) actively negotiates these "sub-ceiling" discounts.
  • These negotiated prices are only available to CEs that are members of the PVP.
  • Sub-ceiling contracts can provide significant additional savings for a CE.
  • The availability of sub-ceiling prices varies by drug and manufacturer.
  • The PVP maintains a catalog of all its contracted sub-ceiling products.
  • CEs access these prices through their regular wholesaler accounts.
  • Joining the PVP is a key step in maximizing the financial benefit of the 340B program.
  • The CCP-340B should regularly review PVP offerings to identify savings opportunities.

Direct Purchasing and Limited Distribution

  • Most 340B drugs are purchased through a traditional wholesaler.
  • However, some manufacturers require CEs to purchase drugs directly from them.
  • This is common for high-cost specialty drugs.
  • The CE must set up a direct purchasing account with the manufacturer.
  • The manufacturer is still obligated to verify the CE's eligibility and provide the 340B price.
  • Limited Distribution Drugs (LDDs) are another challenge.
  • These are drugs that are only distributed through a small, select network of specialty pharmacies.
  • A CE may need to contract with one of these specialty pharmacies to access an LDD.
  • This may require setting up a contract pharmacy relationship solely for that purpose.
  • The CCP-340B must have processes to manage these non-traditional purchasing channels.
  • Accessing specialty drugs can be a significant operational hurdle for CEs.

Procurement Integrity

  • Procurement integrity involves ensuring that every drug purchase is compliant.
  • This means ordering the right drug, on the right account, for the right location.
  • The pharmacy purchasing team is on the front lines of 340B compliance.
  • They must be thoroughly trained on the different accounts (340B, GPO, WAC) and when to use them.
  • Purchase orders should be reviewed before being sent to the wholesaler.
  • Wholesaler invoices should be reconciled against purchase orders to check for pricing errors.
  • Any pricing discrepancies should be investigated immediately with the wholesaler and manufacturer.
  • A CE should have a clear policy on how to handle incorrectly priced drugs that are received.
  • Regular audits of purchasing data are essential to catch errors.
  • The CCP-340B is responsible for the overall integrity of the drug procurement process.

Physical Inventory Model

  • The physical inventory model involves physically separating 340B drug stock from non-340B stock.
  • This is the simplest model from a compliance perspective.
  • 340B-purchased drugs are stored on a separate shelf, in a separate cabinet, or in a separate automated dispensing cabinet.
  • When a 340B-eligible prescription is dispensed, the drug is taken from the 340B stock.
  • When a non-eligible prescription is dispensed, the drug is taken from the non-340B (GPO/WAC) stock.
  • This creates a clear and easily auditable trail.
  • However, this model can be difficult to manage operationally.
  • It requires significant physical space to maintain duplicate inventories.
  • It also increases the risk of stock-outs if demand is miscalculated for one inventory.
  • The risk of human error (pulling from the wrong stock) is also high.
  • This model is most common in smaller pharmacies or for specific high-cost drugs.

Virtual Inventory Model

  • The virtual inventory model is the most common model used by CEs.
  • All drugs of the same NDC are stored together in a single, commingled physical inventory.
  • The segregation of 340B and non-340B stock is managed by software.
  • This software uses "accumulators" or "virtual buckets" to track inventory.
  • When a 340B-eligible drug is dispensed, the software deducts a unit from the virtual 340B bucket.
  • When a non-eligible drug is dispensed, a unit is deducted from the virtual non-340B bucket.
  • This model is much more efficient from an operational and space-saving perspective.
  • However, it is entirely dependent on the accuracy of the software and the data inputs.
  • The CE must have a deep understanding of how its virtual inventory software works.
  • This is the standard model used by TPAs for contract pharmacy arrangements.

Mixed-Use Settings

  • A mixed-use setting is any location where 340B drugs are stored, dispensed, or administered to both 340B-eligible and non-eligible patients.
  • Examples include a hospital's main outpatient pharmacy, an infusion center, or a clinic procedure area.
  • These settings require a robust inventory management system to prevent diversion.
  • The system must be able to identify the patient's 340B eligibility at the point of care.
  • This information then dictates which inventory (physical or virtual) the drug should be assigned to.
  • The CE must have clear policies and procedures for all mixed-use areas.
  • Staff working in these areas need specific training on 340B compliance.
  • Auditing these areas is a high priority for both internal auditors and HRSA.
  • The complexity of mixed-use settings is a major driver for the adoption of virtual inventory models.
  • The CCP-340B must map out all mixed-use locations within the entity and ensure appropriate controls are in place.

Pros and Cons of Each Model

  • Physical Model Pros: Conceptually simple, easy to audit, low reliance on complex software.
  • Physical Model Cons: Requires significant physical space, higher carrying costs due to duplicate inventory, increased risk of stock-outs, prone to human error.
  • Virtual Model Pros: Space-efficient, optimizes inventory levels, reduces carrying costs, automates compliance tracking.
  • Virtual Model Cons: Highly dependent on software accuracy, requires complex setup and validation, can be a "black box" if not well understood, data integrity is paramount.
  • The choice of model depends on the CE's size, volume, and resources.
  • Many CEs use a hybrid approach.
  • For example, they may use a virtual model for most drugs but a physical model for high-cost or specialty drugs.
  • The CE must document its chosen inventory management strategy in its policies and procedures.
  • Regardless of the model, the CE is responsible for ensuring it is compliant.
  • The CCP-340B must be an expert in the theory and practice of both models.

Inventory Reconciliation

  • Inventory reconciliation is the process of comparing physical inventory counts to the records in the pharmacy system.
  • For 340B, this also includes reconciling virtual accumulator balances with purchasing records.
  • This process is critical for ensuring the accuracy of a virtual inventory system.
  • It helps to identify software errors, data feed issues, or incorrect dispensing practices.
  • Reconciliation should be done on a regular basis (e.g., monthly or quarterly).
  • Discrepancies must be investigated and resolved.
  • For example, if a virtual accumulator shows a large negative balance, it may indicate that non-eligible dispenses are being incorrectly assigned to 340B.
  • If it shows a large positive balance, it may indicate that eligible dispenses are being missed, resulting in lost savings.
  • The reconciliation process should be documented.
  • This is a key internal control that demonstrates program oversight.

The Role of Accumulators

  • Accumulators are the core component of a virtual inventory system.
  • They are electronic "buckets" that track the quantity of drugs dispensed.
  • A separate accumulator is maintained for each NDC for each account (340B, GPO, WAC).
  • When a drug is dispensed, software logic determines the patient's eligibility.
  • A unit is then added to the corresponding accumulator (e.g., the 340B accumulator).
  • This process happens in real-time as dispensing data is processed.
  • The accumulators essentially keep a running tally of what needs to be purchased on which account.
  • The accuracy of the entire virtual inventory system depends on the correct functioning of these accumulators.
  • The CCP-340B must understand how their software's accumulators are configured.
  • This includes the logic used to assign a dispense to a specific bucket.

The Replenishment Process

  • Replenishment is the process of ordering drugs to replace what has been dispensed.
  • In a virtual system, replenishment is driven by the accumulator balances.
  • When an accumulator balance reaches the drug's package size, a purchase is triggered.
  • For example, if the 340B accumulator for a drug with a package size of 100 tablets reaches 100, the system will generate a purchase order for one bottle on the 340B account.
  • The accumulator balance is then reduced by the quantity ordered.
  • This ensures that purchases are always retrospective and based on actual dispensing.
  • This "buy and replace" model is a key principle of a compliant virtual inventory.
  • The system should have controls to prevent ordering ahead of dispensing.
  • The replenishment process should be automated but subject to review by pharmacy staff.
  • The CCP-340B must ensure the replenishment logic is compliant and efficient.

Handling Accumulator Discrepancies

  • Discrepancies in accumulator balances can and do occur.
  • A negative balance may indicate that a purchase was made without a corresponding dispense accumulation.
  • A large positive balance may indicate that eligible dispenses are not being captured correctly.
  • These issues can be caused by data feed errors, incorrect NDC mapping, or software glitches.
  • Regular monitoring of accumulator reports is essential to catch these issues early.
  • The CE must have a process for investigating and correcting discrepancies.
  • This may involve manually adjusting accumulator balances.
  • All manual adjustments must be documented with a clear reason for the change.
  • This creates an auditable record of discrepancy management.
  • Unresolved accumulator discrepancies can lead to non-compliant purchasing and compliance risks.

NDC Mapping and Crosswalks

  • Accurate NDC mapping is critical for virtual inventory management.
  • The NDC on the dispensed drug claim must be correctly mapped to the NDC of the purchased drug.
  • This can be complex, as a single drug can be available in multiple NDCs.
  • A "crosswalk" is a table that links different NDCs that are considered equivalent for accumulation purposes.
  • For example, a TPA may crosswalk a 30-count bottle NDC to a 90-count bottle NDC.
  • This allows dispenses from the 30-count bottle to accumulate towards a purchase of the 90-count bottle.
  • This mapping must be clinically appropriate and regularly maintained.
  • An incorrect crosswalk can cause major accumulator and purchasing errors.
  • The CE is responsible for the accuracy of its NDC mapping, even if managed by a TPA.
  • The CCP-340B should have a process to regularly review and approve the NDC crosswalk file.

Regular Auditing and Reconciliation

  • The accuracy of a virtual inventory system must be regularly verified.
  • This is done through auditing and reconciliation.
  • An audit should compare a sample of dispensing records to the accumulator transactions.
  • This verifies that the software is correctly assigning dispenses to the right buckets.
  • A reconciliation compares total purchases from the wholesaler to total accumulations in the software.
  • These two totals should align over time.
  • Significant variances point to a systemic problem that needs investigation.
  • This process should also include a review of manual adjustments to ensure they are appropriate and documented.
  • These checks provide assurance that the virtual inventory is a reliable reflection of reality.
  • This documented oversight is crucial for demonstrating compliance to HRSA.

Definition of a Drop Shipment

  • A drop shipment is a practice where a drug is shipped directly from the manufacturer to the Covered Entity.
  • However, the purchase order and financial transaction still go through a wholesaler.
  • This is common for high-cost specialty drugs or drugs with special storage requirements.
  • The CE places an order with its wholesaler as usual.
  • The wholesaler then instructs the manufacturer to ship the product directly to the CE's registered address.
  • The wholesaler still invoices the CE for the drug.
  • This practice is permissible under the 340B program.
  • The key compliance requirement is that the drug must be shipped to a 340B-registered location of the CE.
  • It cannot be drop-shipped to a physician's office or a patient's home.
  • The CE must maintain clear records of all drop shipments.

Compliance Considerations for Drop Shipments

  • The "ship to" address must be a registered 340B site listed in OPAIS.
  • The purchase must be made on the correct account (340B, WAC, etc.).
  • The CE must have a process to receive and document the receipt of the drop shipment.
  • This creates an auditable record that the drug came into the CE's possession.
  • This is important for demonstrating that the CE is maintaining control over the drug.
  • The drug must then be managed according to the CE's inventory model.
  • Drop shipments can create challenges for inventory tracking if not properly integrated into the pharmacy system.
  • The CE should have a specific policy and procedure for managing drop shipments.
  • The CCP-340B should periodically audit these transactions to ensure compliance.
  • This includes verifying the shipping address against the OPAIS database.

Drugs Administered in Physician Offices

  • Physician-administered drugs (e.g., injections, infusions) can be 340B eligible.
  • The key requirement is that the physician's office must be a registered child site of the CE.
  • The patient must meet the patient definition at that site.
  • The drug cannot be purchased by the physician's practice and then reimbursed by the hospital.
  • The drug must be purchased by the CE and managed as part of the CE's 340B program.
  • This often involves the CE's central pharmacy dispensing the drug to the clinic for a specific patient.
  • Alternatively, the clinic may maintain a small stock of 340B drugs purchased by the CE.
  • This stock must be managed carefully to prevent diversion.
  • A robust system for tracking administration and billing is required.
  • This is a common area of focus during HRSA audits.

Home Infusion and Home Health

  • Home infusion therapy provided by the CE can be 340B eligible.
  • The CE's home infusion service must be part of the CE (e.g., on the MCR for a hospital).
  • The patient must meet the patient definition.
  • The drug is dispensed from the CE's pharmacy and delivered to the patient's home for administration.
  • The CE must maintain clear records showing it was responsible for the service.
  • This is a complex area, as the patient is not physically at the CE's facility.
  • However, HRSA has clarified that the location of administration does not have to be a registered site, as long as the encounter originates from the CE.
  • The CE dispenses the drug from a registered site, and that is the key location.
  • The same principles apply to drugs provided by a CE's home health agency.
  • Clear policies and meticulous documentation are essential for these scenarios.

White Bagging and Brown Bagging

  • White Bagging: A specialty pharmacy dispenses a drug and ships it directly to the provider (e.g., the CE's infusion center) for administration. This drug is generally not 340B eligible for the CE, as the CE did not purchase it.
  • Brown Bagging: The patient picks up a specialty drug from a pharmacy and brings it to the provider for administration. This drug is not 340B eligible for the CE.
  • These practices are often mandated by payers/PBMs.
  • They create significant challenges for a CE's 340B program.
  • They can result in a loss of 340B savings, as the CE is forced to bypass its own pharmacy.
  • They also introduce safety and handling risks, as the CE does not control the chain of custody.
  • A CE should have a clear policy on whether it will accept white-bagged or brown-bagged drugs.
  • The CCP-340B should be aware of these practices and their impact on the program.
  • There is no way to make a white-bagged or brown-bagged drug 340B compliant for the administering CE.

Role of the Formulary

  • A formulary is a list of medications routinely stocked and dispensed by a healthcare system.
  • The Pharmacy & Therapeutics (P&T) Committee is responsible for managing the formulary.
  • 340B status can be a factor in formulary decisions.
  • If two drugs are clinically equivalent, the one with greater 340B savings may be preferred.
  • However, clinical efficacy and patient safety must always be the primary considerations.
  • The formulary management process should be documented and separate from 340B compliance.
  • The CCP-340B may provide financial data to the P&T committee but should not dictate clinical decisions.
  • The CE's drug master file or chargemaster (CDM) must be kept in sync with the formulary.
  • This ensures that drugs are accurately identified and tracked throughout the system.
  • A well-managed formulary is the foundation for an accurate 340B program.

Importance of the 11-Digit NDC

  • The National Drug Code (NDC) is a unique 11-digit, 3-segment number assigned to each drug.
  • The first segment identifies the labeler (manufacturer).
  • The second segment identifies the product (drug, strength, dosage form).
  • The third segment identifies the package size.
  • 340B eligibility and pricing are determined at the 11-digit NDC level.
  • All tracking, purchasing, and dispensing in a 340B program must be done at this level of detail.
  • Using a 9-digit or 10-digit NDC is not sufficient for compliance.
  • The pharmacy system must be configured to use the full 11-digit NDC.
  • This is critical for accurate accumulator management and purchasing.
  • HRSA audits are conducted at the 11-digit NDC level.

NDC Mapping and Crosswalking

  • NDC mapping (or crosswalking) is the process of linking different NDCs that are considered equivalent.
  • This is essential for virtual inventory management.
  • For example, a pharmacy may dispense from a 30-count bottle but purchase a 90-count bottle to save money.
  • A crosswalk is needed to allow three 30-count dispenses to accumulate towards the purchase of one 90-count bottle.
  • The crosswalk must be based on the same active ingredient, strength, and dosage form.
  • The conversion factor (e.g., 3 to 1) must be accurate.
  • An incorrect crosswalk can lead to major inventory and compliance issues.
  • For example, mapping a tablet to a capsule would be non-compliant.
  • The CE is responsible for the accuracy of its NDC mapping, even if provided by a TPA.
  • The CCP-340B must have a process for regularly reviewing and approving all crosswalks.

Managing the Drug Master File

  • The drug master file is the central database in the pharmacy system that contains information about every drug.
  • For 340B, this file must have a field to indicate the drug's 340B eligibility status.
  • It should also indicate if the drug is an orphan drug.
  • The file must be meticulously maintained.
  • New drugs added to the formulary must be promptly added to the master file with the correct 340B status.
  • Discontinued drugs should be inactivated.
  • Any changes to a drug's NDC (e.g., manufacturer changes package size) must be updated.
  • An inaccurate drug master file is a common root cause of compliance problems.
  • For example, incorrectly flagging a non-340B drug as eligible could lead to diversion.
  • The CCP-340B should have oversight of the drug master file maintenance process.

Challenges with Repackaged and Compounded Drugs

  • Repackaged drugs can pose a challenge for NDC tracking.
  • A repackager buys drugs in bulk and repackages them into unit-dose or smaller packages, assigning a new NDC.
  • The CE must be able to trace the repackaged NDC back to the original source NDC to verify 340B eligibility.
  • Compounded drugs also create complexity.
  • If a compound is made from one or more 340B-eligible ingredients, those ingredients must be tracked.
  • The resulting compound is assigned a new internal identifier, not an NDC.
  • The pharmacy system must be able to link the compound back to the 340B ingredients used.
  • This ensures that the correct quantities are decremented from the 340B accumulators.
  • This is a high-risk area for compliance.
  • The CE must have specific policies for managing 340B in relation to repackaged and compounded products.
  • Auditors will scrutinize these processes closely.

Block 4: Contract Pharmacy & Third-Party Administrators

Definition and Purpose

  • A contract pharmacy is a retail pharmacy that contracts with a Covered Entity to dispense 340B drugs to eligible patients.
  • The purpose is to improve patient access to medications.
  • Many CEs, especially those without an in-house pharmacy, rely on contract pharmacies.
  • The CE may contract with multiple pharmacies to serve a wide geographic area.
  • The relationship is governed by a written contract between the CE and the pharmacy.
  • The contract pharmacy itself is not 340B eligible; it acts as an agent of the CE.
  • The CE retains ownership of the 340B drug inventory at all times.
  • The contract pharmacy model was established by HRSA through guidance in 1996 and expanded in 2010.
  • It is a major source of 340B savings for many CEs but also a major source of compliance risk.
  • The CE is fully responsible for the compliance of its contract pharmacy network.

The Replenishment Model

  • Contract pharmacies operate on a replenishment inventory model.
  • The pharmacy dispenses drugs to patients from its own general stock.
  • The pharmacy then sends the dispensing data (claims data) to the CE or its TPA.
  • The TPA software reviews the claims to identify those for eligible 340B patients.
  • Once a full package size of an eligible drug has been dispensed, the TPA triggers a replenishment order.
  • The CE purchases the drug at the 340B price and has it shipped to the contract pharmacy.
  • This replenishes the pharmacy's stock with a 340B-purchased drug.
  • This "dispense first, replenish later" model is standard.
  • It avoids the need for a physically separate 340B inventory at the retail pharmacy.
  • The accuracy of the replenishment process is critical for compliance.

Registration and Termination

  • Each contract pharmacy location must be registered in OPAIS under the CE's 340B ID.
  • Registration follows the same quarterly schedule as for CEs and child sites.
  • A written contract must be in place before a pharmacy can be registered.
  • The CE's AO or PC is responsible for the OPAIS registration.
  • The registration must include the pharmacy's legal name, address, and DEA number.
  • A contract pharmacy cannot begin dispensing 340B drugs until its official start date in OPAIS.
  • If the relationship between the CE and the pharmacy ends, the pharmacy must be terminated in OPAIS.
  • The termination should be effective on the date the contract ends.
  • A final reconciliation of inventory must be conducted upon termination.
  • Maintaining an accurate list of active contract pharmacies in OPAIS is a key compliance requirement.

The Written Agreement

  • A legally binding written agreement is required for every contract pharmacy relationship.
  • The contract should clearly define the roles and responsibilities of both the CE and the pharmacy.
  • It should detail the services to be provided by the pharmacy.
  • It must specify the inventory replenishment model and the fees involved (e.g., dispensing fee paid to the pharmacy).
  • Crucially, it must outline the compliance requirements and responsibilities.
  • This includes the pharmacy's duty to provide dispensing data and cooperate with audits.
  • The contract should state that the CE retains ownership of the 340B inventory.
  • It should include provisions for record retention and HIPAA compliance.
  • The agreement must give the CE the right to audit the pharmacy's records.
  • HRSA will ask to review these contracts during an audit.

CE Oversight Responsibilities

  • HRSA guidance explicitly states that the CE must provide oversight of its contract pharmacies.
  • The CE is ultimately responsible for any compliance violations that occur at the pharmacy.
  • Oversight includes regularly reviewing reports from the TPA.
  • The CE should understand the TPA's logic for identifying eligible claims.
  • The CE must conduct its own independent audits of the contract pharmacy.
  • These audits should test a sample of dispenses to verify patient eligibility.
  • The audit should also reconcile purchasing records with dispensing data.
  • The frequency and scope of these audits should be defined in the CE's policies.
  • A common recommendation is to audit each contract pharmacy annually.
  • Documenting these oversight activities is essential for proving compliance to HRSA.

Definition and Core Service

  • A Third-Party Administrator (TPA) is a vendor that provides technology and services to help CEs manage their 340B programs.
  • TPAs are most commonly used to manage contract pharmacy networks.
  • Their core service is to provide a software platform that automates the identification of eligible 340B claims.
  • The TPA's software acts as a "virtual inventory" manager.
  • It prevents the need for the CE or contract pharmacy to manage this complex process manually.
  • TPAs are not required by HRSA, but they are essential for managing a contract pharmacy program of any significant size.
  • There are many different TPA vendors in the market, each with its own software and service model.
  • The CE pays the TPA a fee for its services, often based on the number of claims processed.
  • The CE is responsible for selecting a qualified TPA and overseeing its performance.

The Claims Qualification Process

  • The heart of a TPA's function is the claims qualification process.
  • The TPA receives a data file of all prescriptions dispensed by the contract pharmacy.
  • It also receives data files from the CE containing lists of eligible patients, providers, and locations.
  • The TPA software then compares the pharmacy's dispense data against the CE's eligibility data.
  • A claim is "qualified" as 340B-eligible if it matches on key criteria.
  • These criteria typically include the patient's name/ID, the prescriber's NPI, and the date of service.
  • The logic for this matching process is defined by the CE in consultation with the TPA.
  • Only qualified claims are added to the 340B accumulators for replenishment.
  • The accuracy of this process is fundamental to preventing diversion.
  • The CE must understand and approve the TPA's qualification logic.

Data Feeds and Interfaces

  • The TPA system relies on a number of electronic data feeds.
  • Dispense File: From the contract pharmacy, containing details of every drug dispensed.
  • Patient File: From the CE's EHR or registration system, listing all potentially eligible patients.
  • Provider File: From the CE's credentialing system, listing all eligible prescribers and their NPIs.
  • Drug Formulary/Crosswalk File: From the CE's pharmacy system, used for NDC mapping.
  • The timeliness and accuracy of these data feeds are critical.
  • A delay in the patient file could cause eligible claims to be missed.
  • An out-of-date provider file could cause claims from new doctors to be rejected.
  • The CE is responsible for ensuring the quality of the data it provides to the TPA.
  • The CCP-340B often manages the process of generating and transmitting these files.

Reporting and Analytics

  • A key function of a TPA is to provide detailed reporting to the CE.
  • These reports are essential for program oversight and management.
  • Financial Reports: Show the estimated 340B savings generated through the contract pharmacy network.
  • Operational Reports: Track key metrics like the number of claims processed, match rates, and accumulator balances.
  • Compliance Reports: Provide data that can be used for internal audits and reconciliation.
  • The CE should have a process for regularly reviewing these reports.
  • The CCP-340B uses these reports to monitor program health and identify potential issues.
  • For example, a low match rate may indicate a problem with the eligibility files.
  • The quality and usability of a TPA's reporting suite is a key factor in vendor selection.
  • These reports are also a key part of the documentation needed for a HRSA audit.

CE Oversight of the TPA

  • The CE cannot delegate its compliance responsibility to the TPA.
  • The CE must provide active oversight of its TPA vendor.
  • This starts with a strong contract that clearly outlines the TPA's responsibilities and performance expectations.
  • The CE must understand the TPA's software logic and configuration.
  • The CE should conduct its own independent audits of the TPA's output.
  • This means taking a sample of claims the TPA qualified as eligible and verifying the eligibility independently.
  • The CE should also test claims the TPA rejected to ensure they were correctly identified as non-eligible.
  • Regular meetings should be held with the TPA account manager to review performance and address issues.
  • The CE must treat the TPA as a critical partner, but one that requires verification and oversight.
  • "The TPA did it" is not a valid defense in a HRSA audit.

Establishing an Oversight Plan

  • HRSA requires CEs to conduct oversight of their contract pharmacies.
  • A formal, documented oversight plan is a best practice.
  • This plan should be included in the CE's main 340B policies and procedures.
  • The plan should define the frequency and scope of oversight activities.
  • It should specify what will be reviewed, such as monthly reports and annual audits.
  • The plan should assign responsibility for these activities (typically to the CCP-340B).
  • It should also detail the process for documenting oversight activities.
  • The plan should cover all contract pharmacies in the CE's network.
  • A risk-based approach can be used to vary the intensity of oversight (e.g., more frequent audits for high-volume pharmacies).
  • Having this plan in writing is key to demonstrating compliance with the oversight requirement to HRSA.

Desktop vs. On-Site Audits

  • Oversight audits can be conducted in two main ways.
  • Desktop Audits: These are conducted remotely. The CE reviews data and reports from the TPA and pharmacy.
  • This is the most common and efficient method for routine oversight.
  • It involves analyzing dispense data, reconciliation reports, and eligibility matches.
  • On-Site Audits: These involve a physical visit to the contract pharmacy.
  • On-site audits allow for direct observation of workflows and review of original prescription records.
  • They are more resource-intensive and are typically reserved for high-risk pharmacies or to investigate specific issues.
  • The CE's oversight plan should specify when each type of audit will be used.
  • A hybrid approach, with annual desktop audits for all and periodic on-site audits for some, is a common strategy.
  • Both types of audits must be thoroughly documented.

Key Audit Area: Patient Eligibility

  • The primary goal of a contract pharmacy audit is to test for diversion.
  • This means verifying patient eligibility for a sample of 340B-qualified prescriptions.
  • The auditor selects a random sample of dispenses that were replenished with 340B stock.
  • For each dispense, the auditor must trace it back to the CE's medical records.
  • The audit must confirm that the patient, prescriber, and location all met the CE's 340B eligibility criteria.
  • The date of service for the prescription must align with an eligible encounter.
  • This process independently validates the accuracy of the TPA's claims qualification logic.
  • Any dispenses that cannot be matched to an eligible encounter represent potential diversion.
  • This is the most critical part of the oversight audit.
  • The CCP-340B must have full access to the CE's EHR to perform this work.

Key Audit Area: Inventory & Reconciliation

  • The audit should also review the inventory management process.
  • This involves reconciling the TPA's data with the pharmacy's data and the CE's purchasing records.
  • The total quantity of a drug dispensed to eligible patients (from TPA data) should match the total quantity purchased by the CE and shipped to that pharmacy.
  • This is often called an "in-out-on hand" reconciliation.
  • The audit should review accumulator balances to ensure they are being managed correctly.
  • It should also verify that the correct NDCs and package sizes are being used for replenishment.
  • This part of the audit confirms that the replenishment model is working as intended.
  • It helps to identify any systemic issues with data flows or software logic.
  • Significant discrepancies require further investigation.
  • This demonstrates a comprehensive approach to oversight beyond just patient eligibility.

Remediating Findings with Partners

  • If an audit identifies findings, they must be addressed in partnership with the TPA and contract pharmacy.
  • The findings should be formally documented and shared with the partners.
  • A root cause analysis should be conducted to determine why the error occurred.
  • For example, was it a data feed issue from the CE, a logic error by the TPA, or a workflow issue at the pharmacy?
  • A joint Corrective Action Plan should be developed.
  • The plan should specify the actions to be taken by each party (CE, TPA, pharmacy).
  • The CCP-340B is responsible for tracking the implementation of this CAP.
  • A follow-up audit should be conducted to validate that the fix was effective.
  • This collaborative approach to remediation is key to maintaining a healthy and compliant partnership.
  • It is also evidence of a robust oversight program.

The Importance of Data Integrity

  • The entire contract pharmacy model is built on the electronic exchange of data.
  • The integrity of this data is therefore paramount for compliance.
  • "Garbage in, garbage out" is a critical concept; if the data provided to the TPA is flawed, the output will be non-compliant.
  • Data integrity means the data is accurate, complete, and timely.
  • The CE is responsible for the integrity of the eligibility files it provides.
  • The contract pharmacy is responsible for the integrity of the dispense file it provides.
  • The TPA is responsible for the integrity of its matching and accumulation processes.
  • The CCP-340B must have a high-level understanding of all these data flows.
  • Regular data validation checks should be part of the routine oversight process.
  • Data integrity issues are a common root cause of audit findings.

Managing Eligibility Files (Patient & Provider)

  • The CE must provide its TPA with accurate and up-to-date eligibility files.
  • The patient file should include all individuals who have had a recent eligible encounter.
  • The provider file should include all credentialed CE providers and their correct NPIs.
  • These files must be generated and sent to the TPA on a regular schedule (e.g., daily).
  • The process for generating these files should be automated to the greatest extent possible to reduce human error.
  • There must be a clear process for adding new providers and deactivating termed providers.
  • The definition used to pull data for these files must align with the CE's 340B patient definition policy.
  • The CCP-340B should periodically audit these files to ensure they are accurate and complete.
  • An inaccurate eligibility file is a direct cause of either missed savings or compliance risk.

Reconciling Dispense Data

  • The CE must have a process to reconcile dispense data from the contract pharmacy and TPA.
  • This involves comparing the total number of prescriptions received by the TPA to a report from the pharmacy itself.
  • This check ensures that all dispense data is being successfully transmitted and received.
  • It can help to identify any missing files or data transmission errors.
  • The CE should also perform financial reconciliation.
  • This involves comparing the fees paid to the contract pharmacy and TPA against the contractual rates and claim volumes.
  • It also involves reconciling the cash collected from payers with the claims processed.
  • This financial oversight ensures the program is operating as expected from a business perspective.
  • These reconciliations are a key part of vendor management and oversight.
  • The finance department is often a key partner in this process.

Data Security and HIPAA

  • The data exchanged between the CE, TPA, and contract pharmacy contains Protected Health Information (PHI).
  • Therefore, all parties must comply with the Health Insurance Portability and Accountability Act (HIPAA).
  • A Business Associate Agreement (BAA) must be in place between the CE and its TPA, and between the CE and each contract pharmacy.
  • The BAA is a legal contract that outlines each party's responsibilities for protecting PHI.
  • All data transmissions must use a secure method, such as a Secure File Transfer Protocol (SFTP) site.
  • The TPA's data security protocols should be reviewed by the CE's IT security team.
  • The CE's contracts should specify the security requirements for its vendors.
  • A data breach at a TPA or contract pharmacy could have serious legal and reputational consequences for the CE.
  • Data security is a critical, though often overlooked, aspect of 340B vendor management.
  • The CCP-340B must ensure that all necessary BAAs are in place and that data is handled securely.

Vendor Performance Metrics

  • Managing vendor data involves tracking key performance metrics.
  • Match Rate: The percentage of contract pharmacy claims that successfully match to an eligible patient/provider. A high match rate indicates good data quality.
  • Data Timeliness: Are the eligibility and dispense files being sent and processed on schedule?
  • Data Accuracy: What is the error rate found during independent audits of the TPA's output?
  • Invoice Accuracy: Is the contract pharmacy correctly invoicing for its dispensing fees?
  • These metrics should be tracked over time to identify trends.
  • They can be incorporated into the contract pharmacy performance scorecard.
  • They provide an objective way to measure and manage vendor performance.
  • These metrics should be reviewed regularly with the vendors.
  • They help the CE to hold its partners accountable and drive continuous improvement.

Block 5: Audits, Integrity & Reporting

Audit Notification & Scope

  • HRSA notifies a Covered Entity of an upcoming audit via an official engagement letter.
  • The notification is typically sent to the Authorizing Official and Primary Contact.
  • The letter provides the dates of the audit and the name of the HRSA field auditor.
  • It also includes an initial data request list.
  • The scope of the audit covers a specific time period, usually the CE's previous fiscal year.
  • The audit will review compliance with all major 340B requirements.
  • This includes eligibility, diversion, duplicate discounts, and (if applicable) GPO and orphan drug rules.
  • Audits are currently conducted remotely, with live interviews and data sharing via virtual platforms.
  • The CCP-340B is the key person responsible for coordinating the audit response.
  • Upon notification, the CE should immediately activate its audit response team.

The Data Request List

  • The initial data request list from HRSA is extensive.
  • It will ask for all 340B policies and procedures.
  • It will require a full list of all 340B drug purchases during the audit period.
  • It will also require a full list of all outpatient dispenses or administrations.
  • From these lists, the HRSA auditor will select a random sample for testing.
  • The CE will then need to provide detailed documentation for each sampled transaction.
  • This includes the patient's medical record, the prescription, and proof of dispensing.
  • The CE must also provide documentation supporting its eligibility (e.g., MCR, grant info).
  • Gathering and organizing this data is a significant undertaking.
  • Having a well-organized and readily accessible data repository is key to a smooth audit.

The Audit Itself: Interviews & Testing

  • The audit typically begins with an entrance conference with the CE's leadership.
  • The auditor will then conduct interviews with key staff, including the CCP-340B and pharmacy staff.
  • The core of the audit is the transaction testing.
  • For diversion testing, the auditor will review the medical record for each sampled dispense to verify patient eligibility.
  • For duplicate discount testing, the auditor will review Medicaid claims data to ensure carved-in claims were identified and carved-out claims did not use 340B drugs.
  • For GPO prohibition testing, the auditor will trace outpatient purchases to ensure they were not on a GPO account.
  • The CE must be able to "tell the story" for each sampled transaction, providing a clear and logical audit trail.
  • The CCP-340B typically leads the presentation of this information to the auditor.
  • Being organized, transparent, and responsive is crucial during this phase.

The Audit Report and Findings

  • At the end of the audit, the auditor will hold an exit conference to discuss preliminary observations.
  • This is not the final result, but it gives the CE an indication of potential findings.
  • Several weeks later, HRSA will issue a formal Final Report.
  • The report will detail the audit scope, methodology, and official findings.
  • Findings can be at the level of the parent entity or specific to a child site or contract pharmacy.
  • Common findings include diversion due to ineligible patient/location, duplicate discounts, and GPO violations.
  • The report may also cite the CE for having inadequate policies or records.
  • If there are findings, the CE will be required to develop a Corrective Action Plan (CAP).
  • If no violations are found, the report will state that the CE is in compliance.
  • The Final Report is posted publicly on the HRSA website.

Audit Preparedness: The Concept of "Always Ready"

  • The best way to prepare for a HRSA audit is to operate in a constant state of audit readiness.
  • This means assuming an audit could happen at any time.
  • Key components of readiness include up-to-date policies, regular staff training, and robust documentation.
  • Conducting periodic, rigorous self-audits is the most effective preparedness activity.
  • These self-audits should mimic the methodology used by HRSA.
  • An audit "binder" or electronic repository should be maintained with all key documents (policies, eligibility docs, etc.).
  • The 340B Steering Committee should review self-audit results and oversee readiness efforts.
  • Engaging an external consultant to perform a mock audit can also be highly valuable.
  • The goal is not to "cram" for an audit, but to build a culture of compliance.
  • The CCP-340B is the champion and leader of this "always ready" philosophy.

Authority and Purpose

  • The 340B statute gives drug manufacturers the right to audit Covered Entities.
  • The purpose of a manufacturer audit is to verify the CE's compliance with respect to that manufacturer's drugs.
  • The primary focus is on preventing diversion.
  • Manufacturers are concerned that their 340B-priced drugs are only going to eligible patients.
  • The ACA clarified that these audits must be based on a reasonable cause.
  • The manufacturer must have evidence suggesting a potential violation by the CE.
  • The audit plan must be submitted to and approved by HRSA before the manufacturer can proceed.
  • This HRSA approval step is intended to prevent burdensome or harassing audits.
  • Manufacturer audits are less common than HRSA audits but can be very intensive.
  • The CE's responsibilities to cooperate are similar to a HRSA audit.

The "Reasonable Cause" Standard

  • A manufacturer cannot simply decide to audit a CE at random.
  • They must have a "reasonable cause" to believe a violation has occurred.
  • The evidence for this cause must be more than just a suspicion.
  • Examples could include a CE's purchasing volumes being far greater than expected for its size.
  • It could also be based on data from a third-party source suggesting diversion.
  • The manufacturer must outline this evidence in its audit workplan submitted to HRSA.
  • HRSA reviews the workplan to determine if the reasonable cause standard has been met.
  • If HRSA does not approve the plan, the audit cannot move forward.
  • This standard protects CEs from being targeted unfairly by manufacturers.
  • The CE has the right to see the HRSA-approved workplan.

Audit Process and Scope

  • Once approved by HRSA, the manufacturer (or its chosen audit firm) will contact the CE.
  • The audit scope is limited to the CE's records related to that specific manufacturer's drugs.
  • The auditor cannot look at records for other manufacturers' products.
  • The audit will focus on tracing dispense records for the manufacturer's drugs back to patient eligibility documentation.
  • The process is similar to a HRSA audit, involving data requests, transaction sampling, and record review.
  • The audit is typically conducted by a third-party accounting or consulting firm hired by the manufacturer.
  • The CE must provide access to the necessary records to allow the audit to be completed.
  • Patient-identifiable information is subject to HIPAA, so a Business Associate Agreement (BAA) is required.
  • The CCP-340B would coordinate this audit just as they would a HRSA audit.

Dispute Resolution

  • The CE has the right to dispute the findings of a manufacturer audit.
  • If the CE disagrees with the auditor's conclusions, it should first try to resolve the issue directly with the manufacturer.
  • This may involve providing additional documentation or clarifying policies.
  • If a direct resolution is not possible, the CE can use the HRSA 340B Alternative Dispute Resolution (ADR) process.
  • The ADR process is a formal mechanism for resolving disputes between CEs and manufacturers.
  • It involves a panel of experts from the 340B community who review the evidence and make a decision.
  • The ADR panel's decision is binding.
  • This process provides a neutral forum to handle complex disagreements.
  • Having strong documentation is the best way to defend against incorrect audit findings.

Remediation and Repayment

  • If a manufacturer audit confirms that diversion occurred, the CE is liable.
  • The remedy is the same as for a HRSA audit finding.
  • The CE must repay the manufacturer the 340B discount for the diverted drugs.
  • This is the difference between the 340B price and the WAC or GPO price.
  • The repayment calculation must be agreed upon by both the CE and the manufacturer.
  • The CE should also implement a Corrective Action Plan (CAP) to prevent future violations.
  • The results of the audit and the resolution must be reported to HRSA.
  • A confirmed finding of diversion in a manufacturer audit can trigger a follow-up audit from HRSA.
  • This highlights the importance of treating every audit, regardless of the source, with the utmost seriousness.
  • The CCP-340B is responsible for managing this entire process, from audit coordination to remediation.

The Importance of Self-Auditing

  • Internal auditing, or self-auditing, is the cornerstone of a compliant 340B program.
  • It is the process of proactively looking for and correcting compliance issues before an external auditor does.
  • HRSA guidance strongly encourages regular self-audits.
  • It demonstrates the CE's commitment to program integrity.
  • It helps to identify and mitigate risks early.
  • The findings from self-audits provide valuable insights for process improvement and staff training.
  • A robust self-auditing program is the key to maintaining a state of continuous audit readiness.
  • The CCP-340B is typically responsible for designing and leading the self-auditing program.
  • The results of these audits should be reported to the 340B Steering Committee.
  • It is one of the most important functions of a 340B compliance professional.

Developing an Audit Plan

  • A formal audit plan should be developed annually.
  • The plan should outline the scope, frequency, and methodology of the internal audits.
  • It should cover all key risk areas: diversion, duplicate discounts, GPO, and orphan drugs.
  • A risk-based approach should be used to prioritize audit activities.
  • For example, a new contract pharmacy or a high-volume clinic might be audited more frequently.
  • The plan should specify the sampling methodology that will be used.
  • It should also define the roles and responsibilities of the audit team.
  • The audit plan should be a formal document, reviewed and approved by the Steering Committee.
  • This demonstrates a thoughtful and systematic approach to compliance oversight.
  • The plan should be a living document, updated as new risks or program areas emerge.

Monthly, Quarterly, and Annual Audits

  • Auditing activities should occur at different frequencies.
  • Monthly Audits: These are often targeted checks of key processes. Examples include reviewing accumulator balances or new provider eligibility.
  • Quarterly Audits: These are typically more comprehensive reviews. An example is a full transaction audit of a single contract pharmacy or clinic.
  • Annual Audits: This is a comprehensive, deep-dive audit of the entire 340B program, mimicking a full HRSA audit.
  • This tiered approach ensures that issues are caught in a timely manner.
  • Monthly checks catch operational errors quickly.
  • Quarterly audits provide a more detailed look at specific risk areas.
  • The annual audit serves as the ultimate test of program compliance and readiness.
  • The results of all audits should be tracked and trended over time.
  • This data can highlight recurring problems that need a more systemic solution.

Sampling Methodology

  • The credibility of an audit depends on a sound sampling methodology.
  • A random sample is generally preferred as it is unbiased.
  • The sample size should be statistically significant enough to be representative of the whole population.
  • However, for internal audits, even a small random sample can be very informative.
  • Sometimes, a targeted or judgmental sample may be used.
  • For example, an auditor might specifically select high-cost drugs or prescriptions from a new provider to test.
  • The methodology used should be clearly documented in the audit workpapers.
  • This includes how the population was defined, how the random sample was generated, and the sample size.
  • Consistency in methodology allows for trending of results over time.
  • The CCP-340B should be familiar with basic audit sampling principles.

Reporting and Remediating Findings

  • The results of every internal audit must be formally documented in a report.
  • The report should outline the scope, methodology, and findings.
  • For each finding, a root cause analysis should be conducted.
  • A Corrective Action Plan (CAP) must be developed to address the finding.
  • The CAP should include specific action steps, responsible parties, and deadlines.
  • The CCP-340B is responsible for tracking the implementation of all CAPs.
  • The audit report and CAP should be presented to the 340B Steering Committee for review.
  • This process creates a closed-loop system of identifying, correcting, and monitoring compliance issues.
  • This documented history of self-identification and correction is viewed very favorably by HRSA.
  • It shows that the CE has a mature and effective compliance program.

When a CAP is Required

  • A Corrective Action Plan (CAP) is required whenever a compliance violation is identified.
  • This applies to findings from a HRSA audit, a manufacturer audit, or the CE's own internal audits.
  • The purpose of a CAP is to formally document how the CE will fix the problem and prevent it from happening again.
  • For HRSA audits, submitting a CAP in response to findings is a mandatory step.
  • Failure to submit a satisfactory CAP can lead to further penalties.
  • A CAP is not just about fixing the specific errors found in the audit sample.
  • It must address the underlying root cause of the problem.
  • For example, if diversion was caused by an out-of-date provider file, the CAP must address the process for maintaining that file.
  • A CAP is a formal commitment by the organization to improve its compliance.
  • The CCP-340B is usually the author of the CAP.

Components of an Effective CAP

  • Description of the Finding: A clear statement of the compliance issue identified.
  • Root Cause Analysis: A summary of the investigation into why the problem occurred.
  • Corrective Actions: Specific steps that will be taken to fix the identified problem and prevent recurrence.
  • Responsible Person(s): The specific individual or department accountable for each action step.
  • Timeline: A realistic deadline for the completion of each action step.
  • Monitoring and Validation: A description of how the CE will monitor the CAP's implementation and validate that it was effective.
  • This often involves a follow-up audit focused on the specific issue.
  • The CAP should be detailed, well-organized, and professional.
  • It should be written in a way that gives HRSA confidence that the CE takes the finding seriously.
  • Vague or incomplete CAPs are likely to be rejected by HRSA.

Implementing the CAP

  • Developing the CAP is only the first step; implementation is key.
  • The CCP-340B must act as the project manager for the CAP implementation.
  • This involves coordinating with all the responsible parties named in the plan.
  • Regular check-ins and meetings are needed to track progress against the timelines.
  • Any barriers to implementation should be identified and escalated to the Steering Committee.
  • Documentation must be collected to prove that each action step was completed.
  • For example, if the CAP includes staff re-training, the training materials and attendance logs must be saved.
  • The implementation process must be managed with the same rigor as any other important project.
  • Failure to implement a CAP is a serious issue that can jeopardize the CE's participation in the 340B program.

Validation and Monitoring

  • After the CAP has been implemented, the CE must validate its effectiveness.
  • This means testing to see if the corrective actions actually fixed the root cause.
  • This is typically done through a follow-up or validation audit.
  • The validation audit should focus specifically on the area where the original finding occurred.
  • It should use the same methodology as the original audit to allow for a direct comparison.
  • The goal is to demonstrate a zero error rate in the follow-up sample.
  • If errors are still found, it means the CAP was not fully effective, and further action is needed.
  • The results of the validation audit should be documented and reported to the Steering Committee.
  • This final step closes the loop on the corrective action process.
  • It provides objective evidence that the compliance gap has been closed.

Reporting to HRSA

  • For findings from a HRSA audit, the CAP must be formally submitted to HRSA by a specified deadline.
  • HRSA will review the CAP to determine if it is acceptable.
  • HRSA may ask for clarification or require changes to the plan.
  • Once the CAP is approved, the CE must provide HRSA with periodic updates on its implementation status.
  • Upon completion, the CE must submit a final report to HRSA, including the results of its validation audit.
  • HRSA will then issue a formal close-out letter once it is satisfied that the issue has been fully resolved.
  • This entire process can take many months.
  • All communication with HRSA must be professional, timely, and well-documented.
  • The CCP-340B is the primary liaison with HRSA during this process.
  • Successfully navigating the CAP process is a critical compliance skill.

340B Self-Audit Checklist

  • This is a comprehensive internal tool used to assess compliance across all areas of the 340B program.
  • It breaks down each HRSA requirement into a series of "yes/no" or "compliant/non-compliant" questions.
  • Sections typically cover OPAIS accuracy, eligibility documentation, and policies and procedures.
  • It includes a section for transaction testing, mimicking HRSA's audit methodology.
  • The checklist guides the auditor through tracing a sample of dispenses to verify patient eligibility.
  • It also guides the review of purchasing records for GPO or orphan drug compliance.
  • It provides a structured way to document findings and required follow-up actions.
  • This tool is essential for conducting the mock audits that are part of a continuous readiness program.
  • Many consulting firms and the PVP (Apexus) provide templates for these checklists.
  • The CCP-340B uses this tool to systematically evaluate program risk.

Contract Pharmacy Performance Scorecard

  • A rating scale or scorecard is used to evaluate the performance of contract pharmacy partners.
  • This is a key tool for fulfilling the CE's oversight responsibility.
  • Key metrics can include the timeliness and accuracy of dispense file submissions.
  • It can also track invoice payment accuracy and timeliness.
  • A critical metric is the "match rate" - the percentage of dispense claims that successfully match to an eligible patient/provider.
  • The scorecard should track the resolution of any discrepancies or data requests.
  • It can also include qualitative assessments, like the pharmacy's responsiveness and collaboration.
  • The results should be reviewed periodically (e.g., quarterly) with the contract pharmacy.
  • This tool provides objective data to manage the relationship and enforce contractual obligations.
  • It helps document that the CE is actively overseeing its vendors.

TPA Functionality Assessment Matrix

  • This tool is used to evaluate the capabilities of a Third-Party Administrator (TPA) software vendor.
  • It is particularly useful when first selecting a TPA or considering a switch.
  • The matrix lists key functionalities required by the CE.
  • Criteria include the TPA's ability to manage different inventory models and replenishment logic.
  • It assesses the flexibility in defining and updating patient and provider eligibility rules.
  • The robustness and user-friendliness of the TPA's reporting features are evaluated.
  • The matrix should assess the TPA's data security protocols and HIPAA compliance.
  • It can also include factors like customer support and implementation services.
  • Each potential TPA is scored against these criteria to facilitate an objective comparison.
  • This structured assessment helps the CE choose a partner that best fits its specific needs and complexity.

Root Cause Analysis (RCA) Framework

  • An RCA framework is a structured problem-solving tool used to investigate a compliance breach.
  • It goes beyond just identifying the error and seeks to find the underlying cause.
  • Common RCA tools include the "5 Whys" or a "Fishbone" (Ishikawa) diagram.
  • A Fishbone diagram explores potential causes across categories like People, Process, Technology, and Policy.
  • For example, a diversion finding's root cause might not be a single mistake, but a flaw in the provider credentialing process.
  • The RCA process involves a multidisciplinary team to get different perspectives.
  • The outcome of the RCA is the foundation for an effective Corrective Action Plan (CAP).
  • A CAP that doesn't address the root cause is unlikely to prevent recurrence.
  • HRSA expects to see evidence of a thorough root cause analysis in a CE's response to an audit finding.
  • The CCP-340B must be skilled in leading these types of analyses.

340B Compliance Dashboard

  • A compliance dashboard is a high-level reporting tool used for ongoing program oversight.
  • It visually tracks Key Performance Indicators (KPIs) to provide a snapshot of program health.
  • Financial KPIs can include monthly savings estimates and inventory valuation.
  • Compliance KPIs can include the percentage of self-audit findings closed on time.
  • Operational KPIs can include contract pharmacy match rates and inventory accumulator balances.
  • The dashboard should use charts and graphs to make trends easy to spot.
  • For example, a sudden drop in a contract pharmacy's match rate could indicate a data feed problem.
  • The dashboard is typically reviewed monthly by the CCP-340B and quarterly by the 340B Steering Committee.
  • It provides a structured way to report on the program to executive leadership.
  • It transforms raw data into actionable intelligence for program management.

DSH Adjustment Percentage

  • This formula is the gateway to 340B eligibility for DSH hospitals. It measures the proportion of inpatient days attributable to low-income patients (those on Medicare SSI and Medicaid). It is calculated by CMS and found on Worksheet E, Part A of the Medicare Cost Report.

$$ \text{DSH \%} = (\frac{\text{Medicare SSI Days}}{\text{Total Medicare Days}}) + (\frac{\text{Medicaid, Non-Medicare Days}}{\text{Total Patient Days}}) $$

340B Ceiling Price

  • This statutory formula determines the maximum price a manufacturer can charge for a drug in the 340B program. It is calculated quarterly by the manufacturer for each covered outpatient drug at the 11-digit NDC level. The ceiling price is the Average Manufacturer Price (AMP) minus the Unit Rebate Amount (URA).

$$ \text{Ceiling Price} = \text{AMP} - \text{URA} $$

Virtual Inventory Replenishment

  • This is the core logic of a virtual inventory system. It ensures that drugs are repurchased on the correct account based on what was dispensed to patients. The system "accumulates" dispenses to eligible patients and triggers a 340B purchase order once a full package size is reached.

\( \text{Order Qty}_{\text{340B}} = \lfloor \frac{\sum (\text{Dispenses}_{\text{Eligible}})}{\text{Package Size}} \rfloor \)

340B Savings Estimation

  • This calculation is used to quantify the financial benefit of the 340B program. For each drug, it is the difference between what the entity would have paid at a non-340B price (typically WAC or GPO) and the actual 340B price, multiplied by the number of units purchased.

\( \text{Savings} = \sum_{i=1}^{n} [(\text{Reference Price}_i - \text{340B Price}_i) \times \text{Units}_i] \)

Penny Pricing Rule

  • "Penny pricing" is a specific outcome of the ceiling price formula. When a drug's AMP increases faster than its Best Price, the URA can become nearly equal to the AMP. If the calculated ceiling price (AMP - URA) is less than or equal to $0.01, the statute requires the ceiling price to be set at $0.01.

If \( (\text{AMP} - \text{URA}) \le \$0.01 \), then \( \text{340B Ceiling Price} = \$0.01 \)

Block 6: Advanced Topics & Governance

Purpose and Charter

  • A 340B Steering Committee is a best practice for program governance, though not explicitly required by HRSA.
  • Its purpose is to provide enterprise-level oversight and strategic direction for the 340B program.
  • The committee should have a formal charter that outlines its purpose, authority, and responsibilities.
  • The charter should define the committee's membership and meeting frequency.
  • It establishes a formal structure for accountability and decision-making.
  • Having a charter demonstrates a commitment to robust program management.
  • The committee serves as the central hub for all 340B-related compliance and optimization efforts.
  • It ensures that the program is not siloed within the pharmacy department.
  • The CCP-340B often drafts and maintains the committee charter.
  • The charter should be reviewed and approved by executive leadership.

Multidisciplinary Membership

  • Effective governance requires input from across the organization.
  • The committee should be multidisciplinary.
  • Pharmacy: The Director of Pharmacy and the CCP-340B are core members.
  • Finance: A representative from finance or revenue cycle is crucial for financial oversight.
  • Legal/Compliance: The organization's Compliance Officer and/or legal counsel should be members.
  • Executive Leadership: A C-suite sponsor (e.g., CFO, COO) provides authority and ensures resources.
  • IT: An IT representative is important for managing software systems and data feeds.
  • Clinic Operations: A leader from the ambulatory clinics provides an operational perspective.
  • This diverse membership ensures that decisions are considered from all angles.
  • It also helps to disseminate 340B knowledge and foster a culture of compliance throughout the entity.

Key Responsibilities

  • Reviewing and approving all 340B-related policies and procedures.
  • Monitoring program compliance through the review of audit results (both internal and external).
  • Overseeing the development and implementation of any Corrective Action Plans (CAPs).
  • Making strategic decisions, such as the Medicaid carve-in/out strategy.
  • Evaluating and approving new contract pharmacy arrangements.
  • Reviewing program financial performance and the use of 340B savings.
  • Staying informed about legislative and regulatory changes that could impact the program.
  • Ensuring the organization is in a constant state of audit readiness.
  • Providing support and resources to the 340B compliance team.
  • The committee is responsible for the overall health and integrity of the 340B program.

Meeting Frequency and Documentation

  • The steering committee should meet on a regular basis.
  • A quarterly meeting schedule is a common and recommended frequency.
  • This allows for timely review of data and emerging issues.
  • Ad-hoc meetings can be called if urgent issues arise.
  • Every meeting must have a formal agenda, distributed in advance.
  • Detailed meeting minutes must be taken.
  • The minutes should document who attended, what was discussed, what decisions were made, and what action items were assigned.
  • Meeting minutes provide a critical, auditable record of program oversight.
  • During a HRSA audit, these minutes can be requested as evidence of an active governance structure.
  • The CCP-340B is typically responsible for preparing the agenda and recording the minutes.

Reporting to the Board

  • The 340B program represents both a significant financial asset and a major compliance risk.
  • Therefore, it is a best practice for the steering committee to report up to the organization's Board of Directors or a subcommittee.
  • This reporting should occur on a regular basis, such as annually.
  • The report should provide a high-level summary of the program's status.
  • It should include an overview of program savings and how they are being used to support the mission.
  • It should also summarize the state of compliance, including any recent audit findings or key risks.
  • This ensures that the highest level of governance is aware of and engaged in the 340B program.
  • It demonstrates that the organization takes its fiduciary and compliance responsibilities seriously.
  • The C-suite sponsor of the steering committee is typically responsible for delivering this report.
  • The CCP-340B prepares the data and content for the report.

Calculating Program Savings

  • Accurately calculating 340B savings is essential for program management.
  • The basic formula is (Reference Price - 340B Price) x Units.
  • The "Reference Price" is the price the CE would have paid without 340B (usually WAC or GPO).
  • This calculation should be performed regularly (e.g., monthly) to track financial performance.
  • For contract pharmacy, savings are often calculated as the reimbursement received minus the 340B cost and fees.
  • This requires capturing claims adjudication data from the TPA or PBM.
  • The methodology for calculating savings should be documented and consistent.
  • These savings reports are a key deliverable for the Steering Committee and leadership.
  • They quantify the value of the 340B program to the organization.
  • The CCP-340B must be proficient in these financial calculations.

Tracking Program Costs

  • A successful program requires tracking not just savings, but also costs.
  • Direct costs include the purchase price of 340B drugs.
  • Vendor fees are a major cost, including fees for TPAs and contract pharmacies.
  • There are also internal administrative costs.
  • This includes the salaries of the 340B compliance staff (e.g., the CCP-340B).
  • It can also include the cost of compliance software and external consulting or auditing services.
  • Tracking these costs provides a full picture of the program's net financial impact.
  • This information is needed to calculate the program's return on investment (ROI).
  • Understanding the cost structure is crucial for budgeting and resource planning.
  • The finance department should be a key partner in tracking these costs.

The "Stretching Scarce Resources" Mandate

  • The intent of the 340B program is to allow CEs to "stretch scarce federal resources."
  • This means using the savings generated by the program to further the CE's patient care mission.
  • While the statute does not dictate exactly how savings must be used, HRSA expects them to be used appropriately.
  • Examples of appropriate use include expanding access to care for uninsured or underinsured patients.
  • Savings can be used to fund clinical services, such as medication therapy management or patient education.
  • They can also be used to offset the cost of uncompensated care.
  • The CE should be able to articulate and document how its 340B savings are being used.
  • This is crucial for responding to criticism that CEs are profiting from the program.
  • This narrative of value is a key advocacy tool.

Documenting Use of Savings

  • While not a formal HRSA audit requirement, documenting the use of savings is a best practice.
  • It provides a powerful defense of the program's value.
  • The CE should create an annual report or summary detailing the use of 340B savings.
  • This can include quantitative data, such as the value of free care provided.
  • It can also include qualitative data, such as patient testimonials or descriptions of new services.
  • The report can link specific programs or services to the 340B savings that fund them.
  • This documentation should be reviewed by the Steering Committee and shared with executive leadership.
  • Some CEs publish this information on their websites to be transparent with the community.
  • This practice helps to build support for the program among policymakers and the public.
  • The CCP-340B often plays a key role in gathering the data for these reports.

Navigating Payer Reimbursement Issues

  • Payer reimbursement is a major factor in 340B financial management.
  • The savings from 340B are realized when a payer reimburses the CE for more than the 340B drug cost.
  • Some payers, particularly PBMs and MCOs, have sought to reduce reimbursement for 340B drugs.
  • They may require claims to be identified as 340B and then pay a lower rate.
  • This practice, known as discriminatory reimbursement, reduces the CE's ability to generate savings.
  • Many states have passed laws prohibiting this practice.
  • The CCP-340B must be aware of the laws in their state.
  • They must also monitor payer contracts and reimbursement policies for any discriminatory clauses.
  • Working with the managed care and revenue cycle departments is key.
  • Navigating these complex reimbursement issues is an advanced area of 340B management.

Federal vs. State Authority

  • The 340B program is a federal program created by federal law.
  • HRSA is the sole federal agency responsible for its administration and oversight.
  • However, states can and do pass laws that impact the 340B program.
  • This is most common in the context of Medicaid and commercial insurance regulation.
  • A state cannot change the core federal requirements of the 340B program (e.g., patient definition, eligibility).
  • But, they can regulate how their state programs (like Medicaid) interact with 340B.
  • This creates a complex web of overlapping federal and state rules.
  • A CE must comply with both sets of regulations.
  • Where state and federal law conflict, federal law generally preempts state law.
  • The CCP-340B must be knowledgeable about both federal and state-level issues.

State Medicaid Policies

  • State Medicaid policies are the most common area of state-level 340B regulation.
  • As discussed previously, states set their own rules for duplicate discount prevention.
  • This includes whether MCO claims must be identified as 340B.
  • States also set their own reimbursement rates for 340B drugs dispensed to Medicaid patients.
  • Some states reimburse at a lower rate for 340B drugs, effectively taking a share of the discount.
  • The billing requirements (e.g., use of modifiers) for 340B claims vary by state.
  • These policies can have a major impact on the financial viability of carving in Medicaid.
  • The CCP-340B must stay up-to-date on their state's Medicaid provider manuals and bulletins.
  • This is a dynamic area, with state policies changing frequently.
  • Collaboration with the CE's revenue cycle and government relations teams is essential.

Prohibitions on Discriminatory Reimbursement

  • In response to PBMs and insurers cutting 340B reimbursement, many states have passed anti-discrimination laws.
  • These laws prohibit payers from reimbursing a 340B Covered Entity or its contract pharmacy at a lower rate simply because the drug was purchased through 340B.
  • They also often prohibit payers from imposing extra fees or audits on 340B providers.
  • These laws are designed to protect the CE's ability to generate savings from the program.
  • The specific protections and enforcement mechanisms vary by state.
  • Over half of all states have enacted some form of these protections.
  • The CCP-340B must know if their state has such a law and what it covers.
  • This information is critical when negotiating contracts with PBMs and health plans.
  • These state laws are a key focus of 340B advocacy efforts.

Regulation of PBMs and TPAs

  • Some states have also begun to regulate the activities of Pharmacy Benefit Managers (PBMs) and Third-Party Administrators (TPAs).
  • These laws may require PBMs and TPAs to be licensed by the state.
  • They may impose standards of conduct and transparency on these entities.
  • For example, a state law might require a TPA to disclose its fee structure to the CE.
  • It might also set standards for data security and handling.
  • These laws are generally aimed at protecting CEs from predatory or unfair business practices.
  • While not directly regulating the 340B program, they affect the vendors that CEs rely on.
  • This is an emerging area of state-level activity.
  • The CCP-340B should be aware of any such laws in their state that could impact their vendor relationships.

Staying Informed on State-Level Issues

  • Staying informed about state-level issues requires a multi-faceted approach.
  • Regularly reviewing the state Medicaid agency's website and publications is a must.
  • Monitoring the state legislature's activities during its session is also important.
  • Joining state-level hospital or health center associations can provide valuable updates and advocacy opportunities.
  • National 340B advocacy groups (like 340B Health or NACHC) also track and report on state-level developments.
  • Networking with 340B professionals at other CEs in the same state is a great way to share information.
  • The legal and regulatory landscape is constantly shifting.
  • A proactive approach to monitoring is necessary to avoid being caught off guard by a new law or rule.
  • This is an advanced competency for a CCP-340B, demonstrating an understanding of the broader program environment.

Recent Legislative Action

  • The 340B program is frequently a topic of debate in the U.S. Congress.
  • Numerous bills are introduced each session to reform, expand, or restrict the program.
  • These bills rarely become law, but they indicate the direction of the policy debate.
  • Recent legislative efforts have focused on issues like defining "patient" in statute.
  • Other proposals have sought to impose stricter reporting requirements on CEs regarding their use of savings.
  • There have also been bills to provide more clarity on contract pharmacy arrangements.
  • The CCP-340B should have a general awareness of major federal legislative proposals.
  • Advocacy groups are the best source for tracking these developments.
  • While not directly testable on day-to-day compliance, understanding the legislative environment is part of being a subject matter expert.
  • It helps to anticipate potential future changes to the program.

HRSA Rulemaking and Guidance

  • HRSA has the authority to issue regulations and guidance to implement the 340B statute.
  • Regulations go through a formal notice-and-comment process and have the force of law.
  • Guidance documents explain HRSA's interpretation of the statute but are not legally binding in the same way.
  • A major area of recent rulemaking has been the Alternative Dispute Resolution (ADR) process.
  • HRSA has also issued guidance on numerous topics, including the patient definition and contract pharmacy.
  • The status of this guidance can be complex, as it is sometimes challenged in court.
  • The CCP-340B must stay current on all new final rules and significant guidance from HRSA.
  • The HRSA website and the Federal Register are the official sources for this information.
  • Failure to adapt to new rules or guidance can lead to non-compliance.
  • This is a key reason why continuous learning is essential in the 340B field.

Key Judicial Decisions

  • In recent years, the 340B program has been the subject of numerous lawsuits.
  • These cases often involve disputes between CEs, manufacturers, and the government.
  • A major area of litigation has been manufacturer restrictions on 340B pricing for drugs dispensed at contract pharmacies.
  • Courts have issued conflicting rulings on whether HRSA has the authority to enforce its contract pharmacy guidance.
  • Another key lawsuit was a Supreme Court case regarding Medicare Part B reimbursement cuts for 340B hospitals.
  • The Supreme Court ruled unanimously in favor of the hospitals in that case.
  • These court decisions can have a profound impact on program operations and finances.
  • The CCP-340B should be aware of the outcomes of major 340B-related litigation.
  • This helps to understand the legal basis for current policies and potential future risks.
  • Legal developments often shape the next wave of regulatory and legislative action.

Manufacturer Restrictions on Contract Pharmacy

  • Beginning in 2020, many drug manufacturers began imposing restrictions on 340B pricing for drugs shipped to contract pharmacies.
  • Some manufacturers stopped offering the discount altogether for contract pharmacy dispenses.
  • Others will only provide the discount to a single contract pharmacy designated by the CE.
  • Some require the CE to submit claims data from its contract pharmacies to a third-party platform as a condition of receiving the discount.
  • These restrictions have been the subject of intense litigation and government enforcement action.
  • HRSA has maintained that these restrictions are a violation of the 340B statute.
  • This issue has created enormous operational and financial challenges for CEs.
  • The CCP-340B must have a process for tracking these manufacturer-specific policies.
  • They must also have a strategy for responding, whether through data submission or dispute resolution.
  • This remains one of the most volatile and complex issues facing the 340B program.

The Role of Advocacy

  • Given the constant policy churn, advocacy is a critical part of the 340B ecosystem.
  • National organizations like 340B Health (for hospitals) and NACHC (for health centers) lead these efforts.
  • They represent the interests of CEs before Congress, HRSA, and the courts.
  • They provide valuable education, resources, and analysis to their members.
  • The CCP-340B can participate in advocacy by staying informed and sharing their program's story.
  • This includes responding to surveys and data requests from advocacy groups.
  • It can also involve communicating with elected officials about the importance of the 340B program to the community.
  • By providing real-world examples of how 340B savings are used, CEs can help to shape the policy debate.
  • Understanding the advocacy landscape provides important context for the compliance role.
  • A well-informed compliance professional is also an effective advocate for their program.

The Spirit vs. The Letter of the Law

  • Compliance requires adhering to the specific "letter" of the 340B statute and HRSA guidance.
  • This means following the rules for eligibility, purchasing, and billing precisely.
  • However, a successful program also embodies the "spirit" of the law.
  • This involves using the program's savings to benefit the community and enhance patient care.
  • A key role of the CCP-340B is to track and articulate how savings are used.
  • This narrative is crucial for defending the program against external scrutiny.
  • It demonstrates that the entity is a good steward of the benefit.
  • Compliance is the foundation, but mission impact is the ultimate goal.
  • Balancing rigorous compliance with demonstrating value is a core competency.
  • Always ask: "Is this compliant?" followed by "How does this help our patients?"

The Primacy of Auditable Records

  • The fundamental rule of 340B compliance is: "If it isn't documented, it didn't happen."
  • HRSA audits are based entirely on the CE's ability to produce clear, auditable records.
  • Every single 340B transaction must be traceable and defensible.
  • This includes policies, procedures, eligibility documentation, purchasing records, and dispensing data.
  • Records must demonstrate patient eligibility for every 340B drug.
  • They must prove that duplicate discounts were avoided.
  • They must show that GPO and orphan drug rules were followed.
  • The CCP-340B must think like an auditor at all times.
  • Proactive documentation and record-keeping are the best defense against adverse audit findings.
  • A lack of auditable records is itself a major finding, even if no other violation is found.

Oversight as a Continuous Process

  • 340B compliance is not a one-time project; it is a continuous, dynamic process.
  • The program is constantly changing due to new regulations, guidance, and state policies.
  • The CE's own operations (new clinics, new providers, new software) also change.
  • Therefore, oversight must be ongoing.
  • This includes regular self-audits, policy reviews, and staff training.
  • It involves continuous monitoring of KPIs through a compliance dashboard.
  • The CCP-340B must foster a culture of compliance throughout the organization.
  • The 340B steering committee is a key governance body for this ongoing oversight.
  • Waiting for an external audit to review compliance is a recipe for failure.
  • The goal is a state of constant audit readiness.

The Covered Entity's Ultimate Responsibility

  • A CE can delegate operational tasks to TPAs and contract pharmacies.
  • However, the CE can never delegate its ultimate responsibility for program compliance.
  • HRSA holds the Covered Entity, and only the Covered Entity, accountable for violations.
  • This is true even if the violation was caused by an error from a TPA or contract pharmacy.
  • Therefore, robust oversight of all vendors and partners is non-negotiable.
  • This includes regular audits, performance monitoring, and strong contractual agreements.
  • The CE must understand how its TPA's software works and what its limitations are.
  • The CCP-340B acts as the CE's internal expert to ensure this oversight is effective.
  • "Our TPA handles that" is not an acceptable answer in a HRSA audit.
  • The CE's Authorizing Official is the individual who attests to compliance and is ultimately on the line.

Role as Expert, Educator, and Leader

  • The CCP-340B is the organization's subject matter expert on all things 340B.
  • This requires a commitment to continuous learning to stay current with a rapidly changing program.
  • A key part of the role is to be an educator.
  • You must be able to explain complex 340B rules to different audiences, from pharmacists to executives.
  • Effective training programs are essential to building a compliant culture.
  • The CCP-340B is also a leader.
  • You must lead the steering committee, lead audit responses, and lead compliance initiatives.
  • This requires strong project management, communication, and interpersonal skills.
  • You are the champion for program integrity and the advocate for program value.
  • This certification represents a commitment to this high level of expertise and leadership.
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