Keeping up with 340B Program changes: Audit findings review

Like complying with the rules of other government healthcare programs, your healthcare organization’s compliance with 340B Drug Pricing Program requirements is crucial. But frequent regulatory changes and constantly evolving program requirements can make compliance challenging. 

The 340B Program enables eligible healthcare provider organizations, or covered entities, to stretch their often-scarce resources to reach more patients and provide more comprehensive care. Created in 1992, the federal government program requires drug manufacturers to provide outpatient drugs to these covered entities at substantially reduced prices. 

The Office of Pharmacy Affairs of the Health Resources and Services Administration oversees the 340B Program to ensure covered entities comply with the program’s requirements. HRSA conducts its audits of covered entities annually. Your healthcare organization can prepare for its audit by reviewing HRSA audit expectations and results. This article covers some of the most recent audit findings available from HRSA that shed light on HRSA’s areas of focus and can help you prepare for next year and beyond. 

Background: What are 340B Program audits? 

There are two types of 340B Program audits: 

• HRSA program integrity audits, which evaluate covered entities’ compliance with eligibility requirements and documentation. 
  
  
• Manufacturer audit of covered entities, which manufacturers of covered outpatient drugs request from HRSA to ensure covered entities are complying with eligibility and documentation requirements. 
  
  

This article covers the first type of 340B Program audit, the HRSA program integrity audits. Covered entities should be aware of these audit findings as they focus on their 340B Program compliance and prepare for their upcoming audit. 

Since 2017, HRSA began using consulting and technology firm The Bizzell Group to conduct audits on the agency’s behalf. Since then, we have noticed a more robust, sophisticated audit process from previous HRSA auditors. As HRSA’s audit processes have evolved, covered entities’ internal monitoring processes for 340B Program compliance also should evolve and advance. 

Takeaways from HRSA audit findings 

One way to maintain a robust 340B Program compliance program is to stay up to date with HRSA audit findings. And there are a lot of audit findings available to help your organization prepare. The number of audits has been steadily increasing since 2012, when HRSA began conducting them. 

HRSA has performed approximately 200 audits per year since 2015, and it has posted more than 2,000 audit results on its website since 2012. In this article, we’ll focus on some of the most significant HRSA fiscal year 2023 program integrity audit findings to date. Here are nine key audit findings with takeaways for your preparation.  

• Of the FY 2023 covered entities audited, 83% were hospitals, 40% were critical access hospitals, and 33% were disproportionate share hospitals. 
• In FY 2023, HRSA audited covered entities from 39 states. 
• Grantees made up nearly 17% of the covered entities audited in FY 2023. This includes Community Health Centers, Ryan White HIV/AIDS Program grantees, and Sexually Transmitted Disease Clinics. 
• “Incorrect 340B OPAIS Record” was the most common audit finding at 50%, followed by “Inaccurate or Incomplete Medicaid Exclusion File” at 31%. 
• “Duplicate Discount” was a finding in 10% of audits, and “Diversion” was a finding in 7%. Most diversion findings are related to a 340B Drug Program drug dispensed to an inpatient. 
• “Incorrect Entry in 340B OPAIS for Medicare Cost Report Filing Date” was the most common “Inaccurate 340B OPAIS Record” finding. 
• “Failed to Remove Duplicate Contract Pharmacies From 340B OPAIS” and “Off-Site Outpatient Facilities Not Listed in 340B OPAIS” were two other common inaccurate 340B OPAIS record findings. 

In addition, in FY 2019, HRSA made two changes to the audit language that had significant effects on FY 2023 audit findings: 

• “Areas for Improvement” do not require a response in “Corrective Action Plan.” This change has been significant because it means that covered entities do not have to spend time submitting a formal corrective action plan for each area of improvement found during the audit process. 
• The word “recommends” replaced “expects” in the Areas for Improvement section regarding annual independent audits of contract pharmacies. This language change had caused some organizations to review the annual external audit requirement in the contract pharmacy program as optional. However, beginning in FY 2023, HRSA included a new data request list item, which requires covered entities to provide a cover page or statement on letterhead from the organization that conducted the last independent audit of that covered entity’s contract pharmacy or pharmacies. HRSA requires the document to include the audit period covered, audit scope, who completed the audit, and when the audit was completed. It appears that by adding this requirement HRSA might be looking for an external review of the covered entity’s 340B Program. In response to this addition, covered entities should consider such an external review as a requirement when prioritizing their compliance activities. 
  
  

Need more 340B Program compliance strategies? 

Staying up to date on current 340B Program audit findings such as those listed here is one way to make sure your organization stays compliant with evolving requirements.  

To learn more about how Kodiak’s 340B Program experts can help you enhance your 340B Program monitoring and compliance, reach out to us today.