Section 340B of the Public Health Service Act discounts outpatient drugs for healthcare organizations that care for many uninsured and low-income patients. This includes Federal grantees from HRSA, the Centers for Disease Control and Prevention (CDC), the Department of Health and Human Services’ Office of Population Affairs, the Indian Health Service and other qualifying hospitals. In order to continue to purchase drugs at the discounted rate provided by pharmaceutical manufacturers, organizations must consistently:
- Keep their information accurate and up to date, including the addition of new outpatient facilities
- Recertify eligibility each year
- Prevent the transfer of drugs to ineligible patients
- Report on how they bill other drug rebates, such as ones through Medicaid, to prove they’re not receiving duplicate discounts
- Maintain auditable records documenting compliance with the program
340B Compliance Risks
The Health Resources and Services Administration (HRSA) uses a program-specific audit process for its 340B compliance audits that does not follow Generally Accepted Government Auditing Standards (GAGAS). They are also performed by highly trained auditors. This makes it more difficult to prepare for and pass.
Failure to pass your 340B audit may result in a “Corrective Action Plan Implementation and Repayment” (CAP). This involves:
- Removal from the 340B program
- Providing a refund to manufacturers within six months
- HRSA posting a notice on its website to alert manufacturers to the extent that violations have occurred
- A requirement to submit additional documentation to demonstrate its CAP implementation
- A re-audit to assess compliance with 340B Program requirements (if auditors identify the same finding of noncompliance, the organization may be subject to additional audits)
Being found guilty of noncompliance in two or more audits is often viewed by auditors as a systematic problem. This can lead to disqualification from re-entering the 340B program for a considerable period of time.
Using risk-based software to prepare for a 340B audit not only prevents you from failing your audit, but it helps you cut down on the time and resources you may otherwise waste preparing for one manually.