Health Center Compliance with the Federal 340B Program

The Federal 340B Program has detailed compliance requirements and participants are struggling to understand, comply with, and monitor these requirements.  Scrutiny by the Health Resources Services Administration (HRSA) had been mainly focused on for profit hospital environments; however, the focus is now shifting towards Health Centers and contracted pharmacies.   HRSA along with the Office of Pharmacy Affairs (OPA) is expected to begin announcing audits of the 340B Program at a substantial number of Health Centers around the country in the next few years.  These audits will assess compliance with all facets of the programs.
Major issues in the Federal 340B Program now revolve around:

  • Duplicate discount guidelines, especially surrounding Medicaid patients.
  • Patient definition, especially considering referrals.
  • Physician outreach programs (at offsite locations) or moonlighting.
  • Risks related to retail pharmacy sales at an onsite location.

Health Centers who utilize contract pharmacy arrangements are at greater risk of an audit.   Retail pharmacy chains who have become involved in the 340B Program have been lackadaisical regarding the compliance requirements and it has been reported that some retail chains do not even have a basic understanding of the program.   These chains may:

  • Protest against outside auditors or the Health Center staff reviewing files and controls surrounding compliance of the program. They may claim that the information is “proprietary data” and deny any access to the records.
  • Be improperly processing Medicaid MCO claims for 340B patients.
  • Be contracting with multiple Health Centers at one individual site. This increases the risk of the mismanagement of revenue due to multiple patient files.
  • Be adding up to 25 locations, anywhere in the United States, as approved contracted pharmacies of the Health Center even if the Health Center thought their contract was for one site. Sometimes these additional locations are mail order, where a patient is not even seen by the contracted staff.

The Health Center who contracts with a retail pharmacy chain is responsible for all compliance requirements with the program.  A finding of non-compliance with the program can mean sanctions, being removed from the program and/or repayment to manufacturers for the period of the violation.  The Health Center should consider if the proper controls and procedures are in place to adequately maintain the program in accordance with Federal guidelines.
AAFCPAs performs program audits of both on-site and contract pharmacies enabling Health Center clients to monitor compliance and reduce any potential risks from an OPA audit.
If you would like to talk to an AAF professional about how this affects your organization, please contact Matt Hutt, CPA.
Additionally, feel free to share your thoughts using the form below.
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About the Author

Matthew Hutt CPA
Matt leads AAFCPAs’ Healthcare Division, providing assurance, tax and advisory solutions for Federally Qualified Health Centers (FQHCs), behavioral health providers, home care agencies and hospices, nursing homes, and senior care living centers. Matt advises healthcare providers on consolidation and coordination of care, including the integration of behavioral health into the primary care delivery system. He also provides consulting solutions for providers transitioning to new value-based reimbursement models, and data driven patient care, including: developing business process and controls for collecting and advantaging data to provide analysis on: provider activity, delivery of care, and analysis of efficiency & cost effectiveness. Matt is also highly-sought after for his knowledge on issues related to affordable housing developers with requirements related to the US Department of Housing and Urban Development, MassHousing, Low Income Housing Tax Credits, Historical Tax Credits and New Markets Tax Credits. 

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