The federal 340B Drug Pricing Program can deliver significant financial and patient care benefits to healthcare providers, but it's long been a double-edged sword for many organizations such as rural clinics, specialty clinics and federally qualified health centers (FQHCs).
On one hand, the program allows healthcare providers to help disadvantaged individuals get the outpatient prescription drugs they need. On the other hand, it’s becoming increasingly difficult to maximize the program's benefits and comply with its evolving regulations and pushback from the pharmaceutical industry. This is especially true as tight staffing and operating budgets strain all types of providers.
Many healthcare organizations lack the internal expertise or resources to navigate a drug pricing program made complex by regulations intended to ensure delivery effectiveness and minimize fraud. The frequent regulatory updates add another layer of complexity, making it even more challenging to stay compliant. Legacy, siloed compliance and administrative solutions can also create program challenges because they limit data visibility and make it difficult to share insights across an organization.
5 Best Practices to Reduce 340B Pain and Risk
If your organization is feeling the 340B pain, here are five areas where best practices can lighten your burden by helping you strengthen internal controls, keep up with regulatory compliance changes and mitigate program-related risks (hello, HRSA audit!).
1. Understand the full extent of your organization's risk
Gaining end-to-end visibility into your 340B program operations and the risks involved can save you operational and compliance headaches. To accomplish that goal, you need to understand how activity flows through the program and conduct regular, comprehensive risk and internal control assessments to identify vulnerabilities and gaps and proactively mitigate issues.
- Screen for eligibility and other common compliance risks. The process for meeting eligibility requirements for covered entities along with each prescription is becoming increasingly more challenging. With the rise of contract pharmacies that create a layer between the patient and healthcare organization, diversions, or ineligible patients receiving 340B drugs, are a common and growing problem. Healthcare providers must also be diligent about ensuring they have controls in place to prevent or detect duplicate discounts (i.e., 340B discounts and Medicare fee-for-service rebates on the same drug). Failure to comply can result in financial penalties and loss of program eligibility.
- Move away from manual processes. If you’re still using email and spreadsheets for monitoring activity and tracking compliance requirements, you could introduce greater risks. Manual processes add to the complexity of assessments and can lead to errors.
Today’s lean staffing situation can make matters even worse. Teams overloaded with manual processes have a greater risk of missing crucial information or entering incorrect data. There are often opportunities to use systems already in place or data analytic tools to help shore up controls. In addition, ensure you have the subject matter expertise to know what to look for, and design processes and controls that help reduce exposure to these operational and compliance risks.
2. Be prepared for an HRSA audit
It’s not a matter of whether you will be audited by the Health Resources and Services Administration (HRSA); it's when. Beat HRSA to the punch.
- Document all policies, procedures and work instructions and keep complete and accurate compliance records that cover a minimum of three years. Those records include invoices, contracts, bill-to and ship-to addresses and medical records.
- Conduct internal 340B audits regularly. When the HRSA arrives, your team will be prepared with documentation in hand. You’ll be able to say, “Look, here are the last three quarters' worth of our internal audits . Here's what we found. Here's how we improved our operation.” HRSA loves seeing audits that drive Quality Assurance and Performance Improvement (QAPI) and document progress. A history of audit readiness and compliance demonstrates your organization's commitment to integrity, transparency and accountability in program participation. Maintaining a positive reputation is crucial for building trust with patients, partners and regulatory agencies.
- Work on continual training and adoption. You don't want an uninformed staff member jeopardizing your organization’s compliance. Train all those involved in compliance, especially new employees, so that they fully understand 340B requirements, policies and procedures.Hold semi-annual training sessions, at a minimum, with additional 3-month followup training for new employees.
- Document your training. This is another advantage when HRSA comes knocking.
3. Recognize what it takes to implement and optimize 340B effectively
Success depends on managing your 340B program with the idea that everything leads to achieving maximum benefits, operational efficiency and compliance. Consider these strategies to meet that goal.
- Leverage technology. Automation technology with data analysis capability can help you accelerate, streamline and facilitate all areas of your operation, including implementing and optimizing 340B. It can eliminate manual processes that slow down work and lead to errors and make gathering data about your operation faster and easier, bringing data sources together and removing silos. You can also gain better visibility into your operation and insights to make more informed decisions and ensure the best outcomes, including 340B compliance.
- Foster organization-wide acceptance of internal audits and continuous improvement. Discuss how conducting audits on a regular basis can be a positive practice, leading to continual improvement. Yes, mock audits can score points with the HRSA, but a continual-improvement culture offers benefits beyond just meeting compliance, including enhancing efficiency for better staff and patient experiences. Make sure any findings during an internal audit are dealt with appropriately — having an HRSA audit that discovers the same errors/issues can create a much bigger problem.
- Seek expert assistance with negotiations. Creating an effective implementation also involves negotiating with manufacturers and GPOs. Unless your team has extensive experience and skill in ongoing vendor contract negotiations, it's best to bring in a specialist to achieve the optimal results (like pricing, specific drug/dosage coverage and contract expiration) and avoid issues. For example, overlooking contractual interpretation issues or inefficiencies in patient service agreements can hurt compliance and your bottom line.
4. Strengthen your internal controls
Put another assessment on the list for safeguarding program integrity and ensuring compliance. This one involves internal controls — how much control do you have over your operation? Over your inventory to prevent misuse or loss of drugs?
- Make sure you have checks and balances for the data reported on inventory and supply chain management. That means you need controls limiting access to only those directly responsible for the data. You also want a separation of duties.
No one person should be responsible for every aspect of the program. For example, you should separate the jobs of drug purchasing and dispensing. Even components within general administrative functions such as data management, including data gathering and analysis, should be separated, if possible to ensure integrity and compliance.
- Document all policies and procedures regarding your internal controls. This practice will help you avoid last-minute scrambling when the HRSA requests such records.
5. Fill your 340B expertise gaps
If your organization is like many and you don't have the time, internal expertise or resources to navigate 340B, consider bringing in specialists to help create a well-managed program. Such a program can not only help meet HRSA requirements, it can also be a key factor in enhancing financial sustainability and providing better patient care through improved operational efficiency.
Here are some areas where outside resources can play an important role.
- Identify gaps. Partner with internal or external subject matter experts to identify areas for improvement and fill in compliance and operational gaps.
- Understand and strengthen compliance. You can subscribe to newsletters, pour over the HRSA website, attend conferences and engage with industry associations to stay ahead of compliance changes. But do you really want to spend the time, given all your responsibilities? Consider partnering with a 340B consultant who can keep you informed of policy changes, new regulations and best practices.
- Boost credibility. An independent assessment can help improve credibility with board members, leadership, physicians, patients, regulators and other stakeholders about the state of your operations and compliance. You can tell the board, “The consultant has kicked the tires and done an objective audit.” And if you pass, you can confidently say, “We’re good.”
- Learn how to create a continual-improvement culture. Many organizations have difficulty developing the culture required for successful compliance because of a lack of expertise or internal resistance to change. Consultants can help teach and motivate as independent, unbiased resources, presenting the benefits of continual improvement and guiding your organization to adoption.
Feeling Overwhelmed by 340B Compliance Challenges?
Operating a compliant 340B program isn't easy when you're focused on meeting patient and operational needs with a lean staff and even leaner budget. But you don't have to tackle the endless requirements alone. We've been guiding healthcare organizations through 340B challenges for decades. Find out more about how our healthcare internal audit experts can help you mitigate risk and stay ahead of 340B regulatory changes.
