Hospitals and other healthcare providers hoping to participate in the federal 340B Drug Pricing Program need to register with the Health Resources & Services Administration (HRSA). As a prerequisite, providers need to already receive Medicare and Medicaid funding and they must be willing to divert the savings they get under 340B into expanding healthcare access to people in need.
Healthcare providers will often work with 340B consultants, like Florida-based Ravin Consultants, to determine eligibility and implement their programs. Once signed up, they become covered entities under the program. They are then required to meet certain criteria to continue in the program from one year to the next.
According to the HRSA, there are five requirements for continuing 340B program participation:
1. Maintain Accurate OPAIS Information
All the information the HRSA relies on to administer the 340B program is contained in a database that is part of the Office of Pharmacy Affairs Information System (OPAIS). A good portion of that information is provided by the covered entities themselves.
In order to continue in the program, covered entities must maintain accurate and up to date OPAIS information. This includes registering new outpatient facilities as they are added to a covered entity’s program. Covered entities must also provide information about their contract pharmacies.
2. Prevent Illegal Diversion
Covered entities purchase discounted outpatient drugs from pharmaceutical companies through the 340B program. Those drugs cannot be distributed to just anyone. Program rules distinguish between eligible and ineligible patients.
To remain in the program, covered entities must take steps to prevent illegal diversion of the covered drugs to ineligible patients. They must document how they prevent such diversion. Diversion includes both selling and otherwise transferring drugs to patients.
3. Avoid Duplicate Discounts
The 340B program prohibits manufacturers from offering both discounted pricing and Medicaid drug rebates on the same drug. In other words, manufacturers cannot allow covered entities to double dip. In order to remain in the program, covered entities must report their Medicaid billing for fee-for service drugs so as to document their avoidance of duplicate discounts.
4. Maintain Audit Preparedness
The HRSA relies on regular 340B audits to ensure compliance among covered entities. Interestingly, the audits do not always have to be conducted by government agents. Under certain circumstances, pharmaceutical companies can conduct audits as well.
At any rate, covered entities are required to maintain audit preparedness to continue participating in 340B. That means they are required to keep meticulous records covering everything from the drugs purchased to the discounts received to how drugs were distributed to patients. All their documentation must be fully auditable.
Failing to keep appropriate records could result in both program termination and a requirement for the covered entity to reimburse pharmaceutical companies for any discounts they received. In short, failing an audit could result in financially devastating consequences.
5. Recertify Eligibility
Finally, covered entities must recertify their eligibility on an annual basis. As a reminder, the HRSA sends emails to a covered entity’s primary contact and authorizing official. Both parties are required to log on to the OPAIS to update and modify information as needed.
As far as federal programs go, the 340B discount drug program is fairly straightforward. Yet it is still not the easiest program to navigate. In order to maintain compliance and continue participation, a covered entity needs to make sure that all its T’s are crossed and its I’s dotted. The biggest hurdle is record-keeping. If an organization is lax in this one regard, it could very well jeopardize its eligibility for 340B in both the short and long terms.