Speaker 1 (00:04):
Welcome to 340B Insight from 340B Health.

David Glendinning (00:12):
Hello, from Washington, D.C. and welcome back to 340B Insight. The podcast about the 340B Drug Pricing Program. I'm David Glendinning with 340B Health. We hope you had a restful and safe end of the year, and we are thrilled to be back to kick off our 2021 season of the podcast. This episode is sponsored by 340Basics. 340Basics is a third party administrator that combines its intuitive drug inventory system and split billing software ensuring the administration of the 340B Program in a hospital setting remains compliant, is uncomplicated and furnishes improved management of the 340B Program.

David Glendinning (00:54):
Please learn more by visiting 340basics.com. Our guest today is Steven Miller, the Vice President of Pharmacy Services here at 340B Health. We spoke with Steve about federal auditing of 340B hospitals. Hospitals need to be prepared for the possibility of these audits of their programs, even if they have not undergone one in the past. So, we know it is an issue that is on many of your minds, but before we go to that interview, let's take a minute to cover some of the latest news about 340B.

David Glendinning (01:24):
The end of December featured a major development in the ongoing fight over the issue of discounts for 340B covered entities on drugs dispense to contract pharmacies. The top lawyer for the Department of Health and Human Services issued an advisory opinion stating unequivocally that drug manufacturers must offer these discounts regardless of where eligible hospital patients receive the covered drugs. As HHS general counsel Robert Charrow wrote, "To the extent contract pharmacies are acting as agents of a covered entity, a drug manufacturer in the 340B Program is obligated to deliver its covered outpatient drugs to those contract pharmacies, and to charge the covered entity no more than the 340B ceiling price for those drugs." Be sure to check out the letter posted in the show notes. It's a heck of a read. The development means that the six drug companies to date that have refused 340B pricing through contract pharmacy are in violation of federal law.

David Glendinning (02:34):
According to HHS, 340B Health released a statement from our president and CEO, Maureen Testoni applauding the advisory opinion and calling for the process of refunding effected hospitals to begin as quickly as possible. But at least some of the drug makers indicated that they would continue to defy federal authorities by keeping the restrictions in place on 340B contract pharmacies. The HHS advisory opinion by itself does not institute an enforcement proceeding against the specific manufacturers that have denied 340B pricing for contract pharmacy.

David Glendinning (03:10):
Potential next steps could involve HHS sending letters demanding that the manufacturers cease their conduct or referring the companies to the Office of Inspector General to assess civil monetary penalties for 340B overcharging. The opinion could support such penalties. In addition, 340B Health is part of a joint federal lawsuit on this issue and that litigation remains active and pending. Our complaint asks a court to order that effected hospitals be repaid for the discounts that companies should have been offering them. You can read details about our lawsuit in the show notes for this episode or at stop340bcuts.org.

David Glendinning (03:50):
And now, for today's feature interview with 340B Health Vice President of Pharmacy Services, Steven Miller. As many of you know, the federal government contracts with auditors to review a couple of hundred 340B covered entities every year, mostly hospitals. Those auditors are looking for possible 340B Program non-compliance such as instances of database errors, duplicate discounts or diversion. Preparing for and successfully navigating such reviews are one of the most important jobs for a hospital's pharmacy and administrative staff. Our own Myles Goldman sat down with Steve to discuss the 340B audit process. Let's hear that conversation.

Myles Goldman (04:39):
Thanks, David. I'm joined by Steven Miller, the Vice President of Pharmacy Services at 340B Health. Steve, I'm looking forward to discussing a topic of great importance to 340B hospitals, audits and how to prepare for them. Welcome to 340B Insight.

Steven Miller (04:57):
Thank you, Myles.

Myles Goldman (04:58):
Before we get started discussing audits, can you tell us a little bit about your background and training?

Steven Miller (05:04):
Well, thank you for asking about this Myles. I have an extensive background in independent pharmacy hospital, health system pharmacy and financial business operations. It's hard to believe I started working in a local independent drug store and that's what we called pharmacies in the '70s as a clerk more than 40 years ago. In early 2005, I left retail and went to work for an academic medical center as a staff ambulatory pharmacist and worked my way up to the director of ambulatory pharmacy. And then later, the director of pharmacy business services. I was responsible for all of the outpatient pharmacy operations, 340B regulatory requirements, pharmacy contracting, third-party billing, pharmacy patient billing, pharmacy patient assistance, and pharmacy department financial reporting. I left UVA in October of 2016 to join 340B Health as the only pharmacist on staff, and I'm happy to be here.

Myles Goldman (06:08):
We're certainly happy to have you as a colleague. So, let's talk about audits. A recent report from the government accountability office noted that HRSA has performed more than 1200 audits of covered entities since 2012. Were hospitals included in that total?

Steven Miller (06:27):
Yes Myles, they were. Actually HRSA has posted 1430 audit results for covered entities through December of 2020. Of those 78% were for hospitals, that's more than a thousand hospitals that have audit results posted. A stark comparison, HRSA has audited only 31 pharmaceutical manufacturers hosting findings for seven of those. All of those findings have been posted after the civil monetary penalty and ceiling price rule was finalized to pretty interesting comparison to see how few manufacturers have actually been audited.

Myles Goldman (07:07):
That is good to know. Let's start with the basics. How frequently does HRSA audit a 340B hospital and do hospitals know when they are going to be audited?

Steven Miller (07:17):
In federal fiscal year 2015, HRSA began auditing 200 covered entities each fiscal year. About 155 of the 200 audits are 340B hospitals. About 60% of those, 155 are DSH hospitals. HRSA uses an algorithm to identify 90% of the covered entities to audit. The more 340B drug purchases, child sites, contract pharmacies you have, the more likely you are to be audited. The remaining 10% of the audits are targeted audits due to complaints from other 340B stakeholders such as manufacturers, or previously audited covered entities with findings. HRSA calls this a re-audit.

Myles Goldman (08:04):
Who does the actual audit?

Steven Miller (08:07):
In 2016, HRSA contracted with the Buzzell Group to perform the 340B site visits and collect information about the covered entities, 340B policies, practices, and then trace selected samples from the data that the covered entities have submitted in advance. Most of the auditors are pharmacists and at least one is a pharmacy technician by background. Some of the auditors continued to work for hospitals or health centers while performing audits for HRSA. So, they have an in-depth working knowledge of 340B. Several of the auditor have been auditing covered entities since the Buzzell Group started auditing for HRSA in 2016. These auditors are often described as very knowledgeable, easy to work with, detailed, very thorough, but also willing to help identify supporting documentation for the samples they are tracing.

Myles Goldman (09:03):
Is there a particular aspect of the audit process that hospitals should spend the most time preparing for?

Steven Miller (09:11):
Well, first you have to make sure that you have adequate policies and procedures that you can follow and then you are following and then make sure that they align with HRSA enforcement. Secondly, you'd need to make sure your data is clean and well-organized, that's quite a task. You need to know exactly where to find the supporting documentation for each compliance element that's included in the audit.

Myles Goldman (09:38):
I want to examine with you best practices for preparing for a 340B audit. What role does a hospital's data play in preparing for the audit?

Steven Miller (09:48):
That's a great question, Myles. Data is key, right? Hospitals may use different software solutions for different aspects of the patient's healthcare journey in the hospital encounter patient registration, medical record, insurance billing, patient billing, pharmacy split billing. All of these software programs may be a separate system or they may be a component or module of a larger integrated technology solution.

Steven Miller (10:17):
Regardless, as the patient moves to the health encounter, the patient's information i.e. their data must also flow through each of the systems until it is ultimately filtered and sorted for 340B eligibility. And error at any point along the way can result in a drug being claimed as 340B that shouldn't, or a missed opportunity for savings. To prepare for an audit you must have a clear understanding of your data, every element, how the data connects between departments or different components and how it flows to 340B qualification.

Myles Goldman (10:53):
Are there tools that help with tracking this data?

Steven Miller (10:57):
Yes. There certainly are many tools that are used by hospitals to monitor the data and keep up with the data. There are a number of split billing and other software resources, third party vendors who help the hospitals to set up logic, to look for qualifying data elements, and then accumulate those into buckets that the hospital within purchase against over time as they have enough in each of those buckets for the different purchase types.

Myles Goldman (11:34):
How does a hospital's written 340B policies and procedures factor into audit preparation?

Steven Miller (11:42):
All audited covered in an aCe must provide a copy of their policies and procedures in advance of the audit visit. HRSA uses the hospital's policies and procedures as the standard for any aspect of compliance that is not explicitly addressed in the 340B statute. In other words, HRSA will assess if you're following your policies and procedures, when something comes up that factors into compliance. For example, if your policy is to qualify patients based on their outpatient status for billing purposes, some coverages require changes to the outpatient status and your system may not catch the retrospective changes. If data is sent in real time to this split billing software, this can cause a diversion funding for giving 340B drugs to inpatients.

Myles Goldman (12:34):
I've heard about internal auditing. What does this mean?

Steven Miller (12:38):
Internal auditing is a method used by hospital staff to monitor the covered entities logic and filters that are working as expected. Hospitals should continually examine their information systems and pull data to review. Targeted sampling should also be done to validate higher risk elements or higher risk drugs that are accumulating or purchased correctly or compliantly. HRSA expects hospitals to routinely audit their own systems and data and we'll often ask for the template used to do so during an onsite visit.

Myles Goldman (13:14):
So, these hospitals have sort of a internal auditing template?

Steven Miller (13:18):
Yes, they do. They can set that up however they choose to do so to look at various data elements, and that's really what HRSA is interested in is looking to see what data elements a hospital is reviewing and their internal review of the qualifications.

Myles Goldman (13:36):
How often do hospitals generally do internal auditing?

Steven Miller (13:40):
Most hospitals do this fairly often. Some do it weekly, some do it monthly. I'm not aware of any that do it less than monthly, just because there is so much data flowing through the systems that would be overwhelming if you didn't sample it very frequent.

Myles Goldman (13:54):
I feel like this conversation on internal auditing is a good compliment so now moving into a conversation about external auditing. So, tell us more about that.

Steven Miller (14:04):
Internal auditing naturally contains some inherent bias because the staff who are doing the internal auditing usually are also working in the 340B operations. So, they have a very close understanding of how things should work and they can sometimes miss how it is actually working. So, an external auditing can be done by someone without that bias or influence, and they have a more objective review. They can provide an analysis and a report on how everything is working for maintaining 340B compliance, that can be reassuring to the hospital that they have this objective review. They can also identify a problem that the hospital did not see, and then the hospital can take action to fix it.

Myles Goldman (14:50):
How frequently should a hospital do these external reviews?

Steven Miller (14:55):
Usually it's once a year, that seems to be adequate.

Myles Goldman (14:58):
What resources should 340B compliance professionals refer to as they prepare for an audit?

Steven Miller (15:05):
Well, nearly every company providing consulting or rather 340B operational services have their own tools and recommendations for covered entities. The source of truth really remains with the 340B statute and HRSA's Office of Pharmacy Affairs website. Beyond this, the HRSA prime vendor provides additional resources and is a HRSA contractor for our call center. 340B Health is an association of member 340B hospitals and has been in existence since the beginning of the 340B Program.

Steven Miller (15:38):
We have an extensive assortment of policy guides, compliance resources and audit trends and analysis on nearly every aspect of the 340B Program. Every 340B Health member organization should contact us to set up a technical assistance call when notified of an upcoming HRSA audit. We can help you understand how the process works and what the auditors are focused on reviewing today and what they reviewed in the past.

Myles Goldman (16:05):
That's good to know. I'd also heard that Medicaid Exclusion Files are an important maybe subject to take a look at as well?

Steven Miller (16:12):
Absolutely. Every hospital needs to look at the information they have in the Medicaid Exclusion File if they're using 340B drugs or their Medicaid fee-for-service patients every quarter.

Myles Goldman (16:25):
It quickly becomes obvious that there's a lot of technical expertise involved in preparing for an audit. Are there skills 340B compliance professionals should strengthen to successfully help their hospitals through the audit process?

Steven Miller (16:40):
Yes, Myles. In my view, the most important skills include data analysis and manipulation of the data, understanding how healthcare technology systems work and how data flows through them is critically important to being prepared for an audit.

Myles Goldman (16:57):
We of course are having this conversation in the context of a global pandemic and COVID-19 is impacting hospitals, impacting hospital pharmacies and of course impacting 340B operations and compliance. Can you provide us an overview of changes HRSA has made to the auditing process during the public health emergency?

Steven Miller (17:23):
HRSA quickly pivoted on-site audit visits to virtual visits last March. For fiscal year 2020 audits, they provided two options for hospitals to select for the visit, a shorter virtual visit that required more data to be uploaded to HRSA after the visit and a one day visit where the auditor reviewed all in the samples using a screen-share application. However, beginning October 1st, 2020 HRSA has only conducted the one day virtual audits. Other than the obvious in-person versus virtual differences, the audits are really very similar.

Myles Goldman (18:00):
Thank you, for sharing that information with us Steve. Are there any final pieces of advice you have for hospitals?

Steven Miller (18:07):
Being audited by government agency for compliance can feel intimidating. However, hospitals tell me that the auditors are not that scary. Pulling all of the data to submit in advance of the audit is a lot of work, but it's a good exercise for hospitals. It's almost a forced comprehensive review of your 340B Program. If you make yourself perform a comprehensive review at least annually, the audit will not be so hard. Check the easy boxes often, make sure all of your information is listed accurately and completely on OBASE. Check the Medicaid Exclusion File at least quarterly to make sure all of your billing numbers are listed appropriately if you're using 340B drugs for your Medicaid fee-for-service patients. So, the key takeaway is to be continually ready and then when your turn comes, you're going to be in good shape.

Myles Goldman (19:05):
It's all really great advice, Steve. I appreciate you sharing all of these best practices for preparing for 340B audits with us. Thank you for taking the time to speak with us today.

Steven Miller (19:17):
It's been my pleasure, Myles.

David Glendinning (19:18):
All right. Thanks again to Steven Miller for joining us to discuss the 340B audit process and for all the great work he and his team do to help hospitals steer through it. If you work for a member hospital and want to learn more about the assistance, resources and education, that 340B Health offers in this area, please be sure to reach out to Steve and his team. As always, this year's 340B Coalition Winter Conference will feature numerous sessions with experts on all areas of program compliance. Attendees will hear from regulators and compliance experts on what you need to do to run your programs efficiently and to avoid adverse audit findings, billing and reimbursement pitfalls, and program eligibility problems.

David Glendinning (20:04):
If you have not yet signed up for the conference, which takes place over five half days between February 16th and 24th, please do so today. You can learn more at 340bwinterconference.org. This is the first of what will be a full season of episodes in 2021. As always, we welcome your episode ideas and feedback. You can email us at podcast@340bhealth.org. We will be back in a few weeks to discuss how the COVID-19 vaccine rollout is going at our member hospitals. Until then, thanks for listening and be well.

Speaker 1 (20:48):
Thanks for listening to 340B Insight, subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at 340bpodcast.org. You can also follow us on twitter @340bhealth and submit a question or idea to the show by emailing us at podcast@340bhealth.org.