HRSA ratchets up audits of 340B hospitals

4 red and green capsules on top of dollar bills

LAS VEGAS--Audits of hospitals that participate in the 340B drug discount program have risen dramatically in recent years and there is no end in sight, according to Maureen Testoni, senior vice president and general counsel for 340B Health, the primary lobby in support of the program.

Testoni, who spoke this week at the Healthcare Financial Management Association Annual National Institute in Las Vegas, said she expects the Health Resources and Services Administration (HRSA) to audit about 500 340B programs in 2016 and 2017.

That compares with only 400 or so audits the HRSA conducted between 2012 and 2015. Of those audit targets, about three-quarters are hospitals.

“The number of audit findings against hospitals have been going up every year,” Testoni said. A finding often means that the hospital must repay all or some of the amount in dispute back to the drug manufacturer. Testoni said that there were “findings” against 340B hospitals in 42 percent of the audits performed in fiscal year 2012. That figure rose to 80 percent in fiscal 2015.

Scrutiny of the 340B program has intensified in recent years after reports surfaced that some hospitals in North Carolina profited by reselling the heavily discounted drugs to insured patients and pocketing the difference. The program has also come under fire due to allegations that some participating hospitals do not provide their patients with enough information about charity care programs.

The biggest audit issue for hospitals is diversion--a prescription or drug dispensed off hospital premises that was then billed to the 340B program. Diversions comprised 50 percent of findings against hospitals in fiscal 2015, up from 33 percent in fiscal 2012, but down from 61 percent in fiscal 2014, according to HRSA data.

Clinics affiliated with the hospital can dispense drugs and qualify for 340B–so long as the hospital actually provided care to the patient and the clinics are registered for the 340B program as well. Care provided to patients outside of the hospital system can also lead to a finding against the hospital if HRSA found that the scrip for the drugs was written off hospital premises. Contract pharmacies that do business with hospitals can also lead to a finding if there is not a specific paper trail.

Another common audit finding against hospitals involves duplicate discounts regarding Medicaid enrollees who are also eligible for 340B. Testoni said clear communications between the hospital departments and state Medicaid programs are vital.

Testoni recommended that hospitals in the 340B program conduct internal audits of its contract pharmacy claims, certify that its clinics are 340B participants, and ensure there are verifiable communications links between all the entities.