As a 340B covered entity, you may be surprised to learn that you are solely responsible for the compliance of contract pharmacies and third-party 340B administrators (TPA). Most 340B audit findings issued by the Health Resources and Services Administration (HRSA) for diversion and duplicate discounts involve their contract pharmacies and 340B administrators. Managing TPAs and contract pharmacies is an area of the program that covered entities often do not fully understand. How do you ensure compliance while using 340B TPAs and contract pharmacies? By including contract pharmacies and 340B administrators in your compliance plan.
Promptly addressing issues is essential for preparing for the eventual external audit. This article will explain how to include contract pharmacies and 340B administrators in your compliance plan, how to create an effective compliance plan with multiple stakeholders, and how to use ComplianceBridge to help manage your compliance plan and run internal audits.
Adding Contract Pharmacies and 340B Administrators to a Compliance Plan
While contract pharmacies or 340B administrators have stepped up to take on the responsibility of reimbursing manufacturers for incorrect discounts, HRSA has said that it is in fact the covered entity’s sole responsibility to manage reimbursements. Moreover, covered entities should be the organization resolving issues directly with manufacturers and wholesalers and sharing this information with HRSA. Why? The covered entity is who is being audited every year, not their contract pharmacies and TPAs. if they allow these activities to go unmonitored and uncorrected, they’re leaving the door open for 340B violations.
The covered entity needs to create a plan to address the violations and prevent future occurrences. The best way to follow HRSA rules is by ensuring contracts between the covered entity and 340B contract pharmacies and TPAs address all requirements. These agreements should outline your responsibilities as a covered entity.
Understanding Your Liability During Contract Creation
As you draft your contract that will be used when formalizing your partnership with contract pharmacies and 340B administrators, the HRSA recommends you keep these best practices in mind to avoid any risk of non-compliance.
- Entering an agreement with a contract pharmacy or 340B administrator does not exempt a covered entity from meeting 340B program requirements.
- The covered entity should manage remedial action to ensure compliance.
- The covered entity should work in good faith to resolve the issues directly with the manufacturer.
- Material breaches should be notified to HRSA, summarizing compliance problems and the actions taken to remedy those problems.
- If a covered entity has found a case of non-compliance at a contract pharmacy or 340B TPA that results in repayment to manufacturers, the covered entity must work in good faith with the manufacturer to provide necessary documentation as requested by the manufacturer to support refund owed.
- Reclassifying a previous purchase requires first notifying manufacturers and ensuring all processes are transparent with a clear audit trail.
- Covered entities should maintain written procedures that describe all processes for identifying 340B-eligible patients and how the covered entity’s contract pharmacies and 340B TPAs are meeting 340B program requirements. Procedures should include plans on how non-compliance is resolved.
- Any agreements with a contract pharmacy or 340B TPA should include an agreed process to resolve non-compliance.
Creating a Multi-Stakeholder Compliance Plan
As a covered entity working with contract pharmacies or third-party 340B administrators, it is vital that you be the source of truth when setting up all the policies and procedures to comply with 340B regulations. To do so, you should create a compliance plan that takes into consideration all stakeholders.
The first step is to correctly document key personnel, policies, procedures, and internal controls.
Internally, all covered entities have two essential personnel: the Primary Contact and the Authoring Official, who manages annual recertification, allowing the covered entity to continue buying drugs at 340B prices. If your covered entity has an agreement with contract pharmacies or 340B TPAs, then you should have at least one contact from each third party, as well.
It is essential to keep this list of key personnel up to date to meet 340B regulations and annual recertification requirements. Also, the list will help ensure that all stakeholders are kept aware of the latest policies and procedures set by the covered entity.
Policies and Procedures
Policies and procedures should be in place to ensure the covered entity is meeting 340B program requirements. To meet those requirements set by HRSA, you should document policies and procedures that support the following:
- Maintaining CE information within the Office of Pharmacy Affairs Information System (OPAIS) up to date.
- Showing eligibility and managing annual recertification
- Preventing the transfer or sale of 340B drugs to ineligible patients
- Preventing duplicate discounts from the 340B and Medicaid drug rebate programs
- Ensuring contract pharmacies and 340B TPAs understand their role in resolving non-compliance
- Preparing for external program audits.
Internal controls, from an auditing perspective, are processes used to support compliance. For example, with the 340B program, internal controls are essential to help prevent a covered entity from selling drugs with 340B pricing to ineligible patients. Setting up software to align TPA and covered entity buying and selling practices is an example of an internal control.
When collaborating with multiple stakeholders, it is essential to create more internal controls to ensure that the covered entity is aware of actions done by contract pharmacies and 340B administrators. Controls can include notifications by third parties to the covered entity whenever a reimbursement is being issued to a manufacturer and auditable internal memos to rectify the breach.
Perfect Your Compliance Plan with ComplianceBridge
ComplianceBridge’s auditing software is a more sustainable, affordable way to manage your compliance plan with multiple stakeholders. Use ComplianceBridge to create a source of truth between you and third parties such as contract pharmacies and 340B administrators.
Incorporating third parties into your compliance plan is essential for meeting 340B regulations and keeping your covered status. ComplianceBridge will help you streamline your auditing process. Create and reuse question sets to ensure comprehension of program processes and procedures, and send them to the personnel internally as well as stakeholders at contract pharmacies and third-party 340B administrators. Reminder notifications will keep program audits on schedule, and you can even watch in real-time as results come in to see how everything is shaping up.
The best way to ensure you’re prepared for an HRSA audit is to adhere to rigorous internal audit procedures that include all areas of your organization. With ComplianceBridge, you’ll find a compliance auditing system that is both easy to implement and utilize. Request a demo to see it in action!