HRSA Audit Findings and Implications for Patient Definition

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1 HRSA Audit Findings and Implications for Patient Definition August 20, 2015 Speakers: Maureen Testoni Senior Vice President and General Counsel Jeff Davis Counsel, Legal and Policy Affairs B Health B Health 1

2 Housekeeping Webinar IT platform technical questions Contact Lee-Anne Gabrielli at (202) or Q&A: Submit questions online anytime during event using the chat feature Slides: will be sent to attendees 3 business days post webinar B Health 2

3 Disclaimer This presentation is not to be construed or relied upon as legal advice. This copyrighted presentation is intended for 340B Health member hospitals, prospective members and corporate partners only. Distribution outside of your hospital or company is expressly prohibited B Health 3

4 Today s Agenda Audit finding overview Specific findings that could impact your operations Challenging findings B Health 4

5 Audit Finding Overview Results for hospitals posted on HRSA website Total posted for : 293 No findings or finding that does not require repayment: 133 (45%)* Findings that require repayment: 158 (54%)* * These statistics take into consideration hospital public letters stating that no repayment was required B Health 5

6 Hospital Findings Findings for Hospitals Per HRSA Website No Findings 25% Diversion 52% 50% of diversion findings related to contract pharmacy Duplicate Discount 21% Inaccurate Database 43% GPO 6% Contract Pharmacy Oversight 4% Inauditable records and low DSH percentage one each Registered a non-reimbursable site two (Totals equal more than 100% because some hospitals had more than one finding.) B Health 6

7 Hospital Audit Findings Over Time FY 12 FY 13 FY14 (93/99 are posted) FY15 (only 56 are posted) No Findings 42% 21% 19% 30% Findings 58% 79% 81% 70% Repayment 45% 63% 64% 55% State repaid 3% 1% B Health 7

8 Specific Audit Findings Over Time FY 12 FY 13 FY14 (93/99 are posted) FY15 (only 56 are posted) Diversion 33% 58% 60% 43% Duplicate Discount 30% 21% 21% 16% Inaccurate Database Contract pharmacy oversight 24% 49% 45% 45% 4% 5% 2% GPO 1% 11% 9% Inauditable records 1% Nonreimbursable site DSH % 1% 1% 1% B Health 8

9 Public Letters FY12 All 25 public letters posted 3 No duplicate discount occurred 1 State Medicaid assumed repayment responsibility 21 Standard form letter FY13 39 public letters posted; 60 expected 7 Repayment is required due to an isolated incident and not a systemic issue 6 No duplicate discount or diversion occurred 1 No duplicate discount occurred, but does not challenge diversion finding and repayment is still necessary 1 State Medicaid assumed repayment responsibility 24 Standard form letter FY14 Only 9 letters posted 5 Standard form letter 3 No repayment is actually required 1 Repayment is required due to an isolated incident and not a systemic issue FY15 No public letters posted B Health 9

10 Diversion B Health 10

11 Definition of Patient Existing requirements for hospitals 1. The covered entity has established a relationship with the individual, such that the covered entity maintains records of the individual s health care; and 2. The individual receives health care services from a health care professional who is either employed by the covered entity or provides health care under contractual or other arrangements (e.g., referral for consultation) such that responsibility for the care provided remains with the covered entity 3. An individual will not be considered a patient of the covered entity for purposes of 340B if the only health care service received by the individual from the covered entity is the dispensing of a drug or drugs for subsequent self-administration or administration in the home setting. (61 Fed. Reg (Oct. 24, 1996)) B Health 11

12 Existing Requirements for Hospital Outpatient Settings A hospital outpatient facility is considered an integral part of the hospital and therefore eligible for section 340B drug discounts if it is a reimbursable facility included on the hospital s Medicare cost report. When these facilities are added to the master list of eligible and participating covered entities, the off-site facilities will be able to access 340B discount pricing. On-site clinics that are not included on the Medicare cost report will not be eligible for PHS discount pricing (59 Fed. Reg (Sept. 19, 1994)) B Health 12

13 Patient Definition HRSA audits say prescriptions should be written: 1. By providers that are employed by, or under a contractual or other arrangement with the covered entity, and 2. At sites that are reimbursable on the covered entity s cost report Scripts written at an off-site location are very likely to result in findings (with some exceptions) HRSA is looking for evidence that the hospital had responsibility for care that led to script B Health 13

14 Example Credentialed Providers Scripts written by employed or credentialed providers on the hospital premises are unlikely to result in findings If script is written at hospital, hospital is responsible for the care Scripts written by employed or credentialed providers in their private offices are likely to result in findings relationship with prescribing provider as employed or contracted does not extend to the provider s private practice, but is valid only for services rendered at the hospital B Health 14

15 Scripts Written at Off-Site Location Must show that hospital is responsible for care ongoing medical responsibility of the hospital for health services provided to the individual demonstrate actual responsibility Actual Responsibility not shown solely by: Demonstrating that hospital is part of the continuum of care (proximate in type and time) Documenting that hospital provided services to the same individual at another point in time Establishment of a health record Provision of lab services initiated in private physician s office B Health 15

16 Scripts Written at Off-Site Location (cont d) Scripts written outside the hospital pursuant to a referral or referral arrangement may demonstrate hospital responsibility Examples: Need documentation of the referral (e.g., notes in patient s chart) or the referral agreement (e.g., hospital primary care clinic has agreement with outside clinic to provide mental health care to hospital clinic s patients) Need documentation of co-management of the patient s care (e.g., interaction between the hospital and the private physician) Advising an individual to follow-up with a different health care provider is usually not enough Expectation is that responsibility for the care provided at the off-site location remained with the covered entity B Health 16

17 Employees HRSA is issuing findings for scripts written pursuant to a self-insured health plan when the patient has not received services at the hospital. So far, these findings are not being overturned. Comments in audit findings on employees: A hospital s role as the administrator of a self-funded plan does not rise to the health care arrangements contemplated by the 340B patient definition Managing an employee benefit plan shows a hospital acting as an administrator of a self-funded plan, not as the health care provider of these individuals Findings may be overturned if patient received care at the hospital, but very fact-specific B Health 17

18 Contract Pharmacy Half of all diversion findings relate to contract pharmacy! HRSA audits are looking for logic that verifies: 1. Status of patient 2. Location where prescription originated from 3. Eligibility of the provider 4. Verification that covered entity maintains responsibility for patient s healthcare Per HRSA final audit reports: Logic based on time is not enough Logic based on eligible provider list definitely not enough Specific vendors are named B Health 18

19 Contract Pharmacy Vendors Hospital, not the vendor, has the responsibility to ensure compliant logic is used Do not assume that vendor s logic options will protect you from findings Hard to meet HRSA s patient definition standard in contract pharmacy B Health 19

20 Other Findings B Health 20

21 Maintaining Records Need record of the specific episode of care that resulted in the script Audit Finding: CE did not maintain a health care record of the specific episode of care resulting in the prescription to demonstrate responsibility for care B Health 21

22 Inventory Management 9-digit replenishment is permissible when hospital is unable to match package size In cases where 11-digit NDC replenishment is not possible because [the hospital] is unable to match the package size, [the hospital] may replenish at the 9-digit NDC and is responsible for having policies and procedures to handle this situation. [The hospital] must have auditable records to demonstrate proper accumulation in a replenishment model B Health 22

23 Incorrect Database Record If clinic has a different address than the parent, it should be separately registered HRSA finding: must separately register a clinic with a separate address even though it is located in a building physically connected by an elevated walkway to the main hospital B Health 23

24 Challenging Findings Hospitals have success in overturning findings Some findings are made in error, so hospital just needs to provide additional facts Findings related to patient definition issues are sometimes overturned, but are very fact specific At least half of the hospitals that report challenging findings to 340B Health succeed in overturning one or more of the findings B Health 24

25 Resources 340B Health compliance resources (for 340B Health members) ( What to expect when you receive an audit letter Data requests used in HRSA audits Compliance outline, checklist, sample policy guides Technical assistance calls over 100 audited hospitals OPA resources ( PVP resources ( Includes sample policies and procedures and self-audit outlines B Health 25

26 Upcoming Events 12 th Annual 340B Coalition Winter Conference February 17-19, 2016 San Diego, CA Save the Date!! Early Spring Lobby Day in Washington, D.C. Date TBD Stay tuned for details! 20 th Annual 340B Coalition Summer Conference July 11-13, 2016 Washington, DC Save the Date!! Summer Legislative Event in Washington, D.C. July Stay tuned for details! For conference registration details, contact Sam Wilhelm-Ross at or For legislative event registration details, contact Liam Steadman at or B Health 26

27 Upcoming Roundtables Illinois (Chicago Late September, date TBD) Missouri (Kansas City- October 2) Ohio (Cleveland - October 14) Pennsylvania (Pittsburgh October 15) Stay tuned for more details! For registration details, please contact Lee-Anne Gabrielli at lee-anne.gabrielli@340bhealth.org or B Health 27

28 Upcoming Webinars Maximizing Your 340B Health Membership August 27-1:00-2:00 Eastern Webinar for Prospective 340B Health Members September 16-1:00-2:00 PM (Eastern) B Health 28

29 Additional Questions? Maureen Testoni Senior Vice President and General Counsel 340B Health th Street, NW, Suite 910 Washington, DC Phone: B Health 29