Developing a Comprehensive 340B Internal Audit Checklist to Ensure 340B Program Integrity and Compliance
As a 340B program manager, you ensure your organization complies with the requirements of the 340B Drug Pricing Program. One of the most effective ways to maintain program integrity is through regular internal audits. However, given the program's intricacies and evolving regulations, creating a comprehensive audit checklist can be a complex task.
In this guide, we'll walk you through the essential steps for developing a robust 340B audit checklist. We'll cover everything from understanding key compliance requirements to implementing best practices for documentation management. By the end, you'll have the tools and knowledge to conduct thorough internal audits, identify potential compliance issues, and keep your 340B program running smoothly.
Let's start by exploring the components of a 340B audit checklist and why it's so important for your program's success.
Step 1: Understand the Components of a 340B Audit Checklist
What is a 340B Audit Checklist, and Why is it Important for 340B Compliance?
A 340B audit checklist is essentially a comprehensive list of program elements you should have available as auditable records. It also includes the aspects of your program that you must review regularly to ensure compliance with program requirements and maintain appropriate documentation to support your program's administration.
The importance of a well-developed audit checklist cannot be overstated. Edward Vargas of Virtue 340B explains, "You're certainly responsible for being able to substantiate 340B compliance and patient eligibility for all drugs purchased under the 340B program and patients that they're dispensed to." A thorough checklist helps you monitor your program regularly, ensuring you don't have control gaps that could snowball into larger, more material instances of non-compliance.
Key Program Compliance Requirements
When developing your 340B audit checklist, it's essential to focus on these key compliance areas:
Eligibility and Registration Documentation: Ensure your registration on the OPAIS database is supported by internal eligibility documents.
Contract Pharmacy Compliance: Verify that all contract pharmacies registered on OPAIS have fully executed pharmaceutical service agreements (PSAs).
Prevention of Duplicate Discounts: Understand and document the controls across your various third-party administrators (TPAs) and clinical settings to prevent duplicate discounts.
Prevention of Diversion: Document the processes and logic used across different platforms to ensure only eligible patients receive 340B drugs.
Inventory Management: Implement systems to track 340B drug purchases and dispensations accurately.
Common Pitfalls to Avoid for Covered Entities
Edward Vargas highlights three primary pitfalls that 340B program managers should be wary of:
Inaccurate or Inadequate Record Keeping: Maintain complete and accurate documentation related to 340B dispensations, administrations, and drug purchases.
Lack of Oversight of Contract Pharmacy Activity: Monitor contract pharmacy activity closely, as the risk of ineligible claims being captured in local retail pharmacies is higher than for patients seen at your facility.
Outdated Policies and Procedures: Ensure your policies and procedures are up-to-date and reflect your operations.
As Vargas notes, "You can't rely on them to help substantiate your 340B activity if your policies don't match what your operations are."
By understanding these critical components and potential pitfalls, you'll be better equipped to develop a comprehensive 340B audit checklist that addresses all vital aspects of your program's compliance. In the next section, we'll explore the essential documentation you need to gather for your audits.
Step 2: Gather Essential Documentation
Essential Documents for HRSA Audits
Gathering the proper documentation is crucial for a successful 340B audit. Here's a list of essential documents you should compile:
Proof of Eligibility
For hospitals: Most recently filed Medicare cost report
For grantees: Proof of grant or funding from the government or HRSA
Purchasing and Dispensation Records
Captured claims
340B purchases
Contract Agreements
Contract pharmacy agreements
Vendor contracts related to 340B program facilitation
Policies and Procedures
Updated policies reflecting current operations
Procedures for staff and stakeholders to follow
Best Practices for Organizing and Maintaining Audit-Related Records
Edward Vargas recommends the following best practices for document organization and maintenance:
Implement a Centralized Digital Storage System
"Adopting a centralized, easily accessible digital storage system is going to be best practice," Vargas advises. This approach allows for easy updates and quick retrieval of historical documents when needed.
Maintain Both Electronic and Physical Copies
While electronic storage is preferable, keeping physical copies as a backup can be beneficial.
Use Version Control
Implement a system to track document versions within the document itself or through a naming convention that indicates when revisions were made.
Ensure Accessibility
Store documents in a centralized area accessible to relevant team members, not in personal folders. As Vargas notes, "You don't want team members to put them in their personal folders... you want them to utilize a centralized area that multiple people can access."
Tools and Software for Documentation Management for 340B Program Compliance
To effectively manage your 340B program documentation, consider using the following tools:
Microsoft Excel or Power BI
These tools can help maintain crosswalks of program details and links to applicable documents.
340B Universe Template
Vargas recommends using a "340B Universe Template" or "340B Universe Document." This electronic tracker is a central repository for all pertinent elements applicable to specific pharmacies or sites within your program.
Document Management Systems
Consider implementing a dedicated document management system with features like version control and user permissions.
Following these guidelines and utilizing appropriate tools, you'll be well-equipped to organize and maintain the essential documentation for your 340B program audits. In the next section, we'll delve into conducting internal audits and self-audits to ensure ongoing compliance.
Step 3: Conduct Internal 340B Program Audits and Self-Audits
Conducting regular internal audits is essential for maintaining 340B program integrity. Here's a step-by-step guide to performing effective internal audits:
1. Pre-Audit Planning
Review policies and procedures to identify critical areas of focus
Map out operational workflows to test controls and their effectiveness
Review past audit findings to inform areas of focus
Define your scope period (e.g., one month, three months, six months)
2. Collect Required Documents and Data
Gather all necessary documentation, including:
OPAIS registration records
Contract pharmacy documentation
Captured claims
Purchasing records
3. Perform Targeted and Random Sampling
As Vargas suggests, "Use a blend of targeted and random sampling to review a sample of captured claims or purchases." Focus on:
Identifiers with material financial risk
High-risk providers or patients (such as referral claims)
4. Analyze Data and Identify Discrepancies
Use data analytics to flag:
Dispensing pattern discrepancies
Eligibility irregularities
Volume and spend anomalies
5. Generate an Informed Compliance Assessment
Ensure your methodology and approach substantiate your audit results.
Identifying and Addressing Compliance Issues
When compliance issues are identified during internal audits, follow these steps:
Document the issue thoroughly
Develop a corrective action plan that includes:
Identified issues
Responsible parties
Action items for remediation
Track the resolution of each issue
Document the entire process for future reference
As Vargas notes, "Whatever discrepancies you identify throughout your audit or potential compliance findings, developing and implementing a corrective action plan that includes identified issues, responsible parties, and action items for mediation that can be tracked through resolution and documented is certainly going to be a best practice approach."
Best Techniques for Self-Audits
To ensure ongoing compliance, implement these self-audit techniques:
Monthly Internal Reviews
Conduct monthly reviews with a defined structure and scope
Perform spot checks on previously identified areas of concern
Continuous Data Reconciliation
Regularly reconcile drug purchases with utilization records to identify any discrepancies that might indicate diversion or other compliance issues.
Engage Third-Party Auditors
Consider engaging a third party, like Virtue 340B, to review your program. As Vargas points out, "Not only will getting a third-party review perform an independent assessment of your program, but it can also help inform your self-audit approach."
Leverage Compliance Software
Utilize compliance software and data management tools offered by your vendors to support your self-audit process.
Stay Informed of Regulatory Changes
Keep abreast of regulatory changes and potential impacts on your program. As Vargas emphasizes, "Ensuring that you're staying updated to changes in regulations or potential changes and how your organization is equipped to react to them are all elements of a regular internal audit plan."
Implementing these internal audit and self-audit techniques will better equip you to maintain 340B program compliance and identify potential issues before they escalate. In the next section, we'll discuss developing a customized audit checklist tailored to your organization's needs.
Step 4: Develop the Audit Checklist
Creating a Customized Checklist
Developing a customized 340B audit checklist is crucial for addressing your organization's unique risks and compliance needs. As Edward Vargas emphasizes, "You want your audit checklist to be nice and tailored to your program and to represent the risks posed to your program, not just simply general program compliance elements."
Here's how to create a checklist tailored to your organization:
Start with basic 340B compliance requirements identified by HRSA
Assess your program's unique activities and 340B universe
Identify financial and compliance risks specific to your organization
Include elements specific to your program, such as:
Contract pharmacy operations
Medicaid Exclusion File election
Clinical areas utilizing 340B
Sample Items to Include in Your Audit Checklist
Your customized checklist should include:
Eligibility Verification
Mechanism to confirm patient and provider eligibility
Core elements to review in captured claims
Drug Purchase and Dispensing Reconciliation
Drug purchase logs
Comparison of purchases with dispensing records
Medicaid Billing Procedures
Claim level identifiers for in-house pharmacies (if carving in Medicaid)
Payer identifiers for contract pharmacies (if carving out Medicaid)
Contract Pharmacy Oversight
Review of contract pharmacy agreements
Monitoring of contract pharmacy operations
Internal Controls
Procedures to prevent duplicate discounts
Measures to prevent diversion
Ensuring Completeness and Accuracy
To maintain the effectiveness of your checklist:
Update based on previous audit findings
Engage stakeholders across the organization, including:
Compliance officers
Pharmacy managers
C-suite executives
Seek input from cross-department members to identify overlooked areas.
As Vargas notes, "Having that organizational buy-in and input is going to lead to having the most robust internal audit approach."
Step 5: Monitor and Update the Checklist
Regular Updates and Reviews
Consistently reviewing and updating your audit checklist is crucial for maintaining its effectiveness. Vargas advises, "You're certainly going to want to review it regularly."
Why Regular Reviews Are Important
Identify trends or changes in your organization
Adapt to new encounter types or clinical settings
Address increased/decreased volume at contract pharmacies
Ensure the checklist remains relevant to current operations
Incorporating Feedback from Previous Audits
Use insights from past audits to refine your checklist:
Follow up on previous findings in subsequent audits
Assess the effectiveness of corrective actions
Keep documentation of organizational actions for reference
Adapting to Changes in Regulations and Organizational Processes
Stay proactive in updating your checklist to reflect:
Regulatory changes affecting the 340B program
New reporting requirements
Changes in pharmaceutical manufacturer policies
Internal organizational changes
Vargas states, "The program is always subject to regulatory change. It's increasingly subject to more scrutiny across the board."
To stay ahead of these changes:
Monitor industry news and updates
Attend 340B-focused conferences and webinars
Engage with industry experts or consultants
Regularly review HRSA guidelines and communications
Remember, as Vargas notes, "Ensuring that you're staying updated to changes in regulations or potential changes and how your organization is equipped to react to them are all elements of a regular internal audit plan that can proactively help you to be prepared for changes as they occur."
By following these steps to develop, monitor, and update your 340B audit checklist, you'll be well-equipped to maintain program integrity and adapt to the ever-changing landscape of the 340B Drug Pricing Program.
Wrapping Up: Key Takeaways for 340B Program Managers
Developing and maintaining a comprehensive 340B audit checklist is critical for program managers. By following the steps outlined in this guide, you'll be better prepared to ensure your organization's compliance with 340B program requirements and maintain program integrity.
Let's recap the essential points:
Understand the components of a 340B audit checklist and critical compliance areas
Gather and organize crucial documentation using centralized digital systems
Conduct regular internal audits and self-audits using targeted and random sampling
Develop a customized checklist that addresses your organization's unique risks
Continuously monitor and update your checklist to adapt to regulatory changes
Remember, as Edward Vargas emphasizes, "What can seem like a minor control gap or something that only affects a certain percentage of your claims... stands a chance to continue to occur in the background of your program and snowball." Regular, thorough audits using a well-developed checklist can help prevent these issues from escalating.
Additional Resources for 340B Audit Preparation
For program managers seeking further assistance with 340B audit preparation, consider the following resources:
· HRSA's 340B Program website: Access official guidelines and updates
· 340B Prime Vendor Program: Offers educational resources and tools
· 340B Health: Provides advocacy and educational materials for covered entities
· Virtue 340B's services: Expert consulting and independent auditing services
For a deeper dive into developing a risk-based audit plan, check out Edward Vargas's book, "340B Mastery: Transforming Risk into Reward in Pharmacy Program Management," available on Amazon.
Maintaining 340B program compliance can be complex, but you don't have to navigate it alone. If you need expert guidance or support in developing your audit checklist or conducting independent audits, contact Virtue 340B. Their team of specialists can help you optimize your 340B program while ensuring compliance with all regulatory requirements.
By implementing these strategies and leveraging available resources, you'll be well-equipped to manage your 340B program effectively and confidently face any possible audit challenges.