340B Audits: 5 Key Things Covered Entities Should Know

A disproportionate share of hospitals and other healthcare providers participating in the 340B Drug Pricing Program are subject to routine audits. Program participants, also known as covered entities, must always maintain compliance with the program. Audits ensure as much.

An audit does not have to be particularly difficult if a covered entity prepares for it. Moreover, there are expert 340B consulting firms around the country capable of helping by conducting mock audits. Florida-based RavinConsultants.com is just one of them. A properly implemented mock audit can make all the difference in the world.

With all of that said, here are five key things covered entities should know about 340B audits:

1. Two Entities Can Conduct Them

The first item on the list is one that surprises many covered entities: multiple entities can conduct the audit. Audits are typically in the domain of the Health Resources & Services Administration’s (HRSA) Office of Pharmacy Affairs (OPA). However, they do not have to be. Drug manufacturers can also conduct audits.

Should a manufacturer believe an audit is necessary, it must first contact HRSA to make an official request. The HRSA will then determine whether it is more appropriate for the OPA to conduct the audit. Officials can ultimately choose either the OPA or the manufacturer.

2. Audits Can Be On-Site or Off

Next, covered entities should be aware of the fact that audits can be conducted on-site or off. It is up to the HRSA’s discretion. When audits are conducted off-site, auditors rely on data already entered into the 340B system as well as additional documentation furnished by the covered entity. During on-site audits, the required documentation is reviewed in person.

3. Preparation Time Is Given

Covered entities never have to face an audit unprepared. In fact, the HRSA gives covered entities time to get ready. Before an audit is conducted, the agency notifies the covered entity with an engagement letter. The letter contains all the details of the pending audit including the procedures auditors will follow, any and all policies the covered entity needs to be aware of, and the types of documents auditors will be looking at.

Government auditors usually conduct a teleconference in advance of the actual audit as well. This is time to go over the details and preparations. It is also a time for representatives of the covered entity to ask questions.

4. What Is Covered by a Typical Audit

At minimum, 340B Program audits look at a covered entity’s policies and procedures, compliance with program regulations, and its 340B drug transaction records. Auditors also verify covered entity eligibility and internal controls designed to prevent program abuse.

Auditors can choose to look at other things within the scope of the program. Preparing for an audit’s minimum standards in no way guarantees a covered entity OS fully prepared. This is why it’s important for entity representatives to pay attention to the initial engagement letter and ask any relevant questions they might have during the preparatory teleconference.

5. Follow-Up Action Required

Finally, every 340B Program audit requires follow-up action. If the covered entity agrees with the final report issued by auditors, it must acknowledge as much. A covered entity can also appeal auditors’ findings within 30 days. If corrective actions are recommended in the final report, a covered entity is expected to comply within a reasonable amount of time.

Audits are a tool HRSA utilizes to make sure covered entities are complying with 340B Drug Pricing Program rules. They are part of the game. If healthcare providers want to participate in 340B, they need to be prepared for audits.