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340B Corner: FQHCs & OPA 340B Audit Findings

Posted by Tanya Frederick on Oct 13, 2016 11:20:11 AM

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federally qualified health centers FQHCThe 340B Program is an essential lifeline for most Federally Qualified Health Centers (FQHC) to be able to provide care for their patients. FQHCs are community-based health care providers that receive funds from the Health Resources and Services Administration (HRSA) Health Center Program to provide resources in underserved areas. These health centers may be Community Health Centers, Migrant Health Centers, Healthcare for the Homeless, and Health Centers for Residents of Public Housing. They must meet a stringent set of requirements in order to keep their grant funding. HRSA conducts operational site visits to monitor compliance with their grant funding requirements. In 2015, HRSA added a few basic 340B compliance questions to the regular grant operational site visit to potentially identify sites that need further investigation by the Office of Pharmacy Affairs (OPA). These questions revolve around 340B policies and procedures, self-auditing and 340B monitoring.

Due to the diversity of covered entities and the need for flexibility in program implementation, HRSA recommends that each covered entity establish and document criterion that demonstrates compliance. It is important for all covered entities, including FQHCs, to have 340B policies and procedures that document the requirements and methodology for standardized practices throughout the covered entity. They should provide clarity to ensure compliance with all applicable 340B regulations, federal and state laws. They need to be continually evaluated and modified to reflect the covered entity’s actual practice.

To have a successful 340B program, the entity must provide oversight through monitoring 340B transactions for compliance issues and potential lost savings. As SCA performs independent 340B compliance audits for FQHCs, we find similar audit results to the results that are posted in the OPA findings. FQHCs can gain excellent insight to areas that OPA is focusing on during their audits by reviewing FQHC-specific audit results. Audit results will also provide areas that entities should concentrate on while performing self-audits. Below are the posted OPA 340B audit findings for FQHCs through September 30, 2016:

OPA 340B Findings for FQHCs

No Findings


Incorrect Database


Duplicate Discount




No Contract Pharmacy Oversight 


No Auditable Records



The OPA findings above resulted in 58% of FQHCs audited to make repayments to manufacturers. 14% of FQHCs audited had contract pharmacies removed from their program.

When you review the OPA findings, the majority of the findings fall into four areas:

1. Outpatient clinics not being registered in the OPA database:


In order for an outpatient clinic to provide 340B drugs to eligible patients whether it is a clinic administered drug or a prescription filled in a contract pharmacy that originated in the clinic, the clinic must be registered in the OPA database. In a FQHC, an offsite clinic must be covered under the grant funding that is provided to the entity to register in the OPA database. FQHCs should compare their registered clinics in the OPA database to their clinic sites covered under their scope of services in their Electronic Handbook. Review any clinics that do not appear in both places to see if OPA registration is appropriate.


2. Incorrect information on the Medicaid Exclusion File (MEF):


When a covered entity provides 340B drugs to a patient with a Medicaid payor, they are considered to be “carving-in” Medicaid. The entity should add the entity’s NPI number on the OPA database to notify Medicaid that they use 340B drugs and each claim billed to Medicaid should have the same NPI number listed on the claim. If the entity is going to ‘carve-out” Medicaid, meaning that they will not provide 340B drugs to a patient with a Medicaid payor, the NPI number is not listed in the OPA database. Entities should also follow individual State Medicaid requirements for 340B billing.


3. Contract pharmacies registered in the OPA database without a contract in place:


A Contract Pharmacy can provide significant savings in 340B; however, it creates a high degree of risk if not being monitored and audited regularly. The covered entity is responsible for ensuring contract pharmacy arrangements are in compliance with all 340B program requirements to prevent diversion, duplicate discounts and maintain auditable records. A covered entity must have a contract finalized and signed prior to registering a contract pharmacy. A contract pharmacy cannot dispense 340B drugs on behalf of the covered entity until it has been registered in the OPA database.


4. 340B drugs dispensed at contract pharmacies for prescriptions written at ineligible sites not supported by responsibility of care:


The OPA requires that the facility provide oversight through monitoring transactions at the contract pharmacy. A prescription must tie to an actual visit of an eligible patient. Every prescription must meet all three components of the following patient definition:

  1. The covered entity has established a relationship with the patient, such that the covered entity maintains records of the patient’s healthcare; and

  2. The patient receives healthcare services from a healthcare professional who is either employed by the covered entity or provides healthcare under contractual or other arrangements (e.g. referral for consultation) such that responsibility for the care provided remains with the covered entity; and

  3. The individual receives a healthcare service or range of services from the covered entity which is consistent with the service or range of services for which grant funding has been provided to the entity.

In many cases, covered entities are dedicating significant resources to ensure compliance oversight to their 340B program. Even with these efforts, SCA finds many covered entities are not monitoring efficiently and are surprised when weaknesses are uncovered in their 340B processes that expose them to compliance and monetary risk. This illustrates the need for ongoing internal and external assessment of compliance with the 340B rules and expectations. Responsibility for oversight always rests solely on the covered entity for both the facility and contract pharmacy compliance.

Southwest Consulting Associates (SCA) analyzes HRSA’s posted results for covered entity audits to establish trends in the findings. As HRSA posts audit results, we will provide you with a more detailed breakdown of the findings and tips to help you ensure HRSA audit readiness. SCA provides independent, annual 340B compliance audits and 340B quarterly compliance audits to minimize or prevent adverse findings in a HRSA audit.  To find out more about SCA’s 340B external audit program, please visit our website or request a proposal at


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Topics: FQHC, Federally Qualified Health Center, Community Health Center

About This Blog

The climate of provider reimbursement is ever-changing and this blog is intended to keep you up-to-date on the latest information regarding:

  • DSH Reimbursement
  • 340B Pharmacy Drug Discount Program
  • Compliance Issues
  • Litigation Surrounding Provider Reimbursement

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