For 340B covered healthcare entities, complying with the federal drug pricing program’s specific regulations and passing regulatory audits by the Health Resources & Support Administration (HRSA) is only the tip of the iceberg.
In this HealthcareLINC Attorney Q&A, McAfee & Taft healthcare lawyer Cori Loomis explains why participating entities must also comply with a myriad of adjacent issues, laws, rules and agency regulations — including the False Claims Act, Anti-Kickback Statute, state provider licensure laws, Medicare provider-based rules, and privacy laws, just to name a few — or face even more severe consequences and penalties. She also provides practical tips for avoiding potential compliance pitfalls.
McAfee & Taft’s Healthcare Group regularly works with clients concerning 340B-related questions and compliance issues. If you have questions or need assistance with anything related to this program or any healthcare legal matters, please reach out to one of our healthcare attorneys.
.
Q&A Transcript
.
What are some of the challenges in legal oversight of 340B programs?
You’ll recall a week or so ago we did a first part of this, on the scrutiny the program is under and some arrangements that are coming to light that are causing some issues. And so now we want to transition to more of the compliance oversight within the entity that is the covered 340B entity. So the one challenge I really want to point out is that if you’re looking only at complying with the 340B regulations, that’s all you’re looking at. And there are just a lot of issues adjacent to 340B compliance. So it’s more, in other words, it’s more than just worrying about your HRSA audit. That’s the regulatory body that audits this program. And so you have consultants looking at and saying, “we will help you implement, and will help you with your 340 B oversight.” You need to understand they are looking only – pretty much – the 340B regulations, which there really aren’t that many of compared to some other programs. So it’s important that healthcare providers realize the areas that are adjacent to the 340B program that could crop up and address those issues as well.
The adjacent issues that can crop up that you need to be wary of are the False Claims Act, the Anti-Kickback Statute can arise, state provider licensure laws, beneficiary inducement prohibitions, Medicare cost reporting issues, provider-based rules. There are also federal and state pharmacy and wholesale laws that could come up, as well as privacy laws.
What are examples of situations where 340B issues may violate adjacent laws?
So often I find it’s helpful not just to list all of those statutes or regulations that could provide, but to give you some examples so you’ll have them in your head when you see them and recognize them. Just take, for example, the Anti-Kickback Statute. Things that may cause problems with 340B implementation in the anti-kickback arena could be arrangements in which a vendor receives compensation based on net revenues of the 340B program.
Another example is if a contract pharmacy has dispensing fees that are either below or above fair market value. A third example under the Anti-Kickback [statute] could be “joint venture”-type arrangements, where the pharmacy or the 340B entity’s contribution is patient referrals. Anything that, you know, addresses any of those should raise red flags under the Anti-Kickback Statute.
Under the False Claims Act, some examples are submitting state Medicaid claims in excess of the 340B actual acquisition cost, which is required, or reporting incorrect disproportionate share hospital information on your cost report in order to become eligible for the 340B program. That would raise issues as well. Another example under the patient inducement context would be if a provider is providing services at no cost or below cost to patients in order to get them to be a relationship or establish a relationship for 340B.
Another example is providing additional services without cost to patients if they fill prescriptions at your pharmacy. So any benefit to induce their business can also raise issues.
Do all of these violations carry their own separate consequences?
Yes, all of these these laws outside of the 340B program. If your 340B program is audited by HRSA, you’re going to have regulatory penalties or, you know, you’re going to have to correct or submit a correction action, a corrective action plan. All these other statutes that you could violate have, frankly, more severe consequences as far as penalties and the possible negative ramifications.
Do you have any tips for 340B entities to avoid potential compliance pitfalls?
One tip is don’t just make compliance or oversight of the 340B program the pharmacy department’s issue because, one, your pharmacy department usually doesn’t have authority over anyone else to hold them accountable and, like we just went over, there are a lot of adjacent issues — compliance, statutory regulatory issues — that your pharmacy department will have no idea about. So you really need to put together a team — your compliance, your legal — if you have those in-house resources, and if you don’t, you may need to, you know, call us, get our assistance, or be aware that those other adjacent issues may be as this as significant as compliance with the 340B regs.
For information:
healthcarelinc.com
mcafeetaft.com/healthcare
