Exploring 340B Solutions for Covered Entities

All Posts

Exploring 340B Solutions for Covered Entities

Hot topics for hospital and health system 340B drug discount programs


The Challenge

Achieving true optimization of your 340B program requires constant scrutiny of savings opportunities and a laser focus on achieving compliance. In this issue brief, we examine four priority areas for ensuring compliance with the Health Resources and Services Administration (HRSA) and state requirements.

  • Medicaid Billing
  • Internal Audits
  • 340B Oversight
  • Location Eligibility

Medicaid Billing

Preventing duplicate discounts is essential for achieving 340B program compliance. Medicaid billing requirements vary by state and may involve different penalties for non-compliance. HRSA requires that covered entities have processes in place to prevent duplicate discounts. Be sure your entity is reviewing the following to prevent these:

  • If Carve-in – Medicaid Exclusion File must include all NPIs/Medicaid provider numbers used for billing in areas where 340B drugs are used and review your Medicaid Exclusion File on a quarterly basis to ensure that all NPI/Medicaid Provider numbers used to bill 340B claims are accurately listed
  • If Carve-out – Ensure all BIN/PCN for Fee for Service Medicaid are excluded from eligible transactions

Regarding state Medicaid billing requirements, review the following to ensure this information is included:

  • Required modifiers are applied to the claim
  • NPI/Medicaid provider number are applied to the claim
  • Submission of correct charge on claim

The process for recording the required information should be defined in your organization’s policies and procedures. Failure to comply with HRSA and state requirements may result in Medicaid overpayment or non-compliance penalties, and penalties can be severe.



Note that the federal government recently settled with a California

hospital for more than $31 million for Medicaid overpayments.1


Internal Audits

Covered entities have a responsibility to ensure the integrity of their own program. HRSA expects that covered entities perform regular internal audits to validate program integrity and compliance. Three main areas to review for compliance include:

  • Eligibility
  • Prevention of duplicate discounts
  • Prevention of diversion

Best practices for a robust internal auditing process should cover the following:

  • Reviewing the Medicare Cost Report (MCR) at least annually, and validating the disproportionate share adjustment percentage to ensure eligibility for DSH, SCH and RRC covered entity types
  • Verifying hospital/site ownership, ensuring that the 340B entity is owned by an appropriate organization
  • Checking all OPAIS registration data on a quarterly basis
  • Validating government official’s contact information to ensure that the information on file in OPAIS is current
  • Verifying the correct Medicaid status (Carve-in vs. Carve-out) is designated in the Office of Pharmacy Affairs Information System (OPAIS)
  • Validating location information is correct for contract pharmacies in OPAIS
  • Confirming the registration of eligible child sites in OPAIS
  • Validating the annual re-certification within OPAIS once it is completed
  • Reviewing and updating policies and procedures at least annually
  • Performing monthly transaction reviews to ensure that duplicate discounts and diversions are not occurring

HRSA recommends that all covered entities perform an annual independent external audit to ensure that the covered entity is in compliance.


Our 340B Solutions team has more than two decades of experience

with the 340B program compliance, oversight, and optimization.

340B Oversight

HRSA expects covered entities to have an oversight committee in place. HRSA wants to see that the oversight committee:

  • Meets on a regular basis as defined in the policies and procedures
  • Reviews 340B rules, regulations, and guidelines to ensure consistently
    oversight across the organization
  • Ensures that the organization meets compliance requirements of program eligibility, patient definition, 340B drug diversion, and duplicate discounts
  • Oversees the review process of compliance activities and takes corrective actions based on findings
  • Assesses any audit findings for material breach
  • Identifies opportunities to optimize the 340B program and determines
    how savings are used by the entity to support programs for the underserved

The composition of the committee varies by organization. Consider representatives from the following:

  • Hospital Leadership
  • Director or Manager of Pharmacy
  • 340B Coordinator
  • Clinical Coordinator
  • Pharmacy Buyer or Inventory Manager
    Director of Compliance
  • Finance/Reimbursement and Accounting departments
  • Medical Staff Credentialling
  • Information Technology

When your covered entity is audited by HRSA, the auditor may ask to see the minutes from your oversight committee meetings. If your organization does not have a committee or lacks notes, HRSA could cite your entity for lack of oversight. HRSA would then expect a Corrective Action Plan (CAP) to be submitted.

Location Eligibility

Over the past year, accommodations related to location eligibility have been expanded due to COVID-19. Previously, an offsite location was required to be included on a reimbursable line of the MCR in order to be eligible and registered.

Under the new accommodations, covered entities may use 340B drugs at certain offsite locations before such locations are reported on the hospital’s most recently filed MCR and registered in the online 340B database of OPAIS as a 340B child site of the hospital. Permissible use and prescribing of 340B drugs at such offsite locations will continue to be subject to the 340B program definition of “eligible patient” of the hospital. Hospitals remain required to register offsite locations in OPAIS once the location is reported on a filed MCR.

It is expected that this accommodation will remain permanent even after the national health emergency is declared over. The patient still needs to meet the eligible patient definition requirements, and the location will need to be registered as soon as it appears on the MCR as reimbursable.

Be sure to maintain auditable records and outline eligibility scenarios in the policies and procedures for any offsite location.


By establishing and maintaining a robust process, covered entities can help ensure their program’s compliance and achieve optimal savings from 340B. CPS® 340B Solutions has more than two decades of experience with the 340B program compliance, oversight, and optimization. CPS offers independent audits, program maintenance and training assistance, 340B program opportunity assessments, implementation assistance, and 340B program referral capture services to meet HRSA expectations, achieve compliance, and increase savings.


Download the Issue Brief


1 https://www.justice.gov/usao-cdca/pr/oc-based-health-care-organization-agrees-pay-over-315-million-settle-claims-it. Accessed 2.10.22.


Submit your contact information below to receive insights from our team of pharmacy solutions experts.