Using Data to Prevent Drug Diversion for 340B Covered Entities



By: Jeff Spencer

Covered entities that participate in the 340B Drug Pricing Program face intense pressures from all sides. Their mission to provide affordable drug treatments to those in need are hindered by ambiguous definitions of patient eligibility as well as complex data records. Despite good-faith efforts at compliance, covered entities face tough federal penalties for missteps—potentially even losing their 340B-eligibility status.

Diversion, a key violation of 340B program requirements that occurs when a 340B drug is dispensed to an ineligible patient, is a prevalent challenge for covered entities. The Health Resources & Services Administration (HRSA) recently updated its audit results for FY 2018. Of the 101 covered entities undergoing audits, 28 of them were cited for diversion. In most of these cases, diversion occurred when the 340B drugs were:

  • Dispensed at contract pharmacies for prescriptions written at ineligible sites or that were not supported by a medical record.
  • Given to inpatients.
  • Improperly accumulated.

If diversion is identified during a HRSA audit, covered entities may be required to:

  • Submit re-payment to the manufacturers
  • Develop and implement a Corrective Action Plan
  • Participate in a follow-up audit

The difficulties with diversion

Diversion has been a hard issue to address. It’s often challenging to identify the precise time, place, and circumstances under which a prescription for a 340B drug was written. Historically, many covered entities have used “encounter data” to verify 340B eligibility—that is, they will qualify a prescription if it was written on the same date that the patient visited their 340B-eligible provider.

However, linking a provider visit to a specific prescription creates assumptions that could lead to diversion findings in the 340B audits. For example, a physician may work at a 340B-eligible hospital and at their private practice on the same day, so when using encounter data only there’s no way to know from which location a prescription was written. Again, this can lead to an assumption that the prescription was written at the 340B-eligible location.

Replacing assumptions with data

To ensure compliance with federal guidelines and prevent diversion, 340B covered entities must remove assumptions from their methodology where possible. Prescription data and documentation available in a 340B hospital’s own information system(s) is the best way to verify eligibility. With this approach, the precise date, location, and circumstances around 340B prescriptions are validated.

As stewards of the 340B program, it’s in everyone’s best interest to take any necessary steps to eliminate diversion. If you’re a 340B hospital concerned about diversion, contact your third-party administrator or 340B consultant. PSG has developed proprietary capabilities and algorithms that directly use hospital prescription data to successfully prevent diversion for our clients. Want to learn what this could mean for your hospital? Contact PSG today for a demo and program analysis.

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Jeff Spencer is an experienced consultant in the pharmacy healthcare industry with special expertise in 340B drug programs, health system pharmacy strategies, employee benefit integration, data analysis, program benchmarking, and development of custom client deliverables such as executive-level reports and financial projections.