At Realistic Strategies LLC, we understand that 340B compliance is a top priority for covered entities. Our 340B Audit Series is designed to provide actionable insights, best practices, and expert guidance to help your organization navigate the complexities of HRSA audits. In Part 2 of this series, we’ll focus on one of the most critical components of audit readiness—340B policies and procedures.
A well-documented 340B policies and procedures (P&P) manual is the foundation of a compliant and audit-ready 340B Drug Pricing Program. HRSA auditors routinely request P&Ps as part of their compliance reviews, and any discrepancies between written policies and actual practices can lead to audit findings, requiring corrective action.
At Realistic Strategies LLC, we help covered entities establish and maintain 340B compliance through structured policies, ongoing monitoring, and internal audits. In this article, we’ll discuss why regularly reviewing and updating your 340B policies and procedures is essential, what key elements should be included, and how strong documentation can help prevent costly compliance issues.
Why 340B Policies and Procedures Matter
A comprehensive 340B P&P manual does more than document how your organization manages 340B drug purchasing and eligibility—it also serves as a critical tool for demonstrating compliance during a HRSA audit.
Key Reasons to Maintain Strong 340B Policies and Procedures:
- Ensures consistent application of program rules across pharmacy, finance, and compliance teams.
- Provides a clear compliance roadmap for internal staff and external auditors.
- Helps prevent drug diversion and duplicate discounts by outlining safeguards and controls.
- Reduces the risk of audit findings by aligning written policies with actual program operations.
HRSA expects 340B-covered entities to maintain detailed, up-to-date policies that reflect how the program is managed in practice. If policies are outdated, incomplete, or inconsistent with operational workflows, your organization may face compliance risks.
Key Components of a Strong 340B Policy and Procedure Manual
A well-structured 340B P&P manual should cover all aspects of program compliance. Below are the essential areas your policies should address:
1. Patient Eligibility and Prescription Documentation
- Clearly define who qualifies for 340B pricing based on HRSA’s patient definition.
- Establish procedures for verifying patient eligibility and maintaining adequate medical records.
2. 340B Drug Procurement and Inventory Management
- Detail how 340B drugs are purchased and tracked to prevent diversion.
- Outline the use of virtual inventory replenishment models or separate physical inventory tracking.
3. Preventing Drug Diversion
- Specify controls to ensure 340B drugs are dispensed only to eligible patients.
- Document the process for preventing diversion in contract pharmacies and mixed-use settings.
4. Avoiding Duplicate Discounts
- Define procedures for Medicaid billing compliance and use of the Medicaid Exclusion File (MEF).
- Include guidelines on managing Medicaid managed care claims to prevent duplicate discounts.
5. Contract Pharmacy Oversight
- Detail how contract pharmacies are monitored for compliance.
- Require quarterly audits and documentation of prescription claims and dispensing data.
6. Internal and External Audit Procedures
- Establish self-audit processes to identify and address compliance risks.
- Outline the steps for responding to a HRSA audit and implementing corrective actions when necessary.
How Often Should 340B Policies and Procedures Be Updated?
HRSA recommends that covered entities regularly review and update their policies and procedures to reflect regulatory changes, operational updates, and audit findings. At a minimum, policies should be reviewed:
- Annually, to ensure compliance with the latest HRSA 340B guidance.
- Whenever major operational changes occur, such as adding new contract pharmacies or adjusting procurement practices.
- After an audit, to address any compliance gaps and prevent future findings.
Updating policies proactively can help your organization stay ahead of regulatory changes and reduce audit risks.
How Incomplete or Outdated Policies Can Lead to Audit Findings
If your 340B policies and procedures are outdated, missing key compliance areas, or not followed in practice, your organization may be at risk of HRSA audit findings.
Common Policy and Procedure Issues That Lead to Audit Findings:
- Policies do not align with HRSA’s latest guidance, leading to non-compliance.
- No clear process for preventing duplicate discounts, resulting in Medicaid billing errors.
- Lack of contract pharmacy oversight policies, increasing the risk of non-compliant drug dispensing.
- Failure to document internal compliance monitoring, making it difficult to demonstrate proactive program management.
To avoid these risks, covered entities should implement internal audits and compliance reviews to verify that policies are being followed correctly.
Strengthening Your 340B Compliance with Updated Policies
Well-documented 340B policies and procedures are critical to ensuring program integrity, maintaining eligibility, and preventing compliance issues. Covered entities should prioritize annual policy reviews, internal audits, and staff training to align operations with HRSA requirements.
At Realistic Strategies LLC, we help healthcare organizations develop, review, and optimize their 340B policies and procedures to minimize risk and improve audit readiness. Whether you need a policy review, audit preparation support, or compliance training, we can guide your team through the complexities of 340B program management.
Need Expert Support for Your 340B Compliance?
Let’s ensure your 340B policies and procedures are audit-ready and aligned with HRSA best practices. Visit www.realisticstrategies.com to learn more about our 340B compliance solutions.
Stay tuned for more insights in our 340B Audit Series!