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The 340B Drug Pricing Program represents a vital financial lifeline for eligible healthcare organizations, they can stretch scarce resources and enhance patient care. The program’s growth to $53.7 billion in 2022 comes with heightened scrutiny and stringent compliance requirements. Failing to meet these standards can result in costly manufacturer repayments, program termination, and reputational damage. A systematic audit approach is your best defense against these risks so developing a robust 340B audit checklist is a critical risk mitigation to protect program benefits.
Understanding 340B Audit Fundamentals
Healthcare organizations participating in the 340B program face multiple audit types, each with distinct focuses and consequences:
- HRSA Audits: Official reviews conducted by the Health Resources and Services Administration focusing on statutory compliance, particularly eligibility maintenance and prevention of diversion and duplicate discounts
- Manufacturer Audits: Targeted examinations initiated by pharmaceutical companies concerned about potential diversion or duplicate discounts involving their products
- Internal Self-Audits: Proactive assessments conducted by the covered entity to identify and address compliance vulnerabilities before external scrutiny
HRSA audit findings typically require Corrective Action Plans and may necessitate manufacturer repayments, while manufacturer audits focus primarily on financial recovery. In serious cases, entities might face program termination.
Recent HRSA audits consistently highlight these common issues:
- OPAIS registration inaccuracies
- patient eligibility gaps
- duplicate discount failures
- inadequate contract pharmacy oversight
Essential Components of a 340B Audit Checklist
Program Eligibility Documentation
- Verify accuracy of all OPAIS registration information, including entity type, address, Authorizing Official, and Primary Contact
- For hospitals: Confirm Medicare Cost Report information, DSH adjustment percentage, and hospital classification/ownership documentation
- For grantees: Maintain current grant funding documentation
- Ensure all outpatient facilities (“child sites”) are properly registered and listed on appropriate cost reports
- Document regular reviews of eligibility criteria to detect any changes requiring HRSA notification
Patient Eligibility Verification
Preventing drug diversion, the dispensing of 340B medications to ineligible individuals, requires robust systems for verifying patient eligibility:
- Document your organization’s patient definition policy, addressing the established relationship, provider eligibility, and service consistency requirements
- Implement procedures for distinguishing between inpatient and outpatient status at the time of service
- Establish systems to verify provider credentials and employment/contractual relationships
- Create processes for properly documenting referred prescriptions and maintaining responsibility for care
- Conduct regular sample audits tracing prescriptions back to qualifying patient encounters
Inventory Management Controls
Proper tracking of 340B medications from purchase through dispensing is essential for program compliance:
- Document your inventory model (physical separation or virtual/split-billing)
- For virtual inventory systems, verify accurate accumulator settings and 11-digit NDC mapping
- Implement controls to prevent GPO prohibition violations for applicable hospitals
- Establish procedures for handling returns to stock and drug waste
- Create reconciliation processes comparing dispensed quantities with actual purchases
- Review purchasing records across all accounts (340B, GPO, WAC) to ensure appropriate segregation
The integrity of your inventory system depends on accurate NDC mapping. Even one incorrect digit can trigger compliance issues. Regular validation of NDC crosswalks and split-billing configurations prevents these errors.
Contract Pharmacy Oversight
- Maintain complete, current written agreements with all contract pharmacies
- Document your process for conducting required annual independent audits of contract pharmacy arrangements
- Implement oversight procedures for Third-Party Administrators (TPAs)
- Verify all contract pharmacies are properly registered in OPAIS before 340B dispensing begins
- Establish protocols specifically addressing duplicate discount prevention in contract pharmacy settings
Duplicate Discount Prevention
- Document your Medicaid carve-in or carve-out decision and implementation procedures
- Verify Medicaid Exclusion File (MEF) information is accurate, complete, and current
- Implement state-specific claim identifiers or modifiers when required
- Establish specific processes for managing Medicaid Managed Care Organization claims
- Create audit procedures to verify compliance with your carve-in/out policy

Implementing an Effective Audit Process
- Establish a tiered audit schedule:
- Daily/weekly monitoring of critical data points and system alerts
- Monthly targeted reviews of high-risk areas
- Quarterly comprehensive assessments
- Annual deep-dive evaluations mirroring HRSA audit scope
- Form a cross-functional 340B oversight committee include pharmacy, finance, compliance, IT, and administrative leadership to ensure all aspects of the program receive appropriate attention.
- Document your audit methodology, include sampling techniques, testing procedures, documentation requirements, and escalation protocols.
- Leverage technology solutions that support compliance monitoring, include split-billing software with robust audit trail capabilities and data analytics tools for trend identification.
- Maintain comprehensive, organized records with appropriate retention periods (minimum 5 years recommended) for all compliance-related documentation.
Responding to Audit Findings
- Corrective action plans with clear timelines and responsible parties
- Documented remediation efforts with evidence of implementation
- System improvements to prevent recurrence
- Clear thresholds for potential self-disclosure to HRSA or manufacturers
- Cadence for follow-up audits to verify effectiveness of corrective actions
Staff Training and Competency
- Develop role-specific training modules for all staff involved in 340B operations
- Create a formal onboarding process for new 340B team members
- Implement annual competency assessments for key 340B roles
- Document all training completion and competency verification
- Establish a process for communicating program updates and policy changes to relevant staff
Best Practices for Hospital Sustainability Through 340B Compliance
- Reinvest program savings in expanded services for vulnerable populations, demonstrating the program’s impact on your community
- Implement continuous education programs for all staff involved in 340B operations
- Establish clear communication channels between departments affecting 340B compliance (Pharmacy, Finance, IT, Medical Records)
- Develop key performance indicators to measure compliance program effectiveness
- Create a culture of compliance where every team member understands their role in program integrity
The Patient-Centered Approach to Compliance
Ultimately, 340B compliance isn’t just about avoiding penalties, it’s about protecting a program that directly benefits your patients. When framing compliance initiatives within your organization, emphasize how each audit check and procedure supports your ability to:
- Provide medications at reduced costs to eligible patients
- Expand services to vulnerable populations
- Maintain financial sustainability of essential healthcare services
- Ensure consistent program access without disruption
Building a Sustainable Compliance Foundation
In an environment of increasing regulatory scrutiny and program complexity, a comprehensive 340B audit checklist serves as both protection against compliance risks and support for your organization’s mission. You can better safeguard the program benefits that enable by implementing the strategies outlined in this article. You will serve your most vulnerable populations and demonstrate your commitment to the program integrity.
Remember that 340B compliance is not a one-time effort but an ongoing process requiring regular attention and resource allocation. The investment in robust audit procedures today will enable program sustainability and care for underinsured and uninsured patients.