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The HRSA will be closely scrutinizing contract pharmacy arrangements and focusing on diversion, duplicate discounts, and 340B database records.


HRSA’s Increased Funding Means Greater 340B Audit Risk

  • 2/6/2015

In 2014, the Health Resources and Services Administration (HRSA) committed an additional $6 million to increase 340B program integrity and oversight. The Office of Pharmacy Affairs (OPA) used the funds to establish a program performance and quality branch of the agency to augment the already established operational and informatics branches. The additional branch will be primarily responsible for developing audit reports and recertifying 340B covered entities.

Expect more audits in 2015

The OPA has stated that its goal in fiscal year 2015 is to double the number of audits performed in previous years. In the OPA’s recently published Program Integrity: FY 2014 Audit Results, it is clear that HRSA is closely scrutinizing contract pharmacy arrangements and focusing on diversion, duplicate discounts, and 340B database records.

Contract pharmacy arrangements

HRSA's 2010 guidance allowed covered entities to contract with multiple outside pharmacies to increase patient access to medications. The number of contract pharmacy arrangements has grown significantly as a result, and as of January 2015, more than 36,000 active contract pharmacy arrangements were listed in the HRSA 340B database. Contract pharmacy arrangements involve a very intricate level of oversight to ensure they have the proper internal controls in place to comply with all of the 340B regulations and guidelines governing the program. HRSA has asserted that covered entities are ultimately responsible for program compliance.

Best practices for 340B contract pharmacy compliance

  • Ensure there is a written contract pharmacy agreement between the covered entity and the outside pharmacy.
  • Register and maintain accurate information about 340B contract pharmacy arrangements in the 340B database.
  • Understand state Medicaid agency 340B billing requirements for Medicaid and/or Medicaid managed care organizations regarding contract pharmacy arrangements to avoid potential duplicate discounts.
  • Verify that all Medicaid and National Provider Identifier (NPI) billing numbers, institutional information, and contract pharmacy arrangements for carve-in entities are accurately recorded in the HRSA Medicaid Exclusion File.
  • Do not utilize contract pharmacies to dispense 340B qualified medications until the pharmacy has been registered, certified, and is listed under the covered entity in the 340B database.
  • Maintain comprehensive 340B policies and procedures addressing contract pharmacy arrangements.
  • Develop a well-defined process to validate patient eligibility.
  • Maintain a comprehensive list of health care professionals’ NPI numbers for distribution to the contract pharmacies and third party claims processors.
  • Maintain auditable records at both the covered entity and the contract pharmacy.
  • Conduct regularly scheduled self-audits of all aspects of the 340B process.
  • Engage an outside vendor to perform an audit of the 340B contract pharmacy. OPA expects covered entities to have an outside independent audit of both internal and contract pharmacy processes at least annually.
  • Implement immediate fixes to problems identified in the self-audit or independent audit process, and immediately report any compliance breaches to HRSA.

How we can help

CLA has the 340B experience to help covered entities comply with the 340B regulations and guidelines. We can evaluate all aspects of your 340B program including procurement, inventory, distribution, dispensing, and billing of 340B qualified medications. CLA can help implement your program, address regulatory concerns, or conduct audits.