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Sample 340B Policy & Procedures Manual
Page 1
A Guide for Hemophilia Treatment Center Leaders
Purpose: The purpose of this tool is to provide an example of a 340B policy and procedure manual (P&P
manual) that exhibits high program integrity, to assist participating hemophilia treatment center (HTC) leaders
in the preparation of a unique site-specific P&P manual that supports placing compliant guidance/policy into
practice.
Instructions:
1. Identify which team members within the HTC will be involved in the creation, review, and approval
process of the P&P manual.
2. Meet to discuss the project and assign responsibilities and timelines.
3. Review the sample P&P manual.
4. Based on the topics presented in the sample, customize a draft P&P manual for the specific entity. This
sample is not intended to be “cut and pasted”; rather, it is intended to provide structure and content that
entities may want to address as part of creating a 340B-compliant program. Entities are expected to
delete or add new language to customize their P&P manual to apply to their unique practice settings
and 340B program requirements. There are many possibilities for structuring a 340B P&P manual; this
sample represents just one option.
5. If you have specific questions, contact Apexus Answers ([email protected]), who will
provide assistance or connect you with a resource that can provide help.
6. Review and approve the draft P&P manual with entity team members.
7. Regularly update the P&P manual, and maintain all records of previous versions of P&P manuals and
meeting minutes from P&P manual reviews.
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A Guide for Hemophilia Treatment Center Leaders
340B Standard Operating Procedure Table of Contents
I.
PURPOSE ....................................................................................................................................................................... 3
II.
DEFINITIONS .................................................................................................................................................................. 3
III. REFERENCES ................................................................................................................................................................ 3
IV. POLICY REVIEW, UPDATES, AND APPROVAL ............................................................................................................ 3
V.
BACKGROUND ............................................................................................................................................................... 3
VI. 340B POLICY STATEMENTS ......................................................................................................................................... 3
VII. RESPONSIBLE STAFF, COMPETENCY ........................................................................................................................ 5
VIII. 340B ENROLLMENT, RECERTIFICATION, CHANGE REQUESTS............................................................................... 7
IX. PRIME VENDOR PROGRAM ENROLLMENT, UPDATES ............................................................................................. 8
X.
340B PROCUREMENT, INVENTORY MANAGEMENT, DISPENSING .......................................................................... 8
XI. RECOMMENDED MONITORING AND REPORTING ................................................................................................... 11
XII. Appendix [I]: Contract Pharmacy Compliance Elements ............................................................................................... 13
XIII. Appendix II: Program Income Revenue, Reporting, and Restrictions ............................................................................ 15
XIV. Appendix III: Grant and Audit Regulations, Cost Principles, and Policies ...................................................................... 18
XV. Appendix IV: HRSA Office of Pharmacy Affairs and 340B Policies Resources ............................................................. 20
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Sample 340B Policy & Procedures Manual
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A Guide for Hemophilia Treatment Center Leaders
I.
PURPOSE
This document contains descriptions of the policies and procedures used at [Entity] to maintain compliance
with the 340B program.
II. DEFINITIONS
Definitions of terms may be found in [Appendix: 340B Glossary of Terms, other entity-specific definitions].
III. REFERENCES
Include other references to P&P manuals, 340B Glossary of Terms, HRSA website, etc.
IV. POLICY REVIEW, UPDATES, AND APPROVAL
This policy will be reviewed, updated, and approved by [Entity] staff/committee at [interval] with documentation.
[Reference P&P Committee Policy]
V. BACKGROUND
Section 340B of the Public Health Service Act (1992) requires drug manufacturers participating in the Medicaid
Drug Rebate Program to sign an agreement with the Secretary of Health and Human Services. This agreement
limits the price manufacturers may charge certain covered entities for covered outpatient drugs. The resulting
program is called the 340B Drug Pricing Program. The program is administered by the Office of Pharmacy
Affairs (OPA), a part of the federal Health Resources and Services Administration (HRSA)/Department of
Health and Human Services.
Upon registration on the HRSA 340B Database as a participant in the 340B program, entities agree to abide by
specific statutory requirements and prohibitions.
VI. 340B POLICY STATEMENTS
As a participant in the 340B Drug Pricing Program, [Entity’s] policies are as follows:
 [Entity] uses any savings generated from 340B in accordance with 340B Program intent. [Appendix:
include reference to 340B intent from 340B University Notes]

[Entity] meets all 340B program eligibility requirements.
o [Entity’s] HRSA 340B Database covered entity listing is complete, accurate, and correct.
[Appendix: include screen shots of all entity data on the HRSA 340B Database]
o
[Entity] receives a grant or designation consistent with that conferring 340B eligibility. [Appendix:
provide source document demonstrating this criterion]
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
[Entity] complies with all requirements and restrictions of Section 340B of the Public Health Service
(PHS) Act and any accompanying regulations or guidelines, including, but not limited to, the prohibition
against duplicate discounts/rebates under Medicaid, and the prohibition against transferring drugs
purchased under Section 340B to anyone other than a patient of the entity. [Reference: Public Law
102-585, Section 602, 340B Guidelines, 340B Policy Releases]

[Entity] maintains auditable records demonstrating compliance with the 340B requirement described in
the preceding item.
o The prescriber is employed by the entity, or is under contractual or other arrangements with the
entity, and the individual receives a health care service (within the scope of grant/designation for
which 340B status was conferred) from this professional such that the responsibility for care
remains with the entity. [Appendix: reference where to locate current prescriber list, include
description of relationship between entity and prescribers and any supporting documentation]
o
The HTC maintains records of the individual’s health care. [Reference policy or provide in
appendix a screen shot or description of medical record system]
o
[Entity] bills Medicaid per Medicaid reimbursement requirements, and as [Entity] has reflected
its information on the HRSA website/Medicaid Exclusion File.
 [Entity] informs HRSA immediately of any changes to its information on the HRSA
website/Medicaid Exclusion File.

Medicaid reimburses for 340B drugs per state policy and does not collect rebates on
claims from [Entity]. [Reference: State policy(ies) for 340B
reimbursement/billing/duplicate discount prevention (state Medicaid manual, etc.);
Appendix: [Entity’s] Medicaid information from OPA Medicaid Exclusion File for all sites,
state Medicaid contact(s) information, last documentation from state contact.]

[Entity] has systems/mechanisms and internal controls in place to reasonably ensure ongoing
compliance with all 340B requirements.

[Entity] has an internal audit plan adapted by the internal compliance officer and conducted annually,
and an external audit plan (include details if 340B is addressed). [Appendix: also reference Section IX]

[Entity] uses contract pharmacy services (if applicable), and the contract pharmacy arrangement is
performed in accordance with HRSA requirements and guidelines, including, but not limited to, the
following:
o The HTC obtains sufficient information from the contractor to ensure compliance with applicable
policy and legal requirements, and the HTC has used an appropriate methodology to ensure
compliance (e.g., through an independent audit or other mechanism).
o

The signed contract pharmacy services agreements comply with 12 contract pharmacy
essential compliance elements https://www.gpo.gov/fdsys/pkg/FR-2010-03-05/pdf/2010-4755.pdf.
[Appendix I: provide copy of agreement, compliance elements, reference where contract is
maintained (e.g., department of pharmacy or compliance office, etc.)]
[Entity] acknowledges its responsibility to contact HRSA as soon as reasonably possible if there is any
change in 340B eligibility or a material breach by the HTC of any of the foregoing policies.
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
[Entity] acknowledges that if there is a breach of the 340B requirements, [Entity] may be liable to the
manufacturer of the covered outpatient drug that is the subject of the violation, and, depending on the
circumstances, may be subject to the payment of interest and/or removal from the list of eligible 340B
entities.

[Entity] elects to receive information about the 340B program from trusted sources, including, but not
limited to, the following:
o The HRSA Office of Pharmacy Affairs
o The 340B Prime Vendor Program, managed by Apexus
o Federal regulations
o HRSA and MCHB
VII. RESPONSIBLE STAFF, COMPETENCY
The following [Entity] staff are engaged with 340B program compliance. Pharmacy staff member(s)
participating in the 340B program complete initial basic training via webinar on the 340B and Prime Vendor
Programs (https://www.340bpvp.com/education/340b-university) and attend 340B University every [interval]
(suggested interval is every 1 to 2 years). [The following staff are not specific for all entities and this list is
not all-inclusive.]
A. Chief Executive Officer
 Responsible as the principal officer in charge for the compliance and administration of the
program
 Responsible for attesting to the compliance of the program in form of recertification
B. Chief Operating Officer
 Responsible for the same/similar duties as CEO
 Responsible for oversight and communications of organization-wide operations
C. Chief Financial Officer
 Responsible for the same/similar duties as CEO
 Must account for savings and use of funds to provide care for the indigent under the indigent
care agreement
 Responsible for required financial reports/reporting of related programs
D. Chief Pharmacy Officer/Director of Pharmacy
 Accountable agent for 340B compliance
 Agent of the CEO or CFO responsible for administering the 340B program to fully implement
and optimize appropriate savings and ensure that current policy statements and procedures
are in place to maintain program compliance
 Must maintain knowledge of the policy changes that affect the 340B program, which include,
but are not limited to, HRSA/OPA rules and Medicaid changes
E. Pharmacy 340B Coordinator/340B Program Coordinator
 Accountable agent for 340B compliance
 Manages contract pharmacy relationships
 Day-to-day manager of the program
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









Responsible for maintenance and testing of tracking software
Responsible for documentation of policies and procedures
Maintains system databases to reflect changes in the drug formulary or product
specifications
Manages purchasing, receiving, and inventory control processes
Continuously monitors product min/max levels to effectively balance product availability and
cost efficient inventory control
Ensures appropriate safeguards and system integrity
Performs annual inventory and monthly [or other interval] cycle counts
Ensures compliance with 340B program requirements of qualified patients, drugs, providers,
vendors, payers, and locations
Reviews and refines 340B cost savings report detailing purchasing and replacement
practices, as well as dispensing patterns
Monitors ordering processes, integrating most current pricing from wholesaler; analyzes
invoices, shipping, and inventory processes
F. Corporate Compliance Officer or Director of Internal Audit
 Designs and maintains an internal audit plan of the compliance of the 340B program
 Designs the annual plan to cover all changes in the program from the preceding year
G. Director of Reimbursement
 Responsible for communication of all changes to Medicaid reimbursement for pharmacy
services/products that affect 340B status
 Responsible for modeling all managed care contracts (with/without 340B)
 Engages pharmacy in conversations that affect reimbursement
H. Director of Accounting
 Responsible for annual or semiannual physical inventory of pharmacy items
 Responsible for establishment of “inventory average” process approved by the external
audit firm [Reference policy or type of process used—e.g., FIFO], as the inventory will
decrease in value due to same NDCs purchased at dramatically different discounted 340B
prices
I.
Chief IT Officer/Pharmacy Informatics Person
 Supports the pharmacy software selection of tracking software to manage the 340B program
 Defines process and accesses data for compliant identification of eligible patients
 Archives the data to be available to auditors when audited
J. Clinical Pharmacy Coordinator
 Is aware of products covered by 340B and Prime Vendor Program pricing
 Works with the medical staff to use effective therapeutic classes that optimize savings with
good clinical outcomes [Reference Pharmacy and Therapeutics Committee role]
K. Pharmacy Procurement/Inventory Manager
 Responsible for establishing distribution accounts and maintaining those accounts
 Responsible for ordering all drugs from the specific accounts as specified by the process
employed
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Sample 340B Policy & Procedures Manual
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VIII.
340B ENROLLMENT, RECERTIFICATION, CHANGE REQUESTS
Recertification Procedure
HRSA requires entities to recertify their information as listed in the HRSA 340B Database annually. [Entity’s
authorizing official] annually recertifies [Entity’s] information by following the directions in the recertification
email sent from HRSA to [Entity’s authorizing official] by the requested deadline. Specific recertification
questions should be sent to [email protected].
Enrollment Procedure: New Clinic Sites
The [Entity staff] evaluates a new service area or facility to determine whether the location is eligible for
participation in the 340B program. The criteria used include that the service area must be within the scope of
the grant/designation received by the entity that confers 340B status, have outpatient drug use, and have
patients who meet the 340B patient definition.
If a new clinic meets these criteria, the [Entity] authorizing official completes the online registration process
during the registration window (January 1–January 15 for an effective start date of April 1; April 1–April 15 for
an effective start date of July 1; July 1–July 15 for an effective start date of October 1; and October 1–October
15 for an effective start date of January 1). http://opanet.hrsa.gov/opa/CERegister.aspx?mode=opf&isnew=true
[Entity staff] follows the online registration process here: http://opanet.hrsa.gov/opa/CERegister.aspx?isnew=true
Enrollment Procedure: New Contract Pharmacy(ies) (if applicable)
1. The [Entity staff] ensures that a signed contract pharmacy services agreement, containing the 12
essential compliance elements in the Contract Pharmacy Guidance, is in place between the entity and
contract pharmacy prior to submission to HRSA. This staff ensures that the [Entity’s] legal counsel has
reviewed the contract and verified that all federal, state, and local requirements have been met.
2. The [Entity] authorizing official (AO) completes the online process at
https://opanet.hrsa.gov/340B/Views/CoveredEntity/RegisterDirectory during the registration window (January
1–January 15 for an effective start date of April 1; April 1–April 15 for an effective start date of July 1;
July 1–July 15 for an effective start date of October 1; and October 1–October 15 for an effective start
date of January 1).
3. The [Entity staff] ensures that the contract pharmacy online registration form is completed. The
authorizing official will receive an e-mail requesting that the AO review, certify, and approve the
pharmacy. This must be completed within 15 days from the date the e-mail is received by clicking the
enclosed link.
4. The [Entity staff] begins the contract pharmacy arrangement only on or after the effective date shown
on the HRSA website.
Changes to [Entity’s] Information in HRSA 340B Database Procedure
It is [Entity]’s ongoing responsibility to immediately inform HRSA of any changes to its information or eligibility.
As soon as [Entity] is aware that it has lost eligibility, it will notify HRSA immediately and stop purchasing (or it
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may be required to repay manufacturers).
An online change request will be submitted to HRSA by [Entity’s AO] for changes to [Entity’s] information
outside the annual recertification timeframe.
IX. PRIME VENDOR PROGRAM (PVP) ENROLLMENT, UPDATES
Enrollment in PVP
1. [Entity] completes the online 340B program registration with HRSA.
2. [Entity] completes the online PVP registration (https://www.340bpvp.com/register/apply-to-participate-for340b/).
3. PVP staff validates information and sends confirmation email to [Entity].
4. [Entity] logs on to www.340bpvp.com, selects user name/password.
Update PVP Profile:
To update your profile:
1. Access www.340bpvp.com.
2. Click Login in the upper right corner.
3. Input your log-in credentials.
4. In the upper right corner, click the orange triangle by your name, and click My Profile.
5. You’ll find a list of your facilities; click on the 340B ID number hyperlink to view or change profile
information for a given facility.
6. The My Profile Change Request form is divided into two categories: HRSA information and 340B
Prime Vendor Program (PVP) participation information.
7. To update HRSA information, complete the 340B Change Form detailed above. After the HRSA 340B
Database has been updated, the PVP database will be updated during the nightly synchronization.
8. To update the 340B Prime Vendor Program (PVP) participation information, you can edit your DEA
number, distributor and/or contacts, and click “Submit.”
X. 340B PROCUREMENT, INVENTORY MANAGEMENT, DISPENSING
340B inventory is procured and managed in the following settings:
 Clinic administration
 In-house pharmacy
 Contract pharmacy
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
Note: [Entity] may wish to establish a pricing policy (addressing establishment of usual and customary
charges, applying income-based discounts, third-party billing/reconciliation, and/or Medicaid [physicianadministered drugs, fee-for-service drugs, managed care, Medicaid as secondary payer]).
In-House Pharmacy, Sample Standard Processes
Inventory
1. [Entity] uses either only 340B inventory, or electronically or physically separate 340B and non-340B
purchased inventories.
2. [Entity] does not resell or otherwise transfer discounted drugs to anyone other than to 340B-eligible
patients.
3. [Entity] staff places 340B orders from [manufacturer/wholesaler] through inventory reviews by using
[system] at [time interval] and/or by [Entity] approved purchasing protocols/policies. [Entity] staff
receives and checks in 340B inventory by examining the [manufacturer/wholesaler] invoice against the
order, and reports inaccuracies to the [manufacturer/wholesaler].
4. [Entity] staff maintains up-to-date records of 340B-related transactions for a period of [interval] in a
readily retrievable and auditable format located [reference].
5. 340B inventory is stored in the pharmacy, maintained with a security system. Only pharmacy
employees and/or authorized personnel have access to the pharmacy through [describe security
measures].
6. [Entity] staff examines reports in [Appendix] (e.g., pharmacy system inventory, purchasing invoices,
physical inventory report, usage reports) at [interval], and reports to [specify committee name]
[interval].
Disposition/Dispensing—Controls to Prevent Diversion
1. Pharmacists and technicians dispense 340B drugs only to patients meeting all the criteria in [reference
P&P manual, section VI].
2. 340B eligible prescriptions are filled by [Entity] eligible providers
3. [Entity’s] pharmacy shall dispense drugs in compliance with [State] State Board of Pharmacy
regulations and local, state, and federal requirements.
4. [Entity] staff examines dispensing reports in Appendix at [interval] and reconciles to purchasing records.
Billing—Controls to Prevent Duplicate Discounts
1. [Entity] ensures that billing information is accurate, verifiable, and auditable at all times.
2. [Entity] ensures that accurate Medicaid billing number is listed in the HRSA OPA Medicaid Exclusion
File.
3. Billing claims shall be submitted [specify mandated coding of claims—check your state Medicaid office]
to ensure correct coding of 340B drugs and claims to prevent “duplicate discounts.”
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Clinic-Administered Drugs—Sample Standard Processes
Processes will vary, based on state law, permit type, and so on. [May use In-house Pharmacy, Sample
Standard Processes (above) and customize.]
1. 340B drugs/supplies are purchased for [Entity] to provide medical services, diagnostic services, and
treatment for 340B-eligible patients meeting all the criteria in [reference P&P manual, section VI].
a. Limited scope for HTCs of hemophilia, related blood disorders, and clotting disorders.
2. There is a locked medication room/cabinet(s) located in the clinic to store 340B inventory and
maintained with a security system. Only authorized personnel have access to the pharmacy through
[describe security measures].
3. Dispensing/administration records are documented and maintained in [Entity electronic health record]
that may include the following data elements: [describe].
4. Billing: [May use In-house Pharmacy, Sample Standard Processes (above) and customize].
5. Reports and records are examined and maintained at [interval].
Contract Pharmacy Sample Standard Processes
(Refer to Appendix I—Compliance Pharmacy Elements)
Arrangement
[Entity] has contracted with [Vendor] to facilitate both the design and implementation of the 340B contract
pharmacy program. [Entity] is responsible for 340B compliance. The executed contract with [Vendor] appears
in the Appendix.
Purchasing
1. 340B drugs are purchased on behalf of [Entity]. [Entity] is the “bill-to” and drugs are purchased by
[Contract Pharmacy] per established contract. [Contract Pharmacy] is the “ship-to” and appears on the
HRSA 340B Database [reference P&P Manual, section VI].
2. [Contract Pharmacy] uses the appropriate accounts for [Entity] 340B drug purchases, ensures
appropriate identification, and maintains segregation of drug invoices/records via virtual/physical
inventory.
3. Reports and records are examined and maintained at [interval].
Inventory, Dispensing, Reports
1. [Entity] uses a virtual inventory model or traditional inventory model for contract pharmacy services.
2. 340B-eligible prescriptions may be presented to [Contract Pharmacy] via [e-prescribing, hard-copy, fax,
and phone]. [Contract Pharmacy] verifies patient, prescriber, and clinic eligibility via [define source].
Updates are made by [Entity] at [interval].
3. [Contract Pharmacy] staff dispenses/administers prescriptions to 340B-eligible patients using [Contract
Pharmacy] non-340B drugs for virtual inventory or 340B drugs for traditional inventory.
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4. [Contract Pharmacy] staff places 340B orders on behalf of [Entity] and/or by approved [Entity]
purchasing protocols/policies, based on 340B eligible use as determined by [define source], from
[Manufacturer/Wholesaler]. Ordering processes vary based on [Entity’s] protocol/policy/procedures.
a. Generally, orders are placed “just in time” (when patient makes requests) and communicated to
[Entity] staff via [email, /manufacturer/wholesaler system, etc.].
b. When entities carry shelf stock for emergency supply, orders are triggered by units dispensed
and defined minimum quantities to have on hand, placed by using [online system or other
appropriate means] at [time interval], and communicated to [Entity] staff via [email,
/manufacturer/wholesaler system, etc.].
5. [Entity] pays invoice to [Manufacturer/Wholesaler] for all 340B drugs.
6. [Contract Pharmacy] staff receives 340B inventory by examining the manufacturer/wholesaler invoice
against the order, and reports inaccuracies to [Manufacturer/Wholesaler] and [Entity] staff within
[interval].
7. Any non-replacement 340B inventory (e.g., emergency supply) is stored at [Contract Pharmacy] and
clearly marked as belonging to the 340B entity. The inventory is protected by a security system. Only
pharmacy employees and/or authorized personnel have access to the pharmacy.
8. [Contract Pharmacy] will provide a [interval] report to the [Entity]. [Reference reporting section]
XI. RECOMMENDED MONITORING AND REPORTING
The purpose of conducting self-audits is to provide internal control and monitoring of trends to
comprehensively monitor 340B compliance. The self-auditing process helps to identify potential diversion,
software inaccuracies, and problem areas that need to be addressed, and should be customized to ensure that
all systems are functioning properly. [Reference Pharmacy Record Storage Policy] A sample self-audit
process is available at https://www.340bpvp.com/resource-center/other-resources/compliance-selfassessment/.
Reporting 340B Noncompliance
Address the types of noncompliance that warrant a report to HRSA/manufacturer, records kept,
documentation, and plan for corrective action. [Reference existing HTC pharmacy compliance policy, SelfReporting Non-Compliance Tool]
340B Compliance Review
The 340B Compliance Review summarizes all activities necessary to ensure comprehensive review of 340B
compliance at [Entity]. [Entity] staff is responsible and accountable for overseeing this review process, as well
as taking corrective actions based on findings.
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Area of Focus
Activity
Review of HRSA 340B Database, EHB, and grant
scope to validate eligibility for [Entity]. [Entity] staff
responsible:
Review of 340B self-audit reports. [Entity] staff
responsible:
Review of quarterly contract price load. [Entity] staff
responsible:
Update (minimum) of prescriber and patient eligibility
files with PBM/contract pharmacy. [Entity] staff
responsible:
Third-party vendor external audit of Entity/Contract
Pharmacy (optional). [Entity] staff responsible:
(suggested)
Entity
Eligibility
No
Diversion
No Duplicate
Discount
Annually
X
Monthly
X
X
Quarterly
X
Monthly
X
Annually
X
Frequency
X
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XII. Appendix I: Contract Pharmacy Compliance Elements
HRSA has provided essential covered entity compliance elements as guidance for the contractual provisions
expected in all contract pharmacy arrangements.
Excerpt from: https://www.gpo.gov/fdsys/pkg/FR-2010-03-05/pdf/2010-4755.pdf
(a) The covered entity will purchase the drug, maintain title to the drug and assume responsibility for
establishing its price, pursuant to the terms of an HHS grant (if applicable) and any applicable Federal, State
and local laws. A ‘‘ship to, bill to’’ procedure is used in which the covered entity purchases the drug; the
manufacturer/wholesaler must bill the covered entity for the drug that it purchased, but ships the drug directly
to the contract pharmacy. In cases where a covered entity has more than one site, it may choose between
having each site billed individually or designating a single covered entity billing address for all 340B drug
purchases.
(b) The agreement will specify the responsibility of the parties to provide comprehensive pharmacy services
(e.g., dispensing, recordkeeping, drug utilization review, formulary maintenance, patient profile, patient
counseling, and medication therapy management services and other clinical pharmacy services). Each
covered entity has the option of individually contracting for pharmacy services with a pharmacy(ies) of its
choice. Covered entities are not limited to providing comprehensive pharmacy services to any particular
location and may choose to provide them at multiple locations and/or ‘‘in-house.’’
(c) The covered entity will inform the patient of his or her freedom to choose a pharmacy provider. If the patient
does not elect to use the contracted service, the patient may obtain the prescription from the covered entity
and then obtain the drug(s) from the pharmacy provider of his or her choice. When a patient obtains a drug
from a pharmacy other than a covered entity’s contract pharmacy or the covered entity’s in-house pharmacy,
the manufacturer is not required to offer this drug at the 340B price.
(d) The contract pharmacy may provide other services to the covered entity or its patients at the option of the
covered entity (e.g., home care, delivery, reimbursement services). Regardless of the services provided by the
contract pharmacy, access to 340B pricing will always be restricted to patients of the covered entity.
(e) The contract pharmacy and the covered entity will adhere to all Federal, State, and local laws and
requirements. Both the covered entity and the contract pharmacy are aware of the potential for civil or criminal
penalties if either violates Federal or State law. [The Department reserves the right to take such action as may
be appropriate if it determines that such a violation has occurred.]
(f) The contract pharmacy will provide the covered entity with reports consistent with customary business
practices (e.g., quarterly billing statements, status reports of collections and receiving and dispensing records).
(g) The contract pharmacy, with the assistance of the covered entity, will establish and maintain a tracking
system suitable to prevent diversion of section 340B drugs to individuals who are not patients of the covered
entity. Customary business records may be used for this purpose. The covered entity will establish a process
for periodic comparison of its prescribing records with the contract pharmacy’s dispensing records to detect
potential irregularities.
(h) The covered entity and the contract pharmacy will develop a system to verify patient eligibility, as defined
by HRSA guidelines. The system should be subject to modification in the event of change in such guidelines.
Both parties agree that they will not resell or transfer a drug purchased at section 340B prices to an individual
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who is not a patient of the covered entity. See 42 U.S.C. 256b(a)(5)(B). The covered entity understands that it
may be removed from the list of covered entities because of its participation in drug diversion and no longer be
eligible for 340B pricing.
(i) Neither party will use drugs purchased under section 340B to dispense Medicaid prescriptions, unless the
covered entity, the contract pharmacy and the State Medicaid agency have established an arrangement to
prevent duplicate discounts. Any such arrangement shall be reported to the OPA, HRSA, by the covered entity.
(j) The covered entity and contract pharmacy will identify the necessary information for the covered entity to
meet its ongoing responsibility of ensuring that the elements listed herein are being complied with and
establish mechanisms to ensure availability of that information for periodic independent audits performed by
the covered entity.
(k) Both parties understand that they are subject to audits by outside parties (by the Department and
participating manufacturers) of records that directly pertain to the entity’s compliance with the drug resale or
transfer prohibition and the prohibition against duplicate discounts. See 42 U.S.C. 256b(a)(5)(c). The contract
pharmacy will assure that all pertinent reimbursement accounts and dispensing records, maintained by the
pharmacy, will be accessible separately from the pharmacy’s own operations and will be made available to the
covered entity, HRSA, and the manufacturer in the case of an audit. Such auditable records will be maintained
for a period of time that complies with all applicable Federal, State and local requirements.
(l) Upon written request to the covered entity, a copy of the contract pharmacy service agreement will be
provided to the Office of Pharmacy Affairs.
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XIII.
Appendix II: Program Income Revenue, Reporting, and Restrictions
Maternal and Child Health Bureau (MCHB) Grants and Subgrants require compliance with the grant
administrative regulations, cost principles, HHS Grant Policy Statement, and MCHB Guidance. All revenue
generated by the HTC, not just 340B revenue, must be reported on the SF 425 form, restricted, and used to
support the activities of the HTC as prescribed by the terms of the grant or subgrant. Exceptions to the grant
restrictions must be submitted to HRSA or the region through the HRSA Electronic Handbook (EHB).
A. Resources:
 HHS regulations, 45 CFR 74.2, 74.24, and 92.25
o
http://www.ecfr.gov/cgi-bin/text-idx?SID=5a3b7f93c277077d6c7130e0e38836a9&tpl=/ecfrbrowse/Title42/42tab_02.tpl

HHS Grant Policy Statement, pages II-60, 61, 62
o www.hhs.gov/asfr/ogapa/grantinformation/hhsgps/107.pdf

The HTC Manual for Participating in the Drug Pricing Program Established by Section 340B of the
Public Health Service Act, July 2005
o http://www.hrsa.gov/hemophiliatreatment/340Bmanual.htm

Program Guidance for Regional Grantees, HRSA-12-133
B. Program income is defined as gross revenue, earned by recipient or subrecipient, directly generated by a
supported activity, or earned as a result of the award.
 It is the position of HRSA that any and all revenue earned by the HTC is considered program
income.

It is considered “earned as a result” of the award and subaward.

Program income includes the following:
o
Fees collected by the HTC for services, camps, physical therapy, social therapy, social
workers, nurses, doctors, nurse practitioners, and other programs for men, women and
children
o
Medicaid, MCO, and Medicare payments
o
Private insurance payments
o
340B and non-340B revenue from Factor
C. Program Guidance HRSA-12-133, p. 15:
 Provide a description of how program income, including program income from any 340B Factor
Replacement Product programs, will be used and disbursed, consistent with applicable federal
regulation and policies. Include any information on guidelines or policies for disbursement. Address
how this information will be transmitted to grant sub recipients/sub awardees and how the grantee
will monitor sub recipient/sub awardee compliance.
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D. Pursuant to 45 CFR 74.24, recipients are to add program income revenue to the funds committed to the
project or program to “further eligible project and program objectives.” More specifically, reportable net
program income is to be used for patient health, education, and supportive services necessary to provide
comprehensive care to patients served by the HTCs.
 ADDITIVE: HRSA allows HTCs to add the program income to the amount included in the award and
subaward.

45 CFR 74.24(b)(1):
o (a) The standards set forth in this section shall be used to account for program income
related to projects financed in whole or in part with Federal funds.
o
(b) Except as provided below in paragraph (h) of this section, program income earned
during the project period shall be retained by the recipient and, in accordance with the
terms and conditions of the award, shall be used in one or more of the following ways:
 (1) Added to funds committed to the project or program, and used to further eligible
project or program objectives;
o
Specifically, allowable expenditures of program income relate to patient health, education,
and supportive services necessary to provide comprehensive care to patients served by the
HTCs.
E. Program Guidance HRSA-12-133, p. 25:
 If a recipient or sub recipient organization purchases or reimburses for outpatient drugs, an
assessment must be made to determine whether the organization’s drug acquisition practices meet
Federal requirements regarding cost-effectiveness and reasonableness (see 42 CFR Part 50,
Subpart E, and OMB Circulars A-122 and A-87 regarding cost principles).
F. If a recipient or subrecipient organization is eligible to be a covered entity under section 340B of the PHS
Act and the assessment shows that participating in the 340B Drug Pricing Program and its Prime Vendor
Program is the most economical and reasonable manner of purchasing or reimbursing for covered
outpatient drugs (as defined in section 340B), failure to participate may result in a negative audit finding,
cost disallowance, or grant funding offset.
G. The HTC Manual for Participating in the Drug Pricing Program Established by Section 340B of the Public
Health Service Act, July 2005, at p. 15, states:
 “HTCs use extra income from the 340B discount to maintain or expand supporting services and as
well as provide factor replacement products to uninsured patients.”

Using 340B Income, p. 29:
Guidance on the programmatic use of this income is the responsibility of the office administering
the program and the office awarding the grant within the rules of the HHS Grants Management
Regulation (GMR) (Part 74 of Title 45 of the Code of Federal Regulations) and HRSA’s grants
policy which is based on the PHS Grants Policy Statement (GPS). (This may be superseded in the
future by the publication of a separate HRSA GPS.) These general rules may be supplemented by
specific guidance in the NGA or by letter from the Grants Management Officer (GMO) and/or the
Associate Administrator for the Maternal and Child Health Bureau (MCHB).
The grants awarded to HTCs do not provide funds for purchasing and dispensing FRP. This is an
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activity that many HTCs undertake in addition to the activities directly supported by their grant
funding. Income received beyond FRP operating costs is then used to support activities of the
same general type as those supported by the grant awards. In a letter to grantees dated May 23,
2003, the HRSA GMO and the Associate Administrator for MCHB clarified how the grants policy
rules on program income affect the HTCs. In brief, FRP revenue, whether or not the HTC is a
340B covered entity, is program income and subject to the rules for that kind of income in the
grant regulation and the policy statement. The rules apply to both HTC regional grantees and their
affiliates. Program income needs to be reported on the Federal Financial Status Report beginning
with grant awards for FY 2003. Program income may be used to reimburse costs provided by HTC
parent institutions.

The 340B Guide, p. 78:
The grants awarding office may, on a case-by-case basis, allow a grantee to use the income for
eligible costs of the project that might not be expressly allowable costs under the terms and
conditions of the award.
H. The general policy in the drug acquisition regulation in 42 CFR Part 50, Subpart E, section 50.503, states:
“It is the policy of the Secretary that program funds (including program income) which are utilized for the
acquisition of drugs be expended in the most economical manner feasible.”
I.
Program income is restricted if earned during the award and subaward project period, even if the hosting
parent organization uses its 340B eligibility to purchase drugs. Even if the hosting parent organization
wishes to reject the MCHB grant or subgrant, the program income reserves earned during the award and
sub award period remains to be restricted to support the HTC activities.
J. Program income earned AFTER the termination of the award or subaward is not restricted or reportable.
K. Document all expenditures of program income and how they further support the HTC award/subaward.
Note: HHS and HRSA MCHB Branch SOON TO RELEASE Program Policy with more information
regarding program income.
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XIV.
Appendix III: Grant and Audit Regulations, Cost Principles, and Policies
1. 45 PART 74—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR AWARDS AND SUBAWARDS
TO INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NONPROFIT
ORGANIZATIONS, AND COMMERCIAL ORGANIZATIONS.
Go to http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=6bc65a05235b8a7565aaff6ebe269556&rgn=div5&view=text&node=45:1.0.1.1.35&idno=45
2. 45 PART 92—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE
AGREEMENTS TO STATE, LOCAL, AND TRIBAL GOVERNMENTS.
Go to http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=6bc65a05235b8a7565aaff6ebe269556&rgn=div5&view=text&node=45:1.0.1.1.50&idno=45
3. 42 PART 51a—PROJECT GRANTS FOR MATERNAL AND CHILD HEALTH.
Go to http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=6bc65a05235b8a7565aaff6ebe269556&rgn=div5&view=text&node=42:1.0.1.4.24&idno=42
4. HHS GRANT POLICY STATEMENT.
Go to http://dhhs.gov/asfr/ogapa/grantinformation/hhsgps107.pdf
FEDERAL GRANT REGULATIONS
1. 2 CFR PART 25 UNIVERSAL IDENTIFIER AND CENTRAL CONTRACTOR REGISTRATION.
Go to http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=6bc65a05235b8a7565aaff6ebe269556&rgn=div5&view=text&node=2:1.1.1.3.3&idno=2
2. 2 CFR PART 170—REPORTING SUBAWARD AND EXECUTIVE COMPENSATION INFORMATION.
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.1.8.10#2:1.1.1.8.10.1
3. 2 CFR PART 175—AWARD TERM FOR TRAFFICKING IN PERSONS.
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.1.8.12
4. 2 CFR PART 180—OMB GUIDELINES TO AGENCIES ON GOVERNMENTWIDE DEBARMENT AND
SUSPENSION (NONPROCUREMENT).
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.1.8.15
For HHS Implementing Regulation, see 2 CFR PART 376—HHS NONPROCUREMENT DEBARMENT
AND SUSPENSION.
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.2.1.10.1
5. 2 CFR PART 182—GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE
(FINANCIAL ASSISTANCE.
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.1.8.17
2 CFR PART 382—HHS REQUIREMENTS FOR DRUG-FREE WORKPLACE (FINANCIAL
ASSISTANCE) HHS implementation
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.2.1.10.2
6. 2 CFR PART 215—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NONPROFIT ORGANIZATIONS (OMB CIRCULAR A-110).
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.2.10.2
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FEDERAL COST PRINCIPLES
1. 2 CFR PART 220—COST PRINCIPLES FOR EDUCATIONAL INSTITUTIONS (OMB CIRCULAR A21).
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.2.10.4
2. 2 CFR PART 225—COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS
(OMB CIRCULAR A-87).
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.2.10.6
3. 2 CFR PART 230—COST PRINCIPLES FOR NON-PROFIT ORGANIZATIONS (OMB CIRCULAR A122).
Go to http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=6bc65a05235b8a7565aaff6ebe269556&r=PART&n=2y1.1.2.10.8
4. 48 CFR PART 31—COMMERCIAL ORGANIZATION CONTRACT COST PRINCIPLES AND
PROCEDURES.
Go to http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=6bc65a05235b8a7565aaff6ebe269556&rgn=div5&view=text&node=48:1.0.1.5.30&idno=48
OMB CIRCULAR A-133 AUDIT REQUIREMENTS AND COMPLIANCE SUPPLEMENT
OMB CIRCULAR A-133 Audits of States, Local Governments, and Non-Profit Organizations.
Go to http://www.whitehouse.gov/sites/default/files/omb/assets/a133/a133_revised_2007.pdf
OMB COMPLIANCE SUPPLEMENT
Go to http://www.whitehouse.gov/omb/circulars/a133_compliance_supplement_2012
FEDERAL REGISTER NOTICE 2012 OMB COMPLIANCE SUPPLEMENT.
Go to http://www.gpo.gov/fdsys/pkg/FR-2012-08-01/pdf/2012-18808.pdf
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XV. Appendix IV: HRSA Office of Pharmacy Affairs and 340B Policies Resources
1. HRSA OPA Website: http://www.hrsa.gov/opa/index.html
Questions: Email: [email protected] or phone: 888.340.2787
2. HRSA 340B Database: http://opanet.hrsa.gov/opa/
3. 340B Program Integrity: http://www.hrsa.gov/opa/programintegrity/index.html
4. 340B Program Requirements: includes Federal Register notices, policy releases, manufacturer
notices, forms, and reports: http://www.hrsa.gov/opa/programrequirements/index.html
5.
340B Frequently Asked Questions: http://www.hrsa.gov/opa/faqs/index.html
6. 340B Annual Recertification: http://www.hrsa.gov/opa/programrequirements/recertification/index.html
7. 340B Forms: http://www.hrsa.gov/opa/programrequirements/forms/index.html
8.
Medicaid Exclusion/Duplicate Discount Prohibition File:
http://www.hrsa.gov/opa/programrequirements/medicaidexclusion/index.html
9. 340B Federal Register Notices: http://www.hrsa.gov/opa/programrequirements/federalregisternotices/index.html
10. Covered Entity and Contract Pharmacy Registrations:
https://www.federalregister.gov/articles/2012/07/24/2012-17969/notice-regarding-section-340b-of-the-public-health-serviceact-registration-period
11. Health Care Communities 340B Peer-to-Peer Resources: This community strives to connect 340B
covered entities and stakeholders with high-performing sites that have exemplary 340B pharmacy
service offerings: http://www.hrsa.gov/opa/peertopeer/index.html
This tool is written to align with Health Resources and Services Administration (HRSA) policy, and is provided only as an example for the purpose of encouraging 340B program integrity. This information has not
been endorsed by HRSA and is not dispositive in determining compliance with or participatory status in the 340B Drug Pricing Program. 340B stakeholders are ultimately responsible for 340B program compliance
and compliance with all other applicable laws and regulations. Apexus encourages all stakeholders to include legal counsel as part of their program integrity efforts.
© 2015 Apexus. Permission is granted to use, copy and distribute this work solely for 340B covered entities and Medicaid agencies.
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