Articles Posted in FQHCs

filesA Denver area Federally Qualified Health Center (FQHC) must pay $400,000 in fines and implement a corrective action plan for HIPAA violations that resulted from a hacker’s breach into the health center’s employee emails.  The breach led to theft of electronic protected health information (ePHI) of 3,200 individuals. Although the HIPAA violations were a result of a malicious breach, Metro Community Provider network (MCPN) was found at fault by OCR officials after OCR’s investigation showed MCPN did not conduct a risk analysis of its ePHI environment and waited another two months after discovery of the breach to conduct a risk analysis. MCPN had no system of risk management in place to determine what vulnerabilities the center was susceptible to.

Georgia Healthcare and HIPAA Compliance Lawyers

The HIPAA Privacy Rule was enacted to protect patient health information and  secure for patients more control over the use of their private information. Under Federal law, healthcare businesses have a strict obligation to protect the information of patients. While there is no private cause of action for violations of HIPAA, complaints can be filed with the Office of Civil Rights (OCR) of the Department of Health and Human Services (HHS), states’ Departments of Health, federal third-party Payors (Medicare, TRICARE, VA, etc), state licensing boards, and, in some cases, state law may provide a cause of action for individuals under specific state privacy laws. Such complaints can lead to investigations, fines and other negative consequences for a healthcare professional or practice.

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accounting-calculator-and-files-90360-m.jpgWhile various types of regulatory and insurance “audits” are on the radar of any prudent Federally Qualified Health Center (FQHC) or hospital, as health care providers, Section 340B audits are a relatively new and unknown animal. The Section 340B Program, whereby qualified covered entities can benefit from substantial discounts on certain patient drugs, has existed since 1992. Section 340B audits, however, began less than three years ago. The U.S. Department of Health and Human Services, through the Health Resources and Services Administration (HRSA) authorized the first Section 340B Audits in 2012. Since then, the number of Section 340B Audits has been on the rise. In 2014, HRSA audited 99 health care providers and has forecasted doubling that number this year. Increasingly, these audits present serious financial and business risks for Section 340B Program participants.

Presently there are two categories of Section 340B audits: audits conducted by HRSA and audits conducted by the drug manufacturer. Results of HRSA-conducted Section 340B audits are publically available. All Section 340B audits are geared toward requiring and facilitating Section 340B “covered entities” (i.e., the FQHC or hospital that participates in the program) to ensure Section 340B program integrity and accurate record keeping. Requirements are set forth in 42 U.S.C. § 256b, which authorizes Section 340B compliance audits.
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hospital-corridor-1057587-m.jpgFor Federally Qualified Health Centers and other eligible safety net health care centers, proper utilization of the federal Section 340B Drug Discount Program can offer enormous financial advantages to facilitate delivery of high quality primary health care services to their communities. The Section 340B Program, created in 1992, requires drug manufacturers to provide outpatient drugs to qualifying health care centers and organizations at reduced prices. The purpose of the Section 340B Program is to provide a financial advantage that supports FQHCs and other safety net providers, enabling them to stretch scarce federal resources as far as possible to the benefit of their patients.

Georgia FQHC Law Firm

The federal Health Resources and Services Administration (HRSA), which regulates and supervises the Section 340B Program, has legal authority to audit Section 340B Program covered entities. Alternatively, HRSA may authorize a drug manufacturer to audit a covered entity under particular circumstances and according to HRSA’s protocol. An audit is for the purpose of assessing covered entity compliance with HRSA regulations and protocol governing the Section 340B program and, in particular, to identify and remedy diversion of Section 340B drugs or duplicate discounts.

Program Integrity Audits, as they are known, were first initiated in 2012 and have increased each year. Audit results can be reviewed on the HRSA website. A covered entity’s failure to pass audit scrutiny can result in very adverse financial consequences, including having to refund discounts to a drug manufacturer and/or exclusion from the Section 340B Program. Through Fall 2014, approximately 240 audits have been performed. More audits are expected in 2015, as HRSA continues to ramp up its oversight and scrutiny of the Section 340 participants. Many hundreds of FQHCs will be the subject of upcoming audits.

For FQHCs and other covered entities that potentially subject to an audit, the financial stakes are so high that audit readiness should be a top priority. Fortunately, HRSA provides contract pharmacy guidelines that, if properly followed, can reduce the risk of being audited and of a bad audit outcome. For every Section 340B participant, following HRSA guidelines is therefore a must.
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