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January 23, 2020

GAO Reports Suggests Increased Oversight of 340B Program

On January 10, the GAO released a report which "found weaknesses in the Health Resources and Services Administration’s (HRSA) oversight [of the 340B Program] that may result in some hospitals receiving discounts for which they are not eligible." The GAO report primarily focused on the extent to which HRSA is monitoring and reviewing nongovernmental hospital contracts with state or local governments. These contracts, required by statute as a condition of participation in the 340B Program, must be between the nongovernmental hospitals and a unit of state of local government, and must indicate that the hospital will provide health care services to low-income individuals not eligible for Medicaid or Medicare. As a result of its review of these contracts, the GAO recommended that HRSA take a more proactive role in actually reviewing and auditing these contracts.

While these recommendations are non-binding, nongovernmental hospitals should take notice and review their existing governmental contracts to confirm compliance with 340B Program requirements. HRSA currently requests a copy of these contracts as part of its audit processes, so nongovernmental hospitals should ensure they have compliant contracts readily accessible in the event of a HRSA audit.