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Prepare for your A-133 Audit

Tuesday, December 18, 2012   (0 Comments)
Posted by: Joy Ingram
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by Paul Bailey, Partner, and Kyla Delgado, Senior Manager, CliftonLarsonAllen

The Office of Management and Budget recently published updated guidelines that financial auditors must use in performing A-133 audits. The guidelines are outlined in the 2012 Compliance Supplement to OMB Circular A-133 (A-133) and are utilized by auditors to assist in determining whether or not an entity is in compliance with the terms of their grant award.

There are 14 compliance requirements with the following ten noted specifically to apply to CFDA 93.224:

A.         Activities Allowed or Unallowed

B.         Allowable Costs/Cost Principles

C.         Cash Management

E.         Eligibility

F.         Equipment and Real Property Management

H.         Period of Availability of Federal Funds

I.          Procurement and Suspension and Debarment

J.         Program Income

L.         Reporting

N.         Special Tests and Provisions

All health center grantees expending more than $500,000 are subject to the provisions of OMB Circular A-133.  The guidelines are helpful tools for internally evaluating your compliance because they include suggested audit procedures for certain risk areas for grantees.  The latest guidelines now include a separate section that focuses on compliance for organizations participating in the 340B drug pricing program and suggests that auditors focus on three different areas:

  1. Determining whether a grantee’s records are correct in the Health Resources and Services Administration’s Office of Pharmacy Affairs (OPA) 340B Discount Drug Program database.
  2. Whether drugs were diverted to individuals who are not eligible patients.
  3. Whether the health center received duplicate

Specifically, auditors are required to:

ü  Review the grantee’s registered locations are accurate in the 340B Discount Drug Database 

ü  Review the grantee’s latest change form submitted to the OPA and compare it with the organization’s actual location.

ü  Test a sample of drugs purchased for use under the funding program during the audit period to determine whether 340B drugs were properly identified, including (1) payment at the discounted price and (2) proper identification as a 340B drug upon receipt.

ü  Test a sample of records of 340B drugs purchased for use under the funding program and released from inventory during the audit period to determine whether required authorizations were received, to whom the drugs were dispensed, and if the grantee determined that such individuals were eligible patients before dispensing the drugs.

ü  For eligible patients who received 340B drugs, test a sample of Medicaid reimbursement requests to verify that the grantee did not claim, receive, or retain a duplicate rebate for those drugs under the Medicaid program.

Health centers should use the guidelines to monitor compliance for the risk areas described above so that, by the time their A-133 audits are performed, they will be able to demonstrate their compliance with program requirements.  In general terms what does that mean and more importantly what can you do prior to the arrival of your auditor?

In conversations we have had recently with some of our clients we are recommending that they review which sites are dispensing 340B drugs and compare that to the information that has been registered with the OPA and is in the 340B Discount Drug Database.  Document the policy and procedures in regards to pharmacy inventory and the identification of 340B drugs.  Verify that you are using the correct Medicaid provider number/NPI for 340B drugs that are billed to Medicaid and that those drugs were purchased under the 340B drug program and that the Medicaid provider number/NPI is listed on the HRSA Medicaid Exclusion File.  Finally, we recommend that your organization internally audit 340B prescriptions throughout the year and verify that drugs were dispensed to eligible patients.  This may be as simple as selecting a handful of 340B prescriptions every quarter from the various dispensing locations.

The guidelines may be found on the OMB website at the following link:http://www.whitehouse.gov/sites/default/files/omb/assets/OMB/circulars/a133_compliance/2011/hhs.pdf

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