Recent HRSA Audit Trends: Supporting Documentation for Eligible Providers

Written By: Chelsea Violette and Heidi Larson

Historically, HRSA auditors have requested a list of eligible providers from covered entities during HRSA audits. Recently, however, HRSA auditors have been requesting that covered entities upload documents demonstrating that, for each audited utilization record, the prescriber was (at the time the medication was administered or prescription written) employed by, under contract with, or had some other type of arrangement/relationship with the hospital such that responsibility for the clinical care provided to the patient remained with the covered entity. HRSA FAQ 1442 further explains that non-covered entity providers solely with admitting privileges at a covered entity hospital are insufficient to demonstrate that any person treated by that provider is a patient of the covered entity, for 340B Program purposes.

We often hear; the provider is credentialed or has privileges, but what does that really mean? Credentialing is the process of obtaining, verifying, and assessing the qualification of a provider to provide care or services for a health care organization. Credentialing documents include evidence of licensure, education, training, and experience. A privilege is defined as an advantage, right, or benefit that is not available to everyone. For providers, the act of being privileged is the process whereby a specific scope and clinical service of patient care is authorized for a healthcare practitioner by a health care organization, based on evaluation of the individual’s credentials and performance.

Back to the question at hand, what have HRSA auditors been requesting to demonstrate provider eligibility? The answer may depend on the type of provider.

Employed or Contracted Providers – Hospital or Clinic Administered and Retail Prescriptions

  • If the provider is employed by the covered entity, an auditor would expect to see confirmation of employment of the provider by the covered entity. This could be the cover or signed page of a provider contract, a checklist of privileges granted to the provider, a screenshot of the internal Medical Staffing Office platform, or other such document.
  • For residents (often an area of challenge for entities and focus for auditors), requested documentation may include a signed contract between the covered entity and the resident, or with a college/educational institution that allows residents to practice at the covered entity and is accompanied by a list of past and current residents.
  • For health care providers who may not be directly employed with the hospital to provide services, an auditor may expect to see a signed collaborative practice agreement to provide services to patients whereby the care of the patient remains with the hospital. For contracted services, such as for the emergency department, a HRSA auditor may request a signed document with the contracted entity to provide services and a list of providers that fall under the contracted services agreement.
  • For providers with “privileges,” HRSA will expect to see a signed agreement that shows the scope of privileges and preferably documentation or confirmation from the covered entity that the responsibility for care of the patient remains with the covered entity and the providers privileges are not merely admitting privileges.

For each of these supporting documents, auditors have requested that they indicate start dates and, when possible or appropriate, duration of the agreement or granted privileges. Eligible provider lists are also requested to indicate start and term dates for providers.

Healthcare Professionals – Hospital and Clinic Administered Drugs

While supporting documentation to demonstrate responsibility of care may seem more straight forward for providers employed by or contracted with the covered entity, it can leave a bit of gray area for orders written by outside providers. For hospital or clinic administered drugs that are administered as a result of an order from an outside provider, most often observed in the infusion setting, many entities qualify drugs as 340B eligible under their healthcare professional definition. In doing so, they assert their responsibility of care through patient assessment and care related to the administration delivered by members of the entity healthcare team, such as nurses. As HRSA auditors have become more familiar with this practice, they have begun requesting documentation in the medical record to substantiate care beyond the simple administration of the drug, such  as vital signs or clinic notes stating the patient was evaluated for appropriateness of receiving the drug and that it was well tolerated (or that the patient had a reaction and was treated accordingly). In these instances, HRSA auditors have further validated the inclusion of this definition in the entity’s policy and requested documentation that the healthcare professional providing patient care is employed by the entity and was working that day. This may include a contract, privileging documentation, and/or a timecard.

Referrals – Retail Prescriptions

In scenarios in which covered entities have captured retail prescriptions as a result of a referral arrangement, HRSA auditors have requested copies or screen shots of the referrals in the course of the audit and for them to be uploaded to the NIH portal subsequent to the audit. While obtaining documentation back from the referral provider remains a best practice to demonstrate continued responsibility of care, this has not been requested in recent audits, and documentation of the medication in the patient’s medication list with the covered entity has been sufficient.

Preparing for HRSA Audit Success

The key to supporting documents is that they demonstrate that care for the patient by the provider remains with the covered entity at the time the medication was administered, or the prescription was written. Covered entities should consider all aspects of patient definition to use 340B drugs. It is also important to include entity management of provider privileges in policies and procedures.

Unfortunately, these documents are not always found in one location, with one person, or even within the same department. Start checking for these documents during your monthly self-audits, understand each provider type and the documents needed, and lastly, know who would be your point person for each type of provider to obtain the necessary documents and establish a working relationship with them so that you’re both prepared when your number is up for a HRSA audit.

Observing Key 340B Program Savings Trends Based on Drug Spend

Written by: Jake Thompson, PharmD, MS, SpendMend VP of Pharmacy Services, Growth and Optimization

Industry Observations

In the past two years, my team and I have worked with over 50 distinct hospitals on drug spend optimization projects ranging in size from $300K up to $75M. We partner with these organizations to ensure that they are maximizing the savings opportunities in their drug spend with specific emphasis on their 340B program.

Over the course of this work, patterns have begun to emerge, and although I suspect the sample set is still a little too small to draw final conclusions on the matter, the data has revealed the first signs of some noteworthy trends that are worth discussing.

The chart below demonstrates a sample of the data we are tracking and highlights a cross section of the different Covered Entity types with which we work. We measured the total savings the partnership delivered compared to the total drug spend during that same period. It is important to note a few key definitions:

  • Total Savings: This is realized savings that the hospital captured after our team identified an opportunity and closed the gap, resulting in direct savings measured down to the exact NDC impacted.
  • Drug Purchasing: This is the total drug spend over the same time period the “Total Savings” was measured.
  • Savings/Spend: This is the percentage of savings our team delivered when comparing “Total Savings” divided by “Drug Purchasing”.
  • Client Names:
    • DSH = Disproportionate Share Hospital
    • SCH = Sole Community Hospital
    • CAH = Critical Access Hospital


CLIENT NAME                               Total Savings            Drug Spend       Savings %

DSH – Large Health System               $2,509,477               $75,424,689        3.33%

DSH – Academic Health System        $1,920,691                $32,523,751       5.91%

SCH – Stand Alone                             $423,056                  $18,868,569        2.24%

DSH – Stand Alone                             $79,989                    $2,677,901          2.99%

CAH – Stand Alone                             $384,302                  $1,216,320          31.6%

When looking across all our engagements, the results are profound. Our clients realized savings ranged from $11K to $2.5M, which equates to 0.49% to 31.6% Savings/Spend. To dive deeper, we broke up the engagement results into four groups (Small, Medium, Medium-High, High) based on the Covered Entity’s total annual drug spend. This helps break down the average savings based on the size of the hospital’s drug spend. Reflecting on these categories, the patterns begin to emerge, as evidenced in the analysis below:

Range                              Annual Drug Spend             Average Savings

Small                                $0 – $2.5M                                   13.3%

Medium                           $2.5 – $10M                                    4.1%

Medium-High                  $10M – $20M                                  1.9%

High                                 >$20M                                           2.7%

As stated above, we are still likely too early in the data gathering to draw conclusions, however it is evident there are a few interesting trends worth exploring. Most apparent is the trend that savings opportunity as a percentage of drug spend is inversely proportional to annual Drug Spend. Meaning, the more you spend the smaller percentage of opportunity you are leaving on the table. And vice versa – the less you spend the more percentage of opportunity you are leaving on the table. In all cases though, the average savings realized has been significant. In my previous roles, reducing your drug budget 2-4% would gain positive recognition of the executive leadership team.

So why the trend?  And what does it mean for your covered entity?

It’s a great question that you may be asking, “Why would the percentage of savings opportunity be inversely proportional to the drug spend?” My experience as a pharmacy leader and a consultant can help to shed some light on why the opportunity reshapes at each level.


Foremost, I observe that companies with a small drug spend simply have a much higher savings opportunity as a percentage than companies with a large drug spend. To be honest I suspected that the opportunity as a percentage would be higher than in the larger hospitals, but I did not expect the difference to be so pronounced.

Without proper research, it is difficult to say exactly why this difference would be so stark, but at this point, with over 18 years in the market I can offer a few theories as to why this would be. I have observed in my career that most covered entities with a smaller drug spend are only budgeted a single person to manage their drug spend and in these instances this person is typically wearing multiple “hats” and only maintaining the process amongst many other pressing issues.  Hence the large impact when someone from our team solely focuses on drug spend.

What does it mean to these hospitals? Access to experts: By partnering with expert consultants in 340B drug procurement, you can achieve significant savings (or at minimum validate current purchasing optimization). By partnering with 340B optimization experts, you get access to the country’s most advanced 340B experts without funding a full time FTE and recruiting the expertise to your geographical area.


As we move further up to Medium spend, you will start to see where the program has grown to such a point that a full-time resource becomes necessary. In these facilities, the person leading the 340B program typically is a superstar technician or previous buyer. These individuals are experts in the hospitals’ individual 340B program and positioned perfectly to collaborate with outside consultants. This person often is self-taught 340B through their own organization’s 340B program setup and often is not as well versed on what other organizations are doing. As such, the percentage of opportunity is still significant, but is a lesser percentage than groups with a small spend.

What does it mean to these hospitals? Access to education: By partnering with experts in 340B drug procurement, your dedicated 340B team members are able to learn directly from our consultant team who will share their experience supporting hospitals across the country, in a wide variety of settings. This education helps teach your staff how to prioritize compliance and optimization opportunities. By partnering with a consultant, your internal 340B expert can learn how to identify savings opportunities, but most importantly, provide them with the skillset to help fix financial leakage in the process.


As we climb to the Medium-High drug spend levels between $10M-$20M, these hospitals often have a second 340B team member and the group has invested in additional training on best practices. With the additional resources invested, the internal 340B team has been able to dedicate more time to unearthing savings opportunities and addressed the areas of low hanging fruit. This paves the way for the optimization opportunities of higher complexity to be addressed. As a result, a partnership with our optimization services is still able to drive hundreds of thousands of dollars in savings, albeit a slightly lower percentage than would be seen with the medium-spend level.

What does it mean to these hospitals? Strategic Growth: By partnering with expert consultants in 340B drug procurement, your dedicated 340B team will learn techniques to help maximize and grow your 340B program. These strategies will propel your 340B value and drive practice changes that result in significant financial gains. Through your partnership, you gain insight into opportunity analytics, skilled project facilitation and management, and insightful strategy execution. Because you have partnered with consultants “who have been there, done that” you get strategies implemented much faster than doing it on your own, resulting is more savings faster.


Groups with the highest levels of drug spend experience a modest increase in opportunity percentage similar to the Medium-High group. Although conventional wisdom would suggest that groups at these levels would offer a small savings opportunity percentage, the reality is that the dollars are still very large and impactful to the covered entity. These larger facilities are often a lot more complex and thus need much more organization and structure to their 340B team. Even though organizations with drug spend of over $20M will usually have a whole team to support it, they will still miss many of the more nuanced opportunities.

What does it mean to these hospitals? Solutions to complex problems: By partnering with experts in 340B drug procurement, we will collaborate to mitigate the complex and costly challenges your team has identified, but not yet been able to resolve. By engaging with specialized consultants who focus on generating solutions to close financial gaps, you gain insight into industry techniques that have aided other institutions in resolving similar complexities.


Even though it is easy to get caught up in the decreased percentage of savings, proportionate to drug spend, all of the covered entities we have partnered with have realized significant reductions in drug spend that have had tremendous impact on the organization’s bottom line. No matter the size of organization, there are always opportunities.

Reflecting on past optimization partnerships, the key determinant to covered entity success in realizing meaningful savings has stemmed from our team’s ability to break down complex 340B initiatives into actionable steps. Instead of passing a list of possible action items along, our team synthesizes your comprehensive program data to identify realistic and meaningful opportunities, vetted by our experts.

SpendMend Pharmacy leverages Turnkey Pharmacy Optimization by only hiring experts that have successfully implemented 340B opportunities and strategies within their own covered entities. Our no-risk approach means we only get paid when you realize savings (100% contingency model). If you would like to learn more about the potential savings opportunities at your institution, visit the SpendMend website and schedule a free consultation with one of our team members.