Episode Summary
Most 340B programs can assemble documents quickly when an audit notice arrives.
That is not the same thing as being in control of the operation for the eleven months before the letter.
Dr. Darra M. Edwards oversees 340B compliance across covered entities in a health system spanning 15 states and more than 50 hospitals.
In this conversation she separates audit preparation from audit readiness, and gives a test any program can run today.
The episode moves from monthly operating rhythm, through the evidence chain behind a single claim, into what the rebate model changes and where automation genuinely helps.
The true difference between audit preparation and audit readiness, and why most programs are measuring the wrong one.
The single blunt test for readiness: if the audit letter changes how your team practices, you were never ready.
Why most operators falsely assume a clean TPA report means a defensible claim.
The critical distinction between a monthly review and a risk-targeted monthly review, and why random sampling misses what matters.
The controls that should run daily rather than monthly, including modifier application and negative neutral inventory balances.
How a Medicare observation reclassification can retroactively break an eligibility decision that looked correct at dispense.
Why HRSA findings usually turn on whether practice aligns with written policy, not on the quality of the final report.
The reason rebate readiness is not a new discipline but an extension of audit readiness with a timing clock attached.
Show Notes
- Audit preparation begins when the letter arrives and consists of collecting files and getting the team ready.
- Audit readiness is the control system running during an ordinary month when nobody expects an audit.
- If the audit letter request changes the way you practice, the program was not audit ready.
- The first warning sign of a reactive program is discovering that an exception has been recurring for months.
- Investigating a single claim is not the same as identifying root cause, affected population, and validated documentation.
- Some controls belong on a daily cycle, including whether yesterday's processed claims carried the correct modifiers.
- Monthly reviews should target the highest-risk points in the program rather than sampling randomly.
- Risk points include Medicaid carve-in and carve-out decisions, modifier application, entity-owned retail pharmacies, and contract pharmacies.
- Ask what changed since last month: new business entities, a new freestanding emergency department, new providers, resigned providers.
- Every system should tell the same story about a given claim, from wholesaler purchasing data to provider lists to EMR documentation.
- Relying solely on the TPA's eligibility determination means losing sight of where that data originated.
- The covered entity remains accountable to HRSA for eligibility regardless of which vendor produced the report.
- A patient classified as outpatient at dispense can be reclassified to inpatient later under Medicare observation rules.
- Your policies and procedures have to state whether that claim remains eligible, and your audit trail has to demonstrate it.
- HRSA findings are usually based on whether your practice aligns with your own written policy.
- The rebate model extends audit readiness rather than replacing it, adding submission timing and claims-level completeness.
- Incomplete claims-level data creates denial risk that did not exist under an upfront discount.
- Rebates and expenditures often flow through different financial systems, so CFO visibility into both has to be built deliberately.
- The best metric for program control is how long exceptions have gone unresolved, not total savings or claim value.
- An exception that recurs after a correction has been applied is a system problem, not an isolated event.
- The highest-value automation target is manual reconciliation, because you cannot hire enough people to review the full data volume.
- Automating rule evaluation moves a program from sampling a subset of claims toward reviewing all of them.
- Human judgment remains necessary to determine whether an exception is a compliance problem or a data gap.
- The savings exist to improve services delivered to the community, so the analyst's job includes reviewing impact, not only numbers.
- Before the rebate workflow becomes operational, test three things.
- Confirm your EMR can produce the required claims-level data elements and that IT can generate those reports daily.
- Confirm your TPA can support claims-level data transmission if that is part of your model.
- Confirm finance can track whether rebates were actually received, and report out against what was submitted.