Enhancing program integrity

(a) Audits (1) In general Section 340B(a)(5)(C) of the Public Health Service Act (42 U.S.C. 256b(a)(5)(C)), as amended by section 7(b), is further amended by adding at the end the following: (v) Additional audits (I) In general In addition to the audits otherwise authorized under this subparagraph, the Secretary may audit, to assess compliance with requirements under this section— (aa) covered entities, including the child sites of a covered entity and contract pharmacies, to identify any violations under this section, including violations related to improperly claiming eligibility for the program under this section, drug diversion, duplicate discounts, use of contract pharmacies, or claiming a discount under this section on a drug that is not a covered outpatient drug purchased pursuant to an agreement under paragraph (1); and (bb) manufacturers, including to identify any failure to provide an accurate ceiling price. (II) Standards The Secretary shall conduct audits described in this clause in accordance with generally accepted standards that the Secretary determines appropriate and shall make the protocol for such audits publicly available. (III) Requirements The Secretary may not close an audit described in subclause (I) before a corrective action plan required by the Secretary has been fully implemented, as applicable. (IV) 340B vendor information To meet the requirements for submission of information for audits under this clause, with respect to carrying out the program under this section, a covered entity shall contract only with vendors agreeing to— (aa) submit data to the Secretary and independent outside auditors contracting with the covered entity as necessary to determine the covered entity’s compliance with statutory and regulatory requirements under this program, prohibitions on drug diversion and duplicate discounts, use of contract pharmacies, and claims for discounts on covered outpatient drugs purchased pursuant to agreements under paragraph (1); and (bb) respond to requests from auditors in a timely manner, as determined by the Secretary. (V) Consequences of audit The Secretary shall ensure that, in the case of an audit finding that— (aa) a covered entity did not meet one or more of the eligibility criteria for being a covered entity, as defined in paragraph (4), during the full period under review in an audit, the audit results in consequences that are consistent and appropriate with the violation and that do not treat the failure to meet eligibility criteria as an issue that can be corrected retroactively; or (bb) a manufacturer did not meet its requirements pursuant to an agreement under paragraph (1) during the full period under review in an audit, the audit results in consequences that are consistent and appropriate with the violation and that do not treat the failure to meet the criteria as an issue that can be corrected retroactively. (VI) Regulations Not later than 1 year after the date of enactment of the SUSTAIN 340B Act, the Secretary shall establish, through notice and comment rulemaking, the audit and reporting procedures required by this clause.. (2) Additional sanctions authority Section 340B(d)(2)(B) of the Public Health Service Act (42 U.S.C. 256b(d)(2)(B)) is amended— (A) in clause (v)(II), by inserting or where the covered entity knowingly and intentionally fails to implement a corrective action plan relating to a violation involving improperly claiming eligibility for the program under this section, drug diversion, duplicate discounts, compliance with contract pharmacy requirements, or claiming a discount on a drug that is not a covered outpatient drug (or claiming a rebate on a drug in the case of an AIDS drug purchasing assistance program, as determined by the Secretary), within 180 days of the Secretary notifying the entity of the requirement for such plan, unless the Secretary determines it is appropriate to allow additional time for compliance, after knowing and intentional,; and (B) by adding at the end the following: (vi) Increasing the frequency of audits conducted for entities previously found to be in violation of requirements of the drug discount program that relate to eligibility, drug diversion, duplicate discounts, compliance with contract pharmacy requirements, or claiming a discount on a drug that is not a covered outpatient drug (or claiming a rebate on a drug in the case of an AIDS drug purchasing assistance program described in subsection (a)(4)(E), as determined by the Secretary), and assigning responsibility for making corrections relating to such a violation to a corporate officer of the covered entity. (vii) (I) Establishing a process for a covered entity to develop and implement a corrective action plan, and a process by which the Secretary provides for proper and timely notification of a potential violation by a covered entity. (II) Disenrolling from the program a covered entity that fails to implement a corrective action plan within 180 days of issuance of a final audit report related to a statutory violation involving improperly claiming eligibility for the program under this section, drug diversion, duplicate discounts, compliance with contract pharmacy requirements, claiming a discount on a drug that is not a covered outpatient drug (or claiming a rebate on a drug in the case of an AIDS drug purchasing assistance program described in subsection (a)(4)(E), as determined by the Secretary), or failing to comply with reporting of program savings and use of program savings as required.. (b) Verification of private non-Profit hospital contracts with State or local governments Section 340B(a)(5) of the Public Health Service Act (42 U.S.C. 256b(a)(5)), as amended by section 6(b), is further amended by adding at the end the following: (G) Verification of private non-profit hospital contracts with State or local governments (i) In general In the case of a private non-profit hospital that has a contract with a State or local government to provide health care services to low-income individuals who are not eligible for Medicaid or Medicare, whether the hospital is registered or seeking to register for the drug discount program as a covered entity described under subparagraph (L), (M), (N), or (O) of paragraph (4), the Secretary shall take all of the following steps, each of which shall be documented: (I) Prior to registering or approving annual recertification of such a hospital (or while carrying out any program audit of such a hospital), the Secretary shall obtain and review the hospital’s contract with a State or local government and shall verify and document that— (aa) the document provided by the hospital is a contract, in that it is a mutually binding agreement for the hospital to provide health care services or supplies in exchange for something of value; (bb) the contract clearly lists the name of the hospital and the unit of State or local government that are parties to the contract and is signed and appropriately dated by appropriate officials of the hospital and the unit of State or local government; (cc) the contract specifies an effective date; (dd) the contract clearly is in effect and not expired at the time of registration (or at the time of recertification, in the case of annual recertification, or for the full period examined in an audit, in the case of an audit); and (ee) the contract explicitly requires that the hospital provide health care services, and that such services must be provided to individuals who are both low-income and not eligible for either the Medicaid program or the Medicare program. (II) The Secretary shall verify the contracts meeting the requirements of clause (i) for all covered entities described in this subparagraph and registered as of the date of enactment of the SUSTAIN 340B Act by no later than 1 year after the date of enactment of the SUSTAIN 340B Act. (III) The Secretary shall not register or recertify any covered entity described in this subparagraph if the entity's contract with a State or local government does not satisfy items (aa) through (ee) of subclause (I). (ii) Process The Secretary shall develop a process to verify the contracts meeting the requirement of clause (i)(I), including specifying a timeline.. (c) Verification of certain covered entities Section 340B(a)(4)(L)(i) of the Public Health Services Act (42 U.S.C. 256b(a)(4)(L)(i)) is amended by inserting (provided that such a private non-profit hospital annually submits to the Secretary verification of such an active contract with a State or local government and verification of its non-profit status) before the semicolon.