ACE ACE Contract Pharmacy & Third Party Administration 2 — Questions and Answers
Question 1: What does TPA stand for in the context of the 340B program?
- Total Pharmaceutical Auditor
- Third Party Administrator (Correct answer)
- Treatment and Prescription Authority
- Transactional Pricing Adjudicator
Correct answer: Third Party Administrator
TPA stands for Third Party Administrator, a vendor that manages 340B data and operations — such as split billing or claims adjudication — on behalf of a covered entity.
Question 2: What is a key service that a Third Party Administrator (TPA) typically provides to 340B covered entities?
- Issuing 340B eligibility determinations for patients
- Managing split-billing software to identify 340B-eligible claims (Correct answer)
- Setting ceiling prices on behalf of HRSA
- Conducting HRSA audits of contract pharmacies
Correct answer: Managing split-billing software to identify 340B-eligible claims
TPAs commonly manage split-billing software systems that identify which pharmacy claims qualify for 340B pricing, separating them from non-340B claims.
Question 3: When a TPA commits an error that results in a 340B violation, who is held responsible by HRSA?
- The TPA, since it controls the data
- The contract pharmacy, since it dispensed the drug
- The covered entity, which retains compliance responsibility (Correct answer)
- The manufacturer, since it set the ceiling price
Correct answer: The covered entity, which retains compliance responsibility
HRSA holds the covered entity responsible for all 340B compliance, regardless of TPA errors, because the entity cannot transfer its statutory obligations to a vendor.
Question 4: Which of the following should be included in a contract between a covered entity and its TPA?
- The TPA's marketing budget and client acquisition goals
- Data ownership, audit rights, breach notification procedures, and performance standards (Correct answer)
- The TPA's internal employee compensation structure
- Details of the TPA's relationships with competing covered entities
Correct answer: Data ownership, audit rights, breach notification procedures, and performance standards
A sound TPA contract should address data ownership, the covered entity's right to audit, breach notification timelines, and service level performance standards.
Question 5: How should a covered entity evaluate ongoing TPA performance?
- By relying solely on the TPA's self-reported metrics
- Through periodic audits, performance reviews, and reconciliation of 340B savings data (Correct answer)
- By checking the TPA's Better Business Bureau rating annually
- Only when HRSA requests a performance report
Correct answer: Through periodic audits, performance reviews, and reconciliation of 340B savings data
Covered entities should periodically audit TPA data, review performance against contract benchmarks, and reconcile reported savings to ensure accuracy and compliance.
Question 6: What is a replenishment model as used by TPAs in 340B contract pharmacy arrangements?
- A method where the covered entity reimburses the pharmacy for all drug costs upfront
- A system where the pharmacy purchases drugs at retail and is later reimbursed at 340B prices
- A model where eligible prescriptions are identified and the covered entity orders replacement inventory at 340B prices (Correct answer)
- A rebate program that returns savings to patients directly
Correct answer: A model where eligible prescriptions are identified and the covered entity orders replacement inventory at 340B prices
In a replenishment model, the contract pharmacy dispenses drugs from its own inventory, and after eligible claims are identified, the covered entity replenishes that inventory at 340B ceiling prices.
ACE ACE Contract Pharmacy & Third Party Administration 2
What does TPA stand for in the context of the 340B program?