Essential Building Blocks for Effective Diversion Programs

By Scott C. Gerard, CPA; Eric R. Jolly, CPA; and Tamara Y. Mattox, CIA
| 7/10/2018
Healthcare Connection
The United States is in the grip of a nationwide opioid epidemic, and governmental authorities at both the federal and state levels are mobilizing to combat it. But healthcare systems also must take an aggressive stance against opioid abuse, beginning with their controlled substance diversion programs.
The Drug Enforcement Administration (DEA) and various state authorities generally require healthcare systems to establish programs to guard against theft and diversion of controlled substances, but they have provided little to no guidance beyond that. The new and revised pain assessment and management standards from the Joint Commission, which accredits healthcare organizations, require accredited hospitals to address patient education and engagement, including storage and disposal of opioids to prevent these medications from being stolen or misused by others. Experience shows, however, that an effective diversion program must go further.

The Need for Action

After percolating in the background for years, the opioid problem has now taken center stage, seizing widespread attention. In October 2017, President Donald Trump declared the crisis a public health emergency. Several months later, Democratic Sen. Maggie Hassan of New Hampshire entered the March 5, 2018, issue of Time magazine, which was devoted to stories of opioid addiction, into the Senate record. Her state has one of the highest rates of death due to drug overdose. According to the Centers for Disease Control and Prevention, “Opioids were involved in 42,249 deaths in 2016, and opioid overdose deaths were five times higher in 2016 than in 1999.”1
Not surprisingly, hospitals and their employees play a significant role in the crisis. But, while many people might picture drug-seeking patients showing up again and again in the emergency department (ED) as the main opioid issue for healthcare systems, the problem extends beyond the doors of the ED. Increasingly, hospital employees are capturing the headlines after diverting opioids for their own use or for sale. When discovered, these thefts can result in hefty fines for employers.
In December 2017, for example, Intermountain Healthcare agreed to pay $1 million to the federal government to resolve allegations that its lack of controls made it possible for a former employee to divert controlled substances for personal use.2 The government alleged that from September 2007 through March 2015, 244 prescriptions of oxycodone (46,616 pills) and 151 prescriptions for other controlled substances (11,430 pills) were issued with no legitimate medical purpose and not in the course of the doctor’s professional practice. All of the prescriptions were filled by the pharmacy and were picked up by the former employee. As part of the settlement, the company agreed to implement a comprehensive corrective action plan to prevent, identify, and address future diversions.

Five Guidelines for a Diversion Plan

An effective controlled substances diversion program should:
  1. Take a hospitalwide approach. Too often, healthcare systems regard controlled substances programs as owned by the pharmacy and leave all responsibility to that department. However, the Controlled Substances Act requires hospitals to account for all controlled substance transactions in a closed loop system that includes orders, stocking, transfers, dispensing, and expiration or waste. Moreover, the DEA’s Pharmacist’s Manual specifies that healthcare professionals and pharmacists share responsibility for preventing prescription drug abuse and diversion, whether among the community population or employees. Thus, the program should consider not only the pharmacy department but also the physicians in the ED who deal with drug-seeking patients, the physicians who order the medications, the physicians who manage discharge medications, and the nurses who administer the medications, among others.

  2. Assure regulatory compliance. State and federal regulations related to diversion programs focus primarily on the risk of employee diversion within the closed loop system. An effective diversion program should implement preventive and detective controls to track the movement of opioids in the loop. Hospitals should perform regular reconciliations of transfers to and from the floor, automated dispensing machine (ADM) removals to administration and waste records, and reverse distributor pickups (waste returns) to ADM-expired controlled substances.

    The Joint Commission standards highlight the need to also consider the patient population, including drug-seeking patients and other patients who leave the hospital with opioid prescriptions that can lead to addiction. Physicians should research patients’ history of opioid use and monitor their prescriptions. Healthcare systems should arm their providers with the proper information to educate drug seekers and refer them to treatment programs rather than simply turning them away or referring them to their primary physicians.

    Recordkeeping is another critical component of regulatory compliance, because violations can trigger costly penalties. The DEA requires hospitals to maintain invoices and documentation of every step in a controlled substance’s movement for two years; some states mandate that records be held longer.

    In addition to uncovering drugs that are unaccounted for, the reconciliations already described can help hospitals identify documentation gaps before the authorities do.

  3. Describe investigatory procedures. The part of the diversion program directed toward employees should lay out formal investigatory processes that must be followed every time a diversion is suspected – for example, when an employee seems to have withdrawn from the ADM, administered, or wasted more medication than required or in relation to their peers or when medications are unaccounted for.

  4. Address pharmacy employee diversions. Pharmacy employees sometimes might divert opioids before adding them to the inventory. To mitigate this risk, programs should provide for continuous dual custody upon receipt (for example, by a pharmacist and a pharmacy technician) of controlled substances until they are entered into inventory.

    Reconciliations are another important tool. Healthcare systems should reconcile wholesaler invoices to ADM-stocking receipts and perform regular manual inventories.

  5. Address nursing employee diversions. Drug usage should be monitored and analyzed to confirm that opioids were removed from inventory for a legitimate patient who was prescribed and administered the medication, with any excess wasted. Such oversight can be accomplished with ADM diversion monitoring software, bar-coded medication administration systems, exception reports from ADMs to electronic health records, and other methods.

    Although pharmacies generally conduct nursing-monitoring programs, the pharmacy should not be charged with primary responsibility for policing nurses. It is up to hospital leadership, from chief nursing executives to managers, to hold clinicians accountable. Nursing leadership is best positioned to detect problems due to their knowledge of the patient side of drug movement. Without the involvement and support of leadership, the nursing diversion component of an effective controlled substances diversion program is likely to fail.

All Hands on Deck

In response to the opioid crisis, healthcare systems should implement controlled substance diversion programs that take a multidisciplinary approach. To reduce the risks presented by the patient population and employees, a diversion program should involve the pharmacy, clinical providers, and leadership, as well as a strong system of internal controls to help prevent and detect drug diversion.


1 Centers for Disease Control and Prevention, “Drug Overdose Death Data,” December 2017,

2 U.S. Attorney’s Office, district of Utah, “Settlement Reached in Significant Drug Diversion Case,” Dec. 8, 2017,

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Scott Gerard
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Eric Jolly
Partner, Healthcare Consulting
Tamara Mattox
Tamara Mattox
Senior Manager, Healthcare Consulting