H0946B2371A09145 SFR:CDM 06/27/16 #90 A09145
AMENDMENTS TO HOUSE BILL NO. 946
Sponsor: REPRESENTATIVE BAKER
Printer's No. 2371
Amend Bill, page 1, lines 4 through 14; pages 2 through 9,
lines 1 through 30; page 10, lines 1 through 6; by striking out
all of said lines on said pages and inserting
Section 1. Short title.
This act shall be known and may be cited as the Pharmacy
Audit Integrity Act.
Section 2. Scope of act.
This act covers any audit of the records of a pharmacy
conducted by a managed care company, third-party payer, pharmacy
benefits manager, a health program administered by a department
of the Commonwealth or any entity that represents a company,
group or department.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Auditing entity." A person, company or government entity
that performs a pharmacy audit, including a plan sponsor,
pharmacy benefit manager, managed care organization or third-
party administrator.
"Business day." Any day of the week excluding Saturday,
Sunday and any legal holiday.
"Department." The Insurance Department of the Commonwealth.
"Extrapolation." The practice of inferring a frequency of
dollar amount of overpayments, underpayments, nonvalid claims or
other errors on any portion of claims submitted, based on the
frequency of dollar amount of overpayments, underpayments,
nonvalid claims or other errors actually measured in a sample of
claims.
"Health care practitioner." As defined in section 103 of the
act of July 19, 1979 (P.L.130, No.48), known as the Health Care
Facilities Act.
"Nonproprietary drug." As defined in section 2(7.1) of the
act of September 27, 1961 (P.L.1700, No.699), known as the
Pharmacy Act.
"Pharmacist." As defined in section 2(10) of the Pharmacy
Act.
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"Pharmacy." As defined in section 2(12) of the Pharmacy Act.
"Pharmacy audit." An audit, conducted on-site or remotely by
or on behalf of an auditing entity of any records of a pharmacy
for prescription or nonproprietary drugs dispensed by a pharmacy
to beneficiaries of a health benefit plan. The term does not
include either of the following:
(1) A concurrent review or desk audit that occurs within
three business days of the pharmacy's transmission of a claim
to an auditing entity.
(2) A concurrent review or desk audit where no charge-
back or recoupment is demanded by the auditing entity.
"Pharmacy benefits management." Any entity that performs any
of the following:
(1) The procurement of prescription drugs at a
negotiated contracted rate for dispensation within this
Commonwealth to covered individuals.
(2) The administration or management of prescription
drug benefits provided by a covered entity for the benefit of
covered individuals.
(3) The provision of any of the following in conjunction
with the administration of pharmacy benefits:
(i) Mail-service pharmacy.
(ii) Claims processing.
(iii) Retail network management.
(iv) Payment of claims to pharmacies for
prescription drugs dispensed to covered individuals via
retail or mail-order pharmacy.
(v) Clinical formulary development and management
services, including, but not limited to, utilization
management and quality assurance programs.
(vi) Rebate contracting and administration.
(vii) Certain patient compliance, therapeutic
intervention and generic substitution programs.
(viii) Disease management programs.
(ix) Setting pharmacy reimbursement pricing and
methodologies, including maximum allowable cost, and
determining single or multiple source drugs.
"Pharmacy benefits manager" or "PBM." A person, business or
other entity that performs pharmacy benefits management.
"Pharmacy record." Any record stored electronically or as a
hard copy by a pharmacy that relates to the provision of
prescription or nonproprietary drugs or pharmacy services or
other component of pharmacist care that is included in the
practice of pharmacy.
"Plan sponsor." Any of the following that pays for or
processes a claim for payment for prescription drugs or pharmacy
services:
(1) A health insuring corporation.
(2) A person authorized to engage in the business of
sickness and accident.
(3) A person or government entity providing coverage of
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prescription or nonproprietary drugs or pharmacy services to
individuals on a self-insurance basis.
(4) A group health plan, as defined in 29 U.S.C. § 1167
(relating to definitions and special rules).
(5) A service benefit plan, as referenced in 42 U.S.C. §
1396a(a)(25) (relating to state plans for medical
assistance).
(6) A Medicaid managed care organization that has
entered into a contract with the Commonwealth.
(7) Any other person or government entity that is by
law, contract or agreement responsible for paying or
processing a claim for payment for the provision of
prescription or nonproprietary drugs or pharmacy services.
Section 4. Procedures for conducting pharmacy audits.
(a) Procedure.--An entity conducting a pharmacy audit under
this act shall conform to the following rules:
(1) Except as otherwise provided by Federal or State
law, an auditing entity conducting a pharmacy audit may have
access to a pharmacy's previous audit report only if the
report was prepared by an auditing entity.
(2) Any information collected during a pharmacy audit
shall be confidential by law, except that the auditing entity
conducting the pharmacy audit may share the information with
the pharmacy benefits manager and the plan sponsor, for which
a pharmacy audit is being conducted.
(3) No auditing entity conducting a pharmacy audit shall
compensate, directly or indirectly, any of its employees or
any contractor with which an auditing entity contracts to
conduct a pharmacy audit, based on the amount claimed or the
actual amount recouped by the pharmacy being audited.
(4) The entity shall provide the pharmacy being audited
with at least 10 business days' prior written notice before
conducting a pharmacy audit. The audit may be delayed for a
period of up to 30 days at the request of the pharmacy, one
time per year, and shall only be granted if there is good
cause, including, but not limited to, a planned medical
procedure or planned absence from work of a necessary
pharmacist. If a delay is requested by the pharmacy, the
pharmacy shall provide notice to the PBM at least five
business days prior to the day the audit is to commence.
(5) The entity shall provide the pharmacy being audited
with a masked list of prescriptions to assist the pharmacy in
preparing for the pharmacy audit. A list is considered masked
if the last two numbers of the prescription are marked with
an "X."
(6) The entity may not initiate or schedule a pharmacy
audit during the first five business days of any month for
any pharmacy that averages in excess of 600 prescriptions
filled per week, without the express consent of the pharmacy.
(7) The entity shall accept paper or electronic
signature logs that document the delivery of prescription or
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nonproprietary drugs and pharmacist services to a health plan
beneficiary or the agent of the beneficiary.
(8) The entity shall provide to the representative of
the pharmacy, prior to leaving the pharmacy at the conclusion
of the on-site portion of the pharmacy audit, a complete list
of pharmacy records reviewed.
(9) Any pharmacy audit that involves clinical judgment
shall be conducted by or in consultation with a pharmacist.
(10) No pharmacy audit shall cover:
(i) a period of more than 24 months after the date a
claim was submitted by the pharmacy to the pharmacy
benefits manager or plan sponsor unless a longer period
is required by law; or
(ii) more than 250 prescriptions, provided that a
refill shall not constitute a separate prescription for
the purposes of this subparagraph.
(11) No auditing entity may use extrapolation to
calculate penalties or amounts to be charged back or recouped
unless otherwise required by Federal requirements or Federal
plans.
(12) No auditing entity shall include dispensing fees in
the calculation of overpayments unless a prescription is
considered a misfill. As used in this paragraph, "misfill"
means a prescription that was not dispensed, a prescription
error, a prescription where the prescriber denied the
authorization request or a prescription where an extra
dispensing fee was charged.
(13) A pharmacy may do any of the following when a
pharmacy audit is performed:
(i) To validate the pharmacy record and delivery, a
pharmacy may use authentic and verifiable statements or
records, including, but not limited to, medication
administration records of a nursing home, assisted living
facility, hospital or health care practitioner with
prescriptive authority.
(ii) To validate claims in connection with
prescriptions or changes in prescriptions, or refills of
prescription or nonproprietary drugs, a pharmacy may use
any valid prescription, including, but not limited to,
medication administration records, facsimiles, electronic
prescriptions, electronically stored images of
prescriptions, electronically created annotations or
documented telephone calls from the prescribing health
care practitioner or practitioner's agent. Documentation
of an oral prescription order that has been verified by
the prescribing health care practitioner shall meet the
provisions of this subparagraph for the initial audit
review.
(b) Written report.--An auditing entity shall provide the
pharmacy with a written report of the pharmacy audit and comply
with the following requirements:
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(1) The preliminary pharmacy audit report must be
delivered to the pharmacy or its corporate parent within 60
days after the completion of the pharmacy audit. The
preliminary report shall include contact information for the
individual who conducted the pharmacy audit, including
telephone number, facsimile number, e-mail and auditing firm,
so that audit results, discrepancies and procedures can be
reviewed. The preliminary pharmacy audit report shall
include, but not be limited to, claim level information for
any discrepancy found and total dollar amount of claims
subject to recovery.
(2) A pharmacy shall be allowed 30 days following
receipt of the preliminary audit report to respond to the
findings of the preliminary report.
(3) A final audit report shall be delivered to the
pharmacy or its corporate parent not later than 60 calendar
days after any responses from the pharmacy or corporate
parent are received by the auditing entity. The auditing
entity shall issue a final pharmacy audit report that takes
into consideration any responses provided to the auditing
entity by the pharmacy or corporate parent.
(4) The final pharmacy audit report may be delivered
electronically.
(5) No pharmacy shall be subject to a charge-back or
recoupment for a clerical or recordkeeping error in a
required document or record, including a typographical error,
scrivener's error or computer error, unless the error
resulted in overpayment to the pharmacy.
(6) No auditing entity conducting a pharmacy audit or
person acting on behalf of the entity shall charge-back or
recoup, attempt to charge-back or recoup or assess or collect
penalties from a pharmacy until the time period to file an
appeal of a final pharmacy audit report has passed or the
appeals process has been exhausted, whichever is later.
(7) If an identified discrepancy in a pharmacy audit
exceeds $25,000, future payments to the pharmacy in excess of
that amount may be withheld pending adjudication of an
appeal.
(8) No interest shall accrue for any party during the
audit period, beginning with the notice of the pharmacy audit
and ending with the conclusion of the appeals process.
Section 5. Appeals process.
(a) General rule.--An auditing entity shall establish a
written appeals process under which a pharmacy may appeal an
unfavorable final audit report to the entity.
(b) Adjudication.--The adjudication of a claim may not be
appealed through the audit process.
Section 6. Limitations.
(a) General rule.--The provisions of this act shall not
apply to an audit of pharmacy records when:
(1) fraud or other intentional or willful
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misrepresentation is indicated by physical review or review
of claims data or statements; or
(2) other investigative methods indicate a pharmacy is
or has been engaged in criminal wrongdoing, fraud or other
intentional or willful misrepresentation.
(b) Federal law.--This act does not supersede any audit
requirements established by Federal law.
Section 7. Enforcement.
The department shall have enforcement authority and take
action or impose penalties to bring noncomplying entities into
full compliance with this act, including the promulgation of any
regulations necessary to carry out this act.
Section 8. Effective date.
This act shall take effect in 90 days.
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