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SENATE AMENDED
PRIOR PRINTER'S NOS. 2120, 2371, 3693, 3707
PRINTER'S NO. 3933
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
946
Session of
2015
INTRODUCED BY BAKER, FABRIZIO, D. COSTA, STAATS, LONGIETTI,
DAVIS, GIBBONS, PICKETT, PASHINSKI, CRUZ, GROVE, McNEILL,
YOUNGBLOOD, M. K. KELLER, KILLION, P. COSTA, COHEN, THOMAS,
EVERETT, CARROLL, FARRY, SCHLOSSBERG, PHILLIPS-HILL,
M. DALEY, WARD, READSHAW, HARKINS, SAYLOR, GOODMAN, GALLOWAY,
BARRAR, BOYLE, MICCARELLI, DeLUCA, NEUMAN, MATZIE, TOEPEL,
WATSON, KNOWLES, O'BRIEN, SANTARSIERO, PETRI, M. QUINN,
D. PARKER, DEASY, CUTLER AND BARBIN, AUGUST 18, 2015
SENATOR WHITE, BANKING AND INSURANCE, IN SENATE, AS AMENDED,
SEPTEMBER 27, 2016
AN ACT
Providing for pharmacy audit procedures. PROVIDING FOR PHARMACY
AUDIT PROCEDURES, FOR REGISTRATION OF PHARMACY BENEFITS
MANAGERS AND FOR MAXIMUM ALLOWABLE COST TRANSPARENCY.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
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.
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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.
"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
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include either of the following:
(1) A concurrent review or remote audit that is
initiated within seven business days of the pharmacy's
transmission of a claim to an auditing entity.
(2) A concurrent review or remote 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
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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
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.
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(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
solely compensate 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, unless both parties agree
otherwise. 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) (Reserved).
(6) The entity may not initiate or schedule a pharmacy
audit during the first five business days of any month for
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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
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
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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:
(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
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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 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
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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, waste, abuse or other intentional misconduct
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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CHAPTER 1
PRELIMINARY PROVISIONS
SECTION 101. SHORT TITLE.
THIS ACT SHALL BE KNOWN AND MAY BE CITED AS THE PHARMACY
AUDIT INTEGRITY AND TRANSPARENCY ACT.
SECTION 102. 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 103. 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.
"COVERED ENTITY." A MEMBER, PARTICIPANT, ENROLLEE, CONTRACT
HOLDER OR POLICY HOLDER PROVIDING PHARMACY BENEFITS TO A COVERED
INDIVIDUAL UNDER A HEALTH COVERAGE PLAN PURSUANT TO A CONTRACT
ADMINISTERED BY A PHARMACY BENEFIT MANAGER.
"COVERED INDIVIDUAL." A MEMBER, PARTICIPANT, ENROLLEE,
CONTRACT HOLDER OR POLICYHOLDER OR BENEFICIARY OF A COVERED
ENTITY WHO IS PROVIDED HEALTH COVERAGE BY THE COVERED ENTITY.
THE TERM INCLUDES A DEPENDENT OR OTHER PERSON PROVIDED HEALTH
COVERAGE THROUGH THE POLICY, CONTRACT OR PLAN OF A COVERED
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INDIVIDUAL.
"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.
"GENERIC DRUG LIST." A LIST OF DRUGS, MEDICAL PRODUCTS OR
DEVICES, OR BOTH, FOR WHICH A MAXIMUM ALLOWABLE COST HAS BEEN
ESTABLISHED BY A PHARMACY BENEFITS MANAGER.
"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.
"MAXIMUM ALLOWABLE COST." THE MAXIMUM AMOUNT THAT A PHARMACY
BENEFITS MANAGER WILL REIMBURSE A PHARMACY FOR THE COST OF A
DRUG OR A MEDICAL PRODUCT OR DEVICE.
"MULTIPLE SOURCE DRUG." A COVERED OUTPATIENT DRUG FOR WHICH
THERE IS AT LEAST ONE OTHER DRUG PRODUCT THAT IS RATED AS
THERAPEUTICALLY EQUIVALENT UNDER THE FOOD AND DRUG
ADMINISTRATION'S MOST RECENT PUBLICATION OF "APPROVED DRUG
PRODUCTS WITH THERAPEUTIC EQUIVALENCE EVALUATIONS."
"NETWORK." A PHARMACY OR GROUP OF PHARMACIES THAT AGREE TO
PROVIDE PRESCRIPTION SERVICES TO COVERED INDIVIDUALS ON BEHALF
OF A COVERED ENTITY OR GROUP OF COVERED ENTITIES IN EXCHANGE FOR
PAYMENT FOR ITS SERVICES BY A PHARMACY BENEFITS MANAGER OR
PHARMACY SERVICES ADMINISTRATION ORGANIZATION. THE TERM INCLUDES
A PHARMACY THAT GENERALLY DISPENSES OUTPATIENT PRESCRIPTIONS TO
COVERED INDIVIDUALS OR DISPENSES PARTICULAR TYPES OF
PRESCRIPTIONS, PROVIDES PHARMACY SERVICES TO PARTICULAR TYPES OF
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COVERED INDIVIDUALS OR DISPENSES PRESCRIPTIONS IN PARTICULAR
HEALTH CARE SETTINGS, INCLUDING NETWORKS OF SPECIALTY,
INSTITUTIONAL OR LONG-TERM CARE FACILITIES.
"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.
"PHARMACY." AS DEFINED IN SECTION 2(12) OF THE PHARMACY ACT.
"PHARMACY AUDIT." AN AUDIT, CONDUCTED ON-SITE 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.
"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
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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 FOR
COVERED ENTITIES.
"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.
"PHARMACY SERVICES ADMINISTRATION ORGANIZATION" OR "PSAO."
ANY ENTITY THAT CONTRACTS WITH PHARMACIES TO ASSIST WITH THIRD-
PARTY PAYER INTERACTIONS AND CAN PROVIDE A VARIETY OF OTHER
ADMINISTRATIVE SERVICES. THE ADMINISTRATIVE SERVICES VARY BUT
MAY INCLUDE CONTRACTING WITH PBMS ON BEHALF OF PHARMACIES AND
MANAGING PHARMACIES' CLAIMS PAYMENTS FROM THIRD-PARTY PAYERS.
"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.
CHAPTER 3
PHARMACY AUDITS
SECTION 301. PROCEDURES FOR CONDUCTING PHARMACY AUDITS.
(A) PROCEDURE.--AN ENTITY CONDUCTING A PHARMACY AUDIT UNDER
THIS CHAPTER 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
SOLELY COMPENSATE ANY OF ITS EMPLOYEES OR ANY CONTRACTOR WITH
WHICH AN AUDITING ENTITY CONTRACTS TO CONDUCT A PHARMACY
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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 14 CALENDAR DAYS' PRIOR WRITTEN NOTICE BEFORE
CONDUCTING A PHARMACY AUDIT, UNLESS BOTH PARTIES AGREE
OTHERWISE. IF A DELAY IS REQUESTED BY THE PHARMACY, THE
PHARMACY SHALL PROVIDE NOTICE TO THE PBM WITHIN 72 HOURS OF
RECEIVING NOTICE OF THE AUDIT.
(5) (RESERVED).
(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
NONPROPRIETARY DRUGS AND PHARMACIST SERVICES TO A HEALTH PLAN
BENEFICIARY OR THE BENEFICIARY'S CAREGIVER OR GUARDIAN.
(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
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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
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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:
(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
AUDITING ENTITY WHO CONDUCTED THE PHARMACY AUDIT AND AN
APPROPRIATE AND ACCESSIBLE POINT OF CONTACT, 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.
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(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 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 302. APPEALS PROCESS.
A PHARMACY MAY APPEAL A FINAL AUDIT REPORT IN ACCORDANCE WITH
THE PROCEDURES ESTABLISHED BY THE ENTITY CONDUCTING THE PHARMACY
AUDIT.
SECTION 303. LIMITATIONS.
(A) GENERAL RULE.--THE PROVISIONS OF THIS CHAPTER SHALL NOT
APPLY TO AN AUDIT OF PHARMACY RECORDS WHEN:
(1) FRAUD, WASTE, ABUSE OR OTHER INTENTIONAL MISCONDUCT
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
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INTENTIONAL OR WILLFUL MISREPRESENTATION.
(B) FEDERAL LAW.--THIS CHAPTER DOES NOT SUPERSEDE ANY AUDIT
REQUIREMENTS ESTABLISHED BY FEDERAL LAW.
SECTION 304. ENFORCEMENT.
THE DEPARTMENT SHALL HAVE ENFORCEMENT AUTHORITY AND TAKE
ACTION OR IMPOSE PENALTIES TO BRING NONCOMPLYING ENTITIES INTO
FULL COMPLIANCE WITH THIS CHAPTER, INCLUDING THE PROMULGATION OF
ANY REGULATIONS NECESSARY TO CARRY OUT THIS CHAPTER.
CHAPTER 5
PBM REQUIREMENTS
SECTION 501. PBM REGISTRATION.
TO CONDUCT BUSINESS IN THIS COMMONWEALTH, A PBM MUST REGISTER
WITH THE DEPARTMENT. THE DEPARTMENT SHALL PROMULGATE REGULATIONS
TO IMPLEMENT THIS SECTION.
SECTION 502. GENERIC DRUG LIST AND REIMBURSEMENT.
(A) GENERAL RULE.--IN ORDER TO PLACE A PARTICULAR DRUG ON A
GENERIC DRUG LIST, A PBM SHALL, AT A MINIMUM, ENSURE THAT:
(1) THE DRUG IS LISTED AS "A," "B," "NR" OR "NA" RATED
IN THE MOST RECENT VERSION OF THE FOOD AND DRUG
ADMINISTRATION'S "APPROVED DRUG PRODUCTS WITH THERAPEUTIC
EQUIVALENCE EVALUATIONS," COMMONLY KNOWN AS THE ORANGE BOOK;
AND
(2) THE DRUG IS AVAILABLE FOR PURCHASE BY ALL PHARMACIES
IN THIS STATE FROM NATIONAL OR REGIONAL WHOLESALERS AND IS
NOT OBSOLETE OR TEMPORARILY UNAVAILABLE.
(B) REMOVAL FROM LISTING.--A PBM MUST MAINTAIN A PROCEDURE
TO ELIMINATE DRUGS FROM THE LIST OF DRUGS SUBJECT TO MULTIPLE
SOURCE DRUG PRICING OR MODIFY THE MAXIMUM ALLOWABLE COST IN A
TIMELY FASHION.
(C) SUBSTITUTIONS.--A PBM MAY NOT PENALIZE A PHARMACIST OR
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PHARMACY ON AUDIT IF THE PHARMACIST OR PHARMACY PERFORMS A
GENERIC SUBSTITUTION PURSUANT TO THE ACT OF NOVEMBER 24, 1976
(P.L.1163, NO.259), REFERRED TO AS THE GENERIC EQUIVALENT DRUG
LAW.
SECTION 503. AVAILABILITY OF GENERIC DRUG LIST.
(A) GENERAL RULE.--UPON EACH CONTRACT EXECUTION OR RENEWAL,
A PBM SHALL, WITH RESPECT TO CONTRACTS BETWEEN A PBM AND A
PHARMACY, OR ALTERNATIVELY, A PBM AND A PHARMACY'S CONTRACTING
REPRESENTATIVE OR AGENT SUCH AS A PSAO:
(1) INCLUDE IN THE CONTRACT THE SOURCES UTILIZED TO
DETERMINE MULTIPLE SOURCE DRUG PRICING, INCLUDING, IF
APPLICABLE, THE MAXIMUM ALLOWABLE COST OR ANY SUCCESSIVE
PRICING FORMULA OF THE PBM.
(2) UPDATE THE PRICING INFORMATION EVERY SEVEN CALENDAR
DAYS.
(3) ESTABLISH A REASONABLE PROCESS BY WHICH PHARMACIES
HAVE A METHOD TO ACCESS RELEVANT OR CURRENT MAXIMUM ALLOWABLE
COST PRICING LISTS IN EFFECT AND ANY SUCCESSIVE PRICING
FORMULAS IN A TIMELY FASHION.
(B) CONFIDENTIALITY PROVISION.--NOTHING IN THIS SECTION MAY
PROHIBIT A PBM FROM ESTABLISHING A REASONABLE CONFIDENTIALITY
PROVISION WITH A PHARMACY'S OR PHARMACIST'S CONTRACTING
REPRESENTATIVE AGENT SUCH AS A PSAO.
SECTION 504. MULTIPLE SOURCE DRUG PRICING APPEALS PROCESS.
(A) PROCESS TO BE ESTABLISHED.--ALL CONTRACTS BETWEEN A PBM
OR A PHARMACY, OR ALTERNATIVELY, A PHARMACY'S CONTRACTING AGENT,
SUCH A PSAO, SHALL INCLUDE A PROCESS TO APPEAL, INVESTIGATE AND
RESOLVE DISPUTES REGARDING MULTIPLE SOURCE DRUG PRICING. THE
CONTRACT PROVISION ESTABLISHING THE PROCESS SHALL INCLUDE THE
FOLLOWING:
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(1) THE RIGHT TO APPEAL SHALL BE LIMITED TO 14 CALENDAR
DAYS FOLLOWING THE INITIAL CLAIM.
(2) THE APPEAL SHALL BE INVESTIGATED AND RESOLVED BY THE
PBM THROUGH AN INTERNAL PROCESS WITHIN 14 CALENDAR DAYS OF
RECEIPT OF THE APPEAL BY THE PBM.
(3) A TELEPHONE NUMBER AT WHICH A PHARMACY MAY CONTACT
THE PBM AND SPEAK WITH AN INDIVIDUAL WHO IS INVOLVED IN THE
APPEALS PROCESS.
(B) DENIAL.--IF A PBM DENIES AN APPEAL, THE PBM SHALL
PROVIDE THE REASON FOR THE DENIAL AND IDENTIFY THE NATIONAL DRUG
CODE OF AN EQUIVALENT DRUG THAT IS AVAILABLE FOR PURCHASE BY
NETWORK RETAIL PHARMACIES IN THIS COMMONWEALTH FROM WHOLESALERS
AT A PRICE THAT IS EQUAL TO OR LESS THAN THE MAXIMUM ALLOWABLE
COST FOR THE APPEALED DRUG AS DETERMINED BY THE PBM.
(C) APPROVAL.--IF A PBM GRANTS AN APPEAL, THE PBM SHALL MAKE
THE PRICE CORRECTION, PERMIT THE REPORTING PHARMACY TO REVERSE
AND REBILL THE APPEALED CLAIM AND MAKE THE PRICE CORRECTION
EFFECTIVE FOR ALL SIMILARLY SITUATED PHARMACIES FROM THE DATE OF
THE APPROVED APPEAL.
SECTION 505. ENFORCEMENT.
THE DEPARTMENT SHALL ENFORCE THE PROVISIONS OF THIS CHAPTER
AND SHALL TAKE ACTION OR IMPOSE PENALTIES TO BRING NONCOMPLYING
ENTITIES INTO FULL COMPLIANCE WITH THIS CHAPTER.
SECTION 506. DEPARTMENT AUTHORITY.
THE DEPARTMENT SHALL PROMULGATE REGULATIONS NECESSARY TO
IMPLEMENT THE PROVISIONS OF THIS CHAPTER.
SECTION 507. APPLICABILITY.
THIS CHAPTER SHALL APPLY TO ALL CONTRACTS AND AGREEMENTS FOR
PHARMACY BENEFITS MANAGEMENT SERVICES EXECUTED OR RENEWED ON OR
AFTER THE EFFECTIVE DATE OF THIS SECTION.
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CHAPTER 11
MISCELLANEOUS PROVISIONS
SECTION 1101. EFFECTIVE DATE.
THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
(1) THE ADDITION OF CHAPTER 5 SHALL TAKE EFFECT IN 90
DAYS.
(2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT IN 60
DAYS.
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