PRIOR PRINTER'S NOS. 2120, 2371
PRINTER'S NO. 3693
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, QUINN,
D. PARKER, DEASY AND CUTLER, AUGUST 18, 2015
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
JUNE 30, 2016
AN ACT
Providing for pharmacy audit procedures.
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.
Section 3. Definitions.
The following words and phrases when used in this act shall
<--
1
2
3
4
5
6
7
8
9
10
11
12
13
14
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Audit." A review of one or more pharmacy records conducted
by an auditing entity for payment for the provision of
prescription or nonproprietary drugs or pharmacy services.
"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 Department of Health of the Commonwealth.
"Health care practitioner." As defined in section 102 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.
"Pharmacy." As defined in section 2(12) of the Pharmacy Act.
"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.
20150HB0946PN3693 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(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 any
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. Administrative services may include,
but are not limited to, 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
20150HB0946PN3693 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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 audits.
(a) Procedure.--An entity conducting an audit under this act
shall conform to the following rules:
(1) The pharmacy contract between a PBM and a pharmacy,
or alternatively, a PBM and a pharmacy's contracting
representative or agent shall identify and describe in detail
the audit procedures.
(2) The entity conducting an audit shall give the
pharmacy written notice at least 30 days prior to conducting
an onsite audit or requesting records for any audit conducted
offsite. The audit may be delayed 30 days at the request of
20150HB0946PN3693 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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 10 business days
prior to the day the audit is to commence.
(3) The entity conducting the audit shall audit no more
than 100 prescription records per onsite audit.
(4) A pharmacy may do any of the following when an audit
is performed:
(i) Validate a pharmacy record by using an original
or photocopied record of a hospital or health care
practitioner for drugs or medicinal supplies written or
transmitted electronically for purposes of validating the
pharmacy record with respect to orders of prescription
drugs.
(ii) Validate one or more claims for payment for the
provision of prescription or nonproprietary drugs or
pharmacy services by using either of the following:
(A) an original pharmacy record or photocopy of
the record; or
(B) any legal prescription complying with the
Board of Pharmacy requirements may be used to
validate claims in connection with prescriptions,
refills or changes in prescriptions. This shall
include prescription records in an electronic form or
otherwise contained digital media.
(iii) Resubmit a disputed or denied claim for
payment using any commercially reasonable method of
resubmission, including resubmission by facsimile, mail
20150HB0946PN3693 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
or electronic means, provided that the period of time
when a claim may be resubmitted has not expired as
mutually agreed upon by the contracting parties.
(5) An audit must be conducted applying only the
applicable Federal or Pennsylvania laws and regulations.
(6) A clerical or recordkeeping error, such as a
typographical error, scrivener's error or computer error
regarding a required document or record does not constitute
fraud, and claims relating thereto shall be subject to
neither recoupment nor criminal penalties without proof of
intent to commit fraud or absent an indication there was an
error in dispensing the prescribed drug.
(7) The finding of an overpayment shall not include the
dispensing fee amount. This provision specifically does not
include the payment of multiple dispensing fees for the same
prescription, exclusive of refills.
(8) The period of time covered by an audit may not be
more than 12 months from the scheduled date of the audit.
(9) An onsite audit may not be initiated or scheduled
during the first three business days of any month unless
consented to by the pharmacy.
(10) The auditing entity may not receive payment, by
contract, based on a percentage of the amount recovered.
(11) An entity conducting an audit under this act shall
not use the accounting practice of extrapolation in
calculating recoupments or penalties for audits. An
extrapolation audit means an audit of a sample of
prescription drug benefit claims submitted by a pharmacy to
the entity conducting the audit that is then used to estimate
audit results for a larger group of claims not reviewed by
20150HB0946PN3693 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the auditor.
(12) When calculating for days' supply for topical and
ophthalmic products, the pharmacist's reasonable,
professional judgment based on communication with the patient
or prescriber shall take precedence.
(13) The auditing entity shall not recoup payment for a
prescription which has been used by the patient in accordance
with the prescriber's instructions even if the prescriber's
instructions are different than the manufacturer's suggested
use.
(14) When directions for use include variable dosing
instructions, the highest prescribed dose must be used to
calculate day's supply, copay and allowable refill date and
quantity.
(15) The pharmacy's usual and customary price for
compounded medications shall be considered the reimbursable
cost unless the pricing methodology is published in the
provider contract and mutually agreed upon by the contracting
parties.
(16) A pharmacy shall be permitted to utilize
information regarding the availability of third-party
resources provided by a PBM and shall not be liable to repay
any amount for which a third party is liable only if a
pharmacy has actual knowledge regarding the availability of
third-party resources available to a claimant for pharmacy
benefits. PBMs and prescription drug plans may pursue claims
for such third-party resources.
(17) With the exception of overpayments, if a PBM
approves a claim through adjudication, the auditor may not
retroactively deny or modify the claim based upon
20150HB0946PN3693 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
retroactively obtained ineligibility information, unless the
claim was fraudulent.
(18) An auditor may not deny or reject any claim
retroactively through audits in the event that the PBM or
auditor has subsequently become aware of another payer
responsible for payment of the claim following adjudication
or payment of the claim.
(b) Written report.--An auditing entity shall provide the
pharmacy with a written report of the audit and comply with the
following requirements:
(1) The preliminary audit report must be delivered to
the pharmacy or its corporate parent within 60 days after the
completion of the audit. The preliminary report shall include
contact information for the individual who conducted the
audit, including telephone number, facsimile number, e-mail
and auditing firm, so that audit results, discrepancies and
procedures can be reviewed. The preliminary audit report
shall include, but is not limited to, claim level information
for any discrepancy found and total dollar amount of claims
subject to recovery.
(2) A pharmacy shall be allowed at least 60 days
following receipt of the preliminary audit report to produce
documentation to address any discrepancy found during the
audit. This shall include prescriptions not initially
provided in the audit.
(3) A final audit report shall be delivered to the
pharmacy or its corporate parent within 120 days after
receipt of the preliminary audit report or final appeal.
(4) The audit report must be signed and include the
signature of any pharmacist participating in the audit.
20150HB0946PN3693 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(5) Any recoupments of disputed funds shall only occur
after final internal disposition of the audit. Any recoupment
shall be provided in writing to the pharmacy for payment.
(6) Interest shall not accrue during the audit period.
(7) Each entity conducting an audit shall provide a copy
of the final audit report, after completion of any review
process, to the plan sponsor. The final audit report may be
delivered electronically.
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 cannot be
appealed through the audit process.
Section 6. Limitations.
(a) Exceptions.--Any rights derived from this act shall not
apply to:
(1) Audits which are the result of a complaint to the
PBM or Board of Pharmacy in which suspected fraudulent
activity or other intentional and willful misrepresentation
is evidenced by a physical review, review of claims data or
statements or other investigative methods.
(2) Concurrent reviews or desk audits that occur within
three business days of transmission of a claim where no
chargeback or recoupment is demanded.
(b) Federal law.--This act does not supersede any audit
requirements established by Federal law, including extrapolation
audits when required.
Section 7. Enforcement.
The department shall have enforcement authority and shall
20150HB0946PN3693 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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.
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
20150HB0946PN3693 - 10 -
<--
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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
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:
20150HB0946PN3693 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(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
20150HB0946PN3693 - 12 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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
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.
20150HB0946PN3693 - 13 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(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
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
20150HB0946PN3693 - 14 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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
20150HB0946PN3693 - 15 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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
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.
20150HB0946PN3693 - 16 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(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, WASTE, ABUSE OR OTHER INTENTIONAL MISCONDUCT
20150HB0946PN3693 - 17 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
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.
20150HB0946PN3693 - 18 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14