Enacts provisions to establish standards for audits of pharmacies by entities that pay for or reimburse the pharmacy for the cost of pharmaceuticals and health care services.
STATE OF NEW YORK
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9424--A
IN ASSEMBLY
March 3, 2016
___________
Introduced by M. of A. LAVINE, DUPREY -- read once and referred to the
Committee on Health -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the public health law, in relation to audits of pharma-
cies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The public health law is amended by adding a new section
2 280-b to read as follows:
3 § 280-b. Pharmacy audits. 1. Definitions. As used in this section,
4 the following terms shall have the following meanings:
5 (a) "Audit" means a review of the records of a pharmacy by or on
6 behalf of an entity that pays for or reimburses the cost of pharmaceu-
7 tical products and health care services that is conducted at a pharmacy
8 or from a remote location other than a pharmacy.
9 (b) "Entity" means:
10 (i) a pharmacy benefits manager;
11 (ii) a health plan;
12 (iii) a state agency, except the office of the Medicaid inspector
13 general;
14 (iv) an insurer;
15 (v) a third party administrator;
16 (vi) a managed care organization; or
17 (vii) a company, group or agent that represents or is engaged by any
18 of these.
19 (c) "Pharmacy benefits manager" means an entity that contracts with
20 pharmacies or pharmacy contracting agents on behalf of a health plan,
21 state agency, insurer, managed care organization, or other third party
22 payer to provide pharmacy benefit services or administration.
23 (d) "Pharmacy" has the same meaning as set forth in section six thou-
24 sand eight hundred two of the education law.
25 (e) "Fraud" means an intentional deception or misrepresentation made
26 by a person with the knowledge that the deception could result in some
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14134-02-6
A. 9424--A 2
1 unauthorized benefit to himself or some other person. It includes any
2 act that constitutes fraud under applicable federal or state law.
3 (f) "Audit period" means the time period that begins on the day on
4 which the auditor arrives at the pharmacy for the on-site audit or in
5 the case of a remote audit, the day on which the pharmacy submits the
6 claims requested in the audit. The audit period ends on the day on which
7 the final audit report is received by the supervising pharmacist, the
8 pharmacy corporate office or the pharmacy accepts the settlement of the
9 audit, whichever is later.
10 2. A contract between a pharmacy benefit manager or alternatively the
11 agent of a pharmacy and a pharmacy benefit manager shall include a proc-
12 ess by which a pharmacy may appeal a finding in a preliminary audit
13 report or a final audit report. The audit appeal process shall be
14 presented to the pharmacy in writing or electronically prior to the
15 issuing of any audit notification and shall provide the name and elec-
16 tronic address of the individual responsible for processing appeals, a
17 reasonable timeframe for filing an appeal and for notice of the result
18 of any appeal. The appeal process shall be included with a notice of
19 audit. If the result of the internal appeal process is not satisfactory
20 to either party, that party may seek mediation from an outside entity
21 acceptable to both parties. The entity conducting an audit of a pharmacy
22 or its agent may not receive payment based on a percentage of the amount
23 recovered.
24 3. An entity conducting an on-site audit of a pharmacy shall:
25 (a) Provide at least fifteen days advance written notice of an audit
26 by mail or common carrier, return receipt requested, or electronically
27 with electronic receipt confirmation, addressed to the supervising phar-
28 macist of record and the pharmacy corporate office where applicable.
29 (b) Allow a pharmacy seven days after receiving notice of an on-site
30 audit in which to request a change of the audit date. The entity
31 conducting the audit shall grant reasonable requests.
32 (c) Include in the written advance notice of an on-site audit the list
33 of specific and complete prescription numbers to be included in the
34 audit.
35 (d) Except in cases of fraud, limit audits to no more than one audit
36 by the same entity in a twelve-month period.
37 (e) Limit the total number of prescriptions audited to no more than
38 one hundred randomly selected in a twelve-month period, except in cases
39 of alleged fraud.
40 (f) Limit audits to claims adjudicated within the previous twenty-four
41 months.
42 (g) Refrain from on-site audits during the first five calendar days of
43 any month or the day before or after a federal holiday due to high
44 anticipated prescription volume, except with consent from the supervis-
45 ing pharmacist.
46 4. An entity conducting a remote or desk audit shall:
47 (a) Provide at least five business days advance written notice of an
48 audit by mail or common carrier, return receipt requested, or electron-
49 ically with electronic receipt confirmation, addressed to the supervis-
50 ing pharmacist of record and the pharmacy corporate office where appli-
51 cable.
52 (b) In the case of an electronic notification, confirm that the super-
53 vising pharmacist of record or the pharmacy corporate office has
54 acknowledged receipt before proceeding with the audit.
55 (c) Allow a minimum of ten business days for a pharmacy to comply with
56 an audit request sent electronically, beginning on the day on which the
A. 9424--A 3
1 supervising pharmacist of record or the pharmacy corporate office
2 acknowledged receipt of the audit notification.
3 (d) Limit the number of claims to no more than twenty-five randomly
4 selected claims.
5 (e) If a remote or desk audit reveals the necessity for a review of
6 additional claims, the follow-up audit shall be conducted on-site.
7 5. An entity conducting either an on-site audit or a desk audit shall:
8 (a) Audit a pharmacy using the same standards and parameters used in
9 auditing similarly situated pharmacies on behalf of the same audit
10 client. Any documentation and records required by an auditor during an
11 audit shall be of the same type as documentation and records required
12 for other similarly situated pharmacies.
13 (b) Accept that the final adjudication of a claim means that the drug,
14 prescriber and patient eligibility has been approved.
15 (c) Accept information pertaining to the records of a hospital, physi-
16 cian or other authorized healthcare provider written or transmitted by
17 any means of communication as validation of the pharmacy record with
18 respect to orders or refills of any legend or narcotic drug.
19 (d) Accept as validation the electronic or physical copy of a
20 prescription that complies with state law.
21 (e) Accept as validation any reasonably clear and accurate electronic
22 documentation such as a signature log or scanned patient records indi-
23 cating that the prescription was picked up, delivered by the pharmacy or
24 sent to the patient by common carrier. If such records are not avail-
25 able, accept written verification from the patient that the prescription
26 was received.
27 (f) Validation of appropriate days' supply and drug dosing must be
28 based on manufacturer guidelines and definitions, or in the case of
29 topical products or titrated products, the professional judgment of the
30 pharmacist based on communication with the patient or prescriber.
31 (g) An audit that involves clinical or professional judgment must be
32 conducted by or in consultation with a pharmacist with a valid New York
33 state license.
34 (h) In the case of invoice audits, an entity shall:
35 (i) accept as validation invoices from any wholesaler registered with
36 the department of education from which the pharmacy has purchased
37 prescription drugs;
38 (ii) accept as validation a receipt from another pharmacy for trans-
39 actions authorized under state law;
40 (iii) accept invoices that support inventory on hand; and
41 (iv) request documentation pertaining only to the claims under audit.
42 6. An entity conducting an audit of a pharmacy shall provide the phar-
43 macy and the pharmacy corporate office where applicable with a prelimi-
44 nary audit report no later than forty-five days after the date on which
45 the audit was completed and shall contain claim level information for
46 any discrepancy found. The preliminary audit report shall be sent by
47 mail or common carrier with return receipt requested or electronically
48 with electronic receipt confirmation.
49 7. The pharmacy receiving the preliminary audit report shall have no
50 fewer that forty-five days in which to produce documentation to address
51 any findings or contest any findings in the report in accordance with
52 the audit procedure. The entity shall consider a reasonable request from
53 the pharmacy for an extension of time to submit documentation to address
54 or correct any findings in the report.
55 8. If the audit results in a dispute or denial of a claim, the entity
56 conducting the audit shall allow the pharmacy to resubmit a corrected
A. 9424--A 4
1 claim using any commercially reasonable method including facsimile, mail
2 or electronic mail.
3 9. An entity conducting an audit must provide the pharmacy that it the
4 subject of an audit and the pharmacy corporate office where applicable
5 with a final audit report containing claim level information for any
6 discrepancy found no later than sixty days after the preliminary audit
7 report was received by the pharmacy or sixty days following the day on
8 which the pharmacy contested the preliminary report, whichever is later.
9 10. With regard to financial recoupments or recoveries:
10 (a) An entity conducting an audit of a pharmacy may not assess a
11 recoupment associated with a typographical, scrivner's or clerical
12 error. A clerical error is an error that does not result in actual
13 financial harm to the covered entity or consumer and does not include
14 the dispensing of an incorrect dose, amount or type of medication or
15 dispensing a prescription drug to the wrong person.
16 (b) Except in cases in which fraud is evidenced, an entity's finding
17 that a claim was incorrectly presented or paid must be based on identi-
18 fied transactions and not based on probability sampling, extrapolation
19 or other means that project an error using the number of patents served
20 who have a similar diagnosis or the number of similar prescriptions or
21 refills for similar drugs.
22 (c) An entity may not charge interest during the audit period.
23 (d) Except for additional safety requirements for an individual drug
24 required by the manufacturer or by the federal Food and Drug Adminis-
25 tration, a recoupment may not be based on documentation requirements
26 that exceed requirements of the New York state board of pharmacy or the
27 performance of a professional duty that exceeds requirements of the New
28 York state board of pharmacy.
29 (e) Amounts recovered pursuant to audit results shall be identified in
30 remittance statements and reflected in the 835 EDI remittance by claim
31 or prescription numbers level and shall not appear as a lump sum adjust-
32 ment.
33 (f) Recoupments of any disputed funds shall occur after the final
34 internal disposition of the audit, including the appeals process set
35 forth in this section.
36 (g) An entity may recoup the dispensing fee only if:
37 (i) the prescription was not actually dispensed;
38 (ii) the prescriber denied authorization;
39 (iii) the prescription was a dispensing error by the pharmacy;
40 (iv) the amount of the dispensing fee paid was incorrect; or
41 (v) the identified error is based solely on an extra paid dispensing
42 fee.
43 (h) In the case of errors that have no financial harm to the patient
44 or to the plan, the auditing entity may not assess any chargebacks.
45 § 2. This act shall take effect on the ninetieth day after it shall
46 have become law.
