SF 973

as introduced - 87th Legislature (2011 - 2012) Posted on 03/22/2012 09:14am

A bill for an act
relating to health; establishing a pharmacy audit integrity program; proposing
coding for new law in Minnesota Statutes, chapter 151.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [151.60] PHARMACY AUDIT INTEGRITY PROGRAM.
new text end

new text begin The pharmacy audit integrity program is established to provide standards for an
audit of pharmacy records carried out by a managed care company, insurance company,
Medicare Part B audit contractors, third-party payor, pharmacy benefits manager, health
program administered by a state agency, or any entity that represents such companies.
new text end

Sec. 2.

new text begin [151.61] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of sections 151.60 to 151.66, the following
terms have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Audit contractor. new text end

new text begin "Audit contractor" means a contractor that detects and
corrects improper payments for an entity.
new text end

new text begin Subd. 3. new text end

new text begin Entity. new text end

new text begin "Entity" means a managed care company, an insurance company, a
third-party payor, a pharmacy benefits manager, or any other organization that represents
these companies, groups, or organizations.
new text end

new text begin Subd. 4. new text end

new text begin Insurance company. new text end

new text begin "Insurance company" means any corporation,
association, benefit society, exchange, partnership, or individual engaged as principal in
the business of insurance.
new text end

new text begin Subd. 5. new text end

new text begin Managed care company. new text end

new text begin "Managed care company" means the entity or
organization that handles health care and financing.
new text end

new text begin Subd. 6. new text end

new text begin Pharmacy benefits manager or PBM. new text end

new text begin "Pharmacy benefits manager"
or "PBM" means a person, business, or other entity that performs pharmacy benefits
management. The term includes a person or entity acting for a PBM in a contractual or
employment relationship in the performance of pharmacy benefits management for a
managed care company, nonprofit hospital or medical service organization, insurance
company, third-party payor of health program administered by a state agency.
new text end

new text begin Subd. 7. new text end

new text begin State agency health program. new text end

new text begin "State agency health program" means any
program sponsored or administered by an agency of the state, except for Medicaid.
new text end

new text begin Subd. 8. new text end

new text begin Third-party payor. new text end

new text begin "Third-party payor" means an organization other than
the patient or health care provider involved in the financing of personal health services.
new text end

Sec. 3.

new text begin [151.62] PHARMACY BENEFIT MANAGER CONTRACT.
new text end

new text begin (a) A pharmacy benefit manager (PBM) contract that is altered or amended by that
entity may be substituted for a current contract but is not effective without the written
consent of a pharmacy. The pharmacy must receive a copy of the proposed contract
changes or renewal along with a disclosure by the PBM of all material changes in terms of
the contract or methods of reimbursement from the previous contract.
new text end

new text begin (b) An amendment or change in terms of an existing contract between a PBM and a
pharmacy must be disclosed to the pharmacy at least 120 days prior to the effective date
of the proposed change. A PBM may not alter or amend a PBM contract, or impose
any additional contractual obligation on a pharmacy, unless the PBM complies with the
requirements in this section.
new text end

Sec. 4.

new text begin [151.63] PROCEDURES FOR CONDUCTING AND REPORTING AN
AUDIT.
new text end

new text begin (a) Any entity conducting a pharmacy audit must follow the following procedures:
new text end

new text begin (1) a pharmacy must be given a written notice at least 14 business days before an
initial on-site audit is conducted;
new text end

new text begin (2) an audit that involves clinical or professional judgment must be conducted by or
in consultation with a pharmacist licensed in this state or the Board of Pharmacy;
new text end

new text begin (3) the period covered by the audit may not exceed 18 months from the date that the
claim was submitted to or adjudicated by the entity, unless a longer period is permitted
under federal law;
new text end

new text begin (4) the PBM may not audit more than 40 prescriptions per audit;
new text end

new text begin (5) the audit may not take place during the first seven business days of the month
due to the high volume of prescriptions filled during that time unless consented to by
the pharmacy;
new text end

new text begin (6) the pharmacy may use the records of a hospital, physician, or other authorized
practitioner to validate the pharmacy record and delivery and includes a medication
administration record;
new text end

new text begin (7) any legal prescription which meets the requirements in this chapter may be used
to validate claims in connection with prescriptions, refills, or changes in prescriptions,
including medication administration records, faxes, e-prescriptions, or documented
telephone calls from the prescriber or their agents;
new text end

new text begin (8) audit parameters must use consumer-oriented parameters based on manufacturer
listings or recommendations as follows:
new text end

new text begin (i) day supply for eye drops, so that the consumer pays only one 30-day co-payment
when the bottle of eye drops is intended by the manufacturer to be a 30-day supply;
new text end

new text begin (ii) when calculating the day supply for insulin, the highest dose prescribed must be
used to determine the day supply and patient co-payments; and
new text end

new text begin (iii) when calculating the day supply for topical products, the pharmacist's judgment
shall take precedence;
new text end

new text begin (9) a pharmacy's usual and customary price for compounded medications is
considered the reimbursable cost unless an alternate price is published in the provider
contract and signed by both parties;
new text end

new text begin (10) each pharmacy shall be audited under the same standards and parameters as
other similarly situated pharmacies;
new text end

new text begin (11) the commissioner of commerce shall address issues with questionable auditing
practices;
new text end

new text begin (12) the entity conducting the audit must establish a written appeals process which
must include appeals of preliminary reports and final reports;
new text end

new text begin (13) if either party is not satisfied with the appeal, that party may seek mediation; and
new text end

new text begin (14) if copies of records are requested by the auditing entity, they will pay 25 cents
per page to cover costs incurred to the pharmacy.
new text end

new text begin (b) The entity conducting the audit shall also comply with the following
requirements:
new text end

new text begin (1) auditors may not enter the pharmacy area where patient-specific information is
available and must be out of sight and hearing range of the pharmacy customers;
new text end

new text begin (2) the pharmacy must provide an area for auditors to conduct their business;
new text end

new text begin (3) a finding of overpayment or underpayment must be based on the actual
overpayment or underpayment and not a projection based on the number of patients served
having a similar diagnosis or on the number of similar orders or refills for similar drugs;
new text end

new text begin (4) in the case of errors which have no financial harm to the patient or plan, the PBM
must not assess any chargebacks;
new text end

new text begin (5) calculations of overpayments must not include dispensing fees, unless a
prescription was not actually dispensed or the prescriber denied authorization;
new text end

new text begin (6) the entity conducting the audit shall not use extrapolation in calculating the
recoupment or penalties for audits;
new text end

new text begin (7) any recoupment will not be deducted against future remittances and shall be
invoiced to the pharmacy for payment;
new text end

new text begin (8) recoupment may not be assessed for items on the face of a prescription not
required by the Minnesota Board of Pharmacy;
new text end

new text begin (9) the auditing company or agent may not receive payment based on a percentage
of the amount recovered;
new text end

new text begin (10) interest may not accrue during the audit period, which begins with the notice of
audit and ends with the final audit report;
new text end

new text begin (11) an entity may not consider any clerical or record keeping error, such as a
typographical error, scrivener's error, or computer error regarding a required document or
record as fraud; however, such errors may be subject to recoupment;
new text end

new text begin (12) a person shall not be subject to criminal penalties for errors provided for in
clause (11) without proof of intent to commit fraud;
new text end

new text begin (13) the commissioner of commerce may determine and assess a civil penalty for
each violation of sections 151.60 to 151.64; and
new text end

new text begin (14) the commissioner of commerce may require the entity to make restitution to
any person who has suffered financial injury because of the violation.
new text end

Sec. 5.

new text begin [151.64] AUDIT INFORMATION AND REPORTS.
new text end

new text begin (a) A preliminary audit report must be delivered to the pharmacy within 30 days
after the conclusion of the audit.
new text end

new text begin (b) A pharmacy must be allowed at least 30 days following receipt of the preliminary
audit to provide documentation to address any discrepancy found in the audit.
new text end

new text begin (c) A final audit report must be delivered to the pharmacy within 90 days after
receipt of the preliminary audit report or final appeal, whichever is later.
new text end

new text begin (d) No chargeback, recoupment, or other penalties may be assessed until the appeals
process has been exhausted and the final report issued.
new text end

new text begin (e) An entity shall remit any money due to a pharmacy or pharmacist as a result of
an underpayment of a claim within 30 days after the appeals process has been exhausted
and the final audit report has been issued.
new text end

new text begin (f) Where not superseded by state or federal law, audit information may not be
shared. Auditors shall only have access to previous audit reports on a particular pharmacy
conducted by that same auditing entity.
new text end

Sec. 6.

new text begin [151.65] DISCLOSURES TO PLAN SPONSOR.
new text end

new text begin An auditing entity must provide a copy of the final report to the plan sponsor whose
claims were included in the audit, and the money shall be returned to the plan sponsor and
the co-payment shall be returned directly to the patient.
new text end

Sec. 7.

new text begin [151.66] APPLICABILITY OF OTHER LAWS AND REGULATIONS.
new text end

new text begin (a) Sections 151.60 to 151.65 do not apply to any investigative audit that involves
fraud, willful misrepresentation, or abuse, including without limitation:
new text end

new text begin (1) insurance fraud;
new text end

new text begin (2) billing for services not furnished or supplies not provided;
new text end

new text begin (3) billing that appears to be a deliberate application for duplicate payment for the
same services or supplies, billing both the beneficiary and the PBM or payor for the
same service;
new text end

new text begin (4) altering claim forms, electronic claim records, and medical documentation to
obtain a higher payment amount;
new text end

new text begin (5) soliciting, offering, or receiving a kickback or bribe;
new text end

new text begin (6) participating in schemes that involve collusion between a provider and a
beneficiary, or between a supplier and a provider, and result in higher costs or charges to
the entity;
new text end

new text begin (7) misrepresentations of dates and descriptions of services furnished or the identity
of the beneficiary or the individual who furnished the services;
new text end

new text begin (8) billing for prescriptions without a prescription on file, when over-the-counter
items are dispensed;
new text end

new text begin (9) dispensing prescriptions using outdated drugs;
new text end

new text begin (10) billing with the wrong National Drug Code (NDC) or billing for a brand name
when a generic drug is dispensed;
new text end

new text begin (11) not crediting the payor for medications or parts of prescriptions that were not
picked up within 14 days;
new text end

new text begin (12) billing the payor a higher price than the pharmacy's usual and customary charge
to the general public; and
new text end

new text begin (13) billing for a product when there is no proof that the product was purchased.
new text end

new text begin (b) All cases of suspected fraud or violations of law must be reported by the auditor
to the Board of Pharmacy.
new text end

Sec. 8. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 7 apply to claims adjudicated on or after January 1, 2011.
new text end