2018 -- S 2786

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LC005437

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

RELATING TO HEALTH AND SAFETY

     

     Introduced By: Senator Erin Lynch Prata

     Date Introduced: April 05, 2018

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 5-19.1 of the General Laws entitled "Pharmacies" is hereby

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amended by adding thereto the following section:

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     5-19.1-33. Audits.

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     (a) When an on-site audit of the records of a pharmacy is conducted by a pharmacy

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benefits manager, the audit must be conducted in accordance with the following criteria:

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     (1) A finding of overpayment or underpayment must be based on the actual overpayment

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or underpayment, and not a projection based on the number of patients served having a similar

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diagnosis, or on the number of similar orders or refills for similar drugs, unless the projected

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overpayment or denial is a part of a settlement agreed to by the pharmacy or pharmacist.

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     (2) The auditor may not use extrapolation in calculating recoupments or penalties.

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     (3) Any audit that involves clinical or professional judgment must be conducted by, or in

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consultation with a pharmacist.

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     (4) Each entity conducting an audit shall establish an appeals process under which a

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pharmacy may appeal an unfavorable preliminary audit report to the entity.

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     (5) This section does not apply to any audit, review or investigation that is initiated based

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on or involving suspected or alleged fraud, willful misrepresentation or abuse.

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     (6) Prior to an audit, the entity conducting an audit shall give the pharmacy thirty (30)

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days' advance written notice of the audit, and the range of prescription numbers and the range of

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dates included in the audit. Additionally, the number of prescriptions shall not exceed one

 

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hundred (100) selected prescription claims which also includes all associated refills. Time allotted

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must be adequate to collect all samples. Signature logs shall not exceed twenty-five (25).

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     (7) A pharmacy has the right to request mediation by a private mediator, agreed upon by

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the pharmacy and the pharmacy benefits manager, to resolve any disagreements. A request for

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mediation does not waive any existing rights of appeal available to a pharmacy under this section.

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     (8) A preliminary audit report must be delivered to the pharmacy within fifteen (15) days

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after the conclusion of the audit. A pharmacy must be allowed at least thirty (30) days following

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receipt of the preliminary audit to provide documentation to address any discrepancy found in the

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audit. A final audit report must be delivered to the pharmacy within sixty (60) days after receipt

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of the preliminary audit report or final appeal, whichever is later. A charge-back, recoupment or

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other penalty may not be assessed until the appeal process provided by the pharmacy benefits

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manager has been exhausted and the final report issued. Except as provided by state or federal

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law, audit information may not be shared. Auditors may have access only to previous audit

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reports on a particular pharmacy conducted by that same entity. Auditors may initiate a desk audit

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prior to an on-site audit unless otherwise specified in the law.

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     (9) Contracted auditors cannot be paid based on the findings within an audit.

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     (10) Scanned images of all prescriptions including all scheduled controlled substances are

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allowed to be used by the pharmacist for an audit. Verbally received prescriptions must be

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accepted and applicable for desk, on-site and follow up appeal documentation.

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     (11) Any clerical error, typographical error, scrivener's error or computer error regarding

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a document or record required under the Medicaid program does not constitute a willful violation,

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and is not subject to criminal penalties without proof of intent to commit fraud.

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     (12) Pharmacists are allowed at minimum one opportunity to reschedule with the auditor

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if the scheduled audit presents a scheduling conflict for the pharmacist.

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     (13) The period covered by an audit may not exceed one year.

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     SECTION 2. Title 27 of the General Laws entitled "INSURANCE" is hereby amended

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by adding thereto the following chapter:

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CHAPTER 1.3

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HEALTH INSURER ANNUAL REPORTING

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     27-1.3-1. Pharmacy benefit manager transparency.

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     (a) Health insurers with a minimum of two thousand (2,000) Rhode Island lives covered

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at the end of the preceding year, or who offer insurance through the Rhode Island health benefit

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exchange, shall annually report the following information to the department of health, in plain

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language, as an addendum to the health insurer's annual statement:

 

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     (1) The health insurer's state of domicile and the total number of states in which the

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insurer operates;

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     (2) The total number of Rhode Island lives covered by the health insurer;

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     (3) The total number of claims submitted to the health insurer;

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     (4) The total number of claims denied by the health insurer;

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     (5) The total number of denials of service by the health insurer at the preauthorization

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level, including:

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     (i) The total number of denials of service at the preauthorization level appealed to the

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health insurer at the first-level grievance and, of those, the total number overturned;

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     (ii) The total number of denials of service at the preauthorization level appealed to the

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health insurer at any second-level grievance and, of those, the total number overturned; and

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     (ii) The total number of denials of service at the preauthorization level for which external

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review was sought and, of those, the total number overturned;

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     (6) The total number of adverse benefit determinations made by the health insurer,

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including:

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     (i) The total number of adverse benefit determinations appealed to the health insurer at

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the first-level grievance and, of those, the total number overturned;

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     (ii) The total number of adverse benefit determinations appealed to the health insurer at

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any second-level grievance and, of those, the total number overturned;

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     (iii) The total number of adverse benefit determinations for which external review was

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sought and, of those, the total number overturned;

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     (7) The total number of claims denied by the health insurer because the service was

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experimental, investigational, an off-label use of a drug, was not medically necessary, involved

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access to a provider that is inconsistent with the limitations imposed by the plan, or was subject to

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a preexisting condition exclusion;

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     (8) The total number of claims denied by the health insurer as duplicate claims, as coding

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errors, or for services or providers not covered;

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     (9) The titles and salaries of all corporate officers and board members during the

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preceding year, and the bonuses and compensatory benefits of all corporate officers and board

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members during the preceding year;

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     (10) The health insurer's marketing and advertising expenses during the preceding year;

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     (11) The health insurer's federal and Rhode Island-specific lobbying expenses during the

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preceding year;

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     (12) The amount and recipient of each political contribution made by the health insurer

 

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during the preceding year;

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     (13) The amount and recipient of dues paid during the preceding year by the health

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insurer to trade groups that engage in lobbying efforts, or that make political contributions;

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     (14) The health insurer's legal expenses related to claims or service denials during the

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preceding year; and

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     (15) The amount and recipient of charitable contributions made by the health insurer

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during the preceding year.

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     (b) Health insurers may indicate the extent of overlap or duplication in reporting the

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information described in subsection (a) of this section.

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     (c) The department of health shall create a standardized form using terms with uniform,

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industry-standard meanings for the purpose of collecting the information described in subsection

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(a) of this section, and each health insurer shall use the standardized form for reporting the

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required information as an addendum to its annual statement. To the extent possible, health

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insurers shall report information specific to Rhode Island on the standardized form, and shall

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indicate on the form where the reported information is not specific to Rhode Island.

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     (d) The department of health shall post on its website the standardized form to be

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completed by each health insurer pursuant to this section, and shall post on the Rhode Island

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health benefit exchange an electronic link to the standardized forms posted by the department of

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health.

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     (e) The director of the department of health may issue such rules, regulations, and orders

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as shall be necessary to carry out the provisions of this chapter.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HEALTH AND SAFETY

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     This act would establish audit requirements for pharmacy benefit managers, and would

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also establish annual reporting requirements for health insurers.

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     This act would take effect upon passage.

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