2019 -- S 0581 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS -- PHARMACIES

     

     Introduced By: Senators Lynch Prata, McCaffrey, and McKenney

     Date Introduced: March 14, 2019

     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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     5-19.1-34. Audits.

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

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intermediary, 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 unless

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required by state or federal laws or regulations;

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

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with, a pharmacist; and

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

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

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

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

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     (c) Prior to an audit, the entity conducting an audit shall give the pharmacy fourteen (14)

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days advance written notice of the audit and the range of prescription numbers involved in the

 

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audit. The carrier or their intermediary may mask the last two digits of such numbers.

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Additionally, the number of prescriptions shall not exceed one hundred fifty (150) prescription

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claims and their applicable refills. The time allotted must be adequate to collect all samples. The

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examination of signature logs shall not exceed twenty-five (25) signature logs in number.

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     (d) A pharmacy has the right to execute the dispute resolution contained in their contract.

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     (e)(1) A preliminary audit report must be delivered to the pharmacy or its corporate office

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within sixty (60) days after the conclusion of the audit. A pharmacy must be allowed at least

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thirty (30) days following receipt of the preliminary audit to provide documentation to address

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any discrepancy found in the audit. A final audit report must be delivered to the pharmacy or its

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corporate office within ninety (90) days after receipt of the preliminary audit report or final

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appeal, whichever is later. A charge-back recoupment or other penalty may not be assessed until

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the appeal process provided by the pharmacy benefits manager has been exhausted and the final

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report issued. If the identified discrepancy for a single audit exceeds twenty-five thousand dollars

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($25,000), future payments in excess of that amount may be withheld pending the adjudication of

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an appeal. Auditors shall only have access to previous audit reports on a particular pharmacy

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conducted for the same entity.

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     (2) Auditors may initiate a desk audit prior to an on-site audit unless otherwise specified

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in the law.

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

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     (4) 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 upon validation by the auditing entity and applicable for the initial desk or on-site audit.

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     (5) The period covered by an audit may not exceed two (2) years.

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     (6) Within five (5) business days of receiving the audit notification, pharmacies are

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allowed, at a minimum, one opportunity to reschedule with the auditor if the scheduled audit

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presents a scheduling conflict for the pharmacist.

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

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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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     (g) Limitations.

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     (1) Exceptions. The provisions of this chapter do not apply to an investigative audit of

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pharmacy records when:

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     (i) Fraud, waste, abuse, or other intentional misconduct is indicated by physical review or

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review of claims data or statements; or

 

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     (ii) Other investigative methods indicate a pharmacy is or has been engaged in criminal

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wrongdoing, fraud, or other intentional or willful misrepresentation.

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     (2) Federal law. This chapter does not supersede any audit requirements established by

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federal law.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS -- PHARMACIES

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     This act would establish audit requirements for pharmacy benefit managers.

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     This act would take effect upon passage.

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