Chapter 278
2019 -- S 0581 SUBSTITUTE A
Enacted 07/16/2019

A N   A C T

Introduced By: Senators Lynch Prata, McCaffrey, and McKenney
Date Introduced: March 14, 2019

It is enacted by the General Assembly as follows:
     SECTION 1. Chapter 5-19.1 of the General Laws entitled "Pharmacies" is hereby
amended by adding thereto the following section:
     5-19.1-34 5-19.1-35. Audits.
     (a) When an on-site audit of the records of a pharmacy is conducted by a carrier or their
its intermediary, the audit must be conducted in accordance with the following criteria:
     (1) 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, unless the projected
overpayment or denial is a part of a settlement agreed to by the pharmacy or pharmacist;
     (2) The auditor may not use extrapolation in calculating recoupments or penalties unless
required by state or federal laws or regulations;
     (3) Any audit that involves clinical judgment must be conducted by, or in consultation
with, a pharmacist; and
     (4) Each entity conducting an audit shall establish an appeal process under which a
pharmacy may appeal an unfavorable preliminary audit report to the entity.
     (b) This section does not apply to any audit, review, or investigation that is initiated
based on or involving suspected or alleged fraud, willful misrepresentation, or abuse.
     (c) Prior to an audit, the entity conducting an audit shall give the pharmacy fourteen (14)
days advance written notice of the audit and the range of prescription numbers involved in the
audit. The carrier or their its intermediary may mask the last two digits of such the numbers.
Additionally, the number of prescriptions shall not exceed one hundred fifty (150) prescription
claims and their applicable refills. The time allotted must be adequate to collect all samples. The
examination of signature logs shall not exceed twenty-five (25) signature logs in number.
     (d) A pharmacy has the right to execute the dispute resolution contained in their contract.
     (e)(1) A preliminary audit report must be delivered to the pharmacy or its corporate office
within sixty (60) days after the conclusion of the audit. A pharmacy must be allowed at least
thirty (30) days following receipt of the preliminary audit to provide documentation to address
any discrepancy found in the audit. A final audit report must be delivered to the pharmacy or its
corporate office within ninety (90) days after receipt of the preliminary audit report or final
appeal, whichever is later. A charge-back recoupment or other penalty may not be assessed until
the appeal process provided by the pharmacy benefits manager has been exhausted and the final
report issued. If the identified discrepancy for a single audit exceeds twenty-five thousand dollars
($25,000), future payments in excess of that amount may be withheld pending the adjudication of
an appeal. Auditors shall only have access to previous audit reports on a particular pharmacy
conducted for the same entity.
     (2) Auditors may initiate a desk audit prior to an on-site audit unless otherwise specified
in the law.
     (3) Contracted auditors cannot be paid based on the findings within an audit.
     (4) Scanned images of all prescriptions including all scheduled controlled substances are
allowed to be used by the pharmacist for an audit. Verbally received prescriptions must be
accepted upon validation by the auditing entity and applicable for the initial desk or on-site audit.
     (5) The period covered by an audit may not exceed two (2) years.
     (6) Within five (5) business days of receiving the audit notification, pharmacies are
allowed, at a minimum, one opportunity to reschedule with the auditor if the scheduled audit
presents a scheduling conflict for the pharmacist.
     (f) Any clerical error, typographical error, scrivener's error, or computer error regarding a
document or record required under the Medicaid program does not constitute a willful violation
and is not subject to criminal penalties without proof of intent to commit fraud.
     (g) Limitations.
     (1) Exceptions. The provisions of this chapter do not apply to an investigative audit of
pharmacy records when:
     (i) Fraud, waste, abuse, or other intentional misconduct is indicated by physical review or
review of claims data or statements; or
     (ii) Other investigative methods indicate a pharmacy is or has been engaged in criminal
wrongdoing, fraud, or other intentional or willful misrepresentation.
     (2) Federal law. This chapter does not supersede any audit requirements established by
federal law.
     SECTION 2. This act shall take effect upon passage.
LC002040/SUB A