§ 26-52-103 — Pharmacy benefit manager audits

(a) Any pharmacy benefit manager or person acting on
behalf of a pharmacy benefit manager who conducts an audit of a
pharmacy shall follow the following procedures:
(i) Provide written notice to the pharmacy not less
than ten (10) business days before conducting any on-site,
initial audit;
(ii) Conduct any audit requiring clinical or
professional judgment through or in consultation with a licensed
pharmacist;
(iii) Limit the period covered by the audit to not
more than two (2) years from the date that an audited claim was
adjudicated;
(iv) Allow verifiable statements or records,
including medication administration records of a nursing home,
assisted living facility, hospital, physician or other
authorized practitioner, to validate the pharmacy record;
(v) Allow legal prescriptions, including medication
administration records, faxes, electronic prescriptions or
documented telephone calls from the prescriber or the
prescriber's agent, to validate claims in connection with
prescriptions, refills or changes in prescriptions;
(vi) Apply the same standards and parameters to each
audited pharmacy as are applied to other similarly situated
pharmacies in a pharmacy network contract in this state;
(vii) Not conduct any audit provided for in this
section during the first seven (7) calendar days of any month
without the consent of the audited pharmacy; and
(viii) Establish a written appeals process and
provide a copy to every audited pharmacy.
(b) A pharmacy benefit manager or person acting on behalf
of a pharmacy benefit manager who conducts an audit of a
pharmacy also shall comply with the following requirements:
(i) Any finding of overpayment or underpayment shall
be based on the actual overpayment or underpayment and not on 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;
(ii) Any finding of an overpayment shall not include
the dispensing fee amount unless:
(A) A prescription was not received by the
patient or the patient's designee;
(B) The prescriber denied authorization;
(C) The prescription dispensed was a medication
error by the pharmacy; or
(D) The identified overpayment is based solely
on an extra dispensing fee.
(iii) No audit shall use extrapolation in calculating
the recoupments or penalties for audits, unless required by
state or federal contracts;
(iv) No payment for the performance of an audit shall
be based on a percentage of the amount recovered;
(v) Interest shall not accrue during the audit
period;
(vi) No audit shall consider any clerical or
recordkeeping error, such as a typographical error, scrivener's
error or computer error regarding a required document or record,
as fraud. These errors may be subject to recoupment. No
recovery shall be assessed for errors causing no financial harm
to the patient or plan. Errors that are the result of a pharmacy
failing to comply with a formal corrective action plan may be
subject to recovery. Any recoupment shall be based on the actual
overpayment of a claim;
(vii) A preliminary audit report shall be delivered
to the audited pharmacy within one hundred twenty (120) days
after the conclusion of the audit;
(viii) A pharmacy shall be allowed at least thirty
(30) days following receipt of the preliminary audit report to
provide documentation addressing any audit finding, and a
reasonable extension of time shall be granted upon request;
(ix) A final audit report shall be delivered to the
pharmacy not more than one hundred twenty (120) days after the
preliminary audit report is received by the pharmacy or
submission of final internal appeal, whichever is later;
(x) Recoupment of any disputed funds or repayment of
funds to the pharmacy benefit manager or insurer by the
pharmacy, if permitted pursuant to contracts, shall occur, to
the extent demonstrated or documented in the pharmacy audit
findings, after final internal disposition of the audit
including the appeals process. If the identified discrepancy
for an individual audit exceeds fifteen thousand dollars
($15,000.00), any future payments to the pharmacy may be
withheld pending finalization of the audit;
(xi) No chargebacks, recoupment or other penalties
may be assessed until the appeal process has been exhausted and
the final report issued.
(c) Subsections (a) and (b) of this section shall not
apply to:
(i) Audits in which suspected fraudulent activity or
other intentional or willful misrepresentation is evidenced by a
physical review, review of claims data, statements or other
investigative methods; or
(ii) Audits of claims paid for by federally funded
programs.
(d) This section shall apply to a contracted pharmacy, or
the pharmacy's designee who holds a contract with a pharmacy
benefit manager, entered into, renewed or extended on or after
July 1, 2016, and to all audits of pharmacies on and after July
1, 2017.