Bill Text: PA SB882 | 2011-2012 | Regular Session | Introduced

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Bill Title: Providing for pharmacy audit procedures.

Spectrum: Slight Partisan Bill (Democrat 8-5)

Status: (Introduced - Dead) 2011-03-28 - Referred to BANKING AND INSURANCE [SB882 Detail]

Download: Pennsylvania-2011-SB882-Introduced.html

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PRINTER'S NO. 937
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 882 Session of2011
INTRODUCED BY STACK, KITCHEN, FONTANA, ALLOWAY, BOSCOLA, LEACH, FERLO, RAFFERTY, WOZNIAK, EICHELBERGER, ARGALL AND ERICKSON, MARCH 28, 2011
REFERRED TO BANKING AND INSURANCE, MARCH 28, 2011
AN ACT
Providing for pharmacy audit procedures.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Pharmacy
Audit Integrity Act.
Section 2. Purpose and intent.
The purpose of this act is to establish minimum and uniform
standards and criteria for the audit of pharmacy records.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Pharmacy benefits manager" or "PBM." 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 or health program administered by a
department of the Commonwealth.
Section 4. Scope of act.
This act covers an audit of the records of a pharmacy
conducted by a managed care company, nonprofit hospital or
medical service organization, insurance company, third-party
payor, pharmacy benefits manager, a health program administered
by a department of the Commonwealth or any entity that
represents a company, group or department.
Section 5. Procedures for conducting and reporting an audit.
(a) Procedure.--An entity conducting an audit under this act
shall conform to the following rules:
(1) The pharmacy contract shall identify and describe in
detail the audit procedures.
(2) The entity conducting an audit shall give the
pharmacy written notice at least two weeks prior to
conducting an initial onsite audit for each audit cycle or
requesting records for an audit conducted offsite.
(3) The entity conducting the onsite audit shall not
interfere with the delivery of pharmacist services to a
patient and shall utilize every effort to minimize
inconvenience and disruption to pharmacy operations during
the audit process.
(4) An audit that involves clinical or professional
judgment must be conducted by or in consultation with a
licensed pharmacist applying all applicable Pennsylvania law
and regulations.
(5) A clerical or recordkeeping error, such as a
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typographical error, scrivener's error or computer error
regarding a required document or record does not constitute
fraud and claims relating to the error shall be subject to
neither recoupment nor criminal penalties without proof of
intent to commit fraud. However, recoupment of any payment or
overpayment made due to error, strictly limited to the amount
of the payment or overpayment plus interest, is permissible
in situations in which the pharmacy knew that services were
not covered or were provided to an ineligible recipient and
in which restitution of the amounts paid constitutes a proper
remedy pursuant to 13 Pa.C.S. Div. 2 (relating to sales).
(6) A pharmacy may use the records of a hospital,
physician or other authorized practitioner of the healing
arts for drugs or medicinal supplies written or transmitted
by any means of communication for purposes of validating the
pharmacy record with respect to orders of refills of a legend
or narcotic drug.
(7) A finding of an overpayment or underpayment must be
based on the actual overpayment or underpayment and may not
be 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. This paragraph or any other
section of this act does not prevent any entity from using
its collected data to target audit resources or to detect
fraud.
(8) A finding of an overpayment shall not include the
dispensing fee amount. However, the dispensing fee does not
have to be paid in the event that a filled prescription was
not finally dispensed to or picked up for the intended
patient.
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(9) Each pharmacy shall be audited under the same
standards and parameters as other similarly situated
pharmacies audited by the entity.
(10) The period of time covered by an audit may not go
back in time more than 18 months from the scheduled date of
the audit.
(11) An onsite audit may not be initiated or scheduled
during the first seven calendar days of any month due to the
high volume of prescriptions filled in the pharmacy during
that time unless otherwise consented to by the pharmacy.
(12) The auditing company shall not receive payment
based on a percentage of the amount recovered.
(b) Written report.--An entity conducting an audit under
this act shall provide the pharmacy with a written report of the
audit and comply with the following requirements:
(1) The preliminary audit report must be delivered to
the pharmacy or its corporate parent within 90 days after the
conclusion of the audit.
(2) A pharmacy shall be allowed at least 60 days
following receipt of the preliminary audit report in which to
produce documentation to address any discrepancy found during
the audit.
(3) A final audit report shall be delivered to the
pharmacy or its corporate parent within 120 days after
receipt of the preliminary audit report or final appeal, as
provided for in section 6, whichever is later.
(4) The audit report must be signed and include the
signature of any pharmacist participating in the audit.
(5) Any recoupments of disputed funds shall only occur
after final internal disposition of the audit, including the
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appeal process as set forth in section 6.
(6) Interest shall not accrue during the audit period.
(7) An entity conducting an audit shall provide a copy
of the final audit report, after completion of any review
process, to the plan sponsor.
Section 6. Appeal process.
The following shall apply:
(1) The National Council for Prescription Drug Programs
(NCPDP) or any other recognized national industry standard
shall be used to evaluate claims submission and product size
disputes.
(2) An entity conducting an audit shall establish a
written appeal process under which a pharmacy may appeal an
unfavorable preliminary audit report to the entity.
(3) If, following the appeal, the entity finds that an
unfavorable audit report or any portion of the report is
unsubstantiated, the entity shall dismiss the audit report or
the portion without the necessity of any further action.
Section 7. Extrapolation audits.
Notwithstanding any other provision in this act, an entity
conducting an audit under this act shall not use the accounting
practice of extrapolation in calculating recoupments or
penalties for audits. An extrapolation audit means an audit of a
sample of prescription drug benefit claims submitted by a
pharmacy to the entity conducting the audit that is then used to
estimate audit results for a larger batch or group of claims not
reviewed by the auditor.
Section 8. Third-party resources.
(a) Third-party resources.--An entity covered by this act
shall take all reasonable measures to ascertain the legal
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liability of any third parties, including health insurers, self-
insured plans, group health plans as defined by section 607(1)
of the Employee Retirement Income Security Act of 1974 (Public
Law 93-406, 88 Stat. 829), service benefit plans, managed care
organizations, pharmacy benefit managers, the Medicare program,
other prescription drug plans or other parties that are by
statute, contract or agreement legally responsible for payment
for prescription drugs before claims become the liability of any
prescription drug plan administered by the pharmacy benefit
manager.
(b) Identification cards and claims processing systems.--
Information regarding third-party resources identified pursuant
to subsection (a) shall be included on identification cards
issued by a PBM or prescription drug plan to persons eligible
for prescription drug benefits and shall be included in all
mechanized claims processing systems established by a PBM or
prescription drug plan, including systems required under section
1903(r) of the Social Security Act (49 Stat. 620, 42 U.S.C. §
301 et seq.). Where information regarding third-party resources
is made available to pharmacies on identification cards or
through mechanized claims processing systems, a PBM may direct a
pharmacy to submit claims for payment to the third parties prior
to submission to the PBM or prescription drug plan, provided
that this requirement shall not apply when a pharmacy has a
reasonable basis to believe that a claim is not covered by
available third-party resources based upon a diagnosis code or
other information available to the pharmacy.
(c) Claims against pharmacies.--Provided that a pharmacy
makes reasonable inquiries of recipients regarding the
availability of third-party resources, unless a pharmacy has
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actual knowledge regarding the availability of third-party
resources available to a claimant for pharmacy benefits, a
pharmacy is entitled to rely on information regarding the
availability of third-party resources provided by a PBM, and
shall not be liable to repay in whole or in part for any amounts
for which any third party is liable. PBMs and prescription drug
plans are hereby authorized to and shall pursue claims from the
third-party resources. Upon the effective date of this act, this
subsection shall apply to all pending and future claims against
pharmacies asserted by PBMs or prescription drug plans,
including claims relating to benefits provided to recipients
prior to the effective date of this act.
(d) Applicability.--This section shall apply to agencies of
the Commonwealth managing health care programs and their agents.
This section shall also apply to other entities described in
section 4 only to the extent that they engage in coordination of
benefits between multiple plans. Subsection (c) shall apply to
all section 4 entities covered by this act.
Section 9. Fraud.
(a) Exceptions.--Fraud shall not include the following:
(1) Payments for prescriptions where the proper
pharmaceutical was delivered to the intended patient, who is
eligible for benefits, in the prescribed amounts.
(2) Errors outlined in section 5(a)(5).
(b) Investigations.--Nothing in this act shall prevent
investigations by the law enforcement agencies of the
Commonwealth or the United States or use by entities under
section 4 of collected data or other information to detect
actual fraud by pharmacies or pharmacy personnel intended to
defraud prescription drug plans.
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(c) Restrictions on audits.--The restrictions on audits in
section 5(a)(10) do not apply once a pattern of systematic fraud
has been established in order to allow for recovery of
fraudulently obtained overpayments.
Section 10. Administration of this act by Commonwealth
agencies.
Provisions of this act shall not apply to the extent
determined by applicable Federal agencies to be contrary to
Federal law or regulations or to disqualify the Commonwealth in
whole or in part for Federal financial participation in
Commonwealth health programs or other Federal benefits,
subsidies or payments. However, the Commonwealth shall appeal
any such determinations made by Federal agencies and attempt to
obtain waivers or other agreements of understanding with Federal
agencies in order to fully implement this act. To avoid the risk
that the Commonwealth may be required to repay Federal financial
participation or other benefits, subsidies or payments, the
Commonwealth may request determinations from applicable Federal
agencies regarding whether any provisions of this act violate
Federal laws or regulations or disqualify the Commonwealth in
whole or in part for Federal financial participation in
Commonwealth health programs or other Federal benefits,
subsidies or payments.
Section 11. Pharmacy Error Reduction Committee.
(a) Establishment.--The Pharmacy Error Reduction Committee
is established to create a real-time, electronic pharmacy error
reduction system for Commonwealth prescription drug programs and
shall have as its purpose the reduction of prescription errors
in order to save the Commonwealth money and reduce
administrative burdens on businesses. The system shall check
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multiple databases to ensure that the pharmacy filings contain
the correct information. The system shall check each pharmacy
claim for the following information: physician name, physician
license number, name of prescription, prescription dosage,
patient name, name of patient's insurance provider, patient's
insurance identification number, as well as other information
that will reduce errors and has been approved by a majority vote
of the committee. If a pharmacy claim does not contain the
correct information, the pharmacy error reduction system shall
return the claim to the pharmacist for correction and
resubmission.
(b) Membership.--The committee shall consist of:
(1) Two members of the State Board of Pharmacy elected
by a majority of the board to serve on the committee.
(2) Two practicing pharmacists selected by the Governor
from a list submitted by a State trade association that
represents practicing pharmacists before the Department of
Public Welfare, the Department of Aging, the General Assembly
and other governmental bodies.
(3) Two practicing physicians selected by the Governor
from a list submitted by a State trade association that
represents all practicing physicians before the Department of
Public Welfare, the Department of Aging, the General Assembly
and other governmental bodies.
(4) The Secretary of Public Welfare or a designee, who
shall serve as the chairperson of the committee.
(5) The commissioner of the Department of State's Bureau
of Professional and Occupational Affairs or a designee.
(6) The Secretary of Aging or a designee.
(c) Powers and duties.--The committee shall:
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(1) Hold meetings to discuss and develop an electronic
pharmacy error reduction system.
(2) Consider issuing a request for proposals to develop
software, programs and other items to create and implement
the electronic pharmacy error reduction system or utilize
existing departmental staff, equipment and technology to
produce and implement the pharmacy error reduction system.
(3) Provide the electronic pharmacy error reduction
system to pharmacies throughout this Commonwealth.
(4) Obtain and share information to develop and
implement the electronic pharmacy error reduction system.
(d) Time period for completion of duties.--The committee
shall complete its work within one year of the effective date of
this section.
Section 12. Effective date.
This act shall take effect in 60 days.
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