Bill Text: HI SB975 | 2022 | Regular Session | Amended

Hawaii Senate Bill 975 (Prior Session Legislation)

Bill Title: Relating To Pharmacy Audits.

Spectrum: Moderate Partisan Bill (Democrat 7-1)

Status: (Engrossed - Dead) 2021-12-10 - Carried over to 2022 Regular Session. [SB975 Detail]

Download: Hawaii-2022-SB975-Amended.html

THE SENATE	S.B. NO.	975
THIRTY-FIRST LEGISLATURE, 2021		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO PHARMACY AUDITS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that there are currently no regulations governing pharmacy audits by pharmacy benefit managers or insurance providers. This lack of regulation allows pharmacy benefit managers to unilaterally and unjustly audit and recoup payments as a revenue source. Citing unfair auditing practices that can result in high penalties and fees, pharmacies have pushed back on these abusive inspections, resulting in several legislative measures often referred to as "The Fair Pharmacy Audit Act" or the "Pharmacy Audit Bill of Rights", versions of which have been enacted in thirty-eight states.

The purpose of this Act is to implement regulations to prevent abusive audits aimed at reducing consumer access to pharmacy benefits and establish procedures for audits of pharmacies conducted by health providers, insurance companies, third-party payors, or any entity that represents such companies or groups.

SECTION 2. Chapter 431R, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§431R- Pharmacy audits; procedures. (a) Notwithstanding any other law to the contrary, when an audit of the records of a pharmacy related to claims submitted under a prescription drug benefit plan is conducted by an agency or any entity that represents such agency, it shall be conducted in accordance with this section.

(b) Any audit that involves clinical or professional judgment shall be conducted by or in consultation with a pharmacist licensed pursuant to chapter 461 or the board of pharmacy.

(c) A finding of an overpayment or underpayment shall be based on the actual overpayment or underpayment and not a projection based on the number of patients served having a similar diagnosis or the number of similar orders or refills for similar drugs; provided that the calculations of overpayments shall not include dispensing fees.

(d) The agency or entity conducting the audit shall not use extrapolation in calculating the recoupments or penalties for audits.

(e) Any clerical or record-keeping error, including but not limited to a typographical error, scrivener's error, or computer error, regarding a required document or record, shall not in and of itself constitute fraud; provided that such errors may be subject to recoupment. No recoupment of the cost of drugs or medicinal supplies properly dispensed shall be allowed if the error has occurred and been resolved in accordance with subsections (h) or (l); provided that recoupment shall be allowed to the extent that the error resulted in an overpayment, underpayment, or improper dispensing of drugs or medicinal supplies. Any recoupments shall be made to the payor.

(f) If a contract between a pharmacy or pharmacist and a pharmacy benefit manager specifies a period of time in which a pharmacy or pharmacist is allowed to withdraw and resubmit a claim and that period of time expires before the pharmacy benefits manager delivers a preliminary report that identifies discrepancies, the pharmacy benefits manager shall allow a pharmacy or pharmacist to withdraw and resubmit a claim within thirty days after:

(1) The preliminary audit findings are delivered if the pharmacy or pharmacist does not request an internal appeal under subsection (l); or

(2) The conclusion of the internal appeals process pursuant to subsection (l) if the pharmacy or pharmacist requests an internal appeal.

(g) The preliminary audit findings shall be delivered to the pharmacy within sixty days after the conclusion of the audit. Final audit findings shall be delivered to the pharmacy within ninety days after receipt of the preliminary audit findings or resolution of a final appeal, as provided in subsection (l), whichever is later.

(h) A pharmacy shall be allowed at least thirty days following receipt of the preliminary audit findings to correct a clerical or record-keeping error or produce documentation to address any discrepancy found during an audit, including to secure and remit an appropriate copy of the record from a hospital, physician, or other authorized practitioner. Any duly issued prescription may be used to validate claims in connection with prescriptions, refills, or changes in prescriptions.

(i) No chargebacks, recoupment, or other penalties shall be assessed until the appeals process as set forth in subsection (l) has been exhausted and the final audit findings are delivered to the pharmacy. Interest shall not accrue during the audit period.

(j) The entity or agency conducting the audit shall not receive payment based on a percentage of any amount recovered as a result of audit findings.

(k) Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the agency or entity.

(l) Each agency or entity conducting an audit under this section shall establish a written appeals process under which a pharmacy shall have at least thirty days from the delivery of the preliminary audit findings to appeal such finding. If, following the appeal, the agency or entity finds that unfavorable audit findings or any portion thereof is unsubstantiated, the agency or entity shall reverse or issue a correction of the findings. If either party is not satisfied following an appeal, the party may seek mediation.

(m) Each agency or entity conducting an audit shall provide a copy of the final audit findings, after completion of any review process, to the respective agency that the entity represents, if requested.

(n) Notwithstanding any law to the contrary, audit information, documentation, and findings shall remain confidential. An entity or agency conducting an audit shall only have access to previous audit findings concerning a specific pharmacy or pharmacist if that entity or agency conducted the previous audit.

(o) This section shall not apply to any investigative audit that involves fraud, wilful misrepresentation, wilful misconduct, abuse or health or safety issues, including without limitation investigative audits or any other statutory provision that authorizes investigations relating to insurance fraud.

(p) The audit criteria set forth in this section shall apply only to audits of claims submitted for payment after July 1, 2021.

(q) For the purposes of this section:

"Agency" means a health care provider, insurance company, third-party payor, sickness insurance provider under part I of article 10A of chapter 431, mutual benefit society under article I of chapter 432, dental service corporation under chapter 423, and health maintenance organization under chapter 432D.

"Entity" means an individual or organization that represents an agency."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2050.

Report Title:

Pharmacies; Pharmacy Benefit Managers; Audit; Procedures

Description:

Establishes procedures for audits of pharmacies conducted by a health care provider, insurance company, third-party payor, sickness insurance provider, mutual benefit society, dental service corporation, health maintenance organization, or any entity that represents such companies or groups. Effective 7/1/2050. (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.