Bill Text: IL HB2017 | 2011-2012 | 97th General Assembly | Amended

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Bill Title: Amends the Illinois Insurance Code. Makes changes in the provision concerning definitions. Provides that when an on-site audit or a desk audit of the records of a pharmacy is conducted by any entity, the audit shall be conducted in accordance with certain criteria. Provides that the auditing entity, administrator, or its representative must provide the pharmacy with a written report of the audit and comply with certain requirements. Sets forth provisions concerning appeals processes, accounting practices, and applicability.

Sponsorship: Partisan Bill (Republican 3)

Status: (Failed) 2013-01-08 - Session Sine Die [HB2017 Detail]

Download: Illinois-2011-HB2017-Amended.html

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Rep. Franco Coladipietro

Filed: 4/13/2011

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AMENDMENT TO HOUSE BILL 2017
AMENDMENT NO. ______. Amend House Bill 2017 by replacing
everything after the enacting clause with the following:
"Section 5. The Illinois Insurance Code is amended by
changing Sections 512-3 and 512-7 as follows:
(215 ILCS 5/512-3) (from Ch. 73, par. 1065.59-3)
Sec. 512-3. Definitions. For the purposes of this Article,
unless the context otherwise requires, the terms defined in
this Article have the meanings ascribed to them herein:
(a) "Third party prescription program" or "program" means
any system of providing for the reimbursement of pharmaceutical
services and prescription drug products offered or operated in
this State under a contractual arrangement or agreement between
a provider of such services and another party who is not the
consumer of those services and products. Such programs may
include, but need not be limited to, employee benefit plans

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whereby a consumer receives prescription drugs or other
pharmaceutical services and those services are paid for by an
agent of the employer or others.
(b) "Third party program administrator" or "administrator"
or "entity" means any pharmacy benefits manager or person,
business, or other entity that performs pharmacy benefits
management. The terms include a person or auditing entity
acting for a pharmacy benefits manager in a contractual or
employment relationship in the performance of pharmacy
benefits management for a managed care company or nonprofit
hospital or the services of a pharmacy benefits administrator,
medical service organization, insurance company, third-party
payor, person, partnership or corporation who issues or causes
to be issued any payment or reimbursement to a provider for
services rendered pursuant to a third party prescription
program, but does not include the Director of Healthcare and
Family Services or any agent authorized by the Director to
reimburse a provider of services rendered pursuant to a program
of which the Department of Healthcare and Family Services is
the third party.
(c) "Fraud" means an intentional act of deception or
misrepresentation to obtain an authorized benefit.
(Source: P.A. 95-331, eff. 8-21-07.)
(215 ILCS 5/512-7) (from Ch. 73, par. 1065.59-7)
Sec. 512-7. Contractual provisions.

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(a) Any agreement or contract entered into in this State
between the administrator of a program and a pharmacy shall
include a statement of the method and amount of reimbursement
to the pharmacy for services rendered to persons enrolled in
the program, the frequency of payment by the program
administrator to the pharmacy for those services, and a method
for the adjudication of complaints and the settlement of
disputes between the contracting parties.
(b)(1) A program shall provide an annual period of at least
30 days during which any pharmacy licensed under the
Pharmacy Practice Act may elect to participate in the
program under the program terms for at least one year.
(2) If compliance with the requirements of this
subsection (b) would impair any provision of a contract
between a program and any other person, and if the contract
provision was in existence before January 1, 1990, then
immediately after the expiration of those contract
provisions the program shall comply with the requirements
of this subsection (b).
(3) This subsection (b) does not apply if:
(A) the program administrator is a licensed health
maintenance organization that owns or controls a
pharmacy and that enters into an agreement or contract
with that pharmacy in accordance with subsection (a);
or
(B) the program administrator is a licensed health

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maintenance organization that is owned or controlled
by another entity that also owns or controls a
pharmacy, and the administrator enters into an
agreement or contract with that pharmacy in accordance
with subsection (a).
(4) This subsection (b) shall be inoperative after
October 31, 1992.
(c) The program administrator shall cause to be issued an
identification card to each person enrolled in the program. The
identification card shall include:
(1) the name of the individual enrolled in the program;
and
(2) an expiration date if required under the
contractual arrangement or agreement between a provider of
pharmaceutical services and prescription drug products and
the third party prescription program administrator.
(d) Notwithstanding any other law, either State or federal,
when an on-site audit of the records of a pharmacy is conducted
by any entity, the audit shall be conducted in accordance with
the following criteria:
(1) the entity conducting the on-site audit must give
the pharmacy written notice prior to conducting the initial
on-site audit and must specify the records and documents to
be examined;
(2) any audit that involves clinical or professional
judgment must be conducted by or in consultation with a

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pharmacist that that is duly licensed;
(3) any clerical or record-keeping error, such as a
typographical error, scrivener's error, or computer error,
regarding a required document or record does not constitute
fraud; however, such claims may be subject to recoupment;
(4) 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 unless mutually agreed
to in writing by both parties;
(5) each pharmacy shall be audited under the same
standards and parameters as other similarly situated
pharmacies audited by the entity; and
(6) the period covered by an audit may not exceed 2
years from the date the claim was submitted to or
adjudicated by an entity.
(e) The auditing entity, administrator, or its
representative described in subsection (d) of this Section must
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 within 90 days after conclusion of the audit
along with a written copy of the appeals process to the
pharmacy that is being audited;
(2) a pharmacy shall be allowed at least 30 business

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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 within 180 days after receipt of the preliminary
audit report or final appeal, as provided for in Section 6
of this Code, whichever is later;
(4) an acknowledgement of the audit, as conducted, must
be signed and shall include the signature of any pharmacist
participating in the audit;
(5) recoupments of any disputed funds, or repayment of
funds to the entity by the pharmacy if permitted pursuant
to contractual agreement, shall occur, to the extent
demonstrated and/or documented pursuant to the pharmacy
audit findings, after final internal disposition of the
audit; should the identified discrepancy for an individual
audit exceed $25,000, then future payments to the pharmacy
may be withheld pending finalization of the audit;
(6) interest shall not accrue during the audit period;
and
(7) each entity conducting an audit shall provide a
copy of the final audit report, after completion of any
review process, to the audited pharmacy.
(f) Notwithstanding any other provision in this Code, the
administrator conducting the audit pursuant to subsections (d)
and (e) of this Section shall not use the accounting practice

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of extrapolation in calculating recoupments or penalties for
audits.
As used in this Section, "accounting practice of
extrapolation" means an audit of a sample of prescription drug
benefit claims submitted by a pharmacy to the administrator
conducting the audit that is then used to estimate audit
results for a larger batch or group of claims not reviewed by
the auditor.
(g) The audit criteria set forth in this Section shall
apply only to audits of claims for services provided and claims
submitted for payment after the effective date of this
amendatory Act of the 97th General Assembly.
(h) This Section shall not apply to any investigative audit
that involves potential fraud, willful misrepresentation, or
abuse, including, without limitation, investigative audits or
any other statutory provision that authorizes investigations
relating to insurance fraud.
(Source: P.A. 95-689, eff. 10-29-07.)".