Bill Text: IL SB0757 | 2023-2024 | 103rd General Assembly | Engrossed

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Bill Title: Amends the Pharmacy Benefit Managers Article of the Illinois Insurance Code. Provides that when conducting a pharmacy audit, an auditing entity shall comply with specified requirements. Provides that an auditing entity conducting a pharmacy audit may have access to a pharmacy's previous audit report only if the report was prepared by that auditing entity. Provides that information collected during a pharmacy audit shall be confidential by law, except that the auditing entity conducting the pharmacy audit may share the information with the health benefit plan for which a pharmacy audit is being conducted and with any regulatory agencies and law enforcement agencies as required by law. Provides that a pharmacy may not be subject to a chargeback or recoupment for a clerical or recordkeeping error in a required document or record unless the pharmacy benefit manager can provide proof of intent to commit fraud or such error results in actual financial harm to the pharmacy benefit manager, a health plan managed by the pharmacy benefit manager, or a consumer. Provides that a pharmacy shall have the right to file a written appeal of a preliminary and final pharmacy audit report in accordance with the procedures established by the entity conducting the pharmacy audit. Provides that no interest shall accrue for any party during the audit period. Provides that an auditing entity must provide a copy to the plan sponsor of its claims that were included in the audit, and any recouped money shall be returned to the plan sponsor, unless otherwise contractually agreed upon by the plan sponsor and the pharmacy benefit manager. Defines terms.

Spectrum: Moderate Partisan Bill (Democrat 7-2)

Status: (Engrossed) 2023-05-19 - House Committee Amendment No. 1 Rule 19(c) / Re-referred to Rules Committee [SB0757 Detail]

Download: Illinois-2023-SB0757-Engrossed.html

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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
adding Section 513b7 as follows:
(215 ILCS 5/513b7 new)
Sec. 513b7. Pharmacy audits.
(a) As used in this Section:
"Audit" means any physical on-site, remote electronic, or
concurrent review of a pharmacist service submitted to the
pharmacy benefit manager or pharmacy benefit manager affiliate
by a pharmacist or pharmacy for payment.
"Auditing entity" means a person or company that performs
a pharmacy audit.
"Extrapolation" means the practice of inferring a
frequency of dollar amount of overpayments, underpayments,
nonvalid claims, or other errors on any portion of claims
submitted, based on the frequency of dollar amount of
overpayments, underpayments, nonvalid claims, or other errors
actually measured in a sample of claims.
"Misfill" means a prescription that was not dispensed; a
prescription that was dispensed but was an incorrect dose,
amount, or type of medication; a prescription that was

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dispensed to the wrong person; a prescription in which the
prescriber denied the authorization request; or a prescription
in which an additional dispensing fee was charged.
"Pharmacy audit" means an audit conducted of any records
of a pharmacy for prescriptions dispensed or nonproprietary
drugs or pharmacist services provided by a pharmacy or
pharmacist to a covered person.
"Pharmacy record" means any record stored electronically
or as a hard copy by a pharmacy that relates to the provision
of a prescription or pharmacy services or other component of
pharmacist care that is included in the practice of pharmacy.
(b) Notwithstanding any other law, when conducting a
pharmacy audit, an auditing entity shall:
(1) not conduct an on-site audit of a pharmacy at any
time during the first 3 business days of a month or the
first 2 weeks and final 2 weeks of the calendar year or
during a declared State or federal public health
emergency;
(2) notify the pharmacy or its contracting agent no
later than 14 business days before the date of initial
on-site audit; the notification to the pharmacy or its
contracting agent shall be in writing and delivered
either:
(A) by mail or common carrier, return receipt
requested; or
(B) electronically, not including facsimilie, with

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electronic receipt confirmation and delivered during
normal business hours of operation, addressed to the
supervising pharmacist and pharmacy corporate office,
if applicable, at least 14 business days before the
date of an initial on-site audit;
(3) limit the audit period to 24 months after the date
a claim is submitted to or adjudicated by the pharmacy
benefit manager;
(4) provide in writing the list of specific
prescription numbers to be included in the audit 14
business days before the on-site audit that may or may not
include the final 2 digits of the prescription numbers;
(5) use the written and verifiable records of a
hospital, physician, or other authorized practitioner that
are transmitted by any means of communication to validate
the pharmacy records in accordance with State and federal
law;
(6) limit the number of prescriptions audited to no
more than 100 prescriptions per audit and an entity shall
not audit more than 200 prescriptions in any 12-month
period, except in cases of fraud, waste, or abuse; a
refill shall not constitute a separate prescription and a
pharmacy shall not be audited more than once every 6
months;
(7) provide the pharmacy or its contracting agent with
a copy of the preliminary audit report within 45 days

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after the conclusion of the audit;
(8) be allowed to conduct a follow-up audit on site if
a remote or desk audit reveals the necessity for a review
of additional claims;
(9) accept invoice audits as validation invoices from
any wholesaler registered with the Department of Financial
and Professional Regulation from which the pharmacy has
purchased prescription drugs or, in the case of durable
medical equipment or sickroom supplies, invoices from an
authorized distributor other than a wholesaler;
(10) provide the pharmacy or its contracting agent
with the ability to provide documentation to address a
discrepancy or audit finding if the documentation is
received by the pharmacy benefit manager no later than the
45th day after the preliminary audit report was provided
to the pharmacy or its contracting agent; the pharmacy
benefit manager shall consider a reasonable request from
the pharmacy for an extension of time to submit
documentation to address or correct any findings in the
report;
(11) be required to provide the pharmacy or its
contracting agent with the final audit report no later
than 90 days after the initial audit report was provided
to the pharmacy or its contracting agent;
(12) conduct the audit in consultation with a
pharmacist in specific cases if the audit involves

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clinical or professional judgment;
(13) not chargeback, recoup, or collect penalties from
a pharmacy until the time period to file an appeal of the
final pharmacy audit report has passed or the appeals
process has been exhausted, whichever is later, unless the
identified discrepancy is expected to exceed $25,000, in
which case the auditing entity may withhold future
payments in excess of that amount until the final
resolution of the audit;
(14) not compensate the employee or contractor
conducting the audit based on a percentage of the amount
claimed or recouped pursuant to the audit;
(15) not use extrapolation to calculate penalties or
amounts to be charged back or recouped unless otherwise
required by federal law or regulation; any amount to be
charged back or recouped due to overpayment may not exceed
the amount the pharmacy was overpaid;
(16) not include dispensing fees in the calculation of
overpayments unless a prescription is considered a
misfill, the medication is not delivered to the patient,
the prescription is not valid, or the prescriber denies
authorizing the prescription; and
(17) conduct a pharmacy audit under the same standards
and parameters as conducted for other similarly situated
pharmacies audited by the auditing entity.
(c) Except as otherwise provided by State or federal law,

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an auditing entity conducting a pharmacy audit may have access
to a pharmacy's previous audit report only if the report was
prepared by that auditing entity.
(d) Information collected during a pharmacy audit shall be
confidential by law, except that the auditing entity
conducting the pharmacy audit may share the information with
the health benefit plan for which a pharmacy audit is being
conducted and with any regulatory agencies and law enforcement
agencies as required by law.
(e) A pharmacy may not be subject to a chargeback or
recoupment for a clerical or recordkeeping error in a required
document or record, including a typographical error or
computer error, unless the pharmacy benefit manager can
provide proof of intent to commit fraud or such error results
in actual financial harm to the pharmacy benefit manager, a
health plan managed by the pharmacy benefit manager, or a
consumer.
(f) A pharmacy shall have the right to file a written
appeal of a preliminary and final pharmacy audit report in
accordance with the procedures established by the entity
conducting the pharmacy audit.
(g) No interest shall accrue for any party during the
audit period, beginning with the notice of the pharmacy audit
and ending with the conclusion of the appeals process.
(h) An auditing entity must provide a copy to the plan
sponsor of its claims that were included in the audit, and any

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recouped money shall be returned to the plan sponsor, unless
otherwise contractually agreed upon by the plan sponsor and
the pharmacy benefit manager.
(i) The parameters of an audit must comply with
manufacturer listings or recommendations, unless otherwise
prescribed by the treating provider, and must be covered under
the individual's health plan, for the following:
(1) the day supply for eyedrops must be calculated so
that the consumer pays only one 30-day copayment if the
bottle of eyedrops is intended by the manufacturer to be a
30-day supply;
(2) the day supply for insulin must be calculated so
that the highest dose prescribed is used to determine the
day supply and consumer copayment; and
(3) the day supply for topical product must be
determined by the judgment of the pharmacist or treating
provider upon the treated area.
(j) This Section shall not apply to:
(1) audits in which suspected fraud, waste, or abuse
or other intentional or willful misrepresentation is
evidenced by a physical review, review of claims data or
statements, or other investigative methods;
(2) audits of claims paid for by federally funded
programs; or
(3) concurrent reviews or desk audits that occur
within 3 business days after transmission of a claim and

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in which no chargeback or recoupment is demanded.