Bill Text: IL SB1844 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Illinois Insurance Code. Provides that all entities providing prescription drug coverage shall permit and apply a prorated daily cost-sharing rate to prescriptions that are dispensed by a pharmacy for less than a 30-day supply if the prescriber or pharmacist indicates the fill or refill could be in the best interest of the patient or is for the purpose of synchronizing the patient's chronic medications. Provides that no entity providing prescription drug coverage shall deny coverage for the dispensing of any drug prescribed for the treatment of a chronic illness that is made in accordance with a plan among the insured, the prescriber, and a pharmacist to synchronize the refilling of multiple prescriptions for the insured. Provides that no entity providing prescription drug coverage shall use payment structures incorporating prorated dispensing fees determined by calculation of the days' supply of medication dispensed. Provides that dispensing fees shall be determined exclusively on the total number of prescriptions dispensed. Establishes criteria for an entity conducting audits (either on-site or remotely) of pharmacy records. Provides that the Department of Insurance and Director of Insurance shall have the authority to enforce the provisions of the Act and impose financial penalties. Effective January 1, 2018.

Spectrum: Bipartisan Bill

Status: (Failed) 2019-01-09 - Session Sine Die [SB1844 Detail]

Download: Illinois-2017-SB1844-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 SB1844 Introduced 2/9/2017, by Sen. Kwame Raoul SYNOPSIS AS INTRODUCED:
215 ILCS 5/512-11 new
215 ILCS 5/512-12 new
215 ILCS 5/512-13 new
Amends the Illinois Insurance Code. Provides that all entities providing prescription drug coverage shall permit and apply a prorated daily cost-sharing rate to prescriptions that are dispensed by a pharmacy for less than a 30-day supply if the prescriber or pharmacist indicates the fill or refill could be in the best interest of the patient or is for the purpose of synchronizing the patient's chronic medications. Provides that no entity providing prescription drug coverage shall deny coverage for the dispensing of any drug prescribed for the treatment of a chronic illness that is made in accordance with a plan among the insured, the prescriber, and a pharmacist to synchronize the refilling of multiple prescriptions for the insured. Provides that no entity providing prescription drug coverage shall use payment structures incorporating prorated dispensing fees determined by calculation of the days' supply of medication dispensed. Provides that dispensing fees shall be determined exclusively on the total number of prescriptions dispensed. Establishes criteria for an entity conducting audits (either on-site or remotely) of pharmacy records. Provides that the Department of Insurance and Director of Insurance shall have the authority to enforce the provisions of the Act and impose financial penalties. Effective January 1, 2018.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
SB1844 LRB100 09762 SMS 19931 b
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
Sections 512-11, 512-12, and 512-13 as follows:
(215 ILCS 5/512-11 new)
Sec. 512-11. Medication synchronization. All entities
providing prescription drug coverage shall permit and apply a
prorated daily cost-sharing rate to prescriptions that are
dispensed by a pharmacy for less than a 30-day supply if the
prescriber or pharmacist indicates the fill or refill could be
in the best interest of the patient or is for the purpose of
synchronizing the patient's chronic medications.
No entity providing prescription drug coverage shall deny
coverage for the dispensing of any drug prescribed for the
treatment of a chronic illness that is made in accordance with
a plan among the insured, the prescriber, and a pharmacist to
synchronize the refilling of multiple prescriptions for the
insured.
No entity providing prescription drug coverage shall use
payment structures incorporating prorated dispensing fees
determined by calculation of the days' supply of medication
dispensed. Dispensing fees shall be determined exclusively on

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the total number of prescriptions dispensed.
The provisions of this Section shall not apply to a
supplemental insurance policy, including a life care contract,
accident-only policy, specified-disease policy, hospital
policy providing a fixed daily benefit only, Medicare
supplement policy, long-term care policy, or short-term major
medical policy of 6 months or less in duration or any other
supplemental policy.
(215 ILCS 5/512-12 new)
Sec. 512-12. Audit of pharmacy records.
(a) Notwithstanding any other law, when an entity is
conducting a retrospective audit of the records of a pharmacy
for its reimbursements claims (on-site or remotely) or performs
concurrent daily reviews, the auditing entity must comply with
the following:
(1) The entity conducting the initial on-site audit
shall give the pharmacy and the pharmacy's corporate office
written notice at least 30 days before conducting the
initial on-site audit for each audit cycle and shall
disclose the specific prescriptions to be included in the
audit.
(2) Unless otherwise consented to by the pharmacy, an
audit shall not be initiated or scheduled during the first
7 calendar days of any month or the day before or after a
federal or State holiday due to the high volume of

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prescriptions filled during that time.
(3) When an entity is conducting an on-site audit, it
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. The on-site audit
shall not exceed 4 hours in duration and shall review no
more than 100 unique prescription numbers during an initial
audit.
(4) No entity shall conduct an on-site audit at a
particular pharmacy more than one time annually. However,
this paragraph (4) shall not apply when an entity must
return to a pharmacy to complete an audit already in
progress.
(5) The period covered by an audit shall not exceed 2
years from the date the initial prescription claim was
submitted to or adjudicated by an entity.
(6) Each pharmacy shall be audited under the same
auditing standards and parameters used for conducting
audits of other contracted network pharmacies under each
pharmacy network contract that a pharmacy benefits manager
or health plan utilizes in this State. Any documentation
and records required by an auditor during an audit shall be
of the same type as the documentation and records required
for other contracted network pharmacies under each
pharmacy provider network contract that a pharmacy

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benefits manager or health plan utilizes in this State.
(7) Any audit that involves clinical or professional
judgment shall be conducted by or in consultation with a
pharmacist licensed under the Pharmacy Practice Act.
(8) Each audit shall be conducted by a field agent who
possesses the requisite expertise in pharmacy practice in
this State.
(9) Any unintentional clerical or record-keeping
error, such as a typographical error, scrivener's error, or
computer error, regarding a required document or record
shall not necessarily constitute fraud. These claims may be
subject to recoupment, but shall not subject a pharmacy to
criminal penalties without proof of intent to commit fraud.
In the case of errors which have no financial harm to the
patient or plan, the entity must not assess any
chargebacks.
(10) All audits shall be conducted in accordance with
generally accepted accounting principles, standards, and
procedures; and auditing principles, standards, and
procedures; and using standards and parameters established
by rule that are identical for all audits conducted.
(11) An entity conducting daily concurrent reviews,
either directly or on behalf of a pharmacy benefits
manager, must complete the concurrent reviews and allow
final processing for final claim adjudication within 3
business days or 5 calendar days, whichever is sooner,

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after the initial adjudication effort for the claim.
(12) Prescriptions are considered valid prescriptions
if they are compliant with the Pharmacy Practice Act and
Illinois Controlled Substances Act and have been
positively adjudicated upon claim submission by the
entity. Plan restrictions should be addressed during the
claims adjudication process either through the rejection
of the claim or a rejection of the claim with direction to
obtain a prior authorization and may not be the basis for a
retrospective recoupment of a paid claim.
(13) 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.
(14) With the exception of overpayments, if a pharmacy
benefits manager approves a claim through adjudication,
the pharmacy benefits manager may not retroactively deny or
modify reimbursement based on information accompanying the
original claim or information available to the pharmacy
benefits manager at the time of adjudication, unless the
claim was fraudulent, the pharmacy or pharmacist had been
reimbursed for the claim previously, or the services
reimbursed were not rendered by the pharmacy or pharmacist.
(15) A pharmacy benefits manager may not require more
information to be written on a prescription than is

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required by State or federal law. Nor may a pharmacy
benefits manager require more stringent records to
validate a prescription order than is required by State or
federal law.
(16) Electronic records, including electronic
beneficiary signature logs, electronic tracking of
prescriptions, electronic prescriber prescription
transmissions and imagery of hard copy prescriptions,
electronically scanned store, patient records maintained
at or accessible to the offices of an audited pharmacy's
central operations, and any other reasonably clear and
accurate electronic documentation shall be acceptable for
auditing under the same terms and conditions and for the
same purposes as their paper analogs.
If paper logs are used, auditors must look at least 14
days past the dispense date to check for patient pickup.
Point of sale electronic register data shall qualify as
proof of delivery to the patient.
(17) 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 or refills of a
legend drug or other controlled substance.
(18) Validation of appropriate day's supply and drug
dosing must be based on manufacturer guidelines and

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definitions or, in the case of topical products or titrated
products, the professional judgment of the pharmacist
based upon communication with the patient or prescriber.
(19) A pharmacy's usual and customary price for
compounded medications is considered the reimbursable cost
unless an alternate price is published in the provider
contract and signed by both parties.
(20) A pharmacy benefits manager may not require a
pharmacy to agree to recoupments deducted against future
remittances and shall invoice the pharmacy for payment if
the pharmacy elects. Recoupment may be deducted against
future remittances without mutual consent when the
pharmacy is considered delinquent in payment of the invoice
per the contractual arrangement.
(21) Interest shall not accrue during the audit period.
(22) Notwithstanding any other provision in this
subsection (a), the entity conducting the audit shall be
prohibited from using the accounting practice of
extrapolation in calculating recoupments or penalties for
audits. A finding of overpayment or underpayment must 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.
(23) A finding of an overpayment shall not include the
dispensing fee amount.

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(24) The preliminary audit report shall be delivered by
the entity to the pharmacy and pharmacy corporate office
within 30 days, with reasonable extensions allowed, after
conclusion of the audit and shall contain individual claim
level information for any discrepancy found and total
dollar amount of claims subject to recovery, organized by
plan sponsor, identified by organization name, for which
each claim is associated.
(25) A pharmacy shall be allowed at least 30 days
following receipt of the preliminary audit report in which
to produce documentation to address any discrepancy found
during an audit or to file an appeal.
(26) A final audit report containing claim level
information for any discrepancy found and total dollar
amount of claims subject to recovery shall be delivered to
the pharmacy and pharmacy corporate office within 45 days
after the audited pharmacy's receipt of the preliminary
audit report if the audited pharmacy does not file an
appeal or offers no documentation to address a discrepancy
found during an audit, or within 60 days after the auditing
entity receives the audited pharmacy's appeal or
documentation to address a discrepancy. The final audit
results shall be reflected in the remittance advice at the
claim level.
(27) The entity shall establish an appeals process that
meets the following requirements:

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(A) The National Council for Prescription Drug
Programs or any other recognized national industry
standard shall be used to evaluate claims submission
and product size disputes.
(B) Each entity conducting an audit shall
establish a written appeals process under which a
pharmacy may appeal an unfavorable preliminary audit
report to the entity.
(C) If, following the appeal, the entity finds that
an unfavorable audit report or any portion thereof is
unsubstantiated, the entity shall dismiss the audit
report or said portion without the necessity of any
further action.
(28) A pharmacy benefits manager may not recover
payment of claims from the pharmacy which is identified
through the audit process to be the responsibility of
another payer. The pharmacy benefits manager must
reconcile directly with the other payer for any moneys owed
without requiring the pharmacy to reverse and rebill the
original claim in the retail setting.
(29) Each entity conducting an audit shall provide a
copy of the final audit report, after completion of any
review process, to the plan sponsor and to the contracted
network pharmacy within 3 business days after its
completion by the entity.
(30) The full amount of any recoupment on an audit

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shall be refunded to the plan sponsor. Written
documentation of the refund with the refund date and plan
sponsor's name and address shall be provided to the
contracted network pharmacy subjected to the audit
recoupment.
(31) Neither the agency conducting the audit nor its
agents shall receive payment based on a percentage of the
amount recovered. This Section does not prevent the entity
conducting the audit from charging or assessing the
responsible party, directly or indirectly, based on
amounts recouped if both of the following conditions are
met:
(A) the plan sponsor and the entity conducting the
audit have a contract that explicitly states the
percentage charge or assessment to the plan sponsor;
and
(B) a commission to an agent or employee of the
entity conducting the audit is not based, directly or
indirectly, on amounts recouped.
(32) The entity conducting the audit shall not base
compensation of any employees of the entity involved with
the audit process on a percentage of the amount recovered
or audit findings.
(b) Except as otherwise provided in subsection (a), all
recoupments from final audits of pharmacies are to be
considered property of the plan sponsor. The entity shall be

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required to refund recoupments to each plan sponsor associated
with the audited claims.
(c) Recoupments of any disputed funds shall occur after
final internal disposition of the audit, including the appeals
process as set forth in subsection (d).
(d) Notwithstanding any other law, each entity conducting
an audit shall establish an appeals process under which a
pharmacy may appeal a preliminary audit report to the entity.
(e) This Section does not apply to any audit, review, or
investigation that involves allegations of fraud, willful
misrepresentation, or abuse.
(215 ILCS 5/512-13 new)
Sec. 512-13. Enforcement.
(a) Enforcement of this Article shall be the responsibility
of the Department and the Director.
(b) The Director shall have the authority to adopt any
rules necessary for the implementation and administration of
this Article.
(c) The Director shall take action or impose penalties to
bring non-complying entities into full compliance with this
Article. Any violation of this Article may subject a
non-complying entity to financial penalties not less than
$1,000 per violation.
Section 99. Effective date. This Act takes effect January
1, 2018.