Bill Text: MI SB0287 | 2017-2018 | 99th Legislature | Introduced


Bill Title: Insurance; health benefits; pharmacy benefit managers; regulate. Creates new act.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2017-03-30 - Referred To Committee On Insurance [SB0287 Detail]

Download: Michigan-2017-SB0287-Introduced.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 287

 

 

March 30, 2017, Introduced by Senators SCHUITMAKER, KNEZEK and GREEN and referred to the Committee on Insurance.

 

 

      A bill to provide for the regulation of the management of

 

pharmacy benefits; to require the licensing of pharmacy benefit

 

managers; to provide for the regulation of certain other entities

 

under certain circumstances; to provide for the powers and duties

 

of certain state governmental officers and entities; to prescribe

 

penalties and provide remedies; and to allow for the promulgation

 

of rules.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

 1        Sec. 101. This act shall be known and may be cited as the

 

 2  "pharmacy benefit management act".

 

 3        Sec. 103. For purposes of this act, the words and phrases

 

 4  defined in sections 105 to 111 have the meanings ascribed to them

 

 5  in those sections.

 

 6        Sec. 105. (1) "Board of pharmacy" means the Michigan board of

 


 1  pharmacy created in part 177 of the public health code, 1978 PA

 

 2  368, MCL 333.17701 to 333.17780.

 

 3        (2) "Claim" means an attempt to cause a health benefit payer

 

 4  or a pharmacy benefit manager to make a payment to cover a service

 

 5  that is provided by a pharmacy benefit.

 

 6        (3) "Department" means the department of insurance and

 

 7  financial services.

 

 8        (4) "Director" means the director of the department or his or

 

 9  her designee.

 

10        Sec. 107. (1) "Federal act" means the federal food, drug, and

 

11  cosmetic act, 21 USC 301 to 399f.

 

12        (2) "Food and Drug Administration" means the United States

 

13  Food and Drug Administration.

 

14        (3) "Health benefit payer" means a public or private entity

 

15  that offers, provides, administers, or manages a health care

 

16  benefit plan, including, but not limited to, all of the following:

 

17        (a) An insurer or health maintenance organization regulated

 

18  under the insurance code of 1956, 1956 PA 218, MCL 500.100 to

 

19  500.8302, or a dental care corporation regulated under 1963 PA 125,

 

20  MCL 550.351 to 550.373.

 

21        (b) A nonprofit health care corporation.

 

22        (c) A preferred provider organization.

 

23        (d) The medical services administration in the department of

 

24  health and human services.

 

25        (e) A person acting in a contractual relationship with an

 

26  entity described in subdivisions (a) to (d) to perform any activity

 

27  on behalf of the entity described in subdivisions (a) to (d).


 1        Sec. 109. (1) "Maximum allowable cost price" means a maximum

 

 2  reimbursement amount for a multiple source drug.

 

 3        (2) "Multiple source drug" means a drug for which there are 2

 

 4  or more prescription drugs, each of which meets both of the

 

 5  following requirements, as determined by the director:

 

 6        (a) Is considered to be pharmaceutically equivalent or

 

 7  otherwise interchangeable by the Food and Drug Administration.

 

 8        (b) Is generally and readily available for purchase by

 

 9  pharmacies in this state from national or regional wholesalers and

 

10  is not obsolete.

 

11        (3) "Obsolete" means that the prescription drug may be listed

 

12  in the national pricing compendia but is no longer actively

 

13  marketed by the manufacturer or labeler.

 

14        Sec. 111. (1) "Person" means an individual, sole

 

15  proprietorship, partnership, corporation, association, or any other

 

16  legal entity.

 

17        (2) "Pharmacy" means that term as defined in section 17707 of

 

18  the public health code, 1978 PA 368, MCL 333.17707.

 

19        (3) "Pharmacy benefit" means a health care benefit plan that

 

20  is offered by a health benefit payer and provides coverage for a

 

21  pharmacy service to a covered individual. Coverage under a pharmacy

 

22  benefit includes, but is not limited to, coverage for a

 

23  prescription drug that is dispensed to a covered individual.

 

24        (4) "Pharmacy benefit manager" means a person that manages a

 

25  pharmacy benefit on behalf of a health benefit payer. A person that

 

26  engages in, or subcontracts for, 3 or more of the following

 

27  activities is considered a pharmacy benefit manager that is subject


 1  to this act:

 

 2        (a) Claims processing.

 

 3        (b) Pharmacy network management.

 

 4        (c) Pharmacy discount card management.

 

 5        (d) Payment of claims to pharmacies for prescription drugs

 

 6  dispensed to individuals covered by a pharmacy benefit.

 

 7        (e) Clinical formulary development and management services,

 

 8  including, but not limited to, utilization management and quality

 

 9  assurance programs.

 

10        (f) Rebate contracting and administration.

 

11        (g) Conducting audits of network pharmacies.

 

12        (h) Setting pharmacy reimbursement pricing and methodologies,

 

13  including maximum allowable cost price and other prescription drug

 

14  pricing standards, and determining single source drugs or multiple

 

15  source drugs.

 

16        (i) Retention of any spread or differential between what is

 

17  received under a pharmacy benefit as reimbursement for a

 

18  prescription drug and what is paid to pharmacies by the pharmacy

 

19  benefit manager for the prescription drug.

 

20        (5) "Prescription drug" means that term as defined in section

 

21  17708 of the public health code, 1978 PA 368, MCL 333.17708.

 

22        (6) "Prescription drug pricing standard" means a standard for

 

23  reimbursing a prescription drug that is based on the cost of the

 

24  prescription drug or an industry-recognized benchmark for the

 

25  pricing of the prescription drug. Prescription drug pricing

 

26  standard includes, but is not limited to, the average wholesale

 

27  price, the wholesale acquisition cost, the maximum allowable cost,


 1  the national average drug acquisition cost, and the average

 

 2  manufacturer price.

 

 3        (7) "Temporarily unavailable" means that the prescription drug

 

 4  is experiencing short-term supply interruptions and only

 

 5  inconsistent or intermittent supply is available in the current

 

 6  marketplace.

 

 7        Sec. 113. (1) A pharmacy benefit manager that provides

 

 8  services to residents of this state shall apply for, obtain, and

 

 9  maintain a certificate of authority to operate as a pharmacy

 

10  benefit manager from the department. A certificate of authority

 

11  under this act is renewable annually.

 

12        (2) The director shall collect, and the persons affected shall

 

13  pay to the director, the following fees that, on appropriation, the

 

14  department shall use to cover the costs incurred by the department

 

15  in administering this act:

 

 

16

     (a) Filing fee to accompany application

17

for pharmacy benefit manager's certificate

18

of authority........................................  $ 200.00.

19

     (b) Certificate of authority for a

20

pharmacy benefit manager............................  $  25.00.

 

 

21        (3) Subject to this section, an applicant for a certificate of

 

22  authority to operate in this state as a pharmacy benefit manager

 

23  shall submit to the department an application in a form and manner

 

24  prescribed by the director. An officer or authorized representative

 

25  of the pharmacy benefit manager shall verify the application form.

 

26        (4) An applicant shall include with an application form all of

 


 1  the following:

 

 2        (a) All organizational documents, including, but not limited

 

 3  to, articles of incorporation, bylaws, and other similar documents,

 

 4  and any amendments to the organizational documents.

 

 5        (b) The names, addresses, titles, and qualifications of the

 

 6  members and officers of the board of directors, board of trustees,

 

 7  or other governing body or committee of the applicant, or the

 

 8  partners, members, or owners if the applicant is a partnership or

 

 9  other entity or association.

 

10        (c) A detailed description of the claims processing services,

 

11  pharmacy services, insurance services, other prescription drug or

 

12  device services, or other administrative services provided by the

 

13  applicant.

 

14        (d) The name and address of the agent for service of process

 

15  in this state.

 

16        (e) Financial statements for the current year and the

 

17  preceding year that show the assets, liabilities, direct or

 

18  indirect income, and any other sources of financial support

 

19  considered sufficient by the director that demonstrate financial

 

20  stability and viability of the pharmacy benefit manager to meet its

 

21  full obligations to covered individuals and network pharmacies. The

 

22  director may allow a recent financial statement prepared by an

 

23  independent certified public accountant to meet the requirement of

 

24  this subdivision.

 

25        (f) Any other information the director requires. However, the

 

26  director shall not demand trade secret information from an

 

27  applicant.


 1        (5) The director may revoke, suspend, deny, or restrict a

 

 2  certificate of authority of a pharmacy benefit manager for a

 

 3  violation of this act or on other grounds or violations of state or

 

 4  federal laws as determined necessary or appropriate by the

 

 5  director. A pharmacy benefit manager has the same rights to notice,

 

 6  hearings, and other provisions that are provided to insurers under

 

 7  the insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302.

 

 8  If a certificate of authority is revoked, suspended, or denied, the

 

 9  director may permit the operation of the pharmacy benefit manager

 

10  for a limited time not to exceed 60 days under conditions and

 

11  restrictions as determined necessary by the director for the

 

12  beneficial interests of the covered individuals and network

 

13  pharmacies.

 

14        (6) The director may renew a certificate of authority of a

 

15  pharmacy benefit manager, subject to any restrictions considered

 

16  necessary or appropriate by the director.

 

17        Sec. 115. (1) Both of the following apply to a contract

 

18  between a pharmacy benefit manager and a pharmacy or between a

 

19  pharmacy benefit manager and a pharmacy's contracting

 

20  representative or agent, including, but not limited to, a pharmacy

 

21  services administrative organization:

 

22        (a) If a pharmacy benefit manager uses a prescription drug

 

23  pricing standard to reimburse a pharmacy or a health facility, both

 

24  of the following apply:

 

25        (i) The contract entered into by the pharmacy benefit manager

 

26  must include a current list of the sources used to determine the

 

27  prescription drug pricing standard. The pharmacy benefit manager


 1  shall update the prescription drug pricing standard not less often

 

 2  than every 7 days and provide a means by which the pharmacy may

 

 3  promptly review the updates in a format that is readily available

 

 4  and accessible.

 

 5        (ii) The pharmacy benefit manager shall use the same

 

 6  prescription drug pricing standard or set of prescription drug

 

 7  pricing standards for all covered individuals and pharmacies

 

 8  participating in the same pharmacy benefit. This subparagraph does

 

 9  not prohibit a pharmacy benefit manager from managing multiple

 

10  pharmacy benefits for 1 or more health benefit payers.

 

11        (b) The pharmacy benefit manager shall include in the contract

 

12  a process to appeal, investigate, and resolve disputes regarding a

 

13  prescription drug pricing standard, which process must include all

 

14  of the following:

 

15        (i) A 21-day limit on the right to appeal following the

 

16  initial claim.

 

17        (ii) A requirement that the appeal be investigated and

 

18  resolved within 10 business days after the appeal.

 

19        (iii) A telephone number at which the pharmacy may contact the

 

20  pharmacy benefit manager to speak to an individual responsible for

 

21  processing appeals.

 

22        (iv) A requirement that the pharmacy benefit manager provide a

 

23  reason for any appeal denial and the identification of the national

 

24  drug code of a prescription drug that may be purchased by the

 

25  pharmacy at a price at or below the prescription drug pricing

 

26  standard used by the pharmacy benefit manager.

 

27        (v) A requirement that the pharmacy benefit manager do all of


 1  the following if the appeal is successful:

 

 2        (A) Adjust the prescription drug pricing standard that is the

 

 3  subject of the appeal. The adjustment under this sub-subparagraph

 

 4  shall take effect on the day after the date the appeal is resolved.

 

 5        (B) Apply the prescription drug pricing standard that is

 

 6  adjusted under sub-subparagraph (A) to all pharmacies and covered

 

 7  individuals participating in the pharmacy benefit to which the

 

 8  appeal was made.

 

 9        (C) Allow the appealing pharmacy to resubmit the claim to the

 

10  pharmacy benefit manager for reimbursement using the prescription

 

11  drug pricing standard adjusted under sub-subparagraph (A).

 

12        Sec. 117. A pharmacy shall be reimbursed for a legally valid

 

13  claim at a rate of not less than the rate in effect at the time of

 

14  original claim adjudication as submitted at the point of sale.

 

15        Sec. 119. (1) A pharmacy benefit manager shall not do any of

 

16  the following:

 

17        (a) Mandate that a covered individual use a specific pharmacy,

 

18  mail-order pharmacy, specialty pharmacy, or any other pharmacy, if

 

19  the pharmacy benefit manager has an ownership interest in the

 

20  pharmacy or if the pharmacy has an ownership interest in the

 

21  pharmacy benefit manager.

 

22        (b) Except as otherwise provided in this subdivision, provide

 

23  an incentive to a covered individual to encourage the use of a

 

24  specific pharmacy if the incentive only applies to a pharmacy in

 

25  which the pharmacy benefit manager has an ownership interest or

 

26  provide an incentive to a covered individual to encourage the use

 

27  of a specific pharmacy if the incentive only applies to a pharmacy


 1  that has an ownership interest in the pharmacy benefit manager.

 

 2  This subdivision does not apply if the covered individual willingly

 

 3  designates as the covered individual's primary pharmacy a pharmacy

 

 4  in which the pharmacy benefit manager has an ownership interest or

 

 5  that has an ownership interest in the pharmacy benefit manager.

 

 6        (c) Require that a pharmacist or pharmacy participate in a

 

 7  network managed by the pharmacy benefit manager as a condition for

 

 8  the pharmacy to participate in another network managed by the same

 

 9  pharmacy benefit manager.

 

10        (d) Automatically enroll or disenroll a pharmacy in a contract

 

11  or modify an existing agreement without written agreement of the

 

12  pharmacist, pharmacy, or person acting on behalf of the pharmacist

 

13  or pharmacy.

 

14        (e) Prohibit a covered individual from receiving a

 

15  prescription drug benefit, including a 90-day supply of a

 

16  prescription drug, at a network pharmacy of the pharmacy benefit

 

17  manager.

 

18        (f) Impose on a covered individual who uses a pharmacy a

 

19  copayment, deductible, fee, limitation on benefits, or other

 

20  condition or requirement that is not otherwise imposed on the

 

21  covered individual when the covered individual uses a mail-order

 

22  pharmacy.

 

23        (g) Distribute to a pharmacy a prescription, or a copy of a

 

24  prescription, to dispense a drug utilizing information submitted to

 

25  the pharmacy benefit manager for the purpose of obtaining a prior

 

26  authorization or to complete any other nondispensing or

 

27  administrative function that is conducted by the pharmacy benefit


 1  manager.

 

 2        (h) Solicit a covered individual utilizing information

 

 3  submitted to the pharmacy benefit manager for the purpose of

 

 4  obtaining a prior authorization or to complete any other

 

 5  nondispensing or administrative function that is conducted by the

 

 6  pharmacy benefit manager.

 

 7        (2) This section does not mandate the inclusion of a pharmacy

 

 8  in a health benefit payer network or pharmacy benefit manager's

 

 9  network or the exclusion of a pharmacy from a health benefit payer

 

10  network or pharmacy benefit manager's network.

 

11        Sec. 121. (1) Except as otherwise provided in this subsection,

 

12  a pharmacy benefit manager shall not sell, lease, or rent

 

13  utilization or claims data that the pharmacy benefit manager

 

14  possesses as a result of a contract between the pharmacy benefit

 

15  manager and the health benefit payer. A pharmacy benefit manager

 

16  may sell, lease, or rent the data described in this subsection if

 

17  the pharmacy benefit manager obtains the covered individual's

 

18  consent before selling, leasing, or renting the data.

 

19        (2) A pharmacy benefit manager shall not directly contact a

 

20  covered individual on behalf of a health benefit payer without the

 

21  express written permission of the health benefit payer and the

 

22  covered individual. A health benefit payer may make a request of a

 

23  covered individual for permission under this subsection.

 

24        (3) A pharmacy benefit manager shall not transmit to a

 

25  pharmacy any personally identifiable utilization or claims data

 

26  that is related to a covered individual unless the covered

 

27  individual has voluntarily elected to fill a prescription at that


 1  pharmacy.

 

 2        Sec. 123. Each pharmacy benefit manager shall maintain a

 

 3  current formulary list by major therapeutic category and make the

 

 4  list available to prescribers and pharmacies that are participating

 

 5  in the pharmacy benefit manager's network or have contracted with a

 

 6  health benefit payer that utilizes the pharmacy benefit manager for

 

 7  the management of the health benefit payer's pharmacy benefit.

 

 8        Sec. 125. (1) Except as otherwise provided in subsection (2),

 

 9  if a pharmacy benefit manager makes or approves a change in a

 

10  formulary that causes a prescription drug to not be covered,

 

11  applies a new or revised dose restriction that causes a

 

12  prescription drug to not be covered for the number of doses

 

13  prescribed, or applies a new or revised step therapy or prior

 

14  authorization requirement that causes a prescription drug to not be

 

15  covered until the step therapy or prior authorization requirement

 

16  has been met, the pharmacy benefit manager shall do 1 of the

 

17  following:

 

18        (a) At least 60 days before the effective date of the

 

19  formulary change, new or revised dose restriction, or new or

 

20  revised step therapy or prior authorization requirement, provide

 

21  notice of the formulary change, new or revised dose restriction, or

 

22  new or revised step therapy or prior authorization requirement to

 

23  each covered individual who is currently receiving benefits for the

 

24  prescription drug. The notice described in this subdivision must be

 

25  provided in writing or, if the covered individual has agreed to

 

26  receive information in this manner, by electronic means.

 

27        (b) If a covered individual who is currently receiving


 1  benefits for the prescription drug requests a refill of the

 

 2  prescription drug, cover up to a 60-day supply of the prescription

 

 3  drug on the same terms as covered previously if the prescription

 

 4  drug continues to be prescribed for the covered individual during

 

 5  that time period and inform the covered individual of the formulary

 

 6  change, new or revised dose restriction, or new or revised step

 

 7  therapy or prior authorization requirement, unless either of the

 

 8  following applies:

 

 9        (i) The covered individual's prescriber agrees to a request

 

10  from the health benefit payer or the pharmacist to change the

 

11  prescription in accordance with the formulary change, new or

 

12  revised dose restriction, or new or revised step therapy or prior

 

13  authorization requirement.

 

14        (ii) If the formulary change, new or revised dose restriction,

 

15  or new or revised step therapy or prior authorization requirement

 

16  pertains to generic substitution, the prescription does not

 

17  prohibit generic substitution or the covered individual agrees at

 

18  the pharmacy to generic substitution.

 

19        (2) A pharmacy benefit manager is not required to provide the

 

20  notice described in subsection (1) or cover up to a 60-day supply

 

21  of a prescription drug under subsection (1) if either of the

 

22  following applies:

 

23        (a) The prescription drug is being discontinued from coverage

 

24  on the formulary for safety reasons or because the prescription

 

25  drug cannot be supplied by or has been withdrawn from the market by

 

26  the drug's manufacturer.

 

27        (b) The formulary change, new or revised dose restriction, or


 1  new or revised step therapy or prior authorization requirement for

 

 2  the prescription drug is made, approved, or applied for safety

 

 3  reasons.

 

 4        Sec. 127. (1) Except as otherwise provided in subsection (2),

 

 5  if a pharmacy benefit manager makes or approves a change in a

 

 6  formulary that causes a prescription drug to not be covered,

 

 7  applies a new or revised dose restriction that causes a

 

 8  prescription for a prescription drug to not be covered for the

 

 9  number of doses prescribed, or applies a new or revised step

 

10  therapy or prior authorization requirement that causes a

 

11  prescription drug to not be covered until the requirements of the

 

12  step therapy or prior authorization requirement have been met, the

 

13  pharmacy benefit manager shall provide notice of the formulary

 

14  change, new or revised dose restriction, or new or revised step

 

15  therapy or prior authorization requirement to all of the following

 

16  in the following time frames:

 

17        (a) Except as otherwise provided in this subdivision, to

 

18  prescribers at least 60 days before the effective date of the

 

19  formulary change, new or revised dose restriction, or new or

 

20  revised step therapy or prior authorization requirement. A pharmacy

 

21  benefit manager is not required to provide notice to a prescriber

 

22  under this subdivision if the pharmacy benefit manager provides

 

23  coverage of up to a 60-day supply of the prescription drug as

 

24  provided in section 125.

 

25        (b) To pharmacies participating in the pharmacy benefit

 

26  manager's network, by the effective date of the formulary change,

 

27  new or revised dose restriction, or new or revised step therapy or


 1  prior authorization requirement.

 

 2        (c) To prescribers who did not receive advance notice of the

 

 3  change under subdivision (a), by the effective date of the

 

 4  formulary change, new or revised dose restriction, or new or

 

 5  revised step therapy or prior authorization requirement.

 

 6        (2) Subsection (1) does not apply if the formulary change, new

 

 7  or revised dose restriction, or new or revised step therapy or

 

 8  prior authorization requirement is being made, approved, or applied

 

 9  for safety reasons or because the prescription drug cannot be

 

10  supplied by, or has been withdrawn from the market by, the drug's

 

11  manufacturer.

 

12        Sec. 129. (1) A pharmacy benefit manager shall secure the

 

13  participation in its network of a sufficient number of pharmacies

 

14  that dispense, other than by mail order, prescription drugs

 

15  directly to covered individuals to ensure convenient access to

 

16  those pharmacies that are within 30 miles of a covered individual's

 

17  residence.

 

18        (2) If a covered individual wishes to use an out-of-network

 

19  pharmacy that is geographically closer to the covered individual's

 

20  residence than the closest in-network pharmacy, a pharmacy benefit

 

21  manager shall allow the covered individual to designate the out-of-

 

22  network pharmacy as the covered individual's primary pharmacy and

 

23  shall treat the out-of-network pharmacy as though it were in-

 

24  network for the purpose of providing services under a pharmacy

 

25  benefit. A covered individual who designates an out-of-network

 

26  pharmacy as the covered individual's primary pharmacy under this

 

27  subsection is eligible for all incentives, reductions, and cost


 1  sharing that he or she would otherwise be eligible to receive if

 

 2  the covered individual had designated an in-network pharmacy as his

 

 3  or her primary pharmacy.

 

 4        Sec. 131. (1) Subject to this section, a health benefit payer

 

 5  or a pharmacy benefit manager may conduct an audit of a pharmacy in

 

 6  this state. A health benefit payer or a pharmacy benefit manager

 

 7  that conducts an audit of a pharmacy in this state shall do all of

 

 8  the following:

 

 9        (a) In its pharmacy contract, identify and describe in detail

 

10  the audit procedures including the appeals process described in

 

11  subdivision (m). A health benefit payer or pharmacy benefit manager

 

12  shall update its pharmacy contract and communicate any changes to

 

13  the pharmacy as changes to the contract occur.

 

14        (b) Provide written notice to the pharmacy at least 2 weeks

 

15  before initiating and scheduling the initial on-site audit for each

 

16  audit cycle. Unless otherwise consented to by the pharmacist, a

 

17  health benefit payer or pharmacy benefit manager shall not initiate

 

18  or schedule an on-site audit during the first 6 calendar days of a

 

19  month, a holiday time frame, a weekend, or a Monday. A health

 

20  benefit payer or pharmacy benefit manager shall be flexible in

 

21  initiating and scheduling an audit at a time that is reasonably

 

22  convenient to the pharmacy and the health benefit payer or pharmacy

 

23  benefit manager.

 

24        (c) Utilize every effort to minimize inconvenience and

 

25  disruption to pharmacy operations during the audit process. A

 

26  health benefit payer or pharmacy benefit manager that conducts an

 

27  audit of a pharmacy in this state shall not interfere with the


 1  delivery of pharmacy services to a patient.

 

 2        (d) Conduct an audit that involves clinical or professional

 

 3  judgment by or in consultation with a pharmacist.

 

 4        (e) Subject to the requirements of article 15 of the public

 

 5  health code, 1978 PA 368, MCL 333.16101 to 333.18838, for the

 

 6  purpose of validating a pharmacy record with respect to orders,

 

 7  refills, or changes in prescriptions, allow the use of either of

 

 8  the following:

 

 9        (i) Hospital or physician records that are written or that are

 

10  transmitted or stored electronically, including file annotations,

 

11  document images, and other supporting documentation that is date-

 

12  and time-stamped.

 

13        (ii) A prescription that complies with the requirements of the

 

14  board of pharmacy and state and federal law.

 

15        (f) Base any finding of an overpayment or underpayment on the

 

16  actual overpayment or underpayment of claims.

 

17        (g) Subject to subsection (4), base any recoupment or payment

 

18  adjustments of claims on a calculation that is reasonable and

 

19  proportional in relation to the type of error detected.

 

20        (h) If there is a finding of an underpayment, reimburse the

 

21  pharmacy as soon as possible after detection.

 

22        (i) Conduct its audit of each pharmacy under the same sampling

 

23  standards, parameters, and procedures that the health benefit payer

 

24  or pharmacy benefit manager uses when auditing other similarly

 

25  licensed pharmacies. The health benefit payer shall provide to the

 

26  pharmacy samples of the standards, parameters, and procedures for

 

27  the audit being conducted.


 1        (j) Audit only claims submitted or adjudicated within the 1-

 

 2  year period immediately preceding the initiation of the audit

 

 3  unless a longer period is permitted under federal or state law.

 

 4        (k) Not receive payment based on a percentage of the amount

 

 5  recovered.

 

 6        (l) Not include the dispensing fee amount in a finding of an

 

 7  overpayment.

 

 8        (m) Establish a written appeals process that includes a

 

 9  process to appeal preliminary audit reports and final audit reports

 

10  prepared under this section. If either party is not satisfied with

 

11  the results of the appeal, that party may seek mediation.

 

12        (2) On completion of an audit of a pharmacy, the health

 

13  benefit payer or pharmacy benefit manager shall do all of the

 

14  following:

 

15        (a) Deliver a preliminary written audit report to the pharmacy

 

16  on or before the expiration of 60 days after the completion of the

 

17  audit. The preliminary written audit report must include contact

 

18  information for the person performing the audit and a description

 

19  of the appeal process established under subsection (1)(m).

 

20        (b) Allow the pharmacy at least 30 days following its receipt

 

21  of the preliminary written audit report under subdivision (a) to

 

22  produce documentation to address any discrepancy found during the

 

23  audit.

 

24        (c) If an appeal is not filed, deliver a final written audit

 

25  report to the pharmacy within 90 days after the time described in

 

26  subdivision (b) has elapsed. If an appeal is filed, deliver a final

 

27  written audit report to the pharmacy within 90 days after the


 1  conclusion of the appeal.

 

 2        (d) Except as otherwise provided in this section, only recoup

 

 3  disputed funds or overpayments or restore underpayments after the

 

 4  final written audit report is delivered to the pharmacy under

 

 5  subdivision (c).

 

 6        (e) On request, provide to the sponsor of the health care

 

 7  benefit plan a copy of the final written audit report delivered to

 

 8  the pharmacy under subdivision (c).

 

 9        (3) A health benefit payer or pharmacy benefit manager shall

 

10  not conduct an extrapolation audit in calculating recoupments,

 

11  restoration, or penalties for an audit under this section. As used

 

12  in this subsection, "extrapolation audit" means an audit of a

 

13  sample of prescription drug benefit claims submitted by a pharmacy

 

14  to the health benefit payer that is then used to estimate audit

 

15  results for a larger batch or group of claims not reviewed during

 

16  the audit.

 

17        (4) Any clerical or record-keeping error, including a

 

18  typographical error, a scrivener's error, or a computer error,

 

19  regarding a required document or record that is found during an

 

20  audit under this section does not, on its face, constitute fraud.

 

21  An error described in this subsection does not subject the

 

22  individual involved to criminal penalties without proof of intent

 

23  to commit fraud. To the extent that an audit results in the

 

24  identification of a clerical or record-keeping error, including a

 

25  typographical error, a scrivener's error, or a computer error, in a

 

26  required document or record, the pharmacy is not subject to

 

27  recoupment of funds by the health benefit payer or pharmacy benefit


 1  manager unless the health benefit payer can provide proof of intent

 

 2  to commit fraud or the error results in actual financial harm to

 

 3  the health benefit payer, pharmacy benefit manager, or a covered

 

 4  individual.

 

 5        (5) This section does not apply to any of the following:

 

 6        (a) An audit conducted to investigate fraud, willful

 

 7  misrepresentation, or abuse, including, but not limited to,

 

 8  investigative audits or audits conducted under any other statutory

 

 9  provision that authorizes investigation relating to insurance

 

10  fraud.

 

11        (b) An audit based on a criminal investigation.

 

12        (6) This section does not impair or supersede a provision

 

13  regarding health benefit payer pharmacy audits in the insurance

 

14  code of 1956, 1956 PA 218, MCL 500.100 to 500.8302. If any

 

15  provision of this section conflicts with a provision of the

 

16  insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302, with

 

17  regard to health benefit payer pharmacy audits, the provision in

 

18  the insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302,

 

19  controls.

 

20        Sec. 133. (1) The director is responsible for the enforcement

 

21  of this act. The director shall take action or impose sanctions to

 

22  bring noncomplying entities into full compliance with this act. The

 

23  director has the same authority to examine and investigate entities

 

24  regulated by this act and may enforce this act in the same manner

 

25  as provided for insurers under the insurance code of 1956, 1956 PA

 

26  218, MCL 500.100 to 500.8302.

 

27        (2) The department may promulgate rules under the


 1  administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

 2  24.328, that it considers necessary to implement, administer, and

 

 3  enforce this act.

 

 4        Enacting section 1. This act takes effect 90 days after the

 

 5  date it is enacted into law.

 

 6        Enacting section 2. This act applies to contracts delivered,

 

 7  executed, issued, amended, adjusted, or renewed in this state

 

 8  beginning January 1, 2019.

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