Bill Text: MI SB1000 | 2013-2014 | 97th Legislature | Introduced
Bill Title: Health; pharmaceuticals; standards for pharmacy auditing practices; provide for. Amends 1978 PA 368 (MCL 333.1101 - 333.25211) by adding sec. 17771.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2014-06-12 - Referred To Committee On Insurance [SB1000 Detail]
Download: Michigan-2013-SB1000-Introduced.html
SENATE BILL No. 1000
June 12, 2014, Introduced by Senators SCHUITMAKER and CASWELL and referred to the Committee on Insurance.
A bill to amend 1978 PA 368, entitled
"Public health code,"
(MCL 333.1101 to 333.25211) by adding section 17771.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 17771. (1) Subject to this section, a health benefit
payer may conduct an audit of a pharmacy in this state. A health
benefit payer that conducts an audit of a pharmacy in this state
shall do all of the following:
(a) In its pharmacy contract, identify and describe in detail
the audit procedures including the appeals process described in
subdivision (m). A health benefit payer shall update its pharmacy
contract and communicate any changes to the pharmacy as changes to
the contract occur.
(b) Provide written notice to the pharmacy at least 2 weeks
before initiating and scheduling the initial on-site audit for each
audit cycle. A health benefit payer shall not initiate or schedule
an on-site audit during the first 6 calendar days of a month,
holiday time frames, weekends, or Mondays unless otherwise
consented to by the pharmacist. A health benefit payer shall be
flexible in initiating and scheduling an audit at a time that is
reasonably convenient to the pharmacy and the health benefit payer.
(c) Utilize every effort to minimize inconvenience and
disruption to pharmacy operations during the audit process. A
health benefit payer that conducts an audit of a pharmacy in this
state shall not interfere with the delivery of pharmacy services to
a patient.
(d) Conduct an audit that involves clinical or professional
judgment by or in consultation with a pharmacist.
(e) Subject to the requirements of this article, for the
purpose of validating a pharmacy record with respect to orders,
refills, or changes in prescriptions, allow the use of either of
the following:
(i) Hospital or physician records that are written or that are
transmitted or stored electronically, including file annotations,
document images, and other supporting documentation that are date-
and time-stamped.
(ii) A prescription that complies with board requirements and
state and federal law.
(f) Base any finding of an overpayment or underpayment on the
actual overpayment or underpayment of claims.
(g) Subject to subsection (4), base any recoupment or payment
adjustments of claims on a calculation that is reasonable and
proportional in relation to the type of error detected.
(h) If there is a finding of an underpayment, reimburse the
pharmacy as soon as possible after detection.
(i) Conduct its audit of each pharmacy under the same sampling
standards, parameters, and procedures that the health benefit payer
uses when auditing other similarly licensed pharmacies. The health
benefit payer shall provide to the pharmacy samples of the
standards, parameters, and procedures for the audit being
conducted.
(j) Audit only claims submitted or adjudicated within the 2-
year period immediately preceding the initiation of the audit
unless a longer period is permitted under federal or state law.
(k) Not receive payment based on a percentage of the amount
recovered.
(l) Not include the dispensing fee amount in a finding of an
overpayment.
(m) Establish a written appeals process that includes a
process to appeal preliminary audit reports and final audit reports
prepared under this section. If either party is not satisfied with
the results of the appeal, that party may seek mediation.
(2) Upon completion of an audit of a pharmacy, the health
benefit payer shall do all of the following:
(a) Deliver a preliminary written audit report to the pharmacy
on or before the expiration of 60 days after the completion of the
audit, with reasonable extensions allowed. The preliminary written
audit report shall include contact information for the auditing
entity and a description of the appeal process established under
subsection (1)(m).
(b) Allow the pharmacy at least 30 days following its receipt
of the preliminary report under subdivision (a) to produce
documentation to address any discrepancy found during the audit.
(c) If an appeal is not filed, deliver a final written audit
report to the pharmacy within 90 days after the time described in
subdivision (b) has elapsed. If an appeal is filed, deliver a final
written audit report to the pharmacy within 90 days after the
conclusion of the appeal.
(d) Except as otherwise provided in this section, only recoup
disputed funds or overpayments or restore underpayments after the
final written audit report is delivered to the pharmacy under
subdivision (c).
(e) Upon request, provide to the sponsor of the health care
payment or benefits program a copy of the final written audit
report delivered to the pharmacy under subdivision (c).
(3) A health benefit payer shall not conduct an extrapolation
audit in calculating recoupments, restoration, or penalties for an
audit under this section. For the purposes of this subsection, an
extrapolation audit is an audit of a sample of prescription drug
benefit claims submitted by a pharmacy to the health benefit payer
that is then used to estimate audit results for a larger batch or
group of claims not reviewed during the audit.
(4) Any clerical or record-keeping error, including a
typographical error, a scrivener's error, or a computer error,
regarding a required document or record that is found during an
audit under this section does not, on its face, constitute fraud.
An error described in this subsection does not subject the
individual involved to criminal penalties without proof of intent
to commit fraud. To the extent that an audit results in the
identification of a clerical or record-keeping error, including a
typographical error, a scrivener's error, or a computer error, in a
required document or record, the pharmacy must not be subject to
recoupment of funds by the health benefit payer unless the health
benefit payer can provide proof of intent to commit fraud or the
error results in actual financial harm to the health benefit payer
or a covered individual under a health care payment or benefits
program.
(5) This section does not apply to any of the following:
(a) A health benefit payer pharmacy audit or investigative
audit conducted by or on behalf of a state agency that involves
fraud, willful misrepresentation, or abuse, including, but not
limited to, investigative audits or audits conducted under any
other statutory provision that authorizes investigation relating to
insurance fraud.
(b) An audit based on a criminal investigation.
(6) This section does not impair or supersede a provision
regarding health benefit payer pharmacy audits in the insurance
code of 1956, 1956 PA 218, MCL 500.100 to 500.8302. If any
provision of this section conflicts with a provision of the
insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302, with
regard to health benefit payer pharmacy audits, the provision in
the insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302,
controls.
(7) As used in this section:
(a) "Claim" means any attempt to cause an entity to make a
payment to cover a health care benefit under a health care payment
or benefits program.
(b) "Health benefit payer" means a public or private entity
that offers, provides, administers, or manages a health care
payment or benefits program, including, but not limited to, all of
the following:
(i) A health insurer or any insurance company authorized to
provide health insurance in this state.
(ii) A nonprofit health care corporation.
(iii) A health maintenance organization.
(iv) A preferred provider organization.
(v) A nonprofit dental care corporation.
(vi) The medical services administration in the department of
community health.
(vii) A pharmacy benefit manager.
(viii) A legal entity that is self-insured and providing health
care benefits to its employees.
(ix) A responsible party.
(x) A person acting for an entity described in subparagraphs
(i) to (ix) in a contractual relationship in the performance of any
activity on behalf of the entity described in subparagraphs (i) to
(ix).
(c) "Health care benefit" means the right under a health care
payment or benefits program to have a payment made by a health
benefit payer for a specified health care service.
(d) "Health care payment or benefits program " means an
expense-incurred hospital, medical, or surgical policy or
certificate, health maintenance organization contract, and any
other plan or program of health care benefits that provides
coverage for or administers coverage for prescription drugs or
devices.
(e) "Pharmacy benefit manager" means that term as defined in
section 2 of the third party administrator act, 1984 PA 218, MCL
550.902.
(f) "Responsible party" means an entity that is responsible
for the payment of claims for health care benefits under a health
care payment or benefits program.
