Bill Text: NJ S3304 | 2020-2021 | Regular Session | Introduced
Bill Title: "New Jersey Pharmacy Audit Bill of Rights;" establishes procedures by which entities are required to conduct audits of pharmacists.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-12-21 - Introduced in the Senate, Referred to Senate Commerce Committee [S3304 Detail]
Download: New_Jersey-2020-S3304-Introduced.html
Sponsored by:
Senator LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
SYNOPSIS
"New Jersey Pharmacy Audit Bill of Rights;" establishes procedures by which entities are required to conduct audits of pharmacies.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning pharmacy audits and supplementing P.L.1971, c.144 (C.17B:34-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "New Jersey Pharmacy Audit Bill of Rights."
2. As used in this act:
"Entity" means a hospital service corporation, medical service corporation, health service corporation, or other managed care company, or an insurance company, third-party payor, pharmacy benefits manager, any entity licensed by the Department of Banking and Insurance, or any entity that represents those companies, groups, or departments.
3. Notwithstanding any other law, rule, or regulation to the contrary, when an audit of the records of a pharmacy is conducted by an entity, the audit shall be conducted in accordance with the following requirements:
a. An entity conducting an audit shall give the pharmacy notice at least 14 days prior to the audit and include in the notice a comprehensive list of claims by prescription number to be audited, although the final two digits of each prescription number may be omitted. The cost of the claims shall not be used as a criterion in determining which claims to audit. The audit shall not include more than 100 prescriptions per audit and an entity shall not audit more than 200 prescriptions in any 12-month period, provided that a refill shall not constitute a separate prescription;
b. Any audit that involves clinical or professional judgment shall be conducted by or in consultation with a pharmacist;
c. Any clerical or record-keeping error, including but not limited to a typographical error, scrivener's error, computer error, or omission error, regarding a prescription, front or back label, or other document or record shall not in and of itself constitute fraud. An entity shall not be entitled to recoup the costs of drugs or medicinal supplies properly dispensed shall be allowed if a clerical or record-keeping error has occurred; provided, however, that recoupment shall be allowed to the extent that the error resulted in an overpayment, though recoupment shall be limited to the amount overpaid;
d. A pharmacy shall, within 60 days following receipt of the preliminary audit report, correct any error or address any discrepancy found during an audit which may be subject to recoupment for overpayment as provided for in subsection c. of this section, including to secure and remit an appropriate copy of the record from a hospital, physician, or other authorized health care practitioner for drugs or medicinal supplies written or transmitted by any means of communication if the lack of a record or an error in a record is identified in the course of an audit or in the preliminary audit report;
e. Notwithstanding the provisions of any law, rule, or regulation to the contrary, a hospital, physician, or other practitioner authorized to administer drugs or medicinal supplies written or transmitted by any means of communication may provide relevant records to a pharmacy that is under audit pursuant to the provisions of this act, for the purposes of validating the pharmacy record with respect to orders or refills of a legend or narcotic drug;
f. A finding of an overpayment or underpayment may be a projection based on the number of patients served with a similar diagnosis or on the number of similar orders or refills for similar drugs. The recoupment of claims shall be based on the actual overpayment or underpayment unless the projection for overpayment or underpayment is part of a settlement agreed to by the pharmacy;
g. Each pharmacy shall be audited by an entity under the same standards and parameters as other similarly situated pharmacies audited by the entity;
h. An audit shall not cover a period exceeding two years from the date the claim was submitted to or adjudicated by an entity;
i. An entity shall not initiate or schedule an audit during the first seven calendar days of any month due to the high volume of prescriptions filled during that time unless otherwise consented to by the pharmacy;
j. The preliminary audit report shall be delivered to the pharmacy within 30 days after conclusion of the audit. A final audit report shall be delivered to the pharmacy within 60 days after receipt of the preliminary audit report or final appeal, as provided for in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), whichever is later;
k. A pharmacy shall not be held responsible for any penalty or fee in connection with an audit and there shall be no recoupment of funds from a pharmacy in connection with claims for which the pharmacy has already been paid without first complying with the requirements set forth in P.L. , c. (C. ) (pending before the Legislature as this bill);
(1) There shall be no recoupment from a pharmacy except in cases of:
(2) fraud;
(3) error that resulted in an overpayment provided that recoupment shall be limited to the amount overpaid; or
(4) a misfill; provided, however, that when a patient receives the correct drug in the correct dosage and quantity pursuant to a prescription drug order then no misfill shall be found to have occurred; and
l. A pharmacy shall not be audited by the same entity more than once every six months.
m. A pharmacy benefits manager shall not prohibit a pharmacy from dispensing any legal drug in any quantity.
Notwithstanding any other provisions in this subsection, the entity conducting the audit shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits.
4. Recoupments of any disputed funds shall only occur after final internal disposition of the audit, including the appeals process as set forth in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
5. Each entity conducting an audit shall establish an internal appeals process under which a pharmacy shall have at least 30 days from the delivery of the preliminary audit report to appeal an unfavorable preliminary audit report to the entity. 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 portion thereof without any further proceedings.
6. A plan sponsor may request, and an entity conducting an audit shall provide, a copy of the final audit report, after completion of any review process, to the plan sponsor at its request.
7. The provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not apply to:
a. any investigative audit commenced based upon an articulable suspicion of fraud, willful misrepresentation, or abuse, including investigative audits pursuant to section 7 of P.L.1968, c.413 (C.30:4D-7), section 8 of P.L.1983, c.320 (C.17:33A-8), section 71 of P.L.2003, c.89 (C.2C:21-4.4), or any other statutory provision providing for an investigation relating to insurance fraud; or
b. audits conducted by the Department of Human Services pursuant to section 7 of P.L.1968, c.413 (C.30:4D-7), provided, however, that the provisions of chapter 49 under Title 10 of the New Jersey Administrative Code shall apply to audits conducted by the Department of Health under section 7 of P.L.1968, c.413 (C.30:4D-7).
8. An entity conducting an audit pursuant to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not compensate the agent or employee conducting the audit based on percentage of the amount recovered by the audit.
9. The Commissioner of Banking and Insurance shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) rules and regulations to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill). The Commissioner shall investigate complaints of alleged violations of this section; to prohibit recoupment; to order reimbursement of any wrongful recoupment; to institute fines for violations of the law, rules, or regulations; and to take any other actions pursuant to any authority granted pursuant to P.L.2015, c.179 (C.17B:27F-1 et seq.), relating to the regulation and licensure of pharmacy benefit managers.
10. This act shall take effect on the first day of the sixth month next following enactment.
STATEMENT
This bill establishes the "New Jersey Pharmacy Audit Bill of Rights" including certain procedures and processes by which entities auditing a pharmacy are to follow. The bill defines "entity" as a hospital service corporation, medical service corporation, or other managed care company, or an insurance company, third-party payor, pharmacy benefits manager, any entity licensed by the Department of Banking and Insurance, or any entity that represents such companies, groups, or departments.
Under the bill, the audits are to be conducted in accordance with certain requirements concerning the scope of an audit, procedures to properly perform an audit, record-keeping, and recoupment. Additionally, the entity conducting an audit shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits.
Under the bill, recoupments of any disputed funds are to only occur after final internal disposition of the audit, including the appeals process as set forth in the bill. Each entity conducting an audit shall establish an internal appeals process under which a pharmacy shall have at least 30 days from the delivery of the preliminary audit report to appeal an unfavorable preliminary audit report to the entity. If, following the appeal, the entity finds that an unfavorable audit report or any portion thereof is unsubstantiated, the entity is to dismiss the audit report or portion thereof without the necessity of any further proceedings. Each entity conducting an audit is to provide a copy of the final audit report, after completion of any review process, to the plan sponsor at its request or in an alternate format.
The provisions of the bill do not apply to any investigative audit commenced based upon an articulable suspicion of fraud, willful misrepresentation, or abuse, including without limitation investigative audits under the "New Jersey Medical Assistance and Health Services Act;" the "New Jersey Insurance Fraud Prevention Act;" the New Jersey criminal statute establishing insurance fraud as a crime; or any other statutory provision which authorizes investigations relating to insurance fraud.
Additionally the Department of Human Services is exempt from the bill's provisions when conducting audits under the "New Jersey Medical Assistance and Health Services Act," so long as the regulations establishing an appeals process for Medicaid providers apply to the parties under audit by the Department of Human Services pursuant to the "New Jersey Medical Assistance and Health Services Act."
Under the bill, an entity conducting the audit may not pay the agent or employee who is conducting the audit based on percentage of the amount recovered. Lastly, the Commissioner of Banking and Insurance is assigned the enforcement of the bill's provisions and is to promulgate rules and regulations to effectuate its provisions. The Commissioner has the authority to investigate complaints of alleged violations of this section; to prohibit recoupment; to order reimbursement of any wrongful recoupment; to institute fines for violations of the law, rules, or regulations; and to take any other actions pursuant to any authority granted pursuant to current law relating to the regulation and licensure of pharmacy benefit managers.
