CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 524Introduced by Senator SkinnerFebruary 17, 2021 An act to amend Sections 4430, 4431, 4432, and 4439 of, to repeal the heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of, and to add the heading of Article 26 (commencing with Section 4430) of Chapter 9 of Division 2 of, the Business and Professions Code, relating to health care coverage. LEGISLATIVE COUNSEL'S DIGESTSB 524, as introduced, Skinner. Pharmacy benefits audits: California State Board of Pharmacy enforcement.Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law would be a crime, the bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill TextThe people of the State of California do enact as follows:SECTION 1. The heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of the Business and Professions Code is repealed.9.5.Audits of Pharmacy BenefitsSEC. 2. The heading of Article 26 (commencing with Section 4430) is added to Chapter 9 of Division 2 of the Business and Professions Code, to read: Article 26. Audits of Pharmacy BenefitsSEC. 3. Section 4430 of the Business and Professions Code is amended to read:4430. For purposes of this chapter, article, the following definitions shall apply:(a) Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b) Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c) Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d) Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e) Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f) Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g) Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h) Pharmacy has the same meaning as provided in Section 4037.(i) Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j) Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.SEC. 4. Section 4431 of the Business and Professions Code is amended to read:4431. (a) Nothing in this chapter shall This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b) Nothing in this chapter shall This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.SEC. 5. Section 4432 of the Business and Professions Code is amended to read:4432. Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this chapter. article. This chapter shall article does not apply to contracts authorized by Section 4600.2 of the Labor Code.SEC. 6. Section 4439 of the Business and Professions Code is amended to read:4439. This chapter article shall not be construed to suggest or imply that the Department of Consumer Affairs or the California State Board of Pharmacy has any jurisdiction or authority over the provisions of this chapter. article.SEC. 7. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 524Introduced by Senator SkinnerFebruary 17, 2021 An act to amend Sections 4430, 4431, 4432, and 4439 of, to repeal the heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of, and to add the heading of Article 26 (commencing with Section 4430) of Chapter 9 of Division 2 of, the Business and Professions Code, relating to health care coverage. LEGISLATIVE COUNSEL'S DIGESTSB 524, as introduced, Skinner. Pharmacy benefits audits: California State Board of Pharmacy enforcement.Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law would be a crime, the bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES
CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION
Senate Bill
No. 524
Introduced by Senator SkinnerFebruary 17, 2021
Introduced by Senator Skinner
February 17, 2021
An act to amend Sections 4430, 4431, 4432, and 4439 of, to repeal the heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of, and to add the heading of Article 26 (commencing with Section 4430) of Chapter 9 of Division 2 of, the Business and Professions Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 524, as introduced, Skinner. Pharmacy benefits audits: California State Board of Pharmacy enforcement.
Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law would be a crime, the bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.
This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. The heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of the Business and Professions Code is repealed.9.5.Audits of Pharmacy BenefitsSEC. 2. The heading of Article 26 (commencing with Section 4430) is added to Chapter 9 of Division 2 of the Business and Professions Code, to read: Article 26. Audits of Pharmacy BenefitsSEC. 3. Section 4430 of the Business and Professions Code is amended to read:4430. For purposes of this chapter, article, the following definitions shall apply:(a) Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b) Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c) Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d) Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e) Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f) Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g) Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h) Pharmacy has the same meaning as provided in Section 4037.(i) Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j) Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.SEC. 4. Section 4431 of the Business and Professions Code is amended to read:4431. (a) Nothing in this chapter shall This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b) Nothing in this chapter shall This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.SEC. 5. Section 4432 of the Business and Professions Code is amended to read:4432. Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this chapter. article. This chapter shall article does not apply to contracts authorized by Section 4600.2 of the Labor Code.SEC. 6. Section 4439 of the Business and Professions Code is amended to read:4439. This chapter article shall not be construed to suggest or imply that the Department of Consumer Affairs or the California State Board of Pharmacy has any jurisdiction or authority over the provisions of this chapter. article.SEC. 7. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. The heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of the Business and Professions Code is repealed.9.5.Audits of Pharmacy Benefits
SECTION 1. The heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of the Business and Professions Code is repealed.
### SECTION 1.
9.5.Audits of Pharmacy Benefits
SEC. 2. The heading of Article 26 (commencing with Section 4430) is added to Chapter 9 of Division 2 of the Business and Professions Code, to read: Article 26. Audits of Pharmacy Benefits
SEC. 2. The heading of Article 26 (commencing with Section 4430) is added to Chapter 9 of Division 2 of the Business and Professions Code, to read:
### SEC. 2.
Article 26. Audits of Pharmacy Benefits
Article 26. Audits of Pharmacy Benefits
Article 26. Audits of Pharmacy Benefits
Article 26. Audits of Pharmacy Benefits
SEC. 3. Section 4430 of the Business and Professions Code is amended to read:4430. For purposes of this chapter, article, the following definitions shall apply:(a) Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b) Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c) Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d) Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e) Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f) Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g) Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h) Pharmacy has the same meaning as provided in Section 4037.(i) Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j) Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.
SEC. 3. Section 4430 of the Business and Professions Code is amended to read:
### SEC. 3.
4430. For purposes of this chapter, article, the following definitions shall apply:(a) Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b) Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c) Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d) Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e) Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f) Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g) Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h) Pharmacy has the same meaning as provided in Section 4037.(i) Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j) Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.
4430. For purposes of this chapter, article, the following definitions shall apply:(a) Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b) Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c) Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d) Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e) Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f) Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g) Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h) Pharmacy has the same meaning as provided in Section 4037.(i) Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j) Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.
4430. For purposes of this chapter, article, the following definitions shall apply:(a) Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b) Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c) Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d) Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e) Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f) Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g) Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h) Pharmacy has the same meaning as provided in Section 4037.(i) Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j) Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.
4430. For purposes of this chapter, article, the following definitions shall apply:
(a) Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.
(b) Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.
(c) Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.
(d) Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.
(e) Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.
(f) Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.
(g) Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.
(h) Pharmacy has the same meaning as provided in Section 4037.
(i) Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.
(j) Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.
SEC. 4. Section 4431 of the Business and Professions Code is amended to read:4431. (a) Nothing in this chapter shall This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b) Nothing in this chapter shall This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.
SEC. 4. Section 4431 of the Business and Professions Code is amended to read:
### SEC. 4.
4431. (a) Nothing in this chapter shall This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b) Nothing in this chapter shall This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.
4431. (a) Nothing in this chapter shall This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b) Nothing in this chapter shall This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.
4431. (a) Nothing in this chapter shall This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b) Nothing in this chapter shall This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.
4431. (a) Nothing in this chapter shall This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.
(b) Nothing in this chapter shall This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.
SEC. 5. Section 4432 of the Business and Professions Code is amended to read:4432. Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this chapter. article. This chapter shall article does not apply to contracts authorized by Section 4600.2 of the Labor Code.
SEC. 5. Section 4432 of the Business and Professions Code is amended to read:
### SEC. 5.
4432. Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this chapter. article. This chapter shall article does not apply to contracts authorized by Section 4600.2 of the Labor Code.
4432. Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this chapter. article. This chapter shall article does not apply to contracts authorized by Section 4600.2 of the Labor Code.
4432. Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this chapter. article. This chapter shall article does not apply to contracts authorized by Section 4600.2 of the Labor Code.
4432. Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this chapter. article. This chapter shall article does not apply to contracts authorized by Section 4600.2 of the Labor Code.
SEC. 6. Section 4439 of the Business and Professions Code is amended to read:4439. This chapter article shall not be construed to suggest or imply that the Department of Consumer Affairs or the California State Board of Pharmacy has any jurisdiction or authority over the provisions of this chapter. article.
SEC. 6. Section 4439 of the Business and Professions Code is amended to read:
### SEC. 6.
4439. This chapter article shall not be construed to suggest or imply that the Department of Consumer Affairs or the California State Board of Pharmacy has any jurisdiction or authority over the provisions of this chapter. article.
4439. This chapter article shall not be construed to suggest or imply that the Department of Consumer Affairs or the California State Board of Pharmacy has any jurisdiction or authority over the provisions of this chapter. article.
4439. This chapter article shall not be construed to suggest or imply that the Department of Consumer Affairs or the California State Board of Pharmacy has any jurisdiction or authority over the provisions of this chapter. article.
4439. This chapter article shall not be construed to suggest or imply that the Department of Consumer Affairs or the California State Board of Pharmacy has any jurisdiction or authority over the provisions of this chapter. article.
SEC. 7. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 7. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 7. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
### SEC. 7.