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Regular Session, 2012
SENATE BILL NO. 756 (Substitute of Senate Bill No. 373 by Senator Mills)
BY SENATOR MILLS
PHARMACISTS. Provides relative to pharmacy records audits. (1/1/13)
AN ACT1
To enact R.S. 22:1856.1, relative to the audit of pharmacy records by certain entities2
including pharmacy benefit managers; to provide for definitions; to provide with3
respect to an appeals process; and to provide for related matters.4
Be it enacted by the Legislature of Louisiana:5
Section 1. R.S. 22:1856.1 is hereby enacted to read as follows: 6
ยง1856.1. Pharmacy record audits; appeals7
A. As used in this Section, "entity" means a managed care company,8
insurance company, third-party payor, or the representative of the managed9
care company including pharmacy benefit managers, insurance company, or10
third-party payor.11
B. Notwithstanding any other provision of law to the contrary, when an12
on-site audit of the records of a pharmacy is conducted by an entity, the audit13
shall be conducted in accordance with the following criteria:14
(1) The audit may not take place during the first three business days of15
the month.16
(2) No entity shall conduct an on-site audit at a particular pharmacy17 SB NO. 756
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more than one time annually. However, this Subsection shall not apply when an1
entity must return to a pharmacy to complete an audit already in progress, or2
there is a suspected or previously identified history of errors or inappropriate3
or illegal activity that the entity has brought to the attention of the pharmacy4
owner or corporate headquarters of the pharmacy.5
(3)(a) The entity conducting the initial on-site audit shall give the6
pharmacy notice at least two weeks before conducting the initial on-site audit7
for each audit cycle.8
(b) If the audit, review, or investigation is initiated based on or involves9
suspected or alleged fraud, willful misrepresentation, or abuse, notice before the10
initial on-site audit is not mandatory where it could impede the audit, review,11
or investigation.12
(4)(a)(i) Any clerical or record-keeping error, such as a typographical13
error, scrivener's error, or computer error, regarding a required document or14
record shall not necessarily constitute fraud.15
(ii) A claim arising under Subsection B of this Section may be subject to16
recoupment.17
(b) No claim arising under Subsection B of this Section shall be subject18
to criminal penalties without proof of intent to commit fraud.19
(5) A pharmacy may provide the records of a hospital, physician, or20
other authorized practitioner of the healing arts for drugs or medicinal supplies21
written or transmitted by any means of communication for purposes of22
supporting the pharmacy record with respect to orders or refills of a legend or23
narcotic drug.24
(6) Each pharmacy shall be audited under the same standards and25
parameters as other similarly situated pharmacies audited by the entity.26
(7)(a) The preliminary audit report shall be delivered to the pharmacy27
within ninety days after conclusion of the audit.28 SB NO. 756
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(b) A pharmacy shall be allowed at least thirty days following receipt of1
the preliminary audit report in which to initiate an appeal to address any2
discrepancy found during an on-site audit, as outlined in Subsection F of this3
Section.4
(c) A final audit report shall be delivered to the pharmacy within one5
hundred twenty days after receipt of the preliminary audit report or notice of6
appeal, whichever is later.7
(d) Each entity conducting an audit shall make available a copy of the8
final audit report to the plan sponsor upon request or as otherwise required by9
contractual agreement.10
(8) Any audit which involves clinical judgment shall be conducted by or11
in consultation with a licensed pharmacist.12
(9) Interest on recoupment debts shall not accrue during the audit or13
appeal period.14
C.(1) Recoupment of any disputed funds, or repayment of funds to the15
entity by the pharmacy if permitted pursuant to contractual agreement, shall16
occur after final internal disposition of the audit, including the appeals process.17
Recoupment shall not be based on documentation requirements in addition to18
or exceeding requirements for creating or maintaining documentation19
prescribed by the Louisiana Board of Pharmacy; or on a requirement that a20
pharmacy or pharmacist perform a professional duty in addition to or21
exceeding professional duties prescribed by the Louisiana Board of Pharmacy.22
(2) The provisions of this Section shall not apply in cases of United States23
Food and Drug Administration regulation or manufacturer safety programs.24
(3) The full amount of any recoupment on an audit shall be refunded to25
the responsible party.26
(a) Except as provided in this Subsection, a charge or assessment for an27
audit shall not be based, directly or indirectly, on amounts recouped.28 SB NO. 756
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(b) Nothing in this Subsection shall prevent the entity conducting the1
audit from charging or assessing the responsible party, directly or indirectly,2
based on amounts recouped if both the following conditions are met:3
(i) The responsible party and the entity have a contract that explicitly4
states the percentage charge or assessment to the responsible party.5
(ii) A commission or other payment to an agent or employee of the entity6
conducting the audit is not based, directly or indirectly, on amounts recouped.7
(4) Before recoupment of funds may be made based on an audit finding8
overpayment or underpayment, a final audit report shall be distributed, unless9
fraud, waste, or abuse is suspected.10
D. Recoupment of claims shall be based on the actual financial harm to11
the entity or on the actual overpayment or underpayment. A finding of an12
overpayment that is the result of dispensing in excess of the benefit design, as13
established by the plan sponsor, shall be calculated as the difference between14
what was dispensed in accordance with the prescriber's orders and the15
dispensing requirements as set forth by the benefit design. Calculations of16
overpayments shall not include dispensing fees unless one of the following17
conditions is present:18
(1) A prescription was not actually dispensed.19
(2) The prescriber denied authorization.20
(3) The prescription dispensed was a medication error by the pharmacy.21
(4) The identified overpayment is solely based on an extra dispensing fee.22
(5) The pharmacy was noncompliant with program guidelines.23
(6) There was insufficient documentation.24
E. Should the identified discrepancy for an individual audit exceed ten25
thousand dollars, future payments to the pharmacy may be withheld pending26
finalization of the audit.27
F. Each entity conducting an audit shall establish an appeal process28 SB NO. 756
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under which a pharmacy may appeal an unfavorable preliminary audit report1
to the entity.2
(1) If, following an appeal, the entity finds that an unfavorable audit3
report or any portion of an unfavorable audit report is unsubstantiated, the4
entity shall dismiss the audit report or the unsubstantiated portion of the audit5
report without any further proceedings.6
(2) No interest shall be charged to the entity during the appeal period.7
(3) Following the final audit report, and if not otherwise provided for in8
the provider contract, either party may seek mediation to address outstanding9
disagreements.10
(4) Notwithstanding any other provision of law to the contrary, the11
agency conducting the audit shall not use the accounting practice of12
extrapolation in calculating recoupment or penalties for audits, unless otherwise13
agreed to by the pharmacy or mandated by a government agency or in the case14
of fraud.15
G. Unless otherwise provided for in the network agreement, pharmacies16
or payors may seek mediation to resolve contractual disputes related to pricing17
or on-site audits.
18
H. This Section shall not apply to:19
(1) Any quality assurance review, as defined by the time period prior to20
the reimbursement by the entity to the pharmacy.21
(2) An investigation that is initiated based on or that involves suspected22
or alleged fraud, willful misrepresentation, or abuse.23
(3) Any federally funded activity specifically preempted by law or rule.24
Section 2. This provisions of this Act shall apply to contracts entered into, amended,25
extended, or renewed on or after January 1, 2013.26 SB NO. 756
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Establishes the pharmacy audit and appeals process.
Effective January 1, 2013.
(Adds R.S. 22:1856.1)