HLS 14RS-221 ENGROSSED
Page 1 of 5
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2014
HOUSE BILL NO. 62
BY REPRESENTATIVE PUGH
PHARMACISTS: Provides relative to pharmacy record audits
AN ACT1
To amend and reenact R.S. 22:1856.1(A), (B)(introductory paragraph) and (3)(a), (C)(3),2
(D), and (E) and to enact R.S. 22:1856.1(B)(10) and (11), relative to pharmacy3
record audits; to provide for standards and requirements concerning pharmacy record4
audit procedures; to provide for conditions under which recoupment of certain5
reimbursements to pharmacies may occur; to make technical changes; and to provide6
for related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 22:1856.1(A), (B)(introductory paragraph) and (3)(a), (C)(3), (D),9
and (E) are hereby amended and reenacted and R.S. 22:1856.1(B)(10) and (11) are hereby10
enacted to read as follows: 11
ยง1856.1. Pharmacy record audits; recoupment; appeals12
A. As used in this Section, "entity" means a managed care company,13
insurance company, third-party payor, or the representative of the managed care14
company including a pharmacy benefit managers manager, insurance company, or15
third-party payor.16
B. Notwithstanding any other provision of law to the contrary, when an on-17
site onsite audit of the records of a pharmacy is conducted by an entity, the audit18
shall be conducted in accordance with the following criteria:19
* * *20 HLS 14RS-221 ENGROSSED
HB NO. 62
Page 2 of 5
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
(3)(a) The entity conducting or any vendor or subcontractor of the entity1
which conducts the initial on-site onsite audit shall give the pharmacy notice at least2
two weeks before conducting the initial on-site onsite audit for each audit cycle.3
* * *4
(10) If the audit is conducted by a vendor or subcontractor of an entity, the5
vendor or subcontractor shall identify to the pharmacy the entity on whose behalf the6
audit is being conducted without necessity of this information being requested by the7
pharmacy.8
(11) The audit shall be based only on information obtained by the entity9
conducting the audit and not based on any audit report or other information gained10
from an audit conducted by a different auditing entity. Nothing in this Paragraph11
shall prohibit an auditing entity from using an earlier audit report prepared by that12
auditing entity for the same pharmacy. Except as required by state or federal law,13
an entity conducting an audit may have access to a pharmacy's previous audit report14
only if the previous report was prepared by that entity.15
C.16
* * *17
(3)(a) The full amount of any recoupment on an audit shall be refunded to18
the responsible party.19
(a) (b) Except as provided in this Subsection, a charge or assessment for an20
audit shall not be based, directly or indirectly, on amounts recouped.21
(b) (c) Nothing in this Subsection shall be construed to prevent the entity22
conducting the audit from charging or assessing the responsible party, directly or23
indirectly, based on amounts recouped if both of the following conditions are met:24
(i) The responsible party and the entity have a contract that explicitly states25
the percentage charge or assessment to the responsible party.26
(ii) A commission or other payment to an agent or employee of the entity27
conducting the audit is not based, directly or indirectly, on amounts recouped.28
* * *29 HLS 14RS-221 ENGROSSED
HB NO. 62
Page 3 of 5
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
D.(1) No pharmacy shall be subject to recoupment of any portion of the1
reimbursement for the dispensed product of a prescription unless one or more of the2
following has occurred:3
(a) Fraudulent activity or other intentional and willful misrepresentation by4
the pharmacy as evidenced by a review of claims data or statements, physical review,5
or any other investigative method.6
(b) The pharmacy has engaged in dispensing in excess of the benefit design,7
as established by the plan sponsor.8
(c) The pharmacy has not filled prescriptions in accordance with the9
prescriber's order.10
(d) Actual overpayment to the pharmacy.11
(e) The pharmacy received reimbursement based on incorrect information12
it submitted on the initial claim.13
(2) Recoupment of claims shall be based on the actual financial harm to the14
entity or on the actual overpayment or underpayment. A finding of an overpayment15
that is the result of dispensing in excess of the benefit design, as established by the16
plan sponsor, shall be calculated as the difference between what was dispensed in17
accordance with the prescriber's orders and the dispensing requirements as set forth18
by the benefit design. Calculations of overpayments shall not include dispensing19
fees unless one or more of the following conditions is present has been satisfied:20
(1) (a) A prescription was not actually dispensed.21
(2) (b) The prescriber denied authorization.22
(3) (c) The prescription dispensed was a medication error by the pharmacy.23
(4) (d) The identified overpayment is based solely on an extra dispensing fee.24
(5) (e) The pharmacy was noncompliant with program guidelines.25
(6) (f) There was insufficient documentation.26
E.(1) Each entity conducting an audit shall establish an appeal process under27
which a pharmacy may appeal an unfavorable preliminary audit report to the entity.28 HLS 14RS-221 ENGROSSED
HB NO. 62
Page 4 of 5
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
(1) (2) If, following an appeal, the entity finds that an unfavorable audit1
report or any portion of an unfavorable audit report is unsubstantiated, the entity2
shall dismiss the audit report or the unsubstantiated portion of the audit report3
without any further proceedings.4
(2) (3) No interest shall be charged to the entity during the appeal period.5
(3) (4) Following the final audit report, and if not otherwise provided for in6
the provider contract, either party may seek mediation to address outstanding7
disagreements.8
(4) (5) Notwithstanding any other provision of law to the contrary, the9
agency conducting the audit shall not use the accounting practice of extrapolation in10
calculating recoupment or penalties for audits, unless otherwise agreed to by the11
pharmacy or mandated by a government agency or in the case of fraud.12
* * *13
Section 2. This Act shall become effective upon signature by the governor or, if not14
signed by the governor, upon expiration of the time for bills to become law without signature15
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If16
vetoed by the governor and subsequently approved by the legislature, this Act shall become17
effective on the day following such approval.18
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Pugh HB No. 62
Abstract: Provides for standards and requirements concerning pharmacy record audit
procedures, and for conditions under which recoupment of certain reimbursements
to pharmacies may occur.
Present law establishes standards and requirements for audits of pharmacy records by an
"entity", defined for purposes of present law as a managed care company or its
representative, an insurance company, or a third-party payor. Present law further provides
for appeals and recoupment procedures related to such audits of pharmacy records.
Proposed law retains present law.
Present law requires an entity, as defined in present law, which conducts an initial onsite
audit of a pharmacy to give the pharmacy notice at least two weeks before such audit for
each audit cycle. Proposed law adds requirement that if a vendor or subcontractor conducts HLS 14RS-221 ENGROSSED
HB NO. 62
Page 5 of 5
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
an initial onsite audit of a pharmacy on behalf of an entity, the vendor or subcontractor is
subject to the same requirement for providing notice to the pharmacy as is the entity.
Proposed law adds requirement for a vendor or subcontractor of an entity, if conducting a
pharmacy records audit on behalf of an entity, to identify to the pharmacy the entity on
whose behalf the audit is being conducted without necessity of this information being
requested by the pharmacy.
Proposed law adds requirement that a pharmacy records audit be based only on information
obtained by the entity conducting the audit and not based on any audit report or other
information gained from an audit conducted by a different auditing entity. Provides that
nothing in proposed law shall prohibit an auditing entity from using an earlier audit report
prepared by that auditing entity for the same pharmacy. Further provides that except as
required by present law or federal law, an entity conducting an audit may have access to a
pharmacy's previous audit report only if the previous report was prepared by that entity.
Proposed law stipulates that no pharmacy shall be subject to recoupment of any portion of
the reimbursement for the dispensed product of a prescription unless one or more of the
following has occurred:
(1)Fraudulent activity or other intentional and willful misrepresentation by the
pharmacy as evidenced by a review of claims data or statements, physical review,
or any other investigative method.
(2)The pharmacy has engaged in dispensing in excess of the benefit design, as
established by the plan sponsor.
(3)The pharmacy has not filled prescriptions in accordance with the prescriber's order.
(4)Actual overpayment to the pharmacy.
(5)The pharmacy received reimbursement based on incorrect information it submitted
on the initial claim.
Proposed law makes technical changes to present law.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 22:1856.1(A), (B)(intro. para.) and (3)(a), (C)(3), (D), and (E); Adds R.S.
22:1856.1(B)(10) and (11))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Health and Welfare to the
original bill.
1. In the enumerated list of conditions that subject a pharmacy to potential
recoupment of reimbursement for the dispensed product of a prescription, added
the condition of the pharmacy receiving reimbursement based on incorrect
information that it submitted on the initial claim.
2. Made technical change.