EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0374*
HOUSE BILL 374
J5 3lr0476
CF SB 565
By: Delegate Kipke Delegates Kipke, Alston, Bagnall, Bhandari, Chisholm,
Cullison, Guzzone, Hill, Hutchinson, S. Johnson, Kaiser, Kerr, R. Lewis,
Lopez, Martinez, M. Morgan, Pena–Melnyk, Reilly, Rosenberg, Szeliga,
Taveras, White, and Woods
Introduced and read first time: January 26, 2023
Assigned to: Health and Government Operations
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 10, 2023
CHAPTER ______
AN ACT concerning 1
Health Insurance – Pharmacy Benefits Managers – Audits of Pharmacies and 2
Pharmacists 3
FOR the purpose of expanding the applicability of the provisions regarding audits of a 4
pharmacy or pharmacist to all pharmacy benefits managers; authorizing a pharmacy 5
benefits manager to conduct an audit through an auditing entity that is registered 6
with the Maryland Insurance Commissioner; requiring the Secretary of Health to 7
adopt certain regulations for pharmacy benefits managers that contract with 8
managed care organizations that establish requirements for conducting audits of 9
pharmacies or pharmacists; establishing requirements and prohibitions regarding 10
audits by pharmacy benefits managers, including provisions related to audit limits, 11
the acceptance of certain documents as validation or proof, the recoupment of funds 12
or charging and payment of fees for prescriptions of unbreakable package sizes, 13
access to financial documentation, and audit documentation; requiring that a final 14
audit report include certain information if applicable; authorizing a pharmacy or 15
pharmacist to confirm with a pharmacy customer or purchaser that the pharmacy 16
customer or purchaser received a certain refund; and generally relating to audits by 17
pharmacy benefits managers. 18
BY adding to 19
Article – Health – General 20
Section 15–102.3(k) 15–103(b)(33) 21 2 HOUSE BILL 374
Annotated Code of Maryland 1
(2019 Replacement Volume and 2022 Supplement) 2
BY repealing and reenacting, with amendments, 3
Article – Insurance 4
Section 15–1629 5
Annotated Code of Maryland 6
(2017 Replacement Volume and 2022 Supplement) 7
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 8
That the Laws of Maryland read as follows: 9
Article – Health – General 10
15–102.3. 11
(K) THE PROVISIONS OF § 15–1629 OF THE INSURANCE ARTICLE APPLY TO 12
PHARMACY BENEFITS MA NAGERS THAT CONTRACT WITH MANAGED CARE 13
ORGANIZATIONS . 14
15–103. 15
(b) (33) THE SECRETARY SHALL ADOPT REGULATIONS FOR PHAR MACY 16
BENEFITS MANAGERS TH AT CONTRACT WITH MAN AGED CARE ORGANIZATI ONS THAT 17
ESTABLISH REQUIREMEN TS FOR CONDUCTING AU DITS OF PHARMACIES O R 18
PHARMACISTS THAT ARE : 19
(I) TO THE EXTENT PRACTIC ABLE, SUBSTANTIVELY SI MILAR 20
TO THE AUDIT PROVISI ONS UNDER § 15–1629 OF THE INSURANCE ARTICLE; AND 21
(II) CONSISTENT WITH FEDER AL LAW. 22
Article – Insurance 23
15–1629. 24
[(a) This section applies only to a pharmacy benefits manager that provides 25
pharmacy benefits management services on behalf of a carrier.] 26
[(b)] (A) This section does not apply to an audit that involves probable or 27
potential fraud or willful misrepresentation by a pharmacy or pharmacist. 28
[(c)] (B) A pharmacy benefits manager shall conduct an audit of a pharmacy or 29
pharmacist under contract with the pharmacy benefits manager in accordance with this 30
section. 31
HOUSE BILL 374 3
(C) (1) A PHARMACY BENEFITS MA NAGER MAY CONDUCT AN AUDIT 1
THROUGH AN AUDITING ENTITY. 2
(2) AN AUDITING ENTITY MU ST REGISTER WITH THE COMMISSIONER 3
AS AN AUDITING ENTIT Y BEFORE CONDUCTING AN AUDIT IN THE STATE. 4
(3) (2) THE COMMISSIONER MAY ADOP T REGULATIONS TO CAR RY 5
OUT THIS SUBSECTION . 6
(d) A pharmacy benefits manager may not schedule an onsite audit to begin 7
during the first 5 calendar days of a month unless requested by the pharmacy or 8
pharmacist. 9
(e) When conducting an audit, a pharmacy benefits manager shall: 10
(1) if the audit is onsite, provide written notice to the pharmacy or 11
pharmacist at least 2 weeks before conducting the initial onsite audit for each audit cycle; 12
(2) employ the services of a pharmacist if the audit requires the clinical or 13
professional judgment of a pharmacist; 14
(3) [permit] ALLOW its auditors to enter the prescription area of a 15
pharmacy only when accompanied by or authorized by a member of the pharmacy staff; 16
(4) allow a pharmacist or pharmacy to use any prescription, or authorized 17
change to a prescription, that meets the requirements of COMAR 10.34.20.02 to validate 18
claims submitted for reimbursement for dispensing of original and refill prescriptions; 19
(5) for purposes of validating the pharmacy record with respect to orders 20
or refills of a drug, allow the pharmacy or pharmacist to use records of a hospital or a 21
physician or other prescriber authorized by law that are: 22
(i) written; or 23
(ii) transmitted electronically or by any other means of 24
communication authorized by contract between the pharmacy and the pharmacy benefits 25
manager; 26
(6) FOR PURPOSES OF AN I NVOICE AUDIT, ACCEPT AS VALIDATION 27
INVOICES ISSUED BEFORE T HE DATE OF DISPENSIN G FROM: 28
(I) A WHOLESALE DISTRIBU TOR: 29
1. THAT HAS BEEN ISSUED A PERMIT BY THE STATE 30
BOARD OF PHARMACY UNDER TITLE 12, SUBTITLE 6C OF THE HEALTH 31
OCCUPATIONS ARTICLE; AND 32 4 HOUSE BILL 374
2. FROM WHICH THE PHARM ACY OR PHARMACIST HAS 1
PURCHASED PRESCRIPTI ON DRUGS; OR 2
(II) FOR INVOICES FOR DUR ABLE MEDICAL EQUIPME NT OR 3
SICKROOM SUPPLIES , A DISTRIBUTOR THAT H AS THE APPROPRIATE 4
AUTHORIZATION TO DO BUSINESS IN THE STATE; 5
(7) (6) ALLOW ACCEPT A COMPLETED CASH REGISTER 6
TRANSACTION TO SERVE AS PROOF OF DE LIVERY OR PICKUP FOR A PHARMACY 7
CUSTOMER UNLESS THERE IS CONT RADICTORY INFORMATIO N; 8
[(6)] (8) (7) audit each pharmacy and pharmacist under the same standards 9
and parameters as other similarly situated pharmacies or pharmacists audited by the 10
pharmacy benefits manager; 11
[(7)] (9) (8) only audit claims submitted or adjudicated within the 2–year 12
period immediately preceding the audit, unless a longer period is authorized under federal 13
or State law; 14
[(8)] (10) (9) deliver the preliminary audit report to the pharmacy or 15
pharmacist within 120 calendar days after the completion of the audit, with reasonable 16
extensions allowed; 17
[(9)] (11) (10) in accordance with subsection [(k)] (M) (L) of this section, 18
allow a pharmacy or pharmacist to produce documentation to address any discrepancy 19
found during the audit; and 20
[(10)] (12) (11) deliver the final audit report to the pharmacy or 21
pharmacist: 22
(i) within 6 months after delivery of the preliminary audit report if 23
the pharmacy or pharmacist does not request an internal appeal under subsection [(k)] (M) 24
(L) of this section; or 25
(ii) within 30 days after the conclusion of the internal appeals 26
process under subsection [(k)] (M) (L) of this section if the pharmacy or pharmacist 27
requests an internal appeal. 28
(f) If a contract between a pharmacy or pharmacist and a pharmacy benefits 29
manager specifies a period of time in which a pharmacy or pharmacist is allowed to 30
withdraw and resubmit a claim and that period of time expires before the pharmacy 31
benefits manager delivers a preliminary audit report that identifies discrepancies, the 32
pharmacy benefits manager shall allow the pharmacy or pharmacist to withdraw and 33
resubmit a claim within 30 days after: 34
HOUSE BILL 374 5
(1) the preliminary audit report is delivered if the pharmacy or pharmacist 1
does not request an internal appeal under subsection [(k)] (M) (L) of this section; or 2
(2) the conclusion of the internal appeals process under subsection [(k)] 3
(M) (L) of this section if the pharmacy or pharmacist requests an internal appeal. 4
(g) During an audit, a pharmacy benefits manager may not disrupt the provision 5
of services to the customers of a pharmacy. 6
(h) (1) A pharmacy benefits manager may not: 7
(i) use the accounting practice of extrapolation to calculate 8
overpayments or underpayments; [or] 9
(ii) [Except] EXCEPT as provided in paragraph (2) of this subsection: 10
1. share information from an audit with another pharmacy 11
benefits manager; or 12
2. use information from an audit conducted by another 13
pharmacy benefits manager; 14
(III) CHARGE A PHARMACY OR PHARMACIST A FEE UNL ESS AN 15
AUDIT FINDS THERE WA S A FINANCIAL DETRIM ENT TO THE PHARMACY CUSTOMER 16
OR PURCHASER ; 17
(IV) CHARGE A PHARMACY OR PHARMACIST A FEE WITH REGARD 18
TO AN INCORRECT DAYS OF SUPPLY CALCULATIO N IF THE PHARMACY BE NEFITS 19
MANAGER IS UNABLE TO ACCEPT THE CORRECT D AYS OF SUPPLY WITHOU T HELP 20
DESK INTERVENTION ; 21
(III) RECOUP ANY FUNDS FRO M OR CHARGE ANY FEES TO A 22
PHARMACY OR PHARMACI ST FOR A PRESCRIPTIO N WITH REGARD TO AN INCORRECT 23
DAYS OF SUPPLY CALCU LATION IF THE PACKAG E SIZE OF THE MEDICA TION IS 24
UNBREAKABLE AND THE PHARMACY BENEFITS MA NAGER CANNOT ACCEPT THE 25
CORRECT MATHEMATICALLY CALCU LABLE DAYS’ SUPPLY DURING PRESCR IPTION 26
ADJUDICATION ; 27
(V) (IV) HAVE OR REQUEST ACCE SS TO A PHARMACY ’S OR 28
PHARMACIST ’S BANK, CREDIT CARD, OR DEPOSITORY STATEM ENTS OR DATA AS IT 29
RELATES TO COST –SHARING; OR 30
(VI) (V) AUDIT CLAIMS TH AT WERE REVERSED OR FOR WHICH 31
THERE WAS NO REMUNER ATION BY THE PURCHAS ER OR COST TO THE PH ARMACY 32
CUSTOMER EXCEPT IF NECESSARY TO EVALUATE COMPLIAN CE TO A CONTRACT . 33 6 HOUSE BILL 374
(2) Paragraph (1)(ii) of this subsection does not apply to the sharing of 1
information: 2
(i) required by federal or State law; 3
(ii) in connection with an acquisition or merger involving the 4
pharmacy benefits manager; or 5
(iii) at the payor’s request or under the terms of the agreement 6
between the pharmacy benefits manager and the payor. 7
(3) FOR CLAIMS THAT WERE AUDITED IN VIOLATION OF PARAGRAPH 8
(1)(VI) OF THIS SUBSECTION , THE PHARMACY BENEFIT S MANAGER OR PURCHAS ER 9
SHALL PAY THE PHARMA CY OR PHARMACIST $20 PER CLAIM FOUND TO B E IN 10
VIOLATION. 11
(I) (1) A PHARMACY BENEFITS MA NAGER OR PURCHASER MAY NOT 12
AUDIT MORE THAN 50 125 PRESCRIPTIONS DURING A DESK OR SITE AUDIT UNLESS 13
THE PHARMACY BENEFITS MA NAGER OR PURCHASER R EQUESTING THE AUDIT PAYS 14
THE PHARMACY OR PHARMACI ST $20 PER ADDITIONAL PRESC RIPTION OR PROOF 15
OF DELIVERY OR PICKUP R EQUEST. 16
(2) THE FEE REQUIRED UNDE R PARAGRAPH (1) OF THIS SUBSECTION 17
IS IN ADDITION TO TH E FEE REQUIRED UNDER SUBSECTION (J)(1) OF THIS SECTION. 18
(J) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , A PHARMACY 19
BENEFITS MANAGER OR PURCHASER SHALL PAY A PHARMACY OR PHARMACI ST $250 20
PER HOUR OF AUDIT OR $10 PER PRESCRIPTION AUD ITED, WHICHEVER IS GREATER . 21
(2) THE FEE REQUIRED UNDE R THIS SUBSECTION SH ALL BE 22
ADJUSTED ON JULY 1 EACH YEAR FOR INFLAT ION IN ACCORDANCE WI TH THE 23
CONSUMER PRICE INDEX. 24
[(i)] (K) (J) The recoupment of a claims payment from a pharmacy or pharmacist 25
by a pharmacy benefits manager shall be based on an actual overpayment or denial of an 26
audited claim unless the projected overpayment or denial is part of a settlement agreed to 27
by the pharmacy or pharmacist. 28
[(j)] (L) (K) (1) In this subsection, “overpayment” means a payment by the 29
pharmacy benefits manager to a pharmacy or pharmacist that is greater than the rate or 30
terms specified in the contract between the pharmacy or pharmacist and the pharmacy 31
benefits manager at the time that the payment is made. 32
HOUSE BILL 374 7
(2) A clerical error, record–keeping error, typographical error, or 1
scrivener’s error in a required document or record may not constitute fraud or grounds for 2
recoupment of a claims payment from a pharmacy or pharmacist by a pharmacy benefits 3
manager if the prescription was otherwise legally dispensed and the claim was otherwise 4
materially correct. 5
(3) Notwithstanding paragraph (2) of this subsection, claims remain 6
subject to recoupment of overpayment or payment of any discovered underpayment by the 7
pharmacy benefits manager. 8
[(k)] (M) (L) (1) A pharmacy benefits manager shall establish an internal appeals 9
process under which a pharmacy or pharmacist may appeal any disputed c laim in a 10
preliminary audit report. 11
(2) Under the internal appeals process, a pharmacy benefits manager shall 12
allow a pharmacy or pharmacist to request an internal appeal within 30 working days after 13
receipt of the preliminary audit report, with reasonable extensions allowed. 14
(3) The pharmacy benefits manager shall include in its preliminary audit 15
report a written explanation of the internal appeals process, including the name, address, 16
and telephone number of the person to whom an internal appeal should be addressed. 17
(4) The decision of the pharmacy benefits manager on an appeal of a 18
disputed claim in a preliminary audit report by a pharmacy or pharmacist shall be reflected 19
in the final audit report. 20
(5) The pharmacy benefits manager shall deliver the final audit report to 21
the pharmacy or pharmacist within 30 calendar days after conclusion of the internal 22
appeals process. 23
[(l)] (N) (M) (1) A pharmacy benefits manager may not recoup by setoff any 24
money for an overpayment or denial of a claim until: 25
(i) the pharmacy or pharmacist has an opportunity to review the 26
pharmacy benefits manager’s findings; and 27
(ii) if the pharmacy or pharmacist concurs with the pharmacy 28
benefits manager’s findings of overpayment or denial, 30 working days have elapsed after 29
the date the final audit report has been delivered to the pharmacy or pharmacist. 30
(2) If the pharmacy or pharmacist does not concur with the pharmacy 31
benefits manager’s findings of overpayment or denial, the pharmacy benefits manager may 32
not recoup by setoff any money pending the outcome of an appeal under subsection [(k)] 33
(M) (L) of this section. 34
8 HOUSE BILL 374
(3) A pharmacy benefits manager shall remit any money due to a pharmacy 1
or pharmacist as a result of an underpayment of a claim within 30 working days after the 2
final audit report has been delivered to the pharmacy or pharmacist. 3
(4) Notwithstanding the provisions of paragraph (1) of this subsection, a 4
pharmacy benefits manager may withhold future payments before the date the final audit 5
report has been delivered to the pharmacy or pharmacist if the identified discrepancy for 6
all disputed claims in a preliminary audit report for an individual audit exceeds $25,000. 7
(O) THE FINAL AUDIT REPOR T SHALL, IF APPLICABLE: 8
(1) IDENTIFY EACH PHARMACY CUSTOMER OR PURCHASER 9
RECEIVING A REFUND ; AND 10
(2) SPECIFY THE AMOUNT B EING REFUNDED TO EAC H PHARMACY 11
CUSTOMER OR PURCHASE R. 12
(P) A PHARMACY OR PHARMACI ST MAY CONFIRM WITH THE PHARMACY 13
CUSTOMER OR PURCHASE R THAT THE PHARMACY CUSTOMER OR PURCHAS ER 14
RECEIVED THE REFUND AMOUNT FROM THE PHAR MACY BENEFITS MANAGE R. 15
(Q) (N) (1) A PHARMACY BENEFITS MA NAGER SHALL PROVIDE A 16
PHARMACY OR PHARMACI ST BEING AUDITED WIT H A PHONE NUMBER AND, IF 17
AVAILABLE, ACCESS TO A SECURE P ORTAL THAT THE PHARMACY OR PHARMACIST 18
MAY USE TO ASK QUEST IONS REGARDING THE A UDIT. 19
(2) AN INDIVIDUAL WHO IS FAMILIAR WITH THE AU DIT SHALL 20
RESPOND TO ALL TELEPHONE INQUIRIES MADE THROUGH A PHONE NUMBER OR 21
SECURE PORTAL PROVID ED UNDER PARAGRAPH (1) OF THIS SUBSECTION WITHIN 22
72 HOURS 3 BUSINESS DAYS AFTER THE CALL INQUIRY WAS MADE. 23
(R) (O) (1) THE PHARMACY BENEFITS MANAGER SHALL GIVE T HE 24
PHARMACY OR PHARMACI ST THE OPTION TO PRO VIDE REQUESTED AUDIT 25
DOCUMENTATION BY POS TAL MAIL, E–MAIL, OR FACSIMILE. 26
(2) IF A DOCUMENT IS REQU ESTED REGARDING AN AU DIT, THE 27
PHARMACY BENEFITS MA NAGER SHALL PROVIDE A SECURE FACSIMILE N UMBER 28
AND A MECHANISM FOR RECEIVING SECURE E –MAILS. 29
(3) ON OR BEFORE OCTOBER 1, 2025, A PHARMACY BENEFITS 30
MANAGER SHALL PROVID E A MECHANISM FOR SE CURE ELECTRONIC 31
COMMUNICATION FOR PHA RMACIES AND PHARMACI STS TO COMMUNICATE W ITH 32
AND SUBMIT DOCUMENTS TO THE AUDITING ENTI TY. 33
[(m)] (S) (P) (1) The Commissioner may adopt regulations regarding: 34 HOUSE BILL 374 9
(i) the documentation that may be requested during an audit; and 1
(ii) the process a pharmacy benefits manager may use to conduct an 2
audit. 3
(2) On request of the Commissioner or the Commissioner’s designee, a 4
pharmacy benefits manager shall provide a copy of its audit procedures or internal appeals 5
process. 6
SECTION 2. AND BE IT FURTHER ENACTED, That: 7
(a) Except as provided in subsection (b) of this section, for an audit of a pharmacy 8
or pharmacist under contract with a pharmacy benefits manager, this Act shall apply only 9
to an audit performed on or after January 1, 2024. 10
(b) For a pharmacy benefits manager that contracts with the State or a local 11
government, this Act shall apply only to audits that occur on the first day of the first plan 12
year beginning on or after January 1, 2024, or the first time a contract between a pharmacy 13
benefits manager with the State or a local government is amended or renewed on or after 14
January 1, 2024. 15
SECTION 2. 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 16
October 1, 2023 January 1, 2024. 17
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.