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.
Italics indicate opposite chamber/conference committee amendments.
*hb0374*
HOUSE BILL 374
J5 (3lr0476)
ENROLLED BILL
— Health and Government Operations/Finance —
Introduced 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
Read and Examined by Proofreaders:
_______________________________________________
Proofreader.
_______________________________________________
Proofreader.
Sealed with the Great Seal and presented to the Governor, for his approval this
_______ day of _______________ at ________________________ o’clock, ________M.
______________________________________________
Speaker.
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 certain pharmacy benefits managers, including provisions related to audit 11
limits, the acceptance of certain documents as validation or proof, the recoupment of 12 2 HOUSE BILL 374
funds or charging and payment of fees for prescriptions of unbreakable package 1
sizes, access to financial documentation, and audit documentation; requiring that a 2
final audit report include certain information if applicable; authorizing a pharmacy 3
or pharmacist to confirm with a pharmacy customer or purchaser that the pharmacy 4
customer or purchaser received a certain refund; and generally relating to audits by 5
pharmacy benefits managers. 6
BY adding to 7
Article – Health – General 8
Section 15–102.3(k) 15–103(b)(33) 9
Annotated Code of Maryland 10
(2019 Replacement Volume and 2022 Supplement) 11
BY repealing and reenacting, with amendments, 12
Article – Insurance 13
Section 15–1629 14
Annotated Code of Maryland 15
(2017 Replacement Volume and 2022 Supplement) 16
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 17
That the Laws of Maryland read as follows: 18
Article – Health – General 19
15–102.3. 20
(K) THE PROVISIONS OF § 15–1629 OF THE INSURANCE ARTICLE APPLY TO 21
PHARMACY BENEFITS MA NAGERS THAT CONTRACT WITH MANAGED CARE 22
ORGANIZATIONS . 23
15–103. 24
(b) (33) THE SECRETARY SHALL ADOPT REGULATIONS FOR PHAR MACY 25
BENEFITS MANAGERS TH AT CONTRACT WITH MANAGE D CARE ORGANIZATIONS THAT 26
ESTABLISH REQUIREMEN TS FOR CONDUCTING AU DITS OF PHARMACIES O R 27
PHARMACISTS THAT ARE : 28
(I) TO THE EXTENT PRACTIC ABLE, SUBSTANTIVELY SIMILA R 29
TO THE AUDIT PROVISI ONS UNDER § 15–1629 OF THE INSURANCE ARTICLE; AND 30
(II) CONSISTENT WITH FEDER AL LAW. 31
Article – Insurance 32
15–1629. 33
HOUSE BILL 374 3
[(a) This section applies only to a pharmacy benefits manager that provides 1
pharmacy benefits management services on behalf of a carrier.] 2
[(b)] (A) This section does not apply to an audit that involves probable or 3
potential fraud or willful misrepresentation by a pharmacy or pharmacist. 4
[(c)] (B) A pharmacy benefits manager shall conduct an audit of a pharmacy or 5
pharmacist under contract with the pharmacy benefits manager in accordance with this 6
section. 7
(C) (D) (1) A PHARMACY BENEFITS MA NAGER MAY CONDUCT AN AUDIT 8
THROUGH AN AUDITING ENTITY. 9
(2) AN AUDITING ENTITY MU ST REGISTER WITH THE COMMISSIONER 10
AS AN AUDITING ENTIT Y BEFORE CONDUCTING AN AUDIT IN THE STATE. 11
(3) (2) THE COMMISSIONER MAY ADOP T REGULATIONS TO CAR RY 12
OUT THIS SUBSECTION . 13
(d) (E) A pharmacy benefits manager may not schedule an onsite audit to begin 14
during the first 5 calendar days of a month unless requested by the pharmacy or 15
pharmacist. 16
(e) (F) When conducting an audit, a pharmacy benefits manager shall: 17
(1) if the audit is onsite, provide written notice to the pharmacy or 18
pharmacist at least 2 weeks before conducting the initial onsite audit for each audit cycle; 19
(2) employ the services of a pharmacist if the audit requires the clinical or 20
professional judgment of a pharmacist; 21
(3) [permit] ALLOW its auditors to enter the prescription area of a 22
pharmacy only when accompanied by or authorized by a member of the pharmacy staff; 23
(4) allow a pharmacist or pharmacy to use any prescription, or authorized 24
change to a prescription, that meets the requirements of COMAR 10.34.20.02 to validate 25
claims submitted for reimbursement for dispensing of original and refill prescriptions; 26
(5) for purposes of validating the pharmacy record with respect to orders 27
or refills of a drug, allow the pharmacy or pharmacist to use records of a hospital or a 28
physician or other prescriber authorized by law that are: 29
(i) written; or 30
4 HOUSE BILL 374
(ii) transmitted electronically or by any other means of 1
communication authorized by contract between the pharmacy and the pharmacy benefits 2
manager; 3
(6) FOR PURPOSES OF AN I NVOICE AUDIT, ACCEPT AS VALIDATION 4
INVOICES ISSUED BEFO RE THE DATE OF DISPE NSING FROM: 5
(I) A WHOLESAL E DISTRIBUTOR: 6
1. THAT HAS BEEN ISSUED A PERMIT BY THE STATE 7
BOARD OF PHARMACY UNDER TITLE 12, SUBTITLE 6C OF THE HEALTH 8
OCCUPATIONS ARTICLE; AND 9
2. FROM WHICH THE PHARM ACY OR PHARMACIST HA S 10
PURCHASED PRESCRIPTI ON DRUGS; OR 11
(II) FOR INVOICES FOR DURABLE MEDICAL EQUIPMENT OR 12
SICKROOM SUPPLIES , A DISTRIBUTOR THAT H AS THE APPROPRIATE 13
AUTHORIZATION TO DO BUSINESS IN THE STATE; 14
(7) (6) ALLOW ACCEPT A COMPLETED CASH REGISTER 15
TRANSACTION TO SERVE AS PROOF OF DE LIVERY OR PICKUP FOR A PHARMACY 16
CUSTOMER UNLESS THERE IS CONT RADICTORY INFORMATIO N; 17
[(6)] (8) (7) audit each pharmacy and pharmacist under the same standards 18
and parameters as other similarly situated pharmacies or pharmacists audited by the 19
pharmacy benefits manager; 20
[(7)] (9) (8) only audit claims submitted or adjudicated within the 2–year 21
period immediately preceding the audit, unless a longer period is authorized under federal 22
or State law; 23
[(8)] (10) (9) deliver the preliminary audit report to the pharmacy or 24
pharmacist within 120 calendar days after the completion of the audit, with reasonable 25
extensions allowed; 26
[(9)] (11) (10) in accordance with subsection [(k)] (M) (L) (M) of this 27
section, allow a pharmacy or pharmacist to produce documentation to address any 28
discrepancy found during the audit; and 29
[(10)] (12) (11) deliver the final audit report to the pharmacy or 30
pharmacist: 31
HOUSE BILL 374 5
(i) within 6 months after delivery of the preliminary audit report if 1
the pharmacy or pharmacist does not request an internal appeal under subsection [(k)] (M) 2
(L) (M) of this section; or 3
(ii) within 30 days after the conclusion of the internal appeals 4
process under subsection [(k)] (M) (L) (M) of this section if the pharmacy or pharmacist 5
requests an internal appeal. 6
(f) (G) If a contract between a pharmacy or pharmacist and a pharmacy 7
benefits manager specifies a period of time in which a pharmacy or pharmacist is allowed 8
to withdraw and resubmit a claim and that period of time expires before the pharmacy 9
benefits manager delivers a preliminary audit report that identifies discrepancies, the 10
pharmacy benefits manager shall allow the pharmacy or pharmacist to withdraw and 11
resubmit a claim within 30 days after: 12
(1) the preliminary audit report is delivered if the pharmacy or pharmacist 13
does not request an internal appeal under subsection [(k)] (M) (L) (M) of this section; or 14
(2) the conclusion of the internal appeals process under subsection [(k)] 15
(M) (L) (M) of this section if the pharmacy or pharmacist requests an internal appeal. 16
(g) (H) During an audit, a pharmacy benefits manager may not disrupt the 17
provision of services to the customers of a pharmacy. 18
(h) (I) (1) A pharmacy benefits manager may not: 19
(i) use the accounting practice of extrapolation to calculate 20
overpayments or underpayments; [or] 21
(ii) [Except] EXCEPT as provided in paragraph (2) of this subsection: 22
1. share information from an audit with another pharmacy 23
benefits manager; or 24
2. use information from an audit conducted by another 25
pharmacy benefits manager; 26
(III) CHARGE A PHARMACY OR PHARMACIST A FEE UNL ESS AN 27
AUDIT FINDS THERE WA S A FINANCIAL DETRIMENT TO T HE PHARMACY CUSTOMER 28
OR PURCHASER ; 29
(IV) CHARGE A PHARMACY OR PHARMACIST A FEE WIT H REGARD 30
TO AN INCORRECT DAYS OF SUPPLY CALCULATIO N IF THE PHARMACY BE NEFITS 31
MANAGER IS UNABLE TO ACCEPT THE CORRECT D AYS OF SUPPLY WITHOU T HELP 32
DESK INTERVENTION ; 33 6 HOUSE BILL 374
(III) RECOUP ANY FUNDS FRO M OR CHARGE ANY FEES TO A 1
PHARMACY OR PHARMACI ST FOR A PRESCRIPTIO N WITH REGARD TO AN INCORRECT 2
DAYS OF SUPPLY CALCU LATION IF THE PACKAG E SIZE OF THE MEDICA TION IS 3
UNBREAKABLE AND THE PHARMACY BENEFITS MA NAGER CANNOT ACCEPT THE 4
CORRECT MATHEMATICAL LY CALCULABLE DAYS ’ SUPPLY DURING PRESCR IPTION 5
ADJUDICATION ; 6
(V) (IV) HAVE OR REQUEST ACCE SS TO A PHARMACY ’S OR 7
PHARMACIST ’S BANK, CREDIT CARD, OR DEPOSITORY STATEM ENTS OR DATA AS IT 8
RELATES TO COST –SHARING; OR 9
(VI) (V) AUDIT CLAIMS THAT WE RE REVERSED OR FOR W HICH 10
THERE WAS NO REMUNER ATION BY THE PURCHAS ER OR COST TO THE PH ARMACY 11
CUSTOMER EXCEPT IF NECESSARY TO EVALUATE COMPLIAN CE TO A CONTRACT . 12
(2) Paragraph (1)(ii) of this subsection does not apply to the sharing of 13
information: 14
(i) required by federal or State law; 15
(ii) in connection with an acquisition or merger involving the 16
pharmacy benefits manager; or 17
(iii) at the payor’s request or under the terms of the agreement 18
between the pharmacy benefits manager and the payor. 19
(3) FOR CLAIMS THAT WERE AUDITED IN VIOLATION OF PARAGRAPH 20
(1)(VI) OF THIS SUBSECTION , THE PHARMACY BENEFIT S MANAGER OR PURCHAS ER 21
SHALL PAY THE PHARMA CY OR PHARMACIST $20 PER CLAIM FOUND TO B E IN 22
VIOLATION. 23
(I) (J) (1) A PHARMACY BENEFITS MA NAGER OR PURCHASER M AY NOT 24
AUDIT MORE THAN 50 125 PRESCRIPTIONS DURING A DESK OR SITE AUDIT UNLESS 25
THE PHARMACY BENEFITS MA NAGER OR PURCHASER R EQUESTING THE AUDIT PAYS 26
THE PHARMACY OR PHARMACI ST $20 PER ADDITIONAL PRESC RIPTION OR PROOF 27
OF DELIVERY OR PICKUP R EQUEST. 28
(2) THE FEE REQUIRED UNDE R PARAGRAPH (1) OF THIS SUBSECTION 29
IS IN ADDITION TO TH E FEE REQUIRED UNDER SUBSECTION (J)(1) OF THIS SECTION. 30
(J) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , A PHARMACY 31
BENEFITS MANAG ER OR PURCHASER SHAL L PAY A PHARMACY OR PHARMACIST $250 32
PER HOUR OF AUDIT OR $10 PER PRESCRIPTION AUD ITED, WHICHEVER IS GREATER . 33
HOUSE BILL 374 7
(2) THE FEE REQUIRED UNDE R THIS SUBSECTION SH ALL BE 1
ADJUSTED ON JULY 1 EACH YEAR FOR INFLAT ION IN ACCORDANCE WI TH THE 2
CONSUMER PRICE INDEX. 3
[(i)] (K) (J) (K) The recoupment of a claims payment from a pharmacy or 4
pharmacist by a pharmacy benefits manager shall be based on an actual overpayment or 5
denial of an audited claim unless the projected overpayment or denial is part of a settlement 6
agreed to by the pharmacy or pharmacist. 7
[(j)] (L) (K) (L) (1) In this subsection, “overpayment” means a payment by the 8
pharmacy benefits manager to a pharmacy or pharmacist that is greater than the rate or 9
terms specified in the contract between the pharmacy or pharmacist and the pharmacy 10
benefits manager at the time that the payment is made. 11
(2) A clerical error, record–keeping error, typographical error, or 12
scrivener’s error in a required document or record may not constitute fraud or grounds for 13
recoupment of a claims payment from a pharmacy or pharmacist by a pharmacy benefits 14
manager if the prescription was otherwise legally dispensed and the claim was otherwise 15
materially correct. 16
(3) Notwithstanding paragraph (2) of this subsection, claims remain 17
subject to recoupment of overpayment or payment of any discovered underpayment by the 18
pharmacy benefits manager. 19
[(k)] (M) (L) (M) (1) A pharmacy benefits manager shall establish an internal 20
appeals process under which a pharmacy or pharmacist may appeal any disputed claim in 21
a preliminary audit report. 22
(2) Under the internal appeals process, a pharmacy benefits manager shall 23
allow a pharmacy or pharmacist to request an internal appeal within 30 working days after 24
receipt of the preliminary audit report, with reasonable extensions allowed. 25
(3) The pharmacy benefits manager shall include in its preliminary audit 26
report a written explanation of the internal appeals process, including the name, address, 27
and telephone number of the person to whom an internal appeal should be addressed. 28
(4) The decision of the pharmacy benefits manager on an appeal of a 29
disputed claim in a preliminary audit report by a pharmacy or pharmacist shall be reflected 30
in the final audit report. 31
(5) The pharmacy benefits manager shall deliver the final audit report to 32
the pharmacy or pharmacist within 30 calendar days after conclusion of the internal 33
appeals process. 34
[(l)] (N) (M) (N) (1) A pharmacy benefits manager may not recoup by setoff 35
any money for an overpayment or denial of a claim until: 36 8 HOUSE BILL 374
(i) the pharmacy or pharmacist has an opportunity to review the 1
pharmacy benefits manager’s findings; and 2
(ii) if the pharmacy or pharmacist concurs with the pharmacy 3
benefits manager’s findings of overpayment or denial, 30 working days have elapsed after 4
the date the final audit report has been delivered to the pharmacy or pharmacist. 5
(2) If the pharmacy or pharmacist does not concur with the pharmacy 6
benefits manager’s findings of overpayment or denial, the pharmacy benefits manager may 7
not recoup by setoff any money pending the outcome of an appeal under subsection [(k)] 8
(M) (L) (M) of this section. 9
(3) A pharmacy benefits manager shall remit any money due to a pharmacy 10
or pharmacist as a result of an underpayment of a claim within 30 working days after the 11
final audit report has been delivered to the pharmacy or pharmacist. 12
(4) Notwithstanding the provisions of paragraph (1) of this subsection, a 13
pharmacy benefits manager may withhold future payments before the date the final audit 14
report has been delivered to the pharmacy or pharmacist if the identified discrepancy for 15
all disputed claims in a preliminary audit report for an individual audit exceeds $25,000. 16
(O) THE FINAL AUDIT REPOR T SHALL, IF APPLICABLE: 17
(1) IDENTIFY EACH PHARMA CY CUSTOMER OR PURCH ASER 18
RECEIVING A REFUND ; AND 19
(2) SPECIFY THE AMOUNT B EING REFUNDED TO EAC H PHARMACY 20
CUSTOMER OR PURCHASE R. 21
(P) A PHARMACY OR PHARMACI ST MAY CONFIRM WITH THE PHARMACY 22
CUSTOMER OR PURCHASER THAT THE P HARMACY CUSTOMER OR PURCHASER 23
RECEIVED THE REFUND AMOUNT FROM THE PHAR MACY BENEFITS MANAGE R. 24
(Q) (N) (O) (1) A PHARMACY BENEFITS MA NAGER SHALL PROVIDE A 25
PHARMACY OR PHARMACI ST BEING AUDITED WIT H A PHONE NUMBER AND, IF 26
AVAILABLE, ACCESS TO A SECURE P ORTAL THAT THE PHARMACY OR PHARMACIST 27
MAY USE TO ASK QUEST IONS REGARDING THE A UDIT. 28
(2) AN INDIVIDUAL WHO IS FAMILIAR WITH THE AU DIT SHALL 29
RESPOND TO ALL TELEPHONE INQUIRIES MADE THROUGH A PHONE NUMBER OR 30
SECURE PORTAL PROVID ED UNDER PARAGRAPH (1) OF THIS SUBSECTION WITHIN 31
72 HOURS 3 BUSINESS DAYS AFTER THE CALL INQUIRY WAS MADE. 32
HOUSE BILL 374 9
(R) (O) (P) (1) THE PHARMACY BENEFITS MANAGER SHALL GIVE T HE 1
PHARMACY OR PHARMACI ST THE OPTION TO PRO VIDE REQUESTED AUDIT 2
DOCUMENTATION BY POS TAL MAIL, E–MAIL, OR FACSIMILE. 3
(2) IF A DOCUMENT IS REQU ESTED REGARDING AN A UDIT, THE 4
PHARMACY BENEFITS MA NAGER SHALL PROVIDE A SECURE FACSIMILE N UMBER 5
AND A MECHANISM FOR RECEIVING SECURE E –MAILS. 6
(3) ON OR BEFORE OCTOBER 1, 2025, A PHARMACY BENEFITS 7
MANAGER SHALL PROVIDE A ME CHANISM FOR SECURE E LECTRONIC 8
COMMUNICATION FOR PH ARMACIES AND PHARMAC ISTS TO COMMUNICATE WITH 9
AND SUBMIT DOCUMENTS TO THE AUDITING ENTI TY. 10
[(m)] (S) (P) (Q) (1) The Commissioner may adopt regulations regarding: 11
(i) the documentation that may be requested during an audit; and 12
(ii) the process a pharmacy benefits manager may use to conduct an 13
audit. 14
(2) On request of the Commissioner or the Commissioner’s designee, a 15
pharmacy benefits manager shall provide a copy of its audit procedures or internal appeals 16
process. 17
SECTION 2. AND BE IT FURTHER ENACTED, That: 18
(a) Except as provided in subsection (b) of this section, for an audit of a pharmacy 19
or pharmacist under contract with a pharmacy benefits manager, this Act shall apply only 20
to an audit performed on or after January 1, 2024. 21
(b) For a pharmacy benefits manager that contracts with the State or a local 22
government, this Act shall apply only to audits that occur on the first day of the first plan 23
year beginning on or after January 1, 2024, or the first time a contract between a pharmacy 24
benefits manager with the State or a local government is amended or renewed on or after 25
January 1, 2024. 26
SECTION 2. 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 27
October 1, 2023 January 1, 2024. 28