MD
Maryland Senate Bill SB565

Maryland 2023 Regular Session

Maryland Senate Bill SB565 Compare Versions

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33 EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
44 [Brackets] indicate matter deleted from existing law.
55 *sb0565*
66 ^
77 SENATE BILL 565
88 J5 3lr3005
99 CF HB 374
1010 By: Senators Ready and Klausmeier
1111 Introduced and read first time: February 6, 2023
1212 Assigned to: Finance
1313
1414 A BILL ENTITLED
1515
1616 AN ACT concerning 1
1717
1818 Health Insurance – Pharmacy Benefits Managers – Audits of Pharmacies and 2
1919 Pharmacists 3
2020
2121 FOR the purpose of expanding the applicability of the provisions regarding audits of a 4
2222 pharmacy or pharmacist to all pharmacy benefits managers; authorizing a pharmacy 5
2323 benefits manager to conduct an audit through an auditing entity that is registered 6
2424 with the Maryland Insurance Commissioner; establishing requirements and 7
2525 prohibitions regarding audits by pharmacy benefits managers, including provisions 8
2626 related to audit limits, the acceptance of certain documents as validation or proof, 9
2727 the charging and payment of fees, access to financial documentation, and audit 10
2828 documentation; requiring that a final audit report include certain information if 11
2929 applicable; authorizing a pharmacy or pharmacist to confirm with a pharmacy 12
3030 customer or purchaser that the pharmacy customer or purchaser received a certain 13
3131 refund; and generally relating to audits by pharmacy benefits managers. 14
3232
3333 BY adding to 15
3434 Article – Health – General 16
3535 Section 15–102.3(k) 17
3636 Annotated Code of Maryland 18
3737 (2019 Replacement Volume and 2022 Supplement) 19
3838
3939 BY repealing and reenacting, with amendments, 20
4040 Article – Insurance 21
4141 Section 15–1629 22
4242 Annotated Code of Maryland 23
4343 (2017 Replacement Volume and 2022 Supplement) 24
4444
4545 SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 25
4646 That the Laws of Maryland read as follows: 26
4747
4848 Article – Health – General 27 2 SENATE BILL 565
4949
5050
5151
5252 15–102.3. 1
5353
5454 (K) THE PROVISIONS OF § 15–1629 OF THE INSURANCE ARTICLE APPLY TO 2
5555 PHARMACY BENEFITS MA NAGERS THAT CONTRACT WITH MANAGED CARE 3
5656 ORGANIZATIONS . 4
5757
5858 Article – Insurance 5
5959
6060 15–1629. 6
6161
6262 [(a) This section applies only to a pharmacy benefits manager that provides 7
6363 pharmacy benefits management services on behalf of a carrier.] 8
6464
6565 [(b)] (A) This section does not apply to an audit that involves probable or 9
6666 potential fraud or willful misrepresentation by a pharmacy or pharmacist. 10
6767
6868 [(c)] (B) A pharmacy benefits manager shall conduct an audit of a pharmacy or 11
6969 pharmacist under contract with the pharmacy benefits manager in accordance with this 12
7070 section. 13
7171
7272 (C) (1) A PHARMACY BENEFITS MA NAGER MAY CONDUCT AN AUDIT 14
7373 THROUGH AN AUDITING ENTITY. 15
7474
7575 (2) AN AUDITING ENTITY MU ST REGISTER WITH THE COMMISSIONER 16
7676 AS AN AUDITING ENTIT Y BEFORE CONDUCTING AN AUDIT IN THE STATE. 17
7777
7878 (3) THE COMMISSIONER MAY ADOP T REGULATIONS TO CAR RY OUT 18
7979 THIS SUBSECTION . 19
8080
8181 (d) A pharmacy benefits manager may not schedule an onsite audit to begin 20
8282 during the first 5 calendar days of a month unless requested by the pharmacy or 21
8383 pharmacist. 22
8484
8585 (e) When conducting an audit, a pharmacy benefits manager shall: 23
8686
8787 (1) if the audit is onsite, provide written notice to the pharmacy or 24
8888 pharmacist at least 2 weeks before conducting the initial onsite audit for each audit cycle; 25
8989
9090 (2) employ the services of a pharmacist if the audit requires the clinical or 26
9191 professional judgment of a pharmacist; 27
9292
9393 (3) [permit] ALLOW its auditors to enter the prescription area of a 28
9494 pharmacy only when accompanied by or authorized by a member of the pharmacy staff; 29
9595 SENATE BILL 565 3
9696
9797
9898 (4) allow a pharmacist or pharmacy to use any prescription, or authorized 1
9999 change to a prescription, that meets the requirements of COMAR 10.34.20.02 to validate 2
100100 claims submitted for reimbursement for dispensing of original and refill prescriptions; 3
101101
102102 (5) for purposes of validating the pharmacy record with respect to orders 4
103103 or refills of a drug, allow the pharmacy or pharmacist to use records of a hospital or a 5
104104 physician or other prescriber authorized by law that are: 6
105105
106106 (i) written; or 7
107107
108108 (ii) transmitted electronically or by any other means of 8
109109 communication authorized by contract between the pharmacy and the pharmacy benefits 9
110110 manager; 10
111111
112112 (6) FOR PURPOSES OF AN I NVOICE AUDIT, ACCEPT AS VALIDATION 11
113113 INVOICES ISSUED BEFO RE THE DATE OF DISPE NSING FROM: 12
114114
115115 (I) A WHOLESALE DISTRIBUTOR: 13
116116
117117 1. THAT HAS BEEN ISSUED A PERMIT BY THE STATE 14
118118 BOARD OF PHARMACY UNDER TITLE 12, SUBTITLE 6C OF THE HEALTH 15
119119 OCCUPATIONS ARTICLE; AND 16
120120
121121 2. FROM WHICH THE PHARM ACY OR PHARMACIST HA S 17
122122 PURCHASED PRESCRIPTI ON DRUGS; OR 18
123123
124124 (II) FOR INVOICES F OR DURABLE MEDICAL E QUIPMENT OR 19
125125 SICKROOM SUPPLIES , A DISTRIBUTOR THAT H AS THE APPROPRIATE 20
126126 AUTHORIZATION TO DO BUSINESS IN THE STATE; 21
127127
128128 (7) ALLOW A COMPLETED RE GISTER TRANSACTION T O SERVE AS 22
129129 PROOF OF DELIVERY OR PICKUP FOR A PHARMAC Y CUSTOMER; 23
130130
131131 [(6)] (8) audit each pharmacy and pharmacist under the same standards 24
132132 and parameters as other similarly situated pharmacies or pharmacists audited by the 25
133133 pharmacy benefits manager; 26
134134
135135 [(7)] (9) only audit claims submitted or adjudicated within the 2–year 27
136136 period immediately preceding the audit, unless a longer period is authorized under federal 28
137137 or State law; 29
138138
139139 [(8)] (10) deliver the preliminary audit report to the pharmacy or 30
140140 pharmacist within 120 calendar days after the completion of the audit, with reasonable 31
141141 extensions allowed; 32
142142 4 SENATE BILL 565
143143
144144
145145 [(9)] (11) in accordance with subsection [(k)] (M) of this section, allow a 1
146146 pharmacy or pharmacist to produce documentation to address any discrepancy found 2
147147 during the audit; and 3
148148
149149 [(10)] (12) deliver the final audit report to the pharmacy or pharmacist: 4
150150
151151 (i) within 6 months after delivery of the preliminary audit report if 5
152152 the pharmacy or pharmacist does not request an internal appeal under subsection [(k)] (M) 6
153153 of this section; or 7
154154
155155 (ii) within 30 days after the conclusion of the internal appeals 8
156156 process under subsection [(k)] (M) of this section if the pharmacy or pharmacist requests 9
157157 an internal appeal. 10
158158
159159 (f) If a contract between a pharmacy or pharmacist and a pharmacy benefits 11
160160 manager specifies a period of time in which a pharmacy or pharmacist is allowed to 12
161161 withdraw and resubmit a claim and that period of time expires before the pharmacy 13
162162 benefits manager delivers a preliminary audit report that identifies discrepancies, the 14
163163 pharmacy benefits manager shall allow the pharmacy or pharmacist to withdraw and 15
164164 resubmit a claim within 30 days after: 16
165165
166166 (1) the preliminary audit report is delivered if the pharmacy or pharmacist 17
167167 does not request an internal appeal under subsection [(k)] (M) of this section; or 18
168168
169169 (2) the conclusion of the internal appeals process under subsection [(k)] 19
170170 (M) of this section if the pharmacy or pharmacist requests an internal appeal. 20
171171
172172 (g) During an audit, a pharmacy benefits manager may not disrupt the provision 21
173173 of services to the customers of a pharmacy. 22
174174
175175 (h) (1) A pharmacy benefits manager may not: 23
176176
177177 (i) use the accounting practice of extrapolation to calculate 24
178178 overpayments or underpayments; [or] 25
179179
180180 (ii) [Except] EXCEPT as provided in paragraph (2) of this subsection: 26
181181
182182 1. share information from an audit with another pharmacy 27
183183 benefits manager; or 28
184184
185185 2. use information from an audit conducted by another 29
186186 pharmacy benefits manager; 30
187187
188188 (III) CHARGE A PHARMACY OR PHARMACIST A FEE UNL ESS AN 31
189189 AUDIT FINDS THERE WA S A FINANCIAL DETRIM ENT TO THE PHARMACY CUSTOMER 32
190190 OR PURCHASER ; 33 SENATE BILL 565 5
191191
192192
193193
194194 (IV) CHARGE A PHARMACY OR PHARMACIST A FEE WIT H REGARD 1
195195 TO AN INCORRECT DAYS OF SUPPLY CALCULATIO N IF THE PHARMACY BE NEFITS 2
196196 MANAGER IS UNABLE TO ACCEPT THE CORRECT D AYS OF SUPPLY WITHOU T HELP 3
197197 DESK INTERVENTION ; 4
198198
199199 (V) HAVE OR RE QUEST ACCESS TO A PH ARMACY’S OR 5
200200 PHARMACIST ’S BANK, CREDIT CARD, OR DEPOSITORY STATEM ENTS OR DATA; OR 6
201201
202202 (VI) AUDIT CLAIMS THAT WE RE REVERSED OR FOR W HICH 7
203203 THERE WAS NO REMUNER ATION BY THE PURCHAS ER OR COST TO THE PH ARMACY 8
204204 CUSTOMER . 9
205205
206206 (2) Paragraph (1)(ii) of this subsection does not apply to the sharing of 10
207207 information: 11
208208
209209 (i) required by federal or State law; 12
210210
211211 (ii) in connection with an acquisition or merger involving the 13
212212 pharmacy benefits manager; or 14
213213
214214 (iii) at the payor’s request or under the terms of the agreement 15
215215 between the pharmacy benefits manager and the payor. 16
216216
217217 (3) FOR CLAIMS THAT WERE AUDITED IN VIOLATION OF PARAGRAPH 17
218218 (1)(VI) OF THIS SUBSECTION , THE PHARMACY BENEFIT S MANAGER OR PURCHAS ER 18
219219 SHALL PAY THE PHARMA CY OR PHARMACIST $20 PER CLAIM F OUND TO BE IN 19
220220 VIOLATION. 20
221221
222222 (I) (1) A PHARMACY BENEFITS MA NAGER OR PURCHASER M AY NOT 21
223223 AUDIT MORE THAN 50 PRESCRIPTIONS DURING A DESK OR SITE AUDIT UNLESS THE 22
224224 PHARMACY BENEFITS MA NAGER OR PURCHASER R EQUESTING THE AUDIT PAYS THE 23
225225 PHARMACY OR PHARMACI ST $20 PER ADDITIONAL PRESCRIPT ION OR PROOF OF 24
226226 DELIVERY OR PICKUP R EQUEST. 25
227227
228228 (2) THE FEE REQUIRED UNDE R PARAGRAPH (1) OF THIS SUBSECTION 26
229229 IS IN ADDITION TO TH E FEE REQUIRED UNDER SUBSECTION (J)(1) OF THIS SECTION. 27
230230
231231 (J) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTIO N, A PHARMACY 28
232232 BENEFITS MANAGER OR PURCHASER SHALL PAY A PHARMACY OR PHARMA CIST $250 29
233233 PER HOUR OF AUDIT OR $10 PER PRESCRIPTION AUD ITED, WHICHEVER IS GREATER . 30
234234 6 SENATE BILL 565
235235
236236
237237 (2) THE FEE REQUIRED UNDE R THIS SUBSECTION SH ALL BE 1
238238 ADJUSTED ON JULY 1 EACH YEAR FOR INFLAT ION IN ACCORDANCE WITH TH E 2
239239 CONSUMER PRICE INDEX. 3
240240
241241 [(i)] (K) The recoupment of a claims payment from a pharmacy or pharmacist 4
242242 by a pharmacy benefits manager shall be based on an actual overpayment or denial of an 5
243243 audited claim unless the projected overpayment or denial is part of a settlement agreed to 6
244244 by the pharmacy or pharmacist. 7
245245
246246 [(j)] (L) (1) In this subsection, “overpayment” means a payment by the 8
247247 pharmacy benefits manager to a pharmacy or pharmacist that is greater than the rate or 9
248248 terms specified in the contract between the pharmacy or pharmacist and the pharmacy 10
249249 benefits manager at the time that the payment is made. 11
250250
251251 (2) A clerical error, record–keeping error, typographical error, or 12
252252 scrivener’s error in a required document or record may not constitute fraud or grounds for 13
253253 recoupment of a claims payment from a pharmacy or pharmacist by a pharmacy benefits 14
254254 manager if the prescription was otherwise legally dispensed and the claim was otherwise 15
255255 materially correct. 16
256256
257257 (3) Notwithstanding paragraph (2) of this subsection, claims remain 17
258258 subject to recoupment of overpayment or payment of any discovered underpayment by the 18
259259 pharmacy benefits manager. 19
260260
261261 [(k)] (M) (1) A pharmacy benefits manager shall establish an internal appeals 20
262262 process under which a pharmacy or pharmacist may appeal any disputed claim in a 21
263263 preliminary audit report. 22
264264
265265 (2) Under the internal appeals process, a pharmacy benefits manager shall 23
266266 allow a pharmacy or pharmacist to request an internal appeal within 30 working days after 24
267267 receipt of the preliminary audit report, with reasonable extensions allowed. 25
268268
269269 (3) The pharmacy benefits manager shall include in its preliminary audit 26
270270 report a written explanation of the internal appeals process, including the name, address, 27
271271 and telephone number of the person to whom an internal appeal should be addressed. 28
272272
273273 (4) The decision of the pharmacy benefits manager on an appeal of a 29
274274 disputed claim in a preliminary audit report by a pharmacy or pharmacist shall be reflected 30
275275 in the final audit report. 31
276276
277277 (5) The pharmacy benefits manager shall deliver the final audit report to 32
278278 the pharmacy or pharmacist within 30 calendar days after conclusion of the internal 33
279279 appeals process. 34
280280
281281 [(l)] (N) (1) A pharmacy benefits manager may not recoup by setoff any 35
282282 money for an overpayment or denial of a claim until: 36 SENATE BILL 565 7
283283
284284
285285
286286 (i) the pharmacy or pharmacist has an opportunity to review the 1
287287 pharmacy benefits manager’s findings; and 2
288288
289289 (ii) if the pharmacy or pharmacist concurs with the pharmacy 3
290290 benefits manager’s findings of overpayment or denial, 30 working days have elapsed after 4
291291 the date the final audit report has been delivered to the pharmacy or pharmacist. 5
292292
293293 (2) If the pharmacy or pharmacist does not concur with the pharmacy 6
294294 benefits manager’s findings of overpayment or denial, the pharmacy benefits manager may 7
295295 not recoup by setoff any money pending the outcome of an appeal under subsection [(k)] 8
296296 (M) of this section. 9
297297
298298 (3) A pharmacy benefits manager shall remit any money due to a pharmacy 10
299299 or pharmacist as a result of an underpayment of a claim within 30 working days after the 11
300300 final audit report has been delivered to the pharmacy or pharmacist. 12
301301
302302 (4) Notwithstanding the provisions of paragraph (1) of this subsection, a 13
303303 pharmacy benefits manager may withhold future payments before the date the final audit 14
304304 report has been delivered to the pharmacy or pharmacist if the identified discrepancy for 15
305305 all disputed claims in a preliminary audit report for an individual audit exceeds $25,000. 16
306306
307307 (O) THE FINAL AUDIT REPOR T SHALL, IF APPLICABLE: 17
308308
309309 (1) IDENTIFY EACH PHARMA CY CUSTOMER OR PURCH ASER 18
310310 RECEIVING A REFUND ; AND 19
311311
312312 (2) SPECIFY THE AMOUNT B EING REFUNDED TO EAC H PHARMACY 20
313313 CUSTOMER OR PURCHASE R. 21
314314
315315 (P) A PHARMACY OR PHARMACI ST MAY CONFIRM WITH THE PHARMACY 22
316316 CUSTOMER OR PURCHASE R THAT THE PHARMACY CUSTOMER OR PURCHASER 23
317317 RECEIVED THE REFUND AMOUNT FROM THE PHAR MACY BENEFITS MANAGE R. 24
318318
319319 (Q) (1) A PHARMACY BENEFITS MA NAGER SHALL PROVIDE A PHARMACY 25
320320 OR PHARMACIST BEING AUDITED WITH A PHONE NUMBER THAT THE PHAR MACY OR 26
321321 PHARMACIST MAY USE T O ASK QUESTIONS REGARDING THE AUDIT. 27
322322
323323 (2) AN INDIVIDUAL WHO IS FAMILIAR WITH THE AU DIT SHALL 28
324324 RESPOND TO ALL TELEP HONE INQUIRIES WITHI N 72 HOURS AFTER THE CALL WAS 29
325325 MADE. 30
326326
327327 (R) (1) THE PHARMACY BENEFITS MANAGER SHALL GIVE T HE PHARMACY 31
328328 OR PHARMACIST THE OP TION TO PROVIDE REQUESTED AU DIT DOCUMENTATION BY 32
329329 POSTAL MAIL, E–MAIL, OR FACSIMILE. 33 8 SENATE BILL 565
330330
331331
332332
333333 (2) IF A DOCUMENT IS REQU ESTED REGARDING AN A UDIT, THE 1
334334 PHARMACY BENEFITS MA NAGER SHALL PROVIDE A SECURE FACSIMILE N UMBER 2
335335 AND A MECHANISM FOR RECEIVING SECURE E –MAILS. 3
336336
337337 [(m)] (S) (1) The Commissioner may adopt regulations regarding: 4
338338
339339 (i) the documentation that may be requested during an audit; and 5
340340
341341 (ii) the process a pharmacy benefits manager may use to conduct an 6
342342 audit. 7
343343
344344 (2) On request of the Commissioner or the Commissioner’s designee, a 8
345345 pharmacy benefits manager shall provide a copy of its audit procedures or internal appeals 9
346346 process. 10
347347
348348 SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 11
349349 October 1, 2023. 12
350350