EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0565*
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SENATE BILL 565
J5 3lr3005
CF HB 374
By: Senators Ready and Klausmeier
Introduced and read first time: February 6, 2023
Assigned to: Finance
A BILL ENTITLED
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; establishing requirements and 7
prohibitions regarding audits by pharmacy benefits managers, including provisions 8
related to audit limits, the acceptance of certain documents as validation or proof, 9
the charging and payment of fees, access to financial documentation, and audit 10
documentation; requiring that a final audit report include certain information if 11
applicable; authorizing a pharmacy or pharmacist to confirm with a pharmacy 12
customer or purchaser that the pharmacy customer or purchaser received a certain 13
refund; and generally relating to audits by pharmacy benefits managers. 14
BY adding to 15
Article – Health – General 16
Section 15–102.3(k) 17
Annotated Code of Maryland 18
(2019 Replacement Volume and 2022 Supplement) 19
BY repealing and reenacting, with amendments, 20
Article – Insurance 21
Section 15–1629 22
Annotated Code of Maryland 23
(2017 Replacement Volume and 2022 Supplement) 24
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 25
That the Laws of Maryland read as follows: 26
Article – Health – General 27 2 SENATE BILL 565
15–102.3. 1
(K) THE PROVISIONS OF § 15–1629 OF THE INSURANCE ARTICLE APPLY TO 2
PHARMACY BENEFITS MA NAGERS THAT CONTRACT WITH MANAGED CARE 3
ORGANIZATIONS . 4
Article – Insurance 5
15–1629. 6
[(a) This section applies only to a pharmacy benefits manager that provides 7
pharmacy benefits management services on behalf of a carrier.] 8
[(b)] (A) This section does not apply to an audit that involves probable or 9
potential fraud or willful misrepresentation by a pharmacy or pharmacist. 10
[(c)] (B) A pharmacy benefits manager shall conduct an audit of a pharmacy or 11
pharmacist under contract with the pharmacy benefits manager in accordance with this 12
section. 13
(C) (1) A PHARMACY BENEFITS MA NAGER MAY CONDUCT AN AUDIT 14
THROUGH AN AUDITING ENTITY. 15
(2) AN AUDITING ENTITY MU ST REGISTER WITH THE COMMISSIONER 16
AS AN AUDITING ENTIT Y BEFORE CONDUCTING AN AUDIT IN THE STATE. 17
(3) THE COMMISSIONER MAY ADOP T REGULATIONS TO CAR RY OUT 18
THIS SUBSECTION . 19
(d) A pharmacy benefits manager may not schedule an onsite audit to begin 20
during the first 5 calendar days of a month unless requested by the pharmacy or 21
pharmacist. 22
(e) When conducting an audit, a pharmacy benefits manager shall: 23
(1) if the audit is onsite, provide written notice to the pharmacy or 24
pharmacist at least 2 weeks before conducting the initial onsite audit for each audit cycle; 25
(2) employ the services of a pharmacist if the audit requires the clinical or 26
professional judgment of a pharmacist; 27
(3) [permit] ALLOW its auditors to enter the prescription area of a 28
pharmacy only when accompanied by or authorized by a member of the pharmacy staff; 29
SENATE BILL 565 3
(4) allow a pharmacist or pharmacy to use any prescription, or authorized 1
change to a prescription, that meets the requirements of COMAR 10.34.20.02 to validate 2
claims submitted for reimbursement for dispensing of original and refill prescriptions; 3
(5) for purposes of validating the pharmacy record with respect to orders 4
or refills of a drug, allow the pharmacy or pharmacist to use records of a hospital or a 5
physician or other prescriber authorized by law that are: 6
(i) written; or 7
(ii) transmitted electronically or by any other means of 8
communication authorized by contract between the pharmacy and the pharmacy benefits 9
manager; 10
(6) FOR PURPOSES OF AN I NVOICE AUDIT, ACCEPT AS VALIDATION 11
INVOICES ISSUED BEFO RE THE DATE OF DISPE NSING FROM: 12
(I) A WHOLESALE DISTRIBUTOR: 13
1. THAT HAS BEEN ISSUED A PERMIT BY THE STATE 14
BOARD OF PHARMACY UNDER TITLE 12, SUBTITLE 6C OF THE HEALTH 15
OCCUPATIONS ARTICLE; AND 16
2. FROM WHICH THE PHARM ACY OR PHARMACIST HA S 17
PURCHASED PRESCRIPTI ON DRUGS; OR 18
(II) FOR INVOICES F OR DURABLE MEDICAL E QUIPMENT OR 19
SICKROOM SUPPLIES , A DISTRIBUTOR THAT H AS THE APPROPRIATE 20
AUTHORIZATION TO DO BUSINESS IN THE STATE; 21
(7) ALLOW A COMPLETED RE GISTER TRANSACTION T O SERVE AS 22
PROOF OF DELIVERY OR PICKUP FOR A PHARMAC Y CUSTOMER; 23
[(6)] (8) audit each pharmacy and pharmacist under the same standards 24
and parameters as other similarly situated pharmacies or pharmacists audited by the 25
pharmacy benefits manager; 26
[(7)] (9) only audit claims submitted or adjudicated within the 2–year 27
period immediately preceding the audit, unless a longer period is authorized under federal 28
or State law; 29
[(8)] (10) deliver the preliminary audit report to the pharmacy or 30
pharmacist within 120 calendar days after the completion of the audit, with reasonable 31
extensions allowed; 32
4 SENATE BILL 565
[(9)] (11) in accordance with subsection [(k)] (M) of this section, allow a 1
pharmacy or pharmacist to produce documentation to address any discrepancy found 2
during the audit; and 3
[(10)] (12) deliver the final audit report to the pharmacy or pharmacist: 4
(i) within 6 months after delivery of the preliminary audit report if 5
the pharmacy or pharmacist does not request an internal appeal under subsection [(k)] (M) 6
of this section; or 7
(ii) within 30 days after the conclusion of the internal appeals 8
process under subsection [(k)] (M) of this section if the pharmacy or pharmacist requests 9
an internal appeal. 10
(f) If a contract between a pharmacy or pharmacist and a pharmacy benefits 11
manager specifies a period of time in which a pharmacy or pharmacist is allowed to 12
withdraw and resubmit a claim and that period of time expires before the pharmacy 13
benefits manager delivers a preliminary audit report that identifies discrepancies, the 14
pharmacy benefits manager shall allow the pharmacy or pharmacist to withdraw and 15
resubmit a claim within 30 days after: 16
(1) the preliminary audit report is delivered if the pharmacy or pharmacist 17
does not request an internal appeal under subsection [(k)] (M) of this section; or 18
(2) the conclusion of the internal appeals process under subsection [(k)] 19
(M) of this section if the pharmacy or pharmacist requests an internal appeal. 20
(g) During an audit, a pharmacy benefits manager may not disrupt the provision 21
of services to the customers of a pharmacy. 22
(h) (1) A pharmacy benefits manager may not: 23
(i) use the accounting practice of extrapolation to calculate 24
overpayments or underpayments; [or] 25
(ii) [Except] EXCEPT as provided in paragraph (2) of this subsection: 26
1. share information from an audit with another pharmacy 27
benefits manager; or 28
2. use information from an audit conducted by another 29
pharmacy benefits manager; 30
(III) CHARGE A PHARMACY OR PHARMACIST A FEE UNL ESS AN 31
AUDIT FINDS THERE WA S A FINANCIAL DETRIM ENT TO THE PHARMACY CUSTOMER 32
OR PURCHASER ; 33 SENATE BILL 565 5
(IV) CHARGE A PHARMACY OR PHARMACIST A FEE WIT H REGARD 1
TO AN INCORRECT DAYS OF SUPPLY CALCULATIO N IF THE PHARMACY BE NEFITS 2
MANAGER IS UNABLE TO ACCEPT THE CORRECT D AYS OF SUPPLY WITHOU T HELP 3
DESK INTERVENTION ; 4
(V) HAVE OR RE QUEST ACCESS TO A PH ARMACY’S OR 5
PHARMACIST ’S BANK, CREDIT CARD, OR DEPOSITORY STATEM ENTS OR DATA; OR 6
(VI) AUDIT CLAIMS THAT WE RE REVERSED OR FOR W HICH 7
THERE WAS NO REMUNER ATION BY THE PURCHAS ER OR COST TO THE PH ARMACY 8
CUSTOMER . 9
(2) Paragraph (1)(ii) of this subsection does not apply to the sharing of 10
information: 11
(i) required by federal or State law; 12
(ii) in connection with an acquisition or merger involving the 13
pharmacy benefits manager; or 14
(iii) at the payor’s request or under the terms of the agreement 15
between the pharmacy benefits manager and the payor. 16
(3) FOR CLAIMS THAT WERE AUDITED IN VIOLATION OF PARAGRAPH 17
(1)(VI) OF THIS SUBSECTION , THE PHARMACY BENEFIT S MANAGER OR PURCHAS ER 18
SHALL PAY THE PHARMA CY OR PHARMACIST $20 PER CLAIM F OUND TO BE IN 19
VIOLATION. 20
(I) (1) A PHARMACY BENEFITS MA NAGER OR PURCHASER M AY NOT 21
AUDIT MORE THAN 50 PRESCRIPTIONS DURING A DESK OR SITE AUDIT UNLESS THE 22
PHARMACY BENEFITS MA NAGER OR PURCHASER R EQUESTING THE AUDIT PAYS THE 23
PHARMACY OR PHARMACI ST $20 PER ADDITIONAL PRESCRIPT ION OR PROOF OF 24
DELIVERY OR PICKUP R EQUEST. 25
(2) THE FEE REQUIRED UNDE R PARAGRAPH (1) OF THIS SUBSECTION 26
IS IN ADDITION TO TH E FEE REQUIRED UNDER SUBSECTION (J)(1) OF THIS SECTION. 27
(J) (1) SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTIO N, A PHARMACY 28
BENEFITS MANAGER OR PURCHASER SHALL PAY A PHARMACY OR PHARMA CIST $250 29
PER HOUR OF AUDIT OR $10 PER PRESCRIPTION AUD ITED, WHICHEVER IS GREATER . 30
6 SENATE BILL 565
(2) THE FEE REQUIRED UNDE R THIS SUBSECTION SH ALL BE 1
ADJUSTED ON JULY 1 EACH YEAR FOR INFLAT ION IN ACCORDANCE WITH TH E 2
CONSUMER PRICE INDEX. 3
[(i)] (K) The recoupment of a claims payment from a pharmacy or pharmacist 4
by a pharmacy benefits manager shall be based on an actual overpayment or denial of an 5
audited claim unless the projected overpayment or denial is part of a settlement agreed to 6
by the pharmacy or pharmacist. 7
[(j)] (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) (1) A pharmacy benefits manager shall establish an internal appeals 20
process under which a pharmacy or pharmacist may appeal any disputed claim in a 21
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) (1) A pharmacy benefits manager may not recoup by setoff any 35
money for an overpayment or denial of a claim until: 36 SENATE BILL 565 7
(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) 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 PURCHASE R THAT THE PHARMACY CUSTOMER OR PURCHASER 23
RECEIVED THE REFUND AMOUNT FROM THE PHAR MACY BENEFITS MANAGE R. 24
(Q) (1) A PHARMACY BENEFITS MA NAGER SHALL PROVIDE A PHARMACY 25
OR PHARMACIST BEING AUDITED WITH A PHONE NUMBER THAT THE PHAR MACY OR 26
PHARMACIST MAY USE T O ASK QUESTIONS REGARDING THE AUDIT. 27
(2) AN INDIVIDUAL WHO IS FAMILIAR WITH THE AU DIT SHALL 28
RESPOND TO ALL TELEP HONE INQUIRIES WITHI N 72 HOURS AFTER THE CALL WAS 29
MADE. 30
(R) (1) THE PHARMACY BENEFITS MANAGER SHALL GIVE T HE PHARMACY 31
OR PHARMACIST THE OP TION TO PROVIDE REQUESTED AU DIT DOCUMENTATION BY 32
POSTAL MAIL, E–MAIL, OR FACSIMILE. 33 8 SENATE BILL 565
(2) IF A DOCUMENT IS REQU ESTED REGARDING AN A UDIT, THE 1
PHARMACY BENEFITS MA NAGER SHALL PROVIDE A SECURE FACSIMILE N UMBER 2
AND A MECHANISM FOR RECEIVING SECURE E –MAILS. 3
[(m)] (S) (1) The Commissioner may adopt regulations regarding: 4
(i) the documentation that may be requested during an audit; and 5
(ii) the process a pharmacy benefits manager may use to conduct an 6
audit. 7
(2) On request of the Commissioner or the Commissioner’s designee, a 8
pharmacy benefits manager shall provide a copy of its audit procedures or internal appeals 9
process. 10
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 11
October 1, 2023. 12